31 Essential, Frugal and Wise Actions – 3

Part 3 of 6

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Here are Actions 12-16

Review last year’s expenditures – when it comes to managing your finances, it’s difficult to know where you’re going, when you don’t know where you’ve been. Tally up your spending activities from last year using records and statements. Which categories of spending ‘jump out’ at you? Where are opportunities to cut back? How much were you able to save? Don’t have any idea where your money went last year? Skip Immediately to #13 and get this year off to a good start!

Track expenses – tracking expenses is essential for taking control of your finances and planning for future. Do you need to keep such meticulous records that you know where every penny went? Well, no. But the more accuracy, the better. Recording expenses can take many forms: a notepad or journal, a spreadsheet, online (mint.com, budgetpulse.com), a PC program (Quicken, Microsoft Money) or any number of smartphone apps (Mint, GoodBudget, Mvelopes). Personally, I’m old school and use Microsoft Money. It was discontinued years ago but copies are still available on ebay and, it works fine installed on modern PCs. It fits my needs. I am also a little bit leery about keeping financial records in the cloud, or apps such as Mint that directly access accounts,. However, Mint is well regarded.

Set a budget – not to worry. Establishing a budget does not have to be as tedious and painful as you fear. Step one: begin by recording on-going, necessary monthly expenses: mortgages, loans, tuition, phone and internet. Step two: estimate variable expenses based on last year: auto repairs, gas, utilities, house maintenance. Step three: estimate necessities where there is leeway for spending, such as clothing and food – these are areas where spending can range from basic to lavish, from Mac’n’cheese to Porterhouse steaks. Step four: estimate spending for purely discretionary items: vacations, dining out, entertainment, hobbies. Add it all up and adjust the items in steps 3 and 4 to fit your income. Allow (plenty of) room for saving and giving.

Set goals for big-ticket items – some goals may have a timeline of decades (saving for retirement, attaining financial independence). Some last a decade or so (kids’ college education). Others are a few years or even months (replacing a car or appliance, home renovation, down payment on a house, a vacation.) Dream a little, but then prioritize. Evaluate the viability of your goals and what it takes to achieve them.

Set up automatic bill payment to save time and postage, avoid late fees – this action is as much about quality of life as it is about saving money. Life is simply too short to spend it writing checks and stuffing envelopes. Moreover, the cost of postage and stamps can really add up. Say you write 10 – 15 checks a month for recurring bills and donations. A first-class stamp is currently 47 cents. An individual check may cost 10 cents, or more. Altogether, you could needlessly be spending $60 – $100 on stamps and checks every year! Worse yet, what if you overlook or forget a payment and get socked with a late fee? Late payments can also adversely impact your credit score. Set up as many automatic payments as you can for (1) charitable donations, (2) utilities (3) internet and phone (4) credit cards (5) mortgages and loans (6) insurance (7) rent, (8) IRA and HSA contributions, and more.

All for now. Look for Actions 17 – 21 early next week. Cheers, Paul

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31 Essential, Frugal and Wise Actions – 2

Part 2 of 6

Here’s the second installment: Actions 7 – 11.

Make a list of all your newspaper and magazine subscriptions; cancel any that are not regularly read. Take action if you have a stack of periodicals piling up in a corner, untouched and unread. This ‘stack’ could represent hundreds of dollars wasting away every year. Chances are you only have time to read a handful of magazines each month. Frugal alternatives: (1) catch up on your reading for free at the local library (2) ‘share’ subscriptions or swap magazines with friends.

Review all recurring expenses (monthly and annual). Cancel any that are no longer important. These are expenditures that can add up but are easily overlooked as regular charges. They can include (but are not limited to):
- Gym, YMCA or health club memberships
- Pool or golf club memberships
- Any other association or club memberships where you rarely participate
- Credit alert or credit score services (of minimal value, provided you routinely review statements and your credit report)
- Credit or mortgage life insurance – incredibly expensive for what you get. Better to buy a term life policy.
- Subscriptions to video or music providers (Netflix, Sling, Pandora, Sirius, etc.)
- Annual credit card fees (unless the rewards exceed the annual fee)
- Monthly checking account fees – time to find a new bank or a credit union!

Contemplate whether it’s time to cut (or cut back) the cable. Here are several strategies for scaling back or eliminating the cost of cable:
- Cancel premium packages for channels rarely watched.
- Replace cable with a combination of over-the-air broadcasts and streaming services. Attention sports fans, click here for ways to get your sports fix – without the expenses of cable.
- Go old school: rent DVDs from RedBox or check out DVDs from the local library.
- Limit TV viewing – engage more in productive and healthy alternatives. Another advantage: you are less inclined to buy so much stuff when you are no longer being bombarded by commercials.

Investigate dropping the telephone land line – given the pervasiveness of cell phones, do you still need a land line? It depends…
- Pros: (1) dropping the land line could save several hundred dollars each year (2) lose the telephone ‘spam’: all those annoying telemarketing and robo calls. (3) simplify your life
- Cons: (1) there may not be much savings if your phone line is bundled with internet service (2) a land line typically has better sound quality; cell coverage is still spotty in many areas (3) emergency response for 911 calls is faster, since your address pops up in the 911 response center.

Review cell phone plans – cell phones, particularly those with data plans have become a big monthly expenditure. If you’ve had your plan a while, it’s time to shop around. Just be aware of any early termination fees. Take advantage of family plans where data and airtime can be pooled.

Cheers, Paul

Next time: Actions 12 – 16 Friday the 20th.

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31 Essential, Frugal and Wise Actions

January is the longest month of the year. Granted, six other months also have 31 days. But none last as long as January. To help pass the time, I present you with 31 Frugal and Wise action items. Make that long, slow slog through January (and February) profitable. Enhance your finances.

I’ll be breaking down the recommendations into six installments between now and the end of the month. (Unfortunately, 31 is a prime number and can’t be evenly divided.) Here are Actions 1 – 6:

Review Auto and Home Insurance Policies: Call your current insurer and ask about reducing premiums; get quotes from competitors. Some of you might have experienced what I have: premiums go up year after year but then you phone your insurer and somehow, they find a way to reduce your premiums. Definitely worth a 10-minute call. If your present insurer can’t do much for you, it’s time to shop around. Possible ways to save: (1) increase deductibles (2) cancel comprehensive and collision coverage on older cars (3) ask if you are you eligible for discounts because of your employer, alma mater, memberships or affiliations (4) get a discount purchasing home and auto policies together from the same insurer (5) ask about discounts for teen drivers with Driver’s Ed and good grades. But avoid skimping on liability coverage limits. Here are the J.D. Power rankings for auto insurance: and homeowners insurance:

Consider Umbrella Liability Insurance: As you faithfully practice Frugal and Wise ways, your savings and net worth are bound to increase. You should consider adding an umbrella liability policy to augment the liability coverage provided by your auto and home policies. Typically, an umbrella policy brings your total coverage up to one or two million dollars. Yet, the cost is reasonable, perhaps several hundred dollars to around $1000 per year. Just remember: a million bucks ain’t what it used to be…

Start Gathering Tax Records: For most folks, preparing a tax return is less painful than a root canal, but not by much. Be on the lookout for 1099 and W-2 forms arriving in the mail or made available online. Tally up last year’s charitable contributions and other deductions. If you are getting a refund, you’ll want to file as soon as possible. If you owe taxes, you don’t want surprises – better to know sooner than later and be prepared. Make an appointment now with your accountant or tax preparer. If a Do-It-Yourselfer, start your return online or with tax preparation software. Here are tax prep software reviews from two sources: http://www.pcmag.com/article2/0,2817,1904319,00.asp , http://www.thesimpledollar.com/best-tax-software/

Check Your Payroll Withholdings: If you anticipate getting a BIG tax refund this year, congratulations! You just gave Uncle Sam an interest-free loan for the year with your hard-earned money. I realize that many, if not most, taxpayers prefer large refunds. But as the Frugal and Wise, you should be taking a different tack: increase your take-home pay by reducing tax withholding. Then immediately save or invest the difference. Just don’t overdo it; withhold too little and you could end up paying a penalty. Come every April, you ideally should owe Uncle Sam a modest sum, say, a hundred dollars or so. Ask your payroll or HR department for a W-4 form to increase the number of exemptions you claim (the more exemptions, the less taxes are withheld from your paycheck.)

Resolve to NEVER Pay ATM Fees Again: Believe it or not, the average ATM fee is now $4.57 per transaction! This is SO unnecessary. You might as well be tearing up Five Dollar bills and scattering them in the gutter! Tips for locating surcharge-free ATMS: (1) Convenience stores – 7-11, Wawa and Sheetz among others (2) Drugstore chains: CVS, Walgreens, Rite Aid (3) Your bank or credit union’s website may have a directory of free ATMs. Note: some “free” ATMs might ask if you want your account balance. Just say No! Otherwise you could get dinged 50 cents or a dollar. If it’s your bank that’s charging the fee, it’s time to switch banks or, better yet, join a credit union.

Pull Your Credit Report: You are entitled to a free credit report every year from each of the 3 major credit agencies: (Equifax, Experian, TransUnion). It’s important to verify the accuracy of your credit record as well as to detect any signs of fraud or identity theft. Visit the online portal annualcreditreport.com – you can either access your credit reports online or download a form to mail a given agency. I suggest staggering the three agency reports so that you are reviewing your credit record every four months.

That’s all for now. As always, your input and suggestions are welcome. The next installment will include Actions 7 – 11. Cheers, Paul

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Shaping Up the FRUGAL Way

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It’s a New Year. Inevitably, millions of Americans will – once again – resolve to lose weight and get into shape. They are going to join a gym! Guess what? Eighty percent to those who sign up in January will be gone before the end of February! Here are some other interesting statics on gym membership: (source: creditdonkey.com)

The January surge – ‘resolution seekers’ will swell gym attendance this month by 30 – 50%
The second week in January is typically the busiest week of the year
Only 50% of gym members visit more than 100 times a year
Gym or YMCA individual membership runs $20 – $65 (or more) per month but there is generally a $100 ‘initiation fee’. Quit after a couple of months and you’ve paid dearly for your handful of visits!
Monthly membership fees are usually charged to your credit card or automatically deducted from your bank account; it’s easy to overlook them, meanwhile they add up month after month and year after year…

Don’t get me wrong. I am not discouraging anyone from joining a gym. Regular exercise leads to improved well-being, both physically and mentally. And the gym can provide an important social setting as well. But there may be lower-cost options that are right for you. Consider your choices carefully. You want to attain both physical and fiscal fitness:

Partner up – walk, run or bike with neighbors or friends. Make exercise a social event. Plus, a partner or group can provide the accountability you need to exercise regularly.
Shape up at home – get workout DVDs from the library or watch videos on YouTube. There might be a minimal expenditure for equipment (stretch bands, hand weights, etc.).
Check out local high school pools – does your school district open its pool to the public? This could be a very reasonable alternative to a gym or YMCA. Example: the Upper Darby, PA High School pool, charges $45 for annual membership plus $2 each visit.
Join the USMS (US Masters Swimming) – if you want to kick your swim workout up a few notches, join the USMS and be prepared for a vigorous workout. Annual membership is around $50. The USMS chapter near me holds practice at Villanova University most weekday mornings for $6 a session. Happiness is swimming a mile before 7AM!
Take advantage of community/public pools – the City of Philadelphia operates the 50 meter/Olympic-size Kelly Pool in a lovely section of Fairmont Park. Admission is free to all and there are 3 dedicated lap lanes. Unfortunately, the pool is only open approximately 10 weeks during the summer. In contrast, outdoor pools at the International Swim Center in Santa Clara, CA are open year-round (I’m very jealous!) Noontime swims for the public cost $5.
Investigate fitness classes offered by your community or school district – Jane and I are signed up for Pilates through our school district. It averages about $8 per 60 minute session. And guys, Pilates is not some namby-pamby chick thing; it’s tough stuff!
Does your employer provide a fitness center or subsidize membership? A gym located at your workplace can be very convenient and probably cheaper than other gym offerings (or maybe even free). Plus, there is a trend among employers to offer wellness incentives that decrease employee’s healthcare copay.
Ask your health insurance provider if they offer wellness incentives – example: Independence Blue Cross in the Philadelphia area will pay up to $150 per year towards gym membership.

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May 2017 be the year that your bod and your finances shape up! Cheers, Paul

Take These Five Actions Before Year-End

2017-calander — My 2017 Dollar Store Calendar ($1.06 with tax) It’s the Muscle Car theme.

We are now in the last few days of 2016. Here are five Frugal and Wise actions you should take before the year’s end:

Stock up on holiday merchandise for next year. Take advantage of the post-Christmas deep discounts on holiday decorations, lighting, greeting cards and wrapping paper. Do not pay full price for the same items next November or December. (But please exercise some restraint in your post-holiday purchases.)

Pick up your 2017 calendars at the dollar store. OK, the dollar store calendars are not as nice as the on ones sold at book stores or Staples for upwards of $8.00. But are the calendars from Staples 8 – 15 times better???

Make last minute charitable donations – if you itemize deductions on your federal tax return, additional donations can reduce your 2016 tax bill (or increase your refund). Typically, those with middle class incomes are in a 25% tax bracket. That means that every $100 donated to charity could reduce your federal income taxes by $25. To qualify as a deduction for 2016, mailed donations must be postmarked no later than December 31^st. Donation by credit card or electronic fund transfer must be initiated by the 31^st.

Gather up unwanted clothing and household items to donate. This week could be a great opportunity to reduce household clutter and get a tax break to boot! All that stuff no longer being used can be carted off to the Salvation Army, Goodwill, Purple Heart or similar organizations. Be sure to get a receipt for your donation. As a rule, your donation is valued by what it would cost to purchase similar items in a thrift store (Thrift Store Value). Donating $100 worth of clothing and household goods (not all that difficult to come up with) could reduce your tax bill by, say, $25.

Bump up your retirement plan contribution by a percent or two – at a minimum, you should be contributing enough to your 401k or 403b to get the full match from your employer; failure to do so means losing out on a huge sum of money over a lifetime. Every year, try to ratchet up your contribution just a bit more: 1 or 2 percent each year? Such a small reduction in take-home pay likely will not be missed* but could significantly accelerate your retirement savings. See my posting You can’t spend what you ain’t got: Why You Need to Automate Your Savings.

*Example: If your annual salary is $60,000, one percent is $600 or only $50 per month. If your contribution is pretax and you are in a 25% tax bracket, your take-home pay is only reduced by $37.50 per month. Over a 30 year period, assuming a 7% annual return, these extra 1% contributions would accumulate about $56,000 in additional savings!

Wishing you a Happy and Prosperous New Year! Cheers, Paul

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My Favorite Things Part V

trains This is the final installment of the My Favorite Things series. Admittedly this episode has a definite home electronics bent. But then, with the Northern Hemisphere in winter, it’s a great time to stay home, listening to good music or catching up on shows and movies.

Note: most of the items below are discretionary purchases, not necessities. Please treat them as such in your budgeting.

Klipsch Speakers – in general, it’s hard to beat BIC speakers for their bang for the buck (refer to the BIC DV62si bookshelf speakers mentioned in My Favorite Things Part IV). However, Klipsch speakers are definitely a step up but still provide excellent price/performance. I happen to own ten Klipsch speakers: 5 for the home theatre, 2 for the living room stereo, 2 for the home office and this nifty KMC-1 portable Bluetooth speaker (atop the big speaker). The KMC-1 is an incredible value at $130, outperforming other, more expensive, name-brand Bluetooth speakers.

Below the KMC-1 is my pride and joy: the Klipsch RF-5’s. Real cheery wood veneer, made in Hope, Arkansas, not imported. A pair of RF-5’s go for $1500 retail. I got mine on eBay for $450.

Fugal and Wise Take Away: save big on home electronic items getting them used on Craig’s List or eBay. Take advantage of all those audiophiles and techies who are continually trading up to the latest and greatest. Or snag an item the is being discontinued by the manufacturer at a discount.

Roku Streaming Players – I like Roku for three reasons: (1) They are ‘content agnostic’ unlike Amazon, Apple and Chrome/Google offerings. (2) Roku offers the largest variety of video content sources (3) A great value throughout the product line. Prices are comparable to Amazon Fire, but a fraction of what Amazon TV costs. Meanwhile, Roku offers models which stream 4K Ultra High Def content, which Apple TV does not.

Cons: The Roku user interface and remote can be a bit clunky. 4K programming choices are still limited (but growing).

Fugal and Wise Take Away: Streaming players are a great alternative to costly cable services – refer to Cut the Cable! Cut the Costs!

Yamaha YST-SW012 Subwoofer – the best subwoofer to be found for under 100 bucks! Mine is in the home office, rounding out the Klipsch RB-41 bookshelf speakers. The Yamaha provides that extra kick, whether you are listening to Copeland, Coltrane or Coldplay. Or Bach, Basie and Barry White.

Cons: Best in smaller space, may be under powered for larger rooms. No controls for cross-over or polarity, just volume (not a big deal for most folks)

A Patio Sound System for under $200!: Yamaha NS-AW150 outdoor speakers & Blue Fidelity Model 300 amp. For being so inexpensive, this combo makes a pretty awesome patio sound system. I’ve received a lot of compliments on how great it sounds. The Blue Fidelity unit receives music via Bluetooth streaming from your phone, tablet or PC. Though only the size of a deck of cards, it puts out plenty of power – the neighbors occasionally ask me to turn it down (luckily, we share similar tastes in music.)

Cons: If I were doing it over, I’d get the Yamaha speakers in black rather than white so they’d hide dirt better.

Mazda 3 – we have a 2012 Mazda 3 sedan with the 2.0 liter Skyactiv engine and 6 speed manual transmission. It looks like all the other nondescript compact sedans out there. But wait until you get behind the wheel! This is a driver’s car. Zero to 60 in 7.9 seconds. Top speed of 123 MPH, limited only by a computer chip. And how it corners! It pains me greatly to say this, but it actually handles a bit better than my 1996 Mazda Miata. Zoom. Zoom.

Cons: It takes a while to get over the 2012’s smiley-face grill (the 2013 and later models have better looks). Seats are not terribly comfortable for long trips. Around town mileage is so-so in the low to mid 20s in miles per gallon. And I really wish the redline was 500 – 1000 RPMs higher.

Frugal and Wise Take Aways: New, a 2012 Mazda 3, like ours, listed for just under $20,000. We bought ours used in 2015 from a private owner for $10,500. That’s a substantial savings even though the car had 43,000 miles on it at purchase. Another point: you don’t have to pay vast sums of money to own a car that’s fun to drive. A step up from the Mazda 3 but still on the reasonable side is the Honda Civic Si (although the Si requires premium gas.)

Lionel Trains – I saved the best for last. As I write this, there are sixty year-old Lionel trains circling the Christmas tree. Prices for vintage model trains peaked in the early 2000’s. Since then, pricing on all but the rarest items have been steadily declining. Why? Model train owners are an aging demographic. More train collections are getting downsized or sold to settle estates.

Here’s a link to my trains in action.

Frugal and Wise Take Aways: With prices being more reasonable, this is a great time to get into the hobby. Check offerings on eBay or a local train meet. Here’s a schedule of train meets around the country – just put in your zip code to find events near you. But another point: don’t get caught up in a ‘collectables’ mania. Model train prices peaked about the same time as the Beanie Baby craze and the dotcom bubble: a cautionary tale indeed.

In closing, here’s the link to the last version of My Favorite Things: this time covered by Luther Vandross. Enjoy!

I wish you all Merry Christmas, Happy Holidays and a Happy, Frugal, Wise and Prosperous New Year!

Cheers, Paul

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