Money Saving Ideas | Frugal, Wealthy and Wise

My Favorite Things Part II

Here’s the next installment of “My Favorite Things”

Vanguard Mutual Funds – the house that Jack (Bogle) built. Vanguard consistently has the lowest fees in the mutual fund industry. Even a small fraction of a percentage in fees can translate in tens of thousands or even hundreds of thousands of dollars difference over a lifetime of investing. While best known for ‘passive’ index funds, Vanguard also offers a number of excellent actively managed funds with low fees. Unlike most mutual fund families, Vanguard is not ‘owned’ by share holders but by its funds: ultimately by its investors. This is one reason it can keep costs so low. While I can’t vouch for it personally, Vanguard also offers a Personal Advisor Service to guide your investments. The fee is 0.3% annually with a minimum of $50,000 of assets managed, a fraction of what other financial institutions would charge.

Cons: I am not particular fond of the website but it’s adequate. There are no walk-in offices for deposits and transactions, not even at their headquarters in suburban Philadelphia. Paper-based transactions and forms must be conveyed via mail or courier. Not all of its actively managed funds are stellar performers. See this Kiplinger’s article on Vanguard Funds to avoid.

Kiplinger’s Personal Finance – a truly worth-while go-to magazine on personal finance, particularly for those just embarking on the journey towards Frugal, Wealthy and Wise. In it, you will find cost-saving ideas and strategies that potentially could save you hundreds and even thousands of dollars. I definitely prefer it to Money magazine. Kiplinger’s is more button-down with less fluff. A great tool for becoming a savvy consumer and investor.

Cons: Reading it year after year, a lot of topics tend to get recycled. Be objective about its investment suggestions. Personally, I am huge fan of Vanguard funds and believe that it’s the best place for most people to keep most of their investments. But the editors do have to keep the advertisers happy and, this may blur objectivity a tad.

The Economist – an erudite, insightful weekly news magazine that truly covers all corners of the globe. You will likely be scurrying to a dictionary (or google) and adding new words to your vocabulary with each issue. I particularly enjoy the quarterly Technology issues.

Cons: It’s expensive (but worth it IMO). While the weekly online edition is available on Thursdays, the printed edition usually doesn’t show up in the mail until Monday. The editorial slant is conservative on business and government policy but liberal on social issues. And it takes a fair amount of time each week to read cover to cover.

Just a word about magazine and newspaper subscriptions in general. These are discretionary expenditures that need to be scrutinized (see earlier FW&W posts “Catch the Little Foxes” and “25 to Thrive”). If magazines, no matter how worthwhile to read, are piling up in a corner unread, you probably should cancel the subscriptions. Kiplinger’s and The Economist are the only two magazines I currently subscribe to and it’s tough just keeping up with them. A frugal alternative: read these magazines at your local library.

Microsoft Money – I guess I’m an Old School kinda guy; I use a personal finance software package released 12 years ago and has since been discontinued. But it meets my needs: to balance accounts and track expenses over time; I don’t need a bunch of bells and whistles such as real-time updates of my accounts. You can buy a Money 2004 CD on eBay for under $10 (no activation key required on the 2004 edition and it runs fine on modern computers). Believe it or not, many financial institutions still provide statement downloads in the MS Money format for importing. If not, Money 2004 can import download files in the Quicken format. This is one of the very few Microsoft products (out of two, I think) that can be whole-heartily endorsed and they don’t even sell it anymore!

I encourage you to use some sort of personal finance application, either online or as software on your PC, to keep your finances in order. If using a discontinued software product such as MS Money puts you off, check out Mint or Quicken. Yes, there will be a learning curve. And it takes time to ‘feed the beast’. But it is far easier to balance a checking account. And tracking expenses is essential for the Frugal, Wealthy and Wise.

My Favorite Things: to be continued in the next posting. I would appreciate your feedback and the sharing of your experiences with any of these products and services.

Meanwhile watch this “My Favorite Things” clip from The Sound of Music movie c. 1965.

Enjoy. Paul

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ATM Fees Increase For 10th Consecutive Year

https://www.thestreet.com/story/13842354/1/atm-fees-increase-for-10th-consecutive-year.html?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

Get thee to a Credit Union!

7368821426_a5e7f46426 — Photo credit: Backdoor Survival via Foter.com / CC BY-NC

Credit Unions are Divine: They Show Your Finances a Better Way

hrcu2-3 — Kansas City MO © 2016 Paul J Reimold

Having joined a credit union some 30 years ago, I can testify to their advantages and blessings.

Frankly I am totally mystified as to why anyone would keep their personal accounts at a traditional bank. I mean, are there really people out there who pay monthly fees for their checking accounts??? And are routinely charged for ATM withdrawals??? While getting next to nothing for interest on their savings accounts and CDs???

Perhaps you hesitate to join a credit union because of the perception that they have limited services and geographical reach. It ain’t so. Today’s credit unions are for the most part, indistinguishable from banks. They offer a plethora of conveniences: online banking, mobile apps, automatic bill payment and check deposits using your smart phone. Furthermore, credit unions accounts are insured up to $250,000, just like banks. (They have their own federal agency: National Credit Union Administration NCUA)

As far as geographical reach, if your credit union is part of the CO-OP ATM network, you have access to 30,000 fee-free ATM’s throughout the country – that’s a number of apocalyptic proportion. Similarly, the CO-OP shared branch network gives you the option of conducting in-person banking at over 5,000 locations nationwide.

Here are four compelling reasons why credit unions reside in a higher realm:

Credit Unions are non-profit organizations owned by their depositors. Unlike banks, they are not beholden to Wall Street and the relentless pressure to increase profits and squeeze more revenue from each and every customer. In contrast, witness the recent Wells Fargo debacle.
As a result, they charge no fees or lower fees. Free checking accounts are practically a given.
Loans (auto, personal, home equity, mortgages) typically carry lower interest rates: (Note: I do not encourage readers of Frugal Wealthy and Wise to take out loans unless there is a good reason, no matter how low the interest rates happen to be.)
Interest paid on savings accounts and CDs are generally superior to banks (but shop around).

So how do you join a credit union that will have you as a member? Once upon a time, membership in credit unions was restricted to employees and immediate family of a particular company, labor union, government agency, or non-profit organization. These limitations have largely been lifted. Some credit unions may still limit membership to residents of a particular geographic area. Others have no restrictions other than US citizenship. You typically must deposit an initial $5 – $25 as a minimum balance to maintain your account– essentially a fee but money well spent, IMHO.

As enthusiastic as I am about credit unions, I exhort you to carefully shop for one that meets your needs and confirm that it is insured by NCUA. Also, there will be times when you find better deals on financial products at other institutions.

Downsides? I really can’t think of any. So if you are not currently banking at a credit union, this may be the appointed day and hour to show your finances a better way.

Cheers, Paul

P.S. I’d like to hear from you, dear readers, about your experiences with both credit unions and banks.

P.P.S. Here are links to find locations of Credit Union CO-OP ATMs and branches.

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Twenty-Five to Thrive

25 Cost Saving Ideas to Transform Your Finances

twenty-five Here are 25 actions for cutting everyday expenses. Most are small steps but, small steps that can really add up over time. Future postings will be discussing a number of these actions in greater detail.

Got any ideas to add to the list? Please let me know via a comment, Facebook or Twitter. Can we collectively come up with 50 or even 75 ideas? Here are the 25 to prime your creative, frugal thinking:

Continue reading “Twenty-Five to Thrive”

Cut the Cable!… Cut the Costs!

Cut the Cable At age 14, our son Ben transitioned from home schooling to attending the local high school. Shortly after the term began, he came home all dismayed – “Everyone else has cable”, he reported, “but we don’t.” Yep. We never had it and we never will.

Let’s see: the cumulative cost for cable service from the time Ben was born until he went college would have easily paid for his first semester at Penn State – and that’s not even taking into consideration interest or investment returns!

Folks, the time has come to think long and hard about your cable service.

Continue reading “Cut the Cable!… Cut the Costs!”

Part 2 of 2: Dawning New Light – LED Light Bulbs Brighten Your Finances

world-lamp-1236637(2) I have to confess: when I initially created the LED Bulb Calculator and spreadsheet, I was blown away by how quickly LED bulbs pay for themselves.

Do the calculations for yourself. The savings from LED bulbs could be substantial enough that you’ll want to swap out your existing light bulbs sooner than later, like maybe starting this week. The savings could even justify replacement of working incandescent bulbs rather than waiting for them to burn out. From the previous LED posting*, let’s review the variables required to calculate savings from LED bulbs:

Wattage of incandescent bulb being replaced
Cost of electricity in kilowatt hours (KWH)
Price of LED Bulb
Watts consumed by equivalent LED/CFL bulb
Average usage per day

*Note: If you missed the Part 1 installment on LED bulbs, click here to read.

To replacing an existing, functioning incandescent bulb with an LED bulb:

Payback period (in months) = Price of LED bulb ÷ (((Incandescent Wattage – LED Wattage) ÷ 1000) x Daily Usage x Cost per KWH) x (12 ÷ 365)

Example:

Price of 60 watt equivalent LED bulb is $5.00
Incandescent Wattage is 60 watts
LED Wattage is 10 watts
Cost per KWH is 15 cents or $0.15
Average daily usage is 2 hours

Payback Period = 5.00 ÷ (((60 – 10) ÷ 1000) x 2 x 0.15) x (365 ÷ 12) or $5.00 ÷ 0.015 x 30.42 =

Approximately 11 months (333 days), less than a year

Folks, anytime you have the opportunity to make a surefire investment that pays for itself in less the year, you probably want to take it.

For this example, the calculated Return on Investment (ROI) over 5 years is 107% per year! Try getting that kind of interest rate from a CD these days…

Annual savings from replacing just one bulb: $5.48

Note these calculations do not even take into account the savings due to the longer life of an LED bulb.

If the cost of replacing the incandescent bulb is factored in at the price of $1.00, then:

Payback Period is reduced to 285 days, approximately 10 months
ROI over a 5 year period increases to 123% per year
Annual savings increases to $6.29

Obviously the outcome will vary somewhat, depending upon the cost of electricity (KWH) where you live (US average is 12.5 cents per KWH) and the local prices for LED bulbs.

I am providing you, dear readers, with 2 ways to calculate your savings: (1) go to my on-line calculator to get the payback period and annual savings (2) download a more sophisticated spreadsheet which also calculates Rate of Return and factors in additional savings from the longer life of LED bulbs. The spreadsheet is compatible with most Excel versions as well Open Office.

To download the spreadsheet, I ask that you sign up for emails from Frugal, Wealthy and Wise. Once you sign up, you can click a link on the Thank You page to download the spreadsheet — you can opt out of the email list anytime in the future.

Here’s screen shot of the spreadsheet.

LED Spreadsheet

A bit of advice about deploying LED bulbs in your home: buy just a few to begin with, perhaps different brands to determine which you prefer. Shop around as prices can vary widely. In my experience, Home Depot has the best selection and value. You will likely want the ‘soft white’ variety for home use. Use either the calculator or spreadsheet to determine how much a given bulb must be used each day before it’s worthwhile to swap it for an LED bulb.

As always, I appreciate your comments, feedback. Please share your experiences with LED Bulbs.

Regards, Paul

PS You may also want to consider installing LED bulbs at your business or place of worship.

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