Spend Wisely

Quick 8 and 18 month review of the BMW 335d

June 8th, 2011

BMW 335d 2011 Review

The Diesel Driver recently ran an 18-month review of the BMW 335d.  The review is pretty much all positive.  They call out that few people have even noticed its a diesel, meaning that anecdotal “average Joe” can’t see any of the classic diesel concerns such as smell, noise, etc.

Few if any passengers have guessed it’s a diesel although many have commented on the car’s power. The 425 pound-feet of torque is not only fun but has come in handy many times over.

And on fuel economy they note:

The best sustained fuel economy we’ve recorded was 40 mpg (5.9 l/100 km), although we’ve seen as high as 42 mpg (5.6 l/100 km) for brief periods of time. On a drive from Philadelphia to New York, the 335d used 6.0 l/100 km (39.2 mpg) with an average speed of 65 mph (105 km/h).

I have had the car for about 8 months now and have driven approximately 3,500 miles.  To put it plainly, I absolutely love this car.  On the highway, I have been able to get 40+ MPG, and my average city/highway driving has given me with an average of 31-33 MPG.  The car is fun to drive, handles great and has excellent pickup (especially at higher speeds).

My only complaints with the car so far are:

  • When I first took delivery of the car, there was definitely a noticeable smell.  I did some research and this apparently due to “Particulate Filter Regeneration“.  After about 2500 miles though, I haven’t noticed the smell.
  • The HD radio reception is spotty.  This seems to be a common issue with BMW’s and is not limited to the 3-series.
  • I still miss the old “wrap around the driver” feeling of the old E46 style BMW 3-series seats and dashboard.

You can read our other diesel articles here:

More of 18 month review at the source…

BMW 335d 18-Month Report and Review | The Diesel Driver

Read the Fine Print: Lesson in Saving Becomes Lesson in Getting Shafted

June 7th, 2011

A few weeks back, we posted about Youth Savings Accounts, which can be a great way to get above market rates for relatively small amounts of money.  Personally, I have set up one for my son and it allows him to earn 6.17% on $500, which is much better than the national average savings account rate.  Of course, leave it to Bank of America to find a way to screw people and their kids.  This case over at The Consumerist caught my eye:

In 2007, a mother of three thought she would introduce her kids to the world of banking by having them each open up passbook savings accounts at the local Bank of America branch. But rather than learning how savings earn interest over the years, the kids found themselves schooled in the finer points of bank fees and the need to check your statement.

The big issue was that the account started out as a “free” youth account, but quietly turned into an “anything-but-free” account in 2008.

The mom tells San Francisco’s KGO-TV that when she opened the accounts for the children, she had believed there wouldn’t be any fees associated with them because they were all tied to her existing BofA account. Alas, starting in 2008, each account was hit with a monthly fee of $3. In 2009, that fee went up to $5 per month.

Banks change terms and conditions all the time.  These changes are often buried within pages and pages of fine print.  As far as I know, all the recent laws such as the CARD Act only apply to credit cards and not deposit accounts.  Additional, the new overdraft protection rules only apply to overdraft fees.  This means banks can continue to add fees to savings, checking and other such accounts with little notice.  If you are going to take advantage of Youth Savings Accounts, be sure to read the fine print and be on the look out changes to the terms including:

  • Monthly Fees
  • Changes to minimum balance requirements
  • Changes to maximum balance that earns bonus interest rate
  • Changes to interest rates (this is a big on, because savings rates can change without notice)

I  do not bank with Bank of America.  Here are just a few reasons why:

Why anyone would bank at Bank of America is beyond me.  Jump over to The Consumerist to watch a video and to read more.

Mom Tries To Teach Kids Value Of Saving, Kids Learn Lesson About Bank Fees Instead | The Consumerist

I just sold my PS3 – here’s why

June 7th, 2011

Back in February 2008, when the Blu-Ray vs. HD-DVD war was finally over I went out and bought a Sony Playstation 3 (PS3).  I didn’t buy it for the games; I bought it because at the time the PS3 was the cheapest and best Blu-Ray player around.  In fact, in the last 3+ years we haven’t played a single game on it… we only used it for DVD, Blu-Ray and Netflix movies.

My reasons for selling now:

  • The unit was 3+ years old – Systems with moving parts like fans and hard drives are more prone to failure
  • It used a lot of power (see table below)
  • PlayStation 4 is probably coming out late next year and resale value of the PS3 is going to drop
  • I was able to sell it for a fair price of $165 or about 42% of my original purchase price
  • The PS3 requires a Bluetooth remote and thus was the only thing that wouldn’t work with my universal remote.
  • Based on my families movie watching it cost us approximately $7-$10 a year to run the PS3.
  • The PS3 was a bit noisy and could be heard slightly when watching movies.

PS3 Power Consumption

With the $165 I got from selling my PS3 on Craig’s List, I purchased a new Panasonic DMP-BDT110 Wi-Fi Ready 3D/2D Blu-ray Disc Player.  This new player cost me approximately $135 including tax and shipping.  The result is that I now have a player that does everything I need, since I don’t use my PS3 for games.  I got this particular player because of its price and exceptionally low power consumption.  I also do not believe in paying a lot of money for “fancy” digital players.  The key components inside a $300 Blu-Ray player are basically the same as that of a $100 player… the difference is in the bells and whistles (Wi-Fi, styling) and, since it is all digital, the resulting picture and sound is identical.

 

 

Benefits of the switch:

  • I have an extra $30 in my pocket
  • I have a brand new player that will easily last another 3 years
  • The new player uses 97% less power in standby and 92% less power when playing a movie.  This will save approximately $6.75-$9.75 a year in power.
  • The new player uses IR and thus is compatible with my universal remote
  • The new player is entirely silent and has no fans
  • I got a “free” copy of Avatar
  • The depreciation of the new player will probably be on par with that of the PS3 I just sold – so this is a wash

If you are interested, the player I got is available at the following Amazon for a pretty good price: Panasonic DMP-BDT110 Wi-Fi Ready 3D/2D Blu-ray Disc Player

Note: If you have one of the original PS3s from 2006 or 2007, the amount of power that system is using may be significant.  These models typically use between 180 and 200 watts of power when on.  Newer “slim” models only use about 60 watts.

Coupons, with a Side of Obsession and Fraud

June 7th, 2011

Coupon Crazy

Extreme Couponing is on the rise. TLC even has a TV show about it:

For those in the mood for a great review and entertaining rant about TLC’s Extreme Couponing, I recommend this post over at Scratchbomb.com: Extreme Couponing Induces Extreme Vomiting.  Matthew makes excellent points and I agree almost everything he has to say.  I particularly agree with the following:

  1. There is virtually no such thing as a coupon for decent food. There are no coupons for “bananas” or “organic chicken” or “fresh vegetables”. These extreme couponers are stocking up almost exclusively on packaged or frozen food, loaded with preservatives, salt, hormones, and a billion other horrible things. It’s all Franken-food, the absolute worst shit imaginable. Not a lot of salad in these people’s shopping carts, but a whole lot of things stuffed with cheese and/or skewered on sticks.
  2. The goal for most of these people appears to be not feeding/supplying their families, but accumulating the most stuff for as little money as possible, then shoving those things into every corner of their house, then building more corners in their house into which things can be stuffed. The line between “extreme couponer” and “hoarder” is extremely thin–if such a line exists.

Unfortunately, like many fast growing national obsessions, Extreme Couponing has its cases of scams and frauds.  Frugal Confessions has a interesting article on how relatively widespread coupon fraud has become.

Once I began researching, I was very surprised to find the problem is more widespread and costly than just a few consumers getting away with free products. Just in the month of May 2011 there were 25 counterfeit coupons posted on the Coupon Information Corporation (CIC) website with various rewards being offered from the manufacturing companies for the successful prosecution of individuals responsible for producing the counterfeit coupon.

For those that are new to being frugal at the grocery store, consider reading: 5 Sneaky Price Tricks Your Grocer Doesn’t Want You To Know.

Before you start going crazy with the coupons, you might want to consider Extreme Couponing? 5 Reasons Why I’ll Pass.  Here Paul, explains 5 big issues with the practice.  Of his five reasons, 3 out of the 5 have to do with time:

1. It’s a Full-Time Commitment

3. You Become a Slave to Coupons

4. You Spend Hours at the Grocery Store

I use coupons all the time, but I take a basic time/value equation into account when I do.  For example, if I spend 2 minutes finding a coupon that can save me $3 off something I was going to buy anyway, this is effectively like earning $90 an hour.  Or perhaps I spend 20 minutes digging for a 10% off coupon for a on a major purchase — if this saves me $150 off a $1000 purchase, my effective hourly rate is now $450 an hour.  It works for small purchases too.  For example, Redbox always has codes available at sites like Inside Redbox; here it will literally take less than 60 seconds to find a coupon that could save you a $1.  This works out to $60 an hour, which is definitely worth the time.

So please, go find those discounts, but don’t make it your full time job or obsession and be sure you make a time/value calculation when you do it.  Perhaps your time is better spend learning something new or working to get a promotion or better career or maybe even spending more time with your family.

 

Photo Credit: Dmdonahoo

 

What are Best Buy Reward Zone Points Worth?

June 6th, 2011

One article we seem to get a lot interest in was our post on what My Coke Reward Points are worth.  Having recently gone to Best Buy, I figured it would be good to do a similar post on the value of Best Buy Reward Zone points.

The way the program works is straight forward:

  1. Join the program
  2. Earn 1 point per dollar spent at Best Buy
  3. Cash in the points for Best Buy certificates
  4. If you spend over $2500 a year, you get Premier Silver status and earn 1.25 points per dollar

The conversation ratio is presented in the following table:

Reward Zone point value

As you can see in the chart above, Best Buy Reward Zone points are worth about $0.02 a point, which means you are getting “2% cash back”.  This is actually decent, especially when compared to other points that are typical worth 1/2 of that at $0.01 per point.  In addition, when you combine this with a rewards credit card it is possible to get “3 to 5% cash back” when shopping at Best Buy.   While this may sound like a great deal, you should consider you are getting this “cash back” on prices that may not actually be that great of a price.

From my experience, prices at Best Buy tend to be 5 to 15% higher than they are online, even when including shipping.  The same is true when compared to club stores like Sam’s Club and Costco or discount retailers like Video Only.  This is not always the case, Best Buy sale prices usually match or beat some online retailers.  But, when Best Buy’s sale price matches online pricing, and you include the Reward Zone points, you may actually be able to get a good deal.

Pros:

  • Points are worth about $0.02 each (effectively 2% cash back)
  • Silver status lets you earn 1.25 points per dollar (effectively 2.5% cash back)
  • No need to carry the card, just use your phone number
  • Free and easy to sign up
  • The Reward Zone Gamer’s Club provides 500 bonus points per $150 spent (effectively 6%+ cash back)

Cons:

  • Points must be spent at Best Buy
  • You must spend at least $250 to reach the minimum cash back payout
  • Reward certificates are non-transferable
  • Points expire annually (unless you are Premier Silver, or use the Best Buy credit card)
  • Best Buy prices are, ironically, usually not the best buy available
  • Hassle of worrying about points

In conclusion, I believe Best Buy Reward Zone points are a great way to maximize the value you get when shopping at Best Buy.   If you spend more than $250 a year at Best Buy, you would be silly to not spend 30 seconds and sign up.  However, going out of your way to earn Reward Zone points, or earning Reward Zone points at other retails or with a Best Buy credit card is probably a waste of time.  Even though the points are worth $0.02 each, you have to use them at Best Buy and the higher price you pay over other retailers will probably negate the benefit.  However, if you can catch a good sale at Best Buy, negotiate a good price, or take advantage of a price match… it could be worth looking into.

One final thought.  The 6%+ on video games is actually a decent deal.  With this program you earn your base Reward Zone Points as well as get a bonus 500 points for every $150 spent.  The result of this looks something like this:

Of course, buying new video games at full price is hardly frugal living… I prefer to take advantage of pre-order sales (typically 10 to 15% off) or buy the game a few months after release.

 

Below Your Means Basics

June 6th, 2011

This month we will be presenting a series of Below Your Means (BYM) Basics articles to help those of you who are new to living below your means, and serve as a refresher for those of us who have (or strive to) live the BYM way.

When you live below your means, you shed a huge source of pressure and strain in your life.  Spending beyond your means, in other words – going into debt – means you are trading your future to get something now.  You are agreeing that in the future you will be willing and able to have a certain amount of money.  But none of us can predict the future.  There are lots of ways people get into trouble with debt.  Accidents and health problems lead to massive medical bills and lost wages.  Your ability to earn can be impacted by layoffs, swings in the economy, your own health, and the health of your loved ones.  Those common tragedies are only one reason to worry about spending more than you have.  In fact, bankruptcy laws are in place to protect people specifically from those kinds of ‘unexpected’ crises.

Money CastleThere is a much more insidious price to pay for living beyond your means.  Doing so assumes that you know now what you will want and need in the future.  In reality, most of us aren’t entirely sure what we want and need today, much less the kinds of opportunities and challenges we’ll face tomorrow.  When you take on debt and fail to save, you narrow the possibilities of what the future could hold.  Want to move to a new town?  You’ll need a job with an income sufficient to pay for your debt, and you’ll need to sell your house before you can buy a new one.  Tired of your car?  You can’t sell it because you owe more money on it than it’s worth.  Have a great opportunity to travel to a place you’ve always wanted to visit?  You can’t take the time off, and you don’t have the money saved up to go.  Hate your job, or worse, discover that your career is unsatisfying?  You’re stuck because your monthly payments are too high to switch to something new.

Saving, on the flip side, acknowledges not only that you need to be prepared for the problems of the future, but that you want to have resources at your disposal to seize the opportunities that come your way.  Want to move to a new town?  Sell the stuff you don’t need, get a few leads on some work if you need them, and get going.  Tired of your car?  Sell it and get something else (or go without).  Have a great opportunity to travel?  Plan a leave of absence and head out!  Hate your job, or worse, your career?  Feel free to get started on the next chapter in your life.

In short, money is a tool that you can use to achieve happiness.  It certainly isn’t the only tool, but it’s an important one.  Using it wisely requires that you know yourself and what makes you happy, and you understand that as you grow and change, your wants and needs will grow and change.  While our site isn’t designed to help you live a deliberate, centered life, there are a few resources we recommend to do so.  Franklin Covey’s The 7 Habits of Highly Effective People, while centered a bit too much on an upper-middle class suburban existence, has a great process to follow to think through what is important to you and how to get there.  And David Allen’s Getting Things Done: The Art of Stress-Free Productivity is such a great way to organize your life that he has spawned what Wired magazine referred to as a cult of hyper-efficiency.  Covey’s book especially can take you to additional resources on how to live a successful, meaningful life, but honestly — whatever helps you discover more about yourself, and how to make good choices, go for it.

This month we’ll explore:

  • The Basics of Tracking Your Spending and Building a Budget: This is the single step with which your journey starts.  Sure, you can cut down on your spending, even significantly, without knowing where your spending is going.  But finance is, at it’s most basic, an exercise in math.  If you bring in more money than you spend, you’re living below your means.  If you don’t, you’re not.  Tracking your spending isn’t everything when it comes to living below your means, but it’s hard to be successful without it unless you institute an all-cash system.  Fortunately, there is a whole industry building computer software to help make it simple, and some of it is free.
  • The Basics of Debt and Savings: Debt means giving up opportunities in the future for a lifestyle today.  It is a very dangerous gamble.  You will also see how to use debt as means to manage your cash flow and take risks to increase your wealth.  If you have consumer debt now, you’ll need to first and foremost – stop digging the hole deeper!  Next, you’ll need to pay that debt off as soon as possible and free your future from the tyranny of your past decisions.  Savings, on the other hand, gives you freedom.  It means you have protection from the unexpected and resources that you can use to seize opportunities.
  • The Basics of Spending Wisely: Tips and tricks for spending the least amount possible on things that aren’t critical for happiness and health.
  • The Basics of Living Richly: Spend your money on things that bring you true satisfaction and happiness.  Spending as little as possible for everything else.  Knowing the difference isn’t always easy, and we focus on tools and techniques to help you get there.  To start, realize that most millionaires are ordinary people who live modestly.  And, as this study shows, money doesn’t necessarily bring happiness beyond a certain income.
  • The Basics of the Investing Smartly: Keep tabs on the economy and investing opportunities.  While we aren’t a strict investing site, nor are we financial advisers, we do report on happenings in the economy so you can make educated decisions about where to put your hard-earned savings.  We also believe that, like personal debt, government debt is very risky and the government’s inflationary and spending policies are significant risks to personal well-being and to our country’s future.
  • Common Pitfalls: Identify common pitfalls on your way to financial independence, and share the stories of people who share your commitment to living well by living below their means.

 

Thumbnail Photo: Blocks 1 by Crissy Alright

Story Photo: Frits Ahlefeldt-Laurvig

Southwest Airlines fares not the lowest anymore

June 3rd, 2011

 

The Wall Street Journal has an interesting article on the dramatic increase in Southwest Airlines airfares over the last 5 years.  The big headline statistic is:

Southwest’s average ticket price has jumped 39% in the past five years, while the average ticket price for domestic trips for the industry was up 10%, according to the Department of Transportation.

In a spot check of 24 markets for travel over the Fourth of July weekend, Southwest had the lowest prices in only 11.

Southwest Airlines Boeing 737That’s a big increase.  Percentages can be confusing though and since Southwest’s fares started out much lower, there are still many routes where Southwest is the cheapest option.  This is most likely true if you live near a Southwest hub airport like BWI, LAS, MDW, PHX or HOU.   Southwest Airlines made headlines in the past for its aggressive use of fuel hedges.  When fuel and oil prices skyrocketed, Southwest enjoyed must lower price fuel than other airlines.  They used this advantage to expand their business as the “low fare leader”.  Unfortunately, hedge contracts don’t last for ever and the article points out that many of those advantages are now gone:

The end of the fuel hedges made the biggest change in pricing, however. For many years Southwest’s fuel costs were significantly lower than rival airlines because Chief Executive Gary Kelly decided when prices were low before the U.S. invasion of Iraq to pre-purchase fuel and buy hedges against higher prices.

I, personally, have never flown Southwest.  This is mainly due to the fact they don’t serve Seattle anywhere near as well as Alaska Airlines does and that they do not offer First Class seating.  When I used to be a very frequent traveler, the ability to get free upgrades to First Class was enough to steer me clear of the airline.  Their frequent flyer program is also pretty limited and only gets you flights and rewards on Southwest, as someone that likes to save my miles for big international flights, this is a non-starter.

If getting the lowest fare is your priority, and you have always assumed Southwest had the best rate, shopping around a little bit may now make more sense.  Of course, be sure to compare apples-to-apples, the articles points out:

One major reason Southwest prices can seem higher than competitors, he noted, is because Southwest doesn’t charge fees to check baggage or penalties to change tickets. Check one bag for $25 each way and a Southwest ticket that is $50 higher than another airline may, in fact, cost the same.

More information is available at the source.

Can’t Call Southwest a Discount Airline These Days | The Wall Street Journal