My Personal Finance Journey

Category Archives for Saving Money & Frugal Living

Financial Considerations of Getting a New Pet

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

Previously on this site, we have reviewed several topics relating to the joys and pains of pet ownership. We have reviewed the decision points around if you need to purchase pet insurance, helping out with dog fostering as a low cost alternative to pet ownership, and looked at the costs of different pet products. In addition, we’ve discussed whether or not Petco or Petsmart is a cheaper place to purchase your monthly pet supplies.

 Today, I wanted to add to this running pet-financial discussion by sharing the story of how my girlfriend and I decided that we could financially handle adopting a second dog and how I account for the cost of dog ownership in my personal finances. And, by sharing our story, I hope to provide a template that you all can use if you are considering adopting or getting a new pet.

 At the beginning of June 2012, my girlfriend and I decided to adopt a second greyhound dog, named Coat (shown in the picture below!). He’s a big sweetheart and very much likes to cuddle! I really don’t think he knows the definition of a “personal comfort bubble,” as I can sleep with my feet on top of him and not phase his snoring.



One Time Expenses Associated with a New Pet

The first step in determining whether or not we could afford a second dog is to sum up any one-time expenses needed to obtain and get a new pet situated in our home. Since we already had an existing greyhound, Charlie, our house was already equipped for dogs, and little extra outfitting was needed. 

 Listed below are the various things we considered for one time expense items and the corresponding amounts we paid:

  • Adoption fee 
    • $0 since we adopted him from some friends. 
  • Food bowls, water dishes, sleeping beds, leashes, collars, doggie clothes/jackets, etc
    • $0 since we already had all of these things from our current dog.
  •  One-time vaccinations
    • $0 since these had already been taken care of by our friends we adopted him from.


Planning for Regular Monthly and Yearly Pet Expenses

The next step was to tally up the regularly-occurring monthly and yearly pet expenses that we knew for sure would be incurred by having another dog.

 Since my girlfriend keeps exquisitely detailed records for her current greyhound, Charlie, this step was pretty simple. By looking at her existing past receipts from Charlie’s routine expenses, we came up with the following expense amounts shown below on a per dog basis:

  • + $50 per month for high quality dog food and toothpaste (since greyhounds have special dietary needs and very bad teeth).
  • + $350 per year for regular basic annual checkup and bloodwork.
  • + $250 per year for Frontline and Interceptor to prevent against parasitic intrusions. 
  • Total = $1200 per year, or $100 per month in guaranteed expenses per year for each dog. 
Having tallied up these expenses, we then assessed our current income, expenditures, and financial priorities to see if we could accommodate these requirements. 
Even though $2400 total per year for both dogs is, without a doubt, a good chunk of change, we decided that it would be worth it for the happiness we get from having dogs around and to provide a greyhound with good quality of life. 

Pet Emergency Fund vs. Pet Insurance


 Having determined that we could afford the regularly-occurring expenses of having a second dog, we then needed to decide how we were going to plan for the unexpected expenses. 

 To do this, the first step was to determine how far/how much we are willing to spend to treat a dog in the event of a sudden life-threatening injury or illness. As I mentioned in the pet insurance article I wrote in 2010, I believe pet insurance is a good idea for people who feel that they would do and spend ANYTHING in order to save a pet’s life – chemotherapy, exploratory surgeries, multiple visits to the emergency 24 hr vet, anything.

 For me, I simply was not raised this way, and instead believe that you should enjoy the time you have with a pet, but that you shouldn’t go to severe financial extremities to save one if a terrible illness occurs. Some veterinarian treatment is absolutely OK, but there is definitely a financial limit. Because of this belief, I knew that we would need a doggie emergency fund to account for unexpected injuries and illnesses for each dog. 

 To get a feel for how much we’d need to save up for each doggie emergency fund, my girlfriend again went back in her receipt records for our current dog, Charlie. She then tallied up the total vet bills from the past 3 years she has had Charlie to determine what unexpected expenses tended to pop up over time.

  • As it turned out, there was a pattern of expenses that revealed itself. About every other year, unexpected vet expenses of about $1500 per year would pop up. 
  • Most often, these expenses were due to dental work (extraction of teeth, etc since greyhounds have very bad teeth) or leg injuries (since greyhounds run very frantically and can injure themselves).
  • From this pattern that emerged, we determined that each of us would need to carry a doggie emergency fund totaling $1000 at any time.

how I save for yearly and monthly pet expenses

Having figured out the amounts of regularly occurring expenses and doggie emergency fund we would need to expect, I then turned my attention to the question of how to most effectively save up these amounts and integrate them in to my personal finances. 
Regarding the monthly basic expense of $50 for dog food and toothpaste, I would simply incorporate this in to my zero-based budgeting system each month. So, no problem there. 
However, saving for the yearly expected expenses ($600 per year) and doggie emergency fund ($1000 at any time) would require one extra step. Since I am a big fan of automatic savings for financial goals, it was a natural step for me to simply set up an automatically recurring transfer from my checking to savings account each month in order to save up the required $1600 total. For me, I opted to spread out the savings over a little more than one year, so I set the total automatic transfer amount to $111.00. 
So far, it’s been working very effectively and haven’t yet missed the money one bit!

Real-time record keeping of expenses

Having gotten my pet savings plan figured out, the next step was to create a spreadsheet and tracking system to maintain good visibility on actual expenses as they occur.

This tracking system took the form of a simple Google Docs spreadsheet containing 3 columns:

  • Date of expense item
  • Expense item description
  • Expense item category (food, household items, health, and pet sitting)
  • Expense amount
Whenever a new doggie-related expense is incurred, I simply record the item on the spreadsheet, and boosh! Done! I get to see the total spent and what categories incur the most money! 

Comparison of Actual vs. Planned Expenses So Far – Two Month Check In

Having had the two dogs now for almost 2.5 months, I figured it would be interesting to summarize our current expenses to date and how they compare with how I planned above.

So far, we have spent $766.21 total on the two dogs since the beginning of June 2012.

  • Food – $213.15
  • Household Items – $26.24
  • Health Expenses – $466.82
  • Pet Sitting – $60

The pie chart below shows a % break down of the expenses.

As you can clearly see, health expenses have been by far and away, the most expensive item. However, this is in line with what we were planning, and we have not yet needed to dip in to our doggie emergency funds.  Food is the next highest expense thus far, but the amount (~$200), is almost perfectly in line with our budgeted amount.

So, overall, it looks like we’re doing a good job planning for the cost of owning a second dog.

How about you all? How you do you plan financially for pet expenses? Do you have a pet emergency fund or insurance? 

 Share your experiences by commenting below!

Help a Reader: Estimating Monthly Living Expenses Before a Move Across Country

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

Happy Sunday everyone!

On Friday, I received the following question/message from a reader:

I was wondering what you think is a safe estimate for monthly living expenses for a 26 year old moving to Washington DC? 

This boggles me due to living expenses beings higher in that area. In college in the Kentucky, I could live on $1,000 per month in living expenses, making next to nothing in income. I am currently in Saint Louis and have $2,000 per month for expenses, making $62,000 total per year in income.


Reader Financial Details:

  • Reader will be splitting rent, utilities, and other household expenses with their significant other. The price range of the places he is looking at is $2,150 total per month (includes parking fees and utilities).
  • Has no kids. 
  • Has about $15,000 in student loan debt and will be attending graduate school in January part-time, getting a very low student loan interest rate.

How would you advise this reader to proceed with estimating living expenses for the Washington DC area? 
Please share your insight by commenting below!

    ***Photo courtesy of http://s0.geograph.org.uk/photos/59/51/595137_ca89e33e.jpg

    How to Make Bathroom Updates that Break the Mold Not the Bank

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    The following is a guest post. Enjoy! 

    How to Make Bathroom Updates that Break the Mold Not the Bank
    Is your current bathroom out-of-date or lacking style? If you are ready to update your bathroom, you have a multitude of options – from a complete renovation to simply updating the decor.

    And, changes on any level can have a huge impact on the room. This is especially good news for the homeowner wanting to update their bathroom on a smaller budget. Even relatively inexpensive bathroom upgrades that focus on updating decor and functional elements, like hardware and faucets, can go a long way.

    Start your bathroom renovations with a budget

    Before you can start any remodeling project, you have to set a budget and create a design plan. First, decide how you are going to finance the project and how much you want to spend.  You have options from borrowing with a home equity loan or line of credit to tapping into your savings. If you choose to borrow with a home equity loan, it is always a good idea to talk with a mortgage lender or apply online first. Knowing how much you are able to borrow can give you the starting point you need to get planning and get on the road to creating the bathroom of your dreams.

    Tap into some inspiration from the experts

    Once you have your budget set, you can begin working on your design. This means coordinating colors, fabrics and artwork to complement each other without overwhelming the (possibly small) space. Browse through home decor magazines and clip out the bathroom designs that you like. Stick with photos of rooms that are relatively the same size and layout as your bathroom. Many designs that are attractive in large spaces don’t work as well in small spaces – and vice versa.
    Once you have selected a handful of bathroom designs, lay them out next to one another and identify the common themes. Are the walls a single color or are you drawn to an accent wall? Are the rooms modern or do they use bright and busy accents? Make a list of things that you notice and take them shopping with you.

    Update your bathroom detail-by-detail

    Now that you have identified styles that you are drawn to, you can look at your bathroom and start to fill in the details.  Bathroom design elements that can have a huge impact include:
    ·         Shower curtains: If you don’t know where to start your bathroom renovation, the shower curtain is certainly a practical beginning. It can play a big role in tying together a bathroom theme and is also one of the cheapest things to replace. Choose a color or pattern to build from for other bathroom design elements.
    ·         Wall color and texture: Get swatches or samples and try them out.  If you are working with a small space, stay with a soft color and use it on all four walls. In larger spaces, feel free to get more adventurous.  You can also consider adding layers of detail with paintable wallpaper or by creating a tile border with a punch of color.
    ·         Rugs, towels, and window treatments: These elements provide a great opportunity to bring both color and texture into the room. Don’t be afraid to experiment – you can return anything that doesn’t work and try again.
    ·         Faucet style: There are a wide range of options when it comes to selecting a faucet. Choose something that complements your decor, but also provides the functionality you need on a daily basis.
    ·         Lighting: Lighting can have a huge impact on any room. Look for fixtures and bulbs that provide the ambiance needed for the space. If this is your master bathroom, you might want brighter lights that can illuminate your morning routine. For a guest bathroom, you might consider dimmer lights or adding a colored fixture.
    ·         Hardware: It’s often the little things that make the biggest impact. Switch out handles on cabinetry with something that shows a little character.
    ·         Mirrors: The focal point in many bathrooms is a mirror. Invest in something that allows you to sneak a peek for vanity’s sake, but also contributes to the overall design of the room.
    ·         Artwork: Add a stylistic piece that brings together the colors in the room. It helps if you won’t mind looking at the piece multiple times a day.

    Get started on your bathroom updates today

    Bathroom updates can be a quick and relatively inexpensive way to spruce up your home. With advanced planning you can conquer your bathroom renovation in a timeframe and budget you can be proud of.

    How about you all? Have you ever renovated your bathroom? What techniques/strategies did you use to keep the spending down to accomplish the job?


    Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/mike_miley/7466757982/sizes/l/in/photostream/

    Different Uses for Credit Cards

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    Credit cards have become very interwoven in to the fabric of today’s society and economy. In fact, it’s becoming almost an anomaly to actually pay for something with cash! Needless to say, credit cards, if used properly and paid in full each month, have a lot of utility.

    Listed below are some of the most common and powerful uses of credit cards:

    Building Credit History

    A very beneficial use of credit cards is to either start or continue to build up your personal or business credit history. By using a credit card for several purchases each month AND PAYING OFF THE BALANCE IN TIME, you can improve your credit score and thus, increase your chances of a getting a good quality loan for future needs.

    Reducing the Cost of Debt Payoff

    Credit cards can be a powerful tool by offering options to consolidate credit card balances on to one lower interest card.

    Generally, when you are searching for a new credit card, there are often very enticing deals that enable you to perform a balance transfer from your existing higher interest rate credit cards and then keep a 0-3% APR interest rate for a certain introductory period.

    There are several things to watch out for before embarking on this form of debt payoff. 

    • First, you have to watch out for fees that are incurred/charged for transferring balances. These can often be 3% of the balance transferred. So, you’ll need to make sure that the interest rate savings you receive on the new card is worth this balance transfer fee.
    • Second, you will need to make sure that you are able to pay off all of your debt that is transferred within the introductory, reduced rate time period. If you cannot, you will often find that your interest rate will be increased after the introductory period to a level that could cost you more than your previous card.
    • Third, performing balance transfers is by no means a ‘magic formula’ that will make it effortless to pay down debt. It will take long-term discipline and MOST OF ALL, changes in spending behavior, to fully pay off your debt balances. In fact, if you’ve already got a credit card that has a fairly low interest rate (say below 10%), you might even be better off simply sticking with your current card and paying off the balance aggressively.

    Obtaining Rewards and Cash Back

    Another one of my favorite uses of credit cards is to receive a portion of your purchase amount back in either the form of cash back or rewards points. Typically, the amount of cash or redeemable rewards points you can receive is around 1% of your purchases. However, you can often get good credit card terms that enable you to get 3-5% cash back in certain categories.

    In addition, credit cards often feature payment insurance protection on certain purchases. For example, if you pay for a rental car with a credit card, many cards offer insurance in the event that you get in an accident.

    Short-Term Payback Expense Account

    Another use of credit cards that is quite powerful (but that can easily get people in trouble if they don’t pay off their balances quickly) is providing some immediate access to funds to pay for expense items so that you don’t have to wait for money to be transferred from your savings to checking account.

    By using a credit card for most all of your purchases, you can keep a minimal amount of money in your non-interest bearing checking account and just transfer money from your interest bearing accounts as it is needed to pay for expenses that come up.

    A Bad Use of Credit Cards

    While I definitely believe there are a lot of good uses for credit cards, one inappropriate use that I feel is worthwhile to mention is the use of credit cards for things you actually do not have the cash to pay for. Once you get in to this cycle of overspending, you can rack up debt balances that compound daily and get you in to trouble faster than you think.

    How about you all? How do you use your credit cards? What is your favorite and least favorite feature about them? What credit card is your favorite?


    Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/76657755@N04/6881501238/sizes/l/in/photostream/

    Finding the Right Type of Credit Card to Suit Your Needs

     

    The following is a guest post. Enjoy! 

    Finding the Right Type of Credit Card to Suit Your Needs

    There are many good reasons (and perhaps, a few bad reasons) why someone would want to have a credit card. From desiring to improve/build your credit history to having a way to pay for everyday items without having to keep large amounts of money in your non-interest bearing checking account, credit cards, if used properly and paid off in full each month, can be a big help to a person’s life.

    After making the all-important first decision that you indeed want to get a credit card in the first place, the question then shifts to what type of card is going to be best for your specific circumstances and life.

    Listed below are several of the most popular types of credit cards and some of the deciding factors that can help you determine whether or not that specific type of card would be a good fit.   

    Cash-Back Credit Cards

    Cash-back credit cards, as you might imagine, are a very popular choice among credit card consumers because a certain percentage of EVERY purchase you make (regardless of the merchant) gets returned to you in the form of cash-back rewards. In other words, you get cold hard cash back as opposed to only getting a discount on future purchases at specific stores, as with some of the other rewards cards discussed below.

    The bottom line here is that cash-back cards are the best for someone that wants to see the rewards return on their purchases as soon as possible. 

    Airline, Points, and Gas Rewards Credit Cards

    This category that could be summarized as “other rewards” credit cards allows you to accumulate rewards points on all of your purchases (regardless of the merchant). However, you often get added benefits for making purchases from the card issuer. For example, if you have an American Airlines credit card, you get certain perks and additional rewards points for purchases that you make towards flights with that airline. For a review of some popular airline credit cards, click here. Once you’ve accumulated a certain number of points, you can then redeem them by getting a discount on a purchase with the card issuer.

    The bottom line here is that “other rewards” credit cards are good for someone that shops at one specific merchant VERY FREQUENTLY, or enough to make it worthwhile to be restricted to only redeeming the reward points with one merchant. 

    Student Credit Cards

    Student credit cards are generally low-balance starter credit cards for younger adults that are looking to get their first credit card that is not co-signed by Mom and Dad. These cards generally are typically somewhat “stripped down” in that they do not carry as good of rewards as other credit cards.

    The bottom line here is that student credit cards are great for someone 18-25 years of age who is looking to get their first credit card and doesn’t have a lot of credit history built up yet. 

    Pre-Paid Credit Cards

    The last category of card on the list today is pre-paid credit cards. In fact, these are not credit cards at all, in a strict sense, because you are not being loaned any money. Instead, you send in cash to the credit card company, which is then loaded on the card for you to spend. These cards generally come with higher fees than the other types of cards on this list, since you’re paying for an added service from the credit card company.

    The bottom line here is that pre-paid cards make sense for someone that has bad credit history and can’t yet get a regular credit card, but wants to start gradually restore their credit history. 

    How about you all? What type of credit card do you carry? Why did you pick that specific category of card?

    Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/68751915@N05/6722592957/sizes/l/in/photostream/

    The Essential Mortgage Loan Refinance Checklist

     

    The following is a guest post. Enjoy!

    The Essential Mortgage Loan Refinance Checklist

    Looking for a way to put more cash in your pocket? Refinancing your home is a great way to modify your home loan payment and make it better fit your budget. Whether you’re looking to take advantage of low mortgage refinance rates or to change the terms of your loan, it can be a smart move. Of course, refinancing requires some upfront fees, so you’ll want to do the math to be sure they’re covered by the eventual savings.

    Before you sit down to tackle your refinance application, be sure you’ve gathered all of the necessary documents and important information you’ll need to complete it. The mortgage refinance process will go more smoothly if you’re prepared upfront.

    Ready to refinance your mortgage? Use this helpful checklist.

     

    Information on your home and mortgage:

    ·         All properties you own, including addresses, estimated value, annual taxes and insurance.

    ·         The year you purchased the property you’re seeking to refinance.

    ·         The original cost of that property.

    ·         The amount you owe on any loans tied to this property. This includes all mortgages and home equity loans and lines of credit.

    ·         Any additional liens against the property, such as judgments.

    ·         Your most recent mortgage statement.

     

    Personal information:

    ·         Residential addresses for the last three years.

    ·         Social Security Number.

    ·         Driver’s license or state ID card.

    ·         Tax returns, W-2s, and pay stubs for the last two years.

    ·         Employer information, including name, address, and phone.

    ·         Financial assets, including checking and savings account balances, investments, life insurance, vehicles, jewelry, antiques, etc.

    ·         Documentation proving other income sources, like Social Security checks, retirement accounts, child support, alimony, rental income, dividends, etc.

    ·         Information on any bankruptcy proceedings or discharges.

     

    Of course, the documents required by your bank to refinance mortgage terms could vary somewhat from this list. But, this is still a good place to start when you’re preparing to refinance. Once you’ve completed the refinance process, you’ll have peace of mind knowing that your mortgage is best suited to your finances.

    How about you all? Have you ever refinanced your home loan? If so, do you still think it was the best decision financially?

    Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/alancleaver/4439276478/sizes/o/in/photostream/

    Financial Independence: Start With Your Savings Goal

     



    The following is a guest post. Enjoy! 

    How to Work Toward Financial Independence
    Financial independence is the ultimate goal of saving money. Being financially independent is defined as having enough money at your disposal so that you don’t have to work to pay for basic necessities. In other words, your investments and savings accounts bring in enough money for you to maintain your current lifestyle.
    It’s important to note that being financially independent is not the same as being rich. Instead, think of it as having the right amount of money; not necessarily an excessive amount of money. It takes financial discipline and smart decisions to achieve financial independence.
    You should consult with a financial planner to see which approach might make sense for your situation, but consider these three basic steps to get you moving toward financial independence.

    1. Get serious about your savings goal

     
    The key to financial independence is building wealth. To do that, you need to save more than you spend. If you’ve been lackadaisical about saving up until now, it’s time to assert your financial discipline and start saving regularly. Here are some ideas to get you started:
    • Set up an automatic savings account transfer to move a set percentage of your take-home pay into savings each month.
    • Set short-term and long-term savings goals with dates and dollar amounts to keep yourself on track.
    • When you save money on a purchase, move the difference into savings.
    • Transfer found money, bonuses, and commissions into savings.

    2. Make sound financial investment decisions

     
    After having accumulated a substantial sum in your savings accounts, you may be ready to look at long-term investments, whether they are stocks, bonds, mutual funds, real estate, investment groups, or other opportunities. These types of investments typically have much higher rates of return than traditional savings accounts. Of course, they also come with higher risks, which is why you should first consult a professional advisor and bear in mind their long-term nature.

    3. Always look for the best interest rates

     
    Whether it’s for your daily savings account or your stock portfolio, keep your eyes open for accounts that provide the best return on your investment. Staying on top of this can help you to build wealth more efficiently. It’s important to note that moving your funds from their current account may come with a fee, but that may be worth it if the ultimate return on the new account is substantial. Be sure to crunch the numbers to see if it’s a smart move or not.
    Of course, achieving financial independence will take years and an understanding not only of your investments, but also of the market forces, tax codes, and myriad of other factors. Working with a savvy financial planner can help you get a handle on all that is involved. But, you can start making smart decisions today by starting to use savings accounts to build wealth and reach your financial goals.

    How about you all? In your opinion, what is the first step towards becoming financially independent? Is this first step also the most important step, or is there another more important step further down the road that you need to overcome?


    Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/rvoegtli/6691093687/sizes/l/in/photostream/

    Saving Money on Life Insurance: Questions to Ask Before You Buy

     

    The following is a guest post. Enjoy! 
    Saving Money on Life Insurance: Questions to Ask Before You Buy

    Choosing life insurance is just like making any other financial decision. Typically, you will find that taking time to make the right decision will generally yield better results than if you make an uninformed quick decision. As they say, “If you are going to do it, you should really do it right.”

    Here are some questions you might want to ask yourself before committing to buying life insurance. 

    They can help to ensure you not only choose the right life insurance product, but they may also save you some money too!

    How much coverage do I need?

    Finding out how much cover you need is the key to getting the right level of life insurance. There is a remarkable number of people out there who are either under-insured or over-insured. Being under-insured means you won’t have enough coverage should you need to make a claim, and being over-insured means you are probably paying too much.

    Use an online calculator to give you a rough idea of how much coverage you need, or speak to a financial adviser or insurance expert for advice.

    What kind of policy is right for me?

    With life insurance, there is not just one single option. Instead, there are many different products out there. From accidental death insurance, to income protection insurance, to funeral insurance, and much more. Do some research to find out what different products are on offer, and work out which one is best for you.

    Bear in mind that some insurance providers will let you tailor your policy, allowing you to get the most suitable policy at the most suitable price.

    How do I choose an insurance provider that is right for me?

    There are many different providers out there, and it can be difficult choosing the right one. Again, do some research and find out what you can about the insurer. Read independent online reviews, and find out what other people think. Try to choose an insurer that has an “A” rating or higher.

    Where can I find the best deals?

    Many people start their search for life insurance online on comparison websites. This can be a useful place to start, as you can compare multiple options in one place at the same time. Be aware of the comparison criteria used on the website, and also remember that the price given will usually be an estimate, and not what you will actually pay.

    What do I do once I have a shortlist?

    Once you have checked out all the options online and made a shortlist of policies you like, it’s time to get down to the nitty gritty. This is the time to make more thorough comparisons, and to find out more information about each policy. Read the small print to find out if there are any exclusions that may affect you, or anything in the policy that shows it is not as good as it seems.

    How can I save money?

    When you’re looking at life insurance options, be sure to check for any special offers. Some providers offer a certain amount of cash back if no claims are made within a certain time. Others may offer a discount for buying online. Some may offer one or two months free each year. Just be sure to choose a policy that is right for you – don’t choose one just because it has a great offer but not-so-great insurance.

    How can I reduce my premiums?

    One of the best ways to reduce your premiums is to get healthy! You can quit smoking, cut down on alcohol, do more exercise, or reduce your cholesterol or blood pressure if they are high. Becoming more healthy can have a huge effect on your premiums, and can save you a huge amount of money over the life of the policy.

    What is the best payment option?

    Insurers often offer different payment options. You may find that making annual payments will be cheaper than monthly payments, but it will really depend on whether you can afford to pay a large sum up front, or you want to spread the cost throughout the year.

    Do I need to review my life insurance once I have it?

    Reviewing your life insurance regularly is one of the most effective ways to save money, and also to make sure your policy still suits your lifestyle. Try to review your life insurance annually, and also when your lifestyle changes significantly – such as, having a child.

    How about you all? What strategies/methods do you use to 1) find the best life insurance policy and 2) ensure you are saving the most money? 

    Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/diggersf/709831439/

    Is it Cheaper to Use Coin Laundry or Install Your Own Washer and Dryer?

    Ever since I purchased my condominium in the Summer of 2010, one of my ‘grand plans’ was to upgrade the place by installing a stacked washer/dryer combination unit into one of the closets in the living room. I figured that this would be a nice convenience to have while living there during graduate school, as well as boost the value of the property when I looked to sell in a few years down the road.

    Having decided to take on this upgrade, I made saving for the eventual project one of my financial goals and figured I would start accumulating the money after I had saved up the 1% home value cash fund for home maintenance costs that are generally recommended to have. I calculated that the upgrade would cost $1000 for the washer/dryer and an additional $1000 for labor/installation (since installing the unit in the closet would involve drilling holes and placing pipes).

    However, after I had completed saving for my 1% home value maintenance account, I decided to cancel the financial goal of installing the washer/dryer unit because my girlfriend was going to move into my place, and we knew we would desperately be needing the storage space that the target closet represented! 

    While I definitely still feel that reserving the extra closet for miscellaneous storage was the correct decision, the process got me thinking – are the operating expenses actually cheaper if you install your own washer/dryer in your home versus using the coin-operated laundry that our condo community provides?

    Trying to find an answer to this question is the purpose of this post. Let’s get started!

    Analysis Assumptions

    As always, when we start with an analysis, it’s important to list out the assumptions that we’ll use so that everyone is on the same page. These are listed below:

    • In my condo complex, the only relevant utility that I have to pay separately from the fixed Homeowner’s Association fee is electricity. So, that’s the only operating cost that will be considered in this analysis for figuring the cost of having my own washer/dryer.
    • Cost of my time to walk down the row of condos to the community washer/dryers is negligible, so not included.
    • I get quarters to operate the coin-laundry from my bank on the way to work, so there is no added cost to obtain those.
    • Maintenance costs are negligible for keeping up the washer/dryer installed in my condo (which might actually be considerable in real life).
    • Assume that I will be doing 2 loads of laundry each week and that the washer/dryer installed in my condo has the same capacity as the community laundry.
    • Inflation is not taken into consideration for cost increases for doing coin laundry (which might actually be considerable in real life).

     

    Cost to Operate Coin-Laundry

    Washing and drying clothes at my condo’s community laundry facility cost $1.50 each. Of course, this equates to $3.00 total for each load of clothes washed.

    Applying the washing frequency of 2 loads per week, this equates to $6.00 per week or $24.00 per month.

    Cost to Operate Washer/Dryer Installed in My Condo

    As I mentioned previously, the total purchase and installation cost I estimated for the stacked washer/dryer combination was $2000. 

    Aside from this initial cash outlay, the only other operating cost we need to tabulate is the electricity cost per month. When I started searching for an estimate for this value, I soon discovered that there was a great deal of variability in how much people/companies think that washer/dryers cost to operate each year. Below are some of the various figures I found:

    • According to a washer/dryer calculator I found, the total cost to wash and dry my laundry in cold water would be $68 per year.
    • According to EnergyStar, their energy-efficient washer/dryers cost $60 per year in electricity.
    • According to NPR, a washer/dryer cost a total of $10 to operate each month in electricity, or $120 per year.
    • According to the yellow energy tags listed on several washer/dryer combos on Lowe’s website (1, 2, 3, 4), the electricity cost ranges from $19-$32 per year.
    As you can see from my findings above, the electricity cost to operate washer/dryers can vary from $19 to over $100 per year (it’s interesting that the yellow tags attached to the washers and dryers when they are out on the showroom floor are most likely underestimated, haha).
     
    In order to stay conservative in my analysis, I will estimate the yearly electricity cost at $120 per year, or $10 per month.
     

     

    Breakeven Analysis & Conclusions – Coin-Operated Washer and Dryer vs. Installed in Home

    Using the specifics mentioned above, I calculated that it would take 143 months, or almost 12 years of doing coin-operated laundry in order to spend as much as it would to purchase and subsequently operate a washer/dryer that is installed in my condo. If you’re interested in viewing the spreadsheet that I used to calculate this breakeven time period, click on the Google Docs link below:

    Google Docs Spreadsheet – Is it Cheaper to do Coin Laundry or Install Washer Dryer in Your Home?

    To me, this is quite an amazing realization! I guess I always figured that it would take several years of doing coin laundry to breakeven on the cost of a washer/dryer, but I definitely didn’t think that it would be >10 years for my specific situation! I figured that it would be more like 3-5 years max!

    I think that the aspects of my personal situation that tilted the numbers to heavily favor coin laundry being the cheaper option in (at least) the short-term are as follows:

    • 1) Only doing 2 loads per week maximum (whereas a family of 4 might be doing 7-8 loads per week or so), and
    • 2) The fact that my condo unit is not currently drilled to handle a washer/dryer, and I would need to spend another $1000 for the labor and materials to make that happen.

    In fact, if I had been doing 8 loads of laundry per week and my house was already hard-wired with outlets for a washer/dryer (i.e. the initial cash outlay was only $1000 to purchase the machine), it would have only taken about 12 months for me to break even with the cost of installing a washer/dryer. This really highlights to the importance of doing your own analysis for your specific situation to determine whether or not installing a washer/dryer or just doing coin-laundry is better for you financially.

    In addition, it is also worthwhile to note that installing a washer/dryer in your home can sometimes substantially increase the resale value of your home. I can’t remember how many people (girls, in particular), who have told me that they would not EVEN THINK about buying a house or condo unless it had it’s own washer/dryer in it already. By installing this set of appliances in your home, I could see the resale value easily being increased by anywhere up to $5,000, just stemming from the fact that it would be on more people’s ‘list of qualifying homes’ since it has the requisite washer/dryer that they are looking for.

    Conclusions

    From this analysis, I feel that several important conclusions can be drawn about whether coin laundry or installing your own washer/dryer is cheaper:

    • Doing coin-operated laundry will be cheaper and probably a better idea for you if….
      • You only do 1-2 loads of laundry a week (or less).
      • Installing a washer/dryer in your home would require a substantial capital investment up-front.
      • The Time Value of Money (TVM) is of great importance for you, and you don’t want to tie up big chunks of your money for several years that could have been invested elsewhere.
    • Installing a washer/dryer in your own home is a good idea for you if….
      • You and your family do A LOT of laundry each week (4 loads or more).
      • You especially value your time and need the convenience of doing laundry in your own home while you do other things.
      • Your home is already equipped with hook-ups for a washer and dryer, and all you have to do is go down to your local home-improvement store to pick one out.

     

    A Spreadsheet Template to Conduct Your Own Washer/Dryer Breakeven Analysis

    When I started this analysis, I did not intend to create a general spreadsheet that could be used as a template for conducting someone’s own breakeven.

    However, when I saw how sensitive the decision of whether or not it is cheaper to do coin laundry or install your own washer/dryer is to each person’s laundry-going frequency and home set-up, I felt it would add a lot of value to create a tool that could be adjusted by each person to conduct their own analysis.

    As such, I added 4 fields highlighted in orange to the Google Docs spreadsheet shown at the link below:

    Google Docs Spreadsheet – Is it Cheaper to do Coin Laundry or Install Washer Dryer in Your Home?

    The 4 fields include:

    • Cost to Purchase and Install a Washer/Dyer in Your Home
    • Utility Cost Per Month to Operate a Washer/Dryer Installed in Your Home
    • Loads Per Week of Laundry You Will be Doing
    • Cost Per Load to Wash + Dry Your Clothes (Total for both washing and drying)

    To conduct your own breakeven analysis and help determine which option is cheaper for you in the long-term, simply download a copy of the Google Docs Spreadsheet, input your specific answers to each of these items in the orange cells, and then look in Columns B and C to see how many months it takes for the columns to display similar values (your breakeven point).

    The answer may surprise you, like it did me! Give it a shot and let me know how it goes!

    How about you all? Do you currently do your laundry using coin machines, or do you have a washer/dryer installed in your home? Have you ever calculated which is cheaper for your specific clothes washing habits? 

    Is cost even a factor in deciding which route you take with washing your clothes, or is convenience the main deciding point?

    Share your experiences by commenting below!

    PS – Isn’t the English language fascinating? Drier and dryer sound exactly the same, but one is used as a noun, and one is used as an adjective. Apparently, I may have used the word, dryer, too much today! haha

    ***Photo courtesy of http://www.flickr.com/photos/xand83/5510923960/sizes/o/in/photostream/

    Why Renting Works for Me

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    The following is a guest post by Natalie from Debt and the Girl. Enjoy! 

    Why Renting Works for Me
    There has been a lot of discussion lately on the pros and cons of buying vs. renting in today’s market. Some feel that buying a house is the superior solution, while others claim renting is much better. There is no right or wrong answer, as very situation is different. 
    However, I will say that at this moment, renting is right for me at this time.

    Our Story

    My boyfriend and I have a house that was purchased about 5 years ago. Then, the market crashed and realized we were stuck with this property, and at the time, we had diminished incomes due to reasons beyond our control. 
    We tried to put the house up for sale twice, and both times, were met with disappointment. We had spent thousands on much needed repairs/renovations for the house, and we did not receive one offer. It was crushing to say the least. It also did not help that we were trying to sell in one of the worst economic times in American history and that there were foreclosures left and right in our area. There was also the fact that we had crummy real estate agents, but that’s another story for another day! 
    We eventually were able to rent out the house to tenants and move into a lower-cost apartment. The experience gave me a shock to the system that I had not anticipated. It was eye-opening to say the very least.
    Now that my boyfriend and I are living in an apartment, I can say that life has gotten much less stressful and much better. Our rent on the apartment is about $400 less than the mortgage on our house, and we are using that excess money to pay off debt. If we had stayed in that house, our utility bills would have been through the roof! Also, we are fortunate in that we have good tenants right now who pay the rent on time and are not damaging the house beyond belief. Both are very good to consider if you are thinking about renting your property to other people.

    Advantages of Buying vs. Renting

    There are some definite advantages of renting versus buying. 
    Probably one of the biggest things is that you don’t have to pay extra for repairs, landscaping, use of the pool (we have two in our apartment complex), or upkeep of the property. Repairs alone on a house can be VERY expensive. Our heater went out in our house and we had to replace it for $1000, and that was actually a good deal. There were also times when we had to do little but costly things like update the circuit system or reconfigure the pipes so that they didn’t freeze in the winter (not fun). It is easy to spend thousands of dollars on repairs and upkeep before you have even blinked an eye.
    The one thing I will say why I think renting is great is the freedom that you have with it. With the current financial economy, there is no such guarantee that you can sell a house and leave. Therefore, you have the possibility of being tied to one place until the market recovers. This is fine if you plan on living in the same place for years and have good job security, but these are things that many do not have. It is a scary thing to even consider that you may lose your house, and that is something I really don’t want to go through again.  We were very lucky to have gone through that and still come out the other side.
    In short, renting works for me. There is something that is very liberating about being able to have more control over when and where I can move. This freedom will only increase when we sell the house someday. Some would say that I am throwing money by renting, but the truth is that all the money I am saving is going to pay off my debts and build up savings. Renting is still a cheaper option where I live, and it is good option for me right now. I may change my mind in the future, but it works for me. As I have said before, everyone’s situation is different and what works for you may not for others, but right now this is the best option for our family.

    How about you all? Do you prefer to rent or own your home? Why do you choose one way over the other?


    Share your experiences by commenting below!

      ***Photo courtesy of http://www.flickr.com/photos/rubenerd/3858055204/sizes/l/in/photostream/

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