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Does Saving Money Save You Money?

Clearance Deal of the DayCould not live without!  (never used)

 

When you read a blog about saving money, you already possess the most important aspect needed, proper mindset.  Financial awareness is a key component in saving money over the long term.  It’s very easy to think that saving a dollar here or there is no big deal.  For instance, I always use those credit cards which give me the highest return on every purchase.  I have an American Express Blue Cash Preferred card that gives 6% cashback at the grocery and I will use it every single time.  My wife on the other hand will go to the grocery store and just grab any card available.  Her rationale is that if she is only spending $20, that card would only save $1.20 so it’s no big deal.  However, every trip to the gas station, grocery store, or other retail establishment offers a chance to save.  The way I see it is that if I’m going to be making the purchase either way, why not put it on a credit card that will reward me for that purchase?  Why use cash when I can pay with a credit card and get an instant discount a discount that comes after I shop for the best prices and use cashback portals!

The biggest problem for many of us comes from trying to save significant amounts of money by purchasing things we otherwise do not need.  The “Extreme Couponing” craze is one such example of this as those people who follow these methods clip every coupon every week.  If I can buy a can of beets for 10 cents each why not do it?  Because nobody likes beets, they’re garbage, they taste gross and you just wasted your money! This is the opposite of not using your discount when the amounts are small.  You use the discount on items that are deeply discounted, but do they offer a value to you?  If you were some kind of masochist with a beet addiction 100 cans of beets is a fantastic deal and likely saved you about $100, but if you are a normal human being then you probably would have been better off burning the $10 you spent.

This phenomenon is not only present in the extreme couponing circuit.  In fact, every trip to Target provides an opportunity for those demons lurking on the endcaps to claw at your soul.  As you walk the perimeter of the store you see the red homing beacon that are the red clearance stickers.  They sing to you from the cream colored shelves like Sirens in the Tyrrhenian Sea.  Powerless over the possibility of saving tremendous amounts of money you are pulled into their orbit.  Assuming you are not currently reading this while at Target, let’s speak rationally about these fine deals.  Clearance items are only a deal if these are things you would normally buy anyway.  If you have been looking for a bedding set, and had decided on one that was $300 and you find one on clearance for $50 this is a superb deal.  By contrast if you are walking down the aisle and see 80% off a camo beer coozy that says , “My neck may be red, but I’m well read” don’t buy it.  Actually, you’re probably getting this ironically, you can go ahead and get that.  The point is that these items that are “only a dollar” really tend to add up over the course of the year.  In fact these can add up far faster than the “only a dollar” rewards my wife loses when she fails to use the right credit card.

It’s far too easy to base your savings off the MSRP rather than what you truly value an item to be worth.  A better exercise would be to look at these clearance items and ask, “Do I need it? Do I really want it? Would I buy it anyway?  What is it worth to me?”.  So if you walk past the endcap and sunscreen is on sale at 75% off go ahead and pick some up because you probably need it and if you don’t buy it now you will buy some day.  If you walk past the aisle and there is something you have always wanted, but price has kept you from buying it then I think this is a fair purchase.  The Suze Ormans of the world would disagree and advise you to only buy absolute necessities,  fund your emergency savings, fully fund all retirement accounts and then with anything leftover spend money on your wants.  My opinion on this is that sometimes you need to spend some money on the things you want.  So if there is a lamp or shirt you think looks great buy it.

The problem with these deep discounts is that we often go overboard on these clearance items.  In the haze of getting a great deal we often make purchases of things that we do not need or even really want.  As I am composing this my wife came in the door with 3 big bags from Target.  She purchased an $18 lifejacket for $5.38, not a bad deal since our kids will need a lifejacket next year and if she did not make the purchase on clearance we would have paid closer to 20.  However, she also purchased a rug which was on sale for $7.50, she wanted a rug, but I have a feeling that all things equal she never would have bought this style.

My wife happened to be the person who peaked my interest on this topic.  She said, “I used to never look for sales and just buy things I wanted.  I think that I spent less back then than I do now.”  Her hypothesis was that when you go into a store and do not look at prices (but have limited funds) you only purchase things you really want.  Both of us have been guilty of going to Target and buying multiple items, especially clothing, which were on sale.  When my beautiful wife last cleaned out her closet there were multiple items new with tags.  Just as bad there were countless items that she wore only once.  She is not the only one guilty of this either.  I have gone into the store at certain times of the year and bought 5 pair of shorts, but only ended up wearing 3 of the pairs and only a couple times.  Once it’s time to wear them again I’ve undoubtedly gained or lost weight making them useless.

Rather than buying multiples of things you like a little, buying one thing that you really love can be a better deal.  At the beginning of the summer I bought one pair of golf shorts for regular price, but only bought one pair.  I wore these shorts a couple times per week all summer long.  At the end of the year they were 50% off so naturally I bought 5 pairs!  Yet I have worn each pair only once.  One pair is still in my closet untagged.  Basically I spent $20 and wore the shorts 30 times (60 cents per wear), but spent $50 on the discounted shorts and worn those only 5 times ($10 per wear).  So even though my closet looks better with more choices, I’ve likely wasted money overall.  Of course the best option would have been to buy only 1 or 2 pair on clearance and then wear them and I’m saving money.  The problem with clearance deals is they usually don’t work like that.  You end up overspending on things that you don’t need because you feel like you’re saving money.  Unless we think about this consciously we are all subject to doing it.  Which brings me to the question, does anyone want to buy a case of corn on the cob holders?  Accidentally bought too many.  Asking for a friend.

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How we did our California Vacation on a Budget (across the country)

Flight

In June of this year planning commenced on a 6 day fall vacation.  We had initially planned to fly from Louisville, KY to Orlando, FL, but Southwest had a special sale for flights into San Diego for the same price.  Since we had never been to California we decided that a California Vacation would be the best choice for us.  I purchased the plane tickets using points earned from signing up for Southwest Airlines.  I booked a flight for daughter and me, which cost about 36,000 points total.  At the time of booking I had only earned 105,000 Southwest points and had not yet earned my “Companion Pass“.  Once I earned the additional 5,000 points to reach 110,000 I earned my companion pass and simply clicked on my flight to “Add a Companion”.  At this point my wife was added to the itinerary.  Total out of pocket for our cross country flight was $15 round trip.

Car Rental

I knew we would need a car to get around California.  I wanted to rent a vehicle that would be big enough to accommodate our car seats and luggage.  With these options in mind we decided to get an SUV, although my wife was really pushing for a convertible.  I searched online coupon codes and used CarRentalSavers.com .  I found this website to be the best because it included the best coupon codes.  I looked at many different sites and found this one to be at least $30 cheaper for the week. Other sites may have been comparable or even cheaper if we had a normal rental, but ours was one way.  This meant we picked up the car in San Diego and dropped off our car in Santa Ana as we flew out of John Wayne Airport.  The car included unlimited miles and was a very nice car.  We had no trouble at Alamo and even used the kiosk when picking up the car, which allowed us to forgo getting hassled about all of the extra insurance and other upsells.

Lodging

IMG_6042First Hotel 

Obviously we needed to find a place to stay each night of the trip.  Since we were staying 3 days in San Diego, 1 day in Anaheim, 1 day in LA and 1 night near our departing airport a condo or house were out of the question.  Finding an area in San Diego for our home base was not a problem at all.  We stayed near La Jolla and Torrey Pines as it provided better prices, access to La Jolla and was only a 20 minuted drive back to San DIego Zoo.  We knew we needed a hotel close to Disneyland in Anaheim so that was not much of a problem either.  Our day in LA proved to be a bit more difficult because the city is so big and traffic is not great to drive through.  I ended up booking a place that was vouched for by my cousin.  It was near Burbank, supposedly close to Universal Studios, but actually ended up closer to North Hollywood.  The last night we stayed in Huntington Beach which was a quick 15 minute drive back to the airport.

IMG_6696View from Country Inn Room

We stayed at a Country Inn and Suites in San Diego which I highly recommend.  It was in a beautiful location with a nice view of the mountains out our window every morning.  They also had an excellent breakfast which really worked well to save us money on food as one meal was included in the price of our stay.  Most travel blogs emphasize staying in really expensive hotels.  One of my problems with sites such as Priceline is that their rating system puts no value on free breakfast.  I strongly disagree with this valuation because if we were to go out for breakfast and get eggs, waffles, sausage, juice, yogurt and milk it would end up costing us at least $20.  Sure we could go to a fast food place and the 4 of us could eat for less, but it would be far less substantial.  We ate breakfast in our hotel 5 out of 6 days.  The last day we had to be at the airport before breakfast was served.  We ended up buying breakfast at Carl’s Jr. and it cost $9 and that was just for my wife and daughter.  My daughter was complaining that she was hungry 2 hours later.

In Anaheim, our hotel was literally across the street from Disneyland.  Probably 5 blocks if we walked, but since our Disneyland tickets included parking we just drove to the lot.  This ended up being a great idea since by 11:00 PM Pacific Time both kids were passed out.  Which would have made the extra 5 blocks perilous.  I booked our room through getaroom.com which advertised a rate $20 less than booking through the hotel itself.  Unfortunately they add taxes and unnamed fees which put the total at only $2 less than booking directly with the hotel.  I did book through TopCashBack.com which earned me 10% cashback on the stay, which was pretty nice.  The hotel was the Best Western Plus Stovall Inn, which had very nice updated rooms, but they also charged $10 for parking.  The breakfast there was acceptable, but there were so many people that the staff couldn’t really keep up even with the large dining area.

Best Western Stovall's INN Pool Area

Our 5th night was spent in a Comfort Inn near Universal Studios.  The area was in North Hollywood, which is a bit grittier than we would like.  My daughter looked out the window of our room and asked, “Why would they build a hotel here with this terrible view?”  The view out the window was a local mechanic shop, so we did have an excellent view of oil changes.  This room was also recently updated and seemed clean.  It’s not exactly a hotel I would rave about, but for the price and a place to sleep it was okay.  The breakfast area was very nice and clean.  They had cheese omelets, juice, sausage and typical hotel breakfast items.

Our 6th night took us back south to another Comfort Inn in Huntington Beach about 10 miles from the airport.  It was updated, nice and looked (and smelled) very clean on arrival.  The area is also very nice just a few miles from the ocean.

Activities

Many of the activities that we did on the trip were very low cost or even free.  Walking along La Jolla in San Diego was not only free, but it was among our favorite parts of the trip.  The seals on the beach were amazing to see and the views were breathtaking.

IMG_6124

The San Diego Zoo is how Disney would do a zoo.  I know, you are thinking, Disney basically did a zoo, it’s called Animal Kingdom.  Having been to both the San Diego Zoo and Animal Kingdom I believe San Diego Zoo is superior.  That being said, I’m sure that Animal Kingdom will be pretty great in their 97th year as well.  There was something to see every step of the zoo.  Whether it was an animal exhibit or just the assortment of botanicals.  If you enjoy zoos it is definitely worth seeing.

We also visited Torrey Pines State Reserve which offers a beach and beautiful overlooks.  We paid $15 for parking and that was it.  The only problem is for some reason the restrooms and water were all turned off.  This is problematic when you play in the ashy sands of the Pacific and need to get back into your car.

 

We decided to go to Disneyland on Tuesday for “Mickey’s Halloween Party”, it’s a special event that is ticketed separately from the rest of the park.  Disneyland closed on Tuesday at 6PM and Mickey’s Halloween Party took place from 6-11, but you could enter at 3.  We arrived at the park at 3 and enjoyed it immensely.  Instead of the normal price of admission Mickey’s Halloween Party only costs $59 per person.  They only sell a certain amount of tickets, you can trick or treat throughout the park and most attractions are still open.  There were characters out in full force even when we were leaving.  More things for guests to do means that any one line will be shorter.

IMG_7052

In LA we went to the Getty Center, which is fantastic.  It’s a billion dollar art museum that opened in 1997.  The museum was free which I did not know going into it.  Parking is $15, but that is definitely a bargain price even if you were going by yourself.  It’s not exactly the most entertaining for small children as it is not a hands on science museum.  If my wife and I had gone alone we could have spent nearly the entire day touring the massive collections, but with our kids a few hours was ample.  Just seeing the building itself was worth it to me.

We went to Hollywood to check out the sights and typical tourist type things.  We paid $7 to park at the Hollywood and Highlands Center.  It is a very ornate shopping center built around its view of “The Hollywood Sign”.  My daughter wanted to see Hollywood, hoping she would be discovered.  She looked at the sign for about 30 seconds and said, “cooool” then was ready to see the next thing.  We followed the Hollywood walk of fame.  Saw that TCL Chinese Theater and had fun comparing our hands to the stars.  My daughter was a bit disappointed because she wanted to have her footprints and handprints immortalized in the cement, but alas that will have to wait.  I guess seeing Hollywood is worth the $7 parking charge, but otherwise the experience was ruined by the vendors, celebrity impersonators and people in cheap costumes hoping to hustle tourists out of money.

Huntington Beach was a nice way to end our trip watching the sunset over the Pacific Ocean.  They charged $15 for parking, but only $13.50 if you used a credit card.  Since I was going to use a card anyway this worked out perfectly.  The beach was huge over 100 yard from the parking lot to the ocean.  We were also basically alone on the beach which was nice for pictures.

Food

One way we save money on a trip is to minimize our food costs. When we arrived in California we were expected to be absolutely blown away by the prices for food.  I fully expected that if I went into a Subway asking for a $5 footlong they would oblige me with, “Okay sir, that’s one $5 footlong, that will be $28.75.”  This was not even close to reality.  The first night we went to a nice Mexican restaurant that was having huge frozen Margaritas, 5 flavors to choose from for $3 each.  We ordered a margarita, beef nachos, pepsi, and 10 tacos and paid $19 plus a $6 tip.  $25 is cheaper than we eat at the Mexican restaurants in Kentucky.

We try to eat breakfast in our hotel which saves an immense amount of money.  If we had stayed in a condo or rented a house we would have tried to prepare meals at home which would provide huge savings.  Ultimately though, my wife and I value food in much the same way.  I fell like food only gets so good.  Meaning that a $100 meal is not 4 times better than a $25 meal.  We have gone out to very expensive restaurants, but usually feel that they could not live up to expectations.  We might splurge for a meal or two on vacation, but for the most part we try to keep our spending in line with what we spend on food normally.

Total Spent

Flight (3 paid tickets and 1 lap child)                               $30

SUV Rental                                                                      $287

Gas                                                                                  $86.37

Travel Total                                                                  $403.37                                 AVG. $67.23 per day

Food Total                                                                    $166.40                                 AVG. $27.73 per day

San Diego Zoo (2 adults, drink, child free October)     $116.30

Disneyland (3 tickets)                                                   $177

Getty Center                                                                  $15

Torrey Pines                                                                  $15

Hollywood                                                                       $7

Huntington Beach                                                          $13.50

Total Activities                                                             $343.80             AVG.  $57.30 per day

Country Inn & Suites (3 nights)                                      $236.40          The best hotel we stayed in, great staff, great pool, great breakfast.  (78.80 per night using discount, normally $105 +tax)

Best Western Stovall’s Inn (1 night)                              $133.43           Paid for the area near Disney.  Nice Rooms, Awesome pool and topiary area, Adequate Breakfast.  ($10 parking, worst value)

Comfort Inn Universal Area                                            $110.88           Nice room, good breakfast, terrible parking lot, not a very nice area

Comfort Inn Huntington Beach                                       $61.94            Great room, very clean, did not eat breakfast (left too early).  Best value.

Total Lodging                                                                $542.65              AVG.  $90.44 per day

Total Miscellaneous                                                     $66                     AVG.  $11 per day

Trip Total                                                                        $1,522.22          AVG.  $253.70 per day

We could have done the trip for cheaper, but we would have sacrificed some things.  We could have gotten a smaller car and saved a hundred dollars or so.  Driving less miles or having a fuel efficient vehicle could have saved gas.  We could have saved more money by only buying tickets at the zoo ($88), but I am not going to avoid spending at the cost of fun.  We had also budgeted to go to Sea World, but we were enjoying San Diego too much to sacrifice a day doing that.  All around there’s not too much I would change.  Although the Best Western and Comfort Inn were both pricier than I would like and neither was as good as the Country Inn and Suites or the Comfort Inn in Huntington Beach, both about half the price of the Best Western.

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Picking the Perfect Hotel

If I ask you to imagine the perfect hotel your mind probably conjures up images of grand chandeliers, baby grand pianos and beauties feeding you grapes on the plush mattress of a hand carved canopy bed.  Out the window a beautiful sunset begins to crest over the horizon of an unobstructed ocean view.  The salty air touching your skin only briefly before being dabbed away from the damp, cool, mango scented towel.  This sort of fantasy, multiple room palace probably exists for a price.

If I were to ask you to imagine the cheapest hotel what do you see?  Flicking on the light switch, causes the roach herds to scurry toward cover in the putrid motel room.  You pull back the sheets, which audibly crunch from whatever has hardened to their surface.  Through the fitted sheet you can see the stains on the mattress, although their origin is unknown, the evidence manifested clearly lead you to believe these are bodily fluids of some kind.  This kind of hotel certainly exists and the psycho running it would gladly accept your money.

When searching for a hotel I try to find some definite middle ground in these establishments.  I do not need to check into a pretentious establishment where I am expected to tip every person substantially for doing unnecessary tasks.  I am certain that if I lugged the bags of my entire family through the airport I’ll be fine taking them the next 50 yards or so.  I do not need people looking down at me for staying in their hotel.  At the same time I do have certain expectations in a hotel.  I want a nice, clean place where I can lay my head every night.  I will likely not spend much time in the hotel anyway.  Basically for my family a hotel is a place to store our things, take our showers and sleep until the next day.  So as long as the place is clean, quiet and comfortable I am fine.  All other things beyond that are luxuries.  Although having been updated in this millennium is a nice plus.  If your hotel is still rocking a big tube TV I am going to be a bit put off.

Keeping this criteria in mind I try to find the most affordable option, but I try to keep away from the lowest price option.  The last time I went with the lowest price option in an area was a few months ago.  I booked a room in a Howard Johnson, that was supposed to be a 3 star (out of 5).  It was a Hotwire hidden deal and cost about $40, which was very affordable for a 3 star hotel.  I arrived at the hotel and there was a very sketchy looking couple at the counter.  There was an old white Gateway Desktop in the lobby with a line 6 people deep waiting to use the computer.  The “couple” at the counter turned out to be two guys and a girl (sans teeth) who were fine with just one King bed.  I felt like I needed to shield my daughter’s eyes.  Walking through the hall I really felt like I was surrounded by shady characters.  This is not to say that money equals class by any stretch.  However, when you book the cheapest hotel in the area, it’s also the cheapest hotel for everyone else in the area.  So the guys scoring a three way with a tweaker are also booking that cheap room next door to your family.

I try to pick a moderate priced hotel with great reviews.  If possible I try to get a 4 star hotel at a lower price using a site like Priceline or Hotwire.  The problem with this method is that I have personally found that Priceline inflates the rating on some of their hotels.  So you may book a 4 star hotel for $50 and be pumped, but then when the hotel is revealed it is an old Howard Johnson that might generously be awarded 2 stars.  So you think you’re getting a room in a Hyatt or W and you are getting an overrated Ho Jo.  There are websites that exist to help make better decisions on hotels and reveal which hotels are available in an area at the particular star rating that you seek.

Over the next week I will be sharing more information about the hotels I decide to book for our upcoming trip and I will likely give a review of whatever hotel is lucky enough to be chosen by me.

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Now until December 31, 2014 any Flight Booked on Southwest is Buy One Get One Free!

You read the title correctly folks, for the next 16 months any flight that I book on Southwest will include a free ticket for my wife!  Unfortunately, this does not apply to everyone, but only applies to very valuable customers such as myself.  As I have tried to make clear throughout every post of this blog, I am not particularly affluent.  I do enjoy traveling, but the fact is that I have not been on an airplane in about 8 years and my wife has never flown.  This makes having the ability to fly so inexpensively even more exciting for me.  Yesterday, I signed into my Rapid Rewards account and found the following:

Southwest Companion Pass Earned

 

As the above photo states there are two ways to earn a “Companion Pass”.  Method A, requires making 100 “qualifying flights” during one calendar year.  As I have already stated, I have made 0 flights in over 8 years.  The other method is slightly more attainable.  Method B, requires you to earn 110,000 rapid reward points over the course of one calendar year.  That is the one I did.  As you can see above, I have accrued 110,519 points.

 

How did I do it?

Obviously that sounds like a ton of points and it is, but there are definitely some shortcuts to take to get you there quickly.  The first thing that I did was sign up for two Southwest Credit Cards, each one had a 50,000 point bonus.  After meeting the $2,000 spending I had 104,000 points in my account!  Gathering the next 6,000 was not quite as easy.  I continued to use my credit cards to gather points at a rate of 1 point per dollar spent.  This earned me 2,116 additional points (I would have much rather signed up for another credit card and received a nice bonus).  I also used the Southwest shopping portal this earned me 303 extra points.  I could have really maximized this method, but it seemed that I always waited too long when a great reward came along.  Some of the best included 9 points per dollar at Staples and 6 points per dollar at sears.  I was going to buy a TV from Sears and that would have earned me the 6,000 points no problem.  I messed around waiting for a big reward total and then feared I would miss getting the pass in time for my flight.  Although transfering points from Chase Ultimate Rewards do not count toward the pass, transfers from Hyatt do count.  I transferred 8,000 points from Chase to Hyatt, then those 8,000 points turned into 3,600 Southwest points.  Not a great ratio compared to Chase’s 1 to 1 ratio, but still earned my pass.

I booked my flight for October back in June when the prices got very low.  With the 110,000 points in the account I was able to book flights from Louisville, KY to San Diego, CA for 18,000 points round trip.  If my wife and I were the only two flying we could fly across the country for 18,000 points total.  We spent another 18,000 points for my daughter’s ticket, but it’s still pretty amazing that a family can fly across the country for 36,000 points especially when those points all came from signing up for a couple credit cards.  Each card had a $100 fee, so we will be able to take 3 round trip, cross country trips for $200 bucks.  If we leave the kids at home we would get even more value.

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How I earned 6% Cashback and 20 points per dollar on Spending this year

 

“Daddy, can we fly on a plane someday?” A simple question set forth by my daughter January of this year. As a father and husband I wanted nothing more than to book a flight to some beautiful destination at that moment. Unfortunately, in my capacity as the personal financial planner I am much less flexible. Absent a wealthy philanthropist deciding to sponsor our family sometimes we will not be afforded certain luxuries.

 

 

A few days later my brothers returned from a ski trip and my mother suggested that we take a big family ski vacation during Christmas Break. In the same way that my daughter’s idea to fly on a plane sounded fun, this also sounded great. However, my mind slipped back into the “how can I make this happen” mode. Obviously to even consider this kind of endeavor we would need to tighten our purse strings and save as much money as possible. We would need to purchase at least 3 plane tickets, which would cost at least $300 each. At this point I stumbled upon credit card offers that may help my family out.

 

 

I have been a long time user of a couple different cashback reward cards and feel that these are fantastic. The first card I signed up for was an American Express Blue Cash Preferred Card that would earn me $200 sign up bonus and 6% cashback on any grocery purchases. At this point I figured that I would buy gift cards from Kroger and use the extra $200 bonus to pay for these. This card also has a 0% intro rate for 12 months so it was nice. This card is very nice, but is only part of my overall spending strategy. It seemed that the more I looked into credit card offers the more benefits I found.

 

 

After that card I found the Chase Sapphire Preferred Card which has a 40,000 point signing bonus which can be used as a statement credit and be worth $400! I signed up for this card as well, met the spending and got the bonus points.

 

 

My biggest score of the year I will be writing in more detail about in a few days, but I was able to sign up for 2 Southwest credit cards. This netted me 106,000 points which are good toward about $1,908 worth of flights, but it actually gets better. When you earn 110,000 points in one year you earn a “Companion Pass”, this allows me the opportunity to bring a companion (my wife) along with me for free on any trip I book. Even if that flight is booked and paid with points. This effectively doubles the value of my points.

 

 

So far this year, as of 7/30/2013, my wife and I have racked up many miles, points and cashback. These have been earned through cashback portals and credit cards. In cashback alone we earned more than $775 in cashback. Even after paying the $75 annual fee on my AMEX we have earned over $700 cashback this year on our AMEX, Discover, Gas Reward Card and TopCashBack. We earned nearly 6 cents back on every dollar spent. We used this money to purchase a computer, which I built.

 

 

Even more amazing is our return on points and miles! We have earned over 400,000 miles! Even if you value these at only 1 penny each this means we have $4,000 worth of travel in our future. However, 235,000 of these miles can be used toward Southwest, which means they are worth about 1.8 cents per mile (doubled to 3.6 cents per mile with Companion Pass)! If we used all of these for flying Southwest we could get as much as $8,460 worth of travel on those 235,000 miles. Most of these points and miles came from bonuses and they all came from spending money normally. We earned nearly 20 points per dollar spent. That is like getting a 20% (or more) discount on everything we bought, even after finding the lowest prices.

 

 

In order to maximize our points per dollar spent we focus our credit card spending on those cards that provide the biggest payoff. I have a 6% Grocery Card, 5% Gas Card, 2 points per dollar on restaurant and travel. Even with these bigger returns my focus is on meeting spending limits on individual cards that offer big bonuses. If I need to spend $5,000 in 3 months to earn 60,000 points this is far more lucrative than the 5% or 6%. So if I am at the grocery and have not hit my $5,000 amount I will use the card with a spending goal rather than a 6% grocery card.

 

 

Using credit cards has been very lucrative for us this year and we look forward to taking many enjoyable trips at a deep discount. The use of credit cards inappropriately can be very dangerous. If you do not have the money to spend in cash, then using a credit card for spending is out of the question as well. We pay off our bills every month and have not paid any credit card fees over this amount of time. Also be sure to not bite off more than you can chew. For instance if you spend $1,000 a month normally do not sign up for cards that will require you to spend $4,000 each month in order to get the bonus.

 

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Identifying and Stopping Your Disguised Luxury Category

When you read the word “Luxury” what kinds of things immediately come to mind? Yachts, diamonds, private jets, private islands and other extravagances likely take shape in your mind’s eye.  All of these items are fine examples of luxury in celebrity terms.  The term luxury to the common man does not need to be quite as lavish.  The term luxury as I am addressing it concerns an item or service that is not a necessity.  Food is a necessity, but dining out is a luxury.  Clothing is a necessity, but $100 jeans are luxuries.

Looking over budgets of other people and examining my own spending habits I have picked up on a strange trend.  It seems like almost every person has at least one category where they are unfazed by their spending.  We all share a common category, in gasoline, that relates to my observation.  We can buy fuel efficient vehicles and change our driving habits, but ultimately when it’s time to fill up our gas tanks we pay whatever price is asked of us.  This is because gas is viewed primarily as a necessity.  In my family I have found this category is food.   I can go back and forth in an internal dilemma with myself before making a $15 purchase, but for some reason spending $15 on food never really phases me.  My wife has the same ability with food, but also has no trouble buying new clothes even when she would not spend otherwise.  Other people may smoke a pack of cigarettes every day, even though this is a $1,500 per year luxury they don’t even flinch.

The main point in finding these categories that you spend easily is to allow yourself to prevent unnecessary expenditures.  This is the category that needs more vigilance to keep expenses at bay.  Also, you can use these categories to buy other great things.  For instance, at one point I had a phone that would shut down, not get service much of the time and just be generally inefficient.  I wanted a new phone that was $250, but found the expense to be excessive.  Then I looked at my spending and realized that I could cut my food spending by $10 a day by eating at home more often.  After one month that would save me $300 compared to the previous month’s spending.  Even though each meal only lasted for a few minutes I had no problem spending that money, but a phone that I use everyday needed to be justified.

I try to evaluate what is important to me on a regular basis and can create short term goals for myself.  If I can cut these menial luxuries then I will have money to spend on the luxuries I really enjoy.  If I could save $10 on food or cigarettes I would have an extra $3,650 every year that I could put toward new phones, vacations or other aspects of life that are more fulfilling than spending money to fund bad habits.

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Lower Grocery Budget without Extreme Couponing

 

junk-foodphoto

Food expenditures are probably the easiest places to make budget cuts for younger Americans, but the grocery budget is also the easiest to justify keeping.  After all, statistics show that most Americans eat food on a regular basis (citation needed).  In fact, many scientists would probably agree that food is nearly a necessity for human survival.  With all of these facts buried in your brain, spending money on food is viewed as a necessity and unconsciously we reason that “our bodies need the nourishment and our bodies are worth the expense”.  There is nothing wrong with this assertion on the surface we do need to feed our bodies quality foods in order to keep them working in optimal condition.  Unfortunately, drawing a line between expense, nutrition and necessity is based on flawed logic.

Let me be clear, I am not advocating only consuming a dense diet void of any taste, but I would reason that spending more on your groceries does not make you healthier or love yourself any more than the rest of us.  I have drilled down into my spending data for the past few years and have noticed some amazing trends.  The statistics show (in my household), that those times when our food bill is lower correlate with better eating habits.  So, I can back into the reasoning that spending less on food makes my family healthier (not even considering less stress that accompanies bettering your financial situation).

I know that there are those among you that will argue, “it’s cheaper to eat unhealthy foods than it is to eat healthy.”  In many ways this assertion is correct, but there are moves we can make that swing the scale in our favor.  We must learn to value our food differently.  Rather than looking at food’s value on a calorie per dollar basis, we need to evaluate foods on a nutrients per dollar basis.  It’s much easier to get full on high quality foods.  Try this experiment, eat as much chicken and broccoli as possible, then eat a similar meal from McDonald’s.  You will consume more nutrition, get full on far fewer calories and spend less.

Eat at Home

Without question eating at home saves money.  If you are spending more by eating at home, you’re doing it wrong.

 

Go to the Grocery for Big Trips After Dinner

The times when we eat most unhealthy and spend the most money happen to coincide with those times when we have less food available at home.  Too often my wife and I will look in the refrigerator or pantry and say, “You want to go get some dinner?”.  This plays out poorly and expensively in two ways.  First, if we go out to dinner we will spend between $10 and $30 for that meal.  Option 2 is that we go to the grocery with our hungry eyes.  We purchase those items that would not be part of a normal shopping list.  From a psychological perspective it’s much easier to handle these smaller expenditures.  You don’t feel like you’re spending much money if you just spend $25 on most of your grocery trips.  It’s easy to splurge when your total is relatively low, plus you’re hungry and you’re worth it.

Going to the grocery for one big trip each week is easier to handle because you are less likely to make off the wall purchases.  Going to the grocery on a full stomach keeps your brain in control of food purchases.

Make a List

Knowing the items that your family consumes is important for shopping successfully.  Some items that we always try to keep in our house are Bread, Chicken Breasts, Ground Turkey, Ground Beef, Frozen Vegetables, Cottage Cheese, Peanut Butter and the list goes on.  The point is that we have taken a mental inventory of those items we eat on a regular basis and we buy them when they are on sale.  These tips also can be applied to other non-food items as well.  We are not super rigid with our lists, but we know that keeping these key items on hand around our house give us many of the ingredients needed for dishes we eat regularly.

Shop the Sales or go to a Salvage Grocery Store

This likely goes without saying, but making purchases when items are on sale is pivotal to saving money.  Knowing the list of ingredients your family enjoys is key, but so is purchasing these items when they are at their lowest prices.  At our local grocery store the regular price on a loaf of “Nature’s Own” bread is about $3 per loaf, but at the local Salvage Grocery Store they sell the same exact bread for $1 per loaf.  It’s the same delivery guy and everything.  Very often, going to a salvage grocery store is a better deal than even regular couponing and sale shopping.  Most recently, I found a 10 pound  “Black Forest Ham” that is normally found behind the deli counter.  At the local deli they charge more than $5 per pound on this item, but I bought this for $2 a pound.  Always keep stocked up, it might cost more up front, but you spend much less over time.

Buy a Freezer

Frigidaire Freezer

Around the holiday season 2012 my wife and I really started to embrace the stocking up on sales mentality.  We found turkeys were deeply discounted for Thanksgiving.  We ended up buying 6 of them in total and each one was a great deal.  I think the two cheapest were less than 20 cents per pound.  We also found glazed hams for at GFS for $1.30 per pound and ground turkey for $1.45 per pound.  We bought 100 pounds of the ground turkey and 5 hams.  We spent a ton of money, but we used my parent’s spare freezer to store these items, but it was running out of room.  It was then that my wife and I decided that we needed our own freezer.  We ended up purchasing a stainless steel upright freezer that was on sale at Lowe’s.  We ended up spending about $600 for the freezer, but by having the freezer we were able to capitalize on sale prices.  One of our first purchases after buying the freezer was buying boneless skinless chicken breasts by the case at Sam’s Club.  Normal price for chicken breasts seem to hover around $4 per pound or more.  We ended up buying 100 pounds for $1.77 per pound.  Our freezer has already saved us more than it cost in the ability to always eat sale priced food.

Credit Card Cashback

Of course anyone who has read the blog knows that I advocate getting money back by using credit cards for purchases you are making anyway.  So while you’re buying food on sale you might as well get a bonus discount after all your sale prices, coupons and smart shopping are considered.  With the exception of Sam’s Club, I can get cashback for grocery purchases.  One card give 5% at grocery stores, another gives 6% cashback at grocery stores which can really save quite a bit of money over the course of a year.  If I spend $6,000 a year at grocery stores then I will get $360 cashback on my American Express card which is pretty great for expenses I would incur under any scenario.

Start a Garden

Vegetables can be quite expensive when purchased at the grocery store.  My dear wifey bought bell peppers last week at Kroger for 50 cents each because she needed them for a recipe she had been eying.  We have grown accustomed to having a garden, but with the move and home renovation we did not get one planted soon enough.  Today we went to the local farmer’s market and actually purchased pepper plants for 50 cents each.  Even if each plant only produces one pepper we will be ahead.  We planted a late summer garden today and all of the seeds were a bit over $10.  Hopefully this small investment and minimal sweat equity will end up paying for itself many times over as we enjoy our fresh organic vegetables this fall for minimal cost.

 

 

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Selling a Home and Protecting Equity

When my wife and I decided to sell our home earlier this year it was not a long, drawn out process (Selling a home by owner).  We had a rare opportunity to avoid the trap of buying and selling a home at the same time.  My grandparent’s 100 year old home had been rented for the past 10 years, but when the tenant moved out in December it sat vacant.  A 100 year old house, without proper maintenance and a little TLC will not make it too long.  We decided we could move into this house, show it some love and free ourselves from the chains of a mortgage so we could make the right decision on our next home purchase.  Although I have never undergone the buying and selling process simultaneously, I can imagine it is harrowing.  Therefore if you have the opportunity to sell, move into another place and then deliberate your next move I would absolutely recommend doing such.

Now that we had lined up a place to stay upon selling our home we were ready to do the dirty work.  We entertained the notion of hiring a realtor, but the economics of it simply didn’t work out for me.  Over the course of 5 years we had built up about $5,000 in equity.  If we sold the house for $100,000 (less than we gave) after the 6% commission we would owe the realtor $6,000 then after paying our portion of taxes and closing costs we would need to bring $1,500 to the closing.  Even if it meant spending a bit of money upfront it was worth it to me.  The way we looked at it was “we’re paying ourselves 6% to sell our house”. Given the stakes involved it seems a little bit strange how few people sell a house on their own.  I know people that drive 5 miles to save a dime on a gallon of gasoline, but they list their house with a realtor, immediately forgoing 6% of their most valuable asset.    We had never sold a house before, but how hard could it be?

 

Staging the House

The first thing we did was repaint the vibrant colored rooms a neutral tan.  This is not exactly a trade secret, but it is astonishing to see the number of sellers that neglect this important detail.  We then began to move out any unnecessary clutter in the house.  We had the option to go ahead and move it to our new home, which was convenient.  Even if this is not an option for you then rent a storage unit.  We moved quite a bit of furniture including our loveseat (leaving only a couch, but making the room look much bigger).  We moved out the computer desk, printer and other items that looked out of place.

Living Room

After minimizing the clutter we moved around our furniture for pictures.  The home should look picturesque, not lived-in.  If moving furniture from your house permanently is too much of a burden at least move the excess out of the room for pictures.  If you have wall to wall furniture in a room it will look even more cluttered in pictures.  After arranging the room the way you like and cleaning it thoroughly, take your photos.  DO NOT use an old Nokia camera phone or a polaroid.  We used our Canon t2i digital SLR, but there are plenty of point and shoots that offer quality photos.  Memory is cheap, so take hundreds of photos from every angle the photos are what will sell your house.  Hopefully you have taken photos over the course of living in the house and stored them somewhere you can find them.  For instance, when we were starting to list the house there were only dreary days and the grass had not greened up.  I had photos of the exterior of the house from the previous year after all the flowers had bloomed and the grass had pretty stripes.

Selling The House

Although I would contend that pictures sell the house, they are absolutely useless if nobody sees them.  So now is the easy part, we will just list them online and wait for the calls.  Unfortunately this is where we hit a bump in the road as “For Sale By Owners”.  With the exception of Zillow, the majority of the big home sites did not allow FSBOs to list their own homes.  We put our home up on craigslist, Zillow and got people to share it on Facebook (don’t laugh).  I even made a website that included all of our pictures, descriptions, maps to the house and everything.

After a few days of these marketing tactics my dear wifey was ready to give up her career as a realtor.  She recommended that we hire a realtor to sell the home for us.  I could not stomache the thought of parting with a minimum of $6,000 to do work that we could do.  We had already taken better photos than most realtors, we had already done their job for them.  I told her to give it a few more days while I walked the information superhighway in an attempt to circumvent the listing services.  Finally after much searching and deliberation I solved our problem.

We Hired a Realtor?

Yes, it turns out the best way to gain maximum exposure in marketing your home is to use a realtor.  Then the realtor loads your home on the MLS and then that data feeds all of the other pertinent websites.  It seems really unfair that I can do most of the work and I have to pay the guy 6%, so I found another way.

I Googled “MLS Flat Fee Listing Kentucky” and found http://www.getonmlscheap.com .  Chuck is a realtor in Kentucky that charges $199 and he will load your pictures, descriptions and important data onto the MLS.  If a buyer’s agent sells the house then you pay them an agreed upon commission (in our case we offered 3%), but the most the listing agent makes is the Flat Fee.  So even if the house sold through an agent we would only pay $3,200 in fees (per $100,000 sales price).

The regulations are much more strict when working with an agent even in this capacity.  By law we were no longer to say “For Sale By Owner”, even though we were doing all the work.  To make matters worse, we did not know that there are multiple MLS for each area.  All of the agents in my city use a local MLS, but my home was placed on the regional MLS, making it less useful.  However, we were listed on all major websites and even with hindsight I would probably do the same thing again.

Marketing

My wife spent the next day emailing and calling every realtor in our town to let them know that our home was on the market.  In fact, we got a showing the very first day, within minutes of posting on the MLS.  The realtors told us our home was beautiful and it “showed very well”, but we did not get an offer that day.  A few days passed and nobody called.  My wife continued to notify realtors in the area, update Craigslist and Facebook.  Then we randomly got two calls in one day.  A realtor called and scheduled a showing for Sunday and an unrepresented buyer saw our pictures on Facebook and asked to see our home that day (Friday).

Cleaning and Showing

My wife cleaned the house all day and had it looking flawless for our second showing.  The woman and her family looked through the house and she seemed to light up.  She was definitely an interested buyer!  We showed her around the place, left her alone and she continued asking questions.

Offer

She asked if she could come back later that same night at around 10 and we told her that would be fine.  It was at this point that she made us an offer that came in a little low, but we countered with an offer that met in the middle, but allowed us to keep our kitchen appliances.  She said she already had kitchen appliances anyway, so it was a fair deal for all.

Recap

The best part about selling without paying commissions is that you actually get the vast majority of the selling price.  If I had sold my house for $100,000 without a realtor, I would need to sell it for $106,000 with an agent and at 6% commission on 106k I would actually only make $99,640.  Including the Flat Fee MLS listing of $200, the $50 lawyer fee and the $400 tax bill we only paid $650 to sell our house.

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Living Off the Grid

Earlier this year my wife and I came to the realization that the 1,200 square foot dwelling that we have called home for the past 5 years was getting smaller.  She kept on me, asking if I was ready to move and sell our house, nearly every day.  Then the perfect opportunity presented itself to us.  We would sell our 2008 model brick home and move into a 1913 model, converted school house.  Obviously this was a no brainer for us and we lept in with both feet.

I will address the move, selling the home, fixing up the home etc in some detail in the near future, but this entry is not about all that.  For the past month living in this house we have had no cable, internet, or even decent cell phone data speeds.  This includes losing a beloved Samsung plasma TV and Samsung Galaxy S2 in separate mishaps.  All of these absent modern amenities are in addition to getting our water from a well.  These changes are drastic enough without making mention the washer and dryer sitting lonely in the kids’ room waiting for proper wiring in order to fulfill their life purpose.

My wife has been into the “crunchy” lifestyle for a while now, but unlike many of these posers she actually embraced the lifestyle.  No city water? Check.  Clothesline?  Check.  Free Range Chickens?  Check.  Cloth Diapers?  Check.  Really, when you break it down that way it just seems like all these other girls use “being crunchy” as an excuse to grow out their armpit hair, the one lifestyle modification my wife did not adopt.

It is truly amazing the extent to which we, as a society, have grown so dependent on the internet.  With my internet absent and my main computer on the fritz, I constantly felt like I was forgetting some payment.  I was also unable to commit any time to crapping out any new blog content.

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Reward Miles and Points Valuation

Trying to decide how to top off the extra 5,000 miles I needed to attain a companion pass I tried to do some evaluation of valuations.  I looked around to see different ways to transfer miles to Southwest that will count toward the companion pass.  I have some Ultimate Reward points from Chase, which transfer to Southwest at a 1 to 1 ratio, but do not count toward the Companion Pass.  However, transfers from Hyatt to Southwest do count, but the transfers from Hyatt to Southwest are at a rate of 10,000 Hyatt points to 4,800 Southwest points.  I would transfer 10,000 Chase Ultimate Rewards to Hyatt and then get 4,800 points.  How could I even consider such?  Afterall Chase Ultimate Rewards are worth 2 cents per mile and with this valuation I would be getting only 48% of the possible value.  A poor value proposition by any standards.  This got me thinking, what is a point worth to me?

Ultimately I did not decide to go this route, but it did make me further examine valuations that I have seen on other blogs.   The most baffling valuation to me comes from Starwood Preferred Guest points and their SPG AMEX card with a 25,000 point bonus.  It seems like many bloggers push its benefits and some say that it’s worth 2 cents per point.  Making the sign up bonus worth at least $500.  I have not signed up for this card, because it does not seem very valuable to me. Many people argue that you take the retail price of a room and divide it by the number of points needed and you come up with value.  Thus, if you spend the night in a room that is normally $900 per night and you spend 30,000 points you are getting 3 cents per mile of value!  I wholeheartedly disagree with this kind of valuation and reject the premise entirely.  Simple economics suggests that something is only worth what someone would pay for it.  I would never actually pay $900 to stay at any hotel so believing I got $900 worth of value from 30,000 points is a bit silly.  What is my opportunity cost of using these points?  Are there other options that would offer more nights?  I would be much happier staying 5 nights in a 5,000 point per night room that usually costs $100 per night even though my value is 2 cents per point, I am much happier.

Another favorite move of bloggers is to overvalue a first class award ticket.  I understand the desire to have bigger seats and more leg room on a plane.  I would also love to fly first class if anyone is interested in proving to me why it is worth doing.  However, I have read many accounts of trips stating, “I used 125,000 miles to fly first class roundtrip on a flight that would have cost $7,500 I maximized value by getting 6 cents per mile!”  Certainly telling your friends that you took a $7,500 flight for free is remarkable.  Again, this kind of valuation ignores the opportunity cost.  Let’s assume that instead you could book an international flight in coach for 50,000 points, but that flight only costs $1,500 normally this is only 3 cents per mile, which is pedestrian compared to the first class flight.  My first thought is that a plane is for transportation.  The goal is to get from point A to point B, if I want to sit in a comfortable chair I would just stay home.  I would never pay the $6,000 fare difference to ride first class so why would I sacrifice 75,000 more points?  What is my opportunity cost of doing this?  Instead of one first class flight I could (assuming award availability) invite a friend along and pay their way and still have 25,000 points to spare.  Many people use Chase Ultimate Rewards to top off their travel, but these 25,000 Ultimate Reward points are minimally worth $250 as a statement credit.  Which sounds like the better scenario, flying alone across the ocean or flying with a friend and arriving with $250 of free money to start?

When it’s all said and done only you can decide what is important to you.  I like to get more value out of my miles by purchasing more happiness and creating more memories.  Sure, I would probably love 1 night at the W. in Washington, D.C., but if I could get a week’s worth of hotel stays instead I am doing that.

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