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How We Bought 4 Plane Tickets, 7 Nights Hotel and 7 Nights SUV Rental for $40

Anyone who has read previous entries to this blog knows that two of my favorite things to do are spending time with my family and getting good value. This year for our fall trip we decided to, once again, fly to California. This is usually a trip that would be beyond our grasps financially due to the immense expenses involved with flying across the country. To make this trip a reality I relied on various points and miles programs offered by hotels.

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Itinerary

 

The trip included flying into San Francisco then looping around to Yosemite National Park, Sequoia National Park, Monterey and back to San Francisco. This itinerary required 4 round-trip tickets from Louisville to San Francisco, 7 day SUV Rental and 7 nights of lodging. The total cost for only these expenditures would have been $3,256. If you were pricing this out you probably could have searched for better deals and alternate lodging, but the prices I included were for the exact same flights, rental car and hotels that we used. This MSRP value assumes that you just booked the going rates without using other discounts. If you are not interested in the details of each portion of the itinerary scroll to the conclusion section where I will outline all the details including points used and the price without points.

 

Flight

 

We flew Southwest using Rapid Rewards Points, which are tied to the actual cost of the flights. Therefore when flying Southwest whether purchasing tickets with cash or using points it is extremely important to purchase tickets at the lowest fare (which also means the lowest points). Since our youngest child is 25 months old he is over 2 years old his ticket costs the same as an adult fare. This required us to purchase 4 tickets. As soon as the month of October opened up for booking I started checking Southwest on a weekly basis (at least). They offer new sales every Tuesday, some sales are great and some sales are pretty weak. The great thing about Southwest is that there is no fee to cancel your flights, so if you book at one price and the next sale is better you can cancel those tickets and book again.

 

In June the price of tickets round-trip dropped to $350 each (plus $10 for taxes and fees). If I had not prepared for this then the cost for tickets alone would have been $1,400 (plus $40 for taxes and fees). Since I qualified for the Companion Pass, any ticket that I book on Southwest allows me to add a companion to travel with me free of charge. Anyone reading this who has the companion pass, but not enough points to book tickets that way would have paid $1,050 for the tickets (plus $40 for taxes and fees). Since we had the Companion Pass and enough Rapid Reward Points I was able to book this flight for 61,734 points. Alternatively Chase Ultimate Reward Points transfer to Southwest at a 1:1 ratio meaning I could have transferred as many points as I needed from Chase Ultimate Rewards with no cost.

 

Car Rental

 

Since our itinerary required a great deal of driving renting a car was a necessity. Since we have a stroller and a few bags I decided to go with an SUV for this trip. I used carrentalsavers.com to look up rates and found that Alamo offered the most value. I then went to my Chase Ultimate Rewards account to book through them as they offer a “pay with points” option which gives these points a value of 1.25 cents per point.

 

We rented a 2014 Jeep Grand Cherokee which would have cost $433.68 for 7 days booking directly through Alamo after taxes and fees were applied to the total. In lieu of this I was able to book the week using Chase Ultimate Reward points. The total was 20,696 Chase Ultimate Reward Points which actually ended up getting me 2.1 cents per point. To put this into perspective my wife and I both got 25,000 Chase Ultimate Reward points when we signed up for the Chase Freedom card which has no annual fee. So that amounts to about $500 worth of signing bonus for each card.

 

If you are considering this particular itinerary keep in mind that we drove the rental car over 1,000 miles. We spent $152 on fuel that we paid for using point earning cards, but did not pay with actual points.

 

Hotels

 

When creating an itinerary involving multiple destinations the hotel accommodations are the most difficult and arguably the most important of the trip. Using Google Maps I plotted out the trip to the best of my ability. We arrived in San Francisco, saw some sights in the city and headed toward Yosemite. I found that the Modesto and Turlock area was about half way between these two locations. Finding lodging near a national park is very difficult and you pay dearly for the location and often give up a lot in quality of hotel (unless you pay much more). I decided that Comfort Suites worked well for our night in Turlock. We booked a double Queen suite which had two queen beds and a pullout couch. This room was one of the bigger hotel rooms that we have stayed in and it was very nice. The normal cash cost for this room was $139 plus tax per night. It cost us 16,000 choice hotel points. If you sign up for the Choice Hotels Visa you get a 32,000 point signing bonus which would cover 2 nights.

SimplisticSaving.com Comfort Suites Turlock

 

After visiting Yosemite we made our way toward Fresno which is almost directly between Yosemite and Sequoias. Our plan was to have 2 nights in Fresno, one night between Yosemite and Sequoias and another night spent after our day in the Sequoia National Park. Using Club Carlson Reward Points we were able to stay in a Country Inn & Suites which worked out quite nicely because when you have the Club Carlson credit card you get your last night free on a stay of 2 or more nights. Obviously there is more value if you only stay two nights. Normally a room costs $92.50 per night or 15,000 Club Carlson points. Since we have the Club Carlson Visa we used 15,000 points for 2 nights which is 7,500 points per night.

 

After our second night in Fresno we headed to Monterey. This is the only portion of the trip that I did not book in advance. We could have stayed using points for the night, but instead we opted to use Hotel Tonight. Hotel Tonight found us the Best Western Plus in Monterey which is directly on the beach. The normal cost for this is $160 per night plus $18 per night parking. On hotel tonight it was $132 plus $18 parking. A total of $150 for the night. Using American Express Membership Reward Points to wipe out this charge cost 22,000 points.

SimplisticSaving.com 17 Mile Drive Monterey17 Mile Drive in Monterey, CA

 

After our day in Monterey we traveled back to San Francisco. I decided that stopping halfway between Monterey and San Francisco would not only be more economical, but it would allow for us to get to the hotel a bit earlier and relax. We stopped in Silicon Valley at the Four Points by Sheraton – San Jose. This hotel usually runs $180 per night, but I was able to book a room for 4,000 SPG points. My wife and I both have an SPG Credit Card which awarded us a bonus of 25,000 points for signing up. This offered a great value. Although this was a lower category hotel for the chain it was still beautiful. Starwoods Hotels include W, Westin, Sheraton and many high end brands.

SimplisticSaving.com Four Points Sheraton Lobby

Picture of the Four Points by Sheraton Lobby

 

Our final stay was for 2 nights in San Francisco. We stayed at the Radisson in the middle of Fisherman’s Wharf. The location was superb and the hotel was updated in 2012. We were very impressed with the accommodations. The normal rate at this location is $299 per night and parking is an additional $50 per night. Like Country Inn & Suites, Radisson is also part of Club Carlson and we were able to use 50,000 Club Carlson Reward Points for this stay. The normal charge for points is 50,000 points per night, but having the Club Carlson Visa allows your last night of a 2 night (or longer) stay to be free. Along with this huge benefit you are given Gold Elite status which we found very beneficial at this hotel. When we arrived at check-in they told me that as a VIP member my room had been upgraded free of charge to a balcony room on the top floor. As a Gold Elite member they also waived the $50 per night parking charge. When we arrived in our room there was a “welcome gift” of a bag of kettle corn waiting for us in the room. Attached to the gift was a card thanking us for choosing to stay at their hotel for our trip. My children and I went to the pool while my wife got comfortable in the room. Someone stopped by the room during that time to bring us extra towels and a couple bottles of water to welcome their “VIPs”. The sign up bonus for the Club Carlson Card is 85,000 points, plus you get the last night booked with points free and are automatically upgraded to Gold Elite status. On this stay alone we used 50,000 points, but managed to save $299 per night on the hotel, plus $50 each night on parking. So for this stay 50,000 points equaled over $700 in value! That’s not even considering the free upgrade to the balcony room closest to the bay with a tremendous view of Alcatraz.

 

IMG_5123                                                                                                                    Actual Unobstructed View From Radisson Balcony – Blue Angels Flying Over Alcatraz

 

Conclusion

 

All told we received $3,256 in value but paid only $40 for flight, lodging and SUV rental. I put a valuation of dollar per point received. Many of these calculations depend on how they are used. For instance, American Express Membership Reward points used for this stay were worth less than a penny each, but can be used much more beneficially when transferred to another program. SPG points were worth 4.5 cents each used at this particular location. The value of hotel points can be a bit skewed because if I had not had hotel points I would not pay $180 or $350 per night for a hotel room. I would probably sacrifice a bit of quality for a lower price. However, using points allows the user to splurge and afford things that normally would have been out of reach.

 

Retail Price                   Actual Paid               Points                $/Point

 

Southwest – Louisville to San Francisco                                          $1,440                                $40                61,734                   .023

Southwest Rapid Rewards

 

Alamo Mid-Size SUV Rental (7 Days)                                                 $434                                  0                  20,696                   .021

Chase Ultimate Rewards

 

Choice Hotels- Comfort Suites Turlock                                             $139                                   0                  16,000                   .009

Choice Priveleges

 

Country Inn Fresno (2 Nights)                                                           $185                                   0                 15,000                    .012

Club Carlson Rewards

 

Best Western Plus Monterey Beach Resort                                    $178                                   0                  22,000                   .008

American Express Membership Rewards

 

Four Points by Sheraton – San Jose                                                $180                                 0                    4,000                    .045

Starwoods Preferred Guest

 

Radisson Fisherman’s Wharf                                                         $700                                  0                   50,000                   .014

Club Carlson Rewards

 

Total

$3,256                             $40                   189,430                   .017

 

 

 

 

 

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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.

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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.

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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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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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Never Pay Full Price When Better Deals Exist

How often have you seen a great deal offered, but you are ineligible because it’s for new customers only?  Many companies offer special deals to new customers while existing customers are left high and dry.  Obviously companies have an incentive to offer new customers better deals to get them in the door.  You are a paying customer already and they have already won your business.  If they can make hundreds or thousands of dollars on your business what could possibly make them consider cutting their income in half?  As a customer your biggest asset in a negotiation is your loyalty and ability to go elsewhere.  You should evaluate the money you spend and value each service based on its individual value to you.

Anyone who has read this blog before knows that my philosophy revolves around maximizing value.  I believe you do this by buying quality products and services at prices which are in line with your individual valuation.  This is an even better proposition when you can attain these things at below their value. Suze Orman will chastise her callers for making small expenses that they “can’t afford”.  I prefer to think about how this item fits into your lifestyle.  If it is something you will use often it is a better investment than something you use rarely.  The personal aspect of the valuation is important because no matter how inexpensive an item is it’s not worth it to you if you do not have a use for it.  If you do not own a TV, computer or smartphone then a subscription to Netflix would be a terrible investment, even thought I find $8 a month to be a great value. Other times services are nice to have, but only when the price is right.  A service that fits this criteria to me is Sirius XM satellite radio.  I am a subscriber, but would never pay full price because it’s not worth much more that $10 a month to me.

So how can I use the fact that I enjoy the Sirius XM service, but do not find value at full price?  First off, I know that there is no way that I would pay more than $20 per month for Sirius XM.  I purchased a radio last Christmas for $30 (currently $70 at Best Buy).  In January I called to connect the radio and told them that I had gotten the radio for Christmas (didn’t mention I had purchased it for myself).  I told them that I had seen good sign up deals online, but did not have any code.  I have found that they are really good at offering a deal to a new subscriber.  They signed me up for 6 months and told me that on the July 24th my contract would automatically renew at the going rate.  After activating my radio I got off the phone and put a reminder to “Call and Cancel Sirius XM” in my calendar for July 24th.  Today, my new bill posted for $127 for 6 months of XM Premier (the package including Howard Stern).  This works out to over $21 a month for satellite radio which is far beyond my personal value.

I picked up the phone intending to cancel my service because there is absolutely no way that I would even consider paying 21 bucks per month.  I gave the operator my account number and told him “I’d like to cancel my service please”.  He said, “OK sir, I can help you with this, but can I first ask you why you want to cancel?”  I told him the truth, that I enjoyed the service, especially Howard Stern, but the price was more than I would be willing to pay so I would like to cancel.  I was sure to mention that the price was an issue and that I loved Howard Stern because I did not want to be offered a lower price on a lower plan.  He then looked at my account and said, “You’re paying $127 for 6 months which is $21 a month.  I am authorized to offer you two options:  I can change the term from 6 months to one year for the same price which reduces your price to under $11 a month or I can offer you 5 months for $30 which is $6 per month.”  I told him I would take the $30 for 5 months.  He let me know that on December 24th my account would be auto-renewed at regular price.  By accepting a 5 month contract I take the risk that when I call back in December that they will cancel me, but since I am willing to cancel then they can either make a few dollars from me or zero dollars, it’s their choice.

This is not a method that only works for XM.  I successfully called and got Time Warner to reduce my mother’s bill by $20 a month while throwing in an extra box and adding HBO and Cinemax.  Just be aware that the more competition that exists makes a better environment for the consumer.  Personally, I had to beg Time Warner to add me as a customer because the options in my area are very limited.  However, the customer service people you talk to will likely know nothing about your area.  When I called for my mom I just told them that I “would like to switch to AT&T Uverse, because their service is a better value”.  This was true that I would like to do that, but the reality is that AT&T Uverse are not available in our area.  He put me on hold for a few minutes and came back with multiple offers all were significantly cheaper and provided more services.

Just remember that it’s your money and you should not be ashamed to ask to spend less of it.  Also remember that the people on the phone are people and that they like to be treated politely.  I have found you get far more by playing to a person’s ego.  Tell them that they are doing a great job and that you appreciate someone so knowledgeable about their services.    Ask for what you want and if you are not treated fairly then go to a business that will value you as a customer.

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The Most Important Financial Tip (and Weight Loss) You Will Ever Read

 

 

The most important financial tip (and weight loss) you will ever read! This same advice can be generalized to other aspects of your life and help you there too!  This one tip can even help you manage money, lose weight, reduce stress and become a more informed person! This sounds like a late night infomercial claim made by a greasy guy (probably sporting a pony tail) in a cheap suit, but it’s actually the truth.  For my money this is a tip that I would be absolutely lost fiscally if I did not do this.  The answer of course, as you have probably guessed, is winning the lottery.  Then when you win the lottery hire a dietician and personal trainer and you will look great!  Unfortunately there is no easy fix such as this that is 100% foolproof even having great sums of money (I’m looking at you M.C. Hammer and Mike Tyson) is absolutely useless if you do not follow my real financial tip.

Make that cheddar

 

Let’s imagine that we have some weight to lose.  You go to your doctor and say, “I’ve been trying to lose weight for a month and have not lost a pound”.  Assuming that this doctor does not go immediately to some weight loss drug or recommend lap band surgery what will she need to know?

She will ask, “What have you been doing to lose weight?”

You will obviously reply, “I have been eating really good and working out”.

At this point is where there is a problem because your data are flawed.  Many people who are unsuccessful at losing weight or reshaping their body do not know what “eating really good” is in the first place.  I remember for about 3 hours 10 years ago I had a six pack.  This was achieved through disciplined exercise and eating.  I remember at a work potluck I remained in my office.  One of my co-workers came into my office devouring a giant slice of cake, “Hey you need to get some food back there”.

I said, “No thanks, I brought a lunch.” As I ate my grilled chicken breast and broccoli secretly wanting to eat some cake and other baked goods.

She responded, “Come on, you don’t need to eat that, you’re not even fat”

This exchange was immediately reminiscent of the old Head and Shoulders commercial where the woman says, “You use Head & Shoulders?  But you don’t have any dandruff?!?!?!?” and the guy says, “Exactly”.  Knowing that his lack of dandruff was due to his diligence in choosing a shampoo that kept his scalp flakes at bay.  Equally important when I lost weight and had a six pack was making my goal and sticking to it.  I knew that eating healthy food and exercising were very important to implement my plan.  However, when I was starting I did not realize how unhealthy I was in the first place.

It is impossible for a doctor or accountant to develop a plan for you based on “I have been eating really good and working out”.  We need to have a detailed account of what we have been doing as it relates to the aspect of our life that we would like to change.  If you come to your doctor with a baseline of all the foods you have consumed and exercise you have done she can help you from there.  It is too easy to say that you have been eating really good, but leave out the Coke you drank or maybe you are eating “Fat Free” cookies thinking that these are healthy snacks.

Using Financial Software

Since May 2004, I have tracked every dollar I have earned and spent.  This is the most important financial tip I can share!  With more information available one can make better, informed, decisions.  If I am not tracking my spending and spend a few bucks on lottery tickets every few days that is no big deal.  Where did all the money in my wallet go?  If I am recording every dollar I will see that I am spending $500 a month on lottery tickets, then I know where I need to cut expenses.   This is a drastic example and I would hope that if you are spending six thousand dollars a year on lottery tickets that you are at least cognizant of this wasteful spending.  This record keeping is useful in multiple ways.  Obviously it allows me to track the money I have made and how that money has been spent.  In many ways it also acts as a personal diary.  I can look at a few consecutive transactions and recall specific events of a day from nearly 10 years ago.  Sure, I already have a fantastic memory, but if I allow myself a few pieces of information it allows me to be transported back to that day (YMMV).

Why I Started this Record Keeping

In May of 2004 I bought a new computer and had a free copy of Microsoft Money.  I found myself constantly opening my wallet and thinking, “Where did my money go?”, I usually did not have an easy answer.  Sometimes I could retrace my spending, but usually I just let it rest.  Once I had the program and more financial responsibilities I decided to give it a try.  Although I spent less money in 2004 it was actually more labor intensive to track.  Most of my expenses were paid with cash which is not exactly optimal for recording expenses.

Recording Cash (Tip)

One trick that I developed at that time was to create a category called “Cash” and whatever amount was in my wallet was reflected in this account.  The first few transactions I would laboriously track all of my spending down to the penny.   I quickly learned that this was not time efficient, nor was it a viable option for long term spending.  I decided to devise a rounding system that worked for me.  If I went out to the grocery and purchased a soda that was $1.06 and I handed them two dollar bills,  I would record it as $2 and then put the change in a jar.  If I paid with one dollar bill and six cents of change I would record it as $1.  I only treat dollar bills as money for the sake of recordkeeping in my wallet.  I found that this minimalizes the work involved in recording money spent.  It also acts as a form of savings by never spending change, even quarters, I was saving a fairly substantial amount.

Recommendations

I personally use Quicken, but mostly because it was very easy to import my data from Microsoft Money which I used because it was included with my computer.  Mint is a very good free internet based platform that even includes an app for your phone.  If I were just starting out with keeping my data I would start here.  The most important thing is that you keep it in whatever manner is most conducive to you actually doing it.  You can have the most advanced financial software developed by NASA, but if you never use it then it is useless.  If you would use a notebook or ledger on the other hand you should definitely use that instead.  Maybe I am too trusting, but I link all of my banking accounts into Quicken and Mint and download these transactions every few days.  I then go through and categorize spending appropriately.

Using Data

Once you have data on your spending you will be able to use this to implement changes nearly immediately.  Another funny phenomenon happens by virtue of your own awareness you may actually spend less.  You start to make the decisions up front about purchases you may regret.

This same thing happens even more when you are trying to keep track of what you are eating. You look at the number of calories per serving and rethink even eating it.   If you are losing weight write down what you eat and round up on the servings you are consuming.  These kinds of data are not only important for getting help from others, but greatly improve self reflection.  It’s easy to say I don’t spend much money on food, but when I break down spending it becomes a little more clear.

 

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