Handling Unexpected Expenses

Posted on Monday 31 March 2008


Creative Commons License photo credit: Orin Optiglot

It’s been my experience that very few expenses are truly unexpected. Therefore it makes sense to plan ahead so that you don’t find yourself scrambling to pay bills. I like the technique a lot of people call a “freedom account” or “freedom funds”. If you look at your spending for the past year, I’m sure you can identify many irregular expenses, expenditures that don’t necessarily occur on a monthly basis. These are things like auto registration, auto insurance, HOA fees, termite/pest control, annual dues/memberships, etc.

The first step to getting a handle on ‘unexpected’ expenses is to determine the general amount. Add up all the irregular expenses you incur then add ~10% just in case. If you don’t already have a savings account you can use for your “freedom fund”, consider opening an online savings account. I prefer ING because it allows you to set up sub-accounts.

Next take the yearly total you established in the first step and divide by your number of pay periods (i.e. 52 if weekly, 26 if biweekly, 12 if monthly). Each pay period, transfer that amount into your freedom fund. Then when one of those expenses arises, you can simply transfer the money to your checking account and not have to worry about how to pay that bill.

Some of you may be thinking that you can’t ‘afford’ to make those regular transfers to your freedom fund. I say, those are expenses that you will incur, like it or not. Therefore, if you can’t afford it, you’re living above your means (spending more than you make). If that’s the case, you should take a good look at your budget and see where cuts can be made. Can you lower the costs of your cellphone bill or cable bill? Can you bring your lunch to work a few times of week instead of going out to lunch? For most people, there will be numerous ways to cut spending. By taking these steps, you’re that much closer to achieving financial freedom. Doesn’t it feel good?

savvy @ 11:45 AM
Filed under: General Finances
Super Saturday! IRS Offers Free Assistance

Posted on Friday 28 March 2008

By now, I’m sure most everyone has heard about the economic stimulus package.  However, you have to file a 2007 tax return in order to be eligible (in addition to income requirements).  If you’re someone who wouldn’t typically file but will this year to get the stimulus package, the IRS is willing to help.

The IRS has set aside tomorrow, Saturday, March 29 as “Super Saturday”.  Approximately 320 IRS offices will provide free help preparing a simple 1040A for people who are filing solely to receive their stimulus payment. In addition hundreds of IRS partners will be opening their doors on that day offering free help too.

Click these links for more information or for locations.

savvy @ 10:48 AM
Filed under: Taxes
Just Ask!

Posted on Thursday 27 March 2008

I’ve had my cellphone with Sprint forever.  (Yeah, I know everyone else hates them but I haven’t had any problems.)  I have one of the cheapest plans they offer because I don’t really talk on the phone that much.  In addition, I get a 5% discount through my employer.  A few months ago, I kept hearing about the new SERO plans that were really cheap.  The SERO plan was about the same as the one I have in terms of minutes, but cheaper.  But they were only for new accounts/phone lines.  So I called Sprint to cancel and switch to SERO plan.  I guess they didn’t trust that I’d actually open a new account with them so they gave me another 5% off to stay.  Good enough for me.

Fast foward a few months and I heard about how there are plans for the same price as mine but that have unlimited texting, which I don’t have.  I don’t really like to text but it comes in handy on ski trips when cell reception is spotty on the mountain.  On my recent trip to Tahoe, I had about 70 text messages at 15 cents a pop.  I wasn’t a happy camper.  So, I sent Sprint an e-mail saying that I wanted free text messaging too, being such a loyal customer and all.  Within 24 hours, I received a response saying they had agreed to my request.  Now I won’t have to pay for text messages anymore.  No, it wasn’t a huge amount of money but it’s MY money and I like to keep it in my pocket.  So the next time you see a deal you want, JUST ASK.  All they can do is say no but they just might surprise you.

savvy @ 5:01 PM
Filed under: Deals andFrugality
Why Pay More if You Don’t Have to?

Posted on Wednesday 26 March 2008

I try to be frugal whenever possible but I probably have a bit different perspective than most.  I’m not interested in frugality in terms of doing without or not buying the things that I want.  My concerns are not being wasteful and getting the most for my money.

For example, I’m attending a baby shower in a few weeks and went online today to look at the registry.  First, I decided to see if I could find any of the big ticket items (high chair, etc.) cheaper.  The registry was at Babies R Us and one item (a baby monitor) was listed at $99.99.  By using the wonderful site MySimon, I was able to find the same item for only $79.99 at Kmart.  But I don’t really like shopping at Kmart and there’s not one near enough to me to make me want to go out of my way.

While looking for Kmart coupons, I came across the Coupon Cabin site.  There was a store, Diapers.com, that had a $10 off $50 coupon and free shipping.  That was right up my alley!  I would save money and not have to drive anywhere.  Yippee!  I compared the registry items to those sold at Diapers.com and found three that were lower in price.  So I purchased those using the coupon.  I should receive my order on Friday.  I saved over 25% (about $15) by spending ~15 minutes on the ‘net and I didn’t have to go out of my way to drive to BRU (also not really near the house).  Mission accomplished!

savvy @ 2:08 PM
Filed under: Coupons andDeals andFrugality
What’s on My Financial Plate

Posted on Monday 24 March 2008

Well, not much is going on with me financially right now. My finances are pretty much on auto-pilot but I’m always trying to find new ways to maintain the same standard of living while spending less and saving more. For example, I subscribe (free with FF miles of course) to Allure magazine. Last night, I noticed there is a program called AllureRewards. It’s an online shopping portal. You shop at your typical sites (I believe some of the eligible retailers were Sephora and NY & Co) but you receive cash-back on all your purchases. There is no cost to sign up for the program and you’re getting the same things you always buy for less money. Sounds like a winner to me!

Last week, I opened a traditional IRA with TD Ameritrade. By signing up for the Suze Orman ‘Save Yourself’ program, I get $100 (after twelve months) just for doing something I had planned on anyway. So, right now I’m currently debating on which mutual funds to purchase within this IRA. I have another (Roth) IRA that holds individual stocks and ETFs so I decided to try something different with this new IRA.

Also, Mr. Savvy (hubby) and I have been considering purchasing investment property. One particular property that we’ve had our eye on has gone down in a price (for the second or third time). It’s been on the market for a while (at least since August) so I suspect the seller is eager to sell. So we’ll talk about it tonight and will most likely tell our realtor to put in an offer for us. I’ll keep you posted.

savvy @ 3:03 PM
Filed under: Frugality andGeneral Finances andInvesting andIRA andSaving
Fabulous Yet Frugal Travel

Posted on Friday 21 March 2008

People often ask how can they save/reduce spending while still enjoying life. The goal is not to deprive yourself but rather find ways to do the same things cheaper. Here are some ideas for saving money on travel.

DESTINATION

Be flexible – Unless there’s a specific reason for going to a certain location, check out alternates. Hubby and I love the beach but we rarely have our heart set on one particular place. We like to make a list of all the places we’d be willing to go then choose the place that has the best airfare and/or lodging prices.

Know the seasons – Hubby and I decided we wanted to spend Christmas week of 2005 in Hawaii. That time of year is high season for Hawaii and we knew that. We decided in 2004 (a whole year in advance) that we’d go to Hawaii that week. Airlines release seats 331 days in advance so when the clock struck midnight (literally), we were on the phone booking our tickets.

AIRFARE

Loyalty has its benefits – Consider joining a frequent flyer program, especially if you live in a hub city. You will earn free flights as well as get perks (and sales) that other people don’t get. Even if you can’t fly that airline all the time, most airlines have partner airlines that you can earn miles with as well. I fly Delta almost exclusively and it has paid off for me.

Be flexible on your dates – If you have your heart set on Orlando, keep your eye out for deals. An airfare sale may pop up and you’re able to take advantage if you’re not fixed on a certain date to travel. Also, be aware that weekends are the most popular (and most expensive) travel days. If you’re willing to travel Saturday – Monday (vs Friday – Sunday like everyone else), you can save money on your flight.

LODGING

Once again, loyalty has its benefits – I primarily stay at Hilton properties and I get many perks in addition to free stays. Most hotel chains own a number of chains of varying prices so it generally isn’t hard to find a hotel in your chain. For example, with Hilton, I can stay at a Hilton, Embassy Suites, Homewood Suites or Hampton Inn and earn points for my stays.

Think outside the box – Hotels aren’t the only place you can stay. Condos or private villas are often lower priced and more spacious. In the past, I’ve used sites such as www.vrbo.com to find deals. Consider renting a timeshare unit from a site such as www.redweek.com.

Be direct – Booking your lodging online or through an 800 number doesn’t always get you the best price. If you’re interested in a particular property, call them directly and ask for their best rate. There are often specials that aren’t listed online or with the nationwide reservations number.

DINING

Coupons are your friends – If you’re going to a major city in the US, consider purchasing an Entertainment Book ahead of time. These can be had for about $15 and will save you money on dining out. Sites such as www.restaurant.com often sell gift certificates for less than face value.

Kitchenettes are your friends – If you have a kitchen in your condo or even just a microwave and fridge in your hotel room, you can save money on dining. Make a grocery run once you get to town or bring non-perishables such as oatmeal packets with you. That will let you have breakfast in the room once or twice and save yourself some money.

ENTERTAINMENT

Plan ahead – Look for discounts before you go. Some employers offer discounts to major attractions. The internet can also be a source of information. Do a little research about your destination before you leave. Also, consider picking up a guide book (I prefer the Lonely Planet books) for suggestions.

Befriend the locals – Local residents can be your best source of information and are usually more than happy make suggestions. Of course, they know where all the inexpensive or free things are as well.

Of course this post isn’t comprehensive but merely an overview. What are some of YOUR best travel tips?

savvy @ 9:02 AM
Filed under: Frugality andTravel
Six Ways to Save on Healthcare

Posted on Thursday 20 March 2008


Creative Commons License photo credit: Jaye_Elle

Healthcare costs are on the rise. However, there are steps you can take to reduce what you spend.

  • Use a flex spending account – If you know you will have medical expenses (copays, prescriptions, etc.) over the course of the year, you can choose to have pre-tax money set aside. After you incur an expense, you will be reimbursed. Also, many people don’t realize that a lot of over the counter medication is eligible for reimbursement as well.

  • Consider generics – Of course you should consult your physician but if possible, use generic medications instead of their brand name counterparts. Your copay will be cheaper this way.

  • Split the dosage – AAgain, you should consult your physician before trying this. However, sometimes it possible to save money by cutting your pills in half. If a 30 day supply of a 30mg dose is the same price as that of a 15mg dose, you can buy the higher dosage (when prescribed by your doctor) and split the pills to get twice as many doses for the same price.

  • Ask for samples. Occasionally doctor’s offices will have samples they can give you for a particular medication. While you will still need to refill your prescription, this may save you on a few days or up to a month’s cost.

  • Check the web. If you look on your drug manufacturer’s website, they may have a coupon or rebate that you can use to reduce your costs.

  • Use a mail order pharmacy.  If you need a prescription for multiple months, ask your doctor to write a three-month prescription vs a one-month prescription with two refills.  Brick and mortar pharmacies won’t fill prescriptions like that but mail order pharmacies will.  So instead of paying three co-pays (one for each month), you will just pay one (for the three month prescription).  That’s a two-thirds reduction in cost.

What do you do to save money on healthcare?

savvy @ 8:00 AM
Filed under: Frugality andHealthcare
Five Ways to Save on Car Insurance

Posted on Monday 17 March 2008


Creative Commons License photo credit: mmechtley

 

These five simple steps can potentially save you hundreds of dollars a year on car insurance.

 

  1. Shop around – Don’t assume that the company you’ve always used will have the lowest rates. Non-traditional companies with a heavy online presence (think Geico or Progressive) often have much lower premiums.
  2. Take a defensive driving course – Most companies offer a discount for drivers who have taken such a course. These courses can be found online for as little as $40 and your discount will typically last for three years.
  3. Increase your deductible – If you already have an established e-fund, there’s no reason to keep your deductible at $250 or $500.  If you feel that you could absorb a $1000 deductible, then the cost savings may be worth it for you.
  4. Consider liability only – If you have an older vehicle that may not be worth much, it may be worthwhile to consider dropping your comprehensive and collision coverage.  Instead, use that money to build up a “car fund” for when you do replace the vehicle.
  5. Look for multiple policy discounts – In addition to a multi-vehicle discount, many companies offer multiple-policy discounts.  This means you can receive a discount for having your homeowners or renters insurance with the same company that holds your auto insurance.

So, by taking just a little time to evaluate your insurance needs, you can reduce the amount you pay for car insurance.

savvy @ 11:28 PM
Filed under: Insurance