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We moved in the spring, and it seems like the move has created as many questions as it answered: What should I do with my old stuff, sell it or trade it? Which digital services do I really need at the new house? Are mortgage-savings programs a good idea?
The newest question is whether or not to get a "home buyer resale warranty" (not to be confused with a home warranty offered by a builder). If you're unfamiliar with these, they're more or less a service contract on various components of your house, such as appliances, HVAC, and water heaters. They are usually considered at the onset of a relocation, but many can be purchased at any time.
The one we're being offered is by American Home Shield. It costs $356/year for the basic plan ($512/year for the "Enhanced Plan") and works like this: when a covered item breaks down, you can contact them by phone or online and request a service call. After the request is processed, one of their "approved and insured contractors" will come out to diagnose and fix the problem. The cost for this "Trade Service Call" is $60.
Sounds reasonable, but let's look at some of the fine print:
- "This Trade Service Call Fee applies to the initial visit by a contract for each covered trade. This initial fee covers any additional contractor visits required for the same breakdown within 30 days of the original service date. Additional charges may apply for some repairs and replacements."
- "... Warranty covers the repair or replacement of many system and appliance breakdowns, but not necessarily the entire system or appliance."
- "... may provide cash back in lieu of repair or replacement in the amount of AHS's actual cost to repair or replace such item, which in most cases may be less than actual retail pricing."
- "... [items needing to be replaced] will be replaced with units having comparable features, not necessarily the same dimension, color, and/or brand."
Hmmmm... you thinking what I'm thinking? That's a lot of fine print. Let me see if I've got this right:
My two-year-old $1,100 Kenmore stainless steel 3 x 3 x 6-foot side-by-side fridge is acting wonky. So I call, a technician comes out to "fix" the problem and I shell out 60 bucks. 31 days later, it's acting up again so I reluctantly make another call. After parting with another $60, tech tells me it's unfixable.
I call AHS and they give me two options: I can either have the $600 it would cost them to replace it with a "comparable" fridge, or they'll deliver me a brand new 2.5 x 3.5 x 6.2-foot Hotpoint bottom-freezer... in bisque.
This is a real possibility.
So let's do the math: $512 for the Enhanced Plan (basic plan doesn't cover refrigerators) + $60 + $60 = $632. So in essence I've either payed $632 in order to get $600 (which isn't usually a good deal) — OR — I paid $632 for a fridge that doesn't match ...have the same features... or fit (which is arguably an EVEN worse deal).
Of course, while this is a possibility, it isn't a certainty. Instead, he could have fixed it the first time he came out and I could have no more problems the rest of the year.
Then I'm only out $572 ($512 + $60) for a repair that, according to AHS's literature, averages $157. In that case it would have been worth it because I... wait a minute... no... no, it still wouldn't have been worth it. I just flushed $415 down the toilet!
And speaking of toilets, the average cost to repair one is $70 and the average cost to replace one is $285. So if my toilet broke instead of the fridge, I just paid $572 to have an old one fixed when I could have spent the same amount and bought TWO brand new ones!
So you can see, the fewer things that break, the more "expensive" this coverage is. If you really want to get your money's worth, you need a lot of things to break. I don't know about you, but I'm not big on rooting for my house to fall apart so that I can get my money's worth out of a warranty. Come to think of it, kinda sounds like insurance... EUREKA! Call it a warranty, call it a service contract, call it whatever you want, but we've discovered the truth: it's just another form of insurance.
Nothing wrong with insurance as long as you know that's what you're getting. So back to my original question, are these warranties a good idea? If the seller pays for it, then sure, why not. But if it's coming out of your pocket then consider the age of the home, its various components, and what exactly is covered in order to make an informed decision. Again, pay attention to the fine print.
In our first home we chose to get one because we were first-time home buyers and it gave us a little peace of mind (which is, perhaps, the biggest selling point). But when we had a plumbing issue within that first year, since it had to do with pipes outside the footprint of the walls, it wasn't covered (said it right there in the fine print and a customer service rep confirmed it for me, unfortunately).
So will we get a "home buyer resale warranty"? Doesn't look like it. The home is only four years old and we have adequate savings to cover any breakages that would have been covered by the warranty. What we could do each year is put the contract fee (or premium, pending how you look at it) in a separate savings account just for home repairs (not unlike what I suggested for pet insurance). That way if we need it, we'll have it. And if we don't need it, at least we didn't wash it down a drain that never needed fixing.
(Bumped — with an update)
It's too bad really, I was a big fan of Bing Cashback. I first started using Bing Cashback late last year, when, in an effort to diversify the free internet services I frequent (i.e. I don't like relying too much on any one provider, be it Yahoo, Google, or Microsoft), I switched to Bing Search. Since that time, I've saved nearly $250.
But according to their site, that's all changing:
We are writing to notify you that the Bing cashback program will be discontinued, and the last day to earn cash back on your Bing Shopping purchases will be July 30, 2010.
So why did it close down? Usually, these things just boil down to profitability. But here's NPR's take:
Note that Microsoft themselves said, "We did not see the broad adoption we had hoped for." That could mean not enough users of the program or not enough increased search engine market share or... But who knows?
So what if you're a Bing Cashback user and you have rebate money you haven't redeemed? No worries, you have until July 30, 2011.
But what if you're such a Bing devotee that you aren't interested in other rebate programs? There may be hope for you after all. Did you notice that at the end of their announcement, they say, "...and we are currently working on an exciting new program which you will hear more about from us later this summer."
Hmmmm... I'm intrigued.
Update: Rumors are flying around that Bing Cashback might team up with Amazon. Whether or not that is true is anyone's guess. Until we know for sure, you can use this handy list of other rebate sites from Comparerewards.com for your online shopping.
I'm torn. I can't decide if my love for our dog outweighs my distaste for feeling duped into buying yet another kind of insurance: pet insurance. Yes, it's real with actual revenue numbers to back it up. Opinions vary regarding its merits: this piece acknowledges the value, while this piece does not. Then there's this information about calculating the worth of your pet.
If you ask me, it's impossible to put a price on a face like Gertie's. But I think I'm in the "factor it into your budget" camp. In other words, instead of paying premiums to a pet insurance company, open a pet savings account and "pay yourself" instead. If we put money aside now, not only will it be there if we need it but we'll get the benefit of compounding interest.
But that's only half the story, the money-saving, budget-conscience half.
Isn't there a stewardship issue here? Don't think so? Maybe this piece will change your mind. It willl certainly incense the hard core pets-aren't-people-they're-possessions crowd. Even a big-time pet lover like myself was taken back. Listen to this:
APPMA reports that 42% of dogs now sleep in the same bed as their owners. I'm not judging anyone... yet.
Half of all dog owners say they consider their pet's comfort when buying a car. I barely consider my kids' comfort.
With annual growth nearing 50%, the pooper scooper industry is now experiencing a lot of consolidation...There's a "pooper scooper industry"?
I'm not going to say that some of these crazy things people do for their pets are morally or even financially wrong because I don't know their heart or their giving. But it's hard not to have questions when you learn that Fido could be put on a cocktail of Slentrol and Reconcile; one for the unwanted pounds he put on while being depressed and the other for the depression from all the canine separation anxiety. My question in particular: Why medicate when he could just have liposuction and go everywhere with you in your canine-cozy Caddy? ;-)
Is it just me or is there a financial stewardship issue banging around in here somewhere? I think so, or at least there certainly can be without proper balance. You see, I want my giving to reflect how much I love the God and love other people. So it's more about my love for Him and less about my lack of love for Gertie.
Besides, when pet cloning comes down in price, Gertie will know how much we love her for the rest of her lives.
(This piece originally appeared in a July 2007 blog post (membership required) of The Sound Mind Investing Weblog.)
Last summer, we wrote about Swaptree, a website that allows you to list and trade books, music, DVDs, and video games for free (and soon you'll able to trade Blu-ray discs and audio books). Since then, I've had a chance to use it in real life.
Here's how it works in general. Lots of individuals create lists of items they want, as well as items they have to trade. For the most part, you're saying that you're willing to trade any item on your "have" list for any item on your "want" list. (You always have the opportunity to reject a trade, but if you do this too often, Swaptree will evidently get cranky.) This is important, because in most cases Swaptree arranges deals among three parties, rather than two. In other words, you're sending an item to person A while getting an item from person B.
Here's the detailed version of how this works:
After you sign up for a free account, you are prompted to list items you have to trade and those you'd like to have. Listing items you have is quite easy. You either search for it or, better yet, simply enter in the UPC or ISBN in the "Have" list box and click "Add". From there, you select the item's condition and give a description if you'd like, then submit. Very quick and easy.
To add items to your Want List, type in the name of the item in the search box, then click the "Want It" link when it pops up. It's really that easy.
Next, you can view potential trades by clicking on your "Want List" and then sort the selections by "View Only Get Now Items." If there are any trades available to you, they will show up here. Next you can initiate a trade, assuming you are okay with the exchange. But not all items are equal. You may not want to trade a popular movie for an old paperback. But if you are good with the terms, you can initiate the trade and wait for the other party to accept (they are given roughly 2 days). If it's accepted, you'll get an email (or you can check back on the status by clicking the "My Trades").
Assuming it's accepted, you have a couple days to mail the item. Swaptree will give you the person's mailing address. You can either have Swaptree calculate and print the postage/mailing label for you right then (you'll need a credit card to pay for the postage if you select this option and they charge a small fee for this service - but it's extremely convenient and the prices are quite reasonable), or you can calculate your own postage.
After you mail it, you can "Contact the user" to notify them of your ship date and/or ask them questions/make comments. Once you've received your item, you can come back to "Rate the User". This rating might make a difference with whom you trade in the future. Since other users also likely take notice, it's advisable to solicit positive feedback if they haven't already rated you.
And that's Swaptree in a nutshell. We recently moved and came across some old movies and video games that I had intended to sell on eBay. But since I didn't want to hassle with auctions, and there were some DVDs we wanted, I thought I'd give Swaptree a try. And it works as advertised. I'm notified when someone initiates a trade and I check back once a week to see if there any available trades I may have missed or if I want to add some items to our Want List. So far, I've made 4 trades (traded movies for movies and traded video games for movies) and haven't had any issues. The only fees I've paid were the shipping costs. Again, Swaptree makes a small profit when you buy and print postage but you don't have to use their postage generator.
If there's a downside to Swaptree, it's that pending the size of your Want and Have Lists, a trade could take a while. So if you're in a rush, this probably isn't your best option. But it will likely be on my pre-eBay checklist if there's an book, movie, CD, or video game I'm interested in getting. And it sure beats paying retail because as is often the case, patience pays dividends for the frugal.
UPDATE: Swaptree has acquired Swap.com. Besides an eventual name change and a bigger user base, the changes brought about by this acquisition will take some time to manifest. In the meantime, it's free trading as usual.
You may have heard us mention Mint.com a time or two around here. For the uninitiated, Mint is a free, web-based money management tool. Founder Aaron Patzer launched Mint in 2007. It quickly rose to the top of web-based financial tools and two years later, he sold it to Intuit (maker of Quicken/Quickbooks) for $170 million.
While most of the beefs I had in the SMI review I wrote in 2008 (subscribers' link) have been addressed, I wanted to ask about a couple that hadn't:
- An envelope budgeting option, and
- The possibility of a comprehensive part standalone product, part web-based product, and part mobile product all rolled into one.
I was able to ask Aaron Patzer (who still heads Mint, though now as part of Quicken) about these two features during a live webcast he did yesterday. If you're interested in how he answered, fast forward to the 13:16 and 28:00 marks, respectively.
As we become a more and more data-centric society, all that information consumption not only eats up our time but also our money. And if you're anything like me (and for your sake I hope you're not), it's easy to fool yourself into categorizing a "want" as a "need."
Take, for instance the cell phone. Until January 2009, I was an anti-cellphone-ite, a breed on the doom of extinction. My wife, my son, my nephews — even my mom — had a cell phone. I didn't want the extra expense, the extra interruptions, and the extra cargo to lug around (I had trouble enough not forgetting my wallet and keys).
But I eventually caved, in part because my wife wanted me to have a cell phone, and in part because of the convenience factor. And if I was going to schlep one of these around everywhere, I wanted a good one... so I got an iPhone.
With all the things it can do, it's closer to 1-part convenience, 3-parts entertainment. There's nothing wrong with that, as long as I'm honest about it when factoring it into our budget: this is 75% an entertainment-budget item.
This leads me to a New York Times' piece on the cost of home entertainment. There are some interesting figures to consider:
It used to be that a basic $25-a-month phone bill was your main telecommunications expense. But by 2004, the average American spent $770.95 annually on services like cable television, Internet connectivity and video games, according to data from the Census Bureau.
By 2008, that number rose to $903, outstripping inflation. By the end of this year, it is expected to have grown to $997.07. Add another $1,000 or more for cellphone service and the average family is spending as much on entertainment over devices as they are on dining out or buying gasoline.
And those government figures do not take into account movies, music and television shows bought through iTunes, or the data plans that are increasingly mandatory for more sophisticated smartphones.
Incredible really. All this got me wondering 1) how bad the damage was at the Pryor household and 2) where could we cut costs on digital services yet still keep most of the functionality?
I started with our cell-phone plan. I went to the website, downloaded our usage, and checked our monthly average of minutes and text messages used. We use about 450 minutes a month, but had a 750-minute plan. Unfortunately, that's the lowest family plan listed on the site. But I called anyway hoping there were other unlisted options. Sure enough, there's a 550-minute plan that's $10 less. Then I asked about texting (which I use way more than I talk). Unfortunately, there's only one family plan and the individual plans wouldn't cover our average monthly texting. However, I'm experimenting with apps like textPlus which allows free texting to other textPlus users. This could reduce our phone bill by $20/month if we're diligent about using it.
My next call was to our cable company, which provides our home phone, internet, and TV. I started off by kindly letting them know I wasn't happy with my 15% bill increase over the past year and wondered what they could do to help me. In seconds, the rep offered to knock off $13 from the internet portion of my bill, but said that was all he could do. I took him up on his offer, thanked him, and hung up.
I then immediately called back to talk to someone about the TV packages we have. Turns out, we were paying for a package that has only two channels that we ever watch (and not with much frequency). Dumping that tier of service shaved off $10/month. Secondly, there was a package I NEVER signed up for (and never use) but was being charged $8/month for. I promptly canceled that one too and asked for a refund.
The rep was friendly but said she couldn't do that. Now in their defense, I understand: any yahoo could call up months after the fact and say they didn't ask for it and demand a refund. And had I diligently been studying my cable bill every month and comparing it to the ever changing TV package line-up options, I suppose I could have caught the error. But on principle, I couldn't let it go. I had been overcharged. And had they not made the error to begin with, I wouldn't be in this mess. So I called back the next day, spoke with a rep, and then that rep's supervisor. I'm still waiting for a call from the supervisor's supervisor.
Let's re-cap: to that point, I'd knocked off $10 + $13 + $10 + $8 = $41/month (not to mention all those convoluted taxes and fees). And this doesn't include a potential $20/month if textPlus meets our needs. But I wasn't done yet.
With our home phone getting used less and less, I've been wanting to get rid of it (and its $26/month fee) for quite a while. I nagged my wife to death and she finally relented. So I ordered an Ooma. In a nutshell, Ooma is a device that connects to your high-speed Internet and your home phone and allows you to make calls at no charge. It does other things as well, but we're getting it primarily so we can cut the $26/month phone bill. It will take about 10 months to pay for itself, but should be worth it (I'll do an article or post once we've been using it for a while).
So put all these things together and by the end of the year, I will have shaved $67-87/month off our monthly expenses, while not sacrificing a great deal in these luxury/entertainment categories. Notice I said "shaved" and not "saved" because as our good friend Mary Hunt says, "You don't save money buying things on sale unless you stop at the bank to deposit the money you saved."
Bottom line: Be honest about your budget categories and your "needs" vs. your "wants." Technology is nice, but all those 0's and 1's really add up.
By now you've worn it, played with it, smelled it, ate it, listened to it, watched it, cut with it, mixed in it, served on it (or in my case, because I didn't really know what to ask for, broke something on purpose and then Mighty Puttied it), or some combination of the above. Some of you have already returned it for whatever it was you really wanted.
But my question is this, "How'd your budget do? Does it need a little Mighty Putty of its own, or did it hold up pretty well?" Or perhaps a better question is, "What, if anything, will you do differently next year?"
As for me, next year I'll do a better job of looking at sites like dealnews.com (slogan: "Where every day is Black Friday") before I go out shopping. But I have to say, using these online saving tips paid off, especially Bing Cashback.
I'll also continue to use cell phone apps like have ShopSavvy which kept me from overpaying on more than one occasion. With ShopSavvy, you simply take a picture of a product bar code with your phone's camera, and within a few seconds you're shown a list of the best local and internet prices for that item.
And perhaps next year, I'll focus our September-November shopping on the non-toy presents. According to Dan de Grandpre, founder and chief executive of dealnews, the best time to buy toys is at least two weeks after Black Friday (or about two weeks before Christmas) when retailers, such as Toys 'R' Us, Wal-Mart and Amazon.com, slash prices to clear out unsold inventory.
I'm also going to push for drawing names on my wife's side of the family. It's so much more enjoyable (and quite a bit less expensive) to worry about buying gifts only for one or two people. Plus, they get better presents 'cause we can afford a little bit more.
The downside is if you draw you-know-who's name (a.k.a. MrOrMrsImpossibleToBuyFor - because they either don't like anything or they're just going to take it back, or they're taking it back because they don't like anything), you're up a creek for a bigger present.
But all and all, if we keep to the same intentional and pro-active strategy next year, will we let our budget scare us? Not a ghost of a chance.
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