Archive for the ‘Frugal Living’ Category
3 Random Things You May Have Missed
Posted by: Todd Metheny in Frugal Living, Green Living, Managing Finances, Reviews on October 21st, 2009
In case you missed it...
I’ve been working on a pretty interesting appellate brief at work. It’s interesting, challenging, and mentally stimulating. It’s the kind of work we always say we want. It’s also hard. Seth Godin refers to the time when things get hard as “The Dip” (and wrote a book by the same name). It’s a phrase I’ve liked since I first heard it, and I find myself trying to push through things sometimes by telling myself, “you’re just in the dip right now, Todd, push through this.” So I’m pushing through it.
The three things I decided to pimp in this post are all things that should make your life easier, in some small regard, either by organizing data for you (see number 3), saving you a couple bucks (see number 2), or by making it easier for you to make sure your stuff is put to good use when you’re done with it (see number 1). I’m calling it the 3 things you may have missed, because if you’re the kind of person that reads a lot of blogs (and maybe even if you aren’t), you’ve probably either used or heard of these tools. Or maybe I’m just suffering from the curse of knowledge, and assuming, as people subject to the curse do, that anything I’ve heard about you’ve heard about. Obviously that’s not always the case. Without further ado:
1. Freecylce.org – I’m including Freecycle because I just think it’s a pretty cool idea. That’s why I wrote about Pimp this Bum. The concept is simple, people form local groups in their area. When you have something you don’t want anymore, you post the group and let them know what you have to offer. If you see something posted that you’re interested in, you can let them know that you’d like to have it. ”It’s the whole, one man’s trash…” philosophy. It’s green, too. They don’t want you to throw your old stuff away, because someone else might still be able to get some use out of it. Of course, you could give your stuff away (or sell it) on Craigslist or a like site as well, but Freecycle seems to be more of a community thing. If you’ve ever used it, I’d love to hear about your experience with it. My community here in St. Louis has over 6000 members. I’m thinking about checking it out. I’ll have a better read on how much value it adds after I do.
2. Restaurant.com – I’ve written about this little number before, and I tell people about it every chance I get. So does my wife. Between the two of us, I think Restaurant.com owes us for all the word of mouth promotion we’ve offered to help tip their site. If you’re not familiar with it, Restaurant.com typically offers you the opportunity to buy a $25 gift card for just $10. There’s a caveat and a bonus. The caveat is, you’ve got to spend $35 at the restaurant. Some other restrictions may apply. I’ve seen some that can only be used during the week. Some restaurants won’t allow you to use the certificates on alcohol. For the most part, though, you can use them as you please. The other thing to keep in mind is that these are usually newer restaurants or places trying to get noticed. Your favorite place probably won’t be on there (but hey, try something new). Those are the caveats.
The bonus is, if you sign up for email updates from Restaurant.com, you never have to pay $10 for the $25 gift card. Every week, you’ll get a coupon code by email that gives you at least 50% off. About once every two months, the discount code will give you 80% off (just $2 for a $25 gift card!). The week of 9/9/09 it was 90% off, but that’s the only time I’ve seen that after using Restaurant.com for about 2 years. For what it’s worth, this week’s discount is 70% and the password this week is “pumpkin.”
3. Mint.com – The other day I was talking to a mother of four, and she said something to me to the effect of, “I don’t know where all the money goes. We live frugally. We drive old cars. My kids wear second hand clothes. We don’t do anything extravagant. And yet the money is never where we need it to be.”
Keeping and maintaining a budget is hard to do. I admire people that can do it. Mint.com isn’t necessarily a budget substitute, but it sure can help. It can definitely help you answer the question – “where does the money go?” Mint tracks your purchases and spending, and categorizes it for you and attempts to develop a budget. It will also send you alerts when your bills are due, and has several other handy tools.
The annoying thing about Mint is that at first you spend a lot of time re-categorizing expenses that were they haven’t categorized properly. Mint does get smarter if you stick with it. It ends up being something that requires almost no effort on your part. The best thing about Mint is that it’s free. So if you don’t like it, nothing has been lost.
Hopefully one, some or all of these things offered value to some of you. Thanks for reading.
Google is Making More Things Free
Posted by: Todd Metheny in Frugal Living on October 13th, 2009
I have always been impressed with Google as a company. Their mottos, “don’t be evil,” and “information should be free” are two things that are easy to believe in. Google is doing their best to make as many types of information free as possible. They’re constantly working on improving the world we live in. Of course, they’re still a business, and they work to make profits. I honestly believe that they think about improvements first and profits second, though. They invest in ideas first, and figure out how to make money off of those ideas later.
That’s why they bought a company like YouTube. It didn’t make money for a long time, but they’re starting to monetize it with ads now. It still comprises an extremely small part of their revenue, but they keep investing money in it…I assume that’s because it’s something they think is cool, something that makes sense.
With that in mind, I’m not surprised at all that Google came up with a version of 411 that’s free. Instead of spending between $1 and $4 for something as simple as a phone number when you’re in a bind, Google is making it free. I’m sure this isn’t a development that phone companies are thrilled with, as it can only hurt their revenue, but it sure is nice for consumers like you and I. Thanks for reading.
Staying Within Your Circle of Competence
Posted by: Todd Metheny in Frugal Living on October 6th, 2009
It's okay to hire some things out and focus on what you do well.
I’m officially hiring an accountant this year. I’ve done my own taxes the last few years. I think of that as being something I’m as competent to do as the next guy. Not because I had Federal Taxation while in law school (though I did!), but simply because most of the self-preparation programs people use are mostly dummy proof. I used the free version of TaxAct for the last two years. It’s a pretty good program. It’s a competitive business, and there are several other good programs out there as well.
Under my value system, however, it’s worth it to me to make sure that my taxes were done right and that I’m not going to mess anything up in the eyes of the IRS. My returns have become more complicated over the past year as well, on several fronts. My wife started making money. We now own two rental units instead of one. I make a small amount of income from the ads on this blog. All of those things add to my taxable income and conversely, to my itemized deductions. I want to make sure I capitalize on the deductions available to me and have a tax efficient plan going forward.
I’m banking on the notion that my accountant, because it’s what he does for a living, will be more efficient (and better) at doing my taxes than I am. This is hard for me in some ways. I have a desire to do things for myself and to live frugally. I have to balance that with Ricardo’s division of labor, which tells us that a society can accomplish more when its people specialize.
Theoretically, at least, this will allow me to focus that extra time toward developing my career (and making money) and doing things I enjoy, like writing and building this blog.
For me, I think it’s the right choice. I think it’s time. Couple that with a diminishing amount of time for me and perhaps even less for my wife – I feel good about handing over the reigns. Maybe an accountant can help me live in the better half of things.
I’m going through the vetting process of hiring a CPA. I am probably going to go with a recommendation I got from my uncle, who gave the fellow his stamp of approval by saying, that he inherited his current CPA through a referral from the firm that did the accounting for several of my families’ businesses over the years, including his dad’s business, my dad’s business, and various individuals in our family. How can I say no to a referral like that?
I’d love to hear thoughts from anyone that’s hired a CPA. How did you choose them? How did you make the choice to hire someone instead of doing it yourself? Have you been happy with your decision? Are there considerations I’m missing? Any cautionary tales from the wise? Good luck and thanks for reading.
Status and Lipstick
Posted by: Todd Metheny in Frugal Living on September 28th, 2009
What's that bright hue worth to you?
What are we living for? I recently came across an interesting interview, full of great research, including this gem: “The lifestyle of the top 20% of the income distribution has come to be an important aspirational goal for people throughout society, many of whom earn far less than the roughly $100,000-a-year incomes that are represented by that group.”
I can’t tell you how many times (read: lots) someone has told me how rich someone is. ”Such and such is soooo rich. They have a Mercedes, and a big cookie cutter house in the suburbs, and a rolex!” Or they ask me, “Do you know how rich such and such is?” The answer is, no, I don’t, and neither do you.
You can’t tell how rich someone is by their consumption. There’s a very weak correlation between wealth and consumption. Many of the people you have with those things, have less money than you think.
Juliet Schor, a Harvard prof (at the time the article was published – I have no idea whether she’s still there), conducted what the article refers to as “the lipstick study.” The question they set out to answer was how much people care about status when it comes to products. I would say you really don’t have to look any further than bags like Coach, which have indicators that it belongs to that particular brand all over it. The lipstick study looked at how much women paid for lipstick. The department store brands ran about $25, and, according to the study, had little difference in terms of quality to the $2 lipstick.
She found that the same women that buy generic facial cleanser will spend $25 on lipstick. The women couldn’t tell a difference between the lipsticks without the containers. For whatever reason, people believe that the more expensive lipstick is better. The author believed that status was the motivating factor behind these purchases. They didn’t want anyone to see them buying or wearing inferior lipstick.
I’m going to tell you what you already know. Spending money isn’t going to elevate your status in any way that matters. Spending all your money on cars and clothes won’t make you smarter, or better looking, or more interesting. On the other hand, spending less than you earn and living beneath your means will make you feel safe and secure. It will make you feel in control of your life in a way that insecure spending won’t. Thanks for reading.
3 Tips on Buying a Car
Posted by: Todd Metheny in Frugal Living, Managing Finances on July 27th, 2009
I really don’t know much about cars. I’m somewhat ashamed of this. My dad owned a construction company (and his dad before him), and they knew a lot about cars. They were the kind of guys that could fix anything. My dad used to buy the oldest, cheapest dump trucks available and then find a way to get them running for whatever upcoming job he needed them for. The company had its own in house mechanic, but my dad ended up doing his share of mechanic work in a pinch.
One thing I truly regret in life is not learning more of the things my dad knew. I don’t think I’m unique in this regard. I know lots of guys whose dads know a lot more about things like that than they do. In some ways, I didn’t try to learn enough about what he knew because I assumed that he’d be around to do those things.
There are some other things, besides working on cars, that I think I’m actually pretty good at. I’m a pretty decent consumer. I’m pretty good at not making impulse purchases, I’m good at trying to learn things from people now (having learned from my own early mistakes), and I believe I’m good with money.
So while I probably couldn’t fix your car if it were broke (besides a jump, tire change, or oil change), I think I can give you some decent advice about how to buy one. I also have the benefit of hindsight, having just bought a car last November. Here are some of the things I feel like I picked up along the way:
1. Financing – If you can help it, you should avoid ever borrowing money to buy a car. It’s just not something that makes financial sense. It’s important to know the difference between an asset and a liability. Cars are liabilities that depreciate quickly. Anytime you buy a car you’re buying something that’s going to be worth less than what you paid for it in the very near future. You’re paying interest on something that you’ll never see your money on.
So how to handle this dilemma? I think the best way, if you don’t have gobs of cash lying around, is to have a little foresight. Decide what your approximate price range is on a car you intend to buy, then calculate what your payment will be at market interest rates on consumer goods. Then pay yourself that payment each month (or more if you can) into an interest bearing account. Don’t buy the car until you’ve made the payments. Then, instead of paying interest on your purchase, you’ll be earning interest on the money you’re saving. Of course, if you’re car breaks down and you can’t wait, you might have to break this resolve. Still, if you start saving for your next car in a “car fund,” you shouldn’t have to use much (or any) credit on your next automobile purchase.
If you do have to use credit (if you have a car that runs, you don’t), it’s usually better not to finance with a dealership. Focus on getting the lowest interest rate possible. If you belong to a credit union start there. Take the time to shop around.
2. Research – One of the most important tools you have at your disposal is your ability to research. I would suggest Consumer Reports as a starting point. Use their reliability ratings to determine what the major or minor problems have been for a particular make, model and year of car. I love Consumer Reports in general, but the car reliability ranking is some of the best work they do.
A couple of other tools that wouldn’t hurt to consult are the Kelly Blue Book values (for an approximate value for what a car should sell for in a particular condition), and Carfax reports (or other vehicle history report), if you’re planning on buying a used car.
3. You don’t have to buy from a dealer. There are reasons to buy from a dealer. If it’s a relative or family friend, maybe that’s who you should buy from for relationship purposes. If it’s someone that regularly patronizes your business, maybe it’s important to reciprocate to preserve your business arrangement. Buying for a dealer can have some other advantages as well, such as warranties (which have value of their own).
If you are going to buy from a dealer, shop online first. These prices are often close to the lowest you can get from a dealer. This is because these are prices that are designed to get you into the door. I would print out the price and take it into the dealership. Make this the new starting point. Sales people will hate this, because it takes a lot of their rope away. When I was shopping for a car, my wife and I found a price a dealer had posted on eBay. We went to the dealership and negotiated a bit on price. They ended up giving us what they told us was their rock bottom price. We told them we thought we saw it for cheaper than that online, and they told us we were mistaken. We went home and checked and we were right. Their “rock bottom” price was about $900 than the internet price. We didn’t end up buying from a dealer, but if you’re going to visit a dealership, print that thing out and surprise them with it sometime during the negotiation.
All things being equal, you can probably get a better deal buying from an individual. The individual has much lower overhead – they don’t lease land for their dealership, don’t pay a commission to salespeople, a support staff, etc. On top of that, they might have another significant reason or motivation to sell. And on top of that, they might price their goods inefficiently. A private seller can still get more money selling it to you at a cheaper price than a dealer.
Those are my tips. We bought our car from a private seller we found on Craigslist. It was (still is) a 2004 Toyota Camry with one previous owner (two total) and just under 50,000 miles on it. The Bluebook value was listed at $14,800. We bought it for exactly $11,000. We found almost the same car at a dealership for a lot more. If you have tips on car buying or car buying experiences you’d like to share, please let me know by email or in the comments. Thanks for reading.
Having a New House
Posted by: Todd Metheny in Frugal Living, Managing Finances, Real Estate on July 22nd, 2009
Taken from our back deck, that pond has fish in it.
We went from about 800 square feet to about 1450 square feet not counting the basement. We lost half a bathroom in the process, somehow (we still have two toilets but now we only have one shower, in a bathroom half the size of the two bathrooms we had before). We gained another unit of about the same size and a couple new tenants.
We absolutely love the new place, but having it has made it harder to control our spending than before. For one, any time you move into a place that’s bigger than where you lived before, you have to fight the desire to fill it up with stuff. We’re not planning on buying new furniture, but our bedroom is pretty big and we’re talking about moving up to a king size bed.
We also have spent more money on consumer oriented goods recently. All of them have been for me, so I don’t have anyone to point at but myself. I’m typing on the most expensive of those purchases as we speak. We talked about just getting a desktop and a netbook, but I was seduced when the salesperson started showing me all the nifty stuff the mac could do.
On top of that, our new home is over 100 years old, and there are plenty of things we’d like to do with it. We have a brand new back deck that we’re going to buy patio furniture for. We’re probably going to buy a potted tree for the front one (the best place to sit and watch the world go by). We have a spot picked out for a home gym in the basement that will require buying several things (a good pair of running shoes is still the cheapest way to get in shape!), though I think it will get more use and save more money than a gym membership, so that should pay off. Read my friend Josh’s comments on the home gym. I’m finally in a place where I can take his advice on constructing my home gym.
Living so close to a park has also really made me want to get a bike. My wife already told me that if I get one, she gets one. Numerous other projects have popped up, including adding a shower to the bathroom that doesn’t have one. All of these things will cost money.
Making things more difficult is the fact that Rachel’s making money now. I think, in some ways, it’s given us a false sense of security. We need to revisit our budget and try to see where all the things we want to do fit in. It’s getting too easy to justify purchases lately. I think it’s good to have to wait for things for awhile. You avoid impulse spending and are less likely to experience buyer’s remorse.
My point is that it’s easy to spend a lot of money when you buy a new house. The thing is, you probably just spent a lot of money buying the house to begin with and should probably be focused on how you’re going to pay that back instead of how much stuff you can get to shove into it. Try to keep that in mind. We’ll try if you try. Thanks for reading.
On a totally unrelated note, I’ve been getting a tremendous amount of comment spam. It’s getting to the point that I’m afraid I might have to add one of those ‘are you human’ boxes to the site. I’m somewhat afraid that would discourage commenting. I know that I sometimes feel compelled to comment on something and then don’t if it ends up being too much trouble. If you read this blog (or others) and have an opinion, I’d love to hear from you by email or in the comments.
How Not to Move
Posted by: Todd Metheny in Frugal Living on June 30th, 2009
My wife and I packed up our stuff and moved to St. Louis this weekend. Because one of my hobbies is maintaining a personal finance blog, you might expect this post to be full of useful tips and ideas about how to optimize your move. Wrong. This might help you in some way, or all it may do is destroy whatever credibility I have with the people that regularly read this blog. Hopefully the former.
Our move was somewhat complicated by the gap in our closings. We sold our condo in Kansas City. The official closing date and transfer is scheduled for July 1st, but, anticipating our move, we went ahead and met last Friday to sign the papers. Our closing on the place we bought in St. Louie isn’t until July 13th. I’m actually out of town for work the entire week of the 13th, so we’re going to do that one early, too (while reserving Rachel’s right to do a walk through on the 13th – before we take possession). Anyway, we’re subletting a place until we can move in to the place we just bought:
Cost – $750 for the month of July.
Rachel rented a truck for our move. We went with Penske. They assured Rachel that based on the size of our condo, all we would need was a fourteen foot truck. She went with her gut, and we got a 16 footer:
Cost – $160
We also had a very small window of time for which to move. My wife, always a clever Craigslist hound, found a moving company that charged $40 per hour. When we told them what we had and how big our place was, they estimated that it would take three hours.
Supposed Cost – $120 (a very good value I might add)
It didn’t take three – it took about 6, and that was with Rachel and I moving everything we could as fast as we could, and those guys dragging behind (Craigslist comes with a risk).
Actual Cost – $240 (I could have refused to pay them more than the $120 they gave us in the estimate, and it’s likely that nothing would have happened, but they were nice guys and between them I think they had about 100 kids).
Halfway through the truck being loaded, the moving guys (Manny and Gilbert) came to us and said that we weren’t going to be able to fit everything in the truck. Rachel told them they’d get an extra tip if they could make it work. We started mapping out a contingency plan. Rachel called Penske and complained. The nice people at Penske told her that she could (a) come switch out for another truck or (b) keep the truck for a couple extra days on them (she’s good with people). We opted for (b), the plan being that I would drive the truck back and get the rest of the stuff on my own. This would have increased our fuel cost and time cost, plus it would have necessitated an extra trip back to get my car.
Supposed Cost – $100
We ended up giving some of our stuff to Manny and Gilbert and packed the rest the best we could. Her car had more stuff in it than any Toyota Matrix in the history of the Toyota Matrix (only since 2002). She had to hold stuff up while driving (not the safest), but she didn’t complain. My Camry was equally loaded down, but we were leaving that behind. The plan was, if we got everything to fit, that I’d take the train back, go to my KC hearing Monday morning, then drive my Griswaldesque loaded down car to StL on Monday night to attend a resident’s dinner with my wife, the other residents in her program, and all the people they answer to (this was actually a lot of fun by the way).
The bad news is, we had cancelled my train reservation when we thought I was driving the rental truck back. We lost our $33 ticket and had to pay $66 when we reserved again. Making matters worse, we learned that they don’t charge you for the ticket if you don’t show up and pick it up. There’s essentially zero incentive to cancel. We didn’t know. C’est la vie.
Cost – $66
Because we’re subletting a place until we close on our multi-family, we needed a place to keep our stuff. Rachel found a storage unit for and introductory rate of $21 a month. The second month, the rate goes up to $229 per month (we need to make sure our closing doesn’t get pushed back!).
Cost – $21
We got a couple of guys (James and Lonnie) to help us unload the truck, too. After the other debacle, we got a guarantee that they could move everything in 2 hours. They unloaded the truck and moved it into storage in 1, but there was a 2 hour minimum.
Cost – $100
Total – $1,437. That’s a big number. I think my wife did a good job of finding the best deals on movers by using Craigslist. She also went with the cheapest truck she could find, and got us an introductory rate at a storage facility. All in all, I don’t think this is too bad for moving across the state (about a four hour drive). We definitely made lots of mistakes. Our single biggest expense was not managing our closing dates right. Our realtor is partially to blame for that (realtors rarely make anything better – although we do love our KC realtor), though we’re partially to blame for not insisting it go the way we wanted.
The bad news is, we aren’t done paying. We’ll probably hire someone to help again when we move into our place! We have friends that have offered to help, but I declined. I think you reach a certain point in life where you should just hire a mover instead. I don’t know. One of my friends gave me this list as a gift once (around 6 or 7 years ago), called the Bylaws for Buddies (maybe he was giving me a hint). One of the many bylaws was this: “you’re a grown up now, hire a damn mover.” Maybe, deep down, I just didn’t want to violate those bylaws. Thanks for reading.
The New Hidden Costs of Flying
Posted by: Todd Metheny in Frugal Living, Managing Finances on June 8th, 2009
This weekend, we flew to Boston on a United Airlines flight. Kansas City doesn’t fly to Boston, directly. You have to stop somewhere (Chicago O’Hare for us). It’s a trip we’ve taken a couple of times now, since Rachel’s brother RJ has lived there for the last several years. Most airlines are still trying to find a way to operate profitable businesses. Without really delving into the numbers, Southwest Airlines, one of the only airlines with a reputation for profitability, is just barely profitable.
Because it’s a tough business to make money in, airlines are having to get more and more creative. If you raise fares and your competitors don’t, your volume is going to go down and you’ll be hurting even worse. Most people, including my wife and I, shop for airfare based on price. If you can get there in the same amount of time for fewer dollars, why would you do anything else?
One way many airlines are trying to make an extra buck is by charging you to check your bags. The first bag costs $15, the second costs $25. Obviously, this adds another way the airline can make money. If you’re going on a long trip, most people will pack a bag large enough bag that they’ll have to check at least one. This also offers an incentive for people to pack lighter. Less weight equals less fuel. I’d love to see a study on whether fuel consumption and weight have actually been impacted by the bag charge.
United also offered certain seats with additional leg room for an extra $39 per seat. These seats also happened to be closer to the front of the plane. We opted for the cheap seats. A lot of other people did, too. On our return flight, the plane was fairly full in the cheap seats, but the extra leg room seats were sparsely populated. A lady sitting near my wife and I asked if she could move up to one of those seats. The attendant told her no because those seats had an additional charge. I guess the airlines policy is to just leave those seats empty rather than accomodate their guests. I understand their thinking. If we let people move up into those seats, they won’t have an incentive to buy one next time. We want them to experience the pain that the smaller seats offer, so they’re not gambling for the better seat for free. On the other hand, I think it’s a little ridiculous to not let people move up once the plane is in the air. If you could make 15 people more comfortable at no additional cost, why not do it?
These extra costs are just a couple of ways the airlines are looking to save/make money. According to this article, some airlines are starting to charge for beverages as well. American Airlines and US Airways both charge for the first bag. I would not be surprised in the least to see this become the industry norm. Southwest, whose goal (according to their slogan and the book, Built to Last) is to be THE low cost airline has so far not implemented any of the upcharges mentioned. They don’t have assigned seating, don’t charge for your first two bags, and still give free drinks. You can’t buy leg room on a Southwest flight. They do have a program that enables frequent fliers to boarding group A status no matter when they check-in, but other than that they seat people on a first come, first serve basis. Still, with their peers looking for additional things to charge for, I can’t see them bucking what’s becoming the standard in the industry forever. Until they do, they’ll get the slightest premium from me whenever I fly. At the very least, I’ll remember to add $15-25 for checking bags to the price of any ticket I book that would involve me having to check a bag. Thanks for reading.
Declutter Your Life
Posted by: Todd Metheny in Frugal Living on May 26th, 2009
Since we’re getting ready to move, it gives us a great opportunity to assess whether we really need all the stuff in our place. We look around at all the furniture we’ve accumulated over the past few years, the books, and everything else you just seem to accumulate when you live somewhere for any significant period of time. We live in a country where it’s easy to get caught up in the pursuit of stuff. Of course, when you think about it, you don’t need that much stuff. You don’t need to drive a cool car, or have a huge collection of rookie cards, or new gadgets as they hit the shelves. You don’t need much of it at all. You can be more than happy with less.
My wife has taken action on this and has started to put our stuff on Craigslist. Craigslist and eBay are the newer, easier garage sale. Our stuff has generated a lot of interest, thanks to what we think are very reasonable prices. My wife loves doing this, too. She’s fine living with less, too. Plus, she knows she’s going to help move it if we can’t sell it. The only thing I would say about Craigslist or eBay is that you are taking on some measure of risk. With Craigslist, anytime we post something, we get contacted by several people within minutes. Unfortunately, lots of the people don’t end up following through. There’s a chance that people won’t follow through with the transaction. Fortunately for us, we sold both our kitchen table and entertainment center almost immediately to out of towners. They’re both sending us cashiers checks by priority mail, then having a moving company come by to pick up the stuff. It’s a clean way to do these types of transactions.
Even if you aren’t moving, using things like Craigslist or eBay is a great way to sell your stuff to raise extra cash. Everyone seems to win in these situations. People get to buy things they want or need for less than the cost of buying something new, and hopefully, the market takes the goods to the people who are most likely to get the most use out of them and who value the item the most highly. Thanks for reading.
The Personal Finance Playbook was included in a blog carnival over at Greener Pastures. Lots of great posts over there. Check it out.
Alternatives to Having Cable
Posted by: Todd Metheny in Frugal Living, Managing Finances on April 6th, 2009
My wife and I started watching Lost after it was recommended to us by several friends. It’s one of those shows that really sucks you in – very addictive. We primarily watched the show through Blockbuster’s online service – we’d get the DVDs one at a time and watch them. By the time we got finished, the show was in the midst of its current season. We couldn’t watch the current episodes anymore, because abc.com only has the five most recent episodes available. The most current episode available at the time was episode 3 of season 5. We decided we’d wait until the end of the season and just watch all the episode back to back, the way we’ve been doing it all along. We waited a few weeks, and then our withdrawals kicked in and we decided we couldn’t wait to watch the show.
Of course, by this time, epidsode 7 was the most recent episode available at abc.com. At the end of the season, I believe all the episodes will be available at abc. We didn’t want to wait that long. We broke down and bought the first three episodes on itunes for $2.99 each (I know, not the most frugal move). They weren’t available on Hulu.com, which just directed us to abc’s site. They weren’t available anywhere else we looked either. We ended up skipping episodes 4-6 and just got caught up on abc.com last weekend. Desperate times call for…you know. We watched the episode shorts on abc and read the summaries, and we’ll probably rent the season when the time comes. My wife and I both recognize how ridiculous the measures we went to watch this tv show were/are. We’re dealing with that;)
I guess the point is, because of the prominence of the internet, and the ease and low cost of renting lots of movies, many people are questioning whether cable is really necessary anymore. I think that’s a valid question. The decision not to pay for cable is one that should be re-examined by every American family with the prominence of the internet.
First, we’ll consider the cost of cable. We get our cable and internet in a package that cost around $115/month. You can get this much cheaper during an introductory rate. This is one area of our finances that we’ve consistently neglected. We just pay the rate every month like good little sheep, when we should have instead been constantly challenging the company and exploring our options. It’s something we’ve vowed to do a better job at once we move and potentially enter into a new plan – if we opt for cable at all. Our bill is itemized, and it indicates that we would be paying around $45/month for internet alone – obviously a $70 difference/month. So, if we ignore other factors, if we can watch the television shows we’re interested in for less than $70/month, there’s no reason for us to have cable. These numbers are going to be different based on where you live, who your provider is and what cable package you have. I had some trouble pulling prices off of Time Warner online – which has to be one of the worst run businesses in America.
There are multiple places to find tv shows online, one of the most well known and prominent being Hulu.com. Hulu doesn’t cost you a thing, they make all of their money off of advertising. Like any online show, the advertising is brief and less invasive than the overt advertising provided on cable networks. I just got done watching an episode of Arrested Development on Hulu, to make sure this is the case (AD is an incredibly funny show if your humor runs that way). Of course, you can get a lot of the shows directly from the networks as well. If you want to watch current episodes of current shows, this is probably the way to do it. I don’t know how long this will last in its current state. The acting community is pretty upset about not getting a share of the revenue generated by the shows that they’ve been in that are now featured online. Tina Fey alluded to this when she was recently accepting an award for her work on 30 Rock. What other sources out there do people use to watch shows online?
Of course, you might want to couple your banishment of cable in favor of watching online tv shows with a subscription to one of the two online movie rental services, Netflix or Blockbuster. Or you might supplement your movie watching with Redbox, which seems to be increasing in popularity. I plan on doing a comparison of the rates from these three sources of movie rentals later in the week. This is really moot in terms of this analysis for me personally, because we currently have both a cable package and a subscription to blockbuster online.
If you decide to stick with cable after reading this, JD @ Get Rich Slowly has an excellent review of White Fence, a site that is supposed to help you find deals on utilities, phone, internet, television, natural gas and other home services. Be aware that a couple of JDs readers in the comments accused White Fence of being a vehicle serving the needs and desires of AT&T and other private companies. I don’t know. I’m definitely going to check out the resources there sometime before we make our move.
Though you would no doubt save money, there are some other considerations on deciding whether to start satisfying your tv fix with online television. One is the size of your family. If you watch certain things together consistently, you may not be able to crowd around the computer the same way you do with the television. Of course, if what you usually watch together is movies, this still wouldn’t be a problem. Another consideration would be the online accessibility of the things you like. If you’re a big sports fan, you’re not going to get the same amount of games without cable. There are online alternatives, such as MLB.tv, but this costs money as well. Another thing you might consider is the ability to get introductory rates on cable/internet combinations. It often isn’t much more expensive under the introductory rate to just go ahead and get both together.
Something else you might consider with regard to going without cable is how much more productive you’ll have the opportunity to be. It’s so easy to sit in front of the tv and do virtually nothing (that’s what Lost does to us). Some of that convenience is mitigated by the online tv shows. They’re there if you want them, but they’re there at your convenience, whenever you want to watch them. You aren’t locking yourself in to a Tuesday night (or whatever) ritual that you and your family partake in. If you instead use this time to connect with your family, take a class or read a book, you might feel like you’re living a more productive life. If you have other suggestions on this issue please email me or leave them in the comments. Thanks for reading.
