Tuesday, October 18, 2016

Travel Hacking

This post has been a long time coming but I’m finally getting around to making it. For you who aren’t aware of the world of Travel Hacking (i.e. making credit card companies pay for your travel expenses), I wanted to introduce you to the concept and give you some info to get you started. For those who already know about it, hopefully I can help expend your knowledge on the subject.

We don’t do a lot of traveling in our family and if we do we choose to drive since it seems to be cheaper and easier than flying with all of the family. But when my uncle invited me to climb Mt. Kilimanjaro with them it became apparent that I would have to buy my first airline ticket in almost 6 years. But the cost of the ticket to Tanzania was a pretty big barrier for me to get over. With just under a year before the trip I started looking to see if I could find the cheapest fight option possible. This is when I first learned about the world of travel hacking.

Long-story-short I was able to save at least $1,156 on the plane tickets by taking some time to research and plan out how to travel hack.

The journey began when I stumbled upon Brad over at RichmondSavers.com. Brad has established himself as the travel hack expert of the universe and set up this site to offer FREE advice, courses, tutorials, and one-on-one help to people who want to learn more about travel hacking. Kinda like a modern day Robin Hood.  *Note: If you use his services please make sure to sign up for your cards by using his affiliate links since that is how he makes his money which allows him to provide his services free of charge to you.

Step 1: I got in contact with Brad through his website and filled out the simple questionnaire that he uses to find out about your travel needs. I informed him that I was looking to travel hack my way to Kilimanjaro and back in about 10 months. Two or three days later I received an email from Brad with a link to a video that he had recorded for me where he walked me through an individualized set of recommendations and a strategy that would allow me to easily make my goal. At that time the easiest way for me to rack up the 80,000 travel rewards points that I needed was to sign up for two credit cards. The United MileagePlus Explorer Card and the Chase Sapphire Preferred Card.  

Step 2: I signed up for the United card since it had the lower amount of money to be spent before getting the bonus miles. If you spend $1,000 in the first 3 months after getting the card they will give you 30,000 bonus miles. Plus they give you 5,000 miles for adding an authorized user and 1 point for each dollar you spend. Since my auto insurance bill was coming up I was able to easily meet all of the requirements and cash in on 36,000 points in the first month.

Step 3: I then signed up for the Chase Sapphire card. This one was a little more tricky since I had to spend $4,000 in the first 3 months to get the 40,000 bonus points they were offering at the time. Since we don’t spend nearly that much on a card in a typical quarter I ended up working out a plan where I used my new card to pre-pay my electric bill for the next 2 years then a few months later I called them up and asked if they could liquidate the $3,600 credit on my account and send me a check. They did since I hadn’t broken any of their rules but it didn’t sound like they were too happy about it (I had research this plan out by talking to their customer service reps before trying it out).  This allowed me to get 40,000 bonus miles, 5,000 for adding an authorized user, and 4,000 for the 1 point per dollar spent reward – for a total of 49,000 miles. 44,000 of which I had to transfer over to my United account before I could use them.

Step 4: Armed with 85,000 reward miles I then set about booking my tickets. I was able to find pretty good flights for the days that I needed. All of them had fees associated with them that the reward miles won’t cover so I ended up choosing the ones with the least fees associated with them. I ended up having to pay $125 for the fees but that turned out to be less than 10% of the price of the cheapest tickets that I would have been able to find otherwise.   

Step 5: Board the plane and have an awesome adventure!

Step 6: A month or so after returning home I called up the two credit card companies, redeemed $50 in cash for my 5,000 unused miles, and canceled the cards. I didn’t need (or want) them after the trip and I wasn’t about to pay the $95 annual fees that would start being applied on the 1 year anniversary (the fees for the first year are waived).

One concern that you might have about this though is what it might do to your credit score. I was a bit concerned myself about it having a negative impact on my credit to go out and open two new credit cards in a 2 month time frame then close them a few months later. Since I knew that I wasn’t going to be needing to use my credit anytime soon though, I figured that is was worth the risk. However, if I had been planning to buy a house or something like that in the near future I would have probably played it safe and foregone the idea. But, much to my surprise, it actually helped my credit score! When I started the process my credit score was showing up around 743. Because of the additional available credit I got from the new cards it jumped up to around 768 a few months later. And after closing the accounts it went up to about 780 where it’s lingered for the past several months.

Would I do it again? Absolutely! While it did take a bit on planning and effort to pull it off it saved me an entire 2 week paycheck, and cost me much less than 80 hours worth of work. I thought that it was a wonderful solution and I wouldn’t have been able to justify the costs of climbing Kilimanjaro if it hadn’t been for travel hacking.

Wednesday, October 12, 2016

When a Benefit becomes a Detriment

It’s that time of the year again when we have to take a look at the benefits that our company offers and lock in our elections for the coming year. I just finished making my elections and it made me want to put together some thoughts about benefits that I’ve had for anyone out there who might be going through the same thing.

First off, I’d like to come clean and make a confession to a bi financial mistake that I made when I first started getting a benefit package from my employer. When I had to make my first benefit elections we approached it with the following mindset:
1)      We have to have medical insurance
2)      I have glasses so I must need vision insurance
3)      We have teeth so we better get dental insurance
4)      Everything else is a luxury intended for people who aren’t very healthy
The hard part about insurance is that you can’t predict the future so it’s always a bit of a gamble. But now that I look back I kick myself for accepting their dental plan based solely off of the assumption that it would be the safest financial decision and that we must need it.

The first year that we had this insurance we were charged $1,655 for a family dental plan. We all had cleanings and an x-ray and that was it. For the 3 of us we could have paid out of pocket for the same services and it would have only been about $800. So we paid an extra $855 that year for the option to have the insurance company pay up to $2,000 for dental expenses after we met the annual deductibles.

Last year we decided to forego the super expensive dental plan and self-insure our dental care. We each got 1 cleaning (we didn’t take the little boys in since all they do at that age is count their teeth, brush them and charge you $100) and we paid a total of $222 for our dental care. So, just be redefining what benefits were needed in our own paradigms we were able to save our family $1,433.

At the same time we also dropped the vision coverage we had on me because I got new glasses out of it and we found that my prescription hadn’t really changed enough in the past 5 years to warrant needing it again for a few more years. Dropping that saved us another $84.

The main takeaway that I want you to get out of this is that you don’t have to sign up for it just because it’s offered. There are times when it doesn’t make financial sense to pay for insurance. So take the time to really look at your options and the costs and rewards of each one.

And just in case you were curious – here are our current elections and costs that I just made for the coming year. (Total Cost = $7,106.68)
1)      Medical Coverage (Total Cost = $4,065.48) – I chose the cheapest plan (partly because it was the cheapest and mostly because it allows us to have an HSA). Our family deductible is set at $3,000. 15% coinsurance, $6,550 Out-of-pocket maximum. All preventative and maternity prenatal visits are covered 100% and everything else is covered 15%. We had the same plan last year and it increased by $414.36 over last year.
2)      Health Savings Account “HSA” (Total Contribution = $2,350) – If you have the option to get an HSA you should strongly consider it. The annual contribution limit for a family this year was $6,750 but we chose to just leave it at the same amount that we contributed last year.
3)      Dental Coverage (Total Cost = $691.20) – Yep, like a dog to its vomit we went back to dental coverage this year. But, notice that it is considerably cheaper this time around so it is starting to make more financial sense to have it. At our cleanings this past year we made sure to get the dentist’s opinion on if our teeth looked like there might be anything major brewing that would warrant us needing insurance and he thought we’d be just fine without it for another few years at least. But now what we have 4 of us that need to be going to the dentist we would expect to pay at least $700 for us to all have the 2 cleaning and 1 set of x-rays that the insurance plan offers us for free. We figured that we would probably spend about the same amount to properly take care of our mouths on our own as we would for insurance. So we decided to get it to insure that we actually go get the proper care done instead of trying to save money and cut corners that would cause bigger (more expensive) problems down the road.

Monday, October 3, 2016

Monthly Progress: September 2016

The first day of the month is always a big day for me with my personal finance spreadsheets. While I update them nearly every day there are a few things that I do and track on a monthly basis, so the first day of a new month means that I get to hard code the actuals of the previous month and see how we did. I LOVE IT!

So, how'd we do in September?

1)       Net worth: $182,436.38, up $4,361.96

I am a bit obsessive but I actually track my net worth every morning that I work, just because I love seeing the graph it makes and knowing what's going on, and it only takes me about 10 minutes using Personal Capital if I go slowly and analyze anything (if you’re not already using Personal Capital please click on the banner ad for them on the right of this article, they are 100% free and I love them and use their android app nearly every day). But over the past month our net worth has increased from $178,074.39 to $182,436.38, for a total gain of $4,361.96 for September.

2)     Investment income: $603.01

Another detail that I measure on a monthly basis is how much we've made (or lost) due solely to our investments. This helps me to see what I would have to live off if I didn't work at all and choose to live exclusively off of investments, which is the goal. The current amount needed from investments each month is $2,600, which means that at a 4% withdrawal rate we would need roughly $780k in investments (easy calculation: $2,600*12*25=$780,000). On the first of every month I document what all of our investments are worth and back out the beginning value of the previous month and all of the investments that we made during the month.

In September we started with $107,292.49, invested $1,265.66 and ended the month with $109,160.85. Meaning that, in September, we gained $603.01 on our investments. For most of the month it looked like this was going to be a negative number but the markets uptick there at the end was enough to turn it back for a positive ending. Now that we are 9/12th of the way through the year we have seen an investment increase of 8.66% this year which, if things continue at this pace, could set us up for a 11.55% return this year. That would be awesome since my conservative models that I’ve built to project our future retirement date (October 31, 2033) assumes a 6% annual increase, so that extra 8% this year would be padding for future years when the market might drop some.

3)     Financial plan savings: $1,590.59

I'm not going to go into the details behind the calculations on this one since it's more lengthy but you can read more about it in my post about 
Our Current Financial Plan. Thanks to September being a 3 paycheck month, after all of our income, expenses, and planned savings for the month we ended up with an extra $1,590.59 in our checking account to use for investing in our future.

We have actually made one small change from our previously stated plan and instead on dividing this 50/50 between our mortgage and Vanguard we have begun dividing it evenly 4 ways, adding 2 more buckets for remodels and vacation. So this time we invested $397.65 in our medical industries mutual fund VGHCX at Vanguard.

Then I called up my bank and scheduled a payment for an additional $397.65 to go to the principle on our mortgage. So after our regular mortgage payment that automatically pays on the 1st of each month and this extra payment our mortgage dropped down to $109,298.20 today. Which means that, as of today, we actually own 37.185% (roughly 699 sq. ft.) of our home. We bought 18 sq. ft. this month, that’s almost the whole half bathroom down stairs!!!

So, by and large our September turned out just fine. How did things go for you? 

And here's to having a great October ahead of us.

Friday, September 30, 2016

Make Money By Selling Your Poop!

Have you ever flushed a load down the toilet and thought, “It sure is a pitty to see that beauty go down the drain. Surely there’s someone out there who would be willing to buy my poop because, not only does my $hit not stink, but it’s as good as gold because I am that important.”?  If you’re ready to stop flushing away your feces and willing to put it to work making money and saving people’s lives instead then I’ve found the right opportunity for you.

But let me apologize upfront, part of me is sorry about the nature or this post but I just learned about it this morning while looking for a post subject and couldn’t pass it up.  I was a bit shocked that it actually existed and was all for it until I found out that I wouldn’t qualify. But if I did, I would be signing up to sell my poop in a heartbeat. And no, this is not a joke.

The Company

OpenBiome is a nonprofit stool bank and research platform that is attempting to expand  safe access to Fecal Microbiota Transplantation (FMT) in order to combat the effects of Clostridium defficile infections. According to their website every year 500,000 Americans are affected by C. defficile and 30,000 patients die from it. Additionally, 1 in 5 patients with C. defficile do not respond to antibiotics. Butt, FMT introduces healthy bacteria, curing recurrent C. defficile in over 90% of cases.

Since opening in 2012, OpenBiome has:
·         Processed over 1,300 pounds of poop!
·         Passed only 3% of perspective donors through their rigorous screening process
·         Funded 56 pre bono treatments
·         Supported 14 research studies (3 translational and 11 clinical)
·         Covered 96% of all U.S. residents within 150 miles of an OpenBiome partner
·         Partnered with 600+ healthcare institutions across all 50 states
·         Shipped materials to 6 countries
·         And treated over 13,000 patients

The Pay Out

How does $40 per stool sound? I’ve never been able to donate plasma because I can’t do needles but I can poop and would love to be able to collect $40 a day just for dropping off my feces for them.

The Stool Donation Process 

In order to become a donor though and start collecting this $40 per stool you have to pass a series of screenings. As stated earlier, they claim that they only pass 3% of applicants. Here’s the list of the process they require.
1.       Be able to “make daily trips to our Medford or Somerville [(in Massachusetts)] locations for at least 60 days” – I’m already disqualified until they have a donor bank near me.
2.       “Be 18-50 years old during the donation period” – Check
3.       “Body Mass Index (BMI) < 30” – Check
4.       Join the Stool Donor Registry and wait for them to contact you
5.       Fill out and pass a medical history questionnaire
6.       Pass blood and stool screenings to make sure you don’t have any potentially infectious pathogens
7.       Donate Poop! 5 days a week for at least 60 days.
8.       Get paid $40 per stool – HOLY CRAP Batman, that’s a total of $2,400 over the required 60 day period!
9.       Save the world from C. defficile

So, if you think that your crap has what it takes sign up here and try it out. And if anyone is able to actually go through with this process and start donating please let us know how it works out for you.

Thursday, September 22, 2016

What Are Mutual Funds?

Today I wanted to step back to some of the basics of investing again. If you don’t already know, we love investing in the stock market, and have chosen to go 100% into stocks. We can feel comfortable doing this because of our long investment horizon and because we only invest in mutual funds which decreases our investment risks.

Basic explanation -mutual fund is an investment shell.

Within this shell are a large number of investments, typically stocks and/or bonds. When all of these investments are grouped together into a fund, people can purchase shares in the mutual fund. So, having a share of a mutual fund means that the  investor owns part of the investment shell – and thus a small portion of all of the shares contained in it. This allows the investor to invest in hundreds of companies at once and reduces risk because poorer performing companies can be offset by better performing companies in the fund.

But who then is picking the stocks?

If I needed to remodel my house I could either choose to hire a professional to do it or I could try doing it myself. If I do it myself it will definitely take a lot longer and I could potentially do more damage than good, but it could be done. Similarly, while picking your own stocks successfully is possible it can be very difficult without professional intervention. Mutual funds are managed by an individual or team of professionals with a very high level of investment expertise called fund managers. These fund managers have a tremendous influence upon the success or failure of their mutual funds, which is why a fund manager’s track record can be an important element in deciding whether to invest in that fund.

If the fund managers decide what is put into each fund then how do I know what I’m buying into?

Each fund has stated investment objectives that guide fund managers as they decide which categories of investments to buy. The stated objectives are intended to define what a fund is invested in, other third parties – like Morningstar – assign a style to each fund based on their own analysis. Styles help investors make meaningful comparisons between funds by assigning them to categories based on common category traits. Styles usually reflect some or most of the following characteristics:
·         Type of investment – ie stocks or bonds
·         The country or geographic region of the investment – ie Domestic (US) and Foreign (Outside the US)
·         The economic conditions of the country – ie Developing Countries
·         The size of companies in which the fund invests – ie Large Cap, Medium Cap and Small Cap
·         The relative value of company’s stock – ie Value, which means the stock is undervalued and expected to gain value
·         A sector of business – ie Energy, Precious Metals or Real Estate

For instance, the backbone of my portfolio are funds which attempt to track to the S&P 500 (VFIAX at Vanguard and FXAIX at Fidelity). If I type in VFIAX into the Morningstar search box I am given the following Style Map which tells me that it generally invests in very large “core” type stocks. 

By investing in these funds I can be confident that as long as the 500 biggest companies in America are continuing to make money then so will I.

Thursday, September 15, 2016

Which is the Wiser Choice – Buying a New Car or Making Your Existing Car Last

Today we have a great post for you from our friend Ethan over in the UK. He shares some good points with us that can help us save thousands on transportation expenses.

"Once upon a time, when the month of September rolled around, it marked the arrival of the next year’s car models, and with them, a rekindled lust among motoring enthusiasts and common folk alike. And while the cars might have changed dramatically, the lust has not, and millions of consumers find themselves faced with a true first-world dilemma: Do I take the plunge for a shiny new car, or hang onto that aging Mini or Citroen for another year? Left to our lust and ego, the choice would be simple, but in the aftermath of a nearly decade-long financial and employment crisis, we begrudgingly allow our logical selves to creep in and speak their piece. Sometimes, we even listen to what that annoying logical self has to say.

Can you afford a new car?

Next to your house, your car is likely the second most expensive purchase you'll make, and as such, warrants careful consideration. Even if you’re feeling a surge in confidence that financial hard times are in our rear-view mirror, you can’t really ignore the fact that while most people’s earnings have stagnated over the last few decades, the prices of new cars have done anything but. Even today’s modest economy models are priced much higher than many exotic vehicles from a couple of decades ago, while the more prestigious luxury cars now command a price higher than what many people spend on their homes.
These changes, along with many others – perhaps including our own rising level of maturity – are naturally increasing the volume at which our logical selves addresses us. The result is an apparent polarization in the marketplace, with most buyers looking to the extremes and purchasing either the most economical models or to an even greater extent, the more prestigious premium brands. The median-priced models have seen their popularity shrink.

Two prominent factors in buyers’ decision making are the availability of streamlined purchasing methods and the emergence of creative financing programs that serve to lower the monthly payments. The latter is a concern shared by buyers who can only afford a modest monthly payment as well as those who opt for the highest levels of luxury and/or performance, but must still be able to squeeze the monthly cost into their budgets.

Many people at both ends of the auto-buying spectrum are feeling that squeeze. While new car sales figures for the last few years have been increasingly impressive, for a significant number of motorists, the monthly payments for a new car simply aren’t affordable, and their decision is to hang on to their existing car and keep it running for as long, and as efficiently, as possible. But even those who purchase new cars can benefit greatly from keeping their cars operating at their peak.

Keeping your car in tip-top running condition

It can be tempting to put off car maintenance tasks, especially when it seems to be running smoothly with no issues. But you should realise that adopting such a cavalier attitude toward keeping your car in optimum condition makes as much sense as the stereotypical attitude toward dentistry, where minor issues are ignored for years, until they become major problems.

Having your car fully serviced at least once a year can save you money, not only by averting the need for major repairs, but in the day-to-day costs of driving as well. Thanks to improvements in automobile technology, we’ve become accustomed to treating our cars like they are immortal appliances, but there are a few things that we really need to look after if we want the car to continue running well and to last as long as possible. Here are a few items you’ll want to attend to.

Tire pressure and condition – Keeping your tires at the recommended pressure can increase your petrol mileage considerably, but many people don’t even think about tire pressure until one goes flat. In addition, maintaining proper pressure will extend the life of the tire by thousands of kilometers by reducing heat build-up. Finally, uneven wear on the treads can be an indication of a mechanical problem that left unattended could cause a breakdown or even a crash.

Changing the oil – Unless your car is old, with many thousands of kilometers on the clock, you should not need to add oil between changes, and really shouldn’t add oil even if it runs a bit low. Merely adding oil serves only to redistribute the filth and metal shavings that are suspended in the lubricant. Draining and refreshing the oil at least as often as the manufacturer’s recommendation will reduce friction in your engine, helping it to run more efficiently while reducing wear and extending its life.

Other items as recommended in the service manual – Manufacturers have a good idea as to how long the components in your car can last, and recommend replacing some of the more critical ones well ahead of their expected failure point. Ignoring those recommendations can prove quite costly. For example, replacing a worn fan belt can save you from having to pay for a tow when the belt breaks and your car dies. And many cars have rubber or Aramid timing belts to keep things humming inside the engine. When one of those fail, the result can be and often is an engine that cannot be repaired. Saving the few hundred pounds it costs to replace the old belt is a lot easier to deal with than having to pay thousands of pounds for a new engine or replacing the whole car. This is one item that new car buyers needn’t be concerned about, since most manufacturers recommend replacing the timing belt at 70,000km or more.

Other tips for servicing and maintaining your car can be found on the Money Advice Service charity website, and a familiar, trusted mechanic can help guide you through the most effective and economical steps for keeping your car in shape, whether it is a fresh from the showroom model or a classic that reminds you of the youth you imagine having lived through. In either case, properly maintaining your car will increase the likelihood that it will be around and serving you well for years to come."

Thursday, September 8, 2016

Overcoming Money Stress

Can I let you in on a little secret? I really hate spending money. I often view money as more of a safety net to get us the necessities of day to day living than a tool to be consumed to gain the luxuries of life (ie. Quilted Northern toilet paper).  When I walk into a store where I am required to make a purchase my blood pressure quickens and I start inventorying every possible (honest) solution that I can think of to allow me to spend as little as possible or, my preference, nothing at all.

A great deal of this comes from the traumatic financial experiences that I had while living in Zimbabwe for two years during one of the worst periods of inflation in recorded history. While I loved my time in Zimbabwe and look back on it with a great deal of fondness, I think that this is one of the leading causes of my Acute Financial Stress (AFS) disorder – real thing that you can learn more about atPayoff.com.

I know that my fears and anxieties have caused unneeded stress on our marriage as my wife and kids have been asked time and again to forgo activities and products that we can afford so that we can maintain peace at home. After 6 years of marriage I can see why money and Facebook are among the leading strains for marriage.

But, while I still have a long way to go, I can look back and see a vast degree of improvement. Looking at the numbers in my spreadsheets I am often shocked at how little we use to spend while we were in college. While we still live a very consciously frugal lifestyle I can see the amount of lifestyle creep that we’ve allowed into our lives. I would say that over the last 4 years we’ve gone from “Absolutely Absurd” to “Extreme”, how I pray that we never make it to “Spendthrift” status.

This article wasn’t meant to be a confession though. The reason that I started this article was to share with you all one little trick that I have to use sometimes when I feel the anxieties building.

Take Deep Breathes!

When our 5 year old starts to get angry or upset about something we coach him to breathe. Nice big, deep breaths for a few seconds until he can calm down and think rationally before he acts out of emotion. After walking him through the exercise I’ve found myself starting to practice it as well. Sometimes I have to just take a few seconds to breath, tell myself that it’s alright and that we can afford it, or sometimes physically remove myself from the situation and let my wife make the decisions.

While I know that I’ve been doing this for months now, I think that yesterday was the first time that I actually caught myself doing it consciously and realized exactly what I was doing and the effect that it’s had on me. It was in a simply situation, which is part of the reason why it was so noticeable to me. I was on my way up the stairs to grab something from the bedroom and about halfway there I realized that I had just passed the kitchen and noticed that the light was left on, with nobody in there, while the sun was still up. I literally paused on the stairs, turned around, and was about to go back to turn it off because I couldn’t help but see it as a waste of electricity. But then realized that as soon as I grabbed the thing I was going upstairs for I was going to be heading into the kitchen and would be needing the light on anyways. I turned around and stood there for a few more seconds, and realized that I was talking to myself and taking deep breaths. Telling myself that “it’s alright, its 30 seconds of electricity, we can afford it, it’s not even going to be noticeable on the electricity bill, just keep walking, you can do this.”

Sound ridiculous? It is. That’s why I chose this example. Because we can all identify it as insane, scoff about it, and agree that it’s something that wasn’t worth the effort of worrying over. But the truth is that all of us have something like this that drives our financially minded self a little crazy. So whether you also suffer from AFS or not, take a few minutes next time you feel the anxieties starting to take over, breath deep, and remind yourself of the truths that you are forgetting.