Money Hacks

A. Does anybody see this via feed? If so, let me know?
B. Does this appear on the site itself?

Yes, it’s true — Money Hacks may be resurrected.

I have decided that, temporarily at least, Money Hacks will be incorporated into Get Rich Slowly. I’ve created a new money hacks category. In a couple of hours, I will switch the feed source from this site to the new location. If all works according to plan, those of you who read this site by feed won’t notice a thing. It should just be seamless.

Note that if the money hacks end up being a poor fit at GRS, they will return to this site. This is an experiment. I think it’ll work, but who can tell ?

Note: I already posed this question to readers of Get Rich Slowly. If you responded there, please don’t respond here. You’ll mess up my survey!

For the past six weeks, I’ve been posting one short tip here every weekday. But I’ve found that it feels odd to maintain two money sites. Every time I write something for Money Hacks I think, “I should really share this at Get Rich Slowly.” There are other times I post stuff at the main site and think, “I should post this at Money Hacks.” More and more, it makes sense to maintain just one site.

How do you folks feel about this? How many of you read Money Hacks but not Get Rich Slowly? How would you feel about moving over to the main site? Would you prefer that Money Hacks remained an autonomous entity? Would you be okay if it were absorbed by its big brother, Get Rich Slowly? Some combination of the two? Don’t really care? Let your voice be heard!

This is the first Money Hacks entry to be dual-posted at Get Rich Slowly. This is my transitional measure until I decide exactly what I’m going to do.

I don’t usually think of Boing Boing as a source for money hacks, but they just posted a blurb about Wayne Gerdes, who “may be the most fuel-efficient driver in the world”.

Through tricky coasting, careful acceleration, and driving without breaking, the “king of the hypermilers” can apparently squeeze 59 MPG out of a non-hybrid Honda Accord and more than 100 MPG from a Toyota Prius.

I read the original article about Gerdes and listened to the interview with him. Here are some of Gerdes’ recommendations for achieving fuel economy:

• Don’t speed.
• Go easy on the brakes.
• Inflate your tires to maximum pressure.
• Never idle. (His rule of thumb is: “If you’re going to be stopped more than seven seconds, turn off the engine.”)
• Know your route so you can time the traffic signals.
• Keep your vehicle as empty as possible. Added weight reduces fuel economy.
• Remove racks and other objects on the outside of your vehicle.
• If you’re comfortable with it (because it is illegal), use a rolling stop.
• In parking lots, don’t use reverse. Pull into a spot so that you’re facing out.

[Boing Boing: Mileage hacker Wayne Gerdis]

I’ve seen a lot of great sites collecting free college courses. Here’s another. World Lecture Hall links to actual pages of actual college courses. When a professor posts material to the web, World Lecture Hall points to it.

Some courses are delivered entirely over the Internet. Others are designed for students in residence. Many fall somewhere in between. In all cases, they can be visited by anyone interested in courseware on the Internet — faculty, developers, and curious students alike.

The site offers great search capabilities, and allows users to browse by suject area. Interested in Computer Science? You have 88 courses from which to choose!

Sally’s Kitchen has tips on How to Budget Effectively, including an Excel spreadsheet template for download. There are some great ideas and suggestions here, simple things like: print out a small copy of your budget and tape it over your credit card so that every time you’re tempted to use it, you’re reminded of your goals; always shop with a list in order to avoid temptation; when shopping on-line, add items to your wish list rather than your cart, and then check back in a week or a month (when it will be clearer if what you wanted was just an impulse purchase).

Yesterday I mentioned a paycheck calculator from a random web site. But did you know that the IRS actually has a couple of great web-based tools? For example, you can use their withholding calculator to figure out exactly how much to have held back from your paycheck.

Why would you need such a calculator? Well, say for example you run a group of web sites that has begun to produce a not insignificant amount of income, and you’re worried of the tax implications. The withholding calculator can help you get things figure out. Or maybe you always end up owing tax at the end of the year. Or maybe you always get a refund. The withholding calculator can help you adjust things so this no longer occurs.

In order to use the tool, you’ll need to have some information handy, including a recent pay stub and last year’s tax return.

[Internal Revenue Service: IRS withholding calculator]

Ever wished you could find some way to play with the numbers that go into your paycheck? I have. Sometimes I want to know what would happen if I changed my withholding rate, or how my taxes would be affected if I got a raise.

Paycheckcity (a site for which I cannot vouch) has a handy paycheck calculator that lets you play with the numbers. You can select your state, the tax year for which you want to experiment, and then enter a variety of parameters to see what happens to your net pay.

[Paycheckcity.com: Paycheck calculator]

Last spring an AskMetafilter user wondered: At what point is a car not worth repairing?

My ten-year-old 130k-mile Saturn is showing its age pretty badly — leaking oil, disturbing noise coming from the front end, crumbling exhaust system. I’m having a tough time coming up with a satisfying way to determine if it makes financial sense to pay for the repairs or to just ditch the car and buy a new one (living carless isn’t an option, cool as it would be).

The discussion includes how to decide when to buy a new car, whether one should buy new or used, and the advantages (or disadvantages) of leasing. One poster invokes the Car Talk guys, who say: “It is always cheaper to keep driving your old car than it is to buy a new car.”

Consumerism Commentary has a great Quicken hack. Flexo explains how to track airline miles with the program. His method is to:

1. Enable support for multiple currencies
2. Add a custom currenct for the airline miles
3. Add your airline account
4. Hide the balance from your net worth

You can use this technique to track almost any rewards program you have that deals in “points” or “miles” and not real dollars.

[Consumerism Commentary: Quicken hack: How to track airline miles or points]

About.com has posted a list of ten ways to cut the cost of your homeowner’s insurance:

1. Raise your homeowners’ insurance deductible. Raising your deductible is an easy way to reduce your premium on any sort of insurance.
2. Combine your homeowners’ insurance and auto insurance policies. This is a common piece of advice for reducing auto insurance premiums. Most companies give a discount if you carry more than one type of coverage.
3. Ask about other homeowner’s insurance discounts. Some companies offer rate reductions for various pieces of safety equipment, for example.
4. Don’t buy homeowner’s insurance coverage you don’t need. If you don’t have jewelry, don’t protect against its loss.
5. Make your home a better insurance risk. We know that when we finish replacing the knob-and-tube wiring we can get a rate reduction. This gives us some motivation to finish!
6. Know what your homeowner’s insurance policy covers. It doesn’t hurt to read through the policy every couple of years to make sure you still have the coverage you need.
7. Keep your insurance coverages up-to-date. When you make changes, let your agent know.
8. Avoid risks that insurers shun. Trampolines? Swimming pools? Vicious dogs? These things can raise your rates.
9. Improve your credit score. It’s a controversial practice, but many insurers are tying rates to credit scores. They believe credit scores offer an indication of potential risk.
10. Shop around. If you’re unhappy with your current rates, get quotes from three other companies.

Most of these tips are common sense, and similar to “how to get cheaper car insurance” lists. But it’s a good list nonetheless.

[About.com: Ten ways to cut your homeowner's insurance premiums, via Lifehacker]

Liz Pulliam Weston at MSN Money recently asked her readers for money hacks. She picked 12 cool money tricks to publish. My favorite? Getting stores to give you interest-free loans:

Warning: This is an expert hack, recommended only for folks who have good money management skills. I’ll let a Your Money message board poster with the handle of “sneakers” explain how it works:

“Whenever I buy a big ticket item, I make sure I have the cash to pay for it. Then I wait for store financing offers — same-as-cash or deferred interest for an extended period. I opt for the financing, put the cash in a (certificate of deposit) that matures just before the end of the promotional period, and pay it off before the deferred interest becomes due. It’s like a free loan from the stores and I can earn interest while I enjoy the item!”

Obviously, this hack works ONLY if you keep your mitts off the invested money and if you pay the bill before it comes due; otherwise, you could pay a truckload of finance charges.

This is beyond my skill level at the moment, but I admire the guts it takes!

Money Hacks reader Mia left a comment in how Much Should You Save for Retirement discussing other rules-of-thumb she’s learned. She pointed me to an article called “Rate yourself using debt-to-income ratio”.

The article suggests that “healthy families” should strive to:

• Save 12% of their income every year. A 30-year-old should have 10% of her income amassed in savings. A 35-year-old should have 90%. At 40, she should have 1.7x her income saved. At 50 this should be 3x income, and at 60 it should be 8.8x income.
• Add up all of your debt, including mortgage and student loans. At age 30, your debt should only be 1.7 times your income. This number should drop as you age. At 45, it should be equal to your income. By age 65, you should have no debt.

These ratios are fine, but they seem awfully ambitious, especially with regard to debt. I’m nearly 38. Should I be worried that our family’s debt is more than twice our income? What if it’s mostly mortgage debt?

[Rate yourself using debt-to-income ratio]

Every year before we moved into a dorm room in college, we went over a comprehensive inventory list with our resident assistant. We checked to make sure everything was present and in working order. If, at the end of the year, we left the room damaged, we were charged for repairs.

This same principle can be used to your advantage of you rent your home or apartment. Most rental properties require a security deposit to protect against tenants leaving a building with damage. But not every landlord requires a pre-move-in inventory.

A quick-and-easy way to protect yourself against the loss of your security deposit is to thoroughly document your rental before you move in and after you move out. Bring a friend and a digital camera. (A video camera is better. If possible, bring the landlord too.) Move from room-to-room photographing and documenting everything. If there are any major problems, put them in writing and have your landlord sign to acknowledge the situation.

These precautions aren’t foolproof, but they can help bolster your case if a dispute does arise.

More information here and here.

The March 2007 issue of Money magazine has a sidebar that gives a rule of thumb for determining how much you should have saved for retirement. The information is geared toward Boomers, though, and so the start age is 45. Still, it should give you a rough ideas of where you should be.

In other words, if your income is $50,000/year, you should have about $300,000 saved at age 50.

I’m not sure how these numbers were derived, so it’s hard to say how to determine guidelines for folks younger than 45. I know that I hope to have 2x my income saved by the time I’m 40, but I feel like I’m a little behind the curve.

Here are two tips from a reader for making the most of selling on craigslist. Stephen writes:

A lot of people offer free stoves, stackable washer/dryers, and other large appliances simply because they don’t want to move them. If you watch, you’ll notice these from time-to-time in your neighborhood. These can be resold for around $100 to $150 on Craigslist the next day.

Also, if you have something you just want gone, post it in the free section but ad “or highest bidder”. We’ve found that people will offer payment for an item we just wanted gone.  We had a very large shed in our backyard we just wanted to get rid of, and when a guy said “I’ll give you 100 for it” we bumped him 20 spaces and said come get it.  He did, that day.

Got a tip? Send it in!

There are a couple solid approaches to rational stock-market investing. The easiest, of course, is to stick your money into mutual funds. Another approach, however, is to pursue value investing, a method practiced by big names like Benjamin Graham and Warren Buffet.

Value investing is the technique advocated by Phil Town in his recent book Rule #1 (my review at GRS). In plain English, value investing involves buying good companies at a discount price. Obviously there’s a lot of meaning in that one sentence — what’s a “good company”? what’s a “discount price”? — but this isn’t the place to explain the concept fully.

This is the place to share a fine source for beginning your quest for undervalued stocks. Every month in Money magazine, Michael Sivy shares his list of “blue-chip growth stocks for the long run”. This list is also available online. Sivy writes:

If there is any way to beat the market over the long run, it consists of following the strongest, most secure stocks and trying to scoop them up when they are measurably undervalued. There are surprisingly few such stocks that you need to follow on an on-going basis — we’ve come up with 70, which you can track in the table below.

What are the defining characteristics of these great growth stocks? Size is certainly part of it, and almost all of the stocks on the core list have market capitalizations and total revenues that top $5 billion a year. We also looked for companies with diverse product lines and dominant positions in their industries. As for growth, we sought companies that are capable of returning a steady 11 percent to 12 percent a year through a combination of earnings gains and yield.

I’m a big fan of index funds. But I also allocate a little money with which to invest in individual stocks. When I’m looking to find a new one, I start with the Sivy 70.

Americans spend a mind-boggling $10 billion a year on bottled water products. That’s insane! Much bottled water is simply drawn from municipal water systems, the same as the drinking water from your kitchen sink. And even the water that isn’t drawn from the tap has no added nutritional benefit.

Bottled water is more expensive than gasoline, and costs hundreds of times more than tap water.

I’ll admit that I indulge in bottled water from time-to-time. A case of the stuff from Costco runs about $0.25 a bottle, and these bottles can be reused for a l-o-n-g time. Because I’m trying to cut soda from my diet, I’ve taken up Talking Rain, which is a carbonated water flavored with “natural essences”. I know this is an expensive indulgence, but it’s a good transitional beverage while I wean myself from stuff with sugar.

Maybe a year from now I’ll be able to subsist on only tap water.

How much should you have invested in the stock market? According to Money magazine, the rule-of-thumb has changed.

One hundred minus your age used to be the rule, and in fact the basic concept still makes sense: As you get closer to retirement (and go beyond it), you want to increase the percentage of stable fixed-income investments in your portfolio and cut back on higher-returning yet riskier stocks. But the old formula now appears to be overly conservative.

Today’s longer life spans mean you have to keep your money growing to last through a far longer retirement than previous generations enjoyed. Plus, it’s less likely than it would have been in the past that you will have a pension making a big contribution to your retirement income. What would be a better guide? Subtract your age from 120. That more aggressive formula should help you maintain your living standard through your retirement years.

I am nearly 38 years old. According to this formula, I should be 82% invested in stocks. (According to the old formula, I should be 62% invested in stocks. I agree — that seems conservative.) My concern is that while this formula seems to work fine for younger people, it’s rather aggressive for people in retirement. Even a person at age 70 would have 50% of her portfolio in stocks using the new rule-of-thumb. I think 30% seems much more reasonable.

[Money: Five rules of thumb]

Do you have a roommate? A partner? A friend to whom you’ve loaned money? Buxfer is a fantastic web-based tool for anyone in a situation with shared expenses. The site’s programmers write:

As graduate students, having food almost always meant eating out with a bunch of fellow sufferers somewhere on Craig Street. With such a high rate of accumulating bills, our memories and scraps of paper were just not enough. So we wrote a small simple script to keep track of our debts. And boy, did we love it! Well, we thought maybe the others would find this useful too.

You can learn more about Buxfer by:

• Taking a tour of the site
• Reading the blog with updates on developments
• Viewing the FAQ to get into the nitty-gritty

Where was this when I was in college? (Oh, right — the whole internet thing hadn’t come of age yet.)