Saturday, February 2, 2008

Are You RichMorning Roundup: Post-Borat Edition

Here are some of the gems I found stumbling around the internet this morning after a crazy weekend in which I saw Borat … more on that later, though. Let’s get to the goodies.

I Call BS; The Worst Investment Advice I’ve Ever Seen provides a detailed and very specific critique of the, uh, suboptimal investment offerings of Lamont Trading Advisors. In short, you pay them 1% so that they can “invest” your money for you in treasury notes - in other words, you pay them 1% for a free service. I hear Tom Sawyer is having a lot of fun with that whitewash. (@ experiments in finance)

Did I Just Waste $50 On Firewood? Yes, you did just waste $50 on firewood. Firewood is a net energy loss if used in a normal fireplace and only a slight gain if used in a dedicated fire stove, like the one my old man used to heat his garage in the winter. We used to chop wood with our bare hands walking both ways uphill to school, sonny, none of this spending $50 for a dab of firewood on that newfangled Craigslist. Y’hear? (@ my money blog)

I Don’t Think The Wall Street Journal Gets It. I don’t think they get it either, my friend. They want three figures for the same investment information you can get all over? What a rip-off! Get with the program, WSJ … there are plenty of good writers giving away their writing on the internet. Oh… wait… that wasn’t your complaint about the Wall Street Journal? (@ all things financial)

The Eight Best And Worst Money Moves You Can Make Much like announcing to the world that Rosebud is a sled, Enough Wealth reveals this deep, dark secret behind personal finance: it’s not one-size-fits-all. Good article, but a memo to Enough Wealth: kindly don’t bury your content between two solid pages of advertisements. Everyone would like to make a dollar or two from their blog, but I felt like Ned Beatty going down the river in Deliverance by the time I found my way down to the actual content. (@ enough wealth)

This Post Not Sponsored By Interest.Com You know, if you write a blog about personal finance and you try to, you know, actually improve your personal financial situation by having ads, you must be a sellout. Sellout! Sellout! Don’t look at my menu bar! Sellout! (@ blueprint for financial prosperity)

Saving Big Money on a Computer Upgrade

Recently, I provided some extensive consultation to a couple looking to upgrade their home computer. They had purchased the machine in 1999 and were looking to buy a replacement machine for it with a budget of $1000, and they wanted my advice on how to maximize their purchase.

If you are a techie, please note that I am writing this article for home users who are not strongly adept with computer selection and buying. I am not interested in scaring people off by suggesting they build their own machine or anything; I’m merely making suggestions on how to optimize home computer upgrade expenses for non-technical people.

When I arrived for the consultation, the husband showed me a machine that he had spec’d out from Dell. The package he was excited to purchase had an Intel Celeron D processor running at 2.80 GHz, only 512 MB of RAM, a 120 GB hard drive, a DVD-ROM drive and a DVD-RW drive, a 17″ CRT monitor, a copy of Windows XP Pro, a Dell Laser Printer, a Bluetooth wireless keyboard and mouse, some nice speakers, and a small power supply. This package added up to $991.




I read through the specifications twice and I asked him why he had made some of these choices. He said he wanted to “upgrade” all of the features he had on his own computer. So, we went and looked at his own unit and discovered that it was very similar to what he was purchasing from Dell, but many of the components were duplicated.

The first rule of saving money on a computer upgrade is determine which components actually need to be upgraded. You do not need to replace your printer or your keyboard or your mouse or your monitor (unless you want to) or your speakers or your power supply. If you’re technically savvy, you can also salvage many internal parts for future usage.

My client already had a printer that he was largely happy with, a wireless keyboard and wireless optical mouse he was very happy with, and speakers that he was also happy with. He also had a wonderful power supply sitting under his desk, so he didn’t need that, either. He seemed genuinely surprised that he could use parts from his old computer on his new one.

Next, we looked at his software options. The second rule of saving money on a computer upgrade is never re-buy software, ever. He had already purchased a copy of Windows XP, so we scratched the copy of Windows XP Pro. He had been considering getting a copy of Microsoft Office for the machine, but I showed him Open Office instead and we decided to use Open Office for now.

Once we made these choices, we realized that we could re-spec the machine. I asked the couple whether they were committed to their budget of $1,000 and they agreed that even with the savings, they were still budgeting that amount. So we looked at machines again.

The third rule of saving money on a computer upgrade is get the most processor you can within your budget. This will always save you money in the long run, because most everything else can be upgraded with ease. We moved his machine from a Celeron D to an Intel Core2 Duo running at 2.13 Ghz. This will ensure a much longer life for their computer without worrying about changes in operating systems. I felt completely confident telling them that this processor would easily be able to handle the next version of Windows.

We also moved their system from 512 MB of RAM to 2 GB of RAM. The fourth rule of saving money on a computer upgrade is the more memory, the better (within budget, of course). We were also able to get a 19″ flat panel monitor rather than the 17″ CRT monitor. The total cost difference? $18 over the system my client had spec’d.

To summarize, here are the steps you can take to maximize your next computer upgrade:
1. Look at all of the components you have and decide which ones can be reused. The most common reusable elements are the mouse, keyboard, printer, monitor, speakers, and power supply, though you may spot other things. This also includes software, like Windows XP and Microsoft Office. Then simply don’t buy them.
2. When deciding which system to buy, the one component you shouldn’t skimp on is the processor. If you’ve maxed out your processor, then get as much memory as you can. Once you’ve done that, get as much hard drive space as you can. Other items can be upgraded later and they’re much easier and less expensive.
3. For compatibility reasons, it’s almost always worth it to go with a major name-brand vendor, because software is designed to work with their components. You might be able to get a slightly better deal with items from Joe’s Komputer Shack, but if you’re not technically proficient, it may be quite challenging to get it to work and if you have to call someone to fix things, you’ll be losing money.

You can save yourself a lot of money in the long run using these methods. I estimate that by the end of the lifetime of the computer, some smart thinking at the start will have saved my clients $1000 and likely some frustration as well.

De-Crapify

A few weeks ago, I was rummaging around in my closet looking for some old photo albums when I came across a large cardboard box with the letters PS2 written on it in huge letters. With a nostalgic smile, I popped open the box and sure enough, there was my old Playstation 2.

A lot of nice memories flooded over me: long nights playing Gran Turismo 3 and Grand Theft Auto 3 with my college friends, mostly. But as I looked at the games sitting there in the box with a thin layer of dust covering them, it occurred to me that the games had sat in my closet untouched for better than a year and I had no real interest in hooking it up and playing.

Instead, I took those games and sold them on eBay, netting me $300 in the process, money which is currently earning a good deal of interest for me as it sits there waiting on a rainy day. I did a similar thing shortly afterwards with my Magic: the Gathering cards from my high school days, which netted me several hundred dollars, and I followed this with a purging of some of my old hardback and trade paperback books that I won’t read again, netting me a few hundred dollars more. In short, I now have an extra thousand in the bank for a rainy day and a lot more space in my closet for other things that are important to me now.

It was really quite easy: I just went through my closet, realized I wouldn’t ever touch this stuff again and took it to eBay. Particularly good items to sell include DVDs, hardback and trade paperback books, video games, and pretty much anything collectible (except baseball cards - the market for these is pretty low and I discovered that my piles of 1986, 1987, and 1988 baseball cards were nearly worthless). If you’re not going to use or look at something in your closet ever again, now is probably the best possible time to liquidate it and put that money somewhere where it is working for you instead of building up dust in your closet.

How Being a Nielsen Family Saved Us Hundreds of Dollars

Several months ago, my family was invited by the Nielsen Ratings to be a “Nielsen Family,” in other words, we were given a few dollars to spend a week filling out a booklet detailing every television program that we watched in a given week and who watched it.

Given that we generally only watch a small number of programs (and we diligently watch them… Lost, anyone?), we were quite happy to give a small ratings boost to our favorite programs (sadly, a bit too late to help the recently cancelled Arrested Development, but I digress). We diligently filled out the booklet and at the end of the week, we were about to send the booklet out when I spent a bit of time leafing through it.

I noticed that almost every program we watched during the week aired on a broadcast network, with only two exceptions (if you must know, they were Battlestar Galactica and The Wire). That meant that we were paying about $50 a month to watch two television programs that, if we waited a bit, we could watch on DVD rentals (or perhaps receive a season as a gift).

We sent the guide in, but my wife and I (just to be sure) kept a viewing log for the next two weeks and, sure enough, excepting a few minor news events, we only watched Battlestar Galactica and The Wire on cable. Given that this was costing us $50 a month, we elected to cancel our cable and replace it with a small antenna that enables us to receive the broadcast networks quite well (ABC, CBS, NBC, Fox, PBS, and a faint CW).

This plan can save you money, too. Spend a couple weeks logging what you watch. Then, evaluate that data: are there any packages you’re paying for that you’re not watching? If there are, cancel them and put the cash towards more important things instead.

How I Saved $300 On Software This Year

I used to be an active follower of Microsoft Office and McAfee, but the constant upgrade cycle and payments to continue getting antivirus updates got old. So I did some research and discovered free, top-notch alternatives to these money hogs for use at home.

Instead of using Microsoft Office, I’ve switched to using Open Office. These applications replace every major feature that I use Office for (Word, Excel, and PowerPoint - I don’t use Outlook thanks to Gmail and Google Calendar) and at a very agreeable price - $0. Best of all, I can save in the Office formats for when I send documents to friends and associates.

My replacement for McAfee Antivirus is Clam Win. It does everything McAfee did for me - automatic updates, regular hard drive scanning, checking my emails for viruses - without paying out the nose for updates or hogging a bunch of memory and slowing down my other programs. It’s really the best of both worlds, and it’s got a nice cost, too: $0.

In my spare time, I often set up and fix computer problems for people, and I’ve been asked if I can get free antivirus or free Office programs for people. Now, instead of telling them to burn a lot of money or else pirate software, I just set up these two programs and they have everything they need. Happy customers and happy me.

A Gas Station Trick That Puts Money In Your Pocket

The next time you fill up, spend an extra few minutes at the gas station performing a simple, free task, and you’ll put a few dollars right in your pocket.

The secret is air. Most gas stations have a free air pump for your tires available on the side of the station. A lot of stations will also loan you an air gauge to check the tire pressure. The procedure is very very easy and, if you don’t know how to do it, ask the person inside (say that someone/your brother/etc. suggested you check your tires for air pressure but you don’t know how). Almost always, you’ll be able to get someone to show you how.

How does this save money? Each tire that’s underinflated costs you on your gas mileage - on average, it’s about 3.3% of your gas mileage, which amounts to about $0.07 a gallon given current gas prices. I usually spend about 40 gallons a month, so that adds up to about $3 a month, simply from checking my tire pressure once a month or so.

Another tip: if you are willing to look at your own air filter once a month or so - also very simple, and explained in your car manual, but a bit more work - and brush it off really well, you can save about $0.15 a gallon, which means about $6 in my pocket each month without much effort and no supply costs.

But what if you don’t want the inconvenience of airing up your tire? It does take a bit of time, so a way to get around it is to have it done at each car maintenance. Ask them to check the pressure on your tires; most places will do this and air your tires up as a complimentary service along with the maintenance you’re getting (at least, both of the places I’ve frequented over the years have done this). So, don’t hesitate to ask for it when you’re getting maintenance on your car.

October 2006 Review - Net Worth +79%, Debt -1%

I sat down for my monthly financial review recently to see what sort of progress I’d made in the last month. I generally break things down by evaluating my assets, my debts, and then my net worth, and then using these numbers, I attempt to set goals for the coming month. This is a useful exercise for everyone to do, simply so they can keep tabs on their overall assets. Let’s break it down.

Assets: My assets increased in value by 7.3%, mostly due to some consultation work that I invested the income from. This is more than the normal increase in monthly assets, because I am contributing a lot of assets each month into eliminating debt. The best news was that my personal savings increased by a substantial amount - again, thanks to my consulting work. I have now reached an amount in my emergency fund that I am comfortable with, so I plan on funneling as much as possible into debt reduction in the near term.

Debts: My debts as a whole decreased by only 1%. While this seems low, I am still climbing out of a large pile of debt. This decrease is mostly due to a large payment on my auto loan as I hit the home stretch on getting that loan paid off. I have virtually no credit card debt (a tiny balance from my primary use card is the only difference), which is a tremendous relief compared to the five figure credit card debt I had several months ago.

Net Worth: Last month, my net worth went into positive territory for the first time since high school. This month, my net worth increased 79%. That percentage is really high because, well, my net worth is really low and I had a healthy increase this month. Soon, this percentage will mean something, but right now I simply smile at it, knowing that I’m out of the hole.

Goals for November: My goals for the coming month are straightforward:
1. An asset increase of 1.5%. This is more in line with what I expect from a normal month, now that the credit card debt has been eliminated.
2. A debt reduction of 2% Now that I have a healthy emergency fund, my next goal is paying down debts. I really hope to surpass this goal and bring about a re-evaluation of a monthly goal for debt reduction at the end of November.

I don’t plan on setting any difficult goals due to the upcoming holiday season (I buy most of my gifts that I give during November). Though I am committed to improving my financial situation as a whole this month, I am not going to set the bar so high that I cannot cross it. I plan to set stronger goals for December.