What Prompts You to Change?

With gas prices at $4.25 a gallon in my area, everyone's talking about driving smaller vehicles, hypermiling, carpooling, etc. So I started to wonder what can really change people's behavior when it comes to handling money. Perhaps more importantly, how permanent is it?

The last time gas prices went off the chart, Americans collectively reduced the amount of driving we did and stopped buying SUVs. Some thought it was going to trigger a movement towards green energy as well as a realization for us to stop consuming so much oil. That consumption reduction didn't last long though. Gas prices lowered and we pretty much went back to our old ways.

Ways to Do Good for Others and Yourself

We all want to do what we can to help others, but sometimes it may seem like our time and budgets won't allow for it. I can think of a few ways to be efficient by combining contributions with ways to benefit yourself.

Every once in a while I catch myself hoarding things. It's less of a problem now, but I used to buy things compulsively more often. As a result, I ended up with things that I didn't need but were barely used. Because these items were usually new, I didn't like the idea of throwing them away. So when I can't deal with the clutter of stuff anymore, I tend to donate them to Good Will or similar organizations. It's really the best way to clear up your own space and help others at the same time. Do check each organization's website before you donate to make sure you're not adding to their burden by giving them things that they don't need. If you itemize on your tax return instead of taking the standard deduction, you can even write them off.

Pay Attention to the Math

I know, I know, math is a lot of people's least favorite subject, but as we know in personal finance, it can be pretty helpful. Unlike what we did in school, the skills required are pretty basic, and it'll give you the satisfaction of knowing that you're not getting ripped off. It's important to be able to make quick calculations on the spot for price comparison. Moreover, it can be helpful to know whether something is as discounted as a retailer claims it to be.

A few years back, I noticed a math error in Saks Fifth Avenue's advertisements (Off 5th to be exact). The company added the original discounted percentage to the additional discount percentage for the total percentage of discount. For example, an ad claimed that you'll receive 20% off of something and get an additional 10% off for a total discount of 30% off. That's simply not true! It's a total discount of 28%. I know it's not a significant difference (although if you're purchasing something from Saks it might be...). Those advertisements disappeared for a while, but they came back recently. So keep your eyes open for these false claims.

When Trivia Isn't So Trivial

Okay, today's blog post is devoted to me gloating. That's right! I'm super proud of myself because I saved someone hundreds of dollars by knowing somewhat of a random fact about state vehicle laws in California. I'm no lawyer, but I do keep an eye out for economic changes that might make my wallet fatter one day. Well, I guess it paid off. I didn't make myself richer, but it sure feels great helping someone out!

Recently, my co-worker came into the office late because he had to take his old car to the shop after a failed smog check. He had recently bought a brand new car and was trying to sell the old, barely functioning one to someone for a little under 1000 bucks. That was before he failed the smog check. Now, he has to either fix it or sell it at an even greater discount. A repair would probably cost him between $400-$1000, depending on the mechanic and cost of parts.

What Luxuries Would You Give Up?

MSNBC's Life Inc. blog recently posted the result of a survey showing a list of "luxury" items or services that are deemed untouchable by Americans. So which luxury item/service can most of us not do without? The internet, of course! 81% of people surveyed indicated that internet services are untouchable followed by 61% for basic cable and 42% for haircuts and coloring. I must agree with the internet category. If it weren't for the internet services I receive at home, it'd be much harder for me to maintain this blog! But I'd consider a lower speed option in order to save money.

I looked at the survey data a bit closer to compare the answers for people between 18 and 34 years of age (Gen Y and some Gen X) to the rest of the age groups. When asked whether they've made any cuts in the spending categories listed, the least amount of 18 to 34-year-olds answered yes. Furthermore, the highest percentage of people in this age group indicated "untouchable" for 26 out of the 36 expenditures listed.

Is Fear Costing You?

Fear of Disaster
Earthquakes, tsunami, and a nuclear crisis. We've been hearing a lot about these catastrophic events in the news lately. While my thoughts go out to those affected by these terrible disasters, it makes me sad to see some media outlets playing up the fear of everyday folks. I agree that we should be prepared for emergencies, but at the same time, we shouldn't buy into sensationalist reporting.

Headlines like "Nuclear Fallout!" aimed to attract viewers/readers when the actual reporting is about how the nuclear particles won't have much of an effect on those living in the U.S. is just irresponsible. That's why it's important do our own research to be able to distinguish between real news and needless panic before jumping to conclusion. Be reasonably concerned, but check the facts. Rushing out to buy all of the potassium iodide pills on the shelves or hoarding canned foods in the grocery store is just irrational fear. Don't let the anxiety of there being a chance of something happening stop you from performing day-to-day activities. It's costly to each individual as well as our entire society. Instead, focus your energy on communicating with family and work to make sound emergency plans.

Making a Mental List Goes a Long Way

A few years ago, while I was on break from college, I went grocery shopping with my parents. It wasn't a particularly exciting event (duh!), but I still remember it well. The reason is because I was surprised and extremely impressed by my parents' ability to spot overpriced items. They seem to have a mental database full of prices, which is completely different than the way I shopped for groceries back then.

When we walked down the produce isle to look at peaches, my mom immediate told me that it was too expensive and cited the price at another grocery store. Then, it was the lettuce, the ground pork, and the fish. They look at each product and pointed out whether it was worth buying at that particular store or not. My mom specialized in the vegetables and seafood while my dad knew the prices for meats and fruits. They'd say things like, “wait until the shrimps go on sale. They'll be almost as much as half off sometimes.” They should be hired by the Bureau of Labor Statistics to take data for the consumer price index (CPI)…and no computer spreadsheets necessary!

Don't Get Sidetracked By Instant Gratification

I was reminded while working out the other day of the need for instant gratification. It's part of human nature to want to see immediate results. I'm not gonna lie, it's something I struggle with on a daily basis. Hey, when I pay or work for something, I better see what I expected as fast as possible. I'm too busy/important to wait around!

Week 4 of boot camp just ended, and as I mentioned before, I'm feeling more energetic, my pants are looser, and I'm getting stronger. But when I weighed myself the other day, I gained 3 pounds. 3 friggin' pounds! Now you're probably thinking that I’m angry about nothing because it's just muscle weight. And yes, the logical part of me knows that. In fact, there's physical evidence, too. I lost about 2% body fat. But I've been working my a$$ off for a full month. It's frustrating and even slightly demoralizing to not see "results" in terms of weight loss. Why haven’t doctors/scientists/engineers figured out a way for me to be lazy, eat junk food all day, and still lose weight without any side effects? Yeah! What's up with that?

Groupon Mania – Deal or No Deal?

Groupon's been all the buzz recently. Within the last few months, it turned down a $3 billion buyout offer from Yahoo! as well as Google's $6 billion offer. Not such a wise decision if you ask me, the company’s business model can be easily imitated by others, in fact, it already has. Numerous websites have popped up within the last year or so offering local deals. Of course, to add insult to injury, Groupon made 3 terrible (not to mention insensitive) Super Bowl ads. Bad move, especially with a pending $15 billion IPO.

Okay, enough of me giving them business advice that I'm clearly not qualified to do. For now, I'd like to believe the executives at Groupon have some special secret no-fail business plan that the rest of us can't even dream of.

Anyways, I have been on the Groupon train since 2009. When I first started, Groupon wasn’t getting all of the media attention it’s getting now, and like most people, I thought it was a very unique concept. Not only are the discounts generous, the element of supporting local businesses is a huge plus. It’s a great site to discover small local mom and pop places. In fact, my first purchase was to a restaurant that I had been dying to try. Awesome, right? In a blink of an eye, I joined Living Social (now backed by Amazon), DealOn, and BloomSpot. Sites like Yelp, Gilt, and Active.com , which I was already a part of, began to issue exclusive deals to members, too.

Lessons Learned From An 8-Year-Old

While standing amongst all of the things I can't afford in a luxury retail store this afternoon, my attention turned to the interaction of a mother and her daughter about eight years of age. The woman was picking out designer purses and the girl curiously followed along. When the mom started to examine a purse, the eight-year-old nagged, "Check the price tag. Did you check the price tag?"

The first two requests were ignored, but by the third time the girl repeated herself, her mom impatiently replied, "Don't worry about it."

The little girl reached out, grabbed the tag, and gasped, "OH MY GOD! It's so expensive..."

Using the Buddy System in Your Financial Life

Boy, am I tired right now. It’s almost been three days since I updated, but I certainly haven’t been slacking off. In fact, I’ve been “working” way too hard. So what's this complaining about, you ask? Remember that group training membership I spent more than 30% of my "fun" budget on? I’m currently in the middle of my first week of classes. It’s been brutal, but I'm definitely going back for more tomorrow. Why torture myself? Well, there are three main sources of motivation for me: fitness, the chunk of my budget that I already invested, and my workout buddy.

Not only did I bring my own buddy, the class is set up for attendees to mingle and encourage each other. The idea is that by building a community, we'll be more accountable and more driven to keep going. I can tell you that it’s working. I haven’t felt this sore since I first started rock climbing, but I’m excited to go back there every night.

And this has to do with personal finance how…?

Go Ahead, Live a Little and Splurge

I stumbled across the Ask the Readers section on Wisebread yesterday. What do you splurge on? They ask. Well, that’s simple enough, good food, of course! With food trucks, unique ethnic cuisine, and all of those fancy schmancy Michelin Star restaurants, the SF Bay Area attracts foodies (me included!) like a giant magnet. But the more I thought about it, the more complicated this question seems to get. Maybe I just like going on tangents or maybe there’s actually something to this. The problem with the word splurge is that it’s relative. In my current state of only have a $100 discretionary fund, almost everything can count as being extravagant. Buying lunch with friends for $12 plus transportation costs? Well, that’s 1/5 of my monthly budget spent in one (half) day! Splurging? You can say that.

But like I said, it’s all relative. These are small ticket items in my tiny budget. The things that will truly impact my finances most immediately are the big ticket items. I guess this means small gadgets, food, coffee, and occasional clothing items are out of the picture. That leaves…oh! The thing that I’ve been budgeting FOR!

Curb Spending By Using Cash

I talked about how cash is still a superior form of payment in my last post. Now is the opportunity for me to put my money where my mouth is. It's the beginning of the month, and I haven't used any of my discretionary fund yet. This morning, I will go to the ATM and take out $80 in cash (out of my $100 budget) to spend for the rest of the month. What about the rest of the budget? Well, because I have to swipe my Chase debit card a total of 5 times a month to avoid a checking maintenance fee, I left that $20 out for that purpose. Besides that, all of my "fun budget," including food (non-grocery), clothing, and going out money will be spent in cash.

So what do I hope to achieve? I'm not purposely trying to piss off the people standing in line behind me, for sure. It's really to test the theory that using cash can help you to relate more closely to your money. By spending (almost) only cash this month, I'm hoping I'll be more aware of how much $$ is physically disappearing from my wallet. It might hurt more, but hey, I call that tough love!

Have you ever used this method to curb spending? Did it help? If you've never tried this cash only spending method, I encourage you to join me. It'll be more fun with more people =D

Why Cash Still Reigns as King

Okay, I have to admit, I used to be one of those people who roll their eyes when someone fumbles through their wallet to count their cash so they can pay with exact change. Wouldn't it be easier if everyone just swipe their card? As an engineer, the question of efficiency constantly lingers my mind. In this case, card swiping wins against cash, especially when there are 7 other people standing in line behind me and we’re all waiting for the person in front of me to finish paying.

Well, efficiency often comes at a price. In this case, the tradeoff presents itself in the form of interchange fees and wasteful spending.

Interchange Fee
If you’ve ever gone to a store that tells you it doesn't accept credit cards or that there’s a baseline spending you must reach before you can swipe, you probably have the interchange fee to thank for your inconvenience.

Getting a Verizon iPhone? That's so Last Year!

…Last year's model, that is. Yes, it's true. I had been waiting for the iPhone to come to Verizon for a long, long time. But when the oh so shocking "news" was announced, I rolled my eyes. Not because I'm an Android user, but because I honestly think those who rush to get a Verizon iPhone will be in for a rotten deal.

Why pay for last year's model when there's going to be a new model coming out later this year (probably during the summer)? Isn't having to endure using the same phone for 2 years hard enough? With the rapid turnover rate in cell phone technology, having a 6 month old technology while paying the same price is on the verge of unacceptable.

Netflix for Books?

A message popped up in my inbox yesterday morning for a 50% off deal for "BookSwim SF." I clicked on it and entered a self proclaimed "Netflix for Books" website. Intriguing. But how useful is this? In case you're not familiar with Netflix, here's how it works. The basic plan $23.95 a month. You can receive 3 books at a time with no time limit and late fees. When you're done with the books, you just send them back in a prepaid envelope. There are also higher priced plans, the most expensive being $59.95, where you can receive 11 books at a time.

The concept is clearly not new, but this application is especially interesting. Multiple websites other using this model have been popping up in the past year including Bookrenter.com, and Booksfree.com. Maybe this could be a good thing for the supposedly dying print media.

10 Things You Can Do Now to Save on Gas

Gas prices have been going up the past two months, and it doesn't seem like it'll come down anytime soon. To add insult to injury, former Shell CEO, John Hofmeister, predicted publicly that gas prices will be at around $5 per gallon by 2012. Ouch! Here in the SF Bay Area, $5 per gallon doesn't seem so far away already. A gallon of regular at the Chevron near me already sets me back $3.43. Even so, it's not practical to immediately switch to a more fuel efficient vehicle, but here are some things you can start doing right now to lower your gas expense:

1. Get all of that junk you've piled up out of your car. Adding weight to your car can make your car less fuel efficient. According to the Department of Energy, every 100lbs you add, it can reduce your efficiency by up to 2%.

5 Savings You Can Count On In January

Holiday Cards
Stores have to get rid of them somehow to make room for Valentine's Day gifts (it always catches me off guard how quickly the aisles are covered in pink and red). So they have to sell at a huge discount. You can buy next year's supplies now. Chances are, the people you send it to won't know or care that it's a design from last year. Store them somewhere you can find, though, or you'll end up spending more to buy new ones.

Calendars
If you are looking to purchase a calendar, wait until around January 15. They're likely to be discounted for around 75% off of the original price. It probably won't hurt you that much to have it 15 days late. If you can't wait until the 15th, at least wait until Jan. 1 to buy one. It'll probably be 50% off then.

Winter Accessories
A lot of retailers roll out their spring collection during this month.

Don't Get Locked In By Your Internet Provider

My parents are not the most internet savvy people in the world. They know the basics like how to check email, visit websites (mostly bookmarked already), and perform Google searches. When it comes to tasks with more variations, like setting up an account or installing software, though, they always need help. So yesterday, I had the pleasure of setting up Gmail accounts for them.

They each have had the same email address for more than a decade. It's pretty amazing considering that I can't even remember the account I created at the same time. So why did they all of the suddent decide to get new ones? It's because they originally set up accounts through Comcast, who also happens to be their internet provider. Recently, the rate for their phone+internet+cable package went up, so they've been thinking about asking for a lower rate and potentially switching companies. In other words, they don't want to be stuck with the same internet provider forever.

Be Accomplished!

My last post listed some ways to get started on organizing your financial information. If you've done those things already, bravo! Here are some additional goals to set your site on when you're doing your financial planning for the year:

Pay Down Debt
Did you go all out with your Holiday shopping this past year? Are you dreading that credit card bill? That's only one of the many ways some of us end up in debt. While we can't undo what had already happened, we can certainly make it less painful. If you're in debt, chances are you're paying more in interest that your bank is paying you. Sure, the funds you invest in may earn you more, but it's not guaranteed. Moreover, some credit cards have interest rates above 20%.