pocketmint

Spending money to save money

We’ve done a pretty good job of cutting back on unnecessary expenses during this period of reduced income. ‘Magazine subscriptions’ seems like an obvious category to eliminate, right? Yet I kept mine. Here’s why: they save me way more money than they cost.

Consumer Reports

My first-ever magazine subscription, when I was 19 years old, was to Consumer Reports. Other ones have come and gone, but I’ve been a loyal nonstop CR subscriber for twenty years now, and I read every issue cover-to-cover. (The complete lack of advertising makes this a remarkably pleasant experience). I also pay extra for full access to their web site, because the search function is darn handy, and keeps me from having to store and sort through years of back issues.

A lot of what they report on is not of immediate use to me, of course — for example, we buy one car every decade or so. But every time we are ready to make a major purchase, I check CR. About 80% of the time they have a ratings list including feature and price data, plus a detailed explanation of how to assess quality of models not listed. In the past four years I’ve used CR to choose an oven, two televisions, a washer and dryer, a computer printer, a digital camera, and a gas grill — all of which have performed beautifully. That’s not even counting the small stuff, like comparisons of laundry detergent effectiveness, or — in the most recent issue — condoms! Plus they have frequent articles alerting readers to issues like credit card traps and health insurance pitfalls.

Cost: $42 per year ($23 print, $19 web).
Savings: several hundred dollars per year.

(If you want to be extra-frugal, get the web-only CR for $26 per year. I happen to enjoy the print magazine enough to warrant the extra $16, but the important information is all available online.)

Consumers’ Checkbook

A little over a year ago I added Consumers’ Checkbook to my arsenal. They’re sort of like a regional, service-focused version of Consumer Reports, offering both ratings and in-depth reports on various services. They’re only available in seven metro areas, but fortunately for us, one is Puget Sound.

So far this year I’ve used their ratings to select a veterinarian, a dermatologist, and a car repair shop. Checkbook doesn’t have a full report on doctors, so the dermatologist didn’t come with a price comparison or savings. But their feature on ‘doctors rated highly by other doctors’ did help me get someone good. I don’t know anyone locally who visits a dermatologist, so without Checkbook it would have been a crap shoot.

The vet and auto repair ratings, however, have arguably saved us hundreds of dollars this year alone.

Veterinarian:

I know plenty of people with pets, so finding a good vet has never been a problem. What’s harder is finding one that’s both good and cheap, relatively speaking. Here Checkbook’s price comparison between veterinarians was stunningly useful. It would have taken me many hours to do that research on my own. And look at the range!

There are big vet-to-vet price differences. For example, for spaying a 25-pound, seven-month-old dog, charges we found at local vets ranged from $90 to $532. Many of the lowest priced vets rated very high on our customer survey. It is possible to save money and also get top-quality care for your pet.

The vet I selected with Checkbook’s info turned out to be not just great but also very reasonable in cost. When our cat developed alarming symptoms earlier this year, it was worth a lot to know that I wasn’t going to be hemorrhaging money in tests and treatments.

Auto Repair:

Over the last couple of weeks, our trusty little 1999 Honda Civic has been exhibiting some alarming behaviors, such as a sudden loss of electrical function while going 60 mph on the interstate.

Car repairs scare me, because I know very little about automobiles, so it’s very easy to take me for a ride, so to speak. Fortunately, we have a car mechanic in the family — too far away to fix our problem, but at least he could make a long-distance guess at the cause and give me a rough idea of a reasonable charge for repairs.

His assessment: either the ignition switch (~$125 retail part) or the distributor ($450-$500 retail part). Either one would take, he guessed, about one to one-and-a-half hours of labor. (His shop charges $80/hour for labor, for comparison.)

Again, Checkbook reports wild variation in local costs:

There are dramatic price differences. For example, to replace the water pump and timing belt on a 1999 Ford Contour, we found prices ranging from $393 to $950. Hourly labor rates range from $60 to $140. There are many top-quality, low-priced shops. Indeed, we found no relationship between the prices shops charge and the quality of their work.

(Are you seeing a pattern here?)

Checkbook listed ten repair shops within five miles that earned their top recommendation for both price and quality. (Hourly labor charges in our immediate area ranged from $73 to $110.) Jak picked one on a direct bus route that had a $75 rate and customer comments extolling their ‘honesty and service’.

As Jak was the one to take the car in, I didn’t interact with them directly, but the results were impressive. The diagnostic mechanic couldn’t quickly determine whether it was the ignition switch or a distributor problem, but rather than suggest we replace both — which would mean more money for him, and the tack many shops would take — he persevered.

Ultimately he was able to confirm the fault was in the ignition switch, which he replaced. He charged us for one hour labor and — based on the information I got from Bill — something that must have been very close to his own cost on the part. Total charge: $120. It could easily have been double that at another shop for the very same repair; a lazy or dishonest mechanic might have tried the distributor and charged us $600 or more.

Cost: $14 per year (print and web).
Savings: several hundred dollars per year.

(Note that Checkbook subscriptions are for 2-year periods, and cost varies slightly among locations.)

I believe this qualifies as an emergency

I’ve been quiet for a while, going through a number of struggles that have left me without the — in the vernacular of my childhood, the ‘gumption’ — to keep writing frequently.  I’m trying really hard to get the spark back now, because I know in the long run the Pocketmint project is important to me.

Here’s a little of what we’ve been dealing with: about three weeks ago, the big corporate monster suddenly chewed me up and unceremoniously spat me out.  By innocently mentioning what I thought was a widely obvious event, I apparently violated some unknown policy of the parent company (the details of which remain vague to this day) and in under 24 hours received my walking papers — no mercy, no appeal.

This abruptly cut our income by half.  Then, last week, Jak learned that due to staffing cutbacks at Microsoft his hours will be cut to half-time.  This means one-quarter income, and total loss of health insurance.

The bad news is that the mortgage alone on our house come to slightly more than Jak’s remaining half-salary, so we’re behind before we even start.  The good news is that the mortgage is the only debt we’re carrying — we paid off the last of our massive credit-card debt a couple years ago — and we have a pretty decent cash emergency fund. I’ve been putting aside at least 40% of our take-home for the last two years; some of that we’ve pulled out again for major house improvements and additional (Roth) retirement funding, but we’ve got almost $30k in cash savings.

We can put off all the remaining house projects and hunker down to the bare essentials, and make it for maybe 6-8 months like this. Hopefully it won’t come to that; salaried jobs may be rare right now but I should be able to pick up some freelance or contract work. And Jak’s employer will be working on his behalf to try and increase his hours again. Right now he’s burning PTO to keep the insurance going through December. We’re trying to make this work, and hopefully something will get better before it all gets a lot worse, but we’re definitely in a new era now.

We had a talk with the kids last night, resetting their expectations about our way of life — we won’t be going out for sushi anytime soon, or ordering pizza; we won’t be funding any more weekend out-of-town trips for Michaela to watch her school athletic teams. They took it pretty well; Claire immediately wanted to know how we could cut our costs. Someone else must have previously explained to her about the connection between lighting and your electricity bill, because Claire instantly morphed into Lightswitch Nazi, turning off every light in the house that wasn’t immediately necessary, scolding all the while. We were amused.

I also made the point, which I hope Michaela at least will remember, that this is exactly why it’s important to save a lot of what you earn for a real emergency. She tends to spend money as fast as she gets it, which concerns me in someone about to turn sixteen. But only the difference between us and all those people with ‘foreclosed’ signs on their houses is going to be our empty credit cards and our emergency savings account.

If you have a job now and aren’t saving most of your money for emergencies, please start. You may think this is an isolated incident, but I fear it’s not; if the collapsing economy hasn’t touched you yet, it will. Be prepared.

(Photo by sunchild_dd.)

Should we worry about WaMu? and other disasters

Sorry for the recent silence; I’ve been having a rough couple of weeks on the Life front. No financial crises, though, at least not yet! Thanks for all the recent comments — it cheers me up to see so many people reading.

This week got off to an interesting start for us with the early-buzzard circling of Washington Mutual.  WaMu has been my primary bank for over a decade, and currently holds all of our liquid assets — currently around $30,000 in checking and savings.

Now, all of that money is covered by FDIC insurance, so I’m not worried about a possible bank failure costing me money in the long run. But what about the short run?

Marc Hedlund posted to the Wesabe blog Wheaties for Your Wallet yesterday with an explanation for “What happens to your money if your bank closes?”.  Most of it is based on the experiences of one NetBank customer who reported a delay of two to three weeks before he had access to his money after the FDIC shut NetBank down.

This was … alarming, in our circumstance.  But it didn’t match what I remembered hearing from my friend Stacy, also a NetBank checking customer when it folded.  To be certain, I phoned her up and grilled her on her post-closure financial access.  Here’s what she said:

• She never lost access to her money. Debit cards continued to work uninterrupted for purchases and at ATMs.
• She lost online account access for two days, over the weekend. By Monday morning everything was available online again. In the interim, phone support and balance queries remained functional.

I have no idea why her experience was so different from Wesabe’s informant, but that’s an almost unnoticable blip in service. I’ve been more inconvenienced by Comcast going on the fritz.

So I’m not going to rush off and open up a new non-WaMu checking account for bet-hedging purposes. But I think I will be making one other change …

Yesterday I heard an interview on NPR’s All Things Considered with Hurricane Ike refugees in Houston. I was struck particularly by two things: one, that stores in Houston were running out of food.  Wha? I mean, it’s not Manhattan Island here, we’re talking about one of the great highway hubs of the nation, and they can’t truck in nonperishables to restock?  And two, that all purchases were cash-only.  I couldn’t tell from the report whether this was because of logistical reasons (like power outages) or emotional ones, but it did give me pause.  Jak and I typically have no more than $40 cash between us, and often none at all.  Seattle is a lot safer than the Gulf Coast, but there’s always the chance of, say, a really big earthquake.

So on the list for this week is pulling about $200 out of our WaMu accounts into a Cash Stash. Our biggest problem then becomes keeping it out of the hands of the teenager, who keeps losing her debit card and thinks that we should be her personal ATM.

(Photo by zephyrbunny.)