Money Whisperer 2.0

Reward Yourself! ....but still save a few bucks in the process

2012-02-24T20:24:00.000-08:00

So you've worked hard and you are careful with your money and now you want to reward yourself with something. I completely agree with that scenario. What good is spending time trying to figure out how to save money if you never get to splurge and spend some of it?

One of the keys to long term success in saving and investing is occasionally rewarding yourself by spending money on an activity or buying something you really want. In my situation I start a new job this coming Monday. I was able to arrange having week days off between jobs. It was going to be 3 days but my previous employer asked for one more day and I thought I still have 2 days off and the extra day's pay will pay for part of my reward.

My reward I decided was a brand new high end laptop which had the highest processor speed currently available and a 17.3" screen. My current desktop computer was put together by my best friend Mike who is a computer whiz. He provided me that desktop as a favor during a time when funds were tight (my divorce) and I will always remember that.

I have save/made over $3K using the tools from my prior blogs since I started it in June 2011. So now that I am spending close to $1K for a laptop and a copy of Microsoft Office (yes I paid for it) does that mean I have abandoned my quest to save money? Not at all as a matter of fact I saved money on this purchase using some of the methods that I wrote about in prior blogs! First I searched many web sites looking for the best price. None of the online retailers had the laptop cheaper. The closest was $15 more expensive not including the shipping.

So how do you save money and still spend close to $1K? Well you take advantage of every deal or reward program that surrounds the purchase that's how.

Here is how much the laptop would have cost if I drove to Best Buy (which is a mile from my house) and purchased the HP Laptop and Microsoft Office.

$ 799.99 HP Laptop
$ 99.99 Microsoft Office
$ 83.70 Sales Tax (9.3% Phoenix)
$ 983.68 Total
$ 61.19 Gas (I will explain later)
$1,044.87 "Regular Price"

So if you used no strategies that would be your out the door cost. Let's see how much I reduced that amount using strategies from prior blogs or common sense ideas.

Strategy #1

Phoenix Sales Tax is 9.3%. Chandler's Sales Tax which is only 1 mile East of me is only 8.8%. So I simply went to the Chandler Best Buy (4 miles) and paid $4.50 less in Sales Tax.

Strategy #2

Instead of paying Best Buy directly, I purchased $1K in Best Buy gift cards at Fry's and received double fuel points by purchasing gift cards THEN paying Best Buy with those gift cards instead of paying Best Buy directly.

So by purchasing $1K of gift cards I received 2000 fuel points. Each 100 points are worth $.10 a gallon on a fillup.

I used 1000 points to fillup my tank today and was able to purchase gas at $2.639 instead of the posted price of $3.639. I filled my tank with 16.862 gallons of gas so I saved $16.86. Because I still have another 1000 points I will assume that the next time I fill up my car I will save another $16+ ($1/gallon discount * 16 gallons). So now I have saved approx $33 just by doing this. Kroger is in many cities so this is not just an Arizona thing. Save Mart in the Central Valley (California) also has a similar program.

Price Before Discount

Price After Discount

Strategy #3

Since I am paying for the $1K in gift cards at Fry's anyway I might as well pay for it by using my Perk Street Debit Card which gives me 2% back on every purchase I make with the card. So in addition to getting the fuel points I also will receive a rebate of $20 back from Perk Street Financial. By the way since I got the Perk Street Debit card (Sept 2011) I have earned over $200 in cash back rebates.

Oh yeah additionally I paid for my gas with my Perk Street card and earned $.88 on that purchase as well. So that's $20.88 altogether.

Strategy #4

Since I purchased the items from Best Buy I joined the Best Buy Rewards Zone program which gives you $5 of store credit for every $250 you spend at Best Buy. Since I spent almost $1K then I earned approx $20 in Best Buy store credits. It's not cash but it's something you get back.

OK let's see how we did today:

$ 4.50 from Buying the laptop in Chandler with lower sales tax
$33.00 from discounted fuel by purchase Best Buy gift cards
$20.88 from Perk Street Financial for using my Perk Street Debit Card
$20.00 from Best Buy Reward Zone for joining their frequent buyer program
$78.38 Discount by applying moneywhisperer 2.0 strategies.

$78.38 is a 7.5% discount to the amount paid above $1,044.87. So another person who did the same transaction today but did none of these things got a discount of 0%. What would life be like if you could constantly get a discount of 7.5% each time you purchased something.

Summary

Again the goal is not to deprive yourself of all of life's joys in the name of saving money. If an activity or an item is something you really want go get it. Where you make it up is all the other things that you have to buy or have to do. Don't over pay for those things.

Dan
moneywhisperer2.0@gmail.com

Dividend Reinvestment - Boring way to accumulate wealth

2012-02-18T06:12:00.000-08:00

Dividend Reinvestment ... zzzzzzzzzzzzzzzzzz. I know it's not as exciting as buying Apple or Google. Learning about dividend reinvestment as a strategy is about as interesting as someone giving a speech on compound interest.

First what is dividend reinvestment and why should you care? In simple terms here's how it works. Companies who pay dividends typically do so quarterly. In most cases you would receive a credit to your brokerage account for the amount of the dividend. Let me go over a real life example of a dividend I received on 2/15/12.

KMI (Kinder Morgan) paid a quarterly dividend on 2/15 of $.31/share. This was a payment made for those who were the owner of record on 1/31/2012. In other words if you owned the stock on 1/31/2012 you got paid the dividend even if you sold it the next day. Novice investors often think they can buy shares the day before the payment and receive the dividend. It doesn't work that way.

I own 500 shares of KMI in my Self Directed Roth IRA so my dividend was $155. So I had a couple choices upon receiving the money.

1) Keep the cash in my brokerage account
2) Purchase more shares of KMI and pay a commission ($7.95) to do so
3) Elect dividend reinvestment which automatically purchases more shares with no commission

If I had elected to purchase more shares of KMI by myself I would have only been able to purchase 4 shares (as of 2/15) of KMI at $32.245 (the price on 2/15) since you cannot purchase fractional shares on your own. So I would have had to pay a $7.95 commission to purchase my 4 shares or almost $2/share.

Since I elected the automatic dividend reinvestment (through Fidelity, although other brokerage houses will do this), my dividend was automatically reinvested into 4.807 shares (4.807 * $32.245 = $155). Buying shares by myself would have only allowed me to buy $147.05 worth of shares because of the commission. With dividend reinvestment my entire $155 was put towards more shares.

NOTE: Whether you choose to take cash or invest in additional shares via dividend reinvestment, you still have a taxable event either way. The dividend payout is taxed the same no matter what you do with the funds once you receive it, even if it's reinvested.

At the current dividend payout rate this allows me to purchase $620 worth of additional shares of KMI yearly without coming up with any new money. The web site Seeking Alpha has a good article about the power of reinvestment including how you could have turned an investment of $35K in Proctor and Gamble stock into $1 million over 40 years. Yes I know 40 years is a long time so for me this strategy is perfect for a retirement account scenario where you are not touching the money and you can wait and be patient.

Remember you can take the dividends and keep it in cash in your brokerage account and make less than 1% or you can reinvest those dividends automatically (without paying commission) into additional shares easily. I own KMI, T (AT&T) & VOD (Vodafone) in my self directed self directed Roth IRA and I reinvest the dividends automatically.

The key question is do you believe in the companies future. If you do dividend reinvestment is a great way to build wealth over time.

Dan
moneywhisperer2.0@gmail.com

Saving Money for your Child? Ditch the Traditional Savings Account

2012-02-13T15:28:00.000-08:00

Many parents put money away for their children in a traditional bank savings account. While it is great as parents that we are putting money aside in an account for our children the question is why a traditional savings account? Below is a chart from bargaineering.com showing the top 3 highest yielding savings accounts (that have low minimum's to open and no monthly fees) nationwide as of 2/10/2012.

Sallie Mae MMA	0.90% Fri Feb 10	Intro rate: 0.00% Intro months: 0 Rate post intro: 0.90% Compounded daily	To open: $0 To avoid fees: $0 Monthly fees: $0 Check writing: Yes
Discover Bank Savings	0.90% Fri Feb 10	Intro rate: 0.00% Intro months: 0 Rate post intro: 0.90% Compounded daily	To open: $500 To avoid fees: $0 Monthly fees: $0 Check writing: No
First Internet Bank of Indiana MMA	0.85% Fri Feb 10	Intro rate: 0.00% Intro months: 0 Rate post intro: 0.85% Compounded monthly	To open: $100 To avoid fees: $4,000 Monthly fees: $5 Check writing: No

As you can see your child's account is going to be losing purchasing power since the rate of inflation is expected to far outstrip the paltry .90% you can get in the highest savings account. So let's do the math and assume that you have $1,000 put away in little Johnny's account for all of 2012. At a rate of .90% he will have earned a total of $9 in interest. Oh and since the account is in his parents name that $9 is subject to federal income tax so let's say $3 goes to interest. For a year's worth of money in a savings account you now have $6 to show for it. That is not enough for a Vente double mocha double whip somethingchino at Starbucks.

So what should you do then? Well as parent's the first thing you need to do is first look at your own finances. Since you know from above that at most you are going to make 1% interest that's where you start your analysis.

First question. Do you have any debt other than your home mortgage and/or car loan? If you do then forget about putting money in a savings account for your child until you pay off your revolving debt (Credits Cards etc.). Whenever I tell people this the answer I get back typically is "If I do that then I won't have any money set aside for my child". I hate to tell you this but if you have $1,000 in a savings account for your child and $5,000 in credit card debt then your child really has no money because the family is a net $4,000 in the hole.

Let me quickly illustrate why you should use that $1,000 to pay down that credit card debt instead of putting it in a savings account at today's paltry rates.

The average card credit card interest rate is 16.75% as of January 31, 2012. So let's do the math and see how you are doing at the end of 2012 assuming one of two scenario's. The first scenario is that you keep the $1K in your childs savings account and you have $5K on your credit card. The second scenario is that you take the $1K from your childs savings account and pay down the credit card to $4K.

Scenario 1:
Interest earned on savings account at rate of .90% = $9
Interest paid on credit card account at rate of 16.75% = $838
Net Expense = $829 ($838 less $9)

Scenario 2:
No interest earned on savings = $0
Interest paid on credit card account at rate of 16.75% = $670
Net Expense = $670

So by paying down your credit card balance at a high interest rate instead of putting the money in a savings account at a low interest rate means your expense is approximately $160 cheaper in only one year. Don't you think your child could use that extra $160 a year down the road?

Ok now suppose you are fortunate enough through discipline and hard work that you don't have any credit card debt. Should you then put your money in a traditional savings account? The answer in my mind is still a resounding no in the current low interest rate environment.

The worry most people have right now is the safety of their money. And yes putting money into an FDIC insured account does guarantee the safety of your money. However making less than 1% interest in an environment where the cost of living went up over 3+% in 2011 then you are literally losing 2+% in purchasing power each and every day you keep your money in that savings account. So what are your options? Equities (or the Stock Market) is the obvious answer.

Can you lose money investing in the stock market? Absolutely. Can you mitigate your risk by buying large established companies with great cash flow AND get a dividend that is at least 3X what you can get in a savings account? Absolutely!

Finding large established companies that consistently pay dividends is as simple as going through various industries and seeing who the dominant company is:

Payroll Processing? ADP is the first name that comes to mind.

ADP currently pays an annualized dividend of $1.78/share. This works out to a yield of 2.93% which is 3X what you would get in a savings account. They also have raised the dividend amount each year since 1999. That is 13 straight years of dividend increases.

Restaurants? McDonalds Corporation is the largest restaurant chain in the world.

McDonald's currently pays an annualized dividend of $2.80/share. This is a 2.8% yield, also 3X what you would get in any savings account. The dividend has been raised every single year since 2002.

Software? Microsoft needs no explanation of their place in the technology pecking order.

Microsoft pays an annualized dividend of $.80/share. This comes out to a yield of 2.7%. They have raised the dividend every year since 2005. Since the Window's operating system controls probably 90+% of all PC's world wide and XBox being a huge hit; it's safe to say that Microsoft is a safe investment.

This list could go on and on and includes:

2.5% Home Depot - Largest Home Improvement Chain
5.4% Verizon - Largest Wireless Phone Provider
2.4% Wal-Mart - Largest Retailer in the World

The bottom line is I have just listed 6 companies who are clearly the dominant company in their respective industries (yes I know you could argue Apple is more dominant etc). Each of these companies would give you a return which is 200% to 500% better than what you could get at a bank. With the dominance each of the above companies holds in their industries and the history of raising dividends, this is as close to being a safe return on your money as you can get without having FDIC insurance or putting your money under a mattress.

Could Greece default on their debt? Could the European Union collapse? Could the world end in 2012? All of those are possible. I think the more likely scenario is that each of these 6 dominant companies will continue to generate good cash flow and continue to pay out that cash in the form of higher dividends each and every year.

You are probably wondering why I didn't bring up Google or Apple etc. Well those are volatile stocks and outside of the discussion of safer investments where the risk of capital loss is low.

Summary:

Fear makes us avoid doing things that we need to do. There is no substantial reward without some risk involved. What I tried to lay out above is a way to substantially increase your reward over a traditional bank savings account, while keeping your risk as low as possible.

Don't let fear stop you from investing for your child or your family's future.

Dan
moneywhisperer2.0@gmail.com

Need Extra Money to Supplement Your Income? Read on...

2012-02-11T14:30:00.000-08:00

So you've got your full or part time job and if you are like 99% of us you don't feel like you make enough money for the lifestyle you want to live. Well first of all....get over it lol. No really most of us do want to make a little more money than we do for various reasons. So what are your options? You could get a new higher paying job? Well with unemployment still hovering over 8+% it's hard enough to find a job much less one with higher pay. What about leveraging your skill set to make extra money? Or if you have free time, doing odd jobs for extra money or selling items that you make or skills that you have (creating resume's for instance)?

Because of the internet it is easier than ever to put buyer and seller together (see Ebay & Craigslist). At the same time it has become easier for you to connect with employers for odd jobs or tasks. There are 2 sites in particular that offer you the ability to leverage a skill or craft that you possess to make extra money.

Gigwalk.com is a site that allows you to leverage the use of your smart phone. Here's how it works; business want some information about their store or a competitor but can't be at all places at all times. So they contract with Gigwalk.com to "hire" someone to take a picture or a video of something remote. You the user get money deposited directly into your paypal account and the business get's the information they need without having to send an employee out to check on a location. It's like having agents available anywhere you need them. The amounts are small but if you are in the area how hard is it to take a picture or video and email it?

How does it work? Well you log into the app and look for "gig's" in the area where you are. Then you find a gig, perform the task, submit the task to the business and once it's approved then you get paid.

The payments range from $3 to $90 per task. New users only get to do the smallest task with the lowest pay, but as you built up your reputation (do many tasks successfully so they know they can rely on you) you get a "street cred" score. Those who do the best job and are the most reliable will end up getting the higher paid tasks. The App has been available for Iphone and is now in Beta for the Android according to Gigwalks web site. Imagine just for being out and near a business you can make a few bucks. See the details of how gigwalk works here

What would you do for $5? Or what do you need done that you are willing to pay $5 for? That is the brainchild of the site called fiverr.com. The premise is that there are lots of talented or not so talented people that are willing to do things that they are good at. There also people who would rather have someone do things for them instead of doing it themselves. The only rule is it has to be $5. You offer your services and pay for them through the web site. Fiverr takes some commission and the deal is done. Here are some of the services being offered on today's site: (Below is snapshot of one item being offered)

I will put you in any picture you want for $5

i will insert a you into a picture of your favorite place, or with your favorite celebrity... (byblaze30318 )

I will convert your ebook or document to kindle format
I will professionally review YOUR Linkedin Profile and make recommendations for Success
I will proofread and edit anything up to 1000 words
I will teach you how to use Vlookup, Hlookup or Pivot Tables in Excel
I will listen to you vent with very supportive listening for 15 minutes.

As you can see the possibilities are endless. I think if you skilled at setting up powerpoint presentations you can offer that service for $5 for people who frankly just don't want to learn and will only be doing it once. If you make bracelets for other small trinkets that is also another avenue to reach thousands of people without trying to go to craft fairs etc.

I have done this once showing someone how to use vlookup just to see how the site worked. It was very easy. Because of my job I haven't really had time to do this but for those with a little extra time and want a little spending money it's one way to make a little more money.

It works this way: You offer your gig or service for $5. You be notified by fiverr when someone orders your product or service. 48 hours after performing the service you get $4 to your paypal account. The $1 is the sites commission amount. On the purchasing side you order the product or service, pay $5 via paypal or credit card, then get your work. Once your work is completed and sent to you, you have 48 hours to ask for changes. You then review the person selling the work or service.

Summary: If you are willing and have time and a little skill there are ways to supplement your income. Remember unless you do this for hours at a time this is only "fun money" and probably not a way to make a living.

What are you currently doing to try and earn some extra money?

Dan

moneywhisperer2.0@gmail.com

"Greed Is Good"....but it's a bad Stock Market Strategy.

2012-02-03T04:29:00.000-08:00

Mythical Financier Gordon Gecko who coined the phrase "Greed is Good"

Ah yes we all remember Gordon Gecko and the famous line from the movie Wall Street. The exact quote from the movie was "...Greed, for lack of a better word is good"

While greed may be good in many area's it typically get's you in trouble in the stock market. Yes I know you could have purchased Apple 10 years ago and never sold and now be sitting on a fortune. But for every Apple you have dozens of companies who were not as successful and their stock much less profitable.

Remember you only have a paper profit until you sell a stock. People spend hours/days/months calculating when they are going to find the right moment when to buy a stock. Rarely though do people have a plan of when to SELL a stock. The point is you need to have an idea what the sell plan is for every stock you own.

Let me tell you a story here about greed. When I worked in Food Service Distribution I was asked to run a training session at a sales meeting on ways to increase the margin % for sales individuals. This was during the height of the recession and unit growth had slowed to zero or in many cases backwards. So I knew that I had to find ways for our sales staff to make more money assuming there was very little unit growth available in the marketplace.

I then brought up the issue of Card Counting which is a method whereby a player in a casino keeps track of cards that are dealt while playing Blackjack in order to gain an advantage on future hands. Most people knew what card counting was and that it is illegal in casino's. So I asked them "Why do card counters get caught and escorted out of the casino?". Most said well it's illegal etc. I countered by saying "Casino's throw out card counters because they are greedy". The casino could care less about the guy who makes $30 card counting and then leaves the table as long as they don't see him over and over. It's the guy who can't help himself and pushes the bets to the point the casino pit boss stands up to take notice. There is a book written by a guy who spent 20 years card counting. Why didn't he get caught? Because he never won more than $50 at a time. He would go to 6-10 casino's a night but never win more than $50 in a casino/night. He pocketed approximately $50K a year on top of his hourly wage as a mechanic. I am not advocating cheating the point of this story I am getting across is to take some of your profits off the table. While "letting it ride" sounds like a great deal there is nothing worse than having a stock run up 500% only to watch it come all the way down or worse buy more on the way down.

My advise was to take your profits when you can and not get greedy. So how do you do that. Well you need a plan. There is no right way but I will go over one approach that I use. First thing you need to do is segment out what types of stocks that you have.

If you hold stocks like Kinder Morgan (KMI), Vodafone (VOD) or AT&T (T) like I do then you are not looking to sell in the short term. These are all dividend producing stocks which "pay you to wait". They all yield over 4% annually. For stocks like these which are mature and typically less volatile you would typically set for yourself both a sell below and sell above price.

First things to note that these are companies followed by dozens of brokerage houses. So you are not going to have more information than the pros do. For dividend yielding stocks my rule of thumb is that if the stock price goes down by a higher percentage than the annual yield (during the first year) then in general I sell and just realize that I picked a bad entry point. I used to say to myself "I am not selling until it gets back to my cost basis". That thinking allowed my 5% losers to become 25% losers or worse earlier in my investing life. There were even times it got within a few dollars of my cost where I could have sold at a small loss but I held on waiting to get to my cost basis. The stock then reversed course and I eventually sold at a 40% loss instead of a 2-3% loss..

RULE #1: Sell your losers quickly and move on.

The key to rule #1 is to not let small losses become big losses. You can be wrong 3 out of 4 times and still make money if you keep your losses to a minimum and let your winners run.

Now what do you do if your dividend producing stock runs up in price suddenly. Let's take a look at AT&T which has a 6% yield.

If you look at the chart you see 2 moments when the price went up over 10%. The first time from March to May and the second time from early December to January. My rule of thumb is that if the stock advances by twice the amount of the yield (or in this case 12%) then sell some of your holdings. Why sell? Because you are pocketing 2 full years of dividend yield in one fell swoop. In most cases of mature stocks the price varies up and down during any 12 month period. So you could have sold in May 2011 with your 12-15% gain from late March 2011 and just waited. As you can see from the chart there were at least 2 chances to buy back in at or near your March 2011 price (Sept 2011 and Nov/Dec 2011).

RULE#2: If your dividend producing stock advances more than twice the dividend rate then sell some of your holdings.

A good general rule is to sell 25% to 50% of your holdings in this situation. If it's a large mature company then in most cases you will be able to find another entry point down the road lower than what you sold the stock for. You are selling in order to lock in your profits. This would allow you to potentially buy back the same amount of shares for less money and have money left over or what's called "the house money". Alternatively you can find another stock to invest in or just sit on the cash.

Of course there are exceptions to every rule and you need to do what your personality and risk tolerance will allow. When Kinder Morgan (KMI) ran up it was related to a major change in news (the acquisition of El paso) not because of normal fluctuations. Because of that I have held my position despite the run up because the situation changed at the company.

RULE#3: Don't ever use the excuse that you don't want to pay taxes by selling now.

Do not ever let taxes become a reason whether to sell a stock or not. I have people emailing me saying "well I don't wan't to have to pay taxes on that gain if I sell". If you find a good selling point and avoid selling then you stock goes down what have you gained? If you are paying a large amount of taxes because you had a big capital gains number then bravo! My personal goal is to become the largest tax payer in the state. If I achieve that goal I will be satisfied.

The above rules are just MY rules. But the key to successful investing is having a plan. So have a plan when you invest in equities so that you do not make emotional snap decisions when the price of your stock goes up or down. Keeping the emotion of our your buying and selling decisions will yield you better returns over time. Remember, stock in a company is not something to get attached to or fall in love with like your children. It's just a place to park your hard earned money until you no longer want it there.

Do you have rules of thumb that you use buying and selling equities?

Dan
moneywhisperer2.0@gmail.com

2012 Portfolio January 2012 Update: The Running of the Bulls

2012-02-01T20:47:00.000-08:00

The running of the bulls in Spain is an annual tradition (albeit a dangerous one). What also seems to be a tradition is the stock market indices rising during January (or what's called "The January Effect"). Why is that you say? The January Effect is a result of tax-loss selling which causes investors to sell their losing positions at the end of December. The January Effect is predicated on the idea that these stocks, which have been sold off to realize the tax losses, will be at a discount to their market value. Bargain hunters step in and load up on these laggards and this creates buying pressure in the market.

During January Potash Corporation of Saskatche (POT) -NYSE was purchased at at $41.77/share on January 6th, 2012. With a January 31 closing price of $46.74 this gave POT a gain of 9.81%. The MWP gained 2.06% during January 2012. While the broader market gained more during January 2012.

The Motley Fool Web Site has an excellent big picture article on Fertilizer companies and how that benefits Potash Corporation long term. I believe Potash Corporation is going to be a huge winner and I will add to my position every chance I can while the stock is significantly down from it's highs.

Kinder Morgan (KMI) treaded water during January. However KMI is scheduled to pay a dividend of $.31/share during February which the MWP will received $43.40 in dividends. The dividend will be reinvested in additional shares at no cost because the dividends are being reinvested and not taken as cash. KMI's number one goal is to return capital to it's shareholders. The upside is the upcoming purchase of El Paso which makes them the dominant player in the pipeline industry. Jim Cramer of CNBC and Mad Money fame remarked in this Video interview with CEO Richard Kinder that Kinder Morgan is "...the best idea since we started other than Apple"

Chipotle Grill (CMG) is up over 8% since our initial purchase. Chipotle just announced earnings today and showed a 24% gain in earnings per share. Same store sales (stores open over 1 year or more) had increases of over 10% again.

Vodafone (VOD) is the lone holding which has declined in value. Vodafone is being hurt by two things. The crisis and uncertainty of Europe where VOD has a large amount of their business is one issue hanging over their head. The second issue is the announcement by Verizon Wireless (of which VOD has a 45% stake) and AT&T that while millions of Iphones and Droids were sold; the subsidy to carry the Iphone ate into profit margins. I still believe the wireless business in the US ultimately is a 2 person race. Verizon Wireless will continue to dominate and those results will filter down to VOD and the investment community will begin to realize that VOD is a more pure wireless play than Verizon Inc. (who still has their legacy landline business),

Results since Inception of the Portfolio:

2012 Portfolio*	1/31/11	Original Cost	$ Gain / (Loss)	% Gain (loss)
Kinder Morgan (KMI)	4,546	4,152	394	9.49%
Chipotle Grill (CMG)	3,673	3,394	279	8.22%
Vodafone (VOD)	1,896	1,918	(22)	-1.14%
Potash Corp. (POT)	467	426	42	9.81%
Cash	111	111	-
	10,693	10,000	693	6.93%

Market Indices
Dow Jones	12,633	12,185	448	3.68%
NASDAQ	2,814	2,646	168	6.34%
S&P 500	1,312	1,255	57	4.57%

I am still looking for good entry points for AT&T (T) and Weight Watchers International (WTW).

With a gain of almost 7% in January I may be looking to take some money off the table in anticipation of a market pullback. Right now I am happy with all of my holdings and would purchase more if given the opportunity with the exception of KMI which I feel is fully valued. KMI however has an excellent dividend so I am holding on to KMI.

What companies are you investing in now?

Dan
moneywhisperer2.0@gmail.com

Express Scripts & Walgreens Disagree....You Profit

2012-01-28T08:56:00.000-08:00

Express Scripts vs. Walgreens

Express Scripts...I had no idea what that was until late December 2011 when I started seeing dozens of stories about how Express Scripts (one of the largest Pharmacy provider network's) and Walgreens (the nations largest Pharmacy) had a dispute.

The bottom line is that every pharmacy provider network has contracts with individual pharmacies. Express Scripts had an agreement with Walgreens just like they have agreements with CVS, Rite Aid, etc. The problem is that the agreement had an expiration date of December 31, 2011. Most agreements are renegotiated in the background and you never know about it.

Because of various disputes over billing and fees those of you who's employer uses Express Scripts (the third largest RX provider network) no longer can go to Walgreens to get your prescription filled AND billed to your insurance company. So what does that mean for you? Well because of this dispute, all other Pharmacies see an opportunity to take that RX business away from Walgreens. How much of Walgreen's business is Express Scripts? Try $5 Billion or 7% of Walgreens Sales . As you can see below it's big business and everyone wants a piece of it. So for those of you with Express Scripts who are inconvenienced, now is your time to strike a few deals with your new RX provider.

Just in this weeks Ad Circulars there were 3 different ads that gave you store credit for transferring your prescription. Here is a summary of those deals: NOTE: None of these deals require that you be an Express Scripts customer

Safeway - Transfer a prescription to Safeway and receive a $25 Reward Coupon for shopping at Safeway. The catch is that you can only use your $25 reward coupon if you spend a minimum of $50 in ONE shopping trip between 1/4/12 and 3/31/12.

Albertsons - Transfer a prescription to Alberton's and receive a $20 gift card for use at Albertson's. Deal expires 3/31/12. You must present the coupon from the Ad. Even though this deal is only $20, there is no condition of you having to spend more to use your coupon. So you can spend $20 at Albertson's and be on you way.

Fry's (Kroger) - Transfer a prescription to Fry's and receive a $25 credit attached to your VIP card. There is no minimum purchase required to use your $25. The credit shows up when you shop at Fry's and checkout using your VIP card. The checker will ask you if you want to use your $25 credit.

CVS - You don't get anything extra for transferring a prescription but you do get $1 Extra Care Buck for every 2 prescriptions filled. So basically you get $.50 every time you fill a prescription. Considering that you get nothing for filling a prescription at Walgreens then I would say fill it at CVS. This is assuming that the copay is the same at both places.

Logic tells us that $5 billion in sales is too large for Walgreens to pass up. So I am sure the disagreement will be resolved soon. In the meantime take advantage of these money back offers for doing something you were already going to do....fill a prescription.

Dan

moneywhisperer2.0@gmail.com

Corporate Dividends - The Money Making Secret

2012-01-21T09:38:00.000-08:00

Corporate Dividends. Aren't those things that people who are retired get? I have gotten over a dozen emails from people who really don't fully understand the concept of Corporate Dividends. What I will show you here is how dividends can play a huge role in how much you make in the stock market.

First let's define what a dividend is from investopedia.com:

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current price, referred to as dividend yield.

Ok in simple term's if you own stock (shares) in a company, what a dividend does is to return some of your money to you in the form of cash or additional shares. You invested money in the company to make money right? Well periodic dividend payments is the businesses way of starting to give you some return on your money. You also make money if the stock price rises...but remember it's not a real gain unless you sell and the money is back in your pocket.

We spoke about dividends in a blog last year entitled Can you still make money in the stock market? Yes you can!. That blog showed you companies that we all know that pay you dividends quarterly. These are large (in many cases) multinational stable companies.

Why should I buy a company that pays a healthy dividend?

Dividends for these types of companies typically range from 2-6%. So if you purchase $1,000 worth of company X with a 5% dividend yield, then in one years time they will have paid you $50 in dividends.

I get a couple arguements against buying boring companies that pay dividends:

1) It's only paying X% why bother I'll just put the money in the bank.
2) You can't make money in the stock market I am just going to buy a mutual fund that tracks the market

Let's look at those arguements that it's not worth making the effort to find a company that pays healthy dividends and whether you should just buy a fund that mirrors the overall market.

Let's use Verizon Inc. as an example and compare their return to the overall market and to putting your money in a savings account.

On January 19, 2007 Verizon shares closed at $37.25. Yesterday Friday January 20, 2012 Verizon shares closed at $38.97. So on the surface you are thinking that if I purchased 100 shares of Verizon 5 years ago for $3,725 that today I would have shares valued at $3,897.

I know your first thought is why did I have all that money invested for 5 years to only get a return of $172 or a 4.6% return over 5 years! What you are missing is that during those 5 years Verizon paid dividends quarterly.

The dividend amounts paid per year per share

2007 $1.67 or $167 ($1.67 * 100 shares)
2008 $1.78
2009 $1.87
2010 $1.925
2011 $2.00

That means over the 5 year period you owned the stock you were paid $924.50 in corporate dividends. So taking that into consideration let's look and see how you really did:

$3,897.50 Current Value of 100 shares
$ 924.50 Dividends Received over 5 years
(3,725.00) Original Cost of Shares
$1,097.00 Gain over 5 years

Based on your gain you made over 28% over those 5 years including dividends. This is a 28% gain on a stock that was basically flat for 5 years!

The S&P500 was at 1,430 on 1/21/2007. Last Friday 1/20/2012 the S&P500 closed at 1,315 a 5 year loss of 8%. So purchasing shares in an industry leading company who pays dividends like Verizon actually put you well ahead of the market.

How do I know when to purchase a dividend stock?

So if these dividend paying companies are mature and they pay dividends my upside for stock appreciation is limited right? Well here is where you need to find a good entry point. If you can find a good entry point your return can far surpass the stated dividend %.

Let's take KMI for instance. A boring pipeline company paying a 5% dividend. KMI (Kinder Morgan) is relatively close to it's 52 week high. So if you buy KMI now you will get your 5% yield. The key is to find an entry point. You want to look for a pullback in the market or some news about the stock that people to temporarily. See what Jim Cramer of CNBC thinks of KMI during a conversation with Chairman Richard Kinder

I had been tracking KMI since it's went public early in 2011. I found an entry point in at $26/share in October of 2011. I didn't find the absolute lowest point ($24) but then you will never be able to know the exact bottom.. I did know that the stock was off it's high of $32. I had studied the company, was confident in the management in place and saw a business that had high barriers to competitors entering the marketplace in an industry that was booming (Natural gas).

Currently the stock is approx $33. So while I purchased KMI for the dividend by finding a good entry point I have turned my 5% dividend yield into a 31% gain (26% price appreciation + 5% dividend). Remember I didn't even find the lowest price and I had that much appreciation.

Now let's be clear that this it not a normal situation because KMI did an acquisition after my purchase. But the point is by finding a good entry point and not purchasing shares at it's peak you leave yourself some price appreciation. AT&T is another example. I looked at AT&T the day the T-Mobile deal was denied by the US Government. The stock was down $1.50 or 5%. The stock has since recovered to the price before the merger was denied. Because of people overreacting you could be sitting with a 5% price appreciation while waiting for AT&T to pay you an additional 6% yearly or an 11% gain. Try getting that at any bank in 2012.

In the next week I will talk about when to sell your winning stocks.

Summary:

They key for me to dividend investing is finding a company that pays consistent dividends. The second key is to find a good entry point. Be patient. If you look at the stock chart of almost any company over a 12 month period there are always times when the price is lower. So you need to be patient and look at the price of a stock you are interested in all the time not just the day you hear some good news about the company.

Dan
moneywhisperer2.0@gmail.com

Save money on electricity in 2012

2012-01-08T22:33:00.000-08:00

Luckily for most of us we won't have to resort to powering our house with a mountain of potato's. Electricity outside of your mortgage/rent, student/car loan or food might be the largest monthly expense that you have. So what can we do to reduce this expense? Well there are literally thousands of ways to do this. I am going to focus on 10 which are relatively simple to apply that give you a good savings.

10. Select a time of use plan from your electricity provider.

The big electricity users are appliances like the dishwasher, washing machine, dryer etc. If you could save money by using those appliances during times when the electricity is cheaper would you do it? If you do have some flexibility ask your utility provider about a plan that gives you different rates based on the time of day. Generally the plan will give you cheaper rates during nights and weekends when the demand for power is lower. My utility provider (SRP) has a plan which costs approx $.11/kwh (kilowatt hour) 24 hours a day OR a plan that charges approx $.08 during off peak times (peak times are 3-6PM M-F). The rates for peak times are $.30/kwh. I have saved hundreds of dollars per year using plans similar to this one.

9. Run your dishwasher more efficiently

Do you run your dish washer half full?. The dishwasher uses the same amount of electricity whether you run a full load or have one dish in it. So if you are able to wait an extra day in order to run a 100% full load instead of say 80% you will pend 20% less on electricity. Another way to save money is to press the "air dry" button. In a typical dish washer load 25% of the electricity is used when you use the "heated dry" cycle. Just let the dishes air dry. Start the load at night before going to bed then empty it in the morning or the next evening. Just by doing that you have saved 25% off of the cost of running your dishwasher.

8. Save money with your refrigerator

Your refrigerator runs longer to keep it's temperature when you don't have as much in it. So if you don't have much in your refrigerator fill up the empty spaces with jugs of water. Thaw frozen food in the refrigerator which will keep the temperature in the refrigerator lower. Similarly let your food cool off before placing it in the refrigerator. Have a plan before you open the refrigerator door. Meaning don't open the door and stand there and stare at the contents. That only makes the refrigerator work harder to maintain the temperature.

7. Turn off lights when you leave a room

If you are leaving the room for more than 5 minutes turn off the lights in that room. The cost savings is not significant for that one light in that one room. It's the accumulation of lights in many rooms over and over that ends up costing you.

6. Save money with your washing machine

First thing is that you rarely if ever need to wash clothes in hot or warm water. The washer cleans the clothes just as good in cold water. Additionally the cold water is easier on your clothes and will help them last longer. Heating the water is what costs the most money. Second, use a little less detergent than what is recommended on the package. I think you will find that your clothes are just as clean. If you use 25% less detergent that is instantly 25% you have saved on laundry soap expense.

5. Save money with your clothes dryer

The key here is to not make your dryer work harder than it needs to. So clean out the lint catcher after EVERY SINGLE LOAD. A clogged lint catcher makes the dryer work harder and longer. Check the outside of your house where air exits the house. One time I found a bird who set up a nest in the outgoing vent. The dryer ran for an abnormally long time and the clothes were not drying. Lots of sites say line dry your clothes. For me that's not practical but what you can do at a minimum is take out heavy items like towels, let them dry on a portable drying stand for 5-6 hours then put them in the dryer so they come out soft still yet the dryer doesn't have to run so long. Lastly run your dryer consecutively so that the dryer doesn't have to heat up each time you run a load.

4. Use power strips to save on ghost energy

Ghost energy is electricity that is used for items that are plugged in but in standby mode. Most of us have dozens of items that are plugged in which use small amounts of electricity in order for you to be able to flip them on in an instant. This is easy because it's a single off button. At a minimum start by just flipping off the power strip to your electronics at night and when you leave for work.

3. Save money with your oven

Use the oven back to back if you are able to so you don't have to heat the oven twice. Try not to open the door often during cooking as that lets the heat out. Turn off the oven 5-10 minutes before the food is done as the temperature you have it set at will keep for that long. Use the microwave whenever possible instead of using the oven. If it's winter time, leave the door open on the oven once it's off to heat up the house.

2. Use Compact Florescent Lightbulbs (CFL)

Lighting accounts for approx. 20% of your homes electricity use on average. You can generally replace a 60 watt incandescent light bulb with a 15 watt CFL. Doing that alone can save you 75% on your lighting cost. Since lighting is 20% of your overall electricity usage then you are saving 15% just by replacing your bulbs. Oh yeah they last up to 8 times longer than incandescent bulbs.

1. Use Space Heaters and Portable Fans

Instead of heating or cooling the entire house use space heaters and fans. They use very little electricity and they are only used when you need them.

Bonus:

This may only work in Arizona but with my utility provider you can pay with your credit card but they charge a $4.50 fee. I inquired and you can charge up to $500 each time. With an average bill of $200/month you can spend $500 pretty quick. So I have decided to use my Perkstreet 2% cash back Debit Card and charge $500 every time so that I pay $4.50 for charging but I get $10 back for using my Perkstreet card so I make $5.50 each time I do this.

What are you doing to save electricity in your home? Let me know by commenting below or emailing me at moneywhisperer2.0@gmail.com

Dan

"POT" added to 2012 Portfolio

2012-01-07T08:00:00.000-08:00

No despite the rise of "medical" marijuana, I have not gone off the deep end in recommending you invest in the Mary Jane. What I am doing is adding 10 shares of Canadian company Potash Corporation to the Money Whisperer 2.0 Portfolio at the closing price from Friday January 7th of $41.77. Why Potash? Well this is a very small investment but it's a bet on a macro world trend. That trend being the exploding world population. So what does Potash do? Here's a good summarized snipped from wikipedia about Potash Corporation:

"The company is the world's largest potash producer and the third largest producers of nitrogen and phosphate, three primary crop nutrients used to produce fertilizer. At the end of 2010, the company controlled 20% of the world's potash production capacity, 2% of nitrogen production capacity and 5% of phosphate supply"

"Potash" in simple terms is a fertilizer compound that increases crop yields. As the worlds population continues to explode, the need to increase crop yields to feed the world is indisputable. Crop yields worldwide pale in comparison to the US. Potash Corporation will benefit from the worlds food needs.

The two biggest emerging economies (China and India) both account for 7% of Potash Corp's revenues. Those percentages can be expected to grow as those populations and economies expand. Potash Corp has 20% of the Potash market.

So if we know the population is expanding and this is a great trend why isn't everyone doing it?

Inside a Potash Mine in Canada

First of all you can't just make Potash at home. There is no topsy turvy Potash maker you can hang in your back patio.

Second is that Potash has to be mined. So you have to know where you can get it and then you need to spend an estimate $4 BILLION dollars and 7 years lead time to bring a potash mine into production. This is a huge barrier to competition.

Potash Corporation pays a small dividend of $.07/share quarterly or $.28/share yearly which gives you a dividend payout ratio of .7%.

The portfolio as it stands including the 10 share Potash Corp (POT) purchase: See the original portfolio announcement with the opening purchase prices here in my 12/9/2012 blog.

2012 Portfolio*	1/7/12	12/9/11	$ Gain / (Loss)	% Gain (loss)
Kinder Morgan (KMI)	4,605	4,152	453	10.90%
Chipotle Grill (CMG)	3,490	3,394	96	2.82%
Vodafone (VOD)	1,950	1,918	32	1.67%
Potash Corp. (POT)	418		418
Cash	111	537	(426)
	10,572	10,000	572	5.72%

Market Indices
Dow Jones	12,360	12,185	175	1.44%
NASDAQ	2,674	2,646	28	1.07%
S&P 500	1,278	1,255	23	1.82%

Although Kinder Morgan has an incredibly bright future, the price looks like it's getting ahead of itself. I am going to watch KMI closely.

Other Stocks I am watching now:

AT&T (T) - I know how boring can you get? Well boring to the point of this stock yielding close to 6% yearly. Also despite the fact that the T-Mobile deal didn't go through and AT&T having to pay T-Mobile a $4 billion dollar walk away fee where is T-Mobile now? All this did was strengthen the hold that Verizon Wireless (45% owned by Vodafone) and AT&T have over the entire wireless market. At this point all other companies (Sprint, T-Mobile etc), are only bit players in the wireless market. Be honest at this point don't you spend more time on your smart phone than even your home computer?

Weight Watchers International (WTW) - Ok who among us couldn't stand to lose a few pounds. The problem is that we can't do it on our own for the most part. Whether we are too busy or just don't know where to start, the average weight has soared over the years. I know this sounds like a Brick and Morter play but did you know they have 1.7 Million paying online subscribers. This isn't your parent's Weight Watchers anymore.

What are you investing in now? Let me know by commenting below or emailing me at moneywhisperer2.0@gmail.com

Dan

Weekly Ad Circulars - Find the Deals ... Ignore the Noise

2012-01-05T20:31:00.000-08:00

Another year (Jan 5, 2012) and another round of weekly sale circulars from Supermarkets, Drug Stores & Discount Retailers. It seems like I barely get to looking at them and it's already a week old and I am getting a new one. The key to successfully navigating these ads are to quickly scan and find items that you use. If you find an ad that has nothing you use and/or need toss it in the trash right away.

I took about 10 minutes looking at all the ads and came away with some real smokin' deals and some hyped up "non-deals". Here in my opinion are the real deals and the fake deals:

Safeway - Spent $75 and get a $10 coupon for a future shopping trip. (Average Deal)

This one is pretty straight forward. You spend $75 after all discounts in one trip between 1/4/12 and 1/8/12 and you get a $10 coupon at Safeway. What is the downside? Well you have to use the coupon by 1/15/12. There are the typical exclusions of what you can buy to get to your $75 which are the usual (Alcohol, Prescriptions, Tobacco, etc)

This one is good if you shop at Safeway and if you spend over $100 that will be enough to get $.10/gallon at Safeway gas stations. If you don't normally shop at Safeway I would pass because you need to go twice.

Albertson's - Transfer a prescription and receive a $20 Albertson's Gift Card. (Real Deal!)

This one is good as long as you can find an Albertson's. This is similar to the deal you get at Kroger's (Fry's) where if you transfer a prescription you get a $25 gift card. Hey if you are getting a refill on a prescription just transfer it. Your copay may only be $10-15. This would mean you actually get $20 in Albertson's credit for spending $10-15. Getting paid to get your drugs. Now that's a deal. This is a good deal and one I haven't seen Albertson's do in the past. The offer is good through 3/31/2012.

Albertson's - $500 Albertson's Gift Card Giveaway (Sucker Deal)

Normally I would say ignore these types of deals where one person in a store will win. This coming from someone who won a washer/dryer set in Safeway years ago just by entering a drawing at a Clorox display years ago. If you don't shop at Albertson's don't do it on the off chance you might win $500. Albertson's is overpriced. Now if you are already going there to transfer a prescription to get your $20 then go for it. It's a random giveaway between Jan 4 to Jan 10, 2012.

Kroger (Fry's) - Load $40 onto an Itunes gift card and get $6 store credit (Real Deal!)

If you use Itunes and just charge the songs on your credit card anyway why not just load an Itunes card at Fry's and get $6 to spend at Fry's. This is a good deal. Fry's is the most price competitive supermarket and that's another $40 spent on gift cards which should give you 80 points towards fuel discounts at Fry's/Shell/Circle K. If you use Itunes it's a no brainer but I wouldn't go out of my way if you don't normally use Itunes.

CVS - Spend $30 on certain items and receive $10 on a CVSCash Card. (Sucker Deal)

OK I am not a big fan of CVS. I would avoid this offer like the plague. First of all CVS is way overpriced. Good luck finding the "specially marked items". I find this deal to be way too confusing. I can probably find $10 to spend without buying something I don't need but probably not $30. They are effectively giving you a 25% discount since you are ultimately spending $30 to get $40 dollars worth of product. Don't do it. Save your money. Get your stuff at Costco/Sam's Club or Walmart/Target.

Now there is a way to play CVS and I do it all the time. How many times have you wanted to buy gum or something like that and ran into Circle K or 7-11. Well at least in my area there are so many CVS's that I have decided that if I need gum (which is basically the same price everywhere) I now go to CVS. I pay the same price as I would at a Circle K but by using my "Green Tag" I effectively earn $.25 every time I use it.

Here's how it works. By "saving the environment" and not taking a bag with your purchase. You give them this tag to scan and you get $1 store credit for every 4 times you scan the tag. So if gum costs $1.37 whether I go to Circle K or CVS then I effectively am paying only $1.12 for the same gum.

The Tag costs you $.99 cents and you get your money back the 4th time you use it. So when I buy gum I just stop in CVS take my gum and earn $.25 each time. Over the last 2+ years sine they introduced the "Green Bag Tag" I have had it scanned 96 times which has earned me $24 in store credit (it shows how many times you have scanned it during your lifetime on your receipt). I rarely shop at CVS for anything other than a soda or gum.

Spend 10 minutes each week looking at the ads, find what's useful and toss the others. There are savings to be had you just need to find them.

Dan
moneywhisperer2.0@gmail.com

Moneywhisperer 2.0 - 2012 Portfolio on Fire!

2011-12-31T07:16:00.000-08:00

This is the first of what will be month end blogs measuring the performance of the "Moneywhisperer 2.0 2012 Portfolio". The first measurement period is from December 9 to December 31, 2011. The portfolio was first published in a blog HERE on the weekend of December 9th.

The Moneywhisperer 2.0 2012 Portfolio outperformed the market for the first time period. See the results below:

2012 Portfolio*	31-Dec	9-Dec	$ Gain / (Loss)	% Gain (loss)
Kinder Morgan (KMI)	4,602	4,152	450	10.83%
Chipotle Grill (CMG)	3,377	3,394	(17)	-0.49%
Vodafone (VOD)	1,962	1,918	45	2.32%
Cash	537	537	-	0.00%
	10,477	10,000	477	4.77%

Market Indices
Dow Jones	12,218	12,185		0.27%
NASDAQ	2,605	2,646		-1.54%
S&P 500	1,258	1,255		0.19%

*KMI - 140 Shares, purchase price $29.60, current price $32.87
CMG - 10 Shares, purchase price $338.60, current price $337.70
VOD - 70 Shares, purchase price $27.28, current price $28.03

December 2011 was a good month for the Moneywhisperer 2.0 portolio. The main driver was the continued rise of Kinder Morgan and investors recognizing the value of Vodafone.

Kinder Morgan is being recognized by many as one of the big winners in the countries trend toward the use of Natural Gas. The web site Seeking Alpha wrote an excellent article about Kinder Morgan and the advantages they have in this booming industry. Kinder should have a dividend in February 2012 which I am going to reinvest in additional shares (there is no commission to do this).

Chipotle Grill took a big dip during December but it has since come back up to within a dollar of our original purchase price. I continue to believe in Chipotle and the trend towards healthier fast casual dining. Forbes has an excellent article about Chipotle and their former owner....yes McDonalds Corp.

Vodafone rose during December by 2.3%. Investors are starting to recognize the value of Vodafone owning 45% of Verizon Wireless. They own almost half of the money making part of Verizon. They do not own any part of the old legacy landline business.

Companies being looked at:

Potash (POT) - The world population is exploding. How are we going to feed all of these people? Potash Corp is the worlds largest supplier of potassium compounds which help increase crop yields. This is more of a long term play I am tracking.

Leap Wireless (Leap) - You know Cricket Wireless. But did you know they have their own nationwide network? While the company is struggling they have valuable bandwidth. With Verizon recently purchasing $3.6B of bandwith, AT&T & Sprint need more bandwith to operate their networks. Sprint and Leap both use CDMA technology so that's a natural fit.

What companies are you looking at now. Let me know.

Dan
moneywhisperer2.0@gmail.com

Save Money on your RX Prescriptions

2011-12-24T18:18:00.000-08:00

Prescription drug costs. I can show you stats showing how much the cost or prescription drugs have increased over time. But for most of us we don't need a government statistic to show us that. We can tell by the dent it makes in our pocketbooks. Is this an expense that we have control over and just have to pay higher copays etc for? The answer is yes and no. We can't necessariliy control what the RX co-pay amount our employers plan will be set at. What we can do is take some steps which I will detail below to lower your over all prescription cost.

Mail order your prescriptions. Many of us take what are considered "maintenance drugs". These are drugs that we take on an onoing basis for things like high blood pressure, diabetes etc. For the plan I am on you can get a 3 month supply for a copay of $50. A 30 day supply from your local pharmacy would cost you a copy of $25. Simply doing this will save you $100 a year.
Ask your doctor or pharmacist if there is a generic available. Many drugs have a generic version available. The difference in cost can be significant. I was prescribed a 7 day name brand antibiotic recently. The prescription from the doctor said to fill the name brand drug and in small print on the bottom had a box that said "generic available". Many of us are sick by the time we get to the pharmacy and just want to get our drugs. I noticed that and decided to ask the pharamacist tech what the co-pay cost difference was. It turned out that the name brand had a copay of $50 and the generic had a copay of $15. So merely by noticing that little box was checked I saved $35. How many times have we all gotten drugs and not realized we could have saved money using a generic?
Use Walmart's $4 Generic Drug Prescription Program. Walmart or Sam's Club will sell you Generic Prescription drugs if they are on the approved list for $4 for a 30 day supply or $10 for a 90 day supply. Target has basically the same program available.
Seek out a "Prescription Assistance Program" at this link to get help with prescription costs. This web site is a conglomeration of 475 organizations that offer help. It's like a one stop shop for those that need help with prescription expenses. This site is primarily designed to help those with lower incomes.
Work with your doctor and let him know your income limitations. Doctors in many cases have box loads of samples that they can provide you with or can research similar drugs or generics. Most doctors will do what they can to save you money if asked.
States that have prescription programs to help those with lower incomes. You can find a list of those states here at this link.
Use the web to search for the lowest cost in your area on common LEGAL prescription drugs. While this web site is not perfect, it's another tool at your disposal. This is particularly useful for those without insurance.

Many of us (myself included) have prescription drug coverage through our employer and have never really given much thought to how to save on prescription drug costs. Those of you without insurance for prescriptions have been paying a premium for their drugs for years. For each of you only some of the idea's may apply. Hopefully some of these will work for you.

I am curious to find if anyone has any other idea's you can share of how you save money on prescription drugs? If you do please share them by commenting below or email me at moneywhisperer20@gmail.com

Dan

Get rich one day at a time...

2011-12-19T21:03:00.000-08:00

Get rich quick is the American dream. Sure it looked easy on "In Living Color" with the Home Boy Shopping Network. In reality unless you win the lottery or have an inheritance waiting you are going to have to make some trade offs.

So how do you do this?

Spend less than you earn...

If you spend more than you earn you will always be behind on bills. You will constantly be under pressure to time the payment of your bills. You need to sit down and write down all your expenses then get out your check and see what your net pay is. Everyone needs to examine their spending and see what can be cut out. Most would be surprised what they could do without. Here are some things a typical middle class family has and how much they could cut back

Cable/Internet/Phone $140/month + Mobile Phone for $80/month

- I could get a Boost Mobile phone with unlimited voice, data & texting for only $50/month. Disclosure: I use Verizon Wireless because I feel they have superior service. Boost resells Sprint's network so you are getting use of the 3rd largest wireless network in the country.

- Netflix streaming download service for only $7.99/month

- See shows free at hulu.com including The Simpsons, Saturday Night Live or The Tonight Show.

- DSL service in most cities for $20/month

I have now cut this familys $220/month habit down to $78/month. Are they getting the exact service and selection? No they are not but if this family is in a negative earnings to spendings situation this is $142/month that they can save or $1,700+/year.

Car Insurance

- I saved over $150 over a 6 month period by getting quotes for car insurance from different companies. The key is I didn't have to settle for Joe's Car Insurance. I ended up getting a cheaper rate from the second largest car insurer in the country. How much effort was it? I went to a couple of web sites and put in what I wanted for my policy and I got quotes in seconds.
- I have received 10 emails since the blog about car insurance and all 10 of them were able to get a lower rate just by getting quotes. While that is not scientific typically if you get one 1 email there are 10 others with the same situation who didn't or won't email you.

Eat lunch at your desk at work

When I was having financial challenges after my divorce the one thing that saved the most money was brown bagging it for lunch. Going out to lunch costs you in many ways. First of all no matter what you spend you are paying roughly 10% more for it because of sales tax. So that $4.99 combo. It really costs you closer to $5.50. Typically if you are not too picky you can make your own lunch for about $2.50/day. That $2.50 is really $2.50 because you typically pay little (city of phoenix) or no sales tax on food you buy in the market. Also remember you are probably driving to get your food so you will be using gas starting and driving. Let's put a $1 amount to starting and making that trip to the burger joint in gas. Add that to the $5.50 and now you are spending $4 more/day ($6.50 less $2.50). Multiply that by 20 work days a month and you just saved $80.

Drink water instead of Soda

The average american drinks 600 12oz carbonated beverages a year. At a cost per can of $.30/can we are talking $180/year for every single American. That's easy money you can save not to mention how much better it would be for your body. The real savings is in the fact that on average a carbonated beverage in a restaurant costs approx $1.90. So every time you go out to dinner if you drank water instead of a soda think of how much you would be saving.

Own instead of owe

Debt over a long period of time is like carrying too much weight (being overweight). Too much debt doesn't allow you any flexibility to do the things you want to do without incurring even more debt. Much like how being overweight doesn't allow you to do certain things or you avoid activities because you would be out of breath or don't want to wear certain clothes etc.

You want to own things instead of owe money on things. For instance instead of getting a loan at a furniture store for that new couch, go on craigslist and pick up a cheaper couch that you can buy outright. Hey everyone want's nice new stuff but if buying new cripples you financially then it's not worth it.

Get rid of your credit cards

I did that and suddenly there were many times when I just couldn't buy something. Many of those times even after I had the money once I wasn't at that impulse moment I realized I didn't really need it anyway. I got rid of my credit cards and now use a Perkstreet Financial Debit Card that pays me back 2% on every dollar spent. Now if I don't have the money to buy something I just wait until I do have the money. It sounds too simple but it works. Now that I have some money saved it feels really good to build my savings each month.

Pay off loans early

If you have any loans that have interest pay them off as soon as possible. The longer you go the less flexibility you have to do anything. Eliminate some of the activities once in awhile so that you can save that money and pay a little more towards that loan. I do that with money I save. I put it towards my car loan. I will have my car loan paid off 1 year earlier than it was originally scheduled to be paid off. And I am saving over $500 in interest that I won't be charged because of paying off the loan early. I can't wait to OWN my car instead of OWING on my car.

Invest your money

I know the economy is bad and the stock market is scary but you need to do something with your money. So you need to somehow find a way to invest your money beyond getting 1/2 of 1% interest at your bank. You can make money in the stock market by investing in companies that are the market leader in their particular industry.

During 2011 I could have just sat out the market and invested in a money market fund and have made a 1% gain this year. But with risk comes rewards and in order to keep up with inflation I invested in solid American companies and made over 10% during 2011 while the market has remained relatively flat.

You can produce better returns than the general stock market if you do your research and you look to invest in stable companies who have a competitive advantages likes these 3 companies who are poised to continue their domination in their particular industries in 2012.

Remember:

Spend less than you earn
Own instead of owe
Invest your money

What are you doing to get rich? I'd love to hear you idea's by commenting below or emailing me at moneywhisperer2.0@gmail.com

Dan

Moneywhisperer 2.0 - 2012 Stock Portfolio Published

2011-12-04T14:08:00.001-08:00

Did you make money in the stock market in 2011? Well as of 12/2/2011 both the NASDAQ and the S&P500 were down for the year and the Dow was up almost 4%. These results include the largest one week gain on the Dow since March 2009. Were those the returns you were looking for?

Well 2012 is just around the corner and it's time to take stock and figure out where we should invest our money. I am going to publish my 2012 portfolio and track it monthly during 2012. The time period will run from December 12, 2011 to December 12, 2012. You can see my latest results by clicking here.

Here are the ground rules. I will use the closing price for the day for any buy or sell order. The commission expense per trade will be $7.95 (the amount Fidelity charges). I will do a quick blog every time I place a buy or sell order so that the date is established. I will post the updated gain or loss monthly. I will benchmark my results against the 3 main indices (Dow, NASDAQ and S&P500). The portfolio is a $10,000 portfolio and dividends received are included in any returns.

Here's are the closing prices from Friday, December 9, 2011.

Dow Jones - 12,184.26
NASDAQ - 2,645.85
S&P 500 - 1,255.19
Kinder Morgan Inc. (KMI) - 29.60
Chipoltle Mexican Grill (CMG) - 293.31
Vodafone Group plc (VOD) - 27.28

Below are my opening trades:
KMI - 140 shares @ 29.60 + 7.95 commission = $4,151.95
CMG - 10 shares @ 338.60 + 7.95 commission = $3,393.95
VOD - 70 shares @ 27.28 + 7.95 commission = $1,917.55
Cash remaining $536.55

KMI - Kinder Morgan Inc.

I have previously talked about Kinder Morgan in a prior blog posting about how I beat the S&P 500 by over 10% in 2011. The stock is up (including dividends) over 20% since I purchased it earlier this year. Even with that gain it has much more upside based on recent macro trends and a specific company acquisition which positions them for market leader status in the hottest market of the next decade; Natural Gas.

What's great about Kinder Morgan? Well how about the fact the CEO (Richard Kinder) takes $1 in salary a year. He only makes money if the stock performs. Other CEO's who take $1 in salary a year? Well how about the late Steve Jobs of Apple Inc., Larry Ellison of Oracle & John Mackey of Whole Foods are other examples. Notice a trend? Yes it's called pay for performance.

What else do I like? Officers at Kinder Morgan can only travel coach. This is no country club. The goal of Kinder Morgan is to return money to the shareholders in the form of dividends. Also since I purchased KMI in Oct 2011 they announced a $21 Billion purchase of El Paso Corporation.

This now gives the merged KMI the following profile: (from KMI's press release post merger)

KMI – El Paso

Largest independent transporter of petroleum products in the United States, transporting approximately 1.9 million barrels per day of gasoline, jet fuel, diesel, natural gas liquids and crude oil through more than 8,000 miles of pipelines.
Largest owner and operator of natural gas pipelines and storage assets in North America with approximately 67,000 miles of natural gas transportation pipelines. Pipelines are connected to many important natural gas shale plays including Eagle Ford, Marcellus, Utica, Haynesville, Fayetteville and Barnett. Largest provider of contracted natural gas treating services and significant other midstream gathering assets.
Largest transporter of CO2 in the United States, transporting 1.3 billion cubic feet per day. Carbon dioxide is used in enhanced oil recovery projects.
Second largest oil producer in Texas, producing over 50,000 barrels per day.
Largest independent terminal owner/operator in the United States. Liquids terminals have capacity of 107 million barrels and store refined petroleum products, ethanol and more. Dry bulk terminals are expected to handle over 100 million tons of materials in 2011, including products like coal.
Only oilsands pipeline serving the West Coast. The Trans Mountain pipeline system transports 300,000 barrels of crude oil per day to Vancouver, B.C., and Washington state.

The best part about this company is that their primary business is transporting and not owning and selling the product so their earnings are not subject to market price fluctuations. They are the ultimate middle man who can't be cut out because the barriers to entry are high because of the high capital cost to build pipelines.

KMI currently pays a dividend of approximately 5% so if the stock did nothing you would be 5% ahead at the end of 2012 (hence my nickname for them "The Bank of Kinder Morgan"). The company expects to increase the dividend by 12.5% yearly through 2015.

This is a similar situation to the soft drink industry where the real money in the business was not in the producers of the soft drinks (Coke/Pepsi) but in the local bottling companies. This is why Coke and Pepsi over the years have purchased many of their bottling company distributors and will continue to do so.

An article that does a good job of explaining the competitive advantages Kinder Morgan will have in the next decade can be found at the New York Times web site. It's key to note that this article is from the most respected paper in the United States not from some investment newsletter or someone trying to pump up the stock.

CMG - Chipotle Mexican Grill

As someone who has spent 10+ years in the food industry there is one truth above all else. No matter how good your concept is, if you don't have a good system your concept can fail (see Boston Market & Kenny Roger's Roasters).

Who is the gold standard when it comes to operational efficiency in the fast food industry? It's McDonalds corporation. What does that have to do with Chipotle? Well a little known fact is that Chipotle was owned by McDonalds corporation from 1998 to 2006. During thie time Chipotle was able to access all the training and efficiency experts McDonalds had to offer. Now that Chipotle is growing by leaps and bounds they are not bogged down because they have a lockdown system in place.

Now why Chipotle? First of all the company owns all of the stores so all the profits go to the corporation unlike a franchise model where the company just get's a revenue stream. A key metric in judging a food concepts success is same store sales. This is measured by only judging sales for stores open over a year. So you know that location A had sales of $500 last year and this year location A has sales of $550 you know they did 10% better. Many times corporations will report a 35% increase in sales but that is because they opened hundreds of locations. The problem is if existing locations are flat then you aren't drawing more customers to the same locations and your long term future is more precarious.

Year over year revenue growth for the latest quarter is 24% and year over year earnings growth is 25%. Clearly they are hitting on all cylinders. They have 1,163 restaurants as of 9/30. They have plenty of room in the country to expand. Oh did I mention that while they have much of the US and Canada they can fill in we are not even factoring in internation expansion down the road.

Want one last kicker for those worried about risk? Chipotle has Zero long term debt. Now tastes can change quickly and you are paying a premium price for this stock but I believe it's worth the risk.

Here is a good article about Chipotle as an investment from MSN Money Central

VOD - Vodafone

I know what you are saying who the heck is Vodafone? Well for one they are the second largest wireless company in the world. You haven't heard of them because they don't brand Vodafone in the US. They do however own 45% of Verizon Wireless in the US. Vodafone has networks in 30+ countries and partnership networks in over 40+ countries around the world.

This is a pure wireless play and a bet on the fact that people will do whatever they have to money wise to keep their phones. You see video's of people in poor countries with beat up cars with smart phones up to ehtir ear. In this wired up world they don't want to lose their link to others. Ultimately as has been trending in the Asian countries soon the primary way for you go on the internet will be your smart phone.

Vodafone is a pure wireless play. Previously I had talked about Verizon as a wireless play. The problem with Verizon is that they still have a huge wired business that will eventually go away. Verizon actually only owns 55% of Verizon Wireless. Vodafone owns the other 45%. So while Verizon is a great company it's still not a pure wireless play.

Vodafone has a dividend yield of approximately 5% which is the same as Verizon. As Verizon wireless continues to dominate the US market, 45% of that upside is owned by Vodafone. So you get the upside of Verizon's wireless network without being dragged down by their old wireline business.

Summary:

These are the picks and I will give results on the 1st of every month comparing my portfolio to the 3 major indices (Dow, NASDAQ & S&P500). When I make changes to the portfolio I will publish them the evening of the day I make the trade.

Disclosure: I own all 3 of these stocks in my Self Directed IRA account. I do not own them in the same percentages presented above though as they have been purchased at various points during 2011.

What are you top stock pick idea's for 2012? I'd love to hear your ideas by commenting below or emailing me.

Dan
moneywhisperer2.0@gmail.com

Save $1,000 in 2012 without even noticing

2011-12-02T19:18:00.001-08:00

New Years Resolution time is around the corner. I know you are going to get in shape (purchase P90X or Insanity DVD's) and save more money next year. Those are two typical new years resolutions. I have no idea how to get anyone to exercise more. What I can do is help you sketch out a plan to save money in 2012 by cutting back on some things in such a subtle way you won't even notice the change to your daily life. The savings however could be huge in aggregate.

Here are some simple things I did during the last 6 months of 2011 which are going to lower the same expense in 2012.

Cable TV

After examining my cable TV usage I determined that we really didn't need to pay for a second cable box in a room that is rarely used for TV viewing. By realizing that and eliminating the extra box (which eliminated the Tier II channels) my bill is now going to be $18 cheaper per month or $216 cheaper in 2012. OK I won't have the "sports pack" which means I am going to miss the Illinois - Indiana Big10 game of the week in 2012....in the immortal words of Gloria Gaynor "I will survive". Examine your cable/satellite bill closely, there are probably savings to be had.

Banking

First of all you shouldn't have to pay any fees to use your bank if you have direct deposit. Almost every bank has a "free" checking option if you have direct deposit. If you don't then search out credit unions who usually have a "free" checking option or an online bank. During the early part of 2011 I was was using M&I bank (which gave me a $150 bonus to open an account) and using their "cash back" checking. It works like this. You get free checking and they give you small amounts of money for things that you do (deposits, online bill payments etc.). I was earning on average about $4/month for doing all my banking there. During 2011 I switched to an online bank; Perkstreet Financial. Since that time I have earned an average of $35 per month in cash back rewards. That's a $31 difference per month. With a few start up bonuses thrown in the amount is more like a $30 difference per month or $360/year. Online banks are not a fad. They are here to stay and they are saving consumers money.

Insurance

Ok this is not about saving money by getting quotes for car insurance, although that's a great idea that we have covered and you should do it at least once every 2 years. No this is about how you pay for your insurance. I used to pay for my car insurance monthly because that's how you do it right? Well I talked to my insurer and by paying for the 6 month policy in months 1 and 3 they gave me a discount of $25. In addition for the privilage of paying monthly they were charging me $5 a month. So by using the exact same insurance but adjusting the timing of my payments I will pay $85 less every 6 months or $170 in 2012.

Customer Loyalty Programs

Sign up for every customer loyalty program imaginable. Even if you don't think you will frequent the place often. Setup a separate gmail account just for these types of things. You will be amazed how many offers you get in your email inbox. For restaurants you will often get free meal and/or desert offers right around you birthday. Insider tip...you will get so many offers around your birthday that you can't possibly use them all up around your birthday. So vary your birthday when you sign up so you get offers year round. This is worth at least $100 a year for me since I use those offers from restaurants I already patronize.

Razor Blades

I know what you are thinking...how do I save money here? The little known secret about razor blades is that the main two reasons they need to be replaced is from corrosion and wear & tear. I used to constantly buy replacement blades. One of the main culprits that cause corrision in the blade is moisture from the water left on the blade after you shave. It starts to rust and creates a cesspool of bacteria. After you shave dry off the blade with a towel at a minimum. If you really want to extend the life dip the blade in rubbing alcohol. The alcohol will evaporate quickly and keep bacteria down. I now use blades for months now instead of weeks. This is going to save me over $100 in 2012.

Credit Card Annual Fees

Are you still paying a yearly fee for an affinity card? Most people are and they just pay it and not think about it for another year. I have a US Aiirways VISA which I have an annual membership fee of $95. I get miles for every dollar spent which used to seem like a great deal. Now that I use Perkstreet Financial and get 2% CASH BACK I rarely use that card and it will be cancelled in 2012 a $95 savings.

Other idea's

There are dozens of other idea's that will save money but are not easily quantifiable. Here are some of them below:

Why you don't let Bobby Brady do the laundry

Use cold water for most loads of laundry - Except for sheets and/or towels most things can be washed in cold water and get the same results. This saves you on the hot water heater expense. Also you can use half of the "recommended" amount of detergent. It will get the job done. What you don't want to do is pull a Bobby Brady and put too much in.
Eliminate Dry Cycle on your Dishwasher - Don't use the heated dry cycle on your dishwasher. You can eliminate the dry cycle on your dishwasher, just read the manual. Most days if I just wait until the next day the dishes are dry just from sitting in the dishwasher for 24 hours
Wait for Food to Cool before putting away in the refrigerator - Hot food increases the temperature in the refrigerator, . This will make the refrigerator run longer to keep the termperature down.
Quickly glance at your receipt at the grocery store - Those items you worked so hard to get cheaply may just ring up wrong because someone didn't program the item right. Take an overall look at the receipts you'd be surprised how often a mistake is made.

My items will save me over $1,000 in 2012. Some of these may not be applicable to you but I am sure you have some that I am not thinking of. What idea's do you have to save money in 2012? Let me know by commenting below. I'd love to hear your ideas.

Dan

moneywhisperer2.0@gmail.com

Cyber Monday 11/28/2011 - Free shipping check, No Sales Tax check, Cash Back to boot...I'm in!

2011-11-22T18:56:00.001-08:00

Cyber Monday. I know another day thrust on us by corporate America's marketing machine. Black Friday wasn't enough reason to spend money we don't have now they want to give us another day to splurge. What is Cyber Monday? Well you are about to see hundreds of stories about the Monday after Black Friday where all the online deals are supposed to start.

Online shopping is big largely for two reasons; typically you pay no sales tax and because the competitive landscape is so tough often times you will get free or very low cost shipping. But the cherry on top when it comes to online shopping is to get paid cash back on your online purchase.

You are probably saying to yourself "I knew about the sales tax and the shipping but what is this cash back you speak of?" Welcome to the world of shopping portals. If you are doing any online shopping this holiday season you are leaving free money on the table if you don't use a shopping portal. A shopping portal is a site that has links to hundreds of online retailers. You go to the shopping portal THEN click on the online retailer of your choice and the portal site will give you Cash, Frequent flyer miles, points etc.

There are sites where you can get frequent flyer miles for shopping such as:

AAdvantage eShopping (American Airlines)
Skymiles Shopping (Delta Airlines)
Dividend Miles Skymall (US Airways)
MileagePlus Shopping (United Airlines)

Each of these sites give you frequent flyer miles for every dollar you spend. The amount of frequent flyer miles varies by Airline portal and individual retailer so you need to check to site to find out how much.

There are sites that give you "points" for shopping which you can redeem for gift cards.

Mypoints.com has been around for a long time. This site gives you points for using the site as a shopping portal. I know what are points worth? Well you can get a $10 gift certificate to many places from applebee's to bass pro shops for 1,600 points. 6800 to 7500 points will get you a $50 gift card to places like CVS, Claim Jumpers & Kohls. There are hundreds of retailers you can shop at through the site and about 155 different places you can claim your earned points.

I haven't shopped through mypoints.com lately because I think it's easier to shop through a site that gives you cash instead of points. There is one signup bonus you can get if you get a referral. You and the referrer get 750 points if the person signing up spends $20 through the site. The 750 points are worth a $5 gift card typically so you are already ahead. If you need a referral just send me an email at moneywhisperer2.0@gmail.com and I will send you the email referral. I can't seem to do that with a direct link. You get the same site whether you take my referral or not the only difference if you use my referral (or any referral) is that initial 750 point bonus.

I personally am a big fan of mypoints.com because you can also get points just by reading emails AND one time I got a digital 4X zoom 12 megapixel camera for $52 because I saw an email offer. You can do the math and compare getting getting points here vs. cash at other sites. I won't go through that exercise here.

There are other sites that pay you a % cash back on online purchases that original from the portal:

Two of the oldest and most established are ebates and mrrebates. How do they make money? Well the online retailer has marketing dollars that they can spend to get you to their site. Since they are not spending money on retail outlets they can spend that money gathering customers. They can either advertise or they can pay a referral fee to anyone who drives the customer to their site. That is how these sites make money. The online retailer pays a referral fee to the site that drove the traffic to the online retailer and the portal gives you part of the cash they get. Kind of like a Cyber Wholesaler if you will.

Here is my review of the 2 of them and who I think gives you the best deal:

Mrrebates.com

Mrrebates.com is one of the oldest and largest "cash back" shopping portals. They have over 2000 online retailers that you can choose who will all give you cash back on your purchase. The great thing with this site is that you get the exact same deal you would have gotten if you went to the online retailers site directly.

What is good about Mr Rebates? They typically have higher cash back percentages for similar retailers than either ebates.com or bank of america's portal. If you sign up and then refer someone who also signs up you get 20% of whatever rebate they earn. If you are interested in signing up for mrrebates.com you can do so here to sign up (disclosure this is my referral link so I will get credit). When you sign up you get a $5 credit for registering.

What is not so good about Mr. Rebates? You have to wait until 90 days after your purchase before your rebates are credited to your account. They do this to make sure you don't just return the product to the retailer and keep the rebates. This control feature they put in allows them to pay higher rates than the other portals.

Ebates.com

ebates.com is another very reputable "cash back" shopping portal with over 1200 online retailers available. Like mrrebates you get the exact same deal at an online retailers web site as you would if you went direct to the site. Now not every online retailer uses a portal. The most obvious is amazon.com who is so big they don't need anyone to generate traffic to their site.

What is good about Ebates? While they typically don't have as high a cash back percentage rates for similar retailers (in my research) they do credit your savings almost immediately. So it's a trade off between getting a slightly lower rate on ebates but not having to wait the 90 days to get your credit. When you sign up you get a bonus for registering in the form of a $10 gift card to Target, Home Depot & Barnes & Nobile or get a $5 credit to ebates which is essentially the same thing you get at mrrebates. You can sign up for ebates

at this link (disclosure this is my referral link so I will get credit). Here is the best part. If you get someone to sign up using your link you get a $5 referral bonus. If you refer 5 people you get $75 and so on and so on.

What is not so good about Ebates? Well for me it took me 5 months and 8 emails to get my $10 Target gift card for registering on the site. Very poor customer service. They have less stores than Mrrebates and their rebate percentages are not as aggressive as Mrrebates.

Comparison:

Ebates.com Mrrebates.com

Referral Bonus 5 for 1, $75 for 5 20% of referer’s rebates

Online Stores 1,200+ 2,000+

Cash Rebate % as of 11/23/2011 (all are top 40 volume online retailers)

Groupon.com 8.0% 3.0%

QVC.com 3.5% 6.0%

NetFlix.com $8 (new customers) $8 (new customers)

Avon.com 3.0% 4.0%

LLBean.com 2.0% 3.0%

Staples.com 2.0% 2.0%

Target.com 3.0% 4.0%

Walmart.com 4.0% 3.0%

Bestbuy.com 1.0% to 3.6% 1.0%

Cabelas.com 2.0% 4.0%

Victoriasecret.com 4.0% 2.0%

1800flowers.com 8.0% 15.0%

Buy.com 2.5% to 5.5% 4.0%

Missing are ebay.com, amazon.com & Costco.com which don’t partipate in either site.

There's no way she landed without falling with those heels on

The bottom line is that I use both ebates and mrrebates depending on which sites gives me the best deal for that particular retailer. I joined both earlier this year and have received $22 from ebates.com and $15 from mrrebates.com. I have never been a big online shopper BUT these sites now give me a way to compare prices with brick and mortar retailers. Because of this I have purchased some things online this year that I always assumed you needed to go to the physical store for and got free shipping and no sales tax AND cash back.

BOTTOM LINE:

If you don't shop online then this blog isn't helpful. But if you are going to shop online this holiday season you should take advantage of the cash back deals that these two shopping portals offer. Think about how great it would be to find that great online deal and then discover that just by clicking through a portal you get the same deal + additional cash back!

As always if you have any questions or comments you can leave a comment by clicking on the pencil icon or email me at moneywhisperer2.0@gmail.com and I will get back you.

Dan

Post Script:

Many of you emailed about upromise.com. While I think that site is good the premise of the site is to save for your childs education. The amounts you earn are small and you need to use their 529 plans. I just don't see that being a good method for college savings (using upromise for that not 529 plans which I am ok with). You can however use that portal and then ask for them to send you a check periodically which I have done in the past. Then you can use that money to put towards your childs education however you want to.

Holiday Offers - Good Deal or Raw Deal?

2011-11-20T09:14:00.001-08:00

Holiday sale circulars ... read the fine print.

The holidays are upon us and we are being beseiged by dozens of offers. Many times you will see retail competitors give competing deals which seem very similar. So how do you know what's a Great Deal or what is a Raw Deal?

Well history is sometimes a guide. Let's take this Sunday's (11/20/2011) Arizona Republic. Both Safeway and Fry's (Kroger) had ads showing benefits that you could get if you buy gift cards (to other stores) from them.

Safeway's ad said that if you buy $100 in gift cards (from 11/20 to 11/23) you would get "$15 off". I presume that means $15 off of a future shopping trip at Safeway. In addition they have extended the 4X fuel points offer through December 10th. So this is a double win on the surface.

Fry's ad had an offer that if you purchased gift cards from 11/20 to 12/11/2011 that you would get 4X fuel points for every dollar spent. This allows you to get $.10/gallon discount at Fry's, Shell or Circle K. This is a deal that they have run earlier this year, which doubles their normal 2X fuels points.

So how do you decide what's the best place to buy gift cards at? Let's examine the two deals and examine the fine print.

SAFEWAY DEAL:

First problem with Safeway's deal is that you have to purchase $100 worth of gift cards at one time. Well that's not a problem I will just get a gift card to Target or Red Robin because I use those often. Oh wait that's where the deal starts to fall apart. You can't just buy ANY gift card. See the * above next to the words "Gift Cards" in the picture above. That means you can only buy certain gift cards. Yes they do have a selection of gift cards you can purchase. But now you are in the store and realize that I can't buy a gift card for Arco or Shell; things I know I will use soon.

But hey at least I get the $15 off of a future shopping trip right? Well that's not as good as it sounds either. It turns out that you get $15 off only if you SPEND $50 at Safeway, and you have to redeem this coupon within 7 days. If you don't then it expires and you have nothing to show for buying $100 of gift cards to Fandango. What is a fandango anyway? Fandango to me is a clever 1985 guy road trip film starring Kevin Costner and Judd Nelson.

So let's recap. You are told that you will get $15 off a future shopping trip if you purchase $100 in Gift Cards. What you are not told is that there is a limited number of cards that qualify AND you have to buy $100 of Gift cards AND the $15 discount is really only a 30% discount coupon since you have to spend $50 to get your $15. THIS IS A RIPOFF DON'T DO IT.

FRY'S (KROGER) DEAL:

The Fry's deal is very simple. You can buy any retailer gift cards (except a gift card to shop at Fry's) and you get 4X fuel points. Yes the fuel points need to be used by the end of the next month but that gives you at a minimum 30 days to use them. You also have no minimum amount of gift cards you need to purchase to get your bonus.

The way to maximize the amount of time you have to use your fuel points is to purchase the gift cards on December 1. That gives you until January 31, 2012 or 60 days to use your fuel points. Also if it get's down to the end where the points are going to expire and you have say 400 points, you can use them all at once. So instead of getting $.10/gallon discount you can use them all and get a $.40/gallon discount (this can only be done at Fry's own stations, not shell or circle K).

Because you have a choice between Fry's, Shell and Circle K stations (in Arizona) it's easy to find a very low price amongst them and there are over 500 gas stations combined. So this means you can get a low per gallon fuel price AND get $.10/gallon below even that low price.

BOTTOM LINE:

You are going to spend a lot of money this time of year. You are also going to be hit with hundreds of teaser offers. The key is to make sure you are getting a good deal and not a raw deal. At least for these two retailers history has shown me that Safeway typically has too many strings attached to their offers. Fry's (Kroger) offers are generally cleaner and you get what they advertise.

For all of you that are waking up at 11:30PM to go stand in line to get your authentic Shamwow for $5. I say to you...just don't do it. For 2 of the last 3 years I went to the stores around 11AM (the day after Thanksgiving) to find the items in the ad that I wanted and both years the items were there. For the most part you don't have to kill yourself to get the deal you want. Remember this is a different time. You the consumer control things now as retailers are still reeling from the recession.

Last thing. Be careful, last year started a trend of people seeing what you purchase and watching you go to your car. People would go purchase their expensive item walk to their car unload the items then go into another store and have their car broken into. Be aware of your surroundings so we can all have a safe shopping season.

As always if you have any questions or comments you can leave a comment by clicking on the pencil icon below or you can email me at moneywhisperer2.0@gmail.com and I will get back to you.

Dan

Gas Prices Too High? Then use less gas!

2011-11-17T19:22:00.001-08:00

Gas prices. $3+/ gallon gas prices seem to have become the norm. We have talked about how to get discounted gas by taking advantage of supermarket points and using gasbuddy.com or the gasbuddy app to find the cheapest gas. But once you have done all that where can you go from there?

Well the next obvious answer is not to drive like a maniac. People waste millions of dollars each year by using poor driving habits. Was it worth using 10% more gas to get somewhere 5 minutes earlier? That's a choice we can make each and every day.

Today we are going to discuss 10 things you can do to save gas. Remember it's not just the price of the gas it's how efficient you drive that's equally as important when you are trying to save money.

Mr. Cash wasn't thrilled with my fuel efficient driving

Drive 55 mph on the highway. I put this #1 because everytime I have tried this people pass me and often signal to me that I am #1. Ok let's be real, in most towns it's not safe to drive only 55 mph on the freeway. I tried this for awhile but with people zooming around you it's not an easy thing to do during rush hour. You can however do this on the weekend or if you are going to work early or staying late. Every mile you go over 55 mph reduces your efficiency by 1%. So if you drive 65 MPH you are using 10% more fuel for the same distrance traveled. This is an easy win.
Don't "warm up the car". I remember my parents doing this when I was a kid. Just like TV it's not 1960 and you don't need to warm up your TV or your car. Cars are high tech today and no longer need to "warm up". The car is ready to go as soon as you are ready to drive. Kill the idling and if you really think you need to warm up the car then warm it up by driving.

Picture from sullivan.com

You can increase your fuel efficiency by as much as 3.3% by keeping your tires at the proper tire pressure. Every 1 psi drop in pressure reduces your gas mileage by .4%. This is because you have more "rolling resistance" or more tire on the road because the tire is flatter. There are those that feel that overinflated tires on the other hand increase gas mileage. While this may have some merit (less rolling resistance) it is not worth the safety risk of having less of your tire on the road and your tires will wear out sooner.
Don't idle. It's easy to sit in your car with the car running. The fact is after 30 seconds of idling, it's more efficient to stop and restart your car. If you just went into that fast food place instead of sitting in line with the car idling you would save money. One hour of idling uses a gallon of gas so if the average wait in the drive through is 6 minutes that wait costs you $.35 each time. My father was the master of idling. He would announce that we would be going then just get in the car and sit there until we realized he was outside.

UV reflectors good for cars not for humans

Put reflective sun shades on your dash and if safe crack your windows by 1/2 an inch or so. The reflective sun shade will keep the sun from heating up the car and cracking the window will even out the temperature so your car is not hotter than the outside temperature. This saves you so the A/C doesn't need to be used as long or the fan blowing as high. I personally notice a huge difference in the Arizona summer if I forget to put up my reflective sun shade.
Be aware of the upcoming lights. If you see that you have a red light up ahead take your foot off the gas and coast up to the light. You use most of your gas when you hit the accelerator. In most cases you have enough momentum to make it to the light without hitting the accelerator.

Don't drive around with excess weight in your car. For example 100lbs of extra weight in your car will reduce your gas mileage by about 2%. So clean out the junk in your trunk.
Get out and walk! Have you ever gone to two stores in the same complex but one is a couple stores down so you go to the one store shop then get in your car and drive to the other store. That is the worst kind of laziness and the benefit of walking is that you get some exercise.

Carpooling. I have carpooled for a total of about 6 years in two different stints. Right off the bat you know you are saving about 50% because someone else is driving half the time. You have someone to talk to during your drive in and you are more likely to bring your lunch (which saves more money). You also save because you are in the carpool lane on most freeways so you won't have as much stop and go freeway traffic. This means that generally you will get home faster. It's a win win.
Leave plenty of room between the car in front of you and your car. This allows you to react by slowing down by just taking your foot off the pedal instead of hitting the brakes. Hitting the brakes and accelerating again use much more gas than just slowing down by taking your foot off of the accelerator.

TAKEAWAY:

Finding cheap gas is not the only way to save money on fuel. Your habits in many ways play a large role in how much you spend on fossil fuels. Try some of the tips mentioned above. If they work for you great if not that's ok also.

As always if you have any questions or comments you can leave a comment by clicking on the pencil icon below or email me at moneywhisperer2.0@gmail.com and I will get back to you.

Dan

College Tuition Expenses....The next bubble to burst

2011-11-13T11:53:00.001-08:00

The chart above says it all. For years I said to myself how can incomes go up 150% since 1978 yet housing was up at it's peak 420%. The amount of money you make determines how much you can afford in a house. From 1978 to 2000 that was the case. During the 2000's housing got out of whack. As you can see at the end of 2010 housing is coming back inline with the cost of living. Not to digress too much but we won't be at the housing bottom unil the red line declines to meet the blue line.

But that's not the part of the chart that is so bothersome. The top line is the increase in college tuition which is up over 900% since 1978. If you think the housing bubble was bad you haven't seen anything yet. A New York Times article projected that a 3 year old who plans to go to Harvard (in 2027) when he/she is 18 will cost approximately $500K. Is it really going to cost that much? In my opinion...No.

There are too many factors which point to the cost of tuition not only slowing down but actually decreasing in cost over the next 10 years. Just like home prices you can't have household income rising at a certain rate and have tuition rising at twice the rate or more. So how has this difference been possible. Well part of it is that total student loan debt is now at approximately $830+ BILLION as of 2010. What is scary is that $300 Billion of that was from the last 4 years. Remember student loans are forgiven only upon death, student loans cannot be discharged in bankruptsy.

Now that I have painted that rosy picture, how are you going to pay for it and what is the best way to save for Junior's college expenses? Most of the pundits tell people to invest in what's called a "529 plan". This is named for the IRS code that was created for this education account. I will describe how a 529 account works, some of the advantages and disadvantages of the account. I will also tell you why I think a Roth IRA is a better more flexible way to save for your kids college.

What is a 529 college savings plan?

A 529 college savings plan is a type of investment account that allows you to set aside money for your child's education and let it grow tax-free. The federal government won't tax your money when you take it out of the account, as long as it's used for higher education.

What are the advantages:

Your money grows tax-free for as long as you keep it in the program. When you take the money out for educational purposes, you won't pay federal taxes on any part of it – not on the principal or the earnings.
With a 529 plan, you decide when and how much money to withdraw from the account. Compare this to a custodial account with which your child takes control of the money at the age of majority (which ranges from 18 to 21, depending on state law) and can use it for whatever he chooses.
You can open accounts for any number of people, regardless of age and regardless of their relationship to you. Some possibilities: Open one for each of your kids, or even for yourself, if you're thinking of going back to school. You can also change the beneficiary whenever you want depending on how much your kids pissed you off that week.
Any money in a 529 account is considered an asset of the parents, and not of the child. That means your child's eligibility for need-based financial aid will be less affected by a 529 plan than by any other type of asset or savings account. Most other college savings vehicles are considered the child's asset, and this weighs heavily against need-based financial aid eligibility.

Here are the disadvantages:

Your investment options are limited to what's offered by the state. In a state with three plans, for example, you may choose to put your money into a fund that's made up of all equity mutual funds, such as blue chip stocks and international stocks; a fund of all fixed income securities, such as the U.S. Bond Index fund and a money market account; or a fund of some combination of stocks and securities, depending on how much stock you'd like to hold. You can't, however, decide which blue chip stocks you might like to hold or decide which money market fund to invest in.
If you take money out of a 529 plan for other than educational purposes, you'll be assessed a 10 percent penalty on the earnings, plus you'll have to pay federal taxes on the earnings. To top it off, some states slap on an additional 10 percent penalty for early withdrawal. This is a huge negative since you don't know what your kid is going to do 10-15 years down the road.

If you think about it, a 529 plan is a lot like a retirement account. Like a retirement account if you don't use it the way it's designed (for a 401K it can only be redeemed at 59 1/2 years old) then you get penalized 10% and you have normal income tax on the amount you take out. If something happens to your child and/or your child just doesn't go to college you can't use that money for something else without paying a large penalty. You will retire one day (if you die your heir's would get your 401K) that's a given. You don't know if your child will go to college.

So how can you set aside money for your childs college without the risk of the money not being used or your child receiving a scholarship eliminating the need for college tuition? One solution is to use a Roth IRA.

Why should you consider using a Roth IRA for your childs college needs?

If your child doesn't use the money for college you can keep it in the Roth IRA and use it for your retirement.
You can take out the amount you put in (once you have satisfied the initial 5 year waiting period) with no tax consequences and spend it on whatever you need. You can leave the earnings in the account and when you take it out after age 59 1/2 that money would be tax free.
In an emergency you can take the money out if it's needed. I know the account is supposed to be sacred but if things really get bad you have that flexibility. With a 529 plan you don't have that flexibility and if you take the money out of a 529 plan you pay a 10% penalty.
You can invest in any publicly traded company so if you want to invest in Google or Amazon.com you can.

There is a limit to how much you can put away in a Roth IRA in a single year and some who make over a certain amount can't do a Roth IRA at all. Check the eligibility requirements to make sure you qualify to open a Roth IRA.

As always if you have any questions or comments you can leave a comment by clicking on the pencil icon below or email me at moneywhisperer2.0@gmail.com

Dan

Save for Retirement or Pay off Debt?

2011-11-10T04:36:00.000-08:00

Choosing what path to take is the hard part.

In an ideal world none of us would have any debt and hundreds of thousands of dollars already saved for retirement. Unfortunately that's not the case for a large number of us. With rampant inflation, high unemployment and 30% of homes underwater (value of home lower than mortgage loan) many of us have accumulated debt at high rates of interest.

So if you have debt to pay off (we are talking outside of your mortgage) and you want to save for retirement at the same time what do you do?

Pay off debt and save for retirement at the same time
Pay off debt first then work on retirement
Keep saving for retirement and pay off the debt when you can

I am going to show you what the pure numbers would tell you what to do. I do realize that every situation is unique. What works for me may not make sense for you. What I am going to focus in on is a term called "rate of return %". Rate of Return % (or ROR%) is the percentage you are earning or saving. Ok let's get started.

First let's talk about your retirement options and get some information:

Does your employer offer a 401K?
Does your employer match contributions?

If your employer offers a 401K but no match then you are better off opening a Roth IRA as we discussed in a prior blog posting. If your employer has a 401K and has a 401K match then your 401K becomes a very good retirement vehicle.

My previous employer matched $.50 for every dollar I put into my 401K up to 6% of my salary. So if I put 6% into my 401K my employer would add 3% to my account. In simple terms if I put away $100 out of my check my employer would add $50 to my account. This ends up being a ROR% of 50%. You put in $100 and suddenly you have $150.

I have heard had friends tell me "why put money into my 401K I will just lose it in this stock market". Well in this situation you need to max out your employers 401K match. That's a 50% return on your money and if you are afraid of the stock market put the money into a money market account. This means you won't make much but you won't lose if the market goes down AND you have already made a ROR% of 50%!

Now let's talk about your debt situation:

What a credit card trap looks like

All debt (unless it's a short term interest free credit card offer) has an interest rate tied to it. For this purpose we will refer to that interest rate also as "Rate of Return %". The reason being is that if you pay off debt that charges you 14% interest it's like getting a return of 14% since you aren't paying that interest any more.

Years ago I fell into the credit card trap with multiple cards having a balance. I recovered from that time and now have one credit card that I rarely use. I instead rely on my Perkstreet Financial Debit Card which pays me back 2% on every dollar I spend in cash. I only spend money that I have since if I don't have the money I can't spend it and don't have to worry about a looming credit bill in the mail.

I have had various discussions with people over the years on how to deal with multiple credit card balances. For me the answer is simple yet about half the people disagree with how to pay down credit card debt. The answer is simple...pick the card with the highest "Rate of Return %" or the one with the highest interest rate and pay down that card first. This solution seems so logical yet I have friends who use the strategy where they pay down the card with the lowest balance even if it has a lower rate than their other cards. The theory is that they get some sort of psychological "feeling of accomplishment" by getting at least one card paid off. The problem is try going to the bank and cashing that "feeling of accomplishment". I am not even going to demonstrate the math to prove this point.

So how do you decide what to do:

First let's determine the "Rate of Return %" based on your situation.

If your employer matches your contributions then calculate how much and do just enough to get the maximum match. My old employer matched 50% of what I contributed up to 3%. So my rate of return % out of the gate was 50%. That's a guaranteed 50%.
The national average credit card interest rate is currently close to 15%. That's a guaranteed "rate of return %" of 15% if you pay off your credit card.
The stock market (the S&P 500) has had an average return from Octrober 1982 to October 2012 (30 years) of 7.8%. Although this is not a set guaranteed rate. Some years you can win big (17% up in 1996) and some years you lose big (26% down in 2002).

You should always pick the place to put your money where you get the greatest "rate of return%". It's also smart to make sure that you know you will be getting that rate of return. The stock market is a place where you can make a lot of money or lose a lot of money.

Here is the order of how you should handle the question of saving for retirement or paying off debt.

401K match. Because my old employer basically guaranteed a 50% return on the first 6% that I put in that's a guaranteed 50% return and you should do the minimum you need to get the maximum employer contribution and no more. If there is no match then go to paying off your credit cards.
Pay off your credit cards next because (based on the average national rate) that's a guaranteed 15% return on your money.
If you have additional funds after both of these are taken care of you can contribute more to your 401K but then you lose flexibility invest in companies you want to invest in based on your investment goals and tolerance for risk.

You should invest using a Roth IRA as your investment vehicle of choice because of the tax advantages once you start taking distributions for retirement. How can you pick stocks yourself and beat the market? Well you can always pick companies that are the market leader in their particular industry. Those companies typically outperform those copycat companies.

At one point it was fashionable to say "well I won't pay off my (house, car, credit card) early because I can make more in the stock market". With the world the way it's currently being run always take the guaranteed gain. The best bets currently are paying off your credit card debt and taking advantage of your employers 401kK match.

As always if you have any questions or comments you can leave them below by clicking the pencil icon or you can email me at moneywhisperer2.0@gmail.com and I will get back to you.

Dan

Roth IRA - Everyone should have a Roth IRA

2011-11-06T20:11:00.000-08:00

Ok no matter how you try to look at it, retirement planning is not sexy. You typically are putting money away that you can't touch until you are 65+. In this era of immediate satisfaction no matter what the future consequences; doing something that will benefit you years from now is just plain boring.

When most people think of retirement the first thing they think of is their companies 401K. 401K's have many advantages and disadvantages. I will discuss those advantages and disadvantages and then we will take a look at the fogotten child of retirement accounts, the Roth IRA and why I think everyone should have a Roth IRA even if you have a 401k at your work.

401K

Everyone I know who works for a corporation tends to focus solely on their 401K as their retirement vehicle of choice. As a matter of fact about 60% of households nearing retirement age have 401K's according to the US Government.

What's are the advantages of 401K's?

· The money is taken out of your check pre-tax. So if you make $40K without contributing to your 401K you would have taxable income of $40K. If you contribute $1K to your 401K then your taxable income is only $39K. Bottom line you pay less taxes now.

· You can take a loan against your 401K and pay yourself back (pay back into your 401K account) with interest if you need the money.

· The funds are generally taken out via payroll deduction so you don't need to manage putting the money away it is done for you systematically each payroll.

· In some cases your employer will match contributions that you make up to a certain percentage. For instance a former employer of mine would contribute 50% of whatever percentage I would contribute up to a 3% contribution from them. So if contributed 2% then my employer would contribute 1% to my account.

What are the disadvantages of 401K's?

· You can take a loan against your 401K. Although it seems like a great perk; the ability to borrow against your 401K and pay interest back into your account, there is risk. If you have a 401K and you lose your job, you have to pay back the loan immediately. Failure to do so would subject that loan amount to a 10% penalty on the amount plus that entire amount becomes taxable income to you in that year. With the economy the way it is and companies cutting back the risk of losing your job is much higher now than ever. And if you needed to take a 401K loan then obviously you don't have the money to pay it back or the loan wouldn't have happened.

· You are limited to the investments that your employer chooses. If you researched companies and determined you wanted to invest in Google (Goog) or Apple Inc (AAPL) you can't. All you can do is invest in one of your employers generic funds. They typically have names like: International Fund, Bond Fund, Money Market Fund, Large Cap, Medium Cap, Small Cap etc. The funds tend to be so large and invested in so much of the market that they typically just track how the general market (The S&P 500) is doing. As I noted in a prior blog the S&P 500 is down 14% in the last 5 years. Meanwhile Google is up over 30% and Apple Inc. is up over 400%!

· When you withdraw your 401K you have to pay taxes on the money as ordinary income. The theory has always been that you will have a much lower tax rate during retirement. The current state of the economy leads me to believe that taxes will indeed be much higher in the years to come.

· Your employer may not match your contributions to your 401K.

So why do we need another investment vehicle if I already have a 401K? Because a Roth IRA is a much better retirment vehicle with more flexibility than a 401K.

Why you should open a Roth IRA:

· You are contributing to your Roth IRA with after tax dollars. Because you have already paid the taxes on that money when they money is taken out years from now you pay no tax. Again with the national debt at $14 Trillion to think that taxes won't be much higher in the future is naive.

· Your earnings are tax free. So if you had invested in Apple 5 years ago (which you do in a Roth IRA but not in a 401K) the 400% increase in value would be yours to keep without any tax consequences.

· You can take out what you contributed penalty free if your Roth IRA has been open for 5 years.

· You can make your own investment decisions. So if you see a Google, Apple or Amazon.com you can invest in those companies for the benefit of your retirement savings.

Let me give you an example of the biggest difference between a 401K and a Roth:

With a Roth IRA if you invested $10,000 in Apple Inc.(which you can do in a Roth IRA) in September of 1984 (this is 8 months after the famous 1984 Macintosh Commercial) you would today have over $1.2 Million dollars. Because you chose to invest in a Roth IRA you were taxed on the first $10K so let's say you paid $3K in tax. How much in tax would you have to pay on the remaining $1,190,000? Zero.

Ok suppose your 401K performed well also. And including employer contributions let's say that today you had $1.2 Million in your 401K. Well you saved about $3K in tax by going through your 401K. And your $1,190,000 in earnings? They are taxed at the current rate. That is a huge difference from paying zero taxes on your earnings to your current tax rate (which is only going to go higher very soon).

Is it worth paying more in taxes upfront in order to have tax free earnings decades down the road. In my opinion that is an easy answer and the answer is yes. Now remember, these are both retirement accounts so you can't take out your earnings of your Roth IRA at 40 you have to wait until at least 59 1/2 just like your 401K.

Oh but the arguement has always been: "There are big firms that do this for a living how is it possible for me to pick winning stocks when the experts even have trouble?" Well you can start by picking companies who are leaders in their respective industries as a start. Read that blog to see how simply doing that put you miles ahead of the general market.

Takeaway:

If your employer offers a 401K match you should contribute the percentage that gets you the maximum employer match. So if your employer matches up to 6% then put away 6% to get the free money your employer is giving you. If you want to put away 10% in total then put the remaining 4% away in a Roth IRA. If your employer doesn't offer a 401K match then you should go straight to investing in a Roth IRA.

As always if you have any questions or comments you can leave a comment by clicking on the pencil icon or you can email me at moneywhisperer2.0@gmail.com and I will answer your question.

Dan

How to save $300+ in 90 days...

2011-10-30T09:46:00.000-07:00

Quarterly I am going to try and quantify my savings using techniques/strategies that I blog about. Below is how much I saved during the last 3 months (Aug-Oct) First off here are things I don't include in my totals:

Manufacturer coupons - Too hard to objectively quantify. If I buy chips I wouldn't normally buy because I have a coupon, I am not sure I have saved money.
$ off coupons requiring a minimum spending amount - $5 off if you spend $25 I don't include because you may be buying things just to get to the minimum spend.

The bold, highlighted, underlined text in red are hyperlinks to a prior blog discussing the strategy.

Craigslist.com $74

Made $74 on craigslist.com by selling things like: 3rd blender in the house, smoothie maker (never used), etc. They key is we all have extra things that someone will pay for. You benefit from getting rid of the clutter and someone else who's probably just scraping by get's something they need at a discount.

Perkstreetfinancial.com $33

The news that all the major banks (Chase, Wells Fargo & Bofa) are going to start charging a monthly fee to use your debit card led me to move my primary banking to Perkstreet and their 2% rebate debit card with no fee. Thus far I have earned $33 in rebates (when it reaches $50 they will send me a $50 prepaid mastercard debit card). This has been earned in only 45 days since I opened the account on 8/14.

Ebates.com $17.14

I just receved a check for $12.14 for buying things online I was going to buy anyway and I received a $5 Referral Bonus by referring someone to ebates. psssst, if you use that link to the left I get a referral bonus :).

Discount Gas $26.88

By using the Gasbuddy app & getting a $.10/gallon discount I have paid $26.88 below the lowest gas available in my area. How do I judge the amount? I take the lowest price on my gasbuddy app (which is usually costo/Sams Club), then get gas using my $.10/gallon discount. If my price is $.06 cheaper per gallon then my savings is $.06 x the # of gallons of gas. I don't take credit for the entire $.10/gallon.

Transferring Prescriptions $25

By simply taking my original prescription bottle from Walgreens to Fry's RX to refill and presenting them with a $25 coupon for switching RX's I received a $25 credit at Fry's. This coupon has been in every Wednesday circular for at least the last 10 wks.

Smart phone Apps - Checkpoints & Shopkick $70

I have "earned" $50 in gift cards to Shell and $20 in credits to Target by doing more than opening the app and opening up retailer sites on my smart phone.

Purchasing Cash Gift Cards $16.20

By merely reading the fine print I was able to end up with 1 $100 Mastercard gift card (which I spent on regular everyday things) and ended up with a net $16.20 of groceries of my choice at Safeway. So for $100 cash out I received a $100 cash gift card and $16.20 of store credit at Safeway.

$50 Gift card for "going green" $50

Just by doing all my insurance paperwork electronically (not having them send me a paper policy or cards in the mail), 21st Century insurance sent me a gift card worth $50 from Chase Bank.

Misc other things:

$21.00 Store credit - Returning 7 used Printer Cartridges to Office Max
$ 8.50 Recycling Aluminum Cans (a relative wants to recycle but doesn't want to take them in)
$ 8.25 M&I Cash Back Checking account (no fee Cash back for transactions), I now use Perkstreet

That's $342 which I put again towards my car payment (which is now going to be paid off 6 months sooner than originally scheduled) which is something where I can see a quantifiable benefit.

None of the above took a lot of time like organizing hundred of coupons would take. It's about reading the fine print and recognizing a good deal not spending 10 hours so that you can get 5 free jello pudding cups. I respect those that do coupons I just don't see how the extreme couponing is beneficial. Especially when I see the types of food (processed) that is being purchased on that show "extreme couponing".

What I suggest is to put the money you save towards something separate. Don't let it get lost in your everyday spending. This separation helps you see that the money is going to something specific and helps you stay motivated.

As always if you ahve any question or comments you can click on the pencil icon and leave a comment or send me an email at moneywhisperer2.0@gmail.com and I will get back to you.

Dan

Lost money on expired groupons? No you didn't

2011-10-23T21:01:00.000-07:00

Daily Deals have taken over the retail landscape in the past year. The thought of getting an amazing price (50% discount or more) on a good or service is the just the tonic struggling consumers needed during this economic downturn.

While they are great deals the catch has always seemed to have been that, while you are getting a great deal you need to use the deal by some stated "expiration date" in order to get the good or service.

Many assume that if you don't use the deal by the stated expiration date that you completely lose the money that you spent. THIS IS NOT TRUE. If you read the fine print you will see that while the "deal" expired you can still have credit with the retailer for the amount you purchased the voucher for. This is generally the case with all deal sites. Here is the policy for Groupon and Living Social the two largest deal sites.

GROUPON

7. Terms of Sale

Groupon is a service provider for the Merchant identified on the voucher and the Merchant is the sole issuer of the voucher. Vouchers have two separate values: (a) the “amount paid” and (b) the promotional value. The “promotional value” is the additional value beyond the amount paid. Together, the amount paid and the promotional value equals the “full offer value” of the voucher. For example, if you pay $20 for a voucher that gets you $50 of goods or services from a Merchant, the full offer value is $50, the amount paid is $20 (this amount does not expire until it is used or is refunded), and the promotional value is $30 (this amount expires on the date stated on the voucher unless expiration of the promotional value is prohibited by law).

If a Merchant or venue refuses to honor any voucher, Groupon will refund the amount paid upon request in the original form of payment, or will credit the Groupon account of the purchaser with an equivalent number of Groupon “Bucks” for future purchases on the Site. Groupon Bucks do not expire.

LIVING SOCIAL

3. Expiration Dates

The expiration date for a Voucher is as printed on the Voucher.

If the expiration of the paid value of the Voucher as of the date printed on the Voucher is prohibited under the law of the jurisdiction in which the Merchant is located, then the Voucher shall expire as follows: the promotional portion of the Voucher will expire on the date printed on the Voucher, and the paid portion of the Voucher will expire five (5) years from the date the Voucher is issued, except to the extent applicable law requires that the Merchant extend the period in which the Voucher may be redeemed. The Merchant is obligated to honor the Voucher in compliance with law. If the Merchant refuses to honor the Voucher before the legally permitted expiration date, then LivingSocial will refund the paid portion of your Voucher in the form of a credit for future Deals (what we currently call “deal bucks”).

TAKEAWAY

I believe ultimately there will only be 2-3 daily deal sites that will survive long term. I signed up for 4+ sites and now I dread opening my email each morning. Most of the time I just delete the emails without looking at them because it's become too much.

How to play it? If you see a retailer that you frequent anyway that's a no brainer. Pick up the deal and save money where you would be going anyway. If it's a new establishment just make sure you will use it. It's easy to purchase it forget about it until months later. In this economy I wouldn't plan on any business being around long term unless it's a national/regional chain of some sort. Although that's not always the case (remember Kenny Roger's Roasters?).

As always if you have any questions or comments you can leave a comment by clicking on the pencil icon below or email me at moneywhisperer2.0@gmail.com and I will get back to you

Dan

Cheap or Frugal...is it the same thing?

2011-10-19T22:22:00.000-07:00

From urbandictionary.com

"CHEAP"

Negative term for a person who decides to save money. People who save prefer to be called frugal

I think there is a huge difference between being cheap and being frugal. Here is how I define Cheap and Frugal:

Cheap:

Not putting in money for the tax and tip when dining out and there is a single check

Frugal:

Just getting water with your dinner because you don't want to spend $2.50 for a soda

Cheap:

Busting out the empty tupperware containers when there is a potluck at work

Frugal:

Making something for the potluck instead of buying something from the supermarket

I think you get the idea. I had to ask myself...am I a cheapskate? I determined that no I am not. A cheapskate wouldn't buy a Droid Samsung Fascinate one week after it came out & consistenly tip 20%+ at restaurants.

People who are frugal are willing to spend good money on things that they really want. What we don't do is overspend on things that we have to have. Your motto as a frugal individual should be:

Spend money on the products and or activities that you want to buy.

Drive a hard bargain on the things that you have to buy.

The first week (December 2010) the Samsung Galaxy family of phones came out on Verizon I purchased it. Could I have waited 6 months for it to be cheaper? Yes I could have but I did make sure I got the best deal and I ended up paying $50 less at Best Buy Mobile instead of going directly through a Verizon store. That was something I wanted and it's been a great phone.

Not everyone needs or wants a particular phone. I did so I got it. On the other hand let's take something like Toilet Paper or Paper Towels. That's not something you crave to get when you are shopping that's something you just need to buy. The key is getting the cheapest price on the things that you have to have so that you can spend the money you save on the things you really want.

Many of my blogs are about ways to save money on things that you have to have and where to get them:

Let's go over things you have to have and how you can maximize your savings on the essentials:

Banking - Why pay a monthly fee to use your debit card when you can get 2% cash back on your debit card purchases with PerkStreet Financial?
Gas - Get real savings out of your smartphone by checking the gas buddy app for the lowest price gas in your area along with getting your gas at a discount by buying groceries...something you are doing anyway.
Car Insurance - Shop for car insurance every year. If done right you'll at least get some frequent flyer miles or in some cases save $100's of dollars from your current insurer.
Consumables - Things like shampoo, tooth paste, toiler paper and paper towels. Shop at retailers like Costco or Wal-Mart for these items instead of overpriced retailers like CVS who have half off sales but are still more expensive than warehouse or discounters.

Part of being a smart consumer is knowing when to pay more for something. It depends on your pain tolerance. For instance some people are perfectly fine with a lower end generic wireless carrier. For instance I tried Cricket Wireless for about 6 months because it was cheaper but here is what I got for my low price:

Dropped calls almost daily
One day called 411 and it just rang continously...no one ever picked up
The billing office "misallocating my payment"

For me the negatives outweighed the positives.

Takeaway

The key to saving money is balance. You can't try and deprive yourself of everything in the name of saving. So save money on the things you have to buy and spend more on the things you want to buy.

as always if you have any questions or comments you have leave a comment by clicking on the pencil icon or email me at moneywhisperer2.0@gmail.com and I will get back to you .

Dan