Joe's Money

Well, let me start off by saying you won’t be getting a buy one fill up get another free with this deal, a guy can dream right?  So bare with me and I can show you how to ease the latest gas prices just a little bit.

Super America and Speedway both offer the Speedy Rewards card.  All it entails is a free discount card that racks up points as you spend your hard earned cash on everyone’s favorite expense, gas.  The card also ears points on just about everything found in the store as well.  For gas you typically earn 10 points per gallon.  Most in store items reap 20 reward points for every dollar spent, sometimes more for bonus items.  Only a few categories do not earn points like tobacco, lottery, etc.

So right now it takes 24,500 points to get a free $25 gas card.  Yes, you’re absolutely right, that takes a lot of spending to rack up that many points.  However, here is a little trick that will help you get there faster.

When you purchase giftcards, you get a bonus of 1,000 points for every $50 put towards the giftcard.  So when I go to the gas station, I put on a few hundred dollars until it runs out, then repeat.  Gas is a fairly fixed expense so if you budget you should be able to do this as well.  Once the cash is on the gift card, you use that to purchase your gas replacing your cash or credit card.  In addition to the bonus points from purchasing the gift card, you also earn points when you purchase the gas.

Picking up the gift cards in $50 incriments will sure help you get there faster.  While you won’t get a ton in free gas, a little extra never hurts.

Ok.  The first thing you need to do is come back to reality.  Unless you are the perfect soul who never gives in to life’s finer things, you can find money to cut.

The first thing that comes to my mind for myself, is my terrible habit of smoking.  While I didn’t quit in my journey, it certainly was there to help motivate me to try even harder.  Another huge money waster for me was eating breakfast and lunch at my employer’s cafeteria 5 days per week.  I always said to myself, “ah its only $2 for breakfast and $3 for lunch.”  Pretty easy to do the math on this one.  I was wasting $100+ a month on this alone.  Now I bring generic cinnamon pop tarts that cost $1.25 per BOX for breakfast and bring leftovers or prepare my own lunch.  While that still costs money, I know I don’t spend half of what I used to.  Pick your poison, everyone has one, or in many cases, more than one.  This is all about sacrifice at this stage in the game.

There are countless other expenses I’m sure you could do without.  Cable TV, cell phones, etc. are all wants, not needs.  Sometimes it can be hard to distinguish the two, but again, focus.

A little story about a friend of mine…

My friend starts the conversation similar to one I’m confident you were involved with.  Not necessarily you yourself, but someone you know.

“I’m broke.  I don’t know where my money is going.  I’m telling you, I don’t shop, I don’t eat out.”  Line after line.  I knew for a fact that this person was making more money than I.  Probably even more than both me and my wife combined.  So I go into my usual pitch, to get out of the seemingly endless race, you have to sacrifice some things now to be much, much better off later.  The immediate response was “Well, there are some things I just cannot sacrifice.”  This person must have been referring to the near new truck, boat, ATV, and motorcycle they had.  This was in addition to the cars he and his significant other drove daily to work and around town.  I was floored.

The idea behind this is to get you back to reality.  Get a grip.  Make it happen.  It is up to no one but YOU.

It’s odd.  Every financial adviser I’ve ever encountered swears up and down that their actively managed fund will out perform index funds hands down.  However, statistics show otherwise.  Statistics show that index funds out perform managed funds 80% of the time.  On top of that, of the 20% of managed funds that do out perform the index funds, how is one supposed to know which managed funds, or more importantly, WHEN the managed funds will be in that top 20%.

Lets take a quick look at the differences between actively managed funds and index funds.

Actively Managed Funds

The name is pretty obvious with actively managed funds.  It simply means that there is an individual or group of individuals that watch your funds.  They buy and sell based on their professional expertise.  Expenses are typically much higher than index funds because someone is actually “watching” your money.  Fees can be 1.5% or even higher.

Index Funds

Index funds are simple.  Index funds have literally a spread of all stocks on the market.  A little of this, a little of that.  Index funds do not have anyone watching your money.  As the market fluctuates as a whole, so do these funds.  They are bench marked against some of the biggest indexes like the DOW, S&P 500, Nasdaq, and many more.  Fees for these funds can be as low as .02%.

After reading the difference of the two types of funds, you’re probably thinking you’ve got to be kidding me!  I can let this run on auto-pilot and do better than the professionals?  The short answer is yes, or at least 80% of the time.  Remember that even though 20% do out perform the index funds, it is nearly impossible to tell which funds will, and even more difficult, when they will.  Heck, even if you do win, the margin of difference is usually so low the fees eat up the rest of superior gains.

In a nutshell, stick to index funds for the long term.  These funds are available in any style, conservative, moderate, aggressive, you name it.  Keep in mind, you will be investing for 20, 30, or more years.  Stick with your plan.

Everyday I am amazed at the prices I see online in comparison to their retail counterparts around town.  I’m convinced I’m never leaving the house again.

There are so many benefits of shopping online.  Chances are, you can save on sales tax.  As long as the site you are buying from does not have a physical presence in your home state, guess what, no tax!  In my home state, this saves me 7% on everything I buy online that would usually be taxed.  On top of the tax savings, the prices for most items are significantly cheaper than those in the stores.  Online dealers don’t have to pay a staff, don’t have to have a giant physical store to display their goods, and so on.  This makes it easier for them to keep prices low.

Some of the online merchants I ofter use are Amazon, Newegg, and often times even the websites of popular clothing stores.  Clothes aren’t taxed anyways so you don’t have to worry about them having a presence in your state.  The other day, I was able to pick up 2 t-shirts and a hooded sweat shirt for $29 shipped to my door.  The t-shirts were a whopping $6 each.  Have fun finding that locally.

The best advice I can give you is look around online first.  Live by the rule never pay retail!

I can’t begin to tell you my frustrations lately with the credit card companies.  I had heard of all these people saying their rates are getting jacked up for now reason.  They all stated they had never been late or missed a payment, never went over their limit, etc.  I figured there was more to it they simply weren’t disclosing.  I was wrong.  It happened to me.

Traditionally, I never carry a balance on credit cards month to month.  About 4 months ago, my credit card company must have realized that in the midst of the declining market and cut my credit limit in half.  I really wasn’t upset that the limit itself was cut, I would probably never use anywhere close to the max.  However, another piece of the credit score puzzle, is the ratio of debt to available balance.  Generally, you don’t want to have a ratio higher than around 30% or so.  Example below.

Using $300 of a $1,000 balance = 30% ratio
Using $500 of a $1,000 balance = 50% ratio

While even after my limit was cut in half, I still didn’t go over the 30% threshold, I was still a little peeved that this is what they are pulling on loyal customers.  I have never missed a payment, and I have had this account open for around 6 years.  Thanks anyways.

Even more recently, I received my first credit declined message.  I had applied for a gas card good at one of the major gas station chains in the US.  I know I advocate not opening credit cards, but this one offered a 5% rebate on all purchases at this chain.  I figured, I’m here constantly, lets save a few bucks.  There was no fees, so I was good to go.

I was expecting the card in the mail.  When I received the envelope, I could tell there was no card in there.  I almost started to panic at the thought of a declining letter because I know my credit is good and if I was declined, maybe I could have been a victim of identity theft.  Then I opened the envelope.

DECLINED!

As I read through the letter, I was happy to find they provide you with the reason for decline.  It stated my credit history was excellent.  So why would they decline a good outstanding citizen like myself?

“Expected expenses will likely outweigh the revenues for this account.”

I guess they wised up and realized they won’t make any money with me!  So much for saving 5% on gas.

Anyone else have a similar experience?