SaveBuyLive

I’ll come right out and say that yes, you can save money if you bundle your phone, internet and cable TV services and get them all from the same company.  However, before you run out and grab a bundle package to save a dime consider the downsides.

Having everything through one company means that it all goes through one line.  If something happens to that company or that connection you lose all of your services.  There is something to be said for having backup lines of communication.

I’ll give you two personal examples.

When I first moved to an apartment it took 3 weeks for the provider to get my internet set up.  Three weeks.  That meant that my only line of communication with the outside world was my phone.  If they had been through the same provider I would have been without any means of communication for 3 weeks.

Another time, my cell phone took a dive into the kitchen sink.  The end result was that I was without phone service for a week.  Thankfully I still had my email up and running so I could communicate that way.

In this newfangled information economy communication is vital.  Don’t run the risk of putting all your eggs in one basket.  Maintain separate lines of communication so that if one fails you have a fallback.

The Economix blog recently wrote an interesting article discussing whether recessions stimulate the entrepreneurial spirit or not.  It certainly seems logical that as times get tougher and people become unemployed that they will seek out self-employment opportunities.  But is it really true?

They explain that:

There are two competing forces urging people toward or away from self-employment. One is opportunity: how much demand there is in the world for the good or service your new company would offer. The other is opportunity cost: what you’d be giving up by starting your own business.

In an economic expansion, there may be more demand for your new product, and it may be easier to get financing for your new company. But when the economy is strong, workers at bigger companies are probably more likely to claim higher salaries, signing bonuses and other perks that lure them away from the call of being their own boss.

On the flip side, during a downturn, the opportunity costs are lower. Job offers at established companies are fewer and further between, so would-be entrepreneurs probably have less to give up by starting a new company — especially if they’ve already been laid off and have zero other job offers available. But it’s hard to start a new business in a recession. Capital is hard to come by, and demand for goods and services of all stripes is generally lower.

By examining some 30 years worth of self-employment data they found that there is no obvious correlation between the business cycle and entrepreneurship.  So it seems that the myth that recessions spur entrepreneurship is busted.

Some thoughts of my own:

• Their data only reflects people who report being self employed for 15 hours or more per week.  This leaves out a lot of people.
• I’m wondering what criteria they use to define self employed.  Does this mean just people people who have brick and mortar businesses and/or have an established business plan?  Or does it include people who are taking whatever odd jobs they can and hoping something works out.  Depending on how they frame the question their data could be skewed.
• They have not yet differentiated between people who lost their job (or were felt that a lay off was coming) and those who have not.  It is very possible that while the rate of entrepreneurship doesn’t change with the business cycle the type of people who pursue entrepreneurship does.  What do I mean?  Well, if you have a secure job in a recession you’re probably not likely to either quit your job or start a side business since the market is so bad.  Better to just hang in there and be happy that you have a job.  But if your job isn’t secure, wouldn’t you be motivated to do whatever it took to pay the rent?  This is the question you need to ask to really see how business cycles affect entrepreneurship.
• Continuing along those lines.  If the recession forces you to take an odd job like pet sitting you may very well discover that you love the job and can make more money at it than you could in your old job.  Hence the recession could have made an entrepreneur out of someone who formerly wasn’t and may never have been if the recession didn’t come along.

What do you think?  Has the recent recession spurred you on to make extra income?  Or has it caused you to hunker down and just be happy that you have a job?

Money Magazine reports that now may be a great time to begin investing.  If you haven’t started saving for retirement perhaps you should consider beginning to assemble a nest egg.

They begin by stating:

Starting a 401(k) is a bit like entering a marriage. It’s a long-term commitment, not a short-term fling…. If you’re in the early stages of your career, you’re going to be investing money that you won’t even begin to touch for 30 or more years. And even people who are closer to retirement are still effectively contributing for the long term. After all, they’re not pulling out all their dough the minute they hit 65. They’re going to withdraw it over the course of many years.

They continue to state that:

If I were going to factor current economic and financial conditions into the decision, I’d say that you can actually make the case that this is an excellent time for someone to be starting his or her 401(k).

I couldn’t agree more. If you are just starting your career or just starting to save for retirement getting your foot in the door when the market is down is a great idea.  It’s common for the media to say things like this is the worst recession since the Great Depression, but for some reason they neglect to say that since stocks have been beaten to a pulp in recent years that this may be the best time to get in during a new investor’s lifetime.

A few other points:

• Make sure that you diversify your investments.  Keeping everything in stocks can yield big gains, but can also take big hits.  And when the hits come you’ll be wishing you diversified.
• Make sure you invest enough money in your 401/403 to get your employer’s match (if they offer one).
• Make sure you take advantage of other tax sheltered savings options like IRAs.
• Make sure that you save and invest as much as possible.  The more money you put away now, the more you’ll have down the road.

Worried about being laid off?  Trying to figure out how to make sure that the ax doesn’t land on you?  Money Magazine has a list of 6 good ways for you do dodge the bullet.

1. Make sure higher-ups know you by solving problems and taking on high-profile projects.
2. Share client leads or ideas to generate revenue even if that’s not part of your responsibilities.
3. Hang out with the people the boss respects most. The halo of their good reputation may extend to you.
4. Keep on top of advances in your field and expand your expertise beyond your core area.
5. Look for problem spots that you can help fix. And pitch in whenever extra hands are needed.
6. Volunteering to take a pay cut during an industrywide downturn can make you look like a hero.

These are all great techniques to make yourself indispensable or to bring your company more money.  I particularly like #3, because the people the boss likes are perceived as more valuable (even if they do mediocre work) and are less likely to be fired.

I’m not a big fan of #6 unless you are at a small company.  I get the feeling that a big faceless corporation is just as likely to ax you regardless of whether you took the pay cut or not.  And if you are worried about being laid off doesn’t it make more sense to try and rake in as much money as possible so that you have something to live off of when the ax comes?

If the current housing market has taught us anything it’s this says a recent Money Magazine article:

You should think of your home primarily as a place to live, not as an investment.

Regardless of whether you are in the market for a new home, trying to sell your current home, or still interested in using real estate as an investment Money Magazine has some advice for you.

Advice for home buyers

- Factor in future price drops - If the home you are planning to buy is in an area that is expected to fall by 10% make sure to reduce your buying offer by 10% to account for the drop.  If they seller refuses, it’s not like there aren’t other houses out there.

- Consider foreclosures and short sells - You can save a lot on a house if you are willing to buy a property in foreclosure or a property that the bank is willing to short.  But beware, some of these properties are damaged.  You should have an inspector assess the damage and estimate the cost of repairs so you don’t lose all of your savings by spending on fixing the place back up.

- Choose your mortgage wisely - Try to get the best mortgage rate possible by offering up the largest down payment possible (20% if you can).

Advice for home sellers

- Yes, your house is worth a lot less than it was.  And no, it’s not going back up. - Time to face reality.  The housing market has crashed.  You can either resign yourself to staying in your home or you can accept the losses and move on.

- Fix up your house - It’s a buyer’s market right now which means that you’ve got a lot of competition.  Get ahead of all the other people selling houses by putting in some time and money and making sure that your house looks top notch.

- Be creative about selling - If you need need to sell your house but can’t, consider turning it into a rental property.  Or consider rent-to-own options.  Even if no one buys you’ll be able to pull in some money from your house which you can use to help with the mortgage payments.

Advice for investors

- Invest for the long term - Flipping is dead in most areas.  If you are going to invest in real estate do it for the long term.  Consider investing in a vacation home or future retirement property.  Alternatively, consider buying homes for the purpose of renting them out.

- It’s all about location! - If are buying future rental properties buy ones that potential renters will actually want to live in.  Potential renters are people in their 20s and 30s.  They tend to like houses near urban centers, public transportation, universities, major employers and places with jobs.  They aren’t going to flock to rental properties out in the boondocks that are near nothing that would interest a young person.

- Get pre-approved - Given the housing market crash most lenders are leery of investors.  So get pre-approved before you go house hunting.

Finally, Money offers up a list of the housing market forecasts through the rest of 2009 and into 2010 for the nation’s 100 largest metro areas.

Three of the biggest enemies for investors are investing expenses, failed market timing events and poor diversification.  A recent Money Magaine article takes a look at how the first two can mangle your retirement savings. Here’s the lowdown.

Suppose you have a $1 million portfolio consisting of a mix of 50% stocks and 50% bonds.  If that portfolio is beating inflation by at least 3.5% a year then you can safely pull out about $40,000 a year to live on.

Unfortunately since most mutual funds carry trading expenses of 1-2% that accrue each year the amount you safely withdraw drops to $31,000.

But what happens if we hit a rough bear market like the one we are currently in?  Investors grab their money and head for the hills causing the price of stocks to decline.  Investors then rush back into the market when they think things are getting better.  Unfortunately, most of these attempts to time the market are poor at best.  On average investors will actually lose 1.5% by trying to time the market.  And your safe withdrawal rate now drops to $26,000.

The article wraps up by suggesting two two ways to reduce your costs and losses and bring your safe withdrawal rate up to $39,200.
1. Invest in exchange traded funds (ETFs) to reduce expenses.
2. Stick to a long term plan and rebalance regularly to avoid market timing mistakes.

I firmly support both of these conclusions and wish that my 401 would allow investing in ETFs.

To be quite honest, the garbage bill is pretty simple.  You pay a fee for the garbage company to come by and pick up trash and recycling from your home.  You may have the option of paying extra for a larger trashcan.  Basic recycling is often included in the bill, however some companies charge extra for recycling services.

Additional fees may be charged to you if you have a bulk pickup.  For example if you throw out several boxes full of garbage and some furniture.  You may also have to schedule these ahead of time, so be sure to make some inquiries before you start dumping stuff out on the curb.

Many garbage removal companies discourage you from filling your trashcan with yard waste.  However, there are several mechanisms through which you can get your yard waste picked up.  Some areas have a pay per bag yard waste policy, where you buy special bags that you can fill with yard waste that will then be picked up.  Some areas have predetermined yard waste pick up days where everyone in a certain section of town can put their yard waste out and have it collected.

Garbage collection agencies may also provide a variety of ancillary services.  Some of the ones I found are listed below.

Public pay dump – A dump where you can bring your trash.  You may be charged by weight.  You may also be charged by the item.  For example, at one dump near me large furniture and some electronics have set fees attached to them.

Recycling kits – These are kits that allow you to recycle batteries, compact fluorescent light bulbs or electronics.  Basically you fill up the box in the kit and then mail it off.  These are also incredibly expensive.  The lowest price kit I found was $17.  With onerous prices like these I get the feeling that they are trying to discourage recycling.

Medical waste containers – Some garbage companies allow you the option of buying medical waste containers from them.  Basically after you fill up the container, you put it into a sharps box and then mail it in to a special medical waste disposal facility.  I highly recommend that you use this service if you are taking any kind of injectable medication.  Placing needles into the regular garbage puts children, sanitation workers and anyone else who may come into contact with your garbage at risk of being stuck.  If you didn’t know, being stuck with an unknown needle requires an immediate trip to the emergency room and an expensive series of prophylactic medications.  This is not an enjoyable experience for anyone involved.  Please dispose of your medical waste responsibly.

Portapotties – Some waste collection firms will provide these for special events, construction gigs, parties, etc.

Natural gas is used primarily for heating homes in winter but some other common uses include hot water heaters and some stoves.

The natural gas bill breaks down in a similar fashion as other utility bills.

Customer charge
This is a fixed cost that you pay to the company.  It covers administration and maintenance costs.

Distribution charge
This fee covers the cost of delivering gas to your home.  It changes with how much gas you use.

Natural gas cost (aka purchased gas adjustment)
This fee reflects the cost of gas purchase, transportation and storage.  This fee varies according to how much natural gas you use.  This fee will also vary with the market price of natural gas.

Taxes
The government always gets its cut.

Having broken down the charges it would be wise to examine factors that may influence your bill.

Seasonal changes
Since natural gas is used primarily in winter to heat your home, your bill will often rise substantially in winter months and fall in summer months.

Appliance efficiency
The efficiency of central heater, stoves and hot water heaters will also affect your bill.  Less efficient appliances used more gas to produce the same amount of heat and thus cost you more.  If you are considering buy a new appliance look for the Energy Star logo to ensure that your unit is going to be energy efficient and cost you less money in the long run.

Changes in living habits
If for some reason you have begun keeping your house at a warmer temperature, perhaps to make houseguests comfortable, you will be using more gas and pay more.  Similarly if you have taken an interest in cooking, you may see a small increase in your gas bill.

Changes in the costs of purchasing gas from gas suppliers
Natural gas prices are dynamic and vary over time according to world supply and demand.  If the costs of purchasing gas from suppliers goes up so will your bill.

Payment options for the natural gas bill are usually the same as those for other utilities, checks, credit cards and automatic bank withdrawals.  Natural gas companies also offer a budget billing option where they average your use over the last 12 months and then charge you that average number each month.

Some natural gas companies also offer a heat-sharing program.  With this program you can donate money to help disadvantaged families pay their heating bills in winter.

Internet service providers (ISPs) come in two major flavors, dial up and broadband.

Dial up ISPs may charge a monthly fee or a time-based fee.  They provide the slowest connection speed since they have to run over the phone line.  Sometimes they offer additional proprietary content.  However, this content is usually something that you can get just as easily over the internet with any ISP.

Broadband ISPs offer faster service and cost more than dial up services.  Broadband services are usually offered by either the cable or phone company. The price tends to be higher if you get naked internet, that is internet without bundled cable TV or phone.  Some companies don’t allow you to get naked internet, thus forcing you to buy an additional service you may not want.

The cost of internet service tends to rise with the speed of the connection.  This is a major area where you may be able to save money.  If you don’t use a lot of bandwidth intensive services such as streaming video and torrent downloads then you may not need a superfast connection.

And of course, the usual taxes are also added to the bill.

That’s pretty much it.  Overall this is one of the simplist bills you have.

The cable TV bill, while expensive, is often pretty straightforward.

It begins with a fee for basic cable service, which gives you a few stations to watch., usually just a few local networks and C-SPAN.  Next you can move up to expanded basic which gives you many more channels to watch.  This is a popular option as it tends to offer the most channels for price.

After that we move into more expensive services.  Premium channels such as HBO and Showtime allow you to watch movies and exclusive series without having to sit through commercials.  But you have to pay an additional monthly fee to have access to these stations.

Now that high definitions TVs are becoming mainstream, many cable companies are offering high definition channels to subscribers.  However, these channels are usually not free and you will have to either purchase them a la cart or as part of a high definition package bundle.

Several cable TV companies also offer digital channel bundles based around specific themes, such as children’s programming or movie stations.

One of the most popular package options is the sports package.  You pick a specific sport you are interested in such as baseball, hockey, basketball, or football and for a fee you get access to all of the games, even the games that are not normally shown in your market.  This is great for displaced fans that reside in a region of the country where their favorite team is not popular.  It is also a great option for die-hard fans that want to be up to date on every game played.

Pay per view and on demand services are also popular.  For a fee you are able to watch movies or entertainment events whenever you want on an a la cart basis.  Some cable companies have taken this to the next level by eliminating the a la cart concept all together.  For a single monthly fee you can watch as much on demand programming as you want.

Some cable companies also offer music channels.  These work similar to radio stations except without the commercials.  For a single monthly fee you get access to all of the music channels available.  The selection is usually pretty broad with options ranging from grunge, to hip-hop to soft classical and jazz.

Finally, many cable companies offer a sort of super bundle package where you get almost everything I just mentioned above for one monthly fee.

Before you go about picking a super bundle or any of the additional services I described sit back and think about whether you will actually be using them.  There is no point in paying for premium services if you rarely watch them.