Free Money Finance

Money Saving Tip: Save on Eating Out

Here's a simple money saving tip that I use all the time. It's from my post titled Money Saving Tip: Save on Eating Out and was written one year ago today.

Homeowners Becoming Desperate to Sell -- Start Burying St. Joseph Statues All Over to Sell Homes

I think we're all aware that the U.S. real estate market is starting to cool down (though it's still too soon for real estate vultures to get a great deal). The only question remaining is -- how low will it go? Here's a piece from Money Central that details the decline. It starts with an example of a homeowner becoming desperate to sell. The details of this particular story are as follows:

Margot Ray, a radio-ad saleswoman in Stockton, Calif., put her five-bedroom, three-bath house on the market in February for $480,000.

There it sat, along with about 3,000 other homes for sale. She dropped the price to $465,000 in April. Nada.

In July, she had a brainstorm: Why not advertise on the radio? The ad put the house on the map. Now agents remember the address. The price is down to $427,000 and, at a recent open house where Ray raffled football tickets and a spa day, 15 groups of potential buyers showed up on a 107-degree day. But it still hasn't sold.

Ouch, that's a big hit. Down over $50,000 so far and no sign of a buyer. How low will prices go?

Yes, it's just one story, but this story is being repeated all across America. Oh, what a difference one year makes:

Was it only last summer that houses sold in a day, buyers were bidding up prices and sellers in some markets haggled down real-estate agents' commissions? Nationally, 39% more "existing" homes -- not new ones -- are on the market than last year this time.

This situation is forcing sellers to get creative:

In the toughest markets -- including the Florida cities, Detroit, Atlanta, Dallas, Stockton, Sacramento and San Diego -- incentive is the name of the game. One Florida agent offered a Mercedes-Benz with a house sale. Others dangle vacations or gift cards with thousands of dollars in gasoline.

I always thought a "buy this house and get a car free" offer would certainly get people's attention. Who knows -- it may end up that even this isn't enough and sellers will have to band together to offer "buy one get one free" deals on homes. Yikes!

Unfortunately, there are signs that the bad news is spreading:

In its report released Aug. 15, the National Association of Realtors reported that 26 of 151 metro areas experienced outright price declines in the March-June quarter. The biggest price drops in percentage terms were in Danville, Ill., where home prices fell by 11.2% in the spring compared with the spring of 2005, and the Detroit area, where home prices were down 8%. For condominiums, 1 in 4 metro areas reported a decline in prices.

And, for me, some information that hits very close to home (I live in Michigan):

Michigan, where automakers have laid off large numbers of middle-class workers, is one of the most difficult places to sell a home. The Detroit News reports a 43% increase in homes on the market since last year.

Good thing I'm not trying to sell my home right now. In fact, this news may even help my plan to make money on the real estate downturn. Though I'd still rather see our state doing better where house prices are concerned.

I'm also in a better position financially than most due to the financial principles I've followed (and talk about here on Free Money Finance):

People who bought recently and have little equity are in the most difficult situation, says Vince Rizzo, managing partner and broker for HungryAgents.com, a St. Louis-based referral service through which sellers negotiate with local agents for lower commissions. "There are so many people now that borrowed 95% or 100%, and with the market slipping back a little, and you have to pay 6% commission, you are going to have to bring money to the table," Rizzo says.

I have not bought recently, I have 100% equity in my house, and I don't have a risky loan of any sort.

Finally, if you are truly desperate to sell, there's the "tried and true" method of burying a statue of St. Joseph:

To some sellers, it can't hurt to enlist a little heavenly intercession. Myth has it that a statue of St. Joseph can be buried upside down in a property to enhance its chances for sale. The Charlotte, N.C.-based CatholicCompany.com sells a St. Joseph home sale kit, including statue, instructions and a prayer. It's a popular seller, says Les Teahl, customer service manager, but no more now than before.

Teahl and his wife recently got the kit to help sell their home in Charlotte. He recommends against burying it. Instead, he advises, put it in a place of honor, a spot like the corner of his home with an American flag, a big crucifix and photos from his son's wedding.

"We've had people do that and next day the house sold," Teahl says. "It's got a high success rate."

Oh, yeah, that's great financial advice -- for the guys selling the statues. ;-)

One way to avoid lots of the risks associated with buying real estate is to follow a great formula for buying a house. If you're one of the few buyers out there, I suggest you take this advice to heart as you look at potential homes.

Go to College for Free! A Real-Life Example

On my post titled Save 50% on Education Expenses, I received this testimony from someone who saved much, much more than 50%:

Personal story: I went to a local private 4-year college on a full scholarship. I had great grades in high school and really good scores on my SAT's. I could have gotten into schools with much better reputations, but I went to my little local school and paid for nothing -- a full tuition scholarship and other scholarships that ended up covering most of my fees. Four years later, the same small school helped me get an internship (by way of an alumnus) and that led to a full time job in the IT department. I am one of the few recent graduates with ZERO debt and a better paying job than most of my classmates. Now I'm looking into graduate school, which the tuition reimbursement from my employer will help pay for.

I agree that it's definitely worth looking into those smaller schools who are trying to attract those "higher quality" applicants.

Wow! This reader went to school for FREE!!!!! Lots of good stuff/advice here. My thoughts:

1. Yes, going to a small, local, private school may be a better deal overall -- you can get a great education, they tend to give out lots of aid/scholarships, and you can save on expenses by living at home.

2. Getting good grades (and high test scores) is a great way to save on college costs. Do all you can to make sure your kids are taking their studies seriously in high school. (I know, it can be an uphill battle. That's why I said "do all you can do." Most of it is up to them, unfortunately.) ;-)

3. Networking with alumni is a terrific way to land a job/internship.

4. If you want to go to grad school, getting an employer to pick up part (or all) of the tab can save you thousands of dollars.

5. For more ways to save on college costs, see these posts:

• More Great College Savings Tips -- Save up to 50% Off College Costs

• Save Big on College: College for Half-Price

• Money Saving Tip: Save on College Courses

• Money Saving Tip: Save on College by Studying Abroad

• 4 Ways to Save Big on College Costs

• A Great College Money Saving Tip

Save Money on Household Bills

Here are a few tips that Smart Money listed as part of their piece on how to save $100 a month. Today, we'll talk about their list of saving on household bills. Their suggestions:

• Shop around. Use consumer web sites such as lowermybills.com, or myrateplan.com, to see how much you could save on everything from your local and long distance phone service to cable and web access.

• Cancel services you're not using. Save $10.95 a month by ditching one premium channel or $36 a month by downgrading to a basic plan.

• Dump your land line. Consider dropping your local and long-distance plans and use just your cellphone instead.

• Reduce energy costs by as much as 30% using Energy Star appliances and adding insulation.

Not much new here, but these are good reminders of easy ways to save some extra money. Here's what I've had to say in the past on this suggestions in case you'd like more info/details:

• Save on Cable TV: You Don't Need to Eliminate It, Just Cut Back to Save a Ton

• Save Money: 5 Alternatives to High Cable Bills

• Save Up to $500 a Year on Energy Costs with These Simple Tips

• Money Saving Tip: Threaten to Cancel

Five Money Mistakes to Avoid

Here are five money mistakes we should all avoid according to personal finance author Suze Orman. She claims that these are moves that men are more inclined to make than women, so pay attention, guys (and don't turn away, ladies). Here goes:

1. Funding early retirement with a home equity line of credit.

2. Not paying off the mortgage early.

3. Neglecting to make a will.

4. Refusing to take the investing long view.

5. Assuming the role of the family's sole money manager.

Ha! Boy, has she got us pegged! ;-)

Here are my thoughts on each of these:

1. Does anyone really do this? What a crazy idea! How about the strange concept of funding early retirement with something like, say, savings? What a novel concept, huh?

2. Oh, yeah, she's talking my language now! If you buy the right house, you should be able to pay your mortgage off in 10 years at the most. So what's the issue?

3. Yep. No one wants to make a will (including me). But we have to. Just read Do Yourself (and Your Family) a Favor: Read This, then Do Something About It and see if you don't agree.

4. Many people want to get rich quick with a "hot" stock tip. Me? I'd rather get rich slowly -- investing in index funds and letting the power of time and the power of compounding work for me.

5. I do most of the money management in our family, though my wife and I have regular money meetings to make sure we're on the same financial page.

Free Money Finance in Five Carnivals This Week

Free Money Finance is part of five carnivals this week. Here are the carnivals and my posts that were included in each:

• Carnival of Debt Reduction - How to Maximize Credit Card Rewards (And Why Cash-Back Cards are the Best for Most People)

• Carnival of Personal Finance - Which is More Important -- A High Starting Salary or Higher Average Salary Increases?

• Carnival of Investing - Save 50% on Investing Expenses

• Festival of Frugality - Save 50% on Clothes

• Carnival of the Vanities - Sears Elliptical Update: They Don't Stand Behind Their Products and Their Customer Service Stinks

Stop by these carnivals to read some great posts!

Money Saving Tip: Save on Babysitting

Want an idea to save on babysitting costs? Check out my post titled Money Saving Tip: Save on Babysitting written one year ago today.

Sears Elliptical Update: Don't Buy Exercise Equipment from Sears

I thought I'd give you all an update on my on-going war with Sears over the sub-par elliptical machine they sold me and then won't take back.

My last post on this subject was Sears Elliptical Update: They Don't Stand Behind Their Products and Their Customer Service Stinks where I tried (as a reader's suggestion) to get Sears to take back my dud elliptical machine. No going.

The new news is that the repairman did come by yesterday (around 1:30 pm -- so my wife had to wait all morning and part of the afternoon for him) and install the parts they had sent to our house. I used the machine last night for an hour and here's my take on it now:

• The operation is much smoother -- the knocking sound in the front is gone. That's an improvement.

• I put in new batteries before I worked out, and by the time I was done working out, the console was blinking in and out (a sign the batteries were wearing out). On this trip, the repairman told my wife that everything the machine does will drain the console batteries (like display the workout status and adjust the resistance). Last time, he said that batteries being drained too quickly was a sign of a bad console (and that's why we got a new one).

• The machine now squeaks in the front (I haven't determined the exact location yet) and there seems to be way too much "sway" in the front stem as the machine is used. Seriously, I wouldn't be surprised if the thing just snapped off one night and sent me flying across the room. Believe me, if that happens, I'll be seeking the advice of a lawyer.

In the end, I don't think this machine is long for this world. We'll have to see. But I've been thinking of the whole situation and I'm still miffed at it -- especially at the treatment I received from Sears customer service. I mean this is a bad piece of equipment, they are losing a fortune on servicing it, I'm frustrated, and they certainly aren't getting good press out of this. If they really wanted to earn a loyal customer, they would have taken it back and called it a day. But noooooooooooooooooo...

But I'm not giving up. In fact, I'm more determined than ever. My mission, as stated in my last post is as follows:

Ok, now I'm on a mission. A mission to persuade whoever may be reading this (approximately 1,800 people a day -- so hopefully I'll influence more than a handful of readers) to NOT buy ANYTHING of value at Sears. In the past, Sears has been our preferred retail location for items like stoves, refrigerators, dishwashers, washing machines, dryers and the like -- and all of those have been good purchases for us. Their Kenmore brand is solid and they usually have decent prices (especially if you wait for the right time to buy). But my most recent experience with buying an elliptical machine from them -- and the ensuing product and customer service failures associated with this piece of exercise equipment -- has soured me so much on the company that they'll be lucky if I ever step foot in one again. And I'm expanding that philosophy to Kmart too (which is owned by Sears). I simply do not want to give that company another dollar.

Here's what I plan on doing in my on-going war against Sears:

• I will regularly post updates on my machine, how it's working/not working, and any service/contact we have from Sears on it.

• Once a week, I'll be highlighting a "Sears customer nightmare story" -- and believe me, I have plenty of them. People from all over have left their bad Sears experiences in comments to my posts. In fact, let me share one now -- from a reader commenting on my last post:

Sears won't see any more of my money. I've been attempting for two months now to receive a refund on a part I returned. Highlights:

• Ordered $50 part
• Realized the next day I didn't need part
• Called to cancel part
• Sears: our system doesn't handle cancellations (what?!). Send it back to us when you receive it.
• I received and returned the part a few days later
• I've held 6+ conversations with their 800 call centers--no resolution

My advice: don't shop at Sears. If anything goes wrong, they will drown you in bureaucracy betting that they'll outlast you.

I think this "drown you in bureaucracy betting that they'll outlast you" is right on. They aren't going to outlast me. We'll have to see where the battle ends, but even if I end up eating the cost of the elliptical, I'll make them pay much, much more in lost sales and customer ill-will.

• I'm going to send a letter and copies of my blog entries to the president of Sears. I've tried customer service (and failed). And while readers have suggested I contact their media relations department (after all, this blog is a form of media), I think I'll cut to the chase and go to the top. Then we'll see how Sears really handles customer service.

• I have a few other tricks up my sleeve to put the heat on Sears that I'm saving for the holiday season and then into the January exercise equipment season. I should be able to thwart more than my fairshare of Sears business during that time. ;-)

As for you, if you'd like to add your own Sears horror story, please do so in the comments below.

Update: Click here to read the next chapter in my Sears saga.

How to Get Free Krispy Kreme Doughnuts

Here's a little secret I found out recently about how to get free Krispy Kreme doughnuts:

When the "hot" sign is on, some Krispy Kreme locations give away one free original glazed doughnut to every person stopping buy.

This is done on a store-by-store basis, so you'll need to ask your local Krispy Kreme if they offer this or not. If they do, and if you drive by their store often, look for the "hot" sign (a big, red, neon sign that's visible from a long ways off and says that hot doughnuts are available -- see the link above and the words "Look for the Hot Light" for a picture of what it looks like). If it's on, pull in and grab your free doughnut.

Our Krispy Kreme store happens to be on the way to the local mall, across the street from Lowe's and on the main intersection in our city leading to all the other main shopping areas. We go by it at least once a week, and we hit the jackpot about once every third time. My kids get so excited at just the thought of getting a doughnut and since it's free, my wife's ok with it (despite the lack of nutritional content). WE hit it this past weekend and it made a great start to our day.

How can Krispy Kreme afford to do this? Well, first, the cost of a doughnut is virtually nothing. It's not that costly to give them away.

Second, they taste GREAT -- especially when they are hot. Even if people don't buy any more on this trip, it's likely that they will on another trip. Who can forget the great taste of a hot, Krispy Kreme doughnut?

Finally, most people do buy something extra. Getting customers into a store is over half the battle in marketing and they become MUCH more likely to buy something if they go into the store (it's pretty hard to buy something if you're not in the store). ;-) And since Krispy Kreme makes such a large margin on their doughnuts, coffee, etc., they easily end up making money by giving away free doughnuts.

A couple of non-finance comments:

1. My favorite doughnuts are the chocolate iced creme filled (last one in top row).

2. The best: a hot, original, glazed doughnut with a scoop (or two!) of Moose Tracks ice cream on it. Or, if you're a huge chocolate fan, go with Extreme Moose Tracks ice cream. Yummmmmmmm! ;-)

The Best Retirement Plan is Simple

Since I've been working on my retirement number recently, the subject of retirement seems to be on my mind a lot more. Yeah, I still have over 20 years of work left -- even if I retire at 65, which I hope not to -- but it's still on my mind. Good thing too, since it takes a bundle of money to retire properly.

Here's a piece from Money magazine that suggests that the best retirement investment plan is a simple one. We'll start by laying out the scene -- and talking about how investment companies are finding all sorts of ways to "help" you out with retirement:

With the market struggling to eke out even meager gains this year, you may be tempted to look beyond traditional investments for something, anything, to fatten up your retirement account. Financial services firms, of course, are only too eager to oblige with a growing smorgasbord of "alternative" investments - oil-well partnerships, direct investments in privately held companies, foreign currency ETFs - that seem to offer an inside track to superior gains.

But just because it's easier to get into more "sophisticated" investments, does that mean you should? I say no. While exotic investments may seem like an ideal way to revive a flagging retirement account, they often come with risks and onerous fees that could derail your retirement rather than enhance it.

As many of you know, I'm pretty suspicious of financial services firms and financial advisors. Many of them are simply looking for ways to make your money become their money. Yes, there are good ones out there (I like Vanguard, for instance) but you need to be on guard. The bad seem to far out-weigh the good.

The article goes on to tell why these investments aren't a great deal for investors (for instance, many cost a fortune, thus severely reducing your total return) before getting to the bottom line:

My advice: Ignore the siren song of sophisticated investments. Either you'll end up paying huge fees for a magic investing touch that may or may not be there or you'll need incredible timing to come out ahead in the long run.

At the end of the day, what really creates the wealth you need to retire is the long-term growth potential of companies large and small. And you don't need fancy strategies to tap into that. You can do so by simply investing in a mix of low-cost stock and bond funds. The strategy does have three big advantages: It's cheap, it's unlikely to blow up in your face and, even though there may be occasional setbacks, it works.

Yep, I'm with them here. I'll be a bit more specific: index funds. I won't re-hash all the reasons I like them so much (see Why I Like Index Funds or Best of Free Money Finance: Investment Posts) but there are plenty of good reasons. And, no, they're not glamorous or exciting investments, but they certainly get the job -- which is what you want most when you're facing the menacing retirement monster.

For more on retirement, see these posts from Free Money Finance:

• Don't Take Early Social Security Retirement If You Don't Have To

• A Better Way to Set Your Retirement Number

• How Much Is Enough for Retirement Savings? (How to Set Your Personal Retirement Number)

My Real Estate Investing Plan for the Housing Decline

I've previously noted that I hope to make some money (if the right situation presents itself) during the current/pending real estate price decline that many of the areas of the country are experiencing/about to experience. My part of the country is certainly impacted (in June of 2005 there were more than 8,800 homes listed with about 1,450 sold. This past June about 10,500 listed, but only 1,100 sold) and may present some "buying opportunities." Anyway, I thought I'd share my plans in this effort.

But before I start, let me say that what makes investing in real estate possible for me is that I have no debt and have saved a good amount of money over the past several years -- the kind of stuff I recommend on my posts here at Free Money Finance. So while tons of homeowners are scrambling to make their increased mortgage payments (as adjustable rates increase) on houses that are falling in value, I'm looking to make some money by buying a bargain or two. It's a good place to be.

Here's my plan specifically:

1. Track local housing prices. I plan to keep tabs on local pricing by looking online, in the paper, and keeping in touch with a few real estate agent friends.

2. If I can find a good property (good location, well-built, one that I wouldn't mind holding for a bit, etc.) at a great discount (off it's previous high as well as relative to the market -- this may mean finding a desperate buyer), I can snap it up by paying cash (I'd have to sell some investments, of course, but offering cash may help me negotiate an even lower price than I'd otherwise expect.)

3. I'd hold it for awhile, until the softness is gone, then sell (if I wanted to) or hold it even a bit longer. Eventually, there will be increased prices for good real estate in good locations and I should do just fine.

Of course, I realize that the right circumstance may never present itself, and if that's the case, I'm fine. I don't HAVE to buy something -- and I won't push to make it happen just to "do something." I'm cautious and willing to wait and will only move if the right circumstance presents itself.

How about you? Anyone else out there planning a similar strategy? If so, I'd love to hear what you're planning.

How to Save Money at Bed Bath and Beyond

On my post titled Why I Shop at Bed Bath and Beyond -- They Know Customer Service, I had a couple people comment on ways to buy items at Bed Bath and Beyond and save money. Here's the first:

Another nice thing about BBB is that they accept coupons that have expired. So save the coupons that you get in the mail, even after they have expired. My sister is getting married soon and I've been using all of my old coupons for the gift purchases.

Great tip! I've also heard that they accept competitor's coupons -- another great way to save money at BBB. Here's the next tip:

I believe two of my coworkers used them for their registry because they were told if they wanted to make returns on gifts, they could get cash not just store credit. The other said he was able to get what was left on his registry all at 20% off either because he had a bunch of coupons or because he struck a deal with the manager. Either way, both were happy with BBB!

This is, quite simply, a great company to do business with -- and one I support 100%.

And if you use the tips above, you can save a bunch of money while dealing with a company you can trust.

Another Win for Index Funds: They Out-Perform the Best Investment Newsletters

Here's a piece from Kiplinger's giving some advice to avoid short-term performance when determining the value of an investment newsletter. Their findings:

When you're picking investment newsletters, ignore short-term performance. Instead, focus on how the newsletter has done over the long haul. Ten-year performance is ideal.

The worst way to pick a newsletter is to pay attention to the previous year's performance. Over the past 15 and a half years, you would have lost an annualized 13% by focusing on one-year performance. Your money would have essentially been wiped out following such strategies.

By contrast, suppose you selected newsletters based on their performance over the previous ten years. Over the past 15 and a half years, you would have earned an annualized 9%. That still lags the S&P 500 by one percentage point per year, on average. But, obviously, concentrating on ten-year winners is better than focusing on one-year winners.

What about shorter periods, such as three years and five years? The longer time period you consider, the better. Focusing on five-year winners would have earned you an annualized 7%. Three-year winners would have lost you an annualized 1%.

Ok, let's stop here and digest this. Here's what I'm getting out of the information above:

1. The longer the performance period you look at, the better predictor of success for an investment newsletter. Makes sense to me.

2. Here's the blockbuster finding to me: even the ten-year period "lags the S&P 500 by one percentage point per year, on average." So, why not just go with an index fund and save yourself the cost of the newsletter (Later in the article Kiplinger says, "all these newsletters cost a bundle -- all of which comes off the top of your profits") and the time involved in picking and managing their recommendations?

The bottom line: Index funds allow you to earn more without a big time commitment in applying a certain newsletter's strategy. To me, it seems like a no-brainer to invest in them.

Money Saving Tip: Save on Non-Food Items

Want a simple way to save a ton on non-food items? Check out my post titled Money Saving Tip: Save on Non-Food Items written one year ago today.

Money Saving Advice from Northwest Airlines

Here's a piece that a reader pointed out and I'm just getting around to posting on it. Many of you probably heard of the controversy that erupted when Northwest Airlines (which is in bankruptcy) issued a booklet to its employees on how to save money in their personal lives. Seems like the hints were a bit undignified (or at least some employees felt that way) and caused resentment among Northwest workers (who have already taken as much as a 40% paycut to try and keep the airline afloat.)

Some of the ideas they suggested:

• Don't be shy about pulling something you like out of the trash.
• Take in boarders.
• Air-dry clothes.
• Ask for hand-me-downs from family and friends.
• Change your car's oil yourself.
• Use old newspapers for cat litter.
• Donate time instead of money to religious groups or charities.

Actually, these aren't bad suggestions -- and I've offered many of them up myself (and use many of them myself by the way.) But the problem is that the ideas come at an especially difficult time for Northwest employees -- that's why they didn't go over that well (in addition to the fact that they could be viewed as demeaning ideas -- though I don't see them that way). Here's a bit of a summary of the situation that made things so explosive:

On July 31, their [Northwest's unionized workers] annual pay dropped to a range of $16,000 for starting workers to $43,000 for the most senior, when a bankruptcy judge ordered them to accept the airline's contract terms. Camilla Wolkerstorfer, interim president of the Northwest Council of the Association of Flight Attendants, calls the memo "insulting and outrageous." She says flight attendants are so squeezed that some are taking second jobs and working seven days a week to pay their bills. "I just don't get that mentality," she says of the airline's management.

The trash-picking tempest comes at a particularly sensitive time for the money-losing airline and its flight attendants. Northwest, which filed Chapter 11 last October, has forced employees to swallow deep pay cuts and mass layoffs to chop $1.4 billion from its annual personnel budget. But while other unionized groups begrudgingly agreed to giveback contracts, the flight attendants twice rejected the company's new deal.

I'm not going to step into this fray, but I am going to add a few comments:

1. I hope Northwest makes it. I live in Michigan, and they fly a ton of flights out of and into the state. If they collapse and no one takes over their routes, our state will be in a world of hurt airline-wise.

2. All Northwest workers -- the union workers as well as executives -- should probably start looking at ways to cut their personal expenses. It only seems prudent at this point. Some additional suggestions for saving money can be found in the Free Money Finance saving money category.

3. It's tough to take such a pay hit -- very tough. But for now, all Northwest employees should be thankful they even have jobs. The company is on the verge of dying, so at least some salary is better than nothing. Unfortunately, most other airlines are not in that much better shape, so employment opportunities are limited in the industry. Northwest employees should start thinking about how their skills translate to other industries and begin working on a plan to get a new job in those industries.

How to Save Money While Living in a Big, Expensive City

As you might imagine, many of the big-city dwellers didn't really warm up to my post titled 8 Cheap Places You'd Want to Live (And How to Find More) where I offered this piece of advice:

So if you're in the mood to save anywhere from 10% to 50% of your salary, you may want to consider this simple tip: move.

But one commenter had some good thoughts on how to save money even if you do live in an expensive city. Here are the key thoughts:

We sometimes toy with the thought of moving out of Silicon Valley, but our criteria are hard to meet. Given that many of us in expensive areas are in similar situations, an interesting article would be "how to do well and save money without leaving The Big City." In our case, it would include:

1. Low-ball your car expenses. Just because everyone else drives a BMer or Lexus doesn't mean you have to.

2. Enjoy what you're paying for - day hiking, the beach, and weekend backpacking trips to Yosemite and Lake Tahoe are cheap and fun. Use them.

3. (Not for us, as we bought years ago, but decent advice for young people) Here, rents are much lower proportionately than purchasing. A 2 bedroom apartment in our city would rent for about $1,000, while a similarly sized condo would cost $400K or more. A house could be rented for $2K/month, while it would cost $700K or more. Renting is probably a better option than buying at this point.

4. Other LBYM (live below your means) advice works just as well across the street from Google HQ as it does in Cheapville, ND: don't have silly debt, avoid Starbucks, monitor and prune ongoing expenses - however small - and you'll do well.

I love it! Great advice! Just because you live in an expensive area of the country doesn't mean you can't take steps to save money relative to what others in your area are spending -- you can! Think about which of these tips (as well as all the ones listed in the Free Money Finance saving money category) will work for you, then apply them to your life to make living in a big, expensive city a little more affordable.

Click here to read more ways to save money when living in a big, expensive city.

Best of Free Money Finance: Career Posts

Here's a list of what I consider to be some of the best career related posts here at Free Money Finance:

Making More Money

• How to Ask for a Raise

• Five Steps to Getting a Bigger Raise

• Maximizing Your Greatest Asset: Why Your Career is So Important

• How to Earn More Money

• This Year's Graduate's Destined to Earn Millions in Their Lifetimes; Average Graduate Can Earn $25 Million if Career is Managed Correctly

• The Best Career Tip: Manage Your Career

• A High Starting Salary is Worth Almost $1 Million

• Maximize Your Career Earnings: Get a Degree and Manage Your Career

• 10 Ways to Get a Promotion

• Make the Most of a College Education -- It's Well Worth the Investment

Getting the Right Job

• The 10 Rules of Job Hunting

• How to Answer Tricky Interview Questions

• Career Guidance: Do's and Don'ts of Quitting Your Job

• One Way to Find a Career that You'll Love

• Ten Job Hunting Myths

General Career Guidance

• Experience versus Education: Which Counts More in Career Success?

• How Moving to a Cheaper Cost-of-Living City Can Make You Rich

• Your Most Valuable Asset

How I Set My Retirement Number

Last week I posted I Set My Retirement Number and Boy It's a Doozy! and I had this comment from a reader:

If you don't mind sharing, I'd like a little more information as to the five methods that you used in calculating the retirement number. I'm particularly interested in the two methods of calculation that you devised yourself.

So here we go -- I'm going to detail how I set my number.

First of all, I googled around a bit and found three retirement calculators that were to my liking. Each of them asked different questions (and thus made different assumptions), so the answers varied more than a bit. However, I recorded the answers provided by Monroe Bank, Money Central and Dollar Times as three data points in setting my number. Then I set off on developing my own estimations in two different ways.

The first estimation was the simple "4% method." It's developed on the premise that you will be able to take out 4% of your nest egg in year one of retirement -- and if you can do this (and live on it) -- you'll be set throughout retirement. So here's what I did:

• I took the annual salary I would need today to retire. (Note: This was not figured as a percentage of my current salary or our living expenses. I simply determined what we would need to live on today based on actual expenses. I did not adjust downward -- as many people recommend -- since I like to be conservative and I assume any decrease in living costs at retirement will be eaten up by increased health care costs.)

• I adjusted for inflation (assuming 3.5% inflation per year) to get the amount I'd need to withdraw the first year I'm retired. In other words, I increased the number I got in step #1 by 3.5% per year for 23 years.

• I then divided this number by .04 (4% -- you can also multiply by 25 -- it gives the same result) and that was my retirement number estimate #4.

For further details on this method, see Will My Savings Run Out in Retirement? where they comment:

If you withdraw 4% of your personal savings during your first year in retirement and adjust subsequent withdrawals to compensate for inflation, you're virtually assured of never outliving your money over a 30-year retirement.

Remember, in my original post, I said I wasn't counting on anything from Social Security, so I have to save this entire amount myself. If I wanted, I could subtract what I already have saved (plus growth of that amount) to see how much MORE I need to save before retirement. 

By the way, this method gave me the highest estimate of all the methods I used.

As an example, here's what this method would look like for a person planning retirement:

• Let's say the person decides he needs $50,000 a year in today's dollars to retire.
• In 23 years at 3.5%, that number balloons to $110,306 per year.
• Divided by 4%, $110,306 means the person needs $2.8 million at retirement.

From this amount, the person could subtract what he expects to get from Social Security as well as what he thinks his current savings will be worth at retirement to get how much he needs to save in the next 23 years. For instance, someone counting on nothing from Social Security but who thinks his current portfolio will be worth $1 million at retirement only needs to save an additional $1.8 million (principal and growth) in the next 23 years.

My last method took all of the same steps I employed in the example above, but I just laid it out year-by-year. For every year (from now until I'm 92), I listed the following:

• My income needs (increased by 3.5% annually).
• The value of my current savings. I estimated annual appreciation at 6% to be conservative, but my spreadsheet allows me to change this rate to do "what-if" analysis.
• The value of additional savings -- the amounts I contribute annually to my retirement savings for the next 23 years. These numbers include both the amounts I save as well as 6% annual appreciation.
• A running balance for my retirement funds (the value of my current savings plus the value of additional savings less my income needs)

I then took all five methods, and averaged them to get "my" retirement number. This number was a bit higher than the one I got in method #5, so I felt that it was one that would allow me to reach the savings goals I needed.

I end up with lots more money when I die at 92 than I had at 65 when I retire -- my needs are just not as great as the growth of the amount I'll save. This could be looked at two ways:

1. I'm saving too much and thus don't need to put as much away.

2. This protects me against potential snags in my assumptions (what if it costs more to live than I estimate, what if I can't get the annual returns I have estimated, etc.?).

Finally, this number is not set in stone. I will re-visit it in 3-5 years, see how I'm doing and make any needed adjustments. I hope to put in more than planned in the next few years to really boost my savings, so hopefully that review down the road will show I've made good progress towards my goal.

Save 50% on Electronics

Here's part seven of our coverage of Smart Money's piece on how to save 50% on everything. In this post they give ideas on how to save 50% on electronics. Their tips basically come down to two points -- buy near the end of the product's lifecycle (or at least when the initial "thrill" has worn off) and buy during key retailer sales times. Their thoughts:

The average shelf life of a new desktop or laptop computer these days is a blink-and-you'll-miss-it 13 weeks. Wait longer and you'll be choosing from new, full-price models.

But the art of timing extends well past product cycles. If you can, buy end-of-cycle computers and electronics during the two periods when retailers have their biggest sales promotions: the six weeks before school starts and the holiday season.

I tend not to be an early-adopter of electronics (I would be, but my wife won't let me) and we're never in a hurry to buy an item in this category, so we usually get a pretty good deal. The only thing I would add to the above is that you should buy from a company that stands behind their products -- just in case something goes wrong. Case in point: my experience with Amazon and my first iPod.

Click here to read part 1 of this series.

The Value of Education

In The Value of Education I wrote (almost one year ago today) the following:

The money you spend on a college degree still yields a sizable return on your investment. Over a working lifetime, the typical college graduate earns about 75% more than a high school grad does. On average, that difference totals $1 million more -- easily enough to re-pay those student loans and then some.

Check out the entire post for more thoughts on the value of an education.

I've written a lot more on the subject of how valuable a college education can be. For more thoughts, see these posts:

• College is Expensive, but Well Worth It Financially (Or: Give Four Years and $40,000 and Get an Extra $1 Million)

• The Value of an MBA

• Earn More by Going to College

The Five Costliest Mistakes Retirees Make about Social Security

As I've written previously, I'm not counting on any payout from Social Security when I retire. By the time I'm ready to retire, I think it either won't be around, won't pay much, or will raise the retirement age well past the time I'd get anything from it. However, if you're retiring anytime in the next handful of years, you will be getting something and should plan accordingly to make the most of your Social Security payout. I've suggested before that there's a best age to start Social Security (the later the better), but there's so much more than that to be considered.

Author James Mahaney recently emailed me a piece he co-wrote titled Innovative Strategies to Help Maximize Social Security Benefits. Part of this document lists the five costliest mistakes retirees make about Social Security. Here's the list and my comments on each point:

1. Underestimating the real value of Social Security. Key quote: "Some never take charge of this benefit [Social Security] because the discount the viability of the system in general. But whatever your personal beliefs are about the Social Security reform debate or a 'pay-as-you-go system', most new retirees have been paying into the Social Security system for many more years than they have contributed to their Defined Contribution plan. They can count on both as critical sources of retirement income."

Hey, is he talkin' to me? ;-)

I'm not going to ignore Social Security when I get to the age to "manage" it, I just have a hard time believing that it will be worth much in 25 years. I guess we'll see.

2. Rushing to collect, then regretting the reduced benefits for the rest of your life. Key quote: "And most [retirees] certainly didn't stop to think that they could potentially double their initial payments if they only waited until age 70."

I'm planning to wait as long as possible before drawing whatever Social Security has for me -- that's one advantage of not counting on it for anything (and saving myself accordingly).

3. Not understanding how one spouse's decisions affect the other one's benefits. Key quote: "In essence, the value of delaying Social Security 'lives on' as the higher benefit is passed on at death to a spouse. This is a wonderful way to protect a spouse from running out of money."

Good information here -- I never knew this. If you're close to retirement, you HAVE to read this piece.

4. Getting blind-sided by the "Tax Torpedo". Key quote: "The tax situation for the retiree is often worse than expected. Once a very low income threshold is met, every dollar received from an IRA causes up to 85% of a Social Security dollar to become taxed too."

Yikes! I had (mistakenly) thought that taxes would be much more of a non-issue in retirement. Guess again, huh?

5. Assuming that more control equates to more income. Key quote: "The inability to delay 'ownership' of their Social Security benefits may cost many retirees dearly."

Another great point -- and one that shouldn't be missed.

As you can probably tell by now, I highly recommend Innovative Strategies to Help Maximize Social Security Benefits for anyone that's close to retirement or even if you're simply interested in knowing more about Social Security and "best practices" for managing it for yourself or for someone you love.

Money Saving Tip: Calculate the "Per Use" Cost

Here's a simple yet effective money saving tip that I was reminded of on a recent trip to Wal-mart:

Be sure to calculate the "per use" cost of items you buy. Do not assume that it's always cheaper to buy the larger size -- many times it is not.

When I was a kid, the "rule" was that larger size items always cost less than their smaller-sized cousins on a per use basis. So a 20 oz. product of cereal might be $0.10 per ounce while a 30 oz. product of the same cereal might be $0.08 per ounce. This made sense for all -- the product manufacturer saved on some packaging and shipping costs, the retailer got a higher total price (even though it was less on a per ounce basis, the total cost was still more of course because of the higher ounces), and the consumer saved money (as long as you knew you'd use it all, it was a good deal).

Then marketers realized that consumers started seeing this as a "rule" and started getting sneaky. They'd price a few of the bigger items at the same cost per use as the smaller ones -- or maybe even a bit more. As they saw that consumers weren't catching on (they weren't seeing that the bigger products were actually more expensive), the manufacturers/retailers began to raise the prices on more and more bigger items.

Case in point: my recent trip to Wal-mart to buy shampoo. Here are the stats on two different-sized bottles (same flavor) of Suave shampoo:

• 15.0 ounce bottle -- $0.90 cost -- $0.060 per ounce
• 22.5 ounce bottle -- $1.47 cost -- $0.065 per ounce

First of all, we're not talking major amounts of money. 22.5 ounces at the lower-sized price-per-once would be $1.35, so you're only paying $0.12 more. So we're not talking the end of the world here.

But looked at another way, that $0.12 means you're paying 8.9% more for the 22.5 ounce size as you would for 22.5 ounces at the 15 ounce rate per ounce. How would you like to pay 8.9% more for everything you buy? Wouldn't be too happy, huh? Me neither.

This sort of pricing really irks me -- and I'm disappointed to see it from Wal-mart -- but we have to be on guard. This sort of pricing game is happening more and more nowadays, so be sure you check your per use costs if you truly want to get the best deal.

New Rules Make Tax Deductions Harder -- I May Be Giving Less As a Result

There are some new tax rules that may make deducting gifts to charities harder or easier -- depending on what exactly you're trying to do. First, here are a couple new rules that make it harder to get a tax deduction for a gift:

The Internal Revenue Service may deny deductions for donations of clothing or household items -- furniture, appliances, linens, electronics and similar items -- that aren't in "good" condition.

Any significant household item, valued at more than $500, must be appraised before the taxpayer can take a deduction.

Another new rule requires that taxpayers who deduct cash donations have a receipt or bank record, such as a canceled check, to prove the gift. Instead of placing a few dollars in the collection plate, donors might want to write a check.

This is a real bummer. Charities like these rules because they will keep people from donating junk, but for those of us who regularly contribute good stuff, it makes giving more of a hassle. In particular, I'm not going to take the time and effort (much less the cost!) to have a good item worth more than $500 appraised -- I'll simply give it to a friend (who may or may not be as needy as someone at a charity).

And so much for giving cash in any decent amount. If I don't have a checkbook, I can't see giving over a few dollars.

This seems to penalize people for trying to be generous. In my opinion, instead of the charities gaining by discouraging people from giving junk, they'll end up losing more because legitimate donors won't want to deal with the rules/hassles.

There is a positive, new law related to giving and taxes:

Charities are lauding a temporary break that lets taxpayers age 70 1/2 or older contribute up to $100,000 directly from an IRA to charity without paying tax on the money.

United Way of America estimated that the tax break may generate an additional $400 million in new giving to the charitable sector over its two-year lifespan.

This seems to be a win all the way around -- both for charities as well as retirees who are looking for ways to maximize their transfer of assets to charity. Too bad the other rule changes can't be win-wins for all.

Another Way to Get an Incorrect Medical Bill Corrected

In my post titled How to Get an Incorrect Medical Bill Corrected, I noted that a Money magazine reader had gotten a wrong medical bill corrected by using a service from her senator's office. A reader offered this comment which I think is another GREAT way to get a bill corrected:

I had an erroneous charge (of $1,400) from the hospital after I gave birth - they knew it was a mistake, but nobody would fix it. I called numerous times, wrote numerous letters..and nothing happened. Finally, my mother (who works for a hospital) told me to write to their PR Department (each hospital has one) and explain the whole situation and that I was going to write a big letter to the L.A. Times (my local paper) if they didn't fix this problem right away. Needless to say, within a short time, it was cleared up.

Ha! What a great idea! Seems like this certainly would work well -- and be well worth following through if they said you owed a large amount.

Save 50% on Buying a Car (Kind Of, But Not Quite)

Here's part six of our coverage of Smart Money's piece on how to save 50% on everything. In this post they give ideas on how to save 50% on buying a car. They start with a piece of interesting "news":

While new-car sales account for 60% of the average dealership's revenue, they contribute only 15% of the profits, down from 26% in 2001. So where do dealers make it up? From selling warranties, parts and repair services to their happy new-car customers.

Wow -- I didn't know it was this bad. I would have said 50% from the sales of cars and 50% from everything else. 15% just seems ridiculously low. My, what things have come to.

I certainly know that they charge a ton more for service than most other garages. If I didn't have a credit card that saves me tons on my service and if the dealership didn't save me a ton of time, I wouldn't use them. And I NEVER buy the extended warranty -- I just buy a highly reliable car in the first place.

They then offer some ideas on how to save when buying a car -- but nothing close to saving 50% -- at least from what I can see. They do detail the method I used to get my past two cars at rock-bottom prices:

Hot cars aside, many dealerships will accept the invoice rate — the upfront price it paid for the car — plus a few hundred bucks. Sometimes you can pay even less. Obviously, that means taking advantage of buyer cash-rebate incentives, but in some cases, the dealer also gets its own kickbacks from the manufacturer. Edmunds.com lists these rebates as "marketing support" on its Current Incentives & Rebates page.

I simply found out what their cost was, what rebates/kick-backs they were getting, and offered them a couple hundred bucks above this "true cost." I also did it at the end of the month when they were desperate to make their sales numbers, so it worked quite well. ;-)

For more thoughts on saving on cars, see Save on Buying a Car: Four Steps to a Bargain on Wheels (tons of links at the end).

Click here to read part 7 of this series.

Click here to read part 1 of this series.

Thoughts on Stewardship

Here are a couple great comments I received to my post titled Two Foundational Principles of Christianity and Money:

I think the concept of stewardship is one that should be taught to anyone who has ever handled money. It is the one that most changed my financial life. The great part about stewardship is that I no longer have to worry about money. The freedom that comes with that is enormous. I no longer worry about losing a job, having a car die, or even retirement. I just manage the money that God sends my way the best that I can, and he handles everything else. I wonder what ever made me think I could handle "owning" money. Being a steward is much more fun, relaxing, and rewarding.

I agree. Once I switched from being an "owner" to a "steward" it made a huge difference. It is a ton more fun, relaxing, and rewarding.

The second commenter had a short but valuable thought:

The only thing I can add is that you cannot serve both God and money. Always have to keep that in mind.

Of course. And if you are focused on being a steward, then you won't be serving money. You'll be focused on serving God and handling your money the way He would have you handle it.

Money and Happiness -- Any Relation?

Here's a post I wrote one year ago today titled Money Can't Buy Happiness.

I've written more on this topic since then including:

• Does Money Make You Happy?

• Millionaires are Happier

• Comments: Does Money Make You Happy?

• Money Doesn't Make People Happy

• Money, Happiness And The Pursuit Of Both

We've discussed it a bunch, but really haven't come to any final conclusion. So, the question remains: is there a relationship between money and happiness? What do you think?

Posts of the Week -- August 25

Here is a list of my favorite posts this week:

• Which is More Important -- A High Starting Salary or Higher Average Salary Increases?

• Yes, Moving to a Cheaper Cost-of-Living City Can Make You Rich

• Save Big Money by Getting Good Grades in College

• Why I Shop at Bed Bath and Beyond -- They Know Customer Service

• Save 50% on Everything Series

• Sears Elliptical Update: It's Not Good

Have a great weekend!

Free Money Finance recommends Emigrant Direct.

How to Create Cash (And Ask for a Raise)

Want to create more cash for yourself? Check out Best of FMF: More Ways to Create Cash for some ideas. One additional idea is to ask for a raise -- but you need to know WHEN to ask. That's why I wrote When to Ask for a Raise.

Both posts were written one year ago today.

Sears Elliptical Update: They Don't Stand Behind Their Products and Their Customer Service Stinks

Ok, now I'm on a mission. A mission to persuade whoever may be reading this (approximately 1,800 people a day -- so hopefully I'll influence more than a handful of readers) to NOT buy ANYTHING of value at Sears. In the past, Sears has been our preferred retail location for items like stoves, refrigerators, dishwashers, washing machines, dryers and the like -- and all of those have been good purchases for us. Their Kenmore brand is solid and they usually have decent prices (especially if you wait for the right time to buy). But my most recent experience with buying an elliptical machine from them -- and the ensuing product and customer service failures associated with this piece of exercise equipment -- has soured me so much on the company that they'll be lucky if I ever step foot in one again. And I'm expanding that philosophy to Kmart too (which is owned by Sears). I simply do not want to give that company another dollar.

To catch those of you new to the issue up with the rest of us, read Sears Elliptical Update: It's Not Good and Elliptical Wars: My On-going Struggle with Sears (as well as the posts those are linked to) and you can get the whole, ugly story. But the bottom line is that I bought a junky elliptical machine from Sears in February and have had problems with it ever since. I bought the extended warranty, so servicing this thing is costing Sears a fortune and leaving me and my wife without a working machine for periods of time and having to deal with the frustration of working with their service people again and again.

On my last update, a reader commented:

Can't you just return it at this point? Sounds worth giving up on Sears.

Duh! Why didn't I consider that option? I'm not sure if I thought we'd get nowhere with the local management (they weren't too helpful at first when the initial machine died) or if I thought I'd get a brush off from the national customer service people, but for some reason I really hadn't considered it. But now I did, and here's what happened: 

• On August 22, I emailed their national customer service group detailing the story and asking to simply return the machine (saving me the hassle and them the cost).

• That same day, I received an automated email saying they had received my note and would be in touch with me soon.

• On August 23, they called us at home and left a message (I was traveling and my wife was out).

• On August 24 (yesterday), my wife called them back and all Sears said was that they could expedite service to get our elliptical fixed faster than the currently scheduled time they gave us before (since we set the service time, the console, which was on back order until September 12, was sent to us). My wife declined for now, saying she wanted them to talk to me (I had asked her not to agree to anything other than a return of the product and a full refund.)

• When I got home from my trip that night, I called Sears. After waiting 5 minutes on hold (all customer service people were helping someone else -- yeah, right), I got frustrated and hung up.

• I called them today, August 25, at 9:30 am Eastern time. I gave them our case number (that the rep called up on her screen) so she could be familiar with our issues. Now note at this point -- we're talking to a different person every time -- someone who knows very little about our problem and the history behind it. How could they be? They have just seen it for 15 seconds and are now expected to talk to me about the situation and solve my problem. I knew this wasn't going to turn out well.

• I gave her the short summary of what the problems have been and asked that we just call it a day and return the elliptical exercise machine. Nope, she couldn't do that. Even though it's costing them a fortune to service this machine (see my post Elliptical Wars: My On-going Struggle with Sears for details on their costs) -- probably much more than I spent on it in the first place -- she couldn't/wouldn't accept a return. All she could do is "expedite" service to get it fixed now that we had all the parts at our house (they sent them to us -- the technician will install them when he visits). I told her that Sears wasn't getting good press on Free Money Finance (a few thousand people have seen how upset I am with Sears and what a horrendous job they are doing) and she couldn't have cared less (or maybe she wasn't empowered to do anything else). So I told her my wife would call and set up a time.

• My wife did call and set up an appointment for August 29 -- just a bit over a month from when we first called them with this current problem. Now get this: because it's "expedited" service, they don't tell you when they'll be there -- they just give you a range -- 8 am to 5 pm! Unbelievable! Now my wife has to be home all day waiting for the repairman. Is this service? Is this what you'd expect/want from a company you did business with? I'm telling you, folks, if you deal with Sears, this is what you're going to face. (In the interest of full disclosure, my wife could have narrowed the time gap a bit -- selecting a service time of either 8 am thru noon or 1 pm thru 5 pm -- if she wanted to wait to have it fixed until September 8. Unbelievable! How can companies offering this type of service stay in business?)

So, that's where we stand. We'll see how it goes, but I don't have much hope for my elliptical machine lasting very long or Sears's willingness to make it right. But I'm not going to give up. If I have to have them come out to my house 100 times in the next 2 1/2 years before the service agreement expires, I'm going to do that. I'm going to make it cost them a fortune -- and I'm going to keep blogging about it -- hoping to cost them as many customers as possible (and saving people from having to deal with what I've had to face). Also, to note, my service agreement says that if they have to come out to my house three times within a one-year time period to fix the elliptical, they have to give me a new one. I'm on two visits already, so I'm sure we'll hit three within a year. And, yes, I'll make them bring out (and assemble) a new one if/when that occurs.

On a final, more positive note, I want to repeat my advice that all of us do business with companies we trust -- companies that stand behind their products and services. Here's my list of those who really know what it means to serve customers:

• Bed Bath and Beyond

• Vanguard

• Amazon

• Olympus

• Costco

Update: To read the next post in this saga, see Sears Elliptical Update: Don't Buy Exercise Equipment from Sears.

Save 50% on Investing Expenses

Here's part five of our coverage of Smart Money's piece on how to save 50% on everything. In this post they give ideas on how to save 50% on investing expenses. They start with why it's so important that you save money while investing:

Fussing over investment fees is a bore, but if you want to get rich, it's a must. If two guys invested $100,000 in identical portfolios at 7% and waited 30 years, the one who spent 1% of his assets on advice and fees each year would come out $148,000 richer than the guy who spent 2%.

How true! How true! It's the same line of thinking I shared in Expenses, Taxes and Size Matter in Choosing Bond Funds (And Stocks too!) and Ditching Expensive Funds Can Save You Serious Dough.

Now here's a list of their money saving tips that I like:

• The first step: Consolidate your assets. At Fidelity, online trade commissions drop from $20 to $11 once you bring them $50k in assets. Vanguard drops fund fees as much as 50% for clients who invest $100,000 in a single fund.

• Russel Kinnel, director of fund research at Morningstar, advises against paying more than 15% of your expected return in fees. While you might expect to pay the highest fees for the best-performing funds, studies prove the opposite — there's an inverse correlation between fund performance and fees.

• If all you want is cheap trades, check out TradeKing.com. It offers $5 trades, zero account fees and good service.

I'd like to comment on these three:

1. I can vouch for consolidating your assets with one company. I get extra privileges at Vanguard as a result of doing so (I'm not at the level where it's saving me any money yet).

2. I think 15% is too high (that means you'd be willing to pay 1.5% if you got a 10% return). Yikes! See my thoughts below for a much, much better idea.

3. I've never heard of TradeKing and as such, I'm not anxious to give them any of my money. Anyone else had experience with them?

I have two words for those of you who want to save big money and earn great returns on your investments: index funds. In particular, I recommend Vanguard index funds. They're good investments, have low expenses, and the company takes great care of its customers.

For those of you who want to buy stocks, check out The Best E-Broker for You to pick out a good broker with the service and fees right for you.

Click here to read part 6 of this series.

Click here to read part 1 of this series.

Don't Take Early Social Security Retirement If You Don't Have To

A few months ago I wrote The Best Age to Start Social Security. The bottom line of the piece was that the longer you wait to take Social Security benefits, the better off financially you'll be. Most people do the opposite and take early retirement through Social Security. Here's some information from Kiplinger's on why you shouldn't take early Social Security retirement if you don't need to:

Working longer may be the key to financial security for many future retirees who haven't saved enough during their working lives. Early retirees accept a permanent reduction in benefits of 20% or more for the rest of their lives.

Every year you work past age 62 boosts your financial well-being in retirement. Not only do you avoid a reduction in social security benefits and increase your annual income, but you also avoid having to touch your retirement accounts, so they can grow tax-deferred for another year. In addition, you shrink the period during which you have to draw down your savings, trimming the size of the nest egg you need in retirement.

As we've discussed before, you may not be able to work as long as you'd like to before retirement, but if you can, you certainly should. Here's the difference it can make for a person currently making $77,000 a year and needing 80% of that at retirement:

• Retire at 62: Potential Income Gap to Be Funded by Assets after Social Security -- $26,760
• Retire at 66: Potential Income Gap to Be Funded by Assets after Social Security -- $19,200
• Retire at 70: Potential Income Gap to Be Funded by Assets after Social Security -- $8,712

Wow! I never knew it made this much difference!

That said, I'm not planning on getting anything from Social Security. When I retire in 25 years, either it will be paying a minimum amount or nothing at all. I'm assuming the worst (also known as taking the conservative approach) and anything I get will simply be gravy.

Save $15,000 by Cutting Your Own Hair

On my post titled I've Saved Over $1,300 (At Least!) by Cutting My Own Hair, I had this comment from a money saving hair-cutting expert:

I'm 63 and only have had one "professional" haircut in my life, which was when I married my ex-wife, (not the only trimming I got). Assuming one a month @ $15 times 63 yrs, 12x63x15=$11,340. I've gotten very good at doing it myself pulling the hair up in bunches between my thumb and forefinger and snipping. It's actually pretty hard to screw up that way, gauging length by the number of fingers between the head and the cut. I only use the shaver for trimming around the neck and ears, also for trimming my full beard, which I wear short. BTW, I've also cut my second wife's hair for 20 years, at her request!!

Add in what he's saved on his wife's hair, and that gets them to $15,000 in savings!!! Wow, that's great!!! And he used $15 as a guideline for the cost of a haircut. Some people pay way more than that.

And this tip doesn't only work for men. Check out this comment to my post titled Money Saving Tip: Cut Your Own Hair and Save a Bundle:

I've been cutting my hair since Oct. 2005 approximately. I love the results and have saved a bunch of money I think. I've even cut my friends' hair! It's really not that hard and once you get the hang of it -- it's super easy and quite quick. I reccommend it - and if you're nervous, start when you have long hair and cut only a little. Go to the hair cutting place if you mess up. Once you're situated, try new things! I cut my bangs and love them!

Besides saving money, cutting your hair at home saves time -- you don't need to drive to the shop/salon, wait your turn, and drive home. And you can do it when it's convenient for you -- you don't have to be a prisoner to your stylist's schedule.

Save 50% on Entertainment Expenses

Here's part four of our coverage of Smart Money's piece on how to save 50% on everything. In this post they give ideas on how to save 50% on entertainment expenses. Their ideas that I like:

• At StubHub.com, ticketholders sometimes sell tickets for less than face value. If you want to plan ahead, try TheaterMania.com or BroadwayBox.com.

• [Use] early-bird specials and cheapie Monday-night menus [at restaurants]. For more flexibility, Restaurant.com sells $25 gift certificates for $10 for more than 7,500 restaurants. Print your instant certificate and show it to the waiter when you order.

• DVD-by-mail outfit Netflix often tests different prices for its service. On any given day, folks may be offered basic subscriptions ranging from $4.99 to $9.99. If you don't get a deal, delete the cookie files on your Web browser and return to the site until you get a price you like.

Some good tips here (not great, but good). I didn't know about the differing deals on Netflix, so that one is especially useful.

Here are some of my tips on saving on entertainment/eating out:

• List of How to Save Money on Eating Out and Entertaining

• Money Saving Tip: Save on Eating Out

• Money Saving Tip: Low Cost Entertainment

• Money Saving Tip: Saving on Entertainment

Click here to read part 5 of this series.

Click here to read part 1 of this series.

Star Money Articles for the Week of August 21

Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond:

• MightyBargainHunter lists ten unconventional uses for the penny.

• Five Cent Nickel says Dish Network customer service STILL sucks.

• Blueprint for Financial Prosperity highlights the effects of changing personal insurance details on premiums.

• Consumerism Commentary notes that celebrities must pay taxes, too.

• AllFinancialMatters details the ten highest mileage cars.

In addition, there were several entries in AllFinancialMatters's question of the day marathon including:

• While growing up, what were you taught about personal money management by your immediate family and surroundings (directly or by example, positive or negative), and how do these ideas factor into your life now?

• What was the very first thing you purchased using credit (debt)? What was the very last thing your purchased using credit (debt)?

• How much of a balance do you leave on your checking account/s?

• If tomorrow you were to suddenly find yourself unemployed, what would your action plan be and how much trouble do you feel you'd be in?

• What is your hobby and how much money do you spend on it?

Also be sure to check out the MoneyBlogNetwork Forums -- lots of great info on how to grow your blog's revenue!

Enjoy!

Ten Things You Should Buy to Save Money

I frequently tell you things you shouldn't buy to save yourself money, but here's a list that does the opposite -- it lists 10 things you should buy to save yourself money. It was posted here one year ago today.

Save 50% on Education Expenses

Here's part three of our coverage of Smart Money's piece on how to save 50% on everything. Today, they give ideas on how to save 50% on education expenses. Their ideas that I like:

• Colleges are quietly offering tuition discounts of 50% or more — in the form of merit grants — to the most desirable students, regardless of income. In fact, total merit awards have increased fivefold since the mid-'90s, to more than $7 billion. "They take the money from those who are willing to pay and give it to those who won't or can't," says Kal Chany, author of Paying for College Without Going Broke.

• The biggest discounts are reserved for students whose grades and test scores rank them among the top 20% of the school's applicant pool.

• Maximize your need-based aid by shrinking your reported financial assets and income. Pay your debts, prepay your mortgage, max out your retirement contributions, and accelerate any major purchases.

Yes, getting scholarships is a great way to help fund college costs, but they certainly aren't the only ones (nor are they within your control). Here are some college money saving tips I've written about that I like just as much (if not better):

• More Great College Savings Tips -- Save up to 50% Off College Costs

• Save Big on College: College for Half-Price

• Money Saving Tip: Save on College Courses

• Money Saving Tip: Save on College by Studying Abroad

• 4 Ways to Save Big on College Costs

• A Great College Money Saving Tip

Click here to read part 4 of this series.

Click here to read part 1 of this series.

Best of Free Money Finance: Credit Card Posts

Here's a list of what I consider to be some of the best credit card related posts here at Free Money Finance:

• Earn 20%, Guaranteed

• How to Get Out of Debt: Eliminate Credit Card Debt

• Credit-Card Hazards and How to Avoid Them

• Earn Money with Cash-Back Reward Credit Cards

• How Many Credit Cards Should You Have?

• 7 Credit Card Trends that Can Cost You

• Strategies for Dealing with Credit Card Debt

• The Best Cash-Back Credit Card

Yes, Moving to a Cheaper Cost-of-Living City Can Make You Rich

In my post titled How Moving to a Cheaper Cost-of-Living City Can Make You Rich, I highlighted how a person could save over $1 million by simply moving from a high-cost-of-living city to a lower one. One commenter had a couple of stories that showed the pros and the cons of such an idea:

Side A: 5 years ago I moved from San Jose, CA to Raleigh, NC I took a 33% pay cut to do so, but was able to afford a house in doing so.

Side B: A friend of mine still lives in San Jose, while he still can't afford a house (and is looking to move in a couple of years to do so) he has been able to max out his 401k every year because of his high salary.

I'd say that side A will do better financially -- especially if he can at least put in enough money in his 401k to get the full employer match. Also, 33% is a pretty big hit. I don't think you should have to take a position with such a drastically lower salary when you move. A 10% cut is reasonable, but 33% is over the top.

Of course if you can take no cut at all, then you'll really be in the money -- like this commenter:

I currently live in Los Angeles, and it looks like I will be able to move to Ohio and make basically the same salary. Within a two week period I had a chance to look at new housing here and there; it truly boggles the mind how out of whack things are.

Ok, let's pick Cleveland. According to Sperling's Best Places, there's a 68% difference in the cost of living between LA and Cleveland. So this reader just got a 68% salary increase!!!!!! Now add that up over the course of 10, 15, or 20 years and it adds up to millions of dollars!!!! Not bad, huh?

A Better Way to Set Your Retirement Number

Yesterday, I gave a simple method for setting your retirement number. Today, we're going to take the sophistication level up a notch with a suggestion from Kiplinger's on a more advanced way to set your personal retirement number. Here's an example they provide:

• Age: 45
• Current Gross Income: $75,000
• Projected Gross Income Before Retirement (Assuming current salary increases of 1.5% each year until age 65): $99,521
• 85% Retirement Spending Need Estimated: $84,593
• Social Security & Pension Income (Social security income of $19,380 based on Social Security Administration data plus a hypothetical pension income of $25,213.): $44,593
• Potential Income Gap to Be Funded by Assets: $40,000
• Multiply Income Gap by 25 to Arrive at the Number: $1 million

Not a bad method for getting a "rough" estimate of your retirement number, but here's what I would do differently:

1. I'd estimate more than a 1.5% annual salary increase. If this is all you get for the next 20 years, then: 1) you're doing something wrong in managing your career and 2) you're losing big ground to inflation in those 20 years. I'd at least use 3.0%.

2. I use 100% instead of 85% as the amount of income I'll need at retirement as a percent of my current salary. Why? Because of the wildcard of health costs -- there seems to be no end to them increasing. Besides, I prefer to be conservative, so if this change gives me more money than I'll need, that's fine.

3. I'm counting on zippo from Social Security. If I get $1, that will be $1 more than I expect.

Put all these together, and here are the new numbers:

• Age: 45
• Current Gross Income: $75,000
• Projected Gross Income Before Retirement (Assuming current salary increases of 3.0% each year until age 65): $135,458
• 100% Retirement Spending Need Estimated: $135,458
• Social Security & Pension Income: $0
• Potential Income Gap to Be Funded by Assets: $135,458
• Multiply Income Gap by 25 to Arrive at the Number: $3.4 million

Yes, my assumptions make a big difference and could be viewed as fairly conservative (especially on the Social Security issue), but you don't get a second chance to save for retirement. It's better to have more saved than you need than it is to get to retirement and realize that your standard of living needs to drop significantly for you to survive.

For tips on saving for retirement, see these posts:

• The Real Retirement Secret (How to Maximize Your Retirement Savings)

• Three Ways to Make Sure Your Retirement Savings Outlasts You

• Tips for a Great 401k

• 10 Tips to a Prosperous Retirement

Free Money Finance in Six Carnivals This Week

Free Money Finance is part of six carnivals this week. Here are the carnivals and my posts that were included in each:

• Carnival of Debt Reduction - Avoid These Bad Habits to Keep Your Debt Under Control

• Carnival of Personal Finance - The 10 Best Money Moves You Can Make

• Carnival of Investing - Slim Pickings for Real Estate Vultures -- So Far

• Carnival of the Capitalists - Elliptical Wars: My On-going Struggle with Sears

• Festival of Frugality - How Moving to a Cheaper Cost-of-Living City Can Make You Rich

• Carnival of the Vanities - The 10 Best Money Moves You Can Make

Stop by these carnivals to read some great posts!

Dave Ramsey is Bad at Math

Ha! I love the title of this post! It comes from my post titled Best Money Post I've Ever Written where I highlight Nickel's thoughts on Dave Ramsey (and why Nickel thinks Dave is bad at math). It was posted here at Free Money Finance one year ago today.

Save Big Money by Getting Good Grades in College

If you have kids in college or about to go to school (or if you're on the way to school yourself), this piece will interest you.

Money magazine tells us that there are several ways that getting good grades in school can help save both students and their parents a ton of money. First of all, it qualifies them for extra scholarship money:

For college students attending state schools in their home state, there is government money available to them if they maintain a B or better.

Freshmen who ace their classes may qualify as sophomores for school-sponsored scholarships in various academic departments.

But there are other savings as well. For example, on car insurance:

Studies have shown good students tend to have fewer accidents. So for those who drive, maintaining a high GPA is an easy way to cut down on their (or their parents') monthly car insurance payments. Most insurance companies nowadays will offer a "Good Student Discount" of 10 percent to 25 percent for an undergrad who is able to maintain at least a B average (3.0 GPA).

There are also cost savings on housing as well as extra incentives if the student has the right credit card (not a great idea, but I have to mention it):

Some off-campus apartment complexes will give good students a break on their rent.

Credit card issuer Citibank offers a credit card that gives students rewards points based on their GPA, which can be redeemed for anything from a $10 coffee gift card to a free airline ticket.

And finally, my favorite:

Doughnut-maker Krispy Kreme says that for every A students have on their report card, they are eligible for one free glazed doughnut at their local store.

;-)

Not bad suggestions for something (hopefully) your student is working towards anyway. Between the scholarship money and the car insurance savings in particular, this could be several thousand dollars a year -- a sum that could come in quite handy when you're paying $15,000 a year for school costs.

I can't lave this post without offering you a couple extra ways to fund college. The first is you can make some extra income to pay the costs. The second is to strategically plan your student's time in college to save 50% off the costs.

Why I Shop at Bed Bath and Beyond -- They Know Customer Service

I've never really been a shopper at Bed Bath and Beyond until recently. My wife has been a customer there for some time, but as I always viewed it as the equivalent of "the woman's Home Depot", I didn't think I'd like it very much. However, a recent experience has changed my mind.

We've been looking for a mattress pad to make our hard bed a bit more comfortable. We bought a down one at the suggestion of the sales person. Despite my wife's initial hesitations (she's allergic to feathers), the clerk assured her she could bring it back if not fully satisfied. So we tried it and my wife hated it (not because of allergies but because the little feathers stuck out and poked her all night), so we took it back and were considering a synthetic mattress pad. We weren't sure we would like it when the assistant manager helping us said:

"Don't worry about trying it and bringing it back if you don't like it. We'll take back anything, unused or used."

I know this statement shouldn't come as a surprise -- after all, isn't this what good businesses do -- but it's become the exception rather than the rule that a company stands behind their products with no questions asked. And for an item like bedding that plummets in value once "used." It was a remarkable statement to me and, in fact, caught me totally off-guard.

We tried the synthetic option, didn't like it (too fluffy), and took it back. We got our refund with no problem.

Because of our great customer service at Bed Bath and Beyond, I'll certainly be back when I have a need for something they carry. Furthermore, I'll recommend them to my friends (and blog readers). It's great to do business with a company that backs up their products and Bed Bath and Beyond certainly does.

Praise for The Millionaire Next Door

It was over a year ago that I started my series on one of my favorite money books of all time The Millionaire Next Door. However, I continue to get comments on the series such as this one from another fan of this book:

TMND is one of the five best books I've ever read. The only one on finance. Probably only one of ten books I've ever finished reading since I get bored with just about every other book.

I loved TMND because I could identify with it, word by word, page by page. It seemed to describe my life. My investment and spending behavior as well as my family (one wife and three children), is so similar to that described on the book that it was almost like looking into a mirror and understanding myself better.

On the wealth formula, at age 40 I've achieved 6.25 times the suggested net worth to be wealthy, 95% of it created in the last 10 years. I did not realize I was financially wealthy, I just thought I was doing good. The only difference that I have experienced with respect to the book is that it describes wealthy people's habits as being rather boring. I have achieved my economic success while developing four very different companies, investing in different opportunities and enjoying every minute. But the book is not just a mirror to make me feel good about myself or make those who are "being left behind" feel bad. I found it extremely insightful as to how to bring up your children to be economically self-sufficient. I believe my thoughts were heading in the general direction, but the book gives very clear and concise examples making a very strong case not to subsidize your children. It also gave me very good suggestions on how to work on my Will. At my age I had just handwritten a long itemized letter to make sure if I died my wife would know all the properties, company participations, and various investments that we have... but I was sure lacking the depth suggested by the book.

For those who do not find themselves in this book and probably choose to criticize it instead of changing their own habits, I'd suggest you try to meet some wealthy people and ask them a few questions. You may start to believe that the book is onto something and that might help you change your attitude. I myself am buying several copies of the book and lending it to several family members and friends.

For those who don't believe in the book because it does not give you investment advice and financial formulas, I would say it gives you a lot more. It gives you an insight into the right attitude to achieve wealth. I have not made my money on the stock market, nor a dot-com company. I didn't make it because of a masters in this or that, nor did I win the lottery. I saved, invested, reinvested, left my job and took a drastic change in lifestyle to start my own business from scratch. My parents are wealthy, and so were my grandparents. Each self-made. Each not giving a penny nor subsidizing the next generation other than helping to pay for the first four years of college. One may think it is genetic; it's not, it's a matter of learned behavior and attitude, becoming good habits over time. I'm lending the book to my brothers and sisters... I hope I can convince them to read it without the apathy or disdain they might develop. I hope they keep an open mind.

Truly a great book.

A pretty glowing endorsement, wouldn't you say?

As for me, The Millionaire Next Door is a must-read for anyone serious about growing their net worth. (If you want to see other books I really like, review my list of must-read money books.) To see a list of my best posts from The Millionaire Next Door series, visit Best of Free Money Finance: Millionaire Next Door.

How Much Is Enough for Retirement Savings? (How to Set Your Personal Retirement Number)

Here are some thoughts from Kiplinger's on various ways to set your personal retirement savings number:

A conservative rule of thumb suggests that if you withdraw only 4% -- or one twenty-fifth -- of your retirement nest egg during the first year and adjust subsequent annual withdrawals to compensate for inflation, you'll never outlive your money. Another approach is to estimate how much you'll need to withdraw from savings during your first year of retirement and multiply that amount by 25 to determine your target number. For a bare-bones budget, you'd need only half as much, or 12.5 times your initial withdrawal. Your personal number is probably somewhere in between.

It's a basic way of setting a number, but it does give you a range to consider (and believe me, it is a range -- there's a big difference between the "25" number and the "12.5" number.)

Also be sure that when you set the amount you'll need in year one that you adjust for inflation. For instance, if you need $50,000 in today's dollars, you'll need a heck of a lot more in 25 years.

Finally, you'll need to subtract (if you want to) any amounts you expect to get from Social Security. Personally, I'm estimating getting nothing from Social Security so any amount I do get will be a bonus.

For those of you who would like an example, here goes:

• Let's say you think you'll need $50,000 a year in income in today's dollars when you retire in 20 years.
• If you assume inflation of 3.5%, that means you'll need annual income of $99,489 when you retire.
• Multiply $99,489 by 25 to get the high-end of your retirement savings need: $2,487,225.
• Multiply $99,489 by 12.5 to get the low-end of your retirement savings need: $1,243,613.

As I said, this is a very simplistic way of setting your retirement number, and I'll be reviewing a few more-advanced methods in the next few days.

Save 50% on Health-Related Expenses

Here's part two of our coverage of Smart Money's piece on how to save 50% on everything. Today, they give ideas on how to save 50% on health-related expenses. Their ideas that I like:

• You can negotiate your medical bills. While only 10% of Americans try, according to a recent Harris Interactive poll, more than 60% of those who do get discounts. Hospitals and doctors are willing to negotiate because their retail rates bear little relation to the cost of providing care — typical markups range from 200 to 600%.

• If your doctor isn't willing to discuss the cost of different options, get a second opinion.

• Gutsy patients can take it further. Ask the doc for the CPT codes on procedures he's recommended — these are the numeric codes used by the American Medical Association to identify health services. Use the code to look up the Medicare reimbursement rate for the procedure in your area at www.cms.hhs.gov/apps/pfslookup/step1.asp. Kevin Flynn, president of Healthcare Advocates, a Philadelphia firm that helps consumers negotiate health care fees, advises offering your doctor this price plus 10%. To sweeten the deal, offer to pay immediately.

Wow, interesting information. I never thought about negotiating with my doctor, but this piece is probably right -- the margins are gigantic in healthcare. I'm sure they have lots of "wiggle room" that still leaves them with a good profit. I guess everything is negotiable. ;-)

A few other health-care savings suggestions from me can be found in these posts:

• Money Saving Tip: Ask for Free Drugs

• How to Get an Incorrect Medical Bill Corrected

• Don't Pass Up Generic-Drug Savings

• How to Make a Million Dollars in Ten Years, Part 1: Staying/Becoming Healthy Helps You Spend Less and Earn More

• Save Money: Some Insurers Pay You to Get Healthy

• Comments: Money Saving Tip: Ask for Free Drugs; Real-Life Example

• Comments: Money Saving Tip: Ask for Free Drugs; Get Coupons

• Money Saving Tip: Save on Prescription Drugs

• Money Saving Tip: Get Healthy and Re-Quote Insurance

• Money Saving Tip: Watch Medical Bills

• Money Saving Tip: Check Your Medical Bills, Part 2

Click here to read part 3 of this series.

Click here to read part 1 of this series.

The Seven Steps to Becoming a Millionaire

Want to be a millionaire (or, more appropriately a millionaire next door)? If so, see the list of seven factors that make millionaires from The Millionaire Next Door (posted by me one year ago today).

How to Know When It's Time to Quit Your Job

Frequent readers of Free Money Finance know what I think about the importance of managing your career appropriately to maximize its financial impact. In fact, I have a stock paragraph that I put into almost every career post because I feel so strongly about it. Here's the thought:

Your career is your most valuable financial asset, offering you many financial benefits. You can make the most of it by getting a college degree and managing your career to its full potential. Doing this well can earn you millions of dollars in extra income throughout your lifetime.

In order to manage your career correctly and make the most of it, sometimes you'll need to switch from one employer to another. A key to this is knowing when it's time to quit your current job. Here are five signs that can help you decide when it's time to quit from personal finance guru David Bach:

1. You truly hate what you do.

2. You asked for a raise and the answer was "no."

3. You work for a company you don't respect.

4. You work for a company that doesn't respect you.

5. You're bored to death and not challenged.

It's a good list. There are so many thoughts I have on this issue that I'm not sure I can fit them all in one post. But I'll try. Here goes:

1. There is certainly a trade-off between time, money, and "enjoying" work (i.e. which would you rather have, a job you hate that pays $120,000 a year or one you love that pays $40,000 a year?), but all other things being basically equal, you want a job that you at least feel neutral about (one you don't hate). You'll get more out of life, have a better home life, and be better all the way around for at least liking what you do even a bit. Look at it this way -- this is your life. Do you really want to spend 50 hours a week doing something you hate? It's just not worth it.

2. If you were declined for a raise, you should ask why -- maybe there's a good reason (the company's not doing well, you're at the top range of your pay grade, etc.). If there is a good reason, then I would say this isn't necessarily a red flag. On the other hand, if there isn't a good reason, that's a bad sign.

3. If there's nothing you respect about the company, then you should be moving on. Why work for a place you dislike so much?

4. As far as a company that doesn't respect you, see my comments on #3 above and triple them. Get out asap!

5. Number 5 is not a killer -- you have options. First of all, you could find something to do (volunteer for a committee, project, etc.) that could advance your career. Second, if you need additional education and the company pays for it, take some classes on company time. Third, if you're really desperate, join some of the "fluff" committees at work like the Christmas party committee or the annual company picnic committee. Finally, do non-work stuff during work hours. If you've done all you can to take on extra work and have been brushed aside at every point, then bring your own stuff to do. Who's going to care anyway?

6. No matter how bad it is, I advise people to NEVER quit their current job until they have a new one. I've seen too many people quit a decent job they hated only to languish in the job market for months, if not years. Believe me, you'll hate not getting a paycheck a LOT more than you'll hate working at a bad job.

A couple jobs back, I knew it was time for me to leave the company (for various reasons). But it was a decent company, I was being paid well, and I was still challenged. So I took my time, checking out opportunities here and there until I found one that was just right for me -- two years later! That's right, I waited for two years to find just the right job. It all worked out for me, and a key part was that I didn't rush and get out of there with a sub-par job (or no job at all.)

Free Stuff, Save $195, and (Maybe) Improve Your Investment Returns (A Great Offer Exclusive to Free Money Finance)

As most of you know, I'm primarily an index fund investor. But I do invest in managed mutual funds and individual stocks, plus I have an interest in investments of all sorts. So when I got an email from Money Masters explaining their new program, I was intrigued (FYI -- I am NOT receiving any financial incentive to post on this topic -- though you get one. Keep reading.) Here are the details of their program they sent to me:

So how many of you believe that mutual funds are good investments but never get them right? Did most of you say yes? That is not surprising. How many of you feel that you need a lot of money to be able to afford good investment advice? Again, not surprising if most you nodded in the affirmative.

Here’s a new approach that levels the investment playing field and is worth trying.

Retirement Corporation of America, a SEC registered investment advisory firm, has recently launched Money Masters Investment Portfolios, a fully managed, online investment account that provides access to the country’s best mutual funds (and advice) irrespective of the amount of money you have to invest. It is different from the products/services already in the market for the following reasons:

1. Access to a Registered Investment Advisor: Until now, such access was typically limited to only those with substantial account balances-$250K or greater. Money Masters is available to every American – with no minimum balance requirement.  And because it is offered by a Registered Investment Advisory Firm, they take the responsibility of managing clients’ money.  They have a team of professionals constantly looking over their portfolios to maximize performance.

2. Performance Potential: Many of the funds currently approved for inclusion in Money Masters Investment Portfolios are no longer available to the average investor because the fund is either closed to new investors, has a large minimum deposit requirement, carries substantial commissions, or is not available for direct purchase by retail investors.

3. Independence and Transparency:  The firm places a premium on independence and transparency and has gone beyond average fiduciary duties to merely disclose conflicts of interest – and eliminated the conflicts entirely.  For example, it does not accept commissions or payments of any kind from the financial services industry, including 12(b)-1 fee.  This clear impartiality gives them the freedom to select investment funds and managers that they’ve identified as the “best-of-the-best” without bias or influence.  Everything they do is openly disclosed to clients (through web site, the application process, online ClearView Reporting and form ADVs). 

OK, that's the "official" version of their pitch. But here's the layman's version that I received via email while we were talking back and forth:

[We have] a new type of mutual fund that...differs from other mutual funds in the market in several ways:

1. Fund is managed by 15 of the world’s top performing mutual fund managers - chosen from more than 8,000 mutual fund managers based on a strict set of criteria including long term performance and tenure.

2. No minimum account balance, commissions, transaction fees and exit penalties (management fee of 1% or less).

3. Asset allocations per each "Master's" fund are customized based on individual’s objectives and risk tolerance.

What's interesting to me is that they've selected the best mutual fund managers -- people who have proven, great returns -- and have them managing the money. The reason I go with index funds is that most money managers can't beat them (once fees are subtracted). But if you can get the top money managers to pick stocks for you, then maybe you can consistently beat the index funds. Of course, past performance is no guarantee of future returns, so maybe the money managers who are tops this year will crash and burn next year. That's the rub.

But for those of you who may be interested in the Money Masters program, I've negotiated a deal (for you -- not for me -- again, I get nothing out of this deal) where you can get the following:

• Free Financial Freedom Plan
• Free article on Top 10 Mistakes that Investors Make
• Free account set up: Those customers entering this code when completing the signup process will also get the $195 set up fee waived.

Here's how you can take advantage of this offer:

1. Go to the Money Masters site www.moneymasters.com

2. Your invitation code (as they refer to it on the site) is FMF1.  If you enter this code when prompted in the free Financial Freedom Plan/Top 10 Mistakes section, you will be identified as having come from Free Money Finance and offered free account set up (waive $195 fee).

Sounds pretty simple, huh? What's not to love about "free?"

I'm undecided whether or not I'm going to sign up. If any of you do, please come back and let us all know what you think of the service/plans. I'd be interested in hearing your opinion.