Category Archives: Spending Money



How a $350 Phone Can Cost Less Than a $100 phone

Moto X

As the song from Napoleon Dynamite goes, “Yes, I love technology.  But not as much as [money], you see.”  And, pursuing the latest and greatest tech is one of the easiest ways to burn through cash.  That’s why I try to be strategic about what I buy and how I buy it.  In this particular case, I’m looking at buying a 2014 Moto X phone.  Currently, I sport a Samsung Galaxy S III.  There’s nothing wrong with the S3, but for various reasons, I’ve decided to upgrade.  As far as service providers go, I’m with AT&T and have no plans to change (they have the best signal in my neighborhood).  So, the question is, how do I make the purchase?

Well, AT&T has three options:

1. Two year contract

This is the old standby that most people choose.  With this option I would pay $99 up-front, a one-time $40 activation fee, and $60 every month for the 300MB Shared Value Plan (I really don’t use much data).

2. AT&T Next

This is AT&T’s newest option.  If I went this route, I would pay nothing up-front and as little as $18.24 per month on the 30 month installment plan.  This is basically AT&T loaning you the money for your phone and you paying them back in 20, 24, or 30 monthly installments.  After 12, 18, or 24 months you’re free to upgrade your phone and start a new installment plan.  If you cancel your service, you still owe the remainder of your payments.

3. No annual contract

This option is also known as the BYOD (Bring Your Own Device) option.  If you pay full price for your phone up front, which in this case AT&T sells the Moto X for $547, you’ll only pay $45 per month for your service.  You actually save $15 per month.  This is the simplest option.

So, let’s summarize the options we have here:

Two-Year ContractNextBYOD
Upfront$99$0$547
One-time Activation$40$0$0
Monthly Service Charge$60$45$45
Monthly device payment$0$18.24$0
commitment2 years2 yearsNone
Total Cost After 2 years$1579$1517.76$1627

Based on the total cost after two years, it looks like the winner is Next, although I’m not a big installment guy.  But, hold everything!  If I go out to Motorola’s site, I see the same exact phone for $399.  Suddenly, the BYOD option is looking better – a total cost of only $1479 after two years.  Now take another $50 off that price because it just so happens that Motorola is having a one-day-only sale that brings the price down to $349.  So that takes my total cost down to $1429.  That’s a savings of almost $90!  Plus I own the phone out-right.  No loans, no contracts, and I walk away paying less for the $350 version of the phone than I would’ve for the $100 version.

The lesson here is, look at all your options and add up your total cost before just blindly settling for the lowest up-front cost.

Have you upgraded your phone recently?  How did you buy yours?



Mattress Shopping is Exhausting

Ikea Myrbacka Latex Mattress

This past weekend Mrs. Pennypacker and I went mattress shopping.  Neither one of us has ever shopped for a mattress before.  I guess it’s never been a priority for us.  We don’t have any back issues and our current mattress has always just done its job.  But, lately we’ve been leaning toward getting a new one.  It turns out our current mattress is at least 20 years old, it’s developing an indentation down the middle, and, most importantly, we’ve saved up the cash to pay for a new one!

The Search

Before driving to the nearest mattress store and blindly picking out the flashiest mattress in the showroom, I decided it was worth doing a little pre-shopping research.  Google led me to a great site called Sleep Like The Dead.  The site offers objective side-by-side comparisons of different technologies, brands, and models.  Wow!  I had no idea how complicated buying a mattress could be!

The Choices

First off, there’s the classic innerspring mattress.  Our current mattress is an innerspring and we would have no problem buying something similar again.  But, which one do you buy?  The prices range from $100 to $4,000.  What exactly am I getting for that $4,000.  Does the $4,000 one have a built in fridge and flat screen TV?  It seems like manufacturers keep adding more bells and whistles that we couldn’t care less about.  Pillow tops, edge support, center reinforcement, remote control incline.  Just use better quality material and call it good.

Next there is the adjustable air chamber mattress.  Right off the bat, we’re not interested – too expensive. We’re not paying a premium for what seems to be a really fancy air mattress.  Yeah, you can adjust each side to the exact firmness you want, but that just means we have to worry about a motor and a computer breaking down somewhere down the road.  No thanks.

I’ve heard good things about memory foam.  It conforms to your body, apparently giving you the sensation of sleeping on a cloud.   The downside is it tends to retain heat.  I like being on the cool side when I sleep.  Some memory foam beds add a layer of gel on top of the foam to keep you cooler.  But, there seem to be mixed reviews as to the effectiveness of the gel.

The Decision

Latex received an 80% satisfaction rating on Sleep Like The Dead.  But, I’d never heard of it.  Turns out it’s been around for a while.  It tends to run firm, which is fine by us, and it can sleep cooler than memory foam.  Sounds great!  Let’s go try one out.

So, where do they sell latex mattresses?  Actually, not too many places.  But, one store that does have them is Ikea.  It turns out Ikea has great prices on latex mattresses as well as other types .  Looks like the one for us is a queen-size Myrbacka.  It runs $499 and has an outstanding 82% satisfaction rating.

The Buy

Now that we know what we’re buying, it’s time to drive to Ikea and do some test-napping.  My favorite part about shopping at Ikea is the lack of high-pressure sales people.  I don’t like feeling as though I’m shopping for furniture in a used car lot.  My least favorite part about shopping at Ikea is picking up your item in the warehouse.  Something about balancing bulky furniture on a tiny cart doesn’t feel safe.  I suppose it would be fun if I weren’t worried about running into other shoppers or damaging the inventory.

The End

So, after a long day of researching, shopping, and driving, we ended up paying about $800 after you include the foundation and delivery.  Because we live pretty far from Ikea, the delivery cost ended up being a bit more than we expected.  But, I still think we came out ahead of the average mattress shopper.

Have you had any experience shopping for a mattress?  If so, how was it?



8 Things we Spend Money on Today That we Didn’t Twenty Years Ago

Telephone-annees-60-p1010020

1. Cell Phones

Back in the 80’s and early 90’s, each house had one phone line.  Maybe if you were lucky, you had two.  Today, each person in a household has their own cell phone and we buy brand new phones at least every two years.  These days, our phones aren’t just for making calls.  They’ve become tiny computers that we use for texting and surfing the internet.  Phone calls have actually become a secondary function of cell phones.

2. Tablets

The replacement for books, PCs, and portable TVs.  We can read, watch a movie, play a game, and surf the internet all with a tiny flat square that weighs less than a dinner plate.  Of course we still have to have our phone, our TV, and our laptop.  So really, we’ve added a whole new device category that wasn’t even on the radar twenty years ago.

3. Internet

Let’s see, if I was looking for a restaurant before the internet was around, I might open up the phone book and look under “restaurants”.  Then, I’d have to call the restaurant to find out how to get there and what kind of menu they offered.  SOOO much work!  And, I would have no idea if the food was any good until I actually started eating.  Today, we go to Google or Yelp, and instantly find every restaurant within a 10 mile radius, complete with a menu and reviews.

4. Pay TV

We used to buy a TV, hook up the rabbit ears, and watch TV for free.  Then cable came along and we paid a monthly fee to get more channels.  Now there are streaming services like Amazon and Netflix.  TV isn’t free anymore, but we certainly have a lot more options.

5. Subscription music

We went from CDs twenty years ago to MP3s in the early 2000s, to subscriptions today.  Whether it’s satellite radio or Spotify, music seems to be trending in this direction.

6. Energy bars

Power bars came out in 1986, but they weren’t really consumed by the average person.  They were for athletes.  Today, there are so many more options than just power bars and everyone is eating them.  Whether we’re training for a marathon, dieting, or just need something to snack on at our desk jobs, bars have become the ultimate portable meal replacement.

7. Fancy coffee

Twenty years ago, Starbucks hadn’t taken over yet.  People still either dripped their own coffee at home or bought a basic cup for less than a dollar from their favorite fast food joint or convenience store.  Now we buy $5 lattes without even blinking.

8. Designer food

We’re not just buying peanut butter anymore, we’re buying organic, all natural, non-GMO peanut butter and we’re paying twice as much for it.  We’re not just spreading that peanut butter on our average slice of Wonder Bread, we’re smearing that nutty goodness on a slice of organic, 50-grain, gluten-free, non-GMO, bread which costs three times what normal bread costs because it’s also sustainably harvested.  I’m not saying designer food is necessarily good or bad, I’m just saying we have more options today.

So, with all these new ways to spend our money, is it harder today to save money than it used to be?  To me, all these choices we have actually make it easier to cut back and save.  Personally, I could probably live without most of the things on this list, although I’m not sure I could live very long without internet or cell phones.  But, I could certainly downgrade to a cheaper plan if I had to.

Can you think of anything that we pay for now that we didn’t used to?



Climbing that High Deductible Insurance Mountain

High-Deductible-Mountain

For months now I’ve been meaning to dial up our insurance agent to see if there was anything he could do to lower the premiums on our home and auto insurance.  Michelle’s post a couple weeks ago finally motivated me to pick up the phone.

Unfortunately, our agent didn’t have much for us.  I guess I was kind of hoping he’d say something like, “Glad you called us.  It turns out we weren’t giving you the full good driver discount.  We’ll just go ahead and knock a hundred bucks off that premium for ya!”  Instead, our agent explained our rates went up mostly because of an increase in statewide claims last year.  In addition, there were a couple discounts on our homeowner’s policy that went away – new roof (it’s been a few years now) and new home (our house is not new any more).  We could get a small discount on our auto policy if we sign up for that new device you plug into your car to monitor your driving habits.  But, I’m not sure I’m comfy with the concept.

Aside from reducing our coverage amounts, which I really don’t want to do, the only other option on the table is increasing our deductibles.  Awesome!  In my post last week I talked about the benefits of going high on your insurance deductibles.  Well, going high doesn’t always make financial sense.  Here’s the thought process I use to figure out if it’s worth climbing a little further up the high deductible mountain.

1. Is it allowed?

If you’re making payments on your car, many car loans come with maximum deductible requirements.  $1000 is pretty common.  Thankfully, we own our cars free and clear, so we have some flexibility in this area.

If you have a mortgage, banks will often cap your deductible.  Our mortgage company caps our deductible at 5% of our dwelling coverage amount.  Currently we sit well below 1%.  We clearly have some room to maneuver here.

2. Can you afford to pay the deductible?

You should have enough cash sitting in savings to cover your share of a loss.  We have over 6 months of expenses stashed away, so we’re good there.

3. How many years would you need to go claim free to make up the difference?

You have to do a little math to figure out if the drop in premium is worth the deductible hike:

Deductible Increase / Premium Saving = Years to payoff

For example, raising our car insurance collision deductible $250 would save us $20 per year.  Applying our formula, 250/20 = 12.5 years.  Collision insurance covers damage due to accidents with other vehicles that we cause.  We don’t generally get into any at-fault accidents (not that it couldn’t happen), so we might push this one up.

Likewise, bumping the deductible on our home owner’s policy up by $2,000 would save us $200 per year.  This move pays for itself in 10 years.  Will there be a claim in 10 years?  Maybe.  But, Mrs. Pennypacker and I are willing and able to cover the extra $2,000 out of our own pockets.

Have you looked at your deductibles lately?  Does it make sense to push your deductibles a little higher?

 



Use Bill Pay to Save a Dollar or Three at the DMV

dmv-money

Every year I have to pay money to the state to renew my car registration. The DMV offers three ways to pay, in person at one of their fun facilities, by mail – which costs a stamp plus time to write a check and find a mailbox, or I can pay online. Um…online, please. But wait…there’s a catch. My state actually charges an extra fee for paying the registration through their website. Here’s the explanation:

“The price of items purchased through this service includes funds used to develop, maintain, and enhance the state’s official web portal.”

You have the choice of paying an additional $1 if you electronically transfer funds from your bank account, or the price goes up to $3 if you choose to pay by credit card. Now, I realize there are expenses involved in running a website. You also have to give the credit card companies a cut of each transaction. But, even after all that, isn’t it still cheaper than the cost of accepting that payment in person at a physical facility? I mean, you have to pay the clerks at the desk, the security guard (whom I’m sure is not there to prevent theft, but is instead there to prevent customers from rioting out of frustration). There are also costs to operating a building including utilities, rent, cleaning, and more.

There has to be a better way.  Well, it turns out there is! And, it was right under my nose the whole time: use my bank’s online bill pay service! Unlike the DMV, the bank doesn’t charge me a thing for paying a bill online. In fact, they would prefer I handle all my banking online rather than come into branch and take up the extra time and money it takes to accommodate my physical visit. It’s a crazy idea, I know.

After scheduling the payment, I was still a little skeptical. I was concerned that the transaction wouldn’t go through. I worried less about my bank and more about the DMV rejecting the payment for some ridiculous reason. But, I tried it a few days ago and it all went smoothly. In fact, I just received my new registration and my license plate sticker. I am sort of curious though, how the bank paid the bill. Did they pay through the DMV website or did they mail a check?

Do you have any tips for saving money or time at the DMV?



Before You go Shopping, Put on Your Perspectacles

Mrs. Pennypacker recently shared with me an awesome post by Glennon Doyle Melton about being thankful for what you have: Give Me Gratitude or Give Me Debt.  Here’s my take…

Call it keeping up with the Joneses or just giving in to that little voice in your head shouting, “buy me, buy me!”  At some point, we all are tempted by the siren call of more, bigger, and better things.  In fact, I have a few things that have been hanging around on my want list including a new TV, a new laptop, and a new phone.  Granted, we have some savings, so purchasing these items wouldn’t necessarily send us to the poor house.  But, sometimes I have to pause and think – why exactly do I want these things?

I have a TV that works – two of them in fact.  Sure, one is a seven year old plasma and the other one is an old, clunky cathode ray tube.  But, they work!  I can see and hear people doing interesting and exciting things without leaving my couch cushion!

I have a laptop that works perfectly well (I’m currently typing on it).  Of course, It does have a few quirks such as an occasional buzzing sound, below average battery life, and a fan that gets a little loud.  But, it’s perfectly capable of accessing the internet allowing me to find just about any piece of information my heart desires!

I have a phone that works.  Sure, it’s ancient by modern phone standards (four years old), but it can still do pretty much anything my laptop can do only I can put it in my pocket and take it snowboarding!

Buying those things on your want list may not make you poor, but it won’t exactly making you rich either.  Climbing higher on the upgrade ladder chips away at your income while doing little if anything to boost your net worth.  Not to mention the fact that the happiness these things bring you is fleeting.  No sooner do you buy one thing, than your desire shifts to the next thing on your list.  It’s a cycle of short-term happiness, that is hard to escape.

So, how can you keep yourself from being sucked into the trap of more, bigger, and better things?  Do as Glennon Doyle Melton suggests and put on your “perspectacles.”  They help you realize what great things (and people) you already have in your life.

What kind of things are on your want list that might look different with “perspectacles” on?