Wednesday, November 26, 2014

Don't Leave Money On The Table: Dry Cleaning

This is one in a series of short articles about claiming all the benefits you are entitled to – be that discounts, freebies, or whatnot. I’m not going to go to the length of, say, extreme couponing, but I have found there are often discounts or bonuses you can easily take advantage of that can save you money without making major changes in your spending patterns or behaviors.

The following is a perfect example of what I mean by "don't leave money on the table." By making two extremely simple changes to my routine, I saved a couple hundred dollars a year. I didn't have to switch brands or start patronizing a different business. I simply took advantage of everything that was offered to me by a company I was already doing business with anyway.

What you wear to work each day depends greatly not only on your profession, but also on your company. When I worked for a video game company, I could come in to work wearing shorts, a T-shirt, and sandals. Now that I work for a credit union, it's Dockers and a button down shirt or nicer. If you have to wear nice clothes every day, odds are you will be doing a lot of dry cleaning and that can add up. It's a significant enough expense for me that I actually have a line item for it in my monthly budget and track it via

Given that dry cleaning is a recurring expense for me, it makes sense to look at ways to reduce it. One way, which I actually did when I was on a strict debt-reduction plan, is to wear more clothing that does not need to be dry cleaned. That turned out to be a mixed bag. Although my dry cleaning costs dropped, I ended up with more laundry to do at home, which was more work for me :-)

I noticed that my dry cleaner had a website and they offered an email newsletter you could sign up for to receive discounts. The "newsletter" turned out to just be a once a week mailing that had a link to a weekly "secret code phrase." The email is sent out on Monday and, if you take your clothes in on Tuesday and tell the employee that week's secret phrase, you get a 15% discount on your order.

For me to get this discount, I had to make some minor changes to my routine. First off, I used to drop my clothes off on Monday and pick them up on Friday. Changing to dropping off on Tuesday was easy to do and didn't really affect me at all. My clothes are still ready to be picked up by Friday. Second, I head to work before the cleaners open and I drop my laundry off in their night drop on my way. I never speak to a person, so I can't tell them the secret phrase. I contacted the owner with my dilemma and he had an easy fix - just print out the secret phrase and put it in the little pouch that is on my drop off bag. Piece of cake! (I actually prefer this because I'm extremely introverted and probably wouldn't say the phrase to someone in person anyway - especially when the phrase is sometimes something like "rubber baby buggy bumpers.")

These super simple changes to my routine save me an average of about $6.50 per week. That's almost $350 a year in savings!

Do you have any tips for not leaving money on the table? Leave them in the comments!

Wednesday, November 19, 2014

Are Home Energy Audits Worth The Cost?

I live in the Arizona desert and in the summer, temperatures regularly reach 110+ degrees. We run our home air conditioner a lot. Even though we keep it set at a relatively high 78-79 degrees, our electricity bill in the summer, particularly August, often nears or surpasses $400, compared to around $100 during the winter months. I'd love to do something to get that cost down.

A couple of years ago, I installed a small solar powered fan I bought at Costco in our attic to help remove some of the hot air up there. At the time, there was a federal tax credit that reimbursed me for about 30% of the cost of the fan. I installed it myself and, since it's solar powered, it doesn't cost me anything to run. I'm not sure it has had a significant effect on my electric bill, but I like the thought that it is pulling at least some hot air out of the attic at no recurring cost to me.

The local electric companies, of which there are two, promote energy audits as a means of identifying areas where your home wastes energy and steps to take to make it more energy efficient. I've wanted one of these for some time. I knew our house was drafty - after big haboobs, I would often find dirt around the bottom of doors and a couple windows inside the house. We definitely had some leaks.

Approaching haboob, as seen from my backyard. Five minutes later, we were enveloped.

Getting An Energy Audit

Three months ago, I decided to bite the bullet and get an energy audit done. I selected a company that was approved by my electric company and had them come out for a $99 audit. The process was fairly painless. They sealed one door and put a fan in it, which blew air into the house, creating a slight pressure difference between the outside and inside. They then checked all the windows, doors, outlets, and recessed lights to see if there was air leaking out. They also went into the attic and measured the amount of insulation I had and checked the air conditioning ducts for leaks at the joints. They had a cool infrared camera and took pictures of walls that had hot spots, indicating insulation deficiencies. As part of the deal, I also received a box of about 10 compact fluorescent light bulbs, a switching power strip, a low flow shower head, and a $50 Home Depot gift card.

A couple days after the audit was performed, the company came back out to go over the results. This is where they try to sell you their services to fix the problems. You don't have to have them fix anything. If you want, you can take your audit results and fix the problems yourself or hire someone else to fix them. But because they are an approved company, my utility offered rebates if I had them perform the work.

I bought my house new and it is currently just over 10 years old. I wasn't expecting too many issues, other than the ones I knew about. In fact, there weren't many issues found. We had some minor leaks in our AC ductwork. As expected, we had some doors and windows that needed to be re-sealed. They recommended putting insulating boxes in the attic over our recessed lights (we have 19 of them) to prevent air leakage to and from the hot attic. Our attic insulation had also deteriorated and more needed to be added to bring us back up to the recommended insulation rating. They had some other recommendations, but they would only provide marginal improvements and I opted not to have them done.

The Cost

The total cost for the work I had done was about $5,000. But, the salesman assured me, I would receive a $500 tax credit from the federal government for the improvements and $600 in rebates from the electric company. I went ahead and had the work done, much to my wife's chagrin. After all the work was finished, the company came back out and retested the house to see how much of an improvement they made. In my case, they reduced the air leakage of my house by 25%. I'm sure the added attic insulation helped as well, but they didn't have any sort of test for that. We have programmable thermostats, so I know our AC is always set consistently to the same temperature. After the work was done (during the summer), our house was noticeably colder and I actually had to reprogram our thermostats to be set 1 degree higher.

About Those Rebates...

As for the rebates and tax credits... Well, funny thing about those. It turns out the federal tax credits expired in 2013. And, two months after the work was done, I finally got a notice from the company (who has to file the paperwork with the utility company for your rebate) that my rebate was not the $600 I was told it would be, but only $350.

So I did what any internet-savvy consumer would do - I went on the internet and left scathing reviews on Yelp, the Better Business Bureau's website, and any other website I could find that talked about this particular company. I felt I had been completely mislead, if not outright lied to. There is no excuse for their salesman not knowing that the federal tax credit expired 7 months prior to him talking to me.

In an amazing coincidence, two days after I left those reviews, I got a call from the company saying my utility company changed their rebate program to match those offered by the other electric utility in town and I would now be getting an $800 rebate. They never mentioned my online reviews, so it is theoretically possible this was a coincidence, but the timing is definitely suspicious. (Note: I have since contacted the third party company who is administering the rebate program and confirmed that yes, this was in fact, a coincidence.)

Was It Worth It?

So... was the energy audit worth it? I'd say the audit itself was definitely worth it. For $49 ($99 less the $50 Home Depot gift card I received, and not counting the other stuff they gave me), I received a fairly detailed energy analysis of my house.

Was the work done worth $5,000 (or $4,200 with the rebate)? On the rebate form, the company listed all the work done and an annual estimated savings for each step. My total annual estimated savings is $232 dollars. That means it will take just over 18 years to recoup my $4,200 cost. So, no, the work performed was not worth it, at least from a strict cost-analysis standpoint.

However, I think the company was seriously overcharging for the work they did. I'd be willing to bet if I had taken the energy audit findings and made the repairs myself or hired a handyman to perform them, I would have spent a lot less. (Of course, I would have also not been able to claim the rebate from the utility company.) I feel like a fair price for the work performed would be in the $1,500 to $2,000 range, which would equate to a 6 to 8.5 year recoup time. That seems acceptable to me.

The savings are not just theoretical. I am seeing some concrete signs of improvement. If I compare my electricity usage for September 2013 with September 2014, I used 210 kWh less electricity this year. However, the average daily temperature for the month was 1.2 degrees cooler in 2014, so that might explain some of the decline. Comparing October 2013 to October 2014 gives a better picture: In 2014, I used 372 fewer kWh despite the average daily temperature being 1.7 degrees higher than 2013. That works out to a $40 savings for October.

All in all though, I am glad I had the extra insulation installed and the leaking doors and windows fixed, even if I did overpay. Being green makes me feel all warm and fuzzy.

Wednesday, November 12, 2014

Want To Know Your Credit Score? Good Luck.

Several years ago, the passage of the Fair And Accurate Credit Transaction Act required credit bureaus to provide consumers with a free copy of their credit report once a year. This was a great boon to consumers. We no longer were kept in the dark about our credit history and the information credit agencies had in our file. The law also spelled out a clear process for consumers to dispute inaccurate information and set up rules on how and when the credit agencies have to respond to such correction requests.

However, in addition to a credit report, most credit bureaus also produce a credit score. This score is generated by taking all the information found in our credit report and running it through some proprietary algorithms, which reduce it to a single number. This number is NOT required by law to be disclosed to consumers and, in fact, many of the credit bureaus will charge you to find out this information. If you are in the market for a new loan, you may be tempted to purchase this information. You may also be hit up to purchase this information when you request your annual free credit report. Don't bother.

First of all, many companies are now providing this information for free. For example, about a year ago, Discover credit card starting providing their card holders with this information with their monthly statement. I've noticed other credit card companies, banks, and some brokerage firms have started doing the same. ( will also give you your credit score for free.) You may also get your score when a lender pulls your credit report during the loan approval process. Granted, if you want to find out your score before applying for a loan, this is a bit too late, but if you are just curious, there is no need to pay for this information.

The biggest argument against paying to get your credit score is this: you have no idea which credit score your lender is going to use. That's right - there is more than one credit score out there. Just as there is more than one credit bureau that has a credit file on you, you also have more than one credit score. Each credit bureau has their own score and some have more than one.

Here's a real world example: On a recent Discover card statement, my credit score was reported to be 847 out of a maximum of 850.

About one month later, as part of a refinance, I was given a copy of the credit report and credit score my credit union obtained during the loan approval process. Guess what? It was different than what my Discover card reported.

In general, when you hear someone talking about a "credit score," they are referring to the FICO credit score - by far, the most widely used credit score. It was developed by a company called Fair, Isaac, and Company (hence "FICO") in the late 1980s and the number was based on the information contained in your credit reports from the three major credit bureaus - Equifax, TransUnion, and Experion.

The exact formula for coming up with your score is not public information, but it's roughly calculated as follows:
  • 35% is based on your credit payment history, i.e. do you pay late or on time.
  • 30% is based on how much debt you have, i.e. how many accounts you have open, your debt to available credit ratio, remaining balance on installment loans, etc.
  • 15% is based on your length of credit history, i.e. how long have you had your credit cards.
  • 10% is based on the types of credit you use, i.e. credit cards, mortgages, etc.
  • 10% is based on recent credit inquires, i.e. how many times has your credit report been pulled recently.
As you can imagine, these factors change monthly, so your credit score will change monthly as well. That right there is your first clue that you will never be able to definitively say "My credit score is X."

But it gets more complicated. As I mentioned earlier, the FICO credit score isn't the only score out there. Each credit bureau has their own score they generate. And even if FICO was the only company creating a credit score, you STILL wouldn't be able to tell what score might be reported to a lender because FICO itself offers FIVE different versions of their score, each one calculated a bit differently.

You might have heard credit scores range from 300 to 850 points. That's for the first model FICO came up with. Some of their other models have ranges from 250 to 900 or 150 to 950. And that's just at FICO. The other credit bureaus' credit score have different ranges. Some go from 1 to 999, others from 250 to 850.

To make matters worse, some of these scores are not available to consumers at all, for any price. They are only provided to other financial institutions.

Let's go back to the scores I received with my refi. Here's what I got:

Notice the type field for all scores is "FICO". The Brand identifies which of the various FICO scoring methods was used to calculate the score. And also note the possible ranges for the scores vary (and none match the score or range reported to me by Discover card on my statement). Furthermore, realize that each credit agency may not have the exact same information in your credit report as other the other agencies do, so even if two companies use the same type and brand, they may still arrive at a different score.

The bottom line is this:

Don't bother paying to get your credit score.

Odds are high that whichever one you buy will not be the one used by your lender. If you must have a number to fixate on, look for a credit card or brokerage firm that provides this information for free. Then, realize your credit score is not a hard and fast number. It will vary, depending on who calculates the number and from month to month. But in general and across all credit score models, the higher the number, the better. And the more positive information your credit report contains, the higher your credit score will be, no matter which calculation method is used. Just keep your financial life in order and your score will rise to the upper limits of all of the various formulas.

(The day after I wrote this post, Two Cents, Lifehacker's personal finance blog, posted a story about this topic with lots of ways to get your credit score for free. Check it out here.)

Wednesday, November 5, 2014

Goal Progress - End Of October 2014

At the end of each month, I post an update of my goals, including a brief discussion of any notable events that might have occurred during the month. The latest month's figures can always be found under the Featured menu in the menu bar at the top of the blog.

Last updated: End of October, 2014
Current value: $9,188
Change from last month: +1,864
Percent of Goal:  8.45%

Note that the funds in this account are invested in stock, so there will be fluctuations in value that are outside my control. I never withdraw money from this account, so any dips are purely due to stock price changes.

Events Of Note Last Month: After last month's decline, October saw a healthy rebound. The stock price of Realty Income bounced back up to the $45-$46 per share range, which is where it was around August. I was lucky to pick up a handful of shares during the recent dip to $41 at the beginning of the month. That accounted for the majority of the increase and is a nice real world example of the benefits of dollar cost averaging.

In addition to my regularly budgeted contributions and stock price increase, account growth this month included a couple of bonuses. First, my employer paid out another quarterly bonus of a couple hundred dollars, which I funneled to my Tesla fund. Second, I received my first ever royalty payment for my ebook! Granted, it was only $15.34, but still... It's my first ever royalty payment! I also received close to $200 from my on-line courses and ad revenue from my real estate blog.