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Saturday, August 30, 2014

78. Smoking... An expensive habit? Yes!

I first started thinking of this topic on a recent trip I took for business. On the door of the bathrooms in the airplane there was an ash tray. Considering the flight was non-smoking and it was illegal to smoke in the airplane bathrooms I found this to be quite humorous.   

Recently someone mentioned that they had saved a lot of money by quitting smoking. This peaked my curiosity. I looked up the cost for a pack of cigarettes and came across thisarticle which said that a pack in Texas cost $6.69. 

I thought for sure this had to be way high. I personally thought it would be close to $5.50 or less. So I called 3 local gas stations and they gave their prices: $6.00, $7.35, and $5.75 for the same pack of Marlboro cigarettes. 

Basic Math

So let's do some basic math here. 

Scenario 1: Assuming a person smokes 1 pack a week for 52 weeks a year and smoke for 30 years that is $9,937.20. 

($6.37 x 1 pack x 52 weeks x 30 years = $9,937.20)

Scenario 2: Increase the consumption to 3 packs a week goes up to $29,811.60 in 30 years. ($6.37 x 3 packs x 52 weeks x 30 years = $29,811.60)

Scenario 3: Increase the consumption to 7 packs a week (or 1 pack a day) it goes up to $69,560.40 in 30 years. ($6.37 x 7 packs x 52 weeks x 30 years = $69,560.40)

Investing the Money Instead?

Question: What if instead of buying cigarettes you'd invest that money?

Interestingly enough this investment calculator was the first to pop up on my Google search.

If you were to take Scenario 1 and instead of spending $27.60 a month on cigarettes invest the money at 7% annual rate of return for 30 years you would have $33,475.34.

If you were to take Scenario 2 and instead of spending $82.81 a month on cigarettes invest the money at 7% annual rate of return for 30 years you would have $100,438.29.

If you were to take Scenario 3 and instead of spending $193.22 a month on cigarettes invest the money at 7% annual rate of return for 30 years you would have $234,351.85.

That's not even accounting for inflation, etc. Or the financial consequences of lung, tongue, throat, skin, or other cancers/diseases that can impact a person who smokes. It can also significantly impact those who live around the smoker with 2nd hand smoking. Health challenges in children particularly can be compounded by 2nd hand smoking. 

What could you do with say $10,000, $30,000, or $70,000? Have you ever smoked? Do you still smoke regularly? If you did quit what made you quit?


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77. Tips to Save Money - Part 8

Here’s some personal experience on great ways to save an extra buck. I'd love to hear your tips! I have a list of about 60+ tips to save money. This is part 8 tips 30-33. I hope you enjoy!

30. Be weird, it’s cool.
Ignore the opinions of poor people or those with lot's of debt. Live like no one else today, so that you can live like no one else in the future. When people that don't know how to handle money think you're crazy you know you're doing something right. Being weird is cool. Being in debt up to your ears is not. Spend less than you make. Don’t keep up with the Jones’s. Or is it the Kardashians these days? Don’t have the latest model phones, TV’s, cars, or toys. Have money in the bank. Save for retirement, create a will, and buy life insurance. If it is available consider public transportation (train/bus) instead of driving a vehicle. Consider too furthering your education to increase your earning potential over your career or life time. 

31. Pay Off Large Purchases Faster
Putting an extra $100, $200, or $300 towards you car loan or mortgage will drastically reduce the interest you pay on the loan over time. We pay every two weeks (or bi-weekly) our mortgage so instead of 24 payments we pay 26 payments in a year. We also pay an extra $120 every month towards our mortgage. This can mean saving thousands of dollars over the life time of a loan. 

32. Buy Quality
Buying quality products that last longer is a good idea. As an example I used to buy Polo shirts for work around $15. They didn't last long. These lasted for say 2 years. So $15/2 = $7.5 a year. Now I buy $25 shirts. While they are more expensive they also last a lot longer. These last about 7 years or so if taken care of properly.  $30/7 = $4.29 a year. 

33. Buy Older Technology

When we buy technology on the other had we try never to go for the latest model of a TV set, cell phone, etc. Older models are often just as good as the new ones but are a better value. By buying the latest model you are paying a significant premium. We bought iPhone 4s's (for about $99) when the iPhone 5's ($300+) were out for example. 

Which tip did you like best? What tips have worked for you? 

See the full list of tips to save money for the other tips and parts! Leave a comment! 


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Thursday, August 28, 2014

76. Discover Card FICO score and Credit Card Features?

I noticed my Discover card now has a FICO score when I login to view my statement. It shows a credit score in the 700’s. Which is pretty good. Anyone else notice this? Perhaps this is a new trend with credit card companies. 

Apparently this is pulled from the TransUnion credit bureau and is relatively accurate. This is a free service for Discover card members. This measurement doesn’t have any negative impact on a member’s TransUnion bureau score.
From the Discover website :

Why are you putting my FICO® Credit Score on my statement?
Simply put, we want to be your favorite card.  So we're always looking for new ways to treat you right. And now that means a FICO® Credit Score from TransUnion on your monthly statement to help you stay on top of your credit and avoid surprises.  All for free, and with no impact to your credit score

Where did you get this score?
We partnered with TransUnion, one of the three major credit bureaus, and FICO® to provide your FICO® Credit Score on your statement for free.
Perhaps this is a new trend with credit card companies? What features are most important to you on your credit card? Leave a comment!


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Wednesday, August 27, 2014

75. Credit Cards, Rewards, Dave Ramsey, etc.

People tend to spend more when they use credit cards then when they use cash. Regarding identity theft are credit cards more dangerous or less dangerous than debit cards? Typically debit cards are considered more dangerous as the money comes out of your account instantaneously. That said…

Like others we use credit cards to buy things we’d normally buy: groceries, gas, bills, etc. We enjoy rewards primarily for cash back now - Discover, CapitalOne, and Amazon. We pay our credit cards balances off in full every month. 

We get rewards through Discover card with the 5% cash back every quarter. We also get 1% cash back on all purchases. We can get gift cards (through JCPenney, GAP, Old Navy, CVS, AMC, Groupon, Olive Garden, Applebee’s, Boston Market, Macaroni Grill, etc.) or we can use the cash back to go directly to our payments. As a side note Discover also provides a free monthly credit score. I'll post on this more later. There is no annual fee on this card.

We have a CapitalOne Quicksilver Visa that allows us to get 1.5% cash back on all purchases.  There is no annual fee on this card.

We have an Amazon Visa card that gives us 3% cash back on all purchases.  We also get 2% cash back at gas stations, restaurants, and drug stores. Finally, we get 1% cash back on all purchases.There is no annual fee on this card.

We have a Khol's card which gives us 15-30% off coupons that we use occasionally when shopping for clothes. We also use our Target card for 5% off purchases at any Target store. 

Dave Ramsey says a lot of things. Some of it is good and some of it is not so good. He has great advice about getting out of debt and the 7 babys steps are a good system (emergency fund, budgeting, debt snowball, invest 15% towards retirement, save for kids college, pay off home early, build wealth and give...). His advice is not so great for those who are disciplined in paying off their credit card bills every month. 

Let me explain. The issue is Dave Ramsey assumes that everyone who uses credit cards is not disciplined with money and will carry a balance. People who can’t handle money well (those who carry a balance or treat a credit card like an emergency safety blanket) shouldn’t have credit cards. I agree with him there but not everyone is irresponsible with how they use credit cards.

My advice: If you can't be disciplined enough to pay off the card every month don't have a credit card. 

We get about $400-600 a year in cashback rewards alone. We think they're worth it!

What do you think? Are credit cards worth the risk to you? Do you pay off your credit card or cards every month? Leave a comment!


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Tuesday, August 26, 2014

74. Going Back to School for College or Graduate Degree?

What are some factors to consider when contemplating going back to school for either college or a graduate degree?

It really depends on what field your considering going to undergraduate or graduate school in when considering taking out loans. 

So questions:

A. What is the field? 
B. How much debt will you have by the time you graduate? 
C. What impact will this degree have on your career or earning potential? 
D. Have you considered moving to another state and/or living with family while getting this degree? 
E. How much can you work to pay cash for expenses (tuition, room & board, books, etc.) while in school?
F. How long will it take for you to pay that debt back?

First, if you do plan on going back to school educate yourself on all available options. There's a lot of scholarships out there. Start with this website: 

Second, consider website like for comparing job profiles to the salaries of people with comparable skills and experience. Choose a potential degree that suits your interests and allows you to make a living wage. 

Third, consider looking up jobs by company and title. 

This will give you an idea of the potential income for entry level, mid-career, managerial, and executive positions in your field of interest. 

Are you a college student? Read this post for some further advice to college grads.

A college or graduate degree can significantly boost a person's chance at a raise, promotion, or better job. 

It is typically recommended that a student "keep their debt low enough that they don't have to spend more than 10% of their post-graduation pretax income on student loan bills." (Kim Clark, U.S. News 2009)

It is a good idea not to take out more student loans more than your starting annual income. You should be able to pay back your student loans in about 10 years. "If your total student loan debt is less than your annual income, you'll be able to repay that debt in about 10 years." - Suzanna De Bacca, U.S. News 2012

I got an MBA and it cost me about 20-25k. I went to a state school though. The program was supposed to be a 2 year program. It took me 5 years and I paid cash as I went. It was well worth it in 5 years since graduating I've more than doubled my income with a new job opportunity. Again typically it is recommended not taking out more debt than your first years salary worth of loans. 

That said, I have an acquaintance who went to a very prestigious school who took out 150k worth of loans in 4 years for a business management college degree. She pays $1100 a month just in student loans alone. $1100! That's a house payment. That's before groceries, rent, utilities, gas, or anything else. And it will likely take 15-30 years to pay off unless there's a significant increase in her income, she wins the lottery, or she marries someone wealthy enough to pay off the debt. 

So what do you think? Was this helpful? Leave a comment!


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