The Internet Game and How You Can Win It

Time to save some folks some more money. Since it’s that time of year for me again, today I’m going to do it by writing about how I play the internet game. Why didn’t I say the cable/internet game? Because cable is useless. You can get every show or movie with internet alone and as a bonus, there are no commercials in most cases. If live sports are your poison, those are often on over the air tv so you can get your fix in HD with a ten dollar antenna. They make fancy ones that cost ten times that much but if you read the reviews, you will likely conclude, as I have, that no one has ever topped the rabbit ears at any price point. You can even put them in your basement or attic, as I once did, so you don’t even have to look at them in your living room. If your live sports are not on over the air tv, you still have plenty of options – bars, friends’ houses, streaming, etc. In conclusion, no cable needed – and I didn’t even have to go into how the average person spends way too much time staring at a screen and should simply be doing it far less in the first place. Or Kodi for that matter…

Why do I call it the internet game? That’s all that most of life is. And that is certainly the case with internet service providers (ISPs). They lure customers in with a relatively reasonable rate, then double it a year later. The fewer customers fight back or do so successfully, the better the ISP does in the game. More profit equals winning. But you don’t want to fatten up an ISP’s profit margin and you don’t have to. Now in the internet game, there are only two basic scenarios – one easy and one slightly more difficult. But not to worry. I’ve experienced them both and both are beatable. You have scenario one if you live in a major metro area with more than one viable internet option. In other words, child’s play. Scenario two is when you have only one. And no, satellite and the like don’t count as options. Remember, we do not inconvenience ourselves in the name of saving money; we simply save money.

If you have options, as I do here in Houston, the game is already over the minute you show up. First, sign up for your “promotional rate” internet with AT&T. Bonus points if you negotiate an extra hundred dollar gift card out of them as I did last time to negate the unnecessary “installation fee” they charge for a technician to pay you an unnecessary visit. Remember, you are in the driver’s seat because there is competition. When they raise your rate a year later, look at what Comcast, or whatever other option you have, is offering. In this case, I’m about to save some money because they’re offering internet in my area for $30 instead of the $40 I’m paying now. Yay for me. Next, you call your current provider and tell them to cancel your account. When they ask why, simply tell them the truth; they jacked your rate up and there is a cheaper option available to you – so bye. They will probably transfer you to their retention department but that’s why you’ve done your homework. Stick to your guns unless they can beat your other option. There really is no more to it than that since your next call is actually going to be to your other option, which does exist. However, in this scenario, the retention department just might actually work hard to win your business because they know that. Going into the call, I know I’m going to save a minimum of $10 a month, but possibly more if their numbers are down and they’re feeling especially motivated today.

If you don’t have options, you can still win, but you have to be a little more creative. The game starts off the same way as above, but when your year is up, it changes. You can try negotiating with the retention department if you want to but again, they know the local market. So if you don’t have any better options, they are pretty unlikely to be in deal mode. But that’s ok. If you don’t get anywhere with them, simply cancel. Next, have your significant other call them and set up new service at the address. Don’t have one? Invent one. If they require a social security number or something over the top like that, have a friend call and return the favor for him or her. You get the point. This is war, people, so band together against the common enemy, which is anyone trying to rip you off. Once your alternate account name’s year is up, you can typically call and set up your own service again at the “promotional rate” since most ISPs purge your information from their system after six months.

That is the main game but here are a few other pointers.

1. If there is any kind of a modem/router rental fee charged, don’t pay it. You can usually buy a compatible setup for no more than $50-100 and they usually last at least a few years if not longer. Given that you’re avoiding a $10-15 a month rental fee plus taxes and fees being charged on top of it, this small “investment” pays for itself in less than a year.

2. Like all businesses, your ISP wants to make as much profit as possible. Its cost is whatever it takes to provide your service and its revenue is whatever it can get you to pay. Here’s the dirty secret: most of the cost is in setting up and maintaining the network. In other words, there is very little marginal cost between different speeds. And here’s another secret: most people need no more than 10-20 mbps – usually around the bottom rung of service that is offered. When they ask what you use the internet for, they’re listening for that magic phrase – streaming. That’s when they’ll say you need some ridiculous speed like 50 or even 100 mbps (depending on how gullible they’ve decided you are) and attempt to upsell you. If you let them fool you, you can quickly wind up paying way too much for internet. Go with the lowest speed that is offered and when they try to play the upselling game, tell them you use the internet exclusively for email and web browsing. At this point, they may try any number of low brow sales tactics and of course they would; the more they get you to pay, the more they get paid. Once again, stick to your guns. I promise the world will not end over this decision, no matter what they tell you.

3. Another note on speed is that sometimes the best deal isn’t advertised. When I was in Wisconsin, Time Warner (later acquired by Spectrum) used to offer a “budget plan” of maybe 3 or 5 mbps for $15. The next highest speed was about three times the price. As a bonus, it was somehow exempt from the “promotional rate” bullshit. I was able to keep it for years. I still fondly remember the day a sales woman from some company or other came to the door and asked what I was paying. I told her what I paid for internet and that I don’t pay for cable under any circumstances and she literally did an about face and headed for the next house without another word. Good times. But this plan wasn’t advertised on the Time Warner website. I happened to have heard about it from someone so I called and asked for it. After listening to a few minutes of the inside sales rep insisting I wouldn’t be able to do anything with my internet if I went with this horribly inadequate plan and ignoring it all, I was in business. And guess what. ISPs can’t perfectly control the speed you get. So even though 3-5mbps would have been adequate anyway, I often got double or triple the speed I was paying for – most likely a regression towards the mean situation. If you want to find out how much speed you are getting, you can find tons of online options by googling “speed test.” But in any case, it certainly doesn’t cost anything to try the slowest available speed and switch if it doesn’t work. Assuming it won’t work very well may cost you something. Assuming can do that in tons of different situations in life.

That should about cover it. If you’re paying more than $40-50 a month, you’re paying too much. By employing these three methods, you should be able to prevent that from ever happening. Adios for now.

Are You Wasting Hundreds a Year on Car Insurance?

While combing through a friend’s finances with him in search of savings opportunities recently, we struck gold with his car insurance. He is going to save hundreds of dollars over the next year as a result of making one minor change and at this point in his life, that will go a long way for him. In the process, I realized that car insurance is probably a large potential savings opportunity for a lot of people and I was inspired to write a post on the basics. Please note that I am no insurance expert and none of this, or anything in any other post for that matter, is intended as legal advice. But I do know a fair bit and I may be able to help point you in a direction that will save you some cash.

The first thing I tell anyone about insurance in general is that in many cases, loyalty counts for nothing. In my experience, the only reward for staying with a company long term is a consistent premium increase. This doesn’t necessarily apply to all companies but it also doesn’t cost you anything to get a few quotes to make sure your existing company is still competitive. I recommend doing so every couple of years or so. Companies seem to make fairly regular changes to the way they rate drivers, vehicles, etc, and the only way to find out about them is to shop around and see who is offering you the best deal today. Don’t assume that anything will be consistent from person to person or even from year to year for the same person. Numerous variables go into what premium is charged. Some agents seem to be very willing to shop around for you as a new customer but very reluctant to do so when you are already on the books. This has to do with their business model. However, just as with almost any other service, if you are less valuable as an existing customer than you were as a new one, become a new one again – for someone else.

Another important thing to look at with car insurance is your coverage itself. Liability coverage is required in most states now and is required by common sense and basic human decency everywhere. Sometimes the legal minimums are lower but I recommend at least 100/300 for bodily injury and 100 for property damage – and 200/400/200 wouldn’t be overkill either. Remember, if you run out of insurance coverage, you’re on the hook from that point on. And things can get expensive very quickly whether you’re paying to repair cars or people so skimping on this to save a few bucks on premiums could be a very painful decision in the long run. Liability coverage also benefits you in the form of uninsured/underinsured motorist coverage. There are simply far too many irresponsible people out there and as usual, people who make one bad decision, such as not having car insurance, tend to make others as well. In my relatively young life, I’ve already been rear ended by not one, but two uninsured drivers while stopped behind lines of cars at stoplights. It doesn’t get any more “not at fault” than that. In both cases, I was very glad to be covered by my own insurance company even though the drivers who hit me hadn’t had the decency to get coverage of their own.

So where can you save money on coverage? In the physical damage section. For this part, you need to consider both the car you’re driving and your financial situation. First of all, if your car is worth less than $5000, you may want to consider passing on collision coverage altogether. Of course, this means if you are in an at fault accident, you have to pay to repair the damage to your car. But most accidents are minor ones that involve little more than replacing a bumper, which is usually around $1000. Plus, if your car is worth that little, chances are you’re not going to repair minor damage anyway. So by not having the collision coverage, you’re really betting that you either won’t get in an at fault accident or that if you do, it will be a minor one. I like those odds. That said, if you don’t have a reasonable emergency fund of at least $5000, you may want to think twice about this.

Please note that if there is a lien on your car (in other words, if you have yet to pay it off), you cannot do this because it will put your loan in default status. You probably don’t want a visit from the friendly repo man anytime soon – even if your lender is likely to call and threaten you for a while before they go to that extreme.

If you want to follow a more minor version of the no collision coverage strategy that doesn’t put an auto loan in default, you can raise the deductible. Going from $500 to $1000 usually makes a decent difference in the premium. I have never seen going higher than $1000 do much of anything so I leave it there. This should pretty well confirm what I said above about most accidents amounting to a $1000 bumper replacement; insurance companies literally bet on it with their pricing.

Aside from coverage changes, there are a few other more traditional methods of lowering your car insurance premium. You can pay for six months at a time or annually if your insurance company offers that option. This usually saves you a little and offers the bonuses of both a head start on any credit cards you may be churning and locking in the premium for the full term you’re paying for. For example, I will only do a full year here in Houston since premiums are rising very quickly as insurers work to recoup their Harvey related losses. You can also get a discount for getting your car insurance from the same company as your homeowners/renters policy. You can talk to your agent to make sure you’re getting all the discounts you may be eligible for (good student, membership in certain associations, completed safety classes, etc). In the case of many insurers, you can also get a discount for letting them use a gps to monitor your driving habits. However, as a safe driver, but one who also likes to get where I’m going in a timely fashion, I’m always going to pass on that offer.

This obviously isn’t exhaustive of every possibility but hopefully it will give you an idea or two to try out. Good luck and safe travels out there!

My $12 Cell Phone Bill

How much is your monthly cell phone bill? It’s apparently not uncommon for people to spend over $100 a month. Even if you think your bill is low, I can pretty much guarantee that mine is lower. The title of the post gives it away but mine comes to around $12 after taxes and fees. And there is not one thing I need my phone to be able to do that it can’t. How? I use a company called Republic Wireless. This post is not only about the company’s service and how it works but it is also an example of how to cut just about any expense.

To solve any problem, step one is to assess the situation so you know exactly where you are now. When it comes to cell phones, that means figuring out how much data you actually use. Those of us who are old enough remember an era when minutes (yes kids, phones were once used to make calls) and number of text messages were also relevant but I digress. There are probably apps you can use to accomplish this. I did it a long time ago so I don’t remember what I used but I’m sure there are plenty of options. What I found way back then is that I actually used very little data. Why? Unless you live in a pretty old fashioned part of the world, there is wifi almost everywhere you go – at work, school, coffee shops, restaurants, stores, just about anywhere you can imagine. Hell, more often than not my phone connects to wifi when I’m stopped at an intersection; but then I live in a very populated area. Anyway, figure out how much data you’re using in a typical month when not on wifi.

That number is the key here. In my case, I use almost none. Don’t get me wrong. I use loads and loads of data just like anyone else. But the only time I ever use it when not on wifi is when I’m in a car and even that is minimal in the era of in car gps systems and usb slots that allow me to bring my entire music collection anywhere I go.

So I have a plan with Republic that gives me unlimited minutes and text messages (all their plans have those) for $10 a month plus taxes and fees. Then I have 500mb of data available for another $5 a month but any data I don’t use, which is usually all of it or very close, is refunded to me. The phone uses wifi whenever it can which is what makes it possible for the service to be so cheap but if it can’t access wifi, it uses the Sprint network. I know. But it is the cheapest network and since my second phone is on Verizon, I believe I’m qualified to tell you that the difference between the best network and the worst one is extremely minimal – all over the country and even in remote areas. Remember, I travel a lot.

This is where I have to give you some bad news. You didn’t think I’d give you nothing but smiles and sunshine, did you? Republic pissed me off last year. Hard. They changed their plans and got rid of mine. The closest new plan to the one I currently have is a whopping $20 a month plus taxes and fees. I know. The horror. The good news is that I am grandfathered in until I get a new phone. My current one is 53 months old and still going strong and here’s to another 53 months! Obviously I will have to upgrade eventually. But not a minute before I have to because I won’t reward a company for doubling their pricing. However, the other good news is that a Republic rep has assured me no further price increases are planned at this time and given the way this one has worked out, any current customers would probably be grandfathered in the same way I have been if there is another one.

So here is the way the new pricing structure works. The base price starts at $15 a month for unlimited minutes and text messages. Then $5 a month is added for each 1gb of data. You can get a plan with as much as 15gb of data if you want for $90. But there is almost no way you’re using that much unless you’re streaming HD movies on a regular basis. And if you’re doing that on a cell phone, well, I guess I can’t help you. But I can and certainly do suggest that you re-evaluate your life choices. Most people will be able to get by with far less than 15gb a month and will save considerably on their cell phone bills as a result.

You do have to buy your own phone with Republic. But I believe phones have gotten so expensive that most major carriers are making you do that anyway. And the good news is that Republic has a range of quality options that are also very competitively priced. For example, when I bought my Moto X1 it was $300 which was about the same anyone else was charging for that model. And at that time, it was every bit as capable as all but the high end phones on the market – certainly more than good enough to do anything that can be done on a phone by the average person. Today the equivalent available options are probably either the X4 ($349) or the G6 ($249). They also offer other brands including Samsung; currently they have the S9 for $719 and the S8 for $599. But frankly, my other phone is an S7 and I have to say that even being four years old versus the Samsung’s two, the X1 is easily better so I don’t think the brand name is worth the money. Samsung’s tvs are pretty disappointing too in my experience by the by. On my next one I will go back to Vizio since Samsung really doesn’t seem to offer any additional quality for the difference in price. But back to cell phones. You also have the option to get your own phone to use with Republic if you get one that is compatible. The website has the information you will need to do that. Sorry, Apple people. No soup for you. Then again, if you buy Apple products, you probably enjoy lighting money on fire in other ways too so you likely aren’t reading this anyway. Yes, my text messages are a different color and no, you can’t see when I’m typing a reply. And I wouldn’t have it any other way.

Republic Wireless isn’t perfect and it may not be for everyone. But it works just fine for me and if it works for you too, you will probably be able to cut your monthly cell phone bill in half or better. Now multiply this process of need assessment, researching alternatives, and making a change to most of the expenses you have and you’ll understand how I live an upper middle class lifestyle at lower middle class prices, allowing me to save and invest a middle class income’s worth or more each year. And that, my friends, is how you build wealth.

P.S. No, this is not an advertisement for Republic, nor am I getting any money from it in any way. No one reads this so there is no point in trying to advertise.

Happy New Year!

Can you believe this blog survived 2018? Of course you can’t; you don’t exist because there is no one reading this. That’s all right. Did you have a good New Year’s? I know I did! For a few years running now, my celebration is always great. No, I don’t leave home for it. As wonderful as crowds of increasingly drunken fools, cover charges at bars that don’t normally charge them, and cops everywhere (seriously, it’s their damn super bowl) may be, I manage to resist. Why? I can go out and have a good time literally any of 364 days a year; I will leave this one for the amateurs. And there are always more than enough of them out there to make paying a huge premium over any other night a huge waste. Today I want to talk about what I do on New Year’s Eve because whether you like to take the night off or not, these are very important activities that can really help kickstart (that term didn’t used to mean online panhandling, sigh) your financial goals in the new year.

Throughout the year, I record my expenses, investments, and any other transactions. This can be done very simply using Mint or one of what I’m sure are many available apps. Or it can be done with somewhat more of a hassle but also the advantage of not connecting many financial accounts to a single online source if you’re like me and trust no one. Whatever method you choose, New Year’s Eve, or whatever day you do this, is the day it all comes together. So you want to be thinking about that end goal when you set this all up in the first place.

Anyway, while many people are out having one last hurrah before they swear off everything fun for at least the week or two their resolutions survive, I’m at home reviewing what I did over the course of the outgoing year and setting new goals for the new one. All those transactions get aggregated into a handful of spreadsheets, which I use for both direct analysis and creating financial statements – at least my lazy man’s set of financial statements – an income statement and a balance sheet. Screw you, cashflow statement and statement of owner’s (or stockholders’) equity!

The income statement puts all my income sources and expense categories in one place, making it very easy to see where I did well and where I didn’t. This year, there was plenty in both categories. My balance sheet shows me where I stand with everything right now – all my assets and any debts I would have if I were someone who did. These statements are especially useful when comparing them to last year’s versions so this exercise really needs to be done for at least two years to see the full value.

Why do I do this? Sure, part of it is because there is something wrong with my brain. I’d be lying if I said I don’t write a little executive summary and then read it to myself in a poor imitation of a CEO on an earnings call at the end. I do. But it amuses me. And I believe that at least a basic version of this process will help anyone. Not only do you get to see exactly where you stand financially, but if there are any concerns, you can go back and see the exact transactions that got you here. I can’t imagine a more effective way to look back at your year, set goals for the next one, and have a great picture in mind of exactly what it will take to meet them while doing it.

After all, fail to plan, plan to fail. And the information gathering stage is a vital part of planning. If your life is a ship, you’re the captain. How crazy would it be for a captain to care neither where he intends to go or even where he is now? If you want to improve your finances over the next year, and I think we all do, my New Year’s process is a great way to start moving in that direction. And no, you don’t have to do it on New Year’s. After all, if you do it a couple months later, you won’t have to go back and make updates when you have your final tax figures in hand like I do. But then again, your year will also be less fresh in your mind and I think you will lose some of the effect of punctuating one year and outlining the next. Everything is a trade off.

If you don’t know how to create an income statement or a balance sheet, I will outline the process – although before I do that, I will recommend that you learn the basics of accounting. It is a horrible field to work in. Horrible. I know because I did it for a while. But it is a very valuable skillset whether you want to gain insight into a publicly traded company you’re considering investing in or simply trying to understand why things are the way they are at work and how you can get ahead. With all the ways we waste time, I think it’s a crime not to invest some in educating ourselves on an ongoing basis. And accounting is a highly recommended area to do that.  

A balance sheet is simply an expansion of the basic accounting equation: assets minus liabilities equals equity. This equation really is the key to life. Think about it. It could just as easily be calories taken in minus calories expended equals live or die and then it literally applies to everything alive. So first you list your assets –  bank accounts, investments, vehicles, real estate, etc. These are the total values mind you – not the equity you have in them. Then you list your liabilities – any loans, credit card balances (hopefully not!) IOUs to your Mom, anything you owe anyone. Finally, you subtract total liabilities from total assets and you have your net worth. Some folks think you shouldn’t include your primary residence in that but let’s not split hairs. The point is to have a big picture view of your financial life and a basis for comparing one year to another. Oh. Every balance should be as of a specific date – December 31 in this case.

An income statement is a whole year statement as opposed to a snapshot at a specific point in time like a balance sheet. It looks a lot like a balance sheet but instead of assets, you start with income sources – employment income, business income, investment income, credit cards (yes, that’s in my income section ONLY; I’ll post a guide to doing that soon), and so on. Then you list your expense categories – housing, gas, food, insurance, taxes, everything, however you want to break it all up. Total income minus total expenses gives you your net income for the year. Bonus points if that amount for 2018 equals the difference between the 2017 net worth and your 2018 net worth from your balance sheets. Full disclosure: mine was off this year and I don’t care. It was by less than $1000 and even my insanity has limits.

Questions? Leave a comment or shoot me an email. Oh, that’s right. No one is reading this. Oh well. My net worth is soaring, even in a bad year which 2018 certainly was for a handful of reasons (but now I know the how and why and I can work on making the necessary adjustments), and my New Year’s exercise not only contributes to that indirectly by getting me in the right mindset, but it documents the whole thing for me. Here’s to a happy and prosperous 2019 for everyone!

Take Advantage of the Easy Opportunities

About a week ago at the grocery store, the cashier handed me three coupons. Most of the time coupons are worthless to me. Some have too many contingencies, others are for something I would never buy, and still others are for stores or service providers that aren’t the best options in the first place. But I always take a quick look anyway and it turned out these coupons were amazing. One was $5 off a $30 total purchase, one was $3 off a $5 purchase of produce, and one was for a free pound of ground beef. I could use each one of these and they were for HEB, the best and cheapest grocery store in my area. Not only that, there were zero restrictions of any kind meaning they could all be used together. I barely had to modify my next shopping trip at all to take advantage of the more than $10 HEB had decided to hand me.

That opportunity fell into my lap but not all of them will. Sometimes it takes just a little bit of hunting. For example, when I set up this website earlier this week, I took one extra step before checking out. I googled “wordpress coupon code.” After trying a couple that didn’t work, I happened upon one that did and it saved me around $15. And just today, I got the notice that it’s time to renew the registration on my car. Here in Texas, an inspection is required as part of the process. The state sets the price of this inspection at $25.50 but just for the hell of it, I gave Google a shot at helping out again. Within seconds, I found a coupon for 25% off, saving me over $6 on this useless but mandatory service.

For those who are keeping score, that’s over $30 I’ve saved just this week – all on things I would have paid for anyway. Since I invested a total of no more than five minutes of extra effort in making this happen, that means I was paid more than $360 an hour for my “trouble.” As a bonus, our friends at the IRS haven’t found a way to tax money that isn’t spent yet, although I’m sure they’re working diligently on it. So that brings my hourly pay up to over $600 for these activities.

Taking advantage of opportunities like these may seem obvious and absolutely everyone has them but it’s amazing how many people don’t do so. I bet over half of the people who were handed those same coupons threw them out without even looking at them. I bet the same percentage or more don’t do a quick google check for coupon codes when they’re shopping online. And furthermore, I bet that many of these are the same people who claim they can’t afford to save for retirement or even for a rainy day.

I can easily afford those things and more. But a huge part of what got me here was taking advantage of the opportunities that were either in front of me or easy to find from where I was. I’m not talking about working my ass off to find more customers or to hammer out a deal that is both attractive to someone and profitable for me. I’m not even talking about spending ten minutes gathering up coupons and planning a shopping trip. That is more of a time investment than I am willing to make on that even though I do know people who make an excellent hourly rate doing it. I’m not talking about taking a girl out with a promotion that I have to use right in front of her or something else potentially embarrassing. I’m talking about the six-inch putt, the extra point (before they moved them back in the NFL), the gift that is available to anyone willing to simply unwrap it. I’m still taking advantage of these today and still will long after my net worth crosses from six figures to seven.

Folks, life is hard and sometimes opportunities are scarce or difficult to take advantage of. I’m not saying you shouldn’t fight hard because you are very unlikely to succeed if you don’t. I simply want to remind you not to neglect the easy stuff because it is there for the taking and often more profitable than you might expect.