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Archive for March, 2014

Repair It Or Replace It?

March 31st, 2014 at 07:40 pm

(I now blog weekly on frugal living, personal finance & earlier retirement at:
retiredtowin.com)




I think a lot of people have a "replace it" mentality that makes them jump into buying instead of fixing far too easily. And that -- particularly over the long run -- can cost one heck of a lot of money. Not me. I always try to repair first. And that saves me lots of money.

I am particularly mindblown whenever someone talks about running off to buy a new car because the one they have needs something like a new transmission. How does it make any sense to prefer spending thousands to replace one's vehicle instead of hundreds to repair it and get it running right again? Not me. I budget $1200 a year to keep my 1996 Dodge Dakota* running reliably. And I avoid the horrendous burden of buying a new(er) car**.

But my "repair first" mindset applies not just to big ticket items. It also works on small stuff; the stuff some people don't even think about before they run off to spend money buying new.

Is the heel of my shoe worn? I go to the cobbler, not the shoe store. Is the kitchen faucet leaking? I go to the hardware store's plumbing parts section, not the section where the new faucets are displayed. Is my computer getting cranky? I take it to the repair depot***, not to the dump on the way to the new computer store. And so on.

Being consistent about this helps me keep my basic living expenses below $15,000 a year****. And it leaves me much more money to either invest for the future or to spend on something really fun.

# # #


*My Frugal 1996 Dakota Keeps On Trucking:
http://retired-to-win.savingadvice.com/2014/03/26/my-frugal-...

**My Oldie-Goldie Thrifty-Nifty Truck:
http://retired-to-win.savingadvice.com/2014/03/25/my-oldie-g...

***A Frugal Tale of Two PCs:
http://retired-to-win.savingadvice.com/2014/01/11/a-frugal-t...

****My $15K Annual Baseline Budget:
http://retired-to-win.savingadvice.com/2013/12/29/my-18k-ann...

A Double Fistful of Credit Cards

March 30th, 2014 at 11:28 am

I just counted and I have 26 active credit cards. Adding the card credit limits, I have a total of $319,900 in available revolving credit. But I pay off my balances every month and don't use credit cards to finance anything. So what is the point of having all those credit cards? Here are six reasons.

Credit cards give me financial flexibility. Like the time I bought a Subaru Forester with a credit card check because my own funds would not become liquid and available for a few days.

Credit cards give me bonus discounts on major purchases. Like the $135 I got last Fall as cashback rewards on a $9000 roofing job.

Credit cards give me a higher FICO credit score (currently 831, according to DiscoverCard). Because having more credit cards showing on-time payment records means getting a higher credit score. And because having higher aggregate available credit compared to your combined owed balances means getting an even higher credit score.

Credit cards give me an additional level of financial reserves.* So that all my reserves do not need to be in cash.* And that frees up more of my cash for investment.

Credit cards give me lower "street risk". Because having them means I carry just $50 in my wallet.

Credit cards give me a last resort "get-out-of-Dodge" option. Because with or without cash, having credit cards means I can go anywhere and do anything at a moment's notice.

Credit cards are not the enemy. Misusing credit cards is the enemy. And I reap a lot of benefits from having credit cards as my friends.

# # #

*Making Over My Emergency Reserves Plan:
http://retired-to-win.savingadvice.com/2014/01/04/making-ove...

A Discretionary Fund, Not a Discretionary Budget

March 29th, 2014 at 11:16 am

I separate my retirement spending, practically -- and even more importantly psychologically -- into a baseline budget and optional disbursements from a discretionary fund. My baseline budget* covers what I have decided is the minimum lifestyle acceptable to me. The discretionary fund functions as a super flexible pot of money -- distinct from my baseline reserve** -- from which I can pay for goodies, fun, extras, whatever without having to worry about what that spending will do to my budget. Here is how that actually works.

The Baseline Budget
My baseline budget defines my baseline lifestyle. I have chosen to include in that baseline budget living in and up-keeping a country house (instead of a cheaper apartment), having internet access and basic drive-around gas money, eating a meat-and-vegetables diet (instead of a rice and pasta diet), drinking Chivas Regal instead of a cheaper brand, as well as a few other items that distinguish my baseline budget from the minimum budget I could probably survive on. My baseline budget raises my retirement lifestyle from minimal survival to my own personal level of baseline living comfort.

My annual baseline budget* ($18,000) is what I had to have as passive income before I could stop working and retire. I had to keep working until I had crossed that passive income threshold. This is an important point, given that my key financial objective has been to retire as soon as possible in order to free up as much of my remaining life as possible. Life is a zero-sum game, after all. I -- like you and everyone else -- have a set and finite number of days to live. One more day working is inevitably one less day free.

I have taken one more step before turning loose my discretionary spending. Even though my entire baseline budget is covered by my Social Security payments, I sleep better knowing that I have a baseline budget reserve** "just in case." So I have one year's baseline expenses set aside in a savings account. With that in place, I have become very comfortable with my discretionary fund spending.

And here is how a discretionary fund works for me.

My Discretionary Fund
My passive income over and above my $18,000 annual (or $1500 a month) baseline budget gets moved over once a month into a separate discretionary fund bank account. Those discretionary funds accrue there. Whenever I want to do something optional -- book a trip, buy a gadget, hire out something I could otherwise do myself -- I check my discretionary fund balance. If I am comfortable withdrawing from that balance the cost of whatever it is I am considering doing or buying, I go ahead. And I never have to question whether "my budget" can afford the extra cost. Because that is all off budget.

And what if an unexpected unavoidable expense comes up? What if my truck dies... or the well pump goes bad... of I have to travel to see ailing family? Well, my uncommitted discretionary fund stands there ready to bail me out.

This way of handling my finances has had a lot of benefits for me.

Benefits of a Fund Approach
To My Discretionary Spending

First and foremost, separating my wants from my baseline needs*** made it clear to me that I could stop working much sooner than I had thought. So this budgetary approach allowed me to retire years earlier to what I knew I would consider a comfortable baseline lifestyle (for me).

Second, keeping a discretionary fund -- essentially an uncommitted pot of money -- has given me maximum flexibility as to what I can do with that money. If, instead, I had developed a discretionary budget the result could have been becoming committed to recurring expenses just because I could afford them. Expenses such as car payments, time-share payments, club memberships, obligatory annual trips to destination X, and so on. And an expense one becomes committed to can no longer be considered discretionary.

The flip side of this is that keeping my discretionary funds uncommitted allows me to pounce on and take advantage of unexpected opportunities for fun when they present themselves (like grabbing a super bargain of a boat on Craigs List.)

Thirdly, this financial planning method gives me a very solid psychological safety net regarding my financial future. It is a lot less worrisome to think about -- and plan for -- an unexpected drop in passive income when I only have to consider how to continue to cover my baseline budget. On that basis, it would be extremely unlikely that I would have to make any adjustments at all to that budget. Anything else would be, after all, just discretionary.

# # #

*My $18K Annual Baseline Budget:
http://retired-to-win.savingadvice.com/2013/12/29/my-18k-ann...
**Making Over My Emergency Reserves:
http://retired-to-win.savingadvice.com/2014/01/04/making-ove...
***My Financial Independence Key:
http://retired-to-win.savingadvice.com/2013/12/17/my-financi...

Budgeting By Exception

March 28th, 2014 at 11:38 am

I have said that I have a budget. I have even set it out in detail on a blog post.* But the truth is I do not budget at all! What I do is to keep track of my spending and continuously optimize that spending. That is how I cut my baseline spending down by a third over a period of less than a year. And here is how that works.

Like everyone else, I have fixed expenses and variable expenses. Big expenses and small expenses. Planned expenses and unexpected expenses. And on a rolling basis, I keep reviewing each one of those costs and testing to see if I can reduce it without diminishing my life satisfaction or comfort level. It is what I call budgeting by exception. So to speak, I listen for the squeaky cost wheel and then apply some frugality grease to it. And by continuing to do this, I continue to trim down my spending run rate.

But I do not really have a budget. I think that in itself moderates my spending. I do not go to the grocery store with a limit on how much money I can spend there**. I do not go to the gas station thinking I can only put so much fuel in the tank, or set a limit on how much I can drive my truck***. What I do is to approach every spending decision with a firmly internalized mindset to optimize that spending. Not in order to get the biggest bang I can get for my buck -- but rather to get the bang I will be happy with for the fewest of my bucks.****

# # #

*My $18K Annual Baseline Budget:
http://retired-to-win.savingadvice.com/2013/12/29/my-18k-ann...
**My $50-a-Week Food Expense:
http://retired-to-win.savingadvice.com/2014/03/23/my-50-a-we...
***The Frugal Game -- Errand Bundling:
http://retired-to-win.savingadvice.com/2013/12/26/the-frugal...
****My Financial Independence Key:
http://retired-to-win.savingadvice.com/2013/12/17/my-financi...

Index to All My Frugal Living Posts

March 27th, 2014 at 11:26 am

This index consists of a title link list to all my posts in this category. I will edit/update this post each time I publish a new post on a frugal living topic. And I will set/update the order of that list so that it has as much thematic continuity as possible, regardless of when each post was published.

I hope this makes it easy for visitors to my blog to browse and access all my posts in an organized manner.

Frugal Living Index
(Updated July 19, 2014)

Frugality As A Way Of Life:
http://retired-to-win.savingadvice.com/2014/05/10/frugality-...

How I Do Frugality Without Sacrifice:
http://retired-to-win.savingadvice.com/2014/04/12/how-i-do-f...

Having Frugal Fun My Way:
http://retired-to-win.savingadvice.com/2014/07/19/having-fru...

Playing the Frugal Game is Fun!
http://retired-to-win.savingadvice.com/2013/12/14/playing-th...

My Oldie-Goldie Thrifty-Nifty Truck:
http://retired-to-win.savingadvice.com/2014/03/25/my-oldie-g...

My Frugal 1996 Dakota Keeps On Trucking:
http://retired-to-win.savingadvice.com/2014/03/26/my-frugal-...

My Better Way To Heat My House:
http://retired-to-win.savingadvice.com/2014/04/06/my-better-...

Big Job Estimates Save Me Big Money:
http://retired-to-win.savingadvice.com/2014/03/20/big-job-es...

A Frugality-Without-Sacrifice $7500 Windfall:
http://retired-to-win.savingadvice.com/2014/04/12/a-frugalit...

Repair It or Replace It?:
http://retired-to-win.savingadvice.com/2014/03/31/repair-it-...

New Or Not?:
http://retired-to-win.savingadvice.com/2014/04/09/new-or-not...

My $50-a-Week Food Expense:
http://retired-to-win.savingadvice.com/2014/03/23/my-50-a-we...

Freezer Frugality:
http://retired-to-win.savingadvice.com/2014/04/07/freezer-fr...

The Frugal Game: Errand Bundling:
http://retired-to-win.savingadvice.com/2013/12/26/the-frugal...

Raking In Credit Card Cashback:
http://retired-to-win.savingadvice.com/2014/03/11/raking-in-...

Leveraging Up CashBack Rewards:
http://retired-to-win.savingadvice.com/2014/03/18/leveraging...

Cashback Cards ARE Worth The Effort:
http://retired-to-win.savingadvice.com/2014/06/04/cashback-c...

Free Gourmet Coffee Every Day:
http://retired-to-win.savingadvice.com/2014/06/11/free-gourm...

Outsourcing A Move The Frugal Way:
http://retired-to-win.savingadvice.com/2014/04/22/outsourcin...

Frugal Entertainment Boonies Style:
http://retired-to-win.savingadvice.com/2014/04/15/frugal-ent...

Frugal Fun: Hiking Civil War Trails:
http://retired-to-win.savingadvice.com/2014/04/16/frugal-fun...

Florida Snowbirding the Affordable Way:
http://retired-to-win.savingadvice.com/2014/03/17/florida-sn...

A Frugal Tale of Two PCs:
http://retired-to-win.savingadvice.com/2014/01/11/a-frugal-t...

A Frugal Tale of Two PCs (Part 2):
http://retired-to-win.savingadvice.com/2014/06/15/a-frugal-t...

Ditch Digging At 65-- Frugal or Cheap?:
http://retired-to-win.savingadvice.com/2014/04/18/ditch-digg...

# # #

My Frugal 1996 Dakota Keeps On Trucking

March 26th, 2014 at 03:56 pm

I detailed the financial "secret weapon" power of my 1996 Dodge Dakota pickup truck in another post.* I explained how keeping it instead of buying a late-model vehicle every 5 years lowered my retirement "magic number" by $150,000. How its cheaper operating costs lowered that magic number by another $50,000. And how that moved up my financial freedom retirement date by more than SEVEN YEARS.
But is there a "dark side" to an older vehicle like this? Here is why I say "NO".

Some people think older vehicles have to be inefficient... unreliable... unsafe. But no; that does not apply to my truck.

My Dodge Dakota has never broken down on the road. Has never failed to start up. Has never had to be towed. NEVER. And that is 100% reliability. You cannot get any better. A newer, costlier vehicle could not be any more reliable. (And I can thank my by-the-book maintenance program* for that.)

In an accident, I would rather be in my pickup truck than in any car I can think of. Weight, height, bumper strength, material strength would all be in my favor. But the most important factor affecting my driving safety is my risk-averse driving. I do not exceed speed limits (much). I do not drive on ice, snowed-up roads, or in bad rainstorms. I do not have to, remember? I retired seven-plus years earlier than I otherwise could have thanks to my oldie-goldie, thrifty-nifty truck.*

I know someone is going to bring up comfort as a counter-argument to my vehicular frugality. But expense and extravagance are not necessary to attain comfort. I can drive for hours sitting in my Dodge Dakota car seat without stiffness or fatigue. I keep the heater and airconditioner in good repair so temperature control in the truck cab is just fine. And all the while I am driving I am listening to great classical music on a wonderful sound system that I bought on sale and had privately installed at a total cost under $200. So, no. Neither late model, leather, or over-the-top electronics are requirements for comfortable driving. At least not for me.

I do take a hit on fuel efficiency. I get 20 miles per gallon (mpg) and I drive 12,000 miles a year. That is 600 gallons and about $2100 annually . If I had a newer vehicle yielding 30 mpg, I would burn 200 gallons less and save $700 a year. Fair enough. Choosing to keep my 1996 Dodge Dakota means I have had to build up my savings by an extra $14,000 to cover the extra fuel expense. Overall, though, I am still $186,000 ahead on my financial independence magic number. I am still ahead over seven years. And based on a 30-year retirement, that has increased my post-retirement free years by a minimum 25%. All thanks to that little pickup truck.

But my Dakota experience is just one example of how the right vehicle can help set you financially free. If you need a vehicle that can carry a large family, there is a money-saving one for you. If you need a vehicle with cargo capacity, there is one for you. Even if you need a prestige vehicle for your sales/professional career, there is one for you. (I worked as a corporate sales manager in the 1990s, driving clients around in an impeccably maintained 1980 Ford Thunderbird and my clients LOVED it.) The point is: your vehicle is a choice that is either helping to make you financially free faster -- or it is a choice that is dragging you down and binding you to the working world longer and longer.

# # #

*My Oldie-Goldie Thrifty-Nifty Truck:
http://retired-to-win.savingadvice.com/2014/03/25/my-oldie-g...

My Oldie-Goldie, Thrifty-Nifty Truck

March 25th, 2014 at 04:11 pm

I drive a 1996 Dodge Dakota pickup truck. It has over 130,000 miles on it. It runs just fine. It is safe, reliable and comfortable. And it is one of the "secret" weapons that sped up my arrival at financial independence. The big deal here is that years ago I consciously made the choice to treat my vehicle as a means of transportation -- and not as a status symbol. That decision lowered my financial independence "magic number" by $150,000 and cut 8 years off my working life. Here is what I mean.

A status symbol vehicle would easily cost me $500 a month in loan payments and depreciation. If I -- like so many others do -- chose to buy such a new vehicle every 5 years so I could maintain that status symbol impression, that $500 a month would become a permanent part of my baseline budget. And funding that hard-wired expense would require an extra $150,000 in retirement savings (based on an annual 4% safe withdrawal rate to generate the $6000 a year needed to cover those costs).

Not having to bank that extra $150,000 has allowed me to retire 6 years sooner. But the financial power of my secret weapon pickup truck does not end there. Operating my Dodge Dakota is thrifty-nifty too. And cut even more time off my working life.

I do not skimp on maintenance or repairs. My truck gets the full Jiffy-Lube treatment every 3000 miles. Every system is maintained according to manufacturer specs. And once a year, a state-mandated full vehicle inspection identifies and leads to the repair of anything that may need it. My cost for all that is $1200 a year. What would that cost be for a late-model status symbol vehicle? Twice that? More?

And let's not forget the cost of insuring a vehicle. The low $5000 or so replacement cost of my Dodge Dakota lowers my premium payments compared to a late-model vehicle.

If my 1996 Dodge Dakota is only saving me $2000 a year on maintenance and insurance, then that has resulted in another $50,000 I did not have to add to my stash before declaring financial independence. And that meant another 2 years I was able to cut off my working life.

Keeping my truck has given me 8 EXTRA YEARS of financially free life. And that is priceless.

# # #

(There are counterarguments, of course: fuel efficiency, safety and reliability. And we will examine all in an upcoming post.)

A $5000 No-Guilt Spending Spree!

March 24th, 2014 at 04:08 pm

Covering my basic living expenses with $18,000 a year* leaves me a lot of surplus discretionary money. First, I paid off my debts with it. Next, I bulked up my reserves with it. Then, I built up my retirement stash with it. But now I have no debts. My reserves are covered**. And I have all the retirement funds I think I will need. Still the surplus money keeps coming in and piling up. So I think it is time for a no-guilt spending spree. Here is how I am going to do it.

I actually have to "work" at spending money because I have a strong frugal mindset and a very satisfying basic lifestyle***. I just will not go throwing money around spur-of-the-moment or on whims. That is part of why my discretionary fund is now well over $28,000. I have to plan to spend at least some of that. So I am targeting $5000 for a planned spending spree. Here are the details.

$5000 Spending Spree
[] $750 for a spring break hiking trip because I love hiking****.
[] $1000 for a winter comfort to-do list because I hate winter.
[] $500 to kickstart a local trail improvement volunteer program.
[] $500 to test run astronomy as a new hobby.
[] $1000 to have a blog professionally set up because I am so frustrated at trying to do it myself
[] $500 to have built-in bookcases done because I collect books (and I am feeling too lazy)
[] $750 for big-boy toys: a microscope and a little lake rowboat from Craig's List, plus a new rifle.

Finally, I need to set a deadline for this spending and make myself accountable to meet it. So I am setting June 30 as the deadline for the spending to be done. And I will be putting up a Page on my SavingAdvice blog to make public my progress -- or lack of it -- on this spending.

This is a happy problem, I know. And I think anyone (almost anyone?) can have this happy problem if that person adopts a frugality-without-sacrifice*** living mindset and resolves NOT to deficit-finance an otherwise unaffordable lifestyle.

# # #

*My $18,000 A Year Basic Living Budget:
http://retired-to-win.savingadvice.com/2013/12/29/my-18k-ann...
**Rethinking My Reserves:
http://retired-to-win.savingadvice.com/2014/01/04/making-ove...
***Playing the Frugal Game is Fun:
http://retired-to-win.savingadvice.com/2013/12/14/playing-th...
****I Love Hiking:
http://retired-to-win.savingadvice.com/2013/12/23/my-love-af...

My $50-a-Week Food Expense

March 23rd, 2014 at 11:17 am

Buying whatever I wanted to buy, I spent $420 on groceries and other food items for the 2 months of January and February. That's an average of $50 per week for 8.4 weeks (59 days). And that's not as a food "budget", where I set out to limit my spending to $50 a week. No. That's $50 a week buying what I wanted and practicing what I call "frugality without sacrifice."*

I kept my costs down by stocking up on storable items when they went on sale, and staying flexible on my weekly choice of vegetables, fruits and other perishables. Since I only ate out 5 times during that two-month period, the $420 I spent paid for 172 meals plus a robust amount of snacking. Here are the details on how I eat on $50 a week.

My breakfasts consist of oatmeal with milk, strawberries and bananas. My lunches include a ham, turkey or salami and cheese sandwich, a pickle, some beer, and fresh apple. Between lunch and dinner, my snacks may be yogurt, apple and cheese, shredded wheat with milk, or toast with peanut butter.

My dinners are heavy on meat and vegetables, low on starches. Neither rice, pasta nor potatoes form part of my usual daily diet. Instead, on my dinner plate you will find either steak, pork chop, country rib, roast beef or chicken along with large helpings of 2 fresh steamed vegetables such as carrots, broccoli, cabbage or cauliflower. To this I add a large mixed salad and fruit for dessert.

After dinner, I will do more sporadic snacking on crackers with cream cheese, chocolate, or more fruit or yogurt. And I will indulge my extravagant coffee habit.

I am a Keurig K-cup coffee fanatic. My absolute favorite is Tully's French Roast, and I will go through 2 K-cups of that coffee each day. These normally cost 64 cents each in packs of 18. But I manage to get them at a hefty discount. By using store coupons and leveraged cashback redemptions**, I keep my cost down to 40 cents per K-cup. And I keep my food expense down to $50 a week without making any sacrifices on what I choose to eat.

# # #

*Playing the Frugal Game is Fun:
http://retired-to-win.savingadvice.com/2013/12/14/playing-th...
**Leveraging Up Cashback Redemptions:
http://retired-to-win.savingadvice.com/2014/03/18/leveraging...

Index To All My Investing My Way Posts

March 22nd, 2014 at 05:42 pm

This index consists of a title link list to all my posts in this category. I will edit/update this post each time I publish a new post on an investing topic. And I will set/update the order of that list so that it has as much thematic continuity as possible, regardless of when each post was published.

I hope this makes it easy for visitors to my blog to browse and access all my posts in an organized manner.

All My Investing My Way Posts
(Updated December 21, 2014)

My High Yield, High Risk Investing:
http://retired-to-win.savingadvice.com/2014/12/22/my-high-yi...

Why I Only Buy Dividend Stocks:
http://retired-to-win.savingadvice.com/2014/01/01/why-i-only...

Stock Diversification My Way:
http://retired-to-win.savingadvice.com/2014/04/13/stock-dive...

Stacking The Deck For Dividends:
http://retired-to-win.savingadvice.com/2014/04/14/stacking-t...

My Failed Try at Bond Investing:
http://retired-to-win.savingadvice.com/2014/07/22/my-failed-...

How I Stay On Top Of My Stocks:
http://retired-to-win.savingadvice.com/2014/04/09/how-i-stay...

What Makes Me Sell a Stock?:
http://retired-to-win.savingadvice.com/2014/01/14/what-makes...

Profiting From Working My Stocks:
http://retired-to-win.savingadvice.com/2014/04/28/profiting-...

Should I Still Work At Investing?:
http://retired-to-win.savingadvice.com/2014/05/17/should-i-s...

Enough Time For Enough Money:
http://retired-to-win.savingadvice.com/2014/07/12/enough-tim...

Buying Preferred Stocks My Way:
http://retired-to-win.savingadvice.com/2014/04/20/buying-pre...

Stock Panic Nets Me 13% Overnight:
http://retired-to-win.savingadvice.com/2014/05/15/stock-pani...

EPB -- Another Quickie 10% Stock Profit:
http://retired-to-win.savingadvice.com/2014/04/19/epb-anothe...

A 10% Stock Profit In 5 Weeks!:
http://retired-to-win.savingadvice.com/2014/03/21/a-10-stock...

A 16% Stock Profit in 6 Months:
http://retired-to-win.savingadvice.com/2014/03/10/a-16-stock...

OTT: My 88% Stock Loss That Wasn't:
http://retired-to-win.savingadvice.com/2014/04/23/ott-my-88-...

OCIR -- Big Dividend, Big Profit:
http://retired-to-win.savingadvice.com/2014/06/06/ocir-big-d...

# # #

A 10% Stock Profit in 5 Weeks!

March 21st, 2014 at 11:26 am

I just sold 1700 shares of oil stock MEMP for a 10% profit in just 5 weeks. I bought the shares on February 4th for $35,323 and sold them on March 10th for $38,855. My realized gain was $3532. That is a 10% profit in 5 weeks -- which is equivalent to a 100% annual profit. This was an excellent example of how my stock price setting strategy works. And here are the details.*

How I decide which stocks to buy I have outlined in my post "A 16% Stock Profit in 6 Months"** and explained in detail on my blog page "How I Invest in Stocks".*** But the profit I made on this stock sale was a function of the limit price I set for the buy. Because one doesn't just have to pick "good" stocks; one also has to pick "good" stock prices. Here is how I did that this time.

On January 31st, MEMP closed at $21.93 per share. That presented a very good opportunity because MEMP's price chart showed strong buying support at $19.50. When I added MEMP's yearly $2.20 dividend to that $19.50 support price, it gave a "safe" buy price of $21.70. (See my blog page "How I Invest in Stocks"*** for the reasoning.) And MEMP's January 31st price was just 1% above that!

So I put in my buy order on February 3rd at a buy price of $20.77, to allow some room for the price to drop due to a quarterly dividend expiring on February 4th. That next day, I caught the stock as its price predictably dropped. In the following 3 days, MEMP's price slumped to $20.43 but held above its 200-day moving average line. And sure enough, MEMP's price started moving up after that. Which set the stage for me to take a 10% "yearly dividend in advance" profit a short time later. (See my blog page "How I Invest in Stocks"*** for that reasoning.)

# # #

*I am not a financial advisor and this post is not stock investment advice.
**"A 16% Stock Profit in 6 Months":http://retired-to-win.savingadvice.com/2014/03/10/a-16-stock...
***"How I Invest in Stocks":http://retired-to-win.savingadvice.com/how-i-invest-in-stock...

Big Job Estimates Save Me Big Money

March 20th, 2014 at 11:17 am

A few months ago, I had to replace my roof. Some of the estimates I got went as high as $16,500. But by continuing to get estimates based on my "high-low outlier" approach, I was able to get an excellent job done -- with the same materials -- for $8000. Getting these estimates saved me up to $8500.

Getting estimates ALWAYS saves me money. It is critical to the wellbeing of my stash to invest time in getting estimates for major projects. Here is more.

Replacing my roof. Paving my long, long driveway. Installing my whole-house backup generator. Every one of these and many other major home and auto projects could have cost me umpteen thousands more dollars than they did. But they did not -- thanks to my disciplined insistence on getting competing estimates until I find what I call the "low cost outlier" provider.

A case in point is my recent roof replacement. I had to do it or my home insurance company was going to cancel my policy. But even under that kind of pressure, I kept getting estimate after estimate until I knew I had found that low cost outlier. And doing that saved me -- at the very least -- $2500 (and maybe as much as $8500)!

I only sought estimates from "name brand" national home improvement companies and from more local outfits with stellar records on Angie's List. The job quotes were all based on the same brand and type of roof shingle and the same installation process. An apples to apples comparison. And yet the estimates that came in were thousands of dollars apart.

The first 2 estimates were fairly close to each other: $10,500 and $11,300. Then the roofing company with the best record on Angie's List came in at $8000. That looked good. But how would I know that estimate was the low cost outlier deal to take? Answer: I had to keep getting estimates until I found the high cost outlier and could establish the price point around which average quotes clustered.

Sure enough, the next 2 estimates were higher by huge margins: $13,700 and an outrageous $16,500. So there was the high cost outlier answer, and a complete cost-range picture. I signed the $8000 proposal. And saved anywhere from $2500 to $8500, depending on which other quote you look at.

Some of you may be thinking about now: "Well, yeah... Duh!... Of course you get estimates for big jobs like that." I had the same thought and because of it almost did not write this post. But then I asked myself: if everyone gets estimates like I do, how are the high outlier cost companies staying in business? Some people -- maybe lots of people -- must be buying those $13,700 and $16,500 roofs because they assume all companies will charge about the same and therefore just sign a deal with the first outfit they call. So I am writing this post to make it ABSOLUTELY CLEAR that there's a better way that will save you huge amounts of money.

Like when I decided I would not live one more winter season with a 300-foot-long gravel driveway. The 5 estimates I got for asphalting the driveway ranged from $5200 to $12,000. My $5200 paved driveway worked just fine for years until I sold the house.

Like when I needed to get 3 huge trees trimmed and cut away from my house. The 4 estimates I got ranged from $950 to $2400. The arborist-led company with the $950 estimate got the job done right and with no problems.

(And so you can see just how unbelievably outrageous the difference in estimates can be, here is one more real-life example from my personal experience.)

Like when I bought a whole-house Generac back-up generator and needed it and its breaker panel installed. Every company I contacted for an estimate was specifically "approved" by the Generac people to install and work on their generators. Every company was going to have to "pull a permit" from the County and have its finished work pass a County inspection. Again, apples to apples. But my low cost and high cost outliers were worlds apart. Like $500 versus $5000. A ten-fold difference! My $500 installation job was done on time and passed inspection with flying colors. But some poor fool out there somewhere paid five thousand dollars for his installation.

It is great to be frugal on day-to-day expenses and I am. But it is critical to the wellbeing of your stash to invest your time in getting estimates for major projects until you find that low cost outlier that will still do a quality job. Those companies are out there and they can save you thousands!

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I Am A TrailWalker Now!

March 19th, 2014 at 01:04 pm

On my recent two-month snowbird trip, I did a lot of trail hiking in Florida State Forests and Parks. At one of those trailheads, I found a brochure on the Florida State TrailWalker Program**. Now, after hiking 10 of the trails on the program list, I am an official Florida Trail Walker -- jacket patch and all. It took a bit of driving around to get to the "right" forests, but I got it done. Here are the details.

From my snowbirding base near Palatka, on January 10th I went 30 miles south to hike Mud Springs Trail (1.7 miles) and John's Landing Trail (4.5 miles) in the Welaka State Forest. On January 15th, I drove north 20 miles to the Etoniah State Forest and hiked the 4.8 mile Longleaf Pine Trail.

A month later, I did a combination 80-mile trip to the Jacksonville area to hike the Adams Wilderness Trail (1.2 miles) in Cary State Forest, plus the Fire and Water Trail (1.0 miles) and Black Creek Trail (5.0 miles) in Jennings State Forest. The very next day, I hiked the 1.8 mile Up and Down Lake Trail at Duval Moore State Forest (which was just 3 miles from my home base).

Finally, on February 20th I drove 75 miles to the Withlacoochee area and hiked the Holly Hammock Trail (2.3 miles) at Ross Prairie State Forest, and the Tidewater (3.0 miles) and Black Prong (3.5 miles) trails in Goethe State Forest.

All in all, I covered 7 Florida State Forests, 10 trails and 28.8 hiking miles. But not "just" for the TrailWalker patch. Have I mentioned I LOVE hiking? ( http://retired-to-win.savingadvice.com/2013/12/23/my-love-af...

**Florida TrailWalker Program: http://www.freshfromflorida.com/Divisions-Offices/Florida-Fo...

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Leveraging Up Cashback Rewards

March 18th, 2014 at 02:17 pm

I have written before about how I consistently earn 5% cashback rewards on gasoline, grocery, home improvement, restaurant and many other routine expenses by charging them to particular credit cards. But there is more. I have found 2 ways to boost my earned cashback reward by up to 50% at redemption time. Most recently, I have made redemptions that boosted my earned cashback percentage to 6.25% and 7.5%. Here is how.

I just redeemed 20 DiscoverCard cashback dollars for a $25 Bed Bath and Beyond gift card. That is a 25% redemption bonus. Not too long ago, I redeemed 40 DiscoverCard cashback dollars for an $80 Enterprise Rent-A-Car certificate. That is a 50% redemption bonus.

I have learned to never redeem DiscoverCard cashback rewards for straight cash. Instead, I leverage my redemption by obtaining gift cards or vouchers from over a hundred participating companies offering juicy redemption bonuses like the ones I just mentioned. With a hundred-plus outfits to choose from on the Discover redemption website, I always find a useful way to redeem with leverage.

But it is just the opposite when it is time for me to redeem my BankAmerica cashback rewards. Because I have a BankAmerica checking account, anytime I have accrued 20 or more BankAmerica cashback dollars, they can go straight into that checking account. With a 50% bonus on the deposit. I have done it over and over.

I just did it again, turning another 20 BankAmerica cashback dollars into a $30 deposit into my checking account. And isn't that nice?!

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Florida Snowbirding the Affordable Way

March 17th, 2014 at 01:35 pm

I just got back to Virginia from 2 months in Florida that only cost me $3967. That is $66 per blissful snow-free day, including 3000 miles of travel and staying at spacious lakeside homes equipped with everything I could have wanted. Even a bike and a rowboat! Here is how I made that happen.

I drove down from Virginia in my 1996 Dodge Dakota at an easy 250-mile-a-day pace, doing 2 Best Western motel nights each way. Booking those rooms 2 weeks ahead saved me 20%, so the 4 room nights cost me $316. For the 3000 miles of driving I did those 2 months, I spent a total of $513 on gasoline by always filling up at discount stations and using my 5% gasoline cashback ChaseCard.

I stayed one month each at 2 lakeside homes in North Central Florida. I had the run of fully equipped houses. Great big televisions and super sound systems to enjoy on rainy days. Decks over the water to lounge and enjoy beautiful sunrises and sunsets. Even a rowboat to explore the lake. By renting the houses by the month and booking one year ahead, my 60 days of housing in Florida cost me $3040 (about $50 a day) with all utilities, taxes and cleaning fees included. Thanks to fully equipped kitchens, I ate great just like I do at home so had no extra food costs for snowbirding (except for 3 times I ate out for a total of $49). And I spent $9 on odds and ends.

Aside from enjoying the snow-free weather, my main activity on sunny days was hiking the trails in Florida State Parks and Forests. I LOVE hiking (http://retired-to-win.savingadvice.com/2013/12/23/my-love-af...). I did hikes on 32 of my 60 Florida days, covering and covering again 19 trails in 9 parks and forests. By buying a non-resident pass, this cost me just $40 in fees. When the weather was not so good, I watched marathons of cable movies and special shows. And I read.

All in all, I had an excellent time away from winter conditions. I did my regular work via the internet, I hiked my fanny off, I watched a lot of good movies and shows, and I read 2 great military history books. And I did not have to spend an arm and a leg to do it.

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Raking In Credit Card Cashback

March 11th, 2014 at 04:22 pm

For January and February, I've earned $63 in credit card cashback. The $63 came from getting 5% on groceries, 5% on gas, 5% on restaurants and 1.5% on motels and sundries. Using a different card for each spending category allowed me to max out my earned cashback. If I keep this up the rest of the year, I'll receive almost $400 in 2014 cashback just on ordinary expenses. Here's how I'll do it.

The standard credit card cashback is 1%. But most cards do promotions each quarter that yield 5% cashback on specific spending categories. I take advantage of those promotions and carry those cards. So, for the first 3 months of 2014, I'm carrying a Citicard for 5% on groceries, a Chasecard for 5% on gasoline, a DiscoverCard for 5% on restaurants, and a Bankamericard for 3% at Walmart and 1% on everything else. Come April, the promotions will change and so will the credit cards in my wallet.

Knowing what each card's promotions are is not hard. Most card companies send me emails telling me. In March, I'll do a sweep of all my credit card websites to enroll in the promotions. Then I'll put the corresponding cards in my wallet, along with a note to remind me of which card offers what. And I'll be set to go on raking big cashback on everything I buy.

And I do mean everything. Last year, I put a $9000 roofing job on my DiscoverCard and got $112 in cashback for it. If it's chargeable, I keep my cash in my pocket and make sure I charge it.* Taking all my spending into account, this should earn me well over $500 in cashback this year. And there's a lot I can do with an extra $500!

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* (When the credit card statements come I make sure I pay them off. No interest charges for me!)

A 16% Stock Profit in 6 Months!

March 10th, 2014 at 11:46 pm

I just sold 1378 shares of oil stock QRE for a 6-month 11.4% gain. I sold for $25,313 and my cost was $22,751, so I made $2562. Plus I collected $1120 in dividends during the 6 months I held the stock. That gives me a 16.2% total 6-month profit amounting to $3682. This is a perfect example of how my high-yield high-risk investing strategy works when it works. Here's what I do.

I only buy stocks with dividend yields above 8%. To contain my risk, I limit any one stock to 5% or less of my portfolio value. I make sure I understand the company's business model going forward. And I only buy into companies passing these financial health tests: (1) current assets exceed current liabilities, (2) total assets (minus goodwill) exceed long term debt, (3) operating income exceeds interest expense, and (4) operating cash flow exceeds dividends being paid.

I set my buy price based on the price support level showing on the stock's 6-month price chart. For example: if a stock's price support is at $18.25 and its annual dividend is $1.65, I add those 2 numbers together and set a limit buy price of $19.90. And under no circumstances will I buy above that $19.90 limit. That way, if the stock's price drops after I've bought I've got an excellent chance of having the dividends make up for the drop.

Then I sit back and collect my dividends -- unless and until the stock's price rises 10% above my buy price. At that point, I can collect a year's dividends in advance by selling. So I do, which is what I just did with that QRE stock. And having collected that $2562 "dividend gain" in advance has given me a whole year to find another stock to invest the $25,313 cash generated by the sale. Which is what I am doing now.

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For a deeper look at my investing strategy, see my post My High Yield High Risk Investing Strategy at http://retired-to-win.savingadvice.com/2013/12/20/my-high-yi...

(Disclaimer: This strategy works for me, but there's no guarantee that it will work for anyone else. I am not a financial or investment advisor.)