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Does Buying Your Gas In The Early Morning Really Save Money?

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I've already written about the folly of trying to save a few cents per gallon when shopping for gas. But did you know there are times when you don't get exactly what you pay for when you fill up your gasoline tank at the local station?   It's not that the gas stations are doing anything illegal.   But they are taking advantage of the laws of physics in a way that permits them to make a little extra money at your expense. Now, for those of you who regularly ditched your high school physics class, let me give you a quick primer on why this is so.   ;-) Gasoline expands when temperatures rise, but the energy content of gasoline is directly related to its weight, not its volume. The end result of this expansion results is less energy per gallon. Now, it's absolutely true that gasoline retailers adjust for hotter weather when they buy fuel at the wholesale level. But it's also true that the very same retailers (at least in the United States), knowingly refuse to make the same warm-weather adjustments when they sell their gasoline to the public on hot days. The result of this is consumers end up paying a "hot fuel premium" every summer in the neighborhood of two billion dollars. This tends to get a lot of nerds who actually enjoyed their physics classes really spun up. But should they really be that upset? There are roughly 300 million people in the United States. Assuming that about half of them drive, the two billion dollar hot fuel premium costs each driver about $16 per year. That probably doesn't amount to even a half tank of gas per year for the average driver, although it ultimately depends on the type of car you drive, and the cost of fuel. Still, if you want to ensure you avoid the summertime hot fuel premium you can move to Hawaii, which  already requires retail stations to install automatic compensation devices on all its gas pumps. For those who don't live in the Aloha State, they  may be happy to know that Costco recently announced that they have agreed to install the same type of gasoline compensation devices at stores in 14 states. Those states are Alabama, Arizona, California, Florida, Georgia, Kentucky, Nevada, New Mexico, North Carolina, South Carolina, Tennessee, Texas, Utah, and Virginia. Then again, if  a trip to Costco is either impractical or a non-option, the effects of the hot fuel premium can be minimized by filling up in the early morning when temperatures are coolest. True, the Costco decision will not result in any significant gasoline savings, but at least you can be assured that when you pull up to the pump you will get what you paid for. If you liked this article, please be sure to subscribe to my RSS feed. ...

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Evaluate Your Options Before Selling Gold Jewelry

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I was watching a King of Queens marathon late last night and my viewing enjoyment was continually being disrupted by those ubiquitous Cash4Gold ads that urge viewers to collect their unwanted jewelry so it can be turned into "cold, hard, cash!" After the 40th commercial, I finally decided to give up and TiVo the rest of the marathon. This cash for gold thing would have made a great episode of the King of Queens. I could see it now:   Doug and Carrie kick Arthur out of the house and, in order to make up for the lost rent, they decide to collect some of their old gold jewelry so they can turn it into a quick buck.   Of course, Doug would accidentally include Carrie's wedding ring in the return envelope and be forced to spend the rest of the episode trying to get the ring back. The Los Angeles Times recently wrote a piece on Cash4Gold that revealed, not surprisingly, their promise to pay “top dollar” doesn’t always translate into big bucks. In fairness, Jeff Aronson, CEO of Cash4Gold, defends the gold refinery on several grounds.   In the Times' article, he points out that melting down jewelry is “not always the right way for somebody to monetize,” and that his website makes this clear. Yes, when it comes to converting gold to cash you have multiple alternatives from which to choose. But which one is the best option?     Well, unfortunately there is no right answer as each has its own advantages and disadvantages. If you decide that you do want to convert your old gold jewelry to cash, you should first take a minute to consider the time, effort, and monetary trade-offs that your available options offer.     A quick-look summary of my evaluation and overview of the five alternatives follows (click on the image to make it larger): Gold Refiners Refiners such as Cash4Gold can get you money quickly with very little effort.   The trade off is their payout is very poor, typically no more than 10% of retail, although price-per-ounce payouts tend to be higher when you have more than 10 ounces of gold to sell.   They send you an envelope, and you return your gold to them.   The refiners then determine a value and send you a check about a week later.   If you're happy, you cash it.   Otherwise you have 15 days to return the check and get your gold back. If you are in a real hurry, there is also a "fast cash" option that allows you to deposit your payment directly into your checking account within 24 hours. Pawn Shops Pawn shops will evaluate your gold jewelry and offer you a price that is often two to three times higher than what the refiners will offer you.     Convenience wise, you actually have to get off your butt and drive into what are usually the seedier parts of town.   You may also have to go to multiple shops to get a somewhat decent offer. Local Jewelry Stores Oftentimes antique jewelry and/or jewelry of quality craftsmanship can be worth more than the value of the actual metal it contains.   If your jewelry falls into either of those categories, jewelry stores will usually provide you with higher compensation than refiners and, to a lesser extent, pawn shops.     The drawback is that you will most likely have to drive around to multiple stores to get the best price. Ebay Ebay also allows you to take advantage of the added value of your antique and/or high-craftsmanship gold jewelry.   The nice thing about selling your gold jewelry on eBay is that you can ensure you will get a higher price than you would from the refiner by listing it with a minimum reserve price that is above the price of scrap gold.     This option may be a bit easier than driving around to various jewelers, but the payout time is dependent on how long it takes to find a buyer. Gold Parties Gold parties such as My Gold Party and Party 4 Gold are the latest craze where friends get together, share some party snacks and meet with a gold buyer who assesses their jewelry.   In many cases, cash is paid on the spot.   The host or hostess gets a commission based upon the party's total take.   If you are selling, it doesn't get much easier than this.   However, payouts are not much better than other refiners. Personally, I have no intention of selling my gold.   It is my opinion that the value of gold is destined to go higher over the long run. Besides, gold is an inflation hedge that protects your wealth against the declining value of the dollar -- so it makes sense to hold on to it if the government is going to continue to debase our national currency by conjuring trillions of new dollars out of thin air. But hey, if you need to raise some quick cash, it may be your only alternative. With that, I see the TiVo has finished recording the marathon.   It's time to break open a bag of Cheetos (the puffed kind, of course) and a pour myself a cold drink, because I plan on watching Kevin James and Leah Rimini with no further commercial interruptions. If you liked this article, please be sure to subscribe to my RSS feed. ...

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An Easy Way to Compare Credit Card Reward Programs

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I always assumed the cash-back card to be a better value than the one passing out airline miles, but I never did a detailed analysis to confirm my suspicions.   For me it just made better sense to get a dividend check a couple times per year that I could put to use for whatever I wanted. Since we always pay the card off in full at the end of the month, this is pure profit.   At a penny for every dollar I spend, the dividend isn't much -- but, hey, it's free money!     And who doesn't like free money?   ;-) In 2008, we charged $21,089.93 on our dividend credit card.   That is an average of $1757.49 per month.   The charges resulted in dividend payments to us of $210.89 just for buying things on the card.     :-) But what if I had chose airline miles instead? With my particular card, I would have been entitled to 1 mile for each dollar spent.   At that rate it comes down to a trade between a $250 dividend check for a round-trip ticket to anywhere in the continental US, or a $400 dividend check for a round-trip ticket to Hawaii.     Of course the airlines would restrict the days and times I could use those tickets, assuming I could get them at all, but that's life.   Right?   :-) A recent check on a national travel website showed round-trip airfare from Los Angeles to Hawaii for as little as $374.     Based on this unscientific survey I would clearly be better off collecting the dividend miles than saving for a flight to Hawaii. When it comes to cashing in miles for a trip within the continental US, this is not necessarily the case, as it all depends on the desired destination.   For example, at the time of this writing, the cheapest round-trip ticket from Los Angeles to Boston cost $414 -- clearly a better deal than the $250 rebate.   Then again, trips could be had to many other parts of the country for less than $250. Based on that observation, those of you who live near airline hub cities such as Dallas, Atlanta, Denver, and Salt Lake City may decide that the airline miles option would be less desirable because hub cities tend to have lower airfares.   It might not be a slam dunk rule of thumb, but it is worth considering. For those who are considering applying for a new credit card but are not so inclined to do all of this analysis themselves, there is good news.   While surfing the net the other day I came across this handy credit card rewards comparison tool at CreditCardFlyers.com. You simply enter a breakdown of your credit card spending habits and it returns a listing and complete description of the best rewards cards on the market.   After entering data such as how much money I charge per month, and estimating how I distributed that spending (e.g., how much I spent on groceries, how much I charged on gasoline, etc), it gave me a rated list of 17 different cards to compare. For those who don't want to break down their spending, it is sufficient to simply give your estimate of how much you charge per month.   Keep in mind, though, that this can affect the analysis because many cards give additional bonuses for buying groceries or gas, for example. The resulting credit card summary separated the winners by the type of rewards offered, be it rebate, points, or miles.   It also provided an estimated first year payout for each of the cards.     The payouts included bonuses and other incentives for signing up. CreditCardFlyers.com also includes comprehensive reviews on various credit card programs, including information on interest rates and annual fees, and a summary of credit card perks and benefits.   Although there are some low rated cards, the majority of the reviews seem to have a lot of 4.5- and 5-star ratings; still, all of the information is there for you to make an informed decision. Hopefully, CreditCardFlyers.com will take a lot of the mystery out of deciding which credit card program is the right one for you. If you liked this article, please be sure to subscribe to my RSS feed. ...

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My 2008 State of the Household Financial Report (Part 4)

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Today at work I was a bit distracted.   This was entirely due to my anticipation regarding my earlier promise to finish this four-part series with a quick summary of my net worth.   I hope most of you can forgive me; it's just that I feel like the lead actor in the latest Judd Apatow movie.   ;-) Those of you who have seen Forgetting Sarah Marshall or a few of Mr. Apatow's other movies know what I am talking about here.   For those who haven't, quite simply, I was rather apprehensive today about doing my financial blogger nude scene, so to speak.     But after some last-minute moral support from the Honeybee and a couple of other bloggers I have come to terms with it.     So let's get it on.   Lights, camera, action! Well, there it is for all the world to see.   My net worth, that is.   As of 31 December 2008 my net worth was approximately $660,000.     As you can see I estimated our household personal property, which includes things like our two cars,   furnishings, jewelry, and collections.   I also estimated the value of our home at the time.   I know this number is very close because we are currently refinancing and I just had the house appraised.   The appraisal came back at $440,000. Our investments are in good shape as I managed to foresee the financial meltdown coming.   At the end of 2007, I pulled all of our investments out of stocks and placed them into a safe haven, avoiding the big losses that occurred in late summer and early fall of 2008.     We still lost about 5% on the year, because I chose to start putting some of our money back into the market in November after the bulk of the market carnage was over.   Still, as you can see, the bear is still out there. On the liabilities side, we have no loans, credit card debt or any other obligations other than the mortgage.   As the household CEO, I choose to track both our total net worth as well as net worth minus home equity.   I do this as a simple reminder to myself that our house is not to be considered a piggy bank that can be tapped whenever we have an urge to scratch an itch. Well, that's it.   My scene is over.   I hope I did alright. Now, will somebody please hand me my robe?   :-) If you liked this article, please be sure to subscribe to my RSS feed. ...

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My 2008 State of the Household Financial Report (Part 2)

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Welcome to Part 2 of my four-part State of the Household Financial Report.   If you missed it, be sure to check out Part 1 first! Once again, here is the illustrative breakdown of my "outflow", or expenses, for the year in the form of a pie chart.     The money that makes up the pie chart primarily comes from my take-home pay, which excludes withheld taxes, paycheck deductions for health and other benefits such as additional life insurance, and contributions to my 401(k) plan. The pie chart shown below, in essence, represents exactly how we chose to allocate our take-home pay for the year: As you can see, the chart is broken up into various categories.   In Part 1, I dissected and discussed the four biggest categories that consumed our annual household income.   Those categories being the "Loans", "House Expenses", "Entertainment", and "Savings."   I will now review of the remaining categories which, although make up a smaller percentage of the pie, are no less important.     And as I stated in Part 1, this section includes the most important category of them all.   Did you guess which one?     (Hint:   It will be the last category I address in this post). Groceries In pure dollar terms, my grocery bill has gone up 2.4 times since 1999; that far exceeds the rate of inflation over that same period.   So why the increase?   Quite simply, the main reason can be attributed to my two growing kids who are currently aged 11 and 9. I anticipate that the annual grocery bill will really start to skyrocket once my 11 year-old son gets into his teen years.   Heck, he already is eating me out of house and home!   Scary.   I shouldn't be surprised though.   I know I am guilty of eating my mom and dad out of house and home too.   I guess it's payback time!   I'd be interested in hearing how big the grocery bills are for some of you with teenagers out there so I can properly prepare myself for the coming onslaught!   :-) Miscellaneous Bills Ah, yes.   The old "Miscellaneous Bills" category.   This category could easily be called "Life".   We spent roughly 7% of our take-home pay in 2008 on such things as association fees, life insurance, newspaper and magazine subscriptions, haircuts, stamps and other postage costs, Girl Scout cookies and cash donations to charities. It also includes Christmas, birthday, graduation and wedding gifts, and even the vet and grooming bills for our Rhodesian Ridgeback, Major. Utility Bills Utilities eat up 6% of our annual household take-home pay.   There is really no mystery here as to what this category entails, but for the sake of completeness I'll break it out for you.   In addition to natural gas, electricity, phone, sewer, trash and water, other utilities here include our Internet service, and satellite television.     This category is extremely fascinating to me when I look at the 10-year numbers.   I'll explain more in Part 3 when I will breakdown and focus on the long-term trends.   But if you had to guess right now, how much would you say cumulative utility prices have risen over the past decade?     Can you guess which utilities went up faster than the others? Automobile We're not free of auto expenses just because our household doesn't have a car payment or two.   We still spent 5% of our annual income on auto-related items like gasoline, registration fees, car insurance, the auto club membership, and servicing and maintenance on the Honeybee's 2001 Honda Odyssey and my 1997 Honda Civic.   Luckily they're Hondas, so they are extremely reliable. Taxes This section covers all taxes not already withheld from my paychecks by my employer, although for all intents and purposes, this consists entirely of my property taxes.   In 2008, those property taxes accounted for roughly 4% of my annual take-home pay.     How does that compare with you?   Luckily, I live in California, where property taxes are limited by Prop 13.     For those of us in California and other states with laws similar to Prop 13 who can manage to stay in their home for 20 or 30 years, the benefits can be truly substantial. Medical Bills This category accounted for roughly 3% of our take-home income in 2008.   It does not include the small deductions that my employer takes out of my paycheck for the insurance, but it does include all of the deductibles and other non-covered expenses that we encounter each year. Retail This category covers retail items not covered in other categories that you might get at places like Target, Wal-Mart, K-Mart, Kohl's, etc. ATM To me, this is the most important category of them all; it certainly is the one category that every household should track like a hawk.   In my experience helping others get their household finances in order, cash withdrawals from an automated bank teller machine are the biggest single source of what I call "income leakage."   It seems like not a day goes by when I talk with someone who says they are trying so hard to make ends meet, but for the life of them they can't figure out where all their money is going.   The first place I always tell these folks to look is at their ATM receipts.   Why?   Because cash in the wallet or purse is susceptible to impulsive spending that can bust a budget. In 2008 we withdrew only 1.5% of our annual take-home pay from the ATM.   I strongly recommend all households that have trouble keeping cash in their wallets and purses strive to keep this number to 2.5% of their take home pay or less.     Basically, what this does is put a budgetary cap on your impulsive spending -- assuming you can stick to it, of course.   :-) And yes, I realize that by tracking an "ATM" category I slightly affect the accuracy of my other categories!   For example, money I might spend on a movie with cash I got from the ATM doesn't get tracked in the "Entertainment" category.   But as long as the amount of money in the ATM category remains relatively small, its effect on the other categories will be negligible. It's a trade I am more than willing to live with. I hope you enjoyed going over my 2008 State of the Household Financial Report with me.   Hopefully this may give you some ideas for how to track your expenses and income.   Remember that there is no correct way to do this with respect to how you break out your expenses.   But my philosophy is, if you want to do it right, you should be as thorough as possible. Next, in Part 3, I will look at my long-term trends over the last ten years for these same categories as they pertain to my household expenses.   I am sure you'll agree that the data, spanning from 1999 to 2008, are extremely interesting.   After all, it is those long-term trends where the real insight comes into view regarding the wisdom of living within your means. If you liked this article, please be sure to subscribe to my RSS feed. ...

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