How much electricity does your computer use? Your refrigerator? Your washer and dryer? Do you know how to save money on water heating costs? Michael Bluejay's guide to saving electricity answers these questions and more. Bluejay calls himself "Mr. Electricity" — the title is apt!
My guide on Saving Electricity gives you a bit more than you might get elsewhere. I explain exactly what a kilowatt hour is and how much you pay for one. And I show you how to calculate exactly how much electricity your household appliances use, so you know which items are guzzling the most juice (and which ones are the best targets for savings). You'll learn exactly how to read your electric meter. (Find that on any other website!) Finally, I not only give you meaningful tips for slashing your electricity consumption, I give you the tools to figure out exactly how much you're saving as well.
Bluejay recommends you attack the biggest energy users first: "You'll save more electricity by dealing with the biggest electricity-guzzlers rather than worrying about items that don't use much electricity." Because appliances that heat and cool use the most energy, these provide the greatest opportunities for saving. For example: Continue reading...
How did the United States become a nation of debtors? When did credit cards become popular? Did you know that many modern credit card policies are the creation of one man?
The Secret History of the Credit Card was a 2004 "Frontline" presentation from the Public Broadcasting System. The program examines the nation's use of credit and, more specifically, the methods used by credit card companies to obtain enormous profits. The Secret History of the Credit Card won the 2004-2005 Emmy Award for Outstanding Investigative Journalism.
PBS has made the entire program freely available online in RealMedia and Windows Media formats. The broadcast is divided into five segments of roughly twelve-minutes each for easier download.
When this program was produced, 145 million Americans carried credit cards. Of these:
- 55 million paid in full every month
- 90 million carried balances
- 35 million paid the minimum required
Of those who carried credit card debt, the average amount owed was $8,000. "It's nice to be able to spend what you don't have," says man. But the show's panel of citizens didn't really understand how credit cards work. They were ignorant of their credit scores, for example.
The Secret History of the Credit Card provides a brief overview of credit reporting agencies and of the credit scores developed by FairIsaac. The median FICO score is 720 out of 850. Risky customers have scores below 600. Three-quarters of American adults have a credit score. A FICO score often determines how much interest a person will pay — terms usually spelled out in the small-print of the contract. (For more on this subject, see my previous explanation of how credit scores work.)
Credit cards are a relatively recent invention. Until the 1980s, they didn't play a prominent role in American life.
When I picked up The Wealthy Barber from the public library, I figured it must be good: the book was well-worn, the cover bent, pages dog-eared, passages highlighted, whole sections annotated in pencil and pen. Only the best personal finance books receive this sort of treatment. I'm pleased to report that The Wealthy Barber is a good read — author David Chilton offers an excellent introduction to personal finance.
The Wealthy Barber's gimmick is that instead of presenting information in a dry subject-by-subject manner, Chilton has written the story of Roy, a small-town barber who is also a millionaire. (Roy got rich slowly.) The reader learns about IRAs and whole life insurance and compound interest as Roy dispenses advice to a trio of customers, each of whom has different financial circumstances. (This allows Chilton to highlight different approaches to certain problems.)
The Wealthy Barber's financial planning guidelines include:
The American Automobile Association (AAA) says that, on average, it costs 52.2 cents to drive one mile. To drive a Ford Focus like mine 20,000 miles per year, the average cost is 37.6 cents per mile.
How close are the AAA estimates? I ran some numbers.
Based on the purchase price of my vehicle ($16,500), the interest paid ($1,300), and the number of miles on the odometer (81,762 in 66 months), I calculated that for the past year my average cost per mile is $0.2170 over 20,274 miles. But that's only for the car itself. I've also accumulated the following operating expenses:
Good personal finance spreadsheets are hard to find on the web because sploggers monopolize the search results. Still, I've managed to collect links to a stack of them that I'd like to share.
Spreadsheets more useful than web-based calculators because:
- You can modify the fields and formats to meet your own needs,
- You can create "what-if" scenarios by making copies of a sheet, and
- You can save the data for later use.
The following links are all real sites from real people with real useful information to share.
In an earlier entry about the cost of waiting one year to begin investing for retirement, I posted a chart from AllFinancialMatters that demonstrated the power of compound returns. Vintek posted a math exercise related to the subject.
I got this from a book called The Random Walk Guide to Investing by Burton Malkiel. It's a book I recommend, and I'll eventually talk about it in the forum. Here's the exercise:
William and James are twin brothers who are 65 years old. 45 years ago (at the end of the year when he reached 20), William started an IRA and put $2K in the account at the end of each year. After 20 years of contributions, William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10% per year tax-free. James started his own IRA when he reached the age of 40 (just after William quit) and contributed $2K per year for 25 years, making his last contribution today. James invested 25% more money in total than William. James also earned 10% on his investments tax-free. What are the values of William's and James's IRA funds today?
For various reasons I have four credit cards. I always thought of this as too many, but haven't cancelled mine since the crappiest one is also the oldest, and has no fee, and I want to maintain the age of the card on my credit report. Most people I know have one or two cards. But reading online forums on credit, I see plenty of people with more than four. How many is normal? How many do you have?
The average person carries eleven "credit vehicles." Typically, seven are different types of cards and four are installment loans for cars, furniture, student loans or mortgages.
I heard recently that the average number of credit accounts was 12.7 per person, which is slightly higher than Bankrate's numbers indicate. The numbers I heard are closer to the average credit statistics at myfico.com:
On average, today's consumer has a total of thirteen credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards, or bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.). Not included are savings and checking accounts (typically not reported to a credit bureau). Of these thirteen credit obligations, nine are likely to be credit cards and four are likely to be installment loans.
Perhaps of more interest to some readers, Nellie Mae has statistics from the year 2000 about student credit card use. Undergrads carry about three credit cards each and graduate students carry about four credit cards each. The credit trap begins early.
Myfico.com also offers information about average debt load:
Community colleges are an oft-overlooked resource for cheap education. They offer classes from trained professionals and provide access to expensive equipment that you otherwise would never be able to use. I love community college for several of reasons:
- Affordability — Community college classes are affordable. Despite recent tuition increases, a class at Portland Community College costs about $200. Community education courses (non-credit classes) cost even less. Some employers will pay for classes; my business will pay for one class per employee per term. If your employer doesn't have a similar policy, ask!
- Facilities — Community colleges have facilities and practical training unavailable at most universities. My local community college has a wood shop, an automotive shop, and quality darkrooms. Many students take classes simply for access to the facilities. A typical woodworking class is self-directed — you decide what your project is, and then have open access to expensive equipment and an instructor willing to help you use it.
- Instructors — Community college classes are generally taught by real professionals from the field. When I learned computer programming, my classes were taught by instructors who wrote code every day for actual employers. (One of my instructors also taught at Portland State University — she taught the exact same courses at Portland Community College for a quarter the cost.) When I take photography classes, I'm being taught by active professional photographers. One of my writing instructors was Craig Lesley, a prominent Northwest author.
- Networking — Community college classes allow you to network with instructors and students, making valuable contacts in your hobby or profession. I took photography classes at the community college for a couple of years, and the contacts I made in these classes continue to benefit me: I can e-mail my former instructors with questions and ideas; I trade photography equipment with other students; I get to watch as certain students make the leap from amateur to professional. I'm currently in a writers group with a former instructor. Some students land jobs through the contacts they make in class.
- Convenience — Community colleges are aware that they serve a large population of students seeking continuing education. They try to make their classes as convenient as possible. I've taken night classes in computer science, writing, photography, algebra, Spanish, and business management. I've taken weekend classes in application design. I've taken late-afternoon classes in assembly language programming. Community colleges make it easy to get additional education.
- Education — Most importantly, community colleges act as a safety net for those who need an education. Some kids aren't ready for high school. Others aren't ready for college. Community colleges are there to help those who have realized the value of an education and are looking to correct mistakes they've made in the past. Even adults in mid-career can use community college courses to change their focus. After eighteen months of community college computer programming courses, I landed a job hacking C++ for an environmental engineer.
When I was in high school, I made fun of the local community college. You'd never catch me going to such a place. No, instead I went to a fancy private institution where yearly tuition cost as much as a nice car. And while I was earning my degree from this fancy private institution (which I love, by the way — don't get me wrong), I made fun of the local community college. That was a place for losers. I'm older now, and wiser.
Over the past fifteen years I've attended a score of community college courses. Only one (small business management) has been a dud. Oftentimes on AskMetafilter, a user will post a question like "How can I improve my photography skills?" or "I want to get better at programming for cheap" or "What's a good way to learn woodworking?" My answer is always: sign up for a class at the community college.
In the middle of December I received a bill for $5.30 from Sprint. There's nothing remarkable about this except that I've never had a Sprint account! I immediately called the customer service phone number on the bill. It only took a few moments to reach a live operator. "There must be some mistake," I told her. "Why am I receiving this bill?"
The operator tried to explain. "Well, sir, the Federal government recently approved a monthly fee for certain types of accounts." Notice how this phrasing is meant to make you believe the government is levying this fee.
"No," I said. "I don't care about all that. I mean why am I receiving this bill? I don't have a Sprint account. I don't think I ever have."