Jun 13 2012

0% Financing is Free Money

By |June 13th, 2012|Blog, Personal Finance Tips|28 Comments|

I told you last week that I bought a brand new living room furniture set. It cost quite a bit of money (about $2,700) but I have some great furniture, a new TV, and actually a lot of money in my pocket.

Even though I had enough money to pay for the furniture outright, I took advantage of the 0% financing through January 2016 (after putting $500 on my credit card to get some rewards).

Instead of paying $2,700 up front, I put $500 down and took out a loan at 0% for the rest. My furniture will only cost me about $60 a month every month for the next four years.

And I won’t pay a dime of interest over all that time.

Now I Can Pay Off My Student Loans

I’m planning on paying off the last $7,000 of my student loans in a few weeks. I’ve been hoarding cash for months to do this. However, if I had spent $2,800 up front on my furniture then I wouldn’t have the money to pay off all my loans.

my new couch

My new couch from RoomsToGo

Basically, GE Financing is loaning me money at 0%, which allows me to pay off my student loans at 2.38% (yes, I have a super cheap variable interest rate on my student loans).

That’s free money.

If you can get a loan at 0% and you’re certain you can adhere to the rules to keep the 0% rate (usually making all your payments on time and paying off the balance in full by a certain date), then it’s almost always best to take the loan.

Let’s pretend I didn’t have student loans to pay off.

I could have put the money in my Lending Club account, which is currently giving me a 13% return.

I could have put the money in the stock market, where who knows how much money I might have made or lost?

Heck, I could have put it in a savings account and gotten 0.50% interest, which is still a net gain considering the loan is at 0% interest.

As long as you aren’t worried about your credit score dropping a few points, and you are certain you have the money to make payments, then I always recommend getting the 0% financing.

Readers: If you were buying a $2,700 living room set and had enough money to pay it in full, would you pay it upfront or take the 0% loan?

Jun 12 2012

Public Transportation Increases Productivity

By |June 12th, 2012|Blog, Personal Finance Tips|28 Comments|

Last week I took Thursday and Friday off work to participate in the Texas State Republican Convention. It was being held in Fort Worth, while I live in downtown Dallas.

I thought about getting a hotel room and staying in Fort Worth for the 3 days of the conference, but I couldn’t bring myself to pay over $60 a night to stay in a hotel 35 miles away from where I live.

public transportation

photo credit: flickr.com/tyger_lyllie

I figured I would have to drive back and forth from Dallas to Fort Worth in rush hour traffic. It would cost me at least $10 a day in gas, plus I’d probably have to pay for parking. This is all in addition to having to spend who knows how long in my car sitting in traffic.

Then it hit me: There has to be some kind of public transportation that goes from Dallas to Fort Worth.

And sure enough, I found the Trinity Railway Express.

Public Transportation is Wonderful

So instead of spending a bunch of money on gas and time in my car, I hopped on a train and used that time to write this article.

It’s a wonderful thing to take time that would have been devoted to driving and turn it into time that can be productive.

Sure I’m saving money on this deal, but more importantly I get an hour of my day back. I used the time to write posts and work on my new website that might make me a bunch of money one day.

The train was smooth, clean, safe, quiet, and basically perfect for being productive. If I had a daily commute on this train, I’d probably have 3 or 4 blogs and I’d write all the posts when I was on the train.

It had never occurred to me before, but I’m insanely jealous of people who have a commute on public transportation. To have an hour a day or uninterrupted productivity is blissful. I’m jealous of anyone who gets that time on a train.

Readers: Do you have a commute on public transportation? If not, is there any way you could use public transportation? What would you do with the extra time?

Carnival Links

Carnival of Financial Camaraderie at My University Money
Carnival of Financial Planning at Intelligent Speculator
Festival of Frugality at The Frugal Toad
Yakezie Carnival at 20s Finances
Carnival of MoneyPros at Financial Conflict Coach
Carnival of Retirement at Finance Product Reviews
Totally Money Carnival at Young Family Finance

Jun 7 2012

Amazon Sells Great Wall Mounts For Cheap!

By |June 7th, 2012|Blog, Personal Finance Tips|16 Comments|

I’ve already written about my brand new TV that I bought as an open box item from Best Buy, and how I saved 15%. I forgot to mention that the salesman tried to sell me a very expensive wall mount and some ultra expensive HDMI cables for the TV.

swivel wall mountI obviously declined.

That stuff is SO MUCH CHEAPER on Amazon.

The wall mount I bought from Amazon is super sweet because it pulls out from the wall and swivels. In my new living room, the TV is mounted almost in the corner. Without a swivel wall mount, the TV would be practically useless to about half the room.

Did I mention that wall mount cost $70 from Amazon, includes a 10 foot HDMI cable, and was shipped free?

If I wanted a swivel wall mount for a 55″ TV and a 10 foot HDMI cord from Best Buy, it probably would have cost me at least $150. I tried to find an example of what I might purchase at Best Buy, but it’s so hard to search for things on their site I gave up.

Amazon is Best Buy’s Biggest Competitor

A few weeks ago I was in training at work and the lady running the training said, “I learned something yesterday that I thought was really interesting. Do you guys know who Best Buy’s number one competitor is?”

About half the people in the room were under 30, and many of us yelled out “Amazon!”, which is the right answer. But it hit me that a lot of people don’t realize that Amazon sells almost everything Best Buy sells, and they do it at much cheaper prices.

Amazon is also much easier to search and has much more useful user reviews and comments. Best Buy obviously has the benefit of physical store locations, which really helps when purchasing something you want to see with your own eyes (like a new TV), but that’s about the only place where Best Buy beats Amazon.

Amazon is Great for Our Economy

Some people might see Amazon driving Best Buy out of business as a bad thing because Best Buy is closing stores and downsizing, which means people are losing their jobs.

But the reason those stores are closing is because Amazon can sell the same things at cheaper prices and with better service. It means consumers have more money to spend on food, clothes, or anything else they might want because their electronics purchases were 10-50% cheaper.

Getting the same thing at a cheaper price is good for the buyer, the seller, and the whole economy (except the person selling that “thing” for a higher price).

Readers: Tell me about a store that sells great quality products at great prices.

Jun 6 2012

Roth IRA Contribution Limits for Married People

By |June 6th, 2012|Blog, Personal Finance Tips|7 Comments|

The Roth IRA is a pretty awesome way to save money for retirement. I’ve written about it before. I’ve made a video explaining it. I even composed and performed a love song to Roth IRAs.

But even as a self-professed lover of Roth IRAs, I got stumped from a twitter question I got last night from Michael Zook:

@kevin_is_money can we max out my wife’s roth ira if her income is less than $5,000? Your Roth IRA video was amazing

My first instinct was to say no. Roth IRA contributions (up to a max of $5,000 for people under 50 years old and $6,000 for those who are 50+) must be equal to or less than a person’s taxable earnings. Therefore, if someone’s wife hasn’t earned $5,000 for the year then I didn’t think she would be eligible to contribute $5,000.

roth iraI had the response halfway written before I thought I might want to research to confirm. The concept that I, Kevin McKee, maker of Roth IRA videos, might not know everything about them made me feel a little sick.

But let’s face it, I wasn’t sure.

Google actually wasn’t much help on my poorly worded, “Can a wife contribute $5k to a Roth IRA when her husband is the one raking in all the dough?” I found a few blogs that didn’t have the info I wanted, and I wasn’t even sure if I could trust them anyway (because I’m a blogger and at the time I didn’t trust myself).

I decided to check the official IRS website.

IRS Rules on Spousal IRAs

I found the answer I was looking for on the Retirement Topics – IRA Contribution Limits page.

Here it is:

If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. It doesn’t matter which spouse earned the compensation.

Boom. If they make more than $10k combined (or $12k for those 50+ folks), then they can max out both the husband’s and the wife’s IRAs.

I was wrong.

At least I was smart enough to hold off on my reply until I knew I had the right answer. In fact, no one ever would have known if I hadn’t just shared my ignorance with all of you. But I’m not here to save face, I’m here to help people find some answers and entertain a bit.

So to all you married folks out there, don’t worry about having $5k of earned income for each of you. As long as you file jointly then one person’s income counts for the other person’s as well.

Readers: Do you forgive me for not knowing all the rules about IRA for married people? Do you think I should get married just so I can have a better understanding of financial rules for married folks?

photo credit: PT Money

Jun 5 2012

Open Box Items Save Tons of Money

By |June 5th, 2012|Blog, Personal Finance Tips|11 Comments|

Have you ever bought a brand new TV?

I have. In fact, I got one a few days ago. When I moved into my new apartment and bought a living room set, the deal included a brand new TV from Best Buy or a $645 gift card.

I wanted a new TV, but I didn’t want the one they were offering because it was only 720p and it was a plasma and it was 3d. I wanted a 1080p LED TV and I didn’t care about 3d.

I did some searching on Best Buy’s website and found a few TVs that I liked, but I wanted to stay close to the $645 price range so I didn’t have to pay much out of pocket. I eventually found a 55″ 1080p LED TV I liked, but it cost $900. That’s quite a bit more than $645. I didn’t want to pay that much extra, so I thought I might have to find a different model.

But then it hit me. If I could find a store that has that TV as an open box item, I can get a better deal. In addition to that, I won’t have to wait for it to be shipped to me (since it was only sold online) and I can actually see the TV and the picture before I decide to buy it.

Searching for Open Box TVs at Best Buy

An open box item is a product that has either been purchased and returned by another customer (if it had defects, those were fixed and it retains the original warranty), or it was a floor model that the store wants to get rid of. They can’t sell these things as “new” because they aren’t officially new, so they have to sell them at a discount even though they are hardly different than a “new” one.

open box itemThe hard part of buying open box items is that it can be hard to find a store that has the exact TV (or whatever else you want) as an open box item. I used Best Buy’s Open Box and Clearance Items webpage to search the clearance inventory of stores in my area.

It’s not the best webpage in the world. You can’t search by product; you have to go individually through every store near you and see if they have what you’re looking for. At least it’s better than driving all around town to look.

This particular store offered open box items for 15% off (25% if you used a Best Buy credit card). That made my $900 TV cost only $765.

When you consider I already had a $645 gift card it was worth it. I upgraded from a 51″ 720p plasma TV to a 55″ 1080p 120Hz LED TV for only $120. That’s a sweet deal!

Readers: Have you ever purchased an open box item to save money? How did it turn out for you?

Jun 4 2012

Race to $1 Million – June 2012

By |June 4th, 2012|Blog, Life|20 Comments|

Before I get into the really bad news about my net worth, I want to get into some great news about an article I wrote a little over a week ago. Brian Banks, the guy who was falsely accused of rape by Wanetta Gibson and lost 10 years of his life now has tryouts with four different NFL teams, an NFL trainer volunteering to train him for free, and even many other job offers if the NFL doesn’t work out.

Please read that article. The way he is handling the whole situation is simply incredible. The world needs more people like him, and I will be following his story closely and rooting for him.

Now that the great news has been reported, let’s get into some really bad net worth news.

May Was a Crazy Month

I usually have a few things going on that make my months financially interesting. This month was on a whole new level. I can’t even remember everything that happened, but here are a few of the things that have affected me this month:

  • Moved into a new apartment
  • Bought a brand new living room set (which I’ll write more about this week)
  • Bought a brand new bedroom set
  • Sold a bunch of old furniture for $310
  • Bought tons of new odds and ends for my new place
  • Ate out a lot because I was going back and forth from the old and new apartment
  • The stock market had a miserable month

As you can probably tell, this wasn’t a very good month for me.

The Hoff Kicked My Patootie

Race to a Million

There it is folks. I am now $28,256 behind The Hoff.

For those of you who have been around this blog for about 18 months, you might remember the very first update I gave on this race. The Hoff was beating me by $28,193. Now he’s beating me by $28,256.

Four months ago I had closed the gap to within $16,770. At that point I thought I might even be able to catch up this year.

Now I’m gonna be lucky if I finish the year any better than I was 18 months ago.

One Month at a Time

Now that the move is behind me, I can hopefully start gaining some ground again. I have quite a few good things in my financial future. For example:

  • I should get at least $1,200 of income from building a wordpress site for a company and some advertising here.
  • There’s a chance I will pay off the last $7k of my student loans by the end of the month.
  • The next vacation I have is over 3 months away and is already paid for.
  • I don’t see any more large purchases (like a new living room or bedroom) in my immediate future
  • The Hoff and I have a tentative launch date for our new site in July. It’s coming up!!!

If all goes well, I should be getting back to the months of 2011 where I was increasing my net worth by at least $1,000 every month. Wish me luck!

My Net Worth Tracking

As always, here are the net worth tracking graphs I use in my customized Net Worth Tracking Spreadsheet that is free to download. It’s fun to track this stuff, especially when the numbers are going up like mine have been!

I won’t be pulling even with The Hoff this year, but at least I can show a big fat ZERO in the student loan line (blue installment line in the debts graph) and hopefully get more income from my new site! Wish me luck!

Net Worth June 2012

click image for larger version

Carnival Links

Carnival of Financial Planning at My Wealth Builder
Carnival of Financial Camaraderie at Financially Digital
Yakezie Carnival at Daily Money Shot
Fin. Carn. for Young Adults at 20s Finances