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Our Furnance Repair Bill

Heating & cooling your home isn’t cheap, especially when you add in furnance repair bills like the one we had last weekend.  We came home last Sunday afternoon and found that although our thermostat was turned to 65 and we could hear the furnace blower kick on, there was no hot air coming out of the vents.

Heating System

Our central heat system uses a heat pump to warm the house when the temperature is above a certain level and then a gas furnace kicks in as auxilary heat when the temperature outside gets too cold for the heat pump to keep up.

I opened up the furnace and could see that the gas burners weren’t lighting but didn’t see a pilot light anywhere.  Reading through the owners manual I discovered that some of the newer gas furnaces like ours have an igniter instead of a pilot light and they recommended having a professional diagnose it.

Furnance Repair

I knew it would be more expensive for a weekend call but it was pretty cold so I called up the evening and weekend number and scheduled an emergency repair visit.  It turned out our furnance igniter had gone bad but luckily for us he had a van full of furnace parts and had the one we needed.

The total furnace repair bill was $180. The service call was $120 since it was on a weekend, and the part was $60.

Furnance Maintenance

I questioned the furnace technician as he worked to see what I could do to prevent future $120 weekend service calls.  He said that other than regularly changing our furnance filter there wasn’t much else simple that I could do myself.  He did show me how he cleaned the burner and sensor with some steel wool and just cleaned the dust and dirt out of the furnace cabinet.

He said that although our Carrier furnance was pretty easy to disassemble compared to other brands like Trane, where you need special tools just to take apart the furnace, if I wasn’t familiar with the inner workings of our furnace that my best bet was to get it serviced once a year.

He gave me a sheet with a breakdown of all the things they do in their furnace annual service.  Apparently they take apart the furnace and lubricate all the moving parts and go over the following components:

  • Burner
  • Heat Anticipator
  • Heat Exchanger
  • Safety Controls
  • Air Filter

As part of the maintenance, they also check:

  • Flue for proper drawing
  • Temperature rise through furnace
  • Fan and limit control
  • Proper combustion
  • Gas line & manifold pressure
  • Pressure regulator
  • Blower components

Since I don’t have much spare time, I’ll probably take advantage of their annual tune-up either this winter or next.  Hopefully that will ward off any future emergecy weekend repairs.

Written by Ben · Filed Under Home Owner, Personal Finance >Comments (1) 

What Was the Best $100 You’ve Ever Spent?

How often do you spend a big chunk of money and look back on your purchase weeks, months, or years down the road and congratulate yourself on money well spent?

It seems for me that I usually do the opposite.  Things seem to break before they should or don’t do as good a job as I expected them to.  It’s not often that I reflect on a $100 buying decision and pat myself on the back.  Maybe my expectations are too high, maybe “things just aren’t made the way they used to be”, or maybe some of both.

Best $100 Spent

I’m pleased to say that I do have purchase that was money well spent, one where we definitely got our money’s worth.  About a year ago our neighbors moved and sold us their trampoline for $100.  They even somehow got it over the fence and moved it into our backyard while I was at work one day.  The trampoline was probably only about a year old, so for $100 we got a pretty new trampoline, no assembly or delivery required!

All spring and summer, when I’d get home from work my son and I would head out to the trampoline for some dad and son time.  We shared many stories and laughs while we jumped away the troubles of the day and got some exercise as well.  So over the course of a year we racked up hours of entertainment and exercise all for only $100, best money I’ve spent in a long time.

I’m sad to see the cold weather encroaching on our trampoline time.  This will probably be the last week it’s warm enough for us to get out and jump until next spring.  That’s okay though, it’ll be there in March or April waiting for us to have more fun and keep getting our money’s worth.

What’s the best $100 you’ve ever spent?

Written by Ben · Filed Under Personal Finance >Comments (9) 

Good Financial Cents

Each week I’m going to share with you a personal finance site that I enjoy. I started this a while back with Moolanomy, Gather Little by Little, and Being Frugal but got a little sidetracked when our daughter was born.

Good Financial Cents

This week I recommend checking out Good Financial Cents written by Jeff Rose. He’s one of the financial advisor websites with blogs I highlighted a while back. Jeff’s a certified financial planner at Alliance Investment Planning who shares some of his insights about money on his blog.

I like Jeff’s site not only because he’s a practicing financial professional who knows his stuff but also because I agree with the philosophy that a big part of being successful with your money is simply using common sense. For example, his recent post about why you should keep contributing to your 401(k) even when you feel like you’re throwing away money.

About Jeff

Jeff served 9 years with the U.S. National Guard, during which time he supported Operation Iraqi Freedom. It was during his downtime in Iraq that he earned the Chartered Retirement Planning Counselor designation. Jeff is a certified financial planner and also holds a B.S in Finance and a minor in Accounting from SIU-Carbondale.

Recent Articles

Here are a number of other posts from around the personal finance web:

Career

Investing

Retirement

Taxes

Household & Family

Mortgage

Other

Thanks to the following sites for highlighting Money Smart Life articles:

Written by Ben · Filed Under Personal Finance >Comments (3) 

Fixed Annuities Overview

Fixed annuities have caught the attention of some investors who have taken a pounding from the world of stocks over the last few years and started looking for something a little less volatile. This type of investment, though it brings a much lower return on investment, does provide more stability. Are the lower returns and usually high exit fees worth the added security?

What is a Fixed Annuity?

A fixed annuity is an investment product where an insurance company guarantees a certain rate of return for an investor’s money. This guarantee is backed by the full faith and credit of the offering company (fixed annuities are not FDIC insured). The return on a fixed annuity is comparable to the rate of a Certificate of Deposit at the time the annuity is purchased.

Most companies offer an incentive where a bonus rate is added for a certain period of time. For example, XYZ insurance company offers a fixed annuity with a current rate of 4.00%, but if the investor deposits an initial investment of $100,000.00, they will receive a premium bonus of an additional 4.00% for the first year. The investor will receive 8.00% the first year and 4.00% the following years.

There is a “surrender schedule” attached to annuities, in which withdrawals during this time will incur a “surrender fee.” This fee is calculated based on how long the annuity has been owned (surrender fees are waived in the event of the death of the annuity owner).

In most cases, 10% of the principal or the interest earned can be redeemed over a twelve month period without incurring these penalties (please check your annuity contract before making any withdrawals). It is important to remember that annuities grow tax-deferred, so any distribution of earnings will be taxed as income.

Types of Fixed Annuities

Generally, annuities fall into two categories: immediate and deferred. These terms are based on the income stream options of the investment. In an immediate annuity, the investor deposits their money and immediately starts taking an income stream from the investment. On a deferred annuity, the funds are left in the product to grow at the fixed rate stated on the contract of the annuity.

The “pay out” from an annuity can vary based on the length of time the payments will occur, the value of the annuity and the age of the annuitant.

Typical Investor

Fixed annuities have always been popular with retirees looking for guaranteed income and other types of investors seeking security have started using them as well.  The “pay out” phase of the annuity can be set for a specific range of time (10 years, 20 years, etc.) or for the lifetime of one or two annuitants. If a person wanted to make sure that certain bills would be covered at all times regardless any other outside factors they might choose to invest in a fixed annuity.

A CNN Money article titled the trouble with annuities talks about the major disadvantage of fixed annuities as being opportunity cost.

“With such high exit fees, it’s prohibitively expensive to back out of a contract. So you could miss the rise in interest rates and improvement in market conditions that many experts are predicting.” Worst case: Your money ends up lagging behind price increases. “In an inflationary period, having 4% fixed in long-term money could be devastating,” says Salt Lake City financial planner Ray LeVitre, author of “The Retiring Boomer’s Financial Handbook.”

The Money article suggests that short- to intermediate-term high-quality corporate and municipal bonds could be an alternative to fixed annuities if safe growth is the objective. The argument is that they have fewer restrictions and can offer higher yields than CDs.

Of course, everyone’s situation and risk levels are different so if you’re not sure whether fixed annuities are for you then talk with a financial professional about how they fit into your investment strategy. Look for a financial advisor who doesn’t make a commission off of selling you annuities since that can present a conflict of interest.

What do you think about fixed annuities? Do you have any money invested in annuities?

Written by Victor · Filed Under Investing >Comments (0) 

Blog Action Day – Recycle, Recycle, Recycle




Recycling may not be the first thing you might think about when the topic of climate change comes up but recycling can certainly make a difference. Here are some recycling stats from the recycling section on the University of Michigan website:

  • The U.S. recycles approximately 32 percent of its waste which saves an equivalent amount of greenhouse gases to removing 39,618 cars from the road.
  • Increasing the recycling rate to 35 percent would reduce greenhouse gas emissions by an additional 5.2 Million Metric Tons of Carbon Dioxide Equivalent.
  • Net carbon emissions are four to five times lower when materials are produced from recycled steel, copper, glass, and paper. They are 40 times lower for aluminum.
  • Just one person recycling their newspaper, magazines, plastic, glass, and metal for one year is enough to save 471 pounds of carbon dioxide from going into the atmosphere.

I’ve always made recycling a habit, maybe it’s because when I was a teenager we lived in Germany and everyone recycled there.  I’m sure my parents had something to do with building the habit since they were firm believers in “reduce, reuse, recycle” growing up.

Here is some more information on recycling and climate change from the University of Michigan:

“Recycling and waste reduction are actually very much related to climate change. The energy used in the industrial processing of virgin materials and in their transportation, involves burning fossil fuels such as gasoline, diesel, and coal, all major sources of carbon dioxide and other greenhouse gases.

 

While manufacturing goods from recycled materials still requires energy, it is much less than extracting, processing, and transporting raw materials. Recycling and waste reduction also avoid emissions caused by incinerators and landfills which produce large amounts of carbon dioxide and methane (21 times more potent than carbon dioxide). Waste reduction and recycling also slow the harvesting of forests, which act as carbon sinks, meaning they absorb carbon dioxide from the atmosphere.”

I don’t cover “green” topics very often but I do try and use our natural resources responsibly. For many years I would ride the bus to work, now that we have two kids in childcare that’s not as practical but I still do recycle all the junk that we go through.

This post was part of this year’s Blog Action Day to help combat climate change.

Written by Ben · Filed Under Other >Comments (2) 

Job Hunting Tips

Job hunting can be a lot of work and quite stressful.  Finding a good job isn’t easy, there are many different factors to consider when picking the best job for you and your family. Here are some job hunting tips to consider when going through a career change or even just changing jobs within your industry.

Research and networking: Researching the latest trends, pay and job prospects are important to any job move, but it’s just as important to get face-to-face with people in the field. You don’t want to do a job search on your employer’s time, but if you can get away at lunch or after work to attend networking functions, it’s worth your time for two reasons.

First, you might meet your next boss there. Second, simply by talking and getting to know people already doing the job you want, you’ll get a ground-level view of whether the industry is for you and which employers are the most desirable. You’ll also get an idea of companies to avoid.

Weigh the pay/potential balance: With each job move, we naturally want better pay and benefits. That’s common sense. But as you weigh benefits – sometimes companies feature overviews of their benefits packages on their websites – weigh on-the-job opportunities as well. Here’s the job comparison tool that I’ve used.

A hot, new company with great prospects may not pay or offer the same benefits as a mature employer, but the chance to gain unique experience and responsibility faster might make you a more attractive candidate in a year or two.

Consider timing issues at your current employer: If you are up for a salary review soon, it might make sense to have a better idea of what you’re worth in the marketplace. Also, as the end of the year is coming, you might want to use up any money in your flexible benefits accounts for medical appointments, glasses or dental work before you leave. 

Plan to maximize your take-home pay at the next job: This is where a call to your tax or financial planner comes in handy. Some fringe benefits may be taxable, which means your real take-home pay might be less than you expected. To the extent that you get to negotiate your benefits on your way into a job, do it in a tax-smart way.

Plan a request for a written offer from your next employer: Not only should pay, vacation time and other key benefit issues be in writing from a prospective employer, it’s wise to have them list performance evaluation criteria with relevant bonus information.

Decide what you’ll be doing with your 401(k) and other retirement funds: You may not want to make any moves for awhile, but it’s good to talk with a financial planner about whether you’ll be moving that money to private accounts. Also, make sure you know when you can enroll in the company 401(k) and other retirement offerings at your new employer.

Secure your health insurance: You might wait a few months to a year for new health coverage to kick in at a new job.  You might need to buy private insurance until then or go onto a spouse’s health plan in the meantime.

Don’t stop networking:  Even once you’ve taken a new job or decided to stay where you are, don’t stop building your network. Networking keeps you open to new opportunities and helps you value yourself when it’s time to ask for your next raise.

These job hunting tips were produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

Written by Ben · Filed Under Career >Comments (3) 

Setting Goals to Get What You Want

How specific are you when you set your goals? If you were more detailed do you think you’d be more likely to reach them?

I’ve always heard that being very specifc about your goals increases your chances of achieving them. Last weekend, I saw some pretty good examples of this theory in action.

A Ten Year Plan

I met with about 40 other people for our 10 year college reunion and spent a few hours catching up and visiting about where they were in life.  During the course of the evening they were showing a video that was taped about 10 years ago, interviewing members of our class right before graduation.

One of the questions people answered on the tape was, “Where do you think you’ll be in 10 years from now”.  Some of the responses were pretty general like “I hope I’ll be making a lot of money somewhere”. Other people laid out their plans in great detail.

Unfortunately, I wasn’t on the video.  I’m not sure why I didn’t participate; perhaps I was studying hard for finals or maybe I was celebrating my pending graduation.  Whatever the reason, I know if I had that I wouldn’t have been as detailed as many of the responses that I heard.

Achieving Goals

As I visited with people after we watched the video I made a point to ask each person how close they had come to meeting their “ten year plan”.

Not surprisingly, more of the alumni with very detailed plans had reached the point in their life that they had been aiming for.   Of course not everyone’s plans had worked out.  Some people had changed course over time, others had tried unsuccessfully and had to change their plans.

Overall, the people that were specific about what they wanted their life to be like ten years down the road were more likely to have achieved those goals.  Now I need to sit down and make out my 10 year plan to get my family where we want to be when our kids are teenagers, gulp : )

Written by Ben · Filed Under Personal Development, goals >Comments (2) 

What Kind of Spender Are You?

When you look around at all the things you own, what story does it tell about the kind of spender you are? Are you a smart, calculated spender that parts with your money only when necessary or do you tend to spend more freely and frivolously?

When I bought myself a green hooded Columbia Sportswear winter jacket over ten years ago I didn’t realize it would come to symoblize the kind of spender that I would become.

As a broke college freshmen combing through the bargain racks in the mall I almost choked on my gum when I found the deal on the coat. I almost felt like I was stealing the jacket it was so heavily discounted. Turns out the coat was a great purchase, it’s kept me warm through many cold winter days over the years.

As I walked into my 10 year college reunion dinner this weekend I realized I was wearing that same winter coat, the one I’d used throughout my college career. Reflecting on why I was the only one sporting a vintage 1990’s jacket I was reminded that I’m a rather miserly spender. I didn’t mention my observation to my wife because she I’m sure would have been embarrased and sworn then and there to buy me a new coat.

Of course you don’t have to keep the same coat for over 10 years to think of yourself as a smart spender. Everyone’s priorities are different, you may feel more strongly about your wardrobe than I do and update it more frequently. But look at the overall trend of your spending to see how you spend money. If you spend freely and often in all areas of your life then you have the potential to save yourself thousands of dollars a year simply by taking the time to think over each purchase for a few seconds and ask yourself whether you’re being a smart spender

For me, my green coat represents the approach of minimalist spending; I try and spend money only when I have to. That approach doesn’t work for everyone but I’ve done a decent job mastering the skill.

What approach do you take to spending? How much money could you save each year if you put a little more thought and discipline into your spending?

Written by Ben · Filed Under Personal Finance >Comments (5) 

Bond Investing Strategies

Bond investing strategies to help you decide how to invest in bonds are the next topic to cover now that we’ve talked about bond investing basics and some bond investment terms.

Bond Ladders

Bond ladders are a strategy where an investor purchases bonds with different maturity dates. It is the fixed income equivalent of dollar cost averaging. Let’s say for example, an investor wants to spread out the maturities of their bonds, but keep an average weighted maturity of 5 years. They can purchase five bonds with maturities of 1, 3, 5, 7 & 9 years. As the bonds mature, the investor will continue to purchase bonds at the longer maturity.

This helps the investor manage interest rate risk. When interest rates are rising, they can purchase into those bonds with the higher yields. If the rates are dipping, the investor will still purchase the bond and take advantage of the yields of the current bonds they own.

The further the maturity the date, the riskier the investment can be. Most bonds are issued with a maturity date 30 years out. If an investor has a longer timeframe, they can push out the maturity dates of the ladder for a possible higher yield.

Bullet Bond Strategy

This strategy is great for an investor who has a specific target date. For example, a child will be attending college in 15 years. The investor does not need the principal of their investments until that time. Bonds of different varieties and lengths, but with maturity dates around the same time 14-15 years out, can be purchased and held until maturity. There is no interest rate risk because the funds are not being used to purchase new bonds.

Another way to do this, or combine with the bullet strategy is to purchase zero-coupon bonds. These are bonds that are sold at a deep discount, but do not pay any interest. An investor can purchase these bonds and hold them until maturity and take advantage of the discount they received.

Barbell Bond Strategy

With a barbell, the investor purchases bonds with a short-term maturity date and then others 20-30 years out. You create an average weighted maturity somewhere mid-term. In this case, the investor is hoping to take advantage of the inverse relationship of price and yield. If the yield of the longer term bonds drops, the price of the actual bond on the market will go up. The investor will then sell those bonds and realize the gain in principal. They use the shorter term bonds for the interest.

All investment strategies have risks, but this one can hit you on both ends. The yield of short term bonds can drop and long term bonds can rise. If this happens, the barbell strategy becomes a loser for this investor.

Bond Diversification

One final strategy is to treat your bond portfolio as you do your stocks. Think of the maturities and credit ratings of bonds the way you do market cap for stocks. You can purchase a mixture of bonds based on industries, maturities, credit rating and geographic location. We won’t go into the details here because this takes a bit more work, and is not for the novice investor. It can have a rewarding effect on your portfolio though.

As with any investment, each of these strategies comes with varying degrees of risk and different tax implications so make sure you consult a financial professional before making any decisions.

Written by Victor · Filed Under Bonds, Investing >Comments (0) 

PayPal Discourages Use of Credit Cards

PayPal encouraged me to pay with my bank account rather than my credit card as I was setting up a subscription payment last night.  When I first setup the subscription in PayPal it defaulted to use my bank account as the funding source.

I wanted to switch it over to use my credit card just in case the subscription payment was due and there was no cash in the bank account.  In my case it wouldn’t be that I didn’t have the cash, it just might be in another account.  So rather than have the payment not go through, I set it up to use my credit card as a funding source.  Plus that buys me another few weeks of time I can hang onto my money before I actually have to pay for it.

When I attempted to change my funding options from bank account to credit card, PayPal prompted me with the message below:

You’re choosing not to pay with a bank account. Please note that both bank account and credit card payments are sent instantly, and account numbers are never exposed to the merchant.

 

You’ll also find that transactions paid with a bank account:

 

    * Will not accrue credit card finance charges.
    * Let you stay in control of spending and avoid credit card debt.

 

No matter how you pay, you get 100% protection against unauthorized payments sent from your account.

 

Do you want to make this payment with your bank account?

I went ahead and choose the credit card option but thought it was interesting that PayPal is discouraging the use of credit cards and encouraging paying with cash using this approach.  Perhaps it’s to avoid paying fees to the credit card company for processing?

I’ve been to plenty of brick and mortar businesses where they don’t take credit cards to avoid the fees but whatever the reason, this is the first time I’ve ever seen something like this online before.  Have you ever had a business or payment processor encourage you to use cash over credit online?

Written by Ben · Filed Under Credit Cards, Debt >Comments (8) 


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