Everybody Loves Your Money

Over and over I read about various people’s plans for retirement.  You know the one thing that they have in common?  They all have different approaches.  There is no "one size fits all" approach to retirement out there.  Rather than try to match someone else’s approach, I have laid out a number of my own possible scenarios:

1) Retire at 65 and do absolutely NOTHING

This is the least attractive scenario for me.  The magical number of 65 would (in theory) give me access to medicare if it’s still around.  It would also give me a longer saving horizon giving more of my money time to compound.  If I retire at 55 with $1 million, waiting until 65 could increase the number to over $2.3 million without contributing another cent.  That assumes I get 9% on my money, although that may be aggressive considering I’ll be less interested in the risk to get a 9% return.

I really don’t want to wait until I’m 65 to quit working.  Frankly, I don’t like work and would much rather pursue other interests.

Pros:

• Longer saving horizon
• More health care options
• Less risk in outliving my money

Cons:

• I’d have to wait until I’m 65
• Less quality years ahead of me
• Life is short
• Less time to pursue other interests

2) Retire at 55 and Do Nothing

This option sounds pretty darned attractive to me but I’m concerned I’d get pretty bored and I KNOW I’d annoy the heck out of my wife while trying to keep busy.  This option also carries a lot of risk in it.  While we are saving pretty aggressively, we aren’t saving aggressively enough to live on our money for 35+ years.  If things went well in the economy, we could probably pull it off, but I’ve proven to myself that I’m pretty darned risk averse and would like to have as much cushion as possible.

55 is a good age to stop working, but I just don’t know what I’d do with the time.

Pros:

• No longer a slave to a job I’m not too excited about
• More chance to try new things and explore the world
• Potentially many quality, healthy years ahead of us

Cons:

• What do we do about health care?
• How would we make our money last?

3) Retire at 50 and get a lower paid job in an industry that I am interested in

There are lots of jobs out there that I would love to do but the money is terrible.  We just couldn’t live on the salaries that these jobs pay.  I think this option is probably the most practical and interesting option of the 3.  If we scaled back our consumption and had our homes paid off, we could easily live on much less than we do today.  Our only bills would be taxes and ongoing living expenses like power, water, cable etc.  By retiring (aka switching careers) at 50, we could work less, and do work that was more meaningful to us.  This option would also give us access to health care options that we wouldn’t have if we sat at home.

We are on target to pay off our houses before we turn 50 and we don’t maintain any other debt so this option is actually quite achievable.  The only gotcha here is that our daughter will just be going in to college.  We are hoping to offset that by investing today in a 529 plan for her.

Pros:

• Pursue work that we enjoy
• Access to health care options
• More time for hobbies and other interests
• Use much less of our invested assets due to income from the low paying jobs
• More time for invested money to compound

Cons:

• Quitting your high paying job while your daughter is in college doesn’t feel too good
• May not have as much time to travel and enjoy "retirement"

When I was younger I used to think that the best thing I could do would be to buy a second home in Arizona.  Why?  Because some day I want to live there in the winter (aka: Be a Snowbird).  I was convinced that a key strategy to my investing and saving for the future was to lock in a low price on a place to live in Arizona today to get rid of the risk of unaffordable prices later.  I’ve since changed my mind.

Real estate in various parts of Arizona is dirt cheap these days.  Mind you, that comes from someone living in the Seattle area where prices are much higher.  In 2006 the median price of a home in the Seattle area peaked around $400K.  That has come down a bit since then but it’s still much higher than the price of many new homes in Arizona.  The median price of a house in Arizona in 2006 was half of Seattle’s.  I found brand new housing developments down there with houses starting in the $110K range.  During the real estate "run up" that we’ve experienced over the last X number of years, the prices in Arizona seemed to be going crazy.  Just like Vegas, reality is setting in though.

Over the years I’ve also realized that owning a second home isn’t a low cost endeavor.  Whether it’s used as a vacation home or a rental, there are many monthly costs to contend with.  Since long distance landlording (Hey, did I just make up a new word?) doesn’t sound very appealing to me, I’d most likely just sit on the property and let it drain my bank accounts.  For my personality profile, being a landlord just doesn’t feel like a good fit.

So what am I doing instead?  Well, for starters, I’m saving money.  On top of that, we have the second home out near the lake that we are enjoying during our younger saving years.  By my estimation, we’ll be able to sell it as we get closer to retirement age and use the proceeds to buy a place in Arizona.  Who knows.  By that time, we may decide to invest the proceeds of the sale and just rent a place there in the winter time.  The important thing for us now is to keep on task by saving and watching our spending so that we have all of the potential options open to us later.

The sky is falling.  Okay, well maybe not yet but I sure have been reading a lot of articles about gloom and doom.  Our budget deficit is around $9.5T (yeah, that’s trillion), real estate is declining rapidly, consumer prices are rising rapidly, loans are harder to come by, our national spending is increasing and is causing billions of dollars in increases to our national debt, consumer credit is out of control, layoffs are imminent at many companies, local and state governments are not hiring and I could go on and on.

What I can’t tell from all this is when the crisis starts.  Is it time to panic yet?  I’ve been practicing running around the yard yelling, "We’re all gonna die!!!!" so that I’m ready when the time is right.

Seriously though.  How do we work our way out of this tough spot?  Does it just take time for the magic to happen?  Do we just hold on and keep doing what we’re doing?  My gut tells me NO.  The only solution that I can see is for a drastic change in behavior at the consumer level and at the governmental level.  We need a drastic change in strategies here.  The longer we wait to face our reality, the worse it’s going to be.

I read an article yesterday that talked about how a depression might actually be good for our country.  After the initial shock that someone might think that, I read on.  The author’s point is that we need a shock to our system.  We need people to experience the pain of not having everything in order to alter their behavior.  It’s hard to argue that something isn’t needed to change people’s approach to money management.  While I don’t want to see our country go in to a depression, part of me wonders if we are headed there no matter what.  If you only read one article that I’ve linked to here today, I’d make it the link in this paragraph.

If you’ve been reading ELYM for any length of time you’ll know I’m a big fan of credit unions.  I use one for all of my banking needs and have always been 110% happy with it.  As I’ve been reading about all the drama with many commercial banks and lending institutions I started to wonder how my credit union was doing.  All I needed to do was wander on over to their website to see a letter from the vice president of the credit union.  Here is an excerpt from the letter:

Many financial institutions are experiencing very high credit losses from making subprime or "exotic" mortgages (often referred to as "negative amortization" or "Alt A" mortgages). We have never offered those products, which we believe aren’t the right solutions for our members and have contributed to high losses at other institutions. Additionally, we, like all credit unions, are significantly restricted to the types of investments that can be purchased and the financial transactions we can enter. We know it is our members’ money we are investing—and we proceed with the utmost caution in every case.

Over 90% of the deposits that are held here are dispersed as loans to members—the true purpose of a credit union. Our responsible and sound lending guidelines allow us to remain in a healthy position and continue to offer highly competitive deposit and loan rates.

I guess my conservative financial perspective is a good fit for a credit union like mine.  I can’t say enough good things about credit unions.  Given the choice, why would you want to put your money in an institution who’s main goal is to generate profit for it’s shareholders?  I’d much rather put my money somewhere that is solely in existence to create value for it’s members.  I’m getting top rates for my deposits and have access to some of the most competitive loan rates if I need a loan.  On top of that, the fees that my credit union charge me (I’ve actually never been charged a fee from them) are much lower than commercial banks.  For my family, a credit union is the right choice.  With more recent laws, pretty much anyone can join a credit union.  If you have one in your area, it might be worth a look.

For the first time in a long time, we spent the weekend at home.  We decided about a week ago that we were long overdue for just taking it easy and staying home on a weekend.  We had absolutely nothing on the agenda for the entire weekend which was both good and bad.  My wife would call it a good thing.  She’s much more comfortable just floating along through the weekend doing whatever comes to mind.  Unfortunately I’m not very compatible with that approach and was continually looking for things to do.  I cleaned the garage, trimmed all the hedges and bushes in the front yard, mowed the lawn, and washed the cars.  It was nice to get some of the chores done but I kept wondering, "Gosh, I bet it’s more fun at the lake" or "I wonder what everyone at the lake is doing?".  Yes, I know, it’s not a very healthy way to live your life.  I tried to focus on the moment and did have a ton of fun spending time with my wife and daughter but I guess I just have one of those personalities that can’t sit still.

The other thing that probably made me feel a bit caged up is that we agreed ahead of the weekend that we wouldn’t mindlessly spend any money.  (Shouldn’t this always be the goal?)  We did spend a little money on groceries but we steered clear of Costco, where we are always at risk of spending too much.  The one free thing that we did this weekend was we drove down to the north end of Boeing field in Seattle and watched all the airplanes, including the Blue Angels, take off over our heads for the Seafair air show.  It was very cool to watch fighter jets take off right over our heads and feel the rumble of their massive engines.

We also didn’t spend any money at restaurants this weekend.  As part of our "watch what you spend" weekend, we opted to cook steaks from the freezer on the barbeque and we enjoyed fresh vegetables from our local fruit and vegetable stand.  A nice steak with corn on the cob and baked beans really hit the spot and was a LOT cheaper than buying a comparable meal at a restaurant.  The total cost of the meal was around $6.00 for all three of us to eat.  I have to admit, I think it tasted a little bit better knowing that it was a $6.00 meal instead of a $50 meal.

Our emergency fund is starting to build back up.  For every thousand dollars that it increases I think my financial stress level goes down two notches.  Don’t get me wrong, I’m not a walking stress ball about it but I do like the security that a pile of money in the bank brings.  Other than that, not too much going on for us.  We, like many others, are watching the economy and the price of gas.  All the indicators point to some tough times ahead.  Gas is coming down but the overall economy doesn’t look too rosy.  If we can both keep our jobs through all of the drama, I’ll be a happy camper.

The time has finally come.  Our little girl is growing up and is entering kindergarten this Sept.  While I am feeling many emotions ranging from fear of the unknown to happiness that my daughter is growing up, I also feel a bit of excitement that we’ll be seeing a very large expense reduced.  For the last couple years we have been paying over $800 per month for daycare.  We wanted the best daycare that we could get after having had my wife stay home for the first three years.  I think that we chose the facility that we did because it had a very good reputation and it helped us emotionally send our daughter off to strangers after having sheltered her all of her short life.  It turned out to be worth every penny and the experience has drastically helped our daughter improve her social skills and she is already reading at the 2nd grade level.

We won’t see a full $800 per month increase in our budget because we have opted to put our daughter in the "all day" kindergarten program which costs us $225 per month.  Additionally we will also have to pay a daycare near the elementary school for a couple hours a day.  Total cost will be about $400 per month for both kindergarten and daycare.

So, we’ll be saving a full $400 per month in our budget which we’ll use to increase our daughter’s 529 monthly contributions as well as increase our ROTH ira contributions.  It didn’t seem to make a lot of sense to us to just pull that money back in to the budget and leave it unaccounted for.  If we don’t align it to investments or savings we’ll be much more likely to spend it.

We all know someone that doesn’t save a dime.  Maybe that’s you?  The reasons people cite for putting off saving are many.  There is only one problem with all of these reasons.  No matter how good your reason is, your future self won’t accept it.  The best reason in the world won’t help you pay your bills when you are older.  That really good reason of yours won’t provide long term care for you when you become sick.  It won’t pay the landlord when he comes pounding on the door.  Grocery stores won’t take a good "reason" in lieu of money for groceries.  So, first things first.  Let’s get all those reasons out on the table.  Once we have all the good ones identified, we can begin to brainstorm solutions for getting past each reason and get you on the path to saving.

1. I don’t have a job

Yeah, this is a pretty darned good excuse.  If you aren’t working, you really can’t save.  The only thing you can really do in this situation is look hard for employment.  Network with people you know.  Ask them if they know of any jobs, or know someone that might.  Talk to recruiting agencies.  If things are getting desperate, consider doing day laboring to start getting some money in the door while you work to find a job that is right for you.  The bottom line is you need to actively search for positions.  Submitting resumes is really not enough these days.  It takes a lot of perseverance and you should exploit every possible angle.

2. I don’t have any money

Why don’t you have any money?  Are you earning income?  If so, you have money, you are just having to make choices about where that money goes.  In many cases you might have more bills than you have income.  Take a long hard look at those bills.  (See number 3).

3. My bills are higher than my income

So, you aren’t bringing in enough money to pay all of your bills.  It’s time to start making some sacrifices.  Take all of your bills and categorize them by "fixed", "variable" and "optional".  Your fixed bills are the things you can’t change easily.  Your mortgage, your health insurance etc.  While they appear to be non-negotiable, you do have choices.  Can you get a better mortgage at a lower rate with a smaller payment?  Should you move?  Can you shop for cheaper health insurance?  Should you change your deductibles?  You get the point.  Variable expenses are much more fluid.  Do you absolutely need these things every month?  Variable expenses might be things like cable tv, high speed internet, home phone service, cellular phone service etc.  This is where you can usually make some improvements.  Can you opt for a less expensive cable tv package?  How about just getting the very basic channels?  Is there a slower internet service in your area that is cheaper?  Have you called your internet company to see if they’ll lower your price when you threaten to leave?  Do you need both home phone service and cellular service?  Consider dropping one.  Do you need a cel phone?  Maybe not.  The point here is that while they seem like "must haves" there is often alternatives, or you might be able to do without.  That brings me to the "optional" bills.  Things like this are Tivo, Netflix, dining out, newspapers etc.  If you lived in a third world country, you wouldn’t even have access to most of these optional type expenses.  Can you live without them?  You bet you can.  The trick here is to be very honest with yourself about what you absolutely need.  This doesn’t have to be permanent.  Get rid of these until you get caught up and start saving for your future and then bring them back one at a time as you can afford them.

4. I want to enjoy life while I’m young

Who doesn’t want to enjoy life while they are young?  It’s important to set some personal boundaries about what fun means.  Maybe you have evolved your taste so much that fun to you means extravagant purchases at the department store and $200 meals in restaurants.  The measurable difference between a $200 meal and a $40 meal is very small, if it’s even measurable.  $300 pants do not bring you 10 times more enjoyment than the $30 pair.  The strategy here is to start being honest with yourself.  If you believe you must hemorrhage money while you are young to enjoy life, then you are missing out on some pretty basic human satisfactions.  The key on this is moderation.  Just like the motto of this website, the goal is to live life for today while planning for tomorrow.  You can do both.  It’s not that hard.

5. Why save for a day that may never come?

You’re right.  You might not even make it to retirement.  Are you married?  Do you have kids?  The chances of none of you making it to an old age are slim.  Shouldn’t you plan a bit for them?  What if you make it to an age where you can’t retire, but your life might be eased by having a nest egg to draw on in a crisis?  You aren’t saving everything until you are sitting in a rocking chair.  A huge reason to save is to begin to have your money working for you, instead of just working for your money.  That old saying that "It takes money to make money" is pretty darned true.  Look at it this way, if you are able to amass $100,000 in 20 years, at the end of that time you could supplement your income by $8000 per year by getting 8% interest on it.  That’s a pretty decent raise.  By the time you reach $100,000, I think you’ll find it makes even more sense to roll that interest back in and generate even more of a nest egg.  The fact of the matter is that amassing wealth gives you options.  Not amassing any wealth and spending for the day robs you of options.

6. I don’t make enough money

Fair enough.  There are a ton of people in our country that aren’t making enough money.  The only person that can change this is you.  Have you looked at finding a new job?  If you don’t have the skills, can you find any training opportunities in your area to improve your skills?  Look around you.  Are the people that do make more than you doing work that you could do?  Talk to them.  Ask them how you can get in to their line of work.  The better you are at building relationships, the easier it will be to find help in this area.

7. I’m really busy.  I’ll get around to it later

Tomorrow is coming a lot faster than you think.  There will never be an optimum time to start.  You have to take a few minutes to start drafting a plan.  Are you saving through your job?  If not, this is the easiest way to start saving.  Call your HR rep, or your manager and ask them how to start.  It’s usually just a phone call away.  Call your bank, or even better, find a credit union, and ask how you can set up an automatic transfer from your main acct to a savings acct.  Go to Etrade.com or schwab.com, or any number of online brokerage companies and see what it takes to open an acct.  Worst case scenario, just call their 800 number and talk to a representative.  They’ll help you get started.

8. I deserve to have some luxuries in life

Don’t we all deserve a few luxuries in life.  Rather than look at luxuries as a god given right, how about looking at them as rewards.  As you start improving your financial situation, consider using a small percentage of your income to reward yourself.  The key here is that your rewards should be much smaller than your accomplishments.  If you save $1000, go out to a nice dinner.  If you save $10,000, maybe you can decide to get a new TV.  The key here is not to deprive yourself of all luxuries, but instead think of luxuries as a reward for meeting other goals.

9. I’ll count on someone else to take care of this

No one else will take care of this.  I suppose if your helicopter mom is going to stay alongside you through your entire life, maybe you can count on someone else.  She can plan your saving, and investing.  She can make all of your financial decisions for you.  If you are like the other 99.9% of the population, you need to do it yourself.  I kid you not.  No one else is going to make sure your future self is well taken care of.  It just doesn’t happen very often.

10. I spend money on things that give me immediate returns

Sure, hookers give you an immediate return (Besides the obvious STD’s), but I guarantee they won’t help your future self.  Lots of things give you an immediate "return" but what does that mean, anyway?  I struggle to think of any purchase you can make today, in lieu of saving, that will make you better off later.  I suppose the one exception would be finding a Picasso at a garage sale.

11. I save in a 401k

You are saving in a 401k?  GREAT!!!  Is that all you are doing?  Do you have any additional income that you can save in a ROTH IRA?  How about funding a 529 plan for your children?  How about investing in a brokerage account?  There are lots of places to save additional money.  Certainly investing in a 401k is a great first step in your savings plan.

12. I’ll work until I die.  There is no need to save

My mother has always said she’ll work until she drops.  Now that she’s 63 years old, she’s starting to change her tune.  Luckily she has saved some in her 401k and also has real estate to help fund her lifestyle.  My point here is that it’s easy to say you’ll work until you drop when you are young, but your future self may have a change of heart.  Why not plan for a day that you can decide whether you want to stop working or not.

13. I will inherit some money

I’m sure you’ve met someone that doesn’t save at all because they are expecting to inherit some money from a relative some day.  What if that relative loses all their money?  They could be sued, come down with a nasty gambling habit, lose it all in a divorce.  You get the picture.  It’s probably a good idea to have a plan B.  And what if you fall out of their good graces?  Have they told you that you are going to receive X amount of money?  Is it in a will?  Any way you slice it, plan B’s are a great idea.

14. I’ve got plenty of equity in my house

Have you seen the real estate market lately?  You have less equity than you used to.  Even if you still have a significant amount of equity, in order to access that equity you’ll need to move.  Sure there are reverse mortgages, but that isn’t necessarily the optimum financial arrangement.  No matter how much you have tied up in your home equity, you should always have multiple types of investments to ride out the various economic crashes.

15. It’s so cheap to borrow money these days, that you would be a fool not to

I wonder who invented the saying "You’d be a fool not to borrow money when it’s this cheap".  If you have to borrow money to buy a home, or another major purchase, sure it makes sense to borrow the cheapest money you can, but if the interest rate drives your purchases, then you probably have a problem.  If crack cocaine is cheap, should you buy it?  If toilet paper at Costco is half price, should you buy 10,000 rolls?  For the average Joe, it makes the most sense to moderate your behaviors and just chip away at saving, paying down debt, and planning for the future regardless of how cheap money happens to be.

I have to confess something.  More and more these days I’m finding myself thinking about what it would take to check out of the rat race.  I don’t care about having the fanciest stuff, or the latest and greatest tech gadget.  I really want to have the option to just do absolutely nothing as much as I want.

I think it stems from a few things.  First is seeing how happy my friend who retired is.  Sure, he’s older than I am but that doesn’t change the fact that I would sure like to be in his lifestyle situation.  He did a lot of things right to retire around 50.  It’s unrealistic to think that I have done lots of things right that would give me the ability to retire at that age, or even earlier, for that matter.  Sure we are savers and have amassed a decent set of assets but not nearly enough to check out now.

I also keep thinking about all the posts that JD @ Get Rich Slowly has done on the 4 hour work week and reading about various people that have bucked the trend and are working on their terms.  Blogging for a living is a little scary and I can’t even begin to dream about that because I don’t have the readership, or revenues of some of the other guys that have actually done that.  The chicken in me also worries about what I would do if the income stream died off.  Frankly, it would be a lot harder to generate my current income level on my own than it is to just stay at my current job.

As I get a little bit older, I find myself wondering, "What’s the point of it all?"  I suppose this might be due to the fact that I’m not doing work that I’m passionate about.  I mean, do you know anyone that is passionate about doing process development and managing lots of customer expectations?  I don’t.  "Why don’t you do something that you are passionate about then?" you ask.  Well, probably because I don’t know what that is.  Frankly, I probably need the type of job where I’m out and about all day visiting customers.  I absolutely love dealing with people and working from home just doesn’t give me as much of that.

So, what are my options?  Well, I could sell everything I own and end up with a decent chunk of change that I could generate basic interest income off of.  It would probably give me enough to rent a modest apartment and buy basic necessities but the reality is that there are too many variables that could tank that plan.  I don’t have enough that I could take whatever life might throw at me and probably won’t for at least another ten years.  Even then, it would be a very modest lifestyle.

I’ve also thought a lot about selling our primary residence and living rent free at our lake house.  With the money I’m making online, interest income I could generate, and maybe a part time job, I could get by.  But then there is the issue of what kind of life that would be for my daughter.  Is it selfish of me to drastically adjust our lifestyle and potentially rob my daughter of opportunities later as she struggles to figure out how to pay for college etc?  That doesn’t really feel right either.

So, here I sit.  Wondering what the best solution would be for my family.  Wondering if I’ll live a long life and all of the working and saving now will pay off later.  Wondering if I’ll kick the bucket much sooner and then regret not having ever taken a big chance on another way of life.

No matter what happens, I am grateful for the lifestyle and way of life my family has today.  Don’t get me wrong.  If nothing changed for the rest of my life, I’m still very, very grateful for being where we are at.  I just can’t help but wonder what else there might be…….

It’s been no secret that our household has been hemorrhaging money over the last 1.5 years as we built a second home out at our favorite lake.  Now that we have been in it for a few months and have stopped buying both construction materials and basic furnishings etc, our budget is slowly getting back to normal.  How have things changed?

 -We have increased our 401k contributions

When we bought the the place we made quite a few sacrifices.  One of which was to lower my 401k contributions to only 8%.  Why 8%?  It’s pretty simple, really.  My company matches 75 cents on the dollar up to 8% of my income.  No matter what we did, I wasn’t about to miss out on any company matching.  Now that things are getting back to normal, I have bumped the contributions back up and am now maxing out my 401k again.  During construction, the extra money came in very handy for materials.  Our goal was to not take on any debt to complete the place.  We succeeded by cutting down unnecessary expenses, scaling back our investing and pacing the work to our budget.

-We are investing in a ROTH again

Same story on the ROTH.  We stopped contributing to the ROTH temporarily while we finished the construction.  We are now starting to contribute to that again.

-We are increasing contributions to our daughters 529 plan

While we never cut down on contributions to our daughter’s 529 plan, we have decided to increase the contributions now that we have more money in the budget.

-We plan to start paying down the mortgage more aggressively

For a long time we were contributing an extra $150 per month towards the mortgage.  We also stopped that during construction but will now be doing that again.  It’s exciting to see the total mortgage go down extra every month.  I watch that fairly closely because I anticipate hitting a point where we could sell our lake house and use the proceeds to pay off our primary home mortgage.  By doing this, we could end up living mortgage free in our early 40’s.  That fits nicely in to our master plan of retiring early.

Another significant milestone that is coming up for us is that our daughter is going to be starting kindergarten.  It’s an amazingly exciting milestone for our family but it also has financial implications.  We have been paying $800 per month for daycare for the last two years.  That expense is going away which is going to drastically improve our budget surplus.  We’ll definitely take a portion of this and start directing that at our daughter’s 529 plan.

Lately I’ve been looking at all the various gimmicks out there to get me to spend money in specific stores.  Frankly, it would be pretty easy to sign up for saver cards and gift cards in lots of stores but I choose to only sign up for things like this in stores I already frequent.  Here are a couple of the cards we are using, and getting:

-Starbucks card

I’m going to keep a Starbucks card in my wallet with a few bucks on it.  Why?  Because I’d like to get free wifi access when I’m out and about.  I keep my Ipod Touch with me and use it to check email, or look things up when I’m out and about.  I got a free year of Tmobile Hotpots when we bought my daughter an XO laptop last year, but this just makes it even easier.  Now I can park in front of a Starbucks and check email etc whenever I want.  Oh, and I’ll definitely take advantage of any discounts they offer on the cheap "drip" coffee they serve.  I’m way too cheap to buy anything else there.

-Kroger Stores Gift Card

I’ve never bought a gift card from them before but we do all of our grocery shopping at Fred Meyer (a Kroger brand) and recently they started offering a promotion that they would add an extra 10% to the value of the gift card if you put a minimum of $300 on the card.  I’m sure they are doing this to try to get more people to spend their economic stimulus checks there but since we do all of our grocery shopping there, it makes sense for us to buy the gift cards even though we haven’t even received a stimulus check yet.  We have almost used the first $300 and plan to go buy another card for $300.  I’m always happy to get free money.

-Costco American Express Card

We have decided to finally break down and get an American Express card sponsored by Costco.  Why?  It’s pretty simple.  They offer 5% cash back for fuel purchases (and we almost always buy our gas at Costco) for business card users.  They also offer 1% back for everything else, 2% for travel related expenses and 3% for something else, I just can’t remember what.  I have been walking by their booth in Costco for a long time.  I have always been content to walk by because I just didn’t want to complicate our simple approach to credit.  We have always just had one credit card through our credit union.  I trust them and their interest rate is low (although we’ve never paid any interest).  The biggest mistake I made with the strategy of using that credit union card was that I missed out on all the cash back that I could have gotten when building our lake house.  Lesson learned.

-Using employee discounts

My company has a huge employee discount program.  They negotiate huge discounts with some of our preferred vendors (just think of many large name brand companies).  I have saved a fortune on cellular costs, computer costs etc.  They also actively seek out promotional discounts from many local businesses.  Just last week we took our daughter to the Pacific Science Center.  Prior to leaving the house I checked for discounts and found that they did have a standard discount for employees of my company.  When I got there and asked for the discount we saved over $20.  I just love discounts!!!  Add that on top of the free parking spot we found on the street and our day was a lot cheaper than I thought it was going to be.