Credit Card Reasons Revisited

Anonymous Says No To $350

Or, How To Miss Out On $29.20 a Month By Not Using Credit Cards

I recently listed 8 reasons to use a Credit Card which caused someone under the bravery of 'Anonymous' to call my advice crappy.

I understand that Credit Cards can be trouble for some people and I have no problem with people disagreeing with me. I did however take issue with these two segments of his response:

Why not keep the money in a high interest account and transfer it online,free, to your checking account as needed. problem solved
...
Rewards,benefits. Virtually useless. For most people the rewards/benefits do not outweigh the risks with credit cards

Great idea! And if one wasn't using a Credit Card at all, I'd agree. However, I found the line 'Virtually useless' rather suspect. I decided to run an analysis and see for myself (and for you, dear reader) what exactly is the financial benefit of using a Credit Card in the manner I use it.

Remember, our financial plan says to use the Credit Card wherever possible (and to pay it off on time, every time).

My analysis involves the following three scenarios:

Scenarios Under Analysis

Checking Account Only

• One 0% interest, $0 fees checking account


• Salary goes in, checks come out

Checking Account and a 3% APY Savings Account

• Salary goes into Savings


• Money is transfer ed over as needed

3% APY Savings Account, 1% Cash Back Credit Card

• Salary goes into Savings


• All expenses go onto Credit Card


• Credit Card is paid off at the end of the month

The Results!

With a monthly salary of $3,013.26 and monthly expenses of $2,187.50 using a 1% cash back credit card and a 3% APY savings account I will make $29.20 more a month than if I were just using a checking account. I will make you $24.96 more a month than if you I were using a checking and savings account (but no Credit Card).

See the whole sheet for a more detailed look including assumptions I made to simplify the calculations.

Table: Monthly Difference Between the Three Scenarios

Blog Sized Excerpt	Checking Only	Checking and Savings	Savings and Credit Card
Vs. Checking Only	$0.00	$4.24	$29.20
Vs. Checking and Savings	-$4.24	$0.00	$24.96
Vs. Savings and Credit	-$29.20	-$24.96	$0.00

A Partial List of Flaws

• Not everything can be paid for with a Credit Card.


• Expenses aren't actually evenly distributed throughout the month


• It is possible to get an interest bearing checking account


• Using multiple savings accounts will give you finer grained control over transfers to the checking account


• Some people really really really hate credit cards, so this won't work for them


• Some limitations may apply to 1% cash back purchases


• Carrying a balance even once will wipe out months of returns

Conclusion

I stick with my recommendation to use a Credit Card. I realize that my numbers are rough estimates, but I believe that they are strong enough and close enough to show that there is a clear financial benefit to using a Credit Card.

Using a Credit Card isn't for everyone, and I respect that, but just because they don't work for you doesn't magically make them crappy for everyone.

Groceries Without the Games

What's the Grocery Game

If you've been to a couple of personal finance blogs you've probably heard of "The Grocery Store Game". If not, here's a story on it over at Get Rich Slowly. The idea is that you combine coupons in such a way that you get most of your groceries and toiletries for very little cost.

It's Hard Work

Frankly, it seems like a lot of work. You have to go through all the store fliers each week, find the best coupon deals, find the manufacturer's coupons that match with the fliers coupons, etc. Oh. Then you have to drive to each of the different grocery stores and get all those deals, figure out what meals you can make with whatever products you may have been able to get for cheap.

As noted in the comments of the story over at GRS, most of the goods are actually toiletries or unhealthy foods. For me, I don't think it's worth the work.

Saving 14.5% On Groceries With (almost) No Work

As you'll see below, I save 14.5% on groceries before coupons even enter in to the equation. The process I use depends on the store having the two programs I use in place, so my process may not work for you.

Of course, playing the grocery game depends on you having the right big-chain stores in your area anyways, so I think this is a viable alternative for many people who could play the grocery store game.

Full Sheet : http://spreadsheets.google.com/pub?key=pFOJsib3bG6Gbi-GWZVFXRA

Here are the factors that let us save 14.5% whenever we get groceries:

• Grocery Gift Cards
  • Our grocery store sells gift cards which give you a 10% bonus. Eg. Buy a $300 gift card, get a $330 gift card. We bought $1200 of cards five weeks ago.


• Buy the Gift Card on your cash-back Credit Card
  • We get 1% on our Credit Card purchases. That's $12 back on our $1200 purchase


• 5% Student Discount Card
  • The grocery store has a special student affiliate card which gives you 5% off your purchase beyond the normal affiliate card price. My wife is still a student, so I don't think this is dishonest in the least.

Affiliate Card Price Caveat

The grocery store we go to doesn't always have the best overall prices, however when using the affiliate card the prices are competitive with other stores in the area. For this reason, I do not include the "mark down" that the affiliate card gives us. That mark down is only present because they mark the prices up for anyone who doesn't have the card.

Downsides

1) Be sure that the grocery store you do this at is one that you like, otherwise you get stuck with $1200+ of gift cards locked up in the one store.

2) It's easier to be spendy if you're spending gift-card money than real money.

3) You have to put down a large chunk of money right at the start. If the 10% bonus is going to be an ongoing thing, we will buy the smallest denomination possible, and leave the rest of the money in our ING account to further stretch our grocery money.

Real Life

Between May 9th and June 16th we bought $306.94 worth of groceries for a cost of $265.08. Considering that we had agreed to increase our grocery spending (we did) and decrease our eating out (we did!) we are about where we expected to be for grocery spending for the month.

Other

I have no idea where the extra $41.86 I saved went. Probably into my ING account...

Interview Phase Two, and How I Write A Resume

>Job Hunt Update: I got an email today that asked if I could come in for round two of interviews next week! I believe that there are only two rounds of interviews, but I suppose we'll see what happens after this one. Since my resume presumably was one of the factors which got me an interview (I had a friend who works there deliver it too), I've decided to share my resume techniques. Maybe they'll be helpful to someone, and maybe someone can help me improve as well.

Resume Writing, My Style

I don't remember the last time I actually sat down to write a resume from scratch. My resume has kind of evolved and grown since I started college. Recently though I did have an opportunity to sit down with my brother Bob and help him with his resume.

Bob is a really smart kid. He got into computers way before I did, speaks fluent Spanish and is very responsible. And if that weren't enough, he just graduated from high school. Bob isn't very wordy though. His emails and essays make Hemmingway look verbose.

Before and After

So, here below is a before and after of his resume. The one of the left is the one he created himself, the one on the right is the one I helped him with.



Here are the differences:

Things Wrong With the First Resume

• Duplicate information


• Vague, tangentially related objective


• Only one work experience entry


• List formatting runs together


• No spacing between sections


• All fonts, except his name, are the same size


• One third of the page is blank space


• Non-work related interests


• No reason why visiting a foreign country is relevant


• Soft verbs and interest

Improvements In the Second Resume

• Single line address format saves valuable vertical space


• Name top and center makes it the most noticable page element


• Different fonts for each level of information


• Included all past, current and planned education


• Each skill or activity line starts with an adjective or, if appropriate, a verb


• Name software or other tools you know by name


• Title 'Work History' as 'Experience' and include related non-work activities


• Include real numbers in job descriptions where the demonstrate added value


• For jobs/positions without official titles, use a descriptive title that says what you did


• When possible, use verbs with positive connotations in the job title, otherwise use them in your job description

Other Notes

I'm sure there are other considerations that could improve the resume greatly. I'd love to hear your suggestions. One obvious thing would be to tailor it for the specific job you're applying for. In my brother's case, he doesn't have much to work with yet.

In my case, I have more jobs than fit on the resume, since I like to keep it at a single sheet. I include the most relevant jobs and projects I've done, and reword job descriptions to emphasize portions of my responsibilities that could relate to the job I'm applying for.

A good resume is only half of the package for job application; you also need a great cover letter. With the job I'm currently doing interviews for, I found out who I would be interviewing with initially and directed the cover letter to him.

Is It Time to Switch To CFLs?

I've known for quite a while that CFLs (Compact Fluorescent Bulbs) were cheaper in the long run, but I was ambivalent about the savings, and was under the impression that it wasn't that much of a difference anyways. Now that I'm trying to become more disciplined and save money wherever I can, I decided to do an honest evaluation of the potential savings.

We are likely moving in January, so I wanted the CFLs to pay themselves off before then since I don't know what kind of lighting our yet-to-be-found new house will have.

My plan was to a) analyze the costs and b) stick all the existing incandescent bulbs into a shoebox till we're moving out and take the CFLs with us.

We now have all CFLs, except for the two porch lights which are almost never used and which are difficult to replace anyways. If my estimates and calculations are correct, we should save about $10 a month and recoup our costs in four months.

Below is the spreadsheet I used for my calculations. Please let me know if you see any errors. The in-line view doesn't have quite the whole sheet. Please view it on Google docs or download it to see the full thing.

(Post continues after spreadsheet)

View it, Download it as ODS, Download it as XLS.



As you may have noticed, the longer you leave your lights on the sooner you recoup your costs. The obvious solution is of course to leave your lights on all day long. You'll be saving money before you know it! ;-)

There are some minor issues to switching to CFLs. If you're concerned about the color of your lighting, you may want to buy just a couple of bulbs and try them first. The CFLs, though they claim to be pure white, daylight or whatever do seem to have more of a blueish tinge than the incandescents.

I put the bulbs in our house last night, and due to the color of the glass around the light fixtures, the color temperature change isn't that noticeable, except in the bathroom, where we have a built-in vanity with six bare bulbs surrounding it.

When my two year old walked into the bathroom this morning, he said "We got new walls in the bathroom?", "No" replied my wife. "Somebody painted the walls in the bathroom?" returned my son. The color change isn't bad, but it does exist and may take some getting used to. For $10/month though, I'll do it.

The Belt :: Visualizing Weight Loss

I wear the same belt every single day. It's a dark brown belt, and it goes well with jeans and matches my Sunday shoes well enough that my wife doesn't complain. I've been wearing this belt for the past two or three years. Last week when I had to punch a new hole in it, I realized that it tells the story of my weight loss pretty well.


You can see indentations in the belt right before six of the holes. The left most hole is the one I punched last week. That's the under 215 pounds hole. It's the first time I've needed a hole there since I got the belt.

Six holes to the right you can see a faint indentation. That's from when I weighted 240 pounds.

If you were to plot the depth of the indentations, it seems that it would create a bell curve representing my efforts (and lack thereof!) over the years to lose weight. It seems that no matter what I try I always end up back in the 225-230 pound weight range, as witnessed by the two deep middle grooves.

The newest hole is actually a little more snug than I would like it to be. It's not painful and doesn't cut of my circulation, but if I start eating it's tight enough to trigger the loosen-your-belt signals in my brain.

This is intentional in my part of course. My stomach doesn't want to cooperate and tell me when I've had enough until I'm about ready to heave; my waist and belt are more willing to tell me when to quit.

I realize that this isn't a conventional or normal way to help limit eating, but I'm willing to do whatever works to get down to a healthy weight. 200 here I come!