Cutting the Cord

Like a lot of people, we cut the cable cord.  It's been long enough now that I feel pretty confident giving you all my review of the different services we use. 

First of all, we eased into streaming.  My husband wasn't really convinced, but our cable/Internet bill had become ridiculous.  It had finally crept up above $200/month and I was beyond done.  I bought a Fire Stick on sale and added it to the main TV.  We used it, along with the regular cable, for a couple of weeks.  Then the storm hit and since we were moving out of the house anyway, it seemed like as good of time as any to cancel U-Verse.  While we were living with mom and dad the rooms we stayed in didn't have a cable drop, so we had to either stream our TV or go downstairs and be sociable. 

We currently use Prime, Netflix, and Boomerang the most.  We also use PlutoTV and FreeDive occasionally.  And of course, YouTube.  So, let's talk about them, huh?

• Amazon Prime:  There's a pretty good chance that we'd have this even if we didn't stream TV, but I'm pretty sure that if Amazon ever split the video portion off into it's own separate entity a la Amazon Music Unlimited then we wouldn't bother subscribing to it.  The selection of movies and shows is just okay and the menu teases you with selections that are available "to rent" and not included as part of Prime.  I did enjoy the Mind Over Money series
• Netflix:  What can I say?  It's the original streamer.  The selection is good.  The menu is straightforward.  What you see is what you get as far as being included with the subscription price.  The bad news is that the price keeps going up.  Right now, it's still worth it, but the playing field is changing and I'm not sure for the better.  They are throwing a lot of money into original content, a lot of which is really good.  I can't wait for the next season of Stranger Things.
• Boomerang:  This is for the kiddo.  It's probably the one we get the most value out of.  It runs in the ballpark of $40/year and worth every penny.  Lots of old school cartoons:  Scooby Doo, Jetsons, Flintstones, Tom and Jerry, etc.  My only complaint about it is that unlike Netflix, it doesn't have an attention check after every couple of episodes.  It will play all day or night if it gets left on.  That's no bueno when you're not on an unlimited data plan.
• PlutoTV and FreeDive:  I'm bundling these together because they are super similar.  The lineup of content is even very similar.  This is a good way to get some of those Discovery Channel shows that I used to be such a sucker for.  Pluto does have a live option, in addition to on-demand, where you can watch their channels like you would watch regular TV channels.  We've been doing mostly on-demand for years anyway, so this doesn't matter much to us.  There is a live news channel though if you want to keep up with the news that way.  Both PlutoTV and FreeDive are free services and thus have ads.  They are pretty short, but can't be fast-forwarded through.  FreeDive seems to do a better job of placing the ads in natural breaks.  Pluto will sometimes stick an ad right in the middle of a sentence.  The content isn't super new or super vast, but it's definitely worth more than what you pay for it.
• YouTube:  Here I'm talking about just YouTube, not YouTubeTV.  I like the ease of casting a video from my phone to the TV using the app.  It's interface on the TV is kind of clunky, but it's another free option.  I like watching older shows, even if the quality is lacking.  I torture the kiddo by making him watch old episodes of Sea Hunt.  Good times.  

I'm very interested in the service Disney is planning to introduce soon.  At $6-7 a month, it is a little more expensive than Boomerang, which it would likely replace.  I have my doubts that Disney will be able to hold it at that price for very long either.  Time will tell whether or not this is something that will become part of our lineup.  There is a very real danger of adding more and more subscriptions without analyzing which ones you are actually watching.  We've been saying for years that we would like to be able to only pay for the channels we want.  Now, we're getting closer to that reality, and are finding that at $3-7 per channel, it may not be any cheaper to do so.  

One percent at a time

So, one thing that I've been really working on lately is increasing my savings rate.  At the end of last year, I adjusted my W-4 withholding, cut cable, and increased my retirement contributions by 9%.  I was able to get an additional 1% in February when I received a COL adjustment to my paycheck.  I'm currently at about 30% between my work plan and my Roth IRA.  During next open season, I'm going to add a HDHP and HSA to the mix as well.  But is there anything else I can do?

The idea of optimization is that you can make little steps in your every day life to get closer to your goals.  So, my goal has become to decrease my expenses and/or increase my income 1% at a time.  I mean, why not?  It's "just" 1%.  A few dollars a day, really.  Enough to feed one of Sally Struthers' kids.  Or buy Alex Trebek's life insurance.  But that 1% can be huge.  I'm only about 4% away from maxing out my work plan.  If I can find money that can be better optimized as savings then I want to do it. 

Because 1% seems like such a small amount, I started looking at the things that can be cut easily.  The low-hanging fruit, if you will.  So, I started reading articles with titles like '15 Simple Tips for Saving Money."  And what I found was....that I'm already a cheap bastard.  Seriously, tips like "Don't buy $5 coffee" and "Make a budget and stick to it."  In all my searching, the only tip I found helpful was one about keeping your car tachometer below 2000 RPMs to improve gas mileage.  That shit works, yo. 

So, back to the drawing board.  I started looking at what my expenses were vs. what I had budgeted for them.  I found that on average I was budgeting about $5 too much a week for gas and $10 per month too much for electricity.  Now we're getting somewhere.  When I run the 2020 budget in a couple of weeks I'll be able to budget less for those two items. 

I've also cut the amount that I spend on groceries down about $10 every two weeks.  My grocery bill is already pretty bare bones, so after this, there's not a whole lot of room to cut it down anymore.  I've got a post planned for my shopping strategy, so I won't go too much into it here. 

Finally, I took a look at my utilities and realized that my Internet company had introduced new plans.  The plan I'd been on was for 600 GB per month at 150 mbps.  The new plan was 600 GB per month at 200 mbps....for $15 less each month.  I couldn't make that change online...I did have to actually call and talk to an actual human being...the horror!  No, actually she was very nice and didn't give me any grief about switching plans. 

All of those little tweaks gave me the 1% I needed to increase contributions again.  Just three more percent to go...

The importance of an emergency fund

What a difference a year makes.  One year ago today was a Monday, much like any other.  My kiddo and I had gone to the store to get Easter eggs for his class egg hunt.  Like a lot of four year-olds, he had begged for some shiny toy and had thrown a temper tantrum when I wouldn't buy it for him.  When we got back into the car, we had a talk about stuff isn't important and how he had so many toys already (a lot of them are from my husband's childhood...my house looks like Toys-R-Us circa 1984 exploded).  Then we went home and made dinner and he asked to watch a movie before bed, so I let him put a movie on the TV in my room to start settling down.

About 30 minutes later, I got a weather alert on my phone.  It wasn't exactly unexpected because the EMA had warning of potential bad storms for a couple of days.  The dog had been pacing and, unusually, hadn't asked to go out all night.  But this was different, it was a tornado warning, not a watch.  I flipped the TV over to the legendary local weather reporter just as he was saying that there is a possible tornado heading towards my city.

And then the power went out.

That was the point where I decided that maybe we should get in the hallway for a little while.  I grabbed the kid and the blankets and pillows and set up "camp."  I told my husband to get in the hallway and gave the kiddo his tablet and turned the volume up as loud as it would go.

I've always heard that a tornado sounds like a train.  I never did really hear it over the kiddo's game noise.  I felt it.  My ears popped when the pressure changed.  What no one ever talks about is the smell.  The first sign that the roof had been breached was the overwhelming smell of pine.  At first I thought it was where the rafters of the house cracked, but when I stepped outside I learned that it was probably the 15 pine trees that used to stand in our yard.

Just as the all-clear was given, the reporter on the radio came back on and told us to sit tight because there was another one on the way.  We sat in that hallway, this time under a mattress, listening to the rain pour through the holes in the roof.  In total shock.  Thankfully, that one went north of us and caused only minor damage.  The NWS thinks that there might have been a third, smaller one nearby that night as well.  As that storm passed, the chainsaws started and they didn't stop for three weeks.

Once we were able to start gathering ourselves, and taking stock we realized that there were at least two trees down on the house.  One came down right above where we had been laying watching the movie.  It also punched a hole in the living room ceiling.  Another took out a corner of the back porch.  The car that had only been paid off for two weeks (the title had come in the mail only the day before the storm) was missed by inches.  All-in-all we were very, very lucky.  We lost 23 trees, and only two of them actually hit the house.  No one in town was killed and there were only a handful of injuries. 

Luckily, my in-laws who live three houses down were nearly unaffected.  They lost a gutter.  And they were out of town.  We were able to stay there for a couple of days until the cold got to be too much and we moved to a hotel.  We spent a total of 4 weeks in three different hotels.  And then another six months living with my parents, who also live on the same block, but were able to stay in their home.

And this is where the emergency fund comes in.  It was such a relief to be able to roll up to the hotel and reserve a week, and then another, without having to worry about what would happen if the insurance company didn't reimburse us in enough time to pay the CC bill (they did, BTW).  I didn't have to worry about whether or not I'd be able to cover deductibles.  We did have some out of pocket expenses.  And in the interest of full-disclosure, we did choose to go ahead and do some home improvement things that we'd been wanting to do.  And we chose to take on a little bit of debt to do that.  It's very low interest debt, secured by money in our bank account.  It's one of the few cases where we're not doing the mathematically "correct" thing, but instead doing the thing that works for us psychologically.

But the real moral of this story is that just because you've suffered one emergency doesn't mean that another one isn't right around the corner.  In April, the engine in my husband's car threw a rod and he decided to put a new engine in it rather than getting something new.  In November, he totaled my car, you know the paid-off one that survived the tornado.  I decided to replace it with something exactly like it.  Same year, same color, upgraded trim package, and many, many, fewer miles.  What can I say?  I believe in buying what I want and driving it for 10-15 years.  I figure that my now 5 year-old will drive it as his first car.  We paid a little more than insurance covered due to the low mileage.  Finally, last month, my husband got laid off from his job.  We're still doing okay.  Even have the ER built back up.  I'm not going to say the last year hasn't been stressful, but it's been a whole lot less stressful than it could have been.

To Fee....Or Not To Fee

Not me, but this is pretty close to my ideal bill-paying setup.

So, my kid's school has an online system to pay for school lunch.  This is awesome!  Anyone who knows me, knows that in my perfect world, everything could be paid for online (I'm looking at you, water company).  Hell, I haven't had an actual checkbook in almost 10 years now and I can count on one hand how many times I've actually had to have a cashier's check cut in that time period.

However, I've noticed a trend lately of parents bitching about how expensive the convenience fee is for this service.  Okay, so it's not exactly cheap.  It's $1.95 per transaction and if you have more than one child at the school each child has to be a separate transaction.  The beauty of it, to me, is the fact that it's a flat fee rather than a percentage.  So, if you are able to pay for the entire semester's meals at once like I did this morning the percentage is something like 1.2%.  Seeing as how I'm getting 1.5% back on that card, I'm coming out ahead.  Though, I can see how if you had more than one kid and could only afford to pay by the month where that fee would be closer to 5%.  At that point, the $2/month/kid would probably come close to outweighing the $20 to get a checkbook and the convenience of paying online.

There are some fees that I don't mind paying.  Like this one.  Or the one that means I don't have to go by the bank and get cash when I renew the car tags once a year.  And there are other, similar, fees that bother me.  Like the $2.95 fee to pay the power bill with a credit/debit card.  I've almost always paid it with a linked bank account and at this point, inertia has taken over.  In theory, whenever the bill is over $193 (which is about 5 months out of the year), I'd do better to pay it on the card.

Long Term Bills

I said in my last entry that I would talk about what I call long-term bills.  This isn't a new concept.  I've seen the idea called sinking fund, or a freedom fund.  All it really amounts to is taking bills that are substantial, due regularly, but infrequently, and putting a bit aside every month or every payday.  You may not see much point in it at first, when you think of the things that you could use that money for.  But a day will come when you are very glad that you did.  Today is one of those days for me.

August is one of those tight months for us.  Our car tags are up for renewal.  And the semi-annual car insurance bill is also due.  I spent just over $500 on Wednesday just on stuff to keep my car legal.  Before, this would have been a source of major stress and probably would have meant hitting the emergency fund.  But this morning when I sat down to pay the credit card, all I had to do was to move the money from the Long-Term Bill account to the CC Payment account.  Each month, the car tags end up being about $17.50 and the insurance about $60 (plus another $20 for the other car's insurance).  It's so much easier to put a little aside each month than to try to scramble up the money all at once.

I have several things that I use this technique with.  In addition to tags and insurance, I save a little for Christmas/Birthdays/other gift giving occasions each month.  I also have a couple of expensive hobbies.  Both tend to require large purchases during specific times of the year and it's very nice to have a fund when I need it because I set aside $20-40 a month during the off-season.  Psychologically, it's nice to have that money earmarked because I don't feel guilty about spending it on its intended purpose.

Account Setup

I want to talk a little today about how I have my accounts set up.  I have 5 checking accounts and 4 savings accounts.  Yeah, the tellers at my credit union probably think I'm nuts.  They are all connected online, so I can move my money around easily.  The separate accounts are just to keep things classified.  For those of you who are familiar with Dave Ramsey's teachings you can think of it as a digital envelope system.

The savings accounts are pretty straightforward.  There's our contingency fund, which is nothing more than an emergency fund.  It contains enough money to handle something like a broken water heater (BTDT) or blown transmission (crossing our fingers on that one).  Then there is the vacation fund.  I've mentioned before that travel is very important to us.  And while we do try to travel as cheaply as possible, we do regularly deposit money in the vacation fund.  Next is the overdraft account.  In theory, we should never have to use it, but there is enough in that to cover minor mistakes.  Finally is what we call the college fund.  It's money that we are saving for our son's college.  Every paycheck, we put a couple hundred dollars in it and then at the beginning of each year, we deposit that into a Roth IRA.  This account actually doubles as a longer-term savings account (for very, very dire situations only...think long term unemployment) because we didn't open the IRA until he was older and we are limited each year as to how much we can actually deposit.

The checking accounts are a little more interesting.  The first is the main account that paychecks are deposited into and money is disbursed out of.  That is the account that the cashflow planning tool creates.  It is the central account.  Then my husband and I each have our own checking accounts.  That way we are each handling our own day-to-day spending.  Next is the credit card payment account.  I try to treat credit cards like a debit card.  As soon as something is put on the card, the money is moved into the payment account.  Auto-pay for the full amount is set up on every card.  Are there occasions where I float a bill from one paycheck to another?  Of course.  And the planning tool lets me feel confident doing that.  If I know that "yeah, I don't have the money today, but I'll have it in  seven days" then I will do it.  I try not to float expenses that aren't already in the plan, but sometimes life happens.  The final account is the long-term bill account.  I'll talk a little more about long term bills later this week, but essentially this account is used for putting aside money to pay bills that only occur annually or quarterly or every six months.  There are two ways of doing this.  You can have one account for each bill (in which case, I'd probably use a savings account rather than a checking account).  Or you can use the long-term bill tab of the tool that will help track up to 12 different things.

Introducing the Cashflow Planning Tool

I put the instructions and link to my cashflow planning tool up today.  You can find the instructions for the tool here and it will link to the workbook on Google Docs.