Did You Serve Honorably?

I'm from a long line of people who have served in various branches of the US military. Though I never enlisted myself, I still benefit from my father's service in that I'm a member of USAA. This is a private banking and insurance agency that is known for top-notch customer service, and also for being run on a non-profit basis. As the child of a USAA member, I've always been eligible. It's one of the few military benefits that those who serve can pass on to their children. I've found it to be extremely worthwhile, since their homeowner's and auto insurance rates and policies can't be beat. I also use their totally, 100% free banking services. Anytime I have a question or concern, I can call USAA and quickly get a real, live, competant, polite human being on the phone to help me. I couldn't be happier with USAA, and I don't say that lightly.

The reason I'm posting about USAA is that they recently changed their eligibility rules. It used to be that active duty military personnel could enroll anytime, and then there was a window of opportunity after discharge. After a certain amount of time had passed after discharge, you could no longer enroll, though the children of any USAA member could enroll at any time. Now USAA has opened eligibility to anyone who served honorably in any branch of the US military.

If this applies to you and you're not a USAA member, I urge you to consider becoming one. We save a lot of money and hassle with the services USAA provides. We just got our auto insurance dividends, and next month we'll get our annual rebate from our USAA credit card. And yes, those checks arrive at a particularly nice time of year. Even if it didn't make obvious sense from a financial perspective to use USAA for our banking and insurance, I would seriously consider paying for their services just for the outstanding level of customer service they provide. The sweet thing is, we pay less for that service. A lot less.

So if you or someone you know qualifies under the new eligibility rules, especially if that person is your spouse or parent, check out USAA. I would use any service they provide, with confidence that they would do right by me.

June Frugal Action Item: Increase the Deductible on Your Auto Insurance

Image originally uploaded by przemion

This month's Frugal Action Item is predicated on a few assumptions, and I want to make it clear that this one won't be recommended for absolutely everyone. Here it is: if you have an automobile with insurance, raise your deductible by $500. At the same time, put an extra $500 into your savings account. That means in the event of damage to your car, you pay more out of pocket, but that extra money will be sitting right there for you. No sweat. In the meantime, you'll save by paying lower premiums. And you'll earn a tad more in interest each month because of the higher balance in your liquid savings.

Remember: insurance of any type should serve to protect us from financial catastrophe, not from ever having to pay anything for day-to-day expenses. Don't buy more insurance than you really need.

Now I don't recommend this Action Item to those who have just added teenage drivers to the family insurance policy. Nor to those who are already struggling to get by in this economy as it is. If you've lost a job, have a fixed income with very little savings, or are currently living off your savings, skip down to the Alternative Action Item below. The rest of us, if we're reasonably safe drivers, can tighten our belts and make the smart financial move.

I hear you asking, where am I supposed to find an extra $500 to put into savings? Why, from all the money you've been saving by faithfully following the Frugal Action Items since the beginning of the year! Let's take a look at how the savings have been adding up:

January's action item: CF bulb installation. This is probably saving you, on average, $2-3 per month. Let's call it $2.50 per month x 6 months. That's $15.

February's action item: Kitchen Competence. Let's say you turned over a new leaf and gave up just two dinners per month at a restaurant in favor of cooking at home. By the time you figure in the tip and extra transportation, that's probably $45-90 right there, depending on how many are in your family and where you typically eat out. Or maybe you made four loaves of bread and have been sticking with it each month. Homemade bread should be saving you at least $12 per month. So at the low end we've got a range of potential savings here from $12-90 per month, for 5 months. That's $60 to $450. If you've switched from eating out a lot to eating at home, you probably passed more than $500 in a savings after just a couple months.

March's action item: Cheaper Entertainment. If you gave up a Netflix or Blockbuster subscription, or a weekly movie night and started getting your DVD's from the library, you've probably saved at least $10 per month, even if you factor in an occasional late fee plus transportation costs to and from the library. So conservatively we'll call that $10 per month x 4 months. $40.

April's action item: Go Paper-less. The savings resulting from this month's challenge are a little harder to estimate. Let's say you gave up paper napkins, paper towels, and cancelled your newspaper subscription. That's an easy savings of $10 per month. If you were willing to go a little farther and give up tampons, sanitary napkins or diapers, your savings will be significantly higher. Let's say the average family could be saving $15 per month by giving up disposable paper goods. $15 x 3 months = $45.

May's action item: Line drying your laundry. The average dryer uses at least 75 cents to dry a load of laundry. If your family does ten loads of laundry per month, that's $7.50, easy. Two months of $7.50 monthly savings by the end of June: $15.


So there you see how easy it is to find some extra money to make progressive improvements in your financial situation. Using the lowest end numbers for each month above, we get $175 in savings. If your household saw higher savings through any of these Action Items, you've saved more than that. In any case, maybe you haven't quite saved up that $500 yet. That's okay, work at it slowly. When you have that cushion in the bank and you raise your deductible, you'll see an addition savings of perhaps $125 for a six-month policy. See how quickly the savings can pile up when you practice daily frugality?


Alternative Action Item For anyone who doesn't own a car, or who is not in a position to put an extra $500 in savings right now, a challenge of a completely different sort.

It's getting to be summertime (in the northern hemisphere - sorry, southern hemisphere visitors). So our diets should be turning to lighter fare and less cooking. The challenge this month then is to incorporate homemade but cooking-free meals into your weekly routine. Salads (green or fruit), sandwiches, wraps, gazpacho (if you're lucky enough to have ripe tomatoes already), cole slaw, mueslix, smoothies, fridge cookies, a crudité plate with an herbed dip or vinaigrette, etc - all of these will fit the bill. This challenge is designed to do two things: save you small amounts of money because you're not firing up the oven or the stovetop, and to encourage you to focus on what is fresh right now. Foods at the peak of freshness usually need almost no preparation to make delicious meals. You'll most likely eat more vegetables and/or fruits during these meals, which is healthier too. If you live in a hot climate, you'll also avoid heating up your house unnecessarily.

So see if you can eat at least one homemade breakfast, lunch, and dinner each week using no cooked foods. I'll give you a few exceptions though. Any basic food that is always sold in cooked form, such as bread, lunchmeat, or jam, is okay to include on your sandwich, especially if you previously prepared it yourself. But no cheating by bringing home a rotisserie chicken! If you happen to have a solar oven, that's fine to use as you're not drawing any power to do your cooking. And sun tea is allowed for the same reason. So shake up your routine just a bit and see what happens!


New to these Frugal Action Items? More here:

January: Compact Fluorescent Bulbs & Hot Water Pipe Insulation
February: Kitchen Competence
March: Rein In Entertainment Spending
April: Go Paper-less
May: Solar Dryer
July: Stay Cool Without Touching that Thermostat
August: Repair It!
September: Insulate
October: Preventative Health Care
November: Frugal Holiday Wish List
December: Plan Next Year's Garden

As ever, I'd love to hear if these Action Items are making a difference in your household budget. Sound off in the comments!

Fewer Vehicles = A Cheaper Auto Insurance Bill

We sold off some of our vehicles this past week. I'm almost afraid to admit just how bad it was, but we had five - FIVE! - insured motor vehicles. Hear me out though!

One was my motor-scooter which had been my main vehicle when we lived in the city. I didn't have a car at the time. Although I tried to sell it before we moved, it just never happened. Despite the fact that I was hardly driving it at all, I still had to pay some insurance for it. Pennsylvania makes it very hard to put a vehicle "in storage" from a legal perspective. This was obviously a candidate for selling. As much as I loved it, and as great as its gas mileage was, I need a car to cover the distances from where we live and to do the things I need to do.

Vehicle #2 is my car, a cheap Hyundai that I bought used and paid cash for.

Vehicle #3 is my husband's car, a more expensive VW that we also bought used and paid cash for.

Vehicle #4 is his old Honda, which he bought before we even met. It's been in another state (where my husband spends a significant amount of time for his work) for about two years. He uses that car to get around when he's away on business travel.

Vehicle #5 is our 1992 beater pick up truck, also bought used for cash. We need this for hauling stuff to our property where we're gearing up to build our dream home. It's also hugely convenient for hardware store runs, or picking up free mulch at the county recycling center.

Although we have great auto insurance, our bill was high with this many vehicles. The most obvious, if painful, step was to get rid of my motor-scooter. After a post on craigslist, I got many, many phone calls, and finally one from someone living in a major city who was serious. She came that evening with a truck and paid me in cash!

The second vehicle that sold is the old Honda. Someone my husband works with had been interested in buying it for its good fuel economy. So after agreeing on a price, my husband drove his VW to the other state and sold the Honda. That means we're down to one car at home now, plus the beater truck. I'll have to share my car with my husband. We drive the truck only when we need its hauling capabilities; it gets pretty bad mileage.

Two vehicles sold in one week! We got them off our auto insurance policy right away, and also found that the policy on the VW is now cheaper because it's in another state. Our total monthly savings comes to over $108! That's whopping $1272 per year, which will get plowed into accelerated payments on our mortgage. And the bulk of the money we got from the sales will also be a sizable extra principle payment next month. We'll keep a small part of the money around as emergency cash.

I wish we could get by with no cars at all. But with no services within walking distance of our home, and our serious winters, that just isn't an option right now.