Author: Mr. Cheap

Categories
Business Ideas

Leveraging Old Blog Posts

One of the things that really impressed me when I first met Mike was HOW involved he was in the personal finance blogging community.  When he found a blog he liked, not only would he add it to his RSS reader and start following it (and commenting at it), but he’d dig in and read through its complete archive (he’s stopped doing this, but he used to do it all the time).  It makes perfect sense, if you like what someone writes about, why wait for the new stuff when there’s a massive amount of existing material free for the taking?  I’ve never been able to do the same.  After going through (at most) a month or two of the archive, I’ll get distracted and move on to something else:  even with the strongest blogs out there.  I get the feeling most people are like me in this respect, even if they like a blog, they don’t go through its archives.

Given that this is something of value to most blogs / bloggers, it keeps bugging me that there must be ways to make better use of the archives.  I have four ideas, which some people are already doing, but there must be better ways to use them.

  1. Reference old posts in current posts.  I do this all the time (along with everyone else), typically when I want to make a point, but don’t want to explain it again.  I reference the old post, and let anyone who doesn’t believe me click through and read what I previously wrote.  This definitely provides exposure for old posts, and there’s probably a tendency to refer very often to your best stuff (we’re always linking back to Mike’s excellent posts on real estate agents).
  2. Collect cash from advertising on well-indexed old posts.  Apparently (Mike tells me) older posts that have a high rank on Google are one of the most lucrative parts of a blog, as people searching for things will come to the blog, click on an ad or two, then carry on with their browsing.  Regular readers never click on ads (and often don’t even see them if they’re reading the RSS feed).
  3. Use the old posts as the core of a book.  Kevin Smith did this (non-affiliate link) along with a number of other bloggers.  I suggested a few times that a “Canadian Personal Finance Annual” collecting the best posts of the year from various blogs and selling them with some additional material from each blogger as a paper book would be an interesting project (that I don’t *THINK* would take much work), but whenever I’ve mentioned it to people there hasn’t been much interest.
  4. Have a “best of” re-run day.  I don’t actually know anyone doing this, but on a day when you don’t usually post (such as the weekend perhaps), bloggers could start re-running old posts that newer readers haven’t seen before.  Long time readers can ignore the re-run day, while newer readers will probably have a look when it ends up in their RSS reader.  Mike tells me that having duplicate content on your site can get you in trouble with Google and other advertisers…

None of these ideas are terribly appealing, so I’ll throw the floor over to our (far more intelligent) readers.

What neat projects could established bloggers with a large archive, that few people read, do with that archive?

Categories
Personal Finance

Shopping For GICs

My family loves GICs. As a group we’re pretty risk adverse, with my dad being the “crazy risk taker” for being heavily invested in mutual funds over the years (I think I’ve stolen that mantle from him with my real estate and leveraged dividend ventures however).

Much like mortgages, the posted GIC rates in banks are for suckers. There are some techniques for getting top dollars on your GICs, which I typically assume everyone knows, but figured a post would be useful for those who don’t.

To take a step back, GICs (Guaranteed Investment Certificates) are analogous to CDs (Certificate of Deposit) in the US. You put your money into them for a set period of time (often 3 months – 5 years), it is insured by the government (like a bank account) and you are basically guaranteed to get your principle and the stated interest rate back. Because there’s very little risk, the return is quite meager. However, there are a number of ways to boost that return:

  1. Ask. Usually just by asking they’ll increase it by 0.5-0.75%. They’ll be more accommodating if you have more money (sadly, such is life). If you have a wealthier relative and use the same bank / branch as them, often you’ll also get preferential treatment (mention their name)
  2. Comparison Shop. Often the newspaper or various internet sites will show the rates, if they’re insured they’re all pretty much equivalent – go with whoever offers the best rate.
  3. Haggle – If you want to stick with your home bank, tell them the rate being offered elsewhere and ask them to meet (or beat) it. If they refuse, often when you actually transfer the funds they’ll back down and try to get you to cancel the transfer and reinvest with them (assuming its a sizable amount). Don’t give in:  next time they’ll be more accommodating.

If you put money in a GIC, then need it later, you CAN break it, but there’s a penalty cost involved, and given the low returns this definitely isn’t something you want to do. If you want to have more access to your money (liquidity), you can set up a GIC ladder, which is just breaking a large amount of money into separate GICs maturing at different times. If you need the money, you get access to it sooner, if you don’t you reinvest it.

E.g. say you want to invest $10,000 in a GIC for 5 years. Instead, buy 5 GICs, each for $2,000 maturing at 1 year, 2 years, 3 years, 4 years and 5 years. When the first GIC matures, if you don’t need it reinvest it for 5 years. Now the longest you’ll ever have to wait for money is 365 days (assuming you won’t need more than $2k).

Negatives for GICs include that they’re taxed heavily, and inflation takes a big (hidden) bite out of them.  Personally, I just use a high yield savings account for funds that haven’t been put into a specific investment vehicle yet, which gives me complete liquidity.  But back in the day, before these were available, GICs were a (somewhat) decent alternative.

Categories
Real Estate

How to Save Money When Refinancing A Home Mortgage

I recently guest post about refinancing home mortgages that is a topic I’ve recently been interested in. As with many financial issues, there isn’t an easy answer whether you should do this or not, and it depends heavily on your personal situation and how much risk you’re willing to expose yourself to with respect to future inflation and interest rate changes.

If you *DO* decide to break your mortgage, there’s an easy way you can save yourself a chunk of the penalty, assuming you have the right mortgage features.

Refinancing your home mortgage

First, to give a general overview, breaking a mortgage typically entails paying the lender three months interest as a penalty (in Canada at least). More recently, they have begun using an alternative method for calculating the penalty called the interest rate differential (IRD). This is simply how much they WOULD have made off of you if you’d kept paying on the mortgage (and these days is higher than 3 months interest).

Whether or not to make the change is a fairly simple calculation (compare the penalty to the interest savings). The big additional benefits that attract me to the idea is that it’s a great time to get a fixed rate (in case interest rates take off). I’d actually be tempted to pay a premium and get a 10 year mortgage and not have to worry about interest rates for the next decade.

Some might try to make this a moral issue, claiming you’ve made a commitment to the lender and should honour it. This is garbage. Part of your commitment (check your mortgage documents) is that you can break the mortgage if you’re willing to pay the penalty. If they didn’t want you doing so, they shouldn’t have included it as part of the agreement.

I’m currently house hunting, so getting a new mortgage would be a dangerous thing. I will definitely investigate any impact refinancing might have on getting a new mortgage before I did anything.

Getting back how to save money when breaking a mortgage. When I called PC Financial (my mortgage holder), and asked about refinancing they told me it would cost $1,190.19 for me to break it (my mortgage is a little more than $89 K). I am allowed an annual 20% pre-payment, so I asked the rep what the penalty would be if I maxed out the prepayment first, which promptly dropped it to $882.70. He certainly didn’t volunteer this information, but he had it right there, so definitely ask (if you can pre-pay) how much it would lower the penalty fees.

For me personally, I’d just get the 20% out of my line-of-credit (then pay this off with the new mortgage). Even if you got the money from a high interest source (like a credit card cash advance or something) I think it would still be a good way to lower the penalty (in my case it’d save me 25%), as long as you quickly paid it back.

Categories
Personal Finance

Easy Methods for Negotiating with Customer Service Reps

I’m always interested in negotiation tactics. Some people recommend things like mirroring the other person’s body positions to create rapport or trying to hypnotize them by using words that sound like other words and nonsense like that. Maybe these things work for some people, but they seem too silly for me to even try them. These techniques should work for anyone (no need for acting abilities, Jedi mind tricks or anything). Although I’ll discuss these in the context of customer service reps (those difficult people you have to call when you get overcharged on a cell phone bill or your Internet service is down), they should be fairly transferable to other contexts.

  1. Make it hard for them to say “No” – If you say “Isn’t there any other promotion you could put me on to save me some money? Please?” it’s too easy for them to say “I’m sorry, but no”. You aren’t on Jeopardy, so don’t phrase it as a question. Anything you ask for, make it a statement “I’m not willing to pay more, I want something comparable to the deal I’ve been on for the last 3 months.” They may still say no, but it’ll be a lot harder for them.
  2. Keep repeating yourself – It drives me NUTS when people do this to me, so you might luck out and have someone like me on the other end of the line who’ll get frustrated enough that they’ll give you what you want. Remember, they can’t hang up on you. Every time they “explain” their policy or say no, repeat your request. Don’t be a jerk (hear them out when they respond, if you cut them off and get aggressive, they’ll just get aggressive back). Use different words, but keep making the same request:
    • MC: Hi! I got a phone call the other night saying my phone & Internet promotion is ending, which told me to call you to learn about your current promotions.
    • CSR: Yes sir, unfortunately the discounted rate you received for your first year is ending, so after June 1st you’ll be paying $100 / month instead of the $80 you’ve been paying up until now.
    • MC: I see. So what are my options for promotions?
    • CSR: Unfortunately sir the promotions are only for new customers, your rate will be $100 / month.
    • MC: Ok. The message I got said there were other promotions you’d tell me about though. Ideally I’d like something cheaper than the $80 / month I’ve been paying.
    • CSR: Sir, as I just told you, there aren’t any promotions you qualify for.
    • MC: <friendly laugh> well, the computer voice told me something different so I don’t know who to believe. What’s the promotion if I was a new customer?
    • CSR: Still the $80, but unfortunately you don’t qualify for that.
    • MC: So, if I cancel my service then ask you to reconnect me I can get service for $80 / month?
    • CSR: Well sir, you don’t want a service interruption do you?
    • MC: No really, but I’m sure you don’t want to have to send out a technician twice and disconnect me, then reconnect me. For a $240 savings over the next year I’m willing to go without service for a couple of days.
    • CSR: <muttering under his breath about how much he hates me> Ok, I’ve put you in at the new customer rate. Is there anything else I can help you with today?
    • MC: Yes actually…
  3. “Shop” reps – This was a clever idea I came across a while ago, but the plan is if you get someone who won’t give you what you’re looking for (after you’ve tried the first two techniques), thank them, hang up, and hit redial. Get a new rep and repeat the process. Reps are given latitude to deal with customers, so if one is being too stubborn, find some else to deal with. I’d personally be in no mood to get back on the phone after I waited in their queue for 20 minutes, then just spent 15 minutes nagging another rep for what I wanted, but when we’re talking about savings like $240 / year, it’s time WELL spent. One way to also justify this to yourself is every call is costing the company money, so it may be an irritation for you to get what you want, but you ARE costing them money at the same time.
    • One idea I had after reading “The 4 Hour Work Week” was to hire an off-shore personal assistant to argue with companies to get your fees reduced. There’s something delightful about the idea of hiring someone in Mumbai (to save you time) to haggle with the people the company has hired in Mumbai (to save them money).
  4. Keep records of your conversations – In his new book Ramit Sethi uses this as a way to blow away reps. Every time he calls a service, he keeps a spreadsheet with a record of the date, the name (and ID) of the employee he talks to, and a summary of the conversation. When he goes over his past interactions with the company, reps often realize that he’s there to play ball and give him what he wants. I suspect that getting a rep’s name and ID number at the beginning of the call would also encourage them to do whatever they can to help you.
  5. Try non-traditional avenues for contacting the company – Years ago (at the end of 2001) when I had a problem with my Sprint cell phone, I used a service (I can’t remember the name, it may have been Complaints.com) that would post your complaint on-line, help you structure it, plus send it to the head office of the relevant company. They were MUCH more helpful resolving the issue then their service reps had been (even though I’d escalated it to a “manager”). More recently I had problems with Primus, and kept getting the run-around from the off-shore reps. Finally I got frustrated enough that I called their business support line. The woman I talked to initially told me that line was only for business support, but after I told her how much trouble I was having with the residential support line, she fixed things for me.

Some things might work for other people but don’t work for me, including:

  1. Getting angry – Customer service reps are humans (for now, I’m sure robots will replace them soon enough). Perhaps justifiably, when you get angry at them, they get angry right back. I think its fair to be frustrated with a company and to be upset, but often the person we’re talking to had NOTHING to do with the problem (and they’re likely to get annoyed if you start barking at them). I think the above approaches are FAR more effective than raising your voice or starting to curse.
  2. Threatening to take your business elsewhere – This is something that MAY be effective to work into the conversation (by telling them about competitors’ superior deals or sayings you’re “thinking about leaving”). If you throw down the gauntlet and say “Do X or I’m going to terminate my service”, there’s nowhere to go if they say “we can’t do X”. They’re called you and you either back down (at which point you might as well get off the phone and call back to talk to someone else – it’s clear you’re bluffing), or follow through on your threat (at which point you’re now in the market for a new service provider, I hope they’re better than the old one).
  3. Asking to speak to a manager – Apparently reps just hand the phone to the person next to them who pretends to be a manager. I haven’t gotten better responses from anyone I escalated issues to compared to the front line people (other than on tech support calls, the front line people just follow a script and the people they can escalate to are the ones who actually know what they’re doing).

What things have you found work or don’t work for you when negotiating with company reps on the phone?

Categories
Real Estate

Mr. Cheap asks: Help me buy a house!

I’m gearing up to buy my second investment property. Now that I’ve been at the university for a year, settled in pretty well (it’s not looking like they’re going to kick me out) and know the area a bit better, it’s time to consider buying instead of renting.

My plan is to be here at least another 3 years (PhD programs can take 4-7 years). I’m leaning towards a condo townhouse, with 3 or 4 rooms total. I’ll live in whichever is the least desirable room, and hope to rent out the other rooms for $400 / month each (+/- a little bit if some are better or worse than the others). I’d *CONSIDER* a unit with a separate basement unit (which I might live in myself if I decide to splurge).

I’m hoping to get a property for less than $40k / room (which I suspect will make it far more likely that I buy a 4 bedroom townhouse than a 3). I’m ok with a condo townhouse (they seem quite a bit cheaper locally than houses, but if there’s a detached house selling cheap I’ll take a look). Ideally I’d like something within a 15 minute walk from the University of Waterloo or Wilfrid Laurier University (I can walk further if its closer to WLU), but would consider something up to 30 minutes walk away. I’d consider a property one bus ride away from the universities if it was a VERY good price. Cosmetic damage is ok, and more serious damage MAY be ok.

I’m hoping to keep better track of how much time I put into the house hunt this time. Currently I’ve looked at two properties and have invested about 2 hours in the process.

My plan is to put in offers on multiple properties, much as I did last time (I may elaborate on this in a future post, as I think its a really great idea).

Some of the downsides, which I’ll be happy to tell any agents / sellers asking how I arrived at my offer price, is that real estate is going down everywhere, including the Kitchener / Waterloo area. I’m hoping to deal with this by getting a good price on the purchase (and accepting the risk that it may keep dropping after my purchase). Many multi-unit buildings catering to students have popped up recently and there seem to be a number of vacancies in the properties around the campuses. I’ll deal with this risk by being willing to adjust my rents to whatever price point gets me tenants, being willing to add some extra amenities (such as wireless internet, cable TV and maybe a bi-monthly cleaning service) and being on-campus and hopefully able to recruit tenants from people I know and “friends of friends”.

If anyone knows of a property that meets this criteria, that is either currently available for sale or might be soon, please encourage the owner to contact me at [email protected]. I certainly won’t promise top dollar, but I’m not picky about the minor details, and will be ready to buy for the right price (cash offer, minimal conditions which will be quickly removed, flexible on closing date).

Categories
Business Ideas

House Resale Insurance

This idea is targetted primarily at real estate agents.  Like many other middle-men, the Internet is destroying a previously safe and lucrative market for agents.  Either property sales will shift to be predominantly for-sale-by-owner, or agents are going to have to start adding more value to their role in the process.  This is one way they could do so.

This would be an insurance product, that would guarantee the value of residential real estate.  Agents would use it (in part) to sell their services to customers as a guarantee that they would be able to re-sell the house they are buying for at least what they paid for it.  In order to claim this, they would have to list the house with the original agent, give her a reasonable period of time to sell it, at which point if it hadn’t sold the agent would buy it from them herself (less her commission).   In reality, it would be the insurance company who is purchasing the property (and probably the agent would lose out on her commission).

This is obviously reassuring to the buyer, as it’s a guarantee they won’t lose money on the purchase.  It’s good for the agent, as it guarantees them repeat business (previous clients will want to list with them in order to be protected by the guarantee, if the agents sells for MORE than it was originally bought at, it’s gravy for everyone).

In the current market I can see why people would think that either insurance companies would be crazy to offer policies along these lines, or that the premiums would be outrageously expensive, but I don’t think either would necessarily be the case.

Typically house prices go up or plateau (stay the same).  Sharp dives, like we’ve recently experienced, are fairly rare (leading to the now obviously debunked myth that real estate always goes up).  In normal environments, policy premiums will be pure profit, with few or no payouts from the insurance company.  From one perspective, each year the owners are in the property inflation decreases the insurance company’s liability (since the dollar value of the property is worth less in the future than it is today).  Even in the case of a sharp drop, there would be a number of properties that have increased enough in value that they wouldn’t drop back to their purchase price, and there would be owners who just don’t want to sell.  A market like we’re currently in, where interest would be highest in such an insurance product, would probably be the safest time to offer a product like this (how much further can values drop?).

It’s also important to remember, in the worst case they’re only going to cover the DIFFERENCE between the lower sale price and the original purchase price, not the full value of the house.  Also, there should also be exclusions for major changes to the property (such as it being burnt down in a fire) which would be covered by other insurance, not by this.

If agents (or brokerages) bought this as a blanket coverage for all transactions they’re engaged in, I suspect the insurance could be offered to them at a fraction of a percent of the purchase price (perhaps Riscario can comment on whether my intuition is correct on this).

For this post, or any other of the wacky business ideas I post, obviously I’m releasing any ownership claims I may have over these ideas. If you like something I post and feel like you can make money from it, please feel free to do so! Let me know when you’re opening and we’ll do a post on it to give you some free advertising.

Categories
Frugal

Book Review: Europe on 84¢ a day

My apologies again for anyone who tried to comment on the “Bedtime Stories” post.  Somehow I managed to turn off comments on it.

europe-on-84 A couple of times I’ve referred to a trip across Europe I took after my second year of my undergraduate degree.  I was originally inspired to take the trip after Gil White came to my university and gave a slide show about his various backpacking trips abroad, and articulated his vision of ulta-low cost student travel (and hawked his self-published “Europe on 84¢ a day”).

The 84 cents in the title of his book isn’t meant to be taken literally, as he admits that some days he spent far more than this (and others he spent nothing).  It was more meant to capture the reader’s imagination that there are other ways to travel instead of the pre-packaged (and expensive) tours or Euro-rail passes.

His philosophy of travel is built on the idea that most people are good, nice individuals who are interested in learning more about travellers (and telling them about their own lives and cultures).  He feels that travellers fears keep them isolated from the real countries they travel to, and much like in all-inclusive resorts, we end up paying top dollar to have a sanitized experience.

His major suggestion to save money is to hitchhike.  While everyone these days lives in terror of people they don’t know (“stranger danger”) he believes that hitchhiking is far safer than most people realize and has seldom had a bad experience.  My experience was the same, and after hitchhiking for most of 4 months I only had 2 experiences that could be classified as negative (and they weren’t THAT bad).

His recommendation is for men to hitchhike alone, and for women to hitchhike with one other person (either another woman or a man).  He says, rightfully, that two men will have a hard time getting picked up.  He also admits that its a double standard, and feels that hitchhiking is generally safe, however a woman on her own is at the threshold of acceptable danger and is better off with another person.  Having met a woman who was raped while hitchhiking alone, I wholeheartedly agree (feel free to call me sexist, I can take it).

He pushes this further, providing some ideas on how to get the people who pick you up to let you stay with them over-night.  He claims that many drivers are willing to host people they meet, but assume that you wouldn’t want to stay with them (and justifies trying to get them to let you sleep over as “letting them know you WOULD like to stay with them).  This goes beyond what I’m comfortable doing, and the two times this happened for me (once in Germany and once in Finland) they were AWESOME experiences, but I still felt like a bit of a mooch.

In this 1995 edition, he provides extensive information about most European countries, including maps and embassy contact info.  Like the “Let’s Go” travel series, this sort of information is obsolete before the book is published, and modern travellers are able to dig this up on-line.  I think in a current version this should all be chopped out and his book should focus on the core value offered:  his philosophy on travel.

I’ve searched for the book (and author) on-line, and he still seems to be visiting universities in Canada and the US, but I have no idea if the book is still available or in print.  In the 1995 version it has the contact address for the author as “R.R. #1, St. Anns, Ontario, L0R 1Y0 Canada”.  If anyone knows where this books can be purchased on-line (other than used copies at Amazon and E*Bay), please post the info in a comment below.  Thanks in advance!

Categories
Personal Finance

Movie Review: Bedtime Stories

I recently saw Adam Sandler’s “Bedtime Stories”.  To get the obvious first question out of the way, yes, Mr. Cheap watches children’s movies.  And, no, I don’t have any kids.  I get a tear in my eye at the “When She Loved Me” sequence in Toy Story 2.  I watch “chick flicks” in addition to the manly genres of Science Fiction and Westerns.  Heck, I can’t think of a genre of movie I *won’t* watch.

Mr. Cheap is more complicated than you think, thank you very much!

On almost every level, Bedtime Stories was truly terrible.  That’s par for the course for Mr. Sandler, but in this outing he had Xena, Uncle Dursley and the delicious Keri Russell to work with, and he STILL made mess of it!

Setting aside that it’s a bad movie (and it is), the reason I thought it was worthwhile to post about is that it makes some strong assertions in topic areas we blog about.  Given that these are being made to children, and shaping their views on careers, money and economic issues, I think it’s worthwhile to consider.

At the beginning of the movie, Adam Sandler’s father sells his hotel to a British scoundrel because the father is running it into the ground.  We’re lead to believe that the father is virtuous for “caring about guests”, while the brit is scum for running profitable businesses.  The father wrangles a very half-hearted promise from the buyer that Adam Sandler will be considered to run the hotel when he gets older.

Fast forward a few decades and Adam Sandler is the virtuous custodian who pays for elderly drunks’ mini-bar tab  from the evil bureaucrat that insists customers pay for booze they’ve consumed.  The next hour and a half is Adam Sandler’s character whining that he’s worked hard as the custodian, so should now be made the boss of the entire massively-renovated far-larger hotel.  He demonstrates none of the skills to actually DO this job, and doesn’t seem to have any interest in gaining those skills (or working and taking a risk by starting his own hotel).  He just whines and whines, until he figures out his niece and nephew’s bedtime stories can alter reality, so he starts trying to use MAGIC to get what he wants.  I suspect he’d take right away to “Rich Dad, Poor Dad” or “The Secret” if he ever read either.

After using magic extensively (and finding it doesn’t work), at the end of the movie (sorry to spoil it for you), he’s suddenly magically running his OWN hotel!  So whine enough about how much you deserve something, trust in some kooky magic, and you’ll get what you want, or something awfully similar.

In the early part of the movie, he’s the custodian and is treated badly by the “higher ups” at the hotel.  At the end of the movie, he’s the higher up, and for some reason the former higher-ups are now working as his custodial staff while HE treats THEM badly.  Much as the ending of “Night at the Museum” teaches our children, the perfect punishment for villains is to make them janitors.  Of course, there’s no chance that it’s a necessary job, deserving its own dignity and respect.  Nope, let’s teach the kids that janitors are bad people, who deserve their “continuous suffering” because of past misdeeds (and it’s important that they’re treated poorly by those around them:  as long as the custodian isn’t Adam Sandler).

Don’t waste your time watching this, but more importantly, please don’t poison young minds by exposing them to it.  Unless, of course, you want to teach those young minds that all businesses are run by greedy, evil people, that you get what you want in life by wishing for it (instead of through planning, discipline or working hard), and it’s important to reach a status level in society that lets you feel better about yourself by treating other people badly.