Warehouse Clubs: Why They Make Sense for Most People

I want to start by announcing that my wife and I are expecting our first child in November! We’re both beyond excited for the opportunity to be parents. It will truly be an adventure because for one, I’ve never changed a diaper. I also have no idea what it’s like to have to comfort a screaming baby at 3 in the morning. That said, I’m going to approach this new chapter in my life by being humble, learning everything I can and committing to being the best father I can be. 

As a new parent, I realize I’ll be spending a lot of time in Costco. Diapers, formula and baby wipes are just a few of the many things I’ll be buying there. I’ve heard that babies go through about 12 diapers a day when they’re first born. That means over 1,000 diapers in the first three months alone. 

But the truth is, my wife and I have been members of all three national warehouse clubs (Sam’s, BJs and Costco) at some point during our marriage. Some of you might wonder why, as a two-member household, we would pay up to $55 a year for the privilege of shopping somewhere. There are several reasons, which I’ll discuss briefly below. I’ve also included the percent of the yearly membership fee, out of $55, each category would pay for.

  • Prescription glasses. This is probably the best reason I have for why it makes sense to be a member of a warehouse club. Consumer Reports has consistently rated Costco among the best places to buy glasses
    based on price, quality and service. You can get a complete set of glasses for about $150, compared with $200 or even $300 at independent shops. Percent of membership paid: 100%
  • Contact lenses. I wear contacts once a week when playing basketball and usually go through a box of the disposable ones in about a year. While comparison shopping online recently, I found that the lowest price for the contacts I needed was $45 per box. I called Costco and asked for their price: $30 a box. Buying my contacts there instead of from an online seller saved me $15 per box, or $30 total. Percent of membership paid: 55%
  • Low-carb shakes. My wife likes to drink chocolate-flavored shakes for breakfast sometimes because they fill her up and they’re convenient. The cheapest place outside of the warehouse clubs I can find them is Walmart, at $7.00 for a 4-pack. At BJs they were $16 for a 12 pack, saving us $1.66 per 4-pack. Assuming she drinks 120 shakes per year, we save $50. Percent of membership paid: 91%
  • Allergy medication. My wife has minor allergies and normally takes an over-the-counter allergy pill each day. At Sam’s we bought a generic version of Zyrtec, which had a year’s supply of pills for $16. Compare that to drug stores, where you’d pay over $100 for a year’s supply of even the generic version. This one purchase not only pays your annual membership fee but saves you money every month as well. Percent of membership paid: 100%

These are just a few of the ways we’ve saved by having a warehouse club membership. We’ve experienced these savings even though we’re only a two-person family (for now). When the baby comes, we’ll save even more on the things we buy.

Are you a member of a warehouse club? Has your membership paid for itself yet?

Photo by frugalvillage.com

Ripoff Alert #4 – Identity Theft Edition

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

ID Theft

According to the FTC, “identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes.” There are a number of things criminals can do once they have this information, but I want to focus on financial fraud.

Financial fraud happens when criminals use your information to open up new credit cards, take out loans, open a utility account, create counterfeit checks, or apply for a job using your Social Security number.

As many as 9 million Americans have their identities stolen each year, with young adults ages 18-29 being the group most targeted by criminals. Young people rarely have bankruptcies or other negative items on their credit reports, so that makes them an easy target. In addition, college students tend to put all their financial papers in the trash without shredding them. This creates a gold mine for criminals looking for sensitive information.

Often, people have no clue that their identity has been stolen until years later when they’re applying for a mortgage or car loan. By then, the damage will be great and it may be extremely difficult to remove the negative items from your credit report.

The best defense against identity theft is to be proactive. Shredding all financial documents or anything with your Social Security number, bank account numbers, address and birth date is one of the best things you can do to prevent ID theft. Monitor your bank statements monthly and check your credit report at least once a year at AnnualCreditReport.com. Don’t carry a checkbook or Social Security card in your purse or wallet.

If you want to check your credit health more often, Credit Karma offers a free credit monitoring service and access to your credit score as often as once a day. They’ll alert you by email to any changes on your credit report including new addresses and new accounts or loans.

Perhaps the best way to prevent identity theft is to freeze your credit files. This locks your files at each of the three credit bureaus and prevents anyone from opening accounts as if they’re you. You’ll get a secret code from each of the three bureaus which you’ll use to thaw your files if you need to apply for any credit. The cost to freeze your credit varies by state from nothing to $10 per bureau.

If you’re a victim of ID theft, there are 5 steps you need to take immediately:

  1. Contact your banks and credit card companies to report the fraud. Close the accounts you believe have been opened fraudulently and have new cards issued.
  2. Put a fraud alert on your 3 credit reports, and check them for any accounts you don’t recognize.
  3. File a police report in the community where the ID theft took place. Get a copy, and keep a log of all conversations you have with authorities.
  4. File a complaint with the Federal Trade Commission at (877) FTC-HELP.
  5. Do not pay any bills which result from ID theft.

Why I Love Yard Sales

I’ve always loved yard sales. As a kid, my mom and I would ride all over town, on the lookout for those cardboard signs that led to mounds of “treasure”. This allowed us to go on bargain hunts and ultimately save money, but it also provided bonding time for my mom and I.

I loved sorting through the boxes and tables together, looking for old Nintendo games and baseball cards, or anything that would catch the eye of a 10 year-old boy.

My bargain-hunting ways have continued into adulthood. I find time and again that yard sales are perfect for finding things I would have otherwise bought new. For example, this past weekend I found a CD case to replace the one in my wife’s car that was falling apart. The price was marked 1 dollar but I was able to negotiate it down to 50 cents. Had I bought this at retail I would’ve paid $15 for it, easily.

I’ve also found yard sales to be a great source for numerous other things including: clothes, kitchen supplies and other household items.

Back in the day we had to depend on the newspaper classifieds to find yard sales. But today there’s a tool called YardSaleTreasureMap.com that makes the process much more interactive. After entering in your zip code you can see the upcoming yard sales in your area on a map. Their database pulls from Craigslist so you don’t have to look up each address individually to see how far away it is. You can then use their route planning feature to make an itinerary.

What I love about this tool is it allows you to see what is available at each yard sale, based on the Craigslist post. So if you’re looking for baby items, you don’t have to drive all over town looking for them. You can simply target the yard sales that have baby stuff available.

Because not all Craigslist listings have an exact address, they’ve included a section where you can browse more listings. Just click the “Other Ads” tab and cycle through. This is an excellent way to find neighborhood sales. They have apps for Android and iPhone as well.

Something I didn’t consider growing up is that yard sales offer more than just bargains. They allow you to:

  • Practice your people skills and the art of negotiation
  • Interact with your neighbors if the yard sale is near your home
  • Get exercise while walking around
  • Enjoy the nice weather during the warm summer months

Yard sales allow you to stretch a buck, but they offer so much more than that. If you haven’t already, plan to go at least once this year.

What do you like most about yard sales? 

Photo by blogs.momaha.com

Ripoff Alert #3 – Cell Phone Cramming Edition

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Cramming

According to the FCC, cramming is “the practice of placing unauthorized, misleading or deceptive charges on your telephone bill.” Providers of cell phone service, traditional land line service, and business line service cooperate with third-party marketing organizations to put unauthorized charges on your account.

For individuals the charge typically ranges from $3-$5 a month, and for businesses it’s more like $20-$30 a month. The phone companies are hoping you won’t notice such a small amount. Multiplied over thousands of accounts, this is real money for service providers and third-party marketers, who split the spoils. (Doesn’t this get your blood boiling?)

A little over a year ago as I was going through our family cell phone bill, I noticed a suspicious charge for $10 on my sister’s line. It had a vague description like “membership fee”, so I called them up and asked what it was for. Apparently she had signed up for a monthly ringtone service via text and was being billed $10 a month for it. However, my sister said she hadn’t signed up for anything. So I asked them for a credit on my bill, and I was surprised when they offered to credit the entire total of charges going back 6 months.

Most consumers and small business owners, however, don’t go through their cell phone bills every month to see what they’re being charged for. Be suspicious of items like “monthly usage fee”, “service fee”, or “membership”.

Cramming can occur even if you’ve authorized a service but were misled about how much it would cost. And next time you get a spam text, don’t ignore it because it could be a warning sign that your phone company is about to rip you off.

There’s a federal law that requires phone providers to clearly explain each charge on your monthly bill, but this doesn’t mean they always follow the law. You need to go through your bill each month and check for phony charges. Basically, you should call your provider and question anything that is unclear. In most cases you’ll be offered a 2-month credit on your bill.

Has your phone company tried to rip you off with one of these charges?

How to Find Honest Home Repair

As warmer temperatures return to much of the country, many homeowners are firing up the air conditioners for the first time in months. After setting the thermostat to a comfortable temperature, you notice the air coming from the vents isn’t as cool as you remember it being last year. Come to think of it, it’s been a couple years since you last had the AC serviced. Who should you call?

There are so many repair companies out there that it’s easy to become overwhelmed when trying to choose. But many of these companies aren’t on the up-and-up. The Arizona Republic reports that a Tennessee-based heating and air conditioning company was recently charged with ripping off senior citizens and using deceptive sales tactics. They are accused of selling equipment the elderly didn’t need or couldn’t afford and using false safety notices to scare people into buying services they didn’t need.

Last year I saw a series by Dateline NBC on home repair scams. Each episode focused on one area of the home: pools, garage doors, plumbing, and air conditioning. During the garage door repair episode, the Dateline crew installed hidden cameras in one homeowner’s garage and called several local companies to report a malfunctioning garage door opener. During some of the service calls, the repair workers actually just stood around in the garage talking on their cell phones. They didn’t even look at the garage door opener. They then reported to the homeowner that they needed to replace the entire unit at a cost of several hundred dollars. A variation of these events happened with each of the other episodes. In some cases, when work was done, shortcuts were taken and low-quality materials were used to make the repair.

Unfortunately, many so-called repair companies are in business to rip you off. So how do you avoid these people and increase the chances that your repair will be done correctly? Below are some tips to protect yourself when hiring a contractor.

1. What is the company’s reputation? Ask them for references and look around online to see what others are saying about them. Check the Better Business Bureau to see if they have any complaints against them. In addition, your friends, neighbors and coworkers are great sources to find honest repair work.

2. Does their company vehicle have the company name, address and phone number painted on it? Ask to see their business license and write down the number.

3. Ask to see the worn or broken parts before they are replaced. Make sure they’re using new parts for the repair – some try to use old parts to save money. And make sure they aren’t fixing what’s not broken.

4. Anyone who pressures you to sign today is trying to rip you off. Same goes for those who try to do work without any written agreements. Be very wary of unsolicited offers and pushy door-to-door salespeople.

5. Never pay a large amount of money up front. Agree to pay in installments as the work is done. The scamsters love to collect money up front and vanish overnight.

6. For more expensive repairs, get at least two estimates in writing.

Do you have any other tips for finding honest home repair?

Photo by estimate.com.au

Ripoff Alert #2 – Lottery Winnings, Pyramid Schemes

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

You’ve Won a Million Dollars!

This is an old scam that’s still taking people today. You get a letter in the mail stating that you’ve won a million dollars, or 4 million, or whatever the amount is. It could also say “You are due payment of X amount.” You keep reading, excited about how you’ve won so much money out of the blue.

Then you get to the bottom, where it tells you how to “claim” your winnings. All you have to do is send a check for $1,000 for processing fees and once they’ve received your check you get your winnings.

In fact, it’s illegal for companies to require you to pay a fee or buy something in order to claim a prize. Don’t send that check. They’re after your bank account number and the money you send them for the “processing fee.” Just throw it in the garbage.

Pyramid Schemes

My Money Design wrote a post this week about people falling for pyramid schemes. He talks about overhearing a presentation sales pitch for a vacation club. This wasn’t about vacations though, it was about recruiting other people to join the program.

Pyramid schemes exist in a variety of industries. The procedure generally goes like this: You’re invited to a presentation at a conference center or hotel meeting room, you learn about a “great opportunity to make money effortlessly”, you’re told that the more people you recruit the higher your earnings, then you’re given the hard-sell from someone who’s been doing it a while.

If you’re looking into an opportunity like this, ask yourself this simple question: Is the emphasis on selling an actual product or service, or is it on recruiting other people? If the emphasis is on recruitment, it’s a pyramid scheme, and you should run far, far away. Beware of anyone who offers you the opportunity to quit your day job and effortlessly make thousands of dollars a month.

Handling Money in a Relationship

Money, like politics, is a very polarizing subject. Ask five people how they handle money and you’ll get five different answers. It seems that everyone has an opinion about how best to handle money in a relationship.

My wife and I are no different. Before we met, she was never interested in money other than spending it. (I hope she doesn’t get mad at me!)

Then there’s me. As a kid, I always knew how much money I had on any given day. Once a week it seemed, I’d empty out my piggy bank onto the floor and amaze myself with the shiny coins that would come tumbling out. I would count each and every penny, put them into neat little stacks, and take pictures of my creation. Sometimes I would even go get dad and try to impress him with my savings.

Fast forward to today. My interest in money and personal finance has continued to develop and my wife has become somewhat more interested in our financial situation. She’s mostly concerned that the bills are paid and that we have a little left over for the fun stuff. She has even started to brag that her credit score is better than mine!

The Problem

Disagreements over money are a common cause of tension in a marriage and often lead to divorce. What many couples fail to realize is that men and women are different. Women tend to be more conservative with money and lean towards savings and security, while men take more risks and aren’t quick to discuss or admit financial problems when they come up.

We’ve all heard that opposites attract. We’re drawn to those who possess the qualities we lack. This means that often, one person in a relationship is interested in finances while the other isn’t. The problem comes when the one who manages the finances neglects the wishes and needs of the other.

How Do We Get Around This?

In a word: Communication. Realize that marriage is an equal partnership in which both parties should be able to voice their desires. The money manager needs to consider the input of his or her partner, and the partner should in turn be involved in financial decisions and take an active interest in the couple’s finances.

It’s important to communicate often about our needs and wants. To do this, you need to tell your partner what your goals are. Then you need to listen when they’re talking to you. Once you’ve heard each other out and are clear about what the other wants, it’s time to compromise. In a relationship you’re never going to get everything you want. At times you’ll need to give up what you want. This unselfish behavior, if practiced and perfected, will make a relationship thrive.

What if you can’t get your partner to participate in the family’s finances? Lecturing or criticizing will only make him or her more reclusive. Try to understand the reasons behind the disinterest. Above all, being patient with your partner is the best thing you can do.

Who Handles Our Finances?

In our marriage, money isn’t something we argue over. We have disagreements once in a while about what we each think is the best use for our money, but we don’t let our differences get between us. What I’ve found is that we’re both moving toward the center – I’m learning to live a little and she’s getting her save on.

Because of my interest in finances and a thrifty lifestyle, I’m the one who manages money in our relationship. But most importantly, my wife is okay with this. Because we communicate and compromise often, our opposite qualities come together in a way that makes us stronger than before.

Who handles the money in your relationship?

Photo by thesilverpurse.com