Rake in Summer Savings the Lazy Way

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Summer is here, and it is HOT.

Mind you, this week has been a bit of a reprieve from the oppressive heat, but last week was certainly a scorcher.

It got me thinking. 

When temperatures start rising, so do electric bills.

Obviously, where you live plays a big part in how much you end up paying on your monthly electricity bill.  Some places like Southern Louisiana for instance, have cheaper electricity, but scorching hot summers raise costs compared to more energy-expensive states like Northern California, where the climate is more temperate.

But no matter where you are, I have some tips that can help you save on your monthly bills.

The average US household spends about $112 a month on electricity according to the US Energy Information Administration. And a large portion of that is based on heating and cooling usage.

Is it worth moving to save a few bucks on electricity? Possibly.

Especially when you factor in “energy choice” states like Connecticut, Delaware, Washington D.C., Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Texas where you can negotiate cheaper contracts with providers.

But that’s a conversation for another day.

Today I’m giving you the lazy-man’s way to save on electricity.

No state hopping. No having to buy new energy-efficient appliances. No installing smart programmable thermostats. No extreme home makeovers to save a few hundred bucks on your electricity bill.

Why?

Because most of the big savings you’ll find on your monthly electricity bill don’t require a lot of money or investment.

These are my top 10 ways to save on electricity every month – the lazy way.

1. Fill the Cracks

Unless your home is brand new, there’s a good chance your windows and doors are leaking money.

Fill these cracks with caulk and weather-stripping to reduce drafts and your electric bill will drop dramatically.

According to Consumer Reports, sealing leaks in your home can reduce energy costs by 15 to 30%.

2. Use MAJAPs at Night

When it’s hot outside, avoid using your stove, washing machine, clothes dryer and dishwasher. All these major appliances (MAJAPs)  draw a lot of energy and typically produce heat.

This in turn causes your AC to work harder trying to maintain your home’s temperature. Also, depending on where you live, your electricity provider could offer reduced rates at different times of day.

Typically evening usage and weekends are cheaper than daytime during weekdays.

3. Use Ceiling Fans

Even if you have a central HVAC system, consider turning on your ceiling fans to help cool and heat rooms faster.

Fans push hot and cold air through your whole house so you can reach your room’s desired temperature a lot faster. Ceiling fans can save you up to $438 per year.

4. Wash Your Clothes in Cold Water

There’s no excuse for not washing the majority of your clothes in cold water.

Almost every detergent brand now dissolves just as well in cold as hot water at no additional cost and cold water proves to be less damaging to your fabrics.

Estimated savings for washing your clothes in cold water is around $150 per year.

5. Skip the Electric Dryer

If you have a yard and can set up a clothesline, do it.

But if space is limited or you’re worried about allergens, buy a few clothes drying racks off Amazon and hang dry heavier items like towels, jeans and sweatshirts.

Line-drying reduces average monthly electricity costs by $15.

6. Use a Slow Cooker

Avoid using your MAJAPs during the day but if you really want to cut costs, skip cooking in your oven altogether and use a crock pot or instant-pot.

Crock pots heat less of your house than traditional ovens and the best part is they require less work. Most crock pot meals are set it and forget it so you’ll save money and time using a slow cooker more often.

7. Reduce “Electricity Vampires”

Did you know 75% of the energy used by home electronics is consumed when they’re in standby?

These electricity vampires include TVs, computers, cable boxes, cellphone charging stations, and appliances – basically anything that holds a time or other settings.

Consumer Reports says that you can save $25 to $75 each year just killing these phantom electronics.

The easiest way to kill electricity vampires is to use power strips. Make it a habit of shutting off the strips between uses or buy a smart power strip that automatically shuts off when your electronics go in standby mode.

8. Turn Off Lights.

This one should be obvious.

Turning off lights you aren’t using or in rooms you’re not occupying saves a considerable amount of money every month.

Turning off a single 100-watt light bulb from running constantly saves around $131 per year.

If you really want to boost savings, switch all your lights to LED.

9. Raise/Lower the Temperature When You’re way

In the summer, raise your thermostat when you leave the house and in the winter lower it. There’s no sense cooling or heating an empty home.

Programmable thermostats are ideal for this but if you don’t have one, don’t think you have to go out and buy one.

Changing the temperature manually works fine too, it just takes more diligence.

10. Clean Air Filters Every 30 Days; Replace Every 3 Months

When your air filters are dirty your HVAC system has to work harder, which ends up costing you more money.

A good habit to get into is regularly cleaning and replacing your home’s air filters. Clean every 30 days and replace every 3 months is a good rule of thumb.

It might seem like your savings will be eaten up by the cost of replacement filters but that’s not the case.

Most people see savings from $20-$40 annually following this simple hack.

All of these hacks should add up to noticeable savings and don’t require much time or money.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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The Household Chore That Can Save You Money

This post The Household Chore That Can Save You Money appeared first on Daily Reckoning.

The average household in America consumes 10,764 (kWh) in electricity each year at an average cost of $1,351.

If you have the bucks to spend, you can chop that bill by replacing older appliances with new energy-efficient ones.

But if you’re not ready to trash a perfectly good stove or air conditioner to save a few bucks on your power bill, here are some simple steps you can take without doing an extreme home makeover. 

Let’s start with the most energy-hungry room in your home. The…

1. Kitchen

Most of what we do in the kitchen relates to heating and cooling food. You can’t just stop cooking. But there are things you can do to reduce the amount of power you’re using.

Refrigerator/freezer

This is one of biggest energy hogs in your home because it cycles on and off all day, every day. 

Check the thermostat…

If the thermostat is set lower than necessary, your fridge might be consuming up to 25% more electricity than actually needed.

The refrigerator should be in the 35-38 degrees F range, the freezer 0-5 degrees F.

Stockpile the freezer…

When your freezer is empty and you open the door, warm air rushes in. Then it takes more energy to cool the air that is trapped inside.

So keep your freezer three-quarters full to maintain the proper temperature. That will help cut the amount of time the appliance is actively running.

Maintenance pays off, too…

Dust accumulates on the coils at the rear or bottom of your frig. That can restrict cool-air flow and force the compressor to work harder. Cleaning is an easy job. Just roll out the appliance and vacuum the mechanism every six months.   

Switch to ice trays…

Turn off the automatic icemaker. There should be a switch on the unit or a lever that you can move to shut it off.

I know… it’s nice to hold your glass under the dispenser and have ice cubes fall into it. But the motor inside is an energy hog. By using ice trays instead of the icemaker you could save money each year.

After your meals…

Let hot food cool down and properly wrap leftovers before storing. Hot food in a refrigerator forces the compressor to work extra hard and wastes energy. 

Dishwasher

It takes the same amount of water and electricity to run a dishwasher whether it’s half-empty or full. So run the dishwasher when it’s full.

And since much of the energy your washer uses is from the drying cycle at the end, set to air-dry instead of heat-dry.

Stove/oven

Use your microwave or toaster oven to heat up leftovers. They use less electricity than your convection oven.

Crock pots use less energy, too. Plus they won’t turn your kitchen into an oven.

Cover pots and pans while cooking. You’ll trap the heat inside and cut cooking times by about 10%.

Make sure you match the pan to the burner size. A small pan on a large burner is heating up the room instead of the food.

It takes awhile for burners to cool down. Turning them off several minutes before the end of the suggested cooking time could save you a few dollars each month.

It’s tempting to crack open the oven door to take a peek at your food. But that blast of hot air that hits you is costing you big time. Keep the oven door closed as much as possible. This alone could save you up to $20 per year.

When using the oven, pick the right dish. Ceramic or glass conducts heat more efficiently than metal cookware and will let you turn down the temperature by about 25 degrees.

2. Bathroom

Shorter showers and a lower temperature on the hot water heater thermostat will reduce your energy consumption.

In fact, for every 10 degrees you dial down the setting, you can save three to five percent on your bill.

3. Laundry room

Washing your clothes in cold water can save roughly $66 on heating costs.

Hold off doing wash until you have a full load. Cutting the total loads each year by 25% could save 3,227 gallons of water.

Set the washer’s spin speed on high to reduce the amount of time your clothes need to be in the dryer

and save about $11 annually.

Drying clothes on cold cycles rather than hot ones could cut your bill by around $66 per year.

Cleaning the lint trap in your dryer between loads will help the appliance work more efficiently.

And if you’re really serious about cutting the electric bill, dry your clothes on a line outside or inside on a drying rack.

4. Bedrooms

Rather than only relying on the air-conditioning, turn on the ceiling fans. Fans can make the rooms feel three to eight degrees cooler.

And when you leave the rooms, turn off the fans so you don’t waste electricity.

5. Living room

Like the bedrooms, a ceiling fan can cut reliance on the a/c.

Moreover, during the winter you could lower the thermostat by 5 degrees, reverse the direction the fan turns to push the warm air down, and stay cozy. 

6. Air conditioning

In many parts of the country, the a/c is the top power guzzler. Don’t cool an empty home. If you have a programmable thermostat, set it so the temp can go up a few degrees when you’re at work or out shopping.

And even if you don’t have one, get in the habit of changing the settings before you go out.

Air filters get packed full of dust. And that dust clogs the passage for air that feeds the air handler. The compressor then has to work harder, which means more electricity used.

You can buy throw away filters for $10 or so. At that price, replacing them once a month is a good investment. 

Bottom Line

The 6 suggestions I gave you are only a few of the changes you can make in your home and lifestyle to cut your power bill each month.

Other ideas include: Switching to compact fluorescent light bulbs, sealing up leaks around windows, and using heat-generating appliances, like dryers and dishwashers, at night when the temperature cooler and the a/c doesn’t have to work as hard.

The potential list is huge.

But if you tackle them one at a time, the savings will add up.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post The Household Chore That Can Save You Money appeared first on Daily Reckoning.

5 Tips for Less Stress

This post 5 Tips for Less Stress appeared first on Daily Reckoning.

Think about the last five years…

Can you recall an unexpected event that led to financial stress? Maybe a health crisis, layoff, leaky roof, or unexpected car repair.

You’re not alone. Approximately two-thirds of U.S. households experience an unexpected event that negatively impacts their financial wellbeing, according to Pew research.

So it’s no wonder the most common cause of money stress is the feeling that you’re just one financial shock away from disaster.

What’s even more depressing, reducing financial stress when you don’t make enough is nearly impossible.

“Even the kind of frugality that will theoretically bring you some relief will often require an investment of time or finances — and lacking money and time is exactly why you’re feeling overwhelmed,” says Emily Birken, author of End Financial Stress Now.

So what can you do if you’re stressed about money?

Birken recommends building some slack into your budget, which is possible at any income. Here is Birken’s five-step plan to help relieve some of your financial stress: 

Step 1. Adjust Your Tax Withholding

The average tax refund in 2018 was $2,895, which works out to more than $200 per month. One way to increase your monthly net without having to earn more money is to adjust your withholding.

Birken recommends requesting a new W-4 from your Human Resources department and figuring out the right amount of allowances you should claim using the IRS calculator.

Just remember, the tradeoff here is come tax time you won’t be receiving a big pay day from Uncle Sam. But if it relieves some of your monthly financial worry, the adjustment could be worth it. 

Step 2. Start A Surprise Fund

Different than an emergency fund, a surprise fund is slightly less robust and meant to help get you through small hiccups in your budget.

The easiest way to start building a modest surprise fund is to set up automatic savings with your bank.

Even if you sock away $5 a week, that’s $260 you can tap into should the need arise. If you up your weekly auto-save amount to $10 a week, that’s an extra $520 per year. You’ll be surprised how quickly your surprise fund grows and how you won’t notice the small amounts missing.

Step 3. Negotiate Your Bills

Easy wins in creating some slack in your finances include negotiating your bills, suggests Birken. It’s considered easy money because you typically only have to do it once. And if you’re successful, expect to save yourself an extra $20-40 every month.

Even saving $20 per month on your cable bill works out to $240 a year. Think about all the recurring bills you have now that are negotiable.

“Internet, cable, cell phone, and auto insurance are service providers that are willing to adjust their pricing in order to keep customers,” says Birken. “It costs them far more to land a customer than it does to keep a current one happy.”

There are several ways to go about negotiating your bills, do some research on Google and you’ll find scripts and other tactics that can walk you through the process for specific providers.

Step 4. Cancel Unused Subscriptions

Subscriptions you set on auto-pay are easy to overlook. One easy thing you can do is set subscriptions so they don’t auto-renew. When you receive notification that your subscription is about to expire, that’ll give you a chance to gauge whether you need it or not.

For current subscriptions, look through your credit card and bank statements to determine which services you’re signed up for and decide whether you want to cancel or not.

Also identify services you’re doubling up on. Maybe one TV streaming platform is enough or you can drop the gym membership if you’re playing in a hockey league three nights a week.

Step 5. Check Your Bank Balance Daily

It’s easy to leave bills and bank statements unopened to avoid the pain of reality. If you’re serious about adding some slack to your budget, you need to check your bank balance on a regular basis.

I suggest setting a reminder on your cell phone to check once a day. Start extreme and get in the habit of checking daily so you’re more mindful of how much you’re spending and where your money goes every week. The added benefit of daily checks is if you’re running low on funds, you can catch it before you get dinged on overdraft fees.

You’ll also see your spending habits and know if you have a particularly spendy month. If you’re spending a lot, you can make sure you slow down next month.

These are just a few of the ways you can lessen your financial worries without having to get a big raise or take on a new side hustle to up your income.

Be diligent about saving and keep a close eye on where your money goes and you’ll build enough slack to keep your mind at ease.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post 5 Tips for Less Stress appeared first on Daily Reckoning.

3 Ways to Grow Your Savings by Thousands of Dollars

This post 3 Ways to Grow Your Savings by Thousands of Dollars appeared first on Daily Reckoning.

Do you ever wonder why lottery winners sometimes go bankrupt, even after winning big? Why some people keep balances on their credit cards and pay high interest rates when they have savings available to pay the bill?

And why it seems so hard for Americans to set aside regular savings for retirement, even though they know they should?

These paradoxes can all be traced back to one concept you may have noticed is gaining attention as of late: behavioral economics.

The idea of psychology as a driver of economic action dates back at least to Adam Smith’s The Theory of Moral Sentiments (1759). Behavioural economics has, however, only in recent years been getting more popular.

In 2017, the Nobel Prize in Economics was awarded to Richard Thaler, professor of behavioral science and economics at the University of Chicago Booth School of Business. Dr. Thaler’s research looked at why people often make irrational decisions with their money.

Instead of acting rationally and having self-control, we tend to get easily distracted from long-term goals by short-term rewards, we often make poor financial decisions when we know better, and we give in to impulses way more than we should.

The bad news is marketers have figured this out and they’re constantly sending you small “nudges” telling you about special offers, limited-time sales, and never-before-seen deals encouraging you to spend your money now instead of saving it for tomorrow.

The good news is you can apply these same psychological strategies to boost your retirement savings.

Using Small Nudges to Improve Your Savings

In 2008, Dr. Thaler and Cass Sunstein, a legal scholar, wrote a book called Nudge: Improving Decisions about Health, Wealth, and Happiness. Dr. Thaler defined nudges as something that “alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid.”

“Nudges are not mandates,” the authors write: “Putting fruit at eye level counts as a nudge. Banning junk food does not.”

This idea of nudging extends beyond health and personal finance. Several countries around the world, including Britain, Germany and Japan have started implementing “nudge units” within their governments to change citizen behavior.

But for today’s discussion we’ll focus on how you can use little nudges to save more, invest more, and meet your retirement savings goals faster.

Nudge 1: Commitment Devices

Commitment devices are voluntary, binding arrangements that people make to reach goals that may otherwise be hard to achieve. Commitment devices are not a new concept.

From “Christmas club accounts” designed to help you save for holiday expenses, to CDs, financial providers have offered commitment savings products for decades now.

Why do commitment devices work?

  • People are present-biased – People prioritize today’s desires and needs over tomorrow’s and, as a result, fail to make choices that will only benefit them in the future.
  • People lack self-control – People often intend to save money for a bigger expense, but find themselves spending it on more tempting and gratifying things, instead.
  • People are inattentive to the future – It can be difficult to remember the future. People often under-save because they don’t think about how much money they’ll need in the next month, year, or decade.
  • Social pressure – Many people face pressure from their family and friends to share their earnings and savings.

Commitment savings devices have helped a lot of people save more than they would have otherwise. Studies suggest that people would rather be nudged than shoved into commitment savings though.

Here’s an example:

In Kenya, researchers found that simply providing people in pre-existing savings groups with a safe box (a metal box with a key they controlled), increased preventive health product investments by 75 percent in the following year.

However, a hard commitment device – where people put money for preventive health in a locked

box, and could not withdraw it for emergencies – had a much smaller impact over the same one-year period.

Nudge 2: Defaults

Automatic (“opt-out”) enrollment is when you are automatically enrolled in a product or service unless you choose to opt out. Setting the default to “opt-out” instead of “opt-in” has been shown to significantly increase uptake of certain savings vehicles, especially in retirement planning.

Why do defaults work?

  • People prioritize today over tomorrow – People tend to get caught up in their busy lives and systematically fail to make decisions today that will only affect them in the future.
  • People put off taking action on complex tasks – People often avoid taking action on tasks that seem daunting or complex, and financial transactions like choosing a 401(k) plan are no exception.
  • People suffer from inertia – People have a strong preference for the status quo, regardless of whether it is better or worse for them than available alternatives.

Research around the world suggests that defaults affect savings at every step of the way, from the rate at which people participate in savings programs, to the amount people contribute, to the likelihood that people will increase their contributions over time.

Especially in the U.S., we’ve seen the dramatic effect defaults have on retirement savings plans. One study found that when companies began automatically enrolling new hires in a 401(k) plan, participation rates went from 59 to 95 percent.

When the employer changed the default contribution rate from 3 percent to 6 percent, it increased retirement savings amounts without reducing participation rates. The 6 percent default doubled the amount of people who contributed 6 percent of their pay, from 24 to 49 percent.

Nudge 3: Reminders

A lot of people struggle to build good savings habits because there are so many seemingly urgent needs today that it’s hard to save for tomorrow, or they simply forget. Setting reminders is an easy, low-cost way to bring savings goals to the top of your mind.

Why do reminders work?

  • People tend to be inattentive to their future needs – People often fail to think about or budget for large future expenses – think weddings or a new roof, or emergencies, which are hard to budget for.
  • People prioritize today over tomorrow – People tend to put their current desires ahead of their future needs, even when they are tempted to buy something they know they shouldn’t. Temptation today makes saving for tomorrow hard.
  • People procrastinate – People often get caught up in their busy lives and delay taking action. They may intend to deposit money in a savings account, but never seem to find the time.

Research from different countries around the world show that reminders are a useful tool in fighting procrastination and helping people follow-through on their goals.

For example, Canadian online robo-advisor firm Wealthsimple started using a system that provides personalized, frequent alerts (displayed when clients sign in to their accounts) to inform them about possible investment options, like unused RRSP or TFSA contribution room.

“The idea is to proactively educate clients about the opportunities available to them – such as contributing to a retirement account. As this is personalized and immediately useful information, our hope is that it will nudge them to make decisions that are aligned with their longer-term interests,” says Dave Nugent, Wealthsimple’s chief investment officer.

As you can see, gradual changes or “nudges” can make significant shifts in financial behavior. If you’re ever feeling stuck, don’t look to make big moves right away. Instead look for small nudges that can change your course.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post 3 Ways to Grow Your Savings by Thousands of Dollars appeared first on Daily Reckoning.

5 Ways to Haggle with Hospitals

This post 5 Ways to Haggle with Hospitals appeared first on Daily Reckoning.

I recently told you about my weekend hospital visit that totaled $30,124 from a surfing accident I had back in December.  

Fortunately, my insurance erased more than 90% of that bill and the total cost for the stay ended up being just a couple grand. But what if I didn’t have insurance or what if my visit wasn’t covered? 

I’ve been thinking more about what people do when they’re stuck with high hospital bills. What are your options? How much can you negotiate? 

It’s estimated that hospitals in the U.S. overcharge their patients by about $10 billion total every year. Patients are paying markups of 100-1000% annually without even realizing it. This is a huge problem in our country. 

Before you panic, know that most hospitals are willing to cut you a deal. As long as you know who to talk to and what to look for you can almost always slash a few decimals off your hospital bill. Here are some tips on how to do it.

1. Be Proactive

If you have a procedure that’s not an emergency, ask for a discount ahead of time. Explain your circumstances upfront to your doctor if you’re living on a fixed or low income. A lot of facilities have programs in place to help those who are financially strapped, but they don’t necessarily advertise unless you ask. 

And when you’re negotiating, try to do it through email. It’s best to have a paper trail if you successfully negotiate a discount in case you need to remind the billing department of your agreement. Another tip is keep notes during your hospital stay. 

Have a family member or friend help you out. You want to log all the procedures and services you receive so you can compare when your bill arrives. 

2. Pay in Cash 

Talk to your doctor or the billing manager and ask if they’re willing to give you a discount if you pay in cash. Cash will save the office credit card fees and staff time processing paperwork. 

Make sure you point these out when you make the offer, and if you have the means offer to pay the full amount upfront if they lower the bill even more. 

3. Check for Billing Errors

Eighty percent of medical bills have at least one error. Always ask for an itemized bill so you can determine whether you’ve been overcharged for a service. Medical bills are notoriously hard to decipher and it’ll look like a bunch of numbers next to your costs. 

If you’re unsure of what a code means, track it down online so you can see what you’re being billed for and whether or not you actually received that treatment. Codes might be mismatched, which means they don’t line up with your diagnosis. 

If the codes don’t match, your insurer will most likely decline to pay any portion of this claim. 

Watch out for duplicate billing and unbundling, when services that should have been billed under one umbrella diagnosis or code are broken out, sometimes adding up to additional costs. If you suspect your bill has an error, call your doctor, the hospital or your insurance provider to let them know and ask for a new, accurate bill.

4. Do Your Research on Insurance Rates

Look up the fair market price for the care you received. This is the amount providers regularly accept from insurance companies as payment in full, and it’s the amount you should aim for in your negotiations. 

You can find this information in the Healthcare Bluebook. After you know what you should be paying, contact the billing department and explain the situation. 

Ask to lower your bill to be in-line with the market price. Be polite and keep your composure, no one likes helping someone rude. 

5. Negotiate Payment Terms

Sometimes you’ll run into service providers that won’t budge on price — don’t cave. Ask if there are any payment plans that could meet your needs instead. 

Tell the billing representative exactly how much you can pay and when. If they ask for larger payments — and they will — explain that you can’t afford to do more. Make it crystal clear your ability to make payments. If you’re really having a tough time, drop the word “bankruptcy.” Most providers would rather receive some payment than nothing at all. 

Most of the time if you pay small amounts over an extended period of months, the provider won’t turn you over to collections. They’ll accept your money each month and send you a new bill the next month, unless you miss a payment. 

So don’t commit to more than you can afford, because as soon as you’re late on a payment, you lose all negotiating power. 

6. Hire a Billing Advocate 

If all else fails, consider hiring a medical billing advocate. The downside is most billing advocates cost money, though you typically don’t pay unless they’re successful negotiating you a lower bill.

Lastly, whatever you negotiate, make sure you follow through on your end of the deal. If you said you’d send in regular monthly payments, make sure they’re being sent on time every month. 

Failing to keep up your end of the bargain could lead to the provider rescinding any discount you negotiated and land you in the collections department. 

I hope you don’t find yourself in a situation where you need to use any of these tips. But if you do, know there are ways to reduce the costs.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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