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LifeLock Announcer
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Brian Preston
Welcome to the Money Guy Show. I'm your host, Brian Preston. By day, I am a fee only wealth manager down here on the south side of Atlanta. And I'm so glad you've joined us. Let me give you the information so you can know how to check out show notes as well as to contact the show if you've got some interesting topics you'd like to talk about as well as some simple questions. The website is moneyguy.com moneyguy.net or money-guy.com we have acquired all those domain names. If you want to write the show, you can write me at brianoneyguy.net that's Brian B R I A N@moneyguy.net and you might want to go check out our website@moneyguy.com so you can go look at the show notes. And we even have where it's very easy to sign up to get the show notes emailed directly out to you so you can get some of these links and other things that I talk about every week and what we're going to be talking about today. I'm always amazed at how and I guess it's because money is something that impacts us all every day of our lives. And I always wonder what am I going to talk about next? And what kind of popped up this week is I found a way to save myself several hundred dollars a month and that's a lot of money if you think about it. I mean, I've given you guys analysis where kids right out of college, if they're saving two grand a year for just nine years and then stopping it can be worth five to six hundred thousand dollars. If you're saving two grand a year starting at age 22 and doing until you turn age 65, it's very likely if you earn a reasonable rate of return of 9%, you're going to have over a million dollars and so if you can save to $200 a month, it gets very easy to save that $2,000 that I've used in other shows. And that's not what we're going to be talking about on today's show. We're going to be talking about where do you find that $200? And I had something happen to me and I call it ungrateful providers. And I'm not talking about when I get into the details of this. I'm not talking about your insurance agent doesn't appreciate your relationship or your utility provider doesn't appreciate what you're doing for them or what I'm talking about is that a lot of these industries are set up that if you just sit back and you're lazy and don't keep on top of your provider, they'll take advantage of you. They just take you for granted. Your prices increase over time and before you know it, you're overpaying for the service you're receiving. And it's that simple. And I'll give you the example and this is what kind of inspired this whole topic is that. Got my gas bill this month. We have natural gas down here in the south. We don't use the gas that you all probably use up north, but we do use natural gas to heat our houses. Doesn't get that cold like today. Outside it's probably about 58 to 62 degrees, so it's quite comfortable. But at night it gets down into the 30s so we need to get a little heat on us. And that's where natural gas comes in. Got last month's bill and my bill was like $280, which is rather high. It's not the highest it's ever been. I've actually had some four and five hundred dollar bills back when we've had some bitter cold weather year. And also the gas prices were even higher than they are right now. But the gas bill last month was 280 bucks. Well, that kind of ticked me off a little bit because I was like, man, that just does not seem like that's reasonable for the size of house that I live in. So I started doing a little research now and I must confess I think part of it's my wife's fault. She does stay at home with our daughter and I think she likes a toasty house. I'm the type of person, I like it kind of cold. I love, you know, at night we have our thermostat, we have those programmable thermostats that drop the temperature down really cold and I would probably be happy. I remember when I was a single guy, we all used to walk around when I lived with my two roommates. We all kept the temperature at about 62 degrees year round. We just, I mean we pretty much like the cold weather, but my wife is not that way. So you can imagine we're using a decent amount of utilities. And what I found when I had that big natural gas bill is I went on the Internet and I found a website called connectutilities.com and you can go out, like I said, to our website moneyguy.com and I have the link everything there. And I didn't use the service for what it was for. I think this probably this website is set up so that you can type in your name, I mean your address, you don't have to provide your name or anything like that, but you type in your address and they show you all the different utility providers and one of them is natural gas for your address. So what I was able to do on this website is immediately see what all the prices were for every one of the providers in my area. So this is great. It doesn't matter if you live in California, doesn't matter if you live up north in Illinois. You're going to be able to see who your providers are and see what the pricing plans are and you can immediately see if you're being ripped off. And what I found out was, is that I was being charged $0.30 extra per therm and that's a term they use at the gas company. But what that meant to me in dollars was I was being overcharged about $65 a month. So as you can imagine, I quickly switched my Service and there's $65 just found. And now I know that it's not during the summer months. I'm not going to save $65. But I do think there's other areas because this website also lets you go out there. And I'm not saying use the website for its service because obviously you already have service. Probably when you're going to check this out, I just use it as a tool. I don't really know anything about this website other than I was able to type in my address and it was able to show me all the providers as well as their best prices for probably brand new customers. Which also gives you the bargaining power because you can go check out what your phone service could be, what's your Internet, your cable, and see what is the best option. And I know a lot of times they Give better deals to brand new customers. But I got to tell you, if you call that customer service agent, tell them that you're concerned that they're offering better prices to brand new customers and you're thinking about walking with your business. Watch how quickly they will match the prices that they are giving to new customers. Because you're much easier to keep content since you're already an existing customer. There's no work for them. They don't have to come set up anything. There's no man hours used to come keep you happy. So they usually will come off those prices pretty easily. But it does take a phone call. So that's why I titled today's show how to save $200 a month through a few phone calls. Because it really is that simple. So that's how you do it with the utilities. Let's talk about another industry that might be taking you for granted and that's your insurance. And I'm talking about your homeowner's insurance, I'm talking about your automobile insurance and all those type of insurances that are protecting you. And in case you get in an accident or there's something that happens at your house. These type of industries are set up to where they quote you the best price possible when you first sign up for their services. But then every year there's a slight price increase and then what happens is you have to pretty much every three years do a price reset. You need to call either your insurance agent or you can go do on the website. You can go out there on the Internet now. I think you can go to insurer.com and some other websites out there and you can start doing comparisons to make sure that you're not being taken for granted on the services that are being provided to you for your property and casualty insurance needs. So that's how you just make sure that you're getting the best price. Because that's the first place that they'll take advantage of you is if you sit on your hands and you don't do anything. The prices will adjust on an annual basis and go up. And if you don't go, keep them honest by calling your agent or calling your provider to to make sure that you're getting the best price. And sometimes you might even need to call some of these other insurance sites or go look on the Internet. I know Progressive is always advertising that they'll show you even other insurance companies rates to show you if their rate is even better. So you might want to go try out some of these tools. It doesn't hurt. An educated consumer is always going to be the best consumer to get the best rates and take advantage of these industries that will take you for granted if you're not keeping on top of it. When while we're talking about insurance, let's also talk about what you can do with your insurance company that I think a lot of us just take for granted. I've talked about this in previous shows, but a lot of us are walking around or riding around with $250 deductibles on your cars. If you have any damage on your car, do you really think you're going to probably file a $250 claim against your insurance company? Of course not. And why is because you're scared to death if you do file a claim that they're going to raise your insurance rates. And that's a reasonable thing to think that they will do because if you do use insurance, they're going to raise your rates a lot of the time. So we're all, a lot of us in this country are sitting around here scared to death to use our insurance. So if you've got that fear of using your insurance because it is out there designed to be more of a catastrophic or, or big accident type event coverage and protection, then what I would do is go ahead and immediately, assuming you have some cash reserves out there, push that deductible up to $1,000. And when you push that deductible up to $1,000, I think you're going to be really surprised at how much it lowers your monthly as well as annual premiums depending upon how you pay. So these are some very easy, simple ways that you can really find easy money. And I know probably the topic, the title made it seem much easier. But I do think this is easy. You can make a few phone calls, check out to make sure you're not being taken advantage of on your utilities, making sure you're not getting taken advantage of on your insurance protection. And you probably realistically really can find $200 a month. And that's an amazing, amazing thing. Also, there's several other things that are going on out there. We've got Warren Buffett is going to be, I think it's out right now because I'm recording this actually on the 1st of March. It's a Saturday. Berkshire Hathaway's annual report or Warren Buffett's letter to Shareholders comes out usually right around March 1st. So I am so excited. I think we're going to be doing an upcoming podcast discussing that And I'll give you my insight and I'll even give you the link to go out there and look at what Warren has said because it's not only very enlightening on what's going on out there in the economy and the financial markets. Warren also puts a lot of anecdotal information in there, but just about his feeling about life. And it's quite entertaining to go out there and read. So you might want to look at that. Also giving you an update on other things that are going on out there. If you've been watching what's going on in the financial markets, we have been getting beaten up again because of that. For a while we had interest rates on mortgages on the 15 year and 30 year traditional mortgages. They went down significantly about a month ago, month and a half ago. And a lot of people were able to go in there and lock in some great rates. I know I was able to refinance at 4.875% on a 15 year mortgage. But since that time in the last month rates have gone up significantly. Meaning even to the point that I think as of a week ago we were well over for a 15 year, you were over 5.5%. So you can see how in one month we went from four, seven, eight to over five and a half on a 15 year mortgage. Well, good news because if there's a silver lining with this bad financial market and the uncertainty and the volatility out there is that the market's gotten beaten up. And because of that we're starting to see the 15 year and 30 year traditional rates come back down. So I'm just putting you on notice, start watching. You can go out there to Yahoo Finance and I think on Yahoo Finance on the bottom right hand side they had the back bank rate box there that has what the average in the United States rates are for 15 year, 30 year as well as adjustable rate mortgages. Every morning I go in there and look at it because I think it's very entertaining as well as very informative to go out there and watch what's going on with the rates. So if you're looking for a silver lining, if you felt like you missed that opportunity the first time it came around about a month and a half ago, be patient and watch it and don't get greedy. If you have in your head that you want a 5% 15 year mortgage, if it hits 5%, don't get cute with the rate. I remember when I called the mortgage broker and told him I was ready to Lock in at the four and seven eighths. He goes, brian, are you sure you want to do this? I think we can get it down even lower. Maybe you can get four and a half. And I was like, wait a minute. I said, you know, you're probably right. But I said, I don't want to get cute with it. And look back and we missed this great rate. And sure enough, it did go down. I will tell you, I got it at 4, 7, 8. Two days later it did go down to 4 and 3 quarters. So I did not get the dead bottom. But that was it. It went down to four and three quarters and then it did an about face and went straight back up to where we were over 5.5%. So that's why I'm saying don't get cute with interest rates, especially in a volatile market like this. Put in your head what you think a reasonable rate is. That's going to make you very happy in the long term. I think 5%, 4 and 7/8 is a great rate on a 15 year. On a 30 year, if we can get back down to 5 and a half to 5 and 3/8, you know, those are incredible rates that it might hit again. Don't get cute if it comes down to that point. Lock you in. Lock yourself in. If you're in one of these crazy adjustable rates. But you know you're going to be in the house for an extended period of time. Go out there and take advantage of what's going on out there. I'm also not a big fan of, of paying a lot of the discount points, especially on a refinance. You'll probably know when you pay discount points, you do not get to deduct those immediately on your taxes like you do if you're buying a brand new house, you have to basically amortize that over the life of the loan. So if you have a 15 year or 30 year mortgage, you buy those discount points, you're not going to really save yourself a lot of tax money. So don't let people tell you otherwise. It is a little different when you buy a brand new house and you're moving there. You do get to 10 take those discount points immediately. But it's not always a good idea there either. So pay attention to that. And if you're only one thing about refinancing, I always try to remind people I have a client that's at six and a quarter on a 30 year and she called me and wanted to know why we hadn't refinanced yet. And I said, well, the best I've seen was 5, 3, 8 at the best of the market about a month and a half ago. So with a true no cost, it was going to cost you still close to 6%. It's not worth to go from six and a quarter to 6% and pay all, you know, to basically reset that rate, go through the hassle and do everything because every time you do refinance, remember you are resetting that your amortization table. So if you've been paying on this a number of years and you're paying a good bit of principal, I don't know if it's worth the hassle for an eighth of a point or even, maybe even a quarter of a point. It's only when I consider getting to three, eight to half percent better than where we currently are, not coming out of pocket is it really a good deal. So keep that in mind. That's just my personal opinion on what's going on and looking on mortgages. And I hope that some of this real quick information is going to save you some money on your utilities as well as your service providers like your phone, your Internet, your cable or satellite provider. And then hopefully you'll go out there and keep your insurance provider honest as well and save yourself some money. And once you save that money, don't waste it. Use it as an opportunity to go fund that Roth ira, go fund those retirement savings so that you can have the good life that you deserve. Once you reach that retirement age, remember, 15, 20% of your gross wages, you're going to be set I'm Brian the Money Guy Preston. I'll talk to you in about a week.
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Podcast Disclaimer Narrator
The Money Guy podcast is hosted by Bryan Preston and Brian Preston is a partner with Preston and Cleveland Wealth Management. Preston and Cleveland Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with securities laws and regulations, Preston and Cleveland Wealth Management does not render or offer to render personalized investment or tax advice through the MoneyGuy podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.
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Brian Preston
Sam.