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reverse budgetI’ve written quite a bit about the “proper” way to set up a family budget. You know the one; where you sit down at the beginning of the month with a list of everything in the world you’re going to spend your money down to the last penny.

In a perfect world, you’ll know exactly how much money you’ll have left over at the end of the month and exactly what financial goal you’re going to spend it on. Perhaps your goal is to pay down your debt, build up your emergency fund or buy a new boat.

As best intentioned as we may be, things NEVER work out the way we think they’re going to. Sometimes we just don’t have enough time or maybe we don’t exactly agree with our spouse on what we’re going to spend our money on.

We end up losing track of our finances and overspend in a ton of different areas.

But…

What if we actually funded our financial goal first?

Ladies and Gentlemen, say hello to the Reverse Budget!

When you use the reverse budgeting technique, you set aside a predetermined amount of money at the beginning of the month that represents your target financial goal and spend whatever is left over throughout the remainder of the month taking care of the highest priority items first (food, shelter, bills, transportation, etc.).

Here’s how the reverse budgeting method works:

Let’s say your combined household take home pay is $4,000 per month and your financial goal this month is to pay an extra $1,000 per month toward your credit card debt.

You would simply set aside your $1,000 credit card “goal” payment first and use the remaining $3,000 to get you through the rest of the month.

You know you’ll have certain fix bills like rent, utilities, car payments, etc. You’ll also have other expenses such as food, clothing, medical costs, entertainment, gifts, charity, etc.

As your month goes on and you have less and less remaining of your original $3,000 target, you’ll know you’ll need to curb any additional spending to ensure you have your priorities covered until next month.

Naturally, this plan is best run using cash or debit cards so there is no ability (or temptation) to overspend with a credit card that likely has a higher limit than what you have in your bank account.

The reverse budget method isn’t perfect but it can be implemented and tracked much more easily than the more burdensome budgeting method outlined in my budget workshop series.

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Heating Oil Delivery Contracts

There was a time not too long ago when home owners could save a tremendous amount of money on their home heating oil bills by pre-buying their oil for the upcoming winter season.

Heating companies benefited because they reduced their risk exposure from customers not paying for deliveries, and the customers benefited by receiving a 5 to 15 cent per gallon discount over the fluctuating “cash price” or “spot price” at the time the delivery contract was signed (the market price for the heating oil on the day of the delivery).

This payment option worked very well for both the customer and the oil delivery company from about the year 1999 to 2007 as the price of oil rose with relative consistency.

However, as this payment option was gaining in popularity, the price of oil rose dramatically and by early 2008 home heating oil cost over $4.50/gallon in many parts of the country.

Homeowners who were locked-in to the lower pre-pay price (myself included) enjoyed savings of over $2.00/gallon while others had no choice but to pay the full market price.

Delivery companies were often “on the hook” to buy enough oil at higher wholesale prices just so they could turn around and sell it at the lower agreed upon contractual price they had with their pre-paid customers. Consumers who missed out on the pre-buy option where equally bitter about the shift in oil prices.

Delivery Companies Change Their Tactics:

It was during this time that consumers really started to perpetuate the idea that it was “always” better to pre-pay for heating oil deliveries to protect yourself from rising oil prices. There were even banks during this period that offered loans marketed specifically for consumers who wanted to pre-pay for their heating oil but didn’t have the cash on hand to do so. Loan applicants believed they would save more money by pre-buying their heating oil than they would have to pay in interest for the fuel loan.

Recognizing the fever that consumers had for prepaid heating oil delivery contracts (and to protect themselves from future swings in market prices), oil delivery companies started raising the relative prices of their pre-buy oil delivery contracts.  Instead of offering the fuel at 5 cent to 15 cent discounts over the daily cash prices, the delivery companies started charging more money per gallon to pre-buy heating oil to be delivered later over the heating season.

In addition to charging the customer more money per gallon of oil to pre-buy for the upcoming winter heating season, heating oil delivery companies added a few new fees to “protect” the consumer from drastic increases and decreases in heating oil prices.

For example, if you prepaid for your home heating oil at $3.00/gallon and you paid an extra 25 cents per gallon for “downside protection”,  you would never pay more than $3.00/gallon when the oil was delivered, but if the daily cash price fell below $3.00 you would pay what ever that price was.  The drawback of course is that the average price of heating oil over the entire course of the heating season would have to drop below $2.75/gallon for you to break even.

While these “downside” and “upside” protection options seem like a good idea for the consumer, they are actually another way of shifting the risk away from the delivery company and help them further capitalize on the belief consumers have that it is “always” better to pre-buy your home heating oil.  There’s nothing wrong with what they’re doing, they’re simply charging what people are willing to pay.

Current Heating Oil Pricing Plans:

As of today (6/03/15), my local heating oil company in Northern New England is charging $2.85/gallon for their pre-buy contract while their current “spot rate” or “day rate” delivery price is only $2.55/gallon.

In addition to this $0.30/gallon premium to pre-buy oil, my local oil delivery company is charging $0.25/gallon for “downside protection” to protect you if the price of oil actually does drop while you are still receiving your pre-bought deliveries.

In other words, I would end up paying $3.10/gallon to pre-buy my home heating oil vs. paying only $2.55/gallon to fill up my tank today (assuming the price of oil did not change). The only way I would come out ahead pre-buying my heating oil (with downside protection factored in) would be if the daily “cash price” of heating oil rose above $3.10/gallon. I just don’t see a reasonable situation where heating oil rises above $3.10/gallon during the fall of 2015 and winter of 2016.

Several years ago it made sense to pre-buy your home heating oil, however, oil delivery companies are capitalizing on consumer’s new perception that “it always makes sense to pre-buy heating oil” by charging more and more each year to pre-buy the oil vs. paying the daily delivery price when you need the oil.

Last year, the pre-buy price was 15 cents higher than the cash price. This year it is 30 cents higher.

Should You Pre-buy Your Heating Oil for 2016:

For the 2015-2016 heating season, I would only consider pre-buying if I can lock in at a price less than $2.30/gallon, and I would not pay any extra for “downside protection”.

If you don’t believe me and are absolutely convinced that the price of home heating oil is going to go up over the next year, check out my article on how to hedge against rising fuel prices.

Also, if you’re interested in learning about how offshore oil and gas wells are drilled, check out my article on an introduction to drilling offshore oil and gas wells.

Thanks, and please leave your comments and thoughts in the comments section below!

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THANKS for reading my personal finance blog! You can learn more about my site here or you can jump right into the juicy stuff by reading my family’s own detailed debt free success story (which has formed the foundation of this site). Please consider signing up for my free email updates!

pumping gasIf you’re like most people, you’re enjoying the benefits of paying less at the pump for a gallon of gas. If you live in a northern state (like me) you’re probably also very happy that it is a lot cheaper to fill up your heating oil tank too!

Most experts agree that oil and gas prices won’t stay this low forever and there is a good possibility that prices will start rising again sooner than later.

Why will oil prices rise you ask? As more and more oil rigs are shut down there is a growing “perception” (right or wrong) that new oil production will start to fall and the current over supply of oil on the market will reverse course.

But don’t despair! There actually is a way you can lock in these relatively cheap oil and gasoline prices now even if prices double or triple down the road. Here’s how to do!

Here’s how to hedge against to threat of rising gasoline prices:

Let’s say you’re happy with the current gasoline price of $3.00 per gallon (much less in most areas) but feared the price might rise over the next year (which is a very real possibility).

Estimate the amount of gasoline you expect your household to use over the next year, for our example let’s say this was 1,000 gallons.

Multiply that 1,000 gallons by the current price of gas to get your “hedge” amount, for our example this will be $3,000 or $3.00 per gallon times 1,000 gallons.

Then, purchase $3,000 of the United States Gasoline Fund ETF (ticker symbol: UGA) through a discount brokerage firm. Although this may sound super risky and complicated, purchasing shares of Electronically Traded Funds (ETFs)like the “UGA” is just as easy as buying shares of individual stocks. You can buy them through any online discount broker such as TD Ameritrade, Charles Schwab, or Scott Trade. Just don’t get carried away with day trading like I did during the Internet bubble.

OK, so that seems relatively easy enough, but you’re probably still asking yourself how this technique actually locks in the price of gasoline for your for 1,000 gallons of gasoline over the next year. Fortunately, I’ve created the following Excel chart to show you how this works:

In scenario 1, we assume that we follow my plan above and by the end of the year the average price you have paid for the year’s gasoline is $4.35. The total cost of gasoline over this time would be $4,350 (Ouch), but, your investment in the ETF Gasoline fund would also rise by roughly* the same percentage as the price of gasoline you paid (compared to your $3.00 per gallon target price). Therefore you would have gained $1,350 in your investment value bringing your total net cost for gasoline to $3,000 (or $3.00 per gallon).

In scenario 2, the average price of gasoline remains constant throughout the year and therefore averages the target price of $3.00. Your investment in the gasoline ETF also remains unchanged so there is no profit or loss.

In Scenario 3, the average price of gasoline in the following year drops to $2.25. Although you only pay $2,250 for the same 1,000 of gasoline, you lose $750 in your gasoline ETF investment thus bringing you back to your original target price per gallon of gas at $3.00 per gallon.

While investing in the United States Gasoline Fund ETF is not a perfect hedge against fluctuating gasoline prices (gasoline prices can vary quite a bit by region), it should provide reasonable protection in helping you reach your target price per gallon of gas of $3.00 or whatever the current price of gasoline is that you want to “lock in”).

Not only can you use this strategy for protecting yourself against rising gasoline prices, you can use a similar strategy in protecting yourself against rising heating oil prices and other commodities as well.

Some potential drawbacks of this strategy.

The first drawback of this strategy is the cost of executing the ETF trade through a discount brokerage account. However, most online discount brokerages will allow you to make this trade (both the buy and the sell) for under $10.

The second drawback of this strategy is the loss in the “time value of money”. Simply stated, you are losing out on investing the $3,000 in some other financial product such as a savings account, certificate of deposit, or mutual fund.

* The UGA is not a 100% accurate hedge against the price of gasoline. There will always be some fluctuations in the volatility of gas price vs. the volatility of the UGA price although the comparisons should be reasonable for the intent of this example.

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delta porsche cayenne VIP medallionI had just boarded my Delta flight home in Atlanta, GA bound for Portland, ME when I notice a very peculiar site out my window. There on the tarmac was a brand new white Porsche Cayenne parked right next to the jet-bridge stairs.

At first I thought it might have been a private vehicle that had worked out some deal with the airport to pick up a high level corporate executive or celebrity, but when the vehicle drove off there was a subtle “Delta” sticker on the back window.

“Hmm…that didn’t seem like a very cost effective vehicle for supporting aircraft operations.”, I thought to myself.

Apparently, this Porsche Cayenne is a “secret” new customer service product Delta is offering for high level frequent flyers (Diamond Medallion).  The driver of the Porsche will meet arriving aircraft at the jet bridge and redirect select passenger(s) down the service stairway to the parked SUV below.

From there the passenger(s) will be whisked away to the nearest Delta Sky Lounge or directly to the next gate for VIPs with tight connections.

The service is not advertised but it is already getting lots of free exposure in the news thanks to “word of mouth”.

Pretty cool frequent flyer perk if you ask me, now if only they’ll extend the service for bums like me!

 

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A heating oil delivery man battles through the snow to reach a customer's fill line.

A heating oil delivery man battles through the snow to reach a customer’s fill line.

By all accounts, the fall in oil prices over the last month or two has been drastic. While falling oil prices might not be good if you’ve just published a book on getting a job on an offshore oil rig (like I did), there are tremendous benefits of lower oil prices to the average consumer. One area where consumers stand to benefit is in home heating oil prices.

Every year on this personal finance blog I make predictions on the price of home heating oil and offer advice on whether or not you should pre-buy (pre-pay) home heating oil vs the “pay as you go” option. Readers of my blog will know that back in August I recommend NOT to pre-buy home heating oil considering heating oil delivery companies in my region where charging over $3.70 to pre-buy the oil.

Since then, the price of heating oil in my area has plunged and you can currently buy heating oil for less than $2.45/gallon.

With the price of oil hovering near 10 year lows (as low as $55 a barrel this week), now is the time to lock in home heating oil pre-buy contracts if you can find a pre-buy contract price lower than $2.60 per gallon. I believe there is room for oil to fall a little bit more over the next few weeks, but I don’t see the price of oil remaining in the mid $50/bbl range for very long. At $55 barrel, I’m very confident that the price of oil is more likely to rise dramatically over the next 12 months vs. falling dramatically lower over the same period.

Unfortunately, most of the oil delivery companies have already locked in their prices with their heating oil wholesalers so they aren’t able to offer pre-buy contracts to consumers because they’d have to buy it for more than they can sell it for. It is definitely worth it to shop around to find the best price.

If you do decide to pre-buy your heating oil for the 2015/2016 home heating oil season make sure you sign with an established heating oil delivery company with a solid track record. There are several instances where heating oil delivery companies have gone bankrupt leaving families who pre-paid for home heating oil delivery with nothing.

Good luck and please share your comments on home heating oil prices in the forum below!

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Are you considering the purchase of a single family home to rent out? Perhaps you already own a single family home and you’re wondering if it is better to rent it out or sell it.

To help you decide if renting out single family homes is a smart financial move, I’ve prepared this rental property analysis case study specifically focused on single family rental properties.

Download My Free Rental Property Investment Calculator!

Before we get started, you’ll want to download a free copy of my Excel-based Rental Property Investment Calculator. This powerful tool will help you analyze multiple variables that affect the profitability of a rental property and best of all it’s FREE!

Finding the Perfect Single Family Rental Property

Alright, you’ve found the perfect single family home to rent out! The house is in good condition, its in a great neighborhood, and best of all it seems to have a reasonable asking price. So how does a rental property investor know if it is a good deal or not?

Let’s take a look at this single family home investment example:

I’ve arbitrarily picked a local real estate listing for a single family home in my area. Let’s see if it would make sense to buy this property and rent it out.

Drawback of Single Family Rentals: In most cases, single family homes are not as profitable as multiple-family rental properties. Not only do you have one stream of income for the property, the income will usually be significantly less than comparatively priced multi-family rental properties. In other words, a $150,000 duplex rental property will generate more monthly rent income than a $150,000 single family home.

Investing in single family rental properties can be a viable investment strategy.

Investing in single family rental properties can be a viable investment strategy.

House Details:
Asking Price $139,500, 3 Bedroom, 1 Full 1 Half Bath, 1 Car Attached Garage. This home is in a great family friendly neighborhood. Comparable rents for this home are $1000.

TIP: Use Craigslist or local newspaper classified listings to get an idea how much your prospective rental property might rent for.

Crunching the Numbers:

Assuming we put 20% down, I’ve plugged the following variables into my investment property calculator:

rental property investment analysis single family

If you’re unsure about some of the variable listed above in the spreadsheet, you can find the complete instructions to my investment property calculator here.

Investment Analysis Results:

When you plug the variables into my investment property analysis tool, you get several values that give you an idea of what your cashflow will be, what your return on your initial down payment will be, how much your property will appreciate in value, etc. Here’s what the numbers look like for the example single family home above:

rental property results

Click screenshot for larger image.

As you can see from the results above, there is quite a bit of profit potential and return on your investment. Unfortunately, this particular rental property will have a negative cash flow the the first 10 years or so of ownership so you’ll need to supplement your investment over the first few years.

Obviously, it is much better to have a positive cash flow than a negative one. The nice thing about my rental property investment calculator is it will tell you right away if the property you’re considering to buy will have a negative cash flow or not.

Depending on the property, it might make sense to have a negative cash the first few years so you can reap the benefits of someone paying off the mortgage and the appreciation of the property over time.

If cash flow is an issue for you, keep looking around for rental properties that show the potential of having a higher positive cash flow.

Good luck!

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wreath1

Every once in a while I like to profile a small business on my personal finance blog. Not only do these small business case studies provide inspiration for other prospective entrepreneurs, but the stories behind them are often very interesting as well.

Winter Wreaths, Inc.

Today I’d like to introduce you to Winter Wreaths, Inc., in Franklin, ME. Winter Wreaths Inc. is a small family run business that decorates and ships traditional and authentic Maine Christmas wreaths and Christmas centerpieces across the United States and beyond.

Winter Wreaths, Inc. owner Lisa inspects a fresh delivery of reindeer moss.

Winter Wreaths, Inc. owner Lisa inspects a fresh delivery of reindeer moss.

Owners Mark and Lisa Herrington (who happen to be my aunt and uncle) purchased the business earlier this year and have been very busy getting everything together for this winter’s Christmas wreath ordering season. I asked my aunt about her decision to buy a small business.

“I always wanted to do my own business but couldn’t figure out what to make or do that might make a bit of income, plus I was always unsure about the book keeping end of things. This opportunity came up and it felt like the right thing to do to help my dream along.”

In addition to shipping authentic Maine balsam fir Christmas wreaths, Winter Wreaths offers a variety of Christmas table centerpieces, candles, greenery and jams.

A Legacy of Entrepreneurial Spirit

order traditional maine authentic christmas wreaths

One interesting thing about Winter Wreaths Inc. is that my aunt and uncle operate it out of my great-great-grandparent’s house which has remained in our family for 6 generations.

100 years ago my great-great grandparents operated a store on the property (see photo comparisons above). The old store is now gone, but that same entrepreneurial spirit continues through my aunt and uncle’s Maine Christmas wreath business.

My Aunt Lisa sums it up, “It has been nice to be in this house again. Franklin, ME is a little town but people are always stopping by to see what is going on. It feels like old times .”

Indeed, there is now quite a bit of activity at the workshop and it has brought new life and excitement to what many consider the “downtown” area of this historic and quaint coastal New England town.

workshop

The house’s barn (which once held horses and cows) has been converted into a charming store front and workshop that is just overflowing with character.

winter wreath barn

All wreaths and centerpieces are hand made right here in Maine by experienced local craftsmen and feature locally sourced decorations (reindeer moss, Indian berries, pine cones, chestnuts and a hand-tied red velvet bow).

The previous owners of Winter Wreaths, Inc. are still very active in the business helping the new owners along.

“It also helps that the Marshalls (previous owners) are so helpful and sticking with us through this first year. Mary and I have reversed roles, she now decorates wreaths and I do the book keeping! She’s here and I can ask her for help whenever I need to.”

When it comes to ordering traditional Maine-made holiday Christmas wreaths and decorations, Winter Wreaths, Inc has you covered! Buy your own authentic “Made in Maine” Christmas wreath or decorative centerpiece today! As an added bonus, most wreaths come with a complimentary jar of locally made blueberry jam (ask for details)!

uncle markShipped to Your Door!: Can’t make it to Franklin, ME? Don’t worry, Winter Wreaths, Inc. offers shipping on every order (click here for pricing and order form)! Here’s my uncle Mark labeling one of the season’s first Christmas wreaths for shipment! But don’t worry, there’s a whole rack of wreaths behind him, maybe one of them is for you! Check out Winter Wreaths’s Website or call 207-565-3593 and order a Christmas wreath or centerpiece today! Maine Christmas wreaths and centerpieces also make great holiday gifts for family, friends and coworkers!

Order Your Official Maine Winter Wreath Today!

Order an authentic “made in Maine” balsam fir Christmas wreath or centerpiece today to add warmth and charm to your home this holiday season. You can visit my Aunt and Uncle’s website or facebook page or you can call them directly at 207-565-3593.

Tell them their nephew Ben sent you!!!

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A lot of the articles on my personal finance blog deal exclusively with how to save money. Unfortunately, I often fail to look at the “personal” part of personal finance and focus more on the finance side (maybe MBA graduates shouldn’t be personal finance bloggers!).

The truth is, there’s a lot more to personal finance than just saving money. If you want to achieve a healthy financial balance between spending and saving money, its helpful to understand this concept.

For instance, take a look at my family’s decision to buy a boat this year.

We could have saved money renting a boat, but the convenience of owning our own boat led us to purchase our own boat.

We could have saved money by continuing to rent boats, but the convenience of owning our own boat been worth much more to our family. Here’s are Grady White sitting in our slip at the marina.

I’ve written a variety of personal finance articles over the years making the case that it almost always makes sense to rent a boat rather than buy a boat. Not only can boats be very expensive, they can also be very expensive to maintain.

Yes it’s true that we saved a significant amount of money renting a boat for a few years (vs. buying a boat), but now that we’ve experience owning our own boat for a few months, I’m beginning to have a clearer appreciation for the “personal” side of personal finance.

Our Personal Finance Decision to Buy a Boat:

In the case of whether or not we should buy a boat, the biggest factor we looked at was convenience.

grady white kidsRenting a boat wasn’t difficult to do, but it usually meant driving a long way to get to a particular marina that rented boats.

On the nicest days, there was a very limited selection of boats available to rent (if any at all). Then there was the uncertainty of knowing how to operate the boat and going through the orientation process, signing all the paperwork, loading supplies, and not being familiar with the cruising grounds or where to buy fuel, etc.

Being able to go on a spontaneous boat ride and not have to worry about any of the drawbacks listed above is awesome.

This “awesomeness” has a value to us and the value of this “awesomeness” is what made up the “personal” side of our “personal finance” decision to buy a boat.

Whether you’re buying a boat, deciding between renting or buying a ski condo, or determining whether or not to buy a new or used car, don’t lose sight of the “personal” side of your personal finance decision. It’s too easy to get burned out on the “finance” side if you don’t properly value the “personal” side of the personal finance equation.

It’s not always just about saving money!

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The Best Way to Brew Coffee

From percolators, French presses and traditional drip coffee makers to espresso machines, Keurig K-Cups and Aeropress coffee presses, there are many different ways to brew a cup of coffee. I’ll review them all and determine once and for all, which method brews the best tasting cup of coffee (at least in my opinion)!

When it comes to running a blog (personal finance or otherwise), the experts say you should stick with what you know. So in addition to my regular blog articles about paying down debt and investing, I thought it would be fun to spend a little time talking about the best way to brew a great tasting cup of coffee.

After all, you can save a ton of money if you learn how to make a quality cup of coffee yourself (see David Bach’s Latte Factor).

So what makes me an expert on brewing a cup of coffee you ask?

Well, as a commercial ship captain, coffee has become a very essential part of my professional life. Anyone who’s ever spent time working aboard a ship will tell you that there’s two things you should never run out of at sea; the first being toilet paper and the second being COFFEE.

Working long and odd hours tends to grow a person’s dependence on coffee, and with little other recreation at sea, there always tends to be some lively discussions about the various methods of brewing the best tasting cup of coffee.

caribbean coffee ship

Here’s a photo of my ship docking for supplies in Curacao on October 31st, 2013.

Combine this with the persnickety captains I’ve had the “pleasure” of working with over the last two decades (who get really upset if their coffee isn’t prepared “just the right way”), and you’ve got a ripe environment for developing an informed opinion and pallet for the perfect cup of coffee (and the best way to brew it).

1st Place: French Press Coffee Brewers

best french press brewer reviewsMy favorite methods of brewing coffee is via a “French Press” coffee pot. There are many coffee snobs, coffee purist and coffee aficionados who contend that French Press pots are the best way to brew coffee. Based on my own experiences (and those of my shipmates) we agree that the French Press method of brewing coffee is an excellent way to brew a rich, smooth and full bodied cup of coffee.

How to brew coffee with a French Press:

Advantages of French Press Coffee Pots: French Press coffee pots always receive the best reviews. While a lot of this has to do with tradition and the long standing use of French Presses in high end coffee shops, the truth is you get a consistent full bodied and rich cup of coffee (if you know what you’re doing). French Press coffee makers also give the user complete control over the coffee process from ensuring the water is the correct temperature to making sure the coffee grounds are steeped (brewed) the correct amount of time in the brewing water. If you know what you’re doing, you simply can’t beat a fresh cup of coffee brewed in a French Press. Another great “perk” of a French Press is they are relatively inexpensive (less than $40 for a high quality one) and don’t require any electricity (provided you have access to hot water).

Disadvantages of Brewing Coffee with a French Press: The biggest disadvantage of brewing coffee with a French Press is that it takes a little practice to get used to. Like the Aerobie AeroPress (in second place below), there are a lot of variables that go into making a consistent cup of delicious full bodied coffee when made in such a “hands on” way. There is a lot of work that goes into making a cup of coffee brewed with a French Press the results are definitely worth it.

Where to Buy a French Press Pot: We’ve found Bodum French press coffee brewers to offer the best value and quality, you can order Bodum French press brews through Peet’s Coffee & Tea Website. While you’re buying things from Peet’s website, you might as well order some of their amazing Major Dickason’s roasted coffee (Major Dickason is one of our crews’ favorite coffee).

2nd Place: AeroPress Coffee Press and Espresso Brewing System

aeropress review best price Remember how awesome and revolutionary those Aerobie Flying Rings were when they came out in the 1980’s? They were far superior to other flying disks and Frisbees available and they totally disrupted the market for outdoor throwing sports. Believe it or not, this same company “Aerobie” is at it again with the introduction of their Aerobie AeroPress coffee brewer and espresso maker (I know, it’s super weird, right?). One of the officers on my ship introduced me to the Aeropress coffee brewing system a year or so ago and it has quickly become one of my favorite ways to brew coffee.

Advantages of the AeroPress Coffee and Espresso Maker: Reviews for the AeroPress coffee have been very positive. Overall, you’re simply not going to find a better value in terms of being able to brew a high quality cup of coffee. For less than $30 the AeroPress offers its user a very intimate connection to the coffee brewing process allowing for a very strong and rich cup of coffee (like a percolator) but creating a very smooth finish that stays true to the nuances found in different types of coffee beans and coffee roasts. It may not be the best method for busy parents rushing to get ready for work and get the kids off to school, but if you have a few extra minutes in your day (and you really enjoy coffee) I bet you’re going to love the Aeropress system from Aerobie.

Disadvantages of the AeroPess Coffee and Espresso System: While the AeroPress scores high reviews all the way around, it is a little more labor intensive than some of the other methods of brewing coffee. From ensuring you have properly grounded beans and heating up the water, to stirring in the coffee grounds and pressing the brewed coffee through the filter, the average cup takes around 8 minutes to brew properly. Also, if you’re not paying close attention, it is relatively easy to side load the AeroPress as you’re pressing it through and spilling the hot coffee all over the place (I’ve done this on more than one occasion and it wasn’t pretty!).

How to Make Amazing Iced Coffee at Home: With the AeroPress coffee brewer you can make an exceptionally tasty cup of iced coffee by doubling the coffee you put in the Aeropress brewer and then squeezing the coffee out over a full glass of ice. The concentrated coffee melts the ice and dilutes out the beverage to a very delicious and smooth iced coffee!

Best Place to Buy the AeroPress Coffee System: Not only does Peet’s Coffee & Tea Website have great deals on the best rated French Press coffee brewers, they also have exclusive deals and pricing on AeroPress Coffee Brewers too! (YES, YES, we love our Pete’s coffee around here!). While you’re buying things from Peet’s website, you might as well order some of their amazing Major Dickason’s roasted coffee (Major Dickason is one of our crews’ favorite coffee).  If you really want to impress your friends you can buy some Jamaica Blue Mountain Coffee at $44.95 per 1/2 Pound.

3rd Place: Brewing Coffee in a Percolator:

best coffee perculator reviews Coffee perculators have been my parents preferred method of brewing coffee since long before I was born. As a matter of fact, they received two identical coffee perculators as wedding gifts nearly 45 years ago and it wasn’t until just recently that the first of the two coffee perculators failed. Fortunately, my grandmother had carefully stored the second perculator in her home and after presenting it to my parents as a replacement it fired right up after 4 decades laying dormant!

Advantages of Brewing Coffee in a Percualtor: In addition to making a very cool noise as the coffee is brewing and completely inundating the house with a fragrant coffee smell, coffee perculators brew a very strong and rich cup of coffee compared to standard drip coffee machines. If my parent’s experience is any indication, coffee perculators seem to have an incredibly long service life as well.

Disadvantages of Brewing Coffee in a Perculator: My biggest complaint about brewing coffee in a perculator is the fact that the coffee is super hot (near boiling) when it is poured. If you’re a wimp like me this means waiting a while for the coffee to cool off before enjoying. Another issue I’ve noticed brewing coffee with a perculator is that it masks the nuances between different types of coffee. What I mean by this is that even though perculators brew a great cup of coffee, the perculation process makes the differences between a dark Italian vs a more medium roast less perceptible.

Where to Buy Coffee Perculators: It’s not very often that you’ll see coffee percolators for sale in department stores anymore, however, you can still order them online through most major on line retailers. Buy a top rated Presto Percolator at Walmart.com!

4th Place: Traditional Style Drip Coffee Machines

best home drip coffee machine reviews Anyone who’s ever enjoyed a cup of coffee (especially in the USA) has almost certainly had coffee brewed using the method. In fact, there is more coffee brewed in the US using standard drip style coffee machines than all other coffee brewing methods combined.

Advantages of Drip Coffee Machines: The biggest advantage of drip style coffee machines is their convenience and ease of use and the overall quality of the coffee’s flavor (much smoother than a percolator style coffee brewer). If you buy a drip coffee machine with a timer, you can literally set it and forget it and wake up the next morning to a fresh pot of coffee. Another advantages of drip coffee machines is that you can easily adjust the strength of the coffee by adding more or less coffee to the coffee filter. Drip coffee machines are also very inexpensive compared to some of the more exotic methods for brewing coffee.

Disadvantage of Drip Coffee Machines: One disadvantages of Drip Coffee Machines (whether you’re using a cheap Black and Decker Model or a Commercial Grade “Bunn” Model) is that it can very hard to brew a consistent cup of coffee. Even if you measure out the coffee exactly the same every time, you have no control how the actual hot water interfaces with the coffee in the filter chamber which helps create these flavor inconsistencies. Although drip coffee machines also allow users to brew up to 12 cups of coffee or more, the “shelf life” of the coffee is very short (especially sitting on a hot burner) and quickly starts to degrade the quality and flavor of the coffee after 10 or 15 minutes (you might not be able to tell, but I can).

Where to Buy the Best Drip Coffee Machines: I recommend the Hamilton Beach BrewStation Summit Available at Walmart.com today at a Special Roll Back Price!

5th Place: Keurig K-Cup Single Serve Coffee Brewing Machines

Best Deal Keurig K-Cup Machine Reviews Introduced over 10 years ago, Keurig K-Cup single serve coffee brewers gained wide acceptance as a quick and convenient way to brew a high quality single serving of coffee. Although they originally showed up in commercial applications (such as office building break rooms, convenience stores and waiting rooms) as the price came down more Keurig K-Cup coffee brewers were purchased for individual use in homes and apartments across the country.

Advantages of Brewing Coffee with a Keurig K-Cup Machine: Keurig K-Cup coffee brewers are known for brewing a very consistent cup of coffee. In addition to being super convenient (i.e. quick and easy), almost all the major coffee companies and coffee brands offer their coffee in K-Cup compatible packaging. In fact, Keurig’s patent on their K-Cup technology expired in 2012 which made it possible for virtually any company to package and sell Keurig compatible coffee packs that will work in Keurig brewing machines. This has also led to a slight decrease in price for Keurig compatible coffee (although you’re still looking at between $0.60 and $1.00 per cup when brewed at home).

Disadvantages of Brewing Coffee with a Keurig K-Cup Machine: There are several cons against the Keurig K-Cup coffee brewing system that has prevented it from scoring higher on my list. First, the coffee comes out a little bit too weak for my taste. Second, although the expired patent and increased competition for Keurig K-Cup brewers market have lowered prices a little bit, at nearly $1.00 a cup for brewing at home, the Keurig system for brewing coffee is one of the most expensive ways to brew your own cup of coffee. Finally, but no less important, Keurig K-Cups have the perception of creating an unnecessary amount of waste in the form of the one time use cups (although the introduction of reusable K-Cup containers has helped reduce this negative association).

Best Place to Buy Keurig K-Cup Coffee Brewers: Order the highly reviewed Keurig Elite K40 at Walmart.com Today!

6th Place: Brewing Coffee Using an Espresso Machine

best home espresso machine gaggia classic review Perhaps the most “hardcore” way of making a cup of great coffee is by using an espresso machine. Although espresso machines are a little bit of an overkill when it comes to making a simple straightforward cup of coffee (espresso machines are really only needed when making fancy European coffee drinks like Lattes and Cappuccinos) , they can be used to brew a great tasting cup of coffee.

Advantages of Brewing Coffee with an Espresso Machine: Assuming you have access to a quality espresso machine, the actual process of brewing a cup of coffee using an espresso machine is actually very easy. The process actually looks and sounds very cool too and is a great way to “impress” your friends and/or coworkers. The flavor of coffee “brewed” with an espresso machine (after it has been diluted down to the consistency of coffee) is very “creamy” and smooth although not as rich and strong as with a French Press or AeroPress.

Disadvantages of Brewing Coffee with an Espresso Machine: Because you’re using an espresso maker (high pressure steam is forced through a “puck” of compacted coffee and filtered out) what you end up with is not a cup of coffee but a shot highly concentrated coffee (i.e. espresso). In order to tone the mixture down so it is more consistent with a traditional cup of coffee, it will need to be “diluted” with water. Some espresso machines will actually do this for you (the one we have on our ship will), but most of the time you’ll need to adjust the additional water content yourself. Not only does this defeat the whole purpose of having an espresso machine to begin with (in my opinion) but it also gives the coffee a slightly diluted taste no matter how much or how little water you used to dilute it.

Where to Buy an Espresso Machine: Buy the highly rated Mr. Coffee Cafe Barista Espresso Maker at Walmart.com!

More Tips for Brewing the Best Cup of Coffee: Grinding Coffee

I think we all agree that nothing beats brewing coffee with freshly ground coffee beans. But did you know the type of grinder you use can significantly affect the taste and quality of your coffee?

That’s right! If you do grind your own coffee, here are some tips to make sure you’re getting the best cup of coffee and the best value for your money.

Coffee Grinders: Blade vs. Burr:

best burr coffee grinder

Most coffee experts (including myself) agree that Burr coffee grinders are the best grinders for grinding coffee. Coffee snobs are quick to point out that blade style coffee grinders simply cut the same beans over and over again and create a very inconsistent blend of coffee grinds (from course coffee grinds to powdery coffee grinds).

TIP for Grinding Coffee: Try experimenting with different coffee grind settings to see if you can tell the difference!

Blade coffee grinds also generate a lot of static electricity which can affect the brewing process and flavor of your coffee not to mention that blade grinders are very load and will wake up your kids early in the morning (not fun, trust me!).

Burr coffee grinders are better than blade grinders because they grind out more consistent coffee grounds. A good quality Burr grinder also offers multiple grind settings to adjust the size of the coffee grounds. Burr coffee grinders are also much quieter vs blade coffee grinders and are less likely to wake up your kids or your wife or girlfriend (or both!!!). Burr coffee grinders also produce less static electricity in the grinding process.

Where to Buy a Good Quality Burr Grinder: The Cuisinart Supreme Grind Automatic Coffee Grinder is an excellent choice at only $59 order today through Peet’s Coffee & Tea Website!

I hope you’ve enjoyed my comparison tests of the best way to make a cup of coffee, and yes, please feel free to visit our sponsor (Pete’s Coffee) below!

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THANKS for reading my personal finance blog! You can learn more about my site here or you can jump right into the juicy stuff by reading my family’s own detailed debt free success story (which has formed the foundation of this site). Please consider signing up for my free email updates!

A recent advertisement by esurance (by Allstate) claims that one of the reasons they are able to save you money on car insurance is because they have a fleet of Ford Fusion hybrid claims cars.

how does esurance save you money

I certainly commend esurance for being socially responsible in their use of hybrid vehicles to reduce their carbon footprint. Indeed it is a great thing and I don’t disagree with their statement that they will save close to 69,000 gallons of gas by 2017 with their fleet of hybrid vehicles.

However, I do take issue with their implication that hybrid vehicles actually result in a net savings that is passed passed on to consumers. As I explained in a previous article, there are few situations where it makes sense from a cost savings and personal finance point of view to buy a hybrid vehicle. The math simply doesn’t add up. So how does esurance’s costing savings claim stack up?

Here’s a screen shot from my hybrid fuel savings calculator I created for that article using the two vehicles.

According to esurance's claim that they save money driving a fleet of hybrid claims vehicles, the average hybrid car would need to be driven for 5 years (150,000 miles) to reach the break even mark.

According to esurance’s claim that they save money driving a fleet of hybrid claims vehicles, the average hybrid car would need to be driven for 5 years (150,000 miles) to reach the break even mark.

As you can see in the graphic above, the average esurance vehicle would need to be driven for 150,000 miles before you would get to the break even point when comparing a Ford Fusion S Hybrid versus a conventionally powered Ford Fusion S.

Having seen some of the older Progressive claims vehicles still on the road (10 year old Ford Escapes for example) and recognizing how many miles claims agents drive each year (insurance agents I’ve spoken with average at least 30,000 mile per year), it is very possible that esurance might actually see a slight cost savings by operating a fleet of hybrid vehicles. Whether or not these savings are actually passed on to consumers is hard to gauge.

I guess esurance consumers will have to wait at least 5 years to find out!

Just remember, switching to a hybrid vehicle is a very socially responsible decision to make. Just make sure you fully understand the financial implications of buying a hybrid vehicle and don’t by into the hype that you’ll ALWAYS save money when buying a hybrid vehicle.

For more information on hybrid vehicle cost savings (and a copy of my fuel savings mpg calculator) check out my article Vehicle Fuel Efficiency MPG Savings Calculator!

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THANKS for reading my personal finance blog! You can learn more about my site here or you can jump right into the juicy stuff by reading my family’s own detailed debt free success story (which has formed the foundation of this site). Please consider signing up for my free email updates!

volvo v60 polestar review

I love Volvos! I’m not exactly sure when my “infatuation” started (or why for that matter), but when the canary yellow limited edition Volvo 850 T-5R station wagon was released in 1995 my affinity for Volvo was set and I knew that someday I would own that car!

volvo t-5r vs polestar

To me, the car was perfect. It was a high performance sports car built with the practicality of a station wagon. With the exception of it’s canary yellow paint job, it was a true “sleeper” car (meaning you could crush just about any other car at the stop light and they’d never know what hit them) and it had Volvo’s reputation for safety and bullet proof reliability (at the time) backing it up as well.

Unfortunately for me, I was only 17 years old at the time and that particular model only ended up being manufactured that one year (1995).

A few years later I did buy a used 1996 Volvo 854 Turbo (which was pretty fast in its own right) but it never quite captured my excitement and enthusiasm the way the 850 T-5R had.

volvo 854 turbo

In 2002 (at the urging of my wife) we bought a brand new silver 2002 Volvo S40 1.9 Turbo because it was “sportier” (tho it was nowhere near as fast as the 854 Turbo) and more importantly, it was easier to drive around in the big city than the larger 854 sedan (we were living in Boston at the time). While we also loved our Volvo S40, it too did not evoke the same enthusiasm and passion as that first Volvo T-5R I saw in 1995.

The following year (2003) my wife and I realized we had gotten a little too deep into consumer debt and committed to paying off our debt, buying a house and starting a family. There were not going to be any new Volvos for us for a long time.

Through it all our 2002 Volvo became an integral part of our family and after 13 Years, 180,000 miles and 3 kids, the car is still going strong today (although it is really starting to show its age being a New England car) and has solidified Volvo’s place in our family.

2002 volvo s40 bike rack ski rack

Here’s our 2002 Volvo S40 that we bought new 13 years ago. It is still going strong after 180,000 miles, 3 kids and whole lot of fun! But it still isn’t a T-5R!

With the car pushing into its 14th year of existence and our family’s “need” for a car suitable of transporting 5 people (2 Adults and 3 Kids) my wife and I are starting to seriously look at a new or “newer” car to replace our old 2002 S40.

As a personal finance blogger, and as a person who has struggled with car buyer’s remorse in the past (not for our Volvos, but for a leased Toyota 4 Runner), I really wanted to find an inexpensive used Volvo (or similar) with low miles.  I wanted to make a smart financial decision and buy a new car for the right reasons.

And Then This Thing Shows Up at My Local Volvo Dealership…

volvo v60 polestar review

Ladies and Gentlemen, say hello to Volvo’s new Limited Edition V60 Polestar Edition. Channeling the same understated sporty elegance as Volvo’s first “supercar” (the T-5R), the Volvo V60 Polestar Edition is a grocery getting rocket ship worthy of any parent’s longing. Sure, Volvo has released “R” editions and “R-Design” editions over the years, but there’s just something about this new Polestar edition that makes me want to have it NOW!

The car wasn’t even supposed to ever come to Maine. There were only a limited number of them shipped to the US and I was confident that they would end up in the warmer states this time of year. Especially with winter setting in. But as fate would have it, there my “new” dream car was staring me right in the face as I drove past the local Volvo dealership on my way back from my daughter’s gymnastics class.

My wife might say I’m going through a midlife crisis a few years early (I’m 37), but the car just seems so perfect the same way the T-5R did 20 years ago.

But with a sticker price MSRP over $51,000 it just wouldn’t be a smart financial move for us even if the banks did approve us for a loan. Especially where we’re still trying to pay off our mortgage.

Should I Buy my Dream Car?

As tempting as it is to pull the trigger on this awesome car, the reality is it just wouldn’t be a smart financial move (especially now with three young kids).

To help me think rationally and not make such an impulsive decision to buy an expensive car I may soon regret, it helps to put things in perspective.

8 Ways to Talk Yourself Out of Buying a New Car:

1) If my mortgage was paid off, would I borrow money against my house to buy this car? This alternative way of looking at financial purchases was first introduced to me back in 2003 when my family first got serious about our personal finances. Even if I had the money to pay cash for this car (which I don’t), I wouldn’t in a million years borrow money against my house to buy this car that my kids are going to do nothing buy destroy with the pre-packaged applesauce “squeezies”, left over snack bags of rotten grapes and pretzel crumbs.

2) If I did finance the car, am I going to be as excited paying $800+ per month a few years down the road after the excitement of the “new car” is gone? Most likely I’m not going to be.

3) Would I rather take the difference saved by buying a slightly used car and put it towards my children’s college savings or pay off the remainder of our mortgage balance? Most likely I would (although it sure would be a lot of fun driving that car around).

4) Do I really need to buy a $50,000 sports car at the beginning of a cold Maine winter and be afraid to drive it anywhere and have it covered in the nasty salty brine de-icing chemicals that are sprayed on Maine highways? ABSOLUTELY NOT!

5) Do I really want to worry about the kids bumping into the car with their PowerWheels, Bikes and Razor Scooters while the car is parked in our driveway or in our garage? Probably not!

6) Do I really need to be behind the wheel of a car that can go 160 mph (electronically limited) and the potential speeding tickets AND JAIL TIME that come with that? Nope, not me!

7) Do I really want to deal with the ridiculous cost of maintaining a high performance sports car (especially one from Sweden)?  Nope; I know all too well about how much it costs to “properly” maintain even a standard edition Volvo. Polestar vehicles are going to be even more expensive to maintain due to the limited availability and exclusivity of the one of a kind parts.

8) Do I really want to take a hit on the depreciation of the vehicle as soon as I drive it off the lot (and every year thereafter)? Don’t think depreciation is a big factor on high performance European Automobiles? Try comparing the price of a new BMW M3 or Audi S4 to a model that is 3 or 4 years old. Or you can read my article on the shocking cost of buying a new car vs. buying a used one.

I really love this car and I’m super happy for anyone that can reasonably afford to buy their dream car without making financial sacrifices in other areas of their lives. For me though, taking a little while to think about the decision to buy a new car vs. acting on solely on what I “wanted” has likely saved my tens of thousands of dollars down the road.

But rest assured that the dream is not lost. I still believe that someday down the road, I’ll be able to pick up a slightly used version of this car at a steep discount. And who knows, maybe I’ll even find a rare Volvo T-5R to park next to it!

Hopefully my experience will help you in your decision as well!

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