≡ Menu

Hi, I’m Ben and this is 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!

Hello folks! I’m happy to announce the release of my new eBook “How to Get a Job on an Offshore Oil Rig“!

Expert Advice on Applying for Offshore Oil Rig Jobs:

As you’ll see in the table of content’s listing below, I cover everything you’ll ever need to know to get a job in the offshore drilling industry. This book can literally be life changing!

I’ve put a lot of time into this book and hope that you find it beneficial in your search for employment in the oil and gas industry.

300 Tower AdMy name is Benjamin Dinsmore and I’ve been working in the offshore oil and gas industry for the last 15 years. I currently serve as Captain and OIM (Offshore Installation Manager) on one of the newest, largest and most advanced oil rigs operating in the US Gulf of Mexico. I know exactly what recruiters are looking for when hiring for entry level positions and have personally reviewed and made recommendations on 100’s of resumes from prospective new hires.

As you may know, the Offshore Oil and Gas Industry is one of the fastest growing job markets in the US. Even without a college degree, employees can make over $100,000 annually after only a few years of experience on offshore drilling rigs. Make no mistake though; these employees work hard for their money.

While the overall US unemployment rate is still around 6%, oil drilling companies are struggling to hire, train and retain employees to keep up with the demand of an ever increasing number of drilling rigs operating in the Gulf of Mexico, South America, West Africa, Asia, Europe, Australia and North Sea.

Competition for offshore oil rig jobs is incredibly high but you CAN stack the odds in your favor when you start using the information and proven techniques outlined in this comprehensive guide to offshore employment.

What I share in my book is NOT common knowledge. I have been on the front lines of the offshore oil and gas industry for the last 15 years and I know EXACTLY what drilling companies and recruiters are looking for.

You will NOT find information anywhere on the internet that is as up to date and relevant as the material contained in this book.

While there no guarantees in life, if you are SERIOUS about getting a job on an offshore drilling rig, this book is exactly what you’ve been looking for.

Why’s the Book So Expensive?

I’ll be honest with you, the market for books about oil rigs is VERY limited. I literally have over 150 hours of work in this book from writing, editing, formatting and design and can promise you that you’re NOT going to find a higher quality or more comprehensive program on the subject of getting a job on an offshore drilling rig. If you’re not 100% satisfied with the quality of this book, and you really don’t think it’s worth what you paid, then I will happily refund your money.

paperbackstack_550x498

What’s in the Book: Table of Contents:

1. Introduction

2. Life on an Oil Rig
2.1. Culture
2.2. Recreational Activities
2.3. Sleeping Arrangements
2.4. Food
2.5. Communication with Home
2.6. Medical Care

3. An Introduction to Drilling Offshore Oil Wells
3.1. How Oil Companies Decide Where to Drill
3.2. The Success Rate for Drilling Offshore Oil Wells
3.3. How Oil Companies get Permission to Drill in a Particular Area
3.4. The Different Types of Offshore Drilling Rigs
3.4.1. Jackups
3.4.2. Semi-Submersibles
3.4.3. Drillships
3.5. The First Phase of Well Construction: “Spud-In”
3.6. Drilling a Hole for the Second String of Casing
3.7. Cementing the Casing
3.8. Running and Connecting the Blow-Out Preventer (BOP)
3.9. Marine Riser and BOPs In-Depth
3.10. Finishing the well
3.11. Evaluating the Well
3.12. Summary of Drilling Offshore Oil Wells

4. The Different Types of Oil Rig Jobs
4.1. Catering Department
4.1.1. Laundry Attendant
4.1.2. Room Attendant
4.1.3. Galley Hand
4.1.4. Prep Cook
4.1.5. Baker
4.1.6. Cook
4.1.7. Campboss/Executive Steward

4.2. Skilled Trades
4.2.1. Welder
4.2.2. Motorman
4.2.3. Mechanic
4.2.4. Sr. Mechanic
4.2.5. Mechanical Supervisor
4.2.6. Subsea Engineers/Trainees
4.2.7. Electrician
4.2.8. Electronic Technician
4.2.9. Sr. Electrician
4.2.10. Sr. Electronic Technician
4.2.11. Electrical Supervisor

4.3. Merchant Marine/Maritime Jobs
4.3.1. Ordinary Seaman
4.3.2. Able-Bodied Seaman (AB)
4.3.3. Bosun
4.3.4. DPO Trainee
4.3.5. Third Mate/DPO
4.3.6. Second Mate/DPO
4.3.7. Chief Mate/First Mate
4.3.8. Captain/OIM
4.3.9. Wiper
4.3.10. Motorman/QMED
4.3.11. 3rd Assistant Engineer
4.3.12. 2nd Assistant Engineer
4.3.13. 1st Assistant Engineer
4.3.14. Chief Engineer/Maintenance Supervisor

4.4. Deck Department Jobs
4.4.1. Roustabout
4.4.2. Assistant Crane Operator
4.4.3. Crane Operator
4.4.4. Deck Supervisor

4.5. Drilling Department Jobs
4.5.1. Roughneck/Floorhand
4.5.2. Lead Roughneck
4.5.3. Assistant Derrickman
4.5.4. Derrickman
4.5.5. Assistant Driller
4.5.6. Driller
4.5.7. Toolpusher
4.5.8. Drilling Superintendent/OIM

4.6. Administrative Jobs
4.6.1. Safety Officer
4.6.2. Medic
4.6.3. Radio Operator/Rig Administrator

5. How to Find Oil Rig Jobs
5.1. What You Need to Do
5.2. Basic Certification Required
5.2.1. Water Survival/Helicopter HUET Training
5.2.2. Rig Pass Certification
5.2.3. TWIC Card
5.2.4. Merchant Mariner Credential (optional)
5.3. Preparing Your Resume
5.4. Preparing Your Cover Letter
5.5. Where to Find Offshore Job Opportunities
5.6. Oil Rig Job Boards
5.7. Registering an Account on “LinkedIn”
5.8. Seek Out Current Oil Rig Workers
5.9. Transitioning From the Military
5.10. Offshore Drilling Company Job Listings (Career Pages)
5.11. IF ALL ELSE FAILS

6. Preparing for Your Job Interview
6.1. What to Wear
6.2. What to Say
6.3. Sample Interview Questions
6.4. Essential Concepts About Working Offshore
6.4.1. Safety
6.4.2. Risk Assessments
6.4.3. Permit to Work System
6.4.4. Observation Cards
6.4.5. Attitude
6.4.6. Commitment

7. About the Author

8. Appendix
8.1. Sample Cover Letter
8.2. Sample Resume

About the Author:

Captain Ben Dinsmore is the author of “How to Get a Job on an Offshore Oil Rig”. He currently serves as Captain and Offshore Installation Manager on a drillship operating in the U.S. Gulf of Mexico. His writing has appeared in Professional Mariner Magazine and he is a contributing author to gCaptain (the World’s largest maritime website).

He is a 1999 graduate of Maine Maritime Academy, former lieutenant in the United Stated Navy Reserve (honorable discharge), a USCG licensed Master Mariner of Unlimited Tonnage, and a USCG licensed Offshore Installation Manager (Unrestricted)

He is also a graduate of the Isenberg School of Management at the University of Massachusetts, Amherst with a Masters in Business Administration (M.B.A.).

On his days off he enjoys spending time with his family and friends, golfing, cruising around in his boat, and writing articles for his personal finance blog Trees Full of Money. He can also make a mean homemade pizza.

300 Tower Ad

{ 0 comments }

Hi, I’m Ben and this is 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!

Has your current or previous employer offered you a lump sum buy-out package in lieu of your pension? Deciding on whether or not to take a lump sum payment instead of monthly pension payments can be a very difficult decision to make.

worker-group

On one hand, you like the idea of having control of your hard earned money. On the other hand, the assurance of having a reliable source of income each month would be nice too.

To help you through this difficult decision, I have created this simple guide to decide whether or not you should accept a lump sum package from your employer or if you should opt to continue under the pension’s original provisions.

Cash Now vs. Cash Later

Let’s look at the following retirement lump sum vs pension scenario:

Ben is 55 years old. His company has offered him a lump sum retirement package of $150,000 today OR $1200/month for the rest of his life starting 5 years from now. Which scenario is the better deal?

To answer this scenario, we need to calculate the “present value” of what $1200/month for the rest of Ben’s life starting 5 years from now would be worth in today’s dollars. In other words, what is the current value of Ben’s pension offer.

We calculate today’s value of Ben’s pension by using what is called the delayed perpetuity formula which I explain in detail here:

The formula for finding the present value of a delayed perpetuity is p/r(1+r)^t

Where:

p = The total amount paid each year from the pension 12 months x $1,200/month = $14,400

r = The opportunity cost of capital (6% in our example) read more about this value here.

t = The number of years the perpetuity is delayed prior to initial payment (5 years in our example)

Microsoft Excel makes this really easy for us and we can just plug the numbers into any cell using the formula: =14,400/(0.06*(1.06)^5)

As you can see we get a “present value” of $179,342 for Ben’s pension.

You can download the free pension vs. lump sum buy-out calculator I created here.

Screen shot of Free Excel Spreadsheet used to calculate the present value of a pension (notice the formula used in the formula bar).

Screen shot of Free Excel Spreadsheet used to calculate the present value of a pension (notice the formula used in the formula bar).

Conclusion:

Since we already know the “present value” of the lump sum offer $150,000 AND we’ve calculated the “present value” of the pension payments starting 5 years from now $179,342. We can conclude (mathematically speaking) that keeping the pension and not opting for the lump sum buyout is the better deal.

Disclaimer: Everyone’s situation is unique. This analysis does not account for variables such as income taxes, lifestyle choices, other funds available, Social Security or any other factor which may affect your overall financial planning. Be sure to seek advice from a certified professional before making your decision.

{ 0 comments }

Hi, I’m Ben and this is 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!

2015 Open Enrollment Benefits Guide

It’s that time of the year again! That’s right…it’s Open Enrollment season!

Open enrollment periods (typically occurring at the end of the year for most employers) are the times when employees are able to make benefit package selections for the upcoming year.

2015 employee benefits guide

Knowing how to maximize your benefits for your family can help save you thousands of dollars a year but it will require a little planning on your part.

This guide will help you make the most of your employer’s 2015 benefits package and help ensure you’re getting the most value out of your employer sponsored benefits package.

2015 Health Insurance Plan Benefits:

Make sure you take time to review your employer's various health insurance options during the 2015 open enrollment period.

Make sure you take time to review your employer’s various health insurance options during the 2015 open enrollment period.

Under the Affordable Care Act (Obamacare), employers are not allowed to deny coverage for anyone based on preexisting medical conditions. They can, however, use “wellness programs” that offer incentives to employees for being pro-active in leading a healthy lifestyle or for engaging in other “preventative” activities such as receiving annual check-ups.

Physicals: Some companies are now offering health insurance plans with smaller deductibles or “credits” in 2015 if employees participate in a “voluntary” physicals during open enrollment periods. In theory, these screenings may detect early stages of a more serious disease which can be more easily treated than if the disease goes undetected until it becomes a bigger problem.

Some people are reluctant to participate in these voluntary physicals as they feel it is an invasion of their privacy. I see it as a win-win situation as around (you’re saving money and have better monitoring of your health).

Wellness Programs: Your company may offer discounts or free memberships to gyms, fitness centers, health food stores, tennis clubs or similar facilities. Take advantage of these opportunities. It would be a shame to let them go to waste. One company I visited had a cafeteria in which the “healthy” meal options cost substantially less than the fatty fried “unhealthy” options (more of a lifestyle choice than a benefit, but I still thought it was a cool idea).

Varying Coverage Levels:  If you’re employer offers several different tiers or levels of health insurance coverage (such as premium or plus plans or gold, silver and bronze level plans) take a look at your average medical expenses over the previous 2 or three years and calculate what your out of pockets costs would have been under each of the various coverage options.  Compare your out of pocket expenses and co-pays to the premiums you’d pay for each plan to identify the best savings for you.

Potential Savings: Maximizing your employer’s medical benefits could save you a thousand dollars or more a year depending on your family’s medical needs.

2015 Flexible Spending Accounts, Medical (FSAs):

I wrote a detailed report on 2015 Medical Flexible Spending Accounts (FSAs) last week and they are another benefit you can use to save close to $1,000 a year or more using pre-tax money (money you don’t have to pay income tax on) to pay for certain “qualified” medical expenses (co-pays, contacts, glasses, therapy, orthodontia, etc.).

Maximum Contribution: You’re allowed to contribute up to $2500 each year into a medical FSA account to be used towards qualified medical expenses. If you’re in the 25% tax bracket, you could save $625 in taxes each year!

Roll-over Provision: Also, under the Affordable Care Act (Obamacare), employer’s are now allowed to roll over up to $500 of unused funds (from employees accounts) towards the following year (unfortunately, it is up to the company if they want to offer this feature).  Be sure to talk to your employer’s human resources department to see if they honor this option.

Before the Affordable Care Act, any money left over in your FSA was turned back over to your employer. The made people reluctant to participate in their company’s medical FSA because they didn’t want to take the chance of losing the money.

Potential Savings: As mentioned above, depending on your income and federal and state tax burden, you could easily save $1000 or more each year by maximizing your employer’s FSA account.

2015 Dependent Care Flexible Spending Accounts (FSAs):

2015 dependent fsa flexible spending account guideSimilar to medical FSA’s profiled above, you can save a tremendous amount of money on taxes by utilizing Flexible Spending Accounts to pay for dependent care related expenses such as child care or any other person claimed as a dependent on your federal income taxes (child care, elder care, etc.).

Maximum Contribution: The current limit for dependent care Flexible Spending Accounts is $5000 (2015 Dependent Care FSA Limits have not been announced yet).

Potential Savings: If you have at least $5000 of child care each year and you’re in the 25% tax bracket, you could save $1250 in taxes each year by maxing out your dependent care FSA.

2015 Life Insurance Benefits:

Just because your employer offers life insurance as part of their benefits package, it doesn’t mean you can’t get a better deal somewhere else.

Group Life Insurance: Most employers offer some sort of group life insurance plan for their employees. Group life insurance is good for many people because it “groups” people of varying health together allowing people with higher risk health to get relatively inexpensive life insurance.  However, if you’re in good health, your premiums are helping to offset the cost of your less healthy co-workers.  You can usually get better coverage with a term life insurance policy.

Individual Term Life Insurance: If you’re relatively healthy, you can actually get an excellent term life insurance policy much cheaper than what some companies offer through their group life insurance options.  Shop around for the best term life insurance rates.  Never buy whole life insurance policies unless you have no other way to get insurance.

Life Insurance Value Depreciation: Remember that most life insurance policies are not adjusted for inflation. If you buy a 20 year $300,000 term life insurance (and something were to happen to you after 15 years) that $300,000 wouldn’t have the same buying power down the road as it would today.  Read more on inflation’s effect on term life insurance.

2015 401K Plan Benefits:

401k Contribution limits are expected to rise in 2015 but we won’t know for sure for a couple more weeks.  Regardless, open enrollment periods are a great time to review your current 401k contributions to make sure you’re taking full advantage of your employer’s 401k benefits package.

Consider Increasing Your Contribution Levels:  Remember, increasing your monthly contributions does not affect your take home pay on a dollar for dollar basis.  For more information, check out my article on 401k contributions and their affect on your take home pay.  You can also reference this handy table below:

401k Contribution Take-Home Pay Calculator.

401k Contribution Take-Home Pay Calculator.

Company Match:  At a MINIMUM, make sure you contribute enough money to your 401k plan to get your employer’s maximum matching contribution.

Be Careful When Maxing Out Your 401k:  As I’ve written in the past, make sure you don’t max out your 401k contributions too early in the year or you might miss out on your employer’s matching 401k payments the last few months of the year.

Annual Compensation Limits:  If you make over $260,000 per year (lucky you) you should also check out my article on 401k compensation limits and how they could affect your company’s matching 401k payments.

{ 0 comments }

Hi, I’m Ben and this is 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!

Are you thinking of increasing your monthly contribution amount to your company’s 401k plan?  Perhaps you’ve wanted to increase the amount you contribute to your 401k plan each month but weren’t sure if you’d still be able to meet your monthly financial obligations with the decrease in net take-home pay.

We’ll there’s good news you may not realize regarding 401k contributions!

Increasing your monthly 401k contributions does not affect your take home pay on a dollar for dollar basis.

Increasing your monthly 401k contributions does not affect your take home pay on a dollar for dollar basis.

Take a look at my handy 401k contributions table above.  If your household income pushed you into the 28% tax level, a $500 increase in monthly 401k contributions would result in your monthly take home pay “ONLY” dropping by $360.

Increasing your monthly contributions by $200 (at the same 28% tax level), would result in your take home pay being about $144 less per month.

As you can see from the 401k contributions chart above, increasing your 401k contributions closer to the annual 401k contribution limits is not as difficult as it may seem.

{ 0 comments }

Hi, I’m Ben and this is 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!

401k Annual compensation limits are probably one of the least understood variables that could affect your 401k retirement plan savings rate.

401k compensation limitsIt’s important to remember that regardless of how much you earn, you are able to contribute up to the maximum allowable 401k contribution limit each year.

However, the matching contributions that your employer makes on your behalf can be affected if you make over a certain amount each year (hence the term compensation limit).

In this article, I hope to explain annual compensation limits for 401k plans and provide an easy to understand example.

How 401K Annual Compensation Limits Work:

Each year, the IRS sets the maximum amount of money that an employer can use when calculating matching contributions to their employees’ 401k retirement plans. In 2014, this compensation limit (or salary limit as it is sometimes called) was set at $260,000.

What this means is that even if you made $500,000 a year (lucky you!!!) your company could only apply their employer matching contribution formula to the first $260,000 of your salary (under IRS rules).

Let’s assume your company matches 50% of your contributions up to a maximum of 5% of your salary.

If you spread your 401k contributions evenly over 12 months to hit your annual 401k contribution limit ($17,500 in 2014), you’d be contributing $1458.33 per month via payroll deductions.

Without 401k compensation limits, your company would also contribute $729.17 per month to your 401k account (50% X $1458.33).

The problem is, you would hit your annual compensation limit of $260,000 (for employer matching funds) sometime in July after which point your company can not legally match any more of your 401k contributions.

Instead of receiving 12 months of employer matching contributions in your 401k account, you’ll only receive the contributions until sometime in July (because you’ll have hit the compensation limits).

In other words, without compensation limits your company would have paid about $8750 per year in matching contributions ($729.17 X 12 months).

With 401k compensation limits your company will only pay about $4375 a year in matching funds ($729.17 X 6 months) because they can only pay them through June and maybe the first week or two of July.

If you want to maximize your employer’s matching 401k contributions you need to time your contributions so you hit the maximum allowable contribution limit in the same month you hit your annual compensation limit.

Using our scenario above, you could contribute $2500 per month to your 401k through July and receive $1250 per month as a company match from your employer into July maximizing your employer’s contribution payments at around $8500.

Understanding 401k Annual Compensation Limits can save you over $4,000 in lost employer matching contributions.

The downside to this is you will have less take home pay the first 7 months or the year but at a salary over $260,000 per year, you shouldn’t have any trouble budgeting around this and getting by!

Good luck!

{ 0 comments }

Hi, I’m Ben and this is 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!

It’s that time of the year again when many companies allow their employees to make changes to their respective benefit package options. This “open enrollment” period, as it has become known, is a great opportunity for employees to review and maximize their benefits to make sure they are getting the most value out of their companies benefit plans.

With a little planning, you could save up to $1000 a year or more in taxes by fully utilizing your company's Medical Flexible Spending Account (FSA).

With a little planning, you could save up to $1000 a year or more in taxes by fully utilizing your company’s Medical Flexible Spending Account (FSA).

One area where employees can potentially save a bunch of money is through the use of Medical Flexible Spending Accounts or “FSAs” as they are more commonly known.

Medical Flexible Spending Accounts (FSA) allow employees to pay for certain out-of-pocket medical expenses (medical co-pays, glasses, contacts, hearing aids, speech and physical therapy, medical equipment, etc.) using “tax free” money.

How Flexible Spending Accounts Work:

Employees who participate in an flexible spending account (FSAs) are set up with an account (usually with an independent bank or similar financial institution). The employer decides how much he/she wants to contribute to this account over the course of the year and these contributions are then deducted from the employee’s paychecks TAX FREE spread out evenly over the course of the year.

Many FSA accounts are linked to a debit card allowing employees to pay approved medical expenses directly without having to seek reimbursement.

Many FSA accounts are linked to a debit card allowing employees to pay approved medical expenses directly without having to seek reimbursement.

Employees participating in an FSA are often given a debit card they can use (linked to their FSA account) to pay for approved expenses. In other instances, an employee may need to pay for the expenses and submit receipts to be reimbursed from the FSA account.  Sometimes, the FSA bank administrator your company uses may require you to submit receipts for items purchased with the debit card as well.

The maximum amount you can set aside in a flexible spending account for 2014 is $2500. Many people expect that FSA limits will be raised for 2015 but we won’t know for sure until later this month when the IRS announces their FSA contribution limits for 2015.

How Much Can You Save With A Flexible Spending Account:

Example: Let’s say you had a combined federal and state tax rate of 30% and you had $2,000 of out of pocket medical expenses last year. How much would you save if you fully utilized your company’s FSA plan?

Without an FSA: If you didn’t participate in your company’s FSA you would have spent the full $2,000 out-of-pocket using money you’ve already paid income taxes on.

With an FSA: If you had committed $2,000 to your FSA last year (in anticipation of the out-of-pocket expenses) you could have paid for these expenses using pre-tax money (money that you don’t have to pay income tax on).

What does this mean? It means that in order to have $2,000 of “after tax” money at an income tax rate of 30% you actually had to earn about $2860:

$860 MORE than had you used “before tax” FSA money)

On a before tax basis, you come out $860 ahead by using the FSA! Even after paying taxes on the $860 you “saved” by using the FSA you still come out $602 ahead with money that you can use for anything (like paying down your debt as we did).

What Happens to Unused Money in an  FSA:

FSAs used to have a “use it or lose it” provision which meant if you didn’t use all the funds in your account, the funds would be surrendered back to the company (to be used toward certain administrative costs, etc.). The Affordable Care Act (Obamacare) now allows up to $500 to be carried over into the following year to help reduce some of the risk of deciding how much money to contribute to a FSA.  You still need to be careful when choosing how much money to contribute to your FSA to make sure you don’t exceed this $500 carry over provision.

{ 0 comments }

Hi, I’m Ben and this is 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!

Vehicle Fuel Efficiency MPG Savings Calculator

If you’re considering the purchase of a hybrid vehicle like the Toyota Prius or fully electric vehicle like the Nissan Leaf or Tesla Model S, you’re probably well aware that these fuel efficient models come with a steeper price tag than similarly equipped vehicles with traditional gas or diesel engines.hybrid fuel savings calculator

You’re probably also aware that you might actually save money in the long run by paying less in fuel.

I’ve created this free Excel based fuel savings comparison calculator to help you calculate and compare the annual fuel savings between two different vehicles (whether the vehicles are hybrid or not).

The program is super easy to use. Not only will it project your annual fuel savings between two different vehicles, it will also calculate how long it will take you to “break even” (in years).

vehicle mpg savings calculator

This screenshot shows the annual cost savings and years to “break even” between a 2015 Camry LE and a similarly equipped 2015 Camry LE Hybrid. Note the 8.6 year “break even” point.

Instructions for MPG Fuel Savings Program:

1) Download Free Program: Click here to download my free fuel savings comparison calculator.

2) Open the Program: Double click on the file and it should automatically start if you have Excel installed on your computer.

3) Enter Price of Each Vehicle: In order for the program to make a comparison between the two vehicles, it needs to know the value or price of each. You should enter the cheaper vehicle’s data in the “Vehicle 1″ spot.

4) Enter Your Est. Yearly Mileage: Enter the number of miles you expect to drive each year.

5) Enter the MPG Rating of Each Vehicle: This information is easily available online through the vehicle’s manufacturer or various other car information websites.

6) Enter the Average Fuel Cost Per Gallon: The last entry you need to make is the average price of fuel in your area.

7) You’re Done!: Once you’ve entered all the above information and click “enter”, the program will calculate your annual fuel savings and an estimate of how long it will take you to “break even” between buying a traditional gas powered car vs. a similarly equipped hybrid or electric model.

I hope you’ve found this fuel cost comparison calculator useful!

Note: The calculator does not calculate additional cost variables such as additional insurance costs, taxes, maintenance and other costs associated with more expensive vehicles.

{ 2 comments }

Hi, I’m Ben and this is 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!

Should I Repair My Car or Buy a New One

The authors 2002 Volvo S40 with 180,000 miles.

The authors 2002 Volvo S40 with 180,000 miles.

As cars get older, they get more expensive to maintain. One of the questions I get on my personal finance blog is how to decide if keeping your current car is cheaper than buying a new (newer) one.

I recently took our 2002 Volvo S40 to a local mechanic shop for its annual state inspection (annual vehicle inspections are required in Maine).

I knew the car would likely need a little bit of work to pass inspection. After all, I bought the car new 13 years ago and it had over 185,000 miles on it.

However, I was shocked, amazed and disappointed when the service manager told me that my car was “tired” and would need roughly $4,000 worth of work in order to be issued a new inspection sticker. The complete work list was as follows:

New Front Strut
Rusted Bumper
Damaged Wiper Blade Arm
New Wiper Blade
Rear Tires
Troubleshoot Check Engine Light
Oil Leak

Even though the car was becoming a “little” too small for our growing family of 5, we still absolutely loved driving the car and it had literally never let us down (never failed to start, never broken down, etc.). We had become very attached to the car over the years and were reluctant to replace it.

But the facts were unavoidable. Even in a condition where the car could pass inspection, it was still only “worth” about $2,000 according to the used car value guides. At what point would it make sense financially to replace our current car versus sucking it up and making the repairs.

We knew the car was on its last legs, but we really didn’t want to shell out a bunch of money for a newer car that would only get used for 3,000 or so miles per year (the old Volvo is our second car).

DIY Do Your Own Auto Repairs:

While I’m by no means a skilled auto mechanic, I was able to correct some of the maintenance issues on our cars. After investigating why the windshield wiper arm was not working properly, I noticed that the swivel piece on the arm had rusted up and it was easily fixed by exercising it loose with a little WD-40. You’d be amazed what a quick search will reveal on Youtube or even on Google when it comes to easy DIY guides to perform basic car repairs.

Get A Second Opinion from Another Mechanic:

No matter how bad your vehicle’s diagnosis may be, it doesn’t hurt to take your car to another mechanic for a second opinion (just like a second opinion from a doctor). Ask around to your friends and family for a trustworthy and honest mechanic.

In our case, the mechanic basically diagnosed our car with the same issues the previous mechanic had (that I hadn’t already fixed), but his hourly rate was cheaper he was able to recommend less expensive solutions to those problems as well.

Used Parts: On older vehicles such our 2002 Volvo, there are plenty of quality used parts available (salvaged from other vehicles) that still have plenty of life in them. Instead of spending $400 for a new OEM part at the dealership, my mechanic was able to find a quality used one for about $70.

After making several repairs ourselves, and then finding a trusted mechanic that was familiar with our particular make and model of car, we were able to properly fix the car for a quarter of what the initial repair estimate was (about $900).

Don’t give up so easily on your vehicle if it appears worn out and needing replacement. In most cases you’ll be better off financially repairing your current vehicle vs. buying a new or “newer” one IF you explore all available options.

{ 0 comments }

Hi, I’m Ben and this is 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!

Does it EVER Make Sense to Buy a Timeshare

timeshare pros and cons
Purchasing a timeshare is usually not a good deal for the buyer. However, there are certain situations when purchasing a timeshare may be worth it for you and your family. To help you along in the process, here is a quick guide to help you understand the pros and cons of buying a timeshare and whether or not buying into the timeshare lifestyle is a good value for you.

Owning a Timeshare vs. Renting a Condo:

My experience having sat through several timeshare sales pitches over the years is that you can often rent a comparable condo or timeshare unit for the same price as what you’ll end up paying in yearly maintenance fees, taxes and insurance on a timeshare [let alone the actual purchase price of the timeshare].

At one particular timeshare resort in Orlando, FL two years ago, my wife and I were offered the “opportunity” to buy a one week ownership (each year) for $18,000 per year plus an annual maintenance fee (including taxes and insurance) of $780.

While we were participating in the sales pitch to get free tickets to Disney, we still gave the salesman an honest chance to sell us on the idea that timeshares were a good value. Fortunately, we saw through all the high pressure sales tactics timeshare salespeople often use and recognized that, financially speaking, purchasing a timeshare was not a good idea.

After trying every trick in the book to get us to sign on the dotted line to purchase the timeshare, I had to break the news to him that we only paid $680 the entire week to rent the same sized unit he was trying to sell to us for $18,000 plus a $780/yr maintenance fee.

Unfortunately, you really can’t reason with a timeshare salesperson and we eventually had to get up and simply walk away.

Should You Buy a Timeshare?

If you’re seriously considering purchasing a timeshare, here are several questions you must consider to make sure owning a time share is a good fit for your family’s lifestyle.

1) What would it cost to rent a similar timeshare unit/condo in the area compared to the purchase price and yearly maintenance fees for the timeshare? In addition to traditional vacation property rental sites, there are a variety of new options available including airbnb.com which has become very popular with people looking for lodging a various vacation destinations.

2) Are there timeshares for sale on the secondary market (Craigslist, Timeshare Listing Websites, etc.) cheaper than what you can buy through the resort’s sales office [Hint: You can usually buy timeshares for pennies on the dollar from sellers who are desperate to get rid of them].

3) What is the resort’s history on raising maintenance fees?

4) Are you set on visiting the same vacation destination year after year?

5) If you are interesting in “trading” your timeshare for a different resort, how much will it chase to exchange your week?

6) How friendly and helpful is that staff, and what is the turnover ratio in staff at the resort [Tip: If there is a lot of turnover at the resort people are less likely to be committed to their jobs and in turn be less attentive to your needs as an “owner” at the resort]. The last thing you want to do is vacation at a resort in a timeshare you own where the staff doesn’t give a damn about you. If you receive bad service a hotel it’s no big deal to book a different hotel next time. Once you commit to ownership of a timeshare, that’s it…you’re basically stuck with whatever service you get.

7) What does your timeshare maintenance fee cover? How much of your timeshare maintenance fee go to “administrative costs” and how much of the maintenance fee goes to actually maintaining the property (furniture upgrades, facility improvements, etc.). If the timeshare salesman can’t answer these questions or provide reasonable documentation, then I would be very suspicious.

I’ve seen situations were timeshares have been very rewarding to families who’ve bought them (my own family included).

Unfortunately, I’ve also seen situations where people have spent 10’s of thousands of dollars on timeshares, never used them, and then couldn’t give them away if they tried (they actually had to pay someone to take the timeshare just to get out from underneath the maintenance fees).

Do yourself a favor and don’t put yourself in a similar situation. Make an informed decision on whether or not purchasing a timeshare is a good deal for your family and don’t succumb to the high pressure sales tactics used by time share salespeople. And NEVER, EVER sign for a timeshare without sitting on the decision for at least a week!

{ 3 comments }

Hi, I’m Ben and this is 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!

Nothing in life is free. This is especially true when it comes to extended warranties and insurance policies for common purchases such as automobiles, appliances, consumer electronics and other household products. One way or another, businesses will find a way to line their pockets whether you pay for it upfront or down the road.

To help you decide if purchasing an extended warranty is a good idea, I’ve created this simple guide.  Be sure to read my detailed report below as well.

extended warranty info graphic

Standard Warranties vs Extended Warranties

Almost every manufacturer offers some sort of initial warranty coverage for their products; this is just part of doing business as mistakes sometimes happen in the design or manufacturing process.

For example, new and certified pre-owned cars are usually protected by a 3 year 36,000 mile warranty (or similar). Home appliance manufacturers (Kenmore, Maytag, Bosch, Whirlpool, etc.) usually offer standard one year or two year warranties, and most home electronics are protected by at least a 90 day warranty.

However, if you’ve bought any of the above mentioned products over the last few years you’ve likely been offered an extended warranty package by the sales associate or the checkout counter associate. These extended warranties offer similar coverage to manufacturer’s standard warranties, but they’re usually not as comprehensive and in some cases they come with deductibles you must pay.

Consumer Alert: “Extended” warranties often run concurrent with regular manufacturer’s warranties. If your new lawn mower comes with a 2 year warranty from the manufacturer, the 4 year warranty you buy from Home Depot or Lowes isn’t really a 4 year warranty, it’s actually just a two year warranty that starts two years after the standard warranty expires. Don’t let the associate fool you when they tell you the additional coverage “only” costs X amount per year (because the first two years are already covered by the manufacturer’s warranty).

Manufacturer’s Warranties vs Third Party Warranties

We all know how expensive repair bills can be. There is definitely a reassurance in knowing that your car, appliance or cell phone is covered in the event that something happens to it. But at what point does it make financial sense to buy an extended warranty? Is there a point at which extended warranties are not worth the cost?

The answer to this question can usually be found when we understand what the motivation is behind the company offering the extended warranty.

Extended warranties do one of two things for the company offering them. The company is trying to make an additional profit by selling extended warranty packages (as is the case with third party issuers) or, the company is attempting to enhance the confidence and choices of its customers by offering an extended warranty as an option (versus building an extended warranty coverage into the sales price).

Manufacturer Warranties:

When it comes to pricing and intent, manufacturer’s warranties can be a better value for consumers than third party extended warranties [but are they still worth buying?].

While manufacturers do sometimes try to inflate their profits by offering extended warranties to customers, they also seek to enhance their brand’s attractiveness to potential consumers.

Take Sears for example. On one hand, they can appease consumers seeking maximum reliability by spending more money on the design and manufacturing of a particular model of washing machine that would theoretically be extremely reliable (we’re talking military grade construction).

The down fall of course is that this washing machine would be much more expensive and would turn away potential buyers who weren’t as concerned with reliability (they’re willing to take their chances and/or make any repairs needed themselves with less rigidly constructed models).

On the other hand, they can build the same model using normal construction techniques and give the consumer the choice of whether or not they wanted to pay more money for the “peace of mind” of the factory warranty and at home service repairs.

Third Party Extended Warranties:

Companies offering extended warranties to cover products manufactured by another company are what I refer to as third party warranty companies. Like virtually every other insurance provider, their entire business model is centered on people paying more in premiums than what they pay in claims for the repair or replacement of the various products they cover.

Third party extended warranty companies are experts in evaluating the reliability of particular products and adjust the costs of their coverage accordingly to make sure (on average) they come out ahead of the consumer.

A good (actually very bad) example of “third party” insurance or extended warranty coverage is the smart phone (iPhone, Samsung, etc.) insurance coverage offered by most major cell phone carriers.

In most examples, you’re spending at least $10 a month for insurance and then have to pay an additional $250 deductible in the event you actually lose your phone (or it is damaged, broken, stolen, etc.). This is an absurd amount of money especially considering most contracts allow you to “upgrade” to a new phone after a year or two anyway. You’re literally giving money away to a third party “business”.

Other examples of rip off third party extended warranties include those “official” looking auto warranty notices you get in the mail, extended coverage options sold at the counter at Lowes, Home Depot, Walmart, Target (you get the idea) and “home owner warranties” that are sometimes offered to you when you move into a new house..

Remember, if it was a good value to the consumers, third party extended warranty companies couldn’t afford to stay in business.

Extended Warranties vs Other Types of Insurance (Medical, Life, Auto, etc.)

One of the common arguments I get from people about my advice not to buy most extended warranties is that using my theories, I “probably don’t need medical insurance or life insurance either”.

Let me be clear that there is a very big difference between consumer product warranties and life or medical insurance (or even regular automobile insurance). The biggest reason why medical, automobile and life insurance is ESSENTIAL is that you are pooling the risk of dying, hurting other people or accruing crushing medical bills.

In other words, insurance companies basically facilitate a bunch of people pooling their money together to look out for each other in the event one (or some) of them get sick or die. Of course the insurance companies get compensated for this but most people can’t “self-insure” themselves (like many large corporations do).

This is one of the biggest advantages to having an emergency fund is that you can self-insure against minor financial setbacks and not give your money away to someone else to cover it in the event something might happen.

Your emergency fund probably can’t cover major medical bills very easily or provide for your family after your death if you don’t have adequate medical or life insurance. On the contrary, you probably CAN afford a replacement phone, blender or auto repair in which case you can self-insure in these areas of your life and avoid lining the pockets of third party extended warranty companies.

Please share your extended warranty coverage comments and suggestions below!

{ 4 comments }

Hi, I’m Ben and this is 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!

How to Agree with Your Spouse About Money

couple-arguing

According to a 2013 study by Kansas State University Researcher Sonya Britt, arguments about money (especially early on in a relationship) are the number 1 predictor that a marriage will end in a divorce.

If you’re serious about paying down your debt and moving towards financial independence, your biggest challenge may not be the interest rates on your credit cards…it might be your boyfriend, girlfriend, fiance or spouse!

Whether you’re just starting out in a relationship, or you and your partner have been together for a while, here are a few tips to help ensure this area of your relationship is on solid footing.

Review Your Finances Together:

In any relationship, its highly unlikely that you and your partner are both equally passionate about budgeting your money and tracking where all of your family’s money goes.  The fact that YOU are reading my personal finance blog is a good predictor that YOU are the one in your household who is taking the lead in making sure the finances are put together.

While its OK for one person to keep track of the money and pay the bills, it is equally important that this person communicates to the other person (even if they don’t really care) about how much money is coming in, how much money is going out and what is left over.  Both partners should have a rough idea of the household’s financial position.

Set Financial Goals:

The best way to get a reluctant spouse or partner on board with you about money is to come up with some basic financial goals.  Where do we want to be “financially speaking” 5 years from now, 10 years from now, etc? Do we want to take a family vacation somewhere special?  Do we want to pay the mortgage off and work at a less stressful job (or retire)?  Setting financial goals that you both can agree on can help make both of you more committed to achieving them.

Establish a Reasonable Budget:

Probably the single biggest issue regarding disagreements about money revolve around the budgeting process (or lack of budgeting process).  You each need to have reasonable expectations of what the other spouse’s needs and wants are and what their commitment level is towards achieving your shared goals.  If there is room for compromise in your budget (i.e. spending a little extra each month on golf equipment, or buying cool new shoes) its better to lose a few battles and still win the war (the war of fighting off debt and getting ahead financially).

To sum it up, communication is key.  Explaining to your partner why something is so important to you (in a way that they can understand it), will help you and your partner on your journey towards financial independence.

{ 0 comments }