Save Money When You Buy or Sell a House

There's a new company out there called Redfin which is shaking up the real estate industry that can save you a ton of money the next time you buy or sell a house.

Normally, when you sell a house, the realtor charges you a commission equal to 6% of the sales price. If the buyer has a realtor, the selling realtor will split his 6% with the buyer's realtor, so they each take 3%. With house prices as high as they've been many selling realtors will take 5% or even less, if you negotiate.

Redfin is much cheaper and better.

If you are selling your home, Redfin charges a flat fee of $4,000 ($3,000 if you agree to pay before your home sells (but not in California)), and will list your home in the MLS, on google, on Craigslist, and will put a sign in your front yard. You host home tours, and they handle scheduling the showings and the paperwork needed to sell your home. Because Redfin is a self-service seller, your home may not sell, and other Realtors may be hesitant to show your home if there is no commission to share.

However, if you are buying a home, Redfin is totally the way to go. Redfin will keep 1/3 of the 3% commission that the selling realtor gives them and will refund 2/3 of the 3% commission to you. That means you get 2% off the agreed price. You'll even get a Redin realtor to show you the houses that are for sale. Redfin's website is very powerful, and allows you to search MLS listings using a variety of options and see all matching homes on a map of the area.

Now, I haven't actually used Redfin, so I can't say whether the service is good or not, but they do offer a 100% satisfaction money-back guarantee.

http://www.redfin.com/

The Best Credit Card

I present my choice for the best credit card:

Pentagon Federal Credit Union's Platinum Rewards Card.

This credit card offers 1.25% cash back on every purchase, and 5% cash-back on gasoline purchases. Unlike most credit cards which require you to call in and request your cash back or that give you cash back only once per year, Pentagon Federal CU automatically credits the cash back amount to your credit card every month.

Membership in PFCU is available to anyone who pays $20.00 to join the National Military Families Association. For more information, see http://www.penfed.org/

Free 411

Most phone companies charge $1.00 or more for directory assistance (411) service, but you can get it completely free.

There are currently two options for getting totally free 411 services.

The first is Google 411, which is provided by Google and presently has no advertising: 1-800-GOOG-411 (1-800-466-4411). The Google service does not have live operators to assist you, but it will connect you to your listing at the end of the call. Google's service uses Google's local business search database.

The second option is 1-800-FREE-411 (1-800-373-3411) which is also free but runs several advertisements before you can get your listing. Unlike Google, a live operator is available if you have trouble, but they will not connect your call.

How to buy a new car

Here are my simple rules for getting the best deal on a car, and how to avoid getting ripped-off by a car dealership.

1. Read my blog entry entitled “What car should you buy?”

2. Do not buy a car from a corner car lot. Only buy a car from a private party or an authorized dealer of the car you want. For instance, do not buy a used Toyota at a Ford dealership. If you buy a used car from a private party, have it checked out by a mechanic at an authorized dealer before you buy it. Never take "out of state delivery," because doing so will probably eliminate your rights under your local lemon law.

3. My favorite dealerships are Penske owned dealerships (i.e., Penske Honda (Ontario, California), Penske Toyota, Toyota of Rancho Santa Margarita, Longo Toyota). When you call the dealership, ask for the “fleet manager” or the “internet manager.” Note that these “managers” are just salesman who do most of their work on the telephone. They will almost always quote you a price on the telephone that is fairly reasonable. Call several different dealerships and get price quotes from each.

4. Before you go to the car dealership, find out the price you can buy the car from http://www.carsdirect.com/. You might even consider buying from them, but if you don’t, make sure that you don’t pay more than you could have from Carsdirect.com. Note that Penske is a part-owner of Carsdirect.

5. If you intend to finance, before you go to the dealership, get a finance offer from a bank. Check out http://www.bankrate.com/ for the best interest rates. If the dealer can offer you a better rate (they often can), take it. Otherwise, use the financing you got from the bank.

6. Never lease a vehicle. Leases are an excellent value for the dealer, but almost never for the consumer. Remember that the monthly payment on a lease will be much lower than a purchase because at the end of the lease, you do not own the vehicle. If you can’t afford the payment necessary to own a vehicle, then you can’t afford the vehicle. Don’t lease it!

7. Never negotiate your monthly payment. Dealers love to negotiate this way, because once you select a monthly payment (say $300 per month) they can often inflate the price or the interest rate or the length of the loan to reach the monthly payment you want. Negotiate the price (using carsdirect.com price as a maximum) and the interest rate (using the pre-approval letter you got from your bank as a maximum).

8. The interest rate, like the price of a car, is negotiable. This negotiation usually takes place in the finance office after you have agreed on a price with the salesperson. The finance “manager” (another non-manager with a "manager" title) gets paid based upon what you “buy” from him, including financing, extended warranties, and other types of “protection.”

When negotiating the interest rate, ask the finance "manager" to show you the letter from the financial institution which states the “buy rate.” The buy rate is the rate that the dealer can get from the bank. Banks send buy rate letters to dealers weekly (or more often) stating the rate for each type of vehicle and credit score.

When the dealer seeks approval for your loan from the bank, the bank will fax or e-mail a approval letter stating your “buy rate” and the “spread” (which is the number of percentage points the dealer is allowed to mark-up the loan). Ask to see the approval letter. Agree to pay the buy rate, and nothing higher. It is often easier to do this if you tell your fleet or internet “manager” in advance (before you come to the dealer) that you will not finance through the dealer unless they give you the buy rate.

Sometimes the dealer will claim that they don't know what you are talking about. If the dealer won’t show you the buy rate, thank the finance guy and tell him that you’ll use your own financing or go to another dealership. Since the finance manager will make more money if you finance through him, he will almost always cave in and do what you want.

9. Remember that the more time you spend with the salesman and the finance “manager”, the more desperate they will be to make the sale. They don’t get paid unless you buy the car, and thus, the more time you spend with them, the more desperate they will be to keep you from walking away.

If the dealer won’t budge on a particular issue, politely thank them for their time and begin to leave. You’ll almost always see an immediate change in their attitude. The longer you are at the dealership, the harder the dealership employees will push you to agree to a deal. Remember that their attitude is based upon desperation: They often need your sale today to meet a sales goal set by the dealer or the manufacturer, or just to pay their bills, and they believe that if you leave, you will never come back. You rarely need to buy a car today. I often find that I get the best deal if I repeatedly tell them that I need to think about it, and threaten to come back another day.

10. Never buy any extras including service contracts, extended warranties, any kind of insurance, or any other kind of protection from the car dealer. If you believe that the car you are buying is so crappy that it needs extra protection, you should probably buy a different car.

Banking Online

Does your bank charge you any fees for keeping your money?

If it does, you should consider an online bank. Most online banks have much better terms, including no fees, free checks, free online bill payment, and good interest rates. Many online banks will provide you with free, postage paid envelopes to mail deposits, so you never have to drive to the bank again. Many allow you to electronically link your other bank accounts so you can transfer money between different accounts for free. A few even refund the ATM fees charged by other banks. If they are FDIC insured (find out at fdic.gov), your deposits have the same safety as if they were at a local bank.

Check out these online banks (which were FDIC insured as of when I posted this message):

http://www.ebank.com/
http://www.statefarmbank.com/
http://www.virtualbank.com/
http://www.everbank.com/
http://www.penfed.org/
http://www.farmbureaubank.com/
http://www.cnbt.com/
http://www.etradebank.com/
http://www.schwabbank.com/
http://www.ufbdirect.com/
http://www.nbank.com/
http://www.dcu.org/

Check out this list of online banks that will refund ATM fees imposed by other banks:
http://ibankdesign.com/board/index.php?showtopic=117

And check out this list of banks that pay high interest rates:
http://www.fatwallet.com/t/52/437553/

Here are the questions you should ask each bank before you open an account:

1. What is the minimum balance to avoid monthly fees? What is the monthly fee?
2. Does the bank pay interest? How much?
3. Are checks free? Is online bill payment free?
4. Does the bank offer free postage paid deposit envelopes?
5. Will the bank rebate ATM fees charged for using other bank ATMs?
6. Does the bank offer online electronic funds transfer to your other bank accounts?

Shipping your luggage on the cheap rev. 3.0

With the increased airline security, I've seen a lot of articles about shipping your luggage separately to avoid the hassle of carrying most of your bags to, from, and through the airport.

Shipping your luggage seems like a no brainer. You can avoid having to take your bags to the airport, wait in line to check your bags, wait at the airport to retrieve your bags, and the risk that your bags might be lost by the airline.

The only downside is planning ahead a few days before you leave and paying a little extra money. Also, FedEx could lose your luggage just like the airline can, but at least you have a tracking number. If you ship your luggage sufficiently in advance, you can make sure that it arrives a day before you leave, so you know your bags will be there when you arrive.

There are many specialized services that charge several hundred dollars per bag to ship your bags. The prices are pretty high, though, which prompted me to ask: Can't I just do this myself and save money? The answer is YES. For a typical 40 pound suitcase from California to Washington state, it can cost $20 per suitcase if you can ship it ground at least three days before you leave. If you ship 2-day express air, it costs around $50.00.

Here's what you need to do:

1. Call your destination (hotel, friends, whatever) and ask for their shipping address and whether they will accept packages for you before you arrive. If you're staying at a hotel, ask whether they will charge you for receiving and holding your package. FedEx charges more to deliver to a home than a business, and its more likely that someone will be there to receive your package if you ship to a business.

2. Go to Fedex.com, and set-up a FedEx account. Setting up an account is free and makes the process much easier. Also, if you have an account, you get 15% off the shipping costs.

3. Decide whether you want to put your lugage into a box or not. FedEx allows you to ship luggage without using a box, and they offer a special "Tie-On Tag" just for luggage. Using a box offers increased security because the FedEx personnel won't know that they are shipping luggage. If you don't use a box, you should definitely lock your luggage.

If you are going box-less, login to your FedEx account. Get to the home page. Click on "ship" under "package/envelope services" and a pull-down menu will appear. Select "Order Supplies." A new page will appear. Click on "FedEx Ship Manager at fedex.com" and order a supply of FedEx Laser Labels (Item 146525). Then go back to the "Order Supplies" screen and click on "FedEx Express Specialty Supplies." Order a FedEx Airbill Tie-On Tag (Item 150454). These handy hard plastic tags will allow you to firmly attach the Federal Express shipping label to the handles on your suitcase. You'll need one for each suitcase. Although these items refer to "express" shipments, they can also be used for ground shipments.

If you choose to ship your luggage in a box, use the instructions above to order the FedEx Laser Labels only. Measure your luggage with a tape measure, and take into account the handles and straps. Don't rely on the measurements from the manufacturer. You can buy your cardboard boxes from www.uline.com. They have a handy search utility that will allow you to search by size and they sell boxes at reasonable prices.

I have a standard Kirkland 26" rolling suitcase ($139.99 on Costco.com), and it fits perfectly in a 28 x 20 x 12 box. A standard Kirkland 22" rolling suitcase - the largest you can take with you onto a plane ($109.99 at Costco.com) - fits in a 24 x 15 x 11 box.

If you are in a hurry, you can always go to a FedEx/Kinko's and pick-up the Tie-On Tag, manually fill-out the shipping labels, and ship at the same time.

3. Weigh each suitcase on a bathroom scale. Login on FedEx.com and click on "ship" (under package/envelope services), then select "Get Rates and Transit Times." Fedex will give you the price and tell you exactly how long it will take to get from your location to your destination. If you can ship sufficiently in advance, ground is cheapest. Then Click on "Ship" again and select "schedule a Pickup."

You'll have to choose between ground and air service. For shipping your luggage to your destination, I recommend 2-day express air service. Express air service is higher priority than ground. During busy seasons, FedEx will deliver the express air stuff first, while the ground sits and waits. For shipping luggage back home, ground should be fine.

A pick-up costs $4.00 more for Express and $12.00 for ground, which is well worth it. You can also schedule a pickup by calling 800-GO-FEDEX. A ground pick-up requires 24 hours advance notice. An express pick-up can usually be done the same day that you call.

If you want to skip the pick-up, you can always take your package directly to a FedEx/Kinkos.

4. Login to Fedex.com and print out a shipping label. Pull down the "Ship" menu and select "prepare shipment online." You'll need to enter the destination information, including a phone number, select a service (ground, second day, etc.). Before you move to the next screen, be sure to check shipment notifications for "shipment, exception, and delivery" in the right hand column, and enter your e-mail address. Also be sure to enter the value of the items you are shipping, including the cost of your suitcase in the declared value. The default declared value is $100 per package for ground and $500 per package for express. Your clothing and suitcase are almost certainly worth more, so be sure to enter the right amount.

At the bottom, click on "check recipient address" to make sure that the address you entered is correct. FedEx charges extra if they have to correct even the Zip Code, so always run this double-check. Then click on "Get Coutesy Rate" at the bottom to see how much your shipment will cost. After you finish, print out your shipping label and attach it to your box or the Tie-On Tag.

Now, either wait for the pick-up you scheduled or go the nearest Fedex/Kinko's and drop off your shipment.

If you don't have a FedEx account, you can simply go to a FedEx/Kinko's, fill-out the necessary paperwork by hand, and ship your luggage all at once.

Either way, be sure to get a receipt showing your tracking number.

Saving Money on Rental Cars

If you've ever needed to rent a car, you've probably noticed that Hertz, Avis, and all of the big companies are much too expensive. The secret to renting through Hertz and Avis, and the other large rental car companies, is to get a discount. The undiscounted rates are way too high, but it seems that discounts are available to almost everyone.

When making a reservation through Hertz, you have an option to supply a CDP number, which is the code for the discount plan. You can get a discount on Hertz through dozens of organizations, and you probably already belong to more than one of them. Here's a list of common groups that qualify for discounts, along with the CDP numbers that I found on their web-sites or in magazines:

Costco: 336436
American Bar Association: 13000
AAA Southern California: 00014
AARP: 50075
Marriott Rewards Program: 154080
Southwest Airlines Rewards: 205418
American Airlines Mileage Plan: 217692
Alaska Airlines Mileage Plan: 321739
American Express Open Card: 306613 (this was in a magazine ad for Amex)

If you don't belong to any of these organizations, you can join most of the rewards programs (American Airlines, Alaska, Southwest, Marriott) for free. Different organizations have different discounts, so if you belong to more than one, check them all. Also, organizations also offer additional coupon codes to save even more money, but the coupons change every few months, so check your organizations' web-site before making your reservation.

Avis has a similar discount program, but their number is called an "AWD number". They also offer coupons. Check the web-sites of the organizations listed above to find your AWD number and coupon codes, or go a google search for "Avis AWD".

To get the best rates, always rent over a weekend. Weekday rentals are the most expensive because they assume you're a business rental. In fact, it is sometimes cheaper to rent for a whole week (because you go over a weekend) than it is to rent from Monday to Thursday. That's right: If you keep the car over a weekend, it is cheaper.

Also, some of these discount codes also qualify you for free membership in their elite/gold programs, which allow you to bypass the rental counter and go straight to your car. Check out the web-sites of any organizations that you belong to for more details. Or, do a search online for "Hertz Gold Free" and you'll find a list of organizations that qualify.

Here's a site with even more information:

http://www.mousesavers.com/hertz.html

Also, when renting, it is rarely a good idea to take the rental car company's insurance. Also, many major credit cards will provide the rental insurance for free, but only if you decline the rental car company's insurance. Check with your credit card company for details before you rent.

How to Save Money on Your Cellular Phone

There are two easy ways to save money on your cellular phone.

1. Most cellular companies have employee/student discounts. Just click on the appropriate link and enter your work/school e-mail address, and you may save up to 25% on your cellular bill:

Cingular:

https://www.cingular.com/discounts

Sprint PCS:

http://sprint.p.delivery.net/m/p/nxt/ais/wdyw.asp?id12=NEXTEL_promo1_WhereDoYouWork

Verizon:

http://b2b.vzw.com/employee/employeediscount.html

If these links don't work, just type in the name of your cellular provider and "employee discounts" and the appropriate link will show up.


2. Most cellular companies have special departments that handle customers who call to cancel their service. These departments are empowered to make special deals to keep departing customers, even if you are on a contract.

Just call your cellular provider and tell them that you are thinking about cancelling your service, and ask for the retention department. Explain that the service just costs too much money and see what they say.

How to Save Money on Long Distance Calls

Do you pay more than 3.5 cents per minute for Long Distance calls?

The cheapest long distance telephone companies do not advertise. To find the best choice in your area, go to http://www.abtolls.com/. Choose your state on the front page and you'll immediately see a list of a dozen long distance companies and their rates.

Look for a provider with the lowest rates. Note that the "in state" and "out of state rates" are often different, so pick according to the type of call that you most often make. Check to see if the provider charges a monthly minimum. Sometimes, it is better to pay a little bit more per minute if the company bills in six second increments. Many of these companies also offer very inexpensive 800 numbers, if you need them.

The Best Sprint Plans

The best Sprint PCS plans currently available are on the Sprint Employee Referral ("SERO") Plan. The strange thing is, you don't need to be a Sprint employee to get them.

Just go to www.sprint.com/sero, and use "savings@sprint.com" as the e-mail address.

$30 per month for 500 minutes
$50 per month for 1,250 minutes
$99.00 per month for 2,500 minutes

All plans include unlimited data/internet access (which would cost $15. per month extra on almost any other plan), unlimited roaming (on Verizon's network), unlimited long-distance, free nights and weekends, unlimited mobile to mobile. You have to buy a new phone and commit for two years to get the plan, but the phones are also reasonably priced.