Two Phone Calls = $500 in Savings

I recently made two phone calls in one day that literally put $500 in my pocket. Having been with the same insurance company for almost 10 years now, I saw that my car insurance would rise a little every year. The first time the rates were raised, I checked around and found that my insurance company still offered the best rates possible. The second time yielded the same result, so I stayed with my insurer. I guess that made me a bit complacent, as for the past few years, I haven't been doing any comparative pricing. But this year, with the help of online comparative pricing websites, I was able to finally get a cheaper rate, finally saving me $200 per year. In fact, I am now paying a lower car insurance rate than I did four years ago. It took me mere minutes on the computer and about 15 minutes on the phone with an underwriter.

Likewise with my Internet provider. Because I was self-employed at the time and needed fast and reliable Internet service, I have had high speed DSL service when many people were still using dial-up. At the time, in 2001, there were only a few big players in the market and I tried high speed Internet through cable as well as through phone lines, and found the latter to be more reliable, and so I had been with my current provider for the past seven years. I have done comparative shopping lately, and while some new entrants have entered the market with attractive pricing, some of the reviews of their service levels and reliability have given me the impression that their service delivery has been inconsistent at best. By the way, the most misleading part of any Internet ad, and the one you have to be the most careful of, is the one where there preface the speed by using the words "up to ..... Mbps", there providing them an iron-clad excuse when the Internet response is as slow as molasses. You seldom get the maximum speed advertised by your provider. So, in comparing the well-established providers with one another, there wasn't much of a price incentive to switch. But, knowing that it is far more expensive to attract a new customer than keep an existing one, and that the marketplace was becoming increasingly competitive, I called my Internet provider and informed them that I was planning on canceling my service. Their first question to me was obviously "Why?". I told them that it was far more expensive than I was willing to pay, whereupon the Customer Service Representative (with seemingly no need for any additional authorization) offered me a 40% reduction in my monthly rate if I could commit to staying with them for a year. No big deal, as I was quite happy with everything except their price. So that was another $300 in my pocket.

I know that in these busy times we live in, that it's often easier just to do nothing, but we should all take a bit of time once a year to review whether we are getting the best possible deal from our service providers as possible. Given the tough global economic times we currently face, the profileration of technology allowing for easy price comparions and the increasingly competitive nature in virtually all industries, the odds are with us that we can exert our individual economic muscle. Or to simply put it another way, if I offered you $500 to make two phone calls, would you do it? Thought so.

Big City or Small Town - What's Cheaper?

Last autumn, I spent a week in beautiful Nova Scotia, a maritime province in eastern Canada. As with anywhere I travel in the world, I always read the local newspapers, look at real estate prices, frequent local eateries and shop at the local supermarkets. Why? Well, living in a very large city, I have always wondered whether I could live in as smaller community, either within Canada, or overseas. Would the cost of living be lower? Would the air be fresher? Will there be less stress? Can I escape the frigid Canadian winters? Could I retire earlier if I moved to a smaller community?

What I've discovered in my travels, sometimes surprises me. In Halifax, Nova Scotia, a city of roughly 400,000 residents (and about one-eighth the size of my hometown of Toronto), the price of real estate is much cheaper on average (although there are pricier homes, usually on the waterfront). While commuting distances are shorter, some Halifax residents have as long a commute as those in Toronto, primarily due to the absence of multi-lane highways into the city (and gasoline prices are higher, due to government price setting). But, public transit is slightly cheaper, as is downtown parking. Buying bottles of liquor from a beer or wine store is also pricier than I am used to, as is casual dining in restaurants and fast food outlets. But drinking in a bar tends to be cheaper (as the city has 4 universities within the city limits). I even noticed that the price of a Starbucks coffee in downtown Halifax was slightly more expensive than in both Toronto and Vancouver. More importantly, groceries tend to be more expensive, even staples such as milk, eggs and bread. The main reason for price differentials on everyday items seems to be competition (or the lack thereof). There are only two large supermarket chains in Nova Scotia, whereas in Toronto, you can probably count 10 large chains (some of them chains catering specifically to large ethnic communities, but drawing mainstream customers too). However, salaries are markedly lower in the Atlantic provinces. So what's the verdict?

Real estate is the big factor. In large cities where the good jobs are and people flock to, land becomes scarce. When living closer to the city means less commuting time, prices rise to levels where compromises are then made, i.e. more space versus convenience of not having to spend an hour commuting to work.

So should one sell their place in a big, crowded city and move to a smaller city or to the country and enjoy a less stressful life? Sounds idyllic, but my friends in Halifax do not believe that I could live in their city - they think I will get bored too easily. Plus I would be far away from my friends and family which are important to me. Less, but still important is the availability of activities that only a large city can bring, i.e. museums, theatres, major-league sports, art galleries, opera and symphonies, lots of festivals, and many amenities that while you may not frequent as much as you would like, but that you are comfortable in the knowledge that they are there is you feel the urge to partake in such activities whenever you feel like it.

So far, I can handle the congestion and have no mortgage, so it may be better for me to remain in a larger city. Nevertheless, selling my home and buying a much cheaper place of comparable size in a smaller community, thereby accelerating my retirement plans, is very, very tempting too.

This Month's Quote

"What's money? A man is a success if he gets up in the morning and goes to bed at night, and in between does what he wants to do" - Bob Dylan

Hallelujah - North Americans Start Saving Again!

In previous posts, I have written about the non-existent savings rates of Americans in almost two decades. How Americans have spent more than they have earned, often at the urging of their leaders, most famously after 9/11 where George W. Bush said the patriotic thing to do was go out and shop. Recent economic turmoil has resulted in a seismic shift in the mindset of the average American to the point where November statistics show that the savings rate has gone from zero to 2.8%.

My hope is that this is a watershed turning point in the American psyche and that they don't go back to their reckless spending patterns. Diminished asset values, rampant layoffs and a realization that there is no umbrella for the rainy days will do that. My hope is also that we do not see unbridled materialism return and hopefully a return to a simpler lifestyle with greater emphasis on how we can help our fellow human beings in our own communities and all over the world, and that people start giving a damn about the environment and the legacy that we are leaving to future generations.

When Size Does Matter

A few years ago, I became aware of an ingenious, but somewhat sneaky, strategy adopted by food manufacturers and retailers. It was to keep prices low, but offer a smaller quantity of the item. While this, in itself, is not sneaky, the way they packaged the size-reduced product, was. I first noticed it with potato chips. The price was the same, the size of the packaging was the same, but a bag of chips didn't seem to go very far at parties or when watching a movie. That's when I noticed that the average weight had gone from 190g to 170g, a reduction of over 10%. Now aware of this, I began to notice that packages of spaghetti and other pastas had been reduced from 900g (or 2 pounds) to 750g (a reduction of 17%). Again, it was difficult to discern by merely looking at the packaging, many of the changes being very subtle and at times, hardly noticeable to the harried shopper. And these changes started happening way before the recent spikes in the price of gasoline. Before long, I began to notice smaller yogurt containers, 18-unit soda packages instead of the usual 24-unit ones. Now, everything from chewing gum to laundry detergent is being re-packaged or as the industry would like to refer as 'right sizing'.

Given all the economic turmoil, tight budgets, rising commodity and fuel prices, I can understand how food and consumer products manufacturers do not want to raise prices and the consequent ire of their customers, and I do believe this is a smart and legitimate practice. Where I think they are disingenuous, is that they benefit financially off of the ambivalence of their customers. Most people grocery shopping reach for staple products that they are familiar with, and if the packaging is visually identical, they merely grab it and throw it in the cart. They are quite aware of how much their favourite item will cost, but very few will know how much it weighs. In my days n the financial world, there was a saying that "People know the price of everything, and the value of nothing". That is, they'll tell you that the price of a bag of potato chips is $2.00, but can't tell you whether it's a good deal or not, based on quality, weight etc.

These days, if any reading of food packaging is done, the majority of shoppers will be looking at the nutritional information rather than the weight. What about grocery stores that offer the comparative tags on their shelves alerting consumers as to the price per weight or unit? These are only helpful in comparing one brand against another, but if all of the pasta packages are the same size, it doesn't really alert you to the fact that you're getting 17% less pasta than you thought (or were used to getting).

In this case, I put the responsibility squarely on the shoulders of the consumer. An astute shopper knows what he/she should be paying for an item and the cost per unit. Unfortunately, most people shop blindly (and without a list which research has shown, results in a larger grocery bill than originally budgeted). If I told a shopper they were getting 10%-15% less food than they were accustomed to, I'm sure they would be shocked and angered. Being cognizant of this change in food and consumer products retailing practice is important to be aware of, as it can either save you or cost you. The choice is yours.