Save on Auto Insurance: Pay in Full!

I have noticed that many folks I know pay their auto insurance on a monthly basis. This seems as a convenient option, allowing for budgeting and spreading out your cost accross the year. They can also auto-deduct the amount from your account, so there are no bills to think about, checks to send or stamps to buy – as long as you have the available balance in your account, you’re good to go.

The question though is, does this make financial sense? While the terms may change from insurer to insurer, my auto policy is as follows: I can pay in full upfront, or get billed monthly for my premium plus a 16% APR interest charge. It’s this last piece that changes things – it’s a ridiculously high interest rate for anyone with a decent credit.  If you have the cash to pay for this upfront, do it. It’s unlikely that you can get a better after-tax return on you rmoney somewhere else.

If you don’t have the money to pay in full upfront, pay what you can as early as possible. You can consider getting a balance transfer, and pay much less in interest. For example, if your insurance premium is $1800, you can end up paying about $145 in interest.  A recent balance transfer offer I got was 0% APR for almost a year with a 4% balance transfer fee, resulting in an effective finance charge of $72. This is a quick way to save about $70 – by simply paying off your insurance bill with a balance transfer check, and then making the monthly payments to your credit card.

My advice is simple: pay off your highest interest debt first. Monthly insurance bills carrying a finance charge are no different than credit card bills, even though you’re technically paying as you go.

Safety Around Power Lines

I just did some safety training and would like to share a few highlights. This has to do with safety around power lines.

If you see a downed power line:

  1. Stay Clear of the area! Don’t touch anything, assume the line and anything touching it is energized. 
  2. Call 9-1-1! The dispatchers will alert appropriate authorities.
  3. Do not try a rescue! By coming in contact with a person or animal that is energized, you can get hurt as well!

I would say that # 1 & 2 are common sense. While the curiousity can often can get the best of us, I assume most folks have the right instinct to stay away. (Of course, assuming that they realize there is a downed line.). The hard one is the # 3, especially when we see a loved one in trouble. It is a natural instinct to jump in and try and save them, however this can turn tragic: a few months ago 3 members of a family died in their backyard, two of them trying to save the first one.

It is really important to not try a rescue unless we are qualified to do so. While we may have best intentions in mind, we can easily get in trouble ourselves, and not do anything to help.

My recommendation is to do a walk-around your residence, and identify any potential hazards on a clear sunny day when everything is visible. Take note on where the power and gas lines are, and anything else that could turn into a hazard. Then, if there is a wind storm, earthquake or a similar event, you’ll know what areas to avoid until they can be safely inspected.

For more info, check with your local utility.

Gas Prices

I’ve been keeping track of my gas mileage for a while, and as part of that I’ve been noting the gas price paid as well. I figured it would be interesting to plot this data, and see what the pump gas price has been over the past few years.

What I’m showing is the price I paid at the pump on a given day. There is some “noise” in the data, as I didn’t keep the gas station constant, but the difference in markup among the stations I normally use shouldn’t be more than 10-20 cents, so the overall trend can still be observed.

It is tempting to draw a straight line through the last 40 months or so, and assume that prices will keep rising at about 50 cents per year. Of course, this is ignoring that significant dip you see in second half of 2008…

While most of us dread high gas prices, there is some silver lining to it. Back in 2008, the relatively sudden spike actually resulted in reduced traffic congestion on the LA freeways! Less traffic and less resulting emissions are a good thing.

Interesting Smart Meter Legal Issue

With any new technology, there are always new and interesting legal issues, and the Smart Grid is no different.

I was reading an article about the Ojai council wanting to ban the smart meters in the city. What I found interesting is the ban part. In my previous reading on this topic, it was usually  about folks wanting to opt-out of the Smart Meter program. The latter issue was essentially settled by the California Public Utilities Commission (CPUC) which recently ruled that customer may opt out, however that they’d have to pay an initial fee of $75, and another $10 per month to keep their old meter.

First issue is whether the City has any legal standing to enforce such a ban in first place, as this is a matter regulated by the State of California through the CPUC. Maybe this is a clear-cut issue one way or the other, but I’m not a lawyer so it’s an open question to me. For example, I know that a city cannot ban a utility from putting transmission wires in, so there are definitely areas where a city has it’s hands tied.

Second issue is the impact on folks that are happy to have the smart meters installed, and are looking forward to having more energy usage information at their fingertips. Not only would they be prevented from having the new meters, but they would likely be forced to pay extra fees for not having something that they actually do want! I can see a lawsuit or a recall campaign if this were to happen!

I’m actually really puzzled by this ban, especially since the CPUC has come up with what seems like a fair compromise…

Save Time: Avoid Left Turns!

Here’s my simple energy saving, traffic congestion and stress reducing piece of advice for the day: avoid left turns! Unless the road is empty, there is always a wait to make it – and in more congested areas it may even take several light cycles to get through.  It’s also a safety issue – you avoid crossing the oncoming traffic, and being tempted to run that “orange” light.

Of course, the opposite advice applies in England and other countries driving on the left side. =)

I wish the GPS devices would account for this left-turn time lag when calculating your directions. Most of them will allow you to pick the shortest or quickest route, but when calculating the latter, I doubt they put in a proper left turn penalty factor. Of course, they can’t just make up a delay to use (say 30 seconds) and would have to collect and analyze traffic data to be able to do so – but maybe it could be a custom setting? Another option could be to provide you with alternate routes? Google maps already does it, although I don’t think they’re specifically addressing the left turn issue.

Speaking of technology – a few years ago UPS implemented software that allows them to efficiently plan their routes, and big part of it includes not making left turns in commercial areas.

For the record, there are some neat apps that will plan and optimize routes for you (i.e. MapQuest Route Planner) – I wish they included a left turn time delay / penalty in their calculations.

PS: If you find an app that does this, please let me know!

A Simple Rule for Lottery Pools

A few weeks back I wrote about buying lottery tickets and whether it was a good investment or not. Well, turns out that low odds are not the only thing working against you!

In the historic Mega Million jackpot last month, over $600 million was awarded to lucky folks, although not without any controversy. One of the alleged winners was actually part of an office pool, however she claimed that she bought the winning ticket separately, and therefore the winnings were all her’s!

I’ve read a few blogs and articles discussing this, and whether she should have been a part of the pool if she was buying her own tickets (or vice-versa), whether she should share the $$ with the pool, etc.

While I don’t have the answer to these questions, I do have a simple rule to avoid getting into this type of situation in first place: Scan the lottery tickets, and e-mail them to all pool participants! Ok, some folks may not have a scanner ready – but there’s plenty of options here. Photocopiers are everywhere, digital cameras are very common, and let’s not even mention camera phones and smart phones.

Just like with any potentially important transaction, make a record of it, and keep it just in case.


Biggest Cyber-Security Risk?

A recent Wall Street Journal article focuses on an important issue – cyber security, and specifically what puts companies at risk: employee behavior! I would consider this claim as common sense. Just like with physical security, one could have the safest fort in the world, but if someone opens a door from inside, you have a problem.

So what are the top “no-no’s” for employees?

  1. Clicking on phishing links: You’d think that people would know better by now, but this is still an issue. Part of the problem is that scammers have gotten better about this: spell-checkers are everywhere (even here in WordPress!), a lot of company or employee information can be easily gained online, and the stakes are bigger. While their targets (us) have wisened up, we are also doing so much business via e-mail while frequently multitasking, that it can be hard to keep your guard up 100% of the time. The trouble is, sometime you need just one employee out of thousands to make just one mistake, and you could possibly compromise your network & data.
  2. Over-sharing information: So much information is posted online these days, making it easier to create more targeted social engineering attacks. (OK, now this got me thinking how much detail do I want to post here.. hmm…)
  3. Using personal e-mail accounts: I’m not sure how much it is that these accounts are inherently less safe (i.e. can be accessed with any equipment from anywhere in the world, with a simple password), versus people just being less careful (i.e. checking e-mail on questionable machines and networks, using less safe passwords, etc.) but the article cites a few notable cases of account hacking.

So, the bottom line is – don’t open the metaphorical door to strangers, or tell them what the secret knock is.

Subscribe and Save

Subscription type purchases have been common for ages, so it’s no wonder that Amazon has a “Subscribe and Save” service where you can.. well.. subscribe, and save. (quite self explanatory). My question though is what the true benefit to the consumer here is. An advocate could bring up several points:

  1. Savings: If you already need to purchase this product, why not subscribe and get a discount for doing so?
  2. Convenience: Stuff you need shows up at your door, you just need to receive and open the package. Assuming you select the right frequency and quantity, you won’t run out of the desired item, and can save yourself an emergency trip or two to the local store.
  3. Support your favorite store (if you care to do so).

I can surely see items that require regular orders – groceries, pet food & supplies, etc. However, there are certain items that I am not sure why you’d want a regular deliver for – like this Headlight Restoration System deal! I have nothing against this product, but I am a bit confused here – would I really need this product every month and if so, wouldn’t that imply that it’s not really good quality? In all fairness, I could set the deliveries to be less frequent, and even manually skip a few, but still… this is just not an item I envision needing to purchase in regular intervals.

The good part is that Amazon has really great and easy to use setup for the “Subscribe and Save” feature, allowing painless subscription management. You can cancel at any time, or change the delivery frequency, and they even send you a reminder email before shipping the product out! So no harm in signing up, checking the product out, and then adjusting your future orders accordingly.

Check Your Number!

I was really excited to see State of California launch their check your number campaign – raising driver awareness that you don’t need to change engine oil every 3,000 miles! The campaign

“… urges Californians to check the recommended oil change interval for their car in their owner’s manual. They’ll likely save time and money in service costs and do the environment a big favor — without hurting their car or compromising auto performance in the least.

The old standard of 3,000 miles is woefully out of date and no longer applies to most cars. Many cars, even older models, can be driven up to 5,000, 7,500, 10,000, and even 15,000 miles before needing an oil change.”

This is one of those win-win propositions – it’s actually more convenient for the driver (less maintenance related chores), save you money, and also greatly helps the environment!

“Drivers can do their part to help the environment by simply looking up the recommended oil change intervals for their cars and changing their habits accordingly. Advances in modern engines and improved oil formulas have made the 3,000-mile oil change obsolete. Under normal driving conditions, cutting back to the automaker’s recommended intervals will not affect your car’s engine, its performance, or your warranty.”

I have always been a vocal proponent of this, and I am glad to hear the state bringing it up! Don’t listen to what the oil change shops are telling you, ignore that 3,000 mile reminder sticker on your window (i just peel them and throw them away), and simply follow the owners manual. For most cars, a light will come on or blink when you need the oil change, so you don’t even have to think about it.

It’s my personal opinion that most folks could wait even longer between oil changes – but you don’t want to risk putting any warranties at risk. As a Mechanical Engineering professor specializing in engine testing once said – the most important thing for your engine is that there is oil! (if it’s a lil’ old, it’s not a big deal.)

As a side note, I wish I still had access to all the cool lab testing equipment as I used to. The reason you change the oil is that with age and cycling (use) it slowly decays and its properties decline – which is something I could easily test for. I am assuming that your filter is doing it’s job, and there isn’t much gunk flowing around.

So, save some $$$, relax, and save the environment too! Check your number!

Saving on Auto Insurance

Every time I hear one of those Insurance ads claiming “people who switch to [..] on average save $x” I chuckle a little bit. Of course that people that do switch insurers save money – that’s why most people switch in first place! The statistic they provide is useless to most people, as you have no idea what your actual saving, if any, would be. What they’re telling you is that of all those people that get a quote from them, some (maybe a majority, maybe a small minority) will switch insurers, and on average save x amount of money. The only valuable piece of information that a consumer is getting here is that shopping around, be it for insurance or any other service or product, is usually a good idea, and you may find a cheaper provider.

I just find it funny how numbers are used in advertising to suggest things. The message that they are trying to imply is that if YOU switch to THEIR company, YOU will save money. Now, they can’t say this outright, as there will be some percentage of folks who won’t save by switching. What would be useful is if they provided a statistic, saying “20% of folks who call us switch, and save $400 on average”. Now I know that my expected “ROI” for calling them to get a quote, and spending 10-15 minutes with their agent is 20% x $400 = $80 / year. Assuming I don’t earn more than $320 / hour, this is now a valuable use of my time (for simplicity, I’m ignoring future years’ savings). However, if only 5% of people save the quoted amount, and I expect to spend 30 minutes for the quote, my expected ROI is only $20 / year – so $40 / hour of my time, ignoring future years’ savings. Not bad, especially if you assume future year savings, but not nearly as attractive as the first scenario.

Now, while the premium paid is likely the top concern to most folks when choosing an insurance company, I am almost concerned switching to a lower cost provider. While there is no guarantee that a higher cost company will provide me with a better service or value, I am curious to know how they can afford to charge me less. Where is it that they’re saving money on? They could have better actuaries, or at least be able to better assess your “risk level”. That said, they could also be undervaluing your risk level, and giving you a break by mistake. (This works for the individual consumer, as long as it’s not a widespread problem which would cause the insurer to default.) What I’m concerned with thought is that you just may be getting a worse value – and get short changed when an accident happens. How will the insurer treat you when you need them is just as important as what you pay upfront!