The Franklin Prosperity Report · 2013. 8. 14. · The Franklin Prosperity Report • 5 • Go...

Franklin Prosperity Report‘a penny saved is a penny earned’

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August 2010 / Vol. 2, No. 8

The Ultimate Homeowner’s Savings Guide

Most of us spend a sizable chunk of our incomes paying for the homes in which we live, and not just on the big, obvious costs, like the mortgage payment.

Home repair and maintenance, utilities, gardening, and remodeling can take huge bites from budgets as well, not to mention the time such proj-ects require.

Experts estimate that homeowners should set aside at least 1 percent of the value of their home in an annual budget for maintenance and repairs. If you buy a $200,000 home, that’s $2,000 a year that’s probably not in your normal budget planning!

That doesn’t begin to cover the big blowouts, such as a failing appliance or roof work. To help keep costs under control and possibly avoid a major expense down the line, Franklin Prosperity Report talked with experts in a variety of fields to assemble the following checklist of helpful ways

INSIDE THIS ISSUE . . .

2 Dr.Franklin’sMailbag ShopDrugstoresPracticallyFree...Make

YourOwnFertilizer...SecretDVDRental Discounts...ScratchThat‘Gotta-Spend’Itch ...KitchenTricksThatSave...

9 Investing ProfitFromtheDividendWindfallAhead. . . InvestingGurusonOurRadar...Hidden Traps(andBenefits)ofETFs . . .

11 SmallBusiness TheRightWaytoCalculateYourCompany’s Value,andWhy...ProtectYourBusiness Privacy...

13 Spending PointlessFeesonYourCableBill...Huge OnlineDiscountatLocalStores...Car- BuyingTacticsThatWork...

16 YourHome RebatesonYourEnergySpending...Fund PaysYouBackIfContractorFallsThrough...

18 FranklinMatters Ben’sUltimateRecessionKiller:Prudence

20 AskFranklin ClaimingaSpouse’sBenefits...LumpSumor MonthlyPayments,WhichIsBest?

Continued on page 4

2 • The Franklin Prosperity Report

Every month, we ask readers for their best tips on making and saving money. The amounts don’t matter; it’s about little changes anyone can make to keep more cash in their pockets to save, invest, or spend better elsewhere.

Manufacturers of many new bathtubs and showers restrict the chemicals that can be used to clean the tubs and, more specifically, restrict which chemi-cals can be used to clear the drain or you risk voiding the warranty. So, rather than waste money on expensive drain cleaners, for our new bathtub I remembered an old formula: 1 part baking soda (not baking powder) and 3 parts white vinegar. It works great. We have three ladies in our home, all with long hair, and using this once per month saves money and aggravation.

— John P., Nashua, N.H.

Get the Sunday paper and study the advertisement circulars for drugstore ads. Most weeks, there are items to buy at a reduced price. Once purchased, however, one gets a print-out coupon to use for the next purchase equal to the amount paid — that is, one pays only for the sales tax to buy it again. Look in the same Sunday newspaper for the office supply store circulars. They offer items for sale, and the total cost is reimbursed via “rewards” points. For the past two weeks, one could buy two of each item, daily. The points can amount to hundreds of dollars. The only “cost” is tax. This week, I saved over $400 on a new camera, ink cartridges, and gift pen.

— Marie E., Orlando, Fla.

On occasion, I just feel like I want to spend money. My budget does not allow me to purchase what I sometimes desire. So, what I do is go to a dollar store and spend $5, which allows me to buy five things. This “scratches” my spending itch and I feel better without breaking the bank.

— Rick R., Littleton, Colo.

Most people don’t realize that the mass inside of their house retains heat throughout the day and night. I take advantage of my digital thermostat’s multiple settings to lower my power bill. For instance, I can set five different settings per day for each day of the week. In the summer, at 10:30 p.m., I have the thermostat lower the temperature a couple of degrees from the daytime temperature setting. This helps in getting to sleep and, as the outside temperature is cooler, the heat pump is more efficient. Around 4 a.m., it drops the temperature another two degrees as this is the coolest part of the day. At 7 a.m., the temperature is adjusted upward to the daytime setting. As the system setting is in the cooling mode, nothing happens because the daytime temperature setting is the setting at which the heat pump will turn on to begin cooling the house. Throughout the entire year, the fan on the system is set to “circulate” mode, which means that roughly 35 percent of the time, the fan will run whether the system is call-ing for heating or cooling.

— Willard F., Cornelia, Ga.

My wife and I put all of our trips to the doctor or pharmacy on our desk

Dr. Franklin’s Mailbag

The Franklin Prosperity Report • 3

calendar. We put the mileage associated with each trip. At the end of the year when we do our taxes we make sure all of our deductible mileage is accounted for, thus benefiting from savings that is frequently overlooked during tax preparation.

— Jim R., Houston, Texas

Instead of expensive fertilizer, a bag of Epsom salt (magnesium sulfate) acts as a good and cheaper replacement for things such as lawns, garden plants, vegetables, shrubbery, trees, and houseplants. A 4-pound bag costs about $2.50 compared with a 1.5 pound box of fertilizer costing twice as much. For better results, make sure you water your plants after applica-tion. It’s also good to have around the house for use as a soaking aid for minor bruises and sprains, as well as a good laxative for occasional constipation. A hot bath with Epsom salts will also relieve soreness after a long day of yard work or other activity.

— Chris B., Monument, Colo.

If you grow vegetables, then save money on fertilizers by creating your own. Don’t throw away banana peels and eggshells. Shred the banana peels and break the eggshells with a spoon or fork into small pieces, put them around the vegetable plants and cover with soil. You are basically creat-ing your own compost, one that feeds your plants organically with natural nutrients.

— Divyendu M., Bradenton, Fla.

When there’s too much month for the money, this is what I do: I keep on hand a box of powdered milk to mix with the real milk to last longer. I have on hand packages of beans to boil with pieces of ham and onion. Beans are very nutritious, high in antioxidants, and just plain good with corn bread! If you get low on vegetables, serve eggs. Always keep eggs in the fridge. You easily can grow tomatoes and other vegetables in pots on your patio or porch. Vegetable soup supplies the daily need for greens and contains usually four to five vegetables.

— Ruth S., Las Vegas, Nev.

Redbox codes are the way to get free DVD rentals from video rental kiosk Redbox. Redbox creates these codes to get more people into the stores to use their services. You simply need to enter the coupon code from the main screen online or just before checkout at your local kiosk. When you do, you will receive a one-day free rental. Go to www.redbox.com and register. You will get updates on new releases, you can search for movies, and best of all get coupon codes by text message for free movies.

— Susan H., Lake Villa, Ill.

SHARE YOUR MONEY SMARTS AND GET $50! If you have a money-saving (or money-making) idea, send it to [email protected] or by regular mail to Franklin Tips, P.O. Box 20989, West Palm Beach, FL 33416. If we publish your idea, we’ll send you a $50 Walmart gift card.


to decrease the amount of money and time you spend on your home.

Energy Savings

• Slash your power bills: Learn what your utilities cost. Look at a recent bill to find out the cost per gallon of water, per kilowatt of electric-ity, or per therm of natural gas, advises consumer finance expert Kevin Gallegos, vice president of Freedom Debt Relief. Then, he says, focus your energies where you will save the most money.

For example, moving the thermostat just 3 degrees could save $100 per year, Gallegos says, on an annual heating and cooling bill of $1,000.

“A rule of thumb is that every degree you move your thermostat up in the summer or down in the winter saves 3 percent on the energy bill,” he notes.

• Use AC smarter: Keep energy costs low this summer. “Go hotter when you’re gone for the day, upping the temperature by 5 or 10 degrees, but not completely, because more energy will be needed for it to get started again,” counsels Lisa Reynolds, CEO of coupon site RedPlum.com.

If the humidity is high, be patient, as air conditioners first take out the humidity before they start to drop the temperature. Don’t forget to add other cooling methods, including turning off the lights, pulling down the shades and sealing doors and windows to avoid leakage.

• Unplug: Did you know that, in the average home, 75 percent of the elec-tricity used to power home electronics and appliances is consumed while the products are turned off? That’s because many appliances continue to draw a small amount of power when they are switched off.

Though these “phantom” loads occur in most appliances that use electric-ity, the biggest energy hogs are electronics: the fax machine, printer, copier, and computer monitor. Even items with a “standby” setting, such as a TV or DVD player, can suck up energy.

Unplug these devices when you aren’t using them, or, for easy shutoff, plug a group of appliances into a power strip and turn the power strip off when you leave the room, suggests Nishank Khanna, co-founder of UnderTag.com, a free membership website that helps consumers find the best deals. Simply turning off one fax, one computer monitor, and one TV could save $6.10 a month, or $73 a year, Khanna notes.

Likewise, a Smart Strip (www.bitsltd.net) can sense when you turn off one item, such as your computer, and automatically power down several others, such as the monitor, printer, and scanner.

Continued from page 1


• Go fluorescent: In many households, 15 percent to 20 percent of elec-tricity costs go to lighting. Converting from incandescent light bulbs to compact fluorescent lights can save you real money: They last eight times longer and typical cost a third or less in electricity.

• Insulate and block: Putting R-38 insulation in your attic will save you about $420 per year, assuming a 1,000-square-foot attic that previously was not insulated. Find and block air leaks. Check locks, outlets, air conditioning units, and recessed light fixtures. Cover outside vents, including air-conditioning units. If possible, install insulated elec-trical outlet boxes and light fixtures. Place “draft dodgers” or towels at the base of windows and doors to prevent drafts.

However, make sure there is a space under the interior doors of your house. That’s how air flows, and it helps your furnace and air condi-tioner work more efficiently! For more insulating how-to, check out the terrific free guide to home insulation from the Energy Star program (www.energystar.gov).

• Stay out of hot water: Adjust your water heater temperature, advises Dean Bennett, president of Dean Bennett Design and Construction Inc. in Castle Rock, Colo. “Most water heaters don’t have a thermometer showing actual temperatures, so you may need to try out a few settings,” Bennett observes. “Just keep in mind that it does not need to be at highest setting, where many are set, and you’ll save significantly in water heat-ing costs.” If you find you must turn on the cold water tap to “adjust” hot water down to a safer temp, that’s a sign you are losing money. Water should come out of the hot tap at a comfortable level.

• Plant trees: Planting as few as three strategically placed shade trees around your home can reduce your air conditioning costs during summer, saving the average household between $100 and $250 in energy costs per year.

Maintenance Tips and Tricks

• Protect house siding: Make sure you have properly ventilated eaves around your home, Dean Bennett advises. In the summer, they will help keep the attic (and therefore the whole house) cooler. In the winter, they will prevent ice “damming” at the wall of house. Melted snow that hits an ice dam runs down from your roof can ruin an interior wall.

“Put holes and vents in the eaves, and make sure there are vents at the peak of the roof,” Bennett says. “This will cost about $250 if you do the work yourself — up to $1,000 if you hire a contractor.”

Cleaning out gutters every fall and spring will prolong the life of the gutters and the siding of the house. In cold-weather climates, the fall cleaning will prevent icicles from forming and help keep water going down the gutters, like it is supposed to, vs. on sidewalks, which then will


have dangerous icy patches. It’s free if you do it yourself; $35 to $40 if you contract it out.

• Stain for longevity: If you have a deck, put a new coat of stain on it. Use a urethane-based stain and you’ll at least double the life of the wood. Cost: about $35.

• Shop when you paint: Check out your local dollar store for painting bargains. When you need plastic drop cloths, packs of foam paint brushes, roller handles, trays and covers, masking tape, batteries, and more you can get them for a buck at many these stores, which will net you a savings of up to 80 percent over home improvement center prices.

• Find coupons and promotional codes online: Before buying items for your home improvement and gardening projects, check coupon sites, advises Redplum.com CEO Lisa Reynolds. Hundreds of coupons and promo codes are available online for just about anything you can name. Make certain you check for and use rebate offers whenever possible as well, and always ask store salespeople if they have any rebates or coupons you haven’t found elsewhere.

Home Improvements

• Go solar photovoltaic: A solar photovoltaic system is an especially smart energy investment, says retired CPA and tax attorney Hugh H. Sprunt, because it can lock in your cost for electrical power, a signifi-cant benefit when energy prices go up, inflation returns, or energy is rationed in years to come.

“Prices and installation costs for these are way down due to the finan-cial crisis, and you may well be able to buy for 60 percent to 65 percent of the gross cost,” Sprunt says. These systems produce solar power for decades with little or no maintenance expense.

• Cheaper home insurance: The best way to pay less for home insurance is to live near a fire department and well away from flood zones. However, even if your home’s location is less than optimal, you may be able to save some bucks by having your insurance company review your policy for savings. Be sure to mention you have multiple smoke detectors.

You can save several hundred dollars a year on homeowner insurance by buying it from a low-price, licensed insurer. Ask your state insurance department for a publication showing typical prices charged by different licensed companies.

• Get free tax assistance: Research tax breaks for any home improvement you make, whether it be setting up or improving a home office or buying more energy efficiently, for which many states as well as the federal government offer tax savings.


The Tax Incentives Assistance Project, sponsored by a coalition of public interest nonprofit groups, government agencies, and other energy-interested organizations, is designed to give consumers and businesses the information they need to make use of the federal income tax incen-tives for energy-efficient products (www.energytaxincentives.org).

Remodeling 101

• Do the math first: Before you start remodeling your home, consider the market value that it actually will add to your home. If you pay $50,000 to $80,000 to remodel your entire home in a modest neighborhood, it may not be worth the investment.

Ask a Realtor or appraiser to provide comps for recent home sales in your neighborhood and estimate how much you can get in return for your home remodel. If you cannot recoup at least 75 percent of the cost when you sell, experts say you should consider buying another home instead.

Stretch the value of your future dollars by choosing improvements that offer a strong return on your investment, particularly if you plan to sell your home within a few years.

• Don’t skimp on design costs: Trying to draw your own design can be much costlier than hiring an architect to do it. Having a professional design before the addition is built will help you make sure you have the space to do the work and that it will meet the specifications you want.

• Act as your own contractor: The biggest benefit of acting as your own contractor is, of course, saving the money you would pay a general contractor. The drawbacks are that you may have to wait longer for the job to be finished because it will be harder to get subcontractors to show up at precisely the right times during your project.

Pricing for remodeling or adding on is high: Costs for hiring a profes-sional to do the whole thing run from $150 to $300 per square foot. Remodeling expert Pat Fay, author of the Pat Fay Method, says you can achieve the same result on your own for $100 per square foot or less.

• Reface, don’t replace, cabinets: Putting in brand-new kitchen cabinets can cost a few thousand dollars or more, but homeowners can get the same effect as new cabinets for much less by just refacing the cabinets.

With refacing, there is no need to remove the cabinets because only the outer, visible parts are changed, which saves both time and money.

• Hire wisely: When you do need to hire someone else to do a job, make certain to get estimates from at least three companies and the names and contact information for at least three previous customers from each of these. You can check out contractors via the website AngiesList.com as well.


Harvest Garden Savings

• Go native: Chris Cipriano from Cipriano Landscape Design in Ramsey, N.J., works with homeowners to help them make their lawns greener by doing away with grass and planting wildflowers and native plants instead. “Grass uses lots of water and requires repeated mowing and constant upkeep,” Cipriano points out.

Putting in wildflower or native plant “lawns” is the best way to save money and reduce pollution, says Cipriano, who provides these striking stats: As much as 60 percent of household water gets used for watering lawns, according to the Environmental Protection Agency. Grass clip-pings make up 20 percent of municipal waste, and one hour of lawn mowing pollutes the air more than driving 350 miles in a car.

Once wildflowers are established, all you have to do is mow them once a year in the fall and they’ll reseed themselves. They do require watering during the first year, and a little bit of watering the second year, as you over-seed to fill in areas where the wildflowers didn’t “take” quite as well as in others.

But, once you get into that third year, there’s no more irrigation and the only maintenance you have is mowing in the fall! Note: Before you replace your lawn, do check homeowners’ association regulations and your town’s landscaping rules.

• Learn to mulch: Lisa Reynolds suggests making mulch from old newspapers to save money on garden fertilizer. Before putting plants in the ground, lay down two to five sheets of newspaper, leaving 3-inch diameter holes for the plants. Throw a 2- or 3-inch layer of already prepared mulch on top of the newspaper. The newspapers will decompose before the next season.

• Landscape with perennials: Preferably the most disease-resistant, drought-tolerant ones you can find, say the experts at Monrovia.com, a gardening website that offers a wealth of free information.

If you love roses but hate the thought of dealing with the disease prob-lems they so often have, consider Knockout Roses, which are easy to grow and are readily available throughout the country.

“Youmaydelay,buttimewillnot.”Ben’s Good Cents


Investing

Profit From the Dividend Windfall AheadFor almost three years, big U.S. companies have been cutting costs to the bone and hoarding cash like Uncle Scrooge. As a result, they are sitting on the biggest cash piles ever recorded for corporate America. Investment experts expect big chunks of that cash to start flowing to investors through higher dividend payments and stock buyback programs.

“Current yields will almost certainly loom larger in future total invest-ment returns than they have since 1980,” says Josh Peters, equities strat-egist and dividend specialist with the investment research and ratings firm Morningstar. “A bigger yield up front — as long as it’s balanced by sufficient dividend growth — ought to increase the reliability and size of future returns.”

Thanks to a variety of Web-based and other dividend stock-selection services (some free; some paid), ample information is available to locate the best dividend-payment prospects in the blue-chip investment universe. Here are some of the top choices:

• Charles B. Carlson, CEO of money management firm Horizon Investment Services in Indiana who is a CPA and a dividend specialist, runs several sites that can help, including DRIPInvestor.com and BigSafeDividends.com. His publication, Dow Theory Forecasts, has been a longtime advocate of dividend investing. Carlson also wrote The Little Book of Big Dividends, published earlier this year by John Wiley & Sons.

• Independent investor Bill Spetrino publishes a monthly advisory news-letter called The Dividend Machine (www.thedividendmachine.com/offer), which focuses on total return using buy-and-hold tactics similar to those of Warren Buffett. He’s especially careful about “safe” dividends. The Dividend Machine letter is published by Newsmax Media, Inc.

• Morningstar Dividend Investor (www.morningstar.com) and Motley Fool Income Investor (www.fool.com) are two paid services that provide recom-mendations and regular updates on the best dividend-paying stocks.

• DirectInvesting.com is a site focused on dividend reinvestment plans operated by Vita Nelson, a dividend-reinvestment specialist.

• The S&P 500 Dividend Aristocrats Index, published by Standard & Poor’s, covers no less than 40 companies from the S&P 500 that have boosted their dividend every year for at least 25 consecutive years (www.standardandpoors.com).

• Two dividend-focused exchange-traded funds (ETFs) to consider are: Dow Jones Select Dividend Index Fund (DVY) and S&P Dividend ETF (SDY).


“Havingbeenpoorisnoshame,butbeingashamedofit,is.”Ben’s Good Cents

Hidden Traps (and Benefits) of ETF Investing Exchange-traded funds (ETFs) are the hottest investment product in America. As ETF popularity explodes, the funds have become specialized. Yet inves-tors can lose sight of some of the hidden traps — as well as opportunities — in these investments. Here are four that can save or make you a mint:

• ETF Opportunity No. 1: Commission-free trades. Brokerage firms are so desperate for your ETF business that three of the biggest discount firms — Fidelity, Charles Schwab and (most recently) Vanguard — now offer commission-free trades on select groups of ETFs. In fact, Vanguard offers all 46 of its ETFs commission-free. Fidelity has a list of 25 that you can trade free, and Schwab’s commission-free list totals eight.

• ETF Opportunity No. 2: Cost-averaging capability. Dollar-cost-averaging is a terrific strategy for building a nest egg over time by investing fixed amounts on a regular schedule, regardless of price. But it works best if you don’t have to pay commissions. The availability of a wide range of commission-free ETFs now makes them a sound choice for this time-tested strategy.

• ETF Trap No. 1: Trying to time the market. The downside of free ETF trading is that it tempts too many investors to time the market by moving quickly in and out of stocks. Vanguard’s own legendary founder John Bogle considers that ill-advised. Bill McNabb, CEO of Vanguard, says his firm’s offer of free ETF trades “is not intended to encourage active trading of ETFs, which we believe is counterproductive and rarely successful.”

• ETF Trap No. 2: Overlapping positions. Careless selection of ETFs can lead investors into a false sense that they have diversified their portfolios properly. “ETFs are baskets that often hold hundreds of securities,” says Scott Burns, who edits the Morningstar ETF Investor newsletter. “When you start adding baskets upon baskets, the potential for overlap can magnify exponentially.”

• ETF Trap No. 3: Poorly designed ETFs. Fast growth has meant sloppy entrants are on the field. A few regular buyers of ETFs have found that some of the more exotic funds don’t work as advertised. One fund meant to move at twice the inverse of the oil price (that is, to gain ground two times faster than the price of oil declines, or vice versa), instead fell along with oil. If you plan to buy a short or similarly exotic ETF, watch it for a while to make sure it consistently performs as you expect.


Small Business

What’s Your Business Worth? Not Knowing Can Hurt Most small business owners have only a vague idea of what their businesses would be worth if they wanted to sell. And most of the ones who think they know probably are wrong.

Owners err on both sides, say professional appraisers who value businesses regularly. Some fail to include intangible assets in their estimate and undervalue what they’ve built. Others think their businesses are worth much more than reality would dictate.

“Even if your company isn’t required to have a valuation, it is still important to the future of the business to know what it’s worth,” says Donna Walker, a past president of the American Society of Appraisers.

Here are four more ways that having a business valuation can help your business:

• To understand where your business fits in the industry landscape. A business valuation will describe precisely where you fit in your indus-try or specialized market.

• To gain more insight into your “real-world” financial condition. As a business owner, you probably have reports to indicate your financial health. But a valuation that includes intangible assets can expand on, confirm, or deny those beliefs.

• Make fast decisions on expansion, financing, sale, or merger opportuni-ties. When opportunities knock, a current valuation will let you pursue them quickly.

• Make smart choices to enhance the value of your business. A valuation will highlight the things that make a business valuable and show you ways that you can increase what your business is worth.

Selecting a business valuation expert is tricky. These resources can help you find a qualified business appraiser or perform one on your own:

• The American Society of Appraisers (ASA) is an international organization of professional appraisers. You can locate an accredited appraiser at the ASA website (www.appraisers.org) under “Find an Appraisal Expert.”

• The National Association of Certified Valuation Analysts can help you find a credentialed business valuation expert in your area (www.nacva.com).

• Low-cost business valuation software can provide a rough approxima-tion. Choices include Express Business Valuation (www.mbaware.com) and Corporate Valuation (www.moneysoft.com).


Keys to Protecting Your Business PrivacyIn a digital world where nothing that makes its way online ever disappears, protecting privacy is increasingly difficult. Some of the same technology that is helping small firms compete — from social media to Web-based software — also puts privacy at greater risk.

Business owners clamor to reclaim a measure of privacy in their business and personal lives. So what can you do to protect yourself, your business, and your privacy?

Here are six privacy protection ideas and resources for small business:

• Make your domain registrations private. When you register a domain name on the Internet, you’ll be asked to provide details such as your busi-ness name, address, phone number, e-mail contact, and other details. That information goes into a massive database and is often a reason your e-mail address winds up on some spammer’s list. Most domain registrars let you protect your information with “private registration” services that mask your identity. It costs a small annual fee but can be well worth it.

• Know your privacy rights. Start with guarding your personal Social Security number more closely. When dealing with government or banking matters, your Social Security number may be required. Although many businesses request the number, you are not legally required to provide it unless it involves an IRS notification of some kind. Whenever possi-ble, use your business Employer Identification Number instead.

• Fight back against unwanted and intrusive ads. When you do get a call, don’t just hang up. Ask whom the caller represents and request that your name be placed on the internal do-not-call list. Federal and state laws allow you to take legal action against telemarketers who do not add your number to their internal do not call list and who call you back within 12 months of requesting to be placed on that list.

• Educate yourself. Privacy Rights Clearinghouse is a great place for privacy protection advice and information. Visit www.privacyrights.org and select from topics such as identity theft, junk mail and junk e-mail, online privacy, Social Security numbers and more.

• The Better Business Bureau’s “Understanding Privacy” service is avail-able free at the BBB web site. It offers great tips on protecting privacy, for individuals and businesses alike, both online and off (www.BBBOnline.org).

“Neverconfusemotionwithaction.”

Ben’s Good Cents


Spending

Saving Money on TV ServicesThe days of TV simplicity are long gone. The average American household now spends nearly $1,100 per year on television, and many families shell out far more. The average home now has three TV sets.

Complex and ever-more-expensive service packages are now the norm, and Americans waste millions of dollars annually on TV services that they never use.

The choices are as confusing as they are costly. Cable, satellite, fiber-optic, Internet? Do you need a basic, preferred, or premium package? There now are more than 1 billion possible TV package combinations, experts note.

“One of the most frequent requests we get from consumers is for a tool that can help them compare TV services,” says Peter Pham, CEO of BillShrink.

The good news is this: Competition in the TV services field is growing. Some shows are now available free via the Internet, so it’s no longer just an either/or choice between cable and satellite.

Here’s what you can do to save big on TV:

• Review your bill. While most people scrutinize their phone, credit card, and other statements, few look closely at their cable or satellite bills. That’s a mistake. Millions of households sign up for teaser deals that provide premium channels or other services free for a few months. Then the bill doubles, triples or worse, yet people keep right on paying. If you see charges you don’t understand, call the company.

• Get a grip on your viewing patterns. How many movies are you watching on the premium channel that’s costing you $40 to $65 monthly? If it’s only a few, you’d be a lot better off canceling the service and renting (or downloading) from an online service such as Netflix or Blockbuster. Plus, you’d be able to watch what you want, when you want, and not just what happens to be showing.

• Avoid the cardinal sin of cable: And that’s paying monthly rental fees for such things as set-top boxes, digital converters, and similar equip-ment that you no longer need. For instance, if you a buy a new TV that is HD-ready, the converter you rent for a few bucks a month is now a waste. The provider won’t bring this up.

• Get tough. Knowing that you have other options gives you leverage with TV service providers. First, get a quote from the competition. Then, if you are prepared to cancel your service and switch, try this: Call the cable (satellite) company and ask for the cancellation department. Hearing the word “cancel” sets off all kinds of alarm bells and you’ll


wind up in the hands of a “customer retention” representative on the other end of the phone. These are the folks who have the power to lower your bill and offer all kinds of great deals.

• Get help online: Online bill comparison service BillShrink.com just launched a free module that helps consumers compare TV plans. Packages are ranked objectively by cost and provider. Within each suggested TV package, BillShrink simplifies provider rates, terms, and conditions so you can make easy comparisons. Another site, CancelCable.com, offers information on how you can cut the cord entirely, save thousands of dollars, and still watch your favorite shows for free using the Internet hooked to your set.

Net Huge Local Savings Online (Hint: Be Quick!) Group buying is a time-tested way for individuals or businesses to join forces to secure better deals by purchasing in bulk.

Now the Internet — with a dash of social media — is bringing group buying to the local level, and making it bigger and better than ever. Consumers are benefiting with huge discounts on restaurants, health clubs, theaters, groceries, and hotels, to name a few.

Group buying sites function as a place where new deals are put together daily. Each deal specifies a minimum number of people who must participate in order for it to go through. That can range from a handful to hundreds, and the deadline might be days or only hours. These deals don’t usually last long.

The more people they get, the better the deals for everyone. Here are the key local group buying web sites to consider:

• Groupon.com has more than 1 million participants and features daily deals in 40 major U.S. cities. The main focus is on local activities and services, such as eating out, going to shows, getting a massage, or taking lessons of some kind. It’s free to join.

• BuyWithMe.com has a more limited local footprint. It is most active in Boston, New York, Philadelphia, San Diego, and Washington, D.C., but is expanding quickly into other areas. This site’s focus tends to be a bit more upscale and leans toward retail stores, events, health services, and restaurants. Joining the site is free.

• LivingSocial.com pushes out one deeply discounted local deal daily via e-mail. If you click to participate, the site sends you a unique link to share with others. If at least three of them buy the deal, yours is free.

• LocalGinger.com and DealStork.com are smaller sites that cover only a few cities in Virginia, Illinois, and Minnesota so far.


Ben’s Good Cents“Hethatlivesuponhopewilldiefasting.”

Surprise Car-Buying Tactics Can Save You ThousandsSometimes the advice you always have heard turns out to be only partly right, or not right at all, and can end up hurting instead of helping your cause.

Advice on negotiating the price of a new car is a good example. Here are three “surprise” tactics that run counter to what we’ve always been told about negotiating:

• Surprise No. 1: Offering to pay cash will not get you a better deal. Most of us are conditioned to believe that we can squeeze out a better offer on almost anything if we offer to pay for it in full, immediately. That might be true for most things, but when it comes to buying a new car it could be a big mistake. What salespeople don’t tell you is that they often receive fat bonuses for arranging financing, according to Jonathan Rivers of the consumer website BillShrink.com. Thanks to those kinds of behind-the-scenes incentives, dealers have dumped the old adage “cash is king” and developed a new saying: “cash is trash.” Says Rivers, “You are more likely to negotiate a lower selling price by financing (and enabling the dealer to collect his bonus) than by paying for the vehicle outright.”

• Surprise No. 2: The “dealer invoice” price might not be the dealer’s real cost of the car. Commonly held wisdom dictates that new car shoppers should check the “dealer invoice” price for any vehicle they are consid-ering buying (which is done easily online). Supposedly, the invoice price is what the dealer paid the car manufacturer for the vehicle, includ-ing all options. By contrast, the manufacturer’s suggested retail price (MSRP) is the “sticker” price that includes dealer markup. But, for most vehicle makes, the published invoice price is not the true dealer cost because of something called “dealer holdback,” says Joe Wiesenfelder of Cars.com. “Holdback is a portion of a car’s sale price, typically 2 to 3 percent of either the invoice price or MSRP, that an automaker returns to a dealer, usually on a quarterly basis,” Wiesenfelder says.

• Surprise No. 3: Do not pay all “delivery” charges. One of the not-insig-nificant “other” costs that goes with buying a new car is the so-called “destination charge.” This is a non-negotiable fee set by the manufac-turer that covers the cost of shipping the vehicle to the dealership. Although this also may be called a “delivery charge,” under no circum-stances should you pay a destination charge plus a separate delivery charge that a dealer tacks on. “One charge is required; the other is just padding,” Wiesenfelder says. Get that second charge dropped.


An Unknown Big Name Can Save You Hundreds on Heat/ACHeating and cooling account for more than half of the energy use in a typical home. Upgrading to a high-efficiency system can cut energy bills up to 40 percent, saving you hundreds of dollars yearly in utility costs, increasing the value of your home, and providing cleaner air for you and your family.

That’s a lot of upside, and ACDoctor.com — operated by Watsco Inc. — is an under-the-radar gem that can save you money in many ways.

“Many utility companies, for example, offer hundreds of dollars in rebates as well as extremely attractive financing offers and loans to homeowners who purchase high-efficiency HVAC systems,” says Melissa Doyle of Watsco.

The rebate finder tool at ACDoctor.com is easy to use. Just click the “Search for Rebates” tab on top, enter your ZIP Code and click “Go.” You then see a list of incentives offered to residents in your state, includ-ing offers from federal, state, and local governments, as well as utility companies and nonprofits.

The list will vary depending on where you live, but a search of one ZIP Code in Austin, Tex., for example, turned up 21 different HVAC and energy efficiency rebate and loan programs, while a Madison, Wis., search turned up 11. Here are a few examples:

• A Texas utility offering rebates up to $1,000 per home (new homes or existing home upgrades) on water heaters, attic insulation, heat pumps, and waste heat recovery systems.

• A Chicago-area gas company offering homeowners, landlords, and small business owners rebates on furnaces, boilers, insulation, and clothes washers.

• A Fort Collins, Colo., utility offering $50 rebates on Energy Star-rated clothes washers and $25 on dishwashers — plus free pickup and another $35 for each old, discarded unit.

ACDoctor.com has other money-saving tools as well. The site’s energy calcu-lators can help you determine savings of switching to high-efficiency cool-ing and heating.

Start by entering your ZIP Code so the calculator can approximate how many hours your HVAC system will run per year, then fill in the other blanks as needed. Click the “calculate” button to see your potential savings.

Your Home


“Drivethybusiness;letitnotdrivethee.”

Ben’s Good Cents

Remodel Botched? Contractor Rip-off? Your State Might Pay You Back . . . For most homeowners, this little-known tidbit is a jaw-dropper: If a contractor totally blows your home improvement project — or flat-out rips you off — you might be eligible for reimbursement from your state, up to $50,000 in some cases.

Often known as “contractor guarantee” or “construction recovery” funds, these state-run programs usually operate through a construction industry or contractor licensing board or similar agency.

The Florida Homeowners’ Construction Recovery Fund, for example, is avail-able to residents “who have suffered monetary damages by the financial mismanagement or misconduct of a contractor” in that state, and who have tried all other means to get their money back. The Florida fund will pay even if the contractor has filed for bankruptcy. The maximum recovery amount is $25,000 to $50,000, depending on when the claim is made.

Some states also have similar funds that protect homeowners who paid a contractor in good faith but then find that the contractor failed to pay subcontractors, suppliers, or workers. This protects you in case those subcontractors come after you for their money.

Since these are government programs, there’s plenty of red tape to over-come, and each state that has such a fund also has specific rules on what types of situations make you eligible for reimbursement.

Here are some key things to know:

• To have any chance of reimbursement, you have to hire a contractor licensed in your state. If you’re hiring somebody’s unlicensed brother-in-law because he was cheap, you’re out of luck. Before hiring a contractor, ask whether he is licensed and confirm it with the licensing department in your state.

• Most state funds cover licensed plumbers and electricians, as well as general contractors. However, 14 states do not require general contrac-tors to be licensed, though all require licensing for plumbers and elec-tricians.

• Be aware that a “business license” is not the same thing. Contractors need to be specifically licensed by a construction industry, a contrac-tors’ licensing board, or similar authority.


Even the most prosperous nations are not immune to financial crises from time to time. In the United States, there have been at least a dozen down-turns in the economy and several stock market crashes since the end of World War II.

What would Franklin’s counsel be on dealing with a financial crisis?

Franklin himself lived through turbulent times. During his lifetime, he encountered severe financial panics, real estate crashes, runaway infla-tion, and a revolutionary war. There was no Wall Street during Franklin’s time, but even then it was difficult to preserve one’s wealth. Many fortunes were destroyed, but somehow Dr. Franklin survived and prospered. How did he do it?

First, during the periods of peace and economic vibrancy, Franklin estab-lished good financial habits. He lived by his own three principles: indus-try, thrift, and prudence. “In prosperous fortunes, be modest and wise,” he counseled in Poor Richard’s Almanac. He and his wife, Deborah, worked hard to make their printing business profitable and then franchised it around the colonies to multiply their profits.

Second, the Franklins delayed personal consumption and saved regularly. In his autobiography, the financial guru wrote that he lived and dressed “plainly.” He wrote, “We kept no idle servants, our table was plain and simple, our furniture of the cheapest.” They avoided personal debt as much as possible, and borrowed funds only to expand their printing business, and then only “prudently.” Franklin cautions: “Debt exposes a man to confine-ment, and a species of slavery to his creditors.”

Thus, “frugality and industry freed me from my remaining debt, and produced affluence and independence,” he wrote.

Third, Franklin invested his savings wisely, earning interest in various bank accounts (benefiting from compounding interest); buying and manag-ing rental properties in Philadelphia; and selectively loaning money to acquaintances.

How did he handle setbacks? When Franklin’s printing partnership ended abruptly in 1767, he made the difficult decision to cut back consumption (he said he dined at home with only a “single dish”), and urged Deborah to

Franklin Matters

Franklin on Surviving A Financial CrisisBy Mark Skousen


do the same. It kept them out of trouble.

In 1772, while Franklin served as a colonial agent in London, there was a panic, and several banking houses collapsed. Franklin survived because he kept his funds at two of the most conservative institutions, both of which “stood firm.” He wrote, “I lost nothing by the failure of others; and being out of debt myself my credit could not be shaken by any run upon me: Out of debt, as the proverb says, was being out of danger.”

Two years later, in early 1774, Franklin became embroiled in the Hutchinson Letters scandal and was dismissed from his position as postmaster general and colonial agent. For years, Franklin was used to earning a prestigious sum, a combined salary of £1,800 a year. (The average Brit was lucky to make £100 a year during this time.) Now, suddenly, he was without a job.

For most men, such a loss would have been devastating, especially if they were used to living the high life. Not Franklin. During the good times, he always lived within his means and saved heavily. He invested his saved funds in several rental properties back home and bank deposits in conservative institutions in New York and London. During times of financial setbacks, he learned to cut back on his expenses.

Imagine if Franklin had spent all of his £1,800 every year on expensive furniture, dining in the finest restaurants, travel to exotic lands, and other consumer goods. Imagine if he had run up personal debts, thinking that his handsome annual income could easily cover the interest. How well would he had fared when he heard the news of his firing?

Like everyone, Franklin suffered during the war years from runaway infla-tion, and he collected a meager salary during the nine years he served as America’s ambassador in France. Yet his portfolio kept him well-off enough to die one of the richest men in America.

These are important lessons. You can be sure that the latest financial crisis won’t be the last. Live by Franklin’s rules (industry, frugality, prudence) and you can’t be hurt by the vagaries of a shifting economy.

Mark Skousen, Ph.D., is a sixth-generation grandson of Benjamin Franklin.Dr. Skousen is an economist and holds the Benjamin Franklin Chair ofManagement at Grantham University. He is the author of The Compleated Autobiography by Benjamin Franklin.

Be free,

“Outofdebt,astheproverb

says,wasbeingoutof

danger.”


The Franklin Prosperity Report is a publication of Newsmax Media, Inc., and Newsmax.com. It is published monthly for $49 per year and is offered online and in print through Newsmax.com and Moneynews.com.

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Ask Franklin

In a previous issue, I read that I could draw spousal benefits on my husband’s Social Security account in addition to receiving benefits from my own account. My husband is still working and is not receiving benefits yet. Can he file now and defer receiving his benefits while I draw a spousal benefit now? If so, will my spousal benefit increase after he retires? — Nancy G., Graham, N.C.

You cannot receive benefits on your husband’s earnings until he actually applies for his benefits, says attorney David R. Okrent. And while your husband can have his bene-fit payments suspended while he continues to earn retirement credits until age 70, you will not receive a benefit from delayed retirement credits.

Will we save more in interest on our mort-gage if we pay an extra $10,000 in one lump sum or by adding $166.66 per month to our regular monthly payment for the next five years? — Joan and Jerry, Memphis, Tenn.

Paying the $10,000 as a lump sum makes much more sense, says SunTrust Bank financial adviser Joshua Tallent. “Paying it this way means your subsequent payments will be on a lower amount. Typically, mortgage payments are more interest than principal in the early stages of the loan, so the sooner you pay, the more you’ll save.” Also, Tallent notes, paying an additional sum every month can be tough. “You’ve really got to discipline yourself to make the additional payment,” he says. “It’s too easy to use the money for something else instead of making an addi-tional payment on your mortgage loan, and then you aren’t saving any interest that month.”

SEND A QUESTION TO DR. FRANKLIN! If you have a vexing money question, send it to [email protected] or by regular mail to Ask Dr. Franklin, P.O. Box 20989, West Palm Beach, FL 33416. We’ll find an expert who can respond with the inside scoop.

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