Frugality

A couple weeks ago I wrote about how to stretch your 5% cash back. Those strategies work well to stretch your cash back but there is still room for improvement. To maximize your cash back it would be great if you could get cash back on all of your bills. Unfortunately, bills such as your rent or mortgage cannot usually be paid by credit card. Or if they can be paid by credit card there is a surcharge that is larger than the cash back you would get for paying the bill.

There is a way to get cash back for paying your rent even if your leasing company doesn’t offer credit card payments as an option. I found out about this method from reading some frequent flyer blogs that share methods to increase your miles earned from credit cards. I tried using one of their methods myself and it worked without any problems.

In order to get cash back for paying rent the first thing you need to do for this particular method is to get a Bluebird(not an affiliate link) card from American Express. It is easy to sign up for the card but if you need some additional info on applying for the card you can read this post at Million Mile Secrets. Once you have the card you need to buy a Vanilla Reload card at CVS or elsewhere with your cash back credit card. There are several different prepaid cards with the word “Vanilla” on them so make sure you get the right one. There is a $3.95 fee on a $500 Vanilla Reload card. You can use the Vanilla Reload card to fund your Bluebird card and there should be no additional fee. Once the $500 from the reload card is added to your Bluebird account you can use that money to pay bills via the bill pay feature of the Bluebird card. Since you earned cash back for the purchase of the Vanilla Reload card your are effectively getting cash back for paying your bills.

I have tried this myself and didn’t have any problems. I bought the Vanilla Reload card at the CVS next to my apartment and then went home and added the card to my account. The whole process only took about 15 minutes, including the walk to the drugstore and back. The $500 was immediately credited to my account. I entered the information for my rent payment and used the bill pay to pay my rent. My travel credit card pays 2.2% in rewards so I made $11 from the purchase of the $500 gift card. Once you subtract the $3.95 for buying the card the net amount made is $7.05. That amount may not be worth the bother for many people but it is worth it to me. If your credit card pays a higher percentage of cash back then this method would be more worthwhile.

While this method worked fine for me, I have seen lots of people complain about problems with their Bluebird card. If you decide to use this method there is some risk. Also, you don’t want to abuse this method or American Express might shut you down. Some of you may see how this method could be used to basically create a perpetual cash back machine. I would advise you not to try that. There are limits on how much funds you can add to the card each month and limits on how much you can pay from the card each month to limit such use. Even if you stay under the limits you could have your account shut down if American Express feels you are abusing the card. In addition to using the bill pay feature I also use the card for regular purchases to keep me from being an unprofitable customer for the company.

Has anyone else tried a method similar to this to stretch their cash back? If so, I’d love to hear how you do it.

I’ve written about the Staples ink cartridge recycling rewards program a couple of times before.  I detailed both how I make money with the Staples ink cartridge recycling and how I get free stuff from Staples.  I still participate in the Staples ink cartridge recycling program but they have changed how the program works so I’m posting how the changes affect one’s ability to make money from Staples ink cartridge recycling and get free stuff from Staples using the ink cartridge recycling program.

Staples Ink Cartridge Recycling Program

The basics of the ink cartridge recycling program is that Staples will pay you $2 in Staples Rewards for each ink cartridge you recycle with a maximum of 10 cartridges recycled per month unless you are Staples Plus or Premier customer in which case you can recycle 20 cartridges a month.  This means you can get $20 in Staples Rewards a month if you are a basic Staples Rewards customer or $40 a month if you are a Plus or Premier member.  The rewards expire the month after they are issued for base Rewards members and Plus or Premier members ink recycling rewards are good for twice as long

You might be thinking that you don’t have 10 ink cartridges a month to recycle.  Used ink cartridges can be bought cheap on Ebay or Craigslist.  A good price is about 20 cents a cartridge.  That leaves you with a profit of $1.80 for each cartridge you recycle.

When Staples has good sales on toilet paper or paper towels or something else I actually need then I use my rewards to purchase these products.  If I just use the rewards to buy products from Staples then I am getting the products at about 90% off.  One can make even better use of their ink cartridge recycling rewards though.

What I consider the best use of recycling rewards is to use them to buy free after rebate items. When I use the recycling rewards to buy free after rebate items I actually make money.  Free products are nice but cash is even better and gives me more choice on how I want to spend my money.   Since I can and do receive more cash back then I pay for the ink cartridges I recycle, the products I buy with the recycling rewards are basically free.

Staples Ink Recycling Rewards Changes

I’ve been using this program for almost three years and it had been working fine.  Unfortunately, Staples has made some changes to their ink cartridge recycling program that has caused me some problems.  Starting on March 15, 2013 a rewards member can only receive ink recycling rewards if the member has spent at least $30 in ink and/or toner purchases at Staples over the previous 180 days.  The minimum purchase requirement is net of coupons, taxes, and shipping charges.

This requirement is a bit of a pain but the recycling program is still a good deal.  Since I can earn $120 in recycling rewards in 180 days if I have to spend $30 on ink I still come out $90 ahead.  If you actually need the ink you purchase then the entire $30 shouldn’t be deducted from the $120 in rewards.  A more accurate calculation would be to subtract the premium you pay for ink at Staples compared to what you would pay for the ink elsewhere.  In that case you are probably only losing $5 or $10 due to the ink purchase requirement.

If you do not need ink at all then there is another method to keep from losing the entire $30 ink purchase.  You simply buy a popular ink and resell it on Ebay or Craigslist.  Since the ink won’t sell for as much as you paid for it and you also have to pay fees you will lose more money using this method.  If you are lucky enough to sell the ink on Craigslist your loss could be just $10 or less.  If you are selling the ink on Ebay you will probably end up losing $15 or so.  If you don’t think reselling the ink is worth the trouble you can just be nice and buy ink for someone you know or possibly donate it to a local charity.

The other good change that Staples made was that Plus members get to recycle 20 cartridges a month. Before only Premier members could recycle 20 cartridges a month and other rewards members were limited to 10 cartridges a month.

These changes shouldn’t have caused much problems for me but so far they have been quite a pain.  I bought $30 of ink to satisfy the ink purchase requirement but didn’t realize that my recycling rewards counted as a coupon and thus reduced the amount of my purchase.  After I realized the rewards counted as a coupon I made an additional purchase to meet the ink purchase requirement.

I contacted Staples customer service and asked if they would award my April rewards as a courtesy since I didn’t realize the rewards counted as a coupon and the Staples employees assured me my ink purchase would meet the purchase requirement when I asked.  After some resistance, the customer service agent did issue my rewards and I figured everything would be fine for the next six months.

Unfortunately, when it came time for my May recycling rewards to be issued they were not issued.  I contacted a customer service agent through chat and she kept trying to insist that my April rewards were my May rewards.  After I repeatedly pointed out that this was not the case she eventually referred me to their customer service number.  The telephone customer service agent was much more helpful even though she initially stated that I had not met the ink purchase requirement.  After pointing out my two ink purchase transactions that were listed in my rewards account she agreed that I had met the purchase requirement and stated that she would issue my rewards.  She also promised to notify another department that I had met the ink purchase requirement so that I wouldn’t have any future problems.  We will see how that goes.

If I continue to have to contact customer service every month to receive my rewards then I’ll most likely give up on the rewards program when I run out of my current supply of ink cartridges.  If I get really aggravated I might just sell the rest of my ink cartridges.  I hate to give up the free money but with the time and aggravation needed to get the rewards I’ve earned issued the past couple of months the rewards are no longer “free” money.  Prior to the changes I would have recommended the ink cartridge recycling program as an easy way to get a little extra money but until they have all the issues with the change straightened out I can’t recommend the recycling program.

Do any of you use the Staples ink cartridge recycling rewards program? Have you had any problems since the change?

These days it is possible to get 5% cash back on a lot of your purchases. One of the ways I get 5% cashback on my purchases is by buying things in the rotating 5% cash back categories offered by my Chase Freedom and Discover it® card. Right now the Discover it® card is offering 5% cashback on home improvement purchases and the Chase Freedom card is offering 5% cash on restaurants, movies, and Lowes until the end of June. Both of them have a $1500 limit on purchases that will earn the cash back but since I’m not a big spender that is more than I would normally spend. It is still possible to get the full advantage of the 5% cash back offered though.

The methods to stretch your available cash back are fairly obvious but they didn’t actually occur to me until I read about them in a forum. The first method to stretch your cash back is to buy a gift card at a store in the current 5% cash back category. For example, since restaurants are in the 5% cash back category I could buy some $50 gift cards at McDonalds, Burger King, etc. for however much I think I’d spend at restaurants in the next few months. I’d want to make sure I didn’t spend over $1500 so I’d get the 5% on all my purchases. I don’t spend nearly that much at restaurants in a year so I wouldn’t have a problem with staying under the $1500 amount. I do use this strategy, but I usually just pick up a couple of gift cards before the end of the quarter and don’t worry about getting the absolute maximum amount of cash back.

Another method also involves buying gift cards. The difference here is that you are buying gift cards for stores that are outside the current category. For example, the Discover it® card is currently offering 5% cashback at home improvement stores. This isn’t beneficial to me since I don’t own a home and don’t really need anything from a home improvement store. To still earn a little cash back I’ve been buying $50 gas cards at Lowes. Even though I’m buying a gas card the purchase is still categorized as a home improvement purchase I still earn the bonus cash back. I’m only saving $2.50 with each purchase but it only takes 5 minutes and Lowes is on my way home from work so I think it is a good use of my time.

If you are shopping online you should go through a online cash back shopping portal like Mr. Rebates. Depending on the merchant you can earn even more than 5% cash back.

These are only some of the strategies to stretch your 5% cash back. These are the simplest strategies but if people are interested in reading about more strategies I will write about them.

It seemed like I paid taxes since I had to debit $1500 for taxes from my checking account. I’m actually still in the approximately 46% of Americans that did not pay federal income tax last year though. My tax bill was $1300 for self-employment tax and $200 for state income tax but $0 for federal income tax so I’m still in the 46%.

I would have owed federal income tax but I contributed over $4000 to a deductible traditional IRA, took the student loan interest deduction, and the saver’s credit. I plan to take similar deductions and credits on my federal income taxes next year. I don’t feel bad about taking deductions and credits to reduce my federal income tax owed to $0. The following Learned Hand quote pretty much sums up my feelings on the subject.

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

One of the most popular posts on this site is the “Sample $1000 Monthly Budget.” That post is over five years old now so I’ve decided to do a new $1000 budget for 2013. There has been some inflation in the last five years but I’m still easily able to live on a $1000 monthly budget.

A common criticism of the budget is that it isn’t realistic. This budget is based on my actual expenses and I’m real (I’m not the Easter Bunny) so the budget is realistic. Not everyone can live on this budget but many people can. If you’re single, in good health, live in a low cost of living area, and don’t have any debt payments this should be an achievable budget. I currently live in Kansas City, MO but have also lived on a similar budget in Reno, Las Vegas, Dallas, Austin and rural Virginia.

The rent, health insurance, car insurance, and phone are all my actual, fixed monthly totals.

My rent, utilities, phone, and health insurance are lower than they were five years ago.  The rent is cheaper because I found a really good deal in a small apartment complex. The utilities are cheaper because I have an all electric apartment and no longer have to pay a gas bill.  My actual electric bills have always been smaller than $20 so far since I live in a third floor apartment with south facing windows that rarely requires me to use heat.  I probably will have to use the A/C this summer but based on my past electric bills a $20 average monthly electric bill is realistic.  My health insurance is slightly cheaper than it was five years ago but only because I raised my deductible from $5000 to $10,000.  I purchase my health insurance through eHealthInsurance which has lots of relatively low cost plans available. My phone is with Virgin Mobile and I get 300 anytime minutes, unlimited texts, and unlimited data. That is plenty for me.

The food, car insurance, gasoline, and miscellaneous expenses all went up. Although I think I should still be able to eat for $100 a month I usually spend about $120 a month so I’m using the higher amount.  Food prices have definitely been affected by inflation over the past five years.  My car insurance is quite a bit higher.  Most of that is probably because I had an at-fault accident a couple of years ago. Otherwise, I think there would have only been a modest increase in my insurance premium.  Gasoline costs about the same now as it did in  May 2008 but I drive a little more and increased the expense amount to reflect that.  I also increased the miscellaneous expense a little to account for other small items that may have been affected by inflation.

I’ve kept the budget amount for irregular expense savings and entertainment the same. The savings for irregular expenses covers car registration, maintenance, and any other predictable but irregular expenses.  I’ve yet to spend $100 on entertainment this year and generally spend much less than that. I’m keeping the entertainment amount at $100 since I’ll probably take a couple of trips this year that will be covered by the entertainment budget.

My monthly expenses so far this year have ranged from a low of $822.34 to a high of $1075.78. That shows that a $1000 monthly budget is realistic for me.  I think it is an easily achievable budget for people in similar circumstances as me.