How to Survive the High Cost of Living in Ann Arbor

How to Survive the High Cost of
Living in Ann Arbor
Kathryn Greiner
Director of Credit Education
First of Washtenaw
A subsidiary of the
University of Michigan Credit Union
(734) 663-7900
Financial Survival
• Develop a spending plan:
– Spending
– Bill-paying
– Saving
• Find less expensive ways to meet your
needs.
Step 1: Budget Analysis, or Where the Money Goes
Average Monthly Expense
Housing:
Rent/Mortgage
Heat
Electric
Phone
Water
Household Exps.
Repair/Improvements*
Home Insurance
Food:
Groceries
Non-Food/Toiletries
Mid-Week Shopping
Meals Out (lunch)
Transport: Gas/Fares
Maintenance
Parking/Tickets
Car Insurance
Personal:
Clothing* (600/yr)
Medical/Dental*
Education*
Life Insurance
Gifts: Xmas 300,
B-days/other 150
Donations*
Entertainment** Read 10,
Photo 5, Music 10, Fun 40
Child Care
Vacations*
Haircuts/Laundry
Pets*
Other (cable TV)
Other
Expense Subtotal:
Savings: (include direct deposits)
Monthly Living Expenses:
Payment
$550
20
40
35
-045
-010
150
20
20
40
50
50
-065
50
20
-0-0-
Average Monthly Income
Monthly Take Home Pay
Partner’s Take Home Pay
Other Income - roommate
$1,465
-0320
(include child support, alimony, Social
Security, direct deposits for savings
Total Monthly Income
$1,785
Monthly Income
Less Monthly Expenses
Amount Available for debt
$335
38
Creditor
Auto Loan
Student loan
Visa
Hudson’s
Target
Dentist
Mom
40
Total Debt
70
Total Monthly Debt Payments
$495
-050
15 / 10
-022
Subtract from Amount
Available for Debt (see above)
-335
1,420
30
$1,450
Balance
$4,500
1,250
2,500
195
375
250
100
$1,785
-1,450
$9,170
This is your Bottom Line!
*
**
Pymt
$275
35
50
20
40
50
25
<$ 160>
Take year’s estimated total and divide by
12 for monthly expense
Entertainment includes: Reading, Cable,
Videos, Music, Hobbies, Going Out, Sports
Cost of Credit
• Outstanding balance
$2,500
• Interest rate
18.5%
• Minimum monthly payment
2% of balance,
not less than $15
• Interest cost over loan period
$6,650
• Years to pay off
30 years
For Customer Service, call or write
1-800-967-8500
BOX 6000
THE LAKES, NV
39163-6000
Driver’s Edge Visa With NO ANNUAL FEE
Account Number
PAYMENT DUE DATE 01/20/20xx
Statement Closing Date
12/28/19xx
Sale Date Post Date
12/09
Total Credit Line
$1200
Cash Advance Limit
$400
Reference Number
New Balance
$1089.22
Available Credit Line
$110
To report billing errors, write
to this address, calling will
not preserve your rights.
Available Cash Limit
$110
Activity Since Last Statement
14481030
Amount
PAYMENT – THANK YOU
-22.00
* DRIVER’S EDGE CHARTER MEMBER REBATES *
Last Month’s Balance
Earned this Month
Redeemed/Expired
Current Balance
TOTAL
0
0
0
0
* FORD REBATES SUMMARY *
Current Balance
TOTAL
109
HAPPY HOLIDAYS FROM ALL OF US AT CITIBANK!
We’d like to take a moment to thank you for being a Citibank cardmember and let you know that we appreciate your
business. Warmest wishes for the upcoming year.
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Account Summary
Amount Due
Previous (+) Purchases (-) Payments (-) Credits (+) Finance (+) Late
Balance & Advances
Charge Charges
Purchases 1089.62
22.00
21.60
Advances
Total
1089.62
Rate Summary
Number of days this Billing Period
Calculation Method
Periodic Rate
Nominal Annual Percentage Rate
Annual Percentage Rate
Balance Subject to Finance Charge
21.60
22.00
34
Purchases
Before 06/25/1997
Daily
.05863%
21.400%
21.400%
1055.52
(=) New
Balance
1089.22
22.00
1089.22 Minimum Amount Due 22.00
Purchases
Advances
Daily
.05178%
18.900%
18.900%
31.65
Daily
.05178%
18.900%
18.900%
After 06/25/1997
Purchases Minimum Due
Advances Minimum Due
Amount Over Credit Line
Fees
Past Due
Step 2: Monthly Plan for Spending, Bill Paying, & Saving
Bills
Mortgage/Rent
Heat
Electric
Phone
Water
Insurance – Car
Insurance – Other
Car Payment
Child Care
Other* Mom
Cable TV
Hudsons
Target
Student Loan
Dentist
Visa
Due Date
1st
Subtotal Bills:
Savings
Retirement:
Emergency: (goal: 1 month’s income)
Set Aside: (see personal expenses)
(car maint 50, Xmas 10, vaca 25)
Subtotal Savings:
Payment
$550
20
40
35
-065
-0275
-025
22
20
40
35
50
50
$1,227
Payment
$10
30
85
$125
Subtotal Bills:
Subtotal Savings:
$ 1,227
+ 125
This Month’s Bill & Savings Total
$ 1,352
Spending Allowance
This Month’s Net Income:
$1,785
Less This Month’s Bill & Saving Total
- 1,352
This Month’s Spending Allowance:
=
433
Divide above figure by 4 for weekly
spending allowance
=
$108
10 Ways to Save Money
•
•
Don’t shop as a form of
entertainment. If you really need
something, go buy it.
Live within your means.
– Paying cash eliminates extra
interest charges, lowering the
price.
– Forces you to use what you now
have.
10 Ways to Save Money
•
•
Take care of what you have.
Wear it out. Use the parts.
•
Do it or make it yourself.
•
Anticipate needs.
– Eliminates impulse buying.
– Can take advantage of sales.
10 Ways to Save Money
•
Research value, quality, durability
and multiple uses before buying.
•
Get it for less — look for
discounts.
•
Buy it used.
•
Borrow it, rent it, or share it.
Annie Zirkel’s
Cheap Living in and Around Ann Arbor
The Non-Consumers:
- avoid materialism, enjoy simple pleasures
The Necessarily Cheap:
- those who must stretch every dollar
Cheap Lifestyles
The Scrimp & Splurgers:
- sacrifice in some areas so
they can be extravagant in
things they enjoy.
The Habitually Thrifty:
- grew up in a frugal household
Cheap Lifestyles
The Crafty Livers:
- enjoy the challenge of living beyond
their money means by using their wits.
Environmentalists:
- motto is reduce, reuse and recycle
which in cheap talk means save $, save $,
save $!
Cheap Deals
• Planning
• Ingenuity
• Maybe some
rethinking
• Knowing where to
get what you need
for less
Resale Shops
• Ann Arbor PTO
Thrift Shop
• Klothes Kloset
for Women
• Once Upon a
Child
• LA Designs
• Kiwanis Club
Sales
• Retro Threads
Vintage Clothing
More Resale Shops
• St. Vincent
DePaul
• Top Drawer
Women’s
Designer Apparel
• The Tree
closing end Sept
• Treasure Mart
• Recycle Ann
Arbor Reuse
Center
• U of M Property
Disposition
• Woman in the
Shoe
How to Shop Resale
•
•
•
•
Shop frequently and spend time looking
Look at everything
Plan ahead-buy for next year
Network with a friend and buy for each
other
• If looking for something unusual, call & ask
How to Shop Resale
• Check clothes thoroughly:
–
–
–
–
Buttons
Seams
Zipper
Stains
How to Shop Resale
If you really don’t like it, don’t buy it just
because it’s cheap!
- you’ll never wear it
or
- you won’t feel good about your
appearance when you do
Garage Sales
-Inexpensive way to buy furniture and
household items.
- Listed in the Ann Arbor News classified ads
section.
- Fliers posted on phone poles and bulletin
boards.
Other Cheap Resources
•
•
•
•
Auctions
Estate Sales
Rummage Sales
Ann Arbor News
– Freebies in Saturday’s paper only
– Bargains section is daily
• Appliances, computers, furniture
Cheap Dates
• AA is a gold mine of cheap and free events!
– Ann Arbor Observer’s daily listing of events
– UM Arts weekly list of theater, dance and arts
events
– Town and nature walks: Walker’s Guide to
Washtenaw County
Cheap Dates
• Take a walk around downtown Ann Arbor:
– Used bookstores abound
– Free birthday dinner for your companion at
some restaurants – call and ask!
– Award-winning public library
• Videos
• CD’s
• Books on Tape
Free Outings
• UM Museum of Art
– Campus art museum at 525 S. State St.
• UM Exhibit Museum
– Dinosaurs and much more at 1109 Geddes Ave
• Kelsey Museum
– Ancient archeology museum at 434 S. State
Free or Cheap Outings
Cobblestone Farm
– Colonial period house, pioneer events at 2781
Packard Rd.
Matthai Botanical Gardens
- hiking trails and greenhouse/conservatory
Farmer’s Market
- Detroit St at Kerrytown on Saturday’s
Free Outings
• UM Marching Band practice
– Hill and 5th Ave, Fridays before home games
City Parks & Recreation Dept: 994-2780
- city parks
- Natural ice skating rinks
- Sledding hills
Renting
True of False:
“Renting is like throwing money away.”
False!
It is no more true than money is thrown
away on food or clothing.
When Renting is Best
•
•
•
•
No long term commitment to that location.
Low upfront cost.
Move in and out quickly.
An apartment requires less time and
physical labor to maintain.
• Low upkeep costs.
Some people invest at a greater
rate of return by
saving the difference
between the monthly cost of rent
and the true cost of home
ownership.
Your Money or Your Life, by Dominguez and Robin,
Viking Books
Housing as Investment
• Grandparents bought house 30 years ago for
$15,000.
• Today it’s worth $85,000.
• It’s value has grown over 5 fold in 30 years.
• That is just under 6% average annual
compound rate of return.
Mortgage vs. Rent
• Mortgage interest is fully tax deductible.
• Claim property tax as a deduction.
• Homeowners are likely to get a larger tax
refund.
• (Which provides money for home repairs!)
Homeownership Benefits
• Forced savings program builds equity
through compulsory monthly payments.
• House equity can be leveraged.
• Rental income from second property can
offset the costs.
Reducing Housing Costs
Shared housing:
Roommates or tenants
Housing Bureau for Seniors’ HomeShare
Program
Simplicity Movement:
Fewer belongings allow for smaller dwellings.
Live close enough to public transportation or
work so vehicle is unnecessary.
Cut Heat & Electric Utilities
• Turn down your thermostat.
• Make sure your fireplace damper is tightly
closed.
• Use bathroom and kitchen fans only when
necessary.
• Reverse the direction of your ceiling fan.
• Put an inexpensive insulating blanket around
your water heater.
Cut Heat & Electric Utilities
• Schedule a checkup for your furnace
annually, and change filters at least twice
each year.
• Plug air leaks in your home.
• Add insulation if you can see the tops of the
joists in the attic.
• Home sealing and attic insulation can cut
heating and cooling bills up to 20%.
Shop for Best Gas Price
gasbuddy.com
bankrate.com
Aggressive Driving
• Aggressive driving can slash your
highway gas mileage by 10%.
• With gas prices at $2.70 per gallon, that’s
the equivalent of paying an extra 27 cents
per gallon.
• Fuel efficiency peaks at about 60 mph.
After that, factor in an extra 10 cents a
gallon for each additional 5 mph.
Basic Maintenance
• Properly inflated tires will save you up to 6
cents per gallon.
• Save 4 cents per gallon by using the proper
grade of oil.
• Replace a clogged air filter and save 20
cents per gallon.
Maintenance
• Replace a malfunctioning oxygen censor
and save as much as 60 cents per gallon.
• Check your gas cap regularly. Nearly 150
million gallons of gasoline evaporate into
the atmosphere due to damaged, loose and
missing caps.
Keep Up with the Upkeep
• Few things can bust your monthly budget
– or jack up your stress level- like an
unexpected car problem.
• A little advance planning can ward off
unwelcome surprises.
“Cinderella Era”
• By keeping a well-maintained car for an
additional 4 years after it’s all paid for, you
could bank the new car payments and save
as much as
$10,000
• So find a mechanic you can trust!
Find Good Mechanic
• See if the National Institute certifies the
mechanics for Automotive Service
Excellence (look for the blue ASE sign on
display).
• Check the shop’s record with the Better
Business Bureau.
• Get a referral from AAA-even if you’re
not a member.
Do It Yourself
• Replace wiper blades and headlight bulbs.
• Install a new air filter - it’s like changing the bag
in your vacuum cleaner.
• Even if your mechanic performs some of these
services for free, by doing it yourself you’ll save
on the parts, which can be marked up
significantly.
Do It Yourself
• Clean corroded terminals, which can
damage connections between battery and
cable.
• Wash your car regularly and wax it at least
twice a year.