Hustle #4--Saving at Ikea

Ikea cabinets are well-regarded by both Consumer Reports, and kitchen designers (if you ask honest ones. Mine, in fact, has them in his own kitchen.) And they are a lot cheaper than the high-end Pohgenpols and Snaideros, and a lot nicer than the standard Home Depot standards.

But you can always do even better. For instance, once year, they have a sale where if you spend enough (typically $2500), you can get 10-20% off your entire kitchen purchase. This year, there is a sale from mid-March to mid-May, where you get 10% off a $2500 kitchen purchase, 15% off with the purchase of two appliances, and 20% off with the purchase of three appliances.

But wait! There's more! When you make an Ikea purchase using a debit card, you get a coupon for 3% off your next purchase. So, go in and pick out your cabinets, and then buy a $1.29 box of cookies (vegan, even!) with your debit card. Come back the next weekend after thinking it all over, and buy your kitchen with a 3% off coupon! This is not chump change when you are spending thousands.

Finally, pick your store carefully. Different Ikeas don't differ much in terms of the items you can buy, but do differ in the tax rates for the counties they sit in. Here, I can choose one Ikea with a tax rate of 10.25%, or another at 7.5%. Again, in the dollars we are talking, that difference is very large.

Example: say I spend $5000 on stuff. Just by exploiting the "debit card" purchase trick, and choosing the lower-taxed store, I will save $311.25 versus what I otherwise would have paid. In other words, it's like getting my dishwasher for free.

Hustle #3 -- It's Always Negotiable

I can't say I enjoy dickering over price, but the rewards can be immense. This is doubly so since most people aren't willing to do it--meaning their higher prices are subsidizing my lower ones. Many more things are negotiable than you would think: goods from retailers, hotel rooms, automobile repairs, various services. This is even true of large chains.

Case in point: I am staring at a check for $399 that I just received in the mail from an ADT Home Security independent contractor called Defender Direct, Inc.

When I decided to install a security system late last year, I did some research and found that I could either buy directly from ADT, which would have required me to purchase the system from them at a cost of about $850, but pay only about $25 a month in monitoring fees. In the alternative, I could buy from the independent contractor, who would give me the identical system for free plus give me a $99 "rebate," but charge me $45 a month and require a three-year contract. Adding it up:

ADT directly = $1750 over 3 years
contractor = $1519 over 3 years

Still not an easy choice: Although the contractor was cheaper up front, buying/installing through ADT directly seemed like a less risky option than the contractor (even though, as confirmed by ADT, an "authorized" one).

So I called the contractor to tell them of my decision to go with the ADT direct option... and they offered me 3 months free service. I hesitated, tapping on my calculator; their new offer brought the 3-year price down to $1384. I can tolerate a lot of risk to save almost $400. After I told them I still would go with ADT, I was transferred to a supervisor, who offered to give me six months free service (which eventually became "an even $300" or almost 7 months free service). Total price over 3 years: $1219, or a savings of $531 over ADT direct. And ADT provides the monitoring service either way. (Defender Direct makes its money by selling my contract to ADT, presumably for some amount well over $1219! It's win/win for everyone!)

Best of all, at the end of my three year contract, I can "switch" services back to ADT directly, and pay only $25 a month (or even shop around and try to find a cheaper monitoring service; I own the equipment even though it was free to me!)

Hustle #1 -- Health Savings Accounts

AR and I were at an Atlantic City card room some years back, where we befriended a shark. He was very eager to teach AR and me his "card hustles." After seeing we were suitably impressed, he proceeded to show us a million more "hustles." To him, basically anything he did to try (successfully or not) to make money was a hustle. It was very pathetic by the time he got to showing us his "slots hustle," during which, unsurprisingly, he lost about $100 he clearly couldn't afford, all within about 15 minutes. By then, we were far past being impressed.

I'm going to offer my own money-making hustles in this blog. Hopefully, they'll prove more successful than that guy's--though as with the "slots hustle," your mileage may vary.

The first is to get a Health Savings Account. The two of you might not be able to do so; your workplace has to offer it. But if they do, to qualify, you have to sign up for a "high deductible" (min. $1100/year) health insurance plan. Mine has a $1400 a year deductible, with no co-pays (though I get one free "well-woman" visit, plus labs and a flu shot, per year at zero cost to me). That means I pay every cent of my insured health expenses until I hit $1400. After that, I pay 20% of all expenses, up to a total maximum out-of-pocket of $5000.

The real benefit is the HSA. I can put up to $2900 a year into special account, using pretax dollars--meaning to get $2900 in the account, the real cost to me (since I don't pay tax on it) is $2900 - ($2900 * .31), or only $2000. Nice profit--I dare you to find any other investment vehicle with that kind of guaranteed return! I then get to use the HSA account dollars to pay for *all* medical and dental expenses, including things like contact lenses and solutions, OTC medicines, you name it. And unlike a traditional "flexible spending account" (FSA), I don't have to spend it before the year is up.

This health care plan costs me $71 a month, compared to the lower-deductible/no-HSA/no-free-wellness-and-shot plan of $105 a month (which has a $500 deductible, 20% after that up to a yearly out of pocket of $4000/yr). In addition to saving $34/mo straight up, I also "earn" that $900/12 per month (or $75/mo.) from the HSA. On top of that, I get the free visit plus labs ($250) and shot ($30), which averages to (250 + 30)/12 or $23/mo. Total I save per month over the lower deductible plan? $132/mo, or a whopping $1584 for the year.

But what if I get catastrophically ill (costs that exceed my max for the HSA plan--or anything over $5000 for the year)? In this case, the non-HSA plan is in fact better measured over the year--but barely. My HSA coverage costs me, for a year with catastrophic illness, $71X12 for the premium, or $852. But I also must pay the max of $5000/year--everything after that is paid 100%. So, I pay $5852 for the year for the HSA plan. Compare the other plan: $105 X 12 is $1260, plus another $4000 max, or $5260 for the year. But wait--don't forget the well-woman visit and flu shot! I get that with the HSA, but not with the non-HSA plan. Add $280 to the $5260, for $5540. So, all told for a catastrophic illness year, the non-HSA plan would save me 5852-5540 or $312.

But here's the thing: I won't usually get catastrophically ill. And any year I don't--in fact, any year where my medical expenses are less than about $3500 a year, I will save money with the HSA plan. In fact, most years I don't get sick at all; and each one of those years, I have made almost $700 over the non-HSA plan--which isn't even including the $900 HSA tax "bonus". Even if I got catastrophically ill two years out of three, I'd *still* be better off with the HSA plan because it saves me so much money in that one healthy year.

One final thing: I didn't account, in my "costs" of the plan analysis, the $900 I don't get withe non-HSA plan. This is because I could, if I planned it very carefully, get that same benefit by using a traditional FSA. Still, I think the HSA is a better account, even with identical tax deductibility, because with the FSAs, if you don't use it, you lose it. This makes them riskier, and they tempt you into purchases you wouldn't otherwise make, in order to not lose the money you've put in. (I've known of more than one Lasik eye surgery bought for just this reason.) Finally, you get no interest on an FSA--though admittedly the interest on a typical HSA is miniscule (around 1%). Though I have been FSA eligible for as long as I can remember, I haven't taken advantage of it for just these reasons.

So if you have access to an HSA, do the math for your own plans, but odds are good it is worth it.

Cha-ching! :)