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Strange as it seems to someone like me, there are lots of people who’ve never had to rent apartments. An overwhelming number of them are younger people, but it’s not only young people who need to rent apartments.

Redevelopment of Dachong Village, Nanshan, Shenzhen
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I’ve lived in a lot of apartments and few houses. Thus, I feel like I’m qualified to give some advice on this one. Some of my advice is geared towards colder climates, but in a way some might offer something for those living in warmer places also.

1. Always try to start with 1 1/2 times more of cash before you rent a place. The reason for this is because most places are going to require at least a security deposit, which is usually around 1/2 of a month’s rent, while some places will require two months rent, which they call first and last month’s rent for whatever the duration is.

Another reason is that you might need some extra money to hook things up like electricity, phone (yeah, I know you probably have a smartphone), cable, etc. It pays to not have to overly worry about the early expenses.

2. It’s always better to pay a bit more money for a place that gives you “free” utilities. Most people think utilities in an apartment won’t be all that high; don’t believe it.

One of my earliest apartments was nice and sizable; it also leaked a lot of heat in the winter. When my first winter bill came and it was almost $300, and I didn’t have that kind of money to spend on a regular basis, it made my experience living there torture. My next place covered all utilities. It cost more monthly but way less than when I had to deal with utility bills.

3. If you have to pay utility bills, there are a couple of things you’ll want to do or look into so you can reduce your bill.

The first is, if you’re in a cold area, try to find an apartment above someone older. Older people get really cold in winter, so they don’t mind paying more to stay warm. Heat rises, which means if you live above them you won’t have to turn your heat up as much. Truthfully, you could follow this principle by living above anyone; it’ll keep your bills lower than if you’re on the main level.

Contemporary 3-bedroom apartment for sale in Barcelona Old Town LFS3188
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The second is if you’re in a warm area try to live on the main level if there are floors above you. This is because cold air is heavy and thus falls into lower apartments.

The third is, if you live in a cold climate and don’t have someone living below you, get a kerosene heater. If it could keep me really warm in my own house this winter it’ll not only keep you warm in your apartment but it’ll last you longer.

4. Unless you have a special need for one, don’t pay more for a garage. It might seem cool to have one, a nice place to keep your car in. However, in many apartment complexes not only is your car further away than parking out in front of your building, but often there’s no real security protecting the cars; not even cameras. Also, if you live in a place that gets a lot of snow you might think your car is protected from the elements but your car will probably be plowed in a little bit. Much easier to get your car out of a parking spot than having to shovel your way out.

5. Many apartments offer storage sheds, although some places charge for it. Trust me, it’s better to keep things like your bike in your own apartment. If you have the need to store away things like books and clothing it’s a much smarter thing to buy those large bins at a place like K-Mart or Target (or many other places I believe) that usually come in around $10 or so.

They’re nice and deep with a top you can snap on, and you can stack them in a corner somewhere. Sure, it might change the overall look of the room, but your stuff will be much more secure in your apartment since often the locks are easy to pick on storage bins. Keeping your stuff out of sight keeps it out of someone else’s mind.

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Some weeks ago I had someone write me and ask me if there was a way to tell younger people how they might start building their money up so that by the time they were ready to retire they’ve have enough to live on for the remainder of their life. Seemed like a nice challenge to me, so that’s what this post is about.

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There’s no right age to start investing. However, for my example I’m starting by recommending that young people start by at least the age of 20. Many have either gone directly into the workforce while others might be heading into their last years of college. Based on my recommendation in this post I’m going to give you a chance to start building your wealth early and easily, and fairly painlessly early on.

I’m basing this recommendation on the premise that you’re going to do something more with your money than put it in a jar in your house on a monthly basis. I’ve made that recommendation in the past for those who can’t get used to putting money away. It’s a nice way to get started, and it can bring a nice little bump in case you need some extra money for emergencies.

Anyway, the idea is that you’re going to invest your money in some way and keep building on it. This will involve talking to a financial counselor or investor, someone who can give you the best recommendation to get the kind of return on your money over the long haul that I’m giving you.

The figures I’m going to use are based on an average return of 3% a year and 10% a year. You could end up somewhere in the middle, in which case your total will be in the middle of what I’m recommending. Here’s the thing though. It’s possible that you might not ever be in a position to stick with what I’m proposing here. No matter; once you get used to saving money, even if you have to tap into it, you’ll fall back into it pretty easily.

You’re 20 years old; happy birthday! Today, you’re going to take $10, just $10, and invest it. It’s possible that you might have to start with $100, depending on the type of investment you’re looking to do, but go with me just for the sake of numbers. You’re going to start with that $10 and, for the first year, you’re going to invest just $10 a month.

By the end of your first year, you’ll have earned $6.91; your total will be $126.91. That doesn’t sound like much does it? Okay, it’s not. But stay with me because it’ll get better.

On your 21st birthday, you’re going to bump that $10 a month up to $20 a month. You’ve gotten used to taking a portion of money from your paycheck already, so another $10 shouldn’t bother you at all. That is, if you’re also budgeting your money so you’re not living paycheck to paycheck with no clue where your money’s going.

If you bumped yourself up to $20 a month, by your 22nd birthday you’ll have earned a total of $32.25. Hey, it’s more than the $6.91 right? Still looks pretty pathetic though, doesn’t it?

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We’re not done though. From your 22nd birthday through your 30th birthday, you’re going to increase your contribution by $10 each year. Thus, $30 at 23, $40 at 24, all the way up to $200 a month by the time you hit 40. By the time, you’ll have invested $25,200 out of your pocket but your total will be up to $58.884. That’s not too shabby, but it still doesn’t look like tons does it?

Here’s where things get interesting. If you’ve gotten used to setting aside $200 a month towards your savings plan, you never have to increase that amount again if you don’t want to. If you did your money would grow even better than it already has.

For the sake of argument let’s say that you can handle $200 a month until you turn 65, which at this point is still the true age of retirement. At just 3% a year, by the time you turned 65 you’ll have around $612,000 in your portfolio. Assuming your house is paid off and you have no really large monthly expenses, you’ll have enough money to live pretty nicely for the rest of your life, even if you decide to do a little bit of traveling for a few years.

At that point, you’d be earning nearly $52,000 a year off what you’ve invested, and that’s for the rest of your life. If you spend less, you’ll have more. Isn’t it nice to have choices?

What if you did the same thing only earning 10% annually? By your 65th birthday you’d have around $730,000 to play with, earning around $65,000 a year.

That’s a nice range to play with isn’t it, having somewhere between $612K and 730K? And still earning money while just living off a certain percentage a year? The other side of this is that you don’t pay any taxes on any of it until you use it. Thus, if you took your $52,000 or $65,000 a year, that’s the only bit you’d pay any tax on. Well, that plus your social security, if that’s still around years from now.

You won’t need it if you can start this plan as soon as possible. However, let’s look at this from another perspective. What if you can’t get started on a plan like this until you’re 30? If you can start doing the same thing at 30, by the time you’re 65 you’ll have between $204K and 230K. This leaves you with less money to have in retirement, but it’s not all that bad.

One more calculation for you. What if you started at 30 but you’re making enough money so that you can begin with $200 a month? By the time you hit 65 you’ll have between $486K and $530K. That’s pretty good living money as well, especially without a lot of expenses, which you probably won’t have at that point.

This is what saving money can do for you long term. The earlier you can start, the better off you’ll be when you’re younger.

All this and we haven’t even talked about life insurance. That’ll be for another time. :-)

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Last Tuesday I was trying to get out of the house because I had a meeting when I got one of those calls that my Spidey senses told me not to take, but I took it anyway. It turned out to be one of those energy companies calling; ugh.

Overwired, Hawaii
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Usually I tell them I don’t have time for them (if I answer the phone to begin with) but this time around, even though I said that, the guy caught me off guard when he said he’d be calling me the next day and the day after that and all he needed was two minutes of my time.

Of course, 10 minutes later I was just getting off the phone with him after agreeing to switch my energy services over to his company. No need to name the company because in my mind they’re all the same.

When I got back home I have to admit that I had buyer’s remorse. I also have to admit that I didn’t write down any of the information he gave me because I’d been in a hurry to get out; that was dumb of course. I figured that I would call my local power company, National Grid, at some point over the next few days to talk to them about my decision.

Saturday I got a letter from National Grid; actually, I got two letters, but both said the same thing. It reminded me of what I had wanted to do. So, first thing Monday morning that was the first call I made.

I asked the lady on the other end about this particular company I’d signed up with. She said she wasn’t allowed to tell me anything about these companies unless I had certain types of information. I asked her what information that was, and she told me I needed to know how much I was paying for kilowatt hours, which concerns electricity, and per therm, which is for gas.

I asked her what I was paying them now and she went to look it up. Then she told me that my account wasn’t actually with them, but with this other company that, supposedly, I’d been with since 2011; what the hey? Goodness, I didn’t remember ever doing that, but since my name is on the bill it had to be me, and I must have thought I was getting some kind of deal.

After that little bit of shock I asked her what they were charging me. She said they were charging me 11 1/2 cents per kilowatt hour and $1.50 per therm.

Then I asked her what National Grid was charging and she said… 4 cents per kilowatt hour and 95 cents per therm.

What?!?!? :-O I was allowing a third party company to charge me 3 times the amount for electricity, which is the biggest part of my utility bill, and higher than 33% more for gas? What was I, stupid?

I told her that I wanted to change right then and there back to National Grid, and that I wanted to cancel the new company also. As she was doing that I asked her how these outside companies could get away with charging higher rates. She said that National Grid had to be the conduit for all services in our area but that other companies can offer “deals” at whatever rates they see fit.

She added that in some cases they might offer a short term deal to get people to switch but they were under no obligation to keep it there, and that most people don’t pay attention to the rates anyway. She also said a possible warning sign is when they tell you they can save you anywhere from 10 to 20% on your bills without defining what the actual rates are; how would you know unless you ask the question?

Wow, what a lesson! Living in the northeast, you can imagine what our utility bills are like in the winter. Just knowing that I could have saved nearly 75% on my winter bills total… I want to slap myself silly!

Then again, it’s another lesson learned that I get to pass along to you. No matter where you live, you probably have more than one provider for whatever type of utilities you have. Learn to ask the questions I mentioned above depending on what you have and make your choices accordingly.

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