Thrifty Thursday - Upgrade to LED Bulbs

Here’s a hack with a high percentage return.  If you pay your own electricity bill, chances are your use is metered and charged by the Kilowatt hour (kWh).  A Watt (W) is measure of power, or energy per second, so a Kilowatt hour is just using 1,000 Watts of power for one hour.

For example, a common household incandescent light bulb uses 60W of power.  If you left this light bulb on for 3 hours a day for a year, it would use 65.7 Kilowatt hours: $Total\ Energy = Power * Time$ $Total\ Energy = 60 W * {3\ h \over day} * {365\ days \over year}$ $Total\ Energy = {65,700\ Wh \over year} = {65.7 kWh \over year}$ Since Thomas Edison invented the incandescent bulb in 1879, however, there have been some improvements to the technology.  The latest is the bulb.  An LED bulb can create the same as an old incandescent light bulb using much less power.  For example, an LED replacement for a 60W incandescent bulb would typically use only 9W.  This creates a savings of 51W per bulb.

To find out exactly how much of a monetary savings this is, you first need to know how much you are paying for your electricity.  You will need to check your bill or electric company’s website, as this typically varies by area, with some of the South and Midwest having the lowest rates, higher on the coasts, and Hawaii topping the charts.  My electric company also charges me more in the summer, when everyone is using their air conditioners, and less in the winter.

For example, let’s look at an average rate of $0.10 per kWh. Again, let’s assume a bulb we use for 3 hours a day. Therefore, reducing the power of that bulb from 60W to 9W leads to a savings of: $Annual\ Savings = (Old\ Watts\ – New\ Watts) * {hours \over year} * {1\ kW \over 1,000\ W} * Energy\ cost$ $Annual\ Savings = (60W\ –\ 9W) * {3\ h \over day} * {365\ days \over year} * {1\ kW \over 1,000\ W} * {0.10 \over kWh}$ $Annual\ Savings = {5.10 \over year}$ In this example, if the new bulb costs less than$5.10, we’d make the money back in less than a year.  If your energy rate is higher, the payback will be quicker.  Bulbs in locations that are used more often are more obvious candidates for replacement.

These days, prices on LED bulbs have come down so much you can get them for under \$2 per bulb, meaning the bulb in the example would pay for itself multiple times over in one year and continue to pay “dividends” for the next decade.  Where else can you get that kind of investment return?

LED bulbs use less energy and last longer than both incandescent and Compact Fluorescent (CFL) bulbs. Prices have dropped enough so the payback time is under a year for many applications.

Thrifty Thursday - Save Thousands on Your Phone Plan

Recurring expenses are insidious.  Companies love signing you up for subscription services as it means a consistent revenue stream by default.  The burden is on the consumer to take action, but momentum and inaction usually win out and the payments keep getting made. Taking a hard look at these subscriptions and other recurring payments can be very effective in reducing annual expenses, thereby lowering your Target FI Number and leaving more money for saving and investing .   Some expenses that don’t bring enough value can be eliminated.   Others can be greatly reduced with a little intentionality (just get a month or two of that streaming service to binge your favorite show, no need to leave it renewing for the whole year!)   However, there are some that are necessary but we can work on reducing their impact. One of my favorite hacks is switching to a low-cost cell phone plan offered by a Mobile Virtual Network Operator.    MVNOs lease bandwidth on existing cell towers ins

Stocks: How to Pay Someone Else to Work for You

When you work for a company, you work to build someone else’s wealth.  When you own a company, other people work to build your wealth. Fortunately, you don’t have to be Bill Gates or Elon Musk to own a profitable company.   Instead, as we touched on briefly in the article on assets vs. liabilities , you can buy stock in the company.   Buying a share of stock mean you actually own a small piece of a company. One of the most efficient ways to own stocks is by purchasing low-cost index funds.   These funds can either be in the form of mutual funds or Exchange Traded Funds (ETFs).   The key difference to a traditional actively managed fund is that the index fund simply tracks the relevant market.   For example, an S&P 500 index fund would hold shares of the largest 500 U.S. companies In the S&P 500’s case, the largest 500 with some consistent caveats: at least 10% must be publicly available for trade

Calculating your Portfolio Target with the 4% Rule

You are saving money and learning about the difference between assets and liabilities . As you invest your savings into assets, the real magic begins. Your investments start to grow, whether it be from appreciation, cash flow, dividends, or all of the above. Then the growth starts to growth. Then the growth on the growth on the growth starts to grow. It’s a runaway chain reaction, but it does take time. This is the magic of compounding returns and leads to exponential growth of your wealth, the namesake of this blog. However, the opposite effect is just as powerful. Anyone who has ever been in credit card debt with interest rates over 20%, or even worse situations with payday or title loans, understands how hard you have to swim against the current just to stay still. The interest keeps racking up and many people never escape the debt. If this describes your situation, check out Dave Ramsey’s Total Money Makeover for steps to dig yourself out of debt before you start b