Small things can give big savings

This was originally published on Monday, January 16, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

When your budget is tight, it’s hard finding ways to save. Sometimes, the simplest little tips can make a huge difference.

Start your new year off right and start saving money. To start, switch your thoughts from being a spender to being a saver. Through practice and persistence eventually saving will become natural and yield long-term results.

  • Pay for what you need. It is normal to want to live comfortably but rent or purchase a home that is within your price range. Paying for extra space is not practical.
  • Refinance your mortgage. Take advantage of lower interest rates. If you lower your percentage even by half a percent, you can save thousands of dollars over the life of the loan. If you have a $100,000 fixed mortgage for 15 years and change the interest from 7 percent to 6.5 percent, you can save $5,000 in interest charges. If you can handle higher payments, consider a 15-year mortgage versus a 30-year. Let’s say that same $100,000 at 7 percent is for 30 years. If you convert it to a 15-year mortgage, you can save more than $75,000. If refinancing costs will exceed the savings, keep your existing mortgage and pay more every month. This effectively results in savings as well.
  • Insurance. If you rent a home, be sure you purchase renters’ insurance. Know what you are covered for and pay only for what you need. Ask about discounts for which you may be eligible. Bundling your car, home and life insurance can also reduce your bill.
  • Weatherproof your home. Evaluate your home for holes and cracks that let warm air in and cool air escape. Talk to your local hardware representative for the best types of materials to plug the areas of concern. Spending a little more on the best grade material will save you more.
  • Window treatments. Living on Guam, we receive a lot of sun, which heats our homes. Purchase window treatments that block the sunlight and keep the house cool. Consider tinting your windows to keep UV rays out of your house as well. Many residents use their storm shutters not only for storm protection but to keep the sunlight out too.
  • Plant trees. If you put in trees on the sides that are most exposed to the sun, the shade they provide will keep the house cool.
  • Roof coating. There are all sorts of different roof coatings. When recoating your roof, choose one with good reflective properties and that’s guaranteed to last long. Keep your roof white by water blasting periodically.
  • Convert lightbulbs. Old incandescent lights may cost less to replace but overall they consume much more power and also create heat. Slowly convert your lightbulbs to CFL or LED .
  • Conserve water. Inspect your home for leaks and drips. Pay attention to the sound of running water, especially when no one is using water. Water leaks can become serious problems if not fixed immediately.
  • Cable, phone and internet. Pay only for what you need. If you hardly spend time at home, you probably don’t need all the premium channels. Many of the popular channels now have apps to watch on your computer, smartphone and tablet. If you call the U.S. mainland or other countries frequently, check with your provider to see if they have calling plans. Bundled plans are also a good way to save money.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Millennials, learn good money habits

This was originally published on Monday, October 24 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

When you think of millennials, you might conjure up free spirits who like adventure, take risks and seek thrills. Pictures of 20- and 30-somethings cliff diving, hiking and traveling to exotic places are common.

But when it comes to finances, millennials are quite conservative. Millennials came of age when the Great Recession was in full swing. Many saw their parents lose jobs or lose big when the stock market and real estate markets took a plunge. Millennials watched as their parents struggled to keep their homes or moved to downsize.

Growing up during the Great Recession has made millennials uncomfortable when it comes to investing their money. This generation has an opportunity to form good money habits that will last into retirement. Here are some tips to follow:

  • The future. Many millennials grew up to think very short term when it comes to their money. Think about what you want to do in the future. Get another degree? Do you want to retire early and maybe even seek a second career? By planning today you can set some goals that will make your future dreams come true.
  • Retirement. Your retirement is still some time away. You have the opportunity to diversify your portfolio and be as aggressive or conservative as you want, depending on your goals. Decide when you want to retire. Use that date to determine your course.
  • Debt. Know the difference between good debt and bad debt. Good debt increases your value, like a mortgage or student loans. Bad debt is something that you cannot cash in, like credit cards or vacation loans. Pay off your loans with the higher interest rates first and then move on to the next highest and so forth. If you use the money that you would have used to pay off the debt, and add it to what you currently are paying on the second debt, you will be amazed at just how fast they will get paid off.
  • Technology. Millennials do not know a world without the internet. They grew up digital and are not intimidated by technology. So why not use it to manage money? There are some awesome apps that can make managing your money fun and easy. Some apps will even send a text to your phone to let you know that you are coming too close to going over your budget.
  • Don’t forget yourself. You don’t have to work hard and not enjoy your money. Always set aside some money for you to enjoy. It is OK to treat yourself, just as long as it is in moderation. But stay firm to your spending plan. It’s easy to get sidetracked and think you can make it up later. If there is something you want that is outside of your spending limits, take the time and save for it.
  • Credit score. Start by getting copies of your credit reports from the three free credit bureaus. Your credit score determines what lenders are willing to charge you for borrowing their money. It is also used to determine how reliable you are. Employers, landlords and utility companies will often take a look to see your spending patterns and how responsible you are with your money.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like him to cover, email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.

Some financial tips for millennials

This was originally published on Monday, October 10 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

There are many differences between the generations, and the same holds true to financial concerns. According to an article on CreditCards.com, baby boomers were most concerned about retirement while millennials are more concerned about student loans.

Millennials are facing some distinctive financial challenges. The cost of living has increased. What cost $10 in 1944 now costs $136 in 2016. Many college graduates are starting at entry-level, minimum-wage jobs. College tuition and student debt is higher than ever before.

Millennials have been accustomed to banking differently — most never step inside a bank except to set up the account. They are part of the instant generation and not accustomed to having to wait too long for most things.

Unfortunately, wealth and financial health has not evolved as quickly. So what can a millennial do to get on track? Here are a few tips.

Getting out of debt. Credit is easy to come by these days especially for young adults that are just starting off. Credit is given by banks on college campuses and offered through the mail and online. Many millennials are struggling to pay off debt due to the ease of obtaining credit. According to a study published by Forbes.com, “54 percent of millennials are worried about their ability to repay their student loans.”

To avoid falling into a financial credit trap, set a limit for yourself. Take a deep look at what you really can afford. Concentrate on paying off your debts as soon as possible. Time is on your side and the time to buckle down is when you have less responsibilities. Put the extra money you receive like bonuses, tax refunds and holiday gifts toward your debt. Consolidating your loans may be a solution because you reduce multiple payments to multiple accounts to just one payment to one account.

Spending plan. Budget conjures up negative feelings, like the word “diet.” Don’t think of yourself as not allowed to have fun with your money, but instead as choosing to spend your money in moderation. Millennials are very tech savvy and are fortunate enough to know how to use apps and software that make tracking their spending less daunting. They also rely on real-time banking. Some apps use the information from your bank to make tracing their spending effortless.

Millennials should think about the 50-20-30 rule. Put 50 percent of your take-home pay for your necessities. These necessities are roof over their head, food, utilities and other day-to-day expenses. About 20 percent can go to your financial responsibilities. These are paying off debts, savings and an emergency fund. The last 30 percent can be used for your wants, such as dinners out, new clothes and other fun recreational activities.

Emergency fund. Just as the name suggests, this account is for emergencies only — medical bills, car repairs, house repairs and other unforeseen circumstances that will set your budget back. According to Forbes, 50 percent of Millennials polled do not have $2,000 in an emergency fund to cover an unexpected situation. Many experts suggest that a solid emergency fund should cover four to six months of your expenses. Building an emergency fund may mean a few months of living below your means, but when an emergency arises you’ll be prepared.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like him to cover, email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.

Should you buy or lease solar power?

This was originally published on Monday, July 20, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Many people want to find ways to reduce their power bills. Everyone has little tricks or tips to achieve this. One way to lower your bill is using solar power.

When solar power was first introduced to the homeowner it was quite expensive. Innovation in the solar power industry has been steadily bringing the price point down. Many now can afford it. Recently there has been a game changer with the arrival of solar providers. These third-party owners have made solar power more accessible to many households who could not afford solar power. Now the question becomes, do you buy or lease?

Cost savings: In the case of solar panels, in my opinion, buying is usually better than leasing. If homeowners don’t have cash, they can finance their solar panels through personal loans or through a second mortgage. Solar installers can also work with you to create a payment plan that is very affordable. By owning your solar power system you are eligible for the 30 percent tax credit. You will be receiving the net metering credit to your power bill. You may even receive a tax deduction on the interest if you took out a second mortgage.

Selling your home: A new homeowner would likely be pleased to have a solar power system in place when they purchase their home. Studies have shown that homes with a solar power system sell faster and at a higher price. When you lease a solar power system, the equipment is not yours. Before entering a contract, be sure you understand what happens when you rent or sell your home. The next homeowners may not want to continue your contract, which may cause the opposite effect and reduce your home value.

Uncertainty: The price you pay when you enter a solar lease is based solely on predictions of the future. Some solar leases may offer a fixed monthly rate and others may offer an adjustable monthly rate. No one can predict how much fuel or solar energy will cost in 10 years. Most experts say that the price of fuel will continue to rise. Understand that in a solar lease you save money as long as your utility bill exceeds your lease payment.

Worry Free: The biggest benefit to leasing your solar power system is the maintenance, repair and monitoring is provided by the solar leasing company. The performance of your system is guaranteed. It usually takes a day or so to install and you start saving money once it is in place. If you cannot secure a second mortgage or just can’t afford that large initial payment to own, then leasing is a great solution for you.

If you do not want to power your entire house with solar but are looking for ways to cut your power bill, you can still utilize the sun.

The largest consumption of power in our home are those appliances that either generate heat or cool air.

Solar water heater: These have been around for a while. The solar panel is directly attached to the water heater. There are two different types: direct and indirect circulation. On Guam, because we have so much sun, the direct system is most popular.

Solar air conditioners: Let’s face it, many of us will find other ways to cut our power bill before thinking about shutting off our air conditioners. We all want to be comfortable at home, but that air condition comfort comes with a price. Solar air conditioners come in window, split, and central units, and in many different sizes.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like him to cover, please email moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Why Solar is preferred over fossil fuel

This was originally published on Tuesday, July 14, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Solar energy works by converting light energy from the sun into useable electricity.  According to the U.S. Department of Energy, solar energy costs around 13 cents per kilowatt-hour.  Using the national standard of the price of power per kilowatt that is nearly 14% less than traditional electricity provided by fossil fuels.

Developments in solar technologies continue to lower the cost of owning a solar powered system. As the cost of owning a system decreases many more homeowners are starting to purchase them.  The Solar Energy Industries Association (SEIA) stated that in 2012 the solar market grew 76% in 2012 in the US.  Here are a few reasons why solar is preferred over traditional fossil fuel and other green technologies:

  • The obvious is saving the environment. Solar power is clean and sustainable. Lowering your carbon footprint while saving money is a win-win situation. Unlike fossil fuel, which is limited, the sun is everlasting.  The cost of fossil fuel fluctuates depending on many factors such as the weather, civil unrest and changes in the supply and demand.  The sun is constant.  It is a sustainable source of energy.  The amount of energy that the sun emits in a day is much more than the total energy the world uses in that day.  The technology is also very silent because there are no moving parts.  Although some pollution is emitted in creating the materials used to make the photocells, it is much less than the pollution that fossil fuels emit when used in machines.
  • Incentives to go green are provided by the federal government and some states. Since 2008 the Federal Government has offered a 30% tax credit to homes that utilize solar power.  At this time I don’t think this is available on Guam but another benefit is net metering.  Net metering allows utility customers to feed excess power into the power grid.  The customers are then credited against their electrical consumption ultimately lowering their power bill.  Think of it as the power company paying you to produce power and selling it to them.
  • Upfront costs to owning a solar power system is high, so solar purchase power agreements and solar leasing are becoming very popular. Think of leasing as a rent to own financial option.  The solar provider owns the solar system.  They are responsible for the installation, maintenance, repairs and monitoring for the system.  Instead of paying your power company you pay the solar provider, which is much less than what you would pay your power company.  Guam has several solar providers to choose from.  Some offer a zero-money-down to start.  A credit check is usually performed.
  • The lifespan of solar panels is quite long. The performance guarantee on many solar panels is twenty to twenty-five years.  With such a long lifespan you most certainly will recoup your investment.
  • It increases the value of your home. A study conducted by the National Renewable Energy Laboratory (NREL) stated that homes with solar panels were valued17% higher and sold 20% faster than homes without solar panels.
  • Help reduce the world’s dependency on fossil fuels. It also helps reduce our dependence on foreign energy.  Relying on foreign oil and the prices at which they sell it to us causes our economy to suffer.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Is alternative power more expensive?

This was originally published on Monday, July 6, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Recently, a friend contacted me to discuss his options in obtaining a solar panel system for his home. I also was involved in conversations around barbecues that centered on solar panels. In both situations, I was brought into the discussions to shed light on financing the systems. I learned from these discussions and thought that information on this subject might interest Money Matters readers. It is a relatively new industry to Guam. I hope you find the next few articles informative and helpful. I am no expert in this industry, so your comments are welcome.

Question: I have noticed that several people on island are starting to use solar power. I like the idea of “going green” but wonder if I will be actually saving money. I have heard that alternative power is rather expensive.

Answer: In the past five years or so we have seen an increase in solar panels lining the roofs around Guam. And why not? Guam receives an abundance of sun on a daily basis. Guam’s location makes it perfect for those who want to utilize solar power. Yes, solar technology can be expensive, but in the long run solar energy will pay for itself.

Solar energy has come a long way over the years. As it becomes more popular, the price to pay for the technology becomes more affordable. Over the past five years the price for solar technology has decreased tremendously. If you were to completely own your system there is a sizable cost to purchasing, installing and maintaining the system. Before you purchase your very own system take a few things into consideration:

Guam is located in Typhoon Alley and typhoons are common here. Although not as strong as other typhoons in the past, Typhoon Dolphin recently wreaked havoc on us. Technology has improved and now solar panels are able withstand a good amount of wind but they may not be rated to withstand the gale force winds associated with category four or five typhoons. If the winds do not cause damage, flying debris that travels at very high speed could. It will be very time consuming to remove and replace solar panels before and after a storm.

To generate electrical power the sun must be shining. On days that are rainy or overcast, or during the night, the solar power system is not converting the sun’s energy into usable power. To overcome this you will either have to tie into the power grid or use a storage battery. By tying into the power grid you will not be solely dependent on solar power. You will still incur a power bill, although it will be less expensive than your regular power bill. One drawback to solar technology is finding a way to store energy that is not being used. During the hours that the sun is shining the electrical power that is converted is usually much more than what is needed. It would be great to be able to store the excess energy. To do so, a battery system is needed. This battery can be very costly and rather large. Improvements are being worked on and solutions are probably very near.

The traditional solar panels are quite large and bulky and not very attractive. If you live in an apartment building or condo you may not have enough real estate/roof space to install a solar system. Scientists are working on a number of solutions such as panels that are flush with the building that look like tiles, a flexible thin film of solar cells that could be rolled up when needed and recently a Japanese company created solar cell windows. For those who live in areas where there is little to no room for a solar system, some communities have created solar gardens. Community solar gardens allow more than one home to utilize the system without having panels on their rooftops.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. To contact Michael, please email him at moneymattersguam@yahoo.com and read the Money Matters blog at http://www.moneymattersguam.wordpress.com.

More ways to cut your back-to-school costs

This was originally published on Monday, May 18, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

The cost of back-to-school supplies rises each year. Many of us feel the pressure in July and August as the sales start to appear everywhere. By saving up now and following these tips back to school does not have to be a financial headache.

• Dollar Stores – You can get some great deals at the dollar store. Be careful not to skimp on quality though. Items that get used often, such as binders and backpacks, should be of high quality. Besides, you don’t want to have to keep replacing them throughout the year. That would not be cost effective. Items like pencils, crayons, and paper do not have to be expensive name-brand supplies.

• Growth – Kids grow like weeds and they are always growing out of their clothes. When buying clothing think to get them slightly larger. Some pants are sold un-hemmed so they can be sewn to the length you desire. By folding a few layers into the hem you can adjust the hem for growth throughout the school year. Some pants, shorts, and skirts have adjustments at the waist that can be moved when a child outgrows a size or two.

• Compare prices vs. your time – If you have the time to research tons of sales circulars it may be worth it to shop at several different locations. If you are limited on time, find a store that offers a one-stop shopping experience. The time and gas you save may outweigh the dollars you save going to several different stores.

• Shop alone – We have all experienced it: You walk into a store with your child to buy a few items and by the time you get to the register you have a cart full of things you hadn’t planned to buy. Avoid this. If you are alone you can concentrate on your list without interruptions or impromptu purchases.

• Start early – There will be many sales throughout the summer. Keep your list with you and pick up items when you run errands. If you wait till the last minute you will stress yourself trying to gather supplies from barren shelves and settling for any price you can find.

• Thrift stores/garage sales – I am always amazed at the treasure trove of deals that you can find. Gently used items, such as backpacks, shoes, clothing and school supplies, can be found for extremely reasonable prices.

• School stores – At some schools the parent teacher association usually sells lightly used school uniforms. Before going out and ordering new uniforms stop by your school and see what’s available.

• College students – If you have a student heading off to college don’t forget to factor in not just school supplies but textbooks and maybe even furnishings for dorm-room living. Textbooks are very expensive. Most campus stores sell used books or have a bulletin board filled with ads from students selling used books and other items. Look online with Amazon and eBay. They usually sell books lower in price than the campus bookstore. If you are shopping online, do so in a timely fashion so that the books arrive before the school year starts. Before buying your textbooks, confirm which edition is needed.

• Set limits – Lastly and most importantly, set a limit to how much you want to spend on back to school. Buying supplies should not break your budget. The more costly items such as tuition can also be negotiated. Ask your child’s school if they offer payment plans or discounts for paying in advance.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.