Is it worth changing your energy supplier?

Thanks to New Jersey’s energy deregulation law, individuals and businesses have the right to choose their electric and natural gas supplier. Customers can now purchase from the lowest priced or any company that best meets their needs as opposed to whatever company serves the local community. 

"Life is a sum of all your choices." ~ Albert Campus

Electric and natural gas suppliers are different than distribution utility companies. The distribution company is who you currently receive your bill from. They own the pipes and wires that bring the power to you.  However, if you look at your current bill you will see two charges. One is for the distribution company and the other is for the energy supplier. You can change the supplier but not the distributor.  In most cases, if you change providers your bill will still appear to be the same and be paid in the same manner.  Think of this as going to Shop Rite and buying Pepsi instead of Coke.  The receipt is still from Shop Rite no matter what brand you purchase.

"You have chosen wisely." ~ Grail Knight

To determine if you can find a lower rate than you are currently paying, click on your current energy provider to find out which alternative electric suppliers serve your area.

Electric:
Atlantic City Electric
JCP&L
Orangel Rockland Electric
PSE&G

Gas:
Elizabethtown Gas
New Jersey Natural Gas
PSE&G
South Jersey Gas

The website www.lowcostpower.com can also help you make your decision.  The site compares available rates and offers in your area.

"A man who does not think for himself does not think at all." ~ Oscar Wilde

Before changing providers, you should definitely do some homework and research all available options before making a selection. That will help assure the deal you choose is actually as good as it looks.  Here are some important answers you should have answered before signing on the dotted line:

• Is the rate guaranteed? Suppliers typically offer three types of pricing options: fixed, floating, hybrid.  Fixed rates guarantee a certain rate no matter the market price.  Floating rates are adjusted periodically to coincide with the market price.  Hybrid rates offer a combination of both fixed and floating.  Typically, the fixed rate will apply a percentage of the bill and the rest will be subject to a floating rate.   
• What is the length of the contract?  What seems like a good move now might not be 6 months from now.  
• Are there any additional costs?  Some of the offers may seem very low.  That may be because their published cost does not include New Jersey sales tax or other fees.  Some plans will also charge an additional fee if your monthly usage is significantly above or below your normal usage.
• Other products or services?  Some companies provide better customer service than others.  While the gas or electricity will still be delivered through the same wires and pipes, some companies offer additional services such as energy audits or consulting services.  

I looked into this because a gentleman came to my home yesterday and tried to aggressively sell us on the idea of switching providers.  While the idea of saving some money sounded good... the guy was way too unprofessional. (He had no company van, no business card, or any information he could leave behind!) That was one offer we had to let pass.  But the overall idea sounded good so I did the research above.  

"As long as one keeps searching, the answers come." ~ Joan Baez

Since my current home is not a huge energy hog, the potential savings would be barely greater than the cancellation fee if the rate choice ended up not working in my favor.  Predicting energy rates is not a game I want to play.  However, if you are a large energy consumer you may want to do some research and make a switch.  

Quarterly Financial Checkup

Every three months I perform a checkup on my primary retirement account.  (My google calendar sends me a reminder so I don’t forget.)  I review the account to see how my money is performing and to make sure that my investments are still in-line with my desired target allocation.  Depending on how my account has been performing, I either: leave the account alone, rebalance, or reallocate.

The question isn't at what age I want to retire, it's at what income. ~ George Foreman

Asset allocation is arguably the most important factor to long-term investment success.  The major factors for determining the proper allocation are age, risk tolerance, and time horizon.  When you are young and saving for a retirement decades away you can afford to invest more aggressively.  This is because you have lots of years to recover if the markets go down drastically.  So basically you can have more money invested in stocks as opposed to safer investments like bonds.   

Not having to worry about money is almost like not having to worry about dying.
~ Mario Puzo

When you reallocate your account it means that you change the allocation you set at an earlier time as opposed to rebalancing.

You can be young without money but you can’t be old without it. ~ Tennessee Williams

Rebalancing is when you return the holding within your account to its original contribution allocation.  For example, if your desired asset allocation is 70% stocks and 30% bonds but the your stock investments have outperformed your bonds your asset allocation could have inadvertently become 85% stocks and 15% bonds.  That allocation would be much riskier than you desire.  When you readjust your levels back to 70-30 you are essentially selling high and buying low.  The goal for any investor.

Preparation for old age should begin not later than one's teens. A life which is empty of purpose until 65 will not suddenly become filled on retirement. ~ Arthur E. Morgan

Periodic rebalancing is very important to avoiding necessary risk.  Experts recommend rebalancing your accounts at least once a year or whenever your investments get more than 5% out of whack of your intended allocation.      

The retirement plan provided by my employer, called the Thrift Savings Plan (TSP), allows me to contribute to five different funds.

• G Fund - The G Fund invests exclusively in a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP. The earnings consist entirely of interest income on the security.
• F Fund - The F Fund invests in a bond index fund that tracks the Barclays Capital U.S. Aggregate Bond Index. This broad index includes U.S. Government, mortgage-backed, corporate, and foreign government (issued in the U.S.) sectors of the U.S. bond market. The earnings consist of interest income on the securities and gains (or losses) in the value of the securities.
• S Fund - The S Fund invests in a stock index fund that tracks the Dow Jones U.S. Completion Total Stock Market Index. The earnings consist of dividend income and gains (or losses) in the price of stocks.
• C Fund - The C Fund invests in a stock index fund that fully replicates the Standard and Poor's 500 (S&P 500) Index. The earnings consist primarily of dividend income and gains (or losses) in the price of stocks.
• I Fund - The I Fund invests in a stock index fund that fully replicates the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index. The earnings consist of gains (or losses) in the price of stocks, dividend income, and change in the relative value of currencies.

At the start of the checkup:

I get paid bi-weekly.  With each paycheck a percentage of my pay goes directly into my retirement plan.  Going into this quarterly checkup my contribution is being split between three funds.  (30% C fund, 30% S fund, 40% I fund)

The best time to start thinking about your retirement is before the boss does. ~ Source Unknown

Based on the performance of the funds, the current distribution of my funds varied slightly from my desired asset allocation.  (29.69% C, 33.04% S, 37.27% I)

God's retirement plan is out of this world. ~ Source Unknown

Typically, I would just rebalance my account back to my 30-30-40 allocation and call it a day, but since the market has been on great run the past few years.  I’ve decided that now is a great time to reevaluate my asset allocations.

Welfare is not a retirement plan. ~ Ernie J. Zelinski

After reviewing my account I decided I should reduce my risk.  Instead of being 100% invested in stocks, I’m going to pare down to only 88% stocks and the remaining 12% will be split between the G and F funds.  

As in all successful ventures, the foundation of a good retirement is planning. ~ Earl Nightingale

The 88-12 split was determined through a simple calculation financial planners use to determine an appropriate asset allocation.  To determine the ideal allocation for you subtract your age from 120.  The difference is the amount you should have invested in stocks.  (Some planners subtract age from 100.  I prefer 120 because it adds a little more risk without being too aggressive.)     

Always invest for the long term. ~ Warren Buffet

After the checkup:
I adjusted my current holdings and future contributions to the following mix: 6% G fund, 6% F fund, 29% C fund, 30% S fund, 20% I fund.  
These moves will slightly reduce my risk if a market downturn occurs while still allowing me to benefit from future market advances.  During the past 12 months I've had an 18.93% rate of return.  Hopefully the next months are just as successful!

Good Luck with your investments... 

...and remember you are never too young to start thinking about retirement!

What's going on...

I was very busy this week and I'm happy it's the weekend! This past week was fairly balanced. Here's what's been going on...

Career:

Week one of my work detail is in the books.  While I’m still not sure how long the detail will last, I’m confident that the overall experience will be positive.  I now have a better idea of the type of work I'll be doing and think that my skill sets will be well suited for the challenges that lie ahead. During this first week I worked on a variety of different projects. Some my activities included: meeting with community partners, drafting emails, preparing meeting briefing documents, designing invitations and buttons.  

The most exciting part of the week was learning how to use Adobe PhotoShop.  I used the program to design buttons for an event next week. PhotoShop will allow me to become very creative with some photos. My future professional and personal projects will never be the same!

"I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed." ~ Michael Jordan

Family:

For the first time, I gave my son a haircut!  The process went fairly well. First, I strapped him

into a booster seat - so he couldn't run away. Then I put the computer in front of him so he could play the ABC song, his favorite YouTube video, over and over. Then I just kept giving him popsicles until I was done. (Never underestimate the power of bribery!)

My wife purchased Norelco hair clippers designed to cut kid's hair and they worked great! His hair looks nice and even. If you are going to give a kid a haircut, I highly recommend getting this clipper. (Click here to learn more about the clipper.)

"Be nice to your children, for they choose your rest home." ~Phyllis Diller

Finance:

I finally finished my taxes!  

I also entered two limit orders in my personal investment account. (I first mentioned this account in my "Greed is Good!" post.)  I placed an order for XLF and XLU.  For both orders, I entered a buy price that was a few percentage points lower than the current price.  Hoping that something would push the stock lower within the next month or so.   XLF has been declining and I'm getting closer to my buy point.  XLU has been rising steadily so I may need to reconsider my buy point or reconsider the trade.

"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it." ~ Warren Buffett 

I hope all of you are staying balanced!  

Keep on keepin' on!

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Balanced Day!

My stated intention for this blog is to discuss the balancing of my competing priorities and whatever else is on my mind.  Well... Today I did a great job of balancing my priorities.  Below is a quick breakdown of my day.  

x

Enjoy!
 
Family & Recreation:  My wife, son and I went to a local county park and had a blast!  The best part, aside from the weather and company, was our lunch.  We had a picnic by the lake!  (This goose wanted lunch too!)

Personal & Career:  I got my hair cut.  Sure this isn't the greatest personal or career accomplishment but it assisted me in preparing for the upcoming work week.  I start a temporary detail at work tomorrow so the new hair-do represents my new start.  (Wish me luck!)

"Looking the part helps get the chance to fill in. But if you fill the part, it matters not if you look it." ~Malcolm Forbes

Health and Fitness:  I went for a run.  This run didn’t go as well as planned.  I guess my body wasn’t ready for the warm weather, so instead of a steady jog I did sprints. But... at least I got out there!  

“A man can fail many times, but he isn't a failure until he begins to blame somebody else.”  ~Steve Prefontaine

Finance:  I Finally finished my taxes!  

"The politicians say "we" can't afford a tax cut.  Maybe we can't afford the politicians."  ~Steve Forbes

What else is on my mind: 

I hope you all have a balanced day!

The Tax Man Cometh!

Income tax season, the yearly game of write-offs and deductions, is once again here.  Unfortunately, like many others, I typically pay very little attention to how much money I actually pay in taxes.  The government takes their share and I use what is left.  I very rarely consider how much money I make, instead I just concentrate on how much money I bring home. In many ways, I’m the perfect pig for the government’s taxation slaughter!   

If you make any money, the government shoves you in the creek once a year with it in your pockets, and all that don't get wet you can keep.  ~Will Rogers 

As I prepared my tax return this year, I realized that I pay a hefty chunk to Uncle Sam.  In the US we currently pay between 10-35% of our salaries, as an income tax, to support the government.  The tax rate varies depending on the individual’s particular income level.  The more money a person makes, the higher percentage they have to pay.    

I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money.  ~Arthur Godfrey

(I strongly feel that progressive tax rates are unfair and that the nation should adopt a flat tax, but that topic can be saved for a later post.)

The taxpayer - that's someone who works for the federal government but doesn't have to take the civil service examination.  ~Ronald Reagan

The current budget battles occurring in Washington have opened many eyes, mine included, to how our tax dollars are being spent.  I’m comfortable with my tax dollars supporting our nation’s defense and promoting the general welfare of our citizens, as it's stated in the Constitution.  However, the “general welfare” portion is where the slope gets slippery... real slippery!  Should our tax dollars be going to Planned Parenthood (a leading provider of abortions), National Public Radio (a media outlet that tends to favor one political view over others), foreign governments, etc, etc, etc?  Regardless of what causes you consider worthy of our tax dollars, everyone should want and expect the tax dollars to be spent efficiently.  
 
So how exactly are our tax dollars being spent?

Wondering where was my money really going, I visited the What We Pay For website to find out.  The amount that goes towards debt repayment is shocking.  In 2010, we spent $187.8 billion in interest alone!  I find it mind boggling that the most advanced nation in the history of the world could owe so much money.  Why don’t we have trillions in surplus?  I really hope the government gets their act together and reduces the federal deficit.  If they don’t, we are all in BIG TROUBLE!

Taxes, after all, are dues that we pay for the privileges of membership in an organized society.  ~Franklin D. Roosevelt

The average American home makes $46,326 and pays $9679 in income tax.  Here’s a breakdown of where that money actually goes:

• Social Security: $1944.91
• National Defense: $1941.24
• Income Security: $1786.45
• Medicare: $1242.17
• Health: $1038.81
• Net Interest: $504.77
• Veterans Benefits and Services: $336.03
• Transportation: $251.80
• Education, Training, Employment, and Social Services: $247.10
• International Affairs: $181.15
• Allowances: $162.63
• Administration of Justice: $143.72
• Natural Resources and Environment: $106.24
• General Science, Space, and Technology: $83.40
• General Government: $77.98
• Agriculture: $68.33
• Community and Regional Development: $53.45
• Energy: $23.68
• Undistributed Offsetting Receipts: -$214.33
• Commerce and Housing Credit: -$300.54

(For a more detailed look at these costs please visit the What We Pay For website.  The site allows you to enter in your actual annual salary to receive a custom report.)

The United States has a system of taxation by confession.  ~Hugo Black

Knowledge is power!  Every penny that the government collects from taxes is OUR money. We need to make sure that politicians are acting in our best interests.  Politicians that don't do this need to be held responsible for their actions. 2012 is the next National election.  Get informed and cast your vote!

Did you ever notice that when you put the words "The" and "IRS" together, it spells "THEIRS?"  ~Author Unknown

I hope this post gets you thinking about what you pay the government and what you receive for your money!

If you haven't filed your taxes yet this year... 

For the past few years, I've been doing my taxes online with the help of H&R Block.  The site is very user-friendly and helpful because it walks you through the process step by step.   I really appreciate the tips and tax law explanations along the way.  If you haven’t done your taxes yet, I highly recommend using H&R Block’s services.

Information provided by:
www.hrblock.com/
www.usconstitution.net
www.whatwepayfor.com

www.quotegarden.com

Greed is Good!

“Be fearful when others are greedy.  Be greedy when others are fearful.”
- Warren Buffet

Warren Buffet or Jim Cramer I am not, but what I am is consistent.  For years I’ve been contributing weekly to Sharebuilder.com.  Early on I was convinced that I had everything figured out.  I thought the market was easy, it goes up, then it goes down, then it comes right back up.  Just like what JP Morgan said when asked what the market would do, "it will fluctuate." Well it turns out the market is not always as easy I thought.

I have a few investment accounts but this post will focus on my Individual account.  I opened this account in 2004 and invested solely in exchange traded funds (ETFs).  ETFs are essentially a basket of stocks or bonds that track the performance of a specific market index or some other established benchmark (ie - S&P 500).  They offer an investor an opportunity to invest more broadly then investing solely in just one company.  

ETFs are similar to mutual funds.  However, I chose to invest in ETFs over mutual funds for several reasons.  ETFs are traded on an exchange just like stocks.  Their current value can easily be determined and they can be bought or sold at anytime unlike mutual funds, which are priced only at the end of the day.  They also offer much lower expense fees than mutual funds. This hopefully increases the profits that return to the investor.  The lower fees are possible because ETF’s follow a fixed index as opposed to mutual funds, which are run by a fund manager who actively adjusts the fund's holdings. He makes sure he gets his cut before you get yours!         
  
Over the years, I found several several EFTs that appeared attractive to me.  Savvy investors judge an investment’s attractiveness on things like earnings reports and technical analysis.  I on the other hand went mostly with my gut.  Since I was investing in broad strokes, and I was convinced that if it went down it must come back up, I looked for ETFs that represented unpopular segments of the market and placed my bet.  Hoping that at some point the sector would improve and my holding would go up in value.

My method worked well.  Two funds that I invested heavily in were QQQ (currently traded as QQQQ) and SPY.   (QQQQ is a fund that tracks the Nasdaq 100 and SPY tracks the S&P 500.)  As I continued to buy positions their value kept going up!  Eventually, I decided to search for new downtrodden opportunities.  So I started to add a little bit here and a little bit there.  This is when my plan started to falter.  Many of my holdings were so small that the price would have to go up significantly even to cover my fees if I ever wanted to sell.

I eventually stopped investing money in this account (to fund a ROTH-IRA).  Time goes by... and then the country goes into recession.  Like many others, the recession destroyed the value of my positions. Leaving my collection of small holdings looking even more pitiful.  However, I opted not to sell and continued to hold onto the investments, figuring that the investments were long term and selling would result in an actual loss as opposed to the current paper loss.  

With the recent gains in the market during the past two years the account has nicely rebounded.  A couple of weeks ago I decided that I should reevaluate my holdings and only keep the holdings that I still found desirable. I researched my holdings and decided what holdings I wanted to keep in this account.  Then I determined at what price I could realistically sell each undesired position to clean up my account and free up cash while walking away with a little profit in a short period of time.  I submitted limit orders to sell my unwanted shares and in only a couple of days but all of my orders had been executed.

Now, what to do with the available cash?

Listed below are my current holdings, % gain and plans moving forward:

• QQQQ: (+47%) - Over the years I bought sold and re-bought this holding a few times.  I'm thinking that it is once again time to take some profits.  Like they say - Bulls make money, bears make money, pigs get slaughtered!  
• SPY: (+2%) - Over the past 2 years this holding has really gone up in value.  As the economy continues to improve I hope this stock will too.       
• XLF: (-45%) - This holding has not performed well to date, but I have faith!  I plan on putting some of my freed up cash into this holding.  While the banks are still recovering from the recent financial crisis and many institutions still have bad assets on their balance sheet I expect this sector to improve.  It might not be overnight but it will improve!  Many of the banks are currently upping their dividends or at least expecting to in the near future.  It takes money to make money ~ and the banks have the money!    
• XLU: (-1%) - Utilities have been in the news a lot lately.  Many feel that we are in a utilities bull market that could last for a few more years.  Plus, utility stocks tend to provide healthy dividends.  (XLU is currently yielding 4.07%.)  I plan on adding to this holding too.

Well what do you think?  Have I lost my mind? Am I heading for big losses or big gains?  

What is your investment strategy?    

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Some information provided by:

google.com/finance
education.wallstreetsurvivor.com        
finance.yahoo.com
money.cnn.com
bloomberg.com

Hello World!

In life, I’m constantly balancing competing priorities.  With this blog I’m going to discuss those priorities and whatever else is on my mind.   

As a young family man I have many competing priorities and each day offers only so many hours to meet my goals.  To be the person, father and husband I want to be I’m constantly trying to find ways to improve all aspects of my life.  I feel that success is a cumulative result of person’s life and to be successful a person needs to have balance.  Success in one aspect of life at the expense of other areas is not true success.  Unfortunately, each day only has so many hours and the more time I spend on one area the less time I have for the others.  The great dance of life!

Personal vs. Family vs. Career vs. Health and Fitness vs. Recreation vs. Finance

This blog will hi-light my thoughts as I balance those priorities.  I hope that you will follow along and enjoy my ride.  Feel free to provide any comments or suggestions!     


Thanks,
Jay

From Thought of the Jay!