Yesterday came the announcement that surprised few:  after being unable to find a buyer, Circuit City asked a bankruptcy judge to allow them to close their remaining 567 stores.  They had already closed 155 stores in the past 2 months while attempting to find a buyer.  Below is a partial list of stores that are closing or in the process of closing (thanks to Terri Potratz of Now Public for the list):

• Ann Taylor (117)
• Movie Gallery (378)
• Sprint/Nextel (125)
• Ethan Allen (12)
• Dell (140)
• Friedmans (120)
• Pier 1 (25)
• Sigrid Olsen (54)
• Talbots Kids/Mens (78)
• Home Depot (15)
• Eddie Bauer (29) 
• GAP (85) 
• Footlocker (140)
• Bombay (all 384 stores) 
• Disney (98)
• Macy's (11)
• Sharper Image (184)
  
• Wilson Leather (160)
• Pep Boys (31)
• Pacific Sunwear / PacSun (154 Demo stores)
• Zales (105)
• Cache (20) 
• Lane Bryant (40) 
• KB Toys (356) 
• Dillards (26) 
• Fashion Bug (100)
• CompUSA (all stores)
• Linens 'N Things (all 371 stores)
• Mervyn's (all 149 stores)
• Club Libby Lu (Saks owned) (all 78 stores)
• Steve & Barry's (all 173 stores)
• Sergio Rossi (all standalone US stores)
• Office Depot (126 stores)
• Rite Aid (181 stores)
  

Many other companies like Lowe's, JC Penney and WalMart had already announced plans to scale back plans for expansion.  There are some pros and cons to these closings:

Pros: 

• Great bargains to be had for consumers as retailers are trying to liquidate and others are trying to compete.
• A "thinning of the herd" so to speak, as the strongest retailers survive and the weakest go under.  It could be argued that there are too many retailers out there now.  Find a corner where there isn't a Starbucks, strip mall or a big box store.  
• A return to superior customer service as the retailers that remain realize that they must woo their customers in order to keep them (ok, maybe this is wishful thinking...)
  

Cons:

• Many retail employees are being laid-off, which not only gives them less money to spend, it shrinks the number of available jobs.
• Once the retailers close, there will be less competition, which could lead to higher prices.
• Because of all the bargains to be had, customers will be less likely to pay full price, instead opting to wait for extreme deals, further squeezing retailers' profits and increasing the likelihood that some retailers could go under.   This was evidenced during the last Christmas season, where many waited until bargains were at absolute rock-bottom prices before splurging.
  

For me, personally, I only buy when I need stuff anyway, so there is little effect on me.  I am curious though, what effect these closings will have on other buyers.  

Finally, I was able to take a shower this morning as my water is now fixed. The problem: a broken well water pump. The house is 15 years old and it hasn't been replaced, so we were due. It was nice not having to pay a water bill for the last 8 years, but I made up for it in one shot: $2482 total to replace the pump! Couple this with my $161 speeding ticket, this pretty much wiped out my savings account.

On the positive side, I had the cash to foot the bill and did not have to worry about putting it on a credit card. This is where having an emergency fund comes very much in handy. Now it's back to the drawing board as far as savings goes. Fortunately, my quarterly bonus should come in about 2 weeks followed by (hopefully) my annual bonus. Last year, there was no annual bonus, so we'll see. In addition, I should have a pretty good refund as we still have a tax credit from adopting my son from Guatemala 2 years ago. All in all, it sucks, but I feel optimistic for the future!

Check out my guest post today at We Like Money titled Seizing Your Savings.  Thanks to Tiffanie for giving me the chance to write on her blog while she is on vacation.  Hope you like it!

Two studies released earlier this month by the U.S. Department of Transportation reveal another pattern in frugality which started when gas prices rose dramatically: people are driving less and opting for public transporation.  The first, released  in early December showed an increase of 2.8 million riders of mass transit, a 6.5% increase over the same period in 2007.  This covered the 3rd quarter, where gas prices reached their highest point (in mid-July, gas reached an average price of $4.117 according to AAA) before falling through the floor throughout August and September.

Despite gas prices dropping since then to their lowest point in 5 years (the Sunoco station near me is at $1.659 today for regular unleaded), there are still less people driving.  According to the U.S. Department of Transportation, Americans drove 100 billion fewer miles from November 2007 to October 2008 than the same period the prior year.  A recent Gallup poll backs up this statistic:

• Nearly two in three Americans (64%) report adjusting their driving habits in significant ways in response to surging gas prices earlier this year, but only 12% have reverted to their old habits as prices at the pump have plunged
• 52% of Americans say they have not gone back to their old driving habits
• 61% of Americans aged 18 to 34 and 62% of Americans aged 55 and older say they changed their driving habits in significant ways; however, Americans aged 35 to 54 are slightly more likely, at 67%, to say they have changed their driving habits

As a result, some have suggested that this will cause deficits in funds allocated for roads.  Road maintenance won't be necessary as often if the roads aren't traveled on as much, though, so I'm not so sure about this.  It would be real nice not seeing as many orange barrels and large lit up arrows during the summer though!

A couple of bright spots (aside from the lower gas prices) are that this ultimately is better for the environment.  In addition, there have been 10% fewer fatalities as a result of auto accidents in 2008.

From what I'm seeing, people are making fewer trips and grouping their trips (go to the mall, grocery store, etc. on one trip).  For me and many others though, staying home is the real gas saver.  Unless I'm going to work, I'm pretty much a homebody.  I had to stop at the mall last Saturday to pick up a late Christmas gift and the mall was empty, despite many after Christmas bargains.  I've also noticed in my driving that I've been sitting in less traffic jams.  Has the drop in gas prices changed your driving habits?

As a follow up to yesterday's post, here is a link to an article in the Idaho Business Review where the author, Michael Tomlin, proclaims:

I know I am contributing to the problem and not the solution, but I’ve quit spending. In defiance of Barney Frank’s (Dem. MA) telling us to start spending to jump start the economy and re-create jobs, I’m cutting my losses and closing my wallet. And I am actually enjoying it.

Tomlin has dumped his Netflix subscription, stopped eating out and done other things to not "support the economy".  He goes on to say in his post:

Outside our little world we see restaurants closing, clothing stores going out of business, auto dealerships folding, electronics stores filing for Chapter 11 protection, and we know it is our fault. If only we were spending and artificially propping up these unviable businesses with emotional spending as we used to all would be okay.

 

But we are done with that. They broke the rules. Not these local shops, but the business world at large. The rule was always that greed is okay so long as you make sure the business makes money too so it can stay in business. This group of greedy took their money and ran the businesses into the ground, effectually killing the golden goose. Fools.

 

I’ll be hard to lure back. Cheap gas won’t do it, nor spiffier cell phones. My bikes are good and will last for years. I am happy to reread many of the books we have collected and they are far better than most film fare anyway. Nope. I can see that I am now the problem but this time I’m taking care of me and mine.

 

If this recession can’t be beaten by living debt free and within a budget then I don’t care to participate. And a warning to all those who would give my tax money away – I am prepared to spend a lot less still.

The comments on Tomlin's post we're, at the very least, very polarizing.   It appears in Tomlin's case, he is withdrawing from the economy by choice, not be necessity.  That being said, do you think he is part of the problem, or part of the solution?

Check out Neil Boorman's video titled, "The Good Consumer".  Boorman says on his website Bonfire of the Brands: "As an anti-consumerism campaigner, I’m frequently labelled as irresponsible when I encourage people to stop shopping. But the Government is being much more reckless, when they ask us to shop our way out of the crash. If ever there was a time to rethink our reliance upon consumerism, when the economic rules are being re-written, it would be now."  

Clare Short, former British International Development Secretary echoes his sentiment: "If we don’t shift to a less consumerist and throwaway society, we’ll hit crisis after crisis, and it’s coming soon."  

I love his Orwellian-like spoof of the "brainwashing" that retailers, government and financial experts have spouted that we as consumers have an obligation to buy new and buy often.  What's scary is that people are still preaching this crap even though this is exactly what put us into a recession in the first place.  So were you a "good consumer" before the recession and are you still one now?

With gasoline over $4.00/gallon in most places, ARI Fleet shares some great tips on how to get the most mileage out of that increasingly expensive tank of gas:

1. Avoid Long Idling. The worst mileage a vehicle can get is 0 mpg, which occurs when it idles. Idling for long periods of time consumes gas that could be saved by simply turning off the engine. Restarting an engine uses about the same amount of gas as idling for 30 seconds. When idling for longer periods of time, shut off the engine. However, turning off the engine may disable vehicle functions, including safety features like airbags. Drivers should be certain to only utilize this strategy in situations where there is no possibility of collision.

2. Eliminate Unnecessary Weight.  Vehicles get better mileage when they’re not loaded with unnecessary weight. Every 200 lbs. of additional weight trims one mile off fuel efficiency. Most drivers accumulate material in their vehicle trunks, some of it unnecessary. Remove all non-required items from the vehicle, such as unneeded tools, tires, or materials.

3. Keep Tires Inflated to the Correct Pressure.  One underinflated tire can cut fuel economy by 2% per pound of pressure below the proper inflation level. One out of four drivers, on average, drives vehicles with one or more underinflated tires. When a tire is underinflated by 4-5 psi vehicle fuel consumption increases by 10% and, over the long haul, causes a 15% reduction in tire tread life. Check the vehicle’s doorpost sticker for minimum tire inflation pressure.Remove snow tires during good weather seasons. Traveling on deep tire tred dramatically decreases fuel efficiency.

4. Don’t Buy Premium Fuel.  Resist the urge to buy higher-octane gas for “premium” performance. Octane has nothing to do with gasoline performance. Per Johnson & Johnson policy drivers are required to use the lowest cost 87-octane regular unleaded fuel available per vehicle manufacturer’s specifications and requirements.

5. Observe Posted Speed Limits.  This tip may save a life as well as fuel. The Environmental Protection Agency (EPA) estimates a 10-15% improvement in fuel economy by driving 55 mph instead of 65 mph.

6. Fill Your Tank during the Coolest Time of Day.  During morning and evening hours gasoline is densest. Avoid filling the gas tank to the top. Overfilling results in sloshing over and out of tank. Never fill gas tank past the first “Click” of the fuel nozzle.

7. Use Alternate Roads when Safer, Shorter, or Straighter.  Compare traveling distance; remember that corners, curves, and lane jumping require extra gas. Avoid rough roads whenever possible because dirt and gravel rob you of up to 30% of gas mileage.

8. Use A/C SparinglyUse the air conditioner only when needed.  An air conditioner is one of the biggest drains on engine power and fuel economy. It can reduce gas consumption 5-20%, depending on the type of vehicle and the way it is driven. Don’t use it as a fan to simply circulate air. If it’s just too hot to bear without A/C, keep it set around 72 degrees. Use the vent setting as much as possible.9. Keep Windows Closed When Traveling at Highway SpeedsWind drag is a key source of reduced fuel mileage, causing an engine to work harder, thereby reducing fuel economy.Minimize wind drag by keeping the windows rolled up. This allows air to flow over the body, rather then drawing it inside the cabin and slowing down the vehicle. A wide-open window, especially at highway speeds, increases aerodynamic drag, which could result in a 10% decrease in fuel economy. If you want fresh air, run the climate system on “outside air” and “vent,” and crack the window for additional ventilation.

10. During Cold Weather Watch for Icicles Frozen to the Car Frame.  Up to 100 pounds can quickly accumulate. Unremoved snow and ice cause tremendous wind resistance.

11. Anticipate Traffic Flow.  Anticipate traffic conditions and accelerate and decelerate smoothly — it’s safer, uses less gas, and reduces brake wear.In stop-and-go commuter traffic, look two or more vehicles ahead as you keep an eye on the driver in front of you. This enables you to accelerate and decelerate more gradually.By anticipating a traffic light change, an upcoming stop sign, or the need to slow down for a curve, you can avoid or reduce brake use and save gasoline in the process.

12. Avoid Uphill Speed Increases.  When climbing a hill, the engine is already working hard to overcome gravity. Pushing it harder by stepping on the gas is simply a waste of fuel. If you accelerrate, do it before you reach the hill and not while you are on it.

13. Use Cruise Control during Highway Driving.  Unnecessary changes in speed are wasteful. The use of cruise control helps improve fuel economy.

14. Avoid Aggressive Driving.  Time studies show that fast starts, weaving in and out of traffic, and accelerating to and from a stop light don’t save much time and wear out components such as brakes and tires faster.Simply limiting quick acceleration and fast braking can increase fuel economy. When accelerating, pretend you have a fresh egg underneath your right foot. A light, steady pressure helps to minimize the amount of fuel consumed and maintain a more moderate and steady speed.By not driving aggressively, drivers can save up to 20 percent in fuel economy, advises the EPA.

15. Monitor Preventive Maintenance Schedules.  Proper maintenance increases a vehicle’s fuel economy. For example, unaligned wheels that fight each other waste fuel. Keep the air filter clean. A dirty filter clogs an engine’s air supply, causing a higher fuel-to-air ratio and thereby increasing gasoline consumption. Get regualr tune-ups to ensure best fuel economy. Check the owners manual for regular maintenance intervals.

In the past several months, the top 4 major carriers, Verizon, AT&T, T-Mobile and Sprint have either begun offering unlimited minute cell phone plans or reducing the price of their existing plan (Sprint). What does this mean for the customer? Well, it is the first sign that prices will come down and overage charges may be a thing of the past. While Sprint had unlimited service for $199/month and had been testing it in select markets for $119/month, it wasn’t until the top 2 carriers, Verizon and AT&T, announced plans to offer unlimited minutes plans that the war was on. Soon after, T-Mobile joined the fray and Sprint dropped the price on their unlimited plan. Another regional carrier, US Cellular, followed as well. The country’s fifth largest carrier, Alltel, does not yet offer unlimited calling, but with their MyCircle plans, most customers can get virtually unlimited minutes for less money.

For those of you living in cities like Tampa, Pittsburgh, San Francisco or Dallas, there are regional carriers such as Cricket and MetroPCS that have been offering unlimited minutes plans for some time. In the past, these companies main demographic was people in urban areas whose credit wasn't great and would have to put a $150-$200 deposit down with the other companies just to get a phone. However, both have been trying to expand their markets to draw customers away from the larger companies. Perhaps it was these companies expansions into new markets such as Las Vegas, Oklahoma City (Cricket), Detroit and Los Angeles (MetroPCS) that prompted Verizon and AT&T to react. Or maybe it was just a natural evolution of the business as companies try to retain customers that are demanding more from their carriers and are less likely to stay loyal if they are unhappy with their service.

So how did Cricket and MetroPCS react to the big 4 getting into the unlimited minutes game? They slashed their rates to $50/month and offered more. Of course, while MetroPCS and Cricket are far cheaper than any of the big 4, they are only available in select markets and you cannot roam out of those markets without an extra charge. But if you don’t travel often and you live in these areas, they are a great bargain, especially MetroPCS family plans, which you can get your service for as low as $25 per month for each phone.

With prices coming down on cell phone service and unlimited minutes, is it only a matter of time before the cell phone becomes the only phone for most people?

As a follow up to the post I wrote on tipping pizza delivery drivers, I caught an article that relates to tipping servers in restaurants.  It’s from Thomas A. Mason at tip20.com titled Why Should You Tip?  Here are some of the things Mason points out that many people might not know regarding servers:

• Hourly wages are typically significantly less in the service industry, because tips are considered part of the servers income. Your server does pay income taxes. In absence of proper documentation of tips, the government will look at the servers food and beverage sales and base their taxable tip income on a percent of it. So if you do not tip the server, it has actually cost the server money to serve you. 

• Believe it or not, servers do not always get a paycheck.  Sometimes, because of the taxes they pay and/or deductions, servers must pay in to the company rather than get a check.
  

• Your server has to tip too. It is very common for a waiter or waitress to have to tip out their supporting staff, ie; the bartender, buss person, food runners and others.  Bartenders may have to tip out their bar backs.  These tips are based often on the sales of the server, so if you don’t tip them, in addition to the 8% the government gets they often have to shell out money to the support staff putting them further in the hole.  Sometimes the support staff is tipped a percent of the servers tips.  So not tipping the server is the same as not tipping any of the hard working support staff in the restaurant.
  

Servers do a lot of work that they are not tipped on also. It is called side work and it is work that is done for no more than their hourly rate. Side work usually involves cleaning the restaurant, stocking supplies and getting the store ready for the next shifts business. Side work can be time consuming and at times physically straining.

The author makes some very good points, which most people don’t know and are I know are accurate from personal experience. When I served I made good money. However, I tipped out the busperson 10% of the cash I made and the bartender 10% on all alcohol sales. Since they have to claim tips too, it seems like double taxation, but that’s another post altogether. If someone ran up a large bar tap and tipped poorly, I could potentially be waiting on them for free since my money would go directly to the bartender. Because of having to claim tips on a certain percentage of cash sales (at least 10%), many times, I would be forced to claim MORE than what I actually made because the majority of sales were credit card sales, which I had to claim 100% of the tips.

Regarding the sidework issue, one thing the author says but doesn’t make clear is how much less servers’ base pay is. In Pennsylvania, they are paid $2.83/hour plus tips. So if they are doing sidework and have no tables, they only get paid $2.83/hour. Would you work for $2.83/hour? Probably not.

Think about these things the next time you go out to eat. Bad food? Don’t take it out on the server, they didn’t cook it. Bad service? See a manager; most managers will be more than willing to take care of any problems.

My wife and I live in the outer edges of the suburbs where there is still farmland. At our grocery store we recently got something which was a pretty cool thing but is old news for many. Redbox.


For those who don’t know, Redbox is a dvd rental kiosk where you put in your credit or debit card and rent any of the new releases available for $1 per night, with no late fees. As someone who doesn’t rent a lot of movies, the price is right. I got rid of Showtime when they canceled Dead Like Me and The Chris Isaak Show. I dumped my Blockbuster Online membership when I kept a movie for 3 months without mailing it back (total cost: $53.97). The other nice thing about Redbox is that you can return your DVD to any Redbox location. So if I’m heading over to my mother-in-law’s house or to work, I don’t have to go out of my way and can drop it off at the local grocery store there.

Here’s a piece of useless trivia I stumbled upon: The first place redbox was installed in was several McDonald’s in the Denver area. Redbox is partially owned by McDonald’s and Coinstar; they each own 47% of the company and have surpassed Blockbuster in number of outlets.

Yesterday I got to do something I rarely get to do, read the newspaper. An actual newspaper, that is, not just catching an article online. Newspapers appear to be a dying breed, with online media and television being the primary way to get news today. I got to read 2 good articles worth noting.


The first, from the Philadelphia Daily News, called Let us Pay: Struggling with Soaring costs of Food, Fuel, Rent, talks about the struggles of people meeting their daily living expenses. A staffer at a local church speaks about how the economy has changed the members of her congregation: “I remember when I came, we had the conversation of ‘What are we going to do for “them,” for those in need?’ ” Eileen Jones of the First Presbyterian Church in Germantown said. “But with the way the economic status is now, it’s no longer them - it’s us. There are people in our congregation that need the help of our food cupboard, and they’re embarrassed to ask.”

And as one person put it when talking about their bakery business being slower than usual: “You can’t run your car on chocolate mousse.” With gas at over $3.50 a gallon, people are making choices with their discretionary spending. Buy a cake or put gas in the car? Maybe buy food for the dinner table or put gas in the car? As someone who has worked in the gasoline business for many years, I have been on the receiving end of many irate customers complaining about rising gas prices. However, what I’ve seen over the past several years as prices have risen, the complaints have went from being directed at the poor clerk or merchant that makes the same profit regardless of gas prices to venting about the oil companies that are raking in the profits. Customers now seem to understand that it is not the fault of the local gas station. That doesn’t change the fact though that, especially in the suburbs, even going to the grocery store requires a car. It’s a simple equation for many: No gas, no car. No car, no job. No job, no food on the table or money for rent/mortgage.

Along with this article was a Q&A of with Bruce Rader, an assistant finance professor at Temple University. One of the questions struck a chord with me:

Q: Do people’s salaries typically reflect what’s going on in the economy?

A: That’s what eventually should happen. We haven’t seen that in a while, though, especially for the middle class. We might see that pressure. I think the Fed has to worry about this rise in oil and food prices feeding over into the rest of the economy. People are demanding higher wages so they can meet their costs. No one wants to have a lower cost of living.

This is because on Tuesday, I received my letter with my new salary, which will be in my paycheck this week. I was rewarded with a 1.5% raise (woo-hoo!), which not only does not cover the cost of living, it doesn’t even cover the increase in the cost of medical benefits that I received January 1st.  Amazing how the cost of benefits always promptly hits your paycheck, but you are basically taking a paycut for the first several months of the year until the raise kicks in (if you even get a raise, which I didn’t get for 2 years at my job prior to this). When I read the letter, my reaction was “I’ll be sure not to spend all the money in one place.” Which prompted the comment from our office’s admin: “Yeah, that seems to be the general reaction from everybody.”

It seems we have all been beaten down by the economy, resigned to shrinking wages and higher costs of everything.

My wife and I recently upgraded our cellphones with Verizon to the LG VX8550 (new Chocolate). After 3+ years, it was time to upgrade; I had already went through 2 used phones after losing my LG VX6000 and my wife had no reception inside our house. Which is why we are with Verizon…T-Mobile and Sprint don’t work in our house and Nextel phones just annoy me. That being said, reception is much better in our house with both phones; rarely do our calls go right to voice mail without ringing and I don’t get that “Warning-No Service Available” when I make a call.  Plus, with my new every two plan and a buy one get one deal, the phones were free, which is the right price for me.

So, here’s my I’ve been giving a lot of thought lately to just disconnecting our home line altogether, which would save us between $35-$40/month. The base rate for my package is $32.99/month. I have a bundle package through Verizon so I would lose some discounts but also wouldn’t have to pay the 15 different types of taxes and fees either. In addition, most people call my wife and I on our cellphones anyway (at least anyone we actually want to talk to and some we don’t). My concern would be going over my minutes; we have a shared plan with 1400 minutes and come pretty close to that number, mainly because of my job. I do have a Skype phone, but need to renew my SkypeOut plan. $36 per year isn’t bad to save about the same amount per month. I think it’s just an emotional thing at this point. Having a landline for all my life, I just can’t “cut the wires” so to speak.