Time Warner Cable Internet vs AT&T DSL Direct: Round Two–Service

In an earlier post, I explained why I changed my internet service provider from AT&T DSL Direct to Time Warner high speed cable internet.  Now, after several months of uninterrupted service from Time Warner, I have had an opportunity to experience Time Warner’s customer service and compare it to my experience with AT&T customer service.

My experience with Time Warner customer service

A service interruption of over 30 minutes last week prompted me to call Time Warner’s customer service line.  This is only the second service interruption that I am aware of in the several months that I have been with Time Warner.  The previous interruption lasted only a couple of minutes, the time it takes for the modem to reboot.  After going through the automated phone tree, which took two or three minutes, I was advised by the computer that there was an outage of service in my area and that technicians had been dispatched to fix it.  Sure enough, a few minutes later my service resumed.  End of story.

My experience with AT&T customer service

Service interruptions with AT&T were frequent, especially when it rained.  Most lasted a few minutes, but there would be the occasional outage that lasted an hour or more.  At those times, I would call AT&T customer service.  The automated phone tree provided no help, so I would elect to talk to technical support.  After waiting for many minutes, I would be connected to a technician.  In response to my inquiry about a problem with their network, the technician would put me on hold while he or she ran a check on the data line.  The technician would always come back and say there was no problem with the network.  I would then be put through a series of diagnostic tests which I had already performed prior to phoning customer service: power cycle my modem, power cycle the router, reboot the computer, check my network cable connections.  After 20 to 30 minutes of diagnostics, the technician would invariably conclude that I needed a new modem and offer to sell me one for $75.  I always declined and hung up the phone.  Eventually, my internet service would return.  This scenario played out exactly this way every time I had an extended service interruption and called customer service.  In the end, the problem was always with AT&T’s network—always, never with my modem, router, or cable connections.  If I had followed the technician’s advice, I would have purchased numerous modems that I didn’t need.

I expect to receive honest, factual information from customer service delivered in a timely manner.  Time Warner gave me that kind of response this time; AT&T never did.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages

The Road to Wealth: Cut Spending or Increase Income

What is the best approach to building wealth:  cutting costs to free up money for saving and investment or increasing income to create an excess of money that is saved or invested?  Let’s examine the pro’s and con’s of each approach and see if we can come to a conclusion.

The advantages of cutting spending:

  • Available to everyone. Unless a person has implemented every cost cutting measure in existence and exploited them fully, there is an opportunity to reduce spending and free up money for saving. It is simply a matter of making saving a priority. Once that is done, the money for saving can be found.
  • Immediate results. Cost cutting can begin literally from one minute to the next:  adjust the thermostat by a degree or two, up in the summer and down in the winter, and/or unplug all electric appliances not in use that have an LED on when turned off or that have an “instant on” feature. Both of these actions will reduce the cost of energy immediately.
  • Clearly defined spending priorities. Cutting costs forces a person to prioritize spending to discover what can be cut and by how much.  Prioritizing spending helps a person get the most value out of the money that is spent.  Increased value leads to increased satisfaction.
  • Control over spending. Clearly defined spending priorities make it possible to create an effective budget that produces money for saving without making a person feel deprived, because money is still being spent on the most important things in that person’s life. The use of a budget gives a person control over spending.
  • Efficient: No taxes and no cost. Cutting spending produces after-tax money for saving:  one hundred percent of the money freed up by reducing costs is available for saving. Cutting spending does not incur any monetary costs; it takes time, not money.

The disadvantages of cutting spending:

  • Limited effect. Only so much can be achieved through a reduction in spending. Cost cutting is limited by the amount available for spending.  If a person has $3,000 a month available for spending, the most that can be achieved through a reduction of spending is to free up $3,000 for saving and only if 100% of spending is eliminated. A reduction in spending of 30% to 50% is more realistic and would result in $900 to $1500 to add to savings per our example.  If the person in this example needs to accumulate more than that amount per month to achieve a financial goal, cutting spending will not produce enough savings.
  • Deprivation. For some people, any reduction in spending is perceived as a sacrifice and leads to a feeling of deprivation that can undermine the will to cut costs.  Establishing clearly defined spending priorities can mitigate or even eliminate the feeling of deprivation for many people.  However, some will feel deprived it they have to give up anything.
  • Exclusion from mainstream culture.  Mainstream culture is all about consumption and conformity. Reducing spending makes a person different and excludes him or her from the mainstream culture. If subscriptions to cable television, Netflix, and other similar services are canceled to achieve a reduction in spending, a person will be essentially ostracized from discussions of mainstream entertainment.  If cellular plans are downsized to reduce spending, a person may not be able to participate in the 24/7 connectivity that has come to dominate mainstream culture. Eating out less frequently, avoiding coffee shops, bars, the golf course, the gym, and the nail salon can also leave a person feeling left out of the mainstream culture. Being different can make a person feel uncomfortable.

The advantages of increasing income:

  • Potentially unlimited effect. There is no limit to the amount of additional income a person can earn if the right knowledge and skills are developed and then marketed effectively.
  • Enhanced status and power. Increased income avoids feelings of deprivation or alienation from the mainstream culture and thus preserves the status that a person has already accrued. Even if it is saved, increased income also adds to a person’s status: in our culture, more income equals more status. If the increase in income is attributable to advancement, then additional power is also accrued as a result of increased responsibilities.
  • Accelerated achievement of financial goals. With its unlimited potential, increasing income can reduce the time it takes to realize financial goals. It may also cause a person to expand those goals as the possibility of achieving more becomes evident.

The disadvantages of increasing income:

  • Doesn’t address control over spending. If spending isn’t controlled, an increase in income will probably result in an increase in spending, as well. If that increased income is leveraged to maximize an increase in spending, then debt will be accumulated instead of wealth.
  • Takes time to realize results. Whatever approach a person takes to increase income, it takes time before any additional income is realized: the development of new skills, a promotion, finding a better paying position, changing employers, starting a business, finding a second job all take time.  In some instances, such as the completion of a degree or certification or starting a business, it may take years before significant increases in income are realized.
  • Not available to everyone. Not everyone is capable of increasing their income substantially. Some may not have the aptitude to handle additional responsibilities. Others may have physical or mental impairments that keep them from taking a second job or seeking additional training while holding down a job. Still others may be unable to cope with the risks involved in starting a business.
  • Requires investment of time and/or money. Increasing income often involves an investment of time and money: time to acquire additional skills, job hunt, complete a degree or certification, work a second job; money to pay for training, schooling, transportation, childcare, tools, working capital for a business, relocation expenses. Time and money are costs that negatively affect the net amount of additional income that is available for saving.
  • Taxes. Increases in income are subject to taxes which reduce the net amount of additional income.  Depending on a person’s tax situation and other circumstances, it may take $1.30 to $1.50 of increased income to net $1.00 for saving.

Now that I’ve itemized the pro’s and con’s of each approach to building wealth, what do you think? Which one is the best approach? If you prefer certainty, you might choose to cut spending; you are sure to free up money that can be saved by using that approach. If you are one who takes risks and thinks big, you might choose to increase income; you like the idea of unlimited potential.

Fortunately, you don’t have to choose between them; cutting spending and increasing income are not mutually exclusive. In fact, they complement each other. You should do both to enjoy the benefits of each approach while minimizing their downsides.

Cutting spending is the easiest thing to do, and it produces immediate results. You can be adding to savings by the end of the month. The big advantage to cutting spending is the control over spending that is acquired. You must have control over spending if you are to benefit from an increase in income. Otherwise, any additional income will just be spent. Isn’t that what has happened in the past? If you spend everything you make, you will be broke at the end of the month whether you make $1,500 per month or $15,000 per month. You must gain control over spending.

Once you have a budget and control over your spending, you are ready to pursue additional income. Save any increases in income along with the money you are already freeing up as a result of cost cutting and you have the best approach for accomplishing your financial goals.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages

Over 50% of Americans are Broke

In a recent publication, Report on Economic Well-Being of U.S. Households in 2013, released in July of this year, the Federal Reserve notes that 52% of respondents to the survey upon which the report is based could not come up with $400 in an emergency without adding debt to a credit card, borrowing the money from family or friends, or selling something to raise the money.  That means over half of Americans are broke.  What else would you call it when someone cannot get their hands on $400 without borrowing it or selling something to get it?

We’re not talking about that much money.  Four hundred dollars is less that one percent of the median annual income (approximately $50,000) in the United States.  Yet, over half the country has less than $400 in liquid savings, and are one paycheck from a personal financial crisis.

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How to avoid being broke

It doesn’t have to be this way.  People don’t have to be broke if they don’t want to be.  They can take control of their spending, reduce it, and accumulate savings.  Here’s how to do it:

  1. Seek meaning in the non-material aspects of life.  A meaningful life full of love, joy, and happiness cannot be purchased with money and is not found in the material aspects of life, but is free for those who seek it.  A meaningful life is found in giving rather than getting.
  2. Establish spending priorities.  Review spending by going through the checkbook and credit card statements or keep a spending journal for two or more months.  Determine what is most important and what is not.  If accumulating savings is a goal, then saving should be important. 
  3. Use a budget to plan spending.  Plan spending around high priority items and fund them first.  That includes saving.  Set money aside for saving first.  Reduce or cut out spending on low priority expenses until  spending and saving balance with income.
  4. Establish an emergency fund.  Direct all saving into an emergency fund to replace lost or reduced income in the event of a layoff, medical emergency, or reduction in hours.  Once two months of living expenses have been accumulated in the emergency fund, begin to direct some savings to pay for unpredictable expenses such as automobile maintenance and repairs, home maintenance and repairs, appliance repair and replacement, and medical deductibles and co-pays.  Continue to direct the bulk of  savings into the emergency fund until at least six months of living expenses have been accumulated.
  5. Save in advance to pay for unpredictable expenses.  Expenses such as automobile maintenance and repairs, home maintenance and repairs, appliance repair and replacement, and medical deductibles and co-pays are not emergencies and should not be paid for out of the emergency fund.  They are unpredictable expenses: we know they will occur; we just don’t know when.  Save in advance for these expenses, a little each month, so the money will be there when it is needed.  Review past expenses in these areas to get an idea of how much should be accumulated for this purpose.
  6. Get the maximum value out of the money you spend.  Employ unit cost comparison when determining the best price for an item.  Become conscious of the going price for frequently purchased items in order to recognize a sale price when it is offered.  Buy enough of a sale item to last until the item goes on sale again.  When a frequently purchased item goes on sale, consider buying it even if there isn’t an immediate need for it and add it to the inventory for that item.  Research prices for items purchased only once in a while to determine the best price.  Always be shopping, not buying but shopping, to become familiar with the marketplace.  Always make a plan before going to the store; have a list or know what is to be purchased and the approximate dollar amount that is to be spent.  Stick to the plan.
  7. Avoid paying for convenience.  Convenience is costly. Avoid convenience and save money. Eat at home and bag lunch for work.  Avoid prepared, packaged food and meals.  Take coffee brewed at home in a thermos.  Avoid hiring work done around the house when possible:  yard work, house work, laundry, ironing, simple maintenance, washing and waxing vehicles, and so forth.
  8. Buy used when practical and possible.  Used items can be a great value and save a lot of money.  Consider used clothing, vehicles, bicycles, toys, household furniture, office furniture, tools, appliances, cookware, VHS cassettes, CD’s and DVD’s, sports equipment, computers and peripherals, dishes and glasses, and so on.
  9. Don’t compare.  No two households have exactly the same financial makeup, and no one has perfect knowledge of someone else’s financial situation, so it is a waste of time to compare finances.  Don’t do it.  Personal finance is not a competition.
  10. Adjust standard of living based on accumulated savings not increased income.  Maintain the current standard of living when there is an increase in income and save the difference.  Increase the standard of living when accumulated savings can justify it, in other words, when there is enough savings to sustain an increase in living standards.

If you are broke, do not despair.  I was broke until I was nearly thirty.  Do as I did:  implement some of these ideas today, and start setting aside some savings.  Every dollar counts.  The more you try to save, the easier it will get to accumulate savings.  Eventually, you will develop the habit of saving.  Once that happens, you never have to be broke again.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages