Thursday, June 15, 2006

Cutting costs: Saving on lodging, bank fees, and heating oil or propane

Readers continue to share their money-saving tips, which I invited last month in a Philadelphia Inquirer column on free directory assistance. As long as they do, I'll continue to post them here or write about them in the newspaper, as I did in Monday's Consumer Watch column and Consumer Inq posting and in Tuesday's posting on the Philadelphia overstock outlet, Jomar.

Some of the best advice is informed by particular knowledge consumers can acquire on either side of the sales counter, or from the experiences of friends, relatives or neighbors.

Here's one from David Muff, a former hotel manager who hails from Havertown:

When booking hotel rooms, I like to save money by asking for a cheaper rate than the one just quoted to me. As a former hotel manager, I know that reservationists and front-desk clerks are flexible in the selling price when it appears the hotel may not sell out. I’ve had front-desk clerks come down in price three times before accepting their offer. It doesn’t hurt to ask for a cheaper rate. If it appears you are hesitant in accepting their initial offer and the hotel knows it needs to sell that room, then they will most likely discount the room to make that sale.

Mike Morris, also of Havertown, is a lifelong credit-union member who says he can't understand why more people don't take advantage of these nonprofit alternatives to banks:

Use a credit union for checking, ATM, and other non-investment cash-management needs. The fees, if managed correctly, should cost little or nothing each month.

I have been a member of the same credit union since I was in grade school (through my dad's employer - Bell Telephone). I am now in my mid-40s. Over that entire time, my fees have probably totaled less than $100 (for some bounced checks due to sloppy record-keeping when I was much younger). I use the Credit Union for ATM service, checking, money market savings, CDs, and VISA cards, all provided at no charge.

Given the recent relaxation of the rules for credit-union membership, I can't understand why anyone would use a regular bank that beats you up with fees, minimum balances, etc.

After last fall's spike in energy prices, these two suggestions for saving money on heat - one for those who heat with fuel oil, the other for those who use propane - seem timely even in June.

From Victoria Matishen, of Somerdale:

We have belonged to NJCAOG - New Jersey Citizen Action Oil Group - for over 20 years. This is a cooperative of independent home heating oil distributors in this area. We have saved at least 10 cents per gallon of heating oil during that time. This past winter our two deliveries totaling 310 gallons saved us 15 cents a gallon, or $46. We were assigned one distributor. Service has been great and we've never run out of oil.

When we first joined, annual membership was $25. It may be as high as $40 now. Since we are now seniors, our membership is only $15. Either way, one can save money with just one delivery.

There is also an incentive plan for recommending new customers, so if 50 or so of your readers mention our name we'll have free membership for the rest of our lives. (Just kidding.)
For me, there is the added attraction of supporting small, independent businesses.

[Thanks, Victoria. There are similar co-ops in Pennsylvania. Two I know of are PIRG Fuel Buyers and the Energy Cooperative.]

From Jeff Carlow, of West Chester:

Hi Jeff. Interesting article on saving some money on 411 calls today. I found a way to save some money, but it is more of a long-term commitment.

I bought my house 8 years ago. Our house is heated by propane, and a 2,ooo-gallon tank was installed when it was built. We signed a bunch of papers for the tank to be installed with the obligation to buy the propane from Amerigas in Malvern.

I recently was speaking with a neighbor who bought out his lease on the tank. I was surprised and didn't know that was an option. He explained to me that if you lease your tank you can't go out and shop for the best propane price. If you wanted to shop the price per gallon you had to have proof that you owned the tank. I decided to call a few propane distributors for price and regulations on ownership. I found that I could save between 49 and 54 cents per gallon. Take that savings times the number of gallons you use per year and, for me, I figured that payback would happen in approximately 3 years. You also have to have proof that you own the tank. There must be a law or agreement among the propane distributors not tamper with each others' customers.

You've got to bite the bullet and buy out the lease. Amerigas puts the tank on a 30-year depreciation schedule, which is a joke. They told me the tanks can last 50 years. The tank cost $2,100 installed, and the buyout price was approximately $1,600 after 8 years. I told them that the depreciation schedule was ridiculous but they pulled out my documentation from 8 years ago that showed what I had signed up for. They also told me to check if my homeowners insurance would go up. It didn't. They also told me I'd be responsible for any problems with the tank once I owned it. Understood.

I bought out the lease and they quickly quoted me a 50-cent reduction in my per-gallon rate. It was a 25% savings ($2.09 lease price versus $1.59 owner price per gallon). They also sent me proof of ownership of the tank. I called around and got a better price and called Amerigas to see if they could beat the rate, and they offered an additional $.02 off. I'm still with Amerigas but now how some open-market leverage on costs.

Amerigas doesn't advertise this buyout option, as best as I can tell. They are making a premium off their lease customers. You bought and paid for that tank with that premium after 2 to 3 years. Granted, they have complete service/support responsibility for the tank. The rest is gravy for them over the next XX years. I'll be saving at least $ 500 to $700 per year. I'll be staying in my house a long time, so the buyout made sense for me.

I also learned that you can call Amerigas in June or July and lock in your rates for the winter. Again, I don't think they advertise this opportunity. [One warning: Unless it allows your rate to float down if prices decline, a rate lock can work against you as well as for you.]

I look forward to other tips from your readers! It was a good tip from my neighbor.

Got a comment on this tip or others, or on anything else consumer-related? Use the "Comment" button below, and remember to fill in the "word verification" box.


Blogger Victoria said...

Oil group cost is $24 a year, not $40

Thursday, July 13, 2006  

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