Here's the Second FREE On-Line Issue of:
The Pocket Change Investor
The Secrets to Getting Ahead - Even if You Have
A Pile of Credit Card Bills, Hefty Mortgage Payments, Loans Out on a Clunker or Two,
And a Bad Case of the "I'm Tired of Living Payday to Payday" Blues

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Happy New Year &
Welcome to Our Second On-Line Issue!

Many thanks for subscribing to our newsletter. We're not sure if you've seen our most recent issue. If not, here's hoping it helps you save money, get out of debt, and live better on less. To read the whole issue, click here, or click on the links below for specific articles.

  • Does It Pay to Pre-Pay Low-Rate Mortgages? Even if you just have a vague sense of the advice Marc Eisenson and I have shared over the last nineteen years, you know how we're going to answer this question: "You betcha it pays to pre-pay!" Truth is, even we were surprised by how great the savings can be.
  • Shame on You, Dell! Thinking about getting a computer for yourself or a loved one? Read this cautionary, counter-intuitive tale, even if you think you're a smart shopper!
  • The Value of a Life. Maybe, like author Larry Roth, your initial instinct is to go along with the propositions to put limits on medical malpractice lawsuits. But can we legislate the price … or limits on the price … of a life?
  • Driving a Car Insurance Bargain. It's easy to save hundreds on car insurance - maybe even more. Wouldn't you like that moolah in your pocket? We'll show you how to keep it there, even if you've got a teen or two.
  • Our New Year's Gift to You - THE Best Cheesecake Recipe. I don't mean to brag, but even our Italian relations, who swear by a ricotta cheesecake, admit this one's terrific. It's also very easy, low in fat, and quick to make.
There are a few other post-holiday gifts for you in this issue - first off, we're saving you time by keeping it short. We've also come out with a no-frills version of our loan software package. Our final gift is to make it easy for you to give yourself a credit card makeover, now that those holiday bills are coming in. We hope you enjoy this FREE e-issue, and that you'll forward it to everyone you think might benefit from our ideas.

Marc and I Wish You the Happiest, Healthiest, and Safest New Year!
Nancy Castleman

By Nancy Castleman      

You betcha … unless you have a higher interest debt … for example, a balance on your credit cards.

With banks paying a piddling 0.50% to 1.25% on savings accounts, pre-paying your mortgage is a super-smart, super-safe investment that should be a part of your portfolio - even if you have a low-rate home loan.

For example, say your mortgage is for $150,000 at 5% for 30 years. If you send in an additional $25 a month along with your required payment, you'd save $10,831 in bank interest. You wouldn't be paying anything "extra," you'd just be sending in a bit of pocket change - 84 cents a day - against what you owe - a bit earlier than required.

If you can afford to pre-pay a little more, you could round up the required monthly payment on your $150,000 mortgage from $805.24 to $850, building in a pre-payment of $44.76 a month. That would save you $18,172.

Can you come up with $100 a month? You'd save $34,604. The more you pre-pay, the more you'll save and the sooner you'll own your home free and clear.

We've done two things to inspire you to consider pre-paying your mortgage now:

1. We've posted a bunch of pre-payment savings tables to show at a glance how much you can save by pre-paying $25, $50, $100, or $200 a month on 30-year mortgages from $75,000 to $500,000, at interest rates from 5% to 6.75%. Click and save, folks.

2. We've come up with a "no frills" Banker's Secret Software Package that works well in all the Windows environments. For a mere $25.00, you can have the same software we use when we crunch mortgage numbers. You'll see how much pre-paying will save on your loan, and you'll be able to run both traditional amortization schedules as well as schedules with built-in pre-payments, so you can track your mortgage month by month, making sure the bank is properly crediting your payments and pre-payments.

The software will come with A Banker's Secret, our best-selling booklet that answers key questions about pre-paying. (What about pre-payment penalties, tax deductions, bi-weeklies, and record keeping?) And you'll also receive our user-friendly manual that spells out how the program can make it easy for you to:

  • Save on your current home loan.
  • Shop for a new mortgage, a refi, a car, business, or other loan.
  • Cut the cost of those credit card bills.

So if you'd really like to own your home free and clear, invest in the roof over your head, no matter what the interest rate on your mortgage.

By Nancy Castleman      

The other day, Marc tooled around the 'Net looking for a good deal on a computer for his son, Adam. Along the way, Marc found an incredible difference in price between what Dell wanted for the identical computer package - first, if Adam just bought it via Dell's Web site - and then if Adam took advantage of Dell's special discount program for teachers.

You'd think the special discount program for teachers would save him money, huh? Not true! Adam would have had to pay an unbelievable $236 more as a teacher than he would have had to pay as a just plain folk. That's a 32% penalty for believing that a "special" price must be a better price!

Wanting to investigate further, Marc called Dell's toll-free number and explained the discrepancy to the customer service rep, who wasn't at all surprised. Teachers, he explained, are handled by another division. "It might as well be a different company," he said.

Our Advice?
It's unfortunate but true that we can't trust major corporations to automatically give us their best deals. It's also true that we can't rely on them to tell us about every discount we may be eligible for - whether we're buying computers, shopping for long-distance phone service, or even booking a motel room!

Before you make a major purchase, be sure to:
1. Find out what the price would be including any and all discounts and rebates you think may apply.
2. Ask if there are any other discounts or rebates that might apply.
3. Find out what the price would be with no discounts.
4. Always comparison shop. Even small overcharges add up, and the money you save is money you won't have to pay taxes or interest on … or even earn!

P. S. He's a Teacher in the Know!
While we were shocked to learn about the way Dell treats teachers, we were glad to discover that Adam already knew that Dell charges our educators more than it does members of the public - who Adam and his dedicated, but often underpaid colleagues are committed to educating.

By Larry Roth*      

A year ago, I believed that medical malpractice was rare and only affected other people. If putting limits on medical malpractice damages had been on the ballot here in Kansas City, I would probably have voted in favor of them.

But how do you put a value on a life?

My mother was always a fighter. When she was eighteen, between the time World War II started in Europe and Pearl Harbor, she broke her neck in an automobile accident. No one thought she would survive. She was allergic to the plaster cast, so her doctors came up with the weight method of treating broken necks that is still used today.

Last January, my parents met my sister for lunch. Then they went to a birthday party for a friend, which was held at a florist shop. The florist shop had a ledge that my mother didn't see. She fell ... and broke her femur. (There had been someone warning people about the ledge, but he had left seconds before my mother entered the shop.)

She was rushed to the hospital, and operated on the next morning. She was in the hospital a few weeks, where my folks celebrated their 60th wedding anniversary, and where my mother surprised everyone with her progress. Her doctor had said she wouldn't walk for six months, but she was walking in less than three weeks. As I said, she was a fighter.

She came home and was doing well. Then, suddenly and inexplicably, she began growing weaker. Her home therapist thought her medication might be causing the problem. Her doctor didn't seem worried.

When she couldn't even hold a spoon, it was back to the hospital. We couldn't understand why she had been doing so well and then took such a sudden turn for the worse. Nothing was making sense, even though the admitting physician seemed surprised at her level of medication.

My mother continued to deteriorate. Her lungs became fibrous and failed, so she was put on a ventilator. The hospital staff prepared us for the worst. One nurse said, I suppose to be helpful, "It's not unusual for this to happen with ex-smokers."

I flashed back to the 1950's, when health food stores were few, far between, and expensive. My mother knew and shopped at every one of them in Oklahoma City. She talked to the proprietors and studied alternative health methods on her own - long before such things entered the general consciousness. She knew which vitamins and supplements to take, and she didn't believe in skimping when it came to her family's health, or her own. We grew up with salads, unsalted food, and simple desserts. And as you might expect, we grew up without tobacco.

"Ex-smoker?!" the family said, almost in unison. "She's a health fanatic." The nurse looked shocked, and never brought the subject up again. It seemed as though the lung problem had just become as difficult for her to understand as it was for us.

Frankly, I thought my mother would pull through. In fact, she showed signs of improvement just before she died, on April 11th.

Not Everyone Can Make a Mistake
One thing I'd always admired about my mother was her ability to get on with life after the deaths of others. When someone close to her died, she would spend some time alone in her room, and that would be it. Oh, I'm sure there was more to it, but that's the only thing the world would see - the immediate need to be alone.

Those of you who have been through a death in the family know planning a funeral, writing obituaries, etc., can have something of a therapeutic effect. In our case, it drew the family together to remember the past and put together a coherent service. I dealt with the funeral home, and they couldn't have been better about working with us.

The day of the funeral, one of my parents' neighbors of 40 years put into words the thought that was nagging all of us: "None of this makes any sense," she said. And it didn't.

My sister, who was closest to my mother, said she just had to know what happened. She had lost not only her mother, but literally her best friend. She eventually went through more than 1,100 pages of medical records (for which the hospital charged $.25 per page) and found the culprit.

The doctor had put my mother on a heart medicine, Cardarone. (The generic name is Amiodarone.) The drug has a "loading dose" of 1200 mg., which is supposed to be quickly reduced to 400 mg. My mother's dose was not reduced until she was readmitted to the hospital.

Here's what the admitting doctor wrote in the records regarding his surprise at the high dosage of medication my mother had been prescribed: "Suspect this is an error." In other words, my mother died of a drug overdose.

How did this happen? Was the doctor overloaded with work and just too busy to keep current on his patients? Could the doctor not be bothered with double checking his work? Was he multi-tasking one too many functions? As I write this, it's difficult to understand how so serious a mistake could have happened, and why my mother's doctor has not seen fit to talk to the family. He has no idea how much a simple apology would have meant to us.

Given the circumstances, we've met with an attorney, and medical malpractice suits are going to be filed against both my mother's doctor and the hospital.

How Many Are Too Many?
Recently, someone from a polling company called to ask if I thought too many lawsuits were being filed. I said I couldn't answer that question. The pollster kept restating the question, clearly looking for a "yes" response. But how, after my family's experience, could I give that reply?

Had my sister not been willing to buy and plow through 1,100 pages of medical records, our suits would never have been filed, and the doctor would never have to face the consequences for his careless but serious mistakes. How many people have been through experiences just like ours but never discovered the malpractice, never could explain why their loved ones died.

How many doctors make egregious errors but are never brought to justice? I once heard it said that doctors bury their mistakes. Perhaps, in fact, too few lawsuits are being filed.

How do you put a value on a life?

# # #

*Larry Roth is the author of Beating the System and The Best of Living Cheap News and the editor of The Simple Life. Although he stopped publishing Living Cheap News in 1999, back issues of his newsletter are still available. For more information, visit, or send a long SASE to Living Cheap News, PO Box 8178, Kansas City, MO 64112.

By Marc Eisenson & Nancy Castleman      

There's a fast, easy way to deal with insuring your cars. Pick up the phone and call any broker, agent, or insurance company. Answer a few questions about your cars and drivers, write the check, and get back to whatever you'd rather be doing. Let your policy automatically renew every year, and you'll never have to think about it again. What could be simpler?

Of course, if you're willing to invest a bit more effort you could save hundreds of dollars ... every year ... maybe even more. For example, a friend of ours got a bunch of quotes for the same exact coverage on her family's two cars. They varied by $400. Although we've seen disparities in quotes of over $1,000, let's be conservative, and stay with the $400 figure.

Overpay by that amount every year, for 30 years of driving, and voilá, you've wasted $12,000. Instead, if you were to invest that $400 every year at 7%, you'd have put aside $25,182 - after federal and state taxes, assuming 3% inflation! Since most of us will drive for far more than 30 years, the dollar amount would be even higher.

Don't Leave Home Without It
Car insurance, as crazily confusing, convoluted, and costly as it can be, is mandatory in our book - as well as in most states, where it's required by law. Having the wrong coverage, or limits that are too low ... followed by an accident and the inevitable lawsuits ... could literally destroy your world!

Apples, Oranges, and Auto Insurance
In most comparison shopping situations, price checking is simple, "How much is your yellow widget with the brass doodad?" Not so with auto insurance. Everything varies for everyone. Two neighbors driving identical cars may well pay different rates for the exact same coverage from the same insurer!

Not only does the price quote depend on the car being insured, it depends on:

  • Where you live - Some states - Pennsylvania, for example - have much higher rates than others, and city dwellers can pay 30% or more than country folk.
  • How much you drive - A daily commute or lots of mileage in a year can add to the cost of your coverage, while very limited travel (under 7,500 miles a year) might get you a discount.
  • What your car is used for - Insurers prefer pleasure cars to those used for business travel.
  • How old you are - Drivers under 25 have the highest accident rates, followed by people 75 and over.
  • What your gender is - Young women traditionally have had fewer accidents than young men (though they're starting to gain equality in this area as well).
  • How good your driving record is - A clean record qualifies you for safe driver discounts. An accident, DWI arrest, or traffic tickets may mean that your premiums will shoot up, or that your insurer will choose not to renew your policy. (Of course, a DWI could cost you your license and your liberty as well.)
  • What your marital status is - Young couples - age 25-29 - get a better rate than singles that age, which may be due to being perceived as more stable ... or at least less likely to be tearing up the road in the middle of the night.
  • How good your credit report is - Bad credit may be a factor in getting turned down for coverage or being charged more for a policy, since there's a correlation between credit problems and claims experience.
  • How many other drivers are in your household - The more drivers you have, the more risk your insurer takes and the more you'll pay. (But at least you'll get a bigger exemption from the IRS.)
  • Whether you smoke or not - Nonsmokers get into fewer accidents - maybe because they're not spending time fiddling around with cigarettes when they should be watching the road.
  • "Etcetera, etcetera, etcetera," as Yul Brenner said in The King and I.

The Four Keys to Driving the Best Bargain on Car Insurance
We'll provide lots of details below, but in a nutshell, this is all you have to do to save a bundle on car insurance:

  1. Get competitive quotes.
  2. Go for the highest deductible you can afford.
  3. Drop coverage you don't need.
  4. Ask for discounts. Don't wait for your agent or insurer to tell you about them. Many don't. As a study done by the Pennsylvania Department of Insurance showed, some 70% of agents failed to volunteer information on discounts and deductibles. And it's reported that Americans overpay some $300 million annually by not taking advantage of discounts.
Here are some discounts you might be eligible for:
  • Model of car discounts (and surcharges). Insurance companies rate cars based on factors such as safety, repairability, and claims history for theft, fire, and vandalism.
  • Safe driver discounts can cut your premium by as much as 15%. Read "Radar Protectors & Surcharge Preventers" below, if you just got a ticket or had your first fender bender.
  • Multi-policy discounts (when your cars and home are insured by the same carrier). Ask your current insurer, and ask others what their multi-deal would be.
  • Automatic seat belt and airbag discounts.
  • Anti-lock brakes discounts.
  • Theft control device discounts.
  • Carpooling discounts.
  • Low mileage discounts.
  • Nonsmoker discounts.
  • Mature driver (from 50 to 65) discounts.
  • Young driver discounts. (Yes, there are actually ways to save on that expensive-to-insure teen, which we'll explain below.

For our ideas on other ways folks of all ages can drive a car insurance bargain, as well as links to insurers, click here.

Our Gift to You - THE Best Cheesecake
By Nancy Castleman

I've been tinkering with this extremely easy recipe for the last couple of decades, and make it for virtually every family get-together. My original inspiration was in a homely little booklet called "Special Cuisinart Food Processor Recipes" (Greenwich, CT, 1979), which accompanied a Cuisinart that a very generous friend sent as a gift back in the early 80's.

The cheesecake I now make is lower in both fat and sugar than the original recipe, quick to make, and in the opinion of friends and family alike, quite delicious. Hope you'll agree!

Important Tip: This cheesecake tastes much better if you make it the day before you plan to serve it.

THE Best Cheesecake Recipe

11 or 12 graham crackers - I prefer the plain, ordinary Nabisco kind - the ones in the red box.*
1 stick sweet butter (i.e., unsalted)

3 8-ounce bars of "light" (i.e., Neufchâtel) cream cheese - store or name brand, whichever's on sale
4 eggs - either large or extra large
1 cup sugar
2 teaspoons vanilla

1 to 2 pints fat-free sour cream (I prefer Breakstone's over the others, and yes, you can use regular sour cream if you'd like.)

Lightly grease what you'll be baking the cheesecake in, and preheat the oven to 325 to 350 degrees. The original recipe called for 350 degrees and an 8-inch spring form pan. I could never master those spring form pans, so I usually bake my cheesecakes in a beautiful ceramic pie plate (another gift!) that's 9 inches in diameter and 2 inches deep. I find that a 325 degree oven works best.

Break the graham crackers into quarters, and put them into the bowl of a food processor. (No food processor? See my tips below.) Using the everyday metal blade, make fine graham cracker crumbs by "pulsing" - that is, turning the machine on and off rapidly - a dozen or so times.

Cut the stick of butter into five or six pieces, and add them to the graham crackers. Pulse a few times, and then process until the butter is absorbed. Once the crust mixture is smooth, put it into your prepared pan, covering the bottom of the dish entirely. (I press the crust down with my fingers to spread it evenly.)

Clean out the food processor and then add a bar of the cheese and one of the eggs. Pulse until they're mixed. Scrape the sides of the bowl, and add another bar of cheese and an egg. Again, pulse until the mix is smooth. Repeat the process with the last bar of cheese and one of the eggs. Then add the remaining egg, the sugar, and the vanilla. Pulse a few times, scrape the sides of the bowl, and then process until the batter's smooth.

Pour the batter on top of the crust, and put the cheesecake in the oven for about 45 minutes. You don't want it to cook too quickly, because the top and bottom can burn before the cake has set. So check on it a couple of times, and lower the oven's temperature if the top seems to be browning. It's done when the batter stops wiggling.

Take the cheesecake out, and after it's cooled for 10 minutes or so, spread on the sour cream - just like you would if you were using frosting. Put the cake back in the oven for 10 minutes, and then take it out to cool. Once the cheesecake has cooled, cover it and refrigerate. (I use the lid from a big pot as the cover, but you could cover it loosely with foil.)

No Food Processor?
I think it'd be easy to adapt this recipe, but be forewarned … I haven't tried it! But seems to me, there are just a couple of adjustments you'd need to make. For example, starting with the crust, I'd put the graham cracker quarters into a paper bag and gently bang them with a hammer until they turn to crumbs. I'd pour the crumbs into a bowl, add the butter, and cream the two with a wooden spoon until the butter is absorbed. (I'd make sure the butter is softened.)

As for the batter, I'd simply use a wooden spoon and a bit of elbow grease to mix the ingredients together, step-by-step, according to the recipe. And I'd remember that the goal is not a light, airy mix, just a smooth batter.

*When I began making cheesecakes, there were 12 crackers in each of the three cellophaned packages in each box of graham crackers. Now there are only nine!

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This issue of The Pocket Change Investor is dedicated to Peace on Earth.

We take more than reasonable care to give you timely, accurate information. But before making major decisions, speak to your advisors.

Issue #36 ©2004 Marc Eisenson & Nancy Castleman  Good Advice Press  PO Box 78  Elizaville, NY 12523