February Money Challenge Recap: Matching Goals With Engagement

Gmail email webpageI’m wrapping up my money challenges from the last month.  It was an interesting experiment, especially considering that I didn’t really do much thinking and basically decided to do it on a whim.  My quality of life stayed about the same, but I learned some things from all of my efforts.

Here’s a recap of each challenge:

Challenge #1: I will only drive a maximum of once per week. This turned out to be harder than I thought, and it really wasn’t a well-designed goal.  First off, I went on several weekend trips in the last month and most of them required driving.  While the good news is that I carpooled on almost all of these, the bad news is it led to multiple driving trips a week.  However, I rode my bike just about every day to work.  Within New Haven, I didn’t drive on any trips where I could have walked or biked instead.  I didn’t execute this goal perfectly, but I would still call it a mild success.

My Grade: B

Challenge #2: I will not check email from 6 to 10 pm. I employed some outside help from LeechBlock on this one.  Still, I did admittedly cheat a few times.  I sent emails when I felt they were important and that I would forget them later.  I also realized that a lot of the reading and other work I do requires that I have access to my email archives.  I found it tough to be perfect on this one, but I would definitely say that I saved time.

My Grade: B-

Challenge #3: I will plan out my time and what I need to get done each day. I feel like a had a lot of success with scheduling my time, and I was probably more productive the whole month by implementing this goal.  I religiously planned my evenings on Mondays to Thursdays.  But I didn’t always do this on the weekends, mostly because a) I don’t do as much work then, and b) what I’m doing is much less predicatble.  My planning wasn’t perfect, but I think this is one challenge I’ll convert to a regular practice because I know it helps.

My Grade: B+

Challenge #4: I will not purchase any “things.” I definitely thought this was going to be the toughest of the four, but it actually ended up being the easiest.  I only (sorta) broke this rule once: I spent $3 on an mp3 album on Amazon.com.  This was more of a memory lapse rather than defying my own rules.  Other than that, I thought about buying several things, but didn’t actually go through with it.  Obviously I can’t do this forever, but I think it’s important to realize that I can live just fine without buying things most of the time..

My Grade: A

Challenge Observations

The one thing that sticks out in my mind about the whole challenge: to succeed, I need to be fully engaged and seriously want to accomplish my goals.  Perhaps this is a bit cliche for life in general, but I don’t think my heart was really in all of these goals.  Yes, I do think they’re all worthtrying harder at and would improve my life if I did, but they aren’t the most important things to me.  I want to cut back on driving a car, but I don’t care enough about it to let it derail my other plans.  I think checking email less is generally a good idea, but I think there were times when I made exceptions to my own rule and it really didn’t make a difference.

I’d really like to stick to only one goal at a time.  This goal could certainly be more challenging and significant that the ones I tested here.

I definitely plan to continue on with my challenges, starting again in mid-March when I return from Spain.  Right now, I’m almost 100% certain I’m going to stop using credit cards for a month.

Other ideas? Let me know in the comments.

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photo by: Artur Oliveira Gomes

Four Reasons Why I Don’t Like ‘Nice’ Things

I own a crappy car that’s certainly not looking any nicer as I rack up the miles.  In fact, I’m responsible for beating it up even more.  Yesterday, I had a few issues on a road trip back from Massachusetts.  First, I backed in a snowbank and scraped my bumper.  Then, someone parked next to me swung their door open, hitting my car.  To top it all off, a plastic piece under my engine came loose and started dragging on the road, forcing us to pull over on the highway to fix it. I could go on with the perpetual problems that my car has, but I think you get it.

Despite all the issues my car has, I love the fact that I don’t have to constantly worry about my car and I don’t have to put in a lot of effort to care for it.  It’s old and it’s never going to be perfect.  But as long as the engine runs and there’s no serious damage, I can revel in the fact that it’s stress free to own. I think the same concept applies to lots of things that you and I own.  Here are four reasons why I don’t like to always have the latest and greatest stuff out there:

1. I don’t have to worry about blemishing or breaking.  I like to call this the “plastic couch cover” syndrome. Personally, I think it’s crazy to own things and not use them (or excessively protect them) because they might get wrecked if it’s used in the way that’s intended.  I don’t really believe in buying things, like a couch or fancy convertible, simply because they will look nice while unused in my living room or stored in my garage.  I want to sprawl out on the couch without having to worry about if my feet are dirtying it.

2. I don’t have to worry stuff will get stolen or lost. If it isn’t worth much in the first place, I can’t be out too much money if I lose it or if it gets stolen.  This is why I like owning a two-year-old, not-smart phone instead of an iPhone. It’s really unlikely that it would be targeted in any kind of mugging or heist, whereas iPhone thefts seem to be much more likely.  If I lose my phone, it’s probably $50 max to replace it, instead of costing hundreds.  Mine’s not a piece of junk (in fact, it works great), but it’s not in any way expensive, either.

3. I don’t have to spend as much to buy my stuff.  Fancy things cost more.  While there is something to be said for quality, there is also something to be said for paying $3,000 for a set of knives when a $30 set may work just as well.  While I can’t say I’ve ever even touched a $3,000 set of knives, I have a hard time believing they are 100 times better than the cheaper ones.

4. I don’t have to spend as much to maintain my stuff.  My car virtually never goes to the car wash and definitely never gets waxed.  I don’t fix every little ding or make any nonessential repairs on it.  If I spill coffee on the upholstery, it’s not a big deal, either.  On the flip side, I’ve seen others freak out over any little ding or small spill.  As soon as their car makes a “strange noise,” they have to bring it in the the shop to have it checked out (yes, mine is always making strange noises).  I have enough other things to worry about, so my car isn’t about to be one of them. It’s is still reasonably clean and good looking (at least enough so that it wouldn’t stand out in a group of cars).  If it gets scratched, then it’s just acquired a bit more personality.  I’m definitely not about to spend more money than what I need to simply keep it running.

I’m not (universally) against high quality, but I’m against underutilized quality.  I’m not advocating going out and wrecking your “nice” things, either, by using them carelessly.  The ideal is enjoy what you have and be reasonable about maintaining it’s quality, too.

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photo by: Garrette

The Secrets of Maximixing Fulfillment From Your Purchases

Buying things doesn’t always lead to the feelings that I hoped they would.  Often times, I feel the excitement of a purchase is the high point, with interest in a new gadget or toy in a steady state of decline the time afterward.  I recently thought about this after reading a chapter in Your Money or Your Life, which instructed you to look at your purchases and determine if it gave you adequate fulfillment. I really like this concept, but I thought I would take it a step further: evaluate fulfillment potential before buying in the first place.

I always want to get the most out of my purchases.  Sometimes it becomes a bit of an obsession for me.  I’ll often spend 30 minutes on Yelp to figure out the best option for a Saturday night meal or heavily research customer reviews on Amazon.com.  But this would be a total waste of time if I evaluated every dollar I spent in this fashion.

At the opposite end of the spectrum, there’s impulse buying, where almost no time or thought goes into the purchase.  Impulse spending is more problematic since 1) a greater proportion of money is probably spent in this way and 2) what is spent is usually on things that garner less reward.

Regardless of your plan to a acquire a new knick-knack, here are questions to ask yourself before you make any purchases, especially pricey ones:

“Will this purchase really change my life?” Obviously if you’re dead set on buying something already, you’re going to be biased.  But if you’re willing to be objective and open-minded, you may think differently.  There are a lot of expensive purchases made under the assumption that it’s somehow going to revolutionize our life for the better.  Often, the effects aren’t long lasting.  I really like my MacBook Pro, but I’m not certain it’s value to me is worth a whole lot more than a cheaper computer. Many small purchases like an DVD or a cup of coffee probably won’t ever change someone’s life (again, being objective here), but that’s not to say you shouldn’t buy these things.  However, I think it does raise some questions as to its importance in your life relative to other things, which leads to the next question.

“Is there something better I could do with this money?” I use this every time when I refuse to buy lunch.  There are tons of other things I’d rather spend that money on: drinks out with friends, dinner with my girlfriend, or even just buying fancier food (like gourmet cheese!) from the grocery store. There are plenty of places to put the money. If you don’t have an automated savings plan, this is the perfect time to find ways to fund savings accounts.  Instead of spending $70 on a pair of shoes, save it for emergencies, vacations, or other adventures down the road.  You’ll be happier when you’ve saved yourself from three different $70 shoe purchases and suddenly have $210 to spend towards a trip to Europe.

“Have I purchased something similar in the past? How did I feel about it then?” I recently made my third car purchase in my life. Looking back to when I financed my second car, a brand-new Hyundai, I felt great about it at first.  New car smell and all, it was great!  But I eventually got sick of the car payments.  With the most recent car, I knew that I didn’t want to make monthly payments again.  I sought out to buy the cheapest car possible this time around, and I paid $1,000 cash for a 1997 Nissan.  While I still don’t love owning a car, I feel much better about spending $1,000 rather than $10,000, and I knew I would feel even better than sinking a lot of money into this purchase.

“Can I really afford this? Will affording this be stressful?” This is a question I find coming up a lot when my monthly budget starts to get tight.  If I’m being peer-pressured into an expensive night out, but I’ve already eaten up all of my fun budget, I know it’s going to take serious sacrifice to make ends meet.  I’m all about fun times, but it’s not helpful later when I realized I’ve spent too much.  That creates stress, and sometimes it’s simply better to say “no” when it’s not affordable.

Looking back at my purchases now, I wish I had asked some of these questions.  I’ve learned several (expensive) lessons, but it’s taught me how to maximize fulfillment and happiness from my purchases.

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photo by: Jason Cartwright

What’s My Minimum Wage?: Getting By On $13k a Year

I’m living on about $13k (or about $1,100 a month), which is just slightly above poverty level.  Before that, I lived on about $22k/year for my two years of graduate school (2008-2010), and I lived fairly comfortably yet still cheaply.  Having lived on a stipend for the last 3 years, I feel like I have a great sense on how much the minimum is that I can live on without major sacrifices.  The whole experience has been difficult, but I’ve been able to do it without amassing credit card debt and still maintaining a happy and enjoyable life.

Living on about $1,100 a month is no easy feat and certainly requires some sacrifice.  Here are some things that I know I can’t afford to do:

– Eat out for dinner more than once a week (and I never eat out for lunch).

– Buy “things” like DVDs, iPhones, or other gadgets.  I’ve basically eliminated these things from my budget, and only make one or two purchases of “things” a month (and sometimes I make none).

– Do just about any sort of traveling.  Weekend camping trips can fit into the budget here and there.  Flying to Europe definitely can’t.

– Implement any significant savings or investment plan.  I still have automated savings accounts, but they aren’t funded at the levels I would like them to be.

– Live alone or in an expensive apartment.  Right now I pay $400/month for a modest apartment with 2 roommates, but I can’t imagine affording more than that.

– Try to get by without a budget or without tracking my spending.  I know I need to be very aware of my spending and where I’m at with my monthly budget.  I work with this for at least a few minutes on a daily basis.

– Not fall back on my savings here and there.  Car ownership is virtually impossible, especially with unexpected costs. I’ve had to rescue myself with savings a few times.  I hate having to do it, so I avoid it at all costs.

Yikes! Looking at that list, you must be thinking “that kinda sucks!” But I can honestly say that I don’t notice it much in my day-to-day life, and I’m genuinely happy.  Is it sustainable long-term? Absolutely not, and I don’t plan to try to make it so, either.

What I do think like about this level of income is that it’s forced me to be really frugal and has given me real life experience of what my minimum income level is (and what living in poverty is like, too).  I would say my realistic minimum wage is probably more like $17k, but clearly I could get by on a little less if I absolutely needed to.

After my service work ends in August, I’ll undoubtedly be earning more than $1,100 a month.  Envisioning what things will be like then, I feel like just about everything I earn above that sounds like a bonus to me.  For example, say I double my earnings with my next job and earn a still-modest $26k a year. That kind of salary sounds like the high life to me right now!

Despite the fact that I really can’t save much currently, I’ve had time to plan for the future when I will earn more.  Let’s take a look at where I would put my money if I’m earning a “great” salary of $26k:

1) Donate 10% of what I earn ($2,600)

2) Long term savings 10% ($2,600)

3) Invest 15% ($3,900)

Remainder = $16,900

So even with these better-than-average financial goals (at least in terms of % of earnings), I would still have $16,900 ($1400/month), which is about 27% more than what I earn right now! Even at those numbers, I think I could live a very good life.  Can I drive around in Mercedes? No. Can I go out for fancy dinners several times a week? Doubtful.  But that isn’t the point.  I don’t want to do those things anyway.

Just to be clear: I’m definitely not striving to make $26k a year for the rest of my life or even next year.  I’m really just looking at these calculations because:

a) This should be an easy level of income for me to obtain no matter what money earning path I choose,

b) I could live at this level of income for short periods (a year or two more), if needed,

c) I plan to maintain a degree of frugality similar to where I do now, and

d) I don’t have to panic about going out and getting a high-paying ($50k+) job if I don’t want to.

If somehow my life goes terribly wrong, and I end up back at $1,100 a month, I know I’ll be able to handle it.  That is a very reassuring feeling.

What’s the minimum you could live on? Can you survive on $13k?

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photo by: Casey Serin

Finding Financial Bright Sides of Valentine’s (Even if You’re a Hater)

As you might be able to guess, I’m in the “Valentine’s Day is a total commercial holiday” crowd.  With Valentine’s comes a lot of wasteful spending.  As this article points out, my “excuse” is one the major mistakes that men make with Valentine’s Day.  I think the core message of Valentine’s Day is a good thing: celebrating a relationship with someone you love. That said, I’ll still celebrate, reservations aside. Okay, enough of the mooshy stuff, let’s go on to what you can do if you’re like me.

1. Celebrate in a way you’ll both enjoy.  Even though my girlfriend appreciates Valentine’s Day more than I do, it doesn’t have to be a one-sided celebration.  We plan to go out to eat at somewhere that we both like.  I’m sure we’ll watch a movie or do something else special, too.  We do these things in a typically week anyway, so I’m definitely not sacrificing.  I’m sure I’ll have fun.

2. Spring for experiences instead of things.  Buying a stuffed animal is a waste of money as well as a clutter-builder.  It’s cute for about 5 seconds then it’s tossed aside.  Don’t buy things like this! Instead, go out for dinner, a show, or ice skating.  Spending on experiences instead of things can build much better memories and be much more meaningful at the same time.

3. Tone down spending without ditching Valentine’s.  The average male allegedly spends $159 on Valentine’s Day.  Whoa! That sounds excessive and unaffordable for a budget.  But even if you’re not willing to spend that much, for whatever reason, you can find plenty of things that cost less.  Find a reasonably priced (but not cheap looking) assortment of flowers, maybe add a reasonably-sized box of chocolates, and skip that damned stuffed animal!  And make your own greeting card instead of buying one. Using your own words to say how you feel costs less but is appreciated much more by the receiver.

4.  Find deals or other rewards on the things you ending up buying.  I typically buy flowers just once a year. After begrudgingly starting my online flower search, I came across a great realization: I can get rewards for purchasing flowers online.

I recently enrolled in Chris Guillebeau’s Travel Hacking Cartel, and I’ve already become addicted to earning miles (many of which can be earned without spending any money) .  After searching through the Continental Mileathon site, I found that I could earn about 1400 miles from one $55 flower purchase.  These miles are potentially worth up to $56 (if redeemed wisely).  Score!

Even if frequent flyer miles aren’t your thing, there are other deals to be had. By shopping though the Discover online store, I could have earned 20% cash back on my purchase.  There are lots of other promotions and coupons out there for flower sites, so be sure to look around.

If going out to a restaurant, check restaurant.com or buy from Groupon.com to save a few bucks if there’s a deal offered for somewhere you would go anyway.

With these methods, I managed to plan Valentine’s without being a cynic or cheapskate.  I didn’t have to make sacrifices, yet I found ways to keep from ripping a hole in my wallet.  Dare I say I’m looking forward to it?

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photo by: Beadmobile

New Money Challenges: Testing My Financial Willpower

I’ve always liked setting challenges for myself.  Perhaps it’s a strange obsession that I have with self-improvement, but I find it interesting to see how I do when I’m truly testing myself.  Many of the challenges I’ve come up with in the past have been a bit informal.  I’ve told myself I needed to lose weight and have succeeded in doing so many times.  I forced myself to quit spending so much time reading Yahoo news stories and the Facebook news feed.  I even convinced myself to go without eating meat for a week, which turned into 6 years (and counting).

I’ve gotten a little bored with finances lately, so I’ve decided to spice things up with some new ideas.  Here are a few challenges I created for myself for the next month (until March 4):

I will only drive a maximum of once per week.  Excessive driving is one of the things that I truly dislike about car ownership.  Once I had a car around again, but biking and walking trips plummet.  It’s so easy to jump in the car when it’s cold outside or my destination is just a little too far for easy biking or walking.  But, in reality, a lot of people get by in New Haven without a car. It’s tough at times, but if I really want to get somewhere, I’ll find a way, car or not.  Allowing myself to drive once a week will ensure that I plan out my one trip really well and grocery shop or whatever on just that one trip.  In case you were wondering, if I ride in someone else’s car, that counts as my one trip.

I will not check email from 6 to 10 pm. Okay so this isn’t a direct financial goal, but email is a time waster that impedes financial goals.  I’ve been trying really hard to find a better system for reducing email since reading The 4-Hour Workweek.  This period is my prime time for working on my personal and professional development, along with writing.  If I wasted less time dealing with email, I’d have more time to work on these things instead.

I will plan out my time and what I need to get done each day. This goes along with my post on my job and scheduling around my 9-5 workday.  I’m still amazed at how much I get done when I come home from work contrasted to how little I seem to get done on days off.  Having a structure in place is what drives me to work the most.  In order to accomplish this goal, I’m going to use an idea from David Risley.  I’ll plan out each day the night before so that I make sure to manage my free time well and get everything I need done.

I will not purchase any “things”. I’m trembling and pondering this one nervously as I write it.  Will there be something I desperately need?  What if something breaks? I’m going on a trip to Spain in March.  What if I need to buy something for that? Despite my reservations, I feel slightly reassured because I actually completed this challenge accidentally back in October. I just didn’t realize it until I looked back at my spending for that month.  But I want to see if I can do it again, consciously this time.  So, no buying anything non-consumable: no books, CDs, DVDs, computer equipment, or other toys.  I’ll have to rely on borrowing or just get along without it until March 4.

I’m normally not big on attempting multiple challenges at the same time.  I feel that lowers the chances of success, as some goals distract from one another.  But I feel like these challenges are separate enough that I can attempt them without interference from one another. So on we go.  I’ll provide updates throughout the month, and I’ll (hopefully) be reporting successes instead of failures.

Here are some other challenges I’m thinking of for future months:

– Purchase everything with cash only

– Read news for less than 5 minutes a day

– Don’t make excuses for anything I know I should do but don’t due to laziness

Do you have any challenges you think I should attempt? How about some goals for yourself?

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Photo by: Global Jet