Fill In The Blanks

Welcome MMM readers! This is a blog about urban frugalism and my family’s Mustachian journey, here in Seattle, USA. Take a look around, I think fellow Mustachians will find a lot to love.

One of my favorite Personal Finance bloggers, Mr. Money Mustache, is gone for the summer and taking a break from blogging. As some sort of taunt or joke, he left a list of all the blog posts he’s been meaning to write but hasn’t got around to it. I thought it would be fun to steal, I mean write a few of them for him, in a slapdash manner…

An Amazing New Prescription Medication
It’s called “exercise,” and you can self-prescribe based on the dosage you need. Taken daily, it boosts your immune system, and increases your longevity. Side-effects include happiness, weight-loss, and socializing with others. Best of all, it’s practically free.

Fancy New Appliances, for Less than Zero Dollars?
If your old appliances are wasting gas or electricity, and you find almost-new ones on craigslist for a deep discount, the amount you’ll save in energy costs over the lifespan of the new appliance will outweigh the initial cost. Therefore, you’ll be making money by buying new appliances. Do the math.

Are You Using Work as an Excuse to Accomplish Nothing?
When you work a 9-5 for someone else it’s easy to occupy yourself with non-productive busywork that pleases your manager but doesn’t really accomplish anything great. Furthermore, the busywork helps mask the fact that you’re not happy with your job. They seem to go together.

Quality over Quantity
In almost every situation, quality wins out. I’d rather have a small steak from the grass-fed beef we bought directly from a local farmer, than any number of fast-food hamburgers. Same goes for most other purchases, and also intangibles such as spending time with friends and family. Quantity is what marketers want you to buy so it’s what’s shoved down your throat on a daily basis. You have to step back and consciously choose quality, but you’ll be glad you did.

Mr. Money Mustache vs. Peak Oil
Folks like MMM who bike everywhere don’t care about peak oil or the price of gas. In fact, we’d love to see the price of gas go to $10+ per gallon. Then more people would ride bikes and the roads would be safer for all of us. Plus there’d be less pollution, more healthy people putting less of a strain on our healthcare system, etc. I could go on for hours on this one but you get the point.

Recovering from the Pack Rat Years
I feel like I’m living through this one now, with the July Challenge of giving away 100 things. Ask me again in a few weeks.

My 401k is Too Small to Retire, Waah, Waah!
You have a few choices: 1. invent a time machine and go back to when you were 21 to punch yourself in the face. 2. cut living expenses to the point where you can live off your current 401k balance. 3. do #2 but also work your ass off for a few more years to drastically increase the balance.

Fasting: a Fast Way to Greater Badassity
I fast once a year at the Jewish holiday of Yom Kippur. It also includes no water. I consider that pretty badass. It feels amazing and when you break the fast, no matter what you’re eating it tastes like the best food ever. I recommend trying it once in a while. Fasting also makes you very thankful for what you have.

Wealth is something that is created, not just divided
Making and saving money isn’t a zero-sum game, so no need to get competitive about it. You can make a bunch of money and the next guy/gal can too. In fact, it’s best for all of us if we work together and share tips. That’s one reason I started this blog.

Life Cycle Funds: Become a Dynamic Fancypants Investor with No Effort
I just happened to write about Vanguard’s LifeStrategy funds in a previous post, so go check it out. Vanguard also has a set of “Target Retirement” funds, which grow more conservative as they approach the target date. For instance, if you plan to retire in 2040, the fund for that year is mostly stocks with just a few bonds right now, but over the next couple decades, it will slowly sell stocks and buy bonds so you’ll have a low-risk/low-volatility fund by the time you retire. All without the need to rebalance or figure out your optimal blend of investments for your age.


Hope you enjoyed reading these as much as I enjoyed writing them. Next post will be on a topic of my own choosing, or maybe yours…? Let me know if there’s something you’d like me to write about!

update: I sent this post to MMM and he tweeted about it, calling the post “not bad”. I’ll take that as a compliment 🙂

Running: The Most Frugal Sport

While on a run recently, I was trying to think of a more frugal sport than running. But nothing came to mind that tops the simple joy of running around the neighborhood. With the popularity of barefoot running, you can literally run out your front door with no equipment needed.

Practically speaking, you probably want a pair of running shoes, but I’m willing to bet that most people already have a pair, along with a pair of shorts, a t-shirt, and socks.

I started running before I became frugal, so my setup is a bit more pricy: actual running shorts (with the netting inside), and a “running shirt”. I still can’t believe I bought a shirt just for running. I bought it because I knew a guy who was a fast runner and he had such a shirt, so I thought to myself “If I’m going to be a fast runner, I need a shirt like that.” This is how the mind of the average consumer works. I don’t recommend buying any of that, but use it if you got it.

I like to hear what’s going on around me, so I don’t own an mp3 player. I do run with my phone to track my mileage, using a free app called runkeeper. I strap it to my arm with a short strap I had laying around. It seemed silly to buy a specialized velcro thingy just to strap my phone to my arm. If it’s raining or looking like it’s going to rain (which is almost always), I put the phone in a sandwich baggy before I strap it to my arm.

Why am I running so much? Back in April, I entered a 10k race coming up in August. If it seems silly to buy an arm band, it must seem very silly to pay money to run around when I can do it for free. My rationale was that it would motivate me to get out and run regularly. So for about half the monthly price of a gym membership, I’ve gotten 4 months worth of running motivation. It’s worked so well, and I’ve been running so frequently, I set a goal of not only finishing the 10k, but finishing in under an hour.

Time to go for a run!

The Seattle Public Library gets even more kickass!

Here’s a new way to beat the summer heat: starting today, you can “check out” free passes to many local museums, using the Seattle Public Library website. As if the library wasn’t already the most awesome thing known to man.

According to the SPL website, “The Museum Pass allows you to use your Seattle Public Library card to reserve and print out an admission pass to participating Seattle museums at no charge. You can reserve a Museum Pass either by venue or date.”

So far, they have passes for EMP, Children’s Museum, The Burke, The Henry, and many more. The only way this would be more awesome is if you could use your smartphone to get in, instead of needing a printer.

Happy Independence Day!

Happy Independence Day! Due to the magic of blogging, I’m relaxing with family and friends while this is posted.

Just as the founders of our country worked for independence from a system that didn’t allow them to live their lives the way they chose, I declare my independence from commercialism, wastefulness, and anything else that’s keeping us from living the lives we want to live.

Have a fun and safe holiday!

Your Money Or Your Life, Step 9: Managing Your Finances

[This is the 9th and final episode of a series on the book Your Money or Your Life. See my original post about the book.]

First off, sorry for the delay between Step 8 and this post. If you made it this far, you’re going to have money saved up. No doubt about it. I was already a saver before I read the book, but my savings rate has significantly improved since. And not by denying myself. I feel happier about my spending (and not spending) then I ever have before.

This chapter changed a lot between the first and second editions of the book. The first edition simply told you to put all your money in bonds. This is pretty bad advice no matter what the current bond interest rate is, since you shouldn’t have all your eggs in one basket. But these days, with record-low bond rates, investing 100% in bonds is awesomely stupid. Makes sense why they changed Step 9 so drastically.

The new Step 9 is vague about what you should do with your money. One thing hasn’t changed, which is the authors’ advice to be your own investment advisor. This is excellent advice. Nobody can beat the market, so you shouldn’t pay someone to throw random darts at a dart board.

So what should you do with your investment money? It’s going to depend on your risk-tolarance and how long you plan to save before dipping into your capital.

Instead of giving specific advice, the book recommends you do your own research so as to become knowledgeable about long-term, income-producing investments. For me, that means a balance of 60/40 stock indexes and bond indexes*. I use Vanguard because they have the lowest fees. In addition, they have a single fund you can invest in that will give you the 60/40 blend without the need to pick indexes individually, or rebalance when things go askew.

It’s called Moderate Growth (VSMGX), and I highly recommend the fund for any beginning investor who wants a hands-off, “set it and forget it” approach.

To diversify, I also have a small amount of money in safer investments (cash) and a smaller amount in riskier investments (peer-to-peer lending).

Here’s what my entire portfolio looks like:

Investment Percentage
Stocks 67%
Bonds 25%
Cash (emergency fund) 7%
Peer-to-peer lending 1%

Stocks end up more than 60% due to some individual stocks I still own from the days when I thought I could beat the market. Silly me.

Conclusion

So that’s the whole book! You can go back to my first post about it, and get an overview about the entire program. I highly recommend doing all 9 Steps, it has really changed my life for the better.

I’ll do more book reviews now that I’m done with this one. Though they won’t be as long as this one was!

Update: I did a series of follow-up posts on my current investment allocation, starting here. The above info is still great for getting started with investing.


* An index is a list of investments picked by some standard definition, simple enough that they can be bought and sold automatically by a computer program, which is what makes them low-fee investments. For instance, Dow Jones and S&P are the most well-known indexes.

Just-Cash June: Final Thoughts

June is over and I’ve removed the tape from inside my wallet. My credit and debit cards are free! Let’s take a look at how my household spending changed this month compared to an average taken over the past year:

Total spending down 22%. We invested the difference towards retirement. If we’re able to permanently keep up this savings level, I could retire 7 years sooner! Think about that for a minute…

Spending in “Auto” and “Entertainment” were cut in half. When’s the last time you paid for gas with cash? It’s a pain in the ass! And I remember turning down those extra drinks at the bar, since I never had an open tab. Amazingly, I got everywhere I needed to go this month, and felt as entertained as always.

Spending in “Personal Care” and “Shopping” categories down 75%. I guess the added hassle of paying with cash and tracking my purchases was enough to get me to stop buying shampoo and other non-essentials.

[A few notes on the results: I deferred a couple expenses that couldn’t be made with cash (e.g. new tabs for the scooter), so my spending for the month should be a tiny bit higher. Also, I paid no yearly bills this month (e.g. auto insurance), which makes this a relatively inexpensive month.]

I must admit I cheated a couple more times towards the end of the month: once to pitch in towards a class gift for my son’s teacher (money was being collected online), and once to have some books shipped to the boys at summer camp.

This exercise was eye-opening for me as it reaffirmed my belief that money is actually intangible and the paper or plastic we throw around are just abstractions of the concept of “money.”

The paper abstraction (dollar bills) are simply wired into our brains at a lower level than credit or debit cards, so it’s easer to remember what you’re trading away when you spend paper money. This concept is why casinos use chips for gambling. Chips are even more abstract than bills or cards, which makes people more likely to spend a lot of money at the casino. Imagine if you had to gamble with cash at the roulette wheel? That’s pretty much what I did all last month.

From now on, the trick will be keeping this mindset of being at one with my money, but adding the various convenient payment forms back into the mix. Let’s see how it goes!

A final thought: By not using credit cards, I kept about $60 in the local economy that otherwise would have gone to credit card companies in the form of transaction fees. Money-savvy people often like to boast about how they’re not helping the big banks get rich, but if you’re using a credit card, you’re syphoning profits off the stores you patronize, and moving that money to the banks’ bottom line.