How to Take Vacations for Little or Nothing

A sign I saw in a delightful little bar in St Pete Beach. The owner was actually a fairly young guy from New Jersey, who had said “fuck it” one day, moved down, and started a totally new business. He had me thinking about whether maybe I, too, should make a major change and literally make vacation my day job. However, thus far, I have taken zero steps towards doing so.

Happy Monday! I almost feel a little silly writing this post as I haven’t taken anything beyond a few day vacation in about four years now, but it’s the second to last post in my Annual Expenses series, so I’m doing it anyway. Over 2017 and 2018, I averaged $300 per year in vacation spending, which included nothing at all in 2017 and short trips to Wisconsin and Tampa Bay in 2018. The minimum level of spending in the vacation category would, of course, be zero, since this is an entirely optional category. That said, I sure could use a vacation. Anyway, let’s get into it.

My first piece of advice on cutting vacation expenses is to use the specific advantages you have. If you have a job that involves a lot of travel, you may be able to use rewards programs with hotels, airlines, rental car companies, restaurants, etc, to very nearly eliminate the need to spend money on those areas altogether when you go on vacation. If you live near a cruise port or somewhere else awesome, you can probably get a last minute deal for practically nothing if you’re vigilant. Don’t overlook the low hanging fruit.

My next best tip is to use credit card churning to pay for some or all of your vacation. While the situation has deteriorated dramatically over the last year, there are still some cards available with large enough bonuses to cover a round trip flight or two, several nights at a hotel, etc. Keep in mind that you need to plan ahead to make this option work. I recommend four to six months, unless you’re looking to get multiple cards, in which case you probably want to start working on it a year out. Some people don’t like churning for various reasons. My take is that if you do the math and figure out what you’re getting “paid” per hour of actual effort (keeping in mind that this is tax free), it makes a lot of sense to work through whatever issues you have. Very few people make THAT much per hour in their day jobs. If you want to look into this option, this post or this post talk more about churning and this website is probably the best source I know of for detailed, up to date information on what specific cards are offering at this particular moment, whether it’s a good deal or not, etc. You can also check out www.reddit.com/r/churning/.  

Vacation doesn’t necessarily mean going anywhere exotic, or even outside of the United States. Road trips are a great way to go on a vacation without spending a fortune. The more people in your family or group, the better the value since each additional person in your vehicle will reduce your gas mileage only slightly, but would require an entire additional plane ticket if you flew. Think of all the amazing things there are to see and do near where you live. I bet you haven’t even been to them all yet. And there are 49 other states full of them, just waiting to be discovered. You can even get suites in extended stay hotels that have kitchens in them, allowing you to avoid eating some of your meals in restaurants. This type of hotel is usually on the more affordable end. For example, Marriott’s Townplace Suites is usually around $100 or so per night in my experience. Or if you’re adventurous, you can even bring camping stuff and avoid some hotel nights altogether. I myself am not that variety of adventurous. But if you are, more power to you.

One other idea is to use online travel sites. Many of them just aggregate the same deals you could get buying from airlines, hotels, or car rental companies directly. However, some of them offer “blind” deals that can save you some serious money. With those, you commit to buying before you find out exactly what you are getting. But with the hotel deals, for example, you usually get to pick an area of a city and the number of star hotel you want. I remember paying less than $50 a night for a few hotel rooms that regularly went for $100+ doing that back in the day.

And as usual, Costco can save you money here as well. They have an entire travel division offering a wide range of vacation options. They also offer rental cars, which have been the best deals I could find more than a few times. But then, if you’ve been reading this blog for any length of time, you already know that my answer to just about anything is going to be “check Costco first.” It won’t save you money every time, but often it will give you a great product or experience for about the same price as a significantly lower quality one.

So there you have it – some ways to save money on traveling from a man who travels for work and almost never for vacation. But remember, that is only my current state. One day when you’re sitting on a beach somewhere, you’re going to look over and see me enjoying some delicious vacation-y looking drink in a seriously relaxed fashion. You won’t know it’s me, of course. But if you follow some of these tips, maybe, just maybe, you will have spent as little as I did to get there. Have a great day, Everyone!

How I Keep My Utility Expenses Low

I’m sure there are some energy company buildings in there. Image courtesy of Jean-Marc Buytaert

Happy Monday! I hope everyone had a great Thanksgiving break and filled it with happier and less stressful activities than work. Today, I’m going to tell you how I keep my utility expenses down. Over 2017 and 2018, I spent an average of $1100 a year on utilities. While I spent 2017 living in a three bedroom house in frigid Wisconsin, in 2018, I enjoyed the advantage of living in a 700 square foot, one bedroom apartment. My cost per year in my current situation is closer to $600. If you have a 2500 square foot house, you’re obviously going to be spending more than I do. So that is actually the first example of how I keep this expense down – I simply have less space.

First, let’s address one other advantage I have today that many households do not: choice. In most places I’ve lived, there is one utility company in town and they raise rates with impunity every chance they get. Not so in Houston, the energy capital of the world. While I believe there are only two electric companies here, there are almost countless service providers to choose from. And each of them has multiple plan options. There are plans that are oriented to save money for all different levels of use. The key is that you have to figure out how much you use, do the math, choose the best plan, and then repeat the process and switch at the end of the term when your rates would otherwise be raised through the roof. Living in Houston, it is possible to keep your electric bill under $100, or often even $50, at almost any reasonable level of use. And since the weather is good enough that I’m often still using the AC in December, there really isn’t much need for natural gas. So in many cases, all you have are the electric bill and the water bill (usually about $30 a month in my case).

But in spite of the seemingly infinite population living in Houston, most people do not, in fact, live here. What can you do if you don’t? Use less. There are a million tips out there on how to reduce your electricity and natural gas consumption so I won’t go into too many here, but in general, your biggest electricity hogs are your refrigerator and whatever is connected to your thermostat. So optimizing those items will probably be the best place to start. You can adjust the temperature of your refrigerator and freezer to find the best balance between spending a fortune and having food go bad (I never really had a problem when I tried it). Programmable thermostats are great, but the most effective method for battling that thermostat is resilience in the face of slightly uncomfortable temperatures.

From there, you may want to try something like the Kill-A-Watt Electricity Use Monitor. If nothing else, it will get you thinking about electricity use and give you a better understanding of which types of devices use a lot and which don’t. As for water, you can get low flow faucets, toilets, showerheads, etc, that will help cut down on use. But usually this is a fairly cheap bill.

Saving on utilities isn’t anything groundbreaking – it’s mostly all about use. Choosing a modest housing option in the first place is a huge part of it. From there, investing a little bit of thought into what you’re doing goes a long way. To be honest, this would have been a much better post years ago, when I was paying over $100 a month total and that was still on the low end for my area. Utility costs are so low in Houston that I’ve had the luxury of getting lazy and have nearly forgotten most of the measures I used to use to keep them that way.

How I Keep My Technology Expenses Super Low

Even my very basic setup results in this mess of cords behind my tv. Bonus points if you can spot the rabbit ear antenna I pull out on Sundays, which allows me to see the games in HD (on Saturdays I typically watch the Badgers let us down as always with the local alumni association).

Happy Monday, Folks! This is yet another post in my annual expense series. I’m sorry it’s been a little boring, but we’re nearly through! And hopefully I’ve helped you save at least some money. Today I’m going to tell you how I keep my technology expenses much lower than most people and still get everything I need. I’ve already written posts that address this, so this will be a quick one as a good portion of the information is already available at the links I will provide. Over 2017 and 2018, I averaged $500 a year on technology services. I believe a bare minimum number could be as low as $350 a year if you were trying to save every penny.

Step one is simple. I don’t have cable and I don’t recommend it for anyone. Instead, if I were the type who watched tv much outside of football season, I would simply figure out which streaming services had the shows I liked and subscribe only to those, only when those shows were on. Or just use Kodi. But I didn’t say that… So anyway, the only technology services I need are internet and cell phone.

For internet, I use whichever option is cheapest. The dirty little secret of this industry (at least the one most relevant to saving money) is that you need a hell of a lot less bandwith than most people think. Unless you’re streaming video on multiple devices in your home consistently, 20 or so Mbps is plenty. Even then you could get by with it. Those 100+ plans are the internet equivalent to driving a Ferrari on a road where the speed limit is 65 anyway. Last year, I was paying about $40 a month for AT&T. The year before that, I was paying $15 a month for a very minimalist Charter (formerly Time Warner) plan in Wisconsin. This year, I’m paying $30 a month for Comcast Xfinity. I do have my own router and modem, which I spent about $100 total on and should last several years. AT&T provided their own unit and while they didn’t come out and say they were charging rent, their service was about $10 more per month than Xfinity, which means they probably were. But since they didn’t separate that out on the bill, there was also no option to not have it. However, I was able to negotiate $200 in Visa gift cards up front, which made the difference for me and got me to sign up for a year. What do I do when the “promotional pricing” period ends? This. I don’t EVER reward the shenanigans that seem to be standard practice in this industry by paying more.

That leaves cell phone service. Everyone offers unlimited talk and text for basically nothing now, knowing that data is the choke point. So how do I slay the data demon and ultimately spend so little? I know how much I actually use (very little when not on WiFi, which is almost everywhere now) and I use services that provide minimal amounts for minimal money. Previously, and for all of the years 2017 and 2018, which the average above was calculated on, I had been using Republic Wireless. But when their new pricing scheme came out, it effectively doubled the price for a minimal user like me. So I switched to Mint Mobile when I got a new phone and would have had to start participating in that pricing scheme. Either service is a much better option than the contract carriers for most people and I’ve had zero issues with either. The key is taking the time to figure out how much data you actually need. For most people, it is actually a lot less than you think once you factor in that most of it is on WiFi.

That’s it – everything you need to know to pay a small fraction of what most people do for technology and still get everything you need.   

A Few More Expenses – Unremarkable, But Still Savings Opportunities

Even airplanes need roadside assistance sometimes. In this case, another student had left the master switch on and the battery was dead. As a result, the maintenance guys had to tow the plane over to the battery machine so they could jump it for us.

I haven’t done an annual expense post in a while and the year is quickly winding down, so I need to get back on track. The next three expense categories on the list, Memberships, Other, and Supplements, are pretty uninvolved, so I’ve decided to combine them into a single post. Over 2017 and 2018, I averaged $300, $2400, and $100 in these categories, respectively.

Of the $300 I averaged on memberships, roughly $180 a year went to my gym membership. It’s a 24 Hour Fitness membership I got from Costco. They usually sell a two year membership for $400, but it occasionally goes on sale for $360. And that’s when I pulled the trigger. As a bonus, based on my research, it appears that once my membership expires, I’ll be able to repeat the feat. The offer is only for people who are not current members at 24 Hour Fitness. However, according to many forum posts, you can attain that “not a current member” status in a single day. I will certainly give it a try once my membership expires next year. 24 Hour Fitness isn’t the nicest gym I’ve ever used. Many of the locations aren’t all that clean or well kept up. Don’t get me wrong; they’re not terrible. I’d say they’re squarely mediocre. However, they are cheap, they have all the necessary equipment, and they have tons of locations all over in Houston, Dallas, and San Antonio – a huge value to me given my frequent traveling. 24 Hour Fitness also has locations in many other states so I recommend checking them out if you’re looking for a cheap, decent gym with many locations.

The remaining $120 a year was split evenly between my AAA membership and my Costco membership. AAA seems to be a pretty decent company and as someone who travels by car a lot, I’m likely to need the service eventually. When I do, based on my research, I expect to save a significant amount of money on one roadside service or another. Even if I don’t, I appreciate having some peace of mind. I have this instead of a similar service through an insurance company because I don’t trust insurance companies and like most people, my premiums are high enough already. Maybe using the service wouldn’t be treated as a claim and everything would be fine. But I wouldn’t want to bet on that with an industry that is well known for both jacking up premiums and screwing its customers at every possible opportunity. I tend to be a little cynical for sure, but I haven’t found many more crooked industries than insurance and will do whatever I can to avoid letting it take advantage of me even more than it already has, and still does. AAA has been around a long time and has a pretty decent reputation. That’s enough for me until my experiences indicate I should change my view.

As for the Costco membership, I’ve written about my favorite store many times on this blog – in fact, it saved me money in both of the other categories in this post and no, that was not intended. I would estimate that the $60 membership pays for itself at least half a dozen times per year. It is actually likely more than that. It would be difficult to overstate the value here.

I avoid putting expenses into the Other category if I can, opting instead to add more specific categories as necessary. When I do use it, it’s for something I don’t expect to do often. In the case of 2017 and 2018, I made a cross country move from Wisconsin to Houston, Texas. My employer generously paid for most of it. However, as part of the process of recovering psychologically from my 2016 divorce, I decided to get rid of almost everything I owned and replace it once here in Texas. It wouldn’t have been right to ask my employer to pay for that since it was voluntary, although they would have if I had. It wound up costing me about $4800, mostly on some middle of the road quality furniture, resulting in an average of $2400 over the last two years.

As for supplements, I don’t use many at this point in my life, although I’ve used almost all of them over the years. So this category used to be a much bigger one. Today, the vast majority of this spending is on protein powder. And I’ve been using less and less of that in favor of ingesting as many calories as possible in real food form. The protein powder I do buy, unsurprisingly, comes from Costco. Their deals are normally pretty competitive, but if you wait for their sale prices and then stock up, you will blow any other options out of the water. And this is coming from a guy who has bought almost every supplement and checked out almost every possible option over time.

That’s it for today. Yes, it was kind of a mundane post. But even here, there is plenty of potential savings if you happen to be overspending in these categories. As usual, I get everything I want, rarely compromise on quality, and pay as little as possible. Overall, it works out to approximately an upper middle class lifestyle for the cost of a lower middle class one. Have a great week!

What I Do About Medical Expenses

I’m going to reuse this picture because I can’t think of a better way to caption “What I Do About Medical Expenses.”

Happy Tuesday, folks! I hope you enjoyed your Labor Day. As for me, I made a point of NOT laboring and instead, I enjoyed some relaxation time. I’ve been going very hard lately so I was due for some. Anyway, today I’m going to talk about medical expenses. Over 2017 and 2018, I spent an average of $900 in this category. Keep in mind that I don’t include health insurance in this number since I already accounted for it in my insurance category. Most of the spending that brought that average up was in 2018 when I spent months in physical therapy working through a herniated disc in my back. I’m very lucky to have good insurance, but that $50 copay per appointment still added up over time. I also sprained my ankle, making it a very unlucky health year for me. I’ve decided to write this particular post in list form for a change of pace. So here are my tips for saving on medical expenses, in no particular order (although the first one is definitely the most important and you can probably already guess what it is).

  • “An ounce of prevention is worth a pound of cure.”

There is no better way to save on medical expenses than to avoid getting sick. This means investing time, effort, and occasionally money consistently. There is a reason this is one of the first posts I wrote on this blog. In a good year, I spend little or nothing in this potentially very dangerous category. And that is no accident.

  • Understand how your insurance and the medical billing system works and mitigate things as much as possible.

Learn about how deductibles, copays, out of pocket max, etc operate and pay attention to them. Occasionally you can do yourself a favor here. For example, if you need something done and the timing is flexible, you haven’t met your deductible yet this year, and you’re close to the end of the year, wait until next year. That way, you’re giving yourself a better chance to meet next year’s deductible rather than simply throwing the spending away on this year’s, which you won’t meet anyway.

Make sure you know something is covered BEFORE you get the service done. As a young lad of nineteen, I had my wisdom teeth removed, foolishly assuming my insurance would cover it. Later, when a bill for a few thousand dollars showed up, I ultimately learned that it did not – at least not in the particular way I had it done. I don’t remember the details now. But as a kid that age, that was a tough financial hit. More on that later.

Also, understand that medical billing is a very inexact science and that it’s done by humans, who do make mistakes. Pay attention to what’s on your bill and if something doesn’t look right, call and find out what’s going on. You will definitely encounter some of the “it’s them, not us” game between doctor’s offices and your health insurer, but every now and again, you can get something resolved and avoid paying for something you shouldn’t have to. Plus, in the process, you will gain a valuable understanding of a system that intimidates a ton of people.

  • Use your life experience to your advantage and apply what I call the 1-2 week rule.

Back in the days when insurance that covered basically everything was commonplace, I would go to the doctor for basically anything that came up – a minor rash, a cold that lasted a little longer than usual, a strange pain in my knee, etc. But somewhere along the line, I noticed a pattern. More often than not, the outcome seemed to be “give it a week or two and come back if it hasn’t improved.” And those doctors usually knew what they were doing since in most cases, no return visit was necessary. Fast forward to today, when many people have to pay at least $25 for an office visit and some have to pay the entire cost, and my approach has evolved. As long as something doesn’t seem serious (I use a combination of feel, past experience, and Dr Google to make that determination), I just self impose that week or two. Whatever the issue is, it almost always goes away – no copay necessary.

  • If you don’t have insurance, there are work arounds.

Most service providers have a cash price, and if you don’t have insurance, you should ask for it. From what I’ve heard, there is some leeway, especially if you’re going to pay up front. And here is a gem on the prescription side: www.goodrx.com. If you’re not familiar with it, give it a try and thank me later. I have no clue how it works, but somehow it does. I’ve even successfully used it when I had minimalist insurance through a very cheap employer that had a deductible on prescription coverage. One other thing. Remember my wisdom teeth mishap from earlier? I didn’t have a few thousand bucks laying around back then. But the doctor’s office was happy to set up a payment plan for me and six painful months later, the lesson had been paid for in full. They didn’t even charge interest, which I thought was very decent of them. From what I’ve heard, this willingness to set up no cost payment plans is common practice.

  • As usual, Costco can help.

If you haven’t heard, Costco’s Kirkland Signature brand is both awesome and incredibly cheap. Since moving to Texas, I suddenly have allergy issues in the spring and the fall. It’s just one of those things. But their nasal spray works wonders for me – and costs about the same for five bottles (enough to get me through probably a decade or so) as the name brand does for one. And this is just one of many, many examples. I would go so far as to say that area of the store is the most underrated of all. Oh. And with most regular household stuff like ibuprofen or that allergy medication I just mentioned, you can pretty much ignore the expiration dates. Sure, the effectiveness may go down slightly over time, but not to a noticeable degree in my experience. I have an entire bathroom closet full of expired stuff that always gets the job done when needed.

There is only one magic bullet with medical expenses: prevention. And it isn’t actually magic; it requires work and discipline. Beyond that, anything else is going to cost money. But there are ways to keep things from getting out of hand. Hopefully there is an idea or two in this post that will help you. I hope your short week is off to a great start and I’ll be back with my regularly scheduled Wednesday post tomorrow.

My Best Efforts to Keep the Insurance Industry From Robbing Me Blind

This expense is one dragon even I cannot slay.

Happy Monday, ya’ll! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $3000 per year on insurance. To be honest, this category makes me sick since I don’t like betting against myself and have literally never received even close to what I’ve paid in premiums. Not one single year. There is a lot to discuss on this since it includes three subcategories: auto, homeowner/renter, and health/dental. And it is a highly variable expense category since insurance is based on personal factors. But I believe a minimal annual expense would be about $2000. And this is a great topic to go into since my annual auto/renter policy renews in early October and I’m going to be shopping around to try to get just a little bit closer to a reasonable amount – if that is even possible anymore.

I’ll start with health insurance since it is the most important. I’m very fortunate to have a solid plan through my employer that has a very low required contribution of less than $1000 total per year – and that’s pretax. Our dental insurance is less generous and as a result, I even went without it one year. But dentist appointments seem to be much more expensive than they are in the Midwest – about $300 on average versus about half that – so I got back on it. Anyway, admittedly, my minimum annual insurance number above requires an employee friendly setup because if I didn’t have that, it appears I would be paying about $4k total per year for fairly minimal individual health coverage. However, I would then have the advantage of being eligible to contribute to an HSA (health savings account), assuming I chose the right plan. An HSA is the add on you want. A FSA (flexible spending account) is only useful for those who have medical expenses that are both high AND predictable. Unlike an HSA, which is basically a bank account you own (but can only use for medical expenses), a FSA is a tax advantaged, but “use it or lose it” account. So only contribute what you KNOW you will spend or you could easily lose money instead of saving any.

The key with health insurance is really to stay as healthy as possible. It’s not going to be cheap no matter what you do, but if you have high medical costs, it’s going to be a lot worse. This is one of the reasons I said investing in your health is the best investment you could possibly make in one of my very first posts on this blog. This is also one of those areas where you’re going to pay through the nose for having kids, but that’s a whole other topic. Long story short on health insurance, go through your employer if they offer a decent plan and live the healthiest life you can so you can use it as little as possible. Frankly, if this industry doesn’t see dramatic changes over the next decade or so, this country is going to be bankrupt. So I don’t know how in depth it even pays to go into this. It is simply going to be a moving target for a while.

On auto insurance, I’m paying a bit over $1500 a year for a single vehicle, which makes me sick given that I paid just over half that much for two in Wisconsin (and not much more than that for three when I was married). But you only have to spend a day on Houston’s roads to see that the drivers here more than justify that difference. Dallas, San Antonio, and Austin haven’t been much better in my experience, so it’s possible that sky high insurance costs are simply a Texas thing and a well justified one at that. Anyway, nearly half of that is for collision, which you should only have if your vehicle is objectively worth at least $10k in my opinion, and the rest is for liability, comprehensive, and so forth. I have a 100/300 policy and I’m actually likely to increase that and add umbrella coverage in the near future since as my net worth skyrockets, so does my potential loss if I somehow hit one of these aristocrats who drive $400k Bentleys in an area with roads that are about one step above a war zone. And it wouldn’t even need to be a car that expensive. Sending someone to the hospital could cost far more than that very quickly, especially if they sue. And if it’s major, that’s probably more likely than not. It’s a calculation you need to make for yourself. If the vast majority of your assets are in retirement assets, which are typically protected in the event of bankruptcy, then you can probably afford to gamble a little by having the state minimum level of required liability coverage. However, if the opposite is true, then you’re probably going to have to pay for higher coverage limits as I do and be thankful that it’s necessary.

As far as saving on auto insurance, there are at least some things you can do. First and foremost, have good credit and a clean driving record. If you get a ticket, fight it. The ticket itself may only cost a hundred or two, but the increased insurance premiums could cost more than that on an annual basis for five years or more. Some states are better than others for this. I know people in states where they’ve been able to lawyer up and get out of anything and everything up to and including alcohol related stuff. In other states, it’s not even worth trying. Do your research and find out which your state is and act accordingly.

Definitely shop around with your policy. The rule of thumb is to do it every other year, but with as much as I’m paying, I’m doing it every single year until further notice. Loyalty definitely doesn’t seem to be rewarded at all as most insurers raise your rates each and every year now. About the only exception I’m aware of is USAA. If you are eligible to do business with them, thank your lucky stars and do so! I’ve heard nothing but good things. I’ve also heard good things about Amica, although every time I’ve gotten a quote from them it’s been way out of the ballpark so who knows. But most insurance companies are the same basic “charge sky high premiums, then forget your wallet when it comes time to pay the bill” scams operations.

At least by shopping around, you know you’re not getting totally screwed. Ask for the longest term you can get (usually it’s either a year or six months) since if you don’t, you’re effectively financing your annual premium and the interest rate is not low. Also, you can raise your deductibles to the max. Usually it’s only $1000 though, which limits the premium difference it makes. My attitude is that most accidents involve replacing a bumper, which is going to cost about $1000. I’m not going to make a claim and send my premiums into the stratosphere so the insurance company will hem and haw and finally grudgingly pay out five hundred bucks. No thanks. So I’d be paying the first thousand regardless in the event of a serious accident.

That’s another thing to keep in mind with insurance. Don’t make a claim if you don’t have to. Much like with buying extended warranties, you are extremely unlikely to come out ahead in the long run. If you do, you’re one of the lucky (although also extremely unlucky in another way of thinking) few. Think about it. If the insurance company (and warranties are sold by them as well) pays out more than it takes in, it goes out of business. So in most cases, you’re going to have to fight for every dollar. If the scope of the situation gets big, make sure the insurance company knows you will involve an attorney if you need to. And don’t be afraid to follow through with that either. Someone needs to keep the bastards honest. 

I saved the least important type of insurance for last, at least if you’re a renter. Most renters insurance I’ve ever had has included roughly $30k for personal property, which is enough for almost any apartment dweller, and has cost about a hundred bucks a year – yes, even in the insurance hell that is Houston. Usually I just get it as an add on with whatever auto insurance company I’m going with that year. Of course, it is much more significant if you are getting homeowners insurance since you’re insuring the exterior of the building as well. And if you live in a hurricane area like Houston, suck it up and pay for the flood insurance. In case you haven’t been paying attention for many years now, new storms “make history” on a very regular basis. Don’t assume you are safe just because the flooding didn’t reach your area in the past. People have literally lost their homes for doing exactly that.

If it hasn’t come through in the tone of this post, I fucking hate insurance. It is one of the only industries besides politics that makes finance look ethically upstanding. I get that there are problem customers like in anything else, but for the vast majority of us, this is going to amount to decades and decades of donating money to for profit entities. But if you keep an eye on them, both when making sure you’re paying a competitive premium, and when actually making claims, you can at least keep the bleeding from turning into hemorrhaging.

Don’t Be House Poor: How to Tame Housing Expenses

This is what a normally beautiful resort style pool area looks like when it floods during hurricane season. But one advantage of renting is that I didn’t have to lift a finger; the mess was cleaned up automatically.

Happy Monday, ya’ll! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $12,600 per year on my housing expenses. Please note that this only includes rent – not utilities, maintenance (I pay zero since I rent), or any other associated expenses. And that is actually trending upwards. This is the largest annual expense for most people and I’ve made tons of financial progress over the years by being very conservative with it. I still am in some ways, but I’ve definitely moved a significant distance along the cost/quality spectrum in 2018 and 2019.

What does that look like? For the last two years, I’ve lived in what I’d call medium-high end luxury apartment complexes. But I’ve also had one bedroom apartments, as much to maintain the more minimalist lifestyle I’ve learned I prefer as it is to save money. It’s hard to buy too much crap you don’t need when you only have 700 square feet to put it in. So I avoid clutter but also get to enjoy premium features in my unit, beautiful landscaping, great amenities, and a safe, quiet location. But even in the relatively reasonable Houston market, I’m spending more than I was in most of 2017 in the Milwaukee suburbs, which skewed the average down.

This year, I’ll have spent over $15k when all is said and done. I’ve allowed this form of lifestyle inflation to happen because I genuinely enjoy where I’m living and because it is still at an extremely manageable level relative to my total income. The conventional wisdom is to spend a maximum of 30% of your gross income on rent. My preference is no more than 10%, and grudgingly 15% if you’re paying a mortgage instead of renting (more on that later). I acknowledge this would be much more difficult with an income at or below the average range. But there are ways to do it, and without compromising on essentials like safety. And that is why I said I believe this expense can be reasonably kept to $6-10k.

How? For starters, by viewing things from a more traditional perspective. As individuals in today’s world, we are more isolated than at any previous time in the short history of our species. Only a few generations ago, someone living alone as I do was not only fairly rare, but seen as pretty unfortunate and even embarrassing. I think humanity has lost a lot in the process of abandoning our collectivist roots. And I say that as a man you can probably correctly guess is a pretty strong fiscal conservative. Long story short, live with someone. It requires careful relationship management, particularly if you choose to live with a romantic partner, but it can be done. I believe there are likely psychological advantages, even for someone like me who doesn’t need to do things that way for financial reasons. And with two (or more) people kicking in, it’s pretty easy to keep your annual rent expense below $10k in all but the most ridiculous markets, like New York City or San Francisco.

From there, follow the same process I always talk about. Think about what your needs truly are. If you don’t have a fancy car, you probably don’t need to pay more for a place with a garage. If you aren’t going to use a fancy resort style pool area, a gym, a spa, etc, very often, don’t rent somewhere where you’re paying for those things. If you want to be a hardcore personal finance warrior like the legendary MMM, consider paying more to be close enough to work to walk, bike, etc, and see if you can cut car ownership, the second largest expense for most people, out of your life entirely for a year or two. If you don’t care about hardwood floors and granite countertops, well, I think you get the idea.

What if you own your home instead of renting? Theoretically, it should be cheaper then, since with renting you’re paying for someone else to do all the maintenance as well as to have the option to leave on short notice. But in the reality of today’s hyper-inflated housing market, that’s often not the case. So my first advice in this area is not to buy something overpriced. Mark my words, eventually, even the mighty US housing market is going to get a dose of painful reality. Those who have been patient will be the beneficiaries when it finally happens. However, there is an argument for building equity (just don’t overestimate this factor or try to have any financial discussion whatsoever with your average real estate agent, who is desperate enough to say anything and knows/cares very little about economics or your financial well being), having a more permanent situation, fewer neighbors in close proximity, etc. So to allow for that value, which is certainly real in some cases, I would sign off on paying up to 15% of your income on a mortgage – preferably with a twenty year max term so you aren’t paying a fortune in interest or buying way more than you can truly afford. If you can’t do that, buy a less expensive house, rent another year, or look into renting out a room in the house. There are always options; never forget that.

Keeping your housing expenses well in check really only requires thinking a little bit outside of the box. Just because other people do things a certain way, that doesn’t mean you have to follow suit. There are way, way too many people out there who are “house poor” – in other words, their finances are unnecessarily constrained because they are paying way too much for their residence. P.S. If you want to live in Silicon Valley, ask yourself if you can get a job there that will pay you several times what a job in a reasonable housing market will. Keep in mind that the higher the income, the greater the diminishing return effect due to higher marginal tax rates. And spoiler alert, unless you’re a CEO or something pretty close to that, and you couldn’t get that kind of job anywhere else, the answer is going to be no.

What I Spend On Household Expenses and How I Do It

A boring picture for a boring topic, but anyway, one of the microfiber towels I mentioned can almost always be found on my kitchen counter

Happy Monday, everyone! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $700 per year on household expenses. For me, this category includes supplies that get used up like paper towels and toothpaste but it also includes items I use around the house that will be around a while but aren’t expensive enough to be considered long term assets. Examples would be small tools or a coffee maker. I think I could keep this category at around $300 a year if I were really careful about it. There isn’t any huge secret to saving money in this category. Just buy quality when it makes sense, cheap stuff when it doesn’t matter, combine those two when possible, and don’t be wasteful.

When I bought that coffee maker, I bought a nice, but very affordable stainless steel setup that will likely last me a long time. Before that, I had a simple, but effective $20 Mr Coffee version that may have outlasted me if I hadn’t given it away. Do your research before you buy. With coffee makers, for example, it really doesn’t pay to spend a ton of money on a complex, fancy machine, because the longevity tends to be terrible. On the other hand, you definitely get what you pay for with pots and pans and a high quality set will work much better and last you much longer than a cheap one. Note, I said high quality, not high priced. Spending more will typically get you better quality, but there is a diminishing return effect at a certain point. A little bit of research will show you where that point is.

Buying in bulk helps a lot with consumables. I’m a huge Costco fan and it doesn’t matter one bit that I’m a one man household. Paper towels, dish soap, toothpaste, deodorant, and tons of other items aren’t going to go bad before I can use them and I probably save hundreds of dollars a year buying them in bulk at Costco. Of course, Costco isn’t just for buying in bulk and I’ve talked a lot about that on this blog previously.

What’s better than buying in bulk? How about not buying at all? A package of microfiber towels probably costs about the same as a bulk package of paper towels and can do almost all the same things. But the difference is that when the job is done, the microfiber towels can be washed and reused. I haven’t bought any more paper towels since I learned that trick since I rarely even use them anymore. And there are probably other ways that concept can be applied that I haven’t even thought of.   

Finally, pay attention to what you’re doing. Little things add up over the course of a year. Soap is a great example. You don’t need to come anywhere close to filling the designated soap hole (Is there a name for that? I even googled it and couldn’t find anything) in a dishwasher all the way up for your dishes to get clean. Maybe 10-20% max is plenty. Right there, you could spend 5-10 times what is necessary on dishwasher soap and get absolutely nothing additional for it. Same goes for laundry detergent. Remember who puts the lines on the cap and how often they would like to have you coming back to buy more of their product. Healthy hair doesn’t need to be washed every day or anywhere close. Are you noticing the trend here? Figuring out the difference between necessity and convention with everything in your house can amount to a lot of money saved, particularly if more than one person lives in it.

This is kind of a boring category, but if you optimize it, you can still find ways to save hundreds of dollars per year versus if you don’t. And that is a quick description of how I keep my household expenses under control. Have a great week, ya’ll!

How Much I Spend on Gifts and How I Do It

A recent gift I bought myself to celebrate not having been fired – a giant chocolate Costco cake meant to feed about 27 people that mostly fed only one…

Happy Monday, everyone! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $1200 on gifts. Of course, the bare minimum spending in this category would be nothing at all and a reasonable minimum would be maybe $200. But this is one of those areas that I’ve let get out of hand on purpose because I believe it gives me a very good happiness return on my dollar. Some of what I do in this area is pretty traditional and some of it is a little different.

I do give out birthday gifts to the people I’m close to. But those usually aren’t anything crazy – maybe $50 or so. And I’ve actually moved in the direction of taking people out to their favorite restaurants, activities, etc, more than giving out gifts for those occasions now. The other routine time I give out gifts is at Christmas – also pretty typical. But I’d say I spend no more than a total of $500 a year on those two types of gifts. And sure, every now and again I get invited to a wedding. My standard gift is $100 and while I do not bring dates to these things because it tends to give them the wrong idea about how seriously I’m taking things, if I did, my gift would be $200 instead. And if it were someone really close to me, it would be significantly more. But I don’t get invited to all that many weddings. And no, I’m not complaining about that.

Where do I spend the rest? Sometimes I like to surprise people with random things out of the blue. A girl I was dating for a while had a car with steel wheels and those horrible plastic hub caps and at some point, she lost one of them. So one day, I made a replacement appear. One of my favorite coworkers says a certain phrase in a hilarious way all the time so one day I bought her a coffee mug with that printed on it and had it sent to her. I find that these types of gifts, while not very expensive, tend to really brighten the recipient’s day. It’s nice to know someone was thinking of you even though it wasn’t a special occasion.

My favorite types of gifts to give out are also spontaneous, but often more expensive. Every now and again, something crappy happens to someone I care about. Maybe someone with a family to feed winds up in the hospital and I’m able to pay a few bills for him since he hasn’t been able to work and money will probably be tight for a while. Or maybe some asshole hits a friend’s parked car without doing the right thing, causing damage that falls right into that sweet spot the insurance industry has calculated so carefully – you know, expensive enough that a claim could be filed (likely resulting in a hefty premium increase), but barely above the deductible so that very little would actually be paid out. Most people are savvy enough to not make a claim in that situation by now, particularly with insurance premiums being as ridiculous as they are. But a lot of people also don’t have a grand or so laying around to replace a bumper, which means the damage goes unfixed. But I do. And if I can right that wrong for someone, it can go a long way to restoring a little faith in humanity – even if I have precious little of that myself.

The key with this kind of gift, however, is creativity. You see, I only do these kinds of things for people who would never let me if I asked. So often, this involves getting others close to these people involved. But if it’s possible to do these things totally anonymously, those are my favorite gift giving opportunities of all. Because the most important element of any gift isn’t being thanked for it; it’s making someone else’s life just a little bit better. And that tends to be infectious. And that’s why I don’t police this spending category too much.

How Much I Spend on Gas and Some Ways to Spend Less

Even in the land of gas guzzling, we still have different degrees. Image courtesy of Jean-Marc Buytaert

Happy Monday, everyone! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $2800 on gas. This is largely because I drive a ton for work and for my other business activities. However, if I drove a typical number of miles in a year, I believe I could reasonably cut this expense down to about $1200. Are you spending more than that? Here are some ways you can improve the situation, form most effective to least.

1. Drive a fuel efficient vehicle.

Yes, this one is pretty obvious. But it’s the biggest reason most people overspend on gas. How many pickup truck owners do you know who do almost nothing but drive to work in them? How many SUV owners do you know who rarely have more than one or two passengers? These people are spending a fortune owning these vehicles – in many more ways than simply filling their gas tanks. I’ve been without my truck for almost two years now and guess what? I’ve managed to find ways to get by without it in most cases and when that hasn’t been possible, well, that’s why Uhaul and their ilk exist. Even some home improvement stores have trucks available to rent now. Renting a truck even ten times a year is much, much cheaper than owning one. So my advice is to think long and hard about why you’re driving what you are and whether you really need a vehicle that size. If you can’t get at least 30mpg on the highway and there isn’t a very good, consistent reason for it, you’re wasting a lot of money. In my case, I get roughly 30mpg on AVERAGE and drive a car with just shy of 300hp. Automotive technology has come a long way and compromise isn’t nearly as painful as it was years ago.

2. Keep your driving miles down.

There are lots of ways to do this. Carpool, combine multiple trips into single ones with multiple stops, skip going to things you didn’t really want to do anyway, etc.

3. Maintain your vehicle appropriately.

There is a good chance a poorly maintained vehicle will get correspondingly poor gas mileage. This is one way that a fair portion of your maintenance costs will literally pay for themselves. And that’s not to mention the money you’ll save in depreciation since a car that’s maintained ages more gracefully and is worth more money. Here is a post I wrote about basic vehicle maintenance.

4. Drive gently. If you’re adventurous, try some hypermiling techniques.

I’m not going to go into the extreme stuff here, although you should know there are people who can get literally double the EPA rating out of some cars. You can improve your gas mileage quite a bit just by accelerating gently, maintaining a good following distance, minimizing brake use (which is strongly related to following distance), etc. Driving your car like you’re on an imaginary race track isn’t going to save you much time anyway since you will still have to deal with the same (often horribly timed) stoplights and idiots going the speed limit in the left lane that everyone else does. And besides, any time saved will get eaten up pretty quickly when some revenue generator asshole traffic cop lights you up or you get into an accident. Driving aggressively really isn’t worth it and it has a devastating effect on your gas mileage.  

5. Buy the cheapest gas you can find.

I wrote a post with some more tips about this recently so check it out here if you missed it. Gas is the ultimate commodity item and yes, provided you’re doing an apples to apples comparison in terms of octane rating, it’s the same no matter what station you buy it from. I can’t believe how many people swear by the opposite. If you don’t believe me, drive by your local distribution center (likely in the middle of nowhere) and check out how many different logos are on the sides of the tankers – which are all lined up to be loaded with the EXACT SAME GAS.

6. Use credit card rewards to your advantage.

There are multiple credit cards that pay 3% on gas. Additionally, “category cards” like Chase Freedom occasionally pay 5%. This is free money, people. But if you don’t want it, no problem. That’s just more for me.

7. Go to your furthest away destination first.

While you’re planning your multiple errand trip after reading point number two above, consider this. Cars run most efficiently when they’re fully warmed up and this takes some time, depending on your climate. This is why if you live in a place with hellish winters, your winter gas mileage is substantially worse than in the summer time; it takes cars longer to warm up. Anyway, if you drive to your first destination a few miles away, then a few more miles, then a few more, etc, and turn your car off each time, it may never get fully warmed up and you may be losing tons of gas mileage. Contrast this with driving twenty miles to the furthest destination, completely warming up your engine in the process, then making your way back towards home. You want to be driving the highest possible percentage of your miles with your car running as efficiently as possible. Another way to plan out your trips is to avoid rush hour like the plague. Stop and go driving is bad for both your gas mileage and your car’s longevity. Few of us live in a perfect world, but most of us still have some options available that can make a big difference with things like this.

8. Regardless of climate, DO NOT leave your car “warming up” in your driveway.

I don’t know what they were doing thirty years ago because I’m not that damn old. But I do know that today’s cars are designed to run right away and also that idling is bad for them and should be kept to a minimum. I know it gets inhumanely cold in some places – for example, Wisconsin. But if you punish your car for that by leaving it sitting idling, you’re going to take a ton of life out of it in the long term and waste a ton of gas in the short.