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.

How Much I Spend on Fun Activities and How I Do It

A picture from a tour at St Arnold Brewing Company – the oldest craft brewery in Texas

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 $2100 on fun activities. This is really a category I could cut down as much as necessary if I had to. Like most of my spending categories, I don’t have a particular target in mind; I simply make sure that if I’m spending money on something, there is a good reason.

This category includes most of what I spend on dating. And the reason I’m able to spend so little in that normally very expensive area is that over the years, I’ve learned that trying to impress women by spending money has consistently gotten me exactly the opposite of the outcome I was looking for. Yes, I should have known this long before I did, but I had that same single mother upbringing that has proven so disastrous to a huge portion of my generation and it has taken a ton of constant, ongoing work to deprogram the many erroneous lessons I didn’t even realize I was learning over the years. I’m not trying to disparage the efforts of my mother or any other single mother, many of which are nothing short of Herculean. However, from my own life and from observing our society at large, it appears painfully obvious to me that a boy needs a strong, consistent father figure in his life and if there isn’t one, he is likely to make more than a few missteps in the process of figuring things out on his own. But that topic could be an entire series of posts all by itself. For now, I’ll just say that trying to buy your way into a woman’s heart (or into any other part of her) is not an effective method.

Anyway, if I want to have fun, I have fun. But here is the important point. In my life, almost everything has a purpose. So with the free time I have available, I want to enjoy myself but I also want to better myself in at least some way in the process. For example, a lot of my “fun” activities are physical activities like weight lifting, tennis, basketball, swimming, hiking, etc. Most of these benefit my health and fitness level, benefit my mind as I improve a skill set, and also happen to cost me little or no money. I also enjoy reading, cooking, volunteering, and learning to fix things like cars, electronics, plumbing, and so forth. I’ve found that personal growth is what makes me happy and thus, I tend to have fun while learning and increasing my capabilities in various areas. In general, if you can find ways to enjoy yourself while also creating value, you will be able to have fun without spending much money.

Even most social interaction doesn’t have to be expensive. Sure, I go out for drinks, to museums, and various other attractions like most people do. But those tend to be more special occasion activities and with most of my friends, our most common activities are hanging out, grilling, going to the beach, playing some pool, etc. We will occasionally have a roller coaster day that will cost us each a hundred bucks or so or go to a football game and drop more than that. But these are every now and again type activities and as a result, they are special treats when we do them. Contrast that with the people who spray money like a fire hose everywhere they go and then go home to worry about how they’re going to pay their bills. Are they having any more fun than my friends and I are? I doubt it.  Spending money can be required for particular activities, but it isn’t required for meaningful interaction. It’s all about deciding what is really important to you – the activity itself or the people you’re doing it with. If you have the right people involved, it really doesn’t matter what the activity is.

It’s important to have fun in your life. That I will not dispute. But spending a lot of money usually isn’t what gets you there. It’s all about figuring out what you truly enjoy and making that the focus. And if your focus is on spending money, you’re going to live a very stressful life because you can outspend absolutely any income. In my experience, stress is pretty near the opposite of fun.

What I Spend on Restaurants and How I Do It

A recent restaurant meal I had in a hotel bar on a rare trip to Los Angeles, CA

Happy July, everyone! This 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 $500 per year on restaurant meals. A lot of people really blow it financially in this area. I’m in a particularly fortunate situation, which is why my restaurant spending is exceptionally low. A reasonable amount to spend on restaurants could certainly be higher in most cases – maybe $1-2k a year or even more if one has the resources. But on a minimum budget, you would spend $0.

Why is my restaurant spending so low? I eat at restaurants for a living – often very nice ones. Wining and dining people is in the job description. So psychologically, I’m usually pretty restaurant-ed out and prefer to eat food I make at home – which is often as good or better than restaurant food anyway in my humble opinion. I do go out on dates and what not and in my imperfect system of recording spending, some of that winds up in this category and some in the “fun” category. But as you will learn next week, Monday, I don’t spend terribly excessively in that area either. Mostly, I live a fairly quiet, low key lifestyle since I get that stuff out of my system on someone else’s dime while I’m working.

But how would I keep restaurant spending reasonable if I didn’t have the job I have? The underlying mindset is the same as everywhere else; figure out what I actually enjoy about the experience, cut out the superfluous stuff, and keep everything moderate overall.

I come from a lower class background and even after eating hundreds of meals over the last few years at restaurants ranging from sandwich shops all the way up to high end steakhouses and seafood restaurants where the menu prices are in whole dollar amounts with many items sporting three figures, I haven’t quite gotten comfortable with the idea of someone else serving me. So that element is not primarily what I enjoy about restaurants, even though I can certainly appreciate that rare waiter or waitress who has taken the craft to the level of art. The parts I truly enjoy are delicious food and spending time with other people.

And as it turns out, neither of those requires going to a restaurant at all. Instead, whenever I can, I enjoy both of those things at home. That offers the bonuses of knowing exactly what is in my food and being able to optimize everything for nutritional value, cost, and personal taste. I’ve even learned to enjoy the process of preparing food; there is certainly a creativity to it if you’re doing it right. And while not everyone sees things this way, I take pride in my entertaining and I think cooking for a special someone amounts to sharing much more of myself than what I would by going to a restaurant with her.

Besides, the restaurant experience, like so many others in our historically rich society, has become so routine that it has lost much of what used to make it special. I believe eating in restaurants several times a week is unhealthy for us on multiple levels. So I probably only go to restaurants a handful of times a year outside of work. And when I do, it is usually an event. Even if I didn’t have the job I do, I probably wouldn’t go more than once or twice a month. So that’s my biggest tip to saving money at restaurants – learn to enjoy cooking for yourself and in the process, keep restaurant meals the special treat they really should be. And that doesn’t have to cost you a minute either. My repertoire includes time consuming recipes but also plenty that can be produced in no more time than would be spent waiting at a restaurant anyway. Sometimes I take the scenic route but a lot of times I take shortcuts. It gets easier with experience.

When you do go to a restaurant, there are certainly ways you can minimize the expense. First, keep the drinks to a minimum. It’s very easy to double a restaurant bill just by ordering a few drinks per person and in most cases, you are drinking the exact same thing you could have at home for 10-20% of the cost. Another technique is to be mindful of portion sizes. Most restaurant meals contain over half the calories a typical person needs to consume in an entire day. So appetizers really aren’t necessary and in fact, you should probably eat half the food you are served, or even less than that, and then save the rest to bring home and enjoy again later. If it’s a romantic evening, you may want to share an overpriced dessert. Otherwise, you almost certainly don’t need one at all.

I want to end with an important point. To a financially responsible person, restaurants are a luxury spending item. Please do not stiff the wait staff. Like it or not, here in the United States, the restaurant business model involves paying these people practically nothing – so they rely heavily on tips. If you can’t afford to tip (when and where appropriate, of course), you shouldn’t be eating at a restaurant at all in my opinion because in effect, you are not paying for the service portion of the experience. Imagine what it would be like if your employer left it up to customers to decide how much you got paid. I didn’t create the system, but I definitely don’t believe in screwing people over to save a buck, regardless of whether I agree with the way their employers operate. That is a great example of the difference between financially responsible (as I’ve mentioned, I hate the word “frugal”) and cheap.

Have a great week, folks!

What I Spend On Groceries and How I Do It

A recent meal of turkey lasagna, roasted squash, and green peas (I probably wound up having seconds on the lasagna)

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, check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $1700 per year on groceries and I believe I could spend a reasonable minimum of $1200 per year if I had to. This is one area that always blows me away when I read about what people typically spend on it. Supposedly the average is about $3000 per year, per person. Then again, the average American reportedly wastes about a pound of food per day, so that is part of the reason for such a high number. I do all I can to avoid EVER wasting food and probably throw away less than one item per month. But before I go any further, I do have to ‘fess up to one advantage. I eat three to five meals per week at restaurants in a typical week as part of my job, which saves me some food I would need to make at home. And actually, during 2017 I was traveling a lot more and probably ate twice that many meals. So admittedly, my spending would be higher if not for that. However, as a very physically active man, I also eat significantly more total calories than a typical person does and as a result, I believe things balance out to some degree.

As with most shopping, my grocery strategy begins at Costco. Yes, I am only a household of one. But there are still plenty of foods I am able to buy in bulk and consume quickly enough to avoid having them go bad. Some of the many items I can think of off the top of my head that I buy regularly include the mixed bags of organic spinach/kale/other stuff that tastes like grass clippings, tortillas, eggs, butter, cheese, coffee, olive oil, spices, boneless skinless chicken breasts, fish, and assorted frozen foods I can make once in a while when I’m feeling lazy. Absolutely every item I just listed is a great quality/price combination at Costco, with many of them being substantially cheaper than any competitor’s offerings. I don’t buy much produce at Costco, however. That doesn’t seem to be their strongest priced area.

If I don’t buy something at Costco, I go to HEB, a regional chain here in Texas that has solid selection and an “every day low pricing” model. When I lived in Wisconsin, there was a similarly excellent option called Woodman’s. Either way, I take the lazy approach of shopping at stores that offer the lowest prices most of the time rather than shopping at several different ones looking for sale prices that are occasionally a little bit lower. I know people who do things that way and there is certainly money to be saved, but I simply don’t have the time available to be able to execute that strategy.

At the grocery store, my focus is on buying mostly “raw materials,” which tend to be both the cheapest and the healthiest versions of foods. I buy the most in the produce section. Flexibility is key here. Everything has a peak season when it is plentiful and cheap and I plan my cooking around that to some extent. For example, when pineapples are less than $2, I buy them more often and sweeten up my green smoothies with them. And since lately avocados are about double what they are normally, I’ve been using them much less or skipping them altogether. After the produce section, I typically go to the meat section the next most, followed by the frozen section where I buy lots of frozen vegetables. These are a great value because they’re flash frozen almost immediately after being harvested, meaning they’re both fresh/nutritious and benefit from the economy of scale pricing that results from mass production. I do occasionally venture into the middle aisles, where the most processed food lives, but only for particular items when I need them, usually for a particular recipe.

In practice, this usually ends up being a couple trips to both Costco and HEB each week. If I’m just buying my regular stuff, I usually end up spending about $10-15 total on groceries each of these trips and $20-30 per week. Every now and again I stock up or buy special items for recipes and spend a little more. But I never feel like I have to deprive myself in any way to spend what I do on groceries. I guess the only caveat is that since I buy food mostly in raw, unprocessed form, I do spend a fair amount of time cooking. But since I enjoy doing that, and enjoy the results even more, I don’t really see that as a cost. That’s the advantage of learning to enjoy activities that happen to help you to live a better, healthier life and save money in the process.

Anyway, hopefully this gives someone an idea or two. Have a great Monday, Ya’ll!

What I Spend on Clothes and How I Do It

Here’s a fashion-y looking picture. – Image courtesy of Jean-Marc Buytaert

Hola! This is the third post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, check it out here. I plan to go into detail on every category with a post on one each Monday. Over 2017 and 2018, I spent an average of $700 per year on clothes and I believe I could spend a reasonable minimum of $100 per year if I had to.

Clothing is in a seemingly unique position amongst expense categories. That’s because there is so much of it in the world that even very poor countries have all they need and then some. So theoretically, you could spend next to nothing in this category. That would probably involve shopping at places like Goodwill or the Salvation Army. You might not get exactly the style or fit you wanted, but it would be adequate to serve the purpose of covering the areas of your body our overly puritanical society deems necessary to cover as you went about your day to day activities. I’d estimate that would cost about $100 per year, per person. But for just a little bit more than that “bare bones” budget, you can have your cake and eat it too.

I only buy high quality clothes that are always in style but not necessarily “fashionable.” My closet contains mostly polo shirts (mostly Ralph Lauren and Calvin Klein), long sleeved button shirts (both dress and casual), jeans, and khaki pants. I also have a handful of suits I almost never wear (if I did, I would probably go out and spend a grand or two on a couple of really nice ones to replace what I have and leave it at that) and five total pairs of shoes that give me every option I need. I also have some winter clothes in case I ever visit Wisconsin in the winter (that’s October through April, or sometimes May) again – which is very doubtful. I’m trying to be better about only buying clothes I love that fit exactly as I want them to and returning them if I decide I failed with a particular purchase.

Over the last couple of years, I’ve done more and more of my clothes shopping at Costco to the point where now it’s fairly rare for me to buy something anywhere else. I’ve mostly stopped buying Ralph Lauren stuff because I hate the “tennis tails” on their shirts, their quality control seems questionable (I have over a dozen of their shirts, all in the same size and in one of two styles, but they are a fairly wide range of lengths and fits), their stuff is overpriced unless bought at an extreme discount (which is, of course, the only way I ever bought it), and finally, I already have their polo shirts in almost every color I want and they last about a decade. These days most of my polo shirts come from Costco and are both high quality and cheap like almost everything else the store sells. That’s where I started buying the Calvin Klein ones for about $15-20 each. I also have some of the 32 Degree Cool brand which is great for southern weather, decent quality, and even cheaper. I buy all my socks, underwear, undershirts, etc there now. I even buy most of my shoes there – usually for $20-30 a pair. So far I have yet to be disappointed with any of this stuff.

I’ve just about finished my obligatory post divorce closet overhaul, which took about three years. So now I’m transitioning from that phase to a “one item in, one item out, upgrades only” phase I expect will last for the foreseeable future. As a result, my spending will likely decline to probably $2-300 a year or maybe even less. And again, these will be only high quality, great fitting purchases to replace either lower quality/worse fitting clothes or worn out ones.

I don’t really do anything revolutionary in this spending category but my spending is low and getting lower. I do acknowledge that things will almost certainly be more expensive for women. Not only are they judged more on their appearance than men are, but they have much more unique bodies, which makes getting clothes that fit well into a much more complicated process. Plus, their clothes are much less durable in most cases. But what can I say? If you want the fun of a sports car, you have to accept the realities of paying for premium gas, nearly constant repairs, high insurance premiums, etc, that all come with it. However, there are ways to moderate those costs and still have your fun – with both cars and women. The same general concept of buying more high quality, timeless styled clothes and less “fast fashion” or very outfit specific items would probably also help women. My ex-wife was pretty good at doing things that way and she certainly always kept herself looking good. And gentlemen, that is a very rare and valuable quality. Almost every woman I’ve dated since has spent much, much more to accomplish the same feat. But I feel like we’re blurring the lines between this topic and a totally different one. Anyway, have an awesome day, folks! Kick some ass out there!

What I Spend on Cash Donations and How I Do It

A bridge I encountered walking on a trail a while back – I don’t remember where exactly

Happy Monday, Everyone! This is the second post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, check it out here. I plan to go into detail on every category with a post on one each Monday. Over 2017 and 2018, I spent an average of $2100 on cash donations. In most areas of my financial life, I feel pretty comfortable that I know what I’m doing. But since I have only been relatively wealthy for a few years now, this is one area where I’m just getting started and as a result, I’m still figuring things out. For that reason, any feedback or suggestions would be greatly appreciated – even more than usual. So far, the money I’ve spent in this category has mostly gone to either charitable organizations or personal causes people had. I’m no expert on this yet but I have figured out a couple of things.

One, lots of charitable organizations are questionable at best in terms of the way they’re run and the percentage of funds that are actually put towards their causes. I’m not opposed to reasonable costs that are necessary to run an organization, including paying what the market necessitates to employ highly talented people. However, it is pretty clear that some of these organizations are excessively lining the pockets of individuals in one way or another, which is disgusting given that the money is donated for charitable causes.

Two, once you donate to a charitable organization, it will pursue you relentlessly trying to get more out of you. While I lived in Wisconsin, I donated to a couple of very location specific organizations whose mailers have followed me through two different Texas addresses already. It is baffling to me that no one in these organizations has made the connection that I’ve obviously moved and haven’t sent a dime since. I also wonder what portion of the money I donated they are going to spend on sending mailer after mailer before they finally (hopefully) give up. Is it really possible that the entirety of my donations will eventually be spent that way?

While I’m no expert at charitable giving, I have developed a few guiding principles for myself. First, I believe in making sure you are able to donate before doing so. After all, if you’re living on the edge yourself and you donate money, that could be the difference between your being independent and you needing help yourself, which would likely cost society more than your donation helped in the first place. As such, my donations have gradually increased as my personal wealth has and will likely continue accordingly. Second, I believe in helping those who either try to help themselves or have been dealt such a terrible hand that it is almost impossible for them to. I believe there is a distinct limit to how much money can help anyone – the “teach a man to fish” concept. I believe the capability to earn money is much more valuable than the result itself. So I’d be much more inclined to give money to someone who is dealing with a misfortunate setback or set of circumstances and would otherwise be a productive person than to someone who has never made a serious effort to do anything productive. Not only do I want to do the greatest good for society, but for the individual. I believe there is a huge psychological benefit to being self sufficient.

I don’t have any particular target in this area in terms of the amount I spend as it is pretty new for me. I think it is crucially important that people with resources help the less fortunate and I am certainly in that category. But trying to do so in a way that is both effective and not frustrating has proven difficult. I’ve had some success volunteering in local organizations, getting to know how they operate, and then donating additional money once I’m comfortable doing so. But that doesn’t stop the endless hounding from following me to the ends of the earth. I’m nearing the point where I will only donate money if it can be anonymous. I don’t itemize deductions on my taxes yet, so that isn’t an issue and I don’t care whether people know what I donate or not so recognition isn’t either.

Here is a particularly egregious example in my opinion. My alma mater has been after me since the day I graduated and I’ve never even given it a dime. My reasoning there is pretty simple. Tuition was raised by the state allowable maximum every single year I attended. This happened to be in the early part of the Great Recession and in spite of this economic backdrop, perfectly good buildings were constantly being torn down so fancier ones could be built in their place. This struck me as being very out of touch with both the mission of the school (presumably to provide a high quality education to people from a wide variety of backgrounds – including those who, like me, grew up relatively poor) and the reality of the times. A couple years after I left, it was discovered that the school had been sitting on a slush fund in excess of $100 million. I believe the tuition increases immediately stopped to avoid making the PR disaster even worse. But at no point was there any mention of doing anything to make things right with the students who had unknowingly contributed so much to that slush fund. Many of my former classmates seem to have similar reservations since they went through the school during the same timeframe.

If I were going to send any money in this direction, it would be directly to a student or group of students from a financially disadvantaged background who had already continued to demonstrate a good work ethic and continued to do so. I think both elements would be important for me and I would need a way to ensure that both were present to feel good about what I was doing. Additionally, I don’t think I would want to have my scholarship, or whatever form it took, be school specific. But I haven’t started looking into how to do any of that yet. Maybe it will be my first substantial charitable endeavor. For now, I typically donate a hundred or two when I see something that moves me to do so. Like I said, this area is a work in progress.