The Airbnb Challenge – Converting the Living Room into our Bedroom

ECA and I have been hosting on Airbnb for nearly two years now.  We have a townhouse with two bedroom suites upstairs which works very well since we don’t need to share a bathroom.  We have been managing everything, and cleaning the room between guests to maximize our profits.  Last year, we grossed around $20,000 and after considering extra expenses such as utilities, we made around $16k before taxes.

Which really got us thinking, what if we could expand this?  Considering our expenses, if we were able to double this amount, we could theoretically maintain our lifestyle off of the income from Airbnb alone (although we don’t plan to do this), and if nothing else, we could make a considerable amount of money.  So, we set out to convert our living room into a third bedroom and try to open our suite on Airbnb.

Confounding Factors:

Now, our first floor is extremely open.  There are no walls separating the living room from the kitchen or the dining room.  It’s all just one big room with the front door on one side and the back door on the other.  To divide the room, we hung a curtain separating the living room from the kitchen, which made our studio plenty large enough for us even with the couch still present.  But, as you might imagine, a curtain is just not sufficient to separate a room…  That’s not the only issue though!  We also only have a half bathroom downstairs.  Which is fine enough, since we have access to showers at work.

And the Results:

After trying this set up for a little over a week, we have decided that there’s no way this is going to work long term!  Although our guests have been very courteous and quiet when they come and go (as they always have been), being on the first floor, every time someone came in or out, they would often wake us, or just as bad, they didn’t want to turn on the lights when going up and down the stairs, which worry us that they may trip and fall trying to not wake us.  It was also very surprising how loud the guests taking a shower was.  Normally, we don’t even really notice the guests in the other bedroom, but being under them, made a huge difference as the house is just not set up for this situation.

After breaking even, (well, maybe making a little money) we have given up on this idea!  It’s simply not worth it.

Well, there’s nothing wrong with experimenting!  And while if we had to do this, it is a viable option, but the sacrifice simply was not worth it.  We’re going back to having the spare suite as an Airbnb because that has worked and has been rewarding, but I don’t imagine us going back to sleeping in the living room!

The Wonderful World of Credit Card Churning

We have been using credit cards for all our purchases for a very long time.  We always pay off the balance every month and never buy any more than what we would anyway, so there has been no cost to do so.  And other than the shear convenience, with cash-back on every purchase that all of our credit cards offer, we have made a few hundred bucks every year.

But then there’s credit card churning which is on a whole ‘nother level.

Churning is all about getting those sweet, sweet introductory offers.  Usually, these are some lump-sum reward bonus such as $100 cash back after spending $500 in 90 days.  Or it’s airline miles.  Or free nights in a hotel.  Or 0% APR for months.  Or it’s a $50 Amazon gift card.  We’ve been seriously churning for about a year now and I finally feel like I have enough experience to talk about it intelligently.

My favorite way to churn is the introductory offer.  Amazon credit cards, for example, are easy to get and immediate rewards with no effort, but the majority of the cards we’ve been churning require spending a certain amount to get the reward.  Most of the time, you must spend some set amount in a relatively short amount of time to get the introductory offer.  Often, it’s very achievable.  But the best rewards we’ve gotten have required much higher spending up to around $4,000 in 90 days.  With our normal spending rate, this is not achievable.  So, we generally must wait until we’re about to have a big expenditure and then open the card.

Churning Opportunities:

Since ECA travels fairly often for her work, the best time to open a card is right before then.  She pays for everything with the new card up-front, we get the introductory bonus and cash-back, and then she gets reimbursed from her work.  We also opened one of our first cards with a big reward when we first moved to Seattle.  We drove across the country with my old car and whatever could fit in there (which wasn’t really that much).  So, when we went to buy furniture, we opened a card, I believe we also may have bought tickets for a trip at that time too (which may have been the bulk of the purchases).  But still, getting $500 cash-back on $4,000 of purchases is awesome IF you were going to do it anyway!

Some big ticket items that can help hit the mark include health-care expenditures (you can reimburse yourself from your HSA if you spend out of pocket), utility bills (you may be able to over-pay them and then not have to pay in upcoming months), vacations (if you’re planning on doing it anyway), annual car and home insurance premiums, car tab renewal, traveling for work (if you can be reimbursed), or paying your income taxes!

And Room to Fail:

My big plan for this year was to open a Chase Sapphire Reserve right at tax season when Chase was offering $1,000 worth of bonus points (there is an annual fee which reduces the overall benefit, but it’s still very good).  You can pay any taxes you owe with a credit card for a relatively small fee of around %1.87 to %2.25.  Which after the cash-back you get on all purchases, is reduced by 1% anyway, so the fee really isn’t very bad, but with the cash-back bonus, makes it an excellent churning opportunity for those of us who are low-spenders.  Well, unfortunately, even though I had planned to owe around $3,000 in taxes, we ended up getting a refund of around $1,200.  Yes, I know complaining about a refund is kind-of-ridiculous, but it did put us in a risky place to not get the reward.  That said, there’s other options to fall back on.  I needed to renew my car tabs (~$180 – thanks Seattle…).  I needed to renew my driver’s license (~$60, seriously?? And it doesn’t meet TSA’s requirements?).  I also was paying for insurance on a month-to-month basis, so I called them, got my rates lowered a bit and then payed for a year’s worth.  I also bought a new computer and an HTC Vive (not a frugal choice, but a very fun one, and I was planning on doing it anyway).  So, we should be good to hit the limit with normal spending now, but if it looks like we’re not going to hit it, my plan is to just overpay my water or electric bill!

Other Considerations:

Many of the best churning cards also have annual fees.  Sometimes these fees are waived, but often it means that I will end up canceling, or downgrading the card to one that doesn’t have fees.  I think downgrading is the way to go because that way, it doesn’t affect your credit score as much by lowering the average age of accounts.  Speaking of credit score, I have not seen much of an impact by doing this.  I opened 6 accounts in the past year and my credit score was barely affected.  I have been consistently hovering around ~810.  I have noticed that since opening several cards fairly rapidly that I have been less likely to be automatically approved, but this didn’t seem to matter as long as I called in, or went to the bank and applied in person.

Another way to churn would be to take advantage of the 0% intro APR that several cards offer.  I haven’t done this as there is quite a bit of risk (and I am a rather risk-adverse person), but you could not pay off the credit card and instead put the money into the market.  It’s a free loan after all, but you have to pay back that loan eventually!

Finally, a big thing to remember is that if you already have a card that offers a bonus.  Some banks will give you the offer again only once every 2 years.  You may be able to call your bank right now and get the introductory bonus again for a card you already have, or sometimes, you need to cancel the card and then re-open it.  That said, there’s a lot of cards out there to churn, so this hasn’t even come up in my experience yet.

My cards so-far:

I haven’t opened very many cards in the grand scheme of things, but here are the ones I’ve used:

Chase Sapphire Reserve

This card was absolutely incredible and is still pretty good.  When ECA and I opened each of ours, Chase was giving a 100,000 bonus points after spending $4,000 in 90 days.  This could be used to get $1,000 cash back, or with this card, you can get 1.5x the value if you use it to buy air travel or hotels through Chase.  Unfortunately, they lowered the reward to 50,000 bonus points, but it’s still pretty good.  The card does have an annual fee of $450, $300 of which is refunded if you spend at least that much on qualified expenses.  It also pays for TSA pre (which is awesome), and you get a membership in Priority Pass Select, which gives you access to lounges in airports that have free food and drinks (including alcohol!) and unlimited wifi.  If you travel frequently enough, the Priority Pass could pay for the card in the savings from food/drinks you might buy anyway, but be warned, you may not get access to the lounge if they are full.  We didn’t get to once because a lot of flights got delayed in a snowstorm and the lounge was full.  Another awesome thing about Chase cards is that you can transfer points between cards, so that 1.5x bonus can be taken advantage of no matter where those points come from.  The card also has pretty good cash back at 3% for travel and restaurants, and 1% for everything else.  It also gives you trip insurance, rental car insurance, and no foreign transaction fees.

Chase Sapphire Preferred

The Preferred is also a great choice and has many of the same things the reserve has.  50,000 bonus points on $4,000 in 90 days.  1.25x the value as opposed to 1.5x for travel through chase.  Only 2x cash back on travel and dining.  You still get the trip and rental car insurance and the no foreign transaction fees, but you don’t get the Priority Pass or TSA pre.  There’s a $95 annual fee which is waived for the first year, which is nice.  After the first year, we just have down-graded these so that we don’t have to pay and then we can up-grade them when the 2 years comes up to get the intro again.

Chase Freedom:

There are a lot of cards out there with similar rewards, but I recommend the Freedom as a card that everyone should own.  You get $150 when you spend $500 and an additional $25 if you have an authorized buyer make a purchase during that time.  The cash-back is pretty good on the Freedom having rotational categories which you get 5% cash back and 1% for everything else, which as long as you pay attention means you can save 4% on spending in a category that you would spend anyway!

Chase Freedom Unlimited:

The Freedom Unlimited offers the same sign-on bonus as the Freedom, but doesn’t have the 5% cash-back categories.  Instead, it just gives you a straight 1.5% cash back.  Which is good, but there are better cards out there.  Still, I have it and occasionally use it for certain categories.

Chase Amazon Rewards Visa Signature:

This is an easy one.  You sign up and you get a $50 gift card for Amazon.  Which is pretty nice.  It also gets 3% cash back on Amazon, 2% at gas stations and drugstores, and 1% everywhere else.  The Freedom will sometimes give you 5% on Amazon though, so the cashback is nothing to call home over.

Noticing a pattern?  I do like Chase quite a bit, their website works great, their app works great, their customer service has always been top-notch.  For general banking needs, I cannot recommend any other bank higher.  I have definitely been eyeing other cards though, but none of them have quite beat what I can get out of the Chase cards.  Perhaps after I finish off the Reserve I’ll try a card from another bank, or maybe I’ll try to get Chase to give me the offer again for a card I have had for a few years, or if I’m feeling really gutsy, I’ll even do a 0% loan for 15 months and capitalize on that.

If you decide to try this for yourself, be careful and happy churning!

Sparky in Trouble!

Sparky is the name of our car, it’s a 2013 Chevy Spark and I like it quite a bit.  It’s small (just under 12 foot long) so it can fit in basically any parking space.  It seats 3 passengers, so if I do need to drive anyone other than EC Aunt, it can.  It gets fantastic gas mileage (I’ve been averaging over 38 miles per gallon consistently).  It tells me when it needs an oil change, which has been about 3 times per year, and in general it doesn’t require as much maintenance as other cars I’ve owned.  However, recently, I ran into a problem with its battery…

The Spark uses an H6-DLG battery which apparently is pretty rare.  I was having some battery problems (I needed a jump after leaving the lights on for less than 5 minutes), so I knew the battery was bad.  I also needed an oil change so into the shop I went.  Surprisingly, the Firestone (there’s one that I can walk to from my place and I had a $20 off coupon which made it worth it) I took the car to couldn’t source a battery to fit it and they told me the only place I could get one was the dealer!  So, I started to do my own research and while I was able to potentially find a suitable battery.  I did find a potential solution at the Autozone, costing about $160, but unfortunately, Sparky didn’t make it!

I went to garage to set off to buy a new battery, but Sparky wouldn’t start.  Unfortunately, I didn’t notice any neighbors around to give me a jump, and I was worried that even if I did get it started that it would die again once I stopped the car, if they didn’t have a battery that would work for me.  So, I figured I might as well just do what any good mechanical engineer would do and find a suitable replacement regardless of what the official battery was supposed to be.  I mean, a battery is just a battery, there’s nothing that special about the form it comes in.  It just needs to have the right amount of voltage and cranking amperage, right?

I pulled the battery from the Spark, an easy operation, just needing a 10mm wrench, put the old battery into a bag and walked to the light-rail station.  I jumped on the first train and jumped off at the next stop, right next to an O’Reilly Auto Parts store.  I started to look for a battery and asked the extremely helpful cashier if he had anything that fit.  I eventually found a battery that was about the right size, except slightly taller.  I was confident it would fit though since I had already measured the space above the battery, and the polarity was correct, so I traded in my old battery and bought the new one.  The cost was around $130 after tax, not cheap, but not as expensive as the battery I found online that was supposed to replace the one I have.  I jumped back onto the train and made it home with the new battery.

The battery fit pretty well!  The clamp that bolts over-top was specifically designed for the old battery, but I made it work!  That battery’s not going anywhere.  Sparky seems happy about it, so all-in-all, I consider it a victory.  So, next time if I need a battery for the Spark, I think I’ll buy the same one I got, or maybe I’ll just try a different one when the time comes!

2016 in Review

Happy New Year!  One of my favorite annual pastimes is to review the previous years and find out how we did financially and I’m happy to say that 2016 was a very frugal year!  EC Aunt and I have only been out of college since 2012, and there’s a huge difference in our costs from then and now, so I really am only able to compare our expenditures from the last 4 years, but this year we managed to spend the least!

expenditures

This does exclude buying a car in 2016 which I prefer to distribute over several years if possible (assuming that I will be able to continue to drive it during that time).  This does include the cost of my previous car which we did not keep very long, so it’s cost was pretty much entirely in 2014, although we did have it for a bit in 2015.  These expenditures also do not include some costs of buying our house incurred in 2013 such as the closing costs on the house.  The biggest concern for costs not shown on here regarding our path to financial independence is the lack of health insurance, which I currently receive as a benefit through my employer.

Trends:

A few trends that are noticeable for the past few years is the decline in transportation cost, an increase in bills, a fairly consistent expenditure on food, a huge decrease in shopping this year, and a large decrease in vacation.

The transportation costs have been reduced primarily from getting a more efficient car, a slight drop in average price of gas, and the fact that EC Aunt’s work now provides her with a monthly pass for the public transportation.  I would expect once we retire that this cost would actually be even lower since the primary expenditure in this category is the cost to get to and from work.

The increase in our bills over the last few years are primarily due to moving into our townhome in 2014 and starting to pay for our HOA in addition to the other bills we already had and again increasing in 2015 and 2016 as we started to rent out our spare room.  Although I feel like these numbers are high, we’re better off in this position overall since the cost to lease would be higher than the cost to own and we’re actually making a decent amount of money on the house through renting out the spare room and the appreciation of the value of our home.  I’m really not sure how this category will be affected by retiring.  It depends on what we plan to do, and we haven’t quite yet figured it out.  I believe we will sell our home due to the high costs of bills such as the HOA, but whether we buy a new home, or rent, or just travel around for long periods with short rentals to break up trips is still up in the air.

Food costs have been relatively stable, and although we spent quite a bit less on fast food and restaurants, we spent a bit more on groceries this year.  This cost would also be quite variable in retirement depending on how much we travel and when we settle down again.  Traveling generally would make this cost go up quite a bit I expect, but it depends on where we are traveling since the cost of food might also be lower or higher in certain countries.

The decrease in shopping is almost entirely due to a huge cut-back from EC Aunt.  After getting her new position, she has decided that working for money is too hard and it’s easier to just not spend it!  The expenditure was especially high in 2015 for this category as well since EC Aunt bought a new MacBook Pro, an expensive LV purse, and an IPhone 6s…  Of course, she’s still using these, so their cost should carry over a few years as well.  She also cut back on buying clothes this year, although I don’t think her sense of fashion has suffered for it!  We also cut back a bit on our entertainment spending, opting for less expensive activities like clamming on the coast and playing Pokémon Go, heh!

The last major category that we can control actively is vacations.  In 2016, we simply did not travel as much as the last few years.  A big part of this was that EC Aunt felt she was traveling a bit too much with her new job and didn’t want to do it as much.  We were also both very busy with work and finding time to plan out a longer vacation is difficult.  There’s also the fact that we really want to spend more time in each location when traveling but when work is waiting for us to return to, it’s difficult to really enjoy the time we travel.  Of course once we retire, I expect this to be the largest portion of our budget so, this trend is not something I expect to maintain, nor do I want to maintain this low amount.

The only other trends worth mentioning would be the difference in the cost to lease and mortgage interest and property tax.  In 2013, we didn’t have a full year of a lease, so the cost was quite a bit lower for these categories.  We did buy the house that year, but the first payment was not realized until 2014.  Of course, if we continued to lease, the price would have gone up as well, so I’m pretty happy about buying when we did.  Over the last few years, we have been paying off our mortgage at a very accelerated rate.  We owe about $32,000 currently.  This has brought piece of mind and a greatly reduced cost of interest which of course has many pros and cons.  A considerable portion of our expenditures though is our property tax which has been going up and up every year and will go up even further now that Seattle has passed a major expansion to the public transportation system…  Still, as mentioned before, we’re better off owning the house than we would be to lease, so it’s just the cost of living and working in a growing city and really can’t be avoided.

The Breakdown and Its Impact on Financial Independence:

On average in the past 4 years, we have spent just under $28,000 a year, with a high of just under $34,000 and a low of just under $22,000.  Using the 4% rule (ignoring whether or not it is completely valid), we would need at least $550,000  using the low, $700,000 using the average, and $850,000 using the high number.  Furthermore, the high number might not actually be high enough for our retirement since we plan to travel more, we plan to have a modest budget at around $40,000 per year to cover everything, which would allow us a great deal of freedom, but would leave us plenty of room to fall back into super-frugal mode if anything goes badly.  For this, we would need $1,000,000!  So, to be extra sure, EC Aunt and I are shooting for a net worth of a bit over $1,000,000 in our retirement accounts in addition to the house.

balances

Our Progress to our Goal of Financial Independence This Past Year:

This year, we managed to save much more than previous years, not only because we were able to reduce our spending, but also due to the fact that we just made more money.  EC Aunt and I both maxed out our 401ks for the year, saving $18.000 each.  My company matched me $3210 for the year, contributed $3100 into my HSA, and a 401k bonus of $6,100.  Ending the year with a balance of just under $73,000 in my 401k, an excellent gain from my starting balance of $37,200.  We also contributed the remaining amount allowed to max out the HSA with an additional $3550 for a total of $6,550 contributed for the year, putting the final balance at $23,500, up from the starting balance of $14,470.  EC Aunt put in $18,000 into her 401k and received a match of $2850, she also started a Roth IRA, maxing it out for the year, ending her retirement accounts at $84,000, up from their starting balance of around $52,100.  We paid off a great deal of the premium on our mortgage this year!  We started the year with a principal of right at $100,000 and now we’re down to $32,000!  We also started a brokerage account this year which has a balance of $41,500!

In total, we managed to save just under $170,000 for the year, an amazing feat!  We also gained around $16,500 from growth of our accounts.  I expect that we should be able to maintain this rate of savings for the next few years, putting our timeline for Financial Independence at 5 years without any gains!  As long as the markets don’t crash, we could achieve this even sooner!  Here’s to 2017!  Hope it’s a wonderful year!

Uber Frugal Month Challenge – Homework Part 1

One of my fav FI bloggers Frugalwoods is leading the Uber Frugal Month Challenge. We have been very frugal people to start with. I am participating to learn some more frugal tips and share our knowledge with other people. If you would like to participate as well, you can join read all about it in the link above.

Mrs Frugalwoods left us homework, and I will be doing them here in ER Uncle.

Step 1: Establish your goals

  1. Why are you participating in this Challenge?
    • Learn new frugal tips: there is always something new to learn from other people. We feel like we are very frugal people, but want to explore what are other ways to be frugal and still living happy life.
    • Share our store with others: we want to contribute to the community to help others with our experience. We are younger couple in our 20s. I noticed most people in the FI community are older. We hope to bring some unique perspectives.
    • Make new friends & Have fun: Being frugal can be seen as a tough chore. So we want to make it fun!
  2. What are your longterm life goals?
    • Financial independence in the next five years. Having the freedom to pursue wherever our passion leads which can change and evolve overtime. Short term our passion includes exploring the world and creating new experiences together, getting a PhD, etc.
  3. What about your current lifestyle might prevent those goals from coming to fruition and what can you do about it?

My work can be stressful at times, and the idea of treating ourselves with expensive things is very prevalent in my work place. I have a very conflicting personality. By nature, I love very expensive things (I did not think they are that bad but ER Uncle constantly reminds me this is such a luxury) – designer handbags, trench coat, skincare, make up, MacbookPro, household items, etc. On the flip side, I am a minimalist who hates clutter. This really helps counterbalance my spendy nature. I am also a practical person as I want receive the biggest bang for the buck, so my philosophy is to splurge on some quality items on things I really care about that bring me happiness very time when I use them. I hate getting expensive things that do not get used, but am happy to treat myself to something that will get lots of use. So far this philosophy has served me well, but I can see how it may be a potential road block to our FI goal.

Step 2: Review last month’s spending

We use both Mint and Personal Capital. Mint is used for day to day expense tracking and Personal capital is for long term tracking on our wealth building. Below is our 2016 Nov spend.

Screen Shot 2016-12-24 at 10.17.53.png

*** forgot to mention that our water and electricity bill is bi-monthly. Also, we have a sewage bill every quarter ($180) that is not reflected on this chart.

Step 3: Categorize your expenses

I think I picked a hard baseline. November spend listed above is relatively low compared to others. I plan to do this again beginning of 2017 Jan to look at 2016’s full year spend in its entirety. The blue colored ones are what Frugalwoods called “Fixed Mandatory Expenses” and the rest are “Discretionary Expenses”. For the fixed mandatory expenses, our bills are slightly high due to HOA (:() and our Airbnb. I would love to hear your advice on ways to lower it further.

Step 4: What can I eliminate entirely?

Would love to hear your thoughts on lowing the discretionary expenses. We start to get into the mindsets that these spend are what it takes for us to live comfortably. We don’t want to be live miserable or be deprived. We rarely eat out as ER uncle is a good cook and I am decent. We actually enjoy eating at home. Maybe I could get rid of my iphone and get a VOIP. I find VOIP sometimes not working very well and frustrating. I thought it may be good to keep at least one “normal”phone (I think this is just me trying to justify the iphone I really love).

There are 7 more steps. Will continue to cover in the next post 🙂

Until next time,

EC Aunt

Call Your Bank, ISP, Insurance Company, etc.

I recently opened a new credit card and much to my chagrin, I received a late fee after missing my due date.  I thought I had set up auto-payment which I have for all my other cards, but I was wrong.   But not to be dismayed, I called my bank and asked if the late fee could be waived since this was abnormal for me.  They did it, no questions asked!

I think this is a very commonly underutilized way to leverage your finances.  Most of the time, the bank is more concerned with keeping you as a satisfied customer than making a quick buck.  If you ever get a fee, take the 5-10 minutes to call your bank and see what they can do for you.  You can also lower your interest rates on your credit cards, but since I virtually never pay any interest (except when I screw up), I haven’t taken the time to pursue this.

Some utilities are also prime for calling to reduce your monthly bills on as well.  For instance, most internet service providers offer introductory rates which expire after around a year.  Just by calling once a year right before my promotion ended, I have managed to keep about the same rate consistently for several years.

Everyone knows that you should shop around every year for insurance, but even if you don’t decide to switch, you should call your insurance company.  I was quite surprised to find that I could save about $200 a year without any reductions in coverage!  It was also quite a bit lower than the competitor’s rate I was comparing to as well!

Of course, missing payments is generally not a good idea as it can affect your credit and the bank will probably not be so lenient if you make it into a habit and you may not always get a better deal, but definitely call around and see if you can get a better rate!

Pay Off the Mortgage or Invest?

Eccentric Cute Aunt and I hate being in debt.  I’ve always hated asking for a loan, even just borrowing a buck or two from someone.  And anytime I’ve had a loan in my life, I’ve tried to pay it back IMMEDIATELY.  In college, I was forced to take a few Stafford student loans which I started to pay back well before graduating, and was fortunate enough to end college with around $8,000 in loans which we promptly paid back before the grace period ended (whew! No interest!).  And although I have never found it difficult to save up enough money to buy anything that I need, including cars (I’ve never had a car loan and I’ve always owned, never leased), saving up enough money to buy a house with cash was not something that seemed reasonable.  So, we got a mortgage…

We bought our home in October 2013, with a down-payment of around $80,000 which we had saved the prior year and a half after graduating.  We were debt-free at the time, and then suddenly, $225,000 in the hole.  Of course, we owned the house too, but if you’re like us, that somehow feels like a small consolation (I know it’s irrational).  So, with our obsession to be debt-free, we started to pay down the loan.  Today, the balance sits at just under $48,000 and we are extremely far ahead of our 15 year timeline.  If we don’t make any additional payments, the mortgage will be fully repaid in April, 2019, 9 ½ years before the original December, 2028 timeline for our 15 year mortgage.  And knowing us, we will almost definitely be putting in more, so it will likely be paid off within the next year!

All this is great, but was it the right choice?  Is continuing to pay down the mortgage the way to go, or would I be better off investing that money?  I looked at how much and when we put in extra towards the mortgage and compared it to the amount we would have made by investing this money into the S&P 500 with reinvested dividends.

Here is what we actually did (approximately) for the past year: 1

And here is the theoretical alternative would have been for the past year:2

5

I used this calculator to determine the gains on the S&P 500 for each month.

From the theoretical version, if we were to take the total value of the portfolio and use it to pay down the loan at the end, we would end with a loan amount of $55,893.  Compared to the actual value of $57, 611.  Therefore, we would be about $1,700 better off investing just over the past year.

The discrepancy gets a little bigger when I look at the entire life of the loan.  When I go further back and do my “what-if” scenario, I found that we would be around $6,000 better off if we would have been investing the extra money instead of paying down the mortgage.

So in the end, we could have been a little richer by investing, but we have earned a greater peace-of-mind going the safe route and getting that mortgage off our backs.  I’m not sure which is the best choice.  What would you do?

Food Expenditure Update

It’s been long enough since I last wrote that it was worth looking at an aspect of our finances, specifically, food.  It’s one of the largest categories of expenditure for us and therefore deserves a lot of attention.

Last year, from January 2015 through December 2015, we spent about $4,440 on food and dining, giving an average of around $370 per month.  From January up until today, we have only spent $2,380 in food and dining, giving an average of around $340 per month.  These expenditures generally include anything we buy at grocery stores including non-grocery items, fast-food and restaurants.  The vast majority of the spending was $2,000 at grocery stores so far this year ($285/month), $270 at restaurants ($38/month) , and $105 at fast food restaurants ($15/month).  Comparing these from last year, we spent around $253/month at grocery stores, $66/month at restaurants, $43/month on fast food, and $3.80 on coffee shops per month.

Food Expenditures Table Aug 2016

Without trying very hard, we’ve been even more frugal this year than we were last year.  We have spent more on groceries, which makes sense since we’re cooking more at home and eating out a bit less.  It seems that Eccentric Cute Aunt has not been going to Starbucks at all this year either, although it was never really a habit for her, so we have no coffee shop expenditures.  She also seems to eat out even less, opting to pack her lunch nearly every day.

I have also changed my lunchtime diet a bit.  I used to do cold meat & cheese sandwiches, but I have switched to home-made flatbread and hummus for most lunches.  It’s a good meal and since I make the flatbread at home, super cheap.  I also generally get the hummus at Grocery Outlet, a discount grocery chain in the area, saving a few bucks further.  My cost for lunch for a week is about $5 currently (4 cups of flour, 2 teaspoons of yeast, 2 teaspoons of salt, 6 tablespoons of olive oil, 1/4 teaspoon of baking powder, and a 9oz container of hummus), and it’s healthier, so a win-win.  I’ve also picked up baking, making my own bread which is both extremely cheap and extremely delicious!

Not everything has been an decrease though.  EC Aunt has been spending more on fresh fruits this year than last year by my estimation, eating more blueberries, watermelon (which she eats about 1 large one a week!), and lychee rather than fruits like apples.  After reading about the various health benefits of drinking in general, I have also tried to pick up red wine.  I pretty much only used to drink once a month or so with coworkers on the rare occasion, but now I’m drinking more frequently at home (probably 3 days a week on average).  I’ve also picked up home brewing hard cider, which was not very successful on my first batch, but I’m giving it a second chance currently!

All-in-all, I don’t think we’re at the absolute rock bottom of frugality on our food expenditures, but we’re doing quite well!  We are well below the USDA’s “thrifty” plan of $389.90/month (which we were last year as well).    We’ve also managed to avoid the dreaded “lifestyle inflation” which up until now, we’ve experienced very little of even with increased wages.  I think the biggest factor for us is that neither of us really enjoy eating out.  The food is rarely better than what I could have made myself, it takes a long time, and it’s expensive!  Fast food is convenient and cheap and tasty, but it’s horrible for you.  So, we just make our own meals.  Luckily, it’s also the most frugal way to go!

Plugging a Tire DIY

 

Recently, I picked up a self-tapping screw in my tire.  Not sure where it happened, but I’m betting it was in the parking lot of my work.  Fortunately, the screw itself made a pretty good seal, so I wasn’t leaking air very fast, (about 7 psi overnight), so I went and bought a tire repair kit.  The kit I ended up getting has everything you might need to plug or patch a tire and cost me just around $10, but it’s pretty common to find just a plug kit for around $5.  Once I had my repair kit, I grabbed a few other tools and went to work!  It probably took me about 10 minutes to do it, but I got lucky that I didn’t need to remove the tire.  I decided to just plug the tire for now since the hole was pretty small and I don’t have a tire changer, but next time I go get an oil change, I may very likely patch it then.IMG_2348.JPG

Tools used:

Flat-head screw driver

Vise grips (pliers would be fine too)

Tire reamer (comes with repair kit)

Plug Hook (comes with repair kit)

Utility Knife

Gloves (not needed, but keeps your hands clean)

First, I used my screw driver to get the bolt out far enough to grab it with my vise grips.  I didn’t need to take the wheel off the car to do this, I just parked it in such a way that I had access.  I just put the car in park, but I should have probably used the e-brake too since the car moved a few inches when I put in the plug.  Once I got a good grip on the bolt, I slowly pulled it out.  I didn’t let out any air or anything so, air started escaping pretty quickly after doing this.  I then inserted the reamer into the hole and pushed it in and out a few ti

mes.  This is just to clean the hole and make it big enough to put the plug in.  I left the reamer in the hole to keep the air in while I prepare the plug.  I took out a plug and threaded it through the eye of the plug hook.  The one I bought actually splits apart when you pull it out, others are actually more hook-like.  I tried to push in the plug, but the hole was a little too small, so I reamed it a little more.  I then pushed the plug in, with some effort, until only about 1/3 of each end of the plug was showing.  I then very quickly pulled out the hook, leaving the plug behind.  The last step is to cut off the tails of the plug, I left a little bit on assuming that it will be smashed while driving.

IMG_2351
The offending screw.

And that’s it.  It was really easy.  You can get this done at a shop for pretty cheap, so it’s not an amazing way to save money, but you will save a buck or two by doing it yourself and maybe some time.  I know that Costco does this for around $11.  I’m sure other places are about the same, but for how simple it is, and how little time it takes, it’s a nice little DIY repair that I think pretty much anyone can do and I would personally much rather do it myself than wait for an hour or so for a shop to get around to it.  It might even be a good idea to keep a kit in the car in case you need to plug while on a trip.  Of course, if you are unsure, always err on the side of caution.  If the hole is too large or in the side-wall of the tire, the damage may not be repairable.  If the steel rings in the tire get damaged, or exposed, they can rust and the tire can fail catastrophically later too due to rusting.

How to Get Cell Phone Service for Free!

A large bill that can pretty easily be avoided every month is a cell phone bill.  According to J.D. Power and Associates, the average monthly cell bill was $78 a person in 2010.  I pay $0 per month.  Here’s how I do it:

Get a Google Voice Number

Google Talk

Google has a service called Google Voice.  You can get a phone number through this for free which can receive calls through Google Hangouts, sends voicemail to your email and transcribes the audio, and can send and receive SMS messages.  You can make and receive calls using your computer’s microphone and speakers as well.  The quality is generally as good as your connection though, as long as you have DSL or cable though, it works great.  You can use Google Hangouts to make calls from your favorite web browser, so you don’t need to download any apps or anything.  You can also get hangouts on iOS and Android, so you can use it with a smartphone or tablet and use it on the go.  This way, as long as you have wifi, voila~ you have a free working phone!

If you need to make international calls, you can do that too, but Google charges $.10 a minute.  I haven’t tried this aspect, but I’m betting it works fine.

FreedomPop:

Of course, you won’t have wifi everywhere.  The way I get around this is I have a mobile hotspot (MiFi) with FreedomPop.  This is not completely free as you need to buy the hotspot, but once you have it, you can use it to connect to the Sprint LTE wifi network for free for each month.  You are limited to 500 MB for the free plan, but I only use around 250 or so a month, so it works well for me.  Still, service is a bit spotty and the wifi likes to drop for no reason.  My phone is also getting old too, so I’m sure that has something to do with it.  I only paid around $80 total for having FreedomPop for the last 3 years or so, so I can’t really complain about price!  The hotspot is also supposed to work internationally now.  I haven’t tried it yet, but that alone might be a good reason to get a hotspot.

FreedomPop also has a free phone plan, so you can just skip all this and just get one of their phones.  Or you can bring your unlocked phone over.  I haven’t personally done this, so I can’t recommend it, but I will probably do that when I’m thinking of upgrading.

I think these are the rock-bottom ways to save money on the cell-phone bill.  Have you heard of any better?  If so, leave a comment!