My SHINY Nickels

Live Smart. Save Money. Retire Early.

READER MAIL: Hoppin’ Mad in Minnesota

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Occasionally one of my articles gets picked up by a major media outlet. My daily page views will spike to 15,000, I get some awesome new readers and everyone is happy. No, actually, let me take that back. One guy wasn’t happy. At all.

Canada’s national newspaper, the Globe and Mail, picked up my post “Your Starbucks Habit Is Not Why You’re Broke”.   I received this email a few days after it posted.  Maybe it’s just me, but I think I hit a n-e-r-v-e.

“Dear Mrs. Nickels / AKA Laura,

Put this in your pipe and smoke it.  $5.09 at Starbucks PER my wifes 4 PER DAY/& 7 DAYS PER WEEK for the past FU@#ING 9 YEARS.  That’s $66,882.60 ($20.36 per day/ $142.52 per week/ $570.08 per month/$6,840 per year) over the past 9 years!!

So don’t be so biased in your article here. Our cars are paid for….. BY ME, I don’t drink alcohol, and I don’t indulge in Bull$h!t either. We have NEVER had a vacation, we don’t go out to eat.  We have 4 children and a home to pay for.

On top of it all, guess what…….. I am the only income in this family. Take you article and stick it where the sun don’t shine.”

Brad S. –  Minnesota

Oh, where do I begin with this guy? No, seriously. Not sure where to start with this one. (I’ve decided to overlook the spelling and math errors for now.)

I don’t know about you, but my BS meter started flappin off the charts about 15 words in. Maybe his wife goes to Starbucks twice a day (crazy, but somewhat believable), maybe even three times a day (now we’re stretching the bounds of reality), but…4 TIMES A DAY, EVERY SINGLE DAY OF THE YEAR?!?

Sorry, dude. That’s just plain silly.

Maybe he subscribes to the belief that if he exaggerates enough, I’ll just cave and believe him.
But let’s get back to the tall tale by Captain Exaggeration…

“We have never had a vacation, and we don’t go out to eat.”

Again, are you kidding me? Are you trying to convince me that if I took a look at your banking statement for the past 9 years, I wouldn’t see a single meal out? No burger joints, chinese food, sandwich shops…anything? Even my uber-frugal friends still manage to eat out at least a handful of times a year.

There’s my dang BS meter going off again.

I think his goal with all of the inflammatory words was to get me worked up. And it’s true that after I read his email, I cried. Tears from gut-busting laughter.

I get it; he’s frustrated at his wife’s Starbucks habit.  But Brad, if you’re going to yell at me, at least stick to the facts.  I’ll pretend that I believe you for the sake of argument. $500 a month at Starbucks is pretty hard-core, but I still don’t believe it’s why you’re broke.

You poor soul, you missed the whole point. Should anyone be spending $500 a month on Starbucks if they’re in debt or have no savings?  Of course not.  But I don’t think Starbucks is the real problem.  It’s a symptom, but not the problem.

So here is my response to Captain Exaggeration:

Dear Brad aka Captain E,

First, thanks for the kind offer to stuff my pipe, but I don’t smoke.

A $500/month Starbucks habit is pretty crazy. But frankly, it’s not my place to judge where somebody spends their money, if that’s what makes them happy. My only caveat is that all other financial priorities must come first.

  • Downsize your house. We have four kids, and downsized from 2,600 square feet to 980 square feet with one bathroom. Don’t regret it for a moment. Toughen up.
  • Drive reasonable vehicles. Your cars are paid for? Great! Are any of them worth more than $10,000? Sell it and buy something else. Put the cash difference towards debt or savings.
  • Eat out less. Oh wait, you’ve obviously got that one down already. You already told me that you never eat out. * pause for effect *

The truth is, your wife is probably going to Starbucks to escape, not because she truly enjoys the experience. If money wasn’t such a stressful issue, she wouldn’t spend as frivolously to begin with. So reverse engineer that bad boy. Stop spending so much on housing and transportation, and start taking care of your financial priorities (paying off debt, emergency fund, saving for retirement).

Once you’re doing better financially, her need to escape to Starbucks will probably dwindle down to a more reasonable frequency. (Mr. Nickels suggests some marriage counseling as well. You and your wife need to get on the same page when it comes to spending and money.)

But even if I’m wrong, and the Starbucks habit lingers, at least your financial house will be in order.

P.S.  I’ll try sticking my post where the sun don’t shine, but here in sunny California that’s a tall order.

Sincerely,
Laura aka Mrs. Nickels

Mr. Spock Would Say That Emotional Investing Is Not Logical

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[It’s Mr. Nickels at the keyboard today.  I may not write much, but when I do, I usually have something to say.]

The final tactic we used to get the price of the laundromat down to our purchase price of $105,000 actually started early last year.   In pursuit of that earlier investment, we developed a mindset that allowed us to negotiate from a position of power, by removing emotions from the equation.   Not only did we learn to project a ‘take-it-or-leave-it’ attitude, we actually believed it.

Because, as Spock would probably say, emotions are irrelevant.

Lets go back…..

We had a large chunk of money in investments and thought it would be smart to diversify and move some of that money into investments we had more control over.

Our first strategy was to try to get into the real estate rental market. We had a friend that was a retired real estate agent, so we reached out to her to find an agent to help us find the right property. Laura reached out to the agent and told him what we were looking for.

We wanted a distressed property in a middle class neighborhood that could give us nice returns. I also wanted the area to be decent enough that I didn’t feel like I needed to pack heat to go fix a toilet. We had a few houses that we wanted to look at, about 10 miles north of us.  A few days later we met up with the agent and went through the houses on our list.

On that first outing, all of the properties were more distressed than we were comfortable with.  Hmmm.

Where, Oh Where is Our Realtor?

A week passed and we hadn’t heard a thing from our realtor.  To say that he wasn’t helpful is an understatement.  But we had found a few more houses on our own that we wanted to look at so we called him again to set up a time to see them. On this trip out, we finally found the one we wanted to make an offer on. It was a duplex with a two bedroom-one bath in the front and a one bedroom-one bath in the rear. It was distressed, but nothing that we weren’t comfortable with.

When we went to look at the back unit, the gate to get in was locked. He couldn’t find the combination and I had to climb the rickety fence to get into the unit.  Laura refused to climb over, so we relied on my observations and pictures to evaluate it.

While looking at the property, our realtor gets a phone call and tells us he needs to leave. He tells us to lock up when we’re done. (Yeah, we thought it was strange too. And probably not legal. Whatever.) We decided to make an offer. We called up the agent, and he sent over the fact sheet with the property details.  (Remember that locked gate? Yeah, the combination was right there on the fact sheet the realtor had the whole time. No comment.)

The asking price was $97,000. We made an offer of $91,000 and crossed our fingers.

Our Realtor Sucks!

We found out that our realtor didn’t submit our offer for two days.  When he called us back, he let us know there was now an investment group from the bay area that was interested in the property too. (Of course there is.) We were asked to submit our best and final offer. The investment group made their offer sight unseen.

Unfortunately, or fortunately, we lost out on that property. We did find out later that our offer was technically higher than the accepted offer, but we wanted help with closing costs, and we can only assume they went with the deeper pockets.

When our realtor called with the bad news, he apologized for not being more active and attentive with us. He admitted he didn’t take us seriously until he realized we were actually going to make an offer.  (No, we will not be using his services again.)

In the end, I admit we were disappointed, but we knew if it was the right thing for us, it would have happened. There was no emotion involved.  We weren’t going to pay more than it was worth.  This was a totally different attitude than we’ve had in the past.

On to the Land of Laundry

We were moving on to better things….and along came the laundromat in our neighborhood. Early last year, the price was at $150,000. By the time we came into the picture, the price had dropped to $129,500. Our initial offer was for $119,500. Our offer was accepted and we moved into the due diligence stage of the purchase.

The Key to Negotiations…Research, Research, and More Research…and the Right Attitude

When negotiating, the more you know, the better your position. I’ve said it before, Laura is an information sponge. When she is interested in a subject, she will research it until she knows everything about it inside out. So why did we drop our offer to $105,000?  Laura noticed a sudden drop in the rent for 2014, but couldn’t determine why. It was actually the landlord that answered our question. He sent the seller an email and we were copied.

In the email, the landlord said that the seller would have to catch up on his back rent and late charges, as he hadn’t been paying his full rent for most of the year. Wait, what? Not paying his full rent? This was a little slippery on the sellers part, and it had quite an impact on our cash flow calculations.  (In other words, the annual net profit dropped, which means the value of the business went down too.)

I called our broker and sent the seller an email asking for an explanation. That happened on a Thursday, and we had plans to be away that weekend. (After months of nothing but laundry on the brain, we needed a mental break.) But now with the recent news, it wasn’t much of a mental break after all.

Anger Management

By that Sunday, we hadn’t received any response, and we were very angry about the whole situation (let’s face it, I was pissed!). We really thought this was the end of this journey. On Sunday afternoon, we went to a local coffee shop to relax before our drive home. I broke out my laptop and wrote a lengthy email to the broker.

Some key points I brought up besides the latest slipperiness (is that a word?):

We thought the laundromat had a lot of potential, but we would not pay for potential.

The current lease was above market rates. We had negotiated the renewal back down to market rates, but we still had to assume the stinky current lease and ride it out for three years.

In the industry there is a calculation for determining value. I presented our revised calculation, and made our final offer of $105,000. Take it or leave it.

And most importantly, we were not emotionally attached to being business owners. If this fell through, we would find another investment.

That attitude/thought process we had in the end was huge. We really were at peace with it and kept our emotions out of it. If it happened, great! If not, something better would come along. We were both totally prepared to walk away. Without that attitude, if we had let emotion creep in, we would have paid way too much and possibly struggled because of it.

We didn’t get a response until that Monday night, but our final offer was accepted.

Keep Calm and Use Your Head

As I write this, we are almost a month in, and all the numbers are right in line with our projections. It makes me think back to when we were deep in debt. Most of our spending was done with emotion and not logical thought. We have come a long way since then in how we view our purchases.  And we couldn’t be happier.

 

“Insufficient facts always invite danger.” –  Spock

Star Trek: The Original Series, “Space Seed”

We’re Getting an Unexpected Windfall…What Would YOU Do With It?

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Every once in a while, a sweet little cash angel may drop an unexpected gift in your lap.  Sometimes it’s just $20 from a coat pocket, or a crisp $100 bill laying on the ground (this actually happened to me).  But if you’re lucky, it turns out to be a whole lot more than that.

On Monday we received a letter in the mail.  It was from Kodak, my husband’s former employer, asking if he wanted to cash out his pension benefit.  It’s not a large pension, but it would have provided a fixed $6,600 annual payment once he turned 65.   Now they want to cash us out with a lump sum.

Hmmmm.  Interesting.

Turns out we have 3 options:

  1. Take the lump sum in cash (which means a 20% tax withholding and a 10% early withdrawal penalty)
  2. Receive the annuity as originally intended
  3. Take the lump sum and roll it directly over to another qualified retirement plan (no tax withholding or penalties)

So how much is this unexpected chunk of money they’re offering?  

$32,050.20

And with unexpected chunks of money, come decisions.

Decision #1

Take the lump sum in cash?  No way.  Uncle Sam will take 20% in taxes right off the top, as well as a 10% early withdrawal penalty because Randy is not at least 59 ½.  (And… we could still have a huge bill come tax time depending on which tax bracket that extra cash pushes us into. Ack.)

Leave things as they are and just receive a monthly check?  No thanks.  We can invest the entire lump sum ourselves, and get a better return than if we took the monthly annuity option.  So that leaves us with…

Roll over the entire lump sum into another qualified retirement plan?  Yes, please.

Why?

We don’t want a single cent to go to Uncle Sam…yet.   We want every dollar working for us, growing over time.  When it’s time to withdraw, the government will get their cut.  But for now, we want tax-free growth.

And in order to accept the lump sum without that tax withholding or the early withdrawal penalty, it must be transferred to another tax-deferred plan such as a Traditional IRA or a 401k.

Decision #2

Traditional IRA or Randy’s current employer 401k?

If we roll it over to a Traditional IRA, we can’t make (penalty-free) withdrawals until he turns 59 ½, but the IRA will allow us access to all of the low-fee index funds we want to invest in.  If we roll it over to his 401k, he can withdraw the money beginning the year he turns 55, but our investment options are limited to only those his employer offers.

So…drum roll…we’re going to take the lump sum and roll it over to a Traditional IRA.

We’ll have enough saved in other accessible accounts when we begin our early retirement that we shouldn’t need to access this money (or the money it generates) until after he turns 59 ½.  So we’ll open a Traditional IRA, invest the cash in solid index funds and let it marinate for a while.

The decision, for us, was fairly easy.  We looked at each scenario logically, and determined that we would get the most benefit from rolling it into a Traditional IRA.

Why I Am Telling You This Less-Than-Fascinating Tidbit of Our Life

As I said, the decision for us was pretty easy.  A little bit of math and a long-term wealth-building outlook, and we had our answer.

But the sad truth is that for others who find themselves with a lump sum of cash, the decision is made with emotions, not logic.  They don’t have the luxury of sitting back and deciding how this windfall could benefit them long-term.  They can’t see beyond next week,  let alone 5…10…20 years from now.

When your financial life is in chaos, you just take the cash (and the 30% tax/penalty hit) and run.  Maybe there’s unpaid credit card bills, or you’re behind on your mortgage.  So you cash out to get yourself back above water.  Or worse, you see a big shiny car/boat/thing-a-ma-jiggy that has your name on it.

(Now, just so I’m clear, if you’ve got debt, and your intent is to pay it down and become debt-free, then cashing out and paying it down (or off!) is the best thing you can do.)

But my real point is that when your financial life is in order, you can make the decision using logic, allowing that windfall to really work for you. 

A jumpstart towards building wealth.

So don’t wait and hope for a windfall to rescue you from your money troubles.   Get (or stay) debt-free now, so that if/when the sweet little cash angel drops a windfall in your lap, you can use it to really build wealth and be ahead of the game.

 

 

P.S.  Remember that $100 bill I found?  I was 18 years old, on vacation in Hawaii.  I was walking down a path to the beach at Hanauma Bay, and there it was, a fresh $100 bill just lying on the ground.  Not a soul was in sight, so I picked it up and stuffed it in my beach bag, with a grin a mile wide.

Fast forward to a few months ago, and I’m telling the story to my son.  With a look of excitement, he asked if I still had the $100 bill.  I told him, no, of course not, that was almost 20 years ago.  Then he stomped off and pouted, mad that I had spent it.  It was kinda funny, but I have to say I agree with him.  Sigh.

You Don’t Want To Know What Your LAZINESS Is Costing You

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Two months ago, our washing machine stopped working in the middle of a wash cycle.  It’s 15 years old, so we figured it may actually be time to look for a new one.  But if you know us at all, we weren’t going down without a fight.

After some googling, we found it was a simple 2-minute fix.  Literally.

How many people would have called a technician, or worse…bought a brand new washing machine?  (Strangely enough, just a few weeks later, some friends of ours had the exact same problem.  They were just a hair away from buying a replacement, as they didn’t really believe it could be as simple as we described.  They went home, and sure enough…that was exactly the problem. Saved them from spending an unnecessary $700. You’re welcome, friends-to-remain-unnamed.)

Fast forward to this afternoon.

We returned home from an anniversary weekend in Lake Tahoe, and upon walking in, noticed a slight chill in the house.  Which was great news.  Our super awesome Nest thermostat had sensed we were away so the temperature inside the house had dropped to 60 degrees.

And while 60 is not unbearable, I prefer not to wear a ski parka inside. And as I already said, because the Nest is super awesome, it detected that we were home and automatically turned on the heat to reach our preferred 69 degrees.

The efforts to unpack continued, and about 10 minutes later, I noticed something.  Or the lack of something, rather.  The heat still wasn’t on. I stood in front of the family room vent.  No cozy gusts of warmed air.  I went to our bedroom and stood in front of that vent.  No air flow there either.

So I went back to the thermostat in the hallway.

It did turn it on, didn’t it?  It says the heat is on, but there’s no air coming from the vents. Fabulous.

[Randy walks up to me as I stand at the thermostat]

Randy: Didn’t the heat come on when we came home?

Me:  Yes. Well, it’s trying to come on.  I can hear the furnace buzzing, so I’m pretty sure that at least the power is on, but no air is coming out.

Randy: Great.

Me: Yup.

We were home no more than 20 minutes, and we were already putting our DIY caps on.

I checked a few more things to help rule stuff out.  Does the fan/blower work on the manual setting? Yes.  Are the batteries in the thermostat good? Yes. Did we trip a breaker?  No.

So we knew it wasn’t the fan/blower, or dead batteries or a tripped breaker.

Randy got out the ladder, and I got out my laptop and started googling…

I googled “furnace turns on but no air blows”…

I found a few sites right away that gave a list of things to check before calling the HVAC guy.  After turning off the power at the breaker (of course), Randy climbed on to the roof and removed a few service panels on the unit.

Note: Don’t pay attention to the uncut grass. We’ve been gone, okay? I know you just looked. Dang it.

We went through those initial easy fixes, none of them did the trick.

So I googled the actual brand of our furnace, American Standard, which led to some forums on how to troubleshoot problems with that furnace brand. Turns out there’s a blinking red light on the circuit board of our furnace that helps diagnose the problem.

Me: [yelling up to Randy on the roof] Is there a blinking red light anywhere???

Randy: Yes. It’s blinking 3 times.

So I googled that, and it turns out that means it’s the “pressure switch”.  I described the pressure switch, and after a few moments, he found it.

Me: [still yelling] It says to disconnect the rubber tube that leads from that switch, and blow through it to make sure there is no debris or bugs or water.

Randy blows through the tube, and reconnects it.

See that big orange tube?

I turned the breaker back on.

I ran back in the house and switched the thermostat on to get the heat to kick in.  And we waited…then a few l-o-n-g seconds later…WHOOOOOSH!

Gloriously warm gusts of air were pushing their way through the vents…

IT WORKED!

Our house is now a balmy 69 degrees, just how we like it.

Why do I tell you this silly story?

  1. Fixing it ourselves meant we didn’t have to wait for a service technician to come out.
  2. The fix cost us $0.00.
  3. Not all service technicians are honest.  A “good” one will make the easy fix and charge you just the $50 service call fee.  But a “bad” one will make a small problem seem enormous and charge you for labor and parts you don’t even need, easily meaning a bill of $500 or more. And you can’t always tell the “good” from the “bad”.

So don’t be lazy.

The point is to at least TRY. When something breaks, gosh darn it, just Google it.  Or Bing it.  Or whatever-search-engine-you-use it.  Even just running through the “Top 10 Things to Check Before Calling the Service Tech” may help save you some cash.

 

Because the truth is that money should be invested, earning you more money, and not lining the pockets of Big Al’s Furnace Fixers.

Like I’ve said in nearly every other DIY post, we’ve saved so much money by not throwing money at every creak, clink and rattle.  Even if it means asking a handy friend to come over and look at it with you for a promise of pizza and beer, that works too.

Your laziness is costing you money.  Literally.

I’ve gotta ask, partly because I’m nosy, and partly because well, never mind. I’m just nosy.  Have you fixed anything yourself? How much did you save?

 

 

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Now for one last thing , just so I can sleep a little better tonight…

Disclaimer / Legal Mumbo-Jumbo:

DIY projects, such as those mentioned above, are performed at your own risk.

As with any do-it-yourself/DIY project, unfamiliarity with the tools and process can be dangerous. All DIY-related posts should be construed as theoretical advice and aesthetic inspiration. Improper use of tools could result in damage to your property or serious bodily injuries. MYSHINYNICKELS.com is not liable for any damage or injury resulting from the DIY projects listed or referenced.

Your Starbucks Habit is NOT Why You’re Broke

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I’ve just about had it.  If I see one more article/blog post/tweet telling me that I need to give up my foo-foo coffee habit in the name of finance, I’m gonna…well, I don’t actually know what I’d do. But enough already!

There’s always somebody whining about Starbucks.  It’s wasteful.  It’s indulgent.  It’s unnecessary spending.  Yeah, yeah, yeah.  But it’s about time the budget nazis get back behind the scope of their blame cannon and pick a better target.  (Wow, it felt good to get that out.)

Starbucks (or Peets or Coffee Bean & Tea Leaf or…) is hardly the reason why our piggy banks are empty.

If you’re broke, should you be indulging in foo-foo coffee? Probably not.  But is that the reason you’re broke?  Probably not.

We’re neck-deep in oversized houses and overpriced cars, and we’re worried about what coffee we’re drinking?  Why are we so afraid to tell each other the hard truth?  We’re spending too much in every area of our life.  Plain and simple.

It’s like we’re walking among the wreckage of a tornado, and starting the clean-up by dusting what’s left of the mantel.

The truth?  I enjoy a well-crafted cup of foo-foo coffee all the time.  Sometimes I’m on my own, with just my laptop and a latte.  Or sometimes I meet up with a friend and have a long-overdue catch up over espresso.  I love it all.  The aroma, the soft adult contemporary background music, everything.

I’ve said it before, and I’ll say it again. The key is to find what really makes you HAPPY, what gives you the most PLEASURE, and spend more loosely in those areas.  Then cut back on the big stuff that doesn’t make you blissfully content.  You’ll find you have money you didn’t think existed. Does the extra square footage you “had to have” make you smile each morning?  Six months in, does the new car bring you true joy?

Once you start prioritizing your finances according to what’s really important to you, you’ll have money to buy your latte and drink it too.

I Was Just in a Car Accident. And I Feel Fantastic.

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Yes you read that right.  Yesterday at about 5:19pm Pacific Standard Time, I plowed into the back of the car in front of me.  I claim only about 75% fault on this one.  (For the record, who accelerates into an intersection, and then suddenly comes to a smoking-tire, screeching halt???  Sorry, but that just had to be said.)

The other driver was in a steel cage otherwise known as a Jeep Commander, and I was in the Mercedes.  In case you’ve forgotten from my earlier post, my sweet little car looked like this the day I bought it.  Sigh.

June 2009 — The day we bought the Mercedes. I’m not sure what I was attempting to do with my leg here, but I guess that’s what I thought people did when they posed with their new car. Instead, I look like I’m missing a leg and that my torso is super-glued to the door frame. Fail.

The steel bumper of the Jeep ended up with a few tiny scratches, while my front grill crumpled in like a piece of tin foil.  It doesn’t look too bad, but something under my hood started smoking and I distinctly heard a “hiss” sound.  Hmmm.

So after getting out of our cars and doing the whole awkward “so-hey-our-cars-kinda-touched-each-other” back and forth, we pulled over and did an information switcheroo.  Thankfully, no one in either car was injured; my airbags didn’t even deploy.  And, the other driver was actually pretty nice and normal, so that’s a +1.

We parted ways, and the first thing I did was call my husband to tell him the news.

Then I called the insurance company.

The sweet lady over at Esurance laughed at my 75% self-proclaimed at-fault assessment.  I don’t know, maybe I thought between my sparkling personality and my insistence that the driver in front of me was a moron for accelerating and braking would help my cause.  Apparently not.

So, big surprise, I’m officially at fault, blah, blah, blah.  That’s not the reason I’m telling you all of this.

What struck me about this whole darn thing was that my first thought (after determining there were no injuries, of course) was that I had no financial worries.  $1,000 deductible?  No problem.  Replace my car?  We can pay cash for a new one.   Getting in an accident is already stressful enough.  Knowing you have an emergency fund removes that extra unnecessary layer of anxiety.

The only part of this that is a wee bit sucky, is that this is my very first accident.  Ever.  Tomorrow is my 36th birthday, which would have meant 20 years of driving accident-free.  20 YEARS!  Oh well.  Guess I’ll start that clock over again.

My point is that money in the bank is more than just…well, money in the bank.  It gives you the gift of calm.  It gives you the gift of sleeping well at night.  So within minutes of the accident, I already had a pep in my step, and a grin on my face.  Considering what had just happened, I felt fantastic.

So do your future self a favor, and make sure you have an emergency fund.  And, drive safe my friends.

Frugal? Yay. Unethical? Boo.

By:

So it’s been a while, eh?  I admit I’ve been squirrelin’ around with some side projects.  One in particular is a big one, that I hope to have wrapped up and ready in a few days, a week at the most.  It’s pretty big news (for me), but I’m going to keep it under wraps for now.  (I know, I know, I hate it when people hint at something and then don’t tell you.  Or put some cryptic status on Facebook like, “My life is over.”  Then crickets.  I really don’t want to be that person; I promise I’ll divulge more information soon.)

But let me get around to my real reason for posting.  I need to vent for a moment, do you mind?  Thanks.  During an afternoon lunch with my momma a few weeks ago, I casually glanced around the restaurant as I waited for my order to be called.  I noticed a man sitting to my left with a water cup.  Filled to the brim with…soda.  I know people do this.  He’s hardly the only one who does.  In fact, I’ve dined with people who have done the exact same thing, but it always makes me get a pit in my stomach.  It’s just that it’s, well, STEALING.

It bothers me so much, that over the years, every time I’ve witnessed this “unethical frugality” it’s seared into my memory.  Especially the memorable ones.

Like the time I went to an all-you-can-eat place here in town called Fresh Choice, and sat down near a couple who were finishing up their meal.  At least I thought they were finished.  Until the man left and returned a short time later with an overflowing plate of muffins, pizza and cookies.  But the next part is where I had to hold up my jaw, to keep it from hitting the floor.   This guy pulled out a top hat (Yes! A top hat!) out from under the table.  He lined it with paper napkins, and swiftly shoved the cornucopia of food into the hat.  He then bent over, lowered his head into the hat, wiggled it on snuggly, slowly stood up, and WALKED OUT.  Like Abraham Lincoln, with a week’s worth of food on his ‘noggin.

…or the time my husband and I were at Taco Bell, when a lady in a shiny new Range Rover pulled in to the parking lot.  She walked into the restaurant with five kids.  The woman orders ONE large drink and 5 water cups, and then proceeds to fill the kids “water” cups many times over.  She must have filled up that large soda 3 or 4 times before they left.

…or the person who will remain unnamed that keeps a fast-food cup in their car and stops in for “free” refills for months after purchase.

…or the person who will also remain unnamed that steals the towels from hotels, clears out the sweetener packets at the coffee station, and stuffs rolls of toilet paper into their bag.

One last one, okay?   The friend of mine who purchased a space heater at the beginning of December, and then returned it to the store at the end of February, just before the 90-day return period was up.  She was bragging to me about her “free” space heater. Aye, aye, aye.

The craziest part?  Some of these people actually think they’re some sort of frugal genius, who has found a “creative” way to save money.  ARE YOU KIDDING ME???  You’re not saving money!  You’re not “creative”!  You’re a straight-up THIEF!  I get being frugal, of course.  I’m all about saving myself a few bucks.  But if you’re so cheap that you’re crossing over into the land of the unethical, that’s just WRONG.  Does this bother anyone else?

The Graham Cracker Effect

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graham-crackersIf you’re anything like me, the more you have your grubby hands all over your money, the more likely that money will find it’s way to Amazon.com or BestBuy or Target.  So the goal should be to stop “touching” it so darn much, and activate a sort of financial cruise control, if you will.

When we started really putting our savings into overdrive (yes, I’m trying to use as many car metaphors as I can in this post), we started out with a whole lot of manual transferring and moving (there I go again).  Payday would come and I would see that big juicy number in our account.  But in the back of my mind, I knew that number was about to get much smaller.  I still had to transfer to all of our different investment accounts.

No matter how motivated you are to put money away, there’s still something psychologically unnerving about entering a large dollar amount and then pressing “TRANSFER”.  In the early debt-free days, as we learned how to start saving our money, I fully admit it wasn’t always easy pressing that “TRANSFER” button.

“Yowzers, that’s a chunk of money.  I could have totally purchased two flights to Hawaii with that money.  Or a new convertible top for my car.  Or built a new patio cover for the back porch.”  Or I could…Or I could…Hrmph.

That’s when I finally realized that I needed to get everything AUTOMATED.  A hands-free, no-touch, never-saw-it-in-the-first-place kind of setup.  So that’s what we did.  And yes, it was a little bit scary.  We decided to start by directing a portion of our paychecks towards maxing out our 401k ($17,500 x 2) and Roth IRA ($5,500 x 2) contributions, and see how that felt.  But with just that first step, we knew it meant we were putting away $46,000 a year that we previously weren’t saving, so we felt pretty bad@$$ with just that alone.  We got everything set up, filled out various HR forms online and pressed “SUBMIT”.

Then…I started worrying.

“Are we going too far, too fast?”

“Are we going to feel broke all the time?”

But that first pay period passed, and as unbelievable as it sounds, we really didn’t miss it.  Yes, our final net pay was much lower. Of course. But like with many other things, you work with what you’ve got, you spend what you have.  In fact, I like to call it the graham cracker effect*.

 

* Mr.Nickels l-o-v-e-s him some graham crackers.  I used to buy a box of graham crackers on random occasion, and he would eat them at a rather normal pace.  The box would be gone in about a week and a half.  Then we started shopping at Costco. I found the exact same graham crackers in a 4-box package, for slightly less money than I was spending on the singles I was buying at our local grocery store.  So I plopped them in my cart.  Now, standard logic would tell you that if 1 box lasted approximately 1.5 weeks, then 4 boxes should last roughly 6 weeks.  But that’s not what happened.

grahamlarge

This is two weeks worth of graham crackers at our house…ok, I’m exaggerating. A little.

 

Apparently, the consumption rate of graham crackers increases in direct proportion to their current availability in the pantry.  In other words, the more we have, the more he eats.  We ran out of ALL 4 boxes of graham crackers in just 3 weeks.

 

My point is that many of us have a tendency to spend what we have, whether it’s a big amount or a small amount.  If you give yourself $500 to spend for the month, you’ll find a way to spend it.  If you give yourself $1,000 to spend, you’d find a way to spend that in a month as well.  So it’s time to push yourself.  If you currently don’t contribute to a 401k/403b/457/TSP/IRA, start.  Begin with a percentage you think you can handle, or if you get a company match on your 401k (my company matches the first 6%, for example), that should be your minimum.  Then sit back and see if you miss it.  I can almost guarantee you won’t.

Moving from Hoarder to Hustler

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hoardtohustleFirst of all, no, that’s not a picture of my garage.

Have you seen the show “Hoarders” on A&E? (Or some variation of it?)  That show is like a car accident. A part of me wants to watch because I’m fascinated by the levels of filth people will live in, but yet I want to turn away because it’s so disturbing. (Note: I realize that “Hoarders” is mindless reality television, but cut me some slack. At least I don’t watch that “Honey Boo Boo” show.)

After reading a fellow blogger post about her decision to de-clutter her life, I felt the need to do the same. Is my house filled with all kinds of junk? No. But my garage certainly has a few boxes that I know contain items worth something.  Things that I just haven’t taken the time to rightfully part with.

You know how you clean out a closet, and there’s 3 piles? Keep, donate, and sell? Well, the “keep” is pretty self-explanatory, the “donate” goes out to the street when I get one of those card-thingys in the mail, and then there’s that “sell” pile. That stupid “sell” pile ends up in a box and put on a shelf in the garage, next to all the other boxes marked “SELL”.  So it’s come to my attention that I’m in a bit of denial. As if I’ll walk out there someday and find that the Junk Fairy has taken it all away and left me a $50 dollar bill. Hrmph.

So when you multiply that box by several closets/rooms worth of de-cluttering efforts over the years, I’m left with an entire estate sale sitting in my garage.  (Ok, that’s an exaggeration. We have lots of boxes, but we can still park both vehicles in there. We’re not THAT bad.)

So a few Saturdays ago I decided it was find-out-what-the-heck-I-have-in-these-boxes day.  I was almost appalled at the items I had sitting out there just chillaxin’.  A few-years-old Acer netbook.  A relatively new 20″ Sony flatscreen television with a built-in DVD player.  Various audio/video cords and cables, unopened in their original packaging.  Pottery Barn decor.  All of this stuff could easily be sold.  SO WHY THE HECK AM I LETTING IT SIT IN MY GARAGE???

Sorry, but I need a moment to punch myself in the face.  *** THWACK ***

I’m back. Anyway…after finding those initial “easy sells”, I started looking harder at the stuff I had put in the “not-worth-anything” pile. Maybe I need to think a little more before I give up on the rest of this stuff.  So I went on eBay.  Does anybody still want the 10th Anniversary Edition of the PC game Myst?  A quick search of “sold” listings…and it turns out…YES!  They do!  And they’ll actually give me money to take it off my hands!

Suddenly even the pile of “junk” that I had deemed worthless just moments before, was going up in value before my eyes.  I quickly found an empty box and started selecting the first items that would be up for sale.

ebaybox

You’ve got to start somewhere. These little beauties will be the first to go.

The next day I spent about 30 minutes getting my first three items in ready-to-sell condition, and posting them up for auction on eBay.  I listed the Acer Netbook, a pair of wood Pottery Barn candleholders and a Pottery Barn frame.  You can call me Captain Progress.  I was gettin ‘er done.

So I listed them…and…THEY ALL SOLD.  After shipping costs, I made $93.92.  Almost $100 just from 3 items I previously had sitting in my garage collecting dust.  And ya wanna know where that sweet little pile of cash is going?  Straight to our investment account.

Make money? Win.  Clean out my garage?  Win.  And that’s what we call a win-win situation, folks.  From hoarder to hustler.  Why didn’t I do this earlier?

Breaking the Million-Dollar Car Habit

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The BMW Z4. 2 years ago, we came dangerously close to buying this.

I used to have a car payment. Several different ones over the course of my life, in fact. Now that I think about it, I had a monthly car payment of some sort for 13 years non-stop, beginning when I was 20.  I went from a Honda…to a Mazda…then a Toyota…then another Honda…then a Ford…then another Mazda…and finally a Mercedes.

And until we paid off the Mercedes a few years ago, I had never driven a car that was debt-free.  EVER.  It had never occurred to me to just keep the same car.

mercedes

June 2009 — The day we bought the Mercedes. I’m not sure what I was attempting to do with my leg here, but I guess that’s what I thought people did when they posed with their new car. Instead, I look like I’m missing a leg and that my torso is super-glued to the door frame. Fail.

Cars have their appeal, I get that.  They once appealed to me enough to hand over hundreds of dollars a month for the simple task of moving my behind from Point “A” to Point “B”.  But to what end? We all know what happens. It’s the law of diminishing returns. The first few months in a new (or new-to-you) car feel exhilarating.  The pungent aroma of fresh pleather/leather/plastic/vinyl fills our nostrils, causing the pleasure sensors in our brains to light up like the 4th of July.  (That smell is so desirable, you can actually buy one of those little dangly air fresheners in the scent “New Car Smell”. Wow.)

newcarscent

You didn’t think I was joking, did you?

Anyway, as the months and years pass…you trade it in…accepting less than it’s market value just to “get ‘er done”…buy another hunk of steel and rubber to move yourself around…the months and years pass…are you sensing a pattern here?  Ok, good.  I thought it was just me.

I used to be that person.  I was stuck in the cycle until I figured out that if I want to reach my financial goals, I need my money working FOR me, not AGAINST me.  So I did a rough calculation.  How much money did I throw away on car payments during those 13 years?  (Do I really want to know? No.   But for the sake of illustration? Yes.)

13 Years  x  $400 average monthly payment = $62,400

Oh, how that number pains me.  Really, it does.

But if you take into consideration the opportunity cost of throwing that money away, the numbers get worse.  So let’s continue the self-deprecating fun with numbers, shall we?

If I had saved that same $400 a month for the first 2 years (25 months), I would have had $10,000 to buy a well-made, fuel-efficient, no-one-would-laugh-at-me car, with CASH.  That car would be driven (and maintained!) for at least 10…15…maybe even 20 years.  (Stay with me, we’re not done yet.)

So I now have my $10,000 car, paid for with cash, but I continue to save that same $400 I would normally be paying in car payments, for the remaining 11 years. Do you know how much I would have at the end of the same 13 years?  If I had invested that additional money, with an average 9% return, I would have a PAID-FOR car AND…

$89,672.62

Seriously!  The math doesn’t lie.  But this is so depressingly fun, let’s take it one step further.

Sadly, since many people consider a car payment as “part of life” and have one (or more) for much of their working lives, let’s say that I continued to save that $400 each month, as if I had a car payment, for a full 35 years. Do you realize how much I would have?…at the age of 57?

$1,176,736.85

AHHHHHHHH!!!   Let’s go bang our heads against a wall, because that, my friends, is what we miss out on when we decide to jump in to the buy/trade-in/buy/trade-in/buy cycle.

Can you imagine your life without a car payment? What would that mean to your finances?

Do the math.  If you were investing your car payment(s) instead of sending it to the CEO of Ford Motors every month, what would you have in 5…10…20…35 years?  Seriously, do it.  Find a simple savings calculator online, like this one at Bankrate.com, and put in your monthly car payment(s) as the monthly deposit.  Set the Annual Interest at 9%, and play with the number of years.  WARNING: The results may depress and/or inspire you.

So get off the merry-go-round already.  Sell your car, pay off your car, whatever you have to do to get rid of those ridiculously dumb car payments.

Or….don’t.

But be sure to take a good l-o-o-o-o-o-o-n-g whiff of that new car scent every few years…you’ll need it to drown out the smell of your million dollars going up in flames.