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Thursday, December 31

Sold the Bimmer

I got a head start on my 2010 goals Tuesday night: I sold the Bimmer. This happened faster than anticipated and not exactly according to plan. I was listening to NPR en route to work Tuesday when I heard a story about GM's "Fire Sale" to move all remaining new Saturn and Pontiac models from dealers' lots.

I knew I was upside down on the Bimmer and I knew I wanted to reduce my debt load. I spent a good part of my day researching the Pontiac G5. I'd driven the G8 several times. It's a sexy car - I even took it for a test drive and compared it to the Bimmer earlier this year, but picked the Bimmer at the time because of the uncertainty around the future of Pontiac.

Now that its demise is official, I did some research and decided I was comfortable buying a car from a brand that has ceased to exist. The G5 is identical to the Chevy Cobalt, which is still in production.

According to Edmund's True Market Value estimate, the $13,300 I paid for the car (after a fat $6,500 rebate from GM) is within a few hundred dollars of what I should have paid. On the other hand, I received $1,800 more for the Bimmer than I was offered by Carmax in October.

I debated the wisdom of taking the negative equity in the Bimmer and financing it with the purchase of the G5. In total I had over $5,000 in negative equity. That I could finance this - basically no questions asked- surprised me in light of today's credit markets.

My monthly car payment will be less than half what it was, saving me over $400 per month. At the same time my total debt load has been reduced by over $17,000. My plan is to keep paying what I had been paying, as well as applying any excess funds I have, in order to pay the car off ASAP.

Additionally, I will completely "write off" the value of the G5 in Quicken in 2010. This will affect my net worth calculation but I want to be super conservative, particularly considering the Pontiac brand is fading away.

Wednesday, December 30

Moving to Tampa

I first visited Tampa six years ago. Two girls from school and I decided to go on a cruise together. Instead of flying we took a road trip, spent the night at a cheap motel and headed to the port the next morning to enjoy seven days at sea. It was fabulous, though I didn't get to see much in Tampa that time. Fortunately that wouldn't be my last visit to the Suncoast. My job required annual visits to Clearwater Beach for a conference, so I normally would spend an extra couple of days before or after the conference vacationing in the area.

I haven't decided yet whether I'll even move. I've been living in the same place my entire life. Until recently I always felt tied down to the city I'm in. But now I've been thinking about what it would take to uproot my flag and plant it somewhere new.

Things to Consider
  • Money magazine forecasts Tampa home prices will fall over 50% from peak to trough. Some people get scared by that. I see an opportunity to find a bargain.
  • Columbia restaurant. Their original location in Ybor City opened in 1905. I prefer the casual experience of eating on the patio overlooking Tampa Bay at their Clearwater Beach location. I could eat there every day.
  • Lots of sun = positive mental attitude. There's a reason they call it the Suncoast: there are 238 sunny days every year. Of course, the down side is that it's pretty damn humid in the summer. There's a lot of humidity where I am now, so not sure I'd notice much difference.
  • So much to do. Would I get bored eventually? It doesn't seem possible: beach, casino, botanical gardens, Orlando, Miami, beach, Ybor City, beach. Did I mention the beach?
My thinking is that I would basically start over with a much simpler life: sell some or all of my rental properties, use the cash to buy a foreclosure outright. Own a car outright. Those are my two biggest bills now. Without them, I think I could live comfortably even at a minimum wage income. I could find work in the tourism industry, something where I'm active and can lose weight. Something I can do during the day and not think about at night.

I still have to do more research:
  • Taxes and the overall cost of living. There's no income tax in Florida, not even on dividends or capital gains. Some things, like gas, cost more. Unlike where I live, there is no sales tax on groceries. I still need to look at property taxes. Property taxes will be about double what I pay now... all the more reason to find a modest house. I suspect insurance will also be higher... I'll be subsidizing the "Q-tips" drivers.
  • Unemployment is over 10% in Tampa. Will it be hard to find a job?
  • Assuming I don't sell all my rental properties, how much of a burden will it be to manage them remotely?
I get that giddy feeling like I used to as a kid on Christmas Eve whenever I think about moving to Florida. But I have to be sure I've considered all the pros and cons before doing something so drastic.

Tuesday, December 29

My Frugal Miser: 2010 Goals

2010 is a transitional year for me. My earnings from working have been drastically reduced. The upside to this is that it has given me a chance to pause and seriously consider what I want to do with my life. Before, while I did truly enjoy what I did, I was a slave to my job in the sense that life revolved around it. I was always traveling, and when I was home I was usually writing proposals or preparing for our monthly metrics meeting.

Now I am free. The downside is I can't afford to be careless with money. Mistakes are forgiven when your next monthly commission check will be close to five figures.

My Frugal Miser's 2010 Goals
  1. Lose 26 pounds. That's 1 pound every 2 weeks. I need to lose more, but I want to lose weight and keep if off so I'm going to try a more careful approach.
  2. Increase my net worth by $25,000. In past years this was a cinch. 2010 is a transitional year for me, as I'm earning considerably less at my job.
  3. Stick to a budget in key areas including food, gas and entertainment.
  4. Lose the Bimmer. It's the Bane of My Existence.
  5. Consider moving. I've given a lot of thought to moving to the Tampa area over the last few months. I'm not there yet, so I want to carefully lay out the pros and cons of this and, if I decide to move forward, I want to execute on this by yearend.
I haven't made much (if any) mention of my desire to move, mostly because it seemed like such a long shot until recently. I'll explain more tomorrow.

Wednesday, December 23

Reviewing My 2009 Goals

Each year I keep a rolling Word document outlining what I hope to accomplish over the next 12 months. I got serious about this starting in 2006 and it's neat to look back and compare the goals I had four with ago with those I have today.

2006 monthly income goal (net): $3,000
2009 monthly income goal (net): $5,000

2006 investment strategy: dump all free cash into P2P loans
one of my 2009 investment strategies: slowly exit portfolio of loans

My performance on Prosper was poor. Lesson learned: a lot of individuals don't share the values I do about honoring one's obligations. I personally believe those who refuse to pay their debts should be criminally charged.

My income grew handsomely until I lost my job in August.

I achieved several of my other goals: 1) buy 2-3 rental properties (I bought 3); 2) pay off Rental Property #1 (I did); accomplish my 2009 net worth goal.

I failed at two of my biggest goals: 1) weigh 165 pounds by yearend (haven't lost a pound) and 2) earn $125,000 gross income (was on track until August).

I'm taking a few days off from the blog but will be back next week to post my 2010 goals. In addition to the traditional family things for Christmas I am trying to put together a mystery shopping road trip or two. There's not a lot out there but hopefully I'll round up a little work.

Tuesday, December 22

Aggressive Tax Avoidance: Donate Unwanted Items Before Year End

A major motivator in my quest to eliminate 100 pieces of clutter from my life is to increase my tax deductions for 2009.

I use Turbo Tax's It's Deductible software to track and estimate the value of my donations. One nice surprise I found was that the value of my items is often higher than if I were to sell the item myself. I imagine that's because the thrift stores do such a good job and bringing in the target customer for my used goods.

For example, I donated several perfectly good polo shirts that were valued by the software at $9 each. Considering I only buy clothes when they've been sitting on the clearance rack long enough to gather dust, I most likely spent a lot less than that to buy them new. I consider the cash value of my tax deductions to be 25% of the amount, or $2.25 per shirt in this example. I doubt I could fetch $2.25 at a yard sale.

For me, every $1,000 in donations yields me $250 in cash money when I get my tax refund.

Here's another trick: I keep a lookout for super bargains when I go shopping. That $1 hardcover book at Dollar Tree is worth $4.00 according to It's Deductible. 25% of that is $1, so as long as I keep it in great shape, I'm basically getting to read a free book. Even better, the 10 CD audio-book I bought at Books a Million for $1 on the Clearance shelf last week is worth $8 at a minimum, 25% of which is $2. So here, I get to enjoy the audio version of S is for Silence by Sue Grafton, and make a dollar when I donate it.

Monday, December 21

Conquering Clutter: Roundup 3 (5 items)

As I mentioned before, I am eliminating 100 possessions in December. For the first installment, I found 12 items worthy of removal. Then I found 7 more for round 2. For the latest roundup, I present to you 5 new items:

Trash: old, well-used t-shirt rags, mop.

Donating: 3 stainless steel coffee mugs, pants

Selling (possibly): a stack of Berkshire Hathaway annual reports along with photos I took of Warren Buffett and Bill Gates playing bridge.

Since I can read the annual reports online I don't see the need to continue collecting these (even though I treasure their content). I'll see if anyone bites on an ebay auction before tossing them out. I now have 76 items left to dispose of before the end of this month! Need to work harder if I'm going to make it.

Sunday, December 20

I'm Still Here!'s been a week since I posted anything on My Frugal Miser. Last week was quite busy:
  • I helped my mom move to a new place.
  • I survived the third week at my new job, and attended my first Chamber of Commerce luncheon. I'm never one to pass up a free meal. Plus I ran into an old friend/co-worker I hadn't seen in a couple of years.
  • I won a door prize at the luncheon which included two movie passes. My partner and I went to see Twilight: New Moon at the Rave theatre for free Friday night, then treated ourselves to sushi using a coupon I had purchased several months ago (we spent $17 but without the coupon it would have cost $42).
  • I earned almost $150 mystery shopping on Saturday. While everyone else was out Christmas shopping I was shopping for income.
  • My neighbor proved that good deeds are rewarded: my partner and I "secretly" carry the neighbor's newspaper to their door (he is handicapped). I guess the neighbor knew it was us all along because his wife brought us a Christmas gift basket yesterday. That made my day.
I'll post an update to my Clutter Roundup tomorrow. I realize I'm running out of month and have a ways to go.

Thursday, December 10

Conquering Clutter: Roundup 2 (7/88 items)

As I mentioned last week, I will eliminate 100 possessions in December. For the first installment, I found 12 items worthy of removal. Last night I rounded up seven items for the second round:

Trash: shredding 2007 taxes. You can't tell from the photo, but the stack is about 5 inches high! There has to be an easier way! By the way, I know it's a little premature, but 2010 is right around the corner. Besides, I was already audited for 2007 and since I satisfied the auditor I assume I won't be audited a second time.

Donating: neck pillow, reading light, odd collection of cups, leather toiletries holder, collection of wires/antennae, remote control

I now have 81 items left to dispose of before the end of this month!

Tuesday, December 8

Assessing my Credit Card Debt

My top priority is paying down my credit cards. These were under control until I had to access some cash advances to purchase Rental Property #7.

Total Credit Card Debt as of 11/30/2009: $37,913
Previously I reported the wrong amount for last month, so I actually only reduced credit card debt by $333 from October to November.

In December I will not reduce my credit card debt. Instead, it will increase, hopefully for the last time. I have over $6,000 in property taxes to pay and will have to pay these by credit. Unfortunately, this means I will exceed $40,000 in credit card debt for the first time.

Monday, December 7

My Financial Situation (update for December)

I mentioned last month that my #1 goal is to pay off my debt as fast as possible. I wanted to review the progress I made in November and where I stand today:
  • $37,913 in outstanding credit card bills (a reduction of $750!).
  • I prepaid 2 payments towards the $3,500 personal loan I took out to fund the rental property transaction.
  • $95,738 owed on my house (a principal reduction of $538!).
  • $33,787 owed on a HELOC used to purchase a rental property.
  • $37,853 owed on my car (the bane of my existence).
  • $17,558 owed on student loans.
  • $179,890 owed on 2 other rental properties (a principal reduction of $673!).
  • $38,000 in other obligations related to rental properties.
  • $706 paid in cash for fire dues for four of my rental properties.

Sunday, December 6

December Goals

During November I did okay with my goals. The accountability that comes with publishing my goals definitely helped me do better than I would have otherwise.

December Goals:
  • Last month I earned $940 in mystery shopping income. I have started a new job and will have to cut back. I will earn $400 in mystery shopping income.
  • Last month I spent $184 on food. I will spend less than $200 on food this month. I wish I could say I would bring my lunch to my new job every day, but most likely I will go out some. I have to get out of the office to maintain my sanity and eating out helps keep my sanity, as long as my spending is reasonable.
  • Last month I spent $79 on fuel. In December I will spend $200 on fuel. I now have a daily commute of 90 miles, and I won't be mystery shopping as many gas stations this month.
  • My #1 financial priority moving forward will be paying down my credit cards as quickly as possible, followed by a close #2 priority of selling the Bimmer. In December I will reduce credit card debt by at least $750.
December will be a tough month as I adjust to my new job. I will be driving - a lot. I don't buy too many Christmas gifts but will be spending a little, which will be reflected in my credit card debt reduction goal.

Saturday, December 5

Reviewing My November Goals

Tomorrow I will post my December goals. Before I do that I wanted to review how I did in October:

How did I do on my October Goals?
  • reduce credit card debt Yes
  • $750 in earned mystery shopping income SURPASSED!
  • maximum food expenses of $150; maximum fuel expenses of $100 FAILED.
I have a lofty "stretch" goal of reducing credit card debt by $1,500 per month. While I didn't reach it, I did manage to cut credit card debt by $775.

Because I canceled my San Francisco trip I managed to earn $940 from mystery shopping, but it was slightly less than my stretch goal of $1,000. I also earned $287 in reimbursements.

I did achieve my fuel goal by only spending $79 (thanks to a lot of mystery shopping at gas stations) but I exceeded my food budget just a bit. I spent $34 more for food than I had budgeted.

Friday, December 4

My November Income: $4,071

November was a decent month considering I was unemployed. My severance benefits ended November 10th. Since I wasn't actually working, I did a lot of mystery shopping.

$1,458 Severance Pay
$1,240 Mystery Shopping*
$414 Change in Value of Retirement Accounts (Roth IRA and Rollover IRA)
$959 Rental Income*
$4,071 Total Income for November
*note that the mystery shopping income will always vary from the weekly amounts I post. Here I report actual payments received (cash basis accounting) whereas weekly I report the amount I earned. Rental income was lower because of expenses associated with preparing Rental Property #1 for occupancy.

I started my new job December 1st. I am taking a large salary cut but will try to supplement it with as much mystery shopping as possible. I should also see a bump in rental income now that Rental Property #1 is rented.

Thursday, December 3

Conquering Clutter: Roundup 1 (12/100 items)

As I mentioned on Monday, I will eliminate 100 possessions in December. For the first installment, I thought I would start with the low-hanging fruit:

Trash: 3 containers from the bathroom, calcium tablets, old Zicam chews, free samples of tooth whitening strips, broken DVD player

Donating: patriotic (but ugly) shoes, a few clothing items, 14 purple bracelets, stuffed toy, tennis ball, LCD TV, shower radio

The only item I regret disposing of is the portable LCD TV. I bought it on Black Friday, 2006. It is not digital ready so would require a converter box. Perfect though to pair with a DVD player or video game system. I bought it as a gift that I never gave, and I never used it myself.

Tuesday, December 1

Starting My New Job Today

I'm really excited that I'm rejoining the workforce today. Since I've got a lot going on, things may be quiet on the blog for a few days until I settle into my new routine.

Keep posted... I'll be updating my journey to Conquer Clutter, as well as my financial results, later this week.

Wish me luck!

Monday, November 30

My Frugal Miser Goes on a Clutter Round Up

One of the greatest side effects of writing this blog is that I hold myself accountable. I have decided to set a mini-goal for the month of December: dispose of 100 items in 31 days.

First, I should make it clear that I am not a packrat. Most visitors to my house either compliment how simple I am or express concern over its sparseness. I don't even have furniture in my living room, for crying out loud!

Call me anorexic, but I can lose more clutter. And I will.

Here are my rules:
  • In December I will reduce my personal possessions by 100. If I bring something new into the house, I have to eliminate an additional item above and beyond my goal of 100 things.
  • Regularly consumed items do not count. I can't eat my way out of 100 canned goods or scrub myself out of 100 bars of soap.
  • Similar items may be bundled. For example, if I throw away 4 dishes, I will count that as one item, not 4. I'll be a bit flexible on this rule.
  • Items can be sold, trashed, donated or otherwise given away. In other words, as long as the item no longer belongs to me, it counts as disposed of.
I'll regularly post progress updates through December.

Friday, November 27

A Frugal Miser Plans for the Future

Now that I am transitioning back to the workforce after a 3 month transitional period, I have to reassess some things:
  1. My new job is a dramatic pay cut early on (compared to the job I left in August) but has longer-term potential. It is also a longer commute (about 45 miles each way).
  2. If the job works out, I have a rental property about 10 miles from the company which I could consider moving into once the current lease is up in April, 2010.
  3. I would like to retain as much income as I can from the alternative sources I've used these last three months.
I have a lot to think about. I could probably continue 50-75% of my mystery shopping and merchandising on nights and weekends if I plan carefully and really hustle. On the other hand, I want to give this new position 100% of my energy. Another consideration is my need for income. Until I sell the Bimmer, I will definitely need to earn more outside of this new job.

I also need to consider the transactional costs of moving. Fortunately I will have about 5 months to see if the new position will work out long term before I will be able to consider moving. As I blogged about earlier, most people don't fully consider all the costs of change. For example, when I moved into my current home and converted my last home to a rental property, I didn't realize how much more expensive the property taxes would be on the old home when I no longer qualified for the homestead exemption there. Since it was my first property in a city limits, the taxes are significantly higher than my other properties. The house I live in now is outside a municipality, but the location is good for me besides commuting to my new job.

Thursday, November 26

A Frugal Miser Gives Thanks: I Found a JOB!

Ever since I lost my job at the end of August I have struggled with what the future may hold for me. I've been doing okay with my severance (which ran out earlier this month) combined with the money I am making doing mystery shops, merchandising and donating plasma. The best part about this kind of work is the feeling of independence. Even though I've been busting my behind to earn a living, sometimes working 18+ hours/day, I've loved not having to answer to anyone but myself. I've also liked the flexibility of not having to do anything if I wanted to go out of town or just take some "me" time. Alas, the security of an 8-5 gig beckons me.

I interviewed at a startup company back in September and was offered a job right away. It was for a position that I did not necessarily want to do but with promise of moving up the ladder quickly. The night before I was to start, the CEO emailed me and said he was retracting the offer. I had no idea at the time what was going on. Did I do something wrong? Is his company not stable?

A few days later the CEO explained things to me. He assured me he just needed a bit more time as he thought through some things and told me he still wanted to hire me. I didn't give too much thought to this as I figured he was blowing me off but didn't have the kahunas to just tell me.

Then, the call. He asked if I could meet for lunch, where he explained the sanity behind his entrepreneurial thought process. Not only did he still want me, but he wanted me for a role I really wanted to be in, with slightly better pay.

I start next week! Happy Thanksgiving to everyone!

Wednesday, November 25

A Week in the Life of a Mystery Shopper

Last week was relatively slow. Originally I planned to travel to San Francisco for a conference my old employer had paid for me to attend. I figured I'd enjoy a few days in the Bay Area since there would be little out of pocket expense. Instead I decided to stay home for two reasons: 1) I needed to wrap up the lease with the tenant for the townhouse and 2) I wanted to earn more mystery shopping money.

We returned from Tampa early evening so I didn't do any shops.

I ate a free breakfast and then did my merchandising stores: one mystery shop and six stores to merchandise.

This was my most lucrative day, and it was a fairly easy one: 5 gas stations, a doughnut shop, a game store, and a car wash.


A fairly busy day: 3 gas stations, one merchandising job, a discount retailer and a fast food lunch.

Two trailer checks at a movie theatre, a fast food lunch and a game store.

Just a fast food lunch, and it wasn't from lack of effort. Seems like everyone must be mystery shopping to ear money for the holidays as there was almost nothing available.

Total Income for the Week: $251.20
Total Value of Reimbursements: $70.41

Monday, November 23

A Frugal Miser Donates Plasma

If you are really in a bind and need cash, one relatively easy way to make extra money is by donating plasma. I did this twice in November. The first time I was paid $30 and the second time I was paid $40. There are also incentives offered for every 5th donation. The initial visit took a while because you have to go through screening and a physical, but my second visit last less than 90 minutes. I brought a magazine to read while I was donating, so in essence I was being paid to read a magazine.

The caveat is I hate needles. That has kept me from returning to make a third donation. I cringe at having a needle stuck in my arm for an hour or so while the plasma is sucked out of my blood. One problem I encountered is that I have small veins or they are hard to find. It's probably because I am overweight although my arms aren't bigger than the average persons.

The pay varies by site, but you are allowed to donate twice per week. For me that would be $70 per week, $280 per month, or over $3,500 per year.

For now I have decided not to make a third donation. I might change my mind and return, but those darn needles keep me from doing so right now.

Sunday, November 22

Misers Save Money Around the House (Easy Ways to be Frugal)

Moving in and out of stocks is one example of the damage transaction costs do to your future net worth. Likewise, replacing something prematurely comes with transaction costs. Consider these small examples, and how they add up over time:

Easy Ways to be Frugal at Home
  • Stretch your toothpaste. I find that by cutting open an "empty" tube of toothpaste I can get about 5 days' worth of toothpaste from inside the tube. If a tube of toothpaste usually lasts a month and costs $2.50, over twelve months I will stretch my toothpaste an extra 60 days, or 2 1/3 tubes. This saves me about $6.00 per year.
  • Let your pantry go empty twice a year. This is a fun game I play. At least twice a year I try to use up EVERYTHING in the pantry before making a trip to the store. This defers a trip to the grocery store, saving gas, time and money. It also means you are less likely to have to throw something out that has expired. Sure, you'll have some rather interesting meals for a few days, but it sure feels good to know there is nothing wasted. It also gives you a chance to clean your pantry shelves without having to move a bunch of stuff around. Saving two trips to the grocery store per year saves me about $100.
  • Cut down on laundry. Are your clothes really dirty? I find that I can wear pants two or three times before washing them. I never do this with socks and underwear, that's just icky. I also reuse bath towels until they start smelling. My partner and I average 3, maybe 4 average-size loads per week.
  • Take care of things. It's such an easy thing to do, but so many people neglect this and pay big in the long run. I know because I see the condition of my rental properties when tenants move out. If you have a leak, fix it. If the kids draw on the walls, beat the crap out of them. Caulk your windows once a year. Clean your gutters. If something breaks, fix it.

Saturday, November 21

Misers Avoid Transactional Costs... Part 2

On Tuesday I discussed how the transaction costs associated with trading stocks (as opposed to investing in publicly traded companies via a buy-and-hold strategy) will eat up a large percentage of your gains and negatively impact your net worth. Today I wanted to quantify this through an example. Let's consider a stock purchased in a regular (not tax-deferred) brokerage account and what happens when you sell the stock:

  1. Buy 100 shares of XYZ company at $20 per share. Let's use a discount broker where we may pay a $5 fee to buy the shares.
  2. Sell 100 shares of XYZ company 6 weeks later at $22 per share. Looks like a $2 per share profit on 100 shares, or $200 profit, right?
  1. Not only will you pay $10 to your brokerage account, you will also be responsible for short term capital gains, which are taxed at your standard income bracket. Let's assume you are single and you earn $50,000 a year at your job. That puts you in the 25% federal bracket. We'll also use a middle-of-the-road state tax rate of 8%.
  2. $200 profit, less $10 in transaction fees, leaves $190 in profit for the tax man to assess. Uncle Sam gets $47.50 and your state revenue department collects $15.20.
  3. Total profit of $200, less ($10+$47.50+15.20) = $127.30 in actual profit.
We're not done. That $62.70 in taxes and fees is gone...a lost cause. What if you had held onto that stock? Since study after study says you can't time the market, let's assume that holding the stock of XYZ company would have yielded a similar return to the stock of whatever you would have replaced it with. If this is the case, that $62.70 in taxes and fees you paid represents a lost opportunity.

Historically stocks have outpaced inflation by 7% a year. Let's say inflation averages 2% per year for the next 25 years, so your average stock will yield a 9% annual return.

How much did you really lose?
Much more than $62.70. At 9%, in 25 years you would have turned that $62 into about $600! A single transaction resulted in $600 in lost opportunity.

It doesn't take a genius to see that several trades each year will literally reduce your net worth by hundreds of thousands of dollars in a lifetime.

Friday, November 20

Misers Avoid Transactional Costs... Part 1

When I was 18 I opened my first brokerage account with Charles Schwab. I had a lot of fun trading the stock market and I made some money doing it. After a year I decided to look at how much all this trading cost me. I found that my Schwab account, which had something less than $10,000 in it at the time, had racked up over $2,000 in transaction fees. I can't remember what I paid in taxes for all those short term trades.

Over the last year I've given a lot of thought to transactional, or frictional costs, and the long term damage they inflict on my net worth. As I attended the AAII conference last week I was surprised by the number of investment strategies offered by various professionals. Even more surprising were the number of attendees to their sessions. Here I am at a conference of supposedly intelligent investors and all around me are folks bragging about how successful the CAN-SLIM approach has been for them or how this new charting software they purchased "really works".

  • The right way to invest: Buy an investment and hold it.
  • The idiot's way to lose money: "Play the market", "trade stocks", etc.
It amazes me how someone can identify a "hot stock" by watching Mad Money or reading some investment newsletter. They buy shares without so much as reading a financial report from the company then sell just as quickly when their favorite guru tells them to or they find the next hot idea and need the money.

When you do this, you enrich the E*Trade's of the world, not to mention Uncle Sam. Brokerage fees and taxes eat up so much of your potential growth in net worth. What many will find is that you can earn even more money by doing your due diligence to find a solid company you'd like to invest in, buying a piece of that company and holding it. It's much more rewarding, in my opinion, to be able to follow that company over time and become somewhat of an expert in it. I get excited when I know a conference call has been scheduled or I hear about a new store under construction or some news story comes across my Google Alerts.

The penalty of frictional costs goes far beyond purchasing the stock of a publicly traded company. Tomorrow I will talk about how I avoid other transactional costs.

Thursday, November 19

A Week in the Life of a Mystery Shopper

Last week I didn't earn much from mystery shopping because I left for a conference on Wednesday and was out of town the rest of the week.

Busiest day of the week. Completed 11 gas stations and a doughnut shop.

Spent the morning completing four gas stations and two merchandising shops. I did four more gas stations that afternoon.

I donated plasma for the very first time in the morning. It took four hours, but I was promised that subsequent visits would be much shorter. That afternoon/evening I completed 2 gas stations and a public storage center.

First thing Wednesday morning I test drove a luxury car. At least that dang Bimmer qualified me for this shop (had to pull into the dealership with a BMW or Lexus to qualify) as it was relatively lucrative. Left for sunny Tampa, Florida late morning. No more shops this week.

Total Income for the Week: $230.00
Total Value of Reimbursements: $141.44

Wednesday, November 18

Lessons Learned from My Not So Frugal Trip to Orlando

I spent just over $1,000 for 5 days/4 nights attending a conference and enjoying the beach last week. That doesn't even include the flights or one night in a hotel since they were free. I learned a couple lessons, though:
  • Rent a compact car, and refuse the upgrade. Sure, it feels like you're getting a deal, but you'll pay at the pump. I estimated that I spent an extra $20 on gas because of this.
  • Pay attention to the "time out" when you rented. If I had returned the car just 20 minutes sooner than I did, I would have saved $43.31. The additional hourly fees for renting a car are not 1/24th of the per day fee!
  • Consider the cost of extending your trip. Since we decided to spend a couple nights on the beach, we flew in and out of Tampa and drove to Orlando for the conference. Cutting out the beach or even reducing it to one night instead of two would have saved $100-$200.
In total, I could have cut at least 20% off the cost of our trip if I had been more prudent.

Tuesday, November 17

A Frugal Miser Attends a Conference in Orlando

Last week I spent 5 days and 4 nights in Tampa, Florida and Orlando. I am a member of the American Association of Individual Investors, which holds this annual conference. It was my first year attending. I planned the trip prior to losing my job, and had paid the $295 conference fee already as well as three of the four nights lodging (the fourth night I used reward points). There was no way I was going to walk away from this opportunity, especially since the only major expense not already paid was the rental car.

Below are my expenses. Generally I have included the cost for two people since my partner traveled with me but did not attend the conference.

Our flights were free - I only paid $10 for the 9/11 Terrorist Fee. I used a Rapid Rewards voucher and my partner used the Companion Pass I receive for being a frequent flier on Southwest. I used Hilton Honors points to get a free room at the Hilton Clearwater Beach. This made the room, Internet access, bottled water and breakfast free. The only expense was $5.35 for parking. We also had a late lunch at Columbia, a must have when in the Tampa area. This was the "treat" of the trip as we had a pitcher of table-prepared Mojitos, Cuban sandwiches and the 1905 salad, as well as a side of black bean soup and the complimentary hot Cuban bread. There was enough left over that there was no need for another meal. Total spent: $54 for food for two.

I spent nothing on Thursday. We ate the free continental breakfast at the Hilton Clearwater Beach. For the evening, I had prepaid the hotel room back in July. Two nights at the Homewood Suites in Lake Buena Vista, just 1.9 miles from the Hilton where the conference was held, for $160. This rate included dinner Thursday night and breakfast both Friday and Saturday mornings. The Hilton would have cost in excess of $200 per night and included neither. I ate "refreshments" for lunch Thursday - a Whatchamacallit bar and a bag of popcorn - plus I took extras for later. Dinner included the light meal at the Homewood Suites of BBQ pork and some sort of corn and mixed vegetables.

This was the full day of the conference, which meant that all my meals were included in the registration fee. Note that my definition of "meal" is more liberal that most people. Dinner consisted of red wine and hors d'oeuvres. I don't have a problem calling dinner a couple Swedish meatballs and some sort of spinach pastry, as long as it's free.

The conference wrapped up this morning, so back to Tampa for the night. We had a free breakfast at the hotel and a late afternoon lunch/dinner consisting of unlimited soup, salad and breadsticks from Olive Garden ($24.00). I could have selected something less expensive but wanted to use up a gift card I'd had in my wallet for some time. We checked into a Best Western which I paid for with gift cards ($78.96). There wasn't any shampoo in the room and when I requested some at the front desk I was given several, so I added that to the stash from the prior three nights. I'll have enough soap and shampoo for 2 or 3 weeks once I return home. Saturday night we went to the Ybor District, where I spent a total of $20 on drinks and tips.

So maybe I should scratch "frugal" and "miser" from the title. Rental cars aren't cheap in Tampa. I did rent the lowest price option I could find, but I should have paid $43.31 less than I did. I returned the car 21 minutes after the 24 hour rental block. The additional hour fee was nearly as much as if I had kept it another full day. Total price for the rental: $287.00. I also goofed by not objecting to the free upgrade. We were given a Saturn Outlook, which is an SUV that averages just 19 miles per gallon. I spent $59.82 for 22.8 gallons of gas. If I had selected a car that got 10 mpg more, I would have saved $20.65 in fuel expense. Finally, we spent a meager $4.28 at the Burger King dollar menu for a late lunch. When we arrived home, I paid $32 for parking. By using an offsite lot I saved $23 off the least expensive airport lot.

Total Spent: $1,030.41

My only solace is that most of this amount was either prepaid before my job loss of was paid with gift cards. This certainly doesn't qualify as frugal travel, especially considering it doesn't include what my flight or the first night's hotel would have cost since I used loyalty points.

Friday, November 13

How Much Should I Charge for Rent?

That's a question I used to dwell over. Like with many things, I prefer to keep this as simple as possible. Obviously I want to charge the highest amount the market will bear, but I also need to know if this amount would be profitable when I look for new properties.

There are two metrics I use:
  • Rent as a Percentage of Home Value
  • Cap Rate
Rent as a Percentage of Home Value

This is an easy calculation. I've decided that if I can charge 1% of the home's value per month, I will more than likely make a profit. For the $58,000 townhouse I have just rented, I need to charge $580 per month. This figure leaves room for short vacancies, normal repairs, interest on debt, taxes, insurance and, most importantly, profit. By the way, I am actually charging $625 per month, so another $45 or so falls right to my bottom line.

Cap Rate

This is the measurement most often used by lenders, appraisers and investors. It is more complicated, but not too difficult, as the math is basically the same as above. With cap rate, you take your net income and divide it by the market value of the property, times 100. If your net income is $10,000 on a $100,000 home, you have a cap rate of 10. I have read that any cap rate above a 7 is good for owners and anything less is good for tenants. This calculation is more complicated because you have to figure net income by accounting for a variety of things including vacancy amount and operating expenses, which include advertising, insurance, maintenance, property taxes, property management fees, repairs, supplies, utilities, etc.

As with many things, I am a simpleton. There are far too many paper pushers in this world already. That's why I use the first formula. It's easy and it works. Sure, there are other variables I take into account. For example, with newer homes the percentage can be a bit lower because maintenance and repairs will be lower and, as a more desirable property, vacancy should also be less.

Thursday, November 12

A Week in the Life of a Mystery Shopper

Last week I didn't earn much at all from mystery shopping as I wrapped up the renovations inside the townhouse. This week won't be much better as I am in Florida for a conference.

Nothing. Returned home from a wedding in Pennsylvania.

Spent the entire day at the townhouse. Shopped one gas station.

Merchandising mania! Started the day with a gas station audit, then shopped another gas station before heading out to complete 6 merchandising gigs. This was the only full day spent shopping/merchandising this week.

Started the day with four gas stations and a fast food breakfast. Then headed to the townhouse.

Nothing. Spent the entire day at the townhouse.

Had a job interview that lasted several hours. Only completed one gas station shop.

Spent the day at the townhouse - almost finished! Did shop a fast food place for both lunch and dinner and a gas station later that evening.

Total Income for the Week: $155.43
Total Value of Reimbursements: $64.84

Wednesday, November 11

How a Frugal Miser Travels on the Cheap

One of my mantras is enjoying life while making wise financial decisions. I don't want to be the stereotype of a miser who never leaves his home and counts tissue squares so as to ration the cost of his bowel movements. That's not for me.

I love to travel. That's my getaway from reality. This morning my partner and I are flying to Tampa for a 5 day getaway. I am attending a conference in Orlando, which I paid for several months ago before losing my job. Truth be told, I wouldn't be going if I had not already plunked down the registration fee and part of my lodging fees.

Of course, a frugal miser can travel glamorously and still live within his means. Here are a few things most anyone can do to save money when traveling:
  • Find the least expensive parking. In the past I have gone so far as parking for free at a nearby supermarket and using a cab to get me the last bit of the way. Either that or get a friend to drive me to the airport. These aren't options, but I did find cheap parking by Googling "cheap parking at my local airport". I located an off airport lot and a coupon for 20% off regular rates. My per day rate will only be 60% of the cost of the cheapest on site parking, plus we are dropped off at the terminal so no trudging our bags through the parking deck.
  • Rent a cheap car. Renting a car was a necessity as my conference is in Orlando but we are flying to Tampa. Often there are one or two rental car companies with offsite facilities. This alone saves you from paying the "facility" fees and other ridiculous charges that come with renting from an airport location, plus the rates are generally less. In this case, however, I was able to get a discount through Budget Car Rental by using a coupon from a book I bought to support the local schools.
  • Be loyal. If you do travel fairly often, it pays to sign up for a hotel loyalty program and to frequent that brand as often as possible. I primarily used Hilton Honors while I was employed, but I may move to a lower cost chain (Choice Hotels comes to mind) now. You will usually come out ahead in the long run by sticking to one (or two at the most) program, even if the hotel is a few dollars more than an alternative, since you can earn more free nights the more often you stay in one brand. Moving from Silver to Gold to Platinum and taking advantage of special offers will expedite your rewards.
  • Use a rewards credit card. I have two: the Chase Southwest card and the American Express Hilton Honors card. I earn several free nights a year at Hilton-branded properties and I rarely pay for my flight. Everything goes on my card, and I always pay the balances on these card each month.
  • Use coupons or eat in. I work to keep my food costs down while still enjoying the local cuisine. First off, always take advantage of the free breakfast at the hotel. Decide whether you can live with yourself if you take an extra banana or granola bar for your afternoon snack. Then alternate between inexpensive eating and treating yourself. We will have at least a couple meals that we prepare ourselves. This means a quick trip to the local supermarket for sandwich ingredients and making sure our hotel room has a refrigerator. If it doesn't, the hotel ice bucket will be used. For meals out, try to use coupons. I buy the Entertainment Book each year. In addition to the printed book I receive, I can access printable coupons online for other cities. If that's too much trouble, just make smart choices. We never order soft drinks at a restaurant - it's always water. Consider splitting an entree. Order sensibly.
  • No souvenirs. I used to shutter at the thought of not taking home some memento of my travel. But now I realize the memories of the experience are all I need and I rarely ever bring home more than I came with. Who needs extra clutter to keep up with and maintain for the rest of your days? I don't. A few digital pictures will suffice.
Being smart about travel expenses means I'm not paying for my vacation months after coming home. It also means I can take MORE vacations, and that makes this frugal miser happy!

Tuesday, November 10

I've Rented the Townhouse

My very first rental property, a 2 bedroom townhouse which I lived in for three years, has been rented. The tenant will be moving into it in about a week. I consider this a quick turnaround:
  • Closed on Rental Property #7 on 10/27.
  • Began preparing Rental Property #1 the evening of 10/27.
  • Tenant moving in on 11/17.
My tenant will be paying $625 per month, which is $100 per month improvement over what the previous tenants paid. Tomorrow I will review how I determine my profitability from this.

How did I find a tenant so quickly? A few months ago I rented a condo. I listed in on Craigslist and received a dozen inquiries in the first week. This tenant was interested in moving in a month or two, while the tenants I selected signed a lease and paid the first month's rent the next day. Some folks would see a red flag here - I mean, why didn't she find another place instead of waiting on me? Well, her credit is bad. She was in a bad marriage and made some mistakes. She and her two kids are now living with her mom and she vows this will be a new beginning.

I'll save my philosophy for screening tenants for another day. I will say that I am pretty liberal and will give someone a chance if my gut tells me to do so.

Monday, November 9

The Freedom that Comes from Job Loss

It's barely five in the morning and I've been up since 2:45. Not because I was tossing and turning but rather because I was so eager to get the week started.

It is both strange and delightful at the same time that for the first time in many, many years, I actually look forward to waking up in the morning. I am giddy when going to bed thinking of all the things I will be able to do the next day.

I really did enjoy the job that I lost in August. But now I'm starting to realize there were A LOT of things I didn't like at all. For instance, the meetings. Oh my, that monthly Operational Metrics meeting that our Six Sigma emblazoned COO so rigidly enforced... that's history for me! No more staying late into the wee hours trying to make give me the reports I need. No more spending an hour detailing the activity that lead to a Closed - Won or Closed - Lost Opportunity. No more logging in excruciating detail my call notes. No more call quota. No more back stabbing sales engineer sucking up to the boss by making everyone else look pathetic.

I say this knowing full well that I will jump at the opportunity to get back into the workforce. But then I ask myself, Why? Are my bills current? Yes. Am I making enough money mystery shopping to make ends meet? Well, I am right now.

I will take this lesson learned with me to my next J-O-B. The place I am interviewing is a start-up with just 7 employees. No process. No ridiculous rules or formal reporting. Just a "get it done" attitude that is the essence of what work is all about. Strip out the mindless bureaucracy and you are left with the actual work. In some places, there's very little in the way of work and more in the way of making it look like you've been busy. I don't have the job yet, but it is representative of where I'd like to land when I do get hired.

Sorry for the rambling. I've been thinking a lot lately about how much clutter there is in most work environments. Right now I am my own boss, so I do things efficiently and I only report to myself. Cut the extraneous crap and I actually like the art of working.

Sunday, November 8

Assessing my Credit Card Debt

As I mentioned yesterday, my top priority is paying down my credit cards. These were under control until I had to access some cash advances to purchase Rental Property #7. Before, I had just over $23,000 in credit card debt at less than 4% interest. This represented a "balance transfer" check I wrote to myself a couple years ago in order to buy and rehab a rental property.

Total Credit Card Debt: $38,246

My Plan to Pay it Off: I would like to reduce this amount by $1,500 per month. I will use all available rental income and mystery shopping income (after paying other required bills such as mortgages and utilities). I will also explore selling personal belongings. I don't have much to sell (I sold my living room furniture last month), but will brainstorm on how I can monetize even more of my possessions.

Note: I also took out a Prosper loan to purchase Rental Property #7. I don't want to track my payments here for privacy reasons, but the interest on it is fairly high, so I will also be working towards paying it off as fast as possible.

Saturday, November 7

My Financial Situation (Update for November)

I mentioned last month that my #1 goal is to pay off my debt as fast as possible. I wanted to review the progress I made in October:
  • $38,246 in outstanding credit card bills (not counting balances on cards I pay off each month). This increased significantly (about $10,000 over last month) as I desperately sought all sources of cash to buy a rental property.
  • I also took out a $3,500 personal loan to fund the rental property transaction.
  • $96,276 owed on my house (a principal reduction of $556!).
  • $33,810 owed on a HELOC used to purchase a rental property.
  • $38,520 owed on my car (the bane of my existence).
  • $17,642 owed on student loans.
  • $180,565 owed on 2 other rental properties (a principal reduction of $711!).
  • $38,000 in other obligations related to rental properties.
  • I finally closed on Rental Property #7 in October. This will most likely be my last real estate transaction for a while.
In October, I increased my debt load some in order to purchase Rental Property #7. This property has been in my pipeline for almost a year and I was committed to making it happen. Because I needed every spare dollar to purchase this property, I made minimum payments on all my debts this month. I can commit moving forward that I do not plan to take on any additional debt.

Friday, November 6

November Goals

I mentioned last month that once I closed on Rental Property #7 I would make some very tangible goals each month, such as eliminating debt or cutting expenses. Without further ado, here's my plan for November:

November Goals:
  • Last month I earned $1,565 in mystery shopping income. I will be traveling nearly two full weeks in November, so I expect to earn less. I want to set an aggressive goal, though. I will shoot for $750 in mystery shopping income, with a stretch goal of $1,000.
  • Last month I spent $193 on food, and I spent $208 in November 2008. I will spend less than $150 on food this month. I still have a couple gift cards plus a ton of restaurant coupons which will come in handy while I'm on the road. Plus I can do some mystery shopping at meal time.
  • Last month I spent $193 on fuel. In November I will spend $100 on fuel, down from $173 in November 2008. I traveled a good bit last November for my job, so much of my gas was reimbursed or I would have spent more. Thanks to all the gas stations I plan to shop, combined with lower gas prices, I should be able to reach this goal.
  • I took on credit card debt in order to purchase this last rental property. It's something I'm not proud to admit doing but after considerable work to find an alternative, I hit a roadblock. I also had a balance of just over $23,000 on one credit card with a rate of less than 4%. I used a special cash advance offer a couple years ago to finance a rental property. I don't regret this transaction, even though the interest isn't tax deductible. So, my #1 financial priority moving forward will be paying down my credit cards as quickly as possible, followed by a close #2 priority of selling the Bimmer.

The two trips I mentioned are "legacy" trips I arranged while I was still employed, and a large part of the expense was already paid. My partner and I are going to Tampa and Orlando for several days for an investors conference I am attending... nevermind that I cleaned out my brokerage account to buy the last rental property! My partner has never been to Tampa and it's one of my favorite places - I may even move there one day.

The other trip was a conference that my employer paid for. I had a professional development budget which I used. I've been debating whether I should go, as a few of my coworkers are also attending and it could be awkward. But I expensed almost $1,500 to attend, so why not go? I'm still trying to decide for sure. My severance pay runs out a week before the conference, so I can't see what my employer could do to me for going. Like I said, it's a sunk cost to them, anyway. Surely they wouldn't mind if I continue to develop myself professionally, right?

Gas and food are my two largest variable expenses. My two largest expenses overall will be hard to change: the mortgage and car payment. I consider my utility costs to be fairly reasonable, a result of my frugal habits. However, I continue to explore ways to cut these even further.

Thursday, November 5

My October Income: $17,065

October was a decent month. My severance benefits continue through November 10th, and because I wasn't actually working, I had lots of free time to earn money from mystery shopping.

$4,167 Severance Pay
$1,565 Mystery Shopping
$487 Change in Value of Retirement Accounts (Roth IRA and Rollover IRA)
$10,846 Rental Income*
$17,065 Total Income for October

*not typical. The tenants in Rental Property #7 agreed to pre-pay some of their rent (I needed the cash to close on the property). I use the cash basis to report my income.

November (and future months) won't be anywhere near as nice. I will receive one last paycheck from my former employer. I have been aggressively seeking other income, whether from one-off gigs on Craigslist or taking mystery shopping road trips. This month the dust will settle on the purchase of Rental Property #7 as well as some other interim changes that have resulted due to my job loss. By December I will have a more predictable view of my income and debt situation.

Reviewing my October Goals

Tomorrow I will post my November goals. Before I do that I wanted to review how I did in October:

How did I do on my October Goals?
  • close on Rental Property #7 DONE!
  • $500 in mystery shopping income SURPASSED!
  • maximum food expenses of $100; maximum fuel expenses of $100 FAILED.
The rental property closed on the 27th...this is a huge distraction that I no longer have to focus on. Plus, starting in January this property will add to my monthly cash flow.

I grossly underestimated my mystery shopping income. In October I earned $1,564 from mystery shopping fees plus an additional $474 in reimbursements for everything from gasoline to food to gifts.

I did exceed my food and fuel expense goals. I spent $93 more for gas and $93 (not a typo) more for food than I had budgeted. Not to minimize this failure, but I can justify the fuel overage: as I did way more mystery shopping than I thought I would do, I drove a lot more. One of the companies I shop with only reimburses for a $1 gas purchase for the fuel shops, and I inevitably buy more (one would think buying just $1 in gas on a credit card might give myself away as a mystery shopper!). The other company that offers the fuel shops reimburses a much more reasonable $5.00. As for the food, I decided during the Florida trip to splurge a little. Sure, we could have bought inexpensive meals at the grocery store or frequented the dollar menu, but that's not the kind of miser I want to be. Every now and then, I think it's okay to eat at a decent restaurant. I'm still going to order water as my drink and stay away from the most expensive entrees, but I want to enjoy myself from time to time. Still... how many people do you know can say their food budget for a month was less than $200?

Wednesday, November 4

A Week in the Life of a Mystery Shopper

Last week I didn't earn much at all from mystery shopping. Instead I spent most of my time renovating my first rental property after the tenants moved to Rental Property #7. I also went away to a wedding for the weekend. To top it off, I was sick most of the week with an infection in my throat. At one point I could barely swallow!

I ate lunch at a fast casual restaurant. I looked for other opportunities but nothing appealed to me. Sundays can be slow unless I find some gas stations to do.

This was my busiest day of the week for shopping. I completed 11 shops, traveling 213 miles.

Closed on the new property. The tenants vacated the townhouse on the same day, so I started that afternoon sprucing up the townhouse so that I can begin marketing it.

Again I spent most of the day at the townhouse, but I did manage to shop 3 gas stations and 2 banks.

Usually as the end of the month nears I can find last minute shops with great bonuses, but I didn't see anything that interested me, especially since my priority had to be cleaning up the townhouse (which, mind you, was a disaster area!).

I did a gas station and a telephone shop.

Nothing. Attended a wedding in Pennsylvania.

Total Income for the Week: $170.80
Total Value of Reimbursements: $77.75

Tuesday, November 3

A Frugal Miser Brings Home Toiletries and Food from Hotels

I've seen debates online about the ethical dilemma of whether it is okay to take home toiletries, towels, food, etc. when you stay in a hotel. I tend to be liberal on the subject.

First, I never take items that the hotel clearly reuses. For example, towels, remote controls, etc. I remember a couple years ago a group of friends and I spent the weekend at a nice hotel in Pensacola Beach. I didn't find out until a few weeks later that one of my so-called friends took home the hotel hair dryer. How embarrassing.

But I have no problem bringing home other things, such as soap, shampoo, coffee packs...even food from the free breakfast. In fact, if I really like something, like the soap, I've even been known to request an extra from the front desk just to take it home. Now and then I will bring home the tissue or toilet paper if I know I am running low.

Is this going too far? Maybe. I don't see any problem at all taking my used soap or open shampoo, but some may question whether I should take an unused coffee pack or packaged cereal. I guess since the value of these items is nominal, I don't really feel bad when I do it.

What do you think?

Monday, November 2

A Frugal Miser Attends a Wedding

I spent the weekend in beautiful State College, PA, where I attended the wedding of a good friend. I don't go to that many weddings, and after I lost my job I hesitated about going to this one (this friend is also a client of my former employer...that's how we met). But I managed to have a great time and not spend much money. In fact, I didn't spend a dime on food:

Leading Up to the Wedding
  • Cashed in a flight credit for a flight I had canceled at my previous employer. I didn't see any reason in letting it go to waste, especially since the wedding was for a customer of my previous employer. Cost of flight: $0
  • Gift card at Target and Congratulations Card: $26.08. I'm not a big fan of purchasing "things" as gifts, even though at first that would seem more thoughtful than just buying a gift card. I can recall few gifts that I've received that I would have purchased for myself, and I assume most people are like me.
  • Bought $15 worth of gas to travel to the Atlanta airport. Traveling from my home airport would have required a second night in a hotel.
  • Wedding began at 3 PM - I arrived with just 15 minutes to spare. Reception started around 5 PM, which included food and drinks.
  • Checked into Best Western, redeeming more of the travel cards I had purchased before I lost my job. Brand new hotel - I was impressed.

  • Ate breakfast at the hotel. Took a box of cereal, muffin and a cup of coffee with me for later.
  • Checked out. Cash expense was zero since I used a travel card. Actual room cost was $98.00.
  • Filled the rental car 26 miles from the airport. They say you should refuel within 10 miles, but I knew the tank would still be on full. $18.01
  • Arrived at the airport a bit earlier than I had to, which saved me from going over the 24 hour rental period on my compact car. It was a Hyundai Accent, by the way... nice car all things considered. $32.56
  • Ate the cereal and muffin for lunch. Then I had cookies and a soda on the plane.
  • Airport parking: $20.00. Ouch. It didn't occur to me until I was pulling into the airport that I should have found an offsite lot. I would have saved $10 or so if I had done this.
  • Refueled my car: $18.00
Total cost of attending a wedding in State College, PA: $227.65.

Thursday, October 29

A Week in the Life of a Mystery Shopper

Even throwing in a quickie vacation, I managed to earn almost $400 last week in mystery shopping fees and about $75 in reimbursed purchases. However, it was a slower week all in all:

I signed up with a company that primarily does merchandising and completed my first two jobs today. It was easy work: I had to make sure DVDs were arranged according to a certain order, which in the industry is referred to a planogram.

This was a pretty busy day as I had a hodgepodge of shops to do. Note to self: it's easier to go with a "theme" for the day (for example, all gas stations, or restaurants, or retailers) if I want to be as efficient as possible. I did everything from fast food to merchandising to gas stations to mall stores to discount and home improvement retailers today.

I only did four shops today, but the pay was almost as much as what I earned Monday running around like a glutton. I visited two banks, did one merchandising job and went to a movie theatre to ensure a movie poster had been installed.

A quiet day. I ate a free breakfast, that was all. My Florida trip would start later in the day so I spent most of my day mapping it out, creating my data entry worksheet and hunting for more jobs.

Busy day on the road, 15 shops total. We'd spent the night in a Best Western in small town in southern Alabama. Left the hotel around 8 AM and arrived at our hotel in Panama City beach about 4:30 PM. All I did was gas stations today. As I mentioned, I've found that having a theme for the day makes things much easier. We broke up the monotony through the day by making random stops at nurseries to look at banana trees and other native plants. All in all I enjoyed the day. This was the week's best day and I earned $200 in fees and $30 in reimbursements.

Today was a fairly easy day as I wanted to enjoy our time in paradise. I added four gas stations to my itinerary that were all within a couple miles of the hotel, then returned to the hotel to enter them before heading back to the beach to enjoy some sun and sand. After lunch we headed home. I completed two gas station shops on the way home.

Nothing. I could have completed four shops that I'd signed up for, but all week I was battling a cold and I really didn't want to go anywhere, so I didn't. This is what's nice about mystery shopping: you have flexibility. Instead of shopping, I cleaned house, caught up on email and watched a couple of movies on the ROKU. I really enjoy cleaning house, it's good therapy, so I had fun not doing anything in particular on Saturday.

Total Income for the Week: $382.15
Total Value of Reimbursements: $67.75

Wednesday, October 28

Closed on the Rental Property

I closed on the house yesterday! This was one of the most difficult tasks I've had in some time.

For the immediate future I will be focused on renting the townhouse my tenants moved from. Before I can show it, I've got to do some major cleaning. They lived there over three years and IT'S A MESS. I may post before and after shots to give you an idea of what I'm talking about. My plan is to rent it for $625/month. It is a 2 bedroom, 1.5 bath corner unit so it has a decent yard.

Tuesday, October 27

I'm Now a Merchandiser

In my quest to make ends meet, I've supplemented my mystery shopping work with merchandising. What is merchandising, you ask? Well, some companies will use contractors to maintain the shelves at retailers that stock their products. I used to think retailers were the ones that managed their inventory and organized their merchandise. While that is true for many things, it's not for others. Think DVDs, pre-pay phone services, and greeting cards, and these items are probably handled by a merchandiser who comes into the stores on a regular basis to straighten the shelves (according to "planogram"), report outages to the supplier, and maintain the face-to-face relationship with the store managers.

I just started doing this last week, but I was able to sign up for permanent assignments with a few stores, which means I will always be assigned the work for that store and won't have to compete with others to receive it.

How much does it pay? Not much... the ones I've signed up for so far range from $6 to $12 per visit. Fortunately, most assignments pay a set fee regardless of the time it takes. Unless the visit involves installing new displays, it's generally a quick in and out. I did my first two assignments last week, and even though I was new to it, I was in and out of the store in 20 minutes.

Monday, October 26

Closing on the House Tomorrow

Tomorrow morning I will FINALLY close on Rental Property #7. I say finally because I began the hunt for this property nearly a year ago, and it was originally slated to close in September. With my job loss, I ran into some hurdles with financing the property.

A huge burden will be lifted when I hand over the keys to my tenants. I started looking for this house nearly a year ago, and it was originally scheduled to close in September. My job loss messed up the financing. However, I made a commitment, and I keep my commitments, job loss be damned. These tenants happen to be my best friends, and they've been renting a townhouse from me for over three years.

Most likely this will be the last rental property I purchase for some time. Without a more predictable, employer-originated income, banks balk at lending money these days! I do look forward to having a clearer picture of my finances.

So, beginning with November I can take a real assessment of my debt level and create an attack plan to pay it down.

Sunday, October 25

Aggressive Tax Avoidance: Deducting Travel Expenses While on Vacation

I wanted to review the tax consequences of my mystery shopping trip to the beach. Since the main purpose of the trip was to generate income, the IRS is okay if I had a bit of fun on the side. There is a great article about this on MSN. I have a lot to deduct from my taxes:

Mileage is reimbursed at $.55/mile in 2009. I drove a total of 992 miles, so I can deduct $545.60 from taxable income for miles driven. At a 25% tax rate, that's $136.40 in cash money I save on taxes.

Even though I did not have a cash outlay for the hotel, I can still deduct that expense, which was $139.32. Assuming I would pay 25% in taxes on the income this offsets, the value of this deduction is $34.83.

Meals are also deductible, but only for my meals... unless I can establish a business purpose for my partner's traveling with me. Since he did help me with filing, data entry and observations, I might be able to deduct his meals as well. I need to do some digging on that. I spent $101.20 for the two of us.

Other Considerations
Fortunately in 2009 I earned considerable income from a day job for the majority of the year. This means if I lose money at mystery shopping it can offset the income I made from my day job. This will be quite useful for 2009, but if I my wage income in 2010 isn't significant, the advantages of deducting these expenses are minimized.

Saturday, October 24

Cost of a Frugal Miser's "Vacation"

I mentioned Thursday that we were taking a trip funded (hopefully) by mystery shopping along the way. Today I wanted to review the trip. Tomorrow I will review the tax consequences of my trip. Just a note: when you see the deductions I am able to take, you'll be ready to pack your bags and mystery shop your way to the beach, too:

  • If we had traveled directly to our destination, the round trip mileage would have been 638 miles. This includes 50 miles for driving along the beach, to restaurants, etc. while there.
  • We actually drove 992 miles. Difference: 354 miles.
  • I packed as usual, except I had to bring my scanner in order to upload receipts. I brought my multi-function printer/copier/scanner in case I needed to print anything. This was a bit bulky but not a huge inconvenience.
Expenses ($326.15)
  • Fuel: $47.00 (actually spent: $68.00, less $21.00 that was included in reimbursements.) BTW, we drove the sipping Corolla versus the sexy but thirsty Bimmer. I'm trying to keep miles off the Bimmer to increase the resale value when I try to sell it this spring.
  • Lodging: $139.32 (incidentally, this wasn't a cash expense. I had purchased a bunch of Best Western gift cards right before I lost my job to earn airline credits needed for a free flight for a trip I am taking in November. The idea was to use the gift cards for business travel and just expense them over time.)
  • Food: $101.20 ($28.00 of this was non-cash as I used a gift card and a $5 off coupon.)
  • Alcohol, Incidentals: $38.63 (actually spent: $59.63, less $21.00 that was included in reimbursements.)
Income ($244.89)
  • $244.89 from completing 21 gas station mystery shops.
  • this does not include the $21 in reimbursed gas and $21 in reimbursed goods, which I have offset in the expenses above.
Net (-$81.26)
  • Note that my actual cash outlay (besides that which will be reimbursed) was only $158.83 as I used gift cards for lodging and one meal.
  • Tomorrow I will cover the tax consequences of the trip. Taking that into consideration, I did come out ahead.
So, we were able to enjoy 2 1/2 days out of town and it only cost me $81 plus wear and tear on my car, which I get to recover anyway from Uncle Sam. Could I have been more frugal? Certainly. There was a cheapo budget motel on the beach (we were a few miles inland) for $39 per night, but I didn't have a gift card for that and the reviews were terrible. We also didn't have to spend as much on food, but even a miser knows when to see the forest for the trees (otherwise we get into the "miser = miserable" territory which I refuse to cross).

Friday, October 23

Update From Panama City Beach, Florida

We arrived in Panama City about 4:30 PM yesterday. We actually left the hotel we stayed in Wednesday evening a little after 7 AM. I shopped 15 gas stations along the way.

We arrived early enough to enjoy some time on the beach. After I finished entering my reports, we ate sushi and then drove to the public beach. I didn't see any signs saying the beach was closed, just the red flag warning of the high tide activity. It was about 9:30 and NO ONE was on the beach, even though it was still near 80 degrees. I kept thinking the police were going to shine their spotlights on us and tell us the beach was closed for the night. Fortunately, no one bothered us for the hour or so we were there.

Being spontaneous, I signed up for 4 gas stations this morning. The pay wasn't much (only about $20 total) but they were so close to the hotel that it only took me an hour or so. I can justify that.

We'll leave the hotel shortly and head back to the beach. It's in the low 80s again and the wind is steady, so perfect weather for rolling the windows down. Of course, a trip to Panama City Beach wouldn't be complete without stopping at a local dive for seafood. I have two gas stations to shop along the way home, but that's all I can find that is worth doing.

I'll post over the weekend a breakdown of how much was spent on this trip along with what I earned from shopping.

Thursday, October 22

Taking a Mystery Shopping Vacation

No, I'm not taking a break from mystery shopping. I'm taking a frugal vacation...and paying for it along the way.

My partner and I left yesterday for the beach. We'll be back Friday night. Along the way, I will shop several gas stations. Once we're settled, I'll check my shop sites for other jobs that might interest me, like a restaurant or two... we'll see.

So along with a couple days clothes and cosmetics, I've brought along the scanner, camera, laptop and the GPS. I'll post this weekend on how much this vacation cost (or made) me.

Tuesday, October 20

Misers Cut Heat Bills (Volume 2... Water Heater Blanket)

Insulate Your Water Heater
Purchase a water heater blanket for your water heater and it will pay for itself in a matter of months.

According to the Iowa Energy Center, an insulating blanket will cut energy loss 25% - 45%. Assuming you spend $25 per month heating your water, it is safe to say you could save $5 - $10 per month just by installing one.

Not everyone needs a water heater blanket. New models of water heaters are already insulated. How to tell? Simple... just place your hand on the outside of the water heater. If it's warm, then it needs to be insulated.

Monday, October 19

Misers Cut Heat Bills (Volume 1... Electrical Outlets)

My how winter has a way of rushing in. What happened to fall? This week I wanted to focus on ways to save money on winter energy costs. Each day I will focus on an easy task that can save money by cutting energy costs. My plan is to compare my electric and gas bills year over year (assuming the weather is similar). I have a newer home so I'm not sure how much bang I'll get for my buck. We'll see.

Secure Those Electrical Outlets
Electrical outlets on exterior walls can let cold air in. To keep cold air from entering your home via these outlets, unscrew your switch plates and spray some Great Stuff in the crack. Or you could install foam pads around the back. And, if the plug isn't being used, plug in one of those toddler-proof plugs to block more air.

Tomorrow... more ways to insulate your home.

Sunday, October 18

A Week in the Life of a Mystery Shopper

I made $685 last week in mystery shopping fees and earned $141 in reimbursed purchases:

Bought groceries at two supermarkets, bought gas at two stations, ate lunch and dinner out, and shopped two home improvement stores.

I was exhausted and needed to get caught up on home chores. I did one discount retailer just a few minutes from home.

I only did four shops today, and they were all in a town 60 miles from home. One was a very lucrative evaluation of an apartment community. I made nearly $100 just on that evaluation.

Five gas stations, a bookstore and six banks. Three of the banks were phone shops so I didn't actually have to visit the branches. I left the house at 7 AM and was back home by 4 PM, but didn't finish entering reports until almost 7 PM.

Busy day, 15 shops total. I traveled to a community about 50 miles from my house to pick up 11 gas stations. The other four shops included two restaurants, a mall store and a home improvement retailer. I came home with more gas in the car than I started (all free), but it was a LONG day. What made the day seem so long was all the data entry involved.

I was out way too late Thursday night celebrating my partner's birthday, so I only did 4 gas stations.

Mystery shopping marathon. I drove nearly 700 miles in my quest to earn $250 in one day, and I did it. The nice thing was that I only shopped ten places and they were all gas stations in rural communities. I used my partner's Corolla to cut down on operating costs (the Bimmer drinks a lot more gas than the Toyota). Because all I did were gas stations, data entry was significantly less (versus restaurants which tend to take forever to fill out the report), so the time it took start to finish was only 13 hours. Plus, much of my gas for the trip was free.

Total Income for the Week: $685.23
Total Value of Reimbursements: $141.08

I grossly underestimated my income potential when I set my goal in October to earn $500, as I did far more than that in one week.

Friday, October 16

A Week in the Life of a Mystery Shopper

I've decided to ramp up my mystery shopping activity so that I can more quickly pay down some debts. In my area, there is almost always an abundance of shops available just about daily.

Last week was a busy one for mystery shopping:

Woke up and realized I had no assignments to do, so I went online to the two shopping sites I use most often and formed a trip. First stop, 18 miles from my house, was a lucky find: for one company I shopped a fast food restaurant and for another company I shopped a gas station - both were in the same building. I then did a truck stop, 2 gas stations and finished up with another fast food restaurant.

I had planned to visit my grandfather in the nursing home, which was 60 miles from my house. So, I picked up a fast food restaurant and two gas stations that were on the way.

I did four gas stations in the morning, but was bored (and hungry) so I searched for a lunch time job. I found a fast food restaurant ten miles from home along with a gas station across the street from it. I also did a fast food restaurant Tuesday evening.

I didn't see anything exciting for Wednesday so I planned to spend the day catching up on emails, working on the blog and cleaning house. One of the schedulers from my favorite shopping company called and offered me a bonus on a casual dining restaurant for that evening. It was only 9 miles from my house and a straightforward shop mostly concerned with food quality and speed of service (as opposed to many casual restaurant shops, which ask for so much detail that entering the shop takes longer than the actual dining). I took her up on that offer and completed just one shop today.

Over the weekend I planned ahead for this to be a busy day. I completed three very simple shops at a large bookstore chain, evaluated a public storage facility, and enjoyed breakfast at a fast food restaurant.

Signed up for a discount retailer and a home improvement store for a mid-day excursion. Evening at a fast food restaurant. The scheduler offered me a bonus to pick this one up. It was just 12 miles from home.

Mystery shopping marathon. I decided Friday that I needed to juice my results for the week, so I went on a rampage, signing up for shops with 4 different companies. This was a road trip: the nearest shop being 20 miles away and the furthest about 100. I started with breakfast at a drive-in 20 miles from home. My journal then took me north for the remainder of the day, where I shopped several gas stations, a home improvement retailer, a bookstore, 2 video game stores, a discount retailer, a sandwich store and a movie theatre. This was a full day, but it wasn't stressful at all as my pace was leisurely. This day alone I earned over $100 in fees and $46 in reimbursements.

Total Income for the Week: $326.54
Total Value of Reimbursements: $187.25

I grossly underestimated my income potential when I set my goal in October to earn $500. If I had hustled I may have earned that in a single week!

Wednesday, October 14

Misers Save Money at the Dentist...

...Or at least defer costs.

2009 has not been the best year for my oral health. I learned, for instance, that there is a $1,500 annual cap on my dental insurance coverage. Sure enough, Murphy would have his way with me this year as I have had TWO root canals.

The most recent was in September, just a day after losing my job. Talk about being miserable. I will never forget Monday, August 31st. Over the weekend I had developed severe pain in my mouth, particularly the roof of my mouth. It felt like my face would explode. Knowing this was more than a severe sinus infection, I scheduled a same day visit to the dentist to have it checked out. He confirmed my fears and scheduled me with an endodontist for the next day. I was feeling a little loopy from the Lortab late that afternoon when my new boss told me there was someone he wanted me to talk to. I won't delve into the details of that.

Suffice to say it was my last day at work. The next morning, not sure whether I was more miserable from losing my job or from the tooth ache, I headed to my root canal appointment. The next step was supposed to be a visit to my regular dentist for the crown, but when I got the bill from the root canal and realized I had capped out my insurance for the year, I wasn't too eager to add to that cost so I procrastinated.

Fast forward to late last week. I was munching on Chex Mix when I felt a hard crunch that seemed out of place. I felt around my mouth but didn't notice anything out of the ordinary so I carried on. Then Saturday I thought I had been stabbed in the mouth with some Chinese torture device. I called the endodontist Monday morning and came in right away. He probed around and then he pulled out a big piece of tooth. I had fractured it.

I thought I would pass out. Lesson learned.

When I arrived at my dentist's office Tuesday morning, the receptionist told me that I would owe $715 for this visit. So I asked if there was any temporary measure they could take or some way to defer this cost until the new fiscal year.

Problem solved. My dentist did the "build-up", whatever that is. I even told him not to give me any anesthesia other than the topical kind to save on that.

Cost: $111. Savings: $604.

I also rescheduled my cleaning and combined that with the crown and will have that done the first week of January. At that point my insurance will pay. The only downside is that I have to be very careful what I eat and avoid crunchy foods on one side of my mouth. I think it's worth it since I'm saving $600.

Tuesday, October 13

Lessons Learned From Managing Rental Properties

When I decided to become a landlord I didn't do too much homework. My first rental property was almost by accident. I wanted to move to a new house closer to my employer and I didn't want to wait for the townhouse I was in to sell, so I rented it instead.

Along the way I have learned some valuable lessons:
  • Avoid transaction costs. As I have moved from one house to the next, I have chosen to keep the old house and convert it to a rental. Why? First, I avoid the transaction costs involved with selling the house. Second, it disciplines me to save money for a down payment on the next home since I won't be receiving funds from selling a house. I plan to post more entries about "transactional costs" as they come up in many situations, not just buying a home.
  • Buy what you know. All my properties are in the metropolitan area where I grew up, and all but two of them are on the side of town where I was raised. I know this area and its past. It's like trading on inside-information. Besides that, if you plan to manage the properties yourself, you need to be close to them unless you don't mind driving across town at ten o'clock at night to fix a problem or pick up a late rent check. The two properties I own in a different part of town are managed by a third party so that I avoid having to make these trips.
  • Go with your Gut. As with many facets of my life, I like to keep things simple. Most landlords will disagree with what I am about to say: I don't charge a deposit, and I don't do a credit check on my tenants. Why? I would dread the inevitable confrontation that would come if I decided to withhold a deposit when a tenant vacates. Instead, I charge a bit more for the monthly rent. Where a landlord may charge $600 per month, I charge $625. I figure that by lowering the hurdles to rent I will place a tenant much faster and thus the increased rent I collect will justify any damage that a deposit would have covered. And by reducing the time a property is vacant, I make up for the lost rent I would experience from having a deadbeat tenant. I have had one eviction so far. The tenants paid me steadily for about 6 months. I lost out on two months rent, but the tenants left the home in move-in condition when they left. I know this won't always happen, but I figure if you treat your tenants right, they will take better care of your investment for the most part.
  • Live By the Golden Rule. I find this to be an important rule, particularly concerning the condition of the property . Simply put, I rehab each of my properties to where I wouldn't mind living in them myself. It makes the property easier to rent, and it cuts down on ongoing problems. I don't want to be called in the middle of the night with a maintenance issue, so I head off as many problems as I can by offering a property in pristine condition. For instance, I go with tile floors in the kitchen and baths and low maintenance carpet throughout the rest of the house. I have a plumber, electrician and HVAC technician give the home a thorough inspection before I ever show a property.
By following these rules, I've made my rental properties almost entirely "passive income". Sure, I have a couple tenants who I have to remind to pay the rent, but overall my time invested each month averages 2-3 hours.