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Friday, April 30

How I Research a Stock

Investing should be fun. If you aren't having fun (and, generally, making money), you probably aren't doing it right.

First off, investing in individual companies just isn't for everyone. If you don't enjoy doing the research, you won't be good at it. Instead, just put your money into an index fund and spend your time doing something you do enjoy.

I am a sleuth when it comes to investing in a company. I love rolling up my sleeves and getting my hands dirty. Below are some of the things I do both before I make an investment and ongoing to stay current:
  • Stick with what you understand. This is the most important rule for me. If I can't tell you how a company makes its money, it's too complicated for me to own. Back in November I purchased shares of Dollar General (DG). If I had listened to the professional analysts, I would have heard them say how, at $22 per share, the stock was fully valued, the company had too much debt, etc. What I like about Dollar General, and why I made an investment in the company, is that it is easy to understand. It's a low-priced retailer that specializes in opening stores in small towns. These are often communities too small to be served by the behemoths like Wal-Mart. Because the company leases its stores, the cost of opening a new store is usually paid for within two years of opening the store. While there are already close to 9,000 stores in the U.S., the company has a presence in just 35 states - room for expansion westward.
  • Read everything you can get your hands on. I have a voracious appetite for reading anyway, so I'm always looking for new information about a company I like. For example, my local Dollar General recently remodeled, and somehow several copies of the employee newsletter were left on the sales rack. The information wasn't proprietary, but it gave me an idea of what information management thought was important to share with its employees. I also set up Google Alerts so that I receive emails whenever new information is posted online. This is cool because I hear about new stores coming to towns across the country, different crimes that occur (after noticing several stories about shoplifting incidents, I did some digging to see how DG compared to other retailers in terms of shrink, which is the expense a company associates with lost inventory due to theft, damage, etc.
  • Get hands on. This is where the rubber meets the road. I'll email company officers to ask questions (surprisingly, many times I'll get a personal email responding to my question). I'll visit stores and talk to employees. I've even stopped truck drivers at truck stops and asked them about their jobs so that I can learn more.
  • Read between the lines. If there are any red flags about Dollar General, it is its debt level. KKR, the company that took DG private in 2007, saddled it with debt. The company went from having $260 million in debt before becoming private to more than $4.2 billion in debt when it was made public again in November 2009. Interest on debt is consuming about 39% of earnings right now. On the surface this is scary. I don't mean to make light of it, but the debt was taken out not in the normal day-to-day operations of the company, but instead to fatten the wallets of the pirates at KKR. Now that it is once again a public company, it can pay off this debt and move on. Do I agree with what happened? Of course not - it should be illegal. But does that change how I feel about the company? Not at all.
For me, investing in a company is a long-term relationship. I am an owner of the business, and as such I want to know as much as I can about my business. It doesn't matter that I may only own 1/1,000,000,000th of the company, I still am an owner and will think like one.

Thursday, April 29

My Frugal Miser - Why I'm Driving - Not Flying - to Omaha

I've been going to Warren Buffett's annual meeting for nearly 10 years, but usually I fly. I decided that I would drive this year. Why? First of all, flights were more than $400 round trip. If I traveled by plane, I would also have to rent a car. That's another $150 or so. Besides, I would be a prisoner to my flight schedule then. By driving, I can decide when I'm ready to leave.

But the real reason I am driving is because I wanted to see if I could pay for my trip by mystery shopping along the way. As I've done in the past, I enjoy the challenge of doing a little work while I'm on vacation or at least en route to my destination to offset the cost of the trip.

I'll regret doing this later tonight, but the money is good. I'll be driving nearly 700 miles before reaching my hotel tonight in St. Louis. But, I am earning about $370 in mystery shopping fees along the way. Sure, I'll be exhausted tonight when I finally enter my last report, but I'll wake up fresh tomorrow morning, content knowing that I've covered most, if not all, my travel costs.

For added measure, I'm going to challenge myself to find even more work on the way home, and maybe a job or two while I'm in Omaha.

Warren Buffett on Diversification

Diversification is only required when investors do not understand what they are doing...

I get angry when a well-respected person preaches the value of diversification. The only excuse for being diversified is ignorance. Let me explain by posing this question:

  • If a loved one were experiencing the symptoms of a heart attack, would you be more confident taking them to a general practitioner or to a seasoned cardiologist?
I personally invest in individual stocks, but I'll be the first to admit most people shouldn't do this. For the average person, regularly investing in an index fund that tracks something like the S&P 500 is all it will take to beat 90% of all mutual funds out there. Seriously... most actively managed funds under-perform the markets after expenses.

When I first started investing, I held between 20-30 stocks at a time. These were the hot stocks I read about and wanted to own. The problem was, I knew very little about any one of these companies. Besides that, I was paying more in transaction fees to own these stocks than I was paying for electricity to power my home. Seriously.

The disciplined investor will likely do fine owning just 5-10 stocks. If you are doing the appropriate amount of research, there's no way you can keep up with any more than this unless you are a full-time investor.

I learned a lesson about the harm of diversification when I opened an account at In fact, the CFO and other higher ups at Prosper preached the values of diversification on their blog and at the Prosper Days conference I attended a few years ago. Prosper is a micro-lending site where individuals can ask other individuals to borrow money. The folks at Prosper encouraged lenders to "spread the risk" by lending to several borrowers instead of 1-2. I was lending $50 at a time to dozens of borrowers, and doing little more than looking at the interest rate being offered. Instead of making 20 loans for $50 each, I most likely would have done better by making a single loan for $1,000 (or, at most, 4-5 loans total). If I had taken the time to really learn more about the borrower, I could have spent time really vetting out who to lend to.

Take the time to really understand how the company you are researching makes its money. You'll still make mistakes from time to time, but I'm betting your performance will be much greater than simply throwing money at a couple dozen "hot stocks."

Next up... How I research a stock.

Wednesday, April 28

Warren Buffett and His 20 Punches

Our favorite holding period is forever...

I remember how exciting it was when I opened my very first brokerage account. I was eighteen, and smitten by the idea of owning a piece of America. I readily funded my Charles Schwab account and started trading. The problem was, I was trading.

When someone asks me if I trade stocks, my answer is "no, I invest in companies." Watch too much CNBC and you'll be convinced everyone who is "in the market" must keep their eyes glued to some 50 day moving average chart with their fingers ready at the keyboard to hit "buy" or "sell" based on some trend they have uncovered. It's important to keep in mind that for every buyer in the market, there has to be a seller. So for every person who thinks he is selling at the top, there's someone else out there who thinks he is taking a position that is sure to go up.

Warren Buffett introduced me to a wonderful exercise a few years ago: imagine you have a ticket with only 20 punches on it. Every stock trade receives one punch, and after twenty punches you are done trading... for the rest of your life. The purpose of this exercise isn't to say you will only trade 20 times in your life, but it's not far from it: with every investment you make, take your time to decide if it is right for you. Unless something materially changes with the company in which you have invested, or your own personal financial needs change unexpectedly, stick with that company.

By doing this, not only do you reduce your trading costs and taxes, you also force yourself to do your due diligence. When I was an inexperienced 18 year old with a couple thousand in the market, I thought every stock I read about in Forbes was sure to skyrocket. Of course, with the next issue there inevitably would be a company I liked even more and I would have to sell one stock to buy the new one.
  • Know the company before you invest.
  • Set guidelines for what conditions will cause you to sell. Keep it in writing.
  • Instead of searching for the next investment idea, spend your research time learning more about the stocks you already own.
Tomorrow... Diversification is for dummies.

Tuesday, April 27

Warren Buffett Week at My Frugal Miser

I have a confession: I worship Warren Buffett. I've been to his house. I've been to his office. I've filmed him playing bridge. I've stood six feet away from him as he ate a Dairy Queen treat.

No, I'm not a stalker, but I suppose I'm pretty damn close to being one. What I am is a huge follower of his infinite wisdom. Later this week I make my annual trek to Omaha for the Berkshire Hathaway annual meeting. It's the Woodstock for Capitalists. I've been doing this nearly ten years now.

This year I'll be going by car. I've only driven once before, but I thought it would be cool to try to do a little mystery shopping along the way. I won't go hardcore. My goal, simply, is to pay for my travel with mystery shopping.

I'll leave my home near Birmingham, AL on Thursday and expect to arrive Friday in time for the annual cocktail reception at Borsheim's, a large jewelry store where the weekend kicks off with free food and spirits. After driving 1,000 miles, a free drink will really hit the spot.

I thought I would devote this week to explaining how Warren Buffett helps me be a better miser. To get started, why not check out this post I made back in January about how Buffett himself is a miser, too.

Monday, April 26

A Week in the Life of a Mystery Shopper

April 18th - April 24th...

Last week was a decent one. I earned $833 and drove 1,584 miles. I also received reimbursements totaling $169.

I've started to notice that Sunday tends to be the slowest day each week. I only did 4 gas stations today. But who says there's no such thing as a free lunch: I went through the drive-thru of a Dairy Queen for lunch. When I presented my DQ gift card as payment, the cashier, who happened to be the owner, apologized and said he had just bought the store and was in the process of setting up an account to accept gift cards. He said he would give me my meal for free and I could pay him next time I visit his store. Since the store was about 100 miles from home, I imagine it will be a while before I make it back!

A 17 hour day. Fortunately much of that time was at home entering shops, but still... it was a long day! I began my monthly merchandising shops for the DVD project, but also shopped 3 restaurants, 3 gas stations, 3 bookstores and 2 banks.

This was even longer than Monday. I left my house at 6 AM and didn't enter the last report until 1 in the morning. That's 19 hours straight. I did two restaurants, 5 merchandising jobs, 2 bookstores, 3 banks, 1 business verification and 4 gas stations.

This was a much shorter day in terms of hours, but I still earned $168, my third best day of the week. I completed 6 merchandising jobs, 4 restaurants, 2 gas stations and 1 bank.

A slower day but I still earned $81. I only shopped 2 restaurants, a pet store and a bank.

The easiest day of the week. I did a reimbursement-only lunch at an upscale Mexican restaurant, 4 fast food shops and one merchandising job.

An average day: 3 restaurants, 2 mailing centers and 2 grocery stores.

In all I was really satisfied with the week. After Tuesday I worked more normal hours. Monday and Tuesday alone I worked 36 hours - not something I can handle on an ongoing basis!

Friday, April 23

Mystery Shopping the $3 Gas Station

Yesterday I listed some of my pet peeves. I can deal with making a wrong turn because of a bad address or having to answer an email from an editor who wants to know if I really meant it when I said the cashier asked me to watch the register while she used the bathroom (it's happened to me more than once!). What I really have trouble comprehending is how some shoppers will accept work for less than minimum wage.

Let's break this down based on an example from this morning:

Scenario: shopper accepts gas station shop for fee of $5.06. Includes $1.00 reimbursement for inside purchase.*
*This is quite common, but I've seen much worse. There really are $3 shops out there that someone agrees to complete.
Effort Required: This shop requires a minimum of 5 digital photos, taken covertly. Since there is no public transportation in the area, it also requires the shopper to drive to the location (based on the area and proximity to homes, I doubt the shopper is walking).
Data Entry Required: The photos must be uploaded to the report, and receipt must be scanned and uploaded. The form takes a minimum of ten minutes to complete if there are no negative conditions to report.

Since I am really familiar with the area, I also know that there are no other mystery shops in close proximity to this station that have been accepted for the same date. So, this shopper is driving at least a few miles to do this shop.

Let's say it takes the shopper 10 minutes each way to travel, 10 minutes to complete the shop, and 10 minutes to enter the data. That's 40 minutes of effort in time alone, not to mention the gas and wear and tear on the vehicle. Assuming this shop only requires 1/2 gallon of gas, you're looking at $1.36 in fuel cost plus let's estimate another $1.00 in wear and tear (to keep things simple, I won't break out my depreciation calculator).

Fee of $5.06 less $2.36 in vehicle cost leaves $2.70 for time. The hourly rate equivalent?

$4.05 an hour.

I didn't even consider the wear and tear on the computer or camera, or the electricity used to run the computer or batteries to power the camera. But, since the shopper gets $1 reimbursement, they can replenish their own energy with a cheap bag of potato chips.

To each his the way, that $5.06 shop started at $3.00. Yes, I have seen shoppers select them even at that crazy rate.

Thursday, April 22

Mystery Shopping Pet Peeves

Yesterday I discussed what I like about mystery shopping and merchandising. It's only fair to mention some of the things that really get under my skin.

What I Don't Like About Mystery Shopping and Merchandising
  • Low Fees. If you want to see supply and demand in action, take up shopping. Not all companies work on the "quantity over quality" philosophy, but plenty of them do. One company I do a lot of work through starts each month with a ridiculously low fee, and raises it through the month until the job is taken. This makes it difficult to plan efficient routes because I may be going to an area for one company and want to pick up shops in that area. Since I have principles (such as, generally, refusing to work for less than $10 per hour), I'm often not taking jobs for this company that I would like to take. The jobs end up being commissioned for more than the minimum I would have taken had they offered a fair commission to begin with.
  • Poorly Designed Data Entry Screens. Many of the jobs I take are based on earning money through volume. If I can shop 12 gas stations (same brand) and use an Excel template to mark off my responses as I do them, I get a lot more done... as long as the form I have to enter online is user-friendly. On the other hand, some companies use annoying pop-ups or just structure the flow of the report in a bad way. For example, if the report requires 5 photos, sprinkling the upload areas over 5 separate places takes much more time than if they can all be uploaded in the same area of the report.
  • Extra Work Caused by Negative Reports. My favorite mystery shop is one where I have a great experience: the location is clean, service is legendary, and the sun is shining. Unfortunately, that's not always the case. Inevitably, I'll be in some Podunk town, population 650, where the cash register runs off a hand crank and every purchase is rung up as "fuel", even a loaf of bread. Then I have to convince the editing staff that I really did spend $5 in gas and $1.38 on that loaf of bread.
  • Bad Addresses. A lot of my work is in small towns along a route I have created. Unfortunately, these small towns tend to be the places with street names my GPS cannot locate. For example, one community redid its entire address layout a few years ago. I have no idea why, but many locations still list the old street number on the mailbox or storefront, while others have the current information but my GPS is locating addresses based on the old system.

Wednesday, April 21

What I Like About Mystery Shopping

There's good stuff and there's bad stuff as far as mystery shopping. Obviously, I must not mind it too much since I do it full time. Here are a few things I like. Tomorrow's post will be more fun as I will share some of the things about mystery shopping that really get under my skin.

Why Mystery Shop?
  • the money: I'm earning enough to pay my bills. Much of the work I do pays much better than minimum wage (and though I generalize it by calling it "mystery shopping", I also do a lot of revealed audits and merchandising).
  • tax advantages: My actual vehicle expenses are under $0.23 per mile, but the IRS lets me deduct $0.50 per mile. I'm able to offset other income with the deductible expenses I have.
  • no urge to splurge: Many people get the "itch" to go shopping every now and then. Have you ever shopped due to boredom? Who hasn't spent too much on an outfit or a meal because they needed to get out of the house? Since I shop professionally, trust me... I never have that urge! For me, it is a treat when I don't have to shop.
  • expense reduction: sure, splurges are contained, but I also reduce or eliminate many other expenses. Most of my gas and food are free. I have more soap, toothpaste and deodorant than I can use (my friends love me!), and I have a stash of office and cleaning supplies.
  • gets me out of the house: Mystery shopping/merchandising can be fairly physical. If I have 15 gas stations to shop in a day, that's 15 opportunities to move around. Usually when I am home I am sitting around surfing the Internet or reading, which burns fewer calories.

Tuesday, April 20

More Free Stuff this week at Office Depot

My "household" budget category is blown for the month. Office Depot has more "free with your Worklife Rewards card" offers this week. Keep in mind the amount of your purchase is returned to you via a gift card and not cash. Nonetheless, there are some great deals this week:
  • recycled envelopes
  • recycled scissors
  • recycled notebooks
  • rechargeable batteries
  • several other eco-friendly items in honor of Earth Day

Monday, April 19

A Week in the Life of a Mystery Shopper

April 11th - April 17th...

Last week was crazy. I earned $890 and drove 1,523 miles. I also received reimbursements totaling $266, which included one night in a hotel. Things were looking great... until I received a speeding ticket Friday. The officer claimed I was going 60 in a 40 in a construction zone - with workers present, which doubles the fine. I didn't see any workers, so I took photos going back three miles from where he was parked. Does anyone know what the legal definition of "workers present" is? There were workers present - the construction zone was more than 20 miles long.

The quietest day of the week. I did a pizza shop and 7 retail stores.

Quite a bit busier. I did a gas station route and a couple local retail stores. I was gone most of the day but earned $141.

This was also a short day. I did another pizza shop, 6 retail stores, 2 gas station audits, and ate dinner at a steakhouse. Dinner was reimbursement only but worth it.

Took a test drive at a new car dealership (these are my favorite shops... I love looking at cars!), completed 7 retail audits, visited one bank, one home improvement store, and evaluated a car wash.

Busy. I did a little of everything: fast food, banks, retailers, and 3 telephone shops. My partner and I left early evening for the hotel shop and completed two tobacco compliance stores en route.

We continued our road trip, which mostly consisted of tobacco compliance audits. My partner completes the purchase attempt because he is under 25, but I have to watch. Also did a couple of gas stations and retailers and a pizza shop. This was the longest day of the week: we left the hotel about 8 AM and arrived home after 9 PM. I earned over $300 today but after giving my partner some spending money for helping out and the speeding ticket, I probably lost money. Ugh...

A fairly busy day doing all sorts of shops. I went to a couple office supply stores, two discount retailers, two mailing centers, two fast food restaurants and a gas station.

Most of the "retail" shops I did last week were part of a special one-time project. While they only contributed $120 to my income, it involved visiting 30 different stores. Fortunately, the visits were ridiculously easy and usually took about 2 minutes each. This week will be outstanding. I have 17 stores to merchandise, maybe more. This week is a changeout week, which means I have to stock new merchandise and return old, so I will be paid better than my standard visit. I have also signed up for 20-30 other shops already.

Thursday, April 15

Debt Update

Debt reduction has been my major focus in 2010. I can already see the results in reduced interest fees:
  • Mortgage Interest paid in December, 2009: $1,311
  • Mortgage Interest paid in March, 2010: $1,293
  • Personal Interest (credit cards, car loans, etc.) paid in December, 2009: $476
  • Personal Interest (credit cards, car loans, etc.) paid in March, 2010: $386
In just three months, I have reduced my monthly interest expense by $108.

I have not made any extra principal payments on mortgage debt this year. Instead, my focus has been on paying down revolving debt as well as my car loan and personal loan ( loan).

Wednesday, April 14

Reviewing My 2010 Goals: Net Worth Goal

Good news: Barely four months into 2010 I have already reached my goal of increasing my net worth by $25,000. But instead of celebrating, I'm left asking myself how I underestimated my potential so much. Part of it is because of stock market performance, but that's just a small piece.
  • My Roth IRA is up 20.23% YTD and my Rollover IRA is up 8.89%. Both accounts are beating the S&P 500.
  • I've included a $3,000 decrease in the value of my car. I estimate my 2009 Pontiac G5 is currently worth $10,000.
  • Much of the increase comes from income from my rental properties. By keeping my expenses ridiculously low, I've been able to use most of the income to repay debt, which really impacts my net worth in a positive way.

Tuesday, April 13

Loads of Free Stuff at Office Depot this Week

I don't read the Sunday ads like I used to, but I stopped by Office Depot yesterday and found some amazing deals. For this week only, they have a number of items available FREE via their Worklife Rewards program. The details:
  • You can purchase 2 of each item DAILY this week.
  • You will receive 100% of your purchase back on a gift card at the end of the quarter.
  • You need a free rewards card to take advantage of the offer.
I made my purchase on my Citibank Professional card, which offers a 3% rebate in Thank You Points for office supply stores. I also received a $20 off $100 purchase email this morning, so I think a second trip is in order!

They have some really good items available, and all of these will be free in the form of the gift card:
  • Energizer batteries
  • Arrowhead bottled water
  • Uni-ball ink pens, highlighters
  • plastic storage containers
  • photo paper, notebooks
  • stapler, other office supplies

Monday, April 12

A Week in the Life of a Mystery Shopper

April 4th - April 10th...

Last week was a slower week, but I still managed to earn $566 in mystery shopping fees and $234 in reimbursed purchases. I drove a total of 870 miles.

I did not complete any shops on Easter Sunday. Since most people take two days off from work each week, I'm okay with the occasional off day, too.

I picked up the pace Monday, earning $175 in fees. In all I visited 20 businesses. It was a long day but none of the paperwork was too hard. I can handle being on the road 14 hours just fine as long as it does not take another 6 hours to enter paperwork (one of my biggest pet peeves is poorly designed data entry screens!).

I earned just over $70 today from 7 shops., plus $18 of reimbursed gas. Since it barely took me three hours to complete, I was happy with the day.

I don't have a close relationship with my mom, so we try to get together occasionally for lunch. We ate lunch and went to the dollar theatre, so most of my afternoon was spent with her. I still earned $54 in fees and $12 in gas, plus one of the shops was a gourmet chocolatier, so a good day.

I did a lot of work for the $104 I earned today, but most of it was driving time. But I came home with a full tank of gas. Left the house at 6:30, home at 2:30, entered paperwork until after 5:00. That works out to about $10 an hour... about as low as I like to go.

No travel today. I completed three telephone shops and spent the rest of the day with my partner, who is usually off on Friday. I did spend a couple hours at home searching for work for the coming days.

My second best day of the week, earning me $151 in fees and $60 in reimbursements, nearly all of which was gas. I did a lot of driving (more than 250 miles) but the day was fairly easy: I did two jobs close to home, came home to enter them, then headed out to do the other 13 jobs, which were further away.

This week is looking good. I'm doing a special retail project that is super easy (under 5 minutes per store). I have a few merchandising jobs scheduled and a handful of gas stations. I already have $250 worth of work on my calendar and will pick up more as the week progresses.

Friday, April 9

My Frugal Miser - Goal Setting and Accountability and Purple Sticky Notes

Every month I post my 30 day goals, and on the right hand side of this page I post my annual goals. Setting these goals isn't something I do one day each month and then forget about it until the next month.

How I Stay Focused

  • Since financial goals are easy to track, that's what I focus on at My Frugal Miser. I have other goals. For example, losing weight is very important to me right now (unfortunately, I'm not doing well with this one yet!).
  • Each month I list 3-4 goals for that month. I write those goals on a purple sticky note and stick it on the wall at eye level to serve as a constant reminder.
  • At least once each week, I run a report in Quicken to monitor my progress.
  • When there are 10 days or less remaining in the month, I adjust my behavior to achieve my goals. It doesn't always work, but I find this really helps. For example, if I am approaching my limit for food spending, I remind myself of this when thinking about ordering Chinese takeout.
Behavior Modification is one of the most important tools in achieving realistic goals. If I'm not willing to sacrifice, there really is no purpose in having goals to begin with. Now, if only I could modify my eating habits for more than a day or two at a time...

Thursday, April 8

April Goals

April should be a good month for me financially. The question is, can I keep up the pace of my mystery shopping?

April Goals:
  • earn $3,000 from mystery shopping (last month I earned $3,294
  • spend less than $150 on food
  • reduce credit card debt to $28,000
  • reduce car loan to $16,000
I earned $3,294 last month from mystery shopping. While I normally would frown on setting a goal that was below the previous actual amount, I think $3,000 is the upper limit for what I can comfortable earn from mystery shopping. I'll test that theory this month.

I removed my fuel spending goal because nearly all the gas I use is for income-generating activities. Why set a limit on that? I don't take joy rides, so it isn't like I'm driving around aimlessly. I am also going to start shedding some pounds in April. In its place I added my car loan to the mix, as I have decided I should pay it off by the end of the year.

Wednesday, April 7

Reviewing my March Goals

During March I only achieved one of my four monthly goals, but I really feel the three I did not achieve were not failures - not this month, anyway. Keep reading.

March Goals versus Actuals:
  • I earned $3,294 from mystery shopping; my goal was $1,500.
  • I spent $135 on fuel; my goal was to spend less than $50.
  • I spent $204 on food; my goal was to spend less than $150.
  • I reduced my credit card debt to $34,559 (technically to $31,059 - see note below); my goal was to reduce credit card debt to $31,000.
In March I only achieved one of my four goals. In the food budget, I spent $80 on gift cards that I have not used. I did this to earn bonus Hilton Honors points. Without those, I would have spent $124 and beat my goal.

I also went over on my fuel budget, but it was for income-generating activity (mystery shopping).

If I allow for an exception to my credit card debt, I was within $59 of my goal. I spent $3,500 with the U.S. Mint last month with their direct ship program so that I could earn enough flight credits to get to my next Southwest Rapid Reward. Since that is cash money and there were no fees associated with it, it is a temporary blip in the number that will fall off next month.

Tuesday, April 6

My Frugal Miser - March Expenses: $3,446

Every dollar I spend for expenses today is a dollar that isn't earning me income. So, by not saving that dollar today, I'll have to save several dollars between now and retirement to make up for it.

Until now I have only highlighted the expenses I wanted to set goals around. I thought I should start listing all my expenses each month since I'm already doing that for my income. I may need to tweak some of this in future posts. For example, I've always just deducted rental property expenses from rental income and posted the net income. That's not the way an accountant would do it, but it simplifies things for me and I see little harm in continuing to do it this way. I also fear I will forever have "one-time expenses" that I should more accurately break down into monthly amounts (think auto insurance, which I pay twice a year). That's too much work to do for now.

Without further ado...

March Expenses

$194 Auto ($59 for service, $135 for fuel)
$4 Clothing
$204 Food (both groceries and eating out)
$399 Entertainment (movies, gambling, alcohol)
$2 Home Repair
$483 Household (pest control, fire dues, cleaning supplies, etc.)
$107 Health Insurance
$313 Interest on Debt (not including Mortgage Interest)
$99 Miscellaneous (proof that small teeny tiny expenses really do add up)
$1,293 Mortgage Interest (includes residence and rental properties)
$50 Personal Care (Weight Watchers, hair cut)
$298 Utilities

Total March Expenses : $3,446


The household category was way more than normal. I paid my annual fire dues and for the first time ever, I had a professional pest control company come out to my house. I suffered a major reaction from a spider bite (requiring medical attention!) and decided to be extra vigilant in preventing a future bite. I am working extra hard to pay down debt, which will reduce the Interest category. Entertainment was also higher than normal. I went to a casino in March and didn't do well.

Monday, April 5

Comments on How I Calculate Income

Okay, you might want to skip this post. It's a little on the dry side.

I've been meaning to post this. Not sure if I'm posting to satisfy those accountants out there who read my blog or just because I usually like to boil things down but sometimes fear I'm being superficial.

Since I am not a "corporation", I am free to define my own accounting standards. For instance, each month I recognize the gain or loss in my retirement accounts when calculating my income. It would probably be more accurate to only list my gains or losses from transactions like selling stocks, but since I am generally a buy and hold investor, listing it this way would lead to irregular swings. Then again, some might argue I should omit this line item altogether. These are retirement accounts, so their gain (or loss) should only be viewed as progress towards my retirement goals.

I might just do that one of these days. I should set a goal for the value of my retirement accounts at some point in the future, and measure my progress, right? I'll have to let that marinate a little.

I also realize that I'm being inconsistent with reporting my earned income from mystery shopping in one post (A Month in the Life of a Mystery Shopper) but my cash income in another. The reason I do that is because I pull a report from Quicken when calculating my income, but I use an Excel spreadsheet to keep up with my day-by-day earnings. The Excel spreadsheet is mostly accurate, but for some assignments, mostly merchandising, I am estimating the fee I will be paid and do not know for certain until I actually get paid.

Finally, I've been detailing all my income, but not all my expenses. Am I being a braggart? Not at all. In fact, I plan to start listing my expenses as well. One of the reasons I have held back on listing all my expenses is because I've tried to figure out whether I should separate business expenses from personal ones. For example, in Quicken I have one line item for "Mortgage Interest", but that includes the mortgage on my house (a real live expense that I should work on reducing) as well as the mortgages on income-generating investment properties.

Still reading? Sorry if I bored you. These are some things I've been wanting to explain. Posting it here saves a lot of footnotes and asterisks in my regular posts.

My Frugal Miser - March Income: $12,627

March was the first month this year for me being unemployed, but it wasn't a bad month at all.

March Income

$2,292 Mystery Shopping*
$3,828 Change in Value of Retirement Accounts (Roth IRA and Rollover IRA)
$4,737 Rental Income
$1,770 Other Sources
$12,627 Total Income for March
*note that the mystery shopping income will always vary from the monthly summary amounts I post. Here I report actual payments received (cash basis accounting) whereas my monthly mystery shopping update I report the amount I earned for that month.

I added the category "Other Sources" to list non-recurring (or semi-recurring) income since I always seem to have a little something that doesn't fall into the other buckets. This month that source is quite respectable at $1,770 because of a settlement I received. In 2005 a company in which I had purchased some investment notes filed for bankruptcy, and the first (and likely only) distribution of funds was made last month. Also included in this line is $35 I earned from online surveys and a $65 reimbursement check from my last employer.

My retirement accounts experienced a significant 9.3% increase in March. While the S&P 500 is up a little over 5% YTD, my Rollover IRA is up 18.81% and my Roth IRA is up 6.32%. These gains are purely performance related (I haven't made any contributions yet). I'll save my investment philosophies for a future post.

Currently all 7 of my rental properties are occupied but one of my tenants is getting married and expects to move out by the end of April. Depending on when she moves, there may be a dip in rental income in April and there most certainly will be one in May as I rehab the property and search for new tenants.

Friday, April 2

A Month in the Life of a Mystery Shopper


I haven't posted in nearly a week because I've been mystery shopping so much. For March I set a new record. I earned $3,294 in fees and $1,130 in reimbursements. In case you don't have a calculator handy, that's close to $40,000 annually if I could keep up the pace.

It wasn't easy. In fact, I drove over 6,000 miles in March. That's $1,356 in vehicle expenses. Fortunately a large part of the reimbursement was for fuel, so the actual vehicle expense was less.

I did a little of everything last month, but gas stations were #1 by a wide margin, followed by restaurants. Some of the other shops included working out at a gym, checking out a mini-storage, confirming the right ads were playing at the second run movie theatre and getting my carpets cleaned.

I hope I can make the month of April just as busy, but I'm close to capacity as there were few slow days. My only hope is that I become increasingly more efficient with planning and paperwork/data entry.

Tonight I'll be spending the night at a business-class hotel as part of a mystery shop. Of course, I would never waste all that travel time: I'll be visiting 17 gas stations on the way and several on the return trip.