Thursday, September 30

My Frugal Miser - 2011 Capital Budget

One of my three September goals is to create a Capital Expense budget for 2011. I am happy to report I am finished with my planning for this and it is ready to be implemented. The hard part was figuring out what to include in the budget, how much each of my major annual expenses are, and what they might be in the future.

In 2011, I need to allocate $2,000 per month toward future expenses. I will deposit this into my ING Orange Savings account and allocate it as I incur the expenses.

So I'm sure you are wondering what expenses I am including:
  • $521: First, something new I am doing is setting aside 10% of my monthly gross rental income (currently $521 per month when all properties are occupied) for expenses associated with my rental properties. This would include new carpet or HVAC replacement - two major costs I incurred recently and wish I had planned for - and other large expenses such as new appliances and repairs.
  • $417: Second, I am setting aside $417 per month ($5,000 per year) to fund my Roth IRA.
  • $910: Third, $910 will be deposited each month to cover those pesky expenses I dread: property insurance (for 8 houses), car insurance, fire dues, car tag and pest/termite control (again, 8 properties).
  • $152: Last, to make it a nice round number, I will add a $152 monthly cushion just to be safe. My initial thoughts are that I will use this to fund a Health Savings Account. I currently have COBRA under my old employer's plan but am about to switch to a high deductible plan.
So, how do I come up with $2,000 per month? Fortunately, most of this is money I am already spending. I just haven't planned for it before. I'm just adding a little discipline. I HATE surprises, so really I'm doing this so there are none. I mean, wouldn't it be perfect if your personal finances really were on auto-pilot? This is the direction I am headed. I just have to have enough gas in the tank to get me to my destination.

Wednesday, September 29

The Book That Changed My Life

There's one book I can name that changed my life forever. Originally published in 1991, Don Aslett's Not For Packrats Only is a simple book that explains WHY clutter is such a bad thing and then gives tips on how to rid yourself of it. When I first read it as a teen, I had mounds of stuff under my bed. My closet was so full that I could barely close the door. Searching for something I hadn't used in a while took hours sometimes.

This book takes you room by room through your house, asking the question "What's the worst that will happen if I get rid of 'X'?" It's a refreshing read and helps you boil things down to their essence: is this thing helping me reach my life's goals?

Tuesday, September 28

Clutter Round Up: 30 Things in 30 Days

Last December I had a goal of eliminating 100 possessions in 31 days. I didn't reach that milestone. After some reflection I realize it was too much for one month. I've decided to try again in October.

Why the obsession with clutter? My mom was (still is to an extent) a packrat. I remember her addiction very well because she usually brought my brother and me along on her shopping trips. Then, it was our responsibility to keep the house clean. All those purposeless knickknacks, loads of laundry, and "stuff" to work around were a pain. I had started to follow in her footsteps until I read a life changing book, one that changed my lifestyle forever.

In October I will eliminate 30 unneeded items from my house. I will follow the same rules I set for myself last December:
  • If I bring something new into the house, I have to eliminate an additional item above and beyond my goal of 30 things.
  • Regularly consumed items do not count. I can't eat my way out of 30 canned goods or scrub myself out of 30 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.
  • 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.

Monday, September 27

A Week in the Life of a Mystery Shopper

September 19th - September 25th...

Last week was mediocre, and would have been even worse had I not picked up a few merchandising jobs that others had canceled. For some reason mystery shopping has been slower.

One of the larger projects I do is being moved to a different company, and from what I can tell the requirements will make this a much less desirable job. I do notice a trend where companies that use mystery shopping programs look to cut costs as their top priority - above and beyond ensuring quality work. What I mean is, the laws of supply and demand ensure that lower paying work will be done by lower quality workers. Lower pay inevitably needs to lower quality. It's hard to figure out why these highly paid C-level employees don't understand that.

Last week I earned $398 in fees and $101 in reimbursements. I shopped 6 gas stations, 9 restaurants, a storage facility, check cashing company, and 3 electronics retailers. I also merchandised four retailers and completed two business verifications.

This week looks dreadful. I have a couple of merchandising jobs and audits lined up. At the end of the week (first of the month of October) I have a few low-paying jobs selected.

Friday, September 24

Cutting the Electric Bill - September Bill

Once again I failed to reduce my electric bill. I guess I found some comfort when my favorite meteorologist called the Summer of 2010 the second hottest on record. I did some digging around my financial archives to see if I set an unrealistic goal. I'm not ready to concede that I did - as long as the TV is on at night along with the A/C, I have room to improve. Truthfully, I have made only a small sacrifice in order to reach my goal of cutting my bill by 20%. That sacrifice feels like a major one: the thermostat is completely turned off during the day, and set to 80 or 81 degrees at night. Shouldn't this alone have helped?



First, a look back at how much I spent in prior years:


  • 2006 average monthly electric bill: $62.92

  • 2007 average monthly electric bill: $56.58

  • 2008 average monthly electric bill: $97.75 (ouch... I had a roommate who used the A/C too much that summer!)

  • 2009 average monthly electric bill: $36.33 (note: hot water converted to gas)

  • 2010 average monthly electric bill: $38.50

My September, 2010 bills was for 448 kWh (14 per day) - a reduction from August but much higher than last year. In September 2009 I used 290 kWh (9 per day). To reach my goal I should have only used 232 kWh, about half of what I actually used.



I don't want to give up even though it's futile to think I will meet my 6 month goal. At least having this goal in my head keeps me aware of lights that are on or TVs that aren't in use. I may need to adjust my goal moving forward...

Wednesday, September 22

My Frugal Miser Looks Back: Have I Made Progress?

One of the primary reasons I started this blog was to hold myself accountable. It's easy to create goals and resolutions. The hard part is achieving them. I suspected that if I set goals, published them, and then, hopefully, people read those goals and tuned in to see my progress, I would have a greater obligation to take my goals seriously.

The question is, "Has it worked?" Yes and no.
  • In 2008 I spent on average $7.48 per day on food, even though I traveled extensively for my job and my meals were reimbursed while I was on the road. So far this year, I am averaging $4.89 per day. I have reduced my food budget by 35%.
  • In 2008 I spent $2,529 on alcohol. Okay, okay... I used to drink way too much. So far this year I have spent $302.
  • At the end of 2009 I owed $63,415 in credit card debt and car loans. Today I owe $41,152. Since the start of the year I have paid off $22,263 in credit card and auto debt.
  • In December I decided to eliminate 100 items of "clutter" in 31 days. While I failed to finish my goal of 100 things, I did eliminate 41 items or clusters of items (for example, "books" were classified as 1 item even though I got rid of several books.
  • I have yet to lose any weight. This is my greatest personal struggle.
All in all I know I have accomplished more because I am publishing my goals for the world to see. Thanks for helping to keep me on task!

Tuesday, September 21

Happy Birthday to My Frugal Miser (Year in Review)

Today marks the 1 year anniversary of My Frugal Miser. Happy Birthday to me! It all started here: Let's Get Started. I started the blog after losing my corporate sales job of nearly 7 years. Originally as it's name implies, My Frugal Miser was intended as a blog about extreme frugal living. I certainly would like to think I've shared my thought and ideas about how to live a good life on less. Some of my more popular frugal living posts include:

  • Warren Buffett is a Frugal Miser ... how one of the world's wealthiest individuals still lives frugal today. For example, he still lives in the house he purchased in 1958 for $31,500.
  • About the Spartan Student... this is an inspiring blog a found about a Duke University grad student who is living out of a van parked on campus in order to avoid debt.
  • Eating Like a Frugal Miser... this year I am to spend $150 per month on food. I think that's extremely generous. In this post I explain how I manage to eat in nice restaurants on a budget, and (mostly) avoid ramen noodles when I eat at home.
  • Take a Sailor Shower... one of my personal favorite tips involves reducing water and natural gas costs. It just makes sense to bathe this way since you get a nice lather from the soap when the water isn't on.
My Frugal Miser has evolved into a mystery shopping blog, with a heavy helping of frugal living thrown in for good measure. In fact, the most visited page on this site is Can Mystery Shopping Be a Full-Time Job?

Tomorrow I will look back at the progress I have made over the last year. I thought going into this that publishing my goals might help me with accountability. But did it? Stay tuned...

Monday, September 20

A Week in the Life of a Mystery Shopper

September 12th - September 18th...

I am satisfied with my earnings from last week. The hours were long but not crazy like they have been before. I had one day where I worked 21 hours (6 AM until 3 AM the next morning) and the last six of those hours were sitting on the couch doing paperwork. The web site for one of the my merchandising companies kept crashing and that slowed me down considerably. All the other days were very reasonable.

Last week I earned $888 in fees and $240 in reimbursements. Much of this work was merchandising. I have a regular route of 20 stores that I merchandise a DVD display. It's decent work but the company has reduced its frequency to about every 7-8 weeks. Then, I picked up 7 extra stores that the regular merchandisers canceled. I also completed a special 20 store merchandising project - each store took less than 5 minutes but the pay was low. I merchandised two other stores and did a competitive price audit at a fast food restaurant. I shopped 31 gas stations, a car wash, 6 fast food restaurants, 3 casual dining establishments , a payday loan store, and three other retailers. In case you're counting, I visited 92 different establishments last week.

This week will be slower, but I'll do my best to cobble together enough work to stay busy. I've picked up a few merchandising assignments that other people canceled. Reliability in the world of shopping and merchandising is incredibly low.

Thursday, September 16

Mystery Shopping Tip: How to Avoid Being Identified

Yesterday I told you about a husband and wife shopping team who got caught doing their shop. Whenever I talk with other shoppers one of their biggest fears is being identified while doing the shop. If you are identified, you don't get paid for your shop. Most of the time you won't even be able to shop that location again - although, for chains, most companies will let you shop the other locations still.

It's easy to become paranoid. You are completing a "scenario" which has been assigned you, and likely you are playing a role that isn't natural to you. This alone is reason enough to fear you will be exposed. Guess what? Even if employees are looking for the mystery shopper, there's nothing to worry about. You are just another customer and they probably deal with dozens of unique transactions every day.

Here are a few things I do to avoid getting "caught":
  • My mobile phone is my best friend. It is my timing device and the place where I often capture notes. Sure, it might be rude to text a friend while the cashier at the burger joint is serving you, but trust me, a lot of people do it. When you are recording times or jotting down names and descriptions, employees will think you are being just another distracted customer.
  • For low volume restaurants which require a drive-thru and inside transaction, I act completely normal. Maybe in the drive-thru I will wear a hat and glasses, maybe not. Most of the time I do not try to disguise myself. If the cashier recognizes me from eating inside first, I'll tell them my boss or my roommate wanted me to pick us something.
  • Don't overact. Say as little as possible. For example, if the cashier in the above scenario recognizes that I also ordered inside, I will give them a polite but simple explanation and then shut up. Remember, it's none of their business. Have you ever caught someone telling you a lie? It's usually when they ramble about when a simple answer would suffice. Same with scenarios. If you are touring an apartment, be prepared to answer questions, but don't overdo it. Don't be too elaborate. It's okay to say "I'm not sure" when you are asked a question about your preferences.
  • Finally, be confident. Act like a regular. This means ditching "um's" and "you know" and "like" and other annoying vocal distractions. A confident shopper looks like a regular customer to an employee.
I get a kick out of the stories I do hear about shoppers who are exposed. Some have even had the audacity to cause a scene when poor service is given. The LAST thing you want to do is cause a scene. Just continue with the shop, knowing your report will be used to address these problems.

Act normal - chances are good you won't be exposed.

Wednesday, September 15

Mystery Shopping Bloopers

I thought I would start an occasional post about some of the true stories I hear about mystery shopping. This first one was told to me directly by my scheduler at a company I do regular work. We know each other intimately now so she often tells me some of the nightmares she has to deal with as a scheduler.

Last week I picked up an emergency shop that was due in August. This was a fast food lunch shop for a regional chain. It's one of my favorites because the shop is so easy:
  • you either shop the dine-in or drive-thru (but not both).
  • you take four timings (the hardest part, but I'm good with a stopwatch in my pocket so no problem).
  • you make general observations about cleanliness, service and the quality of the food.
  • narrative is very limited as most of the report consists of "yes" or "no" answers.
So the shopper and her husband entered the restaurant with a stopwatch and notebook in hand. They made no effort to conceal the timing device. Once they placed their order, they sat down and opened the notebook and began taking notes. Later, they began an "inspection" of the interior of the store, including pulling out the trash cans and inspecting them.

Now, last time I checked, the "mystery" about mystery shopping is that the staff doesn't know who you are. Well, the couple were identified, and their report was unusable. Not only that, but they were removed from the company's database and are prohibited from future shopping opportunities with this company.

Tuesday, September 14

Frugal Landlord - Is this an "Emergency"?

If you aren't up for a rant, you might want to skip this post.

I had a surprise emergency expense earlier this month. I say "emergency" in empathizing with my tenant although if I were living in the house I would hardly consider this an urgent repair. The A/C went out over Labor Day weekend. Now, the temperatures over the weekend ranged from 50(!) to the upper 80s. Are you kidding me? An emergency?

The tenant called me Friday and asked where the filter was located. At that time she did not tell me the unit was not working. Since this tenant has been living there for two years, I was really displeased to think that in two years the filter had never been changed. I include a statement in my lease that requires tenants to change this regularly (alas, it rarely happens).

Saturday the tenant called and insisted something had to be done: the air conditioner wouldn't turn on. They were burning up. I arrived to find them laying in the floor of the living room with three fans on. Seriously? It was in the mid-60s outside when I arrived. It was a holiday weekend, so getting someone out to the house was a challenge as well.

I try to be the absolute best landlord around. Keeping my tenants in place generally is the most cost-effective strategy since there's a good bit of cost involved in vacancies, from lost rents to repairs and cleaning. The A/C unit is old - I knew eventually I'd be replacing it, just not when.

To make matters worse, the tenant called me later Saturday and said she knew an HVAC repairman and was calling him. I did not want to stir up any drama, so I told her that was fine. Still, if I have to pay for a repair, particularly a major one, I'd like to decide who I call. I didn't pay for a 10 year subscription to Angie's List so that my tenants could just call anyone out to fix something.

How would you have reacted? On the one hand, the unit was old and I knew it. On the other hand, was it reasonable for the tenant to insist on such a timely replacement? My air conditioner has been completely turned off for the last three weeks... it's just not that hot outside. Had I been able to wait until after Labor Day, I would have been able to call on my own HVAC repairman, and coming up with funds when banks are closed... let's not even go there.

Monday, September 13

A Week in the Life of a Mystery Shopper

September 5th - September 11th...

For the second week in a row I'm disappointed. Fortunately, this week will be better.

Last week I earned $185 in fees and $83 in reimbursements. If there's anything positive about this, it's that I only worked 4 days. I picked up an August holdover that was highly bonused - the first shopper was identified so this was a re-shop. The other shops were at the regular rate. I did a few easy merchandising jobs (taking inventory), 10 restaurants and just a few retail stores.

This week is going to be much better. By the end of the day today I will have already earned more than I did all of last week. I have my big merchandising route (20 stores) and several gas stations. One company that used to be my #1 earner has started raising commissions again after a dry spell so I hope to pick up even more stores.

Friday, September 10

My Frugal Miser - Funding my Retirement (Investment Performance Update)

From time to time I post an update about how my stock market investments are performing. I am a value investor, and I believe that most people can outperform the market by following a few very simple rules. My investing philosophy is simple:
  • Minimize trading costs and taxes by sticking to a "buy and hold" program.
  • Buy when everyone else is scared to buy.
  • Focus on smaller companies that are growing at a reasonable rate.
  • Preference goes to dividend paying stocks.
In 2010 I have sold just two stocks, and I was able to buy one of them back when it returned to a more reasonable valuation.

How am I doing?

8/31/2010 (Year to Date)
S&P 500: down 5.93%
Roth IRA: up 11.35%
Rollover IRA: up 15.53%

I outperformed in 2009 as well. Let me make this clear: I am not an investing genius. What I am is a realist. I know not to get caught up in fads - that's why it's so easy to outperform the markets. A large part of "the market" is made up of mutual funds whose managers are chasing after each other. There is very little original thought out there because managers are scared they will make a mistake and lose their job. This fear leads them to follow the pack. It's hard to lose your job when your performance is similar to everyone else.

Investing can be really easy, especially if you do buy and hold like I recommend. Personally I spend about an hour or two each week catching up on news pertaining to stocks I own or would like to own. That's it.

Simple is good.

Thursday, September 9

September Goals

I had a major unexpected expense already this month when the air conditioning unit at one of my rental properties stopped working and had to be replaced. The other big ticket items include pest control/termite insurance for a couple of my properties. I also have been procrastinating on buying a pressure washer so I may do that this month. Thanks to the cost of a new air conditioning unit, I won't make much progress this month in paying down debt. On a more positive note, I should close on the sale of one of my rental properties at the end of September. This will significantly lighten my debt load.

September Goals:
  • earn $2,000 from mystery shopping (last month I earned $1,876)
  • reduce credit card debt and car loan to $40,000 (8/31/2010: $42,798)
  • create a Capital Expense budget through 2011
The first two goals are self-explanatory. This last goal is important to me as I haven't planned major expenses well in the past. I want to allocate funds each month towards larger expenses, but first I need to know how much to allocate. I also want to make sure I don't defer maintenance on my rental properties since procrastinating usually leads to even bigger headaches down the road. Good example: one property had some minor damage to the fascia and soffit when I bought it a couple years ago. I've been putting off repairing it but need to bite the bullet before things get worse.

Wednesday, September 8

Reviewing My August Goals

I made very little progress in August.

August Goals:
  • I earned $1,876 from mystery shopping (my goal was $2,000)
  • My credit card/car loan balance increased, to $42,798 (my goal was $37,000)
  • I funded the rest of my 2010 IRA contribution
I only achieved one of the three goals I set for August. I was expecting more work at the end of the month, but mystery shopping opportunities were unusually lacking and I failed to make up the gap. I finished at 94% of my goal. There are two reasons I did not meet my debt goal and both are timing related. First, I paid for new carpet for the house I am selling but the credit card bill, which I will pay in full, is not yet due. Second, my partner has been using one of my credit cards. While he is responsible for paying it (and I don't include those expenses in my expense tracking), there is a large balance that hasn't been paid yet.

Tuesday, September 7

My Frugal Miser - August Expenses: $5,057

I really don't feel frugal after looking over my August expenses. I spent more on gambling and alcohol than I should have last month. There were three other large and unexpected expenses. I had to replace my stolen phone, pay my semi-annual auto insurance, and I replaced my ROKU (Netflix streaming device) with a Blu Ray player. The ROKU died after four solid years of heavy use. Since I don't pay for cable, I stream movies, documentaries and TV shows from the Internet. The Blu Ray player included wireless streaming, which I pay $9 per month for unlimited access.

August Expenses

$1,031 Auto ($615 for insurance, $53 for service, $36 for fuel, $326 Depreciation)
$2 Clothing
$148 Food (both groceries and eating out)
$911 Entertainment (movies, gambling, alcohol)
$36 Gifts Given
$0 Home Repair
$444 Household (new phone, Blu Ray player, etc.)
$107 Health Insurance
$0 Medical
$106 Interest on Debt (not including Mortgage Interest)
$0 Miscellaneous
$439 Mortgage Interest (primary residence)
$823 Mortgage Interest (rental properties)
$10 Personal Care
$295 Taxes (car tags)
$151 Utilities
$426 Vacation

Total August Expenses : $5,057

Notes

  • Thanks to mystery shopping, I spent $36 for fuel even though I drove nearly 4,000 miles.
  • I paid $50 to Pop-a-lock when I left my keys in the car during a gas station audit. I'm hoping to get this reimbursed through a roadside assistance service provided by my insurance.
  • I separate my mortgage interest by personal residence versus rental properties. I think this is an important distinction: the personal residence interest is an expense I should exercise control over moving forward when looking at ways to be frugal; the other is an expense that generates income.
  • I was pleasantly surprised by the car tag fee. Last year I still had the BMW and the fee was much higher. It will be even lower next year since this year I had to pay two years' taxes on the new car that replaced the BMW.
  • Spending on food was right where I want it to be at roughly $5 per day.

Monday, September 6

A Week in the Life of a Mystery Shopper

August 29th - September 4th...

I'm disappointed.

Still there? Okay... enough whining. Last week was bad. I earned $131 in fees and $179 in reimbursements. I shopped 14 gas stations, 7 restaurants and a grocery store. All were at standard, non-bonused fees.

What happened? I didn't do anything Sunday, Monday or Tuesday. I could not find work. Wednesday was my busiest day as I shopped 13 gas stations. On Friday I shopped two casual dining chains for reimbursement only. The food was excellent and my options for paying work were limited.

I'm optimistic that this is just a bump in the road. A couple of the larger jobs I do are between projects so that's just a timing issue. I'm still suffering from lack of work with one company that used to be my largest source of income. A couple of its clients apparently have reduced the frequency of their work, and someone in my area is picking up jobs for what I deem an unreasonable fee. I can't justify shopping a gas station - with multiple photos - for a $5 fee and $2 reimbursement.

If this weren't enough, the A/C went out at one of my properties. As this is an unplanned emergency repair, my September budget will take a huge hit.

Friday, September 3

My Frugal Miser - August Income: $6,756

I am selling one of my rental properties and August was the first full month where I did not receive any income from it. Since this is my most expensive property, my income suffered. I also spent over $1,500 on new carpet, which I deducted from the rental income I am reporting. I realize I should probably use two categories (Rental Income and Rental Expense) but since this is my personal finance tracker I try to keep things simple.


August Income
$3,928 Mystery Shopping*
$1,621 Rental Income
$1,207 Other Sources
$6,756 Total Income for August
*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 in my monthly mystery shopping update I report the amount I earned for that month.

Notes:

  • My mystery shopping income was much higher than normal... don't expect this to occur again anytime soon.
  • The category "Other Sources" includes non-recurring (or semi-recurring) income since I always seem to have a little something that doesn't fall into the other buckets.

Thursday, September 2

Vehicles and the True Cost of Ownership: How Much is My Car Really Costing Me?

As a mystery shopper I have to be aware of my costs. Depreciation is the cost of using my car in a given time period. Instead of expressing the cost of my car as a one-time expense when I bought it, I spread out the cost of my car over its expected life. Depreciation does not include other vehicle-related costs like gas, maintenance or insurance. I separate those out and report them as they occur.

I determined that each mile I drive costs me $.0867 in depreciation. I ended July with 31,389 and at the end of August there were 35,152 miles on the odometer. I drove 3,763 miles. For August, my vehicle depreciation expense was $326.25.

Wednesday, September 1

Success = Not Overpaying

Yesterday I talked about passive recurring income being the single best method for gaining financial independence. Complementary to that is always obtaining goods and services at a fair price. This means two things:

  1. I pay for quality. There are two types of purchases - commodity-type purchases where you truly are looking at price as the distinguishing feature and value-driven purchases where you are looking for "bang for your buck." If I'm buying baking soda, I will generally buy it for the lowest price possible. It's not like some companies dilute their baking soda - I'm getting the same end product regardless of the price I pay. On the other hand, if I am in the market for a durable item, such as furniture or a car, I will pay for something that I expect will last me a while.
  2. I look for opportunities where price and value are not equal to one another. This is more important than #1 because your cost basis of an investment determines the return you achieve. Buying shares of stock in a company for 75% of their intrinsic value is the kind of opportunity I'm talking about here. Or another example, buying a foreclosed condo for $18,500 when others are selling for $65,000. I actually did this, and it feels great!
Too often consumers and investors overpay. Once you've paid too much, you've sealed your fate. If it's not a commodity (like baking soda), spend some time evaluating your options. Then, stand firm and don't overpay. If someone else is willing to pay more for the foreclosed home than you thought you should spend, let them. Another opportunity will present itself. Just be patient.