Thursday, June 30

There's a lot of Waste Out There


All man’s miseries stem from his inability to sit in a room alone and do nothing.

I was watching a video the other day of Buffett Disciple Mohnish Pabrai and something he said made a lot of sense. He suggested that the reason most people under-perform the stock market is because they can't sit still. Maybe you've heard that 80% of mutual funds perform worse than a simple index fund. In other words, if you just "bought the market" you would make more money than you would if you paid a professional to invest your money. One of the reasons for this is because of frequent trading in stocks.

When I was 18 I opened up my very first brokerage account with Charles Schwab. I deposited all the money I had made at the time from working, which wasn't much, and enthusiastically started investing. About a year later I realized I wasn't making a heck of a lot, but that Schwab was making a killing off me with the commissions I was paying. I don't remember the exact amount that I had invested, but I do remember that in that first year I paid over $2,000 in trading commissions. If all I had done was invested my money in an S&P 500 index fund I would have been about $2,000 wealthier at the end of that year.

There are so many other occasions in life where we spend money and have very little to show for it. We will drive two miles out of the way to save a penny on gas, or run our home air conditioning all day long while we are away. Then we have to work more to pay for it. It's just so wasteful.

I realize now that most of the financial mistakes I've made - really, most of all the mistakes I've made in life - have stemmed from my refusal to do nothing at all. I bought a BMW because I was bored with the Corolla and thought I "deserved" better. I moved into the house I am in now because I wanted a change, not because I wanted to expand my real estate empire (that's the only rental I have that isn't cash flow positive). I've gotten speeding tickets because I wasn't content driving the designated limit. I ran a red light once (and got caught) because I was tired of sitting at the light.

It's absolutely true. We humans can't bear the thought of inactivity. It's all about change... for the sake of change.

Wednesday, June 29

Adjusting to the Slower Pace

It's a little harder than I thought to adjust to my "new life." By new life I mean not having a daily routine. I was at the restaurant every day and that pretty much defined my life for six months. Before that I mystery shopped on a full-time basis.

I don't think I want to go back to full-time mystery shopping; I'd rather be picky and just do the shops that interest me or those that pay well. Last Saturday I earned about $130 but that was just from 5 shops - really easy shops (2 drive-thru restaurants, a sushi place, a home improvement store and a pool store). I'm trying to decide whether I can live off my rental income and just do mystery shopping on the side to fund my discretionary purchases. For example, we are planning a vacation to Las Vegas and Phoenix at the end of August. I'd like to earn enough from mystery shopping to pay for the trip.

The only problem with all this is dealing with all the free time I have. I know how bad that sounds - a lot of folks would love to have a break from their hectic lives. It's sometimes hard to avoid the temptation of getting out of the house, which inevitably leads to wasteful spending.

Friday, June 24

Jury Duty Ends

After 5 full days of performing my civic duties I wrapped up jury duty late this afternoon. The second case I was on was a criminal one: a police officer was charged with domestic violence. We found him not guilty. I left the courthouse with a check for $61.50: $10 per day for "expenses" plus 5 cents per mile for travel. Someone needs to remind these folks about the cost of gas.

Obviously this hasn't been a productive week. I managed to read three books though. Tomorrow I am doing some mystery shopping and might see a dollar movie.

Happy weekend!

Thursday, June 23

Taking Advantage of Cheap Travel

I'm still on jury duty. Yesterday before lunch we wrapped up the car accident trial, finding for the defendant, which means no money was awarded to the plaintiff. You always hear about lawsuit abuse and absurd jury awards to the injured so I am kind of happy we did not contribute to that. Today I will be headed to the criminal courthouse. This is the third courtroom I have seen this week but there's no guarantee I will be selected for the jury today.

I heard that Southwest Airlines is celebrating its 40th birthday this week by offering $40, $80 and $120 fares (varying by distance). That's a good deal, so I booked two flights to Las Vegas: one at the end of August and another in November. I had a free flight in my account so my partner will be able to travel for free in August. The November trip will coincide with the AAII.com Investor Conference. I attended the last conference which was in Orlando two years ago and picked up a lot of good knowledge. I was fairly sure I would go this year and the fare sale at Southwest sealed the deal for me.

Wednesday, June 22

Jury Duty Continues

I was selected to be on a jury which means I spent most of the day yesterday listening to testimony. This morning we are supposed to hear closing arguments and then the jury deliberates. I imagine I will be done by lunchtime.

Yesterday at lunch I went by the bank and deposited a check into the restaurant's bank account. It was a refund of a deposit we had for our natural gas. It was over $2,000 even after they took out the last month's bill. I would love to distribute that to the owner's (myself included!) but we may have to settle some of the other accounts we closed. AT&T, Charter Cable and ADT all want us to basically pay out the balance of our contract terms. In the case of AT&T, that's 30 months of service. I have a hard time justifying that since it's not like we are costing them anything and we didn't receive any special pricing or incentives when we signed up. Just seems greedy to me.

Tuesday, June 21

Jury Duty

I started jury duty yesterday. The first court room I was assigned to was for a murder trial, and I thought that would be exciting. We took a break for lunch before anything happened and when we returned the judge said our presence scared the defendant into accepting a plea bargain of life in prison. If a "life sentence" represented a plea bargain I have to wonder what his punishment would have been if we went to trial!

Since my services were no longer needed we were instructed to return to the jury assembly room, where I was immediately assigned to another court room, this time in the civil courthouse. Civil isn't near as exciting as criminal, though, and I am at a trial over a car accident where there was no damage but the complainant says she suffered injuries. We spent yesterday answering questions from the lawyers about whether any of us had been in an accident before or whether we'd ever been involved in a lawsuit. There's 48 of us and that has to be whittled down to 12, so the odds are I won't be on this jury, either. But, they did ask one question about whether anyone was insured by a particular insurer and several people raised their hand, so that might rule out some of the jurors.

For my service I am paid $10 a day and $.05 per mile. The mileage is insulting since there's no way it covers anyone's actual transportation costs.

Friday, June 17

Pleasant Surprise with my Car Insurance

When I began thinking about selling my car, I listed lower insurance costs as one of the benefits. I paid $652 for six months of coverage in February, which works out to $108 per month. Sure, that included two cars, but I only drove one of them. It's never made sense that I should have to pay more for liability coverage because I owned two cars (I can never drive more than one of them at a time!).

When I called my insurer to drop coverage of the G5 I was delighted by the new figure: $190, or $31 per month. I wasn't expecting a decrease of more than 2/3.

I should have sold sooner!

Thursday, June 16

Back in Tampa Bay

Having just returned from Florida last week, I didn't realize I'd be back so soon. My partner and I stumbled upon some houses that an investor is unloading in Clearwater. Several of the houses are short sales and are selling at distressed prices.

For example, one of the houses we are looking at was listed for sale in January, 2008 for $150,000. While this price might have been unrealistic, the house did sell in 2006 for $94,000. The agent I spoke with said the bank approved a sales price of $37,000. The home is 4 bedrooms, 2 baths and from what I can tell (we've not been inside yet) is in decent condition.

This house is one mile from Clearwater Harbor and about three miles from the beach. There are five major grocery stores within two miles and several big box retailers all within five miles of the house. I mention this because, even though I live in a suburb of a fairly large city now, it's a 15 minute drive to any major retailers, and outside of my neighborhood there are few sidewalks. How exciting it would be to walk or bike to just about anywhere I need to go!

Wednesday, June 15

Why I Sold My Car to CARMAX

Yesterday I sold my 2009 Pontiac G5 to CARMAX. They paid me $8,000. This was all part of my plan to simplify my life as we look at moving to Florida.

I probably could have sold the car for more, so why didn't I do it? Mostly out of convenience: In about an hour I walked out with a check (they called it a bank draft, but it looked like a check to me and I had to take it to my bank to deposit it). I don't have to worry about them calling me back to say it wasn't what they expected. I also don't have to advertise the car, let various people test drive it, or deal with someone after the sale.

As soon as I began thinking about selling the car I started doing my homework. First, I began "watching" ebay auctions to find out what people were paying for the car. Several years ago I had a good experience selling a Toyota Camry on ebay so at first this was going to be the default method I wanted to use. After checking out auctions for a few weeks, I was really disappointed with the final selling price of the cars - most didn't even sell because the car didn't meet the minimum reserve. I also was hesitant since I might end up dealing with an out of state buyer - what if they changed their mind after submitting the winning bid or after seeing the car in person? Then there was the fee I would have to pay to ebay.

I also thought about using Craigslist or the classifieds. Truth be told, I am sure I could have made a little more selling this way. But I didn't want to deal with the drama. It takes a lot of effort to sell a car to another individual.

I ultimately decided that if CARMAX offered me as much as or more than what I valued my car on "the books" (Quicken) I would do it. Based on the mileage formula I've been reporting every month on this blog, I valued my car at $7,601.20. When I was offered $8,000 with no strings attached, it took me about five minutes to say yes.

Thursday, June 9

Amazon.com Sucks

I wanted to make sure everyone knew about Amazon's customer unfriendly practices. If you are frugal like me, you pay attention to prices. Well, I placed an order for a satellite radio with Amazon last week. A couple of days after placing my order, the price of the radio dropped by 10%. I contacted Amazon immediately and asked them to match the new price. Their response?

"We do not do that."

But what do they do? I can return the radio and re-order it at the lower price. And, Amazon will pay the return shipping.

That's absurd. Amazon still sells me the product at the lower price, but also has to shoulder the cost of return shipping. I have to wait for the new product to arrive.

How is this customer service?

Wednesday, June 8

Back Home

Enjoyed myself in the Tampa Bay area but it's good to be back home... I have lots of things I'm trying to get rid of. We looked at several houses but found nothing. At least I have some idea about the neighborhoods I want to live in and the prices I should expect to pay.

The rest of this week I plan to clean up the car so that it is ready to sell. I also will post more items to sell on ebay. Finally, I might look into mail services like The UPS Store. I'm considering moving to Florida now and living in an extended stay place, but would need to have someone aggregate and ship my mail to me. That's the only disadvantage to having rental properties - making sure all my checks get to me. I really wish there was an easy way to require my tenants to pay me electronically.

Monday, June 6

My Frugal Miser - May Expenses: $2,276


I wish every month was like May. I "only" spent $2,276 yet I enjoyed myself and didn't feel like I was sacrificing anything. Considering half that went to mortgages (both my house and my rentals), I didn't spend much, and that's with gas prices near $4 a gallon.






May Expenses

$410 Auto ($230 for fuel, $180 for depreciation)
$0 Bank Fees
$0 Clothing
$151 Food
$37 Entertainment (movies, gambling, alcohol)
$0 Gifts Given
$0 Household
$100 Health Insurance
$0 Medical
$149 Interest on Debt (not including Mortgage Interest)
$0 Miscellaneous
$414 Mortgage Interest (primary residence)
$791 Mortgage Interest (rental properties)
$0 Personal Care
$0 Subscriptions
$0 Taxes
$223 Utilities
$0 Vacation

Total May Expenses : $2,276

Notes

  • My food budget was low because I was still at the restaurant most of May. It will probably be higher than that in future months.
  • On the other hand, I was driving 90 miles to work each day, so my spending on fuel should go down (except in June since I drove to Tampa and back).
  • Interest expense will benefit moving forward from me paying off the car loan.

My Frugal Miser - May Income: $7,973

May was another good month for income, even though I worked at the restaurant nearly the entire month without being paid. Mystery shopping improved and two of my tenants paid their June rent in May. I also sold quite a few things in preparation for the move to Florida.




May Income
$644 Mystery Shopping
$5,660 Rental Income
$000 Salary
$1,669 Other Sources
$7,973 Total Income for May


Notes:

  • 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. Last month I sold some assets as I start planning to move and earned some income from online activities.

Friday, June 3

So Many Things to Sell and I've Got the Bug


Until recently I thought I owned relatively few possessions. I know I have less than most of my friends and acquaintances, but now I'm beginning to realize that's still too much. I guess it takes a life changing event to put into perspective what material things actually matter to me. That life changing event - moving to a different state - is in full swing as my partner and I are leaving for Tampa after lunch today to begin looking at houses.

Yes, I've got the bug. The Selling Bug. I started in the spare bedroom where I have my file cabinet and storage. First I went through memorabilia - old letters, photos, trophies, etc. - and pared it down to the really important things. I've reduced this part of my life to the size of a shoebox. Then I turned to the closet in my office and my dad's coin collection. Ever since he passed I have had his coin collection sitting on a shelf, doing nothing for me but taking up space.

Like I said, it's taken a life altering event to put everything into perspective. My father's coins weren't adding value to my life. I realized that the important things I have from my father are letters and photos. So I took the collection to a coin store in town and walked out of there with $67.00. I can use this money to pay down my debt and hopefully those coins will find a better home.

I also got my first quote on selling the Cartier Love Bracelets. I'm not sure how I want to dispose of them. The quote I received was based on the value of the gold, but I wonder if I could receive more by selling the jewelry on ebay or some other way.

Meanwhile I've been selling everything that isn't bolted down via ebay and Craigslist. I also have an old netbook that I am going to sell on www.cashforlaptops.com (they offered $68 for it).

Does anyone want a broken IKEA couch?

Thursday, June 2

I Just Paid Off My Car!

Yesterday I submitted the Payoff Amount online to pay my 2009 Pontiac G5. I decided to access my HELOC in order to get the car paid in full. Now, I can sell it with the title in hand. I called my bank and was told there will be a 10 day hold and that I should receive the title in the mail in about two weeks.

Originally I was going to pay off the car and then reduce my insurance coverage to liability-only. However, I've decided we only need one car for the time being and selling this will help us move to Florida.

I guess it's possible we will end up with a second car again if I decide to buy a truck or van - that would certainly aid in the move unless I sell just about everything I own. But I haven't been looking and my preference would be to just sell everything and stick to one car for now: my trusty 2007 Toyota Corolla.

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

May was the last month I plan to put a lot of miles on my car. My daily commute to the restaurant was about 90 miles. And, since I'm thinking about selling the G5, I will probably use the Corolla as much as possible moving forward.

I determined that each mile I drive costs me $.0867 in depreciation. In May I drove 2,081 miles. My vehicle depreciation expense was $180.42.


Wednesday, June 1

Sell, Sell, Sell

Now that I've got a little free time I have been busy disposing of possessions in anticipation of the move to Florida.

I've sold several things on ebay. What I've found is that electronics and items that are still new in the box fetch solid prices. For example, I sold a Magic Bullet Blender that I received as a gift two years ago. It was still in the box, never used. Stores sell it for $49 and I sold mine for $34.

I'm also looking to sell an old netbook (www.cashforlaptops.com offered $68), some furniture (probably on Craigslist) and my Dad's old coin collection. I have mixed feelings about selling the coins since he left it in his will for me but it's not really doing me any good sitting in a box in a closet.

The biggest possession I might sell is my 2009 Pontiac G5. I'm still trying to decide.

It's amazing how much money I can raise this way. Money that goes toward paying off debt and moving. Even better, there's a liberating feeling in getting rid of things that are just sitting around my house gathering dust.