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Tuesday, January 31

Short Term Sacrifice, Long Term Gain

If I had to condense all my financial beliefs into one main idea, I would say my plan is to provide for my needs with only passive recurring income.

I look around at my friends and acquaintances and realize many of them have little to show for their years of labor.  I don't have to look far:  my own mother is the perfect example (in fact, I'm probably the way I am because I'm rebelling against the way she raised me).  Let me explain:  Mom thinks money is flammable, and the only way to prevent it from burning a hole in your pocket is to spend it right away.  Over the years her refusal to build a safety net has led to foreclosure; she's been evicted from the apartment she moved into, she's lost every job she's ever had, and she owns nothing more than a few pieces of furniture, clothes and a beat up car.   Whenever I've tried to help her she's just blown the money on something she doesn't need.

I guess I should mention 1) that I love my mom, and 2) she doesn't know about my blog.  And in case you haven't figured it out, she frustrates the hell out of me.

Moving on...

I really don't consider the way I live as sacrificing anything, but people around me seem to think so.  I don't subscribe to cable TV because I think TV makes you lazy, plus there's just not much on TV worth watching.  The financial explanation is even more compelling:  if I assume cable TV would cost me $100 per month and I could earn 8% on that money if it were invested, I would have thrown away about $87,000 over 25 years.  I can think of many things I could do with $87,000 that would give me greater pleasure than being able to watch Hoarders the day it airs instead of later when I can watch it for free.

On the income side, I'm working quite a few hours doing mystery shops that don't pay too much.  Why do I put up with low pay?  Because I'm not where I want to be.

Where do I want to be?  I said it already:  I want to provide for my needs with passive recurring income.  The quicker I get there, the better.  So I continue to toil in the name of debt reduction, knowing that more than likely, at some point in the next 5 years, I will reach financial independence.

Oh, I almost forgot.  One of the few things Mom does have is cable TV.  She would never give that up.

Friday, January 27

49 Shops and More

Starting tomorrow I'm working a route of 49 gas stations along with a few merchandising jobs and restaurant shops.  The 49 shops are all for the same brand.  I particularly like doing shops in volume because I can get a routine going and be super efficient at it.  Repetition saves me from re-reading shop guidelines, printing out reams of instructions, and mentally switching gears.  I just focus and get it done.

I also have four restaurants (again, the same chain), 5 menu audits (again, the same chain - making data entry much easier), and three merchandising jobs (you guessed it - the same job in 3 locations).  It's gotten harder for me to justify the fees some mystery shopping companies pay and one of the ways I mitigate that expense is by cutting out costs (printing one set of instructions for 49 shops is a lot cheaper than printing 49 sets of instructions) and time (learning the scenario once for 49 jobs is much less time consuming than learning 49 different scenarios).

Over the next 7 days I'll earn more than $600 in fees, about $330 in free gas, and various other reimbursements.  Not a bad way to end one month and start a new one.

Tuesday, January 24

Bye, Bye Cartier

Cartier Love Bracelet
It's official:  the last large possession I acquired while working at the software company is gone.  Back in 2009 my best friend and I did a guy's weekend in Vegas. I did really well at the blackjack tables one night, and the next morning we found ourselves racing through the desert to Beverly Hills.  I wasn't totally irresponsible - we stopped at Wells Fargo first and I made a $5,000 principal payment against my mortgage.  But by the time we arrived on Rodeo Drive, I had convinced myself that I deserved a gold bracelet.

I ended up buying two Cartier Love bracelets, parting with over $9,000 in the process.  I guess that purchase is a close tie with the BMW 128i Convertible I also bought in 2009 for the Stupidest Purchase of My Lifetime award.

It didn't take long at all before I regretted the purchase.  The thing was, I wasn't sure how I could turn back.  The price of gold was steadily rising, so I thought if I waited long enough, I could sell it for the gold.  The best quote I received for the two was $2,350, so I held off.

Finally, I decided to try Ebay.  Glad I did.  I didn't get anywhere near what I paid for them, but the $5,850 I received sure helps me pay down some debt.  I probably could have gotten even more - someone made an offer for the first one and I took it; the second sold for $850 more.

I'm not totally divorcing Ms. Cartier.  I still have a money clip with her name on it that I use every now and then.  It's not gold though so it's worth much less.

Monday, January 16

Tough Job

View from the office, 1/15/12
Mystery shopping has taken me across the country plenty of times, but the view doesn't get much better than this.  Across the bridge, in the distance, is the Atlantic coast.  Incidentally, the hotel we check into today is on that coast, not merely yards from it as the one we are checking out of this morning.

I first posted about high end mystery shopping in June, 2010.  Be sure to read that page before considering getting into this line of work.

This week I am visiting 5 luxury properties in the Fort Lauderdale and Miami area.  The weather could be better as the highs are only in the 70s (okay, okay...I'll stop!).  Don't be fooled - this certainly entails a degree of effort that keeps me from calling this a vacation.  Still, I'm eating great food, sleeping in $300+ hotel rooms, and getting paid to report my observations.  It's enough to make me want to pinch myself.

I don't see myself ever working for "the man" again.

Friday, January 13

The Anti-Hoarder

I love watching Hoarders on Netflix.  It's therapeutic in some evil way.  The closest I ever came to being a hoarder was living with one.  My mother.  As a kid we had a lot of useless stuff.  I decided at the age of 12 to rebel against clutter and haven't looked back.

In the last month I've scanned hundreds of pages of documents and shredded the hard copies, taken two trips to a thrift store to drop off donations, and am meeting with a friend today to sell a few things.

I'm coming ever so close to having a true paperless home.  I have a safe full of documents I know I need to keep - my birth certificate, investment notes for a class action lawsuit, notarized deeds... too bad I can't just make electronic copies of those as well.

I've given away about 1/3 of my wardrobe in the last month.  When you consider I've spent a whopping $105 on clothing in the last 2 years you'd think I had a bare minimum set of clothes already, but that's not the case.  I could shed another 1/3 of my clothes if I really wanted to, perhaps 1/2 if I tried hard enough.  I keep hanging onto barely worn pants that will fit ...when I lose 25 pounds.  It's hard to part with those because I would feel like I'm giving up on ever losing weight.

Furniture?  Let me take an inventory:  In the bedroom I have my bed, a dresser and a bedside table.  In the kitchen there is a table with four chairs.  In the living room I have two cheap IKEA chairs, a small bookshelf, a small IKEA table that holds a lamp, and a small TV cart I use for my laptop and projects I am currently working on.  In the second bedroom there is a filing cabinet which holds office supplies I've gotten for free, a few small electronics and photo albums.  There is also a little desk in there I would like to sell.

I still feel the urge to purge.  I have an excessive amount of personal hygiene products, almost all of which I obtained free.  I imagine I could lose a few cooking utensils without missing them.  And still lots and lots of clothes.  

It feels great to shed unwanted possessions, particularly when I can sell them and use the money to pay debt. I just wish it were that easy to shed unwanted pounds!

Thursday, January 12

Business is Picking Up

While I'm still not earning as much mystery shopping as I was in 2010 and 2011, things are starting to pick up.  One of the larger projects I used to work on, a major gas station retailer, will kick off again starting January 28th.  I skipped this project entirely last year but in 2010 it was a big part of my income.  I have signed up for 50 shops over the first 7 days of the program.  That week I will earn $500 in fees and more than $300 in free gas.

Next week I am shopping 5 Miami/Ft. Lauderdale area hotels.  It's the closest thing to a paid vacation one can get.

I also picked up a few of the merchandising jobs I have done in the past.  Before, I had a route of 21 stores that I regularly worked, earning around $400 over 3-4 days every 6 weeks or so.  The company that offered these jobs cut their pay to below minimum wage so I stopped doing them.  I was able to pick up a few locations at a fair but not great rate for later this month.

It looks like I'm back at it full time, at least for the foreseeable future.  The newfound motivation comes from my desire to quickly pay off some of my debt.

Tuesday, January 10

Debt be Damned

As the rent checks continue arriving in my mailbox I am beginning to make a dent on some of my credit card debt.  For the last three months all my extra cash was used to pay property taxes.  Now that this is out of the way, I have a little breathing room and should make steady progress.

The next major expenditure will be in June when I pay property insurance.  It should be under $6,000, which is about what I bring in from rental income in one month. I used to dread paying my car insurance but no more.  In February I will pay $178 for 6 months of liability coverage, and that's with a $100K/$300K policy, much more than the mandatory minimum in my state.  The lower rates are a combination of having just one car without comprehensive coverage, getting older, and being claim-free over the last almost 20 years I've been driving.  I also think some of my traffic tickets are finally falling off my record.

Operation Pay Down Debt, here I am.  Let's do this.  I'll have extra incentive to live miserly as I see those balances fade away.  For whatever reason, having all this debt really stresses me out, even though almost all the debt is the "good" kind (used to produce more income).  I can't wait to see those balances go to a big fat ZERO.

Monday, January 9

Busy Week Ahead

Mystery shopping was relatively slow last week so I'm glad to see a pickup in my activity this week.  I have 30 gas stations and a restaurant lined up already and plan to add a few more to the list.

On Thursday I will go to my third anthrax study visit.  It pays $75 and takes one hour.  Last week I got paid an extra $15 for answering an easy survey to see if I qualified for another study they are conducting.  The anthrax study is easy.  Last week I had my vital signs taken, gave blood (the worst part as I hate giving blood, but not so bad), and received the first injection of the vaccine.  They also gave me a snack and drink after drawing blood.

Sunday we are flying to Fort Lauderdale.  I am mystery shopping 5 hotels in Fort Lauderdale and Miami next week.  I know, I know... tough job.   These are high end properties and all my meals and drinks are reimbursed as well.

Thursday, January 5

How to Spend Less on Vacations Without Sacrificing Fun

Biscayne Bay in Miami
The premise of My Frugal Miser is that I spend money on experiences while cutting everything else to the bone.  I derive very little pleasure from buying clothes, paying the water bill or putting gas in the car... unless I'm gassing up for a road trip!

However, vacationing becomes stressful when the credit card bill arrives (conveniently, after you've been home for a few weeks and are toiling away at your day job) and you have to pay the piper.

In 2011 I spent $3,219 on vacations as well as $3,023 on gambling, which generally happens while I'm on vacation.  The easy solution would be to find a recreational activity that costs less than $3,023 to occupy my time when I am on vacation.

Here are a few almost painless ways I am planning to reduce my spending on vacations and gambling:

  • Food.  Eating while traveling is part of the fun, right?  Well, that doesn't mean I have to spend a ton of money at an expensive restaurant.  I can still experience local food by buying from local markets and preparing the meal myself.  Why not buy fresh seafood from a roadside stand and prepare it myself?  The only change this entails is planning ahead by bringing pans and utensils to cook with.  Another way to reduce this expense is by eating out at lunch rather than dinner.  If breakfast is free at the hotel, I will eat enough to last so that we can eat a late lunch, followed by a light dinner of fruit, granola bars or something similarly simple.
  • Entertainment.  There's no excuse for spending over $3,000 gambling.  More than $.07 out of every $1.00 that I spent in 2011 was spent at a casino.  There's nothing wrong with moderation.  If I go to a casino in 2012, I will set a budget and stick to it, no excuses.  I will find other, less expensive ways to occupy my time such as going to the movies, hiking, or even riding around exploring how the locals live.
  • Getting There.  This is one of the harder ones.  A major expense last year was the actual cost of going to my destination, whether by flying or driving.  I can certainly reduce the cost of driving by mystery shopping gas stations along the way.  The only ways I can reduce spending on air travel would be to plan ahead or to fly less.
I feel confident that I can significantly reduce my spending in these areas without feeling like I am sacrificing anything in the process. 

Wednesday, January 4

2011 Spending in Review: Year Over Year Comparison

This is the first time I've looked at how my spending by category compares from one year to another.  How insightful to look back and see where the money went, but also to see how my spending patterns changed over time.

In 2011 my total spending was 3% less than my 2010 spending.  When you drill down to individual categories there are some important differences which point to opportunities I see to spend less in 2012.

Spending by Category:  2011 Vs. 2010

Spending by Category:  2010 vs. 2011

In 2012 I think it will be easy to further reduce my spending:

  • Mortgage interest will drop @ $1,000 due to principal repayment.
  • Interest expense will also drop for the same reason.
  • Two of the larger categories are recreational:  vacation and gambling.  I plan to spend less on both this year.
  • Spending on food increased by $539 this year.  I averaged $6.45/day or $3.23/person in 2011.  I spent $1.48/day ($0.74/person) more on food in 2011 versus 2010.
  • Transitioning to a one car family saved us $2,353 in 2011 compared to 2010.

A couple notes:

  • Mortgage interest includes interest I pay on investment properties in addition to my home.  Most of the Interest Expense category is also related to rental properties.  I don't mind expenses which are incurred in the pursuit of higher income.
  • Since the amount I spend on taxes is almost completely out of my control I have chosen to exclude that category.  In 2010 I received a very large refund from my 2009 taxes which would skew this report in a way that isn't an apples to apples comparison.

Tuesday, January 3

Utilities - Looking Back on My Household Utilities Cost

I am always interested in comparing how much I spend to "operate" my house to what others spend.  The cost of running a home is a fairly large expense, so keeping it under control is key to meeting my financial goals.  I am continuously looking at ways to be more energy efficient.

  • We are currently a household of three, but the 3rd person is only here temporarily.  She moved into my house in November 2011 so the expenses below mostly reflect two people living in the house.  
  • I live in the Birmingham, Alabama area.  We have hot, humid summers and mostly mild winters.  I only turn on my heat a handful of times every year, but I should note that my neighbors use much more heat than I do.
  • I set the thermostat to 60 in winter and 81 in summer.
  • We have some of the highest sewer rates in the nation, which is reflected in my water bill.
Cable TV
2006: $156
2007: $0
2008: $0
2009: $0
2010: $0
2011: $0

2006: $755
2007: $679
2008: $1173
2009: $436
2010: $500
2011: $564

2006: $120
2007: $229
2008: $196
2009: $575
2010: $296
2011: $239

Natural Gas
2006: $205
2007: $0
2008: $132
2009: $529
2010: $485
2011: $447

2006: $598
2007: $329
2008: $1323
2009: $1335
2010: $900
2011: $913

2006: $327
2007: $432
2008: $571
2009: $573
2010: $522
2011: $559

2006: $2161
2007: $1669
2008: $3395
2009: $3448
2010: $2703
2011: $2722

There are opportunities to reduce my utilities expenses in 2012.  
  • I am in the process of cancelling my wireless phone service with AT&T and moving to Republic Wireless.  Initially I will incur the early cancellation fees which will increase my costs but after that I should be able to reduce my annual spending from $900 to $300.
  • In December 2011 I tested my faucets for water usage and replaced two sink aerators and one shower head with low flow devices.  With a third person in the house and the rate increase on our sewer service and water, my goal is to keep this expense from rising rather than reducing it.
  • I'm actively looking at ways to reduce energy consumption.  We sold our second TV last year and I replaced the refrigerator with one 40% smaller.  I have mixed feelings here because if we can entertain ourselves at home more (streaming movies via Netflix and surfing the Internet), we can save money on entertainment and fuel for the car.  Of course, we could just start reading books and magazines but I think it's going to be tough to convince the others in this house to do this.

Monday, January 2

My Frugal Miser - 2012 Goals

I have grand plans for 2012.

This time last year we were about to open the restaurant.  While that was a much more exciting time in my life compared to today, I still have some exciting plans.

My 2012 Goals
  1. Lose weight. At least 24 pounds.  I've never met this goal.  Will 2012 be different?
  2. Increase my net worth by $50,000.
  3. Reduce utilities expense by 10%. In 2010 I spent $2,703 on electricity, natural gas, water/sewer, Internet and phone. In 2011 I spent $2,722, basically flat year over year.  For 2012, I would like to reduce it to $2,432.
  4. Reduce credit card/LOC debt by $36,000.  My mortgage balances will also decline, but since they are on auto-pilot I will focus on credit cards and the three lines-of-credit I have with my bank.
  5. Purchase 1 rental property.  It will be great if I can purchase more, but I will push myself to at least do 1 new investment this year.