Wednesday, December 31

Ways I am Reducing Expenses (my Personal Burn Rate) in 2015

One of my 2015 goals is to reduce monthly spending, net of vacation and home repairs, to $1,250.  In order to do this, I need to look at costs I can control (such as eating out) as well as those that are relatively fixed (like insurance).  Some thoughts:

  • I've already reduced my health insurance costs by shopping for a new plan.  Last year I did not take advantage of the new plans being offered under the Affordable Care Act.  I spent Monday afternoon evaluating my eligibility and my options.  While I will have to change doctors, I found an HMO plan that has a lower deductible and lower out of pocket fees for things like doctor visits and prescriptions.  I qualify for a voucher that gets me this better plan for $105/month less than I paid in 2014.
  • In 2014 I reduced auto expenses by replacing the S-10 with an Aveo.  Another, unanticipated, savings came from moving to a new house a few miles away.  I'm in a more central location, so I drive less.  In 2015 I will save money by reducing the amount I drive.  Between the bicycle and my 2012 Piaggio Fly 50 scooter, my driving will mostly be limited to income-generating activities including mystery shopping, hospitality work, and tending to my rental properties.
  • While it isn't included in monthly spending, and I don't regularly post the expenses associated with my rental properties, I plan to shop my property insurance needs for the first time.  I spent over $7,000 on insurance in 2014, and that's with $5,000 deductibles on every property and no claims history.  It's time to find savings and I am confident that investing some effort here will be worthwhile. 
  • Finally, there's food.  While eating out is a simple pleasure, it costs so much more than cooking at home, which is also usually healthier.  I think one of the reasons we eat out is because we don't have food available at the house that appeals to me.  By spending a bit more on groceries to add variety, I hope to reduce the amount we spend in restaurants.  Overall, this should reduce the amount we spend on food.

Monday, December 29

Keeping my Personal Burn Rate low

Last week while visiting Birmingham I sat down with the former CFO of the software company where I used to work.  One of the topics he brought up was the concept of a Personal Burn Rate, which is basically an individual's recurring monthly expenses.  We talked about how lifestyle inflation limits the options people have to pursue opportunities.  He recently left the company and spent several months traveling Europe and sailing with his wife.  I asked what his next move was, and he was elated to have options because he has kept his Personal Burn Rate low.

If your fixed expenses are too high, you won't have the flexibility to choose when you want to work or how you want to invest your time.  I see this all the time in the mystery shopping industry:  desperate shoppers with a mountain of bills accept piddling jobs just because they are trying to stay above water.  But instead of this being an "every little bit counts" situation, the shopper is just digging a hole that's harder to get out of.  That $7 job might cost $10 in vehicle expenses alone when you take into account depreciation and maintenance.  Sure, it's $7 today, but now the shopper has to come up with $10 in a couple of months because they took the $7 job.  It's insane.

I've been spending these last days of 2014 looking at my own Personal Burn Rate.  I ask myself, "Where can I reduce expenses with the least amount of pain?"  As I do this exercise I am keeping a list of how I am reducing my Personal Burn Rate.  I'll share some examples later this week.


Saturday, December 20

Brickell, Miami

We're back in the good ol' US of A now.  After arriving in port early this morning, we had a nice final breakfast in the ship's dining room and leisurely got ready.  Customs is so easy when arriving by cruise ship.  There was no inspection at all.  A customs officer looked at my passport and declarations sheet and thanked me.

From there, we walked across the bridge into downtown Miami and took the free Metromover tram to Brickell, which has a pretty cool village-feel to it.  I had to make a sizable deposit at Wells Fargo (I made several fee-free withdrawals at the ship's casino to garner rewards points on my credit card).  Now we are hanging out at Starbucks until the Megabus leaves at 4:40 PM.

I'll post more about the cruise later.  We had a fabulous time and I can't believe how quickly it came to an end.  Besides some gambling, two drinks and a little miscellaneous spending, I didn't bust the budget.

On Monday I head to Birmingham for the holidays.  I haven't visited my Mom this year nor my father's side of the family, so some catching up is in order.

Thursday, December 11

Bon Voyage: Eight Night All-Inclusive Vacation for Two For $500!

Tomorrow morning we are headed to Miami for our 7 Day Eastern Caribbean cruise.  The cruise visits Nassau, St. Thomas, San Juan and Grand Turk.  For less than $500, we are spending one night in Miami and 7 nights aboard Carnival Glory.  This is the ultimate in frugal travel:


  • We are leaving the car at the house, so no parking fees.
  • We will take the PSTA buses from the house to Tampa's Marion Transit Center ($10).
  • From there, we ride the Megabus to downtown Miami ($36 roundtrip).
  • We spend the night in Miami at a high-end hotel.  It's a mystery shop, and lunch, dinner, breakfast and alcohol are all covered).  I also am paid $50.
  • If we need transportation while in Miami, we have (2) $10 credits on Uber to use.  If not, we'll use it to get home when we arrive back in Tampa.
  • For two, the cruise was $619.  This includes the cruise rate of $174 each ($24.86/day/person) plus taxes and port fees.
  • I have an onboard credit of $117.78.  This includes a $100 shareholder benefit and a random $17.78 credit.  I usually receive these small unexplainable credits when I cruise.  The only explanation I saw in the online forums was that if port fees drop, Carnival refunds the savings as an onboard credit.
That's an all in cost of $665, less my $50 shop fee and $117.78 in credits for a total of $497.22.  Of course, gratuities will add to the cost as will any money I lose while gambling.  

There are some other ways we will be frugal onboard, particularly with mitigating the cost of alcohol:
  • Carnival allows you to bring one bottle of wine and one 12 pack of soda per guest.
  • I reach Gold Status in their VIP program on this cruise, so we will be invited to a cocktail party while on board.
  • The art auctions give free champagne.
  • If I gamble enough, all my drinks in the casino will be free.  Last cruise we did this the first night, so all our drinks were free.  Unfortunately, I lost a good bit of money trying to get the free drinks, so I have to be more careful this time.
  • We typically eat all meals onboard, even on port days.  
I am 100% convinced that for the moment, cruising is the best value one can get for the vacation dollar.  The cruise industry has added so much capacity, coupled with recent snafus that scared some people away from cruising, that costs are artificially low.  It costs less to cruise than the airfare alone would cost to visit any one of these locations.  Then you'd have the cost of your hotel, food and ground transportation on top of that.


Sunday, December 7

My Frugal Miser's 2015 Goals

Once again it's time to lay out the annual roadmap.  I actually start thinking about what I want to accomplish several months before the year begins. Publishing my goals keeps me accountable:  it's a constant reminder of what is important to me.

  • Health:  Lose 12 pounds
Last year I finally began losing weight.  This year I do better.
  • Debt:  Reduce balance on 5.75% mortgage to $30,000.
This mortgage is for the last home I lived in before moving to Florida.  I bought the house in 2008 and took out a 15 year mortgage.  I would like to reduce the balance (currently $62,186) to $30,000 by 12/31/15 and pay it off in 2016.
  • Spending:  Average monthly spending, excluding Vacation and Home Repairs, will be less than $1,250.
Keeping day-to-day expenses in check is vital to Financial Independence.  There is still much to be done at the new house, and I will be prudent with how much I spend fixing it up.  I will also be smart when planning vacations, but don't want to limit spending on Experiences by a contrived dollar amount.
  • Leisure:  Take another international trip
We visited Ecuador for three weeks in September, 2014.  It is difficult to explain how such a trip affects one's life.  We were exposed to a different culture, one that lives much simpler than the always-connected lifestyle of the average American.  It was a wake-up call on what is really important.  A side benefit was that we walked everywhere and ate less, and I lost weight during those three weeks.


That's it.  I have four primary goals, and I'm going to reach or surpass each of them next year.

Wednesday, December 3

My Frugal Miser - November Expenses: $6,548



I spent, and spent, and spent in November.  Fortunately much of it was pre-spending to take advantage of holiday deals:  I bought $1,550 in gift cards ($100 in the Entertainment category, $900 in the Home Repair/Household category and $550 for restaurants), and I also bought $75 worth of Groupon/Living Social deals I have yet to redeem.

Accounting for the gift card/deal purchases, I spent around $5,000 in November.  I paid property taxes of $1,355.  Next year I will qualify for the homestead exemption, so this category should be cut in half in 2015.  I spent nothing on fuel thanks to mystery shopping and Shell's Fuel Rewards.  Much of the auto depreciation came from mileage accumulated while mystery shopping along with trips to Orlando for hospitality work.  I bought a new computer (for only $145!) and have sent off the old one to sell.  The old one was less than a year old, but was such a piece of crap that it kept freezing up whenever I used Quicken.

The other major expenses were home repairs.  I covered a portion of the deck to add privacy and protection from the elements and installed baseboard in the master bedroom.  I also bought curtains, blinds and several miscellaneous things to finish off the bedroom.  Last, I booked our flights and car rental for the May trip to Omaha for the Berkshire Hathaway meeting.  Allegiant had a fare sale when they announced new service to Omaha, so I booked early.  I even splurged for assigned seats on an exit row(!).

November Expenses:  $6,548

$388 Auto ($0 for gas, $385 for depreciation, $3 for car wash)
$0 Bank Fees
$0 Clothing
$145 Computer
$277 Entertainment (movies, gambling, alcohol)
$869 Food
$0 Gifts Given
$2,568 Household/Housing/Home Repair
$0 Home Insurance
$245 Health and Dental Insurance
$0 Investment Expenses
$0 Medical/Dental
$29 Miscellaneous
$(6) Personal Care
$0 Subscriptions
$1,355 Taxes
$185 Utilities
$523 Vacation and Recreation

Tuesday, December 2

My Frugal Miser - November Income: $9,576


My income in November was excellent.  I collected rent from every property and had several mystery shopping payments from October come in along with two hospitality jobs I did in November.

Cash flow was meager, as I started paying property taxes.  Across all properties I owe more than $10,000 in property taxes this year.

November Income $9,576

$1528 Mystery Shopping
$8,113 Rental Income
$(64) Other Sources

Notes:.  
  • I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.
  • I include merchandising and hospitality work in the mystery shopping category since the companies that I shop for provide this extra side work.