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What Amount of Money is Not Worth Saving?

When I was a kid, I thought my family was poor. So poor in fact that when we would eat out, I would get the cheapest item on the menu – chicken fried rice. I’ve always hated chicken fried rice. But I love shrimp fried rice. The difference in cost was probably 50 cents. 50 cents was a lot of money to me when I was a kid, so of course I thought it was a lot of money to my parents. I thought I was being quite a good selfless daughter.

Of course I didn’t realize that my family wasn’t actually poor and certainly not so poor to care about 50 cents. They also didn’t want me to eat something I hated.

I wasn’t necessarily the smartest kid.

Fast forward to today and I see that Uber charged me $7 more for my ride than I was expecting. Now $7 is a lot more than 50 cents, even with inflation. But I have a much better view of my finances and I know I’m not poor. And I know the $7 won’t make any difference in my budget, in my savings, in my retirement goals. And contesting the matter with Uber seems like a hassle. On the other hand, it’s not like I’m getting anything better by paying an extra $7 – the ride already happened. And while we’re at it, $7 is probably enough to buy some delicious shrimp fried rice!

Clearly something has changed in my valuation with money. I had discussed this issue with my ex a year ago. I had paid off my debt and had amassed quite a bit in savings and he was well on his way to paying off his debt. We both make six figure incomes at pretty stable jobs. We were at places in our financial lives where saving a dollar here or there didn’t seem quite worth it. It doesn’t mean that we would willingly pay more for no reason, but there were now limits to how much trouble we would go to in order to save a buck. We realized we don’t need the buck, the buck saved means nothing to us in terms of short or long term goals and our time and desire not to deal with hassle became more valuable. We could blow thousands of dollars and we’d still have enough. We can order anything off the menu and I like that.

I still clip coupons, because it’s a habit that I find calming, but even when I was watching every dollar, I still ignored the 5 cent or 25 cent coupons. I mean, that amount of money wasn’t worth cutting out, remembering the coupon and presenting the coupon. There’s still a part of me that loves the thrill of saving a few bucks on my ridiculously expensive contact lens solution. And I still remember when I thought these habits were so important, because these amounts of money were critical. It doesn’t mean, however, that we have to keep the same habits for all time or that we can’t adjust for inflation.

I did go through with pestering Uber and Uber readjusted my fare. Old habits die hard.

What about you – what amount of money is not worth saving?

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A Controversial Way To Save Money on Groceries

controversial way to save money on groceries

Back in the heyday of my student loan pay off blitz, I would sometimes, as people do, forget my lunch at home. Or forget to make one. Now, a periodic $10 is not a big deal when you’re paying off tens of thousands, right? Right. Logical. But the hunger and the deprivation were making me illogical. On many of those days, I skipped lunch. I was cutting back on everything, and I didn’t want stupid mistakes to derail me.

Since that time, I have reversed course into thinking, yeah a $10 lunch here or there will delay your loan payoff by a literal minute, if that. Health is more important.

Now I still believe health is more important than money but I may be revisiting the idea that skipping meals is a bad thing.

A New Diet Plan

What I had found when skipping lunch was that it was unbearable to work for about an hour.  After the pangs stopped, I wasn’t hungry.  I didn’t eat a giant dinner to compensate. I wasn’t irritable. The only effect was that I felt guilty for skipping a meal and treating my health so flippantly.

After reading about intermittent fasting in a few publications, I decided to take the plunge.  I’m starting a diet whereby I only eat one meal a day, typically dinner. 

I’m sure this sounds disordered. But there have seen some studies that show that intermittent fasting might actually lead people to live longer. And General Stanley McChrystal eats only one meal a day. He has a much more demanding exercise regiment and a much more stressful job than I do. Here’s a man who needs more calories and likely does not have an eating disorder. If he can survive, then surely I can too.

There doesn’t seem to make any rhyme or reason why we eat three meals in a day. Looking at our primitive ancestors, they ate whenever they could. They didn’t have set meals. If given an abundance of food, it would still make sense to eat only when hungry, rather than by habit.

I’m not going to starve, darlings.

No one dies from starvation from having one meal a day. Or at least, one big meal a day. And I can foresee a lot of benefits.

Benefit #1: It relieves stress

After we stopped that whole hunting and foraging for food thing, you would think procuring and planning meals would be a breeze now. When I think about planning 21 meals for myself, it seems like a lot to wrap my head around. Each meal has to be balanced in terms of nutrition and I have to figure out where I’m going to eat it and when I’m going to cook it. Then I actually have to shop for and cook it. By forgoing two meals a day, I can focus all my energies on shopping for, preparing and cleaning up one great meal.

 Benefit #2: Reduced environmental impact

I’ve heard a number of people say that the positive environmental impact would be huge if people would eat one meatless meal a week. Well, by cutting out 2 meals a day, you’re cutting out potentially 10 meaty meals. You get all the environmental impact with none of the work (figuring out vegetarian meals can be hard!). 

Benefit #3: Spartanism can be pleasurable

I’m a bit of a masochist. I’ve run 2 marathons. I never turn on my air conditioning. In the winter, I bike to work so long as it’s above freezing. In the summer, as long as it’s below boiling. I had listened to this podcast entitled “Your Climate Controlled Life is Killing You” and it really spoke to me. I really was getting tired of the comfort. There’s that line in that Goo Goo Dolls Song “You bleed just to know you’re alive” and while that sounds perfectly emo and high school, it does make me feel more alive to suffer a bit.

On my morning bike rides, I’ve learned to enjoy this incredibly empty feeling. It’s not hunger. It’s just ….being. You don’t always have to feel completely full. You don’t even need to feel sated. You can function perfectly fine without thinking about food at all – when there’s no food to be digested and when you’re not desirous of any food. It’s at these times when your mind might actually be clearest.

But honestly, I suffer for maybe 10 minutes when I’m hungry. And then the hunger pangs go away. That’s the only difference between eating one meal a day and three meals a day for me.

Benefit #4: Weight Loss

I’ve had this stubborn belly fat for some time now. From eating one meal a day, my stomach shrank. I lost 10 pounds. I looked better, had more energy. My body wasn’t spending all of its time digesting food. Furthermore, I didn’t have to kill myself going to the gym to burn off excess calories I never should have eaten. Now I understand why they say that losing weight is about changing your diet,not about exercise.

Benefit #5: Hunger Control

I was on a budget cross-country flight with a friend. We left at around 4pm and would arrive around 9pm our time. We didn’t realize that there wouldn’t be any food offered on such a long flight. She had brought some snacks and offered them to me, but I was fine. I had had lunch. She devoured all of them and was ravenous when we arrived. This reminded me that I’m used to taming my hunger by now.

I’ve also learned to appreciate hunger. It’s not a bad feeling. I’m not hangry. I get the feeling that my body is starting to figure out it’s hungry but I’m more than my feelings. I’m in control of the way I respond.

Benefit #6: The Controversial Way I Save Money on Groceries 

And we come to the headline of the post – of course this will save money! While it seems like you would eat all the same calories you would have in one day, just in one meal, I ended up eating a normal sized dinner. Plus I don’t buy snacks or any other foods for breakfast or lunch. I doubt you’ll cut 2/3 of your food budget, particularly since breakfast tends to be a pretty cheap meal. But it’s impossible not to save money. Even if you ate out for dinner every day – say $10 a meal –  you would only spend $70 on food for the week and never have to cook. That’s quite a low number for eating out, and you could get it much lower if you cooked.

You can easily cut half your grocery bill (by cutting 2/3 of your meals). You’ll find that you don’t need to buy very much food. Eventually you’ll cut down on food waste, because you won’t need to buy as much food. You won’t need to go to the grocery store as often, cutting down on spontaneous shopping. You will cut down on gym memberships because you don’t need to burn off as many calories. It becomes a virtuous cycle of saving.

In the end, it’s just an experiment I’m doing to see what works. If I’m hangry and irritable and my hair starts falling out, you best be believing that I’ll stop.

What about you? Have you ever tried intermittent fasting or some other crazy diet?

The Only Financial Lesson You Need

 

only financial advice you'll need

You may have heard that old saying that the opposite of love is not hate – it’s indifference. Sometimes two ideas seem to be at complete odds with each other when they’re actually two sides of the same coin. Sometimes people think there are only two options – you either love or hate something – without realizing that there are other, perhaps better, alternatives.

Are you a Spender or a Saver?

In the same way, when people think about personal finance, their minds tend to go to one of two extremes as the only paths to take.

On one end, there is the shopaholic who’s never found a sale she didn’t like. The spender has no idea what she owns or what she wants. She keeps spending because no matter how much she buys, she is always left wanting. The perfect sweater, the newest jeans, a pair of shoes for every outfit. Her house is full but she never feels satisfied; she is always looking for something else.

On the other is the miser who pinches every single penny. The scrooge saves as her life’s calling but still fears that whatever she saves won’t be enough. She cuts necessities to the bone and rejects anything fun or generous. Charing her dinner guests for food. Neglecting friends in need. She finds excuses to avoid giving gifts. The scrooge’s house is empty and so is her life.

The Third Option

People often think the purpose of personal finance is to turn the spender into a saver. However, neither of these scenarios is ideal. The spender lives like there is no future and the saver lives like there is no present.  Though the two extremes are different – they share a common trait that makes both these lives undesirable.

Neither have figured out when they have enough.

Knowing what is enough would enable the spender to see that she already owns enough clothes to last through several lifetimes. She has more cookery than Martha Stewart knows what to do with and her home was submitted to Hoarders International.  New purchases just make her home more cluttered and her wallet lighter. She doesn’t need new purchases so much as to appreciate what she already has.

Knowing what is enough would enable the scrooge to find a reasonable savings goal for financial security rather than endlessly saving. Once the scrooge meets these goals, she could use some money to enjoy her life and to give back. Only then will the Scrooge finally be living a life of abundance rather than perpetual fear.

The Only Financial Lesson You Need

Those that have enough realize that money is merely a tool – it is not the end goal. Money should be used to make our lives easier and better. Our lives should neither be devoted to earning money nor enslaved to the debt caused by its lack. The ideal is not necessarily to have millions of dollars or millions of things but to feel that whatever we have, that we live abundantly. So the goal of personal finance is not to become a spender or a saver – the point is to find your “enough” and use money to get or stay there.

The definition of enough will vary with each individual’s desires and circumstances. No one amount of money or one lifestyle can suit everyone. If you’re a spender, you can keep shopping and if you’re a saver, you can keep a suitable amount in a bank account. You don’t have to change your whole personality in order to meet a personal finance writer’s definition of success. Personal finance is just that – personal.

What Happens If You Find Your Enough

Both sides need to know the endpoint. The spenders need to know when to stop and the savers need to know when to start. And both sides need to know when to quit – when to give up the rat race and retire. If you don’t have a clear end goal, then you could be chasing money for the rest of your life and never feel like you’ve made it.

Enough can mean a wealthy retirement abroad. It can mean spending time with friends and family. But if you don’t have an endpoint, you’ll spend your money chasing all number of possibilities – a new house, fancy car, designer clothing. If you don’t have a purpose for your money, it’ll find a purpose for itself. And you might not like where you end up. You have to first figure out and then focus on your end goal – and then you’ll be able to aim your desires and energies there.

Do you know when you’ll have enough?

 

 

The Questionable Way I Saved $65k in 4 years for Grad School

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Paying for higher education is a huge issue these days. I knew I was on my own when it came to graduate education. Fortunately, I worked for four years in between college and grad school. I scrimped and saved and then cashed out my retirement account to pay for graduate school. I couldn’t find any articles that recommended this approach. I’m sure it’s a controversial way to do so but it worked out ok for me.

It was spring of my fourth year at college. I was barreling toward graduation with a job offer with the federal government. This was pre-recession so this was more or less average, instead of exceedingly lucky.  And I, as a completely entitled millennial, pictured the next 30 years of my life working in a gray cubicle under fluorescent lights in this office.

And that frightened me (though I tell myself the sexual harassment was the bigger issue with that job).  When one of my friends excitedly told me she was going abroad for a year with some of our mutual friends, I jumped ship at the chance.

An Inauspicious Start

I spent one year abroad, where I saved nothing, My first six months back in the States, I floundered about at temp jobs, making $10-20/hour, though I still managed to save because I was living rent-free with my parents. In my last six months, I was unemployed after having been laid off, though I still collected unemployment. But for a solid 2 years I was gainfully employed as a financial analyst. I hunkered down at the whole “being an adult” thing. This is not the start you would expect for someone who saved $65,000 for grad school in 4 years, making, at most, $44k annually.

When I was 21, I read about 401ks and retirement in the book Financially Fearless by 40 by Jason Anthony.  I was appalled that I hadn’t started saving at the ripe old age of 22. My dad is an accountant! Why didn’t he warn me?

A Turnaround

But my parents had always taught us the value of saving. I decided that when I was fully vested I would max out my 401k even while I was making $42k and then $44k a year. Because the 401k is pre-tax, I saved a bunch on taxes by maxing it out, and I still had enough money coming in my paycheck for a simple existence. With the company match, I was saving about $20k in my 401k. Then I saved $5k in my Roth IRA. On top of that I saved a few thousand into my savings account and had saved a few thousand before and after this job while working odd jobs.  So that’s the basic arithmetic answer of how I saved this money.

The aggressive 401k contribution was a method of forced saving.  After I made the election, I was far too lazy to do anything about it so I just had to adjust my spending.  I benefitted from the tax savings, which came to an extra few thousand a year. Being a natural hermit and a scrooge also helped.  I was paying $800/month in rent. This was a reasonable rent 10 years ago but is on the low end for the Washington, D.C. area now, though I still see rents this low. We didn’t have a TV or cable. The furniture was sparse – scrounged from a collaboration of my office’s discarded furniture, Ikea and this sweet Jennifer Convertibles sleeper couch for $200.  (Selling that couch was a huge mistake).

How I Saved $65k in 4 Years

We ate at home and I can’t remember doing a lot during these two years though I do remember studying for the LSAT.  I went to work and I went home and did logic puzzles and wrote essays.  On the weekends we visited our parents. Note: this is a highly effective way to save money and be completely lame.

But the key was having the money withdrawn immediately.  When my sparse paychecks arrived, that was all I could spend. And in fact, I didn’t even spend all of it. I think a lot of people may have worked jobs where they weren’t making bank right out of college. Sometimes people think, “I need to make $X before I can save money.” If $X is barely over minimum wage, then perhaps this person is correct. But I think for many people, even if we aren’t making that much money, saving small amounts of money is valuable. And making it harder to spend money is an easy way of forcing yourself to do that.

So I’m sure you’re saying, well you saved a lot of money for retirement. But how did you use that toward grad school?

Well, I liquidated most of my retirement savings to pay for grad school.

The Controversial Part – Should You Cash Out Retirement Accounts For Higher Education?

A financial adviser would say I was foolish for withdrawing from my retirement accounts to pay for school. I probably was. I’m not going to argue this was a smart thing to do. It was what I felt at the time was a good use of my money.  (And to be fair, I did such a poor job of investing my money, it really hasn’t grown much even as the stock market has soared). I took out the max federal loans and paid the rest with savings and strategic withdrawals from my retirement accounts. I didn’t take any private loans.

The money I saved in these two years would have a snowball effect to provide a solid financial foundation for my future during and after law school. Having the savings was a huge accomplishment in my mind.

What I learned in my first four years of working was that I could live on very little. I also learned that I could be perfectly content on very little. That is a message that I have carried through with me my entire career and has helped me avoid lifestyle creep.

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