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Tuesday, January 31, 2012

Can you make money with buying storage units at auction?

I have a glorious history of acquiring things cheaply and then selling them for a profit. I have sold everything from furniture and electronics to algae (yes, algae). I have gotten stuff from every source imaginable, including dumpsters and things in people's front yards that may or may not have been meant for the trash. One thing I had never done though is buy a storage unit. Mainly because I didn't have anywhere to store the stuff, and they always tend to have the auctions during weekdays when I am at work.

I had the opportunity to go to one lately though, as it lined up with some days I had off work.

I went with a friend and we planned to split the cost and the profits. We went to a total of 3 different auctions, where a total of 21 units were being auctioned off.

We actually ended up buying 4 units. One contained only a washer and dryer, but my friend bought those by himself because he actually needed a set for a rental property his family just purchased.

The other 3 units went for a total of 530 dollars including tax.

We didn't find any guns, gold, safes or anything crazy, but we did get a lot of furniture and other items, including:

2 dressers with mirrors
2 nightstands with drawers
2 TVs
1 queen bed, frame, headboard, and bed set
1 twin bed with frame and headboard
1 small computer desk
5 large paintings
a bunch of clothes
folding table
$3.50 in cash

So while we aren't going to be rich, we should have no problem turning some sort of profit. I have already sold a bunch of the clothes, the folding table, and one of the dressers for a total of $189, so we are well on our way. we should be able to make $100 each I would say when all is said and done. Not the easiest way to make some money, but every bit counts!

-The Money Monk

Monday, January 30, 2012

The Money Monk's Spending and Saving for January

One of the major reasons I started this site was to have some accountability for my spending and saving habits and a catalog of sorts to compare various months and years to chart progress.

January was going to be the first month where I cataloged my finances, and I recorded all my spending and income. However, I realized I did it in an awkward and potentially incorrect way.

For things like mortgage, which is actually about $900, I counted it as $450 since my girlfriend lives with me and pays half. I did this with most of the other bills too.

What I should have done is count the bills in their totality as an expense, and then counted her 'rent' as income. That will give me a more clear and realistic picture of my situation. So that is what I will do from now on, and I will Post the results for February since I messed up on January and I don't feel like going back and recalculating everything for this past month.

What I will say however, is that I spent WAY too much on food this month, mostly eating out. Luckily this is abnormal, but the amount I spent was still appalling. About half of the restaurant spending was a result of two dinners that I attended as result of special occasions, Birthdays, etc. So I felt bad about declining. I will have to decide what to do about these situations in the future. Another large chunk was a result of failing to prepare meals for a weekend away. So with these eliminated Feb should be a better month for food spending.

I also spent more than usual on groceries, because I have been focusing on eating very clean, with a mostly paleo diet. I will have to readjust the things I am buying and stick with the less expensive versions because I am not willing to continue to spend as much as I have this month on food, even aside from restaurants. It was way too much.

The good news is I didn't spend almost ANY money on consumer goods. No clothes, no toiletries, no DVDs, nothing. So overall my spending wasn't bad, but I need to get it even lower. I don't have a high income so I need to save as large a percentage of it as possible.

-The Money Monk

Friday, January 27, 2012

Hope and Change

I don't know what I can give you in the hope category, but I can talk to you about change. In general it's a better idea to be using cash for most of your purchases, for a variety of reasons, and this will invariably lead to you having some loose change lying around. When you include the random coins that you find or pick up (and you should pick them up) you will start to accumulate a decent amount of coinage. 

So what do you do with it all? Most of you may have found out by now that it can be quite a chore to handle. You can't carry much, it is a pain to sort, and a lot of cashiers will act like you handed them a dead baby if you try to pay in change.

The problem of the cashier reactions can be solved by not caring what people think, but dealing with change can still be a logistical pain in the ass. So what is the aspiring early retiree to do with their change?

A couple tips:

1. Have containers for your change by type, and empty pockets every day. Have a different container for pennies, nickels, dimes, and quarters. And sort each time you have a handful of change until waiting until you have a giant pile. If you get home and throw your loose change in the right jar right away, most of your work is already done.

2. Buy coin rolls. You can get a large bag of around 30-40 paper coin rolls for  less than 2 dollars.

3. DO NOT use coinstar! It takes a ludicrous 10% of your money for the simple task of counting it and converting it to cash! that is outsourcing at its worst!

4. Save work by pre-measuring the size of a roll. Find a tube of some kind that fits each type of coin. Then count out a rolls worth of that coin and put it in the tube. Now cut or trim the tube down until it is flush with the stack of coins. Now you have a way to instantly measure a full roll of coins without having to actually count them. Then you can simply stick in in the paper wrapper and you are good to go. Will probably actually take LESS time than coinstar!Note: you will have to do this for each type of coin, but only once.

If you can't find a suitable tube you can use one of the paper rollers that are crimped shut at one end and cut it to size. They do also make commercial products that are designed for this purpose, but I feel it is easy enough to improvise that you don't need to buy anything.

5. Save the change for vendors that don't give you shit about it: Even if you have the right mindset about not caring, it still may slow you down if some stores balk at taking change or insist on counting the whole roll. There are however several stores that will easily take your rolled change. Publix has a scale built into their register and they weigh the rolls to tell if they are whole. It is just as fast as paying with paper cash and I have never had a problem or a complaint from them. Gas stations also seem perfectly willing to take rolled change. I simply take a couple rolls in when I go to buy my groceries and I have never had any problems.

- The Money Monk

Monday, January 23, 2012

Plan Ahead to Cut Costs!

In the last post I talked about in-sourcing, and this is definitely related. You want to make sure you aren't inadvertently out-sourcing 'convenience' by failing to make simple preparations.

I have a weekend commitment to my national guard unit every month, and I have to travel about 140 miles each way to make it to my unit. Incidentally this is the main reason I can't give up my car, even though I'm not sure I would be 'mustachian' enough to do it anyway at this stage in my journey.

So I have to travel down there and I am responsible for my meals. This past weekend I was rushed while preparing to leave and didn't pack meals for the two days I was gone, so I was forced to buy food once I was already down there and ended up spending about $27 for food for those 2 days. that's only about $3 per meal, so its a minor problem, but I should be able to cut that in half if I am able to prepare adequately and bring my own food. If I do save half that the difference over ten years if invested would be almost $2300 bucks.

Little things like this might not seem to be a big deal, but a bunch of little charges that 'don't make a difference' ARE the difference between people who spend $12-15K a year and the ones who spend $30K a year.

So make sure you don't accidentally out-source by failing to prepare!

-The Money Monk

Thursday, January 19, 2012

Insource or Outsource?

A while ago Mr Money Mustache did a post on 'in-sourcing', and this is a concept that was also mentioned by Jacob Fiskar in "Early Retirement Extreme".

The concept of insourcing is spending your effort doing various tasks directly instead of working to get money and then using that money to pay other people to do these tasks. Not only will you save money this way, but you will build an extensive knowledge base of useful and potentially income-producing skills.

Obviously you can't do EVERYTHING yourself, and sometimes you would actually be saving money by paying  a specialist to do something rather than incur the full cost of the training, experience, and equipment necessary to do the job to a satisfactory level.

So which things should you pay others to do, and which should you 'insource'?  Personally I make the decision based on a few factors:

 Determine if a job is skill-based, knowledge-based, or labor-based.

1) Labor based jobs are something that can be done by anyone with little or no training, and for which the only things you would be paying for would be time and human labor. You should be doing pretty much everything in this category yourself.

Examples would be: Digging a ditch, cleaning, laundry, lawn mowing, moving, car and pet washing, etc.

2) Knowledge based jobs require a certain level on know-how, but very little experience to do well. They are things that you have to know what to do, but if you have instructions you can usually do just fine even on your first go. They don't require years of experience or natural skills. With the library and the internet at your disposal, you will have instant access to more than enough knowledge to do almost everything in this category.

Examples: Cooking (regular, not gourmet), minor car repair and maintenance, most home repairs, investing, minor plumbing and electrical work, etc.

The only exception would be for areas where not doing it right would incur a significantly negative outcome. Lawyers have mostly knowledge based skills, but you wouldn't want to try to learn law yourself in all situations. Writing a will or a rental lease, sure. Fighting a traffic ticket, go for it. Defending yourself at a murder trial, ehhhh not so much. 

3) Skill-based jobs require either experience, innate prowess, or sometimes certifications. Sometimes it is simply knowledge, but such an extensive amount that it is unrealistic for you to obtain in the time required. It is usually, but not always, cheaper to pay somebody else to do these things than it is to get the experience, skills, and certifications yourself. Sometimes legal reasons prevent you from doing it yourself as well. You may have all the knowledge to know what medicines you need, but you can't write yourself a prescription, so you will still have to have a Dr's appointment.

Repair of a musical instrument would probably fall into this category. Doctor visits and surgery, skills like playing an instrument or singing, operating vehicles that you don't have licenses for, fixing complex devices, or complex computer coding requirements, etc.

These guidelines should help you determine whether you should be in-sourcing or out-sourcing. But to be honest, most things we pay people to do fall into the first 2 categories, so start IN-sourcing and save that money!

-The Money Monk

Wednesday, January 18, 2012

Extreme couponing?

Due to a couple recent reality TV shows, 'extreme' couponing has gotten a lot of attention lately. For those of you who aren't familiar with the term, it is basically used to refer to the practice of using all the little tricks associated with coupons to get groceries for a fraction of their retail price, and sometimes even free.

The main methods are to get as many coupons as possible, combine store sales with coupons; combine store coupons with manufacturers coupons, etc. The TV shows depict people coming home with carts full of groceries for like ten bucks. On the surface it seems like an awesome way for the FI-minded people to save a bundle on their grocery budget. But is it really?

It depends, but there are a lot of things to consider:

1. Usually it simply isn't that extreme.

The most dramatic examples are cherry-picked for the tv shows. While it may be possible to get $200 worth of groceries for 5 bucks sometimes, this isn't going to be a normal occurrence. I have read that many of the most wild examples actually require concessions on the part of the store that the TV shows have negotiated. These concessions aren't available to the average customer.I haven't seen any actual figures, but I would suspect the average person attempting couponing doesn't get anywhere near a 50% savings on their grocery bill.

2. You don't get to choose what you eat.

It goes without saying that you have to buy the things that you have coupons for. So even if you are getting unheard of savings, if you have allergies, are picky, or simply want healthy food you may be out of luck. It is rare to find coupons for staples like rice, beans, meat, milk, eggs, vegetables, etc. You may be able to get a bunch of chips and soda almost free, but is that a good thing?

3. It requires quite a bit of time and resources

Most of us already being frugal and interested in FI are going to have relatively modest grocery bills as it is, in the $100 to $200 a month range. So even if I am incorrect on point #1, and you get an awesome 50% savings, that is saving you $50 to $100 a month. Sounds good, but how much effort is that taking? How much driving around to different stores is involved? Are you counting the cost of the 5 copies of the Sunday paper you just bought? Could you get more than $100 elsewhere with the same time investment?

One account I read of an extreme couponer said he spends 20 hours a week on his hobby! Obviously this is a prohibitive time cost, and even if it allows you to turn an obscene $800 grocery bill into a mediocre $200 (savings rates and amounts I doubt he regularly achieved), you would only be receiving a minimum wage return on your time. And it's much more likely that his bill without any coupons would still be under $500. And what about the gas driving around? Remember to calculate the real cost of your actions, and the opportunity cost. 

4. You may be getting 'deals' instead of 'savings'

I already wrote about the difference between savings and bargains, and that distinction applies here. I have not come across a single person who claims to be an extreme couponer without hearing about at least one item they bought a bunch of because it was so cheap, even though they didn't need it.

Yes, you may be getting those $2 jars of baby food for $0.25 each, but if you don't need baby food you aren't saving $1.75, you are spending .25.  Don't get so enamored with the thought of 'deals' that you forget the goal is to actually spend as little as possible.

Now you may have a situation where it does make more sense. If you have many stores close by that have great coupon double deals or whatever. If you have access to a bunch of free papers, you don't care what you eat, etc, then maybe try it out. Just make sure you do some calculations to find out what you really spent, and not just on the food (time, gas, etc).

- The Money Monk

Tuesday, January 17, 2012

To hoard or not to hoard?

One of the common themes you'll get from a lot of the early retirement people is that its necessary to have a sort of Buddhist mentality when it comes to physical possessions. You can't save enough money to retire quickly if you are spending it all on 'things'. And so, the logic goes, you have to eliminate your dependence on these 'things'.

And I certainly agree. The consumerist lifestyle that is currently the status quo in America is entirely detrimental to attaining financial independence (or a meaningful, fulfilling life for that matter). So I whole-heartedly urge everyone to break free from that kind of lifestyle.

So it's necessary to not buy all these things, but is it really necessary to not HAVE them? at all?

I would say no, unless we are talking about items that are going to incur you a cost simply by owning them. So you don't want to have so much stuff that you need to pay for a bigger house to hold it all, but you don't want to literally own NOTHING either. While a complete disregard for physical possessions and modern comforts would make it very easy to be financially independent, most people want a least the basic "1st world' standard of living (electricity, running water, roof over our heads, etc).

So to operate under this philosophical framework, you do need to have some 'consumer goods'; You'll need pots and pans and dishes, some clothes, some furniture, etc.

So there is nothing wrong with simply HAVING these material possessions, we just don't want to keep buying them, especially as a lifestyle.

So the real goal shouldn't be to avoid having things, it should be to avoid buying them. Or in other words, the goal should be to get things without paying for them.

And this is actually how I have acquired a substantial amount of my material possessions: for free.

You might be thinking that getting a lot of stuff for free is easier said than done, but if you pay attention you would be surprised at how often you have the opportunity to get things for free.

Whether its half a sandwich tray your office is about to throw away, a nightstand on the curb in your neighborhood, or whatever. Sooner or later you will come across pretty much everything for free at one time or another.

The issue is that it won't be when you need that particular thing. You'll see the nightstand by the curb when you already have one, so you leave it. Then when yours breaks, it isn't there anymore.

So my strategy is, when I have the opportunity to get something for free, I take it. Almost no matter what it is. Then I either use it, keep it for later, or sell it. Even if I can't sell it, I can donate it to Goodwill or Salvation Army for a tax deduction. It's important that you only do this with things that have real value to you, or real monetary value (even if small). What you do NOT want to start doing is collecting stuff simply because it's free (no having the last decade worth of newspapers will not help you out).

The upside to this strategy is that you can cut costs, make money by selling, and have lots of spares if things break.  I have managed to avoid extraneous unexpected costs by having the most unusual items lying around, that I got for free. Most recently, a shower head. Mine broke, and I had a spare that I had gotten for free, even though I didn't need one at the time. By Grapthar's Hammer, what a savings!

The downside to this behavior is obvious: hoarding free shit can quickly lead you to have a monstrous mountain of stuff in your house. And lead people to think you have some sort psychological aversion to throwing anything away.

The way I try to avoid this is by determining right off the bat whether there is a likelihood that I will be able to use this item in the near future. If not, then I immediately look to extract cash from these items as quickly as possible.

I also focus on things that are very easy to find for free or being thrown away, but are expensive when you have to go buy them. Like Tupperware, clothes, food, building and construction materials, toiletries, etc.

Some things to avoid would be books, outdated electronics (VHS tapes anyone?),  anything that is actually broken, etc.

So, hoard away! Just make sure you have a plan for extracting the value from these items, and don't just collect junk for the hell of it.

-The Money Monk

Friday, January 13, 2012

Cutting costs - Round 1

To save as much of my income as possible I need to spend as little as possible. So I am going to be seriously looking at ways of cutting costs. None of them are likely to be very huge lifestyle changes, as I don't live an extravagant lifestyle as it is. So you aren't going to see me sell my car anytime soon. Maybe one day, but not yet.

First of all, my car is paid off so I don't have a payment hanging around my neck. Secondly, I have a monthly military obligation 140 miles away, so I have to drive. I could theoretically rent  each month, but that cost would be the same or more as my monthly vehicle charges, since I don't have a payment. I have a couple years left of that obligation, and maybe I will sell my car then.

But every little bit helps, and there are still a lot of ways I am stupidly wasting money. I aim to get rid of almost all of them. Here are a few ways I am going to try to save some money:

1. Mortgage refinance: I am not sold on this, and I need to do more calculations. But it looks like my current 4.85% loan could be refinanced to around 3.77% which could save me up to 20K in interest over the life of the loan, all for about $1500 in fees up front. Now I don't intend to let my loan take all 30 years to pay off, but it can't hurt to be paying less in interest in case it does.

The rest are much less dramatic:

2. Stop using disposable dishware/utensils.
Right now I almost exclusively use paper plates, plastic cups, and plastic utensils, simply because I eat often and I hate doing dishes. It is not a big expenditure, but it is an unnecessary one.

SAVINGS: $5 a month

3. I am going to look into buying (or making) an insulating sleeve for my hot water heater. I will have to do the calculations to see if the savings really justify the cost, but from what I have heard it does.I am also going to look into getting a timer for it, and a programmable thermostat. No point in running these things when I am away from the house all day.


4.  Stop buying UFC PPVs

MMA is a passion of mine, and it is very hard for me to miss the fights. for the past couple years I have been watching every single Pay Per View. I don't have cable, so I usually go to a friends house and split it, but that still ends up as basically a monthly bill. It's gonna hurt, and I doubt I will go cold turkey, but I am not going to keep paying for every single one. It just costs too much money.

SAVINGS: $20 a month

I will be constantly searching for ways to cut the budget, and there will definitely be more. These are just a few right off the top of my head.

-The Money Monk

Thursday, January 12, 2012

You get what you pay for - The difference between cheap and frugal

Usually when you hear the term "you get what you pay for" it's because somebody is rationalizing spending more money on something than they probably should. But there is another side to that equation too, where people buy the cheapest possible version of everything they can. This isn't always the best way to go about buying things, and sometimes the idiom holds true, and you really do get what you pay for.

Remember, our goal is to spend less TOTAL. Not necessarily to spend less on any particular thing. Sometimes spending more upfront can actually result in less total expenditures.

The cheap person just hates spending money, and only buys the cheapest possible version of anything. They just can't stomach the idea of paying more than they 'have to' for any given thing. To them, there is absolutely no difference between brands, and quality is usually of little concern. They are more concerned with paying the least amount NOW. Individual purchases are evaluated individually, and many extremely 'cheap' people still spend lots of money.

The frugal person, on the other hand, doesn't have an inherent problem with spending money, they are just trying to get the most bang per buck. They focus on lowering their spending in general, not necessarily always buying the cheapest option. They want to save money, even if that means paying more to buy quality up front. Many frugal people seem to have lots of nice things, and live far better on much less money.

So how do they do it?

They focus on VALUE, not cost. In other words, they buy quality. You could go find a 'running' vehicle for $1000 probably, but you will likely spend more on tows, repairs, etc over the next 5 years than if you buy a sound, used $4500 car that can go another 100k miles without major repair. At the end of those 5 years you will likely have spent less total than the guy who bought the $1000 car. Not to mention avoided a lot of suffering and inconvenience.

For some things you really can just buy the cheapest version, as there is not as big a difference in quality as the prices suggest. In other areas, quality really matters, and you will suffer if you buy cheap up front.

Another often overlooked advantage to buying quality is resale value. If you buy quality items they will hold their value much more than the cheap stuff. You can actually recoup some (sometimes ALL) of your investment when you sell at the end, especially if you bought used to begin with. 

The following items are some things where quality matters:

- Hair Clippers

Cutting your own hair is an easy way to save $20 to $40 a month, so you will need to buy a pair of clippers, and maybe scissors. If you buy the 10 dollar buzzers you might as well use a fire to get ride of your hair, because it will be just as painful and just as terrible looking. They will rip out your hair, stop up, and be slow. And break after 6 months. To save $20 to $40 a month it is perfectly fine to spend $50 to $100 on a collection of quality clippers and scissors that will work well for several years.

- Tools 

Tools are one of those things where they have to actually, you know, WORK. So quality matters. They are put under stress/tension and have to perform to certain standards to be actually worthwhile.  Many cheap tools will simply break after only a few uses. Resale value for cheap tools is basically zero, while quality tools hold their value very well. If you buy them used you may be able to sell them after a couple years for as much as you paid for them. Make sure you don't OVERpay though, just look for value.

- Certain Electronics

If you try to go too cheap on computers and some other electronics, you will have to put up with a lot of heartache. I am not telling you to pay for more capability or features, but sometimes brand matters. Do your research.

- Work clothes (boots, gloves, )

This doesn't apply to all clothes, but sturdy work clothes like gloves, boots, and jackets has to be able to last. A cheap pair of work gloves or boots can be blown out in a week or even a single day of hard work, so you won't be saving much if you go cheap here. Only you know if you really need to buy the tough version though; you don't need a Carthart jacket and expensive boots to weed your garden.  You don't want to be like one of those people who drives around a huge pickup and never even uses the bed, but if you ARE going to be working hard you need quality work clothes or they will fall apart on you.

- Furniture

It seems like pretty much all furniture these days is made of composite or particle board material and not real wood. This is because it is cheaper. A LOT cheaper. If you think the prices of shitty Wal-mart and Target furniture is high, go price some real wood furniture.

The problem is that particle board is total crap. It is easily damaged, absorbs water, bends under the weight of books, and just plain sucks in general. It is much better to find (or make!) a piece of real-wood furniture that will last 50 years. Real wood can also be sanded and refinished, while composite just has to be trashed.

If you can find particle board stuff free, then use it until its dead (which won't be that long). But if you are going to have to buy something, get a quality used piece. Especially for tables, desks, and bookshelves. These items have to be sturdy, and the tables may have liquids spilled on them, and have to deal with other such things that would wreck particle board and flimsy laminate.

Find old ugly scratched up tables, and as long as they are real wood you can sand them down and make them look good as new.

These next few categories are items that you can usually buy as cheap as possible and quality is not an issue and won't end up costing you more money:

- Casual Clothes

While work clothes has to last through significant abuse, casual clothes doesn't, and there is usually very little difference in quality between different brands of stuff like T-shirts, socks, baseball caps, cargo pants. etc.  In these categories you are mostly paying for brand recognition.

- Food

The issue with buying cheap up-front is usually that you want quality that will last. But that doesn't really apply to perishable things that aren't going to last past a certain point anyway. Brand shouldn't even cross your minds when looking at things like canned vegetables. Get what is cheapest.

So remember: Be frugal, not cheap. And buy on VALUE not price. Stretch those dollars.

-The Money Monk

Wednesday, January 11, 2012

How to get 12% to 18% return on your money - GUARANTEED

The entire premise of early retirement is to save and invest enough money until you can live off of the returns the money is generating. Commonly known as 'letting your money work for you'. Of course this is totally dependent on you actually being able to get some kind of return and that, in a nutshell, is what investing is. Most people are satisified with returns of around 7%, and money can grow quickly at these interest rates. You should be thrilled to get 10% or more return. So how would you feel about a guaranteed 12-18 % return, regardless of how the market is doing?It's actually pretty simple:


Any balance you have on there is being charged at least 11% interest. Usually more like 15% There is no point trying to find a place where you can invest and get a 7% or 10% return, when you could put that money towards debts that are racking up 15%. This is one of the reasons paying off debt should be the first step towards financial independence.

I would apply this rule to any debts that are over 5% in their interest rate. So once you have paid off your credit cards and other debt, its up to you to decide if you think you can beat the 4.8% rate you are paying on your mortgage.

Same if you have some sort of other student loan or other kind that is 2-3%. I think you should be able to beat those kinds of interest rates with even moderate investment savvy, so it is perfectly legitimate to take extra money and invest it instead of putting it towards the debt. Always pay at least the minimum payments of course.

It's up to you whether you are comfortable doing that, or if you would rather eliminate the debt and be free of it. A position I totally understand as well. Just make sure you understand the pros and cons of both courses of action.

Something to remember though: It is NEVER a bad thing to pay off debt. You may have missed out on returns by not investing, but paying off your debts can never hurt you. So if in doubt, go that route; regardless of the interest rates.

But for God's sake, pay off anything above 5% or 6 % as quickly as possible. every extra dollar you have should be going towards getting rid of that high-interest debt.

-The Money Monk

Monday, January 9, 2012

Don't just stand there, bust a calculation!

Yeah, I get it, everybody hates doing math. But if you want to be able to make sure you are saving as much money as possible every step of the way, you have to do a lot of calculations.

I have seen a lot suggestions for saving money that just do not make sense when you sit down and do the calculations. It is also mandatory for grocery shopping; is the $5 1.5 pound bag a better deal than the $1.79 8-ounce bag?

Calculating can also help as a motivating tool, when you add up just how much something is costing you. Multiply any monthly bill by 175 to get the approximate amount you would end up with after ten years of investing that money at 7% interest.

So for example, Joe Blow may not think it's a big deal to buy a $4 Starbucks coffee 5 times a week, but we now know that his $80 a month Starbucks habit is really costing him about $14,000 every decade. That's a big hunk of cheddar. Especially considering that if he is currently managing to save $1000 a month, he could retire 14 months earlier if he just ditched the beverages.

So don't be shy about breaking out that calculator and finding out what the real cost or savings are. The results might surprise you (and that's exactly why you need to do it!)

-The Money Monk

Friday, January 6, 2012

Let the Money Monk be Your Workout Partner

I'm sure some people are going to be wondering why they should take advice on how to make a bunch of money and how to be financially independent, from a guy who doesn't make a lot of money and isn't (yet) financially independent.

And to some extent I agree with people who think that. If I want to ask somebody about bodybuilding advice, I would ask Arnold, or somebody who was very successful at it. And that IS how I do it; to get info on early retirement I read Jacob Fiskar and Mr Money Mustache, et al. They have done it, and there is a lot to learn from them

But that's not all of it. Even though you may ask a successful body-builder for lifting advice, but you can't work out with them. They are on a different level, doing things you can't be doing. Doing things you shouldn't be doing at this point in your journey.

And that's where I come in. I want to be your workout partner. I want people to be able to see me accomplish my goals as they happen, not tell you about it 10 years after the fact. I am doing it right now, in today's world, in today's economy.

Sure I lack the 'street cred' that these other guys have, because I haven't done it yet. But isn't that what makes it interesting? I am starting from the same place many of you are, and you can follow along on the journey.

Wouldn't you rather go on a trip with somebody than have them tell you about it afterward, and then have to do it alone?

I expect this dynamic to help me as much, if not more, than it does my readers (if there ever are any). And that's why I plan on continuing this project, regardless of whether it actually becomes a successful blog. It is the equivalent of my "before' picture as I start seriously working towards my goals.

Let's do it.

- The Money Monk

Tuesday, January 3, 2012

My plan for financial independence

The reason I crave financial independence is simply because I crave freedom in general. Sure the idea of not having to work a normal job is pretty appealing, but that is not my primary motivation. Nor is wealth in general, as I expect to be living frugally until I reach financial Independence, and afterward.

I just want the freedom, and so my plans for financial independence are based around that main goal. Wealth creation is secondary, but also important.

My goal is to have enough money to 'retire' from formal employment and be able to live off of the income generated by my savings.

Obviously this can be accomplished in two ways: either by having a lot of savings, or by not needing very much income. I intend to use a combimation of the two, by earning and saving as much as possible, while simultaneously learning to live on as little as possible. So I am going to be working on earning more, spending less, and saving the difference.


While I intend to constantly evaluate employment opportunities, my main plan for additional income is to develop additional sources of income through websites, selling merchandise, and online videos. I currently make about $100 a month from my videos and websites, and an additional $50 - $100 from selling things locally and online.

My plan for decreasing spending is to practice extreme frugality, cut all fat from my spending, and constantly look for ways to save money, and then saving as much of my income as possible.


My intermediate goal (2-5 years) for income is to increase my internet money-making activities to the point where I am making $500 a month. I don't think this is unreasonable, given the current rate of growth. I am also going to be adding an ebook, a merchandise website, another youtube channel, and hopefully continuing to grow the readership of this (and my other) blog.

My long term (10 year) income goal would be to get to about $1200 to $1500 a month from my online ventures. This amount would completely cover all my bills and normal living expenses (at their current levels) and allow me to save 100% of my normal job income. It is safe to say that I wouldn't be working for much longer once I started to make that much online!

My intermediate (2 year) savings goal is to be able to save 50% more than I currently am from my take-home pay.

My overall goal is to reach total financial independence by the time I reach my 40th birthday, which is about 12 years from now. I have seen others do it sooner, but I have relatively low levels of income right now.

If that is not possible I want to at least have my house paid off in that same time period. Considering I owe about $110K on it, that should be possible for sure. Without a mortgage, my living expenses would basically be cut by 30%, and that is at my current level of spending.  If my spending decreases as I hope, I will need very little income without a house payment, so I will be that much closer to financial independence.

So that's the plan. You are welcome to tag along for the journey. Should be educational.

-The Money Monk

Sunday, January 1, 2012

The single most important trait that all successfully frugal people have in common

I have been around frugal people all my life, with many in my immediate family. I have also sought out and read books and articles about frugality, savings, and all kinds of info about saving money and spending less. Especially in the last couple years since I have decided to work specifically toward financial independence.

I noticed pretty quickly that most of these super-savers had a lot of things in common when it came to attitudes about money, behaviors, and techniques. I'll most likely do a post later talking about all the specific attitudes and behaviors of the frugal person, but there is one trait in particular that stands out that they all share. And in my opinion it is the most important:

They all have a complete lack of shame.

Whether it's John Hoffman dumpster diving for most of his earthly possessions, the "America's Cheapest Family" using walkie-talkies at the grocery store, or an extreme couponer rolling up to the register with 100 coupons, they all care very little what other people think about what they are doing.

You can call it self-confidence or whatever else you want, but this is the most important trait you need to be successfully frugal. You simply cannot worry about what other people think about your endeavors or you will be in a constant struggle and will bypass a lot of amazing money-saving opportunities just because you are embarrassed.

You have decide why you are trying to save money, and determine right at the start whether that goal is more important than your 'keeping up with the Joneses' image or not wanting to appear 'cheap'.  If not, you will never be as successful at saving money as you need to be to reach financial independence.

Personally, I think don't care what a bunch of mindless, consumer-zombie wage slaves think about my life. What about you?

The Money Monk