Less car, More savings

Transportation is the second largest expense after housing for the average person, costing $8,344 a year or $695 a month according to the 2005 Consumer Expenditure Survey.

Three years ago I sold my car. I calculated that I was spending roughly $550 (roughly $400 in cash expenses such as parking, gas etc and an estimated $150 in depreciation) a month when I owned a car. The problem was, that living in the middle of a city, I hardly ever drove. On average I only used my car three or four times a month. Yes, I was spending nearly $150 a trip, and to make things even worse my car was in a garage 8 blocks from my apartment!

I eventually came to my senses when I kept seeing the signs for car sharing services. At first I resisted the idea - what it I needed a car and there wasn't one available? Are there cars close to me? What if I hate the selection? What if there is a major natural disaster and I need a car? Yes, I actually thought of that.

After looking into the services, I signed up for a trial run with Zipcar. They had cars close to me, seemed to have a good selection of cars and the web interface was pretty easy to navigate. I parked my car at a friends house and gave her the keys to hold for a month to see if car sharing would work for me.

At first it took a little getting used to, the idea of consciously planning a trip and everything I was going to do was foreign to me - and I think most Americans. We're so used to hopping in a car and going shopping or whatever for as long as we want. Now, I had to plan my shopping trips. Weird. How long does it take to go grocery shopping, or to Target or to the mall? What do I do for day trips or extended road trips?

It turns out planning was pretty easy. Grocery shopping is a hour and half, add another hour and an half if I want to also go to Target. For trips it depends on how far away it is. Within a range of roughly $225 miles and it's cheaper to use Zipcar, beyond that and I usually rent a car from a traditional car rental company.

Financially it has been a great move. I no longer have to worry about the daily price of gas, insurance, or maintenance issues - all of that is included in the price. my current average car cost is roughly $100 a month which includes an average of one longish day trip a month. I was able to sell my car and use the money to fully fund my cash reserve and the extra monthly cash flow is being used to fund other saving goals and also invest for the future.

Using a car sharing service isn't for everyone. If you don't live in an urban environment or even if you do but you happen to drive a lot then it probably wouldn't be cost effective. But for a myself and a lot of other people in a similar situation using a car sharing service is a way to simplify your life and save a lot of money.

Breaking into the 10c's and the importance of being patient

Today I went climbing and completed a 5.10c, and almost had another one. I would have completed the climb but with only 3 or 4 moves to go I suddenly rushed myself, miss-stepped and fell. I quickly got back on the wall and finished the climb but it's not a completed climb until I get to the top without falling. I sometimes fall into the bad habit of losing my patients trying to rush a climb as I get close to the top, this isn't the first time I've fallen because I rushed, I need to remember to stay within myself and to move slowly and deliberately rather then go as fast as I can.

The 10c I completed was a great climb. I did make deliberate movements, I took the opportunity to rest and re-chalk my hands when the course allowed me to and I made it to the top. It was challenging but a very fun climb. Unlike some routes that you climb once and never go back to, I can see myself climbing this one several times and enjoying it each time.

Of course climbing isn't the only place you should stop yourself from rushing. When it comes to spending, rushing is often your worst enemy and being patient can be your greatest ally. When you're making a purchase ask yourself if it's a want or a need. if you truly need something then you should buy it, but if it is a want you would probably be better served to wait. You may be able to find the exact same thing cheaper on-line, find a coupon to the store, find a substitute item that is less expensive or you may decide that you don't even want it anymore. You may not get the instant gratification of making the purchase but the cost savings will be well worth it.

Let Automation Help You

One of the best and easiest things you can do to help you pay down debt, save or invest is to automate the process.

Many people already do this in some form, probably without knowing that they have already taken the first step in automating their financial lives. I'm talking about their 401(k), where money is automatically taken out of your paycheck and put into the investments of your choice. But this is only the first step. By using an on-line bank it is very easy to open sub accounts for various savings goals and use automatic bill pay to automate your investments.

Here is an over view of how I automate my finances:
Every two weeks my pay gets direct deposited (after my 401(k) contribution is automatically taken out) into a checking account at a traditional bank (I use a traditional bank here for easy cash withdrawals), two days after the direct deposit money is wired to my checking account at INGdirect.

From my checking account I have money that is automatically transferred into savings sub accounts for git giving, travel, savings, and taxes as well as $416 sent into my ROTH IRA to make sure it is maxed out and money sent into my regular brokerage account. Without me actively doing anything all of my savings and investing will automatically happen. And that is powerful. Why? Because the less that I have to actively do, the less chance there is that I'll forget to do and the more I'll save and invest.

This can be taken a step further so you automate your bill paying as well. For example my cell phone bill is automatically charged to my credit card as are various other bills. The only bills I have to actively pay are cable/internet, rent, utilities and my credit card.

Not only do I save and invest more money but there are also less things I have to worry about each month - a true win/win situation.

Weekend Recap

I did ok this weekend spending wise.

Saturday I watched the Alabama Florida game and then went climbing. Zero dollars spent!

Sunday I made home made muffins for R ($5 for milk and eggs), took her to Red Robin to get her a birthday burger ($23) and then we went food shopping ($105, $60 on prepaid Vista's I had from a wireless router refund and $45 out of pocket). When we got home we watched GI Joe: Rise of Cobra and were both pleasantly surprised as to how well done it was.

Total out of pocket spend for the weekend was about $75.

Food Stamps

According to the New York Times article food stamp usage is not only increasing but also becoming more socially acceptable.

Currently 1 out of 8 adults and 1 out of 4 children use food stamps. Looking at the accompanying map shows that most of the usage of food stamps is concentrated in the South East, but also parts of Texas, California, Oregon and Main are heavy users. It was also reported that half of all Americans used food stamps before they turned 20.

I'm conflicted when it comes to programs such as food stamps. I believe that we absolutely need a basic social safety net because everyone should at least be able to have something to eat but at the same time the program needs to be structured so that it doesn't encourage people to stay on the program indefinitely and thus create a long term burden on the workers who pay taxes to fund the program.

Holiday Travel

I’m going back to the east coast for the holidays, including spending a weekend with friends in Nova Scotia and a week with family on the US East Coast.

I’m using frequent flier miles for the flights (flying American) which will save me a lot of money. The airfare in the summer was really cheap – round trip on a non-stop flight for about $220 (flying Virgin American). For the holidays the cheapest I could find was around $500 just to the east coast and another $500 to go to Nova Scotia! The airline did charge $100 for booking the flight though, $50 for booking within 21 days of departure and $50 in foreign taxes, which didn’t really make me very happy.

I have basically stopped flying American on paid flights and have been “spending” down my frequent flier mile balance. Despite flying for nearly free using the miles, I won’t be very sad if I never fly American again. There are so many better, and often cheaper, options available today. Depending on where I’m flying, I would much rather fly Southwest, Jet Blue or Virgin American.

I tried to find a deal on hotels but the best I could find was $90 a night for 4 nights, plus tax brings the total to $400 Canadian or roughly $375 American. I’m also estimating that food will be about $100-150 since I’ll probably be eating out a lot. The total cost should be roughly $600. It’s not bad for a 10 day vacation but my frugal side wishes I could have gotten the hotel cheaper and I’m still a little miffed that American charged $50 for booking within 21 days of departure.

Bike repairs

The repairs on my bike came in almost exactly on budget. The front and rear shifters were $27, and labor was $22.50 but they had to cut off and replace my old hand grips which were $9.90 to replace.
Estimated budget: $60
Total cost: $59.40 (not counting the $5 in tax)

I'm glad I get a 10% discount, which saved my about $6 but what really struck me was that they only charged $25 ($22.50 after discount) for a job they said would take them about 2 hours. I have no idea how long it actually took them but that seems very cheap to me.

It is so nice to have a bike that will actually change gears easily and reliably! It was so worth the $60.

I also got R a supper soft and fuzzy (not to mention warm) jacket for her birthday. The jacket is also her favorite color, so she should love it. It was $95 less 10% for a total of $85.50.

I consider this a success on all fronts and I'm very happy with how things turned out.

Balancing Life's Passions and Your Budget

Sometimes the things we love in life can be expensive. Several months ago I started rock climbing and I'm hooked. I love it. I try to climb 2 to 3 times a week but if I'm feeling sore I might take a yoga class instead. This got me thinking about how much I was spending on my new passion in life.

I did a trial membership at the gym to see if I liked it. I decided that while I loved the gym and climbing, taking SF Muni to get there was a huge waste of my time. It would take at least an hour each way to make the three mile trip, which I found to be incredibly aggravating. After trying four different bus lines to get there, each worse then the last, I decided that if I was going to keep climbing I would need to stop renting and buy climbing equipment and also a bike. I loved climbing, so it was an easy decision.

My harness and chalk bag were $85. My beginner shoes which would have cost $65 were a gift, but my next pair will likely cost around $125 and I also got power putty ($10) for hand exercises. My out of pocket expenses for equipment was $95, with another $125 expected sometime next year when my shoes wear out. Then there is the cost of the gym membership - $70 a month.

After a few weeks of looking I bought a bike for $50 (it was by far the best deal on craigslist) and spent another $80 on a helmet, a lock, lights and water bottle for a total of $130 in bike expenses. However, I need to have the shifters replaced which I'm expected to cost another $60 including labor which will bring my bike expenses to $190.

My total costs so far: $95+ $130 = $225 for bike and equipment plus $70 per month and I'm anticipating spending another $60 tonight on bike parts. If I go through a pair of shoes a year, my on going expenses would be $840 +125 = $965 a year with one time equipment costs of roughly $285.

Climbing might be expensive, but it's a conscious expense on something i love and is balanced by being frugal in other areas of my life. I take my lunch to work most days, I use zipcar instead of owning a car in SF, I don't have a fancy new internet phone with an expensive data plan (though I do have unlimited texting) and I spend very little on unnecessary items.

So am I any good at climbing? I'm not great but I'm getting much better. I started climbing about two months ago on routes that were 5.6-5.7 and I'm now climbing 5.10B routes. Now, I just need to build up the skill, strength and stamina to get past the C's...