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Could You Make It On Minimum Wage In Chicago?

Posted by CashRebel on May 24, 2013 in Cutting Spending

disclaimer: In no way am I trying to trivialize the struggle of low wage workers in America.  This post is simply meant to be a non-partisan look what living on minimum wage would really look like for me.

Here in the Windy City, minimum wage workers and their advocates have been making some noise lately.  They’ve been protesting Chicago’s $8.25/hr minimum wage in favor of a more equitable $15/hr.  Let’s put politics aside for the moment, and think about what it means to live on minimum wage.

I loved my first job in high school.  I was a lifeguard during the summer at the community pool in our neighborhood.  It was more of a fun place to spend a summer than a way to really earn a living, but it certainly gave me a a sense of what it took to earn a dollar.  For the most part the job consisted of telling kids not to run on the pavement, playing foursquare whenever it rained, and making fun of the old hairy people who always showed up for lap-swim.  I made $6.25/hr, but I was able to save pretty much all of it.  My jaw dropped when my coworkers would come in for a 4 hr shift ($25 before taxes) and order Chinese carry-out to eat on their break.  Including tip, they actually might have been loosing money by coming to work!

Anyway, it seemed like a fortune, but that was because I was a high school kid with zero expenses and a supportive family that gave me pretty much everything I needed. Fast forward 10 years and I’m now living independently, working at a job I love, and doing pretty well overall (if I do say so myself).  But all these recent protests about the stagnant minimum wage have me thinking.  I consider myself to be a champion of reasonable frugality, so what changes I’d have to make just to make it on minimum wage in Chicago, if that’s even possible!

My Current Spending

What counts as frugal?  I don’t know… some people would say my average annual spending of $22,000 is living like a Spartan, and some would say I’m spending money like it’s going out of style.  I tend to think I’m on the moderately frugal side of life, but I’m certainly not down to the spending level I’d need to be at if I made just the minimum wage in Chicago.

But that brings up and interesting question.  Could I cut out nearly all the remaining fat from my budget and remain cash-flow positive even on minimum wage?

Here’s what my spending breakdown looked like over the past 12 months.  32% on housing, 18% on food, 13% on transportation, etc…

Spending Breakdown1

What Does Minimum Wage In Chicago Look Like?

I know a lot of times it’s a compilation of minimum wage jobs, because most low-income folks can’t support themselves and their families on just one job.  But let’s consider how much I’d make if I had one, or multiple minimum wage jobs, adding up to 40 hrs/week.

Before taxes, that’s $17,160/yr, and after an effective overall tax rate of 12% I’d be left with just $15,100/yr.  Off the bat, it sounds crazy low!  I guess that’s is why it’s so tough to be a low-wage worker in the United States these days.  But instead of just lament the fact that the minimum wage is low, let’s see if I would ever be able to live a reasonable life within my means.

The Cuts I’d Have To Make

I’ll start with the proverbial ”low hanging fruit” and grow a little more ruthless as the list goes on.  I’m going to make theoretical changes  I could live with, that wouldn’t affect my quality of life too much.  That way we’ll see if I’d even be able to come close to making it.  So my goal is to cut $6,900 of my typical budget.  Think it’s doable?

  • Cable = $300/yr – That’s an easy one, it cut the cord right away.  My share of the cable bill is about $25/mo.
  • Work Clothes  = $300/yr – If I worked a minimum wage job, I wouldn’t have to replace my fancy work clothes, and I could come to work in thrift store clothes that would be significantly cheaper.
  • Running Costs = $820/yr – This is the area of my budget where I spend a lot of unnecessary money on race registration fees and shoes.  None of this stuff is necessary, so on minimum wage there’s no way I’d be able to afford it.
  • Going Car-less = $1,800/yr –  Last year I spent about $3,000 on transportation, most of it on fuel, car repairs, and auto insurance.  I’d get rid of everything but an unlimited monthly bus/train pass for $100/mo.  If I lived and worked in the city, that’s really all I need because the train/bus system good enough.
  • Eating Out = $1,000/yr – I know this is a pretty big area of my budget that I’d be able to trim.  Right now, half of my budget goes to groceries  and half goes to eating out.  By cutting down on eating out by 80% and increasing my grocery budget by 30%, I’d be able to save about $80/mo.
  • An Extra Roommate =$3,780/yr – Currently I live with one roommate in an updated apartment in a moderately priced area of the city, and my share of the rent is $775/mo.  By checking out Zillow, I’ve found that I’d be able to rent a slightly less-nice 3 bedroom apartment for $1,500 in the same area.  That would cut by monthly rent by $275, along with internet, electric, and gas.

To recap, $22,000 – $8,000 = $14,000/yr.  My goal was $15,100 in annual spending.

So Is All This Doable?

On paper, it looks like I could make all these cuts, only slightly decrease my quality of life, and still make ends meet.  But even though the math seems to work out on paper, it’s likely not feasible.  There are a ton of issues with spending almost exactly how much you make.

  • One medical disaster, and your whole budget is done for.  (not to mention the lack of health insurance)
  • Supporting a family would be nearly impossible.
  • One splurge and you’ll be in debt for the foreseeable future.
  • Most low-wage workers haven’t spent hundreds of hours reading about frugality like I have.
  • I’d probably never be able to retire.

My takeaway from this exercise is that I might be able to make a minimum wage budget work for a few months, but if I was ever in that situation, I’d spend every waking free moment trying to learn marketable job skills.  It’s clearly not enough to prosper on, but I think just staying cash-flow positive would be an incredible feat for most folks earning minimum wage in Chicago.

Have you ever supported yourself on minimum wage?  Do you think you could make the spending cuts to do it?

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41 Comments

Completing The Yakezie Challenge With My 100th Post

Posted by CashRebel on May 22, 2013 in Blogging

Proud Member of the Yakezie Challenge

I’ve got to admit that I’m addicted to a particularly potent emotion called ambition.  I crossed the finish line of a long and grueling endurance challenge this weekend, and a number of feelings hit me all at once.  Triumph, exhaustion, and relief, but most of all ambition!  I couldn’t help but wonder what challenge I’d take on next.

It’s a little weird that I have a tough time just sitting still and enjoying an accomplishment, but I’ve always been that way.  I’m always thinking about what I can accomplish next, and I’ve realized that my constant struggle for self improvement is what makes me really happy :) .  It’s actually the quest for self betterment that’s fulfilling, not necessarily the reward…

Speaking of accomplishments, I get to cross off two items from my Goals List with this post!  Isn’t that bananas!

  • Publish 100 Posts – I think a large chunk of success can be attributed to just sticking with it.  The 100th post is an arbitrary milestone, but I now feel like I understand the basics of blogging.  I wonder what I’ll learn throughout the next 100 posts.
  • Complete the Yakezie Challenge - If you’re unfamiliar with the Yakezie network, it’s a group of bloggers who help each other grow their blogs and get better at writing.  To learn more about it, check out my post about starting the challenge, or the ground rules for entering.  I’d definitely recommend it.

More On The Yakezie Challenge

When I started blogging about 5 months ago, I really had no clue what I was doing (I still don’t).  I didn’t even know what terms like HTML and SEO meant, and I thought that Yakezie was a mafia (a PF mafia…).  But now I know differently.  It’s a group of supportive, kind, incredibly intelligent, and entrepreneurial folks you’ll LOVE once you get to know.  It’s all about helping each other improve, which is a powerful idea.

I started Cash Rebel back in October 2012, but I didn’t really have a goal or a purpose until I joined the Yakezie challenge on February 7th, 2013.  At that time, my Alexa ranking (a measure of website popularity) was up at 2,086,543 (lower is better :) ).  As of the writing of this post, I’m sitting at 198,006.  Check out the graph I made of my Alexa ranking over time (credit for the tracking idea goes to Emily at EvolvingPF).

Gee-Willikers!

Yep, I recorded my Alexa ranking almost every day… did I mention I’m a little obsessed with data?

The Yakezie Challenge is a right of passage through which every member of the network must pass.  There’s a lot of collective wisdom in the forums, and other bloggers will help you out whenever you’ve got an issue, but I think the most powerful aspect of the challenge is that it gives you a frame of reference.  You’ve got an achievable target to hit (Alexa 200,000) within a reasonable time frame (6 months).

Most new bloggers (myself included) don’t know what good looks like.  Without a clear mid-term goal, no one’s going to stick with blogging because there’s not a ton of instant gratification to it at the beginning.  Unless you’re a prodigy, you aren’t going to make much money blogging, so it’s really all about building a community of bloggers and readers, and striving for self improvement.  Getting exposed to other prominent bloggers helped show me what I should be aiming for.

So What’s Next

Don’t get me wrong, completing the challenge is an awesome feeling.  But it’s kind of the same feeling when you go from being a macho, know-it-all high school senior to being a scared shit-less college freshman.  I definitely don’t feel like a “legit” blogger yet, but I suppose that will come with time.  For now it’s just fun to interact with the bloggers I admire and learn from them.

I’m not going to issue my next challenge to hit Alexa 100,000 in 6 months or anything today.  That might happen later, but for now I think I’ll focus on a few aspects of blogging that I’d like to improve on.

  • Guest Posting – I’ve only done one guest post so far.  I really enjoyed doing it and it was a great way to interact with another super smart blogger, but it takes a lot of energy because I want to make sure I’m publishing my best content.  I’ll try to reach out to more bloggers in the coming months, and if you’d be interested in posting here, or having me guest post on your site, let me know!
  • Getting Ahead On Posting – I typically write my posts a day or two ahead of time.  If I get really busy, I’ll probably just not end up posting for a few days.  I’d like to get about 4 or 5 posts ahead so I don’t feel like I have to force myself to pump out content when it’s not ready.
  • Figuring out SEO - For those of you who don’t know, SEO stands for Search Engine Optimization.  Apparently it’s a big deal in the blogging world.  Most major bloggers get the majority of their website traffic through search engines, so optimizing how those lost souls find your blog is a big deal.  I’m pretty clueless when it comes to SEO, so it’s time to sit down and do some research.

What feedback do you have?  Are there any topics you’d like to hear more about?  Is there anything I’ve written that you think is particularly dumb?

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50 Comments

Do You Work For Passion or Money?

Posted by CashRebel on May 20, 2013 in Enjoying Life

The other night I got to talking with a high earning futures trader who I run into on a regular basis.  Trading futures contracts is an uber-complicated job that requires skill, luck, and patience to earn money by buying low and selling high.  It sounds like a stressful career, but what intrigued me was his motivation for work.  He told me that his only motivation, and the motivation of his firm was simply to make money by trading to increase their capital, nothing else.

What a refreshing answer.  Most companies, and the employees they employ, claim to take part in some sort of “noble” work.  Whether it’s providing a superior customer experience, leading a team of people compassionately, or contributing towards a cause that they’re passionate about, most people claim to be motivated by more than money.  So it was interesting to have a conversation with a dude who admits readily that the only reason he goes into work, is to make money off of trades.

Talking with him about his work motivation made me start to question some long held beliefs about what I should  be doing with my life.  I’m doing a job I love, and I feel like I’m making a small difference in the world, but maybe there’s a better way to accomplish all of my goals by making a counter-intuitive career move.

My Current Plan

If you’re a long time Cash Rebel reader, you’ll know that I’ve got some pretty lofty financial goals.  I’m a twenty-something engineer who’s trying to reach financial independence within the next 10 years.  I’ve got a fairly detailed plan, and everything seems to be working well so far.  But those are just my financial goals.

My real passion is the environment.  We humans are slowly but surely pumping carbon into the atmosphere and all but guaranteeing a barely livable future planet.  I believe my mission in life is to try to fight for energy efficiency and renewable energy so we can build a truly sustainable future.  It’s just so ridiculous that we have the tools to fight climate change, yet we choose to ignore it all together.

Anyway, I get to work in this field every day, and I do feel like I’m making a small difference.  As I learn more, I’m hoping to gain a position of power within a  clean-tech company and really scale clean energy/energy efficiency to more parts of the country/world.  Then once I’ve saved up enough to become financially independent, I’ll either continue what I’m doing, or volunteer for the Sierra Club and become a school teacher.

My plans are always changing, but this is about as clear as my plans get more than a few months out.

My What If Plan

So after talking to my trader friend, I got to thinking about making money for the sake of making money.  Currently, I make a good salary doing what I believe in, but since I’ve got a degree in mechanical engineering from a good school, I’ve got some additional options.

I’ve got all the qualifications to be a petroleum engineer making $100,000+ from the get go.  What if, instead of working on saving the environment, I spent 5 years helping oil companies destroy it?  I could easily find a job at a refinery or a rig making boatloads of money.  In fact, I worked for an oil company as an intern one summer, and my salary (when you annualize it), was about 20% more than I currently make (and I was an intern!).

Then after I reach financial independence in just 5 or 6 years, I’d then be able to do a 180 degree flip and volunteer full time for an environmental group.  What’s crazy about this strategy is that even though I’d be working against my long term goals of sustainable energy, it might actually be the smartest big picture decision because then I’d have more time to work against harming the environment once I was retired…

Wrap Up

So clearly there are a lot of jobs somewhere in between saving the planet and destroying the planet, but the extremes present an interesting question about why we work.

I guess I’d admit right now that I work more for my passion than my paycheck. I could absolutely make more elsewhere, but I choose to stay in my current role because I feel like I’m actually making a difference.  That being said, I think the strategy of working just for money and retiring earlier to focus on your passion is a reasonable one as well.

I guess my parents have instilled in me from a young age, that you should choose a career you’re passionate about, because you’re going to be doing it your whole life.  Now that I’ve got an early retirement plan, I’m not sure that this advice is quite as relevant.  This is  more a of a thought experiment than anything else, but it really makes you question your priorities.

Have you ever quit a job you were passionate about to make more money?  Have you ever quit a high paying job to do something you were passionate about?

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Adapting to Wealth and Netflix

Posted by CashRebel on May 17, 2013 in Enjoying Life
Patience is a virtue

Patience is a virtue

Most of the TV shows and movies I watch are brought to me via Netflix.  The reason Netflix has been able to claw significant chunks of market share from cable TV is because they give their users what they way, when the want it, for a reasonable price.  I’m a big fan.

I love being able to start a movie or documentary whenever I damn well please, or watch 5 episodes of Dexter in a row if it’s strikes my fancy.  Netflix has been so successful, in fact, that they’ve launched a few of their own original series.  The first original series is called House Of Cards, and I highly recommend it*.  But here’s the interesting part, instead of releasing each episode once a week like cable has been doing for 50 years, they decided to dump all 13 episodes on Netflix the day it came out.

Measuring Enjoyment

So my question to you is, does this change how much you’ll enjoy the show?

It depends.  I’ve recently been reading a bit about adaptation (Dan Ariely’s The Upside Of Irrationality), and it points out that the way we consume something has a large impact on how much we enjoy it.  If I watched one episode a week (like cable used to demand), there would be long breaks in between shows.  I’d enjoy one episode, then have a week to adapt back to my normal level of enjoyment until I watched the next show when I’d experience an equally large enjoyment boost.

But if I Netflix binged the whole series in 3 days (like I did), I actually end up experiencing less total enjoyment.  It’s counter intuitive, because it seems like getting what you want on demand would increase your happiness, but it’s the other way around.  It actually increases your total happiness if you take breaks and stretch out pleasant experiences.  (I’m still a huge fan of Netflix season dumping, I’m just going to try to stretch season 2 out a little more than I did with Season 1 of House of Cards).

Adapting to Wealth

So what can this teach us about making financial decisions?  Can you ever have too much of a good thing?  The answer seems to be a definitive YES.

I’m notorious for buying a whole 6-pack of ice cream sandwiches and then devouring them in 2 days.  Sure I enjoyed eating those treats, but I would achieve a much higher total enjoyment per dollar spent on ice cream if I was just able to spread the experience of the 6 treats out for a few more days.  I just haven’t learned to exercise enough self control…

It’s not such a big deal with ice cream sandwiches, but I’ve seen people really run into trouble when they acquire a whole bunch of money all at once.  When my buddy got his new job, he started out by buying some nice new going-out shirts.  I’m sure he considered that money well spent because he enjoyed them quite a bit, but within a few days, he bought some new shoes, and then a new tie, and the purchases just kept on coming.  Not only was he falling for the mistaken theory that happiness is tightly correlated with annual spending, but he was trying to buy his happiness all at once which is the clearly the worst strategy.

I don’t think humans adapt well to abundance.  We get as much as we can as quickly as we can because that’s our instinct.  But it turns out that in order to maximize our happiness (which should be everyone’s goal), we need to slow down and take things one step at a time.  Maybe if we try to buy happiness more slowly and deliberately than the average consumer, we’d not only increase or total enjoyment, but we’d end up realizing that we don’t need to buy all that stuff anyway.  Just some food for thought.

Is there anything you gorge on?  Have you successfully rationed out any purchases that make you happy?  

*House of Cards: It’s a show about the shady underbelly of American Politics.  It follows Frank Underwood (played by Kevin Spacey), a corrupt majority whip in the US congress scheming for more power.

 

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Investment Tinkering Part I: Investing In Real Estate Without Buying A House

Posted by CashRebel on May 15, 2013 in Investing
A sweet design for a motorcycle of the future (not mine)

A sweet design for a motorcycle of the future (not mine)

This is part I of a series on the tinkering I do with my investment portfolio over time.  I’m a long term, passive investor, but when I learn something new I like to shake things up.  Enjoy!

In the words of the great Tony Stark, “I like to tinker, it’s what I know”.  I was taught to always look for new ways to optimize my designs and prototypes as I made my way through engineering school.  I can’t tell you how many times we built our first generator until it actually worked (There was a loud cracking sound followed by all the gears sliding to the floor on multiple occasions).  But after tinkering enough with different layouts and materials  we actually got it to work and won the design competition.  It’s led to an attitude of continuous improvement over time in a variety of my interests.

My finances are no exception.  I love thinking about my credit cards, CostCo membership, savings accounts, investment accounts and P2P lending, and tweaking the, ever so slightly to yield slightly better results.  At first, when I did my first cash analysis, I realized there were gigantic iceberg-sized holes in the side of my budget each month leaking valuable dollars towards silly causes like haircuts, Starbucks, and gasoline.

As I started to optimize my spending and saving, I’d see ridiculous improvements in just a few months.  I remember how great a feeling it was when I found out that I’d successfully tripled my savings rate!  Back in early 2012 at the beginning of my financial awakening, I was discovering new leaks everyday and scoring a lot of quick wins.

Real Estate

My most recent tinkering has been with my real estate asset allocation.  I’ve been wanting to invest in real estate for a while now, but I’m not in a position to buy a house, so my current allocation is 0%.  I enjoy the minimal cleaning and maintenance my current apartment provides.  Plus, I love having the option to move to a new city whenever I want.  Renting gives me the flexibility I desire, but I’d still love to have a small investment in RE.

My main motivation is simply asset diversification.  I’m mostly allocated in stocks, as well as a mix of bonds and P2P notes, but I haven’t worried too much about my precise allocation until this point.  So in order to get into RE, instead of buying a condo or a house, I’ve got my eyes set on a diversified Vanguard REIT fund (VGSIX).  A REIT is a Real Estate Investment Trust, they buy real estate, rent it out, and payout a piece of the profits to their shareholders. For a better explanation, see Jlcollinsnh’s post about investing simply in Stocks, Bonds, and REIT funds.  Essentially, it’s a way to own income producing real estate without actually managing a rental property.

I’d like to have an investment in real estate that would grow over time, and eventually sell it for the down payment on my first house when the time is right.  The time won’t be right for at least 5 years or so, and I don’t want that down payment money just sitting in a savings account yielding 1%.  It may be a bit irrational, but it just seems right to keep my down payment money in a REIT because then if real estate is overvalued when I want to buy, my REIT fund will have tracked the market and I’ll have equivalent buying power. I know I could just put in it stocks, but I’m looking for a little bit of diversification.

Tax Efficiency

Anyway, I knew I wanted to add VGSIX to my portfolio, but I wasn’t sure about how to get it into a tax sheltered account.  I could have just bought a few shares in my taxable investment account, but that wouldn’t be the most tax efficient way to do it.  Since REITs typically pay out higher dividends than stocks, I would be taxed at my personal income tax rate instead of the capital gains rate.  So the best practice (or so I’m told), it to put a REIT in a tax sheltered account like a 401K or an IRA.  Since my employer sponsored account doesn’t give me that option, my Roth IRA’s my only option.  The only problem was that I already had contributed 100% stocks to my IRA this year, and I knew I didn’t want to impose tax implications by selling*.

So I posed the REIT/down payment/IRA question to Jim over at Jlcollinsnh, since he’s definitely my favorite investing blogger.  It took a few emails back and forth, but I finally started to understand where my error had been.  I didn’t know that there aren’t tax implications to trading funds within an IRA!?  I’ve read a bunch of investing books and I’ve been investing for a little over a year now, but I guess I’d never learned this trick!

How to turn a REIT into a Down Payment

So here’s the strategy for tax sheltering your REIT fund investment that Jim gave me.

  1. Figure out what you want your asset allocation to be.
  2. Trade that much stock index fund for REIT fund within your IRA.

So that’s pretty straight forward, but here’s the tricky part.  When it comes time to free up some cash for a down payment on a house, all you have to do is the following.

  1. Trade all of the REIT fund for a stock index fund within your IRA.
  2. Sell the same amount of stock index fund in your taxable account.
  3. Use that cash to pay for the down payment on your house.

It seems super simple now that it’s written out, but I was having quite a tough time wrapping my head around it before the guidance.  So after all is said and done, here’s my new allocation.  I will re-balance over time, but this trick should allow me to keep a consistent asset allocation even once I decide to buy a home somewhere down the road.

NewAssetAllocation

Does your asset allocation include REITs?  Is your allocation set up tax efficiently?

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40 Comments

The Great Minivan Debate

Posted by CashRebel on May 13, 2013 in The Master Plan
That's right ladies and gentlemen, it's got a built in vacuum...

That’s right ladies and gentlemen, it’s got a built in vacuum…

A few weeks back, Anna from AreYaGonnaEatThat mentioned to me in a comment that she had her eye on a Honda Odyssey minivan as he next car.  Since I’m a personal finance bully, I pressed her one why she’d want such an inefficient, expensive vehicle.  Beyond the obvious  sex appeal of cruising down main street in a slick 7 seater, I just didn’t see the attraction to such a bulky vehicle.  After going back and forth with financial, nostalgic, and vacuum related arguments for a while, we decided to collaborate on a post to get your thoughts, dear reader, about the pros and cons of buying a minivan!

Reasons Why Minivans Rock – By Anna

Before I begin, it should be noted that when I make big purchases, I tend to keep them for as long as possible.  I rocked my wood panel TV since third grade to college and most of my adulthood (okay, so my parents bought that), the first full-sized bed I purchased still resides in our guest room, and I still have my first and only car.  It’s a 1997 Accord that I bought from my mom after college, and she has been my trusty ride on road trips, numerous errands, a few navigational errors due to my lack of internal compass, and daily commutes.  But, she has seen better days since what was once the “Golden Beauty” is now the “Busted Nugget,” and since repairs and maintenance are becoming more frequent, I’m now opting to purchase a new ride in the next year or so.

My boyfriend and I are later in life, and we can easily see ourselves starting a family and, God-willing, have it grow with a quickness in the next few years, with a mutual agreement of about 3 kids.  Though a sedan will probably be a sufficient if we reach our peak amount, here are some reasons why I’m leaning towards purchasing a minivan:

1)  Buy it for life –  Like I’ve stated above, once I make a significant purchase, I want to keep it until it runs to the ground.  It took me about 3 years to pay off my car, and it was great to not have car payments for the next decade.  Plus, I’m not much of a car person, so the least research I have to do in the greatest span of time, the better.

2)   The “magical” doors of the minivan - Having accompanied my friends that are now mothers, I have learned the value of the sliding doors of vans, and its ease and efficiency in getting children and car seats out, versus the door of a sedan.  This is especially noticed in crowded parking lots where cars might leave little room for others, as well as when children tend to be fussy.

3)   The stability factor of a minivan – it feels a lot sturdier to ride in than a car because of its size, and also more than an SUV due to its lower center of gravity.

4)   The carpool factor – assuming I stay at my current position, I have the convenience of arriving to and leaving from work early, which could come in handy for carpool reasons.  This way, perhaps a neighbor can take my and his/her kids to school in the morning, and I can pick them all up after school.

5)   Sports or other extracurricular activities – my boyfriend and I are big advocates of sports and fitness, and we plan on encouraging our kids to also play in sports.  I know this is feeding into the soccer football mom (to say my boyfriend is a die-hard football fan is an understatement) stereotype, but I think it makes sense to have a minivan since kids, possibly other people’s kids, and equipment can make for a crowded situation in a sedan.

6)   Vacationing – when my boyfriend and I travel, rare is the time it’s just the two of us – we roll with the village.  We’ve traveled with his side of the family, friends, and when we travel with my side of the family, my sister-in-law’s family is at times included since we’re a tight-knit group.  Minivans have been useful in eliminating a car in our traveling caravan, so I feel it will be useful for future vacations, as well.

7)   Nostalgia – when I was little, I was always jealous of the families that had vans since they seemed to be the “party bus,” so I thought owning one was totally rad (What?  I grew up in the 80’s).  In high school, my friends inherited their family vans as their rides, and it was always fun to hop in the van and go to the nearest In-N-Out to hang.  In college, I saw a more futuristic van – one with a TV and game console, at least – and it was fun to ride in outings to and from Big Bear or Magic Mountain.  Add my vacation memories in #6, and it makes for nostalgic moments.

Though I absolutely love the shop-vac feature of the 2014 Honda Odyssey, I would be perfectly happy with a 2010 or so model.  I’d ideally like to stick with a Honda or Toyota since I’ve had such a great experience (read: reliable) with my Accord, plus I just think the Odyssey is as stylish as they come.

Reasons Why Buying A Minivan Is Silly – By Ross

Now before you think I’m hating on minivans without actually experiencing their wonder, I’d like to assure you that I’ve spent my fair share of time in the back of a Wind Star my family owned for what seemed like my whole childhood.  Since I was the youngest of three, during road trips I was routinely sequestered in the back row with all the luggage.  That grey beast took us from coast to coast a few times and she never stopped chugging… until we had to her out to pasture on a fateful trip to go hiking in Colorado.

As you can tell, I enjoy the nostalgic aspect of minivans just as much as the next guy, but I’ve grown a bit since the days of being stuck in the back seat, and I’ve come to view minivans as a gigantic waste of money, fuel, and efficiency.  So here’s my argument for why Anna, and really most folks in her shoes, shouldn’t buy a minivan.

1. Minivans are friggin expensive – Because I’ve never really been interested in owning my very own minivan, I’d never actually looked at how much they cost.  A brand new Odyssey will run you $28,675!  I was blown away.  How is it that any family is willing to drop almost $30K for a vehicle that’s just about as efficient as a pickup truck?  To be fair, Anna was looking at the 2010 model that comes in at a more reasonable $16,000 (according to KBB).  Whoa, that’s a 50% price drop after 3 years!  Still, for any family with up to 5 people, I don’t see what’s wrong with a car like the Honda Civic.  It’s super reliable and the 2010 model comes in a cool $5,500 lower at $ 10,500.  Hold that thought.

2. Minivans are super inefficient – So the 2010 Odyssey gets 18 mpg… not so good for going on actual odysseys.  When you compare that to the 2010 Civic which averages 29 mpg, your fuel costs are going to start to get a little crazy.  Let’s say you went with the Civic instead of the Odyssey, not only would you save the $5,500 upfront, but you’d save $1,100/yr in fuel costs alone ($2,950/yr vs $1,850/yr).  But what if you did choose the Civic, but then 5 years later you have your 4th kid and the car’s too small?  Well then you could literally buy a second Civic with all the money you’ve saved in just 5 years ($10,676).  Or of course you could then sell your original civic and upgrade to an Odyssey for those 7 seats and still save money.

3. The environment - The type of car you drive is one of the biggest impact most people have on the environment.  Small changes in mpg and driving habits can mean a large carbon emissions reduction which is what our planet desperately needs.  Let’s say you bought a 2010 Prius (50 mpg) instead of an Odyssey (18 mpg), the purchase price would be similar ($15,000), but you’d spend $1,900 less on fuel each year.  Meaning you’d save $9,500 every 5 years while reducing your environmental impact.

4. 5 Seaters are big enough for most families – Most families have fewer than 6 kids.  I’m always annoyed by the arguments that a regular sized sedan is too small for 5 people.  As a nearly 6 foot tall adult dude, I regularly ride in the middle seat of sedans and it’s not a big deal.  Don’t tell me that kids can’t do the same.  I think the only reason to scale up to a minivan is if you have 6 more people in the family.  It just makes sense to drive everyone in one vehicle.

5. The sharing economy – I totally understand the love of minivans during road trips.  They are like movable command centers that store anything you pack in them.  But I also think that as Americans, we’ve gotten used to waste.  It is such a waste for a parent to drive his/her minivan to work everyday alone and only use all 7 seats once in a blue moon.  If you’re getting a minivan in order to go on road trips, renting a car/zip car could be a far better solution.  That way you get the extra space when you need it, but the fuel efficiency the other 95% of the time.

6. Soccer mom stereotype – And finally, if you drive a minivan, you’re going to be labeled as a soccer mom.  Maybe that’s not such a bad thing, but I had to throw it in there…

Do you have a minivan?  When do you think it makes sense to buy one?  Who made a more compelling argument?

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A Unique Haircut and Wrap Up #9

Posted by CashRebel on May 11, 2013 in Blogging
My unique haircut...

My unique haircut…

Happy Saturday dear readers!

It’s been an athletic week for me.  From running, to weight lifter, to rowing, to softball, I’ve been able to get outside and enjoy the fresh air.  It seems like everyone in Chicago is just getting used to pleasant weather and coming outside to engage in their sport of choice.

It’s days like these I’m reminded that the fitness gods have blessed me with endurance and speed, but I’m not especially coordinated or good at short bursts, so softball and rowing don’t come naturally.  It is interesting though, how quickly you can improve skills you’ve never tried before.  At the beginning of our first softball practice I think I wiffed on the first 10 balls in a row, but after 20 minutes of coaching, I was at least making contact every time.  I don’t expect to be hitting them out of the park next week, but just hitting a single would be a huge improvement.

My Haircut

Before I get too far, I’d like to explain the interesting haircut you see at the top of this post.  As you probably know, I stopped going to the barber back in 2011.  When I sat down and evaluated my finances, I realized that I was spending $18/mo on haircuts.  That may not sound like a lot, but I really don’t care how my hair looks, so I started looking around for alternatives.  Some people were in the “Let it grow out” camp, but you really don’t want to see me with long flowing hair.  It just doesn’t go well!

So I bought a $15 buzzer thinking that even if it broke after one use, it would pay for itself.  Well here we are 2 years later and I pulled out that same buzzer for maybe the 25th time.  Initially it didn’t quite sound right, but I pushed on.  It was cutting my hair just fine… that is, until it totally died halfway through, and my hair looked quite interesting as you can tell.

I had a few options.

  1. Put on a baseball cap and go get a real haircut ($18)
  2. Go buy another buzzer and throw the current one out  ($15)
  3. Figure out how to fix it myself ($0)

I was about to choose number 2 until I started thinking about what the blogosphere would think of me.  I had to at least try to fix it.  So I got out my screwdriver, opened it up, and cleaned out a bunch of hair.  I didn’t see anything wrong, so I put it back together and tried it just in case.  I was surprised when it started humming like the day I bought it.  Instead of going the convenient $15 route, I took a little time to investigate and repaired a perfectly usable buzzer.  That’s my win for the day!

Here’s who mentioned CashRebel this week.

Thanks for the mentions guys and gals!

And here are the posts I’ve enjoyed this week

  • In honor of Mother’s Day, Kathleen wrote a tribute to her mom, and why she’s awesome over at Frugal Portland.  I can’t think of a more dedicated, supportive, and determined woman than my mom, so happy mother’s day everybody!
  • Daisy at WLGYL Add Vodka wrote a great post about her four different strategies to read a ton, but never pay for books.  Her Swagbucks idea has me interested…
  • Although I’m a big fan of non-stop frugality, there is a time and a place to spend.  Grayson at Debt Roundup talks about how he splurged on a night out with his wife and it was everything he thought it could be.
  • Johnny Moneyseed wrote an instant classic about how most people don’t understand that “rich” means high net worth, not a high salary.

Stay classy everybody!

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How To Run Marathons On A Budget

Posted by CashRebel on May 8, 2013 in Enjoying Life

Medals

As I glided past the finish line of my last half marathon, my runners-high addled mind turned to thoughts of victory and finance.  My buddy and I exchanged a well deserved high five and chest bump as we got some water and looked for a place to stretch, but what I was really paying attention to were all the expensive clothing, shoes, and training aids that seemed to adorn every other competitor who finished.

There was this one woman who had clearly coordinated the colors of her headband, running shoes, Ipod band, shirt, and shorts.  As she struggled over the finish line sweaty yet relieved, I started to wonder whether or not the makeup she’d clearly applied was necessary for the occasion, and how much her whole getup had cost.

I’ve always prided myself on running fairly frugally, but I’d never added up all my costs and compared them to what a novice might spend if he/she didn’t know what was necessary.  I learned the hard way what was necessary in order to train for a marathon since I refused to buy anything related to running unless I really couldn’t go for a run with out it, so I slowly acquired the essentials.  It turns out, it’s not that hard to run marathons on a budget if you’re willing to buy only what you actually need.

The Registration Fees

The first, and certainly the most daunting, hurdle in the road to finishing a marathon is always the registration fee.  Marathons/Half-Marathons can cost anywhere from $50 for small rural races to $250 for high profile races like the NY Marathon.  I enjoy searching for cheaper races and exploring new areas, but sometimes it’s also fun to be part of something bigger, which is why I spent $175 this year to register for the Chicago Marathon this year (kind of a splurge I know!).

The best way to reduce the cost of race registration is to plan ahead or be super flexible.  Typically race registration fee are pretty cheap 6 months to a year out, and they get more expensive as you get closer to the race date.  It’s sort of like Airline tickets.  And also like airline tickets, if you’re flexible, you can snag some great deals.  A lot of times you can find discount race bibs on craigslist the day before if there are racers who are unable to make it.  It would suck to train for 4 months and then be unable to run because the race was sold out, but for those who are perpetually in race shape, it’s a good way to get a deal on race entry fees.

Registration Price: $100.  It’s not crazy expensive, but a race at that price probably has it’s act together.

Shoes

While training for the last half marathon I ran, I racked up about 230 miles over the course of 4 months.  I might run double that if I was training for a real marathon.  Since running shoes are good for roughly 500 miles, I’d say you should replace your shoes after every marathon and maybe every 2 half marathons depending on how much running you do in between races.

Since my birthday is in June, I always get ask for a pair of my favorite Saucony shoes then, and again at Christmas.  They cost bout $110/pair.  It may sound like a lot to pay for shoes, but I definitely recommend going to a running store and letting them pick out your first pair.  Then, after that, you can just buy that same pair on Amazon, but without a little professional guidance you might buy a shoe that’ll make it unbearable to run after a while.

Shoe Cost: $110/race.  Shoes is an area most people skimp, but I truly believe that you’ve got to pay for quality when it comes to keeping your feet healthy.

Running Clothes

I think this is where most folks start to go wrong.  They decide that they want to become a runner so they go out and buy 5 “outfits” the very next day.  Instead of buying the cutest weather-tech ultra wicking t-shirt and shorts with a lightning bolt, I’d recommend getting a couple pairs of mid quality running shorts, and using the 100′s of free T-shirts you acquire on an everyday basis.

It might sound a little gross, but running shorts don’t actually don’t get that sweaty, so I probably wash them only once every 3 runs, so two pairs should be just fine to start out.  Once you start actually running races, you’ll have so many weather-tech wicking shirts than you could shake a stick it, so just start out running in old T-shirts.  Every race you ever do will give you one as part of registration, so it doesn’t make a whole lot of sense to buy a whole bunch before you even start racing.

Clothing Costs for a beginner: 2 X $25 shorts = $50.  Don’t go crazy with $40 crazy complicated shorts, but I also wouldn’t recommend getting the super cheap no-name brand shorts.

Travel

Travel is kind of the big X factor.  If you decide that your fist marathon needs to be in Hawaii or Rio, travel will blow your whole budget out of the water.  But here’s what I’ve done and what I recommend.  I either  race within a few hours of where I live, or I race while I’m already visiting a friend.  If you can’t find races where you live, you aren’t hardly trying.  Just Google “Marathons in your state” and you’ll find plenty of marathon aggregation sites.

If you plan a race while visiting a friend in a new city, lodging is generally free.  The hotel expense is where I think a lot of folks start to blow their budgets.  There’s nothing wrong with doing it that way, it’s just a little more costly.

Travel Cost: $0 – $500.  You can keep it a lot closer to $0 if you’re smart about it.

Extra Crap

Now here’s where they really get ya!  In order to start running, the most important thing is to actually start running.  Worrying about whether or not you have the right extra gear and accessories is a fools errand.

Retailers want to make you believe that in order to be a good running you’ll need to buy Goo, head bands, phone bands (to hold your phone/Ipod), protein bars, recovery shakes, special no-cotton socks, slick underwear, special hip-hugging water bottles, and all kinds of other crap.

  • Every race I’ve ever run has been in good old fashioned white cotton socks and I’ve never gotten a blister.
  • Advanced race nutrition is something you should learn about, but it’s not necessary for distances under 12 miles, so go ahead and start running, then learn along the way (and even then you should probably just bring almonds and bananas instead of protein bars).
  • Instead of hip-hugging water bottles I’ve always just routed my runs past working water fountains.  It takes a little bit of planning, but it’s a super rewarding way to plan your runs.

This is where runners (especially first time runners) waste quite a bit of money.  Instead of working on their endurance and actually accomplishing their goals, they get distracted by the next shiny accessory.  It’s beautiful outside this time of year, just get out there and run!

Extra Crap Cost: $0.

All Together that puts us at about $270 for your first race and $220 for each additional race after that.  Since I run between 2 and 5 races per year, so I end up spending somewhere between $400 – $1,000 per year.  It’s not cheap, but it’s something I’m passionate about, and I don’t mind spending my hard earned cash on it.

What costs have I left out?  Do you have a particular accessory that you’d never run without?
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Making Frugality Happen One Meal at a Time

Posted by CashRebel on May 6, 2013 in Enjoying Life
The homemade snack spread I made for a Superbowl party a few years ago

The homemade snack spread I made for a Superbowl party a few years ago

We all know that eating out is way more expensive than making our own food at home.  Like, waaaaaay more expensive.  This story is about a choice I made this weekend, and how I was able to make frugality happen through sheer will power and stick-to-itiveness.

It’s a decadent luxury to drive to a new restaurant, follow a pretty hostess to a nicely prepared table, and meet the server who will literally bend over backwards (though I’ve never asked) to increase the pleasure of your dining experience.  Your water glass is almost continually filled and your crumbs are cleaned by an army of cheery busboys (Bus-men? Bus-people?) whose job is 100% dedicated to making sure you don’t have to lift a finger.  And that’s the just the folks you interact with.  A gaggle of chefs and dish cleaners toil in ambiguity and extreme heat so exotic food can be magically delivered to your table the mysterious kitchen.

And that’s just the experience you can buy at Chile’s for $9.99.  It get’s so much crazier from there once you hit up fancy establishments with long wine lists and tuxedo clad servers.  Sure it’s a fun experience to dine out, and part of me thinks that these hard working servers, chefs, hostess’s, and bus-people deserve every dime that they earn.  But perhaps we should take advantage of such a circus of excess a little less frequently.

Not Giving In to Lifestyle Inflation

If you read my last post about spending a little too much in April, you’ll know that I accidentally got used to the idea of dinning out more frequently than is probably reasonable.  So this month, I decided to make frugality happen one meal at a time.  Sometimes all it takes is will power and a little creativity.

So here’s the deal. My friends and I had scheduled to go grab some dinner and see a show we’d all been looking forward to.  The plan was to hit up this awesome Indian place (that has the best naan) a few hours before the show.  I’ve been there two times, and it’s been amazing each time.  But instead of just giving into my urge for delicious Indian food, this time, I decided to stretch myself and make frugality happen.

So I texted the group and they all responded positively to my suggestion of eating at my place instead, because we’re all somewhat frugal.  For a lot of folks, cooking comes naturally, but I do tend to struggle when cooking for big groups.  I enjoy what I cook for myself, but a lot of the time it’s not especially interesting or exciting, just healthy and hearty.  So although I felt uncomfortable figuring out how to cook something new, I just decided to make it happen because I had already committed to making something.

Learning New Skills Is Refreshing

I found a recipe for some scrumptious looking vegetarian pizza and walked over to my local grocery store with a list of ingredients in hand.  After picking up a pizza crust, ingredients for a salad, mozzarella cheese, mushrooms, onions, peppers, tomatoes, apples, pizza sauce, and some soda, my final bill including tax was $16.32.  When I got home, I spent one hour cleaning, chopping, arranging and baking.  It was super easy, like 95% of all recipes are, but when it came out of the oven, it was crispy, bubbling pie of greatness.  My friends were duly impressed, and we all toasted with the beers that my buddy had graciously brought over.

I didn’t think much of the $16.32 receipt for the food I purchased it at the time, but compared to the cost of dining out, it’s just astounding.  That is approximately the amount all four of us were prepared to pay, each, to dine at this Indian place.  By forgoing all of the niceties of the restaurant, I was able to feed four people a classy and delicious meal for the price of one.  Sure it took  an extra hour and a little ingenuity, but I’m now a more resourceful person as a result.  Maybe next time I’ll be bold enough to actually cook Indian food!

Although I ended up spending about the same amount of cash as if I’d just given in and dined at the Indian place, I was able to save my friends a collective $48 which they can now use to become richer and more skilled individuals themselves.  And it’s not too much of a stretch to assume that the next time we get together, one of them will be happy to take on the challenge of cooking a cheap, delicious meal so that we can all eat well and save money  (one friend already offered).  By dedicating myself to making frugality happen, I started a frugal spiral that will lead to many great meals that will all make us all richer individuals.

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Remembering Tabula Rasa After An Expensive Month

Posted by CashRebel on May 3, 2013 in Budgeting

Tracks

Last month didn’t go exactly as planned from a budget perspective.  I spent way too much eating out with friends, I had an expensive medical situation, and I needed to replace the brakes on my car.  Sometimes life gets expensive all at once, but it’s quite useful to get up and start over again with a Tabula Rasa attitude.

Sometimes you need to just accept that things didn’t go as well as you would have liked, clear your mind, and start over with  a vengeance like John McClain.  And that’s the beauty of budgets.  Once the clock hits 12:01 on May 1st, everyone gets a new monthly budget, and it’s time for some kick ass frugality.  So here’s how April went.  It might not have been pretty, but you gotta learn from your mistakes.

Eating Out Got A Little Crazy

Looking through my month-end Mint report, it’s clear that I got a little loose at the restaurants.  Typically I try to hit up restaurants about 1-3 times a week (8 times a month).  I like to grab lunch/dinner with friends on the weekends, and sometimes I’ll go out for lunch with my team for lunch at work (I don’t care what you say, I’m not bringing my own sandwich to Chipotle…).

I knew I’d had a bad month when I realized that I actually ate out more days than I didn’t eat out in April.  This type of rampant and unconscious spending (the scariest kind) just kind of crept up on me.  I made a few new friends at work, and they convinced to come out to eat with them a few times.  It’s weird how if you dislike your job, you always want to go out to eat instead of bringing a packed lunch, just because you need to “get out of the office”.  Last month I gave into their coercion but it really seems like a bad deal.  You spend a TON of money each day eating out, and you don’t get very much work done.  Now not only do you hate your job, but you’re fatter, poorer, and less productive because you spent so much time driving to lunch! (I digress)

So I went over my food budget by 50%.  Sure it’s not the end of the world, but it’s not really the way I want to live.  This month I’m adopting the Tabula Rasa philosophy.  Just because i went a little crazy last month, doesn’t mean I have to waste money this month!  When friends asked me to grab some Chipotle (my favorite food in the whole wide world) after a show, I joined them, but since I’d already eaten I just got a (free) water and hung out.  This month WILL be better!

Kicking You While You’re Down: Medical Expenses

This month I saw some medical expenses.  Call me a socialist, but I feel like when our citizens are in a ton of pain, that’s when everyone’s tax dollars should be used to help out.  But instead, when a citizen falls ill, they also get kicked with all kinds of medical bills.  It’s not exactly a great way to get them back on their feet. I suppose I’d have a different point of view if I was like one of my coworkers who hasn’t been to a doctor in 5 years…

But fortunately, last month, the financial damage was pretty minor, and the prescriptions along with my copay only put me 50% over on my Health budget.

That being said, I’m starting May with a fresh perspective.  I’ll do everything I can to keep myself healthy, and stop worrying about the stuff I can’t control.  I’ll keep exercising 4 times a week as well as eating mostly fruits, vegetables, and whole grains.  I’ll just focus on the things I can do to reduce my health costs in the long run.

 Fixing My Brakes

So my brakes started grinding 2 days before I was planning on taking a 100 mile trip to go run a half marathon.  I think most people’s first instinct in that situation is to hope it just goes away.  It didn’t quite work like that. After a few loud squeals at some stop lights, I decided something must be done.

Most people would head straight to the brake place and have the professionals replace the pads.  But since I’ve been embracing new challenges lately, I decided to head to the auto parts store to do it myself, and then compare the cost with what the shop would charge me.

Since the shop only charged $60 more than what it would cost to do it myself, and I was running low on time, I decided the smart choice would be to leave the job to the professionals this time.  After about 2 hours, my brakes were good as new and I was able to make it to my race without my squeely car. It put me 250% over my budget, but that’s the nature of vehicle maintenance.

The only thing I can do differently this month is drive less.  I’ve already made some great strides compared to last year.  If current trends continue, I’ll end up driving 4,400 miles this year, which is about half of what I drove last year (8,900 miles), and about a sixth of what I drove the year before (25,000 miles).  I’m making some great progress, and it makes me consider going car-less sometime in the near future…

How was your budget in April? Do you enter each month with a Blank Slate attitude?

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