Just Out of College? How About Living With Your Parents?

Just when you thought you finally had all the freedom with a livable paycheck! Anyone that has the chance to live with their parents while they are getting started with their career should seriously consider it (of course, assuming there’s a healthy environment at home.) The amount you can save on rent, utilities, food etc. can add up to a nice down payment in just one or two years.

Sarah, a friend from my old office, lived in an apartment with a roommate for a year after college in the same city as her parents, and thought it was getting too expensive. She decided to move in with her parents for the time being as they offered free rent and home-cooked food. Because she had more funds freed up she spent more on dining out, entertainment and clothes, and wondered why she didn’t have any savings.

Life before saving:
Sarah makes $1950 per month after taxes. Living in an in-city apartment she was spending monthly:
$950 Rent and Utilities
$250 Car Expenses
$550 Dining Out and Groceries
$150 Student Loan Payment
$450 Clothes, Entertainment, Travel etc.
Total: $2350

Of course, it started to build up on her credit card.

Now, that Sarah was living with her parents – the question was how to make saving work for her. She was still spending all she earned, and she wanted to buy a home. For someone that likes and is used to spending more than she has, forced saving had to be the answer.

Getting to Savings:
She finally sliced her credit card and asked her parents to open a separate ING savings account for her. Every month, Sarah gives her parents a $1200 check for “rent” or forced savings. They will only deposit it in this account, where Sarah can’t access it until she’s ready to move out and buy a home. The only caveat was it should pay off her credit card balance first before being saved. If she earns a raise, the increase will added to her “rent” check.

Life with savings:
After 3 months, she has paid off her credit card balance, and is now spending the next 18 months saving up almost $22,000. What a great down payment for a home! Her monthly spending now looks like this:
$300 Car Expenses (she now lives a little farther from work/friends)
$150 Dining out and Entertainment (she now takes her lunch to work everyday)
$150 Student Loan Payment
$50 Clothes and Miscellaneous
$50 Local Travel (including camping and a short road trip)
Total: $700

She has even made a game of seeing how little she can spend each month, with some of her friends helping her find free activities to do together. After all, it helps them too.

Her parents also feel great because they wanted to help her buy a home, but don’t have the savings to offer. They are giving her what they can: A place to live and eat for free in order for her to save. Sarah’s decision to live at home is of course a compromise in privacy and living under her parents rules, but she knows this is temporary – there’s a definite end date. She is committed to it, and at the end of her year and a half of saving, she will be able to buy something of her own. Also, she’s now trained herself to spend much less and make lifestyle changes for her big goal of having her own place!

As Sarah mentioned, spending those 12 or 24 months with your parents, might just ensure that you’ll never need to live with them again.

Store Brands – Just As Good?

Free Money Finance today described a promotion by Publix stores in Florida to convince shoppers that store brand products are just as good as the national brand. They matched up Welch’s grape juice and Kelloggs Raisin Bran Crunch with their sister store brand products: Buy the national brand and you will receive the store brand product as well to compare.  Apparently, so many people switched to the store brand that they are moving the promotion to all of its 900 stores. Is there longevity to the profits some national brands are banking on?

I’m not a huge fan of cold cereal in the morning, but a bowl of Honey Bunches of Oats for lunch sometimes sounds perfect. I always aim for the $2.00 big box. About half the time, I can find Safeway’s brand – Oats n More – at that price, and I’m sure to buy enough to last me through the non-sale times. Honey Bunches only hits that price 3 or 4 times a year from its regular $4.59 price, but I think I’m actually liking Oats n More better.

The article above also mentions chain stores like Publix moving to better quality products to better the store brands’ image and keep the consumer hooked on the store brand. Good move.

Post Cereals, or better yet, Kraft Foods – $5 for a box of cereal? You will have to do better than that.

Air Ninja Finds Discount Airlines on Your Route

There seems to be a plethora of sites willing to help you find airline deals. Some deal with air/car/hotel packages, others provide brand name fares, and still others display last minute deals to places you may not want to go. After booking 40 one-way flights around the world, I’d like to share what worked the best for us when we dealt with so many different cities.

• Check Expedia or Travelocity for the best fare city to city. You can assume these are brand name airlines, and it gives you a benchmark for fares.

• Then check Air Ninja for a listing of discount airlines that fly that route.

• Now that you have a good idea of who flies there, check the discount airlines’ sites for the best deal.

Though Air Ninja is *almost* our favorite Ninja, we often found its suggestions to be our best option, and for far less money especially in Europe. This led us to believe that British Airways passengers must be very loyal to their brand, because they certainly are paying significantly more in many cases.

Once in a while, the brand name airline does have the best fare, but we buy it on their site, not Expedia where we’ll pay extra fees. In some areas of Asia, like China and Vietnam, checking with your hotel booking agent may find you better fares as well. I always tried to do my homework before booking, and in 2006 it paid off in savings in the thousands.

Eat at Home – Keep a Snack in Your Car

We’ve all been there. You’re just about to head to your car after a long afternoon and you’ll be home in less than an hour, but your stomach is growling. There it is again. The familiar teriyaki place is sounding good on the way home, along with every other restaurant you pass. The monetorium, however, is reminding you not to stop and spend unnecessary funds on a quick bite – you’ll be home soon where food is much cheaper. Don’t give in!

This is when you’ll appreciate having a snack on hand. Having something somewhat substantial will help tide you over and give you time to get home and make yourself a nice meal. Get a particular kind of snack you like in bulk, like a granola bar, a packaged cookie, anything small, non-perishable, and not too messy. Then, keep one in your bag and your car.

In some cases, you may just be thirsty and it can translate to a feeling of hunger. Try keeping a bottle of water in your car as well. It will go nicely with that granola bar. And be sure to replenish your bag or car when you’ve consumed your stash.

No, It Won’t Just Come to You

Frank the Financially Savvy Athiest commented on the Jesus Camp documentary, which we recently saw as well from our Netflix queue.

I saw the movie Jesus Camp this past weekend. Initial thoughts, Jesus God-Damn tap dancing Christ, that was the most disturbing movie I have ever seen. The children, won’t someone think of the children. More rants and ravings to come on that topic.

During the movie, I really wanted to tell the little girl that she better learn how to bowl a bowling ball if she wants to take pins down, and not just ask something in the air to roll a strike for her. Whatever that something might have been, apparently didn’t.

This is also the key to financing and beginning your adventure. It won’t happen if you sit back and hope your goal just comes to you. Take the first step. Set the date and tell people. What steps do you need to take to knock all of your pins down?

Is AAA Membership Worth It?

Recently, I listened to a cashier at Safeway gathering her three customers in line to commiserate about costly AAA memberships. She described how she wasted almost $400 in the last five years because she’s never had to use any of the services. She’s planning not to renew this year.

AAA’s annual renewal usually brings up the question of “Did I use it last year?” and the resulting decision to renew always brings a little pain for me. In the last couple of years, I can only remember using them to unlock a door. But in the 90’s it was a life saver when my friend’s car hit a huge rock heading back from skiing at Crystal Mountain. The weather had turned rough, the roads were icy, and we were one of eight victims of that rock slide. It was wonderful to have them tow the car all the way back to Seattle. That scene repeated itself at different ski areas two more times during and soon after college.

I must remind myself that I have to treat this as insurance, and as my truck ages, there’s a greater chance I will be using it. Most people don’t ask themselves if they made any claims on their car insurance in the last year, when it’s time to renew. You are paying to insure the future period, and if you made it through the last period without any claims – all the better. Lee and I both have trucks that we intend to keep for the long haul. Lee’s truck is turning nine this year, and mine, eight, so these are the years to have roadside coverage.

In my evaluation, I admit I neglect to take into account the discounts we receive over the year, which turn out to be many, from hotels to frame shops. It even works in our beloved Vancouver B.C. where a little help to ease the strain on exchange rates is much appreciated. The total amount we save annually must be at least 3 times the membership fee of $89 (for Plus.) We also order the maps with ease, though I’m not sure how much these are really worth.

Now, if you decide you should have roadside assistance coverage, should you go with AAA or buy it as part of your regular car insurance policy? Does it depend on the amount you would expect to save in discounts during the year?

Telling Our Friends “We’re Heading Out!”

In January 2006, fresh off New Years celebrations, co-workers, friends, magazines and TV were, as usual, discussing the merits and trials of New Years resolutions. The air in conversation was full of doubt that anyone would accomplish all of their stated goals for the year. We decided it was time to tell some of our friends our goal – that we were leaving Seattle in December for a year-long trip around the world. Yes, it was almost a year away, but we wanted to share our excitement! Here’s what we heard:

“What? Wow! I hate that you’re going to be away for that long, but that’s really cool!”

“Seriously? Are you quitting your jobs? How is that going to work?”

“Why? Where are you going? To safe countries?”

“That’s awesome! You know, I know a few people you should talk to who have done something like that.”

“Nice – but what about Amos?”

We received so many different responses that I was sure a good portion doubted we would actually leave, or be away for that long. I think most of those folks thought we had too much going on in Seattle to just drop it all and leave.
This was all great input for us. Those that only had questions for us about what we would do with our lives in Seattle helped us make sure we had every house/car/dog question covered before we left. Those who thought it wasn’t safe, helped us keep in mind the best things/ways to keep safe. Those who doubted us only helped us keep our departure date firm.
But mostly, friends just wanted to help! Over the next 11 months we would hear innumerable suggestions of beaches to visit, things on sticks to eat, bungalows to rent and other travelers we should meet before we left like Matt and Rebecca who had done a nine month trip like this a few years earlier. What a resource!
Telling our friends was the biggest external motivator because we had self-imposed peer pressure to do everything we could to make it happen. We set the date, we told our friends, and then we began detailed plans and preparation, which meant – the Monetorium.

What About My 401K?

For many finance folks, the 401K is considered a jewel for retirement. I completely agree. It’s possible to start early and contribute regularly to build your own net to fall back on comfortably when you are ready to retire. You are told to “max it out” as often as possible. For people who will always have a long-standing relationship with their employer(s) and relish the routine, this is the way to go.

However, I am speaking to you, the self-motivated person who is or wants to be financially responsible, but also has a loftier and slightly riskier goal in the near future. You may have a company job right now, but sometime soon you want to be self-employed. You may want to take 10 months to travel across Asia or stay home and write your long-awaited book. You may want to buy your first house or may have spied a great area for rental property and want to invest soon. You’re determined to make this work.

Consider *not* maxing out your 401K. Yes, you read it correctly. Every dollar counts for financing your adventure. Contribute enough to get the full benefit of company-matched money, and save the rest in your high-yield savings account like ING. Typically companies will match your contribution up to a certain amount, such as for the first 5% of your salary, they will match it at 50%. Be sure you contribute the 5% necessary to get what some investment advisors would call “free money.”

People have different risk tolerances, and to do this, you’re ready to risk the potential growth of your 401k contributions in the long term for the potential of your new business or book etc. Because you are saving it for something a bit riskier, your goal shouldn’t be frivolous like a new car or new wardrobe. You’re smarter than that. This is for your big adventure.

The Best Thai Dishes are Served Under the Stars

Earlier this month, 3 Things About Money described how to eat on the cheap in Central American countries and find some of the best food on offer. On our trip we did try many goodies off tiny charcoal grills on busy streets, little alleys, and outside local venues. Of course – eat it only if it’s hot off the fire! We found little rolls of things, egg things, noodle things, meat things, sweet things, and lots of fresh fruit!

The best food seemed to be where the locals were eating. Find many of them sitting near the grills at picnic benches under fluorescent lights and the stars. The vendors would typically steer us toward their specialty or if some of the dishes were spicy hot, toward something on the mild side. Dinner for 40 cents. Fresh pineapple and very sweet mango for 20 cents. I’m sure they saw us coming and doubled their prices, because no price was ever listed.

We didn’t get to Central America, but this worked best for us in Asia, especially Southeast Asia. Oh, I miss it already – but I have to remember that I don’t miss the heat!

Getting High and Dirty

Lee and I have a rental house that has a huge laurel hedge wrapping around the backyard. It looks very much like the hedge in our own backyard, 20 feet high, lush and full. They both need trimming once a year and a major cutback every 4-5 years. At our house, this was the year for the cutback. From previous experience we know it would cost $300-$450 to have a company cut it back,and take away all the branches.

A few weeks ago I decided I would do it myself because of the Monetorium. We have ladders, a lopper and I could use the exercise. It took me about a full day to cut it back 3 feet and down 5 feet, with Lee and my brother Mark moving the ladder for me every hour. Mark also took away all the branches in two large loads to the dump. Other than a few bruises from leaning over the branches, it felt really good to do it myself.

Now we have the rental house hedge to tackle, which is at least twice as much work. Should we do it ourselves? Lee would help me on this one and we may get a chain saw to make it faster. If we do it ourselves, we would save $800-$900 on both hedges.

Why didn’t I use a chain saw on our house’s hedge? – I don’t feel comfortable hanging over the edge of our ladder 18 feet up with a running chain saw. If we bought a new chain saw, Lee would be the one holding it at higher elevations.

What about a hedge trimmer? – This works very well on new branches and leaves and is what we typically use for annual trimmings. For major cutbacks, it can’t get through the tougher older branches.

I think we’ll mark off a sunny weekend coming up and see how much we can get done.