IT Pilgrimage

A Journey From IT to Freedom

Posts Tagged ‘Finance’

Save Money by Not Spending It

Posted by IT Pilgrim on June 30, 2008

Poor Over-Used Wallet

Funny how easy saving money is on paper, and how difficulty it is in practice. I ran across an article this morning on the Motley Fool site, which is mainly an investing site but is also great entertainment. Their authors all seem to have a talent for presenting financial material in a humorous and engaging manner.

Well, anyway, the article is about how to spend less money. You always see tips for spending less money, and rather than beating an already deceased animal, the answer seems to be simple and universal. Just don’t spend it.

One easy way to do this…go somewhere where you cant spend it. Spend a weekend at a farm, or camping. Go somewhere where all shopping is far way, inconvenient and the internet is not available. Live out in the country, not the suburbs, way out there. You know the kind of place, the one where when you name the town, everyone looks at you funny ’cause they have no idea where it is. Give it a try for a week or just a weekend, give your wallet a holiday this Fourth of July.

Photo by telethon via Flickr


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Being Frugal and The Path of Least Resistance

Posted by IT Pilgrim on June 10, 2008

I completely get the idea of being frugal. I hate working tons of hours, don’t we all? I understand that every dollar I spend is one more I have to earn, but I just want to know, why does it have to be so hard?

Its so much easier to pop by some fast food restaurant (if you want to call it that) and just get something handed to you. I know that the food is less healthful, and that I waste gas idling in the drive-thru line. I also know that getting myself a healthy, and cheaper meal is so much more work. To get that same hamburger and fires, I have to go to the grocery store, bring food home, unload the car, put it away, get it out again, cook it, and pack it for a lunch or whatever. We’re talking something like 2-3 hours, more if I had to shop on a weekend. I propose that this is the reason that Americans have a problem with our weight.

As Americans, we tend to prefer the path of least resistance, so you tell me, which is it? Perhaps your grocery shopping experience is different than mine, but here’s how mine goes; one hour or more trying to find my way around a gigantic store, constantly bumping into equally tired and confused people, someone’s screaming kids adding to my traffic headache, then standing in a line long enough that I should get paid to stand in it, so I can give my money to an equally stressed and crabby employee? Does this seem like the path of least resistance?

Contrast this trip to pleasantville with cruising up to a building, sitting in my car, listening to my music, and waiting to tell am electronic screen what I want. I then drive some more and pay an employee, whom I only have to see for 30 seconds or so which we both appreciate, I move forward some more, they hand me food in a bag and I drive away. Given this path, who in their right mind would choose the grocery store?

I appreciate that the fast food industry is banking on this, and that they have anything but our best interests in mind. I fully recognize and accept that the food is barely worth calling food and will probably kill us all much faster than anything else. That being said, I also see why we should cook for ourselves at home for many reasons, health, frugality, family bonding, etc. I just know that someone out there has figured this out, surely there must be an easier way to be good. Oh well, back to the drive-thru for me, at least until I get enough sleep to deal with shopping.

Posted in Finance, Frugal Living | Tagged: , | 2 Comments »

Credit Cards, The Root Of All Evil?

Posted by IT Pilgrim on June 5, 2008

Are credit card companies really the root of all evil. These days it seems popular to believe that banks and credit card companies have cause all of our problems. I am including the sub-prime mortgage mess, and the more recently decried credit crisis. Well, I am going to go out on a limb here and voice what will probably be an unpopular opinion here. We have don this to ourselves. That’s right, I am claiming responsibility for my own mistakes. Do I have a home that’s now upside down and un-sellable, yes. Do I have credit card debt, yes. And its all my fault.

We, as the American public have caused ourselves this problem by not taking responsibility for our words and actions. Is this insensitive of me, I would say probably, yes it is. Its time to draw that line in the sand and step over it. By we, I mean as individuals and as corporations, all of us. We buy things on credit that we cant afford, we buy bigger houses in nicer neighborhoods that we cant afford, and the list goes on and on. Rather that waiting for someone to save us, I believe its time to make a stand and start digging ourselves out. All I can hope for is that at least one person hears my rally cry. So where do we start?

Step One: Take Inventory
Its time to take an inventory of your life. Walk around, write down everything you have and everything you owe. I personally like to separate the things I have into two categories: need, and don’t use. Have some extra clothes laying around? Toys, Dvds, etc? Sell them on Ebay, have a garage sale, just get rid of it before you change your mind. Have a gym membership that you don’t use? Get rid of that too. Stop eating out, even if you have to eat cup of noodles every day for a year, its still cheaper than eating out. Stop paying for and get rid of everything humanly possible.

Step Two: Start Digging
Now that you know what you have and what you need, its time to get to work. This is where the expression, no free lunch comes in. Can you get overtime at work? Do it, work overtime until your hands and eyes fall off. 70-80 hours a week, its totally do-able. One word of caution however, try not to work more than 100 hours in a single week. I have found that somewhere after that point you get tired enough to start hallucinating, I do not recommend it. If you cant get overtime, than get a second job, even if its at a burger joint, or greeting people at the local superstore. Work night, work weekends, work lunch hours if you have to. If you’ve read The Millionaire Next Door, you’ll remember that many of them sited working weekends as their big break.

Step Three: Pay It All Back
Making a little extra money now? Good, its time to start filling in that hole you dug. Even if it seems insignificant, $5 or $10 can make a difference. The usual personal finance wisdom is to pay down the smallest debt, or the one with the highest interest rate. I found however, that sometimes, at least to start with, it helps the most to pay off the debt that you hate the most. Whatever that may be for you, be it the credit card, the mortgage, whatever, just pick one. Use every dime of your extra income towards it and make that sore spot go away.

Step Four: Install Some Insulation
Debt paid off now, or at least have your head above water? Beautiful, now its not quite time to quit that second job yet. Now its time to start taking some of that extra income and stashing it (preferably in something bank-like and not in the mattress). That way, when your radiator blows from working so many hours, or your car has trouble you have a little something to absorb the fall. Even if you only stash $25 a month, its more than you had before and a good start.

Step Five: Keep it Small
Now, at this point, hopefully you have made that hateful debt go away and have built yourself a nice little emergency fund. At this point, if you really want, you could probably quit that extra job, but you might want to consider one more little emergency fund. I like to call this, my “take this job and shove it,” fund. That way, if I decide I hate my job too much to come in on Monday, I don’t have to. I would recommend somewhere between two to six months salary, depending on how much you make. The higher paid you are, the harder it may be to find a job, so you will need more.

So, where am I you might ask. In the interest of full disclosure, I am hovering somewhere in step 4. I work two jobs, and take on any little extra way to make money I can find. I have one credit card left, (the one I hated the least), and I am rapidly catching up to that despicable mortgage. I expect them both to go away by the end of this year. I have had a few brain melts and haven’t taken more than 3 days off in near on 4 or 5 years as I am saving that as my reward. I tell you that, just so you can see that it can be done. Statistically, we are one of the hardest working nations in the world, hours-wise, its time to have something to show for it. Anyone with me?

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Hypermiling and Investing Are Kissing Cousins

Posted by IT Pilgrim on June 5, 2008

I know the title is a bit much, but once it popped in my head I couldn’t resist it. If you take a moment, its pretty plain that the similarities are there for all to see. So here’s the gist of how they are so closely related; they are both dependent on planning.

In hypermiling you are forced to plan ahead and continually revise your plan to match road conditions. That car in front of you decides that it needs to cut off the car to his left, well, you revise. Maybe you planned on having 100 feet there, but now you have 20. You have two choices, change your plan, or run into that car (maybe he deserves it).

How is this like investing? Investing is really a lot like highway driving, or really, like tollway driving since you paid to be there. Like the tollway, you don’t have to go there, but you do either for convenience or to try to get ahead. Either way, here you are, you hopefully have some gas in your tank, and at the very least, a destination. Wouldn’t it be better if you had a route you wanted to take? Suppose you have your route defined, well what if there is construction along the way, or an accident?

Let’s jump back to your investments for a minute. Wouldn’t you be better able to achieve your goals if you had a defined plan? What if your investment strategies ran into some construction, we’ll just call it a recession? Or how about an accident, for example Enron was in your portfolio.

So here’s where investing and hypermiling intersect. They both require a well thought out plan that you will be required to revise on a regular basis. There will be bumps in the road that you will have to weather, just as your portfolio will go up and down. It takes a certain steadfastness to coast to a red light when the guy behind you is honking and weaving, just as it does to not jump out of the stock market the minute it takes a dip. In both realms, you will make bad decisions, and you will have to deal with the consequences of your actions. In the end, its really a matter of planning, patience, and most of all courage. Do you have what it takes?

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Investing and Conventional Wisdom

Posted by IT Pilgrim on May 30, 2008

Seems like everyone these days is giving investing advice. Mainly, there seems to be two or three schools of thought:

  • The Inexpensive Index Fund
  • The Mutual Fund
  • The Stock Pickers

I title these because I see them as classifications. Over time, I have begun to see how neatly these classifications seem to line up with personality types. What I wonder is, how much crossover is there? Does everyone really follow their own advice?

Posted in Finance, Investing | Tagged: , | 2 Comments »