Zero Spending Experiment- Week One

March 21, 2009 1 Comment

How hard can it be to go 30 days without spending any money on unnecessary things?  A simple concept that isn’t so simple in reality.

"Time..." by (Erik) @ FlickrIt hadn’t been 24 hours before I was faced with my very first challenge: friends.  If I didn’t have them, this experiment probably wouldn’t be such a challenge.  Fortunately my life is blessed with good people who want to share their lives with me.  The good news was that the event which I was invited was absolutely free.  The bad news is that no night out with friends is “complete” without dinner. 

I pondered to myself how I could rationalize the expense,  “I have to eat.”  I contemplated ways which I could circumvent my own restrictions,  “What if I used a gift card?”  I could chose to turn my friend down and not attend, however, I would not want to sacrifice relationships with my friends in order to save a couple of dollars.  The solution was to live my life as I would have, but to be conservative in my spending.

A couple of smart-ass remarks were made when I ordered onion soup and a salad with a water at a steakhouse, but was all in good humor.  I must say that I did find it a bit difficult to resist ordering the best steak on the menu, but found sweet irony when much of the menu was unavailable to my friends due to the busy day at the restaraunt.  Total spent was a touch over $10.  I was off to a pretty bad start on my Zero Budget Experiment.

The rest of the week has went fairly well, with only a couple of minor spending infractions.  The day after purchasing my bike I went on a 20 mile ride with my friend.  I took water and a banana with me, but by the time we had finished I was about ready for some protein and sugar.  We stopped at a convenience store and grabbed a beef jerky and a Kiwi-Strawberry Snapple.  I could have easily gone without making this purchase, but desire had set in and I was unable to resist.  My other infraction was on another bike ride when I didn’t bring any water with me and stopped at another store to puchase a bottle of water.

I have had some success despite my failings.  I haven’t spent any money at work on water, juice, milk or any other vending machine garbage like I usually do.  I have been re-using my water bottle everyday and fill it up for free at the water fountain.  The flavor of the water is terrible but I’m hoping that I can adjust.  My tastebuds just aren’t that into chlorine.

This week’s most important lesson is that an ounce of preparation can save a pound of money.  Even though I spent money unexpectedly while out on bike rides, I have done a great job of saving money at work.  I spent less than $5 while on the bike rides, but have saved approximately $5 a day by staying away from the vending machines.

I know that more challenges lie ahead in the 20+ days I have left of this experiment, and I’m sure they will happen when I least expect them.  In order to prevent any spending in the next week I will take what I learned this week and apply those lessons to the situations I will be faced with in the future.

Read the results of Week Two, Week Three and A Month in Review.

Filed under Experiments, Spending

Goal Update March 20, 2009

March 20, 2009 Leave a comment

Next week is Spring Break which officially marks the half-way point of the semester.  Mid-term grades have been posted and so far everything is going very well.  My main concern is with passing Algebra and though some of the material so far has been challenging I am currently earning an A-.  If I continue to work hard I know that no matter how difficult the curriculum becomes I can learn the material and pass this class without any problem.  I will earn my Associate Degree in 2 more months.  My girlfriend is already arranging a graduation party, so I would feel rather silly having a graduation party without graduating.

I emailed the Wisconsin Department of Transportation to inquire about the status of my application for the Adopt-a-Highway program and was delighted with the response I recieved.  I will be getting my highway!  I’m not exactly sure which section yet, but no matter where it is I am excited to be nearing completion of this goal.  I’m not going to mark it as an accomplishment until my sign is in the ground and I am able to build a “road crew” to help me get the job done.  I am supposed to be recieving more information in the mail in about a month.

I took advantage of a great sale in order to complete my goal of purchasing a bike.  I have wanted a bike for a long time so it is nice to finally have one.  I am experiencing some “technical issues” with it and as a result will have to take it in for adjustments and repairs this weekend.  It is somewhat disappointing that I need to do this, but I’m sure that once the bugs are worked out that it will be something which I find myself utilizing frequently for daily needs as well as for recreation.  I’ve already put on nearly 50 miles in 2 days of riding.

My exercise routine has been suffering lately as I’ve not stuck to my schedule.  “Life” seems to be taking over and my time at the gym is getting overshadowed.  I have been trying to make up for it as best as possible by taking bike rides, so I have not stopped exercising entirely.  I have just been doing it in a different way as of late.  This is fine, so long as I still get out and exercise 3 days a week.  It doesn’t really matter if I am in the gym on the eliptical or out on a bike ride.  As a matter of fact, I think I’m working harder on the bike than in the gym.

I have managed to eat healthier by preparing meals at home instead of buying fast food.  I did eat at Culver’s one day about 2 weeks ago and it was just okay.  Usually I love to eat there, but I wasn’t impressed.  Maybe my taste buds are adjusting back to home cooking rather than greasy, salty and just plain unhealthy foods.  I still think that a person can eat junk food once in a while and still be healthy but eating it everyday like I was is not good at all.

Kayaking class is coming up.  I’m looking forward to that.  A friend of mine and his wife also signed up to take the class so it will be fun having someone we know along for the experience.  Hopefully it will be a good class and I learn a lot.

That about covers it.  Things around here have settled down and it seems like I am riding on a flat plane, not much going on but still making progress towards some of my goals.  I hope that this summer will allow for some great opportunities to accomplish some of my more “outlandish” goals, like whitewater rafting in the Grand Canyon.  The plane tickets are already paid for!

Filed under Goal Updates

Importance of an Opportunity Fund

March 19, 2009 Leave a comment

"Sunbeams" by aremac @ FlickrI spend a lot of time discussing the importance of having an emergency fund.  The Golden Rule is that you should have at least 3 months of living expenses saved for a rainy day.  You never know when you may need it; your car explodes, you lose your job or any other sort of unexpected, unplanned for situation which may occur.

An opportunity fund is similar to an emergency fund in that you are preparing for the unexpected however, instead of saving in preparation of all of the negative things that you may encounter, an opportunity fund prepares you for all of the positive things which may present themselves.

Have you ever been presented with a great opportunity but weren’t able to capitalize on it because you didn’t have any spare money available at that moment?  Sometimes opportunity comes knocking so it is best to be ready for it.

Unlike an emergency fund where it is recommended that a person have at least 3 months of living expenses saved, putting a number on an opportunity fund is a little more difficult.  It is important that a person know what their goals are and prepare accordingly.  Whatever your goals, figure out what they will cost and begin stashing away some spare money into your Opportunity Fund.  As you save, you may find something which is better than what you had in mind.  Giving yourself a cushion of “just in case” money allows for greater flexibility and gives you options.

I took advantage of my opportunity fund when I purchased a new bike the other day.  I allowed myself to use the money which I had saved up to capitalize on a good deal.  Had I not had this money saved, one of two things would happened.  The first is that I would have had to pass up the opportunity of getting a bike at a good price.  In the case of buying material possessions having to pass on making a purchase probably isn’t such a big deal, but having to pass on something like a friend inviting you on a trip to China for a couple of weeks…that is a great opportunity, and something that would be difficult to miss out on.

The other option I would have had is that could have used my credit card.  Using plastic is so common that most people wouldn’t even think twice about whipping out their card.  They would continue to make the minimum monthly payment until they die while the real cost of what they had purchased would never even be so much as a passing thought.  Using a credit card to pay for something I can’t afford has become something which I will no longer do to myself.  Just thinking about going into credit card debt again makes me sick to my stomach.

Having an emergency fund is one the first stepping stone towards creating financial security.  An opportunity fund is something of a cushion to prevent you from tapping into your emergency fund in case you find yourself in an “emergency”.  Sometimes we struggle with defining what an emergency fund should be used for.  Buying a bike because it is deeply discounted is probably not an emergency, but it is a good opportunity!

Filed under Money, Opportunity

Spending Leads to Spending

March 18, 2009 Leave a comment

"TOOL" by somewhereinAK @ FlickrA couple of weeks after my girlfriend and I went shopping for a new bed, our furniture finally arrived. It was a very exciting moment which I didn’t have the chance to enjoy because I was rushing out the door to get to class.

When I got home our new bed was set up in the bedroom and everything seemed perfect.  Since we were in the market for a new mattress, we took advantage of a promotion in order to get the best deal.  If the purchase exceeded a certain dollar amount they would throw in a flat-screen television for free.  We weren’t in need of a replacement television, however, we did need a new bed so we decided that it would be a good opportunity to get something we needed and something we wanted.

What does all of this have to do with spending leading to more spending? 

Before we had even left the store we “needed” a bracket to mount the TV on the wall. One would think a piece of metal would be rather inexpensive; not so. That bracket cost over $100.  Ouch!!!

I figured that would be the end of the spending, but when the bed and TV arrived we now needed new sheets because this bed was larger than our old one. Off to the store I went.  I was able to find some sheets on clearance and was able to get them rather cheap.  They were even the color that my girlfriend had wanted.

The next issue was the television.  I didn’t have the proper tools to mount the bracket to the wall.  Now a stud sensor and a level were on my list; another $25.  Had we not purchased a new bed or TV, not only would we have been able to save a significant portion of money on the initial purchase, but we would not have had a need to purchase sheets, the bracket or the tools to mount it, saving an additional $125.

I am now running into spending leading to more spending with the purchase of my new bike.  I have a list of things that I could really use if I am going to pursue my new found passion for biking.  Some things are practically necessities like a helmet and headlight & tail light, but others are completely unnecessary like a speedometer and water bottle holder.

I now realize how I found myself in a pattern of spending and buying more and more.  After eliminating my credit card debt and dramatically reducing my spending, I am able to see this pattern, which I wasn’t able to see while I was caught in the habit of spending. 

It is so easy to find something else that is suddenly needed once you purchase something new.  If you buy a gaming system you need games.  Maybe those games require a special type of controller (Guitar Hero, anyone?).  The same concept can be applied to nearly any purchase a person makes.  You buy a new pair of jeans and suddenly a new shirt and some shoes would look so cute with them.

Being aware that spending leads to spending is an important step in overcoming impulsive spending.  Planning your purchases in advance will help you know what you will need as a result of having a new item in your life.  You can plan accordingly and not get blindsided by the cost of “the extras” you forgot to consider.

Filed under Life, Spending

Goal #47) Buy a Bike

March 17, 2009 1 Comment

"The old bicycle and the field of wheat" by Bern@t @ FlickrFor over a year I’ve wanted to buy a bike.  Last summer I spent a fair amount of time researching different types of bikes trying to decide which model would be best for my needs.  I decided that a road bike would be ideal for my future goals as well as my short term needs as  I have been looking for something that I would be able to ride long distances in a short amount of time.

I continued to put off making my purchase because the cost of the bikes I was interested in were out of my desired price range.  I wasn’t interested in spending over $1,000 on a bike so I waited.  Then I waited some more.  Before I knew it, summer was over and I still didn’t have a bicycle.

As winter approached my goal of purchasing a bike lost importance and soon I lost interest in buying a bike.  Afterall, it was winter and I wouldn’t be able to use it until Spring.  Like all seasons, winter came and now is nearly a memory and my desire to purchase a bike returned.

On Saturday I went to a bicycle sale to see what sort of deals they were offering.  If I was able to find what I wanted at a fair price I would buy my bike.  After looking around I found the same type of bike which I was looking at the summer before.  It was no longer priced over $1,000 and was marked down significantly.  I took it for a test ride and was very satisfied with the quality of the ride. 

I spent some time considering the purchase and how it would affect my financial situation.  I had the money saved so I wouldn’t need to place the purchase on my credit card.  I have some money saved in an Emergency Fund so I wouldn’t be placing myself in a vulnerable situation if something bad happened.  Then I considered whether or not a bike was something which I needed, which it wasn’t.  It was something I wanted but did not need.  I also considered how the purchase would change my life.  If I bought a bike I wouldn’t need to use my car as often.  Riding a bike is a good way to get exercise.  It is also a good way to spend time with friends.

I decided that I should purchase the bike.  It was somewhat difficult knowing that this money wouldn’t be in my bank account anymore, but was a trade I was willing to make.  Knowing that I wouldn’t need to go into debt and that I had the money to pay for the purchase up front made the choice a little bit easier.  I will be able to rebuild my savings in a short amount of time and I will now have a bicycle in order to begin preparing for my goal of bicycling the west coast. 

It would be difficult to accomplish that goal without a bike.

Filed under Accomplishments, Goal Updates

Nothing Like Home Cooking

March 16, 2009 Leave a comment

When I go out to eat at a Chinese restaraunt I almost always find myself ordering General Tso’s Chicken.  The first time I ever had it was on my trip to Washington, DC.  My friend and I stopped by Chinatown for dinner one night and it was him who introduced me to this wonderful cuisine.  As part of my experiment to reduce unnecessary spending I decided to prepare this dish at home. 

"What's Cooking Honey?" by DieterThePhotographer @ FlickrThe first thing I would need was a good recipe.  I Googled General Tso’s Chicken and 143,000 search results came back.  I clicked on one of them and wrote up a list of the ingredients I would need.  After a trip to the grocery store I was ready to cook.  If you’ve never cooked with cornstarch (I hadn’t until this point), it is a miracle of nature.  It seems like it should be something out of a science fiction movie and not something that goes into your body.

Step by step I followed the instructions of the recipe until I had something on my plate that looked and smelled like General Tso’s Chicken.  I took a bite and…

…I wasn’t happy. 

It hadn’t turned out anything like I had expected or hoped.  I am not sure where I went wrong, or even if I had but what I ended up with, despite appearances, was not what I had in mind.  The problem may have been in the recipe or my inexperience in cooking this type of food.  It may have been the ingredients I used; instead of fresh spices I used powdered.  My girlfriend tried a couple of bites, and though not a fan of General Tso’s Chicken in general, she didn’t seem to mind the flavor.

Whatever the reason, it wouldn’t be getting eaten by me.  Suddenly the thought of having someone else cooking and cleaning seemed a much better alternative to having spent $12.50 on groceries and wasting the food.  Not only would it have saved me the time and energy, but I would have recieved a superior product at a lower cost.

What was I able to take away from this situation? 

Trying to do things for yourself is always important.  Had this meal actually turned out how I had hoped, I would have had another meal that I could prepare for myself at home.  The more things you do on your own the more independent you become.  You don’t need to rely on other people as much to help you.  Becoming independent empowers a person to achieve more, and the more they achieve the more desire they have to continually improve.  For some, cooking may be the first step of their journey towards independence.

I also learned that there are times when doing it yourself isn’t the best option.  In this case, I would have been better having someone else make the food for me.  That doesn’t mean that I should just stop trying new things, or even that I should never attempt to prepare this dish again in the future.  It just means that there are times when having someone who knows what they are doing is a better alternative than doing it yourself.  Cooking food may not be the best example, but what about operating on your Uncle Tom?  It may be best to leave that to the professionals.

Keep on cooking!

 

Filed under Failure, Food

Using a Credit Card Wisely

March 15, 2009 Leave a comment

At the end of February I accomplished my number one goal of eliminating my credit card debt.  I was faced with the decision of whether or not to close the account and I decided to keep it open in case of an emergency.  It has been about 2 weeks since I have paid the card off and now I am faced with yet another question: Should I continue to use the card if I am able to pay the balance at the end of each month?

"Shovel in the Garden" by Christopher Peterson @ FlickrMy first instinct is to say “no”.  I worked hard to eliminate my consumer debt from my life, why on Earth would I want to start digging that hole again?  After considering the answer to this question it brought about some other points which should be considered as well.

Convenience- Many people feel uncomfortable carrying around cash.  I’m no different.  I have a tendency to misplace my wallet often and when I have any amount of cash tucked away inside it causes a certain level of panic.  I am not able to get that money back if my wallet is actually lost.  It would be gone with the wind.  Credit and debit cards offer protection against theft or loss which provides the carrier with a sense of security and assurance.  You are able to call your credit card company or bank and freeze the account so that no unauthorized transaction are posted to your account.

Rewards- My credit card earns cash back on each purchase I make.  The rewards aren’t much, but over time can add up.  It may take spending $10,000 to get a $100 check, but if I am going to spend the money anyways, shouldn’t I be getting something out of it?  People will argue that getting 1% cash back on purchases doesn’t make sense when statistics prove that purchases made on credit cards are generally 30% higher than if the person had paid with cash instead.  They are right, it wouldn’t make any sense, but if the card is used for fixed bills or other bills that don’t involve shopping, such as the mechanic bill for repairing your car, in my opinion that argument is no longer valid.

Account Activity- Credit card companies have been on a rampage lately, closing inactive accounts and raising interest rates on the accounts that aren’t generating money in hopes that the customer will close their account.  Why would card companies do such a thing?  Its pretty smart actually.  You aren’t earning them any money and are costing them money from having to maintain your account.  You are no longer an asset but a liability, and that means you get the axe.  If my account does not get used it will end up being closed.  This is my only credit card and having access to a line of credit, for the time being, is important in case I find myself in a situation which I actually need the money.

It is true that I worked hard to get myself out of debt and it would be foolish to put myself into the same situation I just fought so hard to beat.  I do feel that the responsibility for my situation lies directly at my own feet, not the credit card company.  If I was responsible for the bad situation, then that means I am also responsible for the good situation which I could provide for myself by using my credit card responsibly.  If I am to fall back into the same pattern as before then it will have been no one’s fault but my own.

I have come to the conclusion that using the card in some instances makes more sense than using cash.  I have decided that before I make any purchase or payment that I have money in the bank to cover what I am spending.  I do not think that credit card companies are evil, they may be sneaky and underhanded, but that only means that we as consumers need to be smarter to win at their game.  Dave Ramsey says that “if you play with snakes you’ll get bitten”.  He is right most of the time, but what about the snake charmers in India?

 

Filed under Credit Cards, Debt

Links To Make You Think- Wishing for Spring Edition

March 14, 2009 Leave a comment

Last week the thermometer pushed into the 40s but this week we were blasted with bitterly cold air that left me wondering what had happened.  Spring Break is on the horizon and a much needed break from academics is almost here.  Warmer weather is just around the corner and offers a beacon of hope for better days.  Today I present you with some “Links That Make You Think”.  They are some of the more interesting and relevent things I’ve come across on the Internet lately:

While traveling this past summer I noticed some very thought provoking images scattered around some of the airports depicting statistics in an entirely different way.

Jennifer at Broke-Ass Student writes about how we are Robbing Ourselves to Pay for Tomorrow through use of credit cards.  She outlines a way of building wealth over the long-term through consistent savings, frugality and goal definition.

A reader at The Simple Dollar asks about savings and what is right for him.  Trent’s response is right on target when he answers that it all depends on what your goals are.

JD at GetRichSlowly talks about his financial turnaround in an article called A Candle in the Dark.  His story is very similar to mine in many ways.  I look forward to continuing transforming my relationship with money and articles like these give me hope.

In a couple of weeks a global phenomenon called Earth Hour will take place.  While I feel that such an event is nothing more than a feel good gesture for those participating, it is a start.  Raising awareness is the first step, but we have a long way to come.

Filed under Link Collection

The $0 Spending Experiment

March 13, 2009 1 Comment

I recently attempted an experiment in order to see if it was possible to cook dinner for two adults for an entire work week on a budget of only $10.  You can read about the results of that experiment here.

"0" by fubuki @ FlickrFor my next experiment I am going to eliminate any unnecessary spending for 30 days.  I will continue to pay all my obligations such as rent and car payments, though I will be reducing spending as much as possible  in other areas such as groceries and gasoline.  All areas of spending which are optional will be eliminated completely.

There will be no dining out, no going to the movies or even renting movies.  We will have to find alternative sources of entertainment.  It is going to be challenging to change my lifestyle and spending habits.  I am aware that I have spending leaks which will be hard to stop.  I think this experiment will highlight exactly how much money slips through my fingers simply by habit.

What I am not willing to sacrifice in this time will be any pre-planned expenses such as car maintenance, opportunity expenses, hygiene products (deodorant, shampoo, toothpaste, etc), and any extra amount of money which can be applied towards debt repayment.

The experiment will begin today and last until April 8, 2009.  I will be making regular posts updating on the progress of this experiment.

Read the results of Week One, Week Two, Week Three and A Month in Review.

Filed under Environment, Spending

You Have One Month Left to Live

March 12, 2009 Leave a comment

"HDR - the empty bench" by emmedibi @ FlickrWe’ve all heard the question, “What would you do with your life if you were told that you only had one year left to live?”  How about one month, one week, one day or one hour? 

If I was sitting in the doctor’s office and he told me that I only had a certain amount of time left to live I’d probably cry.  A lot of the things that I want to do in my life are long term goals.  They are things which I would need to prepare myself in order to accomplish.  Knowing that I only have a short time left on Earth would eliminate many of those goals from my list.

“You Have One Year Left to Live”

After my initial emotional breakdown I imagine myself working to achieve as much as possible.  I would likely quit my job because I couldn’t see spending my last few precious moments on Earth working unless I was doing something which I absolutely love to do.

The first thing I would do is research my family history and learn more about my ancestry.  I do not know much about my lineage and that has always been something which I want to learn more about.  Once I have been able to determine where my family name comes from I would travel to that area in Norway.  Hopefully during my visit I would be able to connect with some people who share a common ancestor.

After finding my roots I would spend as much time as I could traveling and seeing the things that I’ve always wanted to see like the pyramids in Egypt, Stonehenge and The Great Wall.  I’d want all of my closest friends along with me during my travels.

“You Have One Month Left to Live”

Having one month left to live would put a sense of urgency in my travels.  I would choose one or two places that I absolutely would want to go.  It would be hard for me to choose only one or two places, but my dream vacation spot has always been Bora Bora in the French Polynesian Islands.  I would travel there with my girlfriend and share the last moments of my life with her in the most beautiful place on the planet.

“You Have One Week Left to Live”

If my time was limited to one week of life I would abandon all of my personal goals and instead focus my attention on being with loved ones.  I see myself spending quiet time just talking and enjoying the moment of having them in my life.  I would go out and have some fun, maybe going to a concert or something where we could get lost in the moment and enjoy our lives living in the here and now. 

“You Have One Day Left to Live”

If I had one day left to live I would spend that time with my girlfriend.  I see our time together being spent in the outdoors close to nature, away from everything and everyone.  This way we wouldn’t be distracted by the daily buzz of life as usual and could focus on one another entirely.

“You Have One Hour Left to Live”

One hour doesn’t allow much time to spend with people whom are important to me, so instead of trying to fit everyone into a last hour rush, I would write a letter to my loved ones detailing how important they are to me and how much happiness they brought to my life.  Doing this would allow me a chance to offer closure for the people close to me and also for myself, knowing that everyone in my life knows that I love them.

This activity is meant to show people what is important in their lives.  When you know what you value it is easier to focus your attention on working towards these goals.  For me, I am passionate about traveling.  My family and friends are the most important things in my life and while I have many goals, if I were given only a limited amount of time, family and friends would be priority over any personal goals I may have.

What would you do if you were told that you only had one month left to live?

Filed under Life, Prioritizing, Random Thoughts

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