Not Pulling the Punches

Perhaps it's because I was out drinking after work tonight that I'm in a feisty mood. But I've sort of had this half written for a while but tonight seemed like a good night to finish it.
Here are the reasons why you aren't getting ahead:

Troy By Jessica Joslin
Troy By Jessica Joslin (Animal Alchemy)

You lease an expensive car... Actually, you lease any car.
I personally don't know anyone that has leased a car in the past that thought it was a good idea. My only friends that have ever leased a car regretted that decision when their lease was over. I believe they compared it to having a permanent rental car. You are basically renting a car for 3 or 4 years at a time and you can't return it if you don't need it. And at the end of your lease you don't even have any equity in that car, you just give it back and hope you don't get charged for any dings or scratches.

You go to Starbucks regularly - It's even worse if you go multiple times per day
Look, if you need your coffee get your coffee. I know a few things about being tired and it sucks. But if you're a regular coffee drinker invest in a coffee machine and make your first cup of the day at home. I have a hard time justifying any drink that costs $5 and does not contain alcohol. And even with alcoholic drinks I still feel like most of that is paying for atmosphere, otherwise I'll be at home or a friends paying less than half the price at a bar.

You go out to dinner multiple times a week
There's nothing wrong with going out to dinner on occasion, special occasions need celebration. But when it become routine to pay for food and also pay to have someone prepare it for you while you just sit at a table and wait for it means you're just paying to sit on your ass to wait.

You drive long distances to work everyday
I used to commute about 90 miles round trip every day. The reason I did that was because I was too lazy and unmotivated to look for a new job closer to where I lived. I could have moved closer to work but I love San Francisco and the city that I worked in at the time was not a place I wanted to settle into. The change of cutting out my commute probably saved me $4000 per year. I know not everyone had as an extreme commute as me but the further you commute the more you are simply wasting your time and your money.

You pay for parking for work or at home (I live in San Francisco, this is actually extremely common here)
This one might be unique to San Francisco (or perhaps New York too). There's a lot of people here and not enough room for everyone to have a car. If you're wasting money on having a place for your vehicle to sit and do nothing then that's a cost you need to remove from your life. Hopefully you're not leasing your car that sits in your paid for parking spot.....

You pay too much for housing
I can honestly say that because my housing costs are significantly less than most peoples (having owned my house for almost 8 years now) this one factor could probably make up for me failing in every other category mentioned. Most people spend the largest portion of their income on the roof over their heads, so this is easily the place where we can make the biggest difference. I think a rule of thumb that most people say is to spend a third of your income on where you live. I think I've also heard 20% too, I think that if you're in the 20% crowd you are probably doing pretty well and in the minority. I personally know some people that spend about 40-50% of their income on housing which I think is insane. Luckily after years of home ownership the dividends are paying off, unlike renters who's housing costs typically rise, mine have been lowered. First because I was able to refinance at a cheaper rate, and secondly because I rent 2 rooms in my house. So the raise in rent makes my portion smaller. Right now I pay only about 15% of my income towards housing (pre-tax).

You regularly pay for convenience
Car over bus, take out versus cooking at home. Cheese is even marked up by about 30% just by being pre-shredded, and it doesn't even taste as good as a block of cheese that you grate on your own. I don't know how many times I've been with people that insist on taking a taxi to go 4 or 5 blocks (and in San Francisco the blocks are shorter than in other cities)

You buy things that you don't need and justify them as "needs"
How many apps have you bought for your phone? 7 years ago the first iPhone came out, before that your life was fine without any of those apps. You probably got by without the monthly data plan bill too. Some people may consider their smart phone necessary for their work, but for some reason I doubt your apps are needed. Or even just buying the latest and greatest new phone when it comes out, do you really need to upgrade your phone every time Apple releases something?

How to start getting ahead

To start actually pulling ahead of the average person you need to start implementing SOME of these things. Not all, but some of them and gradually. They say that it takes 30 days to create a habit so do 1 item every 30 days. After a year you'll be at Rockstar status!

I don't recommend you try all of these things at once. If you change to much to quickly you'll have a shock to the system and give up, but one at a time you will slowly start to adjust and adapt. I've said it before and I'll say it again, the great thing about being human is that we adjust to our surroundings. If you slowly but progressively change things you will adapt and adjust until it just feels normal.

Do you have any other habits that you think are holding you back? Do you have issues with any of the items mentioned, are they the slow leak in your finances?

10 comments:

  1. Hi Zee
    Maybe it's different in the UK, but leasing (with the option to purchase) is the way most people I know get their cars. I'm on my 4th car lease and at the end of each lease, I've always bought the car and kept it until things start going wrong and parts become too expensive. I then part-exchange for a new leased vehicle and so the cycle begins again. The key is to negotiate a deal whereby the repayments are affordable and to get a vehicle that is "fit for purpose", eg don't go for a big gas guzzling beast when what you really need/can only afford is a small economical city car!

    Where I've lived over the years, I've always needed a car for work, public transport is not an option, eg I could get the tram to work but I would still have to drive to the nearest tram stop and then find somewhere to park! Anyway, I have a year to go before the car loan is paid off and I can look forward to more money to invest.

    As for all the other categories, none of them apply to me so perhaps I'm already on the road to 'Rockstar' status! :-)

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    1. Hey Weenie,

      Yeah, I have no idea what leasing is like in other countries but you're not the only one to mention this. I've never leased a car but from all of my friends that have they wouldn't do it again. To them it really was just paying for a rental car that they couldn't return if they wanted to. There's nothing wrong with doing some of the things I mentioned in these. I mean, for me, I still need my caffeine fix in the mornings or I simply can't get through the day. But that doesn't mean you'll find me a Starbucks, I'll still find a cheaper way to get my morning pick ups.

      I think that as long as you avoid a lot of these things then you're on the right path! You can't do everything, but the closer you get the better off you will be.

      Maybe I should have put gambling on this list! Haha! :)

      When I look back at buying lotto tickets because I really hated work and having a ticket let me dream about quitting my job at the time I thought it was okay, but now I'm just wondering how much I really spent on nothing but daydreams... $800... I'm not sure but I think now I'd rather have the extra money! Thanks for the comment!

      -Zee

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  2. Hey Zee,

    I think that housing cost rule of thumb includes utilities and such, correct? If so with a maintenance allocation of $200 I am looking at like 19% of gross, so not too bad. Commuting is something that need to be addressed however, my commute isn't too far, but the wife has just under a 50 mile round trip. Maybe something to look at in the future, I think she is happy right now so I am not going to push it.

    Anyways these are all great points and things that people need to look at if they want to save money.

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    1. Kipp,

      It seems like usually people include utilities with their housing expenses, you sort of need both to make it work. But at the same time those rules of thumb vary from place to place so it's tough to get a good gauge on what it really should be.

      If you're spending less than 20% of your income on housing then I think you're looking really good. But then again, being that I live in San Francisco, I know my perception of housing is a lot different. People regularly spend 35-40% of their income just on where they put their stuff.

      Commuting for work is a tough one. Work is just one of those necessary evils and sometimes where you work and where you want to live just don't mix. If that's one of your only excessive spending areas then you're probably in pretty good shape. I actually miss the part of my commute where I would listen to talk radio for the business and finance updates. I learned a lot in my car and was very aware of how the market looked like it was progressing. That's about one of the only things I actually miss from those days. Hopefully your wife can do something productive during her commute, I used to listen to books on tape too so there's ways to make that time more useful if you have to do it.

      -Zee

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  3. "I have a hard time justifying any drink that costs $5 and does not contain alcohol."

    Ha, my kind of guy! :)

    Seriously though, great write-up of things most people do, then complain they don't have any money left to save at the end of the month.

    Just like weenie, I'm not sure leasing a car works the same around here. A lot of people do it through the company they work for and because of tax advantages it's apparently a really good deal. Again, not sure, I've never owned a car.

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    1. No More Waffles,

      I know people that talk about how they don't have money to save yet they go out for meals 4 or 5 nights a week and take weekend getaways every other weekend. It's obvious to me that saving isn't their priority which is fine, but they shouldn't complain about not having the money to save if they are spending it freely.

      As for alcoholic drinks... there's nothing that says you can't put alcohol in your coffee is there... Well, I guess the terms of my employment probably state somewhere that I can't drink at work.. Wait.. maybe it doesn't since on Friday they hand out beer at 3pm... Maybe I should look into this.

      I'm more and more curious about the differences in leasing a car in other countries now... wait, scratch that, I'm not really THAT interested.... But it's good to know that perhaps not everywhere the car leasing system isn't stacked against the customer.

      -Zee

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  4. My grandfather used to lease a car and for him it made sense..I guess. Honestly I always thought it was a dumb thing too. I also agree with the Starbucks comment and when it is the one place I can go, I have figured out a way to get basically the same drink that cost $4 for $1.69! A few other things I would put on this list would be : If you buy something you don't use, return it. Don't buy things just because they are "on sale" (like how many freak'n boxes of Cheerios does one person need at a time?) Do file a complaint if something wasn't right-legitimately wasn't right. My family has a tendency to give in to things because they don't want the headache, but they don't have the money either! I just saved them $500 2 weeks ago because I got on the phone with a company and had a talk with them. Oh and here's a big one, don't just pay medical bills! These can actually be negotiated up to 40% off the price of the bill. Yes some people will say, "my time is worth more than money", but then I ask, how much? The call to save my family took a total of about an hour out of my time. If someone offered me $500 for an hour, you bet your ass I'd take it!

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    1. First, I'm glad that someone here is feeling me on the whole leasing a car thing :)

      Those are excellent points that I completely agree with. When I first started working my first "real" jobs I had to buy some work clothes, this led me to Macy's where I picked up dress shirts and slacks, but somehow I got on their mailing list and it seemed like every month I would get a coupon in the mail for 50% off, so I would keep going back... it was a vicious cycle cause I thought it was a deal but I didn't really need it.

      My roommate buys a lot of stuff on sale because it's on sale. One time he came back from the grocery store with 11 cans of green beans because it was a sale he couldn't pass up. 6 months later he tried to return them to the grocery store because he knew he was never going to eat them. I swear he throws out about 40% of the food he buys because he buys it just because it's on sale.

      I need to work more at complaining if things aren't wrong. I'm the kind of person that doesn't really want to "rock the boat" so this is hard for me. I can tell I'm getting better at it but it's still not easy.

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  5. It's worth it if you are comfortable writing, which I see here you are. For example, I just wrote to an airlines because of their screw up, I was forced to stay overnight somewhere and leave for home the next morning. I thought it was pretty messed up that they give people who voluntarily stay $500 credit plus the price of their flight, but us suckers get a hotel room and a late arrival home. It took me about 15 minutes to write a complaint + 10 to fill out the stupid form and received a total of $100 in gift cards (I picked Amazon). So really in under 30 minutes I made $100. Not too shabby. This has always been my style though. I have gotten coupons for free things, money back, etc. One of my "favorites" is a bottle of beer came with no beer in it and I received a hat and a bottle opener from Samuel Adams. Oh joy! It's worth complaining about sometimes. Oh and your roommate sounds like a tool.

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    1. Actually I have no issues complaining when it's smaller things, I have definitely called up an airline to complain about sitting on a plane for 2.5 hours before we took off. It's usually the smaller things though, I'm not sure if I would have complained about the bottle of beer since the monetary value might not be worth my time. Though that is a pretty funny one that I'm not surprised they did something about that. I'm surprised you didn't actually get a beer from them though since that's what you didn't get with the empty.

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