Tuesday, June 19, 2018

Your Car Probably Doesn’t Need as Much Maintenance as You Think

Your car definitely needs maintenance — but it doesn’t need as much of it as you’re being told it does.

I didn’t used to think about routine maintenance a whole lot. For most of my driving life, I drove older, second- to third-hand vehicles and did maintenance myself when I could. My rule of thumb involved changing the oil and oil filter every 5,000 miles, replacing the air filter as soon as I bought the car, replacing fluids, and bringing it into the shop when there was a strange sound or light.

I learned what a dying universal joint sounded like, what a bear head gaskets were to replace, and how many $100 to $500 problems would eventually kill a car’s value. It wasn’t until I began leasing vehicles that I learned about actual routine maintenance and how to ward off some of those costlier issues before they cropped up.

I currently lease a 2017 Subaru Forester and adhere to a fairly straightforward maintenance schedule. Subaru requires a check-in every six months or 6,000 miles. It’s supposed to be whichever comes first, but I work from home and really only use the vehicle for store runs and longer trips. My annual mileage allotment is 10,000 miles a year (which cuts the cost of both my monthly payment and car insurance premiums, but that’s another story), but I’ve only driven about 7,500 in my first 14 months of ownership.

While I think of that 6,000-mile checkup and oil change as generous — and my lease agreement and warranty offer some leeway on it — it turns out that such a stringent schedule may be unnecessary for the average driver. Though the folks at AAA advise following your vehicle’s factory-recommended maintenance schedule, they acknowledge that there’s wiggle room.

AAA notes that, for low-mileage drivers, most automakers recommend an oil change every 12 months (or basically half as many as my maintenance schedule recommends). Modern lubricants can extend the time between oil changes to up to 7,500 miles, while vehicles that use full synthetic motor oils may not need an oil change for 15,000 miles. Over the course of a two-year, 24,000-mile lease, that’s all of one oil change.

Consumer Reports puts that oil-change figure at 5,000 to 10,000 miles, but also recommends following the service indicator on newer dashboard displays for a better indication of when you need maintenance.

Also, as it turns out, you should just about never need to use nitrogen in your tires (at an extra $5 per tire) or flush your transmission fluid (most manufacturers now use 100,000-mile or “lifetime” fluid). Meanwhile, modern coolant and antifreeze is also meant to last for the life of the car and save you about $50 to $100 in changes, according to Consumer Reports.

Automotive pricing and analysis site Edmunds.com, meanwhile, points out something that becomes all too clear to most car owners after a visit or two: Dealership service departments and chain oil-change shops value their bottom line over the needs of your car. Considering the recommended mileage on most of the more modern vehicle maintenance guides listed in Edmunds’ database, may vehicle owners could get away with roughly half of the maintenance visits that chains like Jiffy Lube emphatically suggest (though don’t mandate anymore).

Insurance companies and even some dealerships suggest that you shouldn’t have to take a vehicle in for more than a routine oil change or tire rotation every 15,000 miles or so — though the items you’ll be taking them in for change with age. However, as J.D. Power points out, those who use their cars far more roughly under adverse conditions will have to give their vehicles a little more attention. That makes pre-paying for a dealership maintenance plan a dicey proposition.

While those up-front maintenance plans promise to lock in pricing over the life of the plan and are convenient for folks, they also don’t cover “wear-and-tear” items like brakes and wipers. Not only that, but Edmunds points out that they make a whole lot of money for dealerships by scheduling more service than is needed and charging more than the average cost of service.

So what should be a vehicle owner’s more realistic rule of thumb? Consult your maintenance manual, determine just how much you use your car, and follow the manual’s recommendations. Even if you lease a vehicle, the folks backing your lease just want to see that you’re following the manufacturer’s maintenance guidelines. In the meantime, you can check your tire pressure and tread, fluid levels, oil, timing and serpentine belts (40,000 to 60,000 miles), wipers, and air filters on your own without expending much energy doing so.

The good news about automobile maintenance is that improved technology has made it a whole lot less necessary than it once was. The bad news? Even if you’re doing much of it yourself, someone is always going to try to talk you into paying for more of it than you need.

Open the glove box, crack the owner’s manual to the maintenance section, and save yourself some money and aggravation.

Related Articles:

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Monday, June 18, 2018

Questions About CSAs, Tires, 401(k)s, Allowances, and More!

SUBTITLE – Reader Mailbag

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. What to unplug while traveling
2. CSA plan worth it?
3. Struggling in expensive metro
4. Moving emergency fund into stocks
5. Should I touch my 401(k)?
6. Allowance update
7. Tire buying strategy
8. What blender should I buy?
9. Beans and illness
10. Transitioning to self employment
11. Heat pump question
12. Frugal sailing?

In the last few years, we’ve been sending our children to different weeklong summer camps. We’ve let them be involved in choosing which camps they attend and have sought out ones that cater well to their interests.

The first year, only our oldest child went to camp. His fun was somewhat soured by homesickness and I think he found the camp experience overwhelming.

The second year, both he and his sister went to camp. They chose to go to the same camp and my oldest sibling spent a lot of time talking to his younger sister about his experience, in both conversations overheard and unheard by the parents. That year was a smashing success – our oldest thoroughly enjoyed himself, while our middle child experienced a small amount of homesickness that she got over due to a couple of quick visits with her brother.

This year, they were both so excited to go to camp that it felt like we were looking at brochures for months. Their youngest sibling was also swept up in the summer camp idea, so he’s attending a smaller partial week camp – he’s younger than his siblings were when they first went.

As I write this, the two older ones are both away at camp, leaving us at home with just Sarah and our youngest child and I. The house is quiet. I sometimes view these moments, when some or all of our children are away, as a preview of what our house will sound like when they grow older. I will miss their sounds.

On with the questions.

Q1: What to unplug while traveling

We are going on an eleven day family vacation. What devices should we unplug before leaving to save energy?
– Andrew

The main electrical draws that you might actually consider unplugging are your electronic devices that often stay in a “standby” mode, like your cable box or your television or your desktop computer. You should, at the very least, consider turning those off.

The big appliances generally need to keep running while you’re gone (refrigerator, freezer) or else use so little power when on standby mode as to not be worth the effort (washer, dryer). Obviously, all light should be turned off unless you have some sort of light cycling pattern to prevent theft.

The big thing you should consider is your heating and cooling. I would turn it off entirely during the vacation. If you have a programmable thermostat that allows it, turn it back on several hours before returning home if you want to come home to a cool house, or have a neighbor turn it on for you.

Q2: CSA plan worth it?

Are CSA plans usually a good return on investment? My husband and I joined one in our area and the first few bundles have been underwhelming to say the least. I am pretty sure this won’t be cost effective by the end of the year.
– Karen

In most CSAs, if you add up the total value of what you get over the course of the year in terms of supermarket price, are a good deal. However, some are much better deals than others, and you really have to listen to word of mouth to determine whether one is worthwhile.

The quality of a CSA is almost entirely dependent on the farmer you’re dealing with. Some farmers put a tremendous amount of value in those CSA shares, while others only put moderate value in them. Sometimes the value is shaped by the quality and quantity of the harvest; at other times, farmers will only put in a certain amount of vegetables no matter how good the crop is.

The CSA I used had a significant patch of ground that was for the CSA program, period. They had another smaller patch for other sales. Each week, they’d simply harvest everything harvestable out of the CSA side and put an equal amount in each CSA share. This seems to be a fairly standard, though not guaranteed, practice.

My point? It really depends on the CSA. My guess is that you’re getting positive value from it by the end of the year.

Q3: Struggling in expensive metro

My husband and I both have law school loans (total about $190k). We pay about $1700 per month for the loans. We are federal govt workers and don’t make a big salary. We also have a son in day care (in the DC area, so they are all ridiculously priced – $1500 a month). Our mortgage is $2500/month, and we put money into our TSP (retirement acct) religiously and have a 3% match from the employer. It seems as though we are scraping by, which is embarrassing for two attorneys. My husband especially gets burnt out from his attorney position and needs a vacation desperately, but we can’t afford to go any where. Is there any way to save money here? Do we just have to wait until our son is out of daycare and in public school to finally take a vacation? Are there things I am not seeing?
– Jana

I think this comes back to a bigger question about priorities. Right now, you both have relatively solid and secure federal jobs. The wages aren’t amazing, but the job is secure. However, part of that federal job choice is that you are also choosing to live in one of the most expensive areas in the nation.

The reality is that because of that high cost of living, you’re actually living an equivalent lifestyle to someone earning far less in another part of the country. For example, if you were in Iowa, you’d have a far lower child care cost, probably substantially more than the difference in salary, plus your housing cost would be much lower along with many other costs.

You seem to be unhappy with the high cost of living where you’re at, so you have a decision to make. Should you relocate to a lower cost of living area or not? Is it possible to transfer your job to a lower cost of living area while still keeping a somewhat comparable salary? Should you quit your job and simply get something different? Or should you just wait it out?

I can’t answer those questions for you, but they are all options on the table.

Q4: Moving emergency fund into stocks

I have a system of automatic investments, where every paycheck money is transferred into retirement accounts, my emergency fund, medium term savings, and a taxable investment portfolio (I use Wealthfront for this). However I think my emergency fund has gotten larger than it needs to be, so I’m considering moving some money (probably between 10-15k) into my taxable investment account. My question is: should I do this right now, or wait for a market drop? In general I don’t believe in market timing, but it feels somewhat unwise to push a bunch of money into a stock market that feels ripe for a correction.
– Jerry

Don’t worry about market timing. Instead, ask yourself what your goal is for having that money in a taxable investment account. Why are you putting it there? What’s the goal?

If you don’t have any sort of goal or any sort of timeline for that money, why not use that money to fully fund a Roth IRA? Or, if you’re already doing that, fully funding a 529 if you have kids?

Putting money into a risky investment like the stock market without some sort of goal in mind is usually a decision that will backfire on you. Figure out why you’re going to invest that money and then, from there, figure out what your timeline is for that goal and how much risk you can tolerate. If your timeline is long (10+ years) and your risk tolerance is high, put it in the stock market. If your timeline is short or your risk tolerance is low (or both), look for something else like bonds or money markets.

Understanding your goal is far more important than any twists and turns of the stock market.

Q5: Should I touch my 401(k)?

After I split from my ex-fiance in 2011 I found myself with $80,000 in debt (credit cards, student loans, and a car loan). In 2012 I got serious about paying off my debt and in 4 years I managed to bring that debt down to $50K. I am now married (to a new man) with a baby. My husband is wonderful and has accepted my debt as his. He listens to Dave Ramsey on the radio quite frequently. Recently Dave spoke to a gentleman who used his 401(k) to pay off his debt. My husband suggested it as something we should do but wants me to think about it. I was under the impression that you should NEVER Touch your 401k until you retire but Dave seemed to be OK with it. What are your thoughts?
– Alice

I think you may have misheard the story. Dave Ramsey is pretty adamant about not cashing out a 401(k) to pay off debt (see here), and I wholeheartedly agree with that stance.

The amount of extra taxes and tax penalties that would come from cashing out your 401(k), plus the drastic reduction in retirement savings, makes this a choice that’s very much in the “not worth it” camp.

Do not cash in your 401(k), ever, unless things are truly apocalyptic. You can cut your contributions for a while to help get things in a better place (though I don’t think that’s ideal, either), but please don’t tap that 401(k). Just leave it alone to do its thing.

Q6: Allowance update

I’m preparing to start an allowance with my oldest later this year (when she turns 4). Do you have an update on your allowance scheme since you last talked about it last October?
– Adrian

Right now, we give our children a small weekly allowance with which they can do what they wish with no conditions attached. It’s a very small amount – $2 a week. It takes a long time to save more than that.

They also have some chores around the house that they’re expected to do each week. Again, that’s not tied to the allowance – that’s simply an expectation of being part of the family. Discipline in this regard doesn’t involve allowance; it involves removal of some privileges, while good performance without any trouble over a period of time usually gets a small perk, like a trip to the local ice cream shop. Those small perks are utterly unplanned and spontaneous, in response to seeing a long period of good behavior and handling of their responsibilities.

On top of those things, we also have a job board that lists some extra tasks they can take on to earn a few dollars. These are tasks like doing deeper cleaning in the living room or kitchen or a bathroom, taking care of a small yard work project, or something along those lines. Sarah or I add these to the job board and if a kid wants to take on that job, they initial it and have a few hours to get it done. If they come back and it’s done, it disappears from the job board and they’re paid for it.

On top of that, we contribute to a 529 plan for each of them and remind them regularly of our contributions to that plan. This contribution is automatic; I usually make a point to remind them of that contribution when it’s made, and I’ve found that they consciously know that it’s happening and that it will help make college (or trade school or whatever) an easier option for them.

That’s our current allowance system, which is what has worked out best for us over a period of many years of trial and error.

Q7: Tire buying strategy

What’s your strategy for buying tires? Safety is important, but I’m skeptical that new (NOT used) ‘store brand’ tires are as dangerous and low quality as online comments make them out to be.
– Lester

Honestly, I trust Consumer Reports when it comes to buying tires. I check their most recent tire reviews when it’s time to replace tires, then check around town to see who has the “best buy” tires and what their cost is. (I find that I usually end up going to one of two places in the area for my new tires over and over again.)

I agree with you that I’m skeptical of cheap tires. However, I am not a tire technician and I don’t have the capacity to test tires in any way, nor would I really know how to do so. Thus, I trust an unbiased expert – Consumer Reports – who has been accurate in the past on almost everything I’ve asked of them.

I’d encourage you to do the same thing. Hit your local library and check out the latest Consumer Reports tire comparison. Check out some of the best buys on tires and see what shops carry them locally and what their cost is. This strategy has done very well for me over the years.

Q8: What blender should I buy?

Ever since my blender broke, I’ve been wanting to replace it. (The one I had was used, brand unknown, from a friend who owns a smoothie shop and was upgrading to new models. Since I didn’t have a blender at the time, I gladly accepted it.) I’m trying to decide whether to get a new one or a used one, and whether it makes sense to get a $300+ one if new (like the ones I see at Costco) or cheaper ones that are less than $100. I imagine I would use it about 5-10 times a month on average. What would you recommend? I’ve been told that for kitchen appliances that are motorized, it’s worth it to get a higher-end one, but I can’t get myself to fork up that much for an appliance that I wouldn’t be using on the daily.
– Kevin

If you are going the cheap blender route, I’d just go to Goodwill and grab one of the blenders you’ll find there. They usually have a few that are practically new, bought by people who thought they had lots of use for a blender and then it sat around and gathered dust and was eventually shipped out. You’ll spend like $10 on a blender and it’ll work just as well as any of the sub-$100 ones you’ll find at Target.

We have a pretty good blender (a Blendtec) that we’ve had for many years and it is an absolute workhorse for everything we throw at it. We make smoothies in it. We make guacamole in it. We’ve done scrambled eggs with it. We’ve done pancake batter in it. I’ve made nut butter in it. I’ve made hummus in it. You get the idea. It’s handled all of those things with zero problems.

With your use case, the question is whether you should go the $10 route with a blender that will probably do a mediocre but passable job at blending and struggle with some harder things, or go the $300 route and get an industrial strength blender. If I were you, I’d get the cheap blender and then see if it does all of the things you ask of it without problems. If it does, then you made the right choice. If there are a lot of notable problems with the cheap blender that would be resolved by having a more powerful blender with better blades, then upgrade.

Q9: Beans and illness

I’ve read that uncooked/undercooked beans can cause health problems (nausea from some beans, death from others if consumed in large quantities), but that boiling beans for some time breaks down the toxins. Does your slow cooker boil the beans when it’s on low?
– Keith

When I load up my slow cooker, it will eventually boil if it’s on the low setting, but it can take a few hours to get up to boiling. The low setting will usually maintain a very low simmer, while the high setting will maintain a somewhat faster simmer and reach that level quicker.

I think this depends a lot on the individual slow cooker model, however. Some slow cookers might do better with a pot full of beans on the high setting, which should bring things to a low boil on almost any model.

I have cooked beans on the low setting before in the slow cooker and had no real problems either with the seeming done-ness of the beans or with any gas or other issues.

Q10: Transitioning to self employment

I’m currently setting up my side gig, with a view to turning it into a full time business in three years (which is when my car will be paid off, the kids will both be in school so no more childcare, and I’ll be eligible for long service leave from work, which I can have paid out when I leave). I’m a single mum, so no partner’s income to fall back on, although we’re fortunate to have a decent welfare safety net here in Australia. So my question is, what in your opinion should I have in place before I make the leap? Is there anything you would have done differently when you moved to working full time on The Simple Dollar if you had your time again?
– Jane

Emergency fund, emergency fund, emergency fund. No matter how big you think is plenty, keep going. Things will happen when you least expect them. There will be things you haven’t accounted for.

I would also have a plan for returning to your previous career path and keep up with that plan. Maintain relationships with coworkers and employers and try to keep up with your field.

In other words, protect yourself against the unknown as much as you possibly can. That’s always the best thing you can do as an entrepreneur – protect yourself against obvious risks.

Q11: Heat pump question

Here in the south it is common to have an all electric house with a heat pump instead of a gas furnace. In the winter I have always turned the thermostat down at night to save money (with a programmable thermostat). However, when my parents got a new heat pump installed they were told it is more energy efficient with a heat pump to keep the temperature steady 24 hrs a day than to drop it at night and crank it back up in the morning. Is that true?
– Kelly

It honestly depends on a lot of factors. How well insulated is the home? What is the insulation made of? What’s the typical humidity level? How extreme are the temperatures?

Without knowing those factors, I really can’t recommend one way as being the best in your situation.

If I were you I would talk to a local heating and cooling technician. Their advice is far more likely to be accurate than mine.

Q12: Frugal sailing?

Since spending some time in Cape Cod, I really want to do some sailing. It seems like a rich person’s hobby, though, and I’m not talking about buying a boat or anything like that. Is there a frugal way to get some experience sailing?
– John

The cheapest approach – and probably the best way to do it cheaply – is to go to your local marina and see if someone there needs a crew member. Make it clear what the situation is – you’re new and want to learn.

If you do that regularly and decide it’s really for you, put the word out that you’re looking for an older one person boat. If you have a good reputation at the marina, you’d be surprised ehat people have stowed away in sheds and will sell cheap to the right person – a passionate newer sailor with a small pocketbook, for example.

That’s the path I’d follow and the same general path works for any expensive hobby.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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Want That $10,000 Grant to Move to Vermont? How to Convince Your Employer to Let You Work Remotely

The governor of Vermont recently signed a headline-grabbing bill into law that provides $10,000 to people willing to relocate to the Green Mountain State and work remotely for an out-of-state employer.

Known as the Remote Worker Grant Program, the measure takes effect Jan. 1, 2019. The $10,000 grant can be used to cover the costs of moving and work expenses such as computer software, hardware, or broadband internet.

The new offer comes in response to the state’s aging population. One in six Vermont residents is over 65 according to a U.S. Census Bureau report and the population is getting older faster than most other states in the country.

Perhaps compounding the problem, Vermont has one of the smallest populations in the country. With just 623,657 residents, the only state with fewer residents is Wyoming, according to Census data.

The entire predicament seems at least somewhat surprising given all that Vermont has to offer when it comes to natural beauty and quality of life.

Yes, the state is mostly well-known for being a major producer of maple syrup and delicious ice cream (Ben & Jerry’s anyone?). But it’s also home to thousands of acres of mountain terrain crossed by hiking trails and skiing slopes, and one of the most stunning places in America to observe fall foliage.

With so few people living in the state (just 68 people per square mile) there’s plenty of room to move around. What’s more, U.S. News & World Report ranks Vermont among the best in the country for health care access (No. 4), and its public education system is also among the top 10 in the nation (No. 8).

So what if all of this sounds tempting and you might actually want to take Vermont up on its $10,000 offer?

The first challenge will likely be persuading an employer to let you work remotely from Vermont.

How to Convince Your Employer to Let You Work from Home

To begin with, Rebecca Knight at the Harvard Business Review helpfully points out that working from home increases productivity, efficiency, and employee engagement. Research supports all of this, so dig up those studies and keep them handy when speaking with your boss.

In one example, Stanford professor Nicholas Bloom studied two groups of call center workers at a company called Ctip over nine months, half of whom were permitted to work from home.

“Ctrip was thinking that it could save money on space and furniture if people worked from home and that the savings would outweigh the productivity hit it would take when employees left the discipline of the office environment,” Bloom told HBR. “Instead, we found that people working from home completed 13.5% more calls than the staff in the office did—meaning that Ctrip got almost an extra workday a week out of them. They also quit at half the rate of people in the office—way beyond what we anticipated. And predictably, at-home workers reported much higher job satisfaction.”

Knight also notes that you’re only likely to be given the opportunity to work remotely if you’re already a trusted and valued employee. In other words, be sure you’re in good standing with your employer before suggesting such a work arrangement.

It’s also important to reflect on your motivations for making such a request, Knight continues. Perhaps you feel like escaping from office distractions will allow you to be more productive, giving you the ability to concentrate more on what you’re doing. Or perhaps the reality is that you’d like more quality time with your children each day, or more time to exercise. Don’t assume those personal goals are irrelevant to your employer: Happier employees are generally more productive, too. Whatever the case may be, it’s important to be honest with your employer about why you’re seeking this arrangement, rather than pulling a bait and switch.

Before heading into your manager’s office to have a conversation about remote work, do some planning ahead of time, says Brie Reynolds, a senior career specialist with FlexJobs, a site devoted to remote, freelance, and part-time job listings.

“Think through the ramifications for your position, and the team that you’re on, because you want to present a good case to your boss,” Reynolds says.

And while you’re making your case for a life of remote bliss (hiking, skiing, planting a garden in your big back yard), keep your conversation business-focused, stresses Reynolds.

“Yes, you may want to move because of a lower cost of living and healthy lifestyle, but the main point to make with your boss is this will not hurt the team,” she explained. “But more importantly, this will help, because you’ll be less stressed, you’ll be healthier, and more productive.”

Think about other ways it might help your team, too. For example, if the move represents a time zone change from where you’re currently living and working, perhaps it will allow you to better serve clients in other regions, a point you’ll want to make to your employer or supervisor.

You also may want to make some concessions in order to secure the proposed arrangement. Would you be willing to come to the office for quarterly meetings, or even one day a week if it’s not too far away? (Brattleboro, Vt., is about a two-hour drive from Boston, and three and a half hours from New York City.)

One more bit of legwork to do before approaching your employer: Take a look at how much remote work is already being done by other staff members at your office. Then consider asking one of those remote workers to join you for a cup of coffee to discuss their work arrangement – to find out how they got started and what the parameters are.

The bottom line? “Managers understand that working from home is a great benefit for you, so you can touch on that fact a little bit,” says Reynolds. “But you really need to be prepared say, ‘Here’s why I really think it would be great for my role and for the team.'”

Other Places That Will Pay You to Move There

One last note: If you feel up for the task of convincing an employer to let you work remotely, keep in mind that Vermont is not the only place where such offers are available.

New Haven, Conn., is hoping to attract new home buyers with a $10,000 interest-free loan, which can be used as a down-payment on a home or to help with closing costs. To sweeten the deal even further, if you live in the home for five years, the $10,000 is 100% forgivable.

Meanwhile, Lincoln, Kan., is giving away free tracts of land to those willing to come and build their own home. Lot sizes range from 12,000 to 36,000 square feet and are not far from medical, educational, and recreational facilities.

And finally, for those who want to really get away from it all, Curtis, Neb., (population 896) is offering free lots to those willing to come and construct a home.

Related Reading: 

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Sunday, June 17, 2018

Rethinking These Eight ‘Normal’ Behaviors Can Save You More Than $100,000

Growing up, it often felt like other kids were doing fun stuff I wasn’t allowed to – whether they were getting treats from the ice cream truck, the latest pair of Nikes, a ride on the go-karts, or the chance to climb something exciting (and definitely dangerous). Any protests to my parents were, of course, met with the old saying: “If everyone else jumped off a bridge, would you?”

That well-worn adage is still relevant in adulthood, because it’s exactly what many of our peers are doing financially: jumping headlong into a chasm of debt. And even though we know better, it can be really tempting to follow them overboard.

After all, on some level, there’s still some of that adolescent kid inside each of us who’s just desperate to fit in and be normal. But “normal” in America often means “in debt.” The average American carried $6,375 in credit card debt in 2017, and nearly half (43%) of Americans have carried a credit card balance for two years or more — paying a heavy price in interest as a result. Total credit card debt in America now tops $1 trillion, an all-time high. The same can be said for auto loans and student loans, too.

At the same time, a survey by Pew Research found that only 46% of Americans earn as much or more than they spend each month; more than half of us are living beyond our means. That’s one reason the average personal savings rate in the U.S. — the percent of disposable income we save for emergencies, retirement, and other financial goals — was just 2.8% in April. Financial advisors recommend a savings rate of 10% or more for a comfortable retirement, a target we used to hit regularly from the 1950s to the early 1990s.

When the Joneses are paying more in credit card interest than they’re saving toward retirement, keeping up with them is a terrible idea.

This is why there’s so much power in ignoring media influences and what other people are doing and focusing on what’s really important to you. “You absolutely have to stop worrying about what other people think,” Trent said when writing on this topic last month. “If you want to improve your financial state, there’s almost nothing you can do that’s more important than this.”

Instead, Trent continued, “Recenter your life around what you think and what you value, not what the people around you think or value. Live your life and make your financial choices in accordance to what you care about, not what the people around you care about.”

This is easier said than done in the age of Instagram (and it’s one reason avoiding social media can save you money). But we all have finite time, money, and energy, and what we spend those limited resources on should ideally align with our own values, not someone else’s.

Here are eight behaviors that are all but taken for granted in American culture — all of which are potentially expensive. Before you blindly follow the presumed cultural custom, it’s worth at least giving each some thought and deciding whether it’s truly a priority of yours – or just something everyone else seems to be doing.

Some or all of these might be really important to you, things you feel are well worth the money — and that’s fine! At least you’ll have come to that decision mindfully.

But if you’re able to ignore the societal pressures — from ads, media, family, and friends — pushing you toward even one or two of these tropes, you stand to save money. And before too long, the Joneses will be wondering how to keep up with you.

The Nice Car

Unless you live in a city with good public transit, owning a vehicle is just about required in American life. But owning a nice vehicle is not. You certainly need a reliable way to get to work, go grocery shopping, and bring the kids to practice. Anything more than that, though, is a want — a luxury we’ve managed to convince ourselves is more like a need.

The average sales price of a new car was $35,265 in March, according to Kelly Blue Book. To finance that small fortune, the average new car payment hit an all-time high of $523 a month in early 2018, according to Experian, and the average length of a new car loan is 69 months. If sitting in traffic makes you feel trapped, consider that financing the average new car will cost you $17 a day, every day, for nearly six years (even before gas, insurance, and maintenance).

The average new car depreciates 35% in its first three years – which means you should be able to get that $35,000 car or truck for $22,275 slightly used. The average age of a car on the road today is over 11 years old — for every new model, there’s a 20-year-old beater still chugging along — so a three-year-old vehicle still has plenty of life in it.

But even if you want to buy a new car — and believe me, after driving a string of junkers in my 20s, I’m with you — you needn’t be held captive to a crushing car payment. Toyota makes great, reliable cars in the $18,000 to $25,000 range, as do Honda, Ford, and Hyundai. All-wheel drive Subarus like the Outback and Forester — which get great marks from Consumer Reports — start at around $25,000; we bought our smaller Impreza hatchback new for a hair under $20,000 in 2014, and we love it.

And we’re going to drive that thing long after the roughly $300 monthly car payment disappears. Every month you can hang onto a paid-off car amounts to hundreds of dollars in your pocket. Yes, at some point, an old and battered vehicle can cost almost that much in monthly repairs. But until then, try to squeeze every last mile out of it before you give in and buy a replacement.

  • Savings: $12,500

Carrying a Credit Card Balance

As mentioned earlier, 43% of Americans report having a credit card balance they’ve carried for two years or more. (I’ve been there myself, swamped in five-figure credit card debt.) We preach the advantages of credit card rewards, but “revolvers” — cardholders who carry a balance — are one of the reasons credit card companies can afford to pay those lucrative rewards.

The average American consumer has 3.1 credit cards with a total balance of $6,354, plus 2.5 store credit cards, with another $1,841 on those. With the average credit card APR at 16.75% as of early June, according to CreditCards.com, a consumer who takes two years to pay off those balances — without adding to them along the way — would pay $1,505 just in interest.

The solution, of course, is simple in theory, but more difficult in practice: Don’t charge anything you can’t afford to pay off this month. Build up an emergency fund so that, even if you do need to put a car repair or new furnace on credit, you can pay it off that month and avoid interest.

  • Savings: $1,505

Equating Spending With Love

Whether it’s buying Christmas gifts for everyone we know or celebrating anniversaries with an expensive piece of jewelry, it’s easy to feel pressured to spend more money than you can afford on loved ones.

The prime example of this is the pervasive notion that one should spend two (or even three) months’ salary on a diamond engagement ring. It’s one of those long-held rules of thumb you hear tossed around everywhere, like changing your oil every 3,000 miles. But just like the oil change “rule,” it’s utter nonsense, devised by a marketing department — the result of a brilliant mid-century ad campaign designed to sell more diamonds when nobody really needed them.

As Rohin Dhar explains for Priceonomics, Americans buy diamond rings as part of the engagement process because an ad man named Gerold M. Lauck, hired in 1938 by De Beers, told us to — as a status symbol. Within three years, Dhar says, “despite the Great Depression, diamond sales in the US increased 55%. Twenty years later, an entire generation believed that an expensive diamond ring was a necessary step in the marriage process.”

De Beers continued its relentless marketing efforts through the 20th century — all while keeping a stranglehold on the global diamond supply to inflate prices — eventually suggesting that a man should spend a month’s salary on a diamond engagement ring. “It worked so well that De Beers arbitrarily decided to increase the suggestion to two months’ salary,” Dhar writes. “That’s why you think that you need to spend two month’s salary on a ring – because the suppliers of the product said so.”

Dhar continues: “The next time you look at a diamond, consider this. Nearly every American marriage begins with a diamond because a bunch of rich white men in the 1940s convinced everyone that its size determines your self worth. They created this convention – that unless a man purchases (an intrinsically useless) diamond, his life is a failure – while sitting in a room, racking their brains on how to sell diamonds that no one wanted.”

Thankfully, millennials are increasingly immune to this decades-old marketing ploy: About four in 10 older millennials surveyed by The Cashlorette in 2016 said they would spend one month’s salary or less on an engagement ring. And while American newlyweds spent an average of $5,764 on an engagement ring in 2017, that’s actually down from $6,163 the year before.

Still, even five grand — one month’s salary for someone earning $60,000 a year — is an awful lot of money. And that’s just one ring. For some couples, it doesn’t stop after courtship: birthdays, holidays, and anniversaries can escalate into an arms race of lavishness. Who can prove their love with the more extravagant gift?

It’s not just romantic relationships, either. We love our kids, families, and friends so much that we spend close to $1,000 each year on holiday gifts. But the truth is, while throwing money at the people we love feels good, what they usually want most of all is just our time and attention.

All that’s to say: An engagement ring – or any gift – is merely a symbol of your love. It’s not the love itself. And there are a lot of less expensive, more heartfelt ways to express that love. (For example, here are some ideas for more affordable engagement rings, all under $2,000.)

  • Savings: $3,000 or more

The Big Wedding

Talk about outside pressure: Planning a wedding can be a stressful endeavor, fraught with family politics and heightened emotions. Plus, from photography to flowers, everything costs more once the word “wedding” is tacked on.

American couples spent an average of $33,391 on their weddings in 2017, according to The Knot, not including the honeymoon. And that’s actually down slightly from years past, as millennials embrace less formal (and less expensive) reception settings. That’s a huge chunk of change.

Now, I’m not suggesting anything drastic like eloping (though it would save you a ton of money) or disinviting Aunt Cheryl. Having all your friends and family in one place to celebrate your love story is one of the greatest feelings in the world. It deserves a big party.

But that feeling doesn’t have to cost 33 grand. There are plenty of ways to trim the cost of a wedding while still ensuring everyone has a great time. In fact, our own Drew Housman and his wife were able to throw a 140-person wedding for under $3,000 last year.

You’ll be doing your friends a favor, too: Between gifts, bridal party duties, and bachelor and bachelorette parties, young adults can also expect to shell out up to $20,000 or more attending their friends’ weddings. There’s no shame in toning things down to focus on the most important elements: friends, family, food, and the love of your life.

  • Savings: $10,000 or more

The Big House

Homeownership is a big part of the American dream, and I’m not about to advocate against it. Certainly, owning a home isn’t for everyone — particularly if you’re not prepared to stay at one address for at least five years. But the fact remains that homeownership has been one of the most reliable wealth builders for America’s middle class.

However, there’s a pervasive notion — especially in the low-interest rate environment of the past decade — that you should “buy as much home as you can afford.” TV shows that glamorize and oversimplify the home buying and remodeling processes have created what realtors call an “HGTV effect,” where buyers’ expectations are out of whack with their budgets. And homeowners who have managed to build up equity are constantly tempted to cash it in to match the remodels on Fixer Upper.

A better idea? Buy only as much home as you need and can reasonably afford – or even less. A larger, more expensive home not only costs more upfront — it costs more to heat and cool. It costs more in property taxes, and homeowners insurance. It costs more to furnish and decorate additional rooms and living space – and that extra space encourages the mindless accumulation of “stuff.” And while trendy finishes like quartz counters are no doubt appealing, don’t overlook a modest home just because it’s not your dream house. You can always upgrade later as your budget permits.

The median list price of a U.S. home was $146 per square foot in May, according to Zillow. So scaling back from a 2,000-square-foot home to 1,600 square feet could save you $58,4000, all else being equal. And that’s just on the purchase price; everything from insurance to maintenance to mortgage interest to HOA fees (typically based on square footage) will likely be lower, too.

  • Savings: $58,400 or more

Eating Out

There’s no doubt: Going out to eat or ordering take-out is delicious and convenient. And it’s also the new normal in America, where, in 2016, we spent more on restaurants than on groceries for the first time ever.

Zagat found that Americans eat out an average of 5.9 times a week — 4.9 of which are for lunch or dinner. The same survey found that diners pay an average of $36 per person for dinner out.

You can see where this is going: If that average diner eats out four times a week instead of five, skipping just one $36 dinner per week, that’s $1,872 in a year.

Preparing meals at home can seem challenging at first, but it gets easier (and even fun) with practice. It can also be a whole lot healthier for you, which can lower your long-term medical costs.

If you need a little motivation, here are some tricks to temper your urge to eat out — and some tips to get you started in the kitchen.

  • Savings: $1,872 a year

The Upgrade Cycle

Better than three quarters of Americans now own a smartphone, and we tend to hang onto them for an average of 22.7 months — not quite two years. That’s actually longer than in years past, but most phones can last a lot longer than that.

I’m not saying you have to go through life with a flip phone — although some people do, and they seem to like the freedom of being untethered. But as with car payments, every additional month or year you’re able to squeeze out of your old smartphone is one in which you can put that money into savings instead. With the sales price of a new smartphone averaging $363 worldwide, and a new iPhone, Galaxy, or Pixel topping $800, the savings can add up.

  • Savings: $363 or more

Assuming You Need to Go to College

Like homeownership, this is another institution I’m hesitant to advocate against. A college degree is still worth close to a million dollars in additional lifetime wages, making it a great investment for a lot of people.

However, that’s only if you get a degree. Students who leave school without graduating fare no better than those with just a high-school diploma — and often end up far worse off, bogged down by crushing student loans with nothing to show for them.

Seven out of 10 college students now take out loans, and they graduate with an average debt of $37,172. If you’re committed to pursuing a professional career that requires a bachelor’s degree — and a lot of good jobs do — that’s a pretty good investment.

But don’t just assume you need to go to college because that’s what you’ve heard you should do, or because it’s what most of your classmates are doing. And parents, don’t assume that your kid needs a college degree to be successful. There are many high-paying careers that require just a certificate program or associate’s degree; others even start off with apprenticeships that pay you to learn on the job.

  • Savings: $37,172 plus interest

Summing Up

I won’t lie, a lot of these are nice things to have in your life – that’s why people pay for them even if they can’t afford them. Just be mindful about your motivations: Are you buying a bigger house to impress other people, or because that extra space and expense is truly in service of your goals and your values?

If you want to be a normal American, then by all means, go along for the ride. Just remember that being normal in this country is an increasingly precarious proposition.

Related Articles: 

The post Rethinking These Eight ‘Normal’ Behaviors Can Save You More Than $100,000 appeared first on The Simple Dollar.

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Saturday, June 16, 2018

A Look at My Eleven Frugal Hobbies and Whether They’re a Good Fit for You

One of my most recent interests has been time tracking. I’ve been enjoying tracking my time use as accurately as possible using Toggl and looking at the data that’s produced from doing that over a period of time.

One of the big things I’ve discovered in this process is that I actually have a fair number of hobbies that I devote time to, but they tend to overlap with other areas of responsibility in my life – parental, marital, social, familial, and so on. I started figuring out ways to label various time uses so that they’d show up both as hobby time and as “family time” or “social time” because I really wanted to see how much time I devoted to various hobbies.

Last month, I took a look at what hobbies of mine I spent at least one hour on during the month, and I came up with a list of eleven of them (I combined a few similar time uses into one single group in a few cases). Every single one of them is what I would consider a frugal hobby.

A few days ago, I posted an article entitled The Happy Life on the Path to Your Financial Goals, and one of the big suggestions I made in that article is to find free and low cost things you enjoy doing and dive deep into them if you find them enjoyable.

I thought it might be sensible for me to share a brief description of my eleven frugal hobbies and how I practice them inexpensively. I’ve written up a few of these in detail in the past, but this is intended to be more of a smorgasbord of ideas where you can choose which ones you want to try.

(Note: there are a few practices I do every day like meditation and journaling that could probably count as a hobby, but I chose to exclude them to focus primarily on recreational activities.)


By hiking, I simply mean going into natural areas on foot and exploring, whether it’s walking along a quarter mile nature trail in a state park or backpacking in the backcountry of a national park and anything in between. If you’re on foot exploring a natural area, I consider it “hiking.”

This is a wonderful and peaceful hobby that has little cost associated with it. You just need a nice park or nature preserve near you that offers areas for nature walking or hiking.

Hiking provides fresh air and sunshine, exercise at any level of intensity that you desire, and a great way to escape the bustle of everyday life and simply appreciate nature. There’s also a subtle but notable psychological benefit from spending time in nature, too. Hiking provides all of these things.

Low-intensity hiking can be done with virtually no expense using the shoes and clothing you already have. If you get into it and ramp up in intensity, you’ll need a bit of equipment, but nothing too egregious and it’s all stuff you can continuously use. I have a nice pair of hiking shoes and a backpack which were more than enough to tackle several day-long hikes at Yellowstone.

A while back, I wrote a beginner’s guide to hiking and nature walking at minimal cost if you want more information.

Bodyweight Exercises

Bodyweight exercise basically includes any form of strength-building exercise that doesn’t require additional equipment and thus relies on the weight of your own body for resistance. Thus, bodyweight exercise includes things like push-ups, sit-ups, squats, planks, and so forth. There’s an infinite variety of these exercises out there, so you can try lots of them and find ones that really work for you and achieve what you want to achieve.

My main interest in terms of bodyweight exercise is to mostly improve my core strength and balance. I tend to mix up things like planks with things like balancing on one foot with my leg extended, something I’ll get back to in a bit. I also really enjoy stretching and increasing my flexibility, so I also do some yoga (which is definitely a form of bodyweight exercise that targets the core, improves flexibility, and improves balance). I also enjoy rucking, which I tend to think of as more of a bodyweight exercise than anything else.

I try to put aside at least fifteen minutes a day for stretching and some form of bodyweight exercise. I usually do the daily workout from Darebee (which is free) or one of my bookmarked favorite routines from them, such as the Justice Served workout. Again, the goal for me is to improve my balance and core strength and (secondarily) work other muscles and improve cardio without feeling miserable, and this does the trick.

The nice thing about bodyweight exercises is that there’s no cost associated with them. You can just do them at home, any time you want, at no cost whatsoever. Plus, time spent exercising is going to reduce long term health care costs and extend your life, so it’s time spent likely saving money as well as improving quality of life. Not only that, I usually feel great after doing it.


This is definitely an activity that has a cost associated with it, but I consider an activity to be “low cost” when the out of pocket cost for me is less than a dollar per hour that I spend on it, and taekwondo definitely meets that target.

I participate in taekwondo because it’s an easily available (meaning there’s a class fairly close to where I live, close enough to walk there if I’m okay with a long walk) exercise class with a focus on self improvement, balance, core strength, and technique. I get a killer workout whenever I go to one of the classes – I usually leave with my shirt soaked with sweat.

The cost of the classes themselves exceed that $1 per hour metric that I note above, but the classes basically come with “homework” – there’s almost always something you can be working on at home, whether it’s working on exercises to get your kicks higher, mastering certain moves through repetition, or something akin to that. I spend some time each day working on taekwondo exercises, particularly on days without classes, and adding up all of the invested time pushes the cost well below $1 per hour.

Most of what I said about bodyweight exercises holds true here. It’s a great way to get a workout, which is good for your current quality of life and for reducing long term health care costs. There is a cost associated with taking martial arts classes, but if you actually follow the suggested exercises, the cost per hour of the classes (especially if your school allows for unlimited class attendance) ends up being quite low. See if there are any martial arts classes in your area for adults and sign up.

Check with your local parks and recreation department and see if they offer any inexpensive martial arts classes.

Making Fermented and Pickled Foods

One of my favorite activities is making fermented and pickled foods in my kitchen. Rare is the day when there’s not something fermenting or pickling somewhere in our home, whether it’s cabbage turning into sauerkraut, pickled eggs, preserved lemons, pickled cucumbers, kimchi, pickled garlic, and even drinks like kombucha or kefir.

The process is really easy and requires minimal equipment. I typically use a gallon jar with a special lid that has a small hole with a rubber gasket in it, into which I put a small air lock. The total cost of this lid and the bubbler was about $5, and I’ve used it on dozens and dozens of batches of food. I also have a few glass weights that I picked up somewhere years ago that are useful for weighting down the food and keeping it below the level of the brine.

Mostly, I just cut up a bunch of vegetables or other items that I want to ferment or pickle, add an appropriate amount of salt and, if needed, water, and pack everything down in the jar with the weights on top, then I simply seal it up and wait until the air lock stops bubbling. This general procedure has some variations depending on what exactly I’m trying to do, of course, but that’s the general framework. When a batch of food is finished, I usually keep a container of it in the fridge and I often give some of the product away to friends and family.

It’s a pretty low cost hobby, considering that the ingredients are almost always less expensive on the store shelf than the finished product. I can often buy three heads of cabbage for less than a dollar and turn it into many pounds of sauerkraut by just adding salt and a little water, for example.

In fact, if you like sauerkraut, it’s incredibly easy to make at home and it’s incredibly inexpensive, too, because cabbage is always pretty cheap. This is a great beginner’s guide for making sauerkraut.

Making Homemade Beer/Cider

This is definitely a subset of fermenting foods, but in this case my approach is a little different (and the whole process is a little more expensive). Essentially, all you’re doing is adding yeast to a sweet liquid. The yeast then eats the sugar and converts it to alcohol. When this process is finished up, you move that liquid into individual bottles for long term storage. That’s pretty much it.

Having said that, there are some startup costs. You do need some kind of large vessel to actually make the beer or cider in – a five gallon food grade bucket is great to start with and can be found pretty cheap. You’ll also need a pretty good sized stock pot to actually cook things in and some empty bottles, and each batch of beer or cider that you make will require some basic ingredients (sugar and things to add flavor). This hobby can definitely turn into a “rabbit hole” of expenses if you’re not careful, but if you stick with basic equipment, you’re fine.

This is a great hobby to get into if you enjoy drinking craft beers or cider. You can save a little money over the normal cost of craft beer by home brewing if you keep up with the hobby, but this isn’t a “free” hobby.

If you want to get started, my suggestion is to start saving old bottles until you have several empty six packs, then stop by a local homebrew supply store and get a beginner’s kit with a capper and some caps. The expense will be a little stiff at first, but you’ll refill all of those empty bottles with your product and you’ll have some fun along the way.


Reading has been a major part of my life since I was a young child, and even today I put time aside each day to sit down with a book of interest and read a chapter or two. Most years, I finish somewhere between 50 and 100 books.

Reading is one of those hobbies that can range from absolutely free (if you rely on your local library for your books) to a fairly expensive hobby (if you buy every book new and buy more books than you’ll actually read, though this tends to segue into collecting books more than reading). If you apply some basic smart principles to the hobby, such as sticking heavily with what’s available at the library and not buying books unless there’s an extreme sale or you’re absolute sure you’re going to read the book immediately, it can be a very inexpensive hobby, since most books take several hours (at least) to read.

A good way to begin with this hobby is to simply go to the library with a topic in mind (if you want to read nonfiction) or a genre in mind (if you want to read fiction) and explore those sections of the library until you find something that looks really interesting. Grab it off the shelf, take it home with you, and dive in. For me, I find it most effective to read fiction when I have a large block of time and can get absorbed into the story, whereas I tend to read nonfiction in little bits throughout the day and let my mind ruminate on what I just read.

Playing Board Games

Once a week or so, I go to a local community board game night where two dozen people or so meet up to play board games. The group is almost entirely professional adults, with a few college aged people and a couple older children accompanied by their parents. People bring whatever games they happen to have and then people just divide up into groups to play them.

In addition to that, Sarah and I host a board game day at our house about once a month for several of our adult friends. We get together to have a potluck dinner and play games until late in the night.

Board gaming is another hobby that can be expensive if you move away from actually playing games and focus more on collecting them, but if you keep the focus on simply playing games rather than buying them, it’s a pretty inexpensive hobby all around. The best strategy for keeping it inexpensive is to get involved with a local community board game night (check Meetup, as they’re often listed there) and just show up and play. If you eventually do pick up a game or two, bring it along with you and play it with friends outside of that group as well.

Playing Digital Games

I enjoy playing deep strategy computer games and puzzle games; I’m much less interested in games that require lightning reflexes. I like games that force me to think while I’m playing and make hard choices that run the possibility of backfiring on me later.

I mostly play games like Civilization (which is basically a slow strategic reenactment of the history of human civilization) and Stellaris (also a slow strategic game, but focusing on humankind spreading across the galaxy) and Factorio (a logistics game where you try to run an ever-more-complex factory) and SpaceChem (a puzzle game where you try to build a molecule factory).

Those games individually aren’t free – some of them are actually a bit pricy. However, I tend to research games obsessively when I’m considering buying one and I wait for sales on very specific titles before buying. I usually do this by using Steam and waiting around for their semi-regular sales to see if any of the titles I’ve looked into are on sale.

My goal with such games is to get the money I’ve invested in them below $0.50 per hour of play. I don’t buy a game unless I’m quite confident that I’ll be able to reach that level.

I tend to play such games in bite-sized bursts. Most of them are turn based (imagine a board game with an extremely large board and lots and lots of choices to make) and I’ll occasionally load up a game and take a few turns. When I was younger, I used to play in much longer sessions, but now I’d rather take two or three turns and go on a walk.

Solving Combination Puzzles

A combination puzzle is perhaps best illustrated by an example – the Rubik’s Cube is a perfect example of a combination puzzle. They’re usually handheld puzzles that you rotate in some way in order to solve them and typically take a fair amount of spatial reasoning to solve them.

I greatly enjoy learning how to solve such puzzles. At first, I’ll tackle them completely on my own, trying to figure out how to solve them without any assistance. If I struggle to the point of frustration, I’ll go look for help on the section I’m struggling with. Eventually, I’ll solve it, and then I’ll mix it up again and solve it again. I try to get to a point where I can do it fairly quickly without long pauses, and then I’ll move onto another puzzle (there are many in the genre, often appearing to be more complicated versions of a Rubik’s Cube using different shapes and more faces). It’s a nice hobby as well because you can pick up a puzzle and work on it for just a few moments here and there, or you can sit down and really try to master one of them over a longer period of time.

I find this to be a great mental workout, plus learning the skill of solving such a puzzle is a neat party trick. It’s also been a great tool for bonding with my oldest son, who’s into speed cubing (basically solving some of the most common puzzles, like the Rubik’s Cube, as fast as possible). As you might guess, this hobby is in part fueled by family bonding, as most of our family can now solve the 3x3x3 Rubik’s Cube and a few other similar puzzles fairly quickly.

It’s a pretty inexpensive hobby, too. You can actually buy off-brand puzzles very inexpensively online (they actually tend to work better than the name-brand Rubik’s puzzles and are less expensive, too) and they’ll provide many hours of entertainment if you enjoy these types of puzzles. For example, my son received this set of four puzzles for his birthday at a cost of less than $20 and he has invested countless hours into solving each one – in fact, he’s still working on the 5x5x5 puzzle. All you need is the puzzle itself and perhaps a few easily-found online tutorials.

Studying a New Subject

One of my favorite activities is to simply bury myself in learning about a new topic, usually starting with a general Wikipedia entry or a free online introductory class on the topic. I’ll usually pull out a cheap notebook and pen and start going through the materials online, taking notes as I go.

For example, let’s say I wanted to learn more about philosophy. One great place to start would be Wikipedia’s general entry on philosophy, then dive into each of the sub-pages listed on the menu over on the right, which will give me a good background and avenues to dive further into specific areas that interest me. Another approach might be to listen to the lectures of a free online class, like this introduction to philosophy course from MIT for which the full lectures are online.

Again, as with many of the other hobbies listed here, this is a hobby that can be broken down into bite-sized chunks. I actually like to use that approach because it gives me time to think about what I’ve just read or listened to. I’ll usually read a section of a Wikipedia entry or listen to about a fourth or a fifth of a lecture, write down the big ideas from that, and then go do something else for a while, letting those ideas percolate in my head.

This is one of the most beautiful things about the internet – it provides almost endless opportunities to learn, absolutely for free. The only cost I’ve incurred with this approach to self-guided learning is that I’ve blown through a lot of cheap notebooks and pens, but I can usually get quite a few hours out of both the notebook and the pen, meaning that the cost per hour for this is on the order of pennies.

I suggest doing the same for your topic of interest. Just visit Wikipedia and look up the general page on that topic. Go through it slowly and take notes as you go, and stop regularly so you can process what you’re learning as you do other things. If you prefer to listen, see if you can find an online course related to that topic with free audio or video lectures.


The final hobby on this list is one that tends to eat up a lot of time in the spring, a little time in the summer and fall, and zero time in the winter. We simply have a couple of small vegetable and flower patches on our property that we plant in the spring, maintain in the summer, and harvest and winterize in the fall.

It’s a peaceful and pretty low cost activity that gets us outside during the most beautiful seasons of the year (fall and spring) and puts a lot of fresh vegetables on our kitchen table while also making our property look nice. It gives us a chance to work the earth and get our hands down in the soil. Usually, we garden as a family, with several of us out there weeding and turning the soil over and planting all at once.

It’s an inexpensive hobby to get started. You can get started with any available area of land or a large pot with some soil in it, along with a few tools and some seeds. Prepare to do a bit of homework, though, as you figure out how to fertilize the soil (I like to use compost and “compost juice”) and how and when to plant. The internet is a wonderful resource for gardening questions, however.

Once you have a good system in place, the costs are pretty minimal and you’ll find yourself with an abundance of vegetables and/or flowers throughout the seasons.

Final Thoughts

This post isn’t intended to be a checklist of hobbies that everyone should try. Instead, I recommend a “pick and choose” approach – read through the list, find one or two that might be of interest to you, and dive into them. Most of these hobbies are very low cost, and every single one of them has provided me with many hours of joy over the years.

Good luck!

The post A Look at My Eleven Frugal Hobbies and Whether They’re a Good Fit for You appeared first on The Simple Dollar.

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Friday, June 15, 2018

How to Overcome Projection Bias with Your Finances

One of my favorite exercises for planning ahead for the future is for people to make a detailed picture of what their future will look like. It’s a practice I do all the time.

In that practice, I just sit down and think about the future I’d like to have five years from now (or ten or twenty or whatever my timeframe is) in as much detail as possible. I make the assumption that things will go well, but not unbelievably well. It usually incorporates some significant degree of success on the goals I’m working on.

That type of visioning has a few powerful purposes. The biggest one is to somewhat clarify what goals are most important to me, because success with those goals tend to be the first elements I think about in that vision. A secondary benefit is motivation, because I’m visualizing a great outcome to a goal.

Still, there’s a pretty big problem underlining this practice, and that problem has a name: projection bias.

Projection bias is pretty simple to understand. When people think ahead to their future, they often make a ton of assumptions that center around their life being pretty much exactly the same as it is right now. This heavily extends to their current emotional state – if you’re upset, your projection of the future will have a negative tinge to it. If you’re happy, your projection of the future will have a positive tinge to it.

Wikipedia offers a solid explanation:

Projection bias is the tendency to falsely project current preferences onto a future event. When people are trying to estimate their emotional state in the future they attempt to give an unbiased estimate. However, people’s assessments are contaminated by their current emotional state and thus it may be difficult for them to predict their emotional state in the future an occurrence known as mental contamination.

In other words, we tend to visualize our future self as being much like the person we are now, with similar preferences and interests, but that visualization is often strongly tinted by our current emotional state.

So, if making a detailed picture of your future is shaded both by your current preferences and by your current emotional state, what value does that picture have? I argue that a detailed picture still has a lot of value, but there are a few caveats that should be attached to it.

First of all, you should make projections for the future on a regular basis, not just once. If you make a picture of what your future looks like just once and then try to stick with it over time, you’re going to find yourself working toward a future that probably isn’t really what you want, and it’s a picture of the future that you’ll gradually drift away from over time.

Instead, you should visualize the future in detail regularly. This corrects both for your emotional state as well for your other changing preferences in life.

For example, let’s say I’m visualizing the future when I’m in a mood where I feel like my relationship with one of my children is a bit strained, as I had to take away a privilege from them due to some behavioral problem and they got really upset. That feeling will probably have an impact on my vision for the future, even if I’m aware of it.

It’s a bad idea for me to bank all of my plans on that vision of the future. It’s not going to be very accurate in terms of my likely relationship with my child at that point.

Instead, what I should do is re-visualize the future on a regular basis. I do it about once a month, where I write down all of the details I can think of about where I want my future to be headed. The actual goals I’m working toward are something of an average of those visualizations over the last year or so. If there are consistent threads that show up over and over again, I know those are important to me. However, if something pops up only once or twice, I know those things are probably just tied to my emotional state and my focus at the moment.

In terms of specific, concrete plans, stick to what you know will happen. You know that you’re going to get old and you know that there will come a point when you physically and mentally don’t want to work at your current job, so plan for that. You know that your children are going to grow older and you know that, no matter what career path they might choose, they’ll probably need at least a little financial help with the education needed (whether it’s a trade school or a community college or a university). You know that you’re going to eventually have to replace your car. Those things are about as guaranteed as possible, thus it’s okay to make concrete financial plans for them.

You should be saving for retirement. You should be saving for the future education of your child (assuming, of course, you believe you should play a role in helping to pay for it). You should be saving for your next vehicle, provided you have any sort of need to drive anywhere. You should have an emergency fund. Those things cover issues that you know are going to happen.

The same thing is true for other aspects of long-term planning. You know you’re going to get older and thus more susceptible to declining health, so it’s a very good idea to be proactive about your health starting right now so that you’re not stuck in a bad situation later on.

What about the other plans you might have for the future? If you’re not dead certain something will occur, plan for it in a flexible way.

For example, let’s say that you intend to move to a new house in five to 10 years, ideally one that you build in the country. There are several ways you can start preparing for this.

One way is to simply start saving for that goal. Start putting aside some money each month for a down payment on the land and the expense of building the house. That’s a good approach.

Another approach is to start shopping for land right now and, if you find a decent piece of land, take out a mortgage on it right away and start making mortgage payments. That’s a bad approach.

Why is the first one good and the second one bad? With the first approach, if your goal changes, you still have a big pool of cash in savings with which to use for your new plans. With the second approach, your money is tied up in a chunk of land with a mortgage on it and most of your mortgage payments have gone to just pay off the interest and you’ve been footing the property tax bill, too. Because you locked into a specific plan early, you’ve been pushing your money into a mortgage for years and property taxes for years and your only hope is that the value of the land has gone up a lot.

The thing to remember here is there are a lot of ways that this goal could go off the rails. You might have been intending it as a retirement home, only to get divorced or to have one of you pass away unexpectedly. You could simply decide together that you don’t want a house in the country any more. Maybe a job offer takes you away from realistically being able to live in the country.

The moral of the story? Stay as flexible as possible with your savings as you work toward a big goal that isn’t a guarantee. If you’ve got a big goal that’s five or 10 or 20 years down the road and it’s not something that’s guaranteed to happen, you should be saving for that goal in the most flexible way possible, so that those financial resources can be used for other things. This is why people often save for big goals in a normal taxable investment account that can be used for anything when the time comes. Other accounts, like a Roth IRA or a 529, are designed for tax advantages when used for specific purposes (retirement and college education, namely) but usually have a tax penalty if used for other purposes.

So, let’s summarize what’s going on with projection bias.

It’s a good idea to visualize your future because it helps you see things that are coming down the road and to set long term goals for yourself. However, those visualizations are often at least somewhat flawed thanks to projection bias. You can work around those flaws by only making specific plans and taking specific actions for things that you know are coming, like your own aging, and being much more general in your savings plans for all other goals that could change over time as your life situation and perspectives change.

No matter what, it’s a good idea to save for the future, because you’ll always have big things you want to achieve. It’s just a good idea to not lock down those future plans unless those big goals are inevitable.

Good luck.

The post How to Overcome Projection Bias with Your Finances appeared first on The Simple Dollar.

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Thursday, June 14, 2018

25 Free and Simple Things to Do That Will Make Your Life Better

Unless I happen to slip into a flow state where I’m so focused that I lose track of time on a task, I find myself needing a break about ever hour or so when I’m trying to get something done. My focus wanes and I need to do something that recharges me a little bit.

It’s during those little breaks that I might be tempted to play a game on my phone or play a quick computer game or do some online shopping or something like that, but I find that when I do those kinds of things, I don’t really feel refreshed to go back to whatever task I was working on, and sometimes I’ll even have spent some money.

Instead, I’ve come to fill the little cracks in my day with little free and simple things that simply make my life better. They don’t cost money and they usually don’t take very long, but they provide a nice little perk to my day. I usually do one or two of these things whenever I take a break from working or any bigger task I’m involved with, and on lazier days I often do several of these things scattered throughout the day.

I find that on days when I do these things, I find myself in a better and more focused mood later in the day, which often gives me the energy to do things like make a great dinner for my family, be present with them throughout the evening, enjoy time with my wife after the kids are in bed, and even dabble in some of my hobbies with a clear mind.

Here are 25 free and simple things to do that will make your life just a little better.

Sit outside for five or 10 minutes without any distractions. Leave your cell phone inside and go outside to a comfortable spot with a nice view. Plop yourself down and just look around for a while. It’s often pleasant to do this with a beverage in hand – a glass of water or a cup of coffee works really well. Look at the world around you and notice little details like your neighbor giving his daughter a hug before she goes off to camp or a rabbit hopping across the yard or a little kid learning how to ride his bike or the warmth of the sun on your skin. You’ll feel better and more connected to the world.

Go on a walk around your neighborhood. A walk is a great form of low intensity exercise. It’s not intense enough to leave you sweaty or anything, but it gets your blood moving and your heart rate up a little bit. That little bump in blood flow, plus the fresh air and sunshine that you’re getting, plus the ability to simply explore the area around you and see/greet neighbors makes a short walk around the neighborhood a great little break in the day.

Go on a nature walk or hike in a nearby park. Take the walk around your neighborhood a step further and head to a local park to take a nature walk. This combines most of the benefits of walking around your neighborhood with the known calming benefits of being in nature. The practice of “forest bathing” – simply spending time in a forested area – has a number of known short term and long term health benefits.

Drink a big glass of water. Most of us can afford a little bit of additional hydration throughout the day. Simply drinking a large glass of water can help all of our body’s systems function properly, plus it can help stave off hunger and help us feel more sated. I often genuinely feel better after drinking a glass of water if I haven’t had any water in a while. It seems to awaken me.

Stretch out your body by stretching your various muscle groups for five or 10 minutes. Simply stretching out all of your muscles feels incredible. It’s a pretty low intensity thing to do – I often do it while listening to a podcast or audiobook – and it leaves you feeling more flexible and just feeling good all over. I generally follow Bruce Lee’s stretching routine to the best of my ability. I’ve been doing this for several months and have seen gradual improvements in my flexibility, plus it just feels good to do it and it provides a moment of calm in the day. Note that it’s a good idea to warm up a little first before stretching by doing some jogging in place or jumping jacks.

Clean out the inside of your car. Over time, most cars collect little pieces of detritus – a wrapper, an empty beverage bottle, a forgotten bag, a receipt, a forgotten folding chair in the trunk, a bit of grass from a hike, some dust on the dashboard, and so on. That little bit of messiness can contribute to a small negative feeling when you get in the car, a feeling that can be easily washed away by spending 15 minutes clearing junk out of your car. Clear everything you can off of the floorboards, give them a quick vacuuming, and wipe down the dashboard and panels to remove fingerprints and dust. This little task can make your car feel fresh and new again and you’ll feel good when you get in there to drive next time.

Eat something really healthy, like a piece of fruit or a vegetable. Grab a banana or an apple or a stalk of celery and just munch on it. This is a great thing to do in combination with just going outside and sitting down and looking around for a bit. I’ll often grab an apple and just sit on the front step in the sunshine eating it, watching the life around me. Eating a quick healthy snack usually helps you feel better in the moment and fills you up with something truly good for you, which can take the edge off of cravings for lower quality food.

Document a day in your life (or in the life of someone in your immediate family). Spend a day in which, every 15 minutes or half an hour or hour, you take a picture of whatever it is you happen to be doing at the moment. You can do this with a loved one, too, if you’re spending the day with that person. You can do a selfie or a picture of your environment or whatever. I do this every once in a while, just fully documenting a day. When I’m done, I’ll stick all of the pictures in a document somewhere and add captions explaining it. It’s enjoyable to put this together because it provides a nice meditation on how I actually spend my time. It’s also really fun to go look at older documents like this. It can turn a completely ordinary day into something surprisingly thoughtful and memorable.

Be helpful to someone who needs help, without expecting anything in return. If you see someone that needs a hand, whether it’s someone at the grocery store or someone in your apartment complex or someone at the park or someone in your house, just give that help without question. Load someone’s groceries into their car for them and return their shopping cart. Help your neighbor lay bricks for his new patio. It just takes a few minutes and you’ll be incredibly glad that you did this.

Fill up a bag of items to give to Goodwill. This is a wonderful way to declutter your home quickly and get rid of items that you’re not going to use any more. Just get a big canvas bag and fill it up with items that you don’t use any more that someone else could probably use, then drop off the contents of that bag at Goodwill (or your preferred place to drop off secondhand items) the next time you’re nearby. In one swoop, you’ve cleaned up your living quarters and reduced the amount of stuff you have to maintain and pick up and deal with while also being charitable.

Read a chapter or a section of a really thoughtful book. Check out a book from the library on a topic that you’ve always been curious about, and then in short bits throughout the day, read a chapter or a section of that book. The goal is to read just a handful of pages so that you’re not reading for an extended period. With a thoughtful book, you’re probably going to have a few new ideas to think over after reading that chapter, so you can let those ideas percolate in your head as you go about your day. It’s a great way to slowly digest and learn a new topic, which is a great way to understand the world a little better.

Take care of a task that’s nagging you in the back of your mind. We all have lists of undone tasks. Right now, the faucet on the sink in the upstairs bathroom needs replaced, as does an infrequently used light fixture on the main floor, and I’d like to do some rearrangement in one of the other bathrooms, and there are some closets that need rearranging… it’s quite a list! Just choose one of the things on that list and either complete that task or make a serious start on it by ordering the supplies you need or taking some other first step on that project. You’ll feel like you made real progress on things left undone and that will feel quite good indeed.

Go through your print photos and digitize and organize them. This is a great ongoing project if you have a large collection of photo prints just sitting in a box or an old photo album. Start digitizing them now before they degrade too much and then you can make prints whenever you like, plus you can use those old photos for digital picture frames and screensavers and other tasks. All you really need is a flatbed scanner, which is inexpensive these days, and some time. This is a project that you can do in ten minute chunks over a long period of time – just leave out a box of photos near the scanner and spend a few minutes scanning a few pictures here and there and saving them to your photo archives.

Go through your digital photos and organize them, too. Similarly, if you have a giant collection of digital photos, spending some time organizing them can be a great help when trying to find a photo. A good tool for doing this is Google Photos, where you can easily add descriptions to your photos so that you can search them and quickly find pictures of your aunt Mildred. You can also keep a full copy of all of your photos on your computer, of course, and by using Google Drive, you can share your full photo archive with all of your devices automatically. This is another task that can be done in short batches when you have a few free moments and it’s one of those tasks that becomes more and more valuable the more pictures you’ve described.

Send a quick appreciative message to someone who helped you recently. If someone helped you out or did something thoughtful for you in the recent past, take a moment to send that person an email or a text genuinely thanking them for their help. When people help others, it feels good to feel appreciated for that effort and it takes just a moment to give that kind of appreciation. Not only that, it feels good for you to have given thanks for something good that happened to you.

Write a letter to someone who was a great mentor to you when you were younger. This is just an extension of the previous tip. Rather than simply giving a quick thanks for someone who did something for you recently, take some time and write a letter to someone who really helped you in the past and express your sincere gratitude for that help. Spell out exactly how they impacted your life in a positive way. Writing a letter like this is a great task to do in little pieces, especially if you want to write a draft or two to make sure it’s perfect. A letter like this can be hugely meaningful for both the person writing it and the person receiving it.

Explore your local library. Many people have the impression that the library is just a building full of books. While the library is definitely that, it houses many, many more things. Most libraries have audiobooks, DVDs and Blurays, free internet access, study rooms, meeting rooms, equipment you can check out, community meetings, presentations, and many other things going on there. Trust me – it’s an underappreciated feature of your town. Take a few minutes and see what your local library has on offer.

Fill up your backpack or a basket and go on a picnic. This is a great way to turn that walk around the neighborhood or that walk in the park into a longer adventure without breaking up your day. Just fill up a backpack or a picnic basket with the items you’d need for a picnic lunch and take it with you on a walk. Find a comfortable place to sit and spread out, then enjoy a meal in a natural setting. Better yet – don’t bring any distractions along with you. Leave your cell phone at home or in the car and just enjoy the environment. You’ll end up feeling subtly relaxed and walk away feeling much better about the state of things in your life.

Close your eyes and focus on your normal breathing for five minutes. This is my basic meditation technique that I use at least twice a day to calm my mind. It’s a subtle effect, but it works wonders over the long term with regards to calming anxiety and feeling more aware and in control of your life and just generally content with things. Just find a comfortable place to sit, close your eyes, and focus your mind on your natural in-and-out breathing. If you notice your attention slipping away and drifting into random thoughts, bring it back to your breath. Do this for five minutes. You might not notice a huge change from doing this, but over time there’s a real positive effect in many subtle ways.

Take a longer than usual shower or bath. A daily shower or bath is a hygiene routine that most of us follow, but most of the time it’s a quick and automatic task to be done at the start of the day or the end of a sweaty activity. Rather than just making that task automatic, instead consider a long and luxurious shower. Let yourself soak in the water and carefully scrub every inch of your body. You’ll walk out of the bathroom feeling wonderfully invigorated.

Do some simple bodyweight exercises for five or 10 minutes. This is a great way to improve your fitness in just a few minutes a day. The seven minute workout has become quite popular in recent years and for good reason – it’s a good way to exercise all of your body in just seven minutes. You don’t have to follow that exact workout, but by simply devoting five or 10 minutes to a fairly vigorous set of calisthenics that works all of your body, you’ll get your blood flowing and your endorphins rushing in your veins. You’ll feel quite good when you’re done and you’ll gradually get yourself into better shape and thus more able to tackle an array of everyday tasks in your life.

Make a really great meal for you and your family. Most of the time, we prepare simple meals for ourselves and our family. Rather than going the simplest route, invest a little more time and effort to make something better. Rather than just dumping in a jar of pasta sauce, saute some onions and peppers in a skillet and add the sauce to those. Rather than just grilling something, put it in a marinade an hour or two beforehand to add a ton of flavor. It takes just a few minutes to jazz up a meal, but it almost always pays off in terms of flavor and family appreciation and a general sense that you can, in fact, make amazing meals at home.

Read the archives of a really good blog. Pick out a blog you really like – such as, say, The Simple Dollar – and start digging through the archives. Start from the beginning and read all of the entries over time until you catch up to the present day. It can sometimes be hard to find the earliest entries, so dig around a little. You’ll often find really fascinating nuggets and ideas in the earlier writings of your favorite sites, and you’ll also often see an evolution in writing style and changes in the writer’s life. Since each article on most blogs can be read in just a few minutes, this is a great way to read a site one bite at a time.

Think about something in your life that you’re grateful for and reflect on it for a minute or so. Just consider something that makes your life better – whatever it might be – and think about how much it really adds to your life for a good minute or so. Think about a loved one or your favorite chair or a really great book or one of your personal skills or something as simple as warm sun on your shoulders. You’ll find that such a practice is really effective at brightening your whole day.

Pick a spot in your home that’s messy and clean it for 15 minutes straight. Simply cleaning up one of the messy areas in your home by clearing out all of the junk, getting rid of the useless things, and putting other things back where they belong makes such a huge difference in making your home feel more organized and livable and presentable. I’ll stop and do this with things like my office desk or my office bookshelf and I’ll quickly feel a lot better about the space around me. I also regularly find things that inspire me or things I’ve left undone and forgotten about that I should pick up, which again leads to a greater sense of contentment and control over my life.

But all this stuff is BORING! Whenever I make a list of frugal tips or things to do, I often hear from a reader or two who tells me that everything on my list is boring or somehow not applicable to their life.

If you feel this way, I have two suggestions. First, recognize that perceiving things as boring is very much a “cup half empty” way of viewing the world. We all have the capacity to choose how we see the world, and choosing to see only the negatives in the options before you tends to produce general overall unhappiness. Instead, evaluate the options before you with a nod toward the positive aspects rather than the negatives. What’s good about this option? Ask that question instead of focusing on the negative. Second, lists like these are like a dinner buffet – you should choose the ones that click for you and not worry about the rest. Everyone is different, and different things click with different people. Rather than trying to do all of them, pick out five or ten that seem like they might click well for you or are simple and short enough that you can try them without much risk and just see how it works out.

For me, though, these little perks add a great deal of my value to my day without costing me anything other than just a little bit of time. They put me in a positive mindset about my work, leave me feeling energized even late in the day, and contribute to an overall sense of living the good life without emptying my pocketbook one iota. That’s a pretty great thing, in my opinion.

Good luck!

The post 25 Free and Simple Things to Do That Will Make Your Life Better appeared first on The Simple Dollar.

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