Month: April 2013

The Year That Was

Hey, it’s been a year already, did you notice? Well, if you are new here, this was started April 24 last year. I could remember how confused I was when I did the application for a website, then tried to figure out WordPress and did my first blog. I did about 36 hours of research on how to do a website. Doing the first post was the hardest part of it.

Well, nothing comes easy and I’ve experienced it many times over. Maybe for some, but for me it always take a lot of reading and studying before I begin to understand what is going on in new things.

The past year I studied manual photography. I have tried hard in the past to learn it by reading a few books or asking a few people. Nothing came of it. Since I was rehabilitating from the surgery I had some time. So I went to three night classes for almost three hours a night. It made a world of difference. Now a Digital SLR camera doesn’t look as intimidating as before. Of course, correct practice makes perfect. That means I have another 2,000-3,000 shots before I begin to become an expert. But it helped. And photography opens an entirely new world of appreciation of the beauty of God’s creation.

I also went to several watercolor classes. I learned a few techniques but not as intensive as the photography class. What is the most important thing that I learned? Painting can really relax you. Painting with a bunch of older citizens around you is very relaxing and can be a therapy procedure in itself. I paid only $60 for six sessions.

On the minimalist front, we sold my wife’s bicycle as it’s not being used. I have one of my bicycles for sale now too and pretty soon we will be a one bicycle household.

Well, our readership increased from around 53 last May to 166 visitors for this month (as of today). This year we are averaging 550 visits per month. Considering that some websites have tens of thousands of loyal readers, I am just a very small fish in a large pond.

I wanted to do more articles, but I wanted quality more than quantity so instead of posting twice a week, I do about 5 times per month. I hope to double that in the next few months. I just got sidetrack with three possible income generating projects. I am coming up with a new blog, maybe about heart surgery recovery, maybe some other topic. I’ll let you know as soon as it’s online.

So where are we going? I plan to run this site for about three years, and I had posted 57 articles already. I will try to go for 200 or more articles by the end of the 3rd year. After the 3rd year, I will keep the site for a few more years as ready reference for my grandson James as he will almost be a teenager by then. Hopefully I had given him (and you dear readers) some good insights in living a delightful yet productive life.

What did I learn from the blogging experience? If I can do this, then you, my dear readers, can do anything you set your heart into doing.

Thank you all for taking your time to read. I hope to get more wisdom to share with you in the next two years. Take care now.




Extremely Frugal

This is going to be a fun post (at least for me and maybe one of you). We are going to dissect several ways to be extremely frugal. Most are humorous, verging on ridiculous. But before you put on that judge’s cape to harshly pronounce sarcastic comments on the people (most are fictitious, but I won’t tell you which ones), please remember that this is only for fun.

To protect the identity of the people concerned, Michael will now be known as John and Michelle will now be known as Kathy.

I know you have heard of some people who are frugal in an “extreme” way, and you can probably add hundreds to what I will post here but for now, let’s settle on a few:

• Reused their paper towels – Yes, I’ve read about this. They hang the used paper towels to dry out, and then reuse them again. Savings, a few dollars a week.

• Hypermiled in their Hybrid – they have Hybrid cars that burns 40 miles per gallon (realistically) and followed huge truck in the freeway for at least ten miles. They timed red lights so they didn’t need to come to a complete stop, and exit a curving “25 MPH only” ramp at 45 miles per hour so momentum is not lost. Result: 58 miles per gallon. Savings? A few dollars a day depending on miles they drove.

• Religiously scouted for a used 10-year old Toyota truck. Bought one for $5,000. Drove it for 2 years while maintaining it sparingly. Sold it for $5,500. Earnings? $500. Avoided expenses: Depreciation – about $3,000 per year if they bought a $20,000 brand new car instead.

• Walked or bike to work 100% regardless of weather. There are a few hundreds of them in any big city. There was a lady in Alaska who walked two miles to work daily, oftentimes in cold weather – sometimes at -40 degrees Fahrenheit (below freezing). In California, some people use a Hummer H2 to drive to a grocery store a quarter of a mile away.

• Stuck to a realistic yet minimalistic budget. Ate egg salad sandwiches or peanut butter sandwiches for days on end to ensure to maximize. Result: hundreds of dollars a month in savings.

• Bought only used clothing or clothes on sale in bargain department stores.

• Built their own home – Wait, this is not one of those 12 bedrooms, 10 bathrooms houses owned by sports superstars. These couple saved most of their income for five years. Then they bought an empty lot. They camped in the empty lot using a regular tent while they built their house from scratch, mostly from reused building materials. Big, big savings after a few months’ work.

• Used Alternative things – for example, used empty mayo bottles for drinking glasses. Made their own furnitures and sweaters, blankets and bags, from remnant materials given away by craft stores.

• Bought used bicycles, used them for years – and then sold them for the same amount. Also, bought used bicycles, rebuilt them, polished them – and resold for a profit (this could be a great project for me in the future).

• Ate home cooked meals 90% of the time (the remaining 10% they ate raw food :)). Biggest savings can be had by not eating out or minimizing eating out. Could be thousands of dollars in savings for some living in big cities.

I think most of this are very frugal – er – extremely frugal ways of savings. They are a great habit to make as long as it doesn’t affect other people in a negative way. The only one that may affect people is the hypermilers if they end up being unsafe for themselves and everybody else. It can still be done – but in a safer way.

Think they are too hard? Not really, someone or a few thousands did and are consistently doing it daily. Here’s a few of the real people who I mentioned above: One of them have enough savings to live on without working for 50 years (or more because their investments are accruing interest monthly) and he and his wife are only in their 30s. One bought condominium unit using cash saved and earning more money in rents. A family of four spends about $20,000 a year, their two cars and two houses paid for (one rental house) and has $800K in savings. Most of the above didn’t have to spend time grinding backbreaking hours at work because they had saved enough money to finance their living expenses for at least 20 years. They can do whatever creative things they have planned every day without a boss telling them what to do. Isn’t that the best way to live?

Someone said that income is “not what you make, but what you keep”. Saving and not spending is the way to a life of liberty.




Spend Below Your Means

This is the second article in the “How to get rich, slowly but surely” and for today we will discuss the not so well-known concept of spending below your means. Your monthly expenses should be no more than your monthly income at any given month, including and most especially during the holidays or special occasions. There are several ways to accomplish this, but we’ll do a different approach this time.

The biggest expenses are your residence, transportation, clothing and food. Significantly, they are also our basic needs to have a normal life. I can rattle off tip and suggestions on how to save money on each category, but you’ve seen them in my previous blogs or anywhere else in the dozens of frugal lifestyle websites.

I’ll present to you instead a lifestyle modification plan if your lifestyle happens to be mediocre or less.

  1. Our lives should not be dictated by the world (or society or Hollywood, etc.). I admit that it is a very hard proposition considering that we are constantly bombarded by advertising telling us to spend our hard-earned money. However, to avoid being a slave to a cruel master, we need to sit down and assess what we are trying to accomplish. We have to silence the constant influx of consumerism propaganda. We have to follow our path instead of listening to the cacophony of “buy this and buy that” messages. Someone once said “We have to plan or somebody else will plan our life for us”. What are our goals? Writing them down will make it clearer to us.
  2.  We have to practice delayed gratification. Nothing gets us in more trouble financially than instant gratification. Someone defined it as “buying things we don’t need, with money we don’t have, to impress people we don’t like”.
  3. Pay attention to details. If you notice that you spend a lot of money on soda or desserts, I think it would be prudent to start figuring out why we spend like we do. If our closet is almost imploding with brand new clothes, it’s time to do self-analysis as to why we need so many clothes in the first place.
  4. Develop Self-Reliance. You can’t develop this in a few months. It takes years learning new skills and perfecting them. Learning how to do basic handyman work at home (patching holes in walls, making the sink garbage disposal work, getting familiar with your water heater – among other things) will save you money by not calling in a professional to do basic work. Try to learn a new skill every six months or so. There are hundreds of YouTube videos teaching a variety of skills.
  5. Debt is a cruel master. We are actually slaves to whomever we owe money to. Using all your efforts, avoid debt at all cost. Financial freedom means not being in debt for unneeded things. Sometimes, the only way we can afford a residence is by paying a 30 year mortgage. Make plans for paying it sooner – there’s no penalty for that. Consider renting if housing is too expensive where you live. As for the rest of the expenses, try getting an inexpensive car, buy less but pick quality clothes that last and watch your food budget.
  6. Do not attach your self-esteem to things (big house, expensive luxury cars, diamond earrings, boats and other toys). No one really cares what you have. The ones that do care get envious and a few people out of envy may try to harm you. So you have a Corvette, someone else has a Porsche; someone else has a Ferrari. Someone else has a…. you get my point. This game of one-upmanship is never-ending. The wise lives a wonderful life by not joining this game of vanity.
  7. Consider the fact that everything we have is a gift to us from God. We can’t claim ownership of something that ultimately is not ours in the first place. We can enjoy its benefits but we can’t flaunt it because it may disappear in an instant. He gives. He can take away… Look at some of the places destroyed by tsunami or hurricane. Some of the things took years to make or acquire, yet destroyed in minutes. So what should we do? Do good to those that are unable to help themselves. The financial rewards will come back to us. Some call it Karma. The good Book says “you reap what you sow”. What goes around comes around.

When you get good at spending below your means, try the next step: Spending waaay beneath your means. I’m sure you will be able to generate new ideas once you get really familiar with this frugal lifestyle. There’s only one rule: You accomplish this lifestyle change using only your own efforts and not at the expense of other people.



Emergency Fund 101

I was thinking a lot regarding the last post. I looked at it and thought, OK, so I made a list of things to do to get rich or prosperous slowly. Is that enough? Maybe I can go deeper and discuss each of them? So after more thinking, I decided to delve deeper and further explain a few of the insights. It will be another series and It’ll be called the “How to get rich, slowly but surely” series of posts.

The first insight in the last post was on saving money for emergencies. Is it really necessary to have an emergency fund? What about borrowing from family and friends? With the availability of credit cards to almost anyone that breathes does it make it still necessary? Well, yes and no. If you have perfect credit, and lending institutions are willing to give you money anytime for zero percent interest, then credit cards are a good alternative to emergency funds. What we are trying to avoid are the ridiculously high interest rate being charged for using the card.

But wait, what’s the emergency fund for anyway? Flashback to the 80’s after buying my first ever brand new car. Before I bought the car, I looked at my budget and based on my computations, I can afford payment on a car up to $280 a month because of my low monthly rent. Four of my squadron mates rented one apartment and we split the rent and the utility bills. I got that car and for the first few weeks I felt great about the car but felt really gloomy with the five-year payment plan. Almost two months later, I had an accident when a motorcycle crossed the double yellow line and crashed in front of me. The driver was OK except he doesn’t have auto insurance. My car had a wrecked left side and is not safely driveable. I brought it to an automobile body shop and got a surprise. I had to pay a $500 insurance deductible and that’s just the total amount of savings that I have in my bank account. Without that meager savings, I don’t know where to get the money. I didn’t have credit cards yet, and all my friends were in the navy so we all don’t get paid much. That’s one of the reasons for having an emergency fund.

I could think of a few more reasons, but I think you get the point already.

I mentioned to save for emergencies as little as two to three months’ worth of salary in the previous post. Some financial counselors go for six months to two years’ worth of salaries. It really depends on your comfort level. What about if you are a business owner? I would start with saving at least six months’ worth of personal expenses and a little capital contingency fund in case your cash flow slows down for a few months due to nonpaying customers.  Personal expense means your family’s basic necessities. Basic means the bare minimum for your groceries, utility bills and monthly rent or mortgage. No cable TV, cappuccinos or lattes, restaurant bills, trips to the spa or magazine subscriptions there.

I don’t know about you but when I think about losing a job or a business, I want to have something to fall back on just in case things go bad for a few months. It’s really disheartening when you don’t have any cash and you try to borrow from a friend or a financial institution. This is the time when you learn who are your real friends and there’s not going to be many of them.

This is not to put a fear on you about finances.  It’s just that reality sometimes strikes hard when fully unexpected. Some rich person remarked that “money will fix anything” and we all know that’s not necessarily true. However, having a little saved up sometimes will give you some peace of mind knowing that the unexpected is now expected. And now you are ready for it.

So how do you start an emergency fund? Set aside 10-20% of  your net pay every payday and keep it in a savings or checking account. Some people are unable to save because they wait until they have excess funds to save. Most of the time, there will not be an excess fund. The best way is to budget a small amount each payday before paying all the other expenses (except tithes for those who do). Once you built up enough for three months’ worth of net salary, go for six months or whatever amount you are comfortable with.