Penny-Wise, Pound-Foolish

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If you’ve been following Unconbentional for a while now, you know I love introducing minor changes to your spending so you have money to invest. I’ve talked about saving amounts as small as $2/day cycling or 26¢/coffee just so you can keep adding to your bottom line. What I haven’t told you up ‘til now is that most of this is useless if you’re still an idiot about large “one-time” expenditures. Obviously, that’s common sense for a lot of you, but maybe it’s not because if I’m reading this right, the average Canadian is still blowing $40,100 on their new vehicles! As if that wasn’t enough, the current trend is fuel-guzzling SUVs over a regular “fuel-efficient” car! Don’t even get me started on rent. Some people I currently know spend as much as $1,500/month on living expenses when a little thinking-outside-the-box could turn that into $300! Here’s some quick math, if only to make you reconsider your next major purchase. I firmly believe that ANY purchase over $100 should be: a) something that SAVES you money, b) something that EARNS you money, or c) an EXTREMELY special occasion. (“Friday night” doesn’t count.) I know you know this already, but it’s hard to argue with numbers. Here we go.

A $40,100 vehicle represents the money you’d save on gas alone from about 55 years of cycling 15 KM a day instead of driving, or 301,125 KM. The circumference of Earth at the equator is 40,030 KM, so that $40,100 SUV you just bought is equivalent to what you’d save by circumnavigating the globe 7.5 times by bike. If we’re talking about saving 26¢/coffee by buying one size down every time, we’re talking about 154,230 cups of coffee you’d need to do that with, or 422.5 years of one cup a day. By a single dumb decision – buying a new vehicle LIKE SO MANY CANADIANS ARE DOING – you’ve potentially nuked 154,230 tiny good decisions, OR just shat all over the savings from multiple lifetimes of cycling. Remember, shiny things are stupid. Beware the one-time expenditure.

This is only one example, but my point is you can’t pat yourself on the back for tiny good decisions anymore. You need to do the math on big purchases, and really think about how long it took you to get there based on your frugal decisions. The other day, I was hosting a dinner party and spent $101.46 on two lobsters. I’d have to choose a Subway 6” sandwich over a much tastier sushi lunch 20 times to make up for that, and it kinda hurt to fork over that money. Sure, I’d mentally congratulated myself every time I bought a cheap sandwich, but I destroyed the benefit of ordering 20 of those in one night! You just don’t win as long as you keep making major purchases. If you’re frugal six days out of the week and go hog wild every Friday, YOU’RE NOT ACTUALLY FRUGAL! That puts you in the same boat as everybody else!

Don’t be penny-wise, pound-foolish. Saving nickels and dimes really don’t add up to much. Don’t let one or two big-ticket items set you back years of penny pinching. If you’re not careful, it takes only a day or some asshole car salesman to ruin your financial future. Watch out.

This is Trikey McTrikeface, or How Cycling Changed My Life

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I can’t ride a bike.

No, I’m serious. I really can’t ride a bike. I grew up in hilly New Westminster, BC with overprotective parents who used to drive me to school even though it was literally a block away. My repeated attempts to learn have failed. I don’t know if it’s a balance thing or a confidence thing, but if you put me on two wheels, I’ll go face first into a blackberry bush. It’s embarrassing, but I’ve made my peace with it.

That’s why, when I read this, it really bummed me out. I was missing out on so much. I was missing out on exercise, the money savings, the social aspect of riding with friends, and the thrill of the open road. I remember once, in Bruges, my girlfriend at the time wanted to bike around the city and I couldn’t go with her. It fucking sucked. I resolved to find a solution. After all, I live in Richmond, BC now – a city with no hills and quiet suburbs everywhere. That’s when I decided to man up and buy a trike. I knew I’d look like the village idiot, but it was hard to argue with the positives. Now, I ride all the time and I love it. I even crash into the occasional blackberry bush.

I found one for $280 on Craigslist, and it’s the Kent Alameda 26” Adult Trike. It’s got a huge basket in the back, and when I go cycling with friends, I usually bring four growlers of beer to make the ride more interesting. I ride it to our local brewery a lot, and it’s a 15-kilometre round trip. I save about $2 in gas each time. It doesn’t sound like much, but it’s entirely feasible that I’d ride this trike 2,100 kilometres (15 KM x 140) in a year, meaning this trike WILL PAY FOR ITSELF in a year! I’m already driving less. When I get to know Richmond’s side streets, I’ll be making most of my in-city trips using this trike! It’ll be great!

For those of you who cycle, I know I don’t need to break down the benefits. I’m just glad I was finally able to join in. For those of you who don’t, here’s some quick math: In a 2012 Forbes article, they found the “average annual operating cost of a bicycle is $308, compared to $8,220 for the average car”, meaning a bike (or trike) could save you $7,912/year! Using the ol’ compound interest calculator, investing that over 10 years at 7% interest results in $116,967.84! Can you imagine if someone did this from the time they were 25-35? A $116,967.84 boost at 35 would be insane! Can my derpy little trike actually save me that much money? It can’t hurt to try! Cycling can also increase your life expectancy anywhere from six months to eight years. Given my old life expectancy and a little luck, that could put me up to 90!

Do you cycle? If not, why? I can’t even ride a bike, but I found a way to tap into the goldmine. What’s stopping YOU? Tell us on Facebook.

Roommate #2.5, or Why “K” Plans to Live in His Van

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If you’re willing to look at renting from a weirder angle, you could save about $1,200/month like “K”. This is how.

FYI: This is about more than van-living. Read on.

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First, my situation: My place has housed three people before, but since we’re now back down to two, we’ve readopted a revolving door policy for friends to come and go as they please. When we do this, we generally have one- or two-month arrangements and put people up in our storage closet for about $300/month. Since our guests only sleep in there and are free to use the rest of our apartment anytime, this is actually a lot nicer than it sounds. We have multiple TVs, a fully stocked kitchen, 1.5 bathrooms, and even an office! As proof of concept, we actually have a guest with us next month – “J”. She’s looking for a more permanent space with her boyfriend, but until she finds the perfect place, she doesn’t want to sign another lease. We make a little bit of rent money, and she has the flexibility to keep looking. Everybody wins!

Our friend “K” is gonna win hard in a few months too. Unfortunately, his current situation is a real money pit. In his own words: im paying 1375 plus hydro and internet which bring it to 1500. my plan is to sell my jeep for 14000 and get a 2007 Mercedes sprinter for the same amount roughly. i figure it will cost about 1000 to convert it into a living space, since it will just be a bed, side table and closet cause i dont need to have a kitchen or toilet. [More on this in a second.] ive lived in a honda crv(which was fucking terrible) then a jeep cherokee which was a bit better. then [“R”] and i lived in a mini van that we built a bed frame in and put a double matress with curtains and a battery system to power fans and our laptops without using the vans battery. also we had a solar panel on the roof to charge the electric system”.

Yup, he’s planning on living in a van. But wait! It’s actually WAY better than it sounds! Why? HE GETS TO USE OUR PLACE AS A HOMEBASE TOO! And he’s not sleeping in our storage closet, meaning I can still have short-term guests! WTF, RIGHT?!?

I should probably back up and explain. When “K’s” lease is up at his $1,375/month apartment (that costs him $1,500 after bills), we have an arrangement set up. He will, essentially, become our Roommate #2.5. His plan involves sleeping in his van, but he’ll also be living with us, using our kitchen, bathroom, and office space during the day. He’ll be paying ~$300/month, and in return, he’ll have access to all our amenities, like Internet, running water, and an actual goddamn mailing address. He won’t have any real bills! On paper, he lives here. In reality, the van is home, and because of that, he has the flexibility to take his home wherever he might need to go, whether it’s a job site or a vacation destination! Also, THIS FREES UP ~$1,200/MONTH OF HIS MONEY! Over just one year, HE SAVES ~$14,400 AND I MAKE ~$3,600! Again, everybody wins! It’s like a sort of “friend economy”. Instead of paying strangers for their services or housing, pay FRIENDS for what THEY can provide. Money and favours keep circulating amongst the people you care about, and everyone becomes richer because of it! Friend Economy 101!

Obviously, this really only works for young, single people like “K”. You can’t raise a family in a van. It’s hard to argue with the savings for people who can make this work though! In Vancouver, where a 1-bedroom goes for $1,900, having access to an apartment’s amenities while sleeping in your own space for ~$300 is a steal! Of course, finding opportunities like this isn’t gonna be a walk in the park. This is just one isolated example of a millennial living unconventionally, and saving shitloads because of it.

When possible, use and rely on your friends. “K” found cheap housing. “J” found a temporary place to stay until she lines up the perfect home. I found extra rent money. It’s actually ridiculous things like this don’t happen more often. If we all functioned better as a real community, maybe we’d all be a few thousand richer.

That’s the kind of world I want to live in. I’d sleep in a van too if it meant being able to invest an extra $1,200/month. Would you?

If You “Can’t Adult”, Stop Spending Like One

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Way back in 2000, I had an allowance of $5/day in early high school. I was supposed to buy lunch with it, but most of the time, I’d blow it all on a cup of overpriced coffee. Still, having no real savings to speak of and having no way to go into debt, I just kind of floated along in financial limbo. I only saw as far as my next cup of coffee, and The Bank of Mom & Dad ensured that would happen. My needs were looked after, and it’s not like I needed TWO cups of coffee in a day, so everything was good. For those few sweet years in high school, I didn’t need to worry about money. And you know what? I might want to return to that system as soon as next month.

No, I’m not going back to making daily withdrawals from The Bank of Mom & Dad. That’d be crazy talk. I’m frickin’ 28. No, what I’m doing is a sort of mental budgeting. Roommate “D” hit upon the idea recently when he withdrew a stack of $20s and made sure to only use one a day. Over a month, that’s only $600. If he wanted something that was $40, he’d have to go a day without spending anything. What he didn’t use could be carried over to the next day, and so on and so on. It was kinda brilliant. Going back to that allowance system made it so he never overstretched his budget, and when he ran out of money, he’d just stop. I NEEDED TO DO THAT TOO.

Obviously, this is nothing revolutionary. I was just happy to add one more tool to the financial toolkit. “D” reckons if he sticks to his allowance for June, his expenses should only be about $1,200 total, rent and all! Since I’m still having trouble getting below $1,500, this tool might be a godsend! I’m actually kind of excited for it because this restriction will force me to find low-cost, high-fun activities for entertainment, and that’ll help me for the rest of my life!

Can’t adult? Try going back to having an allowance. I know a lot of you are financially responsible enough that you don’t need this advice, but I also know some of you needed to hear this. Start with $20s for now, one a day, or adjust to your personal situation as needed. Maybe managing your money like a kid again is what you need to become a successful adult.

You Buy Some Things Twice

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A few days ago, we talked about how I cut my drinking down by half, and one idea that helped with that is so goddamn simple, I’m sure it’ll help you as much as it helped me. Speaking in basic terms, all I had to do was imagine that everything I used up needed to be bought a second time. That’s it!

I can hear the collective “uhhh…” already, so let me explain. Let’s use beer for this example because it’s both a consumable, and not something super perishable (like, say, a sandwich). Cool? Okay, let’s talk about beer. For non-drinkers, follow along anyway. I’m trying to make a larger point.

Before you have a 6-pack of beer available to drink, you’ve presumably paid for it at your local beer store. Let’s say it was $12. You take it home, it sits in your fridge for a while, and because it’s so readily accessible, you guzzle beer whenever you feel like until you run out. The old me would’ve crushed that 6-pack in a night, one $2 can after another, without a second thought. I would basically destroy $12 worth of value in an evening because I already had it in my home. Is this sounding familiar yet? FOR MOST OF US, AS SOON AS WE’VE BOUGHT SOMETHING AND HAVE IT IN OUR POSSESSION, WE FORGET ABOUT ITS MONETARY VALUE. For most of us, we’ve “already paid”! I’m here to tell you there are some things you buy twice: You buy it once when you pay for it, and you “#rebuy” it when you use it up because you’re using up its value. Just flip that mental switch, and it’ll help you become more frugal overnight. I like to think it’s already saved me hundreds.

When I took that $12 6-pack home, it was still worth $12. Every time I thought to myself, “I want a beer,” I rephrased that to, “Do I want a $2 beer right NOW?” Most of the time, when I reconsidered the VALUE of that beer and that I was mentally rebuying it, it gave me that little extra bit of willpower to put it back. This doesn’t work with everything – sandwiches are still super perishable – but I’ve had success with it when I’ve considered beer, snacks, and even entertainment. “Do I want to watch this $5 movie NOW, or can I get more VALUE out of it if I watch it with friends?” That kind of thing.

Beer was where it was most effective for me. I knew every $2 can I drank would just need to be replaced with another $2 can later, ad infinitum. Every can in my fridge I could say “no” or “later” to would SAVE me $2 in the future. See what I mean?

There are some things you #rebuy. Just because it’s already in your home doesn’t mean it’s automatically free for consumption. A $2 can of beer is a $2 can of beer. Remember that, and you’ll save a shitload.

This Blog Cut My Monthly Spending by 42%

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Since I started writing Unconbentional in January 2016, I’ve had very open money conversations with friends. Every step of it has been a learning experience. As I did research for articles, I was often forced to run my own numbers and a lot of the time, they weren’t pretty. In some cases, the results called for immediate action. This post was a huge red flag. Even though I knew these weren’t healthy spending habits, spending $3,363.26/month was normal to me! Luckily, this blog saved my life. This is what I spent in April 2017.

Entertainment was a big deal to me back in 01/16, but I still thought I had control over it. $138.03 was reasonable, right? Unless it’s travel, NOPE. In 04/17, I spent only $33.54 on Entertainment that wasn’t Spotify or Netflix. (I don’t know why, but I tend to lump Spotify and Netflix into my Bills category. I consider them essentials.) In that $33.54 were two main purchases, and this is where it got interesting: I bought a $19.99 video game that I didn’t end up liking, and I bought a bunch of supplies to try CREATING a card game for $13.55. I spent half an hour on the video game, tops. Trying to create the card game took HOURS, and was a great night spent with geeky friends. In this case, the unconventional form of Entertainment clearly won out. Instead of consuming, try creating! It’s often the cheaper option, and far more rewarding!

Personal and credit card Debt cost me $161.55, and that’s the big red flag I’m dealing with now. I also included a Home category this time, which I didn’t have in 01/16. I spent $99.23 on stuff like cleaning supplies, toiletries, etc. Travel came to $158. That’s gas, and one super costly cab ride from a bar. Missing a bus really shouldn’t cost $46, but I guess cabbies need to eat too. Meanwhile, Bills are as expensive as ever, and I no longer have a girlfriend covering the cost. On top of that, I pay for Mom’s cell phone and use a stupid amount of data. My total for Bills came to $447.29. That’s phone, Internet, electricity, Spotify, Netflix, and a weird banking thing or two. That can’t be normal for two people living here, can it? What do you pay?

Finally, we’re at Food and Alcohol, and you know what? I’m fucking PROUD at how far I’ve come. I’ve started drinking less and eating healthier, AND I’ve made cooking at home the default option. Food costs came to $518.02 last month, and I think most of that was groceries. It’s not “A’s” $80/month, but we can’t all be as awesome as her. As for Alcohol, I’m way down too! For 01/16, it was $1,120.27! 04/17? Only $530.55, over 50% less!

I’ve still got a LOT of work to do – it’s stupid, for instance, that I still spend more on Alcohol than Food – but the total damage for April 2017 was a mere $1,948.18, DOWN FROM $3,363.26! That’s 42% less I’m spending EVERY MONTH.

I have no doubt starting this blog saved my life. Current goals involve trying to get down to $1,500/month. I’ll provide updates as I get closer, but hopefully, this will inspire you to see what cuts you can make in YOUR monthly spending.

For those of you who are new here, this is why I didn’t include Rent. (Yeah, I know I’m super fortunate.)

What do YOU spend in a month? What can I learn from YOU?

So You Want to Be a Millionaire…

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No 18-year-old has $41,600, but that’s pretty much the only thing standing between a high school grad and them becoming a millionaire in their lifetime. Yep, through the magic of compound interest, that’s all it takes to get to seven digits. Here’s how much money you’ll need to become a millionaire by retirement depending on your age. This data assumes you’ll retire at 65 and have your money invested in something that generates 7% interest. (You can find my justification for that number here and here.) It also assumes that: 1) You make no further contributions toward your nest egg, and 2) you make no withdrawals until you’re 65. This is presented as data ONLY. I hope you find it as interesting as I did.

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All of these equal $1M:
18 – $41,600 x 47 years of 7% growth
19 – $44,500 x 46 years of 7% growth
20 – $47,700 x 45 years of 7% growth
21 – $51,000 x 44 years of 7% growth
22 – $54,600 x 43 years of 7% growth
23 – $58,400 x 42 years of 7% growth
24 – $62,500 x 41 years of 7% growth
25 – $66,800 x 40 years of 7% growth
26 – $71,500 x 39 years of 7% growth
27 – $76,500 x 38 years of 7% growth
28 – $81,900 x 37 years of 7% growth
29 – $87,600 x 36 years of 7% growth
30 – $93,700 x 35 years of 7% growth
31 – $100,300 x 34 years of 7% growth
32 – $107,300 x 33 years of 7% growth
33 – $114,800 x 32 years of 7% growth
34 – $122,800 x 31 years of 7% growth
35 – $131,400 x 30 years of 7% growth
36 – $140,600 x 29 years of 7% growth
37 – $150,500 x 28 years of 7% growth
38 – $161,000 x 27 years of 7% growth
39 – $172,200 x 26 years of 7% growth
40 – $184,300 x 25 years of 7% growth
41 – $197,200 x 24 years of 7% growth
42 – $211,000 x 23 years of 7% growth
43 – $225,800 x 22 years of 7% growth
44 – $241,600 x 21 years of 7% growth
45 – $258,500 x 20 years of 7% growth
46 – $276,600 x 19 years of 7% growth
47 – $295,900 x 18 years of 7% growth
48 – $316,600 x 17 years of 7% growth
49 – $338,800 x 16 years of 7% growth
50 – $362,500 x 15 years of 7% growth
51 – $387,900 x 14 years of 7% growth
52 – $415,000 x 13 years of 7% growth
53 – $444,100 x 12 years of 7% growth
54 – $475,100 x 11 years of 7% growth
55 – $508,400 x 10 years of 7% growth
56 – $544,000 x 9 years of 7% growth
57 – $582,100 x 8 years of 7% growth
58 – $622,800 x 7 years of 7% growth
59 – $666,400 x 6 years of 7% growth
60 – $713,000 x 5 years of 7% growth
61 – $762,900 x 4 years of 7% growth
62 – $816,300 x 3 years of 7% growth
63 – $873,500 x 2 years of 7% growth
64 – $934,600 x 1 year of 7% growth
65 – $1,000,000

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Well, how’d you do? Don’t worry if you fell short. Remember, THIS IS IF YOU MAKE NO FURTHER CONTRIBUTIONS. You could be 35 with only $80,000, and you’d still hit $1M if you put in $4,000 every year until you’re 65. Also, $1M IS AN ARBITRARY NUMBER. Here’s why I’ll never need a $1M net worth. For more proof that $1M is arbitrary, consider inflation. If I have $1M when I’m 65, that’s only a buying power of today’s $480,610!

Whaddaya think? Does this make you want to become a millionaire more or less? Does this seem doable now? Are you now dreaming of yachts and underwear models? Let us know.

It’s not that difficult becoming rich. That’s why rich people are everywhere!