Monday, March 6, 2017

Our $1,000 financial setback

My family just suffered a $1,000 setback.  Here's what happened:

Last week, I was slowly backing the car out of the garage and onto the street. One of my neighbors was driving extremely fast down the road.   The other driver tried to swerve out of the way but could not do it in time, and we collided into each other.

As soon as our cars crashed, my first thought was about my son; he was in the back seat of our 4Runner, strapped into his car seat.  While the sound of the crash was pretty loud, the impact barely moved our car.  My son was fine, happily flipping through a book he was looking through as I was backing out onto the street.  My second thought was about the occupants in the other vehicle.  I quickly went to check on them.  I was glad to see that everyone was fine.  There were no injuries and no air bags went off.  However, the other car had quite a lot of damage where our cars hit each other. 

My neighbor was very nice about everything and we had a nice chat. We exchanged our licenses and vehicle insurance information (we both had GEICO auto insurance).  When I called GEICO, a representative explained to me I was likely going to be found 100% liable for the accident since a car already driving on the road has the “right of way.”  She told me “it doesn’t matter how fast a car is driving down a street, a person backing up into oncoming traffic has to stop.”

I didn’t want to accept fault completely without at least trying to dispute the charge.  Our home driveway has kind of a blind corner for incoming traffic. That's why I always back out extremely slowly whenever leaving the house.  I gathered and sent several photographs of my neighborhood and even used images from Google Maps to demonstrate the blind corner for oncoming traffic to my insurance adjuster.  I wasn’t trying to prove that I was not at fault at all for the accident, but I was hoping that the adjuster would side with me and conclude that maybe I was only 50% or 75% at fault.

After a day, GEICO still held me 100% liable for the car crash.  The rep reminded me that if I wanted to get our vehicle repaired, we would have to pay out a $1,000 deductible.  Ouch!  After getting off the phone, I immediately felt a rush of emotions hit me like a punch to the face. 

I felt anger at how stupid I was to not back out more carefully.  I felt annoyance towards the other driver for driving too fast down the street. I felt regret for increasing our deductible to $1,000 instead of keeping it at $500.  We have a great rate on auto insurance currently ($596 per 6 months for 2 insured vehicles).  My pride was hurt.  Then I started thinking about all the things that we could do with $1,000: invest it in index funds, go on a week long vacation, put it in our savings account, contribute more to our son’s 529 college savings plan, or donate to charity.  There were so many great options for spending $1,000 compared to using towards a deductible towards repairs. 

After a day or two of feeling upset, I finally accepted the $1,000 setback.  A few glasses of whiskey definitely helped☺. I’m glad that no one was hurt.  Although I spent quite some time cringing about it, I realized that there was nothing else that could be done.  The crash happened, and it was time to move on.  Spending anymore time dwelling on the details would just be a waste of my imagination.  We do have a very healthy emergency fund, and $1,000 is not a lot in the grand scheme of things.  It’s less than 0.1% of our net worth.  We make over $1,000 a month consistently in side hustles.  While this is a minor financial setback for us, the cost of repairing our vehicle out of pocket would have far exceeded our deductible.  I’m glad our car is fully paid off and we don’t have any monthly auto loan expenses. 

2017 has started off as a good year with our spending cut back considerably and both of us receiving nice salary increases.  We are still on track to save a ton this year, and this helps us handle thousand dollar setbacks without too much stress.  If this accident happened many years ago when we were living paycheck to paycheck, then we would have certainly gone into credit card debt for this.

I have already changed my deductible to $500; it's only an increase of $43 for a 6-month period to cover both of our vehicles.  Psychologically, a $500 deductible is less upsetting than a $1,000 deductible.  My wife and me have now agreed to ALWAYS reverse park our cars into the garage and so we will be forward facing when exiting our driveway. This will never happen again. Lesson learned.

On a side note, now that we are reverse parking our vehicles, it reminded of this interesting discussion I heard on NPR radio years ago titled “Parking behavior may reflect economic drive.”  Drivers who took “elaborate effort to wiggle in [to] reverse” park their vehicles delay their gratification.  When they “back in and pay the price at the beginning, [they] don’t have to wiggle [their] way out when they leave.”  One researcher actually found a correlation between parking behavior and economic growth rate.  In China, 88 percent of cars are parked reverse.  In the United States, it’s less than 6 percent.  All I know is that heading out of the driveway in the morning is much smoother (and safer).

Having an adequate emergency fund makes sure that thousand dollar setbacks aren’t financial emergencies.  Back to saving and investing more.      

Wednesday, March 1, 2017

February side hustles 2017

The great thing about doing side hustles to generate extra income is that you can hustle on your own terms.  The more hard work, time, and creative effort you put in, the more extra money you can make.  You can hustle as little or as much as you want, whenever you want.  It’s your extra money, and you can choose how you want to spend it.  Instead of focusing on what ideas don’t apply to you, try focusing on different side hustle ideas that you can implement to work for your situation.

Welcome to March.  Did everyone enjoy the short month of February?  This month sort of just flew passed us.  Time really flies and we don’t want to work for the rest of our lives. 
As usual, we spent the month hanging out with friends and trying to find fun activities for our son.  He’s growing so fast and it’s so easy to miss out on his childhood.  We’ve also spent a lot of the month organizing things around the home.  We’ve been selling, donating or discarding any unused items that have been cluttering our home.    


One big event for many couples in the month of February was Valentine’s Day.  It’s estimated that people will spend around $140 for their significant other in 2017.  When I was less educated about my finances, I would feel pressure to spend money towards an elaborate display of affection for my significant other.  Nowadays, my wife and I treat Valentine’s Day as just another normal day.  There’s no point in spending money on each other if we both share the same bank account.  We buy what we want, when we want, and celebrate our relationship on a daily basis.  The best Valentine’s Day gift you can give your significant other is freedom from the stress of feeling forced to spend money for this consumer holiday.

Here’s our monthly summary of side income that we have generated in the previous month of February.
Cash back
On 2.26, my wife received a $300 statement credit on her Chase Sapphire Reserve credit card.  This was to offset a purchase she made for the unlimited JR Pass, a railway pass we will be using throughout Japan on our upcoming trip.  I love how the Chase travel credit activates automatically and is immediately credited to your account after your travel related purchase clears. 







On 2.13, I received a $400 bonus deposited into my Citibank checking account (open new Citibank checking account and deposit $15,000).  My wife received $400 last month from the same deal.   
Paid surveys
On 2.6, I received $3 PayPal deposit from Pinecone Research
On 2.24, I received $6 PayPal deposit from Pinecone Research
On 2.27, I received $3 PayPal deposit from Pinecone Research

Rental Income
On 1.1, I received a check for $700 from our temporary housemate.
On 1.4, we received a net profit of $430 from our rental property.

Miscellaneous Income
On 2.19, I sold an old snowboard to someone in the neighborhood on Nextdoor for $25.
On 2.26, we sold an unused table on Nextdoor for $50.
Less stuff and more money, woo hoo!

Monthly Totals:
We earned $700 cash back
I earned $12 from paid surveys
We earned $1,130 from rental income
We earned $75 miscellaneous income

All of this totals $1,917 from our side hustles for the month of February. Combining increased income and less spending (due to pursuing a more minimalistic lifestyle) is really going to supercharge our savings rate this year.  Keep on saving consistently my friends!

Sunday, February 26, 2017

The real value of material things

This little guy doesn't need expensive toys to be happy, there's a swing set at the park
In my last post, I described how our family has been embracing a more minimalist lifestyle lately.  This has been a big job for us and has involved a ton of organizing, cleaning and eliminating things around the house. 

Over the last few years, we have slowly been accumulating a ton of excess stuff.  When we first moved into our home back in 2010, friends were very happy to donate their unused tables, chairs, and desks.  Once my wife got pregnant, we received a ton of baby supplies donated to us including: a crib, bassinet, various baby swings, stuffed animals, clothing, books and more.  We’ve also purchased a bunch of random knick-knacks like vases, teacups, and lamps.

We are very thankful that many of our friends were able to give us great quality used furniture and baby items.  Many of the hand-me-down baby clothes could only be used a few times until our son grew out of them.  This has helped to keep our expenses to a minimum.

Now that we no longer have use for many things around the house, we’ve been trying to reduce the amount of material items that we have.  Minimizing the amount of stuff we have has been a slow process.  It took years to accumulate all these items.  Every day, we have been organizing things to keep and things to toss.  It’s amazing how much the monetary value of something can drop when no one else wants it.  Some people may be good at selling used junk, but I have no interest in it.  If I can’t sell something easily, I will donate it or trash it.  There are several Goodwill donation centers close to our home.  We’ve also had to call trash services to come pick up a few big items. 
 
The Tempur-Pedic mattress foundation we finally ended up giving away for free
We finally got rid of an old mattress foundation that we’ve been hanging for the last few years.  I’ve been hesitant to part with it, since it cost $500 back in 2010.  When I tried to sell it, I realized that no consignment stores in my area would take it and no one was interested on Craigslist.  I ended up offering it for free on Nextdoor.com, a neighborhood online social community.  We have parted with plenty of items that cost quite a bit when first purchased, and now are pretty much worthless. 

With tax refunds coming back to millions of Americans, companies are trying their best to get consumers to part with their new money.  I’m seeing tons of advertisements on ways to “get the max out of your tax refund” by spending it on sales.  When I was younger, I would always treat my tax refund as “free money” and quickly use it towards some type of frivolous spending.  New companies try to get you set on monthly recurring subscriptions for new clothing, toys, shavers, and even dog toys.  What people don’t realize is that many of these material items end up creating clutter. 

Experiencing first hand how little monetary value many material things hold helps us choose very carefully what type of items we will buy in the future.  In the future, we would rather spend money on experiences, rather than material goods.  And if we’re going to buy any material goods, we will aim to purchase high quality items only.  Our lives are too valuable to spend chasing material things.     
Time spent playing outdoors with my dog is priceless, and yet it does not cost any money
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