Monday, February 13, 2017

Mustachianism and Minimalism

Long time readers of this blog know that we have been trying to focus on living a life based on Mustachian principles, inspired by Mr. Money Mustache. MMM and his wife saved around 66% of their income and retired after ten years of working.

MMM has said that “your current middle-class life is an exploding volcano of wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income.”  MMM focuses on saving more of your income; “spending much less money than you bring in is the way to get rich.  The ONLY way.”

Now that he is retired, the MMM blog and lifestyle has quite a large audience with the blog bringing in about $400,000 a year.  Yet he barely spends any of it on material things because he hates the consumerism lifestyle.  His self-proclaimed purpose is to change the world by shifting our culture.  He is a good mentor to look up to because he does practice what he preaches.

Our lives have changed since discovering Mustachianism.  In order to save 50% of our income, we’ve made some big and small changes.  We’ve cut out a ton of expenses.  We canceled DirecTV, I stopped paying for haircuts, we stopped taking clothes to the dry cleaner weekly, we do our own dog grooming (baths, haircuts, nail clipping, tooth brushing) and we stopped routinely eating out for lunch.  We’ve also worked hard to get promotions at work, max out one 401K (working on the other one), manage our rental property, and continue to hustle on the side to steadily save and invest.

Another lifestyle I’ve been recently introduced to is Minimalism.  A few Mustachians recommended I check out this movie on Netflix called Minimalism: A Documentary About the Important Things.    According to The Minimalists, “minimalism is a lifestyle that helps people question what things add value to their lives.  By clearing the clutter from life’s path, we can all make room for the most important aspects of life: health, relationships, passion, growth, and contribution.”  Although minimalism can mean different things to different individuals, “each path leads to the same place: a life with more time, more money, and more freedom to live a more meaningful life.”  I love this quote from them: “Today’s problem seems to be the meaning we assign to our stuff: we tend to give too much meaning to our things, often forsaking our health, our relationships, our passions, our personal growth, and our desire to contribute beyond ourselves… Minimalism simply allows you to make these decisions more consciously, more deliberately.”

Becoming a minimalist involves thinking carefully about the material goods that you own or will purchase.  If you have a shirt that you haven’t worn in the last 90 days, and you likely won’t wear in the next 90 days – is it worth keeping?  Maybe that shirt is better served donated to a shelter?  Being a minimalist does not mean not owning or buying anything.  It means being conscious about your purchases.  It means buying products materialistically (in the absolute sense); focusing on quality, long lasting and durable goods instead of cheap and disposable ones. 
Not a garage in our neighborhood but many really look like this, if not worse.
It’s amazing that my neighborhood is filled with cars on driveways because the homeowner’s garages are filled completely with boxes of stuff.  People tend to attach an emotional connection to material things, and many find it difficult to donate or discard them.  Next thing you know, even though homes in the United States are getting bigger, there’s still not enough space to store peoples’ things.  Maybe that is why almost 10% of Americans own a self-storage unit and there are more self-storage facilities in the United States than there are McDonald’s, Subway, and Jack in the Box restaurants combined.  As a society, we have become way to sentimental towards are things.  

Over the last few weeks, we have been working to discard clutter and donate unused goods.  Getting rid of all this unnecessary stuff has lifted a burden off our shoulders.  We’ve cleared shelves filled with random souvenirs we haven’t touched in years.  Luckily, neither of us are collectors of things.  Our closet is finally starting to look organized and peaceful.  We still have a ton of toys (mostly gifts) for our son.  Interestingly, fewer toys benefit children in the long term.

Some things have been difficult to discard.  One example: my yearbooks from high school.  A year ago, my mom was cleaning out her house and asked me if I wanted to take my old yearbooks with me.  I took them with me because I could not bear to see the yearbooks thrown in the trash.  I graduated from high school in 1999, over 17 years ago.  I haven’t looked through any yearbook then.  Yet, I kept thinking that these books had sentimental value.  I kept thinking that I might want to flip through the yearbooks one day in the future, as if 17 years of not looking through them didn’t give any preview on how I would treat these books in the future.  I left them on the dining table for a few days. After realizing that I had no desire to look through or keep them around occupying space, I was able to discard my yearbooks.
Not our living room, but it is something to strive for.
Having less stuff surprisingly lowers your stress level and increases happiness. Our house hasn’t looked this clean and organized in years!  We still have a lot of work to do, but it’s been fun finding things to discard or donate.  Going through all these worthless things really makes us conscious of future purchases.  I don’t think it will be difficult to live life with fewer material possessions.  Less really is more.  More money, more time, and more happiness.  

Both Mustachianism and Minimalism focus on attitude adjustments to help you transform your life into one that maximizes happiness and minimizes worry.  You can go as mild or as extreme as you like to fit your life.  If you’re looking for purpose in your life, explore what Mustachianism and Minimalism can offer you.     

Wednesday, February 1, 2017

January 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 February, a brand new month.  Did you all have a good month of January?  Every month I like to write a quick summary of a few fun things we had going on the month before.  I also like to share details about the side hustle income we bring in.  Some of our side hustle income is passive.  Some requires us to put in work.  We are always trying to come up with different ways to bring in extra cash.      

January has been a great start of the year for us.  I am thrilled that I just received another big promotion and salary increase.  I truly love the work that I do; being recognized for my contribution to the company with a salary bump makes me love my work even more.  This means that we can supercharge our savings this year. 

In doing our year-end summary for 2016, we discovered that last year was quite an expensive year for us.  This year, we will be focusing on saving more, investing more, and buying with purpose.  I just read a great articled on Raptitude called “We Are Not Materialistic Enough.”  The author stresses that we should be more discerning with our material purchases, and buy better quality products that are built to last.  We should avoid making purchases of crappy goods that either break down too early or won’t be put to good use.  Conscious spending with purpose ensures that we get more value out of our purchases. 

While we try to keep our purchases of material goods down to a minimum, we don’t hold back when it comes to spending on experiences.  In our free time, we try to find fun and interesting places to take our son.  We get much more value out of short little family trips than anything material item we can buy.   

We visited the Huntington Library and enjoyed all of the botanical gardens.  Our son loved running around and exploring. 

We took our son to the Children’s Museum of La Habra where he had the chance to play in all the random exhibits. 

My wife’s company had a retreat in San Diego and our family enjoyed a short one-night stay.  In our free time, we took our son on his second visit to the Birch Aquarium.  Our son was really fascinated by all the unique sea creatures.   

Our little guy is growing up so fast.  He'll be 2 years old in a few months. Time really flies and we aim to make the most of it.  Here’s our monthly summary of side income that we have generated in the previous month of January.

Award Travel
On 1.18, I received a $550 statement credit on my Barclaycard Arrival Plus credit card by redeeming 55,000 miles towards $550 worth of an Airbnb stay we have booked for our trip to Tokyo, Japan. 
Cash back
On 1.1, I received a PayPal deposit of $26.26 from Mr. Rebates, my favorite cash back site.
On 1.7, I received a $100 statement credit on my American Express Premier Rewards Gold card for utilizing the card’s annual airline fee credit benefit.  I wrote a little blurb about this here.  I purchased a $100 Southwest Airlines gift card and received the $100 credit a few days later.

Paid surveys
On 1.10, I received $3 PayPal deposit from Pinecone Research
On 1.23, I received $3 PayPal deposit from Pinecone Research
On 1.25, I received $3 PayPal deposit from Pinecone Research
On 1.28, I received a $150 check from Olson Research Group for doing a medical telephone interview

On 1.31, I received $3 PayPal deposit from Pinecone Research

Side Job
On 1.23, I received a check for $137.50 for teaching at the local university

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 1.12, my wife received a $400 bonus deposited into her Citibank checking account (open new Citibank checking account and deposit $15,000)
On 1.30, I made a net profit of $151.67 from selling a piece of unused medical equipment on eBay.  My item sold for $169 + $15 shipping and handling fee for a total of $184.00.  eBay took $18.40 in fees, PayPal took $7.48 in fees, and shipping the item cost $6.45.   

Monthly Totals:
We saved $550 towards award travel
We earned $126.26 cash back
I earned $162 from paid surveys
I earned $137.50 for teaching at the local university
We earned $1,130 from rental income
We earned $551.67 miscellaneous income

All of this totals $2,657.43 from our side hustles for the month of January.   This is a great way to kick off our new year.  Side hustle income continues to help us live a rich life.    

Wednesday, January 25, 2017

Dow 20,000

Today the Dow Jones Industrial average pushed passed 20,000 points, a new milestone.  What does this mean and should you care? 

The Dow is a stock market index collection of 30 large American companies.  The Dow was founded in 1896 by the Wall Street Journal editor Charles Dow.  The Dow’s market value is created by adding up the share price of those 30 companies and dividing them by a random number called the Dow Divisor.  These are 30 random companies that the Dow has put together, and these companies aren’t necessarily the largest companies either.  Google, for instance, isn’t a part of the Dow.

Interestingly, the 30 companies that make up the Dow are not always the same and regularly get replaced.  As this article by the Conservative Income Investor explains, the stocks the Dow Jones committee chooses to make up the index can have a huge effect on the returns calculated by the index.  In March 1939, the Dow committee decided to remove IBM from the index and replace it with AT&T.  Later in 1979, IBM re-entered the Dow Jones Index, replacing Chrysler.  From 1939 to 1979, IBM ended up being the best performing stock in the US stock exchange.  Amazingly, $1000 of IBM stock in 1939 would end up becoming $41 million in 1979!  If the Dow had kept IBM in the index, it would have pushed pas 20,000 in 1975, and not 2017!

While the Dow IS an economic indicator, it’s a pretty crappy one.  It only tracks 30 companies, and these 30 companies don’t represent the entire US stock market properly.  If you really want to get an idea of how the stock market is doing, a better metric to follow would be the S&P 500, which is made up of 500 American companies.  The Wilshire 5000 index tracks 5,000 of the largest American companies and is another good metric to follow.  This being said, financial pundits still can’t stop hyping the Dow as a market index.   

The only thing going for the Dow as an index is that it has a very long 120-year history.  I personally think that pundits refer to it because it is attached to a nice BIG number.  When you hear that the S&P 500 closed at 2,298 today, it just doesn’t sound as exciting as hearing that the Dow closed at 20,068 today.  Bigger numbers make bigger financial headlines.  Financial news makes a 100-point drop in the Dow sound scary, but it is really just a 0.5% change. 

Planet Money podcast did a great episode on why the Dow is a terrible measure of the US economy.  You can hear the short and entertaining 17-minute podcast here. 

While the Dow hit new highs today, so did the S&P 500.  And this suggests that investors see the economy improving.  New jobs are being added, unemployment is low, and consumers are confident.  Many investors believe that this could be a start of even greater stock market returns.  Other investors believe that these market highs won’t last long and that a crash is coming. 

What should you do?  Ignore the hype and stay the course.  Keep saving, keep investing, and keep pushing closer towards your own financial freedom. 
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