Wednesday, March 14, 2018

Thanking your past self

If I started investing 20 years ago, I'd be long retired by now.

One of my biggest motivators for striving to work so hard now is looking forward to a rewarding future.  Where you are now with regards to your health, wealth, relationships, and happiness come largely from decisions you’ve made 1,5,10 or more years ago.
Sometime in the future, you will look back at your past.  How do you want to reflect back upon your life?  Do you want to be proud of the choices that you’ve made?
Today I want to talk about things you can do now that your future self will thank you for.
Start improving your financial situation today
If you are living paycheck to paycheck with no adjustments to your spending or saving, a year from now you will likely still be living in the same dire situation.  One financial emergency can put you into a debt spiral.  If you have credit card debt and only make the minimum monthly payment, a year from now your debt will still be sizeable.
Life is long
An argument many younger people in debt often make (myself included when I was younger), is that you should live only for the moment, since life can be short.  What these spenders fail to realize is that statistically, life is long, and you should plan accordingly.  If you don’t plan for your retirement, you may find a lifetime of working forever until your body gives out.   Otherwise you may find yourself to be a burden on others, whether it’s your family or society.  Read this depressing article about what life without retirement savings looks like.  Valuing your free time is one of the best reasons to strive for financial freedom.   
If you are in the middle class and have financial problems, I’d argue that there is always a way to improve your situation.  But some action does need to be taken.  Let’s face it, your money problems are not likely to go away by winning the lottery, marrying rich, or getting a surprise inheritance anytime soon.  We are not all given the same advantages in our lives, but most of us do have some choices that will shape our future.    
When I first started working in 2008, I was living paycheck to paycheck.  I was living for the moment and I told myself I would start saving and investing “sometime in the future when my income increased.”  Credit card debt was normal and just a part of my life – I would always be one month behind on my debt since I took advantage of credit card interest arbitrage.  Thankfully, I always found a way to pay off my monthly credit card balance in full. 
It’s not just about making more income
In the past, if I wanted something, I’d just buy it and charge it on the credit card.  Since I was too lazy to cook, I ate out all the time.  If I needed more money, I would just go out and hustle for more.  I would take on several side jobs or buy and sell merchandise on eBay.  I told myself that the way to get financially ahead was to make more money.  Saving more wasn’t even an option I considered.
I made a good salary but I still felt constantly broke.  Every time I got paid, the money would go towards paying off my credit card bill.  I always found ways to make more money, but I didn’t even think about all the money I could find by just cutting back my expenses.
When the financial crisis occurred, many people around me lost their jobs and were unemployed for a long time.  I watched the news about how the stock market was crashing and how the US economy was in a recession.  People at work started talking about the importance of saving money.  Almost all of my coworkers started to bring their lunches to the office.  I felt guilty going out to lunch while everyone was bringing his or hers into the lunchroom.  I joined them and appreciated how easy it was to bring my lunch.  I immediately noticed how much time, money, and fuel I saved if I just stayed in the office during my lunch hour.  A common topic of conversation during these lunch hours was how broke everyone was.  Many of these individuals were decades older than me, still complaining about living paycheck to paycheck and struggling to make ends meet.
I didn’t want to live like these broke coworkers, so desperate for their next paycheck.  Many of them sadly had a lifetime of working, yet almost nothing to show for it.  Some expressed regret that they didn’t have any money to buy into the stock market, which at one point had dropped 50% in value.  That’s when I decided it was time to take action and fix my finances.  All I knew about stocks during this period was that money was made when you “buy low and sell high.”
I turned to the internet to search for ways to save money and invest.  I read every single financial blog and book I could get my hands on.  I actively read through as many financial posts at that I could, learning as much as I could about saving and then investing in index funds.  I met and married a frugal wife.  Discovering the Mr. Money Mustache blog really lit a fire under our asses to work relentlessly to improve our finances.  We started saving money by bringing our lunches to work, cooking dinner at home, getting haircuts at home, cancelling cable, and making coffee instead of going to Starbucks.  Having a high savings rate set the foundation for having an abundance of money that we could invest.  It took many years for me to go from a paycheck to paycheck existence to saving over 50% of my income. 
The most important thing you can do is take action
You can read through a ton of investing blogs and books, but none of this information will matter unless you take action.  Investing for your retirement doesn’t have to be difficult.  The simplest of all portfolios could simply be to invest everything into one stock market index fund.  The Vanguard Total Stock Market index fund (VTSMX) has a minimum initial opening deposit of $3,000.  After that, each contribution can be as little as $50.  Vanguard Target Date Funds have a good mix between domestic and international stocks and bonds with a minimum initial opening deposit of $1,000.  Future contributions can be as little as $50.  For those looking to invest in an index fund with even less money, the Schwab Total Stock Market index fund (SWTSX) has a minimum initial investment of $1.  Opening a retirement or investment account will take less than 10 minutes of your time.  Every single dollar you invest and hold onto today will continue to increase in value and pay you dividends over time.  These small investments over time can add up to make a big difference. 
S&P 500 returns since the beginning.  You want to start investing as early as possible.
Our financial situation did not improve overnight.  Little by little we worked on cutting out expenses and increasing our savings rate.  As our income has increased, so have our investment contributions.  I slowly increased my paycheck contributions into my 401K (sometimes by as little as 1% every few months) until I could max it out.  We slowly saved enough to buy a rental property, which continues to give off monthly income and tax deductions.
If you are looking to improve your finances today, the first recommendation I would make would be to track your spending.  We automatically track our spending with Mint.  We automatically track our investments and asset allocation with Personal Capital.  We manually track our spending with ClearCheckbook.  After you get a good idea of how much money is coming in and going out of your checking account each month, you can start to optimize your budget and investment accounts. 
I’m thankful today for the investment contributions we made years ago.  Many of these contributions were as little as $50.  Our investment accounts are now close to reaching $400,000 and our net worth is now over $1 million.  This is all due to decisions we made and stuck to in the past.  Sometimes I regret not investing more when we had the chance, but there’s no sense in dwelling on the past.  What we can change is our future.  We continue to save and invest because we likely have a long future ahead of us.  Decades from now, I want us to look back on the financial decisions we continue to make today - and be thankful. 
Start improving your health now
Aside from your finances, maintaining good health also pays off tremendously in the future.  Small health choices today can end up making a huge impact on you’re your health tomorrow.        

Getting just one extra hour of sleep every night can make a huge impact
If I don’t get restful sleep at night for two consecutive days, I find that my mood, creativity and energy levels suffer the next day. 
A recent study found that losing one hour of sleep when switching over to daylight savings time was associated with a 24% increased risk of having a heart attack.  Insufficient sleep has also been associated with conditions such as obesity, diabetes, stroke, heart disease and even cancer.  What small changes can you do to your daily activity to get a little bit more restful sleep?  Here are a few ways that I try to focus on getting more sleep.

I have set a personal rule of never using my smartphone while lying in bed before bedtime.  When I used to have trouble sleeping, I would just lie in my bed and mindlessly browse the internet on my iPhone.  Over the years, I’ve learned that doing so just makes it more difficult to fall asleep.  Now, I use the last moments before falling asleep each night to reflect on my day, visualize my goals, and to be thankful for everything that I have.  A recent study found that screen time was associated with poor sleep.  Those that spend longer times staring at their screens suffered from shorter sleep duration and worse sleep efficiency.  It took them a longer amount of time to fall asleep and their quality of sleep was poor as well. 

One routine I don’t like doing JUST before bedtime is flossing, brushing my teeth, and washing my face.  Going through those motions seems to give me a refreshing feeling, instead of putting me to sleep.  To avoid this, I’ve now developed the habit of doing those things 2 hours before I go to sleep.  This way when it’s time to go to sleep, I don’t have to worry about doing anything else.  I just hop into bed.

A little exercise (even walking) goes a long way
Walking is one of my favorite forms of exercise.  It’s relaxing, low impact, and always helps me clear my head.  Walking at least 30 minutes daily can lower your risk of high blood pressure, high cholesterol, diabetes, stroke, heart disease, osteoporosis, breast cancer, colon cancer, and obesity.  Walking is an underrated form of exercise that will improve your physical and mental health.  
Since we adopted our dog, we spend a lot of time walking her.  Our dog goes on a walk at least 4 times a day.  While these aren’t extremely long walks, we do get to stroll around our neighborhood to meet our neighbors and their dogs.  Our dog has made us more sociable with our community and makes us feel much more connected to our neighborhood.

Our son absolutely loves being outside.  He loves running around our neighborhood and exploring.  He is fascinated by all of the birds, squirrels, pinecones, flowers, and plants we encounter on our regular walks.  Sometimes it’s hard to keep up with our little man since he runs so fast.  Many studies including this one found that outdoor activity has been directly linked to less nearsightedness in children.  Having 2 children in the house has definitely kept us busy, but we are always able to squeeze in some outdoor time to walk.

The lifetime benefits of healthier eating
We mostly cook food at home and we focus on trying to eat a lot of fruits and vegetables.  Plant based diets have been shown to reduce risk of diabetes, high blood pressure, heart disease, and even cancer.  Recent research suggests that diets rich in fruits and vegetables reduce the risk of heart disease.  We minimize our red meat consumption and stick to eating reasonable portions of chicken and turkey.  We try our best to balance our intake of healthy foods daily.  This includes keeping unhealthy snacks and junk food out of our home.  If we don’t have any unhealthy food in the pantry, there’s no temptation to eat it.  And if we do splurge by eating an unhealthy meal, we try to make up for it by having our next meal be healthy. 

James Clear wrote a great article about effortless ways to lose weight and eat healthy that is definitely worth reading.  Maintaining a healthy lifestyle now pays off in the future with less sickness, less money necessary to pay for health expenses, and an overall better quality of life. 

Live a life that you will be proud to look back on
10 years from now, do you want to be in the same financial situation you are in today?  Do you want to be overweight?  Will you reach financial freedom 10 years from now? Do you want to look back at your life history with regret, or with appreciation?  Change doesn’t happen unless you take action.       

Thursday, March 1, 2018

Side hustles February 2018

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.

Once a month (usually on the 1st), I like to post a short summary of our personal and financial situation for the previous month.  Here I’ll share some of what’s been going on with our lives and our side hustles. 

Welcome to March, did everyone have a good February?  It’s been a short but great month for us.  We continue to work hard to save and invest for our future.  With the recent stock market volatility, all our extra income has been going towards our index fund investments.  At one point, we were buying stocks at a 10% discount!    
Did you celebrate Valentine’s Day this past month?  With a newborn at home, things can get pretty busy.  
I only was reminded about Valentine’s Day when a coworker came up to me and said “So, are you ready for the big day tomorrow?  What are you going to do for your wife?!”  I guess for most non-frugal people, Valentine’s Day is a legit holiday where money must be spent to show how much you love your significant other.   Oh, and you absolutely must go to a fancy restaurant - because, that’s just what normal people do. 
Valentine’s Day is just another normal day for us at home.  We don’t need a special day to remind us to love each other.  We find joy in the little things, many of which just so happen to be free. 
February has been another month full of walks around our neighborhood.  It’s great exercise chasing after our son.  He has so much energy and always keeps us on our toes.  He just discovered sand and just loves to play with it and get himself covered in it as well! 
Our son also flew a kite for the first time.
In other news, our son has developed an obsession for sea creatures – I think his father’s obsession has rubbed off on him!  I’ve been checking out books at the library and our son just loves flipping through the pages to learn all about different types of sea creatures.  
He also loves when I draw him different sea creatures.  Lately, he’d rather play with his pictures than his toys!
Here’s our monthly summary of side income that we have generated in the previous month of February.
Award Travel
On 2.13, I redeemed 48,650 Chase Ultimate Rewards points with my Chase Sapphire Reserve account towards a free hotel stay worth $729.76. 

We are traveling as a 4-person family to Seattle for a mini vacation and to attend a wedding.  Since our daughter will only be 6 months old during this trip, we wanted to stay in a suite with an extra room, so that our toddler can sleep in his crib without getting too disturbed by a crying baby.  After doing a ton of research on Tripadvisor and Google, I found the La Quinta Inn & Suites Seattle Bellevue / Kirkland hotel to be a great fit for our family.  
Their 2 room suite with king bed and living room is equipped with amenities like free WiFi, free breakfast, microwave and mini fridge, coffee maker and free parking.  I found the cost per night to be very reasonable.  Thanks to our abundance of Ultimate Rewards points, we don’t need to worry about a $700+ hotel stay busting our vacation budget.

Survey Income
On 2.1, my wife received a $10 Amazon gift card for completing a short survey
On 2.5, I received a $40 check from E Rewards Medical
On 2.5, I received a $10 check from M3 Global Research 
On 2.5, I received a $50 check from M3 Global Research
On 2.9, my wife received a $10 Amazon gift card for completing a Chase survey she received in her email

Rental Income
On 2.5, we received a net profit of $455 from our rental property.  Our tenants paid rent a day late again.  To encourage our tenants to pay on time, our new lease agreement has an increased late fee.

Teaching Income
On 2.5, I received a check for $162.50 for teaching at the local university. 

Miscellaneous Income
On 2.1, I noticed a bank charge that was incorrect on my new Chase Business checking account.  The bank charged me a $12 fee that was a mistake.  Somehow the bank charged me an “insufficient minimal funds” fee that I wasn’t supposed to get.  I called in and the representative on the phone quickly reversed the fee.  Thanks to Mint and Personal Capital, I was able to see the charge and then it was easy to get another credit on my account.
On 2.20, I received a check for $16.95 from Equifax due to a previous class action settlement.  I get all of my class action updates from Doctor of Credit.

Website Income
On 2.21, I received a direct deposit of $100.25 from Commission Junction for income generated by the website.  Thank you for your support. 

Expenses Reduced
On 2.5, I noticed that our insurance for our rental property increased by $14.25.  I contacted our agent to see what we could do about reducing the cost of the insurance.  I was able to increase the deductible to $2,500 and reduce our insurance premium by $39.64.  All it took was a simple email.  The less expenses we spend on our rental property, the more rental income we get to keep. 

Monthly Totals:
We saved $729.76 on award travel
We earned $120 from paid surveys
We earned $455 from rental income
I earned $162.50 from teaching
We earned $28.95 from miscellaneous income
We earned $100.25 income generated by this website
We saved $39.64 on our rental property insurance

All of this totals $1,636.10 from our side hustles for the month of February.  Are you hustling for income on the side?  I'm working on a few other side hustles that should pay off this next month. 
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