Sunday, February 9, 2020

FWOTW: Saving money on condo insurance

Our frugal win of the week (FWOTW) comes in the form of saving money on condo insurance for our rental property.  When we receive new insurance (home or auto) policy renewals each year, we always try to get a few outside quotes to see if we are paying the best rates possible.  Spending a few minutes calling around can save hundreds of dollars. 
This year, I received a letter from our rental property lender stating that we needed to lower the deductible on our HO-6 insurance from $5,000 to $500.  An HO-6 insurance policy is condo insurance that protects a condo unit while providing personal property coverage, liability coverage and living expenses if a condo becomes uninhabitable.  HO-6 insurance is designed to coordinate coverage with the condo association master policy, which covers the building’s common areas.  We were paying $323.91 annually for our HO-6 insurance and lowering our deductible would have increased our premium by $188.98 to a whooping $512.89!

It’s important to keep our rental property operational costs down so that we continue to be profitable.  Keeping tenants’ rental costs down also keeps them happy.  I asked a few local landlords which insurance companies they used and also got the name of a few insurance brokers.  Insurance agents can often find the best pricing since they are very familiar with the types of coverage individuals need.

We were able to find new HO-6 insurance coverage with an annual premium of only $193!  This new insurance offered similar coverage with a few changes that we didn’t need, such as $20,000 coverage of personal belongings (not needed since it is our rental property).

After a few phone calls and emails, we were all set up for another year of rental property HO-6 insurance.  This only took about an hour of time and saved us $319.89 ($512.89 - $193.00)!

Saturday, February 1, 2020

Side hustles January 2020

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.  While I don’t often post articles, I am committed to documenting all of my side hustle income.  Here I’ll share some of what’s been going on with our lives and our side hustles. 

Welcome to February! Did you have a good January and start to 2020? We continue to fill our free time with family activities and adventures.  It gets tiring at times, especially because the kids have so much energy.  But I love seeing the excitement and joy in our kids’ eyes.  I enjoy looking back at all the photos we capture of our experiences. 
The Natural History Museum of Los Angeles is our new favorite museum to visit.  From dinosaurs to gemstones, there is just so much to explore here.  My son loves seeing all the real dinosaur fossils; our daughter loves the Gem and Mineral Hall.
The Children’s Museum at La Habra continues to be a regular spot to visit over the weekend.  Our kids love shopping in the play supermarket (our son loves the handling the cash register), seeing all the dinosaurs, and digging through the sand for fossils.  There’s always a new activity in the arts and crafts room.  This place is like our second home.
As usual, no month is complete without a visit to the Aquarium of the Pacific in Long Beach.  Each creature exhibit is unique and fascinating.  The gift shop doubles as a reading library for our kids. 
On Saturday, January 25th, we went to visit the Cayton Children’s Museum in Santa Monica.  This was a special day where this museum (as well as 40 other Southern California museums) offered free admission.   Our kids enjoyed exploring the various exhibits including a life sized helicopter and fire truck.  There was also a pretend pet hospital, bounce ball pit and elevated obstacle course.
With temperatures heating up, the weather has been perfect to go on family walks around our neighborhood.  The local playground is not far from our home.
We just got back from spending two days at Legoland California and two nights (with free breakfast) at the Grand Pacific Palisades hotel.  It was great to visit on a Thursday and Friday because of how empty the park was.  We got to go on many rides back-to-back with little to no wait times.  I can’t imagine waiting in line for hours on hot days – especially with restless kids.  Since our son is over 42” tall, he’s been interested in trying some of the rollercoasters at Legoland!  These rides are perfect for young kids getting exposure to faster rides. 
Here’s our monthly summary of side income that we have generated in the previous month of January.

Cash Back
On 1.15, I received a $211.10 statement credit on my Chase Sapphire Reserve card for a hotel reservation I made for our family’s hotel stay in Carlsbad.  This was part of the annual $300 travel credit this card provides.
On 1.31, I received a $35.21 statement credit on my Chase Sapphire Reserve card for a restaurant delivery from DoorDash.  This is a new benefit of the CSR card which includes free DashPass for 2 years (normally $9.99/month) and $60 statement credit through end of the this year and $60 statement credit through end of next year.  DoorDash made dinner easy for us while on vacation since we had food delivered to our hotel lobby.
On 1.31, I received a $19.80 statement credit on my Chase Sapphire Reserve card for a restaurant delivery from DoorDash.

Rental Income
On 1.5, we received a net profit of $450 from our rental property. 

Survey Income
On 1.21, I received a $5 Amazon gift card from The Vision Council for completing a medical survey.

Miscellaneous Income
On 1.3, my wife received a $15 Amazon gift card for completing a survey from Amazon Preview.
On 1.6, my wife sold a baby-changing mat for $5.
On 1.22, I redeemed 6,667 Pampers Rewards points for a $30 Amazon gift card.
On 1.22, I redeemed 2,223 Pampers Rewards points for a $10 Amazon gift card.

Monthly Totals:
We earned $266.11 from cash back
We earned $450 from rental income
I earned $5 for completing online surveys
We earned $60 of miscellaneous income.

All of this totals $781.11 from our side hustles for the month of January!  Not a bad way to start this year of side hustles.  With the recent stock market pull back, extra side hustle income will help us contribute more towards our investments.   

I’ve been doing more reading lately and I’m looking forward to sharing some insights I’ve gained.

Sunday, January 26, 2020

Habitual financial improvement

My focus in 2020 is to read more and I’m happy to report that I finished reading my first book of the year: Good Habits, Bad Habits: The Science of Making Positive Changes That Stick, by Wendy Wood.  I’m a big fan of the public library and was able to check this book out for free.  The best part about checking out books at the library is that I can request any book I want and have it set aside for easy checkout.  Since books need to be returned within 3 weeks, this gives me the outside incentive to finish reading the book before it’s due.  For those that like to read and keep books, you can find Good Habits, Bad Habits on Amazon here.
Wendy Wood is a social psychologist and the Provost Professor of Psychology and Business at University of Southern California.  Her main area of study focuses on the effects of habits on human behavior.  Her research has revealed that nearly half of our day (43%) is spent repeating the things we’ve done in the past out of habit. 
What is a habit?
 “A habit happens when a context cue is sufficiently associated with a rewarded response to become automatic, to fade into that hardworking, quiet second self. That’s it. Cue and response. Notice that there’s no room in that mechanism for, well, you. You’re not a part of it, not as you probably think of yourself. You—your goals, your will, your wishes—don’t have any part to play in habits. Goals can orient you to build a habit, but your desires don’t make habits work. Actually, your habit self would benefit if “you” just got out of the way."Wendy Wood.

A habit is a mental shortcut that repeats what we’ve already done in the past.  Habits happen effortlessly while we are thinking of something else.  When we are distracted, feeling tired or overwhelmed, we fall back on our habits, good and bad.  This is why it’s so beneficial to establish good habits – you can perform those actions regardless of how stressed out you are.
Habits outweigh willpower, self-control and conscious decision-making
Good Habits, Bad Habits explores why many of us fail at making positive changes based on willpower alone.  We set lofty goals such as weight loss, saving more money and strengthening personal relationships.  We think that our determination and intention is enough to cause permanent changes; and when we fail, we beat ourselves up about how our willpower or self-control just wasn’t strong enough.
As it turns out, our conduct is largely driven from learned habits and NOT conscious decision-making.  The way we exercise, eat, drink, spend money and respond to the people around us is largely due to repeating things we’ve done in the past without thinking.  We may have put some thought to decisions in the beginning, but habits soon take over.  Think about our morning routines: brushing teeth, showering, shaving, drinking coffee, etc – these tasks happen without thought or effort.  We are often thinking about other things when our habitual morning routine kicks in. 
When it comes to making positive changes, Wood contends that intelligence, talent and motivation are not what it takes to persist in the long term.  Willpower isn’t the issue.  Self-control isn’t the issue.  Wanting something enough isn’t the issue. 
Self-control is often confused with habits.  People that score high on self-control scales tend to weigh less, have better retirement savings, happier relationships and are more productive at work.  How can we be more like them?
People think that sticking to a good habit involves self-control.  As it turns out, those who score high on self-control measurements aren’t really relying on their willpower at all.  They are not practicing self-denial by white-knuckling it through life.  Instead, they are very efficient at forming positive habits that meet their goals.  Wood says that people who are thought to have high self-control “seem to understand the influence of situations and choose ones in which it’s easier to repeat desired actions.  They don’t have much “Friction” in their lives and so are not tempted to act in counterproductive ways.”
“They have a set pattern, and they follow it. They are not making decisions. Here’s the very happy implication: the worst, most effortful run will be that first one. Or the second, perhaps. But effort doesn’t last (in fact, if it does, you’re doing it wrong). Habits will form and take the effort off your hands.”

Self-control is easy when it involves placing yourself in the right situations to develop the right habits.  Healthy eaters have made fattening foods more difficult to reach - by not stocking their pantries with unhealthy snacks or by moving them towards the top of the cupboard.  They don’t constantly struggle to avoid eating unhealthy food - it’s simply not an option. 
How to develop a habit
So how can someone make positive changes and get them to stick?  Wood suggests that repeating something and getting instantly rewarded for it helps us learn a habit.  Consistently engaging in repetitive action will eventually lead to new behaviors that become second nature without us having to actively make decisions.  Being surrounded by a like-minded community can help perpetuate habits.
Stacking new habits on top of existing ones can be extremely powerful, since we are already have our everyday routines set up. Want to floss more?  Connect it to brushing your teeth.  Want to go to the gym more?  Stop by the gym on the way home.  Want to invest more?  Connect payday with an automatic contribution to your investment account.  Want to stop staring at your cell phone and build stronger relationships with family or friends?  Make it habitual to first send a nice message or make a phone call to a loved one every time you want to mindlessly pick up your cell phone.  Get a watch so you don’t need to look at your cell phone to see what time it is (and get distracted by notifications, emails, social media, etc). 
Changing our perspective on self-control can help us not be too harsh on ourselves when don’t succeed at reaching our goals.  Recognize that willpower alone is not enough to develop strong habits.  Creating a healthy environment can help facilitate and nurture our positive habits.  Creating some friction can stave off negative habits.  It’s important to find some joy in what you’re doing, otherwise it will be painful to keep repeating things.
It can take about two to three months to form a habit.  This is when some action becomes so automated that no thought or effort needs to be done – we simply just do it out of habit.  To quote Wendy Wood: “self-control is simple when you understand that it involves putting yourself in the right situations to develop the right habits.”
Policy changes can introduce new habits
Information and willpower alone are insufficient to drive change.  Policy makers can use science to introduce new habits. 
To cut back on public smoking, the government made some big changes.  Cigarettes were taxed at higher amounts, laws were enacted to ban smoking in public places, and cigarettes were placed behind the counter (so customers needed to actively request a pack of cigarettes instead of grabbing them off the shelf or from a vending machine).  The results forced a widespread change of habits that led to a national decline in smoking.
Countries that automatically enroll their citizens as organ donors (with an opt-out decision) such as Spain, Austria and Singapore have highly successful organ-donation programs.  In the United States, the default is that citizens are not enrolled as organ donors (they need to actively opt-in).  As a result, there is an organ shortage here in the United States. 
Many businesses now automatically enroll their new employees in retirement plans (with an opt-out decision).  This has led to significantly increased retirement savings since employees now need to actively decide not to contribute.  They need to go out of their way to sign forms that basically say they would not like to invest in their future retirement. 
A little bit of friction can be enough to get people to stop smoking, donate organs and automatically invest.
Here are some ways that I’ve formed good financial habits:
-       Listening to financial podcasts such as ChooseFI, Afford Anything and Stacking Benjamins and reading blogs such as Mr. Money Mustache helps me stay motivated and encouraged to keep pursing financial freedom.   
-       Unsubscribing from mailing lists and not checking on deal sites has reduced my temptations to buy random crap.
-       I set up my office lunch hour to only be 30 minutes long.  This forces me to bring lunch to the office since there simply isn’t enough time for me to go out to eat.  This also allows me to spend more time with my family every morning (I start working 30 minutes later than everyone else).  Bringing lunch to work is healthier, saves time and saves money.
-       Slowly increasing my savings rate 1% at a time. These 1% increases in our savings rate occur so slowly, with so little friction in our day-to-day finances that we don’t have trouble adjusting to less take home pay.  If you can increase your savings rate by 1% every 2 months, by the end of the year you having increased your savings rate by 6%! 
-       Automating our investment contributions.  When we get our paychecks, a portion of money gets automatically invested into our 401K, IRAs and savings.  Less money ends up in our checking account and as a result, we end up spending less money.
-       Paying off credit card balances as soon as transactions post.  As you all know, I am a big fan of paying for everything with a credit card whenever possible.  This allows us to save up tons of points and miles, which we can redeem towards free travel.  By paying off credit card balances as soon as they clear, we remove the risk of building up credit card debt. 
-       Whenever the stock market has a minor pullback, I make an extra contribution into our investment accounts.  I’ve been accustomed to seeing drops in the market as opportunities to purchase more shares at a discount.  This softens the pain of seeing our investment account balances drop.
Good financial habits can help make saving money automatic and not a struggle – even when life overwhelms you.
I thoroughly enjoyed the science and studies presented by Wendy Wood that get behind the how and why habits develop.  This book was an easy read and I never found it boring at any time.  My only criticism would be that I wish the author added a concise summary of all her ideas on one page, for easy future reference. 
You can get a copy of Good Habits, Bad Habits from your local library for free, or at Amazon here.  How can you make financial improvement habitual? 
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