Sunday, April 26, 2020

FWOTW: Saving money on car insurance

Very few vehicles are on the road these days.
As the current stay at home quarantine continues, we have been looking for different ways to get organized and be productive with our extra free time.  With the vast majority of people staying home and limiting the amount of driving that they are doing, insurance accident claims have dropped tremendously.  Many car insurance companies are automatically refunding portions of paid premiums during the coronavirus outbreak.  Allstate is crediting customers with 15%, Progressive customers are receiving 20%, while Farmers and State Farm are reducing monthly premiums by 25%. 
We have been Geico customers for 7 years now, as they have consistently offered us the best deal on auto insurance.  Geico is currently offering a 15% credit on our next policy term.  While this is great, I figured that it wouldn’t hurt to call Geico to ask if they could offer us any additional discounts.  My wife has been working from home for the last 6 weeks and I have been going to the office only 2-3 days a week.  My commute is 6 miles each way.  I’ve read of some people calling their insurance companies to put their car insurance on hold (for at least 30 days) to save money.  This was an option we considered but I like the idea of having both vehicles accessible in case of emergency.
I set aside time to call Geico to ask for a discount to keep us as happy customers.  To avoid excessive telephone wait times, I used the automated system to connect me to the cancellation department.  I would consider cancelling our policy with Geico if they would not lower our rates.  I nicely explained our new driving situation to the customer service representative and asked if Geico could offer us a discount now, instead of at our policy renewal in a few months.  The Geico rep was very understanding and didn’t hesitate to recalculate our insurance rate due to our reduced driving and long 7-year history with the company.   
After a short conversation, the Geico rep offered me a refund of $204.30!  I accepted the offer right away.  My credit card account received this refund earlier this week. 
I’m glad I made a short phone call to save some extra money.  Are you willing to make a phone call to save money?

Friday, April 17, 2020

Atomic Habits

James Clear is an author, entrepreneur and one of the leading experts on habits.   James Clear writes on and read his email newsletter on a routine basis.  I found his new book Atomic Habits to be helpful and enjoyable.  Atomic Habits is designed to help anyone improve any aspect of their lives including health, productivity, finance, relationships and more.
What is a habit?James Clear defines a habit as “a routine or behavior that is performed regularly – and, in many cases, automatically.”
“Changes that seem small and unimportant at first will compound into remarkable results if you’re willing to stick with them for years.  We all deal with setbacks but in the long run, the quality of our lives often depends on the quality of our habits.  With the same habits, you’ll end up with the same results.  But with better habits, anything is possible.”
The core of the Atomic Habits book is going through the four-step model of habits and then going through the four laws of behavior change.  James Clear lays out his guidelines in a clear and concise manner.
The four-step loop of habits that underlies all of human behavior are: cue, craving, response, and reward.  The cue triggers your brain to notice a reward and initiate a specific behavior.  A craving is the motivational force behind every habit – our reason to act based on motivation or desire.  The response is the habit that we perform, which can either be a thought or an action.  The reward is the end goal of every habit – the reward satisfies the craving and tells our brain which actions are worth repeating in the future.    
How can small habits make a big difference?James Clear emphasizes the importance of the aggregation of marginal gains, a philosophy of striving for just a tiny bit of improvement in everything you do.
“It is so easy to overestimate the importance of one defining moment and underestimate the value of making small improvements on a daily basis.  Too often, we convince ourselves that massive success requires massive action. … Meanwhile, improving by 1 percent isn’t particularly notable – sometimes it isn’t even noticeable – but it can be far more meaningful, especially in the long run.  The difference a tiny improvement can make over time is astounding. 
Here’s how the math works out: if you can get 1 percent better each day for one year, you’ll end up thirty-seven times better by the time you’re done.  Conversely, if you get 1 percent worse each day for one year, you’ll decline nearly down to zero.  What starts as a small win or a minor setback accumulates into something much more.”
While daily habits may not seem much on their own, James Clear describes habits as “the compound interest of self-improvement.”  The effects of your habits multiply as you repeat them, with huge impacts over time.  Because huge results don’t seem to happen right away when implementing small changes in routine, many people give up and go back to unproductive routines.
“A single decision is easy to dismiss.  But when we repeat 1 percent errors, day after day, by replicating poor decisions, duplicating tiny mistakes, and rationalizing little excuses, our small choices compound into toxic results.  It’s the accumulation of many missteps – a 1 percent decline here and there – that eventually leads to a problem.”
“Making a choice that is 1 percent better or 1 percent worse seems insignificant in the moment, but over the span of moments that make up a lifetime these choices determine the difference between who you are and who you could be.  Success is the product of daily habits – not once-in-a-lifetime transformations.”
The importance of setting up good systemsJames Clear wants you to know that no matter how successful you are now, the most important thing to know about your habits is whether they are putting you on a trajectory of success or failure.  The journey is more important than your current results.  Tiny improvements, even 1 percent improvements will push you towards the results you want to achieve.  While setting goals can help define the results you want to achieve, James Clear stresses that one should focus on systems and processes instead of goals.  Developing and sticking to good systems is much better for making progress than just having a goal.
“If you’re having trouble changing your habits, the problem isn’t you.  The problem is your system.  Bad habits repeat themselves again and again not because you don’t want to change, but because you have the wrong system for change.
You do not rise to the level of your goals.  You fall to the level of your systems.”
Choose behaviors that align with the type of person you wish to be“Behavior that is incongruent with the self will not last.  You may want more money, but if your identity is someone who consumes rather than creates, then you’ll continue to be pulled toward spending rather than earning.  You may want better health, but if you continue to prioritize comfort over accomplishment, you’ll be drawn to relaxing rather than training.  It’s hard to change your habits if you never change the underlying beliefs that led to your past behavior.  You have a new goal and a new plan, but you haven’t changed who you are.
The ultimate form of intrinsic motivation is when a habit becomes part of your identity.  It’s one thing to say I’m the type of person who wants this.  It’s something very different to say I’m the type of person who is this. 
True behavior change is identity change.  You might start a habit because of motivation, but the only reason you’ll stick with one is that it becomes part of your identity.  Improvements are only temporary until they become part of who you are.”
How does one create a good habit?
Make it obvious, make it attractive, make it easy and make it satisfying.  James Clear goes into extreme detail with the steps involved with creating a habit and making sure that habit sticks.  In the beginning, small changes seem meaningless.  But over time as small changes continue to stack on top of each other, a tipping point is reached and the habits compound.  At some point, your system keeps you consistently sticking to your good habits.  The process is continuous as you always look for the next step to get 1 percent better.Breaking a bad habit involves doing the opposite of creating a good habit
Make it invisible, make it unattractive, make it difficult, and make it unsatisfying.  Bad habits “repeat themselves again and again not because you don’t want to change, but because you have the wrong system for change.”
Applying principles from Atomic Habits to your finances
1. Make good financial habits obvious.  You can start improving your finances by first tracking your spending.  This can be done manually with ClearCheckbook or automatically with Mint and Personal Capital.  You can implement intentions such as “I will save 20% of my income.”

Make bad financial habits invisible.  Unsubscribe from all mailing lists from retailers and deal sites.  Saving 20% off something is often spending 80% on something you don’t need.

2. Make good financial habits attractive.  Join a culture where saving and investing is considered normal behavior.  This includes following financial bloggers such as Mr. Money Mustache and JL Collins.  This includes listening to financial podcasts such as ChooseFI and Afford Anything.  You can join online financial communities such as Bogleheads.  Saving and investing consistently is easier when everyone around you is doing it.

Make bad financial habits unattractive.  Reframe your mindset.  Think about how having a low savings account balance or a high credit card balance can make you feel like you have lost control of your finances.  The benefits of financial peace outweigh the detriment of financial stress.

3.  Make good financial habits easy.  Automating your saving and investing locks in consistent behavior.  Investing in your 401K is a perfect example of sticking to a great financial habit with zero effort.  Every time you get a paycheck, a portion of money is automatically taken out and invested in your 401K – you don’t even see that amount on your paycheck so there is no temptation to spend it.  You can set up automatic transfers into a savings account as well as contributions into an IRA.  Setting up autopay for your bills ensures that you never miss a payment. 
Make bad financial habits difficult.  If your savings and investments are automatically taken out of your checking account, your account balance will be lower.  You will be less likely to spend money if you have less money in your account.  Consider moving your savings account into an online bank, which typically offer much higher yields.  When you link your checking account to an online savings account, it takes longer to access that money.  By increasing the friction of access to your online savings account, you will be less tempted to access the money.

4.  Make good financial habits satisfying.  Watching your savings and investment accounts grow can be extremely satisfying.  Having a large amount of savings can provide a great deal of comfort and safety, especially in times of financial uncertainty.  Keeping your credit card balances at $0 can provide excellent peace of mind.
Make bad financial habits unsatisfying.  Having an accountability partner such as your spouse or significant other can help keep an eye on your financial behavior. 
Atomic Habits makes it crystal clear on how to create and maintain good habits.  James Clear is an excellent writer.  He provides plenty of science and research behind his claims.  His storytelling is fluid and easy to read.  The best part of this book was the chapter summaries that really helped to concisely tie everything together.  I’ve been able to slowly integrate many of his strategies into my daily life.  Atomic Habits is the most influential book I’ve read in a long time; I highly recommend it.  You can pick up your copy of Atomic Habits from Amazon here or check to see if your local library offers a digital copy for loan.

Thursday, April 9, 2020

FWOTW: My wife continues to cut my hair at home

It’s time for another frugal win of the week (FWOTW) post – quarantine edition!  Since everyone is now staying at home and non-essential businesses are closed, I’ve had several friends and coworkers complain that they can’t get their hair cut anywhere.  After 3 weeks of quarantine, one friend has resorted to shaving his head!
My wonderful wife has been cutting my hair at home since May 2013 and she just cut my hair today while the kids were napping.  The entire process took about 15 minutes.  Afterwards, I hopped into the shower to wash away all the leftover prickly bits of hair.  There’s just something so refreshing about getting a haircut.  In the past, I’ve paid $28 per haircut twice a month!  Getting my haircut at home saves time, money, and fuel. 
If any readers are quarantined and cut their own hair or have a significant other do it - awesome, keep it up!  If you are quarantined and need a haircut, now is the perfect time to start practicing.  Even if you mess up, your hair will grow back.
Once you eliminate an expense, it is gone forever.  It’s not just about saving an amount for one time or one year, but saving that amount every year for the rest of your life!

Wednesday, April 1, 2020

Side hustles March 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 April!  April Fools is cancelled this year.  How is everyone adjusting to the “new normal” way of life? This past month has been the scariest and strangest month that we have lived through.  This new coronavirus pandemic has hit the world hard and fast, effectively causing everything to shut down.  A couple weeks ago, California residents were asked to shelter at home.  There has been a complete closure of all non-essential businesses.  Citizens are asked to isolate at home to keep the number of new disease cases at manageable levels for medical doctors and staff without overwhelming hospitals all at the same time.  Doctors, nurses, medical assistants and hospital staff have been working nonstop to fight this novel new virus.  Grocery workers are also working nonstop to restock shelves and deal with panic buying of groceries and toiletries.    

With much of the U.S. in lockdown, businesses have ground to a halt.  All amusement parks, schools, libraries, movie theatres and malls are closed.  Sporting events and concerts are cancelled.  Children are now homeschooled.  While some companies can continue to move forward with employees working from home, others have had to lay off their workers.  A record 3.3 million Americans have filed for unemployment with estimates of 30% unemployment rates.  Many of our friends have filed for unemployment.  The stock market dropped ~35%, the fastest crash in the history. Many small businesses may not survive this ordeal.  People are dying.  And things could get much worse before they get better.     
This situation is unprecedented.  The U.S. has passed a $2 trillion (that’s $2,000,000,000,000) stimulus package, which includes loans to businesses and even checks to citizens.  World governments are throwing money at their economies to keep everything running while scientists around the world are working to develop treatments for this new coronavirus.   
Here at home, we have been trying our best to adjust to this new normal.  We’ve never had to avoid handshakes, high fives and hugs.  We’ve never had to wait in line before entering a grocery store due to social distancing.  My wife has been working from home for the last 2 weeks and she’s been extremely productive.  She says she’s getting more work done now at home because there are fewer distractions.  She does need to split up her work time between the early morning (before kids are awake), kids naptime, and after the kids go to sleep.  We are grateful that she is still bringing home a steady paycheck.  Everyday that I am off work during the week feels like the weekend.  We are trying our best to keep our kids mentally stimulated and physically fit.      
It’s amazing that just a few weeks ago, I was working on setting up a bonus structure in my clinic and ramping up my schedule.  My work has cut my hours significantly, where I’ve been only working 2 days a week for the last 2 weeks.  In the future, I may be down to working 1 day a week for the next month.  I am thankful that I am a partner of my practice and I have 7 weeks of PTO (paid time off) to burn through before I need to consider applying for unemployment benefits.
We are thankful that we get to spend more quality time with our family.  We may never again have the opportunity to be able to slow down from our busy lives and stay put at home.  This is a moment to reflect on what is truly most important in our lives.  We now have all this extra time to do the things we’ve always wanted to do: exercise more, read more, spend more time with family, be a better cook, catch up with friends, pick up a new hobby, etc.   
Our kids are so used to going out to fun and exciting places every weekend that it’s been a hard adjustment staying home.  It’s hard to explain to our 4 year old son why everything is currently closed when he asks us why he can’t go anywhere “fun” anymore.  We try to stick to a schedule of various activities, games, plenty of reading and daily outdoor walks around our neighborhood.  It’s been nice to see both of our children play together and use their imagination.  I’m glad that our kids have each other.  They’ve turned our neighborhood walks into “jungle exploration” trips.  On our walks we watch out for birds, lizards, squirrels, ants, caterpillars and other insects.
I made a fishing game for the kids so they can fish off the "couch ship".
During uncertain times like this, I am glad that we have 6 months worth of expenses set aside in our emergency fund.  There have been times in the past where I’ve been tempted to invest part or our entire emergency fund to try to chase some extra returns – I’m glad we didn’t do that.  An emergency fund is designed for one purpose – emergencies.  Due to the coronavirus, our rental property tenants have informed us that they will have difficulty paying rent during the next few months.  They have been great tenants for the last ~4 years and we will work with them to get past this difficult time. 
We have also been saving up plenty of Chase Ultimate Rewards points for an international family trip later in the year – looks like we aren’t going to travel outside the U.S. anytime soon.  Our 517,767 Ultimate Rewards points balance can serve as a cash amount of $5,177.67 if we need it.  We would rather use it for business class tickets on an international flight though! 
While the world economy and our personal lives have taken a huge hit, I remain positive that we will get through this difficult time.  Scientists are working hard to come up with treatment protocols for the coronavirus, while multiple companies are testing new vaccines.  This storm will pass.  Once people get back to working again, I expect companies will continue to be profitable.  The stock market will bounce back and continue to be the best way to earn money.
If you are hurting financially or mentally right now, you are not alone.  Almost every industry is affected right now, some much worse than others.  Stimulus checks are coming, and I am hopeful that there’s going to be more checks after that until the economy stabilizes.  The most important thing for all of us to do right now is to stay home and try to flatten the curve of new infections, preventing our hospital systems from getting slammed with too many cases all at once.  We should try to embrace this extra time while we have it.  We can boost our immune systems with daily exercise, stress reduction, healthy eating, and increased restful sleep.  While staying informed is important, it’s also important to give yourself a mental and emotional break by turning off the news once in a while.
Here’s our monthly summary of side income that we have generated in the previous month of March.
Cash Back
On 3.3, I received a $0.37 statement credit from my Discover Cashback checking account. 
On 3.4, I received a $5 deposit in my Chase Savings account for completing a promotion from Chase for selecting automatic savings transfer of $30 a month into my Chase Savings account.  I got notified of this deal from Doctor of Credit here (expired now).  I get all of my random deals from the Doctor of Credit newsletter.

Rental Income
On 3.5, we received a net profit of $450 from our rental property.

Side Job IncomeOn 3.14, I received a direct deposit of $187.50 for teaching at the local university.

Survey Income
On 3.9, I received a $20 check from E-Rewards Medical for completing a medical survey.
On 3.24, I received a $5 Amazon gift card from the Vision Council for completing a survey.
On 3.30, I received a $5 Amazon gift card from the Vision Council for completing a survey.

Miscellaneous IncomeOn 3.1, I sold a rarely worn Rolex watch of mine to a watch dealer for $8,200 cash.  At the time, I was sure we would be seeing an economic recession.  China is one of the world’s leading purchasers of Swiss watches and I could see that their economy was going to temporarily shut down.  It’s amazing that the watch has held its value (and increased in value slightly) since I purchased it in 2012 for $7400.  I probably could have sold the watch for an extra $1,000 in a private sale, but I did not want to risk any fraud or online scams.
Cash is king right now!
On 3.10, my wife received a $50 Amazon gift card for participating in the California Regional Exposure (CARE) Study.  Basically she provided a blood and urine sample to help measure levels of chemicals in people across California.  My chance to participate in the study got postponed due to the coronavirus shut down.

Monthly Totals:
We earned $5.37 from cash back
We earned $450 from rental income
I earned $187.50 from teaching at the local university
I earned $30 for completing online surveys
We earned $8,250 of miscellaneous income

All of this totals $8,922.87 from our side hustles for the month of March!  It’s important for us to continue to hold extra cash in our emergency fund during this time.  I’m glad we shifted our investment portfolio to a more conservative one earlier this month.  From an emotional standpoint, this helps me sleep better at night.  We are taking small bites out of the stock market, but I expect volatility to continue in the near term.  All our new 401K and IRA contributions continue to purchase US and International stock index funds.       

Stay healthy my friends - mentally, physically and financially.  We will get through this.  
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