Post: #1

I love to travel. When I was about 22, I went everywhere I could go when I was in the Marines. But then about 6 years later I got married and swallowed the bad pill of marriage in America: mortgage, expensive vacations, car loans, and credit card debt. So my travel plans got put on hold for nearly 10 years. I'm free from a toxic marriage now and on my own. For the first time in 10 years, I'm enjoying living a life that is both very simple and enjoyable at the same time...I'm making my highest income yet and my expenses are at my lowest. I am saving nearly 30% of each paycheck and traveling two times a year to places like Romania and Poland, with many more to go. I'm 37 now and I've learned a ton about financial responsibility and achieving my goals. The main lesson is that you need to learn to live with little: be a minimalist. In this thread I’d like to share some of what I’ve learned in my lifetime with some of you younger guys.

First off, you have to learn that every dollar you earn is important because it is symbolic of your labor. You give sweat and part of yourself to earn a living. That said, you want to value your money and your labor. Don’t treat your money foolishly, just like you don’t treat your labor foolishly. Never give your labor away to someone who won’t reward you accordingly. In the same way, don’t spend your money on things or people that won’t bring value to your life.

Secondly, know your expenses intimately; spreadsheet your life so that you have a handle on what your fixed monthly expenses are. Most people have no idea what it costs them to live their lives each month…they may think of a figure in their head but they are usually 20-30% off of the real figure. Rent, lights, cable, internet, cell phone, car payment. Once you organize all of your fixed expenses and know what they are, then you should focus on your variable expenses. I always advise friends/family to download 3 months worth of bank/credit card statements and categorize each expense to figure out what it is for. Tally up all of the fixed/variable expenses that you have over the 3 months and then compare them to what your income was for that same period. If you spend more than you make, you are doing it wrong. First and only rule of personal finance: never spend more than you make…ever.

If you find that you are spending more than you make each month, start to make changes. Is your rent more than 30% of your gross? Consider moving into a cheaper place. Is your electric bill high? Don’t keep the lights on or run appliances that are a drain on your electricity. Do you have a home phone and a cell phone? Get rid of the home phone, you don’t need it. Do you have cable but never watch TV? Scrap it and get something like Hulu or Netflix, where you can watch shows you like. Is your car payment more than 15% of your gross? Well, unless you are living in your car, you should think about downsizing to a more affordable car or a used car with more miles but equal reliability. If you are making less than $30k a year and your car payment is more than $300 a month, you’re doing it all wrong. You can’t afford that type of vehicle nor should you be financing it.

As for variable expenses, are you doing out all of the time and spending money you don’t have? Consider cheaper forms of entertainment. If you are trying to meet girls, be prepared to make an investment in doing things with them but sacrifice in other areas outside of that. Don’t each shit food all of the time at McDonald’s. Instead, find a good local restaurant that serves big portions of food for around $15 where you can eat 2-3 meals off of it. Make a dollar stretch. Don’t buy name brand products at the grocery store; buy the store brand shit instead. Look for sales on things you need instead of being impulsive and just going out and buying stuff without researching the better deal first.

You should also include goals into your finances. Are you looking to travel more? Plan for that trip and determine how much you’ll need to save and where you can cut costs in order to achieve that. Are you looking to be able to go out more and dress better? The same principles apply. Be pragmatic and thoughtful about your finances and become a more minimalist-minded man who is good with his money. Being a real man also includes being a good steward of what he has.

Post: #2

thank you for your service, and great thread. Mint has been invaluable for tracking my finances, and I have mine to the bare minimum they have been since I was 25. Its liberating after a marriage, divorce, etc. I dont want to buy anything, just rent my home, rent a vacation spot, even rent my car. I dont really own anything, but my money seems to stay in my accounts longer.

Post: #3

This post is badass!! Word!!! Jakester you dat man. Fuck the cable fuck the car payment don't be a serial consumer. Getting Jacked is an inexpensive hobby. Cook a big protein filled meal on Sunday and eat off it for the week. Get out of debt. Give to your church or charity. Keep your money. Retrain your Pavlonian mind to be rewarded with saving and investing. Money post Jake.

Post: #4

This post is badass!! Word!!! Jakester you dat man. Fuck the cable fuck the car payment don't be a serial consumer. Getting Jacked is an inexpensive hobby. Cook a big protein filled meal on Sunday and eat off it for the week. Get out of debt. Give to your church or charity. Keep your money. Retrain your Pavlonian mind to be rewarded with saving and investing. Money post Jake.

Post: #5

This post jives with what I was reading much earlier today...someone might find it interesting.
Though I'm a little bit at odds with it as I've been thinking about getting a bike licence.

http://www.mrmoneymustache.com/2013/07/0...ces-bliss/ [Stuff holds you down]

Post: #6

Money comes before stuff, needs before wants. Treat yourself to less than you think you deserve.

I wish I knew these things when I was younger. Like most people though, I thought I knew what was best.

Post: #7

(07-08-2013 07:56 PM)jakester318 Wrote:  I love to travel. When I was about 22, I went everywhere I could go when I was in the Marines. But then about 6 years later I got married and swallowed the bad pill of marriage in America: mortgage, expensive vacations, car loans, and credit card debt. So my travel plans got put on hold for nearly 10 years. I'm free from a toxic marriage now and on my own. For the first time in 10 years, I'm enjoying living a life that is both very simple and enjoyable at the same time...I'm making my highest income yet and my expenses are at my lowest. I am saving nearly 30% of each paycheck and traveling two times a year to places like Romania and Poland, with many more to go. I'm 37 now and I've learned a ton about financial responsibility and achieving my goals. The main lesson is that you need to learn to live with little: be a minimalist. In this thread I’d like to share some of what I’ve learned in my lifetime with some of you younger guys.

First off, you have to learn that every dollar you earn is important because it is symbolic of your labor. You give sweat and part of yourself to earn a living. That said, you want to value your money and your labor. Don’t treat your money foolishly, just like you don’t treat your labor foolishly. Never give your labor away to someone who won’t reward you accordingly. In the same way, don’t spend your money on things or people that won’t bring value to your life.

Secondly, know your expenses intimately; spreadsheet your life so that you have a handle on what your fixed monthly expenses are. Most people have no idea what it costs them to live their lives each month…they may think of a figure in their head but they are usually 20-30% off of the real figure. Rent, lights, cable, internet, cell phone, car payment. Once you organize all of your fixed expenses and know what they are, then you should focus on your variable expenses. I always advise friends/family to download 3 months worth of bank/credit card statements and categorize each expense to figure out what it is for. Tally up all of the fixed/variable expenses that you have over the 3 months and then compare them to what your income was for that same period. If you spend more than you make, you are doing it wrong. First and only rule of personal finance: never spend more than you make…ever.

If you find that you are spending more than you make each month, start to make changes. Is your rent more than 30% of your gross? Consider moving into a cheaper place. Is your electric bill high? Don’t keep the lights on or run appliances that are a drain on your electricity. Do you have a home phone and a cell phone? Get rid of the home phone, you don’t need it. Do you have cable but never watch TV? Scrap it and get something like Hulu or Netflix, where you can watch shows you like. Is your car payment more than 15% of your gross? Well, unless you are living in your car, you should think about downsizing to a more affordable car or a used car with more miles but equal reliability. If you are making less than $30k a year and your car payment is more than $300 a month, you’re doing it all wrong. You can’t afford that type of vehicle nor should you be financing it.

As for variable expenses, are you doing out all of the time and spending money you don’t have? Consider cheaper forms of entertainment. If you are trying to meet girls, be prepared to make an investment in doing things with them but sacrifice in other areas outside of that. Don’t each shit food all of the time at McDonald’s. Instead, find a good local restaurant that serves big portions of food for around $15 where you can eat 2-3 meals off of it. Make a dollar stretch. Don’t buy name brand products at the grocery store; buy the store brand shit instead. Look for sales on things you need instead of being impulsive and just going out and buying stuff without researching the better deal first.

This is not necessarily good advice without adding the caveat that you need to do some basic math to determine whether the time spent is worth the monetary savings.

For an example, its nice to save 10 bucks, but if you have spend 2 hours running around searching and checking different stores, you are valuing your time at $5 an hour, which is a shit rate, even minimum wage at a fast food place pays better than that.

If you can make more than that per hour (like $10/hr) you are better off working an extra hour, buying the more expensive product, and have an extra hour of free time for the same money.

Post: #8

(07-09-2013 09:35 PM)snoop Wrote:  You are valuing your time at $5 an hour, which is a shit rate, even minimum wage at a fast food place pays better than that.

If you can make more than that per hour (like $10/hr) you are better off working an extra hour, buying the more expensive product, and have an extra hour of free time for the same money.

This has always been a pet peeve of mine, that yes there is opportunity cost associated with spending time to save a marginal amount of money, but most people don't get to pick and choose which and how many hours they get to work. Simply stated not all hours are created equal. If you have a normal job, the hours of 1-3pm are likely a lot more valuable than 6-8pm. Yes you are valuing your time at $5 an hour, but if you were otherwise just going to sit at home playing with yourself, that's $5 an hour better than any other opportunity you had for that time.

Post: #9

I firmly believe that financial management is a lot like game. Some people have to learn it, and to some it just comes naturally. Maybe it's the Scottish in me, but I've never bothered budgeting (think it's pointless), and I've always had more than enough money for everything I've needed, and basically anything I wanted (but because I don't act on those wants so much, is part of the reason I can).

Like when dealing with a particular girl, for things, don't fall in love with them and throw logic out the window. How many times do you hear a girl say she just *had* to have that coat or whatever, price be damned. I firmly believe that's one reason why women in general are so bad with money, their spending habits (like everything else) are governed by emotions and short term cost/benefit analysis.

Housing/Food/Transport. Those are the big three. Really, those are your only "needs". $300 a month room is probably the bottom of the barrel, and then it get's better from there. Food? While I respect the mantra of "Get a big serving for $10-15 and eat 3 meals from it" that's like explaining how to get better mileage on your Porsche. Far better to just cook all your own food. Get meat/veg that's about to expire, make a huge pot of chili, freeze stuff, You can do it for $100 a month. Transport, you can take public transit or use a bike or live close to work or hell just walk everywhere. Again should be less than $100 a month, possible to do borderline free.

Cell phone isn't a need(pay phone/skype/magic jack, get a room with net included), decent second hand clothes can be bought for 5% of new, eating out, booze, entertainment, trips, all these things are wants. I can point to many examples of ppl that get by without.

I firmly believe you can *survive* on $500 a month. Even at 25 hours a week at min wage, you could save a little something. These are your needs, and I've always had that in my head as a baseline. After that is where things get interesting, and most people stumble.

From this point on, you need to make decisions. The same rules apply for time and money. They are interchangeable, for each other, and for things. Where you need to concentrate, is on the rate of exchange, and whether or not something is a good deal.

You have so much time, and you have so much opportunity to convert that into money. Can you do it efficiently? How much flexibility is there in how many and which specific hours you work? Basically this is how good a job you have.

Now you have so much money, that money can be back converted into time (buy meals instead of preparing). Do you actually save time or are you just saving effort (being lazy).

Basically how much money you have or make is immaterial. Every situation you are presented with you have your resources (time, money) and your options. Smart financial management is being able to honestly look at, and cleverly evaluate them on the fly, as they are presented. This is why budgeting in my opinion is pointless. Because it basically divies up your wants, with the end goal of hitting 0.

A couple examples off the top of my head: If you walk somewhere in 2 hours and save a $20 taxi, is that worth it? You're essentially employing yourself at $10 an hour after tax to walk. Before you do this, what are the alternate options for those two hours? Whether you can afford it (budgeted for it) is immaterial. A good deal(which is purely cost vs benefits vs the alternatives) remains a good deal independent of anything else. If you have to get to work, or a doctor's appointment, than those two hours are likely far more valuable than the $20 you'll spend. If it's sit home and watch TV, it's likely less.

You know that occasionally chicken can be had for $3 a lb, yet for the last month it's been $8 a lb. Being good with money, you looked ahead 2 months back when it was $3 and bought tons and froze it. But wait, steak is on special this week, so you replenish your stores of that. If chicken has been expensive for months and you run out, you can either do without and wait, or pay the higher price. Decisions. The fact is if they can sell for $3 and make a profit, paying 2-3x because you 'feel like it' is a fools errand.

You drive to work, and you budget $100 a month for gas. Gas skyrockets and it will now cost you $150 to get to work. Do you simply not go to work for 10 days because you already exhausted your gas budget? No. Conversely if the price crashes to $75 for the money, would you go buy $25 of gas and just burn it in a field because it's in the budget? Again the pointlessness of a budget. You can budget whatever you want, but the fact is until gas gets to about $100 a liter it still makes sense to drive to work (barring any other reasonable alternatives).

Where you really get into problems however is how to evaluate the value of things like social status, pride, other intangibles. What's the social worth of showing up to the club in a limo? Of feeling like a king and having a brand new $2000 suit? You can't go through life purely viewing everything from the accountant's point of view.

Ultimately though those are your decisions to make. if I have $100, I can buy 1 really nice shirt, or 20 decent shirts at a second hand store which would be perfectly acceptable to work. To have the same new high end wardrobe would cost $2000. Is the increase in personal value of 20 designer shirts over 20 adequate shirts really worth $1900 after tax? Can you really justify that looking great for 1 day is as valuable as being adequate for an entire month or work days/ For many people that would be a months pay. you can live well for 2 months in Thailand on that, and still have more or less the same life at work in terms of dress shirts. But people overvalue what other people think of them (most ppl are thinking about themselves) and aren't competent enough to honestly evaluate the alternatives that amount of money could buy.

Post: #10

For myself, vices were the most expensive. Namely, drinking and gambling. Once I cut both those out of my life (and it wasn't easy), a transformation occured. Not just financially, but in all aspects of life.

Post: #11

Buying stuff doesn't have to be a bad thing. The problem is people buying things they can't really afford.

I try to look at it like this.

I don't really think much about going to a bar and buying a beer. If I want a beer, I just buy it. No contemplation, no decision making, just purchase and drink.

If you have to put decision making into a purchase, you probably can't afford it and should pass.

I also don't look at payment plans as a way to purchase most things. If I can't purchase it with cash, I am not interested.

Post: #12

I used to use a debit card for everything. Pretty much same thing as straight cash.

Now I use a credit card to get points and pay my total balance off every sunday, which gives me a good idea what I spent during the week.

Small centrally located apartment. Logistics, logistics, logistics.

Decent truck with small monthly payment. I keep my monthly payment on vehicles below $150. I always buy 4-5 year old vehicles paying the majority with cash and using a small auto loan to build credit. I start looking around 6 months before I plan on buying. That gives me plenty of time to wait and find a real good deal.

Food can be done around $200 a month easily. Lots of chicken, rice, and veggies bought in bulk.

The main thing is to realize that you are broke when you start spending more than you are taking in (after you have adjusted your take in for all bills, living expenses, and savings allotment). I was "broke" for about 6 months a couple years back. I had around 10k in the bank, and my friends couldnt understand the concept that I didn't have enough cash to go out.

But splurging and having a blast is worth a lot more than nickel and diming my bank account. As long as your net worth is increasing monthly, splurge all you want.

And once you have that cash cushion in your bank account, you have the cash to take advantage of good deals when you see them. If I see a guy on craiglist selling a car 20% or more below market value, I don't have to think twice about snatching it up and relisting it the same day. If it sits for 2 months but takes 1,000 profit, Im up $500 per month. That is why you should be saving your money, so you don't miss opportunities when they arise.

Post: #13

^ yep cash is bullets.

Poverty mindset is to protect your money
Rich mindset is to find opportunities

Post: #14

I try to be minimalist the best I can. Lately, though allowing myself a few things because I want them.

I still think, the key though is still build a war chest that can work for you. Provide you the monthly passive income stream, allow you to buy and sell items, to ride out a tough period of time.

AntiTrace is spot on. Buy and Sell stuff. My friend has an expression, "tell me the price and I will tell you if I am buying or selling." But you better know what you are doing. Reading is free, real cash losses are well, duh, real cash losses.

Problem with the rich mindset (I think I have one because I am always looking for opportunities to invest) is that sometimes the deal moves against you and the deal you are in may not be liquid.

Read the Richest Man in Babylon. If you have not you must. It is a simple book but lays a solid idea on how to do well financially.

Post: #15

(07-10-2013 03:24 AM)Seadog Wrote:  

(07-09-2013 09:35 PM)snoop Wrote:  You are valuing your time at $5 an hour, which is a shit rate, even minimum wage at a fast food place pays better than that.

If you can make more than that per hour (like $10/hr) you are better off working an extra hour, buying the more expensive product, and have an extra hour of free time for the same money.

This has always been a pet peeve of mine, that yes there is opportunity cost associated with spending time to save a marginal amount of money, but most people don't get to pick and choose which and how many hours they get to work. Simply stated not all hours are created equal. If you have a normal job, the hours of 1-3pm are likely a lot more valuable than 6-8pm. Yes you are valuing your time at $5 an hour, but if you were otherwise just going to sit at home playing with yourself, that's $5 an hour better than any other opportunity you had for that time.

that's why I said "If you can make more than that per hour".

And if you can't, then you could work on getting a better/more flexible job, a second job or a side hustle.

And even if you cannot make immediate money with that time, you are losing the chance to use that time in a way that will generate future income. If you spend 5 hours a week running around to save $50, that is $2400 a year, decent money, but what could you learn in 240 hours that would make you more than that next year?

Not saying people should be reckless with their money, but that people should realize their time (especially free time) does have value, and for the most part we all get to determine what that value is.

Post: #16

There was recently a thread about a millionaire austrian investor that, at 50, remained single, childless, who lived in hotels to avoid settling down in one place and carried only a couple of suits and shirts, buying whatever he needed on the spot.

A lifestyle choice I can relate to.

Post: #17