Fiscal Fast: Day 1

This is my entry for day one of my fiscal fast. Each day I will write about the following topics highlighted in blue

The challenges of getting through the day without spending any money.

The toughest challenge was right at the beginning of the day when I drove back home from the Simonizer. I was really tired and I had to drive 30 miles back home, and I really wanted to stop and get a breakfast taco and coffee. I still made it back home, ate a good breakfast of bread, eggs and a peach, and got by pretty easily after I took a nap.

As estimate of how much money I would have normally spent that day.

Shelter = $13
Food = $4
Gas = $5
Total = $22

An observation (positive or negative) about my fiscal fasting experience that day.

In general it was a very positive day. I made a really good pasta sauce that kept me pleasantly occupied, and I read quite a bit of the Diary of Anne Frank. I feel that the fast will keep my mind thinking of creative ways to be entertained. Since it was the middle of the month I also projected out how much I will spend in the rest of the month. It looks like every category will be significantly lower than normal. Including normal debt payments but not including by Roth IRA and savings, I will spend about $2,000 this month. Really not bad.

Figuring out how much you really get paid per hour

Everyone thats gets paid by the hour is not really earning the income that they think they are. Even those that get a yearly salary make quite a bit less than they think they do. One of the most important questions you should ask yourself when you are working is, if you had an unlimited income, what would you be doing with your time?

Fiscal Fast

I will be going on a fiscal fast from Monday July14 until Friday July 18th. What this means is that between Monday and Friday I will not spend money on ANYTHING. I do not have any other bills for the rest of the month, so it will cost me nothing to live those 5 days.

A few details...

On Sunday night I will fill up my gas tank at the nearest gas station to home.
I will spend no more than $20 on groceries the Friday before the fast.
If there is a genuine emergency such as my car breaking down then I will break fast (no pun intended)


I will be leaving a journal entry each day next week concerning the following..
The challenges of getting through the day without spending any money.
As estimate of how much money I would have normally spent that day.
An observation (positive or negative) about my fiscal fasting experience that day.


The main reason why I am doing this is to find ways to enjoy life without depending on money. Also, I want to find places where I could lower miscellaneous expenses and I think by fasting it will show me ways I have not thought of.


Please leave comments of your thoughts or encouragements.

Financial Tips From Consumer Reports

The August 2008 issue of Consumer Reports, a really helpful magazine that my dad has read all of his life, offers two articles that are very useful. The first offers tips for cutting expenses. The second gives a brief overview of budgeting.

The first article offers 6 ways for an average American to save money. These include..

1. Find cheaper auto insurance. By shopping around, the average person can save $65 per month.
2. Optimize your life insurance. Premiums have dropped in the past ten years, the article notes. It may be worth replacing an existing policy. Also, by adopting a healthier lifestyle, you can cut costs. Average savings? $110.
3. Shop smart for food. CR cites U.S. Department of Agriculture data indicating the average family of four can drop its grocery bill by nearly $200 per month though smarter shopping.
4. Stop paying bank fees. The average U.S. household pays more than $25 per month in bank fees. There’s no reason to do so.
   
5. Call up cell phone savings. According to the U.S. Bureau of Labor Statistics, the average family spends $90 on phone-related expenses. Consumer Reports suggests checking to be sure you’re not paying for too many minutes.
6. Pay off your credit card. If you can get out of debt, you’ll not only save on finance charges, but you’ll also free up the cash that was going to pay the principal. Estimated monthly savings: $65.

The second article includes information on how to create a spending plan. A summary of the information in the article is listed below.

• Set goals. I believe that the road to wealth is paved with goals. Consumer Reports believes that long-term goals help you achieve big things, while short-term goals keep you motivated.
• Track expenses. It doesn’t matter how you do it, but track your spending. You can use a notebook, computer software, or even online tools.
• Plan for surprises. If you haven’t already, start an emergency fund. Most experts advise saving three to six months of living expenses, but CR suggests a “personal escrow” approach instead.
• Set priorities. Know which bills get paid first. For most people, this means the big things like food and home. (If you pay yourself first, it may be your retirement.) Whatever’s left after your expenses is your discretionary money.

Finally, I noticed some really useful mobile banking at Wamu, my checking account. I could simply text a number and they will tell me account balances, nearest locations, and nearest free ATM's. I also set it up where they text me when I get my work salary each month and when my account goes under $500. This is getting pretty automatic. :)

My Expenses for First half of the Year

Well the midway point of the year is creeping up and I wanted to check to see how much I am spending, and how much i can typically live on for a whole year. All of the numbers stated were what I have spent so far multiplied by 2. (I dont see many expenses really changing too much, besides rent going down since I moved and miscellaneous gifts and travel for Christmas). I did not include internet and electricity because it is included in my rent. Gas is tough to say, I factored a little higher due to higher prices.

Rent = $7,090
Car Insurance = $960
Car Loan = $2,040
Cell Phone = $840
Food = $3,850
Gas = $4,026
Miscellaneous = $6,876

Total = $25,682

I did not include my credit card payments and extra debt paid off which are still expenses and costs of living. However, since I have not used a credit card once in 2008 I simply wanted to see how much it costs to live on my current (and not past) lifestyle.

Some things of note:
- My car is paid off however I extracted out the payments for the rest of the year, obviously I will live on $170/month less.
- My miscellaneous category is too broad, I should make other categories such as clothes, gifts, and entertainment. It is also too high for my liking. It is $573 a month right now, even just lowering that $100 a month will be good for my financial outlook. I think it should go down because Ill probably not have to go out on dates nearly as much. One right women is better than many not so right ones.
- Gas costs more than food! And if I can tutor 6-8 clients a week Ill be spending even more there. Gas is wierd, the more I work the more I spend there with no way around it.. Unless I were like the Simons with their super gas saving cars!
- The rent category is quite a bit more then it will be, since I am living for $400 a month. Before I was living for $700 a month, and I had to pay a reletting fee and double rent for most of January.

So I am essentially living for $2,100 a month. My teacher pay will be about $2,700 a month, which gives $600 a month into credit cards. I am planning on building my tutoring business, which will cost a few hundred dollars but should pay back about $1000 a month. I also might deliver pizzas one day a week if the tutoring doesnt work out as planned. I will put $150/month into my Roth IRA, and the rest goes into debt.


P.S. I have a blank worksheet you can use to write down your expenses and budget. Email lancekaminsky@gmail.com for a free copy (its copywrited by me... just kidding, I didnt copywrite anything.)

P.P.S. There’s nothing inherently wrong with purchasing things that bring you joy. But problems come when you finance these purchases with debt. If you’re meeting your other financial goals and have money left over, it’s good to indulge your interests and passions. I need to remember this.

My Grandfather

This is a lesson on finances from my grandfather.

Lessons from my mom on finances

Well I just spent a good hour talking to my mom about how she dealt with finances and I guess I have learned quite a bit from her. (Although it seems like I already know what she did).

She worked at Con Ed, an electric company for 25 years, which she receives a pension, social security, and has a bit saved in a 401K and an IRA. She has her house paid off and makes more than enough to live on her pension and social security (when she told me how she doesnt touch her 401K or IRA and said that she will need to at 70 I know she is in REALLY good shape).

So I asked her what she did to get to this situation, and it was pretty easy. She would save up to the match on her 401K, the rest she would simply save in her checking account until it got to a certain amount, and she would buy CD's with that money. Thats it! I asked her what she invested in her 401K and she simply said vanguard. I wanted to know where in vanguard but she did not even know the answer! This is definitely keeping it automatic.

My mom turned out to be fairly conservative in her retirement accounts and super conservative in other accounts, and it worked out extremely well for her. Then again she does get a pension and social security which is extermely hard to do these days (If I teach for 30 years I would get 2/3's of my highest salary there, by then I might need a decent retirement account as well.)

The biggest thing I have learned today was that as long as you stay the course and automatically save/invest each month, its not too hard to have a secure lifestyle.


As for frugality, I could write a whole book on what my mom and step dad do. Whenever my step dad doesnt get what he wants when he buys something he will complain to the manager, the manager will usually ask my step dad, "what can I do to make up for this?" and my step dad will simply say, "I dont know, what can you do!" Simple yet extremely effective.

P.S. I have some videos of the house and the community, I will put them up when I get back to Austin in July