By the numbers: My spending for March 2019

March was a mixed month in my financial world. I ended March with a slightly higher net worth (up 0.6%) but my spending was the highest it’s been this year: $5989.10. Yet, that spending was mostly mindful. I wasn’t frittering away money on silly things.

If I wasn’t buying dumb stuff, then where did my money go? A few worthwhile places:

  • I spent $653.31 on the yard and garden. Specifically, Kim and I tore out a big cedar tree in the corner of the yard, then converted that space to a small orchard. I use the word “orchard” loosely here. We planted three fruit trees, four blueberries, four grape vines, and a bunch of strawberries. I hope to write about this more in the near future.
  • I spent $625.72 on health and fitness. In the middle of the month, I had quite a scare. Out of nowhere, I had chest pains, so I visited the local hospital ER. My co-pays and prescriptions are reflected in March’s spending — and there’s more to come. (We’re about to have a l-o-n-g article on the $6800 hospital bill I received in the mail yesterday. That’ll happen in April or May.) Meanwhile, Kim had knee surgery at the end of the month. I paid for some of her stuff out of my pocket.
  • I spent $579.36 on gifts in March, which is very very unusual.
  • I paid the $450 annual fee on my Chase Sapphire Reserve credit card. (Yes, I know this seems like a lot. But remember the card comes with a $300 travel credit, which means my effective annual fee is $150. I believe I receive $150 in value from the card’s other benefits.)

I don’t consider any of that spending frivolous although I recognize that some of it isn’t necessary. (Do we need an orchard? Do I need to give gifts?)

That said, I did have some weak spots in my spending. I bought several movies on iTunes. In fact, I spent $72.63 on iTunes in March. I need to be careful lest I return to my former profligate ways. No more looking in the iTunes store! I also spent $230.15 on alcohol during the month (most of which was beer).

How did I do with groceries? As you know, my food spending had grown out of control, which is one of the primary reasons I’m tracking my spending in detail this year. Last year, I spent over $1000 per month in food. This year, I’m spending less than $700 per month.

I was very proud of my food spending for most of March. I spent a total of $658.21 during the month: $468.27 on groceries and $184.24 on dining out. That’s my lowest monthly food total in two years (excepting months during which I’ve been on the road).

Going into the last week of March, I’d only spent $241.87 on groceries. That’s amazing! Things fell apart, however, when I stocked up on food for Kim’s convalescence. Meanwhile, we only had three restaurant meals during the month. For one of those, I paid for two guests. Not bad. Not bad.

Quarterly Spending

Now that we’ve made it through the first three months of 2019, I was curious how my quarterly spending compared to last year. Monthly spending can fluctuate quite a bit. You can get a better idea of your actual habits by looking at a bigger picture.

Here are some highlights:

  • I spent $116.56 at the iTunes store during the first quarter of 2019. That’s less than I spent on movies and TV shows during any single month last year, so that’s a win.
  • I spent $2076.54 on food for the quarter, which is lower than any quarter in 2018. I spent $1179.53 on groceries, $323.52 on HelloFresh, and $542.29 on dining out. That restaurant spending is another big win. The grocery spending was good — better than any quarter in 2018 — but I feel like I can do better.
  • I spent a lot on health and fitness during the first three months of the year: $1752.60. And the thing is, it’s not going to get much better.
  • This year, I decided to separate hot tub expenses into its own category. I spent $151.88 on hot tub stuff (chemicals, etc.) during the first three months of the year. And, no, that doesn’t include electricity.
  • Our zoo — three cats and a dog — cost us $447.54 during the first quarter of 2019.
  • You know where I could save big bucks? By drinking less. I spent $586.36 on alcohol during the first three months of the year (and that includes four weeks during which I didn’t drink a drop!). That’s $6.44 per day. Time for me to cut back on my craft beer obsession…

I spent a total of $15,364.85 during the first quarter of 2019, an average of $5121.62 per month. That’s not a great number, to be honest. It’s pretty much what I was spending last year. Still, I’m trying not to get too stressed about things…yet.

The whole point of this exercise is for me to figure out where I’m spending my money and why. Once I have a clear picture, I can make some course corrections.

April is the Cruelest Month

Unfortunately, April is going to have some crazy, crazy spending numbers. My accountant called yesterday to give me my tax bill. I owe $20,000. (I’m not joking.) The hospital called too. They wanted to let me know that I owe them $6800 for the ER visit in the middle of March. To cap things off, payment is due on the vacation that Kim and I booked a year ago. We’ll be headed to Greece and Italy in August — but we’re paying for it today.

Fortunately, I knew that some of these expenses were looming, so I have cash set aside to pay for taxes and our trip. (The ER visit was a surprise, obviously, and I don’t have money set aside for that.) That doesn’t change the fact that April’s expenses are going to be insane, though. It just means I’m somewhat prepared for the insanity.

The upside to having a $6800 hospital bill so early in the year? It gives me a chance to make maximum use of my health insurance! My max “out of pocket” is $7900 annually. Since it looks like I’m going to hit that, it makes sense to address all medical issues that are bugging me in 2019.

At the end of 2018, I had a net worth of $1,334,227.20. At the end of March, my net worth was $1,397,545.18. That’s a leap of more than $63,000 (or 4.75%). That’s great! In reality, this simply reflects a hot stock market. My investment accounts are up $77,933.04 this year (11.45%).

A hot stock market can cover a multitude of sins…

By the numbers: My spending for February 2019

One of my goals in 2019 is to get back to basics. I feel like I’ve succumbed to lifestyle inflation, so I’m taking the time to track my money in detail (using my fave tool: Quicken 2007 for Mac) in an attempt to identify problem areas. When I find money leaks, I need to decide whether to eliminate them or accept them.

While I’m skeptical that sharing my monthly spending report has any real value — and it invites unnecessary judgment (I’m already judging myself!) — popular opinion from GRS readers seems to be: Do it!

You folks like looking at my struggles with money haha.

So, here’s a quick look at how I spent my money in February — the good, the bad, and the ugly.

February Spending Report

In January, I spent $4819.27 to support my lifestyle. In February, I spent $4556.49, a decline of $250.

That’s great! But it still misses my target: $4000 per month. While this is an arbitrary goal, I think it’s a good one. I feel like that’s a sustainable level for the future. (If my income from Get Rich Slowly and other sources increases, then I can consider boosting my target spending.)

Here’s a quick run-down of how I spent on certain key categories:

  • I spent $726.00 on food in February, up $24.99 from January. Of this, $146.41 was spent on dining out, which is extremely low for me. I spent $373.31 on groceries and $189.75 on HelloFresh. (For more info, see my HelloFresh review and look at HelloFresh costs.) In 2018, I averaged $1038.03 per month on food (and spent $1104.97 in February of last year), so I’m happy with the decline so far in 2019. I’d like to see this drop even more, though.
  • Pet spending dropped from $186.63 in January to $112.14 in February. That still seems like a lot. As a point of comparison, I pulled up the numbers from last year. In 2018, I spent an average of $121.40 per month to support our one dog and three cats. Apparently, that’s just how much it costs to feed and care for our beasts. (And they’re certain they could eat more than we currently feed them.)
  • In January, I spent $326.08 on sin, a category I use to track how much I spend on alcohol, tobacco, and marijuana. (Pot is legal in Oregon. I don’t often use it recreationally, but I use it nearly every night to help me sleep. A couple of times per year, I buy cigars and/or clove cigarettes.) In February, my spending on sin dropped to $117.15. This is primarily because I went four weeks without touching a drop off alcohol. And since I resumed drinking, I’ve been much more moderate in my consumption.
  • As I mentioned at the end of the year, the iTunes store is a dangerous spot for me. I have a tendency to browse and buy a lot of movies. In January, I spent only $3.99 on the iTunes store. Last month, I spent only $39.94. That two-month total of $43.93 is far below the $356.33 I spent at iTunes during the first two months of 2018. Progress!
  • In January, I had $1034.40 of one-time expenses. At the time, I worried that every month would have one-time expenses. That’s still a worry. In February, I spent $376.80 to replace the bald tires on my new 1993 Toyota pickup. I also spent $1340 to renew our subscription to Broadway Across America (two tickets for seven shows throughout the year).

Despite spending $4556.49 in February, my net worth increased by $24,276.77 (or 1.78%) — and that’s after a 2.29% increase in January. My net worth has grown $54,894.68 (or 4.11%) during the first two months of 2019.

I wish I could say my increase in wealth has come because I’m so damn smart, but that’s just not the case. All credit goes to gains in the stock market. If we enter a rocky patch — or worse, a recession — my net worth is going to fall fast. When that happens, I want to be ready to cut spending, if necessary.

Final Thoughts

After two months of updating Quicken daily, I’m noticing some patterns. For example, my spending falls into four broad categories.

  • Fixed expenses (such as pets, insurance, and utilities) come to roughly $1100 per month.
  • Variable spending on necessities (such as food, haircuts, and home + car repairs) comes to about $1200 per month.
  • Variable spending on luxuries (such as books, sin, and the hot tub) comes to about $700 per month.
  • One-time expenses (new pickup, theater tickets, and the like) are totaling about $1500 per month.

I consider roughly half of my spending to be necessary; the other half is (mostly) indulgent.

The fixed expenses are obligations. They’re not going away and they’re unlikely to change. Variable spending on necessities can be altered, although there’s going to be a floor for each expense. (You’ve been watching in real-time as I toy with my food spending, for instance.)

Variable spending on luxuries is by definition an indulgence. I could absolutely cut these costs, if needed. And, in fact, I have my eye on some of these. Finally, the one-time expenses are a mixed bag. Some, like the 1993 Toyota pickup, are necessities (or close to necessities). Others, like the theater tickets, are absolute luxuries.

I suspect that I’ll want to re-evaluate some of my one-time expenses by the time the year is over. Some are more like annual expenses than “one-time” expenses, and I’d probably profit from determining which to continue…and which to cancel.

Kim and I enjoy our theater excursions and our Portland Timbers season tickets, but if we truly want to cut costs, some of these indulgences may have to go. We’ll see. For now, I’m content tracking them and flagging them for future discussion.

By the numbers: My spending for January 2019

You know how sometimes you let chores and errands and obligations pile up until there’s nothing left but to ignore what you want to do and take time to actually do what needs to be done? Yeah, well that’s what the past week has been like for me.

I’ve spent most of my waking hours cleaning and repairing the house, driving around Portland to take care of troublesome tasks, and calling companies (and government agencies) to close accounts and/or clarify questions. This includes six hours I devoted to replacing the kitchen faucet. Ugh.

J.D. vs. the Kitchen Sink

All this is to say: I haven’t had time to work much on Get Rich Slowly during the past seven days.

That said, I have been diligently tracking my expenses. As I mentioned at the start of the year, one of my goals in 2019 is to get back to basics. I’d grown complacent over the past few years. I’d succumbed to lifestyle inflation. I want to cut back on expenditures large and small this year to bring my budget more into balance.

Let’s see how I did.

January Spending Report

This month, more so than normal, I was eager to analyze my spending. I spent half an hour clicking through Quicken to see if/how my habits have changed since the first of the year. Here’s what I found:

  • I spent $701.01 on food in January. Of this, $211.63 was spent on dining out, $346.63 was spent on groceries, and $137.77 was spent on HelloFresh. (The final $8.98 was spent on junk food. I track how much I spend on buying crap at gas stations and convenience stores.) Last year, I averaged $1038.03 per month on food, so this is a delicious decline of 32.5% from that level. Nooice! My hope is that I can cut this even more. Even with the drop, this is way way high.
  • I spent a lot on health and fitness in January. Much of this was spent to purchase a new indoor bike trainer — a stand on which I can place my road bike so that I can ride it in the house. I also bought a new yoga mat, etc.
  • The pets cost us $186.63 in January. Hmmm. I didn’t know they were this expensive. Seriously, I haven’t been paying attention to how much our zoo costs us. What really surprises me is that our three cats cost more than the dog!
  • I spent $326.08 on “sin” spending in January. That’s way too much. I track how much I spend on alcohol and marijuana. (Pot is legal in Oregon, remember. I don’t often use it recreationally but I do use it for sleep almost every night.) As I’ll probably write about in the near future, my alcohol spending should decrease sharply in coming months. I’ve decided that I have a problem and I want to change when and how I drink.
  • I only spent $3.99 at the iTunes store in January! This is a huge win for me. I spent less than Kim did at iTunes this month, which is crazy talk. I spent far less than the $204.85 I paid in December. How did I do this? Simple. I didn’t let myself browse the new releases. (That said, when I opened iTunes the other day, I did notice that a movie I’ve been wanting for a long time — Willow — is now available. It took some strength to resist that. I put it on my Wish List in hopes that I’ll see it on sale sometime.)
  • I pumped $5141.33 into Get Rich Slowly to make up for a cash-flow crunch. We switched primary ad sources in November, and there’s a gap while we wait to get in the new vendor’s payment system. (Money came in last week. Yay!)
  • My home value continues to decline. Zillow now says our place is worth $422,000. Nineteen months ago, we paid $442,000. Since then, we’ve put in about $100,000 of necessary repairs — plus another $50,000 in upgrades. In other words, our home is worth $170,000 less than we’ve spent on it. This whole situation remains a sore spot with me. But, as many readers have noted, because Kim and I love this place and have no plans to move, it’s a sore spot that doesn’t really matter. (And I’ll bet some of you would be happy if I stopped bringing this up.)

If we ignore the Get Rich Slowly cash infusion, I still spent $4819.27 last month. That’s about $1000 more than I wanted to spend.

Looking through my list of expenses line by line, I actually see $1034.40 of one-time expenses. So, in theory, next month my spending should be under $4000. In theory. The problem is that I suspect other one-time expenses will arise. I have this sneaking suspicion that I’m constantly rationalizing “one-time” purchases…as if there should be a $1000/month line-item just for “one-time” expenses. I hope not. But I suspect it’s true.

Final Thoughts

Last month, my net worth increased by $30,617.91 (or 2.29%). That’s amazing! This was all because the stock market was on a tear, though. The gains aren’t due to any acumen on my part.

My goal for the first quarter of 2019 is to become more mindful about my spending. Sure, I want to slash what I can, but my main aim is to be aware of where my money goes, to track it diligently so that I can make appropriate changes going forward.

I doubt I’ll post a spending update every month — I’m not sure there’s much value in these for anyone other than myself — but I’ll publish a few throughout the year. If all goes according to plan, by the end of December I’ll have broken some bad habits and built some better ones!

My financial plans for 2019

Earlier this week, I lamented the fact that my net worth plunged by more than 15% in 2018. Although much of this was due to accounting quirks (buying back this website and remodeling the house, neither of which get tracked by my personal net worth) and larger economic forces (the stock market declined by 6.2% last year), some of the problem is that I’ve allowed myself to succumb to lifestyle inflation. I’ve been spending more than I used to.

As a result, I’ve resolved to make some changes.

I’ve already trimmed nearly $500 of recurring monthly costs. (This number will increase to nearly $750 once a couple of contracts end.) But that’s just the beginning. Over the past month, Kim and I have discussed other steps I can take to cut costs. It’s time for me to get back to basics.

Back to Budgeting

Because I track every penny I spend, I have a pretty clear idea of where my financial weaknesses are. When Quicken shows that I spent $4675.56 dining out last year, that’s clearly an issue. (And that doesn’t even count what Kim spent!) When it shows that I spent $2820.39 on iTunes downloads, that’s clearly an issue too.

Analyzing my spending summary for 2018 allowed me to find several ways to curb my spending.

  • I’m going to cut back on groceries. To start, I’ll give HelloFresh a trial run. Kim and I enjoyed a free two-week taste of this meal-delivery service last spring. We liked it. It seemed a little expensive but not outrageous. (Here’s my HelloFresh review.) Because my grocery spending continues to be higher than I’d like — primarily due to impulse spending in the grocery store (beer! juice! fancy cheese!) — we’re going to use HelloFresh for three months to see whether this actually cuts costs. If not, fine. We’ll try something else.
  • I’m going to build barriers between me and “frictionless spending”. Big companies like Apple and Amazon make it easy to achieve instant gratification with one-click shopping. I’m a sucker for this kind of stuff. I spend far, far too much on the iTunes store, for instance. Back when I was trying to get out of debt, I deliberately avoided bookstores and comic book shops because I knew they’d tempt me to spend. Similarly, I’m now going to deliberately avoid browsing online stores. If I have a need and want to order from Amazon, great. If Kim and I decide we want to rent the latest Marvel movie from Apple, great. But I’m not going to kill time by browsing.
  • I’m going to move from tracking my finances casually to tracking them seriously. For the past two years, I’ve used two tools to manage my money. I use Personal Capital to keep tabs on my accounts, to get a sort of overview of my financial situation. And I use an antiquated desktop program (Quicken 2007 for Mac) to manually enter my earning and spending. These habits won’t change. What will change is how carefully I use the tools. I’ll monitor Personal Capital daily. I’ll be much more accurate about how I enter expenses in Quicken.

These are the big changes I’ve already begun to implement. There are plenty of smaller things I hope to do, as well. Continue reading

My 2018 year in review

Across the web, I see other financial bloggers sharing their year-end financial summaries. Some folks had good years. Financial Samurai’s net worth increased by 6.5% in 2018. Others had mediocre years. Fritz at The Retirement Manifesto saw his net worth decline by 2.1% thanks to a volatile stock market.

Me? Well, I’m embarrassed to share how my year went financially. It sucked. No, seriously. It was terrible.

My net worth declined by 15.2% in 2018 — nearly $250,000!

Here’s a graph of the monthly changes to my net worth during the past two years:

My monthly net worth over time

What happened? Did I buy a Lamborghini? Did I spend a ton during my recent three-week trip to Europe? Have Kim and I been binging on cocaine and chocolate? Nope. While there’s no doubt that my habits contributed to my loss of wealth, there are larger forces at play here.

Let’s take a closer look. Continue reading

April 2018 spending update: Did moving to the suburbs save me money?

When Kim and I moved last summer from our riverfront condo to this country cottage on the outskirts of Portland, one of my primary aims was to slash our spending on both housing and food.

Although we owned our condo free and clear, living there still cost us roughly $1200 per month. Plus, there were the added costs that came from living so close to bars and restaurants. Sure, we didn’t have to eat out as often as we did — we understand that was a choice — but we enjoyed exploring what the neighborhood had to offer.

Well, I’ve now had time to gather enough data to determine whether we were able to achieve this goal, to cut our monthly costs. I’m pleased to say the answer is “yes”! But for a few years, this gain is going to be completely negated by our massive home remodeling project.

Let’s look at some numbers.

Saving on Housing

To start, here’s how my monthly housing costs have changed:

  • During the first four months of 2017, we paid an average of $1169.91 to live in our condo. Of that, $644.65 went to our HOA and utilities. The remaining $525.27 was spent on taxes and condo insurance.
  • During the first four months of 2018, we paid an average of $472.55 to live on our house. Of that, $187.91 went to utilities and $284.64 went to taxes and insurance.

Before we made the move, I estimated that it’d cost us about $500 per month for housing expenses. That was a good guess. My expenses are actually a little lower than that. And because Kim is paying me $500 per month to “vest” into ownership of the house, my net monthly housing costs are actually minus $21.45. I’m making money by living here! (Haha. I wish.)

Food for Less

Meanwhile, our eating habits have also changed. We don’t go out to eat nearly as much as we used to. When we do dine out, we choose cheaper places. (Our current neighborhood isn’t quite as hip as our old neighborhood.) Last night, for instance, we hit up our favorite pub. It cost us $54, and that’s expensive for this neck of the woods. In our previous neighborhood, we’d often hit a hundred dollars when dining out.

Here’s how my food spending has changed:

  • During the first four months of 2017, I spent an average of $568.42 per month on groceries and $554.14 on restaurants. That’s a total of $1169.91 per month on food. Holy cats! (And that doesn’t include money that Kim paid for groceries…)
  • During the first four months of 2018, I spent an average of $477.33 per month on groceries and $332.01 per month on restaurants. That’s a total of $809.34 per month on food.

Let me be the first to point out that I spend a lot of money on food. I acknowledge that. This wasn’t a weak spot in my budget back when I started Get Rich Slowly in 2006, but it certainly is today!

That said, moving to the suburbs did indeed help me spend less on food. My grocery bills aren’t down as much as I’d expected — only about 16% — but that’s still saving me nearly $100 per month. Meanwhile, my restaurant spending has been cut nearly in half! Overall, my monthly food budget has declined by 28% (which is more than $300 per month).

Creating Cash Flow

When we were planning for our move last spring, I wrote that I hoped my cash flow would improve by $1200 to $1300 per month. With the reduction in housing and food spending, I’ve saved an average of $1010.58 per month so far in 2018. When you add in Kim’s monthly $500 “mortgage” payment to me, my cash flow has improved by $1510.58.

That’s outstanding!

“But wait, J.D.” you may be saying. “Have other aspects of your budget ballooned because of the move? Are you driving more, for instance? And what about your outlandish home improvement projects? You’ve already admitted that you’ve spent roughly $100,000 on renovations since moving in!”

I am spending about twice as much on fuel as I was before. During the first four months of 2017, I spent an average of $25.79 per month on fuel. So far in 2018, I’ve averaged $56.69 per month on fuel. Other than that, however, the move has had no adverse effect on my finances…except for the very expensive remodeling projects we’ve been doing.

The Big, Fat Elephant in the Room

I haven’t included the remodeling costs in the above numbers because they’re not a regular expense. Trust me: I’m perfectly aware of how much I’m spending on home improvement, and it’s caused me plenty of anxiety. But those costs aren’t recurring, so I don’t include them when calculating average monthly expenses.

What I have been doing is some mathematics gymnastics:

  • My cash flow has improved by $1510.58 per month.
  • Our pre-deck (and hot tub) home improvement costs totalled $92,934.61. Of that, $59,000 came from selling the condo, which means we’ve had $33,934.61 in un-budgeted home improvements since moving in.
  • We don’t have a final tally on the deck and hot tub project (and won’t for several weeks), but I expect it to be close to that $33,934.61.

Based on these numbers, we can calculate how long it will take to recover the remodeling costs (compared with having remained in the condo). Dividing our $33,934.61 excess costs by my $1510.58 per month improved cash flow, we find that it’ll take 22.5 months — just under two years — to compensate. And, of course, it’ll take roughly the same amount of time to compensate for the deck and hot tub.

Translation for non-nerds: Moving from the condo to this house saved me just over $1500 per month. This savings has been temporarily negated by all of the home projects. But after about four years — assuming we find no further problems — we’ll pass the break-even point. At that time, the move will become a financial win!

Fingers crossed, my friends. Fingers crossed.

My used mini cooper and the power of saving

For the past two years, one of my top financial goals has been to save for a Mini Cooper. Just like a child with a toy catalog, I’ve spent hours on the Mini website playing with colors and options packages, building my own dream vehicle. Whenever I’m tempted to buy small indulgences, I ask myself, “Would I rather have this or a Mini?”

Until the beginning of last week, however, I thought I still had a long way to go before I could afford even a used Mini Cooper. Turns out I was wrong.

Savings Success

Since the middle of last year, I’ve been saving like mad, attempting to accumulate enough money to buy a car. My progress has been outstanding:

  • After I built my emergency fund, I began to route my regular monthly savings to my Mini Cooper account. I’ve saved about $6,200 for a car during the past eighteen months.
  • I’ve also been putting “found” money into my car account. When I get a birthday check, it goes to my Mini fund. When I sell something on eBay, it goes to my Mini fund. That’s come to almost $700 in the past year.
  • In October, I won a contest at ING Direct. My prize was a $1,000 6-month certificate of deposit. It matured last week, and I promptly rolled the proceeds into my Mini fund.
  • We refinanced our house recently. The last payment on our old mortgage was made in March. Our first payment for the new mortgage is due May 1st. There’s no April payment! That means I can use that thousand dollars for a Mini.
  • Also as part of the refinance, we received a disbursement check of $1879.03, half of which goes to Kris and half of which goes to me. That’s $939.52 more for a car.

All told, by the beginning of April I had managed to save just over $10,000 for a car. That’s not enough to buy a Mini Cooper — not even a used one. But then I found another chunk of change.

Tax Refund

Because I’m self-employed, I pay quarterly estimated tax payments based on income projections I make at the beginning of each year. But because my business has been growing, these projections have been off. At the end of the year, I owe more than I’ve paid, and so have a tax bill due.

The first year this happened, it caught me by surprise. I owed a lot of money, and I didn’t have anything saved to cover the tax bill. Ever since, I’ve set aside as much as possible to prepare for taxes.

Note: For others with their own businesses, here’s what I do: Every month I transfer living expenses from my business account to my personal account. I keep these expenses as low as possible. I leave the rest of the cash in the business to save for taxes. After taxes are paid in April, I pull any remaining “profits” for the year into my personal account.

Well, I paid my taxes last week. When the checks were written, I was amazed to find that I had a huge chunk of cash left over. In fact, there were several thousand dollars remaining in my tax account, all of which was now available for my personal use. I transferred the money to my Mini Coooper account, and stared at the total: I had $16,768.98 in savings.

I almost had enough to buy a car.

New vs. Used

With stars in my eyes, I dropped by the local Mini dealer last Wednesday to wander their showroom. I spent an hour talking with a salesman. He was awesome. He didn’t pressure me, but answered all of my questions. Though I loved the shiny new cars, the vehicles I really wanted were marked at over $25,000. (Most were around $28,000, and one amazing Mini was $40,000!)

“I don’t have enough saved to buy a car right now,” I told the salesman, “but I’d love to rent one for the weekend.”

He frowned. “I’m afraid we don’t do rentals,” he said. “I don’t know anyplace in Portland that rents Mini Coopers. Sorry.”

Then he added, “You know, Mini is offering 1.9% financing right now — if you have good credit. That’s a good deal.”

“Thanks,” I said. “My credit’s great, but I’m not wiling to take on debt. I’ll just wait and keep saving.”

Then a friend called on Friday. “J.D., have you been down McLoughlin lately?” he asked. “There are two used Minis for sale along the strip.” (I live next to a stretch of road that is home to more than a dozen car dealerships.)

I hadn’t considered buying a used Mini (I’m a new car kind of guy), but the more I thought about it, the more the idea appealed to me.

  • If I bought used, I could avoid the instant depreciation associated with a new car.
  • If I bought used, I could save the price difference for other goals.
  • And if I bought used, I could have my Mini Cooper now.

On Friday afternoon, I dragged Kris with me to look at the two used Minis.

The first vehicle was a 2003 Mini Cooper S marked at $13,800. It had 70,000 miles on it. On the surface, this seemed like a great deal, but the car wasn’t in good shape (even after being cleaned up by the dealer), and the salesman gave me a gitchy feeling. I decided to pass.

The second car was a 2004 Mini Cooper marked at $17,000. It had 60,000 miles on it. This car was more expensive, but from what I could tell, it was also in better shape. I took it out for a spin.

“What do you think?” I asked Kris after the test drive. “Should I buy it?” Though I’ve made tremendous progress with my personal finances, I still have a tendency to second-guess myself. I know I’ve done some dumb things in the past, and I’m afraid of heading down that road again. But Kris has always made smart choices. I trust her judgment.

“Do you like it?” she asked. I nodded. “Then you should buy it,” she said. So I did.

The Negotiator

It’s been a long time since I bought a car. I had forgotten how awful I am at negotiating — and how much I hate it. I tried to do a good job on Friday, tried to remember the tips I’ve shared here in the past, but even knowing this stuff in advance didn’t help me. I don’t think I did poorly, but I certainly didn’t get a great deal, either.

I paid $15,600 for my Mini. Kelly Blue Book says that I could expect to pay $14,790 for this vehicle from a private party, so I paid about $800 too much. (It also says that I should expect to pay $17,240 from a dealer, so maybe I actually saved $1,600?) Kelly Blue Book also says I should have received $1,250 in trade-in for my Ford Focus. I got $550. Ouch.

In retrospect, I ought to have done this differently. Once I realized I had enough to buy a used Mini, I should have been methodical about my search, looking for the best deal. That’s what I do with all of my other purchases! Instead, I let euphoria take hold of me, and I bought the first acceptable vehicle that I saw.

I don’t regret my purchase — not at all! — I just don’t think I was as smart as I should have been.

The Joys of Personal Finance

Time will tell whether I’ve made a good choice. It may be that my impatience has cost me money. Or it may be that the pleasure I receive from this little car is worth every penny. So far — after only two days — it’s all joy and no regret!

My favorite part of this transaction, aside from paying cash for the car, was that I didn’t spend all of my savings. I went into the deal with a budget of $16,768.98, and I spent $15,238.80 after taxes and fees. That leaves me $1530.18 to begin saving for something else.

Who says personal finance is no fun? I’m having a blast!

Note: I’m calling this my “starter Mini”. I plan to pursue Dave Ramsey’s Drive Free, Retire Rich program. I’ll continue to sock away money every month in my car fund. In a couple of years, I’ll be able to take that savings, sell this Mini, and upgrade to a higher-priced model. Eventually I’ll be able to afford a new vehicle!

Commandment #4: Be Frugal

Last night while cleaning the house, I found some old papers. Among the many memories, I found a document entitled “J.D.’s Ten Commandments”. I can’t tell exactly when I wrote this, but I’d guess it was back in 1992 or 1993, just after I’d graduated from college.

My ten commandments were:

  1. Be physically fit.
  2. Be attractive.
  3. Don’t waste free time.
  4. Be frugal.
  5. Maintain the automobile.
  6. Be curious.
  7. Be loving.
  8. Be productive.
  9. Have fun.
  10. Be rational.

The meat of this document are the supporting details beneath each commandment. They’re a fascinating glimpse at my mind from fifteen years ago. For example, under “be physically fit”, I wrote “eat food that will prolong life, not shorten it”. As part of my productivity goal, I aimed to “write for at least three hours a week”. (Ha! Now I write at least three hours a day.)

It’s fun to see which of these goals I’ve achieved and which I’ve missed. It’s also interesting to note which goals have made me happy and which have not. I met my writing goal, for example, and this has been a source of fulfillment. But I also “learn to program in C”. This wasn’t such a dream come true. I spent a year programming computers, and found that the work wasn’t meaningful or enjoyable.

I did a poor job at following some of my commandments. My fourth commandment was “be frugal”, under which I set the following subgoals:

  • Budget for a limit of $10 a week of personal entertainment.
  • For something more than $10, save.
  • Buy only Star Trek comics.
  • Don’t eat in restaurants.
  • Utilize a savings account.
  • Don’t use credit.
  • Pretend that life is a business venture.

I failed miserably at every one of these. In the decade after I made this list, I spent lavishly on personal entertainment. I never opened a savings account — if I wanted something, I usually just bought it on credit. I bought whatever comics I wanted, and ate in restaurants all the time. If I had followed my own admonitions, I might have been able to get a head start on retirement. Instead I found myself with more than $20,000 in credit card debt.

That’s the bad news. The good news is that eventually I figured this stuff out. Eventually I learned to be frugal. If only I had learned these things back in 1992!

I still make lists of financial goals (though I don’t call them “commandments”). Every few months, I draw up a list of my current income and fixed spending. I project big upcoming expenses (“plumbing repairs”, “vacation to Europe”), and then plot how much I need to save. This is as close as I come to creating a budget. The difference between 1992 and 2007 is that now I actually achieve most of the goals I set for myself.

If I can learn to handle money correctly, then anyone can.