Sunday, November 9, 2008

September electricity bill, $7.70, October $9.96

Those are very low numbers, they are not usual for a person’s household electricity bill.

While I am for sustainability, it usually would need an economical reason for me to follow it. For example, I would not go out and buy a Toyota Prius because it is has great fuel mileage, is super chic and green, because of price. While the Prius does get good mileage (48/45 mpg) it is not very economical because of its price. A car similar to the price and mileage of a Honda Civic is more inexpensive, not as great mileage, though the ownership costs is less over time (many reviews on cost over time of Prius compared to other vehicles, and it gets sweeter for other cars as gas prices lower).

Phew, back to the electricity bill. I am not writing a true guide how to save electricity for the matter, a how to for most things in this blog, rather I will write my experience and my suggestions, not a canned list for a broad amount of people.

Here is what I do for a low electricity bill; it will not fit most people, though it can help give useful advice on habits of saving electricity. Most of what I do might be for lazy people.

First, I do not have an air conditioner. I do not need one because it does not get very hot in my apartment during the summer. I do not use my heater at all, because it does not get very cold in my apartment during the winter, I put on a layer, one. I do not use my dishwasher (because it's broken and my landlord does not really want to fix it). I believe my water heater is one of many for the building, so I probably do not pay for the water heater for the apartment (I say probably because I cannot locate it). The rise in the electricity bill is due to my new water cooler, one of those upright 5 gallon bottle on top of it ones, which to me is more economical and sustainable than water bottles.

Remember, I am a single guy in my apartment, a family is different.

The basics:

1. Everything I do not want on forever (refrigerator, water cooler, alarm clock, lights, etc) is on a power strip I turn off.

With this, I consciously choose to turn on and off the power which goes to my computer, monitor, hard drives, TV, game systems, and many other items I consciously choose to turn on. I remember reading all over the place about phantom power these devices use, and saving electricity by turning them off completely from power strips. I turn off the power strips I do not use.

2. I turn off lights I do not use.

This one may sound simple, though to some it's silly or maybe too much work. I had a friend over one day. She turned on all my lights, I mean, every single one, and said I like having light. To me it was too bright and the lights do heat my place, so I turned the ones off which were not necessary. After she told me the reason, I turned them back on. She made a possibly unconscious decision to turn them on, I understand why, which is why for her I left the lights on. That's right; I made the unsound financial decision of leaving of turning the lights back on, similar to paying the dinner bill at a restaurant with friends. Life is about compromise in some ways, sometimes we need to compromise our financial desires for others. Pretty much, if you are not in a room or not in the bathroom, turn off some lights to your comfort level! All I need is one light where I work, play, etc.

3. Participate in activities outside the house.

This does not directly relate to actually saving electricity through some method in the house, it is a very sound method for progression in life. I will talk about more of these aspects in depth as I write posts though here is something's a person can do outside the house to save electricity and move forward in life. Volunteer, exercise, hike, work, a picnic at a park with family and friends, cycling, and many more! Each activity is inexpensive; some of them make money, and are worthwhile in the long run. This may seem silly, it does great wonders to follow my third step because instead of watching TV as much (I actually do not watch any TV) a person can accomplish many other things.

4. I use CFLs.

While many articles are springing up saying these are dangerous because of the mercury content and can cost more in the long run if one is broken (uhh don't break one) they are very efficient. Check out this article. The article says its not too dangerous, just be cautious anyway. Saving $$ over time, blah blah, last long blah blah. It works well for me, my light is on, and it is inexpensive to have them.

My main point:

Do what works best for you. The main point is balance, if we do not have balance in our life, similar to on a rope, we fall off. While what I do may not work best for everyone, nor is it the best saving tips (there are many articles which are broader than mine), its what I do, and it is what works for me.

Sustainability to me is economical not environmental. Why would I go out and buy that for 30% more in the long run when I can have this item for 30% less in the long run? Going green is great, for great reasons. Being chic, hip, with the times, and a good person have really no good justification for going green, though it probably is a main reason for many. It is about sustaining the environment and using our limited resources wisely. My limited resources are economically important to me. Remember, this is my opinion, have a great day.

Sunday, November 2, 2008

My Savings Plan

My favorite phrase to live by, live well below my means.

All it means is, to spend less then what I earn. Earn $1,000, spend $500, save $500. 1000-500=500. Save the $500 for a year and have $6000 at the end of the year. Earn a return on the $6000 and it just keeps building. The reason to do this is to build up an asset base. I've received questions and people coming to me for help with their finances. This is the basis of what I tell them, I use a lot of hand motions too.

The explanation:

When my money makes me enough money to retire living the same lifestyle and more, it is the ultimate goal for retirement. The only way to do this is have large enough principal to create interest/dividends/cash flow which covers our lifestyle and then some without touching principal, rather reinvesting excess back into principal so it keeps building. Basically, its compound interest. Let's say we have $10 million dollars at retirement. Our expenses are $100,000 a year. We need to make at least $100,000 a year in interest/dividends/cash flow or 1% to cover our expenses. Let's say we are ultra conservative, we throw it all in savings which earns us 3% return a year totaling $300,000 a year. After taxes, let's say we have $200,000 left over. After chopping off $100,000 for our yearly expenses, we have $100,000 left over. We reinvest the $100,000 back into our $10 million and after another year of interest we have $303,000 at the end of the year, $3,000 more than the previous year. Rinse and repeat.

My main point:

I know this was simplified beyond belief, though it makes this example easy to understand. The basis of this is how do we even get to $10 million dollars? Earn an income, save some of it, invest it, and let compound interest do its thing, while you still invest in the principal. While I don't have those eye popping statistics of what happens with percentages when you invest and over time, I can tell you it's worth doing if you want a lot of assets for an early retirement.

This is where the rich get richer and poor get poorer phrase gets out of hand. The person investing and producing a return on principal is the one getting richer. The one which chooses to live paycheck to paycheck instead of saving part of their disposable income, and thrives on credit, is the one getting poorer because the ones giving out the credit are getting richer. They are using their principal to lend out money to get a return, just like banks or anyone who loans money or gives out credit cards. When I say living paycheck to paycheck, it applies to the people who earn more than they need to spend. For example, a person earning 6 figures, can still live paycheck to paycheck because they are living beyond their means by buying more than they earn. While a person earning $50,000 a year can save money in every paycheck because they live below their means. It really doesn't matter how much a person makes to save, from $30,000 to 10 million a year. Any money saved, is principal built! And our goal for retirement is a large principal earning us living expenses and then some! (To reinvest of course).

It's never too late or early to invest, especially us early twenties, we have time on our side.

My savings plan:

Enough about the theory and let’s get dirty with the details. This next section is explaining what I do.

(Un)Luckily, I am a single guy with no wife or kids. My expenses are very low and my income for my age is high. With this situation, I save 50% of my income.

For some people it may be difficult to instantly chop off 50% of their income. What I do is have direct deposit, 50% into my checking earning 1.50% annual yield
(at ING Direct I'll write about my experiences with them later, let me know if you want a referral $25 if you sign up and open with $250 or more) and 50% into my high yield savings account (I'm changing it around from ING Direct to other companies, and currently in the application process for another which is one of the highest in the nation with all the rate cuts). With this, I automatically save 50%. I started saving for my emergency fund (will talk about this later) in March and maxed it to my goal of $10,000. Now the rest of my savings goes into another savings account for investments. This is not the only place my savings stops at.

I max out my Roth IRA contribution per month ($416.66) to reach the $5000 max for 2008. My Roth IRA automatically takes 416.66 out of my checking at the end of every month, I will make it $5000 with any additional deposits needed. Also, automatically, from the same investment firm my Roth is at, my 3 529 college savings account deduct $25 each from my checking. A total of $491.66 in savings a month combined with the 50% into my savings. Again this is not where the savings stops at.

Anyone ever heard of rollover minutes? The minutes a person does not use from the previous month rolling over to the next month to have the ability to be used. With the money in my checking, I don't spend everything I have left over after all my bills (I love paying bills as much as I love saving.) From month to month I may have a hundred to a couple of hundred left over which adds up.

While my savings plan is aggressive, it will not work for everyone. Especially those with kids and other obligations. Though I can recommend this plan to those who make enough (can easily adjust the percentage to fit bills and income) and have less obligations. Of course if a person makes a lot, covering bills and kids, and save even more, by all means do it! The goal is to build principal through savings and investment. This savings plan is only part of my plan to build the nest, there is also investing (will be covered later.)

The Basics:


  • 50%


  • 50%

Roth IRA

  • $416.66 a month from checking ($5000 a year)

529 college savings

  • $25 for account 1 a month checking ($300 a year)
  • $25 for account 2 a month checking ($300 a year)
  • $25 for account 3 a month checking ($300 a year)

My main point:

Save as much as you can after affording our life styles and as early as possible. Remember, we all still gotta live life to the fullest!

Compound interest is our best friend.

If you have trouble spending what you save, if you have the ability split your paycheck direct deposit into different accounts, do it. It separates the already saved amount out of our minds and we may not consider it in our discretionary spending, though I recommend discipline as well.

Any questions or comments let me know.

Who am I?

I'm a fresh out of college, a bachelor degree in Computer Information Systems, 22 years old, single guy, with a 23 year plan. I started saving in 2006, when I was 20, by investing into a company 401(k) plan and starting my own Roth IRA, and even opened 3 529 accounts at age 20 (for my future kids). At age 21, I opened an investment account and started buying mutual funds and stocks.

I have been through college debt-free through scholarships, essays, grants, and my hard earned savings. After my tuition waiver ended after the first two years, and reduced aid from FAFSA, it was money out of my pocket. My mom definitely helped me out some by letting me stay at home the first two years and a semester’s tuition. I am also the first generation to have graduated from college in the USA in my family.

I am a very ambitious person. I sold books door to door in Florence, Alabama during the summer of 2006 for Southwestern, and in this program, I learned my weaknesses and how to overcome them. I learned about planning for my future and going out and making my desires happen.

I am semi-retiring at the age of 40. I know I would be able to retire earlier though unlike Madison DuPaix at My Dollar Plan (Congratulations on your left the rat race/left the corporate world/quit my job/semi-retired/problogger/stay-at-home-mom/took a leave of absence) I would like a larger retirement through compounding a lot of earned income longer.

I am going to list my happiness, ambition, and financial goals by age. I already have a lot of objections from people, and many who doubt I will be able to do what I say. A lot of "what ifs..." as well. Those people are great, it’s great to have excuses for why I choose not to do something, I use having excuses as the reason I get things I should be doing done. Phew, hard to read the sentence. What I really mean is this, I am suppose to work out, part of my schedule, and I make excuses of why I choose not to work out, from being too tired, or too sore. After evaluating those excuses, I jump up; pack my gym bag, and start driving and workout because I have excuses.

Happiness, ambition, and financial goals

Age 21
Graduate College (Done)
Age 24
Get a CPA certificate
Age 24(-30) Purchase a house (if the expenses of buying the house is equal to renting a house of the same size, time frame is 24-30 in age.)
Age 25 Engaged
Age 26 Married
Age 27 Start my own business
Age 28 First child
Age 29
Second child
Age 30 Third child
Millionaire in assets
Age 35 Deca-Millionaire in assets
Age 40 Semi-retirement (means many different things to many people)
Age 45 Billionaire in assets

Some of these goals may seem silly, and some maybe. When I tell people them, I get many questions and situational comments from, "what if you don't find the right person?" to "it’s silly to plan those events in your life." My reply? Something I learned selling books and impacting kids in Alabama.

If I am trying to throw the rock as high as I can, it’s better to aim for the moon and hit a bird (on accident he he) then aim for the bird and hit the top of a tree?

The main meaning to this? Aim high, aim higher, we may never reach our end goal, though we'll be at a higher place then if we didn't aim at all. From this, when they mention what a waste of time or how silly it is to plan events I ask them this:

What does an architect do? Plans, drafts, the design of a building. What would happen to the builder if he didn't have those plans? My goals and ambitions are a guideline, not a strict end all plan where everything needs to happen according to it, it is a guide. While my goals are not an architect’s plans in how everything SHOULD be done, it is my guide.

My main point:

Most everything is our choice and where we choose to be in life is no different. I know many would disagree with this, though come with me for one minute. Let’s say we chose to play the lottery. Let’s say we choose the numbers 34, 35, 32, 2, and 19. One week later, we choose to view the results, and they just happen to be 34, 35, 32, 2, and 19.OK, some say its luck, some say its chance, though I say, didn't we choose to take all those actions and those numbers?

I know the example I mentioned is farfetched and even silly in some ways, though I know everyone understands the purpose. I also understand, there may be things where we have no choice, what I learned during those situations are, accept it and move on. There is no need to lay around worrying about something which happened, its best to find a solution and move on.

I'll be writing about different aspects of choice and happiness throughout this blog. I'm sure many will disagree with my view point, which is great; anything I write is not code everyone should follow, only a different view point. I love reading about every ones view points about these things and many others topics.