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How to control your spending?

It was shaping up to be a financially prudent month. Until you checked the bank statements. A few “dangs”. A handful of “ugh, forgot about that ones”. And some “what was I thinkings?”. Oh, and that was before viewing those 2 other credit card statements. Sadly they all added up to make your month fiscally regrettable. Wouldn’t it be handy to have a list of spending considerations to apply before giving your credit cards a workout? A pre-spending checklist. A kind of monetary mom to control your spending.

In fact, there is! Here are some ideas to control your spending with minimal effort or sacrifice:

Shop mindfully – lead us not into temptation

The science of shopping has developed immensely. Every aspect of retail is fine-tuned to make you spend. The lights, colors, music, product placement and last-chance urgency are all there to fill your cart. Store sensors are monitoring where you move, what you buy and where your eyes look. MRI testing reveals what merchandising and messaging lights up our internal “buy buttons”. Heading to the mall with no real needs is like swimming with the sharks. While wearing a meat swimsuit.

Instead, shop mindfully. Shop when you actually need something. Bring a list to the mall or to your laptop of exactly what you are looking for. Double-check that you don’t already have the thing at home – hidden under the couch, in the attic or in your closet.

Set a cooling off period – desperate needs become vague wants

Marketers do everything possible to create passion for their products and drive urgency into your buying process. If the item isn’t an urgent necessity, give yourself a little cooling off period to regroup. Consult with some friends to get their thoughts. See if your Dad thinks it’s a good idea. Set a calendar reminder to see how important the item still is in a couple of weeks. This is often referred to as “the thirty day rule”. In Quora, someone asked me if there is a shorter version of the 30 day rule. Weird question. I suggested the 15 day rule. While you are waiting the 30 or 15 days, spend some time glancing through your credit card bills and account balances to temper your spending desires.

Can you share or borrow one to control your spending?

If the thing you need is large, heavy, expensive or will be rarely used, think about buying it with a neighbor and sharing the cost, maintenance and maybe even the storage. I did this for years with a snowblower. My next door neighbor, Peter and I split the cost, shared the maintenance and took turns plowing each other’s driveway. Way better than us each buying a machine and plowing solo. This idea works well for power washers, table saws, Spiderman costumes, chainsaws, prom dresses and dinosaur cake molds. Less effective for linens, stuffed toys, floss or pajamas.

Can you rent one?

Hello gas powered post hole diggers, drywall hoists and wedding dresses. And believe it or not, even caskets, camping geargoats and luggage. The cost savings can be considerable – e.g. caskets rent for about $750 vs $5,000 to $20,000 to buy. Renting seldom used items can also free up a lot of storage space. How often do you use all of the gear that lines your garage? Renting things you might have bought can be a good way to control your spending.

Can you get a used one?

If you kind of need the item around all the time (like kids, dishes or pets) borrowing or renting likely won’t do. You may need your very own. There are tons of marketplaces to do that. Reverb for musical instruments, Poshmark and Tradesy for used fashions and Craigslist, eBay, Offerup, Facebook Marketplace and Letgo for everything else. Most of my guitars I bought used, typically in mint condition and saving more than half. Or allowing twice as many guitars.

Get the best product

For products, Amazon reviews are great even if you don’t buy from Amazon. Their process limits the reviews to actual purchasers and the large numbers help with accuracy. One of the all-time research bargains is ConsumerReports.org. Sign up for an online membership for $30/year. Completely unbiased reviews of everything from snow tires to sun screen, tractors and strollers. Makes sure you have a product you enjoy, saves on repair costs and the hassle of replacing it before its time.

Make sure you aren’t overpaying

Once you figure out that you really want, but also need, a thing, do your research. On home renovations, there are lots of ways to save. Shopping around is a powerful use of your time. It works on just about everything. A couple of weeks back, I realized that CashflowCookbook.com was running too slow. A local company offered to speed it up for $3,000. A quick online post introduced me to a highly-rated Australian company whose specialty is speeding up WordPress websites. Boom! Their premium offering is all of $495. They did a stellar job and left me with an extra $2,500 in the bank. On the consumer side, there are dozens of sites that focus on comparison shopping on your behalf. Here is the amazing results of my car insurance shopping project. Lots of comparison sites for anything else you need to buy. Check out Google shopping, PriceGrabber and shopping.com.

How do you control your spending? Share your tips in the comments below.

Photo credit Ellie Burgin on Pexels

Bad money habits are standard equipment for most of us. Not your fault. Great news is that they can be easily upgraded to good ones. And all the details are coming, I promise. But let me back up.

Last week, I ordered a chick pea and kale wrap for dinner. I know, I know. A bit rabbit-ish. Then came the option of fries or salad. Isn’t that one a bit obvious? Who would order the healthiest thing on the menu and then pair it with a basket of fries? Salad it was. And just a glass of ice water to drink.

To the outsider, the dinner looks a bit Spartan — pretty bland fare to say the least. Especially when you look at the rest of the menu. Bacon wrapped scallops, rib steaks, baskets brimming with onion rings and a double meat lasagna. Did I lose a bet? Was I being punished for something?

No. Just some habits at work.

The habit epiphany

Way back before songs were 3 minutes long, I would order whatever looked the tastiest. And with the blessing of youth, my waistline stayed intact. My body did its best to process whatever I shoveled in, forage for usable nutrients and keep me moving along. It all worked well. As the years slid by, I noticed a decline in my doctor’s enthusiasm as he pondered the results of my annual physical. A few changes were in order.

Bit of a wakeup call that got me thinking about eating healthier. Food became more about what my body needed and less about what looked tasty. Breakfasts became almond milk, high fiber cereal and berries. Lunches were big salads with minimal dressing and dinners were any kind of healthy, low fat, nutrient-packed fare. A good snack was a protein shake and some celery sticks. Everything washed down with lots of water.

In short, it was awful.

But I stuck with it. Over time it became my new habit. Sodas became way too sweet. Greasy food was just too, well, greasy. I began to crave the healthy stuff. All it took was a first step and a bit of time. Could this be a path to fixing bad money habits? Wait for the rest of the epiphanies.

Turns out bad habits have a vulnerability.

If it works for diet, might it work for other things?

I grew up a non-runner. Tried it a few times, just not me. Felt awkward and clumsy. Even a mile or two was painful.  Maybe my legs too short? Was I too heavy for my height? And please give me a break with all of this talk of runner’s high. After a few hundred yards, every step sucked. I hated that I couldn’t get a running habit in place.

So the logical step was to sign up for the New York City Marathon. A way to force my hand, er, feet. I got a training schedule and clicked off a mile. Then worked up to two. Stayed with it as I lumbered through every yard. After a month of steady running, my body adapted. It shed a few pounds. My mind wandered away from wanting to quit with every step. It started to feel, well, natural. Fun even. I felt strong and alive. No natural ability, no gift in my gait. Just some kindling of determination to get the fire started. Forcing the habit until it became, well, a habit. And the habit stuck. One marathon grew to three and running was my silent therapy for decades.

I discovered bad habits have 3 vulnerabilities:

  1. A realization that they aren’t ordained
  2. A start with the tiniest step in the new direction
  3. A pattern of more steps in that same direction

All habits are changeable.

Does this work for every kind of habit?

I think it does. I have tried it on all kinds of things as I went from:

  • non-swimmer to a triathlete
  • mathaphobe to a professional engineer
  • tone deaf music lover to playing guitar in a bar
  • nervous show-and-teller to professional speaker
  • double double to black coffee
  • Complete slob to organized
  • Cow’s milk to almond milk
  • Chronic procrastinator to progress obsessed
  • Hater of Brussels Sprouts to, well, ok so its not foolproof

Not a medal winner on any of these, but I got myself in the game. All with no special skills, gifts or superpowers. Just enough willpower to lace up my runners, get in the pool, add a bit less sugar or learn that first chord. Then do it all again for just one day. And the day after that, but not worrying about that until that day arrives.

Then the benefits start to kick in. The fun of things getting done. The energy boost. The deep refreshing sleeps, The calmer mood. The utter joy of someone recognizing the song I’m playing. Fun new habits. The old habits gone. Now unthinkable.

Bad money habits get shown the door

Think about bad money habits. What are the big ones?

  • A mess of overdue paper bills that taunt your psyche
  • The love of shopping even as your wallet moans in protest
  • The stress of living paycheck to paycheck
  • A crushing debt load that extinguishes the hope of your savings

These are all fixable. Each needs a bit of time to get started and a then some followup time. And yes, we all have the time. The average American spends 28 hours a week watching TV. Skip a couple of episodes and you can learn how to get your bills automated and back in shape. Or re-shop your car insurance to save thousands.

For the shopping, grab your last credit card bill and look over a couple of months of purchases. Regret any of them? Did the fun of the shop morph into the agony of the bill? Maybe review your last couple of statements prior to your next Amazon click. Resolve to shop more mindfully. Give new purchase ideas a month to season. Did they lose some urgency? Savor the sparse statements and the room to clear some debt or invest for your future.

For the make-it-to-the-next-paycheck stress and heavy debt loads, look for ways to free up some cash. There are $13,000 worth of monthly savings ideas in Cashflow Cookbook. And thousands more in my blog. Very likely that one or more of them can help you free up money with minimal sacrifice to pay down debt and ease your money worries. Pick an idea, optimize an expense, pay a debt or add to your investments. Then make another small step. Then add the next tweak.

What financial habit will you start with?

It’s time to banish your bad money habits. Pick a gateway habit to get started. Watch the results. Then move on to the harder stuff. Let yourself get hooked on the benefits.  As an example, maybe it is bringing your lunch to work 3 days a week. Saves an easy $35 a week or about $150 a month. Why not apply that to pay down your car loan faster? Clear out some credit cards. Or invest that at 7% over 30 years and add another $180,000 to your retirement account. And that is just one small habit. That one starts by just making the first lunch. You got this.

How cool would it be to get free iPhones for life?

Dream with me for a minute. Imagine brand new free iPhones every other year. And hey, if we are dreaming anyway, how about a free cell phone plan to go along with it? Pretty sweet. Since everyone likes free stuff, let’s add in $200 gift certificates from Starbucks, Lululemon, Starbucks and Chipotle. Even better. But is this really possible? And why would these companies give all of this away for free? More important, how can you get in on the deal?

Most personal finance writers would shoot down the idea of new iPhones every other year, fancy coffees, dining out and premium sportswear. I would too, if you actually had to pay for all of it. But what if there were a way to actually get it all paid for…every year…for life?

So what is the scheme and who actually pays for the free iPhones?

Over at Apple there are 147,000 employees. They are all working hard, dusting store fixtures, selling iPads, explaining nuances of iCloud and making all the boxes open slooowwwly. Meanwhile at Chipotle, people are opening stores, scrubbing grills and being incredibly patient while customers fuss over their exact burrito toppings. The Amazon folks are scampering around filling orders and whipping reindeer to get everything to your house on time (kidding on that last one). What are we doing while they are working so hard? Well, frankly not much. And therein lies the elegance of this approach to get free iPhones and other stuff.

As they are busy with all this ceaseless toil, they are growing their companies. Improving sales numbers, opening new stores and making their companies more money. The brands become more valuable and their success continues to snowball. The great products and experience keep the results coming and and their stock prices continue to grow. That stock price growth is what we can use to get their products for free.

Converting stock growth to free stuff

Ok. So far we have companies with products we want. Employees working like the Dickens. Stock prices rising. So how do we cash in and get all the free iPhones and the other cool stuff?

Imagine that we set aside $7,000 five years ago and bought $1,000 worth stock of each of 7 cool companies whose products and services we like. Let’s lay it all out in a table:

free iPhones
An initial investment made 5 years ago

On the left is the company, their stock ticker in blue and an initial investment in yellow. $1,000 per company. Adding up the growth of the stock over the last 5 years, including dividends give us today’s value in green. Finally, the purple column shows the average annual return for each of these stocks. Wow! An average annual return for the group of 34.39%. They are all great companies with big competitive advantages. Will they keep growing like that? I have no idea. And neither does anyone else.  But stay with me!

So our initial investment of $7,000 has grown to over $30,000. Not bad. There are lots of things that we could do with that cash. Usually, my counsel is to keep it invested, especially in an IRA or a 401(k). (TFSA or RSP for you Canadians). But this time, let’s assume that your debts are under control and you have a good start on your retirement savings.

Time for a little fun with our cash

Rather than spend the money in a lump, or invest it for the long term, what if we just pull out each year’s gains after that initial 5 year growth period and spend it on fun stuff. What could we buy and how long could we keep this up? Let’s take a look:

free iPhonesSo we will start with a new iPhone every other year for $1,000, or about $500 per year. Let’s add a cell plan and let it gorge on unlimited 5G data. Tasty. Tuck in a standard Netflix subscription. That adds up to $1,508. Then let’s spend $200 on gift cards from each of Starbucks, Lululemon, Amazon and Chipotle. That all ads up to $2,308 of fun stuff every year. Some nice lifestyle additions. Why those numbers?

They sum to $2,308 or about 7.5% of the value of our stocks. If our stocks grow at about 7.5% a year, we would be able to spend that much and not actually deplete our $30,691. In fact, we could enjoy free iPhones, cell plans, Netflix subscriptions and all those gift cards forever. $2,300 worth of stuff forever, all from a one time investment of $7,000.

But wait, it wasn’t free. We still had to invest $7,000 and wait 5 years.

Actually, you can get that initial investment for free. Or very close to free. Some careful re-shopping of regular bills can easily emancipate the cash for that kind of investment. All with minimal effort. Have a look at easy ways to reduce regular bills like energy costs, home renovations, housing costs, prescription drugs and even vodka expenditures. Want another $13,000 of monthly savings ideas? Check out Cashflow Cookbook.

What about the business of waiting 5 years for that initial investment to grow? Let me answer that with a story. When I was about 27, I started working on an MBA part time. People would often say “Part time? Are you kidding me? That will take you 4 years. You won’t be done until you are 31.” My answer was that I will be 31 eventually. I can either be 31 with an MBA, or without one. Life goes on, tuck away the money, go about your business and check your balance in 5 years. Hopefully you will have a fun account that spits out free iPhones and other goodies for life.

You can, of course set this up with whatever brands you like and nothing says you have to spend the growth and dividend money on the same companies you invest in. The investments are spread across 7 stocks which provides some level of diversification.

We got some free iPhones and some powerful learnings

A few things get reinforced with this example:

  • Compound growth really is the 8th wonder. It can even keep you in iPhones.
  • Great companies have brand power that fuels their growth and investment returns
  • A group of strong stocks can provide an ongoing stream of money to fund a lifetime of expenses
  • This is really a miniature version of the power of long term investing for retirement
  • Invest for the long haul. Markets tend to rise over the long haul, but may rise or fall in the near term

Some caveats

Readers should always do their own research on any investment. This example was for illustrative purposes only and does not constitute investment advice. The author holds positions in Amazon and Apple. Investment results are unpredictable and past results may not be reflective of future performance.

What companies and products would you add to the list? Let me know in the comments below.

Photo credit Douglas Bagg at Unsplash

Stay sane during Covid

It began with a shock as the virus spread, everything closed and markets crashed. Then things got eerily quiet. For a while doom scrolling kept us busy. Then the scramble to set up a home office and learning spaces for the kids. Next came guzzling down Netflix episodes for light drama followed by a US election for even more drama. Most recently we’ve been comparing shots and reactions. But we are all getting weary and it’s time to find new ways to stay sane during Covid.

Fine, I mean fun, dining

No question our eating has changed a lot. Emphasis on the lot.  Where workday dining used to be confined to mealtimes, being at home gives us continuous access to the fridge, the pantry and the cookie jar to relieve some boredom. Here are some ideas to mix things up and stay sane during Covid:

Meal Kits – here in Ohio, our Giant Eagle grocery store has a selection of Great to Go meal kits for two including Chicken Piccata and Mushroom and Green Chile Enchiladas. Meanwhile in Canada, PC Chef has their Oaxacan Pork Tacos with Mango Salsa and smashed Avocados. They make a fun date night, are easy to prepare and build real chef skills for when you are ready to take off the culinary training wheels.

Leftovers – check out Supercook, a clever way to find recipes with what you have left in your fridge. Download their app from the App Store or Google Play and just speak your fridge leftovers into your phone. Boom! It finds you recipes that use just what you have! How Cashflow Cookbook is that?

Wine Clubs – there are some great wine clubs out there including the Wall Street Journal Wine, a cool club that starts off with 14 bottles plus glasses for just $69.99. Or why not try a complete blind tasting kit from Argaux? They offer 2, 3 and 4 bottle kits to test your palette and learn your preferences. You can set up your own testing night and compare scotches, gins or rums. We did a comprehensive vodka testing night right here at Cashflow Cookbook headquarters.

Clear out the brain fog

What a great time to learn something new! We are all used to remote connections and the range and quality of courses has never been better. Wonderful way to reinvest your commute time in ideas to enrich your life and further your career while staying sane during Covid.

Stay sane during Covid take a class
a masterclass can teach you all kinds of new skills. Photo Andrew Pons

Masterclass gives you full access to the best in every field. Learn songwriting with Alicia Keys, cooking with Gordon Ramsey, skateboarding with Tony Hawk or business management with Howard Shultz (think Starbucks). An unbelievable deal at $15/month.

There are lots of other great online learning sites including Udemy, Coursera, EdX and LinkedIn Learning. Titles include business related topics like mastering XL (how fun is that?) or learning to code (How much fun can you take?), to every kind of interest or hobby. Udemy, as an example, includes courses on everything from music and photography to fitness, lifestyle and interior design. Often courses with thousands of 4-5 star reviews are only $20-$40. Coursera and EdX tend to more academic and career-oriented titles.

The great outdoors

There it is, just past your screens and out your front door! Go check it out. Prop up an effigy of yourself in your office chair so you’re not missed on the Zoom call. You got this.

Hike – grab some runners and get to a park or trail. Breathe that fresh air and commune with the woodland creatures. It’s a lot like the Headspace meditation app, but without the computer, the guy with the British accent and the annual subscription. Push the pace a bit and get your heart engaged, or bring some snacks and loaf along. Either way, the latest research says that it will help you stay sane during Covid.

get out for a bike
It’s like riding a, well, you know! Photo Carl Winterbourne

Bike – yah, the dusty metal thing in the garage, just behind the Christmas decorations and the boxes of, well, whatever is in them. Guessing here, but perhaps you haven’t had it out in ages. The good news is that it is just like riding a…well you know. Get a nifty phone holder for your handlebars to help your navigation or just go natural and enjoy the day.

Herb and Vegetable Gardens – A great alternative if all of that huffing and puffing isn’t your thing. Lots of instructions to get you started on YouTube and seeds and kits on Amazon. A wonderful way to commune with your own yard, and get the very freshest ingredients for your garden.

Bird watching – I know, I know, it sounds a bit fuddy duddy. Bust out the Tilley hat and the cardigan and all that. But a bird feeder set up just outside your morning coffee window really adds something. And since your boss isn’t watching, take your time, enjoy the interactions and the colorful species. Hauling the bird food around provides a great workout, which leads us to the next section.

Home workouts

stay sane during covid with home workouts
stay sane during covid with home workouts. Photo Johnathan Borba

Sadly, all of the excuses are gone! The gyms may be closed, but you can set up a home gym. Peloton, Bowflex and NordicTrack are all shipping again. And even if they weren’t your body weight is still there. Maybe more than ever. Get some basic equipment and then amp it up with bespoke virtual classes.

YouTube has every kind of workout and tons of instruction in Yoga, pilates, bodyweight, and Martial Arts. If the Apple elves brought you a watch for Christmas, put it to work with the Apple Fitness+ app. Love this, new classes all the time to bring your treadmill, spin bike, yoga mat and abs to life.

Honeydew list

Since you are at home staring ceaselessly anyway, why not fix a few things up? Tradesmen are booked solid, but what a great time to learn some new skills. Recruit a handy relative or try working under the wing of a pro. There are YouTube channels for every kind of fixit project. Bob Vila and Vancouver Carpenter are awesome for general repairs, while Appliance Repair is great for fixing, well, you know.

If your boredom sinks to previously unexplored levels, it might be time to do the sorting and organizing that you have put off for the last decade or two. Do some robust purging, move those old treasures out to charity and then get some shelves going to give you primo access to the things you really need. Cleaning, sorting, purging and organizing rivals meditation and Xanax for mood improvement.

Looking to ease your boredom, stay sane during Covid and save money? Tackle some energy saving projects, like weatherstripping some leaky doors and windows, sealing around pipes entering your home and adding attic insulation. We did a few Covid-era projects to save on electricity and it made a big difference. See below:

stay sane during covid home energy projects
Looks like those January energy savings projects paid off

Build a kit

stay sane during Covid - build a kit
stay sane during Covid – build a kit

You name it, you can get a kit for it. Deb got me a Les Paul guitar kit that will have me sanding, staining and soldering for weeks. Once done, I will plug it into one of the amp kits I built earlier for a real all-built-at-home experience. To ensure that I can enjoy really great guitar tone, we just got tickets for a Santana concert later this summer.

If you trend to more arts and crafts, here is a cool hands casting kit to immortalize your paws. Or you can find books and kits to make everything from candles to clocks.

Entertainment in a box

A bunch of companies will ship you a monthly box, of well, cool stuff. Hot sauces, mystery games, puzzles, at-home escape rooms, luxury essentials and tons more. Check out Cratejoy as an example. Prices run from $20-$40 a month or so.

Summary

Turns out that there are lots of ways to stay sane during Covid. As scary and as sad as this chapter has been, its also been a time to regroup, reconnect and recharge. Maybe a change to remake your life in a new way. For many it has opened possibilities – more working from home, less commuting, more free time for family. Some of these changes can help free up cash (one less car? reduced commuting costs?), while others can offer a better lifestyle (more time with kids, spouse and pets). Use the time as a chance to improve every aspect of your life. Soon the fog will lift, the world will open up and we will appreciate relative visits, dinners out and concerts like never before.

How are you staying sane during Covid? Let me know in the comments below.

Main Photo by Priscilla Du Preez on Unsplash