Dumb Little Man | Tips for Life

Last month a friend (who is constantly broke) asked me how I always manage to have more spending cash than he did. Bear in mind, this guy makes $30K more than me each year and has NO kids! So for the last month I have been listing things that I do, that he doesn't.

Maybe frugal, maybe smart..Either way you look at it, it's my money. Why not keep as much as possible?

Eating

* I eat fast food once per week and I actually use coupons from the little mailers we get at home. Aside from that, it's home cooking. Stop - I don't have time either so we'll have a pasta night, grill night, etc. Most meals are cooked in 10 minutes. For lunches I just have a turkey sandwich and some chips. (think about fast food lunches: 5 days per week X$6.00 = $30.00/week X 4 weeks/month = $120.00/month!

* I shop at CostCo. Obviously you are not getting everything you need at CostCo but for the $100 annual Executive membership, I get 2% cash back on my purchases and I am saving a ton. Everything there is not sold in bulk which is a common misguided complaint I hear from people.

* For canned vegetables, I buy generic. I swear to God it tastes the same.

* I turn over the ketchup and salad dressing and leave it in the fridge to make sure I get every drop.


Money and Taxes

* I own rental property. I might make a couple hundred dollars per month on this, but the big benefit is taxes. I get to write-off a huge amount each year as the property depreciates. Don't confuse this with the value appreciating and this is not the time to explain the difference. Let's just say that property depreciation substantially reduces your taxable income.

* I have a business license that I paid $600 for. Since I am incorporated and I report some modest earnings, I use the business to write-off my home office and office equipment.

* I max-out my 401k contribution to lower my taxable income.

* I throw $3K year into a medical flex spending account so I can pay the medical bills with PRE-tax money.

* I reduce taxable income by also contributing something to an IRA each year.

* I don't gamble. My wife may go to a casino once every couple months and blow $250 but that's it.

* I negotiate a ton with my phone company, internet company, and satellite TV provider. Every other month I call threatening to leave unless I get put into a better pricing plan. It doesn't work all the time but it does 75% of the time.

* I don't buy anything major unless I have the cash. Sure, I will throw it on the credit card to get the miles or points but it's paid off at the end of the month. I never let credit cards balances revolve. I'd love to have a new plasma or a new pool table like he does, but I am not willing to pay 8%-20% in interest like he is.

* I don't buy anything I don't love. You should see this guy's house. There is clutter all over the place. It almost looks like someone dumped the entire home section from Target in his living room. Sure, I have nice picture frames and some vases but don't buy things just to add to the clutter. If you have to have something, decide what you are replacing first!

* We put as much as possible on our American Express card. Each year, this basically pays for our vacation because the flight and some of the hotel is paid in points.

* I spend $15 on my haircuts. I went to 3 or 4 places until I found a girl that could cut it right, but that beats paying $40 a cut. When I lived in Chicago I went to some goofy boutique and it was $80. No way.

* This one is a tad embarrassing to admit but I buy $100 gift cards on Ebay
for $96.00. As dumb as this sounds, it takes very little time and I can usually do it enough to save 20% on a large purchase.

* I pay $400 to get my taxes done. This woman has returned the favor 10-fold. I used to use TurboTax but once I saw the accountant work, I will never go back. NOTE: This is not HR Block or anything like that, the woman has a family accounting practice. I am not a fan of HR Block because they messed up my taxes 5-6 years ago.

Electronics and toys

* Yes, I have 3 PCs in the house, but one is work-issued (free), one is a $400 eMachines Windows ME (circa 2000-01 that I am actually using right now) and the other is a HP laptop for my wife that I got a great deal on. He has the Gucci of PCs, a monster monitor, etc. He doesn't even know how to use it. I spend 15 hours a day in front of a PC and although this thing is getting a little slow, it does it job.

* Sure, I'd love surround sound in every room of the house but come on. If you think I am waking up sleeping babies just so Top Gun sounds cool, you are nuts.

* I don't rent from Blockbuster. Human nature says people are lazy and I agree. I know that my $4.50 rental will become a $30.00 invoice when I forget to return it on time.


Clothing

* I have 4 suits. I purchased all of them at the Men's Warehouse and although I am not plugging them here, they each cost $400 so I am setup for $1600 or roughly the cost of a single suit from Nordstrom's (where he shops).

* I have NO problem shopping at TJ Maxx or other outlets. As long as you inspect the clothes (you know, zipper is on the front of the pants, the Ralph Lauren polo logo is facing the right way) you are in good shape - at 50% off.

* I get my dress shoes from outlets. You seriously cannot tell the difference because most designer labels are on the inside of the shoes and unless you are taking them off, no one will ever know. My typical pair of dress shoes costs $100 and lasts me 5 years.


Car

* I drive a 1998 Chevy Blazer with 98K miles; he has a new Cadillac. I have no car payment here because I took a home equity loan and paid it off. At least the interest on the loan is tax-deductible. By now, that's even paid off.

* I buy gas at CostCo too. It's generally 0.04 cheaper per gallon

* I get car washes monthly unless the car is totally filthy. When I do, it's the $5.00 wash, not the $29.95 one that sprays a ton of random liquid on your car that you can't see. There is no reason to get a car wash more than that.

* I don't drive just to drive. I try to list all of my errands and get them all done in a single trip on a Saturday when there is less traffic. I am driving an SUV so this must add up to some kind of savings.


There is probably a happy median here. The point is that you should at least 'know' where your money is going each month. You will naturally start cutting things out that aren't worth your sweat.

- Jay