Monday, May 31, 2010

How much money do you need to be happy?

TED has an interesting talk about Happiness is Earning $60,000.

The Q/A is around 17:15 minute mark. Interesting research..

“Clearly… money does not buy you experiential happiness, but lack of money certainly buys you misery,” he said. But the real trick, Kahneman said, is to spend time with people you like.

I remember as a college graduate, I thought that as long as I have $10k in the bank, I'm all set. Ever since then, that magic $10k has always been in the bank but money has been growing elsewhere, including house, investments, cars, etc. But we have kept about $10k in cash just to be there and I feel satisfied.

In any case, Happy Memorial Day. Enjoy the freedoms and remember those who sacrificed their lives for those freedoms we have.

Friday, May 28, 2010

Family Traveling

This expense is probably one of the most variable, but over that past three years of marriage we have spent almost $3000 in traveling expense. This includes trips out to the west coast, trips up north, hotel rooms, rental cars, etc.

As you can see in this chart, there are months where we stay mostly in the DC area, and the huge spikes represent airplane travel, the small to medium spikes usually indicate hotel rooms.

In any case, according to mint, we've averaged about $87/month in travel expense. Not much I can do about that.

We do want to save up for trips overseas as well. A trip to China would probably cost us $1000 each for airfare plus other expenses like taxi money, hotel, and food money. However, if we do go, I'll probably file some of the expenses under Education since trips like that would definitely improve our Chinese language/culture.

We'll see how that goes. I'm slightly dreading those trips already.

Leaving an inheritance for my children's children.

Wednesday, May 26, 2010

Expense: Gas and Fuel

The latest spill in the Gulf of Mexico made me reconsider how much gasoline we are using.  I know one person can't make that much a difference considering the millions of gallons (thousands of barrels) being spilled daily.  In any case, here's a break down of our gasoline usage.  We currently have 3 cars (though like I said in my previous month's rant, I'm getting rid of some).

Fuel Economy

We average about $163/month in fillups. If we go with today's average gas price of $2.90, that comes out to about 56 gallons of gas or about 1400 miles @25mpg per month.

So for a 30 day month that amounts to about 47 miles/day. A trip from our house to church in our minivan (20MPG) for example is about 40 miles roundtrip costing us almost $6. A lot of our relatives live in Springfield/Alexandria. A trip out there is 27 miles if we take 495-66 and 22 miles if we take Fairfax County Parkway. Either case, it would be about 50 miles roundtrip on average costing about $8 per trip out there.

A drive to work using George (somewhere between 35-40MPG) is about 28 miles or 56 miles roundtrip. So it'll cost about $4.50 on average for a round trip. This is well cheaper than the metro, but not when I got the transit subsidies from work. It's an unnecessary expense, a luxury actually when I drive. It saves almost 2 hours in my commute especially if I drive during the non-rushhour times.

Driving is a Luxury

Can I afford it? Of course I can afford it, but can the planet afford it? Our tendency is to think only of ourselves, but the logical conclusion of that is the congestion in the roadways, the dependency to oil that we may or may not deplete within our lifetime and the unnecessary drilling offshore and in places like Alaska, etc. Sure I may be conservative in my spending, but I also hope to see myself being a good steward of our natural resources, you know, God's creation. But I know I also have the tendency to consume and if everyone thinks that they need to follow the lifestyle of the developed world, especially the developing countries, we (ALL) are in deep trouble.

Soapbox anybody?

Here's my rant: Americans (myself included) and other developed nations have been very negligent of the world's resources because these are luxuries we could afford. The problem is going to arise when the developing countries including China, India, Brazil and others want similar luxuries and similar lifestyles. Technology will improve and more innovative ways of energy may follow, but if we continue on this current path, we'll end up with more oil spills, more wars, and less and less resources.
(Note: the latest Economist has a great section on WATER, go read it)

So here's a challenge to the rest of you out there... what are some ways we can reduce, reuse and recycle? What areas can we be less of a consumer and more contributors? What areas can we be innovative in consuming?

I like new stuff, I like cool gadgets, I like new toys, but I also realize so does everyone else. If everyone continues to buy buy buy, if this continues something is going to give and by that time I hope our desire to consume would be somehow satisfied. But I know the human heart has a God-shaped vacuum that can never be satisfied. We'll fill it with stuff and continue to fill it with stuff and will not be satisfied. That's just the human condition. It cannot be satisfied without the infinite glories and joys of God himself, but until then let's hope and pray at least you and I will be satisfied with life.

I'm not frugal because I'm cheap and want to save a lot of money (ok, that's also a reason), I also see now, that being satisfied with what you have helps the environment and helps us to be good citizens of this world.

As a friend used to tell us: leave this place better than when you first came in. Well, the way we're headed it might not be. But I surely hope we can do better.

Leaving an inheritance for our children's children.

To God be the glory.

Expense: Bills and Utilities

This is one expense that we can try to tweak, but more or less it has to be in order to maintain our current level of lifestyle.


Our bills and utilities include:

  • Gas
  • Water
  • Electric
  • Internet
  • Cell Phones

Phone and Internet

I've stated in the past we could probably reduce some of our usage. Especially Internet and Cell Phone, but we have a fairly good deal. We currently have 6 people on our family plan and average $135/month coming out to about $23 a person. Not bad, but of course it could be better. We had a couple months where we had overage, random internet usage fees, and unnecessary texting (which we don't have a plan). I actually like the way China and most other countries does it where only the person sending the text is charged but here the companies double dip from both the sender and receiver of the text message. Oh well.

We're paying $50/month for Internet. We've considered sharing it with our neighbor, but we haven't had a chance to talk with him, since he's been out of town for most of the month.

Final Analysis

According to Mint for the past year and a half we've spent on average $339/month in utilities.

This comes out to be about 8.5% of total budget for the month which is slightly under what we planned for 2010. Nice going!

What can a budget do for you?

Friday, May 14, 2010

Obsession with Net worth

Well, NY Times has an article that looks at the psychology of people who track their net worth and other issues. This Net Worth Obsession as they put it is picking up steam. I thought I was just paranoid with tracking our spending, but with the recession and the high unemployment rates, it isn't really surprising that some people are going to have to cut back on their lifestyle.

I don't know if it is just knowing how much we have, how we compare with others, or just for the sake of security, etc... that we keep track. I think more than anything it keeps us focused and on the goal, leaving an inheritance for our children's children. If we spend too much we will start borrowing from our future and if we spend too little, we miss out on life. So finding that right balance is the key.

I hope you guys read that article. I think it is kinda funny how other people view money.


Wednesday, May 12, 2010

Reduce Energy Bills

lower your electric bill infographic
Lower Electric Bills Graphic

Stuff we have done in the past couple of years: we got rid of our second fridge, re-did our insulation in the attic, got newer appliances, lowered the heat and A/C, limited usage of rooms...

unfortunately we have a side by side refrigerator... and one with an ice maker.

Stuff we still could do: insulate hot water pipes, new washer/dryer...

Monday, May 10, 2010

Investing: Turbulence in the market

Bad News

The last two weeks have been really bad in the stock market. Bad news always spook investors and we were full of bad news. It's these surprises that shock the market including the Oil crisis in the Gulf of Mexico that could wreck the ecosystem, environment, economy, and the way of life in that part of America... and of course the credit crisis in Europe that could derail the Euro and even the EU.

Equipped with the Economist and just having read Only 3 Questions, I feel like was a quick shock to the system, and I was pretty confident the markets would be fine in a week or two. Even as I type, reports of the "surge" is happening in the financial world. After nearly gaining 80% our portfolio this year, we had about a 20% decline in a matter of 2-3 days. In the past, that meant panic selling of stocks to retain as much cash as possible before more blood is spilt. Make the bleeding stop.

Stay on TARGET

But this time around, along with the confidence of my older sister, we waited on the sidelines and even bought as the market had major a correction, even a one day drop of almost 1000 points in the Dow Industrials. I also went in the day after that drop happened not knowing whether it was going further down or not.

Is this crazy? Like I said before, most of our investments are locked into 401k and Roth IRAs. This means we won't be able to touch it in 20-30 years, which means we have a long time horizon. Even if stocks dropped 20-30 percent, we still have time for it to recover. Whick I hope sooner rather than later.

There are too many crazies out there

But in any case, as I scope the panic selling, I notice that many of the solid companies were just being sold because everyone else is selling. The crazy overreaction towards the market was irrational. Just like the crazy bubbles during the Dot Com and Real Estate were irrational. So you got two very irrational feelings moving the market in two very different directions. The only RATIONAL thing to do is to stay calm when you are MAKING a lot of money really fast... and stay calm when you are LOSING a lot of money really fast. The market will correct itself sooner or later.

When rational, sane minds come back, the market will resume it's course. But along this ride will be irrational EXUBERANCE of 1990s and mid 2000s and you will also have irrational FEAR as in 2000-2001 and 2008-2009. Both cases will inevitably return to a more rational market because irration is not sustainable.

Invest in your Sanity

So here's to investing. Buying and owning companies that produce jobs, create innovation, grow America, and develop the world. That's the right thing to do.

What can a budget and an investing plan do for you?

Wednesday, May 5, 2010

Expense: Auto and Transport

I thought our Food Expense was the one area we could slim down, but I was mistaken. I think our #4 expense is one area we could actually cut tremendously, our Auto and Transportation expense.

Fuel Economy

In the past 33 months we have spent almost $5.4k on gas and fuel. This comes out to be about $163.15 a month or about 56 gallons @ $2.90/gallon or about 1400 miles @ 25mpg per month.

We currently have 3 cars, of which one I hope to get rid of two as soon as possible. A 1990 Honda Civic wagon (George) which gets an incredible 40mpg on the highway and a 1999 Ford Ranger (Deacon1) which gets an awful 15-20mpg depending on its mood. We also have a 1999 Nissan Quest (Mini) that gets anywhere between 20-22 depending on how we drive and the weather.

Our average usage is probably 70% Mini, 20% George, 10% Deacon1 which comes out to an effective rate of about 25mpg. In any case, we could be doing better.


Our auto insurance is about 2,664 over these next 33 months plus months until August. So that averages to about $72 over 37 months. We have also hopefully reduced this amount as we have slowly moved from one insurance to another. This number will definitely be cut down, but the damage has already been done.


As for service, we have spent about $2.6k over three years. Looking back at our numbers that included 5 major repairs, 6 oil changes, 3 oil changes by hand, and dozens of stops at advance auto for various other things. The major repairs alone cost $2,168. So I guess we've been okay avoiding major bills (I guess). 1 involved axle, 1 involved ball bearings, 1 involved suspension/steering, 1 involved brakes, and 1 involved something I should have written down.


The final major subcategory is parking in which we spent $683 over these 33 months. It doesn't come out to much, but a lot of it could have been avoided. We were towed by the local HOA 3 times. Poor George. Those tow guys had a thing with him. We also had a few tickets when we parked in front of the bus stop and forgot to get our inspection done. Poor George. I also work in Alexandria, so whenever I wake up before 6AM and feel like a quick day, I would forgo the 1.25hr (but subsidized) metro ride and drive in to work. Parking and parking meters are also an expense I could have avoided. I've since found some spots that have 3hr parking and if I get there early enough and walk an extra mile. But that's good for my health and my wallet.

So that could have been almost $700 in unnecessary expenses.


Overall, we could have saved $700 for parking expenses, $1000 in auto insurance (had we switched earlier), and about $1120 if we cut back 300 miles a month. This savings is about $85 a month. And using our nifty Future Value Calculator, $85/month at 10% return for 30 years will give us a whopping $167k. This would be more if we actually got rid of our cars... which would inevitably force us to drive less and change our lifestyle.

What can a budget do for you?


This is how we are actually doing this year.

We're a little bit high on Fuel Economy, Parking is a minimum, Insurance and Repairs are just below target, so overall we just need to drive a little bit less and get better fuel economy.

Tuesday, May 4, 2010

Expense: Food and Dining

So last week my wife and I were talking about our savings plan. Over the course of almost 3 years we have tracked our expenses through

Our number one expense has been our mortgage/rent. Number 2 has been our giving and donations. Number 3 has been Food and Dining.

Over the past 33 months, our food expense averaged $511/month and our groceries averaged $377/month. We spent almost $17k on food. This comes out to be about 13% of total income. My wife has done a great job over these years in finding great deals and I hope this trend continues.

Our goal hopefully will be bringing that number down to $400/month or about 10% of income. In any case, most of the big spikes in our food expense was due to eating out... and treating friends to nice meals. Mostly people from out of town who come in to visit or some other special occasion. So if we are able to save that 3% and put it into savings, that could go a long way.

What can a budget do for you?

Monday, May 3, 2010

Obama on Everything

Our economy must be good when the president is joking on Goldman Sachs.

Saturday, May 1, 2010

Net Worth 2010 April (+9.79%)

End of month report for April 2010.

In comparison with March, we were up nearly 9.79%.

House price had a slight increase, we paid off credit card bills and investments slightly higher as well as tax refund..

It looks like we have made great gains this month. In actuality, one of the houses in our neighborhood sold higher, lifting up our prices. But like I said in an earlier post, values of our house should not really be counted in net worth.

Our investment has gone up mainly due to tax refund that came in and more being invested. I have been consulting with my older sister and we are trying to solidify a good investment strategy for the long term.

I moved around some of the money. Our savings have been moved to our E-trade account, checking stays in our Apple account, and large majority of our investing are now done in retirement accounts: my TSP (government version of 401k) and our ROTH IRAs, with a small percentage in college funds. I really want to invest more, but we only have about 3 months worth of savings. Main reasons for such a small savings account are due to:

1. Maxing out Roth IRAs
2. Accelerating mortgage payments
3. An early vacation + parties
4. continued giving

I like Ramit's automated finances. I think I've been doing a hybrid version, so trying to implement it better.

Automate your Finances

Seemed like common sense to me, but like all things, it takes experience, trial and error or just someone to tell us how to do things.

Ramit Sethi's how to automate your finances.