Saving money "hacks"

[Lone Wolf]

Lone Wolf:

This site says I have $513 dollars coming to me (Yea!).  But it's asking for my social security number. 



... makes me a little uncomfortable.

If speaking to a human being makes you feel a bit more comfortable, you might want to try giving them a call.  Here are their numbers -- see the one for "Unclaimed Property Claimants".

Sounds like you found a serious chunk of change... congratulations!

[Storm]

I find http://earlyretirementextreme.com/ and its associated http://forum.earlyretirementextreme.com/ to have excellent ideas on how to save money aggressively and retire very early.

This is a very interesting website.  I read some of his articles and found it a little "extreme"... I don't think I can live on $1,000 a month in such austerity as he does, but it is interesting to hear about people that can make it work for them.

The thing that kind of turned me off - I started reading on their forum - the investing advice is just terrible, extremely ill-informed.  For example, they had one guy that was using a margin account on 100% margin to invest in dividend stocks, completely unaware that a 25% correction would cause a margin call and just said something like "if I get a margin call, who cares, I'm up 6% so far this year." (Jan-Mar. 2011)  Other people that were investing in all kinds of crazy REITs, TIPS, etc.

I'm down with the early retirement, but you would think that people intent on retiring 5-6 years from now would be more careful with their investments.  After all, losing half of your meager $100K retirement plan would certainly set you back another 5-6 years, minimum.

Then again, I'm very impressed that people are starting this in their 20s.  If only I had such wisdom to start any type of retirement plan in my 20s, that would have been awesome for me.

[Coffee]

That site strikes me as a bunch of college kids advocating the pauper's life.  Sure-- I can live like a 3rd World peasant, too.  But why???  So I can retire early and live like a peasant??

That's not what it's about, for me.

[6 Iron]

There is a mixed bag at the early retirement forum, with more sensible discussions on some of the nuts and bolts of early retirement. But just like at Bogleheads, there are some fringe ideas. I am looking to begin the transition in my 50's, but if it involves requiring that I use the same razor blade for a year, I probably should wait a little longer.

They do stress an important concept that underlies the essence of this thread: make it a habit to live below your means (LBYM).

[Storm]

6 Iron, I agree.  The general concept is great and I have a ton of respect for people that can make their life work on only $1000 a month.  Personally, I would be happy to retire at 50, and the wife and I love having cars, eating out occasionally, and enjoy the finer things in life such as a hot shower whenever we feel like it, a nice home cooked meal including the occasional steak, and not worrying about whether or not we can afford to buy new shoes when ours wear out.

I think it's great to hear about how they can make it work, but personally, I would rather live like a king than a pauper, and if I can live like a king and save money like I'm living as a pauper, all the better... :-)

[KevinW]

That site strikes me as a bunch of college kids advocating the pauper's life.  Sure-- I can live like a 3rd World peasant, too.  But why???  So I can retire early and live like a peasant??

I participate in that forum too, although I am only "extreme" in some areas.  A lot of people have a strong desire to make their livelihood independent of wage income at a young age for various reasons.  Examples: the rat race is unfulfilling; unable to find stable work; anxiety about long-term career prospects in the US; wish to pursue a life's work which is not compensated well (e.g. art, writing, parenting, activism); peak oil concerns.  ERErs prioritize economic freedom over luxuries and status symbols.

Mathematically if your savings rate is >50% it doesn't take long to reach financial independence due to the perfect storm of rapid savings and only needing a relatively small portfolio to cover expenses.

The thing that kind of turned me off - I started reading on their forum - the investing advice is just terrible, extremely ill-informed. 

Yeah.

The general concept is great and I have a ton of respect for people that can make their life work on only $1000 a month.

I can't fault anyone pursuing this lifestyle because it lies within the established parameters of honest society.  They choose to spend very little, invest in the capital markets, and live on the proceeds.  The other models for opting out of paid work seem to involve mooching off someone, abusing social programs, pyramid schemes, or some other violation of the golden rule.

FWIW, Fisker (the author) cites "How I Found Freedom in an Unfree World" as a key influence.

[Lone Wolf]

I can't fault anyone pursuing this lifestyle because it lies within the established parameters of honest society.  They choose to spend very little, invest in the capital markets, and live on the proceeds.  The other models for opting out of paid work seem to involve mooching off someone, abusing social programs, pyramid schemes, or some other violation of the golden rule.

I agree.  Very interesting stuff.  It's not for me but I applaud anyone who finds an honest lifestyle that makes them happy.  Whether it's a fit for my personal situation has no real meaning for practitioners of this lifestyle.

If nothing else, this kind of material is a great illustration of boiling things down to their essentials and categorizing the things you need vs the things that you just thought you needed.

I'll have to check out how they handle health insurance.  Hopefully the recommendation is some kind of HDHP (this is what I use) rather than suggesting that you just wear a helmet everywhere or something.

[KevinW]

I'll have to check out how they handle health insurance.  Hopefully the recommendation is some kind of HDHP (this is what I use) rather than suggesting that you just wear a helmet everywhere or something.

http://earlyretirementextreme.com/how-t ... -care.html

Yes the most common approach is a HDHP, HSA, healthy lifestyle, and taking care of little things yourself.

[MediumTex]

I'll have to check out how they handle health insurance.  Hopefully the recommendation is some kind of HDHP (this is what I use) rather than suggesting that you just wear a helmet everywhere or something.

http://earlyretirementextreme.com/how-t ... -care.html

Yes the most common approach is a HDHP, HSA, healthy lifestyle, and taking care of little things yourself.

Another positive with a HDHP while you are employed is that if you lose your job the COBRA premium for the HDHP will not be prohibitively expensive (as PPO plan COBRA premiums normally are), which will allow you to maintain health coverage for up to 18 months without breaking the bank while you either look for another job or enjoy your early retirement.

[Lone Wolf]

Yes the most common approach is a HDHP, HSA, healthy lifestyle, and taking care of little things yourself.

Some very nice tips on there.  Grabbing a HDHP for $71 a month (wow) really does seem like a great way to go.  If you then dump the max into an HSA, you're left with a great way cushion for medical expenses or an IRA-like instrument if the money's never needed.  It's a nice instrument and very positive for savers, particularly low-income savers like the ERE crowd.

Another positive with a HDHP while you are employed is that if you lose your job the COBRA premium for the HDHP will not be prohibitively expensive (as PPO plan COBRA premiums normally are), which will allow you to maintain health coverage for up to 18 months without breaking the bank while you either look for another job or enjoy your early retirement.

Ah, great insight.  I had never considered it from that angle but that's one more way of buying yourself a little bit more freedom.

[Wonk]

6 Iron, I agree.  The general concept is great and I have a ton of respect for people that can make their life work on only $1000 a month.  Personally, I would be happy to retire at 50, and the wife and I love having cars, eating out occasionally, and enjoy the finer things in life such as a hot shower whenever we feel like it, a nice home cooked meal including the occasional steak, and not worrying about whether or not we can afford to buy new shoes when ours wear out.

I think it's great to hear about how they can make it work, but personally, I would rather live like a king than a pauper, and if I can live like a king and save money like I'm living as a pauper, all the better... :-)

I also agree with this.  If people want to live a spartan lifestyle, that's fine by me.  But cutting things out of your life has diminishing returns.  I think it's much easier to earn more than to cut more expenses.  I know I've said it before, but GC'ing your own house is totally worth it and I'm blown away that more people don't do this.  Where else can you earn $100K+, tax free, in your spare time (save for MT's carpet cleaning)?  I'd rather build and move every 2 years than have to cut down on vacations and eating out at restaurants. 

[MediumTex]

Where else can you earn $100K+, tax free, in your spare time (save for MT's carpet cleaning)? 

I made $300 over the last two evenings, so I'm probably not on pace for $100k annually from this gig, but my forearms are starting to look like Popeye's.

[6 Iron]

but my forearms are starting to look like Popeye's.

It will be time to quit if your wife starts looking like Olive Oyl.

[MediumTex]

but my forearms are starting to look like Popeye's.

It will be time to quit if your wife starts looking like Olive Oyl.

Hopefully I will quit before that.

[Storm]

Wonk, I bought that book you suggested, and I fully plan on GC'ing my own house within the next 1-2 years.  Thanks for the tip - that is going to save me a ton of money and hopefully my wife will be very happy with the McMansion I build for her... 

[smurff]

Another hack:  unplugging all appliances (except the fridge and freezer) not in use can cut your electric bill by 25% or more.  TVs DVD players microwave ovens toasters lamps computers monitors etc.  These things all draw current and some are in an electricity-guzzling 'standby' mode even when  the power button is off.

To make life easier plug appliances into power strips. Then you can simply flip one switch to turn off six appliances.

[Coffee]

Another hack:  unplugging all appliances (except the fridge and freezer) not in use can cut your electric bill by 25% or more.  TVs DVD players microwave ovens toasters lamps computers monitors etc.   These things all draw current and some are in an electricity-guzzling 'standby' mode even when  the power button is off.

To make life easier plug appliances into power strips. Then you can simply flip one switch to turn off six appliances.

I saw on the Ed Begley Jr. show, about a year ago-- he had something called a "vampire switch" or a "vampire breaker" or something like that.  It was a switch you'd throw when you went to bed or left the house, that turned off all non-mission-critical outlets.

[Coffee]

This is probably it:

http://www.treehugger.com/files/2007/09 ... plug_o.php

Here's the money quote:

"It's funny, 'cos in Ireland, where I live, most of the plugs have switches!"

[EM2]

Please, what does "GC your house" mean? 

Thanx.

Maggie

[moda0306]

GC means General Contractor.

It means you organize the different pieces of building your home: framing, plumbing, electrical, landscape, sheetrock, etc.

[smurff]

This is probably it:

http://www.treehugger.com/files/2007/09 ... plug_o.php

Here's the money quote:

"It's funny, 'cos in Ireland, where I live, most of the plugs have switches!"

Thanks for the link, Coffee.  Now I know where to refer people when they ask me about it.

When I lived in the UK, there were switches on the power outlets there, too.  It seems like a sensible thing to do.

I don't keep my toaster plugged into a strip--it needs too much current and will invariably overheat and interrupt the circuit.  I just keep the toaster unplugged until I need it.  But except for the deep freezer, fridge, FIOS modem, and DVR, everything else in the house is on some sort of surge protector or power strip with a switch. 

BTW, by the way the modem and DVR were (badly) designed, they have to run 24-7.  Verizon told me that the modem is needed to update the HD DVR several times a day, and the smart battery in the FIOS system knows when the power has been disconnected from the DVR so that battery power will automatically kick in.  Disconnecting them from the electric outlets will only force them to go to the battery, and the battery, which is designed to have just a few hours of back-up, will wear out in a couple of weeks and need to be replaced.  I know this from experience...

[Storm]

The DVR needs to stay on, how else is it going to record your shows?  And turning off the Internet is blasphemy! 

[smurff]

Storm, I have atoned for both offences against human decency.

[upside]

Wonk, I bought that book you suggested, and I fully plan on GC'ing my own house within the next 1-2 years.  Thanks for the tip - that is going to save me a ton of money and hopefully my wife will be very happy with the McMansion I build for her... 

What's the title of the book?

[Storm]

Wonk, I bought that book you suggested, and I fully plan on GC'ing my own house within the next 1-2 years.  Thanks for the tip - that is going to save me a ton of money and hopefully my wife will be very happy with the McMansion I build for her...  ;D

What's the title of the book?

Be Your Own House Contractor - http://www.amazon.com/Be-Your-Own-House ... 1580178405

Great book - he makes it sounds pretty simple.  I have a feeling the success or failure of your personal contracting experience is more dependent on the competency of your head carpenter, but it definitely sounds doable.