Making Me a Millionaire

Why You Should Take Up Running

On Thanksgiving Day, I ran my first half marathon.  My time was not anything especial but I was proud of myself for just finishing.  I don’t consider myself an athletic person and I think if I’m able to run a half marathon, anyone can do it.

I think running is a great sport.  It’s good for the body, good for the mind and when you accomplish a feat, the rewards are everlasting.  I will forever be proud of myself for this race and hope to set an example for my kids one day (no, I don’t want them to be runners, I just want them to know that if they put their minds to it, they can accomplish anything).

So how is this related to personal finance?

• Running is cheap. All you need is a pair of $40 running shoes.  No gym memberships, no personal trainers, no pricey equipment.  Just put on a pair of shoes and run out the door. Sure, if you want you can always splurge on special fabric clothing or fancy stopwatches
• Exercise is necessary. If you want to avoid the astronomical medical costs associated with poor health, you need to be exercising now and exercising consistently.  What better and cheaper way to improve your cardiovascular health than to go for a jog?
• Running a race is a lot like saving and gaining rewards later on. Preparing for a race requires discipline, patience and commitment.  The same goes for living your life frugally and striving to become a millionaire.  With each race that I prepare for, I am ingraining the mentality that is necessary for accomplishing a financial goal.  When you can train yourself to be patient for your reward while being disciplined enough to practice everyday, learning to be disciplined enough to save/invest/be frugal and being patient enough to hold out on instant gratification comes to you a lot more easily.
• Finishing a race is exhilarating. There are very few things in my life that can compare to that of crossing a finish line while the crowds are cheering you on.  The hard work, the pain, the strength required, are all worth it once you cross the finish line.  That feeling is one of pride and joy and it is a reminder of what it will feel like one day when you own your home free and clear, or when you’re ready to retire and you’ve got a nice big nest egg and no worries.  Imagine what you will feel the day you retire knowing that all those years of working and saving and investing were all worth it.  It truly is exhilarating.  Go ahead and finish a race and you’ll get a glimpse of what the future can be like.

With the half marathon done, my next goal is to run a full marathon.  How do I plan on preparing for this?  With patience, discipline and commitment!

Running is my way of testing my limits and training my mind to be disciplined.  Are there any sports or activities you do to train your mind?

What Are You Thankful For?

As Thanksgiving Day approaches, I keep thinking about what I am thankful for this year.  We have been so lucky to have so much and to live very peaceful lives.  I say this even after my husband is laid off because we still have access to clean water, good health care and nutritious food and we don’t ever really worry about being in a country filled with political turmoil.

If you ever have doubts about how lucky you are, feel free to check out this site.  Kinda puts things in perspective don’t ya think?

I am in no way rich.  But after looking at my results and learning that I am in the top 0.43% of the richest people in the world, I feel lucky and grateful.

Things I am thankful for this year:

• my family and friends
• that my husband is getting severance
• my health and the relatively good health of all my friends and family
• getting my finances in order and saving money
• starting this blog
• the many nephews/nieces/cousins that came into the world recently

In the world of fiscally-conscious folks, it’s easy to think that being smart with your money is the norm.  But the average savings rate of Americans is still pretty low at 3% although definitely much better than it was a few years back.  With that said, I’d like to say that I am very thankful for having joined all you financial bloggers and readers in the world of smart money management.  We are a small group and hopefully through our blogs, we can spread the word and encourage others to take control of their finances and build more wealth.

Why You Should Increase Your Loan Payments

When we bought our house back in 2004, we got a 5 year adjustable rate mortgage with an interest rate of 5.25%.  A great rate for those days.  In addition, we also borrowed about $50,000 from my inlaws with an interest rate of 5.25%.  Now, why would we do that?  Well, simply because we would rather pay interest to family members than a bank.  The only downside to doing this is the interest we pay on that loan is not tax deductible.

So now that our 5 years are up on the ARM, our new rate is at 3.25%!  Who would have thought they would go down!  In addition, our monthly mortgage payments have been reduced to $1245 from $1499.  That’s more discretionary money for us!

I decided, with the extra bit of cash I have on hand I would try to pay off that loan from the inlaws a little faster since it’s our highest interest loan AND it’s not deductible.

Here’s what the original loan amortization schedule looked like:

I will pay off this loan by February 1, 2020.  By then, I will have paid $21,865.37 in interest on a $50,000 loan.  GEESH!!

Since I was saving a little over $200 each month on the mortgage payments, I decided I would add $200 each month to the payments for this loan.  I was at the time paying a total of $400 a month.  Now I will be upping that to $600 a month.  Here’s what the new loan amortization schedule looks like.

With the extra payments each month, I will be able to pay off this loan a little over 4 years earlier than if I were to leave it at $400 a month.  Not only that, but the total amount of interest I will pay on this loan is reduced to $17,142.89.  Awesome.  I cannot wait to pay off this loan!

By increasing my monthly payments from $400 tot $600 a month, I was able to:

• shave 4 years off my payment plan
• save myself $4722.48 in interest payments

If you have a $500,000 mortgage and you do the same thing, you will end up saving yourself $56067.75.  An extra $200 a month can equal over $55K in savings on interest payments and you’ll pay off your mortgage 4 years earlier.  Ahh how nice it would be to own your home mortgage free!  That is enough incentive for me to put in extra payments whenever I can!

Are Tips Required?

I just read this article about college students who were arrested for not paying a $16.35 tip at a restaurant.  They argued that service was terrible (and if you read the article it was pretty bad) and that the tip was not deserved.   Restaurant management argued that the menu clearly states that 18% gratuity is automatically added to the check for parties of 6 or more.

I was shocked when I read this article.  I truly believe that you tip for service.  And when service is excellent you tip more than the standard amount but it goes both ways.  I don’t believe in tipping people who are rude to me or don’t do their jobs.  If you’re doing a poor job then all you deserve is whatever the restaurant pays you.

I once had to wait over an hour for my food and when I tried to flag down the waitress she just gave us a dirty look.  We were fed up with all the waiting and the rudeness so we gave her a penny in tip.  I’ve also had the experience of receiving excellent customer service once on the day after I got married.  We told the waiter we had just gotten married and he brought complimentary dishes and champagne for us, and was very polite and attentive.  We tipped him $100.

I believe tipping is optional and should be given to those who do their jobs and are respectful of patrons.  What do you think?  Should those students have been arrested?  Should tipping be mandatory regardless of service?

Things I’m Glad I Spend Money On

I try to be frugal as often as possible and for me, being frugal does not mean skimping on quality.  It’s important to me that the products I purchase are good quality and long lasting.  I will gladly put down a large amount of money for something that will offer me much in return.  With that said, here are some of the best big purchases/pricey items I’ve made.

1. My Tempur-Pedic Bed. I used to think it was crazy to spend almost $2000 on a mattress.  Back then, I would never splurge so much on a mattress.  When a friend of ours moved across country, he sold us his Tempur-Pedic mattress for $700 along with a whole bunch of other stuff.  My husband and I had just gotten married and were furnishing our place so we took it all.  The mattress did wonders for our sleep.  I had never slept so well before in my life and when I woke up in the morning, my back never hurt.  We loved our mattress so much we went out and bought 2 Tempur-Pedic pillows to go with it.  We loved those just as much.  Today, we’ve been using the mattress for about 5 years and still love it.  I will never go back to a regular mattress again and we both agree that if the time came to get a new mattress, we will gladly plop down the $2000 for it.  Good sleep and a healthy back are so important to feeling good during the day!
2. Organic, non-processed food. Not all my food is organic, but most of my produce (especially the ones that have the most exposure to pesticides) are.  I’m a firm believer in the importance of living a healthy lifestyle and if there’s anything I can do to improve the quality of my life and avoid major illnesses, I will do it.  If I can prevent cancer in the long run by cutting down on the amount of pesticides, preservatives, nitrites, high fructose corn syrup, and so on, I will do it.  Who knows, maybe I’m not genetically predisposed to cancer anyway and I could have eaten all the chemical compounds I wanted but I’d rather be safe than sorry.
3. My Gym. I used to go to LA Fitness for $30 a month until the place got so crowded that you had to wait in a line to use the treadmills even at 6AM and you had to show up 45 minutes before a class just for a chance to fight for a spot.  I had had enough of showing up at the gym with no machine to use so I decided to quit and join the other local sports club by us.  This was definitely a nicer and more expensive gym and I was hesitant about joining at first but decided I had no other choice because I was NOT going back to LA Fitness.  I always hear people say that you should cut out your gym membership if you’re trying to save money but I will give up many other things before I give up this gym membership.  Why?  Well, first of all, being healthy is important to me.  But second, with the amount we pay for this membership, we get your typical gym equipment, indoor and outdoor tennis, indoor and outdoor swimming, volleyball, a rock climbing wall with instructor, racquetball, squash, basketball, and all sorts of classes (none of them ever full) such as spinning, kickboxing, yoga, pilates, step, belly dancing, water aerobics and so on.  The list is endless.  With access to all these activities, we rarely pay for activities outside of the gym.  If we’re bored on a weekend, instead of heading to the mall, we can go play tennis or go rock climbing.  In the past, we would go watch endless movies on the weekend or go shopping and easily spend $100.  Now, we do one of the many activities offered at our sports club.  So yes, it’s expensive, but it’s worth it!
4. LASIK. The best surgery I’ve ever had.  OK not that I’ve had any other surgery other than getting my wisdom teeth removed, but this is a surgery worth having.  For a little more than a Tempur-Pedic mattress, you can have perfect vision and never have to deal with contacts or glasses again.  You can also pay for LASIK surgery with your FSA account so it is tax deductible!  The procedure is painless and there’s about a 3-4 hour recovery time.  After having this done 4 years ago, I still am amazed at how good perfect my vision is.
5. Travel. My husband and I love to travel.  It’s a great way for us to spend more time together and enjoy our lives.  Sometimes we travel with our college friends and those are always memorable trips.  Yes, travel is expensive, but the experience we’ve gained and the memories we’ve made together are priceless.  There’s no better way to open your mind than traveling.  We do always try to be frugal when we travel though.  We will use points from our credit card for hotel stays and try to research dining options before we go.

In the end, I think having balance is important.  We try to be frugal in many ways in our lives but I do believe there are times when splurging is a good idea or even necessary.  What are some things you spend money on that you will never regret?

Should I Marry Into Debt?

Getting married is one of the biggest life altering decisions you can make.  If you marry the right person, you can enjoy a lifetime of happiness and do great things together.  If you marry the wrong person, you can ruin your life.

Not to scare everyone away from marriage, but it’s important to think about what you’re doing before you step into something that is so permanent and binding.  My husband and I had been dating through college so after we got settled in our lives, it was no surprise we decided to get married.  For us, we were lucky neither of us had debt and were able to start our lives with a stable income.  I can’t say the same for some of our other college friends who got engaged around the same time.  One of my closest friends asked me if she should be worried that her fiance had tens of thousands of dollars to pay back in school loans.  We also were friends with another couple who did not ask for advice, but everyone knew that at least one half of that couple had an obsession with shoes and bags and was proud of the fact that she had maxed out all her credit cards.

So is it a good idea to marry someone who has debt?  Well in my opinion, it depends.

Personally, I think school debt is fine.  Not everyone can afford to pay a college tuition and those who are willing to take a loan just to go to college are the ones who have their priorities straight.  Education is very important and college is a great investment.  Being in debt for education is not a bad thing and if that’s all there is to it, I say go for it!

As for the girl with the shoe/handbag obsession and the maxed out credit card pride…..well…if I was her bf I would find a way to end that relationship fast.  Finances is the number one reason why people get divorced.  You don’t want to be married to someone who is going to bring you deeper and deeper into debt and not care about changing that.  It can ruin your life, your marriage and your future.

What if they’re willing to change?  I do know people who have managed to get themselves out of debt after years of reckless spending.  If you truly believe that your partner is willing and determined to change their spending habits then I would wait a little longer before you get married and give them a chance to prove themselves.  See if their spending habits have changed, if they are paying off their debts and thinking about the future.  If you see a change that you think could be permanent, then I think it would OK to tie the knot.

Do keep in mind that although the debt incurred by your spouse before your wedding day is not yours, any debt incurred after you are married belongs to both of you.

Would you marry someone you loved who had debt?

Cutting Beauty Costs

It’s a well known fact that it costs a lot more money for women to look good than it does for men.  For men, it’s simply shower, shave, put on deodorant.  Or at least that’s all my husband really does.  For women, it’s a lot more complicated.  Being a woman (or being married to one) can be costly.  Yes, you can tell her to never shave, wax, use makeup, defrizz her hair again but then she’d feel unattractive and if you’re a guy, you’d probably like it a whole lot better if she was well groomed and pretty and feeling confident.  Since we’re watching our spending right now, I’m discovering new ways to cut down on beauty-related costs.

1. Don’t bother with expensive shampoo. I used to use only Aveda shampoo and it would cost me somewhere between $30-$40 a bottle.  I have since switched to Dove shampoo which costs me around $6 a bottle (these are 1.2L bottles) and the results?  My hair looks the same as it did when I was using Aveda.
2. Perfume is pointless. I just don’t understand why people would pay $50 for a bottle of perfume when the smell is just so overwhelming and irritating.  I told myself I would never buy perfume again.  Instead, I get body spray from Bed Bath & Beyond.  You can usually get a large bottle for $10 or so and enjoy the smell of berries or vanilla.
3. Skip Sephora. I admit, I have fun at Sephora too but everything in there is just so expensive!  You can get much cheaper beauty products (and a lot of times just as good quality) at Target.  If you want a step up then try Ulta.
4. Check out the local beauty school. Many will offer you haircuts, manicures/pedicures done by students at a very discounted rate.  If you’re just getting a trim, or you want to try out a facial, it can’t hurt to have the students practice on you.  I found my current stylist when he was still in training and only paid $15 for a wash/cut/blowdry.  Now he is no longer a student and works at one of the top salons in my city and continues to give me the rate I had when I first started going to him because I’ve known him for so long.  He charges other people $60 a cut!
5. Shampoo for shaving? I once heard Natalie Portman say on TV that she used shampoo instead of shaving cream when she shaved her legs.  I tried it that same night and converted.  I was a poor college student back then and every penny saved was important.  There really is no difference between using shampoo and shaving cream.
6. Sometimes less is more. I really believe in natural beauty.  I believe a woman can be a lot more attractive simply by being friendly, confident and having good posture.  I am really turned off by women who are dressed to the nines and covered in layers of make up.  I’ve heard so many men comment on girls when they have less make up saying they look much better without all the gunk on their faces.  In many cases, understated beauty is a lot classier than piling it on.
7. Mani/Pedis. I almost never get manicures.  I love the way they look but the idea of growing long nails and using them as storage for dirt, germs and gunk grosses me out.  Instead, I keep my nails short and neat.  I know this doesn’t work for everyone.  If you’re the kind of person who is appalled by you’re “ugly” nails, save the manicures for special events.  Maybe if you’re going to a reunion or someone’s wedding or on vacation.  And if you absolutely need to have nail polish on, try doing it yourself.  A manicure kit will cost you as little as $10.
8. Hairdryers. I got a T3 hairdryer for Christmas one year which uses special technology to dry your hair faster and make it shinier.  It cost $200.  Guess what hair dryer I prefer now?  Yep, my cheap Conair hairdryer.  My T3 hair dryer did NOT dry my hair faster and did NOT leave my hair shiny.  It was just very well marketed.

I know cutting down on beauty costs is very difficult for some women.  For some, it is just absolutely necessary to look primped all the time.  I’m not saying you can’t be all done up, but there are definitely alternatives to spending a fortune on haircare each year.  If you’re a guy, maybe you can encourage her by telling her she looks better without so much makeup on.  Or maybe you can pick out some body spray for her and tell her you like that scent better than her Burberry perfume.  Looking good does not have to cost an arm and a leg!

Best Places to Buy Books

My husband and I are voracious readers.  We will spend at least one day out of the week visiting the local Barnes & Noble and picking out a good book to read.  Sometimes we will sit in the cafe, get a coffee and skim through piles of books and magazines.  This is fun and all, but the fancy drinks add up and since it usually takes about 4 visits for me to finish one book, it’s actually cheaper for me to just buy the damn book.  After all the book buying, we thought it would be a good idea to become a Barnes & Noble member and pay the $25 a year for the discounts we get on books.

We’ve been members for 4 years now and we plan to retire that membership after this year. Why?  Because there are much cheaper places where we can buy our books.

1. Half.com. You can get many books on here for just 75 cents.  You do have to pay an extra $3+ for the shipping but still.  You are paying around $4-$5 for a book instead of $22.  Usually just released books will be more expensive so if you can wait for the prices come down, you’ll save big.  This is also a great site if you are a student and are in search of used/cheap textbooks.
2. Craigslist.  You can also find great deals here although the selection is not as wide as Half.com.  The great thing about Craigslist is you can negotiate with the seller and in most cases you’ll save on shipping since you’ll likely be meeting the seller in person for the exchange.
3. Amazon. This is a great site for those of you who want brand new books.  If the thought of someone else having read your book while sitting on the toilet freaks you out, then Amazon is for you.  The prices are some of the lowest and shipping is usually free if you purchase more than $25.  Unfortunately, this usually means you’ll be purchasing at least 2 books to get that free shipping.
4. Costco. Like Amazon, Costco has some of the lowest prices on brand new books.  You don’t have to worry about shipping costs since you’ll be buying the books at the warehouse.  The only negative?  You’ll need a membership.  But in my opinion, that is not a negative!
5. Borders. OK so Borders doesn’t exactly have the best prices.  But unlike Barnes & Noble, you can sign up for a Borders Reward Card for free!  You then get coupons sent to your email every week or so to use on books.  These coupons are usually equivalent to those given to Barnes & Noble members so you’re pretty much getting discounts without having to pay for a membership.  Another cool thing Borders offers is Borders Bucks.  You get $5 in Borders Bucks for every $150 you spend at Borders.  You can use these Borders Bucks at the store.

Christmas Photo Cards For Cheap

Today I just picked up my photo Christmas cards and paid only $9.99 for a set of 50 with envelopes!

Costco.com allows you to pick a holiday card and insert whichever photo you like.  You get a set of 50 for $14.99.  Great deal considering most photo cards cost more than $1 each.  If you look at the current Costco coupon book, you’ll find a coupon for $5 off the photo cards.  Now this is an excellent deal!

Of course, you can go cheaper and get a pack of cards for less (and even lesser if you shop after Christmas season for them) but I like to send out more personalized cards since the Christmas season is all about family and giving.

Ways to Use Up Your FSA Money

Last year around open enrollment time, my doctor “saw something” in an MRI that I got done.  He told me not to worry but it could be a tumor.  Well of course I worried and since we had til the end of the week to decide how much money we were going to put into the FSA account, we chose to max it out since there was a chance I’d be spending an awful lot of time with medical treatments.

Well luckily that “something” turned out to be nothing and we were left contributing $3,000 to the Flexible Spending Account.  Now that the end of the year is coming, we had to scramble and think of creative ways to spend this money.  Here are some things we did:

• Go to Costco. By doing this, I will reach my goal of spending $2500 to make up the extra cost in membership fees a little faster and I will be using up my FSA money.  Killing 2 birds!  The great thing about the Costco Pharmacy section is the items that are FSA eligible are labeled “FSA eligible” so you don’t need to carry around a list with you or anything.  Just walk down the aisle and go spend happy.  We stocked up on Nyquil, Tylenol, Thermacare, Anti-itch creams, Lubricant Eye Drops, Allergy Meds, Tums.
• Go to a pharmacy. I went to Walgreens.  All FSA reimbursable items are listed on the price labels here.  I went and bought hand sanitizer (yes they are reimbursable!), Vicks eye wipes (it wipes allergens and makeup from your eye), a basal thermometer, fertility tests, and tons of pregnancy tests.  It was a little embarrassing standing at checkout with a cart full of fertility products but I figure they would come in handy one day when we decide to have kids.
• Lasik. My husband and I actually got this done a few years ago and yes, getting Lasik is reimbursable.  This alone will probably use up most of the money in your FSA account.  We paid $2400 per person and honestly, it was the best thing I ever did for my eyes.  Before that I had a real hard time with contacts (they were always irritating my eyes) and glasses were just inconvenient.  I am very grateful for this procedure and what it has done for my life!
• Go see a chiropractor. I started seeing my chiropractor every week just to have him loosen up my muscles, help me with stretching and correct my posture.  It felt great and was a very easy way to use up more money.
• Get a note from your doctor.  I suffer from allergies and asthma.  So when I went to see my doctor for a refill on my inhaler, I asked him if he thought getting a humidifier and an air purifier would help.  Of course he said yes, so I asked him to write me a note so I could buy one and get it reimbursed.  You don’t even need to see your doctor to get the note.  If your doctor knows you have allergies or asthma, you can simply call him and ask him to mail you the note.  After I got the note from him, I went and bought a $200 humidifier, then bought a $560 air purifier from Costco and then spent another $200 on 3 years worth of filters for the air purifier.  All of it was reimbursed.
• Get your teeth cleaned. I get my teeth cleaned every 6 months and am pretty good about keeping them cavity free.  I had a very traumatic experience as a kid with cavity fillings and because of that, I will do whatever I can to avoid cavities.  Taking care of your teeth can save you money and pain in the long run.  I once got a quote for fillings for my cavities (which I did not have but we’ll save that story for another time) that totaled $1100.  That’s how costly it can be!  I’ve never gotten a root canal before but I imagine those are pretty expensive too.