Archive for the 'Frugal Living' Category
Thursday, May 24th, 2012
Update: For a limited time, AmazonLocal has Fandango movie tickets for $6 (good for up to $12 value, including convenience fee). Limit 2 vouchers per customer. Says you can’t combine with any other offer, but I’d still try to combine it with this 2for1 Visa Signature offer on a Friday if I could by using one and seeing if I could get one for free.
Offer is back for 2012. Every Friday this summer from now until August 17th, you can get 2-for-1 movie tickets from Fandango.com if you have a Visa Signature card and use it to buy the tickets. You can also get $5 off $25 in Fandango Bucks gift cards for the rest of the week.
Tickets must be purchased on a Friday for a Friday show time. Limit 1 movie ticket per Visa Signature card purchase, per 30 day period following the date of a purchase in connection with this offer.
Check out your credit cards, you may be surprised to have one and not know it. If you’ve gone after some of the juicy $500+ sign-up bonuses this year, you probably have one of these cards.
If you are a member of AMC Stubs, you can get the Fandango service fee waived as well at those theaters (membership costs $12 a year, they have discounted it previously). Time to see The Avengers!
Posted in Frugal Living | 6 Comments »
Wednesday, May 23rd, 2012
This is pretty cool. New York City is launching a bike-share program called Citi Bike this summer (supposedly late July 2012), with 10,000 bikes and 600 stations for pick-up and drop-off. I’ve seen and used similar bike-sharing programs in Europe, and they seemed to be very practical and moderately popular. I’ve never ridden a bike in NYC, are there many bike lanes or will you be busy avoiding taxis? Combined with the subway, this makes it even easier to get around without a car.
A 24-hour membership will cost $9.95, but an annual membership is only $95 a year and will allow you unlimited trips of up to 45 minutes. A small fee applies after that to encourage you to return the bike quickly for other people to use.
Citi is the primary sponsor to the tune of $41 million and Mastercard is handling the payment infrastructure in addition to contributing $6.5 million. The program is run privately, with no public funding. I hope it works out.
Posted in Frugal Living | 9 Comments »
Friday, May 18th, 2012
I know, not exactly hard-hitting consumer news. 
But actually toilet paper is important to me, and ever since I got a “real” job I’ve been buying Charmin Ultra Soft toilet paper. I don’t even check the price, I just buy it in bulk and revel in the luxurious softness compared to the industrial-grade junk I used to buy.
In the May 2012 issue, Consumer Reports ran their scientific lab tests on 25 different varieties of toilet paper (subscription required for full article) to find the best combination of price, softness, strength, disintegration, and tearing ease.
The findings? First, the hidden shrinkage by retail brands that we’ve seen in various products like orange juice cartons (59 oz. instead of 64 oz.) has spread to toilet paper. Sheets have been made smaller, and rolls are smaller as well. The right way to calculate value is by square feet, but who does that?
The top overall pick was the White Cloud 3-Ply Ultra Soft and Thick brand sold at Wal-mart, which performed well in all categories while maintaining a good price of 25 cents per 100 sheets. The cheapest Scott brand (1,000 sheets per roll!) performed poorly and cost 8 cents per sheet. But if you’re having to use three times the sheets, who cares?
The top green pick was the Seventh Generation brand, which is made from recycled content and did alright in most areas except strength but still had a good price of 22 cents per 100 sheets.
My beloved Charmin Ultra Soft came in 6th, done in by a poor showing in disintegration tests and higher-than-average cost. But wait. The 30-roll megapack at Costco is usually $17.99. Every few months the coupon packet has a $2 off coupon, which is the only time I buy it. Each “Jumbo” roll has 231 double-ply sheets, which works out to after-coupon cost of only 23 cents per 100 sheets. The quoted retail price in Consumer Reports is 41 cents per 100 sheets. I rarely shop at Wal-mart, so it seems that my toilet paper buying habits are still within acceptable frugal parameters.
Posted in Frugal Living | 13 Comments »
Monday, May 14th, 2012
Old security system vs. New security system
I’ve never had a security system until now, other than our dogs which are all bark and no bite. I suppose the main reason for that is that I didn’t own enough property to be worth protecting. Burglars could take everything and it would perhaps fetch $600 total on Craigslist, which is less than what a year of ADT monitoring fees might cost.
Combine the baby nesting instinct with a rash of recent break-ins in our quiet neighborhood, and my mindset has changed. I wanted a home security system, but I didn’t want to pay $60 or even $30 a month for monitoring. The monthly bill is where companies make most of their profit. $60 a month = $720 a year = $7,200 over a decade.
After some research, we settled on a company called Simplisafe. Here’s a list of reasons why we chose it:
- Wireless. Simplisafe uses GSM cellular technology, which means you don’t need a landline (which can also easily be cut by a criminal). Wireless monitoring was a requirement for me, and usually costs extra with other brands.
- Affordable up-front cost. The total cost of equipment was about $400 to completely cover my 2,000 sq. ft. house. You could probably cover an apartment or condo for $200-$300.
- DIY Installation. You order it, and install it yourself using the included 3M sticky tape. No drilling holes. Installation literally took less than half an hour. (Their YouTube video has it done in one minute.) If I moved, I just remove the sensors and buy some new sticky pads for $10.
- Affordable monitoring fee with no contract. Again, the monthly fee is where your cost over time adds up, and you’re usually stuck in a 2 or 3-year contract. Simplisafe 24/7 monitoring is only $15 a month with no contract. You can add instant text message alerts for an optional $5 a month. That’s is pretty much as cheap as UL-listed monitoring will cost. If you prefer, you don’t have to buy monitoring at all and you’ll just have a loud audible alarm (you can also buy extra sirens) which may be adequate for condos and apartments.
- Battery-powered. The base station has a rechargeable battery that will last up to 8 hours in a power outage. All the rest of the sensors use their own individual lithium battery. This means the entire system will work in a power outage or if the power is cut on purpose.
- Expandable. Everything is a la carte on the website, so you buy just as many sensors as you need. They recommend a contact sensor for each entry into the house, and motion sensors to cover important areas.
- UL-listed 24/7 Monitoring. On a cheap system, I imagined the monitoring system to be two minimum-wage employees taking turns in an apartment. But Simplisafe is certified by United Laboratories just like ADT and commercial fire alarm systems. Central station monitoring is provided by AMCEST Corporation (UL #S2299). This may also make you eligible for a discount on your homeowners or renters insurance.
Read the rest of this entry…
Posted in Deals & Offers, Frugal Living | 29 Comments »
Thursday, May 10th, 2012
Reaching financial independence faster boils down to either increasing your income or decreasing your expenses. This is why so many books and blogs focus on frugality and saving money. However, too often the term frugality conjurs up the image of an old woman eating gruel while separating her double-ply toilet paper into single-ply.
After an interesting conversation about how vegetarians often have different motivations (religious, ethical, environmental, amongst others), I thought about the many driving forces that can result in frugality.
Purely Financial
Let’s start hypothetically, and say that all you care about is money and you cut expenses purely because you would rather invest that dollar and have it produce income for you. You could move into a smaller house, buy a fuel-efficient car, walk or use public transportation instead of driving when possible, make dinner from scratch at home instead of ordering dinner at the restaurant, and cancel the cable TV service. But if you won the lottery tomorrow, you’d drive your Hummer everywhere, eat at Morton’s Steakhouse once a week, and subscribe to everything from ESPN to HBO and add in the 5-DVD Netflix plan to top it all off.
Environmental / Green
But wait, you are rather concerned about preserving natural resources, so perhaps you’d still walk a little more and buy a fuel-efficient car. A smaller house would probably use up less electricity and heating oil as well. Using raw ingredients to cook uses less wasteful packaging made of plastic and styrofoam.
Simplicity / Minimalism
If you want to reduce chaos and clutter in your life, then you may still have a reason to move into a smaller home since that’ll force you to get rid of some extra things. Do you really need a big car, or is a hatchback or station wagon enough? Hey, the Europeans make do, as gas costs $10 a gallon there.
Physical Health
Walking or biking is much healthier than driving, so you won’t need that Hummer as much. Medical studies have shown that the more time you spend sitting, the shorter your lifespan, so you don’t want to be that TV-watching couch potato.
Self-Empowerment
Sure, you could pay someone to cook your food, but wouldn’t you feel great if you knew how to brine a turkey, make your own beer, or grow your own vegetables? This might also apply to whatever other skills you want to pick up. Home repair, appliance repair, auto repair, landscaping, investing…
Religious / Philanthropic
The sooner you reach financial independence, the sooner you can start giving more back to society and serving others instead of trying to make money.
So in the end, you could be the same person, with or without a big pile of money. (Maybe not. I’d get some cool toys.) A more practical idea would be to use these other motivations to make saving money more appealing. You’re not buying a compact car because you’re cheap, you’re being minimalistic and environmentally conscious. You’re not skipping Olive Garden because you’re broke, you’re doing it because you know how to can make your own risotto at home that’s even better. Find a different (higher?) cause. (The extra thousands of dollars growing in your brokerage account won’t hurt either.)
Posted in Frugal Living | 11 Comments »
Friday, May 4th, 2012
If you’re like me, you have a cabinet in your kitchen stuffed with a scratched and stained mess of Gladware, Ziploc, or Tupperware food containers and an even larger stack of lids that never seem to fit. I even remember telling myself to stick with one brand and three sizes, but after years of dinner parties, brown-bag lunches, and outdoor potlucks, entropy has kicked my butt. Add in the baby on the way, and I wanted to reset and replace with BPA-free (linked to cancer and hormonal disorders) containers and perhaps buy additional ones for storing baby food.
The creators of America’s Test Kitchen ran another test (like with the knives) of the major brands of plastic food containers including Gladware, Ziploc, Rubbermaid, Sterilite, OXO, and more. All were BPA-free and they used the rectangular/square 8-cup sizes. They froze them, put stinky food in them, microwaved them with chili, washed them repeatedly, submerged them in water to test for leaks, and more. Being frugal doesn’t mean just buying the cheapest thing out there, it’s about finding the best value for the price.
The winner? For plastic food containers, the winner was Snapware MODS (update: now “Snapware Airtight”) which featured good performance across all categories. However, the reviews on this 38-piece set of Snapware Airtight for $40 shipped at Amazon.com seem to be worsening over time, and look at the pictures the constructions does look slightly less “beefy”. I did find a cheaper 20-piece set for $15 shipped at Wal-mart that may be worth trying out. It may be better to recognize that most of the better performing containers use the kind of seal that Snapware uses with snap-down “wing” flap, silicone gaskets, and a lid with full wraparound ridges.
For glass containers, the winner was Kinetic Go Green Glasslock, which is also sold under Glasslock by Snapware. Made of microwave-safe tempered glass, this type of container seems to be enjoying a comeback due to all the concerns about microwaving plastic. I have to say, it does sound like a great idea as long as you don’t drop things a lot (like me). Freezer safe. Add in that airtight lid, and I’m sold.
The main drawback beside fragility is the additional cost. You can buy their 16-piece set for $70 at Amazon.com including free shipping, although I’d rather buy a six-piece set of a medium-size for about $30-$40. All seem to have overall good reviews, and I also noticed that people seem to really love these cute Wean Green Wean Cubes Baby Food Glass Containers, which are also made by Glasslock (Snapware). Hopefully these can last a long time. Besides, there’s always that baby registry…
Posted in Frugal Living | 16 Comments »
Wednesday, May 2nd, 2012
Update 5/2/12: Obihai is offering free refurbished units to members of the United States Armed Forces (Army, Navy, Marine Corps, Air Force & Coast Guard) that are stationed outside of the US, while supplies last. A nice gesture. More information here. Other than that, overall these boxes continue to have great reviews online.
Are you still looking for a home phone solution that’s cheaper than a landline? A new startup called Obihai has started making ATA VoIP boxes that are actually easy to set up. You buy their box, add in Google Voice (GV) service, plug in a normal landline phone, and it will use GV to make and receive phone calls. No computer required.
Now, Google Voice/Gmail has promised free long distance within the US and Canada for the rest of 2011 2012. Past that, it’s unknown so I wouldn’t want to commit too much money upfront, even though the box is compatible with other VoIP providers.
They also offer number porting from cell phones now for $20. If you have a landline phone number you wish to port over, you’ll have to port it over to a cell phone first, and then port it over to GV. (Don’t ask me why.)
Available at Amazon, the OBi100 model is currently $43.99 with free shipping, and all you need to get yourself set up. They also have a slightly more expensive OBi110 model that allows you to bridge a traditional POTS landline with your new VoIP gadgetry, which I figure most people won’t need if the point is to save money by ditching your landline in the first place.
Posted in Deals & Offers, Frugal Living | 10 Comments »
Thursday, April 26th, 2012
Nowadays, it seems everyone has a cell phone. What if you just want a really basic phone plan for light calls (“are you here yet?” “where are you?”) and emergencies? Or you may be thinking about getting an additional phone for grandparents, kids, or other relatives. The good news is now you can get a frugal plan for less than $10 a month.
Here are the cheapest prepaid cellular plans with nationwide coverage assuming light usage. The benefits of prepaid are that there are no credit checks, no long-term contracts, and most phone taxes other than sales tax are already rolled into the cost instead of an extra $5 a month. They may even work with smartphones for people who are okay with data usage only where there is WiFi coverage (potentially home, office, and many cafes).
You may have never heard of some of these names before, but if you look under the hood you may find they use the same cell towers as the big companies (AT&T, Verizon, Sprint) all at a fraction of the cost.
T-Mobile
With a T-Mobile Prepaid plan, you can buy 1,000 minutes for $100 that will last an entire year before they expire and you are required to refill. That’s $8.33/month. In addition, that will get you on their Gold Rewards plan which gets you 15% extra minutes on future refills and in future years you can buy as little as 35 minutes for $10 or 460 minutes for $50 and that will also last you an entire year. The Gold Rewards status lasts as long as you keep your prepaid account account, so in future years you could be spending just $50 a year or less.
New basic phones are about $25, and new Android phones start at $99 direct from T-Mobile. You can also buy a SIM card to put in an off-contract T-Mobile phone or any unlocked GSM including the Apple iPhone.
Page Plus Cellular (Verizon MVNO)
By purchasing bulk minutes from the Verizon Wireless network as a MVNO, Page Plus Cellular offers the coverage of Verizon and the ability to use off-contract Verizon phones (iPhones are blocked still I believe). You can buy a 2,000 minute card for only $80 that will also last an entire year before you are required to refill. Note that there is a $0.50 per monthly service fee charged on the 25th of every month on top of the refill card cost, so a year would cost $86. That’s only $7.16 a month.
Alternatively, you can buy 100 minutes for $10, which lasts 120 days after activation. That can result in only paying $36 a year ($10 x 3 plus $.50 a month), but you have to watch your minute usage and renewal dates carefully. They also have a $12 recurring monthly plan that provides 250 minutes, 250 text mesages, and 10mb of data. Their own phone selection is limited but you can buy off-contract Verizon phones from eBay, just watch out for stolen phones with banned IMEI/ESNs.
H20 Wireless (AT&T GSM MVNO)
H20 Wireless sells 2,000 minutes for $100 that is valid for one year. Additional minutes are 5 cents, and additional texts are 5 cents each as well.
You can use old AT&T phones on H20 wireless. This also means you can rock an AT&T iPhone (can be locked, off-contract) and look like the cool kids but only pay $100 a year for service instead of $700+. Of course, you won’t have a data plan. (If you want data, check out StraightTalk where you can get a $45 Unlimited plan using AT&T iPhone via their SIM card.)
Kajeet (Sprint MVNO)
Kajeet is meant for kids and has built-in parental controls. But they do have a really cheap $4.99 a month plan that includes a dinky 10 minutes included. Additional minutes are 10 cents each, and text messages are 10 cents each as well. Not a bad option for very low usage.
You can buy a new Android phone from them right now for $99, but other than that the phone selection isn’t very good for cheap phones (important for kids that lose/break them often). The bad news is that the parental controls mean that you can’t just bring over any old Sprint phone either.
Other providers with good low-usage options (but not as good as those above in my opinion) include:
- TracFone (MVNO for Verizon, AT&T, T-Mobile, and Sprint) You can buy 800 minutes for $120 good for one year, which includes double minutes on all future airtime. You can later buy 120 minutes for $20 that lasts 90 days, or $6.66 a month.
- PlatinumTel (Sprint MVNO) $10 for 90 days, with no minutes included. Instead, you pay a flat 5 cents a minute for talk, 2 cents per text, or 10 cents per MB.
Posted in Frugal Living | 20 Comments »
Tuesday, April 24th, 2012
If you’re unfamiliar, the Ooma Telo is a VoIP system that creates a home phone service through your broadband internet. Just plug in your regular landline phones and go. Features include unlimited domestic long distance, 911 service, caller ID, voicemail, and call waiting. In addition to the one-time purchase price, new customers must pay a share of government taxes and regulatory fees that works out to about $4 or $5 a month.
Long-Term Review
I bought my system in December 2009 for a then-good deal of $158, and I remembered worrying about the FCC shutting them down because I couldn’t believe their business model could be so cheap over the long haul. Well, I’ve now gotten nearly 2.5 years of home phone service for that $158, working out to a little over $5 a month. (Early adopters with the original Core system were grandfathered out of tax recovery charges.) It appears now that as long as the government gets their share of phone taxes and fees, they won’t be shutting down Ooma any time soon.
The best compliment I can give about the Ooma system that I don’t even notice that it’s not a landline. It just works reliably. In my entire time of ownership I remember reading about a few hours of downtime in the middle of night, and nothing within the last year. The call quality is always great, and I can even use my fax machine with it. In some ways it’s even better than my old landline, because I can get an e-mail whenever a voicemail is left, and I can listen to it online or on my smartphone.
The “unlimited” phone service technically has a limit of 5,000 minutes per month under the explanation that it is meant for personal use. That works out to an average of nearly 3 hours per day, every day, so that’s close enough to unlimited for me. They do regularly bug you to upgrade to their Premier level of service which has added features for another $10 a month, but I’ve never felt the need to. Just make sure your number is on the Do Not Call list and you should be fine.
$109.99 $134 Deal
The retail price is $199 (Amazon). But right now, Ooma has a $50 mail-in rebate (pdf) on their new Telo system if purchased by 4/30/12. In addition, one of their approved retailers OfficeMax.com is selling the system for $199.99 $229.99 but with the coupon code BIGDEALS (valid through 4/28) you get 20% off for a final checkout price of $159.99 $184 with free shipping. After the rebate, your net price would only be $110 $134.
(Officemax hiked up the pre-discount price from $199.99 to $229.99 (higher than retail!) right after I wrote my post. Lame. If you are serious about buying an Ooma, as a current Ooma customer I have 5 single-use coupon codes that will get you $50 off if you buy at Ooma.com by 4/30/12. This will get you to $150 but is not combinable with the rebate. Contact me if interested.)
Paying the one-time $134 and say $4.50 a month in taxes over two years would work out to an all-in average phone bill of $10 a month. This is much, much cheaper than any landline bill, and still much cheaper than Vonage VoIP. One alternative is the Obihai + Google Voice combo, but as of right now that’s only guaranteed to be free through the end of 2012. I know that many people are cell-phone only now, but for many households the most frugal option might be a Ooma box plus a basic prepaid phone plan that can also run $10 a month or less. Whenever possible, lower those recurring monthly expenses!
Posted in Budgeting, Frugal Living | 31 Comments »
Wednesday, April 4th, 2012
The following is a guest post is from Elle at Couple Money. They live on one income, and have fun with the second!
When I read MMB’s questions about baby expenses, I shared a bit of our own experience with him. We are just a year ahead of him last summer we had our first baby, a little girl. It has been a wonderfully fun ride so far, with everyday bringing new milestones and challenges.
During the pregnancy my husband and I decided to track the baby expenses on Couple Money as we’re going through this process. We’re not the first parents to have questions about the finances of raising children, so I share our expenses and have asked others to give their input. Some wonderful bloggers have decided to join in the fun and share their own stories, tips, and advice on what works, what doesn’t, and what’s not worth stressing over.
Are Kids Really That Expensive?
For us, most of the expenses are just small bumps in our monthly budget. I think the main reason is that we made some financial decisions before we became parents that lent itself to reducing baby bills. For one thing, when we first were married we made it a family goal to keep all necessary expenses on 1 income. That allowed us to use the second income to pay down debts, save for goals, and invest for later.
Health Insurance and Doctor Visits
During the first trimester I was dehydrated enough that I needed to go to the ER to replenish; that was about $150 out of pocket. For the most part, though, my pregnancy had been uneventful. The health insurance policy we had when I was pregnant had a $2,500 deductible, so we saved a bit in our general funds to cover the deductible when our baby girl was delivered. Saving up to pay the bill in full allowed us to also get a 15% discount with the hospital.
Once our daughter arrived we quickly added her to my husband’s health insurance policy. That’s been the biggest change to our family budget – our premiums went up about $200/month for the family option.
Housing
No change in our housing bills. We bought our townhouse before we had our daughter. It had 3 bedrooms, so we converted the guest room into her nursery. We don’t have any plans on changing our location, right now we’re focusing on paying down the mortgage.
Daycare
I know that for many parents daycare is a huge expense. From what I saw last year it was about $1,200/month for an infant. Right now I work from home and our daughter stays with me. While it has cut back on the hours I work, the savings from not having her in daycare offsets it.
Food
Since we’re breastfeeding our food bill has increased just a bit to accommodate the extra calories I need to keep up. Since becoming pregnant, we changed our eating habits a bit. We’re focusing on making more meals at home and we a part of a CSA program with weekly deliveries during the part of the year. It’s been helping to keep groceries manageable and we’ve also discovered new recipes and dishes. Our daughter has baby food and some of what we’re eating in addition to breast milk.
Transportation
Even before we found out we were going to have a baby my husband and I were saving up for the vehicle as we’re trying to avoiding taking out a car loan. However we saving up a bit more to purchase a family sized sedan, like a Sonata. Our budget is $10k for the next car. We have the money saved and we’re currently searching for a deal. It’s not an immediate need (tight fit in my Jetta, but fine), so we’re going to make sure we look around a bit before securing the next car.
Clothing/Baby Gear
The first 2 months our bills were higher than normal as we bought a few items we didn’t receive from the baby registry. We waited until our daughter arrived to see if we really needed them or if they were nice to have items. Fortunately most of the necessary stuff was already bought. After the first 8 weeks, our expenses have smoothed out.
We have received gifts from family and friends – both new stuff and gently used. We didn’t have to buy a baby swing, since a buddy’s son didn’t seem to like it. It was practically new and our daughter loved it.
Right now diapers are about $20/month give or take through Amazon Mom and they are delivered right to our door. We get her wipes through Costco where a huge box costs about $20 as well (lasts a couple of months). Any clothes that she needs we pick at Target, Old Navy, or the consignment store around the corner. That’s about $30/month.
Thoughts on Having Kids
This is just a snapshot of our family’s baby expenses. As our little one gets older we know things will change. I’d like to hear from you – what expenses to you have to cover for your little one? What has been the biggest unexpected expense? What’s been the best surprise?
Posted in Budgeting, Family, Frugal Living | 31 Comments »
Tuesday, April 3rd, 2012
The NYT Economix blog and a new BLS report had some nice graphics comparing how the average consumer spends their money in the US, Canada, United Kingdom, and Japan. The data is from 2009.
Source: BLS.gov
Compared with the other countries, Americans spent more of their budgets on housing and health care, and less on recreation and entertainment. The Japanese spent the largest share on food, with a higher percentage spent on food than even housing. This is somewhat surprising, given the stereotype of small living spaces in Japan and large living spaces in the US. But remember, these are percentages and not absolute numbers.
You might think that out-of-pocket healthcare costs are lower in the other countries due to government-subsidized universal health care, but the Economix article points out that the total healthcare expenditures per capita in the US are also much higher (around double) those of other countries. I can’t believe they spend more on clothing than healthcare! Of course, my wardrobe turnover rate has been described as “glacial”.
Our spending breakdown still has a much, much bigger slice going towards housing, and a much smaller slice going towards transportation and food. We are lucky to have nice employer-sponsored health insurance.
Posted in Budgeting, Frugal Living | 10 Comments »
Monday, April 2nd, 2012
Here is an insightful ForbesLife interview by Warren Buffett in their “When I was 25″ series. The article is primarily about how he ended up starting the investing partnership that eventually became Berkshire Hathaway. But what I didn’t know was that before that happened, he actually was ready to settle down in early retirement when he was 25 years old, content to invest just his own money:
The thing is, when I got out of college, I had $9,800, but by the end of 1955, I was up to $127,000. I thought, I’ll go back to Omaha, take some college classes, and read a lot—I was going to retire! I figured we could live on $12,000 a year, and off my $127,000 asset base, I could easily make that. I told my wife, “Compound interest guarantees I’m going to get rich.” [...]
I had no plans to start a partnership, or even have a job. I had no worries as long as I could operate on my own. I certainly did not want to sell securities to other people again.
Adjusting for inflation using CPI, $127,000 in 1955 would be about $1,100,000 in 2012 dollars. Spending $12,000 a year in 1955 would be just about $100,000 a year today. A 9% portfolio withdrawal rate is pretty high, but then again he’s Warren Buffett.
If he had gone the early retirement route, I’m sure he’d still be a comfortably rich Nebraska family man today, but given his quiet lifestyle we probably wouldn’t know anything about him. In fact, Buffett had already turned down an offer to be a partner in the hedge fund that Benjamin Graham founded. But events conspired to let him manage other people’s money without the pressures of salesmanship or marketing, and $50 billion later he’s one of the richest people alive.
I already knew from reading his biography The Snowball that he was quite the young entrepreneur and by 16 years old he had already accumulated over $58,000 in 2012 dollars ($5,000 in 1946). This was from many different micro-businesses including delivering newspapers, selling everything from gum to car washes, and owning pinball machines. He already knew that the faster he earned that money, the more time he would have to let compound interest do its thing. After moving back to Omaha, he even rented a house at first instead of buying so he wouldn’t have to commit any of his precious capital.
In any case, interesting that his initial goal was early retirement and career freedom, not necessarily doing whatever he could to accumulate more money. I look forward to the other articles in this series.
Posted in Frugal Living, Investing | 7 Comments »
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