I’m frugal, I swear.

Screen shot 2009-12-17 at Dec 17, 2009, 11.14.55 PMI got out of my 2007 Toyota Scion TC, walked in to my apartment, made a call on my iPhone, checked my email on my Macbook, opened up the box to my brand new Digital SLR camera, and then thought to myself “Holy crap, am I a hypocrite?” How can I possibly preach frugality, when I own some rather expensive items? I’m sitting here typing this, on my 22″ external monitor, desperately trying to figure out a way to reconcile my possessions with my frugality.

And then it hit me… it’s because I’m frugal that I can own these nice things! We get caught up in the mentality that, to be truly frugal, one must save every dollar they earn and avoid nice things at all cost. Wait, that’s not what frugality is about, at least for me it’s not. For me, frugality is a commitment to manage money wisely, and have fun doing it.

I can afford to spend more money in some areas because I minimize costs in other areas. I keep a tight budget on expenses that most people (not you) tend to spend more frivolously on. I don’t drink alcohol, so that automatically saves me $20-$200 a month less than most other people my age. I still wear clothes that I’ve had since college. I try to eat out no more than once a week. I don’t go clubbin (Girl Ninja would not approve). And I only shower once a week to save water….just kidding….kind of.

Sure I may own some Apple products, drive a car with less than 30K miles, and have two computer monitors, but the beauty of frugality is that it’s expressed differently for each person. It’s about living within your means, not avoiding luxuries.

Indications you may not be frugal and you are just a straight up reckless spender…

1) You put “dining out” expenses on a growing credit card balance

2) You buy things you don’t want or need, simply because it was on sale.

3) You own multiple DVDs you have never taken out of their wrapping (I know some of you are guilty of this).

4) Your name starts with a “C” and rhymes with bongress.

We all tend to make assumptions about others based off our observations. Heck, I’m guilty of it, but I hope a few nice possessions wont disqualify me from joining Club Frugal. What kind of frugal dude/dudette are you? Are you the I’m-so-cheap-I-won’t-have-any-fun frugal? The I-like-to-monitor-my-spending frugal? Or the I’m-not-really-frugal-but-I-like-to-pretend-that-I-am person?

Quasi-anonymous blogging.

Screen shot 2009-12-16 at Dec 16, 2009, 11.23.10 PMWhen I first started PDITF, I made the decision to go rogue and write under the alias Ninja. I know you may have actually thought my first name was Debt and my last name was Ninja, but it’s not, sorry to break it to ya. I may be anonymous to you, but for a select few, my true identity has been revealed. Being a quasi-anonymous blogger is the second most awkward thing in the world, platypuses (platypi?) being the first.

Screen shot 2009-12-16 at Dec 16, 2009, 10.55.28 PMSome people know who I am out of sheer stupidity on my part. I frequently email back and forth with various PF bloggers. I use Mac mail on my computer so I receive my personal email and blog email all in the mail client. Every once in a while I will accidentally send a PF related email out to someone from my personal email. Whoops. To the three PF bloggers that know my true identity, a warning: I will hunt you down and call you a doo-doo face if you share my information with others.

My family knows I blog (Hi family!) and a few of my close friends. Outside of those closest to me, I try to keep my nerdy side on the down-low. It doesn’t bother me if strangers/best friends/family know my financial DNA, but I get really uncomfortable when casual acquaintances discover my hidden hobby.

There is something weird to me about friends of friends reading my net worth updates and my spending habits. The other night, I was hanging out at a close friends house (who is aware of my blog) when he referenced an article I wrote to one of his friends (who I have only met once before). The mention in and of it self would not have been that awkward. It got weird when they decided to hop on a nearby laptop and scour my blog in my presence. I mean come on people, I’m standing right here, do you really need to read it now? This situation was uncomforatble for two reasons….

1) Everyone in the room was pretty much obligated to pretend my blog was really cool. None of them would be bold enough to tell me they thought my blog was lame. It would be like if an acquaintance told me they reached the highest level in World of Warcraft. I would say “No way that’s awesome man!”, but in my head I would be thinking “Maybe it’s time to get a girlfriend dude”. Personal finance is not the sexiest of topics, and contrary to what we all may think, blogging is still perceived as “dorky” by many. There were 5 people in the room that all gave me compliments after browsing PDITF, three of which I’m convinced did so just to be nice. Ya hear that casual friends, I know your web of lies!

2) Even more awkward than receiving half-hearted blog compliments, knowing people that don’t know me very well, now suddenly know a lot more about me (was that wording confusing?). I thought having a positive net worth would be the most aweseomest thing in the world, but I’m quickly learning it’s not all it’s cracked up to be. In fact, I almost like it less. Now that I am hovering around a NW of $30K, I find myself even more self-conscious than when I had a -$30K worth two years ago. I had no problem sharing my negative net worth with anyone that wanted to know about it, but when it comes to positive territories I clam up because I fear people will think I’m bragging. Sure enough, one of the 5 casual friends that browsed PDITF, saw my NW posted in the top left corner. He then said “You’re net worth is $27K?!” I didn’t really know what to say to that. I think all I managed to get out was “Uh, yeah.” I suddenly felt like that persons perception of me was changed. It probably wasn’t, but it still felt that way.

I made the choice to blog quasi-anonymously and I’m glad I did, but it does have some downfalls. Do any of you readers think blogging anonymously is lame? Do you fellow anonymous bloggers, share your website with any family of friends?

A little extra cash flow never hurts.

I’m stealing this idea from My Pretty Pennies, so I better give her credit. You rock my face off girl!

Screen shot 2009-12-16 at Dec 16, 2009, 12.21.23 AMI’m addicted to making money. There is something about being productive that is rewarding, especially when you get paid for it. When I’m not working, I’m figuring out ways I can do something I enjoy and get paid for it. I’ve been tracking my “extra” income over the course of the last year and thought I would share it with you all.

I have a couple different sources of extra income…

1) Yes, this is still embarrassing, but sometimes Momma Ninja hooks her baby boy up with some cash so he can pay down his student loan. I guess this can’t really be counted as income, since I didn’t do anything to earn it, so we will call this “gift” money instead. This article explains why I am comfortable accepting donations from the bank of Mom and Dad (no people this is not an actual bank). Wanna know how much Mom Ninja has thrown my way? $2,000!!! Holy guacamole. I don’t think I realized I got this much help. I’m totally taking Mom Ninja out for ice cream when I visit over Xmas time. That’s right mom, anything you’d like….as long as it’s less than $5 πŸ™‚

2) Interest income. Year to date, I have banked $78 from my online savings account. I pretty much forget this money exists cause it just get’s totaled in with my savings balance. I really wish I was getting a 5% APY, like a couple years ago.

3) Blogging. Boo to the Ya. I wasn’t really planning on monetizing my blog, or at least I wasn’t actively pursuing making blog money. In the 8 months I’ve been around, I’ve managed to bring in $800. That averages out to $100/month. That means you all are totally paying for my gas/water/electricity each month. I need you to keep stopping by so I don’t have to take cold showers and sit in the dark. That would not be fun.

4) Tutoring. I took a huge hit in tutoring income this year. Most of my ‘my kids’ have reached their senior year of high school and are no longer required to take a math class. In 2008, I was tutoring about 8-10 hours a week. I brought home $11,000 in extra income from tutoring last year. 2009 was not so bueno. I definitely can’t complain though because any money is good, and I’m definitely not worth the $40 an hour I charge for Algebra and Geometry. This year I made $5,000 tutoring. It’s the easiest and most fun way to make a quick buck.

All totaled, I supplemented my base salary with about $6,000 of earned income and $2,000 in gift money. 2009 has been good to me and I’m hoping 2010 will be even better. As my tutoring kids get older, I’m beginning to think of new ways to make money. What are some means you all have used to bring home some extra bacon? Do you know how much supplemental income you made in 2009? What’s the easiest way to make some moolah (that doesn’t involve anything illegal)?

Popularity has a price.

Screen shot 2009-12-15 at Dec 15, 2009, 12.08.13 AMYesterday, unbeknownst to me, I was given an invitation to sit at the “cool table” (or at least the personal finance equivalent of a cool table) with all the popular kids. I woke up yesterday morning, and as usual, checked my blog’s stats first thing. Usually I have about 50 or so visitors by 7am my time. Yesterday was a different story though, I had an incredible 1,300 visitors by early morning. I knew my post on counterintuitive frugality was not the cause of this giant boost in traffic. Checking referral sites revealed The Consumerist posted a blog about my recent 401K article. Here’s a link to their article and here’s a link to mine.

Being featured on the #1 Personal Finance blog makes me smile. It resulted in more visits in one day than I usually see in an entire month, futhermore, it also increased my adsense revenue from the typical $0.12 per day to a whopping $7.04. I’m freaking rich suckers and I owe it all to Phil Villarreal. Thanks dude for referencing my post, feel free to do so whenever you’d like πŸ™‚

I learned something yesterday though, popularity has it’s price. While I would say the majority of the comments in response to my article were positive, there were definitely some that were not-so-positive. Here were two of my favorites….

GuidedByLemons:
“I have been so focused on retirement, I completely forgot to establish a game plan for my 30’s, 40’s, and 50’s.”
Um, how about you, like, draw a paycheck during those years? By working?

You totally took my quote out of context dude. Of course I plan to draw a paycheck, but where is the harm in trying to provide extra income from short term investments? Instead of being income dependent, I’d rather have other streams of money to provide additional financial security. I’m pretty sure I never indicated a desire to lose my job and stop earning income.

Unknown:
your post is so riddled with errors, logic and factual, thats its not worth responding to.

I deleted that comment because it provided no constructive criticism and I don’t think it qualifies as English, but it did make me laugh a little bit. Some people are jerks.

I’m all for constructive criticism, in fact there were quite a few opposing views brought to my attention, but sometimes people need to take a deep breath and relax. My life is different than yours, and so are my investment strategies. I didn’t tell anyone else to reduce their 401K contributions, I simply wrote about what MY strategy was. If you don’t agree with it, that’s A-okay by me.

I think some of the consfusion comes from a misleading opening paragraph in that article. The article states I make an argument against funding your 401K up to the employer match, which isn’t true. Just to be clear…EVERYONE SHOULD CONTINUE TO FUND THEIR 401K TO GET THE EMPLOYER MATCH. I’m sure that was an unintended mistake and really not a big deal as most caught the error, but I did want to take a second to clarify.

Getting to bask in the awesomeness of being highlighted on The Consumerist was definitely the best part of my day, even though some people made their best attempts to bring me down. In the words of Miley Cyrus…

There’s always going to be another mountain
I’m always going to want to make it move
Always going to be an uphill battle,
Sometimes I’m going to have to punch someone in the face lose.

Playing with the popular kids for a day sure was nice, but part of me is definitely relieved to be dealing with my normal PF commenters and readers again. I love you all in a totally non-erotic way πŸ™‚

Counterintuitive Frugality

Screen shot 2009-12-13 at Dec 13, 2009, 11.06.45 PMIn case ya didn’t notice, it’s Christmas time. Don’t worry though, this isn’t going to be another PF article about how to save money on your Xmas shopping. Saving money and finding deals, is something I am going to let you figure out on your own. I do plan, however, to talk a little bit about the Xmas gift experience.

I’m a pretty frugal ninja, as if you didn’t already know that. I try to cut costs by any means necessary so I have more money to save, invest, and give. I’m the guy that buys the generic brand cereals,Β  ketchups, and underwear just to save a little bit of money. It might not taste as good, or fit just right, but my pocketbook thanks me πŸ™‚ While frugality may be a part of my DNA, Xmas is the one time of the year I am totally fine droppin’ some dollar bills.

I get anxiety over spending $20 on myself at the grocery store, but can drop $100 on a gift for my girlfriend with out an ounce of stress. Something about giving gifts, cancels out the anxiety of spending money. I think it can be summed up by this math rule…

Screen shot 2009-12-13 at Dec 13, 2009, 10.19.09 PM

The math clearly shows when I spend money, I can be a happy ninja, as long as a friend benefits along the way (not to be confused with “friends with benefits“).

Like most of you, December is usually my most expensive month. I personally don’t limit my Xmas spending to a certain dollar amount, probably because I don’t take the time to set aside an Xmas savings account. Some years I’ll spend $100, other years I’ll spend $300, and this year I’ll spend even more.

One would expect a frugal person to freak out after spending an abnormal amount of money, but for me it’s no problem. Do any of you experience a similar counterintuitive frugality? Is it easier for you to spend money on someone else rather than yourself? Why do you think that is? I’ve finished my Xmas shopping this year, have you?

p.s. If you are reading this via a feed reader, I recommend you stop by and actually check out my website as I put up my Xmas banner last Thursday….let’s just say I think I’ll be on the naughty list this year.

My 401K is gonna be pissed!

Screen shot 2009-12-10 at Dec 10, 2009, 11.38.09 PMI made a pretty impulsive move yesterday. I decided to reduce my 401K contributions from 8% of my gross salary to 5%. *Gasp* Yes, that does mean I am going to have less in my retirement accounts, but don’t worry, I have a ninja-riffic plan in the works. If you read my post on Monday, you know I’m flirting with the idea of living outside of my spreadsheet. As a result, my net worth come retirement may be a little lower, but I think my overall quality of life will improve.

There were a few things that lead to my decision to decrease my contributions.

1) I was contributing 8% to my 401K and fully funding my Roth IRA each year. At my current income ($50K) that works out to 18% of my gross income being invested in retirement accounts. If you keep up with PF blogs, news stories, and TV shows, you’ll notice almost all ‘experts’ recommend a 20-something individual save between 10%-15% of his gross income for retirement. I was contributing 3% more than the average recommendation. Obviously, the more you contribute, the richer you will likely be. But I don’t really care if I have $3MM or $4MM in my account come retirement, as long as I have enough to live a comfortable lifestyle I’ll be a happy ninja. Oh, and the government only matches 5% anyways.

2) I essentially just gave myself a 3% raise. I have contributed 8% to my 401K since my first day of work (at the ripe age of 22). I’ve totally learned to manage my money being 8% poorer than I could be. I now will be taking home about $1,200 more per year (after taxes). That’s $1,200 I can use to save for a house, take a vacation, buy a moped, or rent out an entire movie theater for a private viewing of Twilight III. Sure, most of those expenses are not necessary, but don’t forget, I’ll still be socking away 15% for my gray hair days ahead.

3) The third, and probably most important, reason I decided to reduce my retirement contribution by 3% is this: I had no plans for the short term. Sure saving 18% for retirement is great, but guess what? That doesn’t make me rich until I’m 60 years old. What if I want to have a good chunk of change accessible in my 40’s? What if I want to retire early, but don’t want to be penalized for withdrawing from my retirement accounts? Well my friends, this is where the ‘short-term’ investing game comes in to play. I have to start exploring other means to grow my money. I have been so focused on retirement, I completely forgot to establish a game plan for my 30’s, 40’s, and 50’s.

Sure, I am taking away 3% from my retirement accounts each year, but that doesn’t mean I’m going to waste it. Instead I will transfer that money in to an investment vehicle of my choosing (stocks, bonds, etc). I need to start growing money for a 5, 10, and 20 year time horizon so I can do things like pay cash for the next vehicle I purchase, move up in house as my family size grows, pay for my kids college, and basically enjoy pre-retirement life.

As long as I contribute 15% of my gross income towards retirement, I have no need need (or reason) to contribute more. I’ve realized for me, anything above that 15% mark can be better served in short term mutual funds, real estate, cash, and bonds.

If you aren’t sure what percentage of your income you should be setting towards retirement, ask yourself this question. Would you rather have access to $6MM at age 60, or access to $1MM at age 45 and $3MM by age 60. I use to think I wanted $10MM all at retirement, but I now think I’d be just fine with $3MM in retirement if it meant I had $1MM available to me much sooner.

I have a couple questions for you all, how much do you contribute to retirement (if any), how much would you ideally like to contribute to retirement (if you are currently meeting that goal), and would you rather have $6MM at age 60, or $1MM at 45 and $3MM at age 60? What strategies have you established for pre-retirement goals? What short term investment vehicles do you recommend? Do you think I’m crazy? Any helpful hints, tips, and criticism is greatly appreciated πŸ™‚