Retired At 47

Book Review: How to Live Well Without Owning a Car

Sun, 21 Dec 2008 23:53:46 +0000

One of the thoughts I keep bouncing around is whether I can get by without a car. Cars can be expensive to keep, even if they are already paid off. We can’t ever get away from maintenance, repairs, insurance, and registration, at a minimum. Last week I read How to Live Well Without Owning a Car: Save Money, Breathe Easier, and Get More Mileage Out of Life, hoping to find some new ideas or suggestions. I was not disappointed.

The book starts off with a look at the financial benefits to living car-free. It examines the various costs, including financial, environmental, and quality-of-life. It also gives a look at how and why the author came to live without a car. There is one problem I found in this section however; the book overstates the cost of car ownership by having you add in both the cost of the car and the depreciation. To correctly account for the cost, you need to add only one or the other. So, the true cost is double-counted and may distort the financial benefit of freeing yourself of your vehicle.

The next section of the book addresses the biggest concern most people will face: how to get to work. There are a variety of alternatives presented: walking, mass transit, ridesharing, motorcycles and bicycles. There is a discussion about the possible advantages of moving closer to work so that you can make use of one of the alternative modes of transportation. There is even a chapter that addresses some of the basic questions most of us would ask: how to dress, changing into “work” clothes, etc.

Another section looks at some of the non-work transportation needs most of us have. There is an acknowledgement that we may occasionally need to rent a car, and suggestions on how to maximize the use of the car when we do rent it. Other topics include online shopping, riding with friends, and even dating without a car.

Finally, there are discussions about taking a trial run before making the decision, selling your car, and families deciding to cut back to fewer cars. There is even a chapter dedicated to special situations where you’d normally need a car (taking an animal to the vet, a medical emergency, vacationing, etc.).

Throughout the book there are numerous quotes from “car-free” and “car-lite” people across the US. Many of these are inciteful and inspiring; I enjoyed reading how real people with real jobs manage some of the challenges of being without a car. Overall the book is a quick, fun, and easy read and gave me good food for thought. My only complaint (other than the inaccuracy in calculating the true cost of car ownership) might be that there is a bit too much “cheerleading” throughout. Clearly the author is enthusiastic about being car-free and wants to share that joy with others! But the material is presented clearly and is sure to give most of us some new ideas. I am not quite ready to give up my own vehicle, but what I read has given me something to ponder.

Favorite Links for Week of November 3

Mon, 10 Nov 2008 13:53:24 +0000

Last week I had articles that appeared in the Carnival of Personal Finance and the Festival of Frugality. There are many insightful articles and I encourage you to check them out. Here are a few that I particularly enjoyed:

Being poor is a state of mind at Pinching Copper

Economic Indicators 101 - Part I at Greener Pastures: Personal Finance

Our “Scary” Dining Out Expenses at Pay Yourself First Challenge

Anyone Remember Layaway? at Single Guy Money

Create Your Own Personal Financial Bailout Plan at Think Your Way to Wealth

Cutting Back, Not Missing Out at Domestic Cents

Don’t forget to check out the rest of the articles at:

Carnival of Personal Finance No. 177 at The Sun’s Financial Diary
Festival of Frugality 11/4 Election Day Edition at Bargain Briana

Question Expenses Twice

Wed, 05 Nov 2008 20:01:33 +0000

I took my car into the dealer for maintenance this morning, and it reminded me of an important cost-savings tactic I use: question expenses twice. By this I mean when you are getting ready to undertake a fairly major expense (such as a medical procedure, car repair, or home improvement), be sure you ask for a quote or even a written estimate, before you agree to purchase the goods or service. Then, when you receive your bill, double-check that it matches and question any discrepancies.

I didn’t always do this and often found myself frustrated when I received a bill that I thought was too high. At that point I could ask questions, but didn’t have much leverage. Eventually, I learned to question most expenses before they happened. This is sometimes a little uncomfortable, such as when I was scheduling oral surgery to remove my wisdom teeth. Uncomfortable or not, I asked what the expected cost would be. When I take my car into the dealer for any maintenance, I always ask them to break down the expected costs so I can make a good decision. I’ve learned to ask specific questions, like if there will be additional charges added (shop charges, disposal fees, etc.). This helps two ways: often, when they see that I am cautious with cost, they will offer a discount on some area of cost. I think it is actually a subtle form of negotiation. The second way it helps of course is that when I receive the bill, if there are any unpleasant surprises, I can go back to our original (hopefully written) list of costs. The last time I took my car in for scheduled maintenance, the bill came to $75 more than what I was quoted. I went back to the service advisor and asked (politely), and he promptly adjusted my bill, acknowledging that an error had been made. I am convinced that if I hadn’t asked before the service was performed, the bill would have been left with the extra $75. This morning I asked about the cost of the maintenance service I was considering, and the advisor knocked about $20 off the cost just because I asked.

Sometimes there are legitimate reasons why a cost my overrun the estimate, and that is OK as long as I understand what happened. When I had my wisdom teeth removed, the procedure became somewhat more complicated, with more surgery and less simple extraction and the bill ended up being about $200 higher than I was quoted. I didn’t question that bill because I understood what I was being charged for and why the cost had run higher.

FrugalBabe wrote recently about an unexpected medical bill she received for her husband’s surgery. It was unexpected because she had thoroughly researched what would be covered and how much, if any, her portion of the bill would be. In the end, she called and questioned the bill and it was resolved quickly, with no cost to her. I couldn’t help but think how this situation could have turned out differently if she hadn’t reviewed and researched the costs before her husband had the surgery.

The bottom line is this: sometimes by just questioning the cost of something, the other party will offer you a better price. And even if they don’t, when the bill does arrive and seems high to you, you’ll have much better leverage to fight the additional costs if you received a quote prior to having the work done.

Review of PaperBackSwap

Mon, 03 Nov 2008 16:27:35 +0000

I recently had the opportunity to join the internet book-swapping site PaperBackSwap. I thought I’d take the opportunity to share my experience here and explain some of what I learned.

First, it is a free site and was established in 2004. I really like the concept: you list books you are willing to send off to others. For each book you send, you receive one credit that you may use to request a book someone else is offering. The site maintains the database of books currently being offered by other members. You can also keep a “wish list” of books you’d like to have if they should become available. When you send a book, you pay the postage. However, when you request a book, it is free to you.

What You Can Swap

Apparently when it originated it handled only paperbook books, but that has now been expanded to include hardbook and even audio books (note that audio books cost 2 credits). The books must be in good condition (there is an explanation on the site of what constitutes “good” condition). Furthermore, you can specify your own criteria in your profile; for example, you might state that you don’t want books that are currently in a smoking environment, or that you’d prefer not to receive books that have ex-library stickers on them.

How it Works

Listing books is a piece of cake: you simply enter the ISBN and the database finds your books with photo and other pertinent information. There is a good search facility that will allow you to look for books you want, including books that are not currently available but that you’d like to add to your wish list.

After you list your first 10 books you receive 2 credits from the system, meaning that theoretically you could receive two books before ever being asked to send one of yours. I had four books to list and was surprised that all four were requested by other members within 24 hours. You receive one credit per book you send off, with credit given to you when the recipient acknowledges receipt (alternatively, you can purchase your postage and tracking through PaperBackSwap, which costs a bit extra but gives credit to you as soon as you acknowledge sending the book).

So I quickly accumulated 4 credits and went looking for books to request. I found one I had been wanting right away and have already received it (in good, but not new, condition). Several other books I want are not available at the moment so I added them to my wish list. This is the only downside I found to using this service: popular or recently released books seem to have a long waiting list. There were a couple of books I looked for that currently have over 300 people waiting for them. I didn’t even bother adding them to my wishlist but imagine it would take a long time to see those books.

A Good Alternative to Selling Books

I didn’t initially go looking to swap books. I had a few books I was ready to part with and, being a long-time eBay seller, first listed them on eBay. It seems that either I hit a lull or business has really slowed down on eBay, because not only did none of the books sell, but there were very few people even looking at the listings. Rather than continue to throw listing fees away, I thought I’d try another avenue. I considered selling them on Amazon, but since I have never sold there I thought a lack of feedback might make it tough. So, I stumbled onto Paperback swap and figured I didn’t have much to lose.

Obviously you would not want to list your valuable books here as all books are treated equally. But if you have some books gathering dust, you’re willing to pay media mail postage (generally between $2 and $3 per book) and you’re game to find some books you’d like to receive, this is a fun, easy, and frugal way to swap books.

You Can Also Buy Books without Swapping

If you are looking for a good deal on a good used book but don’t have one to trade at the moment, there is even a way to purchase a credit. For $3.45 you can buy one credit, for $10.35 you can buy 3 credits. This could be a frugal way to buy used books. Remember that audio books take 2 credits, all other books just one credit.

Have You Used PaperBackSwap or Other Swapping Site?

Have you used PaperBackSwap or other sites like SwapTree? I’d be interested to hear your thoughts or experiences. Obviously I am still new to online book swapping so would be interested to hear what others have found, good or bad.

Favorite Links for Week of October 27

Sun, 02 Nov 2008 17:09:21 +0000

I’d like to highlight a few good articles I found during the week of October 27:

Master Your Card: Why I Rent Instead of Own a Home

Ask Mr. Credit Card: Bankruptcy Recovery: Lessons Learned

SavingAdvice.com:The Bliss of Ignorance

The Smarter Wallet:The Dangers of Online Bill Pay and Automatic Deductions

As always, there were many good articles to choose from in these Carnivals:

carnival of money stories #82! at Financial Wellness Project

Master Your Card:Carnival of Personal Finance - Financial Armageddon Edition!

Making Lemonade out of a Stock Market Full of Lemons

Wed, 29 Oct 2008 17:11:28 +0000

I have not yet written about the downturn in the stock market. This has been intentional; partly, I did not want to add to the panic, and partly (mostly), I didn’t have anything helpful to say about it. I don’t have advise to offer and frankly I’m a bit skeptical of anybody’s advise these days. I read, watch, and listen to quite of few market analysts and experts and have seen clearly how even amongst themselves they disagree and suggest a full spectrum of varying advice. Everything from sell your assets, to hold your assets, to trade the daily volatility. The bottom line? Nobody knows.

From a personal standpoint, the timing of this market downturn could have probably been a little better. I retired at the end of September 2007, and basically the market has been on a downward trajectory from that time. Sure, I have a reasonably well balanced portfolio, but like anyone who has anything in stocks, I’ve taken a big and painful hit. But, like Retired Syd said so well, I seriously doubt I would have gone through with my retirement if this had happened before I left full-time employment. As long as this had to happen, it’s just as well it happened after I retired since now I just have to make it work. I have no intention of returning to the workforce.

I have been trying to find the silver lining in all this and I read an article today that uncovered at least one good idea for me. This is an excellent strategy for anyone who has an IRA and has been thinking of converting to a Roth IRA.

I’ll admit that I’ve been kind of bummed when I think about what an opportunity the current market presents for anyone who is in “saving and investing” mode, and that I can’t really take advantage of this. However, this article reminded me that there is still something I can do - I can convert some or all of my IRA funds to a Roth IRA. Yes, I’ll incur some tax liability this year, but it won’t be so bad since, without a fulltime income, I’m now in a much lower tax bracket. And as the article points out, when and if the market recovers and the equities in that account hopefully recover, the money earned in the Roth IRA will never be taxed. How beautiful is that?

In the end all any of us can do is try to make the best of the situation. We may all be at different points in our lives, but if we look for it, we may each be able to find something positive. For young investors, this would be a wonderful opportunity to start or continue investing in a retirement account, possibly picking up some quality stocks or funds at bargain-basement prices. For anyone looking to purchase their first home, they may be able to find something they could not have afforded a couple of years ago. For those of us who are past our earning peaks and looking to our investments to fund our futures, strategies such as converting an IRA to a Roth IRA can help ease the pain. For anyone who has enjoyed short-term stock trading in the past, the current market volatility may be a once-in-a-lifetime opportunity.

I’m sure there are more opportunities to make lemonade out of the basket of lemons our economy has turned into. Are there other strategies you are considering? What have you done to try to make the best of the current downturn in the stock market and housing market?

Defining Moments Part 2 - Stop the Impulse Buying

Mon, 27 Oct 2008 17:20:59 +0000

Last week I wrote about a major defining moment in my life - making the decision to retire early. Today I want to write about a more subtle defining moment, but something that has had a positive impact on my finances - breaking the pattern of impulse buying.

I wish I could remember where I originally read this pearl of widom so I could give credit: if you feel your heartbeat quicken, if you are excited with the prospect of a purchase, you are probably engaging in an impulse buy. Purchases that are planned rarely bring on the same level of excitement. Start to notice your own patterns and see if you find it is true; it certainly is for me. I noticed when I purchased a car a few years ago that I didn’t feel a flush of excitement. This was a very large purchase for me, so I had spent a considerable amount of time reading and researching before I made a decision. You would think that the purchase of something as significant as a car would have thrilled and excited me, but when I finally took the plunge, I felt more of a sense of control, that I knew what I wanted and how much I could spend. I carefully shopped and spent within those parameters. That’s not to say that I’m not happy with the car; in fact, I’ve been surprised how much joy this car brings me (I drove my last one for 19 years, so needless to say there are many new, nice features that now come standard on a car). But the thrill of an impulse purchase has a whole different feeling for me.

In the past I’ve been as guilty as anyone falling into the trap of the impulse buy. I’d see something I maybe never even knew existed, and suddenly I felt excited that this was something I wanted, needed, and it would probably make my life better. As long as I wasn’t going into debt to purchase it, I figured I could afford it and after all I worked hard, didn’t I deserve it? I’m sure I made many such purchases in my life, but the last one I recall really put an end to it. I’m a little embarrassed to tell this story, but here it is:

Years ago I started collecting a few teddy bears. At first they were the kind you could buy at the store, but I “graduated” into artist-made bears. They are made from high-quality materials like mohair, alpaca, and wool and can have the most wonderful expressions. I would pose a couple here and there around the house, and they give it a nice, warm feeling. These bears are normally purchased directly from the artist online, by mailorder, or at a show. One day I attended a high-end show, not planning to make a purchase, when I came to the booth of one of my favorite artists. She makes magnificent, large teddy bears that come with a hefty price tag. Then I spotted the centerpiece of her booth - an enormous (think several feet tall) off-white gorgeous bear with the most endearing expression. The price tag? $900. And suddenly that feeling of excitement came over me: this bear was meant to be mine. I was working hard at a good-paying job, I hadn’t treated myself to anything lately, so I figured I even deserved such a treat. Excitedly I plunked down my credit card and this incredible bear was mine.

Well, when I got home, I felt almost sick to my stomach. What was I thinking? I had just spent $900 on a TEDDY BEAR! As beautiful and well-made as he was, I could not look at him experiencing a sinking feeling in the pit of my stomach. I gave it a couple of months, but couldn’t get past that bad feeling so I ultimately sold the bear and took about a $200 loss. Surprisingly, I don’t regret the loss as much as you might think, because that purchase cured me of impulse buying. Period. It simply does not happen to me anymore. Because now, anytime I feel myself getting excited over a possible purchase, I remember the teddy bear.

How about you, have you experienced something that stopped or slowed your impulse buying? If you still have a problem with containing the urge to buy, I invite you to recall my $900 teddy bear the next time you feel the thrill of the purchase come over you. It might save you a few bucks.

Defining Moments Part 1 - Making the Decision to Retire Early

Wed, 22 Oct 2008 17:12:25 +0000

Sometimes life changes creep up on us slowly, so slowly that we may not even realize the change is underway. At other time, though, we face a defining moment that shapes the rest of our life. I’ve had several of these defining moments in my life, one of the most significant being when I decided to escape the corporate rat race at a (relatively) young age.

I’ve mentioned before that I was 32 when I decided to start planning for early retirement. It might seem odd that I know exactly what age I was, but it really was something that came over me all at once and I remember where I was and what lead me to the decision.

The funny/sad thing is that prior to that point, I had given very little thought to retirement. Fortunately, I was always careful with my money and most of my big financial decisions were reasonable and sound. But retirement seemed so very far off that I just couldn’t get interested in it. I don’t think I even participated in a company retirement plan until my late 20s, and even then just wasn’t that interested in it. At that point my time was spent focusing on my needs and wants.

At age 31, I went through a couple of life-changing events: a divorce which in turn lead to the sale of my home and purchase of another house on my own. I also had a strong feeling of discontent about my job and where my career was headed, but decided that changing jobs at the same time would create too much chaos in my life, so I waited about a year until things settled down. Still unhappy at work, though, I proceeded to change jobs when I was 32. This was a fairly major event for me as I had been at my former job for 7 years and built solid relationships with co-workers and clients. But I felt strongly that the job change was needed to get me back on track, to rekindle my enthusiasm for my career and help me move forward. I was certain that a job change was all that was needed.

Instead, moving to that job felt like I had jumped out of the frying pan and into the fire. I was looking for more interesting and challenging work, and instead ended up in an environment that, although very comfortable and pleasant, had almost no work for me. I had to entertain myself for days on end, trying to look busy with nothing to do! That was when it dawned on me that continuing to search for the “perfect job” was futile; that while I needed to continue working for a number of years, the solution was geared more towards achieving financial independence. I remember sitting at my desk, bored again, realizing that I needed to find a way to pay off my mortgage, to stash away some income-producing investments, and to possibly figure out some part-time work or casual form of other income. And thus my plan was set in motion.

I did in fact change jobs one more time (I could only sit at the desk twiddling my thumbs for so long) but my mindset was different now. My career was no longer the center of my attention, but instead more of a stepping stone to help me move towards early retirement.

How about you, have you faced some defining moments in your life that pushed you towards a bigger goal? What caused the shift in your outlook and how are you going about planning your life change?

Book Review: How to Survive Without a Salary

Thu, 16 Oct 2008 22:32:58 +0000

I read this book, How to Survive Without a Salary: Learning How to Live the Conserver Lifestyle, years ago and just last week read it again. I was once again impressed with its ability to really open my eyes and rethink old habits. It isn’t just another personal finance book, with suggestions about budgeting and cutting back. It is written by someone who is living what he calls “the conserver” lifestyle. And along with suggestions for cutting back and living on less, the author gives us a new way to look at problems.

The book won me over right from the start when it talks about how to value our time and why we can’t just compute the value of our time by calculating our hourly work rate. It also emphasizes the importance of skilling ourselves for just more than just one specialized task. There is an example of a gardener who fixes his own plumbing leak, and his neighbor the plumber who takes up gardening to save money. The usual calculations are performed to determine how much money each guy saves by doing himeself, versus his normal hourly rate. Although each could have made more money in his own trade, the author points out that we can’t work non-stop at our profession, earning our hourly rate. And more importantly, who would want to, anyway? As he states in the book, “…most humans are far too complex and clever to be satisfied with the exercise of a single task, a single skill, or a single career - to the exclusion of everything else.”

I always appreciate seeing a new perspective, a new way of thinking about problems, and in the chapter on “Needs”, the author gives us a new way of evaluating a problem. He emphasizes the importance of finding the real root of a need by asking the following questions:
1. What’s the problem?
2. Who needs it?
3. What would change the need?
4. How long will it last?
5. What are the alternatives?
6. What are the costs?

For example, you may think that you need a car to get to to work. What you really need is the transportation to get to work. This transportation my in fact be a car, but for some people who research and evaluate the need, it may become a form of public transportation, possibly even eliminating the need for a car. In one example, the author’s wife complains that they need to buy a dryer (they’d done without by employing a clothesline) because the childrens’ school clothes aren’t drying fast enough in the winter. The author re-frames the problem by stating that what they really need are sufficient clean dry clothes to get through the week. The ultimate solution is to purchase more clothing for each child, so that even if they clothes don’t dry quickly, they’ll have enough to get through a week. The purchase of the clothing in their case saves significantly over the purchase of a dryer.

There is a chapter devoted to “Casual Income”, addressing possibilities for freelance opportunities and casual employment. Most of us are so programmed to think in terms of full-time careers, that this section may be enlightening to someone who could survive on less income, but never considered “casual” income before. It is particularly well suited to someone who is nearing retirement but wants the security of some part-time income.

Many of the topics are those we’ve seen before when discussing personal finance: budgeting, assessing needs, getting out of debt, buying secondhand. But most of the topics are discussed in a different light than I’m used to seeing - very practical, down-to-earth talk with real-life examples. There is even an entire chapter devoted to buying at auctions.

If you like to read about personal finance, financial independence, and new ways of looking at our relationship with money, I think you will find this book valuable. It was one of the books I read during my quest for early retirement that helped shape my thinking about expenses and income and my overall relationship with money.

Favorite Links for the Week of October 6

Sun, 12 Oct 2008 23:23:09 +0000

This week I was particularly impressed with many good articles in the personal finance arena. I’d like to highlight a few that I thought were especially good:

Accumulating Money:Use Budget Software and Avoid a Crisis

Tough Money Love:How to Get Free Education in Economics

the Financial Wellness Project:Socializing is Good for your Wealth

MoneyNing:10 Activities for the Bear Market

Joyful Days:Three Times As Good, One-Third As Much

Saving Advice:The Zen of Giving Away Your Stuff

Be sure to visit these festivals and carnivals for even more good articles:

Carnival of Personal Finance - 173rd edition at Girls Just Wanna Have Funds

79th Carnival of Money Stories: Cartoon Edition at Living Almost Large

Festival Of Frugality - The Benjamin Franklin Edition! at Dollar Frugal

And as always, thanks to the hosts for their time and hard work putting them together.