Financial Implications of the Election

Being that we all live in completely separate media bubbles now, I feel confident that I will find a receptive audience saying that the U.S. election results were not what I was hoping for. The night of the election and the next day, I was overcome by a kind of existential dread I haven’t felt since 9/11. Like we just crossed the brink of a much darker world.

I started thinking of officially moving to The Bubble.

As of this writing, my candidate is ahead by 2.2 million votes. That’s a full 1.6% lead. And yet, our antiquated electoral system says that she lost. Did you know that since 1988, only one Republican presidential candidate has won the popular vote? That was George W. Bush’s re-election in 2004.  And the electoral college was the only thing that put him into office in the first place. Combine this with a very gerrymandered House, and the fact that poll after poll shows that most people support a progressive agenda, not the Republican platform, and it’s no wonder people are extremely frustrated here. The minority viewpoint rules. As a person who values equality and just straight up math, it’s an unbearably dumb system.

 I’ve always been very “tuned in” with the news. I started reading the newspaper on daily basis when I was in sixth grade. (HYPERLINK ALERT: That’s why it was so hard to cancel my subscription last year!) But things got really depressing this past month. I was there in my liberal bubble, freaking out with everyone else. I considered deleting my Facebook account and replacing it with this:

The manic, depressing final scenes of Stroszek pretty well summed up my mental state. “This is human nature! We’re just tortured chickens, dancing until the money runs out.”

But a few weeks later, I’m coming down, and I’m realizing what a bubble I’ve been living in. Sure, I knew the media bubbles existed. But I was more concerned with the fake news bubble that the right wing lives in. I wasn’t truly aware of the panic bubble that the left wing was living in.

By living in the left wing panic bubble, I believed everything about Donald Trump. He’s a dictator in waiting. He’s going to outlaw abortions and gay marriage. He’s going to deport 11 million immigrants and ban all Muslims from entering the country. He’s going to start a trade war and our currency will be worth nothing. He’s going to build that dumb wall! … Okay, even I didn’t believe that one. Or the “Lock Her Up” chants.

But it’s only now, after weeks of Stroszek-style existential dread that I realized, “Huh, maybe we should just wait and see if any of this actually starts happening before we start panicking.” Don’t get me wrong.  It’s going to be bad. But just how it’s going to be bad is a mystery. My inclination is to panic with each new cabinet appointment. But I just can’t tell anymore when is the right time to panic.

But his most clear and blatant offenses all come down to a few attributes: He’s an egomaniac and a dick. No one wants to work with him. How has he managed to burn through so many campaign managers and transition team members? At this point, I want to believe his presidency will be marked by incompetence, in-fighting, and conflicts of interest. But I really don’t know.

And when every single news story sends me into a tizzy, it’s clear that if there was ever a time for what Mr. Money Mustache calls “The Low Information Diet,” it’s now. So I installed a Chrome browser extension that blocks all news stories, tweets and posts that mention Donald Trump, so I can attempt to live in a world where he doesn’t exist.

What I find so dispiriting about the election results was that a guy was explicitly promising to damage first amendment protections, trash civil rights, abortion rights, and gay rights, and people still supported him. It seems like he’s against what the majority of people are for.

So did people vote out of some selfish notion that they will have a few more bucks at the end of the day under a Trump presidency? Maybe people voted with their pocketbook in mind, no matter what the collateral damage or who gets thrown under the bus. Anything for a few more bucks?

I think a lot of people vote straight party ballot without even thinking. You pick your team, and support that team no matter what their positions are. And then there are the people who actively decided to support this cartoon character who resembles a human being.

But what about our finances?

The gross thing is that Marge and I will probably benefit under this administration. Being a white couple with more than a few dollars in the bank, we might actually see our tax rate lowered. Being that we are able to save over 50% of our income, we are the last people who need a tax cut.

Most people in our income bracket or higher voted for Trump, which is typical because the more money you make, the more likely you are to vote Republican. Which gets to my larger point: For people who already make that much money, what more could you want? If your household is making over $100,000 a year, why could you possibly need a tax cut?

My American Frugal Friends, you know that we live in a land of plenty. You know how easy it is to save half of your income. You know that with some small financial tweaks, people can retire in their 30’s or 40’s. So what possible benefit is there to a tax cut when you are already living on top of the mountain, at the peak of global human wealth?

We know through science that after you make a certain amount of money, more of it isn’t going to make you much happier. This is called the marginal utility of wealth. The level is usually what you’d consider middle to upper-middle class. Making more than that does less and less for your happiness. Are these very rich Americans hemmed in by greed so much that they’re blinded to the plight of everyone else? … Hmm, I guess that question answers itself.

When I see personal finance bloggers mention their taxes, it’s almost offhandedly, like you can barely call it an expense. We all seem to just pay our taxes, get it over with, and not think too much about it.

But whenever I hear people in real life talk about taxes, it’s always complaints. How much they owe, how much they’re going up, how it’s all being wasted. There are actually three certainties in life: Death, taxes, and people complaining about taxes. I guess it’s no surprise we have a Complainypants in Chief now.

So these people who are really struck dumb by the amount of taxes they are paying, what are they doing wrong? Can people making that much money really be so terrible at managing it, that an extra 1% off their taxes is going to make a difference?  In other words, does complaining about taxes correlate exactly with a wasteful consumerist lifestyle? I’d like to think my fellow humans are better than that, but I know they’re not.

There is one area that I do now worry about hurting us financially in the future: Healthcare. Our early retirement goals hinge a bit on the Affordable Care Act. After leaving our full time jobs, we would need cheap healthcare until I reach age 55 and can buy into my workplace’s retiree plan.

There is a short list of places we’d like to move to upon retirement. Canada used to be on our list, and if the ACA is gutted and there are no affordable health care plans, then Canada might just get added back on to the list.

Funny how our 1,500 day timeframe, when we can start making decisions about our retirement, commences around June 2020, in the heat of the next presidential campaign! Wheee!

So what do you think? Are you paying too much in taxes?

The Marie Kondo Test

I try not to be a packrat. I was raised in a pretty orderly, neat house. Everything had a place. Nothing was left on tables or countertops. My mom kept the house so that there were were enough personal affects and decorations around that you wouldn’t mistake it for a hotel, but it definitely came close. It felt lived in, but it was very tidy.

My bedroom was the only exception. There was stuff everywhere. It was organized, but there was just a lot of it. Lots of CDs, videotapes and books, notebooks, video games, and just the detritus of my interests.

mariekondo-3

Typical dining room scene

Over the years, I’ve tried to be more tidy. So I was intrigued to hear about Marie Kondo last year. The queen of tidiness, most people know her as the obsessive compulsive organizer who verbally thanks her possessions before throwing them out. Her methods involve getting rid of anything that does not “spark joy” in you. “What about the mixing bowls?” I would think. “Or the flathead screwdriver? They definitely don’t ‘spark joy’ but I use them.”

Here’s a clip of Mario Kondo helping an American tidy up on our favorite station, NHK:

Initially I wrote her off as a nutcase. But this year I came across the Danish concept of hygge. Basically it translates as “coziness.” This means valuing things like nice lighting, warm socks, reading a book, having a cup of coffee or a piece of cake. Whatever it is that makes you feel nice. And little things make a difference. (I read The Mezzanine this year, and there is an extended comparison of the different types of door knobs, because some really are nicer to grip than others!)

Hygge extends to your surroundings, like the fabrics on the furniture, and, big surprise, tidiness. Being a Scandiphile, hygge innately appeals to me. This focus on the cozy seems like a good way to live. The Danes are frequently ranked as the happiest people in the world, and they attribute this partially to the  hygge lifestyle, so maybe there is something to keeping your surroundings tidy. I’m on board now. I want to be hygge af.*

Better ask the queen how to do it.

mariekondo

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Ridinkulous Quarterly Expenses: Q3 2016

dutchess-county-fair-2016-8

Puzzling sign at the Dutchess County Fair bird barn. Don’t be like Breakfast

The calendar on the wall says it’s October. You know what that means! Time for cardigans and hot mugs of mulled apple cider. Time for leaf-peeping and apple-picking. Time for scarves and slippers.  Logs for a fireplace or wood-burning stoves? Burn ’em if you got ’em! You know how I do. I’m Mr. Muh-fuggin’ Autumn Man! Welcome To Fall!

How did we do on our expenses for three months leading up to this most auspicious season? All I can say is, what a difference timing makes! Looking at our savings rate, you’d think we had failed spectacularly since last quarter! Our savings rate has been slashed in half from 71.7% down to 34.7%!  But in reality, our discretionary spending was nearly identical to the previous quarter. How could this be? Two things caused the drop in the savings rate:

  1. We paid our property taxes. We paid our school taxes for the entire coming year ($1,965), and half of our county tax for the year ($641.26). This $2,606 alone accounts for almost the entire jump in total non-debt expenses from last quarter: $5,745 to $8,505.
  2. Last quarter contained an extra paycheck for both of us because of the way the weeks fell. That’s thousands of dollars less in income this quarter.

Crazy fluctuations are the reason why I do a quarterly expense report rather than a monthly. But even after trying to smooth out expenses, we still see crazy swings due to big expenses from quarter to quarter.

Total Expenses: $10,589.53
Avg Per Month: $3,529.84

Without Debt Payments
Total Expenses: $8,505.79
Avg Per Month: $2,835.26

Savings Rate: 34.7%

Serious Stuff :

Quarterly Total Monthly Average
Mortgage $2,083.74 $694.58
Home Insurance  N/A N/A
Property Taxes $2,606.96 N/A
Medical $116.04 $38.68
Home Maintenance – DIY $63.72 $21.24
Home Maintenance – Contractors $300.00 $100.00

All pretty much status quo here. We had some dentist co-pays under Medical. And the $300 is a down payment for a gardener to make our backyard look nicer. We don’t trust ourselves with plants.

 

felafel-scratch

Felafels from scratch

Food:

Quarterly Total Monthly Average
Groceries $1,228.24 $409.41
Wine & Beer $91.39 $30.46
Dining Out $298.48 $99.49
Takeout Food $201.45 $67.15
Total Food $1,819.56 $606.52
okonomiyaki-mac-n-cheese-1

Mystery mac and cheese

On the whole, up just slightly from last quarter. We keep our food costs down by rarely eating out, and making cheap, delicious meals at home, as outlined in the Cost Per Serving series. Those are from-scratch felafels. They’re super easy if you have a deep fryer. And only use dry beans, never canned.

I also worked out a recipe to enter in our local mac-and-cheese cooking contest which Marge has entered twice. Can I bring home the gold? Some other time, I’ll let you in on the recipe, which its un-Googleable status proves to me is completely unique. Any guesses?

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Our Rental Property – The First Year

Rental House (13)Just a quick update here on how our rental property is doing. The last time we checked in, we were basically running a $10,000 loss! This was our first seven months owning the property, and I blamed the loss on the start-up maintenance to get the house in tip-top shape, the heating bills for the winter months, and well, the lack of tenants, since the house was vacant when we bought it and it took time to find people.

I predicted that the next five months would be profitable since we had tenants, and didn’t expect too much in the way of maintenance. And mostly, that’s been the case! Our rent payments have been rolling in electronically through Cozy. And we haven’t had any major repairs. Basically, all I’ve been doing is going over to mow the lawn.

One bad thing: We were just informed by our first tenants that they will be leaving after their year lease is up! Argh! That’s just how life goes for a landlord I guess. So soon we will have to filter through the punks and rejects to find some more worthy tenants.

Here’s how the first twelve months went.

Rental Income

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Cheapskate Analysis: Should I Replace All My Light Bulbs With LEDs?

Woah, here we are at the newest, yes the second ever edition of Cheapskate Analysis. Today we will be using the power of maths, after being confronted with a series of choices, to find the one that saves us the most money!

If you’re like me, monitoring the costs of everything, you’ve noticed that LED light bulb prices have really dropped since they were first introduced. It wasn’t that long ago that you’d have to spend $50 for one bulb. Now, you can get a bulb for one-tenth of that, or less!

But are they cost effective yet?

The Answer:
Yes… and No!

First, find your electricity cost

Our utility company does not make it easy to figure out the actual cost of the electricity we use. First they divide the bill up into Supply and Delivery. Then they break those down into a dozen constituent parts. I suppose this is good for transparency, but there also is no easy, total rate to look at. I had to add up fractions of a penny to get to the actual rate:

12 cents per kilowatt hour

NatGridbill

Our easy to use electric bill!

Actually, it was 11.997534 cents per kWh, but who’s counting?

Next, find out how much electricity your bulbs are using.

All light bulbs are labeled with their wattage, the only important number. To convert the bulbs to “math-able” kilowatt hours, we just move the decimal point a little bit. I learned this conversion with our earlier entry comparing the air conditioner to the ceiling fan.

For example, a 60 watt bulb = 0.06 kilowatts. A 13 watt bulb is 0.013 kilowatts. Et cetera.

Multiply that kilowatt number by how many hours it is used in a day (or a month, or whatever), and then multiply that number by the cost of the electricity. So a 60 watt light bulb used 4 hours per day every day calculates like this…

0.06 kWh x 4 hours a day = .24 kWh per day or 87.6 kWh per year. Then 87.6 kWh per year x 12 cents per kWh = $10.51 per year.

Easy peasy! Now let’s take a tour around the house to find which bulbs should be replaced.

Light Bulbs (5)

Frequently Used Rooms

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Vacation Rewind: The Cost of My Trip to Macedonia and Vienna

Today it’s time for another vacation rewind that answers the question: How much did my trip to Vienna and Macedonia cost? These posts tend to be some my most popular ones. Uh, have you ever Googled “cost of trip to Peru?” Maybe you should, if you like seeing pictures of me. So let’s do it again!

In 2014, one of my best high school friends got married to a girl from Macedonia. When he told me where she was from, I had to look this country up on a map, because that was the first I’d ever heard of it. Albania? Knew it. Bulgaria? Of course. Kosovo? Sure,  I’ve heard of it, but do I know if that’s a, official country or some kind of region? No, I don’t. But I’d never even heard of Macedonia.

Ohrid (37)Macedonia is part of the former Yugoslavia, bordering countries like Greece and Albania, where this friend had worked for the Peace Corps. So when they got married, they had a U.S. wedding and a Macedonian wedding. And since this could be my one chance to go to Macedonia, I left Marge behind and made the trip solo! Sorry, Marge! Tell your office to increase their vacation time and you can join me on the next crazy jaunt!

The conversion to US Dollars was made back when I took the trip in August 2014 ($1 USD = 0.758 Euros or 46 Macedonian denars) and some cash expenses were rounded to the nearest dollar.

Total Cost = $1,021.83

Flights

Ljubljana Airport (5)

 Flight Retail Cost Discount My Cost
Newark to Skopje, Coach $1,090.00 60,000 United Miles $180.10

 

Ljubljana Airport (4)

Empty Ljubljana Airport

Ever the travel hacker, I looked at all of the available options for flying into Skopje, where the wedding party would be meeting. It’s not easy to get to Skopje’s “Alexander The Great” Airport. Starting from a major U.S. hub, Newark, it takes at least three flights to get there. I wanted to use miles to buy the flight, and since Skopje is a little-used airport, there are only one or two airlines aligned with a major partnership flying into it. My only option was United miles because I had to use Star Alliance partners.

I eventually found flights that worked: Newark -> Zurich -> Llubjana -> Skopje. And then returning by Skopje -> Llubjana, -> Vienna -> Newark. I flew on United for the overseas flights, and Adria for European flights.

Vienna

In my search, that word stuck in my head.  I’d been wanting to go Vienna ever since seeing The Third Man in high school. And it seemed to work as a transit destination for the return trip. I played with the United scheduler, and figured out that I could have a stopover in Vienna for three days and use no extra miles! Hence, the second part of my trip. I planned to stay in Vienna by myself!

Marge was able to put her jealousy aside and allowed me this chance to add a few more days to this extravagant, but very cheap, trip. As you can see, it cost about $180 total, which is all fees and taxes. Every airport you fly into charges you one or two fees. So since this required two stopovers in each direction, this cost was actually higher than I anticipated.

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Frugal Failure? I Bought A New Phone

It was almost a year ago when I published a breathlessly raving review of the hottest cell phone you need to own RIGHT NOW, the Nokia 2600. I received this cell phone as a hand-me-down over ten years ago. It could make and receive phone calls, send rudimentary text messages, and even had games like Bounce and Millenium Mission. And the best part was, the cost came out to only about $5 a month. I used it a handful of times each year.

Tracfone (2)Logically, I came to the conclusion that this Nokia 2600 was the only cell phone anyone ever needed. So it may surprise you to learn that, only a few months later…

Hell was freezing. Pigs were flying. And I bought a new cell phone.

Holy moley! After writing a jokey review and then an honest defense of my 11 year old cell phone, I bet the last thing you thought I’d do is upgrade. Me too. But things change. People change.

Let’s take a moment to remember the good times. Please, play this video and take a look back with me at some of the Nokia 2600’s finest moments. I can’t believe these days are over.


Anyway, the reason I had to get a new phone is that people want to text me. I’ve resisted the move to texting until now, because now we have tenants. And though my old phone was perfectly fine at receiving texts, it was crap at sending them. In fact, it couldn’t reliably send a text unless it was in reply to a message already received. So I decided for the good of my tenants and the quality of my landlording, I had to make a huge upgrade.

I spent $40 dollars to buy a new phone on eBay

This is technically the first cell phone I’ve ever bought, since my earlier one was inherited. Look, a real smartphone!

Moto E (5)

It’s a Moto E. The entire glass front is a screen and it works by using your finger to select things. Technology! Aside from making calls and sending texts, it can basically do everything a computer can do. You can get directions, look up restaurant reviews and see the score of your favorite sports team! Sports!

Want to see what I use it for? Let’s turn it on and see a portrait of an inept smartphone user:

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Ridinkulous Quarterly Expenses: Q2 2016

Poli Genova, Batman! We had a tremendous savings rate this quarter. Almost 72 percent! How did we do it? See the specifics below, but basically we enjoyed a few extra paychecks by how the pay periods fell, and we didn’t have to pay any big bills like property taxes or home insurance. We also spent less than normal on most of our usual expenses. We had so much surplus cash this quarter that we paid off the rest of our student loans over Memorial Day weekend!

And according to our Planting Our Pennies-inspired Retirement Locale calculator, for the first time since we’ve been releasing quarterly expense reports, we can afford to retire somewhere in the world! Where could we immediately quit our jobs and move to? Read on to find out!

And remember, I exclude all income and expenses related to our income property.

Total Expenses: $11,194.08
Avg Per Month: $3,731.36

Without Debt Payments
Total Expenses: $5,745.21
Avg Per Month: $1,915.07

Savings Rate: 71.7%

 

The Necessary Evils :

Quarterly Total Monthly Average
Mortgage 2,083.74 $694.58
Student Loans Go Bye Bye 3,365.13 $1,121.71
Home Insurance N/A N/A
Property Taxes N/A N/A
Medical $193.68 $64.56

Bye bye, student loans! I will be more than happy to see this line item disappear. I got this delightful email from Sallie Mae when it was all done:

 

NavientSuccess

Indeed.

 

Mr. Bucket

Mr. Bucket

Home Maintenance and Improvements

Quarterly Total Monthly Average
Contractors $145.80 $48.60
DIY $10.58 $3.53

The only big expense here is hiring the professional to fix our leaky pipe.

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The End of Parking

You might’ve noticed on our Quarterly Expense Reports going all the way back to Q1 2015 that Marge and I have a monthly bill for parking that is almost $26. That’s all me.

Years ago, I was able to park for free when my office was in another location. But then we moved to Albany where parking is a hot commodity, so like everyone else, I started to pay for the privilege of parking my car. It’s taken directly out of my paycheck, almost $13 every pay day.

This was a bummer initially, because I had been enjoying free parking at our other location. Then, dangerously, I got used to it. I didn’t even think of it. Funny how recurring expenses quickly go from “burden” to “necessary.”

But now in our modern age of planning for Early Retirement, the parking expense has become harder to ignore. As I cut back on everything from pet insurance to newspapers, and from cell phones to rabbit litter, this one remains. Twenty-six dollars is not a lot of money, but in the land of eternal optimization, I am always looking to cut unnecessary expenses

parkingspace

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Should I Sue Lending Club?

In a fantastic mark of my own procrastination, I’ve never talked about my relationship with Lending Club here in depth. For those of you who still haven’t heard of them, Lending Club facilitates lending from one person to another person. Instead of holding onto deposits and lending them out to whoever they choose as a traditional bank would, Lending Club cuts out the work of the middleman and puts the onus on the investor to choose who to lend money to. This results, in an ideal world, in lower interest rates for borrowers and higher interest rates for would-be depositors.

Since its inception ten years ago, this peer-to-peer lending site has slowly become a mini-darling in the personal finance sphere. Mostly this happened after the big boy himself said he was experimenting with it in September 2012.  That was about 18 months after I started using the site, I might add. I started as an investor (read: lender) at Lending Club in April of 2011. Since then, the total amount of loans at Lending Club has exploded, from about $500 million when I joined, to well over $18 billion today.

LendingClubStat

Initially we got returns around of 12 or 13%. But as the loans have gotten older and more people have defaulted,our returns have pretty much flat-lined around 9.5%. That’s still really good, and though I haven’t invested anything new in a year, preferring instead to max out all of our tax-advantaged retirement plans, I don’t have any plans to withdraw from the account either. And since they enabled automatic re-investing based on your own customizable filters, I spend hardly any time on the site anymore.

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