Month: December 2018

How much do you spend to work?

 

 

One of the expenses that many times go unnoticed is what we spend at our workplace. Depending on the kind of job you have you may have to comply with a specific dress code or look, that demands a lot from your budget. Also, the more people you work with the more opportunities you will have for birthday celebrations, secret Santas, Halloween boo’s, Go-Fund-me’s, baby showers, retirement rendezvous and an endless plethora of reasons to potluck.

I don’t want to sound like a Debbie Downer but I just can’t figure out how people can afford the congo-line of celebrations. Seriously! One thing is someone having a heart attack and you along with some co-workers lend a hand to the family to cover bills with a Go-Fund-Me or throw a baby shower here and there, but holy cow can it get expensive!

I must look like the biggest jerk, but some time ago I decided to be very selective with my contributions at work. Boss’s day was the first one to go. I am sorry, that’s like the biggest brown-nosing celebration. Why would I spend money on someone who says hi when she/he feels like and makes 3 times more than me?

Baby showers, I am sorry but they are also very particular. Usually is young people, recently hired at your workplace, you really haven’t even talked much to the person and you are asked to contribute for a shower. The same goes for weddings! Why do we have to be gifting for weddings too if we are not even invited?

Folks, it gets expensive! When it comes to holiday cards and a simple $2.50 card can do…No! We have to go for the $10 card with freaking music and lights or it is just not good enough.

I can easily spend over $1000 a year in cards, flowers, pumpkin day, tomato day, go-fund-me’s, showers, weddings, school fundraisers, meal trains, adopt a family for Christmas, coat drives, food drives and many more. Simply, I can’t. I am all about giving, but I do think that we need to conquer our finances before we can help others. Furthermore, I believe that helping doesn’t have to come in the form of money. Help, can be in the form of guidance to others, listening, caring for others or simply having a genuine relationship with someone that goes beyond Hallmark cards.

Then, there is also the social pressure of the attire for work. In that regard, I think women have it worse than men. It seems like women feel more compelled to dress up and look the best possible at work. As a guy, I watch in awe how some of my co-workers talk about just running into great sales and simply buying something because a deal is just too good to pass. Well, in my experience when a deal is too good to pass, it is worth it waiting it out and think it over. Most likely it is actually too good to be true and consequently, it’s better to let it pass. As far as sales go… the best sale is the one you just don’t buy; great savings that way.

I firmly believe that in order to eliminate some of the expenses at work you must look at your job as a business. Your job should be an extension of your responsibility as CFO of your money. It makes no sense to go to work for $100 a day if you have to dress up in $100 outfit. Or if you must have enough outfits so people don’t notice that you are wearing them more than once; who cares? You shouldn’t.

If you wear $100 outfits every day, go to work on a 30K ride that conveniently you switch every 7 years, join every potluck and celebration at work, pay for daycare for 1 or two kids, pick up your coffee at the drive-thru, buy lunch and take another coffee for the commute home I just can’t imagine what is left of your paycheck! Debt?

Even if you have a nice six-figure salary to cover all this, you are simply throwing money away that could certainly buy you years or early retirement. No question about it.

On my end, I try to look professional and clean. With that said, I own about 3 pairs of work pants that I use through the whole year; each one about $15 a piece. Sometimes, I wear the same pair of pants through the week. All I do with those pants is go to work and come back home. Once at home I jump into my shorts, sweatpants or jeans. I absolutely do not care if people talk about me wearing the same pants. I do change my underwear on daily basis in case you are wondering and shower daily; so no concerns there.

I also have a collection of about 10 shirts that I use regularly, where some of them are as old as ten years old but still look nice. Every year when we go on our summer vacation I hit a store in the town where we camp and buy a few shirts for about $10 a piece.

I estimate that my yearly clothing expenditure orbits around $150. Depending if I need shoes or not. I try to buy shoes for under $60 and they must be built to last at least 2 years.

To illustrate my point I wanted to make a comparison between what I save going to work compare with a typical co-worker.

Itemized expenses Go with the flow & spend as you go yearly expense Small Budget mindful worker yearly expense
Car paymentx12 $3,600.00 $636.00
Boss’s day contribution $10.00 $0.00
Baby showers $10.00 $0.00
Wedding shower $10.00 $0.00
Meal train for someone sick $10.00 $0.00
Students/kids fundraiser $10.00 $0.00
Secretary day $10.00 $0.00
Potlucks( Fall, winter, spring) $30.00 $0.00
Clothes $50 a month, being conservative $600.00 $150.00
Coffee (2)x(5 days)x(4 weeks)x(12 months) $2,160.00 $0.00
Gas, a small car using a tank a week for $25×52 weeks $1,300.00 $1,300.00
Lunch (5 days=50)x(4 weeks)x(12 months) $10 ea $2,400.00 $0.00
Yearly $10,150.00 $2,086.00
Plus 2 $10 contributions for the year

The $636 for car payment comes from my calculation, based on our last purchase of a used minivan for $2,000. For gas, I am using the same amount for both scenarios. However, my proximity to work allows me to get almost two weeks out of one tank. Likewise, I do work with people whose commute is 40 minutes for 20-25 miles away; bad choice for the budget.

Another item that I am completely low balling is clothing. I constantly hear coworkers talking about the clothes they buy, and for sure they brake the $50 mark.

All these things are critical in order to save money and fund investments properly. I firmly believe that if I go to work and I am being paid for what I do, it is a must to make money; as much as I can. In order to increase earning I have to options. I can either get paid more or reduce my expenses to maximize my earnings. Ideally, I would do both.

Someone recently told me, “but you are a teacher, isn’t it all about the kids?” To which I responded, ” I give everything of me when I am at work, and enjoy very much my job, but I go to work for money.” Don’t you?

I would love to hear other people’s opinions on the subject and how you handle expenses at work.

Work party 2

 

buying a used car

Should I buy a brand-new car or a new-used car?

Ohh cars! You gotta love them. How not to? They are such an art! They are designed with such ingenuity. They represent a summary of generations’ hours on end of trial and errors, trying to achieve efficient engines and fuels in order to combust progress and economic growth. Their interiors become every day more and more comfortable, to the point that their seats look more appealing than our couches. They are also loaded with technology that allows you to navigate the radio airwaves or demand phone calls with the command of your voice; as long as you don’t have an accent like mine, that is… a plethora of bells and whistles such as cameras to help your driving, integrated navigation systems so you don’t forget where you grocery shop, heating systems to warm up even the parts of your buddy that never see the sun, safety airbags ready to save your life, and in case you forget to use the brakes they got you covered… Gosh! How not to love them?

Well, unfortunately, it doesn’t matter how much we pay for a brand new car and how new it is, the fact is that it will break down sooner or later. Having a brand new car is no guarantee that it won’t break down, or even worse that it won’t be involved in some sort of collision where you may total your investment and get just a fraction of its cost after the insurance company makes the depreciation calculation. Now, that might be the argument for some people to go ahead and purchase a brand new vehicle and enjoy the perks of a warranty for the first two years or so, plus a hefty insurance policy, just in case.

However, when you calculate the number of hours of work you must invest, and consequently hours of your life, to pay for …what many consider such an investment, you might reconsider your spending.

According to Carfax and similar sources, a brand new car is bound to depreciate 15-20% in the first year of ownership after being driven out of the lot. Twenty percent! To add insult to injury, long gone are the days when you could find a simple car with just the basics. Now with all the bells and whistles that cars are sold with, it is extremely difficult to find a family car for less than $20,000. And once that you are sold into spending $20,000 in a vehicle, why not to spend a few more thousands in all the luxury that everybody craves. What difference does it make if your car payment of, let’s say $500 becomes now $550 for some extra safety features or technology “coolness for your ride?” Right? Just a few extra bucks!

About six years ago my family and I were in need of another car (The one we had got a trans problem). Convinced by a good friend of mine we made it to the Toyota dealer. At the time we were interested in a minivan Sienna. The financing, of course, is always a hook; especially when they offer to finance your 30K+ vehicle at 0%. I just couldn’t wrap my head around the idea of paying such a high price and for such a long time. Also, for something that I knew would end up needing car repairs regardless of how much I care for it.

We moved on from the idea of buying new,  we spent some time thinking about it and came up with the final decision; we were buying used! We spent some time on Craigslist looking around for options and right away we found plenty. We chose a 2005 minivan. It was year 2015, so at the time it was a ten-year-old vehicle. In the pictures, you could see some rust but in general, it looked great. We went to see it and it was solid. There were no noises, oil leaks, rattling underneath or anything like that, and the engine felt very responsive. Needless to say, we made a move. For $2,000 we bought our next car hoping it would last at least two years. I figure, if it lasts 2 years it would cost me about $83 a month. Much less than the car payments of $550 a month that the dealer had offered me previously for a new Sienna.

We have used that car now for 3 years and it’s still running strong. We take it on vacations, to the beach, everywhere. The best of all is that I don’t care if the kids walk in with muddy shoes or sand. If I have to go and buy some wood at the hardware store I am totally comfortable loading up bags of mulch, pavers, cement or whatever I need. If the dog leaves some hair behind after going to the park or beach I can care less. I own the freaking car; the car doesn’t own me emotionally or defines my life. I am paying, after 3 years $55 a month for this car. If I keep it for 2 more years, which I am planning on doing it, the price will come down to $33 a month ($2,000 divided by 60 months).

The best yet is that if I do decide to sell this car, the Kelly Blue Book trade-in value is between $300-700. My guess is that I would be able to sell it privately for $800 to $1,000. Even choosing the worst case scenario of $700 would leave the price of this car at $1,300. After five years of driving it: $1,300 divided by 60 months= $23. How does that look next to any car payment out there?

When I compare our minivan against my Corolla the difference is significant. I bought my Corolla brand new in 2004. It was pretty basic.  I paid $16,000 for it and paid it for 6 years. Dividing $16,000 by 14 years and 12 months, it comes up to $95 a month even after all these years. I still have that car and it runs great but it is still almost double than what I pay for my used minivan.

I don’t know you but I don’t think I will ever buy a new car again. When the need arises I will buy something that is at least 2 years old. Although I think that a car between 5 to 8 years old would have more potential for some serious savings.

You may feel very apprehensive about buying something used. I understand. I get it. Here is my recommendation to you: First of all don’t get the same ideas that some of my fellow teachers get. Don’t switch cars every 5 years or so. There is absolutely no need for that. That is the biggest waste of Benjamins!

Second, if you are uneasy about buying a used car, just hire a mechanic! How much can it be? $150? Even if it was $300, it is still worth it. You are saving thousands of dollars that will make a great deal of wealth in your 401k/403B.

Third, internalize that cars are disposable. With that said, understand that as you junk them you are also throwing thousands of potential savings. Literally tens of thousands of dollars!

 

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