Ways to Break My Starbucks Addiction

As much as I rail against buying Starbucks everyday, I have to admit that I'm often a complete sucker for them. I went to Starbucks the morning after my friend's 22nd birthday and we ordered the exact same drink, but somehow hers cost $1.15 more than mine and the two beverages together cost over $8.00. Ouch! There's also a Starbucks across from my work, and more than once I've wriggled myself into taking a longer break by picking up coffee for one or more of my bosses - sometimes this means they cover the cost of my overpriced coffee, sometimes it doesn't.

Anyway, my point is I love big cold coffee beverages in the summer. I finally switched from obnoxiously worded lattes to slightly sweetened iced coffee, and I couldn't tell the difference. The $2 less I was burning on such a silly item was nice too.

But after just a few weeks of switching to Iced Coffees, I found my Starbucks consumption right back where it was before. Sure, I've never spent TONS there to begin with, but switching to iced coffee was supposed to make the actual monetary hit hurt a little less. Instead, I just went more often because I could 'afford it' now.

Ugh!

Finally, I came up with a better solution. I've been getting up at 6:45 for class 4 days a week, so I need coffee - dammit. It's July in Southern California, so it's too darned hot for straight up brewed black coffee (which I actually prefer, most of the time). To feed my addiction I've taken to brewing coffee the night before and leaving it in the fridge to chill overnight. In the morning, I pour it into a portable cup with a little milk, ice and vanilla syrup (bought on sale at Target a while back).

There's a Starbucks on campus, and now I can walk right by it without being tempted!

Bean Counting or Goal Setting?

I spent far more on dining out during the month of May than I'm comfortable with. My spending was still well within my means, but that $64 could have filled my gas tank 1.5 times. So why did I spend so much money dining out? To begin with, my time wasn't budgeted very well last month. I spent far less time pre-cooking food for the week than I normally would. I also spent less time at home, period.

But at the end of the day, I'm not killing myself over $64. I was asked in a comment recently if I simply try to beef up the numbers in my savings account, or if I have specific goals for saving. The answer is a little bit of both - but my primary goal is to live within my means without feeling as if I'm compromising my lifestyle. I make about $1400 a month in wages, and nearly 3/4 of that is taken up with rent & bills, so stretching those last few hundred dollars can prove to be something of a challenge.

Squirrelling away large chunks of my paychecks to fund travel, major purchases, and nowadays my wedding is a major priority. Being able to afford airline tickets without compromising my rent is a big one. Taking a two week trip to the east coast that I don't necessarily need to take (though I'm sure my grandmothers would beg to differ) isn't exactly in line with the extreme frugality that I often advocate. I encourage extreme frugality as a means to an end, not as a doctrine that should be followed simply to put money away for no specific reason.

I've found that quite a few young adults - myself included until a while ago - have extreme difficulty living within their means, much less saving anything. Burn Five's goal is to present as many different means of saving and as many different reasons for saving as possible, in the hopes that twentysomethings who stick their heads in the sand when it comes to their finances will be inspired to take control and stop living paycheck to paycheck.

Network Marketing, A Pyramid Scheme in Sheep's Clothing.

A buddy of mine recently got involved in "Network Marketing," which looked to me to be just a fancy term for "pyramid scheme." After a while it became obvious that some people really do make money with "network marketing," but most of them had time, money, and resources to dedicate to it in the first place. After a few months of going back and forth with me (and probably a few of his other friends) my buddy realized that a 23 year old with limited resources wasn't likely to make a lot of money using "network marketing," at least not with the group he became involved in. Here's his story, along with some advice for how to better spend the money you might find yourself paying for the privilege to maybe make a lot of money.

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I recently got involved with a network marketing or multi-level-marketing company called Pre-Paid Legal. At first, I thought it was awesome, and so cool to be a part of something awesome, and even have a lawyer at 23. However, as time went on I found out that there’s a lot of information that they don’t tell you, and now it is time for me to get out. I am not endorsing or denouncing network marketing. In theory, it does make sense and it can work but for people our age it tends not to work for the following two reasons:

• People our age tend to not have the network or people around us that make network marketing so successful. A lot of the people that are successful at it were former real estate agents, attorneys, politicians, or well off business people. Basically, people with contacts already. Sure there are those people who started with nothing, and worked the system and became millionaires. Those people are truly rare, but the company spins it as an everyday occurrence.
• We’re too distracted or too busy to really focus on it. Not only does network marketing take some money and energy to get started, but it also takes a substantial amount of time. There are meetings, trainings, and conference calls…every week. Not only are they every week, but you have to pay for them! Sure you can write it off because you have a home-based business, but it’s a hassle, and your time can be used more productively.

Don’t get me wrong, it’s a great way to make extra money if you really really want to work it, but for us there’s a lot of other things that we can do that are both enjoyable, and help us build our wealth. So, this post is dedicated to other things to do with that monthly fee and the time it takes to work the system, and here they are:

• If you’ve read my previous post, you can probably guess what my first recommendation is going to be. Save, save, save! I have reached the point where if something happened to my job, I will be able to live for about 5 to 7 months depending on how I manage my money, and if I were to stop working tomorrow, I could keep up my current lifestyle for about 3 months. If I started with $36 and saved that $36 monthly fee over 1 year at an internet bank at say…3.00% interest, in one year I will have put in $432 dollars, and will have a total of $475 at the end of one year, gaining $7 in the process all for doing nothing.
• Invest, invest, invest. Or at the very least start learning. Mutual funds and the stock market are such an untapped potential especially for twenty-somethings. I’ll elaborate on these two topics on a later post, but the bottom line is that they can return greater returns than a savings account. That $36 monthly fee can be used for some very nice books (don’t buy them full price, get them free on bookmooch, or at a discount on half.com or amazon), or opening up a brokerage or mutual fund account (Note: that some banks/brokers have a minimum balance that you must meet to open an account…maybe that’s even more of an incentive to SAVE!).
• Take a personal finance class or basic investing class at your local community college. I’m not sure about you, but at Orange Coast College classes are $20/unit plus a health fee or administrative fee of some kind. Most of the basic financial classes are no more than 4 units, that’s about $80/class say…$90 with that health fee. That’s less than 3 months of a Pre-paid Legal membership, and I’m sure the knowledge there is a lot more valuable than what Pre-paid Legal offers at their trainings. I’m personally going back to school for a childhood dream, and I’m using some money that I would have spent on Pre-paid Legal for it.

A MacBook Air Is Going to Cost Me Four and Half Months of Wages

I've touched on this before, in my article about spending $37 on a latte, and in my last post; my favorite way to control major impulse purchases is calculating just how many hours I'll have to work to pay for whatever it is I want.

I make $11.75 an hour, which after taxes and deductions is effectively $10.00 an hour. The luxury good that I currently covet the most is the new Star Trek: TNG entire series DVD set, which runs about $300 - $400. Now, I have a deep abiding fangirl love of Star Trek, but I don't love it enough to spend an entire week's wages on owning the entire series, especially since a year's worth of Netflix is $116.28 - a mere day or two of work.

Newly released CDs are about $10 (usually more), and there are very few artists that I love enough to spend an hour and half on. The same goes for DVDs, or video games. A tank of gas for my car is about $40 now. That's a half a day of work, and if that's not incentive to find ways to keep my gas mileage down, I don't know what is.

Even those of us with jobs we enjoy would probably rather have our days to ourselves than a timeclock to punch. When you consider purchases in terms of how many hours you've worked, many of your most coveted items lose their luster, and finding ways to cut down on your absolutely necessary expenses suddenly has a tangible trade off.

So the next time you're in Target/Best Buy/The Apple Store, hell, even Goodwill considering an impulse purchase, think to yourself two things: (1) Do I really need this? Or do I just want it? (2) If I just want it, is it really worth X hours of work?

Ctrl-Alt-Delete! or: Undoing an Impulse Buy

My cell phone went completely haywire last night. The keypad was ignoring me, whenever the keypad would finally begin to respond - it would be interupted by an insistent prompt for me to speak a voicedial (I don't even use voice dial!). A creepy clickclickclickclick was coming from the speakers, punctuated by a prolonged beeeeeeeeeeeeep every minute or so.

I powered it on and off, removed the battery and replaced it, removed the SIM card and replaced it, left the phone alone for ten minutes, sang it a song, every quick fix I could think of. The phone remained posessed. Off to the the Cell Phone Provider Store I went.

Over the years, I've slowly upgraded my phones. The idea of downgrading is appalling to me, because I'm 23 and addicted to gadgets. I don't mine replacing my current model with another of the same, but I don't like to give up features I've become accustomed to. A weakness to be sure, but it's a weakness that only costs me every two years or so.

$121.62 later, I had one of those new-fangled music playin' phones. A Nokia whatever with red stripes and mp3 playing capability. Not all of my phone numbers were on my SIM card, so in what I thought was an exercise in futility, I put my SIM card back in my old phone, hoping the keypad would like me long enough for me to at least copy the numbers by hand. The keypad worked. It kept working. It's still working. Old Cell Phone is working just fine now.

Luckily I live in California and have thirty days to return the new phone. And to be honest, before I'd even attempted to use the seemingly broken Old Phone, it occurred to me that I'd really rather have $121.62, and that I should pop my SIM card into an Even Older Phone, and return the shiny new toy. Hopefully whatever technodemon posessed my old phone has been driven away for good- or at least until my contract's up and I qualify for a free phone. While I might try to rationalize the cool red stripey phone into a necessary purchase, it is NOT.

Dangit.

So how do I console myself, knowing that the shiny new toy is going back? Well:
$121.62 is enough to pay my cell phone bill. Twice.
$121.62 is about two and a half month's worth of car insurance.
Three tanks of gas.
About three guests at the wedding.
One month's energy bill.
Two month's groceries.

and the kicker?

Ten and a half hours of work. Before taxes.

Yeah, that thing is going back.

Giving Myself an Allowance

I use an outdated copy of Microsoft Money to track my finances. It generates a lot of reports for me including a cashflow projector (which I use instead of a typical budget) and some really great spending reports. Month-end is almost here again so I've been poring over my reports. Out of curiosity I filtered out all unnecessary spending categories, just to see how much money I'd have saved over the course of three months if I could manage to radically cut my spending.

$2,622.62.

In THREE months. Mind you, that's after rent, bills, food, and gas. AFTER. I've known for a while now that if I could just figure out how to cut out frivolous spending and impulse buys, I'd be quite well off. I spend less than most of my peers, and I definitely save more than a lot of them, but I could be doing a lot better. I need to be doing a lot better.

More than once I've been told that I shouldn't fuss over every penny, and I do try not to get lost in the minutiae of every other little 3 cents. But I make about $1400 in a good month, so a certain amount of spending vigilance goes a long way for me.

Until I was about 16, I got an allowance of $7.50 every other week, which was enough to buy lunch at school. I could either pack a lunch, or pocket the money. I seem to recall having a fairly active social life and still having fun with my pocket change, so I'm going to attempt a grown-up version of the same.

Every paycheck, I'll get $20. I'm paid bi-weekly, so that $20 is my pocket money. If I blow it on beers at the bar, that's it until the next check. It will not roll over. If I have cash left over when my next paycheck comes, I'll only get enough cash to get the total back to $20. Except on days when I need to buy gas, I'll leave my debit and credit cards at home.

I already put away $125 or more a month, and if giving myself an allowance cuts my impulse spending the way I hope it will, I could potentially double, triple, or even quadruple that amount over the summer.

Dipping into My Savings

Over the past few months I've gotten really good at socking money away. Next week, it's time to pay Fiance back for my half of our airfare to the east coast this summer and my half of the deposit on our wedding venue. The total is about $450. "Oh no!" I thought, going into a mild panic, "I'm going to have to dip into my savings!"

Until I remembered that the whole reason I began saving so aggressively in the first place was so that I'd be able to pull my weight with the wedding costs, and for us to visit my family on the east coast before the wedding.*

I'm fairly positive that this is the first time in my adult life that I've saved up for major purchases before making them. Before, it was my habit to just buy Whatever and figure out how to cover the costs later which resulted in a lot of nailbiting, overtime, and overdraft fees - not to mention unpaid bills, late rent, and searching the couch cushions for gas money.

Starting at age 18 and continuing (I imagine) until just before you die, there are a lot of "I'm a real grown-up now!" moments; buying a car, paying a bill, moving out, cooking your own dinner, getting married, buying a house, having kids - they run the gamut from seemingly mundane to obviously life-changing. I think putting a deposit down on a wedding venue with money I saved up for the cause is a pretty notable "I'm a grown-up!" moment.

To balance it out, I think I'm going to watch Star Wars while playing with Legos and gorging myself on sweets.

*and the Pacific Northwest.

Collegiate Level Dumpster Diving

In Southern California, you don't have to physically dive into a dumpster to dumpster dive. People are constantly leaving furniture and appliances at the end of their driveways or just outside of dumpster areas in apartment complexes. People love to throw perfectly serviceable items away.

Last week Fiance and I went to a buddy's graduation at a small private university, and we discovered on accident that dorm dumpsters on move out day are pretty much treasure chests. There were 6+ couches, 2 or three futons, computers, monitors, televisions, printers, speakers, stereo systems, a keyboard (as in casio), fancy calculators, cds, dvds, clothes, laundry baskets, and probably a lot more. Had I not been in heels, I might have dug a little deeper into the pile of electronics. As it was, we came away with a TI-84 calculator (he's going to sell it on ebay), a printer-scanner combo (though we have 6 printers in this house, not one of them is my printer/scanner, which disappeared two apartments ago), a card for free frozen yogurt at Golden Spoon, a nice document organizer, a hole puncher, season one of the UK Version of The Office, and twenty four cents.

There were a few funny looks from the kids moving out, but really - if these kids are dumb enough to be throwing away hundreds of dollars worth of stuff, they're too stupid for me to care what they think of me. As usual, I'm somewhat mind-boggled by what people will just throw away. Even more disturbing was that a lot of this stuff had clearly been broken as it was discarded. Another printer/scanner combo had obviously just been chucked onto the concrete and shattered. Same thing with a television. The glass shards from both were all over the area (another reason I didn't dig too deep.) I can understand not wanting to schlep a television, or even just a printer, back to mom & dad's, but why destroy the thing when you throw it out?

Either way, I'm going to be making a point of swinging through the local universities at the beginning of summer from now on. I might never have to pay to replace a printer again. And maybe next year I'll nab season two of The Office.

Carnival of Personal Finance #154

This week's Carnival of Personal Finance is up at The Canadian Dream: Free at 45!

My two favorite articles were:

Budgets are Sexy on the Four Stages You’ll Encounter during a “No Spending” Challenge.
Five Cent Nickel on The Social Acceptability of Frugality.

There are many more great posts though, so go check out the Carnival.

My Monthly Trade-Off: Extreme Frugality in One Area, Overspending in Another

Every month, after most of my bills are paid, the groceries are bought and the last thing that I must pay for before the month ends is a tank of gas, I start reviewing my income and spending. It seems that every month I manage to scrimp and save in one area while I spend more in another. In April, I spent very little on food, but a ton on leisure and entertainment. In May so far, I've spent very little on leisure, more on food than usual, and quite a bit on travel (a weekend in San Diego for Fiance's birthday.)

I already save about 10% of my wages, and by month's end I've usually got some extra income that I can also throw into savings - I'm doing very well in that regard. If I exercised some serious self-discipline, I could easily be saving another two to three hundred a month. Most of my friends consider my ability to hang on to my money something of a feat, but I still look at my ledgers at the end of the month and think "Damn! I really shouldn't have spent $X on Y!"

At the end of the day where I spend and where I save in any given month comes down to a value judgement. In May it was "Do I want beers out at the bar & a bunch of new books or do I want to spend a nice weekend with my boyfriend in San Diego?" I chose San Diego, which turned out to be a great idea. In June, I'll be paying for my share of Fiance & I's plane tickets to North Carolina. I'm a displaced Southerner who hasn't been home in four years, so obviously my $266 round trip ticket is well worth drastically curbing my spending in another area.

As the trip to Carolina, the wedding, and eventually married life come closer, I'm sure I'll need to start exercising the willpower to be mega-frugal in more than one category at a time. So here's my game plan:

(1) Leave my debit and credit cards at home. I already leave my credit card at home most of the time, but unless I need to buy gas I really don't need to bring my debit card to work with me. Sometimes the Starbucks across the parking lot calls my name a little too loudly, especially on my morning shifts.

(2) Make sure I'm setting aside time to pre-cook meals and snacks. For the most part I'm pretty good about this, but this summer I'll be in one pretty intense 4 hours four days a week class, an online class, working full time, and planning a wedding. I won't be able to just throw something together when I feel like it. Also, I'm likely to be pretty stressed out. When I'm stressed I either stop eating altogether, or I overeat. If I've got healthy food readily available, I'll be less likely to cave and make a beeline for Chick-fil-a.

(3) Write notes to myself. For example "If you spend $30, you have to cross out one wedding guest!" or "You need this for RENT!" I'm so disciplined most of the time that I generally have $5-$25 to burn if I feel like it. I can sometimes be flippant about spending a little here and there. Most of the time I fight the urge off, but sometimes I fail. Hopefully having visual reminders in my purse, checkbook, and taped to my debit/credit cards will help.

(4) Keep Fiance in the Loop. The fact that he & I are fairly minimalist frugal mostly-vegetarians bodes well for our marriage. The more in the loop I keep him, the more he can help out by saying, "Ummm, honey are you sure you need ANOTHER wedding planning book?"

(5) Stay home more often. Just walking out of the door and starting up the car is spending money. If I stay home I can cook, keep my room organized, post to BurnFive, do surveys, tons of productive stuff- most of which will save or bring in money, as opposed to spending it.

Hopefully in June I'll be able to keep all unnecessary spending to a minimum, instead of just some of it.