Month: May 2020

Have you ever found yourself going from not even knowing a product existed to clicking purchase mere moments after a friend mentioned it off hand? I was in that boat this past week. While I certainly “saved” some money taking advantage of a holiday sale, I still spent a more than I would have not making a purchase.

Sales Don’t Always Save Money

Not saving money buying something on sale sounds counter intuitive. I mean clearly that’s just wrong, right? While sometimes there are certainly sales that outright save money. However, I often find that sales tend to tip the scales for me to make a purchase that likely wouldn’t have otherwise.

I retroactively justify purchases telling myself, “I was going to buy a new one anyway.” Just this past weekend, this moment came in the form of a purchases from the outdoor store REI during their Memorial Day sale.

Making this purchase led me to finally pick up a few items I was considering off of Amazon for some time. These weren’t necessarily things I needed, but have long put off buying. One item, a pack of dry erase markers, I’ve had on a shopping list since January.

Going through the checkout process on Amazon, I noticed even more ways that companies encourage spending, even just a few more dollars. Nearing my order completion, I received the prompt to add about ten dollars more for free shipping. I honestly started looking for something else to buy, I mean it’s FREE. After some brief browsing, and not finding anything I felt I needed, I decided to just eat the shipping cost. Luckily, I was able to sign up for a Prime trial, even though I was previously a Prime member for over a year. It was a win-win for me there, no shipping fee and no unneeded items.

When buying something on sale, at the end of checkout, money has been spent. It may be less than the standard price tag, but it’s still coming out of your pocket.

The Power of Friendship

After heading down the online shopping spiral, I wondered how I got there. I wasn’t even aware of the sale until I heard some friends talking about it. Before I knew it, I was perusing the selections and found what I convinced myself I needed.

Word of mouth is an often under appreciated method of marketing. While advertising screams in our faces and jams it’s way into our feeds, the positive word of a friend can sway a purchase with little resistance.

It doesn’t always even need to be intended social influence either. The pressure of standing out in a situation can lead to buying the way back into normalcy. There have been a number of times I found myself going out to a bar with no intention to drink, but eventually I caved and bought myself one…or more.

The point I’m trying to make isn’t to cut off all relationships or never buy something on sale, but to bring back awareness when buying something. This is for myself more than anyone. The question that needs to be asked before every purchase, “why am I really buying this?”

While I’ve been a little loose with my purse strings this past week, I want to focus on the strategy element of investing in this post. I don’t quite know how to account the large investment I made this weekend after my first post-loan paycheck.

Rising Tides

After spending the last few months pushing down my student loan, I’ve expanded my disposable income. I didn’t realize how much it would be until I had the cash sitting in my bank account on payday. The fact that my problem is having “too much” in this challenging time is certainly a blessing.

A majority of my spending this past week was in the form of gifted subscriptions on the streaming platform Twitch. Subscriptions are paid support to a streamer, and on a couple occasions, I was inspired to pay for other viewers’ subscriptions. For better or worse, I accompanied this spending with a saving strategy of skipping groceries this week, so the scale is slightly balanced. Fear not though, I certainly have enough food to make it another week.

While my spending slightly increased, my saving was an exponential rise. Because of my frugal lifestyle, I was able to make a significant deposit to Robinhood, my broker for buying stocks. In terms of this trial, my deposit put me significantly ahead of any spending to this point. I am curious to see how it impacts my spending for the rest of the month.

Will my matching buffer encourage me to spend more, or will the habit of saving settle in? Only time will tell. What I think was far more important this week, was the strategic work I finished, my investment thesis.

The Thesis

An investment thesis is an argument for why an investment is a good option. While financial analysts and investing firms need a rock solid thesis, making one for personal use allows a lot of room for personal preferences.

My thesis was inspired by this post by entrepreneur, marketing expert, and taco-obsessive, Noah Kagan, in which he walked through step by step of his thesis. If there is any interest of hearing the details of mine, drop a comment below.

Here are some of the high level points. I’ve separated my current investments into three categories, self-managed, automated, and unique. My self-managed portfolio is handled via Robinhood, where I plan to have 40% of my total equity in the Vanguard Total Stock Index fund. An additional 35% of my total equity is spread out evenly across 10-15 companies. The criteria for those companies are ones which are both successful and that I use. From an automated standpoint, I started most of my portfolio with Wealthfront, and I really enjoy their service. I plan to keep 20% of my equity in my account. The final category and final 5% currently belongs to Lending Club, a service I started investing with a few years ago. The idea is crowd funded loans. I like the service offered, and the returns are decent, so I plan to keep my account going.

Ultimately, what I think is important is to have a thesis, any idea of where you are putting your money and why you believe that is the right decision for you. Considerations can be risk tolerance, return expectations, income, opportunities, and more. No two people’s circumstances are the same, and thus it’s not likely every investment option is right for two people. Hopefully this helps you come up with a plan for your own portfolio.

This is the type of trial that seems to go unnoticed at first. I am paying closer attention to my finances than I normally, but overall not much change. In the end, I think saving every dollar I spend will help with my goal out of this trial, preventing lifestyle creep.

What’s Measured is Managed

There is a trend of tracking lately, and it’s been some time since I took a close look at my spending. Keeping track of purchases has been simple enough. I’m keeping a spreadsheet with the list. At this point, with a well stocked grocery run, a few meals out, and a few treats, I’ve invested around $270. My plan is to apply the savings about once a week or so, rather than after each purchase.

I haven’t had much for purchases yet, though I did treat myself to a new pair of sunglasses I’ve wanted. Admittedly, I’m also looking to buy a new watch, but for better or worse, it’s sold out currently. There are some other items I’ve considered, but am holding off for now.

I’m excited to see what the final spending turns out to be. While I expect there to be some irregular purchases, the results should give me a new baseline of expectations for monthly expenses.

What is Lifestyle Creep?

For the most part, I maintain a pretty frugal standard of living. There are a few luxuries from time to time, but for the most part, I don’t spend much. Now having opened a large amount of disposable income, I don’t want that influx to crash into my current standard.

Lifestyle creep is that influx. It starts small, the creep element. With more disposable income, more options open up to spend it. If left unchecked, there’s a new standard of living that must be met. It might be expectations for housing, clothes, food, and wherever else your paycheck goes regularly.

Spending more isn’t necessarily bad. The misstep lies in letting that extra money flow somewhere that doesn’t matter.

Another week down, and with it another trial. Intermittent fasting is something I’ve long meant to try and am glad I finally did. At first it felt as though I didn’t make as much progress as I wanted, but looking back, five pounds was my goal. Overall, I really enjoy the process.

Results

Over the past few weeks, there were a lot of variables thrown into this experiment, but in the end I’m really happy with where the pieces fell.

The easiest place to start is weight, an easy to measure metric. One of the initial drivers of fasting was an attempt to cut some pounds I’ve been carrying since the holidays. I was hovering a little over 170 lbs for a few months, but now am down to 165, as shown in the photo about. I’ll still fluctuate between 164 and 168 depending on a few factors like recent meals or time of day.

A place I’ve seen significant growth is my eating habits. I have a tough time keeping the habit of meal tracking, but fasting is much easier to maintain. Paying attention to when I’m eating, often impacts what I’m eating. Keeping a dedicated eating window keeps me from eating as much junk food. It’s rare to be craving a salad at 11 PM.

The area that I am most happy with are my energy levels and motivation. It’s hard to say what has shaped this, but over the past month, I’ve felt better about many things in my life. Even on days I don’t want to, I push myself to do a workout. If I can only squeeze in a five minute ab routine, it’s better than nothing.

The motivation doesn’t stop at fitness either. I’ve been writing more in my free time. Just this week, I streamed on Twitch for the first time in months. Even with a mediocre sleep schedule, I don’t have the same lethargy I woke up with for what felt like months. Just this morning I woke up at around 4:30 AM after going to bed around 10:30 PM and struggled to find sleep. Throughout the morning, I’ve felt surpringly ready to take on the day ahead.

Challenges

The benefits have been great, but there have certainly been a few struggles over the trial.

A few times, I found myself staring at my fast timer waiting for the second I could finally eat. This typically isn’t a problem if I can keep myself busy throughout the morning. A few times over the weekend though, I have a few hours to kill before I can eat with nothing planned.

This did reveal a eating habit that needed some work which is eating to address boredom. Now, even during my eating period, I’ll check in with myself if I’m eating with purpose or because I’m bored.

Another problem I faced was the conflict between social opportunities and fasting. While it only occurred a few times over the trial, I did have to decline some invitations from friends. Of course, these opportunities were reduced due to quarantining. Even still, having to decline popcorn while watching a movie with roommates is a bit of a bummer.

In the past, especially in my college days, I enjoyed a late night diner visit to spend time with friends and have a tasty bite. A fix I’ve found for addressing this is to shift the fast to allow the eating window to fit any social events. This, of course, works only in cases of planned events, but also butts heads with my previous challenge. An alternate solution would simply be to join but not eat.

Even still, I think these problems are just par for the course. The latter of which is probably for the better. If health goals are the priority, then social opportunities are second to them.

What’s Next?

Intermittent fasting seems destined to join the few trials I plan to maintain in the long run.

For my next trial, I’m tackling an element I haven’t trialed in some time, finance. As a challenge, I am looking to match the money I save to whatever I spend, excluding rent and utilities. I recently paid off my student loan, and with that I have a much larger disposable income. Before I let myself get too carried away, I want to reign in possible lifestyle creep. By effectively doubling the price of every purchase, I don’t think that will be too hard.