Shaving Off My Money Mustache

I’ve been reading, researching, and writing about personal finance for a little over ten years now.  But even before I started formally sharing my financial thoughts, I spent the earliest years of my life thinking through the implications and trade-offs of how I structured my financial and economic decisions. I’ve always had a knack for finding (and utilizing for my advantage) market inefficiencies. I enjoyed saving, accumulating, and investing even early in my middle school years. I’ve certainly noticed my life and consumption have continually evolved over the last thirty years.

I started this crazy process of learning as much as I could about personal finance somewhere around 2000. I spent several years plowing through every single personal finance book at our local library and followed the research and pop-press through my entire doctoral program in financial planning. Although I read Your Money or Your Life and all of Jacob’s ERE stuff, it wasn’t until Mr. Money Mustache (MMM) came along that the movement in my brain had a coherent structure. MMM is a master at putting a ‘why’ behind the choices it takes to peruse an optimal life and efficient spending. I’ve even had Pete, the Mr. Money Mustache himself, sit with me and discuss many of the topics on this blog. Continue reading Shaving Off My Money Mustache

10 Financial Assumptions That Need To Be Challenged

My goal is to challenge assumptions. If there is one persistent theme of Simple Economist, it would be that we need to challenge ourselves and constantly question the status quo. This post is certainly full of references that contain detailed explanations for many of the individual topics. The article will help bring together many different ways we need to challenge the financial assumptions that we are exposed to on a consistent basis.

debtI’m sure you have had it happen. I’m sure there has been a time where you cringed after hearing a comment, news report, or had a family member or friend make a statement based on a faulty assumption. The misinformed (or toxic way of thinking) that is used for rationalizing or marginalizing unwise choices can be tough to be around. I honestly think that is what drives me to write and publish my thoughts each week. I just see so much (often in myself) inefficiency, misinformation, and faulty assumption, that it motivates my need to organize my thoughts and put them down on paper. Do you ever question popular financial assumptions? Continue reading 10 Financial Assumptions That Need To Be Challenged

The Reluctant Environmentalist

Why is it always cloudy over here? I asked my tour guide. It never seems to rain but it always looks overcast. She replied in a pleasantly accented english, “This is normal, you get used to it after a while.” It wasn’t until we left the city of Beijing that I saw the sun for the first time on our several week trip through China. Until that point, I never considered myself an environmentalist. In fact, for most of my life it was much more convenient to not even think twice about the environment in which I lived. Sure, I like clean spaces and I’ll pick up trash around the house to make it look better, but I was never searching to be a part of some greater environmental cause.

chinaSo, why am I still reluctant to ascribe to environmentalist perspectives? I think it is two-fold. First, it is about inconvenience. As painful as it sounds from a first world perspective, the environmentally friendly products are often portrayed to be less convenient or more expensive options. The second is about distractions and guilt. We only have limited amounts of cognition and willpower and we often tend to concentrate on only the most urgent things in our life. For busy people, spending a lot of time thinking about saving the environment is simply not a priority. It takes time to fully wrestle with the idea of ‘what is enough’? Where do we draw the line between waste and consumption? If I drive a car, is that too much? Air condition? Flying across the world in a plane? Recycling? An SUV?

For me, it all boils down to waste. There is some part of the minimalism, living simply, and the efficient living movement that aligns itself to a less environmentally impactful lifestyle. Continue reading The Reluctant Environmentalist

Why Our New Electric Car Is Cheaper Than A Cell Phone (in GA)

We just joined the electric car revolution. Well, maybe a puttering attempt for revolution. But nevertheless, we have joined the electric car bandwagon by purchasing a new Nissan Leaf to drive for the next few years. Due to an unusual set of incentives in place, the cost of owning an electric car (in GA) is probably cheaper than your current cell phone bill.

20141029_124030011_iOSIf you had asked me six months ago if I would ever drive a new car, let alone lease a new car, I would have told you that you are crazy. I have been a staunch supporter of buying reliable, efficient, used vehicles for years. Buying new is a pretty tough sell, but leasing new is generally faux pa in almost all frugallite circles. However, for every rule of thumb, there are always a few exceptions. And this case is no different. By fully utilizing all the current tax and non-profit institutional pricing incentives, we have leased a brand new 2015 fully electric Nissan Leaf for total price of $1,186 ($49/Month) with an estimated gas savings of at least $2,125 ($88/Month) over the course of the two year lease. Special current incentives also include no down payment options. Continue reading Why Our New Electric Car Is Cheaper Than A Cell Phone (in GA)

The Efficiency of Killing Clutter

Simplifying life is one of the recurring themes here at Simple Economist. In many ways, clutter, both mental and physical, is one of our biggest competitors to an efficient life. Ironically, I’ve lived with a lot of clutter. There have been times in my life where I was a ‘collector’ of anything of value. I had the strange part of my brain that wanted to hang on to everything just-in-cluttercase. I hated the idea of recycling or throwing something away just to have a need for it a few weeks later. I’ve since learned that I could minimize most of the extra in my life and simply replace it with cash.

For years I only thought of clutter in relation to its physical presence. I considered all clutter, stuff. However, I’ve since expanded my view and now I think about clutter in terms of mental clutter, organizational clutter, and physical clutter. Each different type has a different effect on my body, yet they all keep me from living an efficient life. My goal is to live a life devoid of waste. And mental, physical, and organizational clutter often build over time and end up squeezing out the important things in my life. My physical space is easy to observe. Anyone who walks into my house will instantly notice if I have clutter strewn around. However, dealing with organizational and mental clutter provides a different, but equally important challenge. Continue reading The Efficiency of Killing Clutter

When It Makes Sense to Buy The Popular

Marketers are pretty good about translating the things we buy into statements about ourselves. Instead of just owning an object for its current functionality, an additional layer of social status has been interjected into the objects we own. This process can be good or bad. We often identify with our purchases or, on the other extreme, will choose not to purchase something because of the identification associated with it.

iphone6Popular items tend to have a polarizing effect. Apple spent millions of dollars on marketing their products to a (former) niche that suggests ‘think differently’. The strategy paid handsomely and their products have reverberated through the tech and popular sectors. However, with their success, many people (especially the uber-hipsters in my town) will no longer buy the popular products due to the very lack of uniqueness.

Despite the mental push back it takes to buy the popular, I often find that my economizing ways lead me to buy objects that are recognizable and easily obtained. Even if there are superior products available, it often makes sense to buy the popular for a variety of reasons. The benefits of buying the popular include having a well-developed (large) support community, high liquidity when buying or selling, availability of parts and accessories, and easy access to information when trouble arises. Although this notion could be extended into plenty of other areas, I’ll keep the focus on larger consumer purchases (cars, technology, housing) to make the point more succinct. Continue reading When It Makes Sense to Buy The Popular

Your Personal Rate of Inflation (Destroying Inflation)

General inflation typically refers to the tendency of goods and service price levels to increase over time. Basically, one U.S. Dollar will buy you fewer loaves of bread than it did when your parents were born. Personal inflation is a subset of inflation that looks at our own (often rising) personal consumption choices over time. The general assumption portrayed by society and economists at large is that we need increasingly more (often higher priced goods) as we grow older. As we will see, we often have a lot more control over our personal rate of inflation than the economy at large.

inflationThe bottom line is that inflation in developed countries is overrated for efficient people and early retirees. In fact, I would make the argument that we can actually train ourselves to utilize our income more effectively as we gain more life experience. As we age, we gain a much better understanding of what our wants and desires truly are. We get better at understanding what is a need versus a want, and what luxuries actually make us happier. In addition, with a few lifestyle changes, we can position ourselves to maintain constancy while our peers’ personal consumption drastically increases over time.

Continue reading Your Personal Rate of Inflation (Destroying Inflation)

The Timeful Productivity System

I’m always looking for something to improve my efficiency and help process the never ending to-do list of life. I’ve tried different types of productivity systems over the years and taken bits and pieces from each. Although personal productivity is highly individualized, there have been several recurring themes across many popular systems. I’ve enjoyed Ariely‘s books and content for years, and his behavioral economics approach to time management resonated with me.

timeful logoI’ve read through all of Allen and Leo‘s stuff and incorporated that into my timeful productivity system. I don’t use the dedicated smartphone app, but I have adapted various parts of timeful productivity to my exact needs. This has helped me get a lot more done. I’ve come to realize that I tend to be more productive when I have more to do. I don’t waste as much time- however, I’m not immune to the effects of Parkinson’s law.

Basically, the timeful productivity system (or at least my modified version) is quite similar to a zero based financial budget. In essence, you are budgeting your time each day. The trick is simply to budget for all of it- including non-productive time. In addition, uni-tasking, structured procrastination, and productivity patterns are all facets of the timeful productivity system. Continue reading The Timeful Productivity System

Broken Systems: Why We Continue To Fail

Failing at something is not very fun. Failing at the same thing over and over is maddening. But almost everyone I know, myself included, has a certain area of life (or more likely areas) where we constantly fail to live up to our own expectations. We tend to have great intentions, but rarely meet even our own standards. When we try to make changes in our lives we often look at the specific symptoms of our problem, yet fail to account for the broader context to the challenges we face. We like to focus on individual items, but we must understand that our lives are built around systems.

Businessman Filing InformationWe all have systems in our lives. We have a connected set of activities and routines that we perform on a daily basis. Whether we analyze it or not, we have systems for many things in our lives. How you get ready for the day is a system. There is a constant set of actions you routinely do to prepare yourself for the day. They may be quite efficient and thought out, or it may be rushed and anxiety inducing. Constantly leaving the house late and feeling stressed getting ready is likely a symptom of a failed system rather than a preferred outcome. Often, our intentions are good. We may even have a nice goal in mind. But we rarely take the time to set up full systems that put us in a position for success. Continue reading Broken Systems: Why We Continue To Fail

Get Off The Couch & Do Something: Battling Inertia

I’m Guilty. The articles that are often the hardest to write are the ones that make me look in the mirror. And I’m guilty. I’m guilty of letting inertia get the best of me. I would like to think that I’m pretty good with my time, energy, and effort- but often I find that I can get lazy. Or at least inefficient. I find that I tend to do the same things over and over. I get quite comfortable with my routines and the products and services that I use most often. I don’t even dislike change. However, the minimal amount of effort that change requires often necessitates a battle with inertia. For anyone who hasn’t thought about science since 4th grade (myself included)- Inertia can be described as resistance to any change in the state of motion. In essence, we tend to keep doing the same things over and over unless an outside force changes our direction.

lazy manAs humans, we have a tendency to gravitate towards comfort and consistency. Even if things are pretty bad, we’ll continue to do them due to laziness or fear of change. It is even worse when things are ok but could be a lot better. I tend to fall in that second category. I get complacent when things are going well but could be better. When I’m saving and spending with plenty of margin I don’t worry about change. When work is going well I don’t think about honing my skillset. When my life and marriage are good I don’t often think about better.

Inertia happens all the time in areas of our personal finance. We often continue to make inefficient decisions with our money and fail to take any action. Here are some of the more popular activities where inaction can be expensive. Continue reading Get Off The Couch & Do Something: Battling Inertia