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Lunch Budget Experiment Update

November 23rd, 2009

 

Hurray!Woo Hoo

This past friday, I’ve accumulated my first $1,000 by cutting back on my lunch expenses…

Now , I’m looking at stocks that will pay at least a 5% dividend (and preferable around 6 or 7%).  After the fourth quarter passes (I get my first dividend after the fourth quarter), I’ll be able to go out to lunch 1 extra day each month.   Then after 25 more days, I’ll have another $1,000.  After I have $2,000 dollars invested in dividend yielding stocks,  I’ll be able go out ever other week.  After another year passes, I’ll have enought money saved up to go out and entire extra day per week.  That’s all I need, going out 3 time a week is plenty.  If I keep the experiment up past 2 year, I’ll just keep saving the money in the lunch fund.

I’m kind of excited about this, I’ve always wanted to have a dividend fund like this since I was 19 years old.  Of course, I’m not considering taxes, but I’m hoping that if I get a 6% or 7%, that will make up for my lack of tracking the tax.

Lunch Savings to date:

Savings from int. rate: 5%
Lunch Budget
Amt Cumultive Yearly Monthly Weekly
6/5/2009 40 40 2.00 0.17 $0.04
6/12/2009 40 80 4.00 0.33 $0.08
6/19/2009 40 120 6.00 0.50 $0.12
6/26/2009 40 160 8.00 0.67 $0.15
7/3/2009 40 200 10.00 0.83 $0.19
7/10/2009 40 240 12.00 1.00 $0.23
7/17/2009 40 280 14.00 1.17 $0.27
7/24/2009 40 320 16.00 1.33 $0.31
7/31/2009 40 360 18.00 1.50 $0.35
8/7/2009 40 400 20.00 1.67 $0.38
8/14/2009 40 440 22.00 1.83 $0.42
8/21/2009 40 480 24.00 2.00 $0.46
8/28/2009 40 520 26.00 2.17 $0.50
9/4/2009 40 560 28.00 2.33 $0.54
9/11/2009 40 600 30.00 2.50 $0.58
9/18/2009 40 640 32.00 2.67 $0.62
9/25/2009 40 680 34.00 2.83 $0.65
10/2/2009 40 720 36.00 3.00 $0.69
10/9/2009 40 760 38.00 3.17 $0.73
10/16/2009 40 800 40.00 3.33 $0.77
10/23/2009 40 840 42.00 3.50 $0.81
10/30/2009 40 880 44.00 3.67 $0.85
11/6/2009 40 920 46.00 3.83 $0.88
11/13/2009 40 960 48.00 4.00 $0.92
11/22/2009 40 1000 50.00 4.17 $0.96

 

For those of you who might not have seen the earlier post about my Lunch Budget Experiment (I called it an Adult Allowance Experiment for the initial post), this is what I”m doing:

I’m cutting $40 out of my weekly lunch expenses by packing cheap (but still health) lunches.  Then after the savings amount hit over $1,000 dollars, I taking the money saved and investing it into a stock that pays a dividend.  I then use the dividend money to pay for the lunches I use to pay directly out of pocket.  IMHO, the beauty of this is I don’t actually carve extra money from my earned income to pay for lunch.  I’m just spend the dividend money I would have spent on lunch anyway.  So after the first 2 years, I get a free weekly lunch via the dividend payments.

The next dividend producing funds that I’ll try to start are:

  • Christmas fund.
  • Home Improvements fund.
  • Kids Allowance fund
  • Vacation fund (this will be a hybrid approach, because it would take too long).

I would like to include a Car fund, but I don’t think I can build up a dividend producing fund quick enough…

 

Tell me what you think, and do you have any suggestions?  Do you think I should stick to the experiment for 2 or  more years?

-MR

Related Posts:

Paying An Adult Allowance

Lunch Budget Experiment #2 – Buying the Stock

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Posted in Experiment

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Cash For Clunkers Program

November 21st, 2009
I had to think long and hard about not buying a new car, after hearing about the “Cash for Clunkers” government program.

 

Is this wasteful?

Disposable cars...

 

In the end I decided not to because:

  • My car was worth (a little) more than the government exchange amount.
  • My car is paid off.
  • I don’t have the cash in hand, to pay for it outright.
  • I would have to take out a car loan.
  • It kind of seems wasteful for me to throw away a perfectly good car.

For some negative effects for our governmental stimulus programs. and why they may not have been such a great deal for you, go to “GetRichSlowly.org” and read Adam Baker’s writeup.

If the program came out in 2011 or maybe even at the end of 2010, I most assuredly would have jumped on it.  If your car was from the 90′s, well this was a great bargain…

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Posted in Taxes

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My Middle Class Lifestyle

November 20th, 2009

This is a glimpse of a typical day in my middle class life.

Phase 1) Waking up.  I wake up to my alarm clock that I’ve had since I was in high school.

The alarm clock is about the size of a small child’s shoebox, and the plastic is factory painted to look like it’s wood.  The edge of the alarm clock got to close to my goose neck desk lamp and the plastic has warped, but just to a small degree.  I know that I can buy a cheap $10 dollar one, but this ones still works, and I’m comfortable with it…

Next, I go into my master bathroom and get a quick shower, because I hate to waste water (and also to make up for the amount that other family members use).  .  I do the typical routine to get ready for work…  No magic here, not much to describe.

My house is a little over 2100 square feet, and was built in 1998,  the shower isn’t too fancy, but the room looks nice enough.  The style of the house is a colonial.

Phase 2) I walk down the stairs quietly (the dog is asleep), and pack my lunch.  Since I’m currently doing a lunch/allowance experiment, I pack the following items in my small insolated lunch bag: eggs and sometimes peanuts.  The ramen noodles that I eat are already at work in my desk drawer…  Before starting my experiment, I would typically go out for lunch at a number of different restaurants.

What types of foods do I eat?…

  • Cajun Chicken spinach salads with hot bacon dressing (yum),
  • Sushi (mostly the spicy types: spicy crab, spicy tuna, eel…),
  • Chinese food (Chicken with Cashews, Hunan Shrimp, etc),
  • Mexican food: Chicken quesadillas, etc.
  • Italian foods (sort of), in particular from Olive Garden and Macaroni Grill (both have different but great bread)
  • and Fast foods: Subway (spicy italian heated sandwich), McDonalds (Quarter pounder with cheese), Taco Bell (varies), etc…

Phase 3) After getting dress in jeans and a polo shirt (I use to have to dress more professionally at work, but now we just dress casually).  I drive my 20 minute to work listening to an audio book playing in my card CD player, the radio, or nothing – preferring to think on those nothing days.  I’m a Gen Xer, so I have an eclectic manner with respect as to what I listen to… ex.) alternative, rock, classical, rap, country and others.

What car do I drive in?  A 2003 malibu (my friends say that I drive a grandma’s car), that I bought new for $11,000 back in 2003.  This was a great price considering the sticker price was listed at $21,000.  I’ll post about how I got it so cheaply at a later time :)

I’m a computer technician, and my wife is a stay at home mom.

I have a BA in computer science.  Every year I think about going for a MBA (the company I work at would even provide money for it), but life for me now is busy enough…

Opps, I digress, back to my middle class lifestyle.  At work my cube is the standard type… nice comfortable chair, 2 (soon to be 3 or 4) monitors attached to a newer PC, a ibm laptop to do work at home, a blackberry, etc…

I arrive at work an hour earlier and leave an hour earlier to avoid rush hour, so I work 7 to 4 with an hour lunch in between.  Although these last few years, it seems that more and more people are changing to the same work schedule…  the roads are definitely busier this year than they use to be at those times.

Phase 4) Once at home, it’s time to rush the kids to the sports that they are playing in at the moment.  Typically Soccer, Basketball, Cheerleading, Baseball, Tee-Ball, Flag football, swimming lessons, gymnastics, etc…

Phase 5) Once I get a free moment, I use to randomly surf the net more, but lately, I’ve been reading blogs and writing in this blog.

We do have a designated movie night on Fridays, where I’ll pop in a DVD that I got at the library.  We still have an old 36 inch CRT tube TV.   We can afford a new flat screen LCD (or Plasma, or LED-LCD…) TV and in fact have the best buy giftcards in a drawer waiting for our current model to break (it’s close to doing so).  The gift cards are from the rewards point from our rewards credit cards.

Phase 6) Then at bed time, I do watch a little bit of TV in our queen size bed (King of Queens and Frazier reruns).  Our bedroom set is wooden, with an armoire, and set drawers with a fancy mirror on top…   Both cars were bought new and are both 2003 models (crazy, I won’t do that again!  Used cars is the way to go).

Next day I do the same routine again, just like the NIN song, “Every day is exactly the same”

My life = Repeat Phase 1 thru 6 ;)

After I’m debt free, I’m going to alter the above routine a bit, maybe throw in a health phase, or a 2nd job phase, or a community service or coaching my kids sports coaching phase…

So what do you think? …  Tell me about your lifestyle or ask me additional questions about mine…

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Posted in Social Class

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Spot Budgeting To Save Money For A Goal Fund

November 19th, 2009

First, let me say, that I’ve always admired people that create budgets and could follow them to the T.  I’ve actually tried to create a budget when I was in college, but it’s never worked out for me. There was always something that would pop up that I didn’t save the receipt for.

Surprisingly, while doing my Breakfast/Lunch experiment, I “out of the blue” realized that my experiment is really a form of budgeting.  I decided to call this type of budgeting “Spot Budgeting“.

Here’s how “Spot Budgeting” works for me:

  • First, every monday, I clip 5 sheets of paper I recycled together and use them as a log for things I do at work.
  • At the top, I add Breakfast and Lunch cost to these 5 sheets, 1 entry for breakfast and 1 for lunch on each sheet.
  • On Friday, I add up the total cost for breakfast and lunch, then I do the following calculation:
    • Is 60 – (weekly breakfasts + weekly lunches), greater than 40?
      • If 60 - (weekly breakfasts + weekly lunches) is greater that 40, then I pay myself the full $40 dollars for an allowance.
      • If 60 - (weekly breakfasts + weekly lunches) is less that 40, then I pay myself the amount that’s less than $40 dollars.
      • The following week I’ll make it up by not eating out for lunch as much.  Then I’ll pay myself the amount over $40 dollars that I didn’t spend.
  • Since I’m adjusting and tracking this weekly, I don’t do any monthly or yearly budgeting comparisons (this makes it simple).
  • Since it a weekly comparison, and it typically only involves 20 entries (only 2 a day) to log per week, it’s very simple and quick to do.
  • If I want to calculate my yearly savings, it’s just (40*52, which is $2080)
  • That’s it…  My budget is just for Breakfast/Lunch and during the typical workweek only.

Now my next stage is to take the money I save by budgeting and put it into a dividend yielding stock (etf, bond, mutual fund or whatever).  Then use the dividend paid by that investment to increase the amount of money I have for lunch.  See my attached spreadsheet table below:

So after 3 years of saving, I can afford to buy another cheap lunch per week, while I’m at lunch… so instead of 2 days out for lunch per week, I’ll added another lunch out with the guys after every 3 years of savings.

My view on the “Spot Budget” is that you are no longer paying for the lunch out of your earned money, but instead using the money from your investment dividends.  So after the 1st year of investing the money, this will effectively be my “Lunch Fund”.

To speed up the savings, I also add “Additional Savings” to my “Lunch Fund”.  The “Additional Savings” could come from bonuses, part of my tax refunds, etc.

Additional Main Adult Total Yearly Amount & Interest Monthly Weekly
Savings Savings Allowance Contributions Interest Interest Rate Earnings Earnings
2009 1000 2080 3080 3,080.00 $154 3,234.00 5.0% $12.83 $2.96
2010 2080 2080 5,160.00 $258 5,418.00 5.0% $21.50 $4.96
2011 2080 2080 7,240.00 $362 7,602.00 5.0% $30.17 $6.96
2012 2080 2080 9,320.00 $466 9,786.00 5.0% $38.83 $8.96
2013 2080 2080 11,400.00 $570 11,970.00 5.0% $47.50 $10.96
2014 2080 2080 13,480.00 $674 14,154.00 5.0% $56.17 $12.96
2015 2080 2080 15,560.00 $778 16,338.00 5.0% $64.83 $14.96
2016 2080 2080 17,640.00 $882 18,522.00 5.0% $73.50 $16.96
2017 2080 2080 19,720.00 $986 20,706.00 5.0% $82.17 $18.96
2018 2080 2080 21,800.00 $1,090 22,890.00 5.0% $90.83 $20.96
2019 2080 2080 23,880.00 $1,194 25,074.00 5.0% $99.50 $22.96
2020 2080 2080 25,960.00 $1,298 27,258.00 5.0% $108.17 $24.96
2021 2080 2080 28,040.00 $1,402 29,442.00 5.0% $116.83 $26.96
* The idea here is to pack food, which saves money and to pay my allowance out of that money

This is my first “Goal Fund”, eventually I plan on have other “Goal Funds” that will pay dividend for other goals, perhaps vacations, taxes, etc.

Well, this is my evolution of my lunch experiment into a Lunch “Goal Fund”.  I’m kind of excited to see this come to fruition!!

Goal Fund for lunch

Goal Fund for lunch

- D

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Posted in Experiment, Frugality, Goal Funds, Ideas, Savings

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Saving Money Using Google

November 18th, 2009

Google is great for searching for your favorite topic of interest, but did you know you could use it to save money too?

Last Feburary, my dryer started making a horrible metal grinding sound (I tried turning up the TV to drown out the sound, but it got louder). I didn’t want to buy a new dryer (these are hard time afterall…), so I decided to try to figure out how to repair it myself via google.  So for the search criteria, I entered “whirlpool dryer squeak” and I was able to find some good site on what the problem and how to fix it.  I like to put just the key words in the search windows.

I tried to type things like “whirlpool dryer is making a squeak sound“, but that wouldn’t give me as good of results as “whirlpool dryer squeak“.

 I didn’t even know how to get the dryer apart to figure out the problem… until I googled it. It turned out to be the felt gasket, that the drum twists around over. It cost me $20.00 in total to fix the dryer.  I ordered the part (off of ebay), and install it. Normally, to get a repairman out, it would probably cost me at least $150 to $200 and they would do exactly the same thing that I did myself.

I’ve been able to do this with my car brakes and with other car repairs too.

During one of the coldest days of last winter (-10F), my heat pump decided to stop working.

Using google, I was able to quickly figure what the problems was, but I didn’t have time to order the part. From a few websites, I was able to determine what to do, and I was also able to determine that the part would cost me only $26. Unfortunately, I didn’t want my pipes to freeze, so I called a repairman so they could get it fixed that day.

 The repairman did exactly what the websites stated to do, but instead of costing me $26 by doing it myself, the repairman’s fee cost me $234.

 The moral of the story, the internet (using google to find a fix-it guide) is a great resource for saving money by diy (doing it yourself).

Google rules!

 -MR

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Posted in Frugality, Ideas, Problems, Savings

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