## How to become a millionaire in 10 years (safely)

I saw a blog post today called How to become a millionaire in 10 years. The majority of commenters dismissed it outright.

I don’t like that attitude. The plan makes some assumptions that aren’t always true. But having the plan is an important first step. What’s impossible now might not be impossible in a few years, so it makes sense to do what you can now.The plan, in brief, is this: Invest \$996 a week, get a 12% return, and in 10 years, you’ve got a million bucks.

Let’s look at the first objection. It is optimistic. Unfortunately, the guy who floats that figure the most frequently is exaggerating. But you can come close by tweaking your strategy a bit. Twelve may be a bit optimistic, but it’s probably close enough. If you’re pessimistic, use a figure of 7% and adjust the rest of your math.

It may be tempting to try to do better. I suggest not. Average returns are all you need. Warren Buffett has said repeatedly that it’s better to spend your energy increasing your earning power rather than trying to outperform the market.

The second objection was that the numbers were just too unreasonable, so how do you become a millionaire in 20 years?

That’s easy. Save less. According to this handy calculator, \$1,100 a month for 20 years at 12% more than does the trick.

Or you can save \$2,000 a month for 15 years and pass the million mark.

So the math is sound. Let’s tackle that really big objection: How in tarnation do you come up with \$996 a week to save? (And no, you don’t have to already be a millionaire in order to do it.)

The key is the same as paying off debt quickly. Don’t try to do it all at once. Take some baby steps. If the best you can do is half that, you still reach the goal in 15 years. Start by saving what you can, then ratchet it up when you can.

I set out to find a large number of common ways that people can save \$996 per week (or more). Step one is the big kahuna, which will save most people a cool \$24,000 a year right off the bat.

Step one: Pay off your cars and your mortgage. Between a house and two cars in the driveway, it’s safe to say most families are spending \$2,000 a month. Some are spending a little more, others a little less. The trick here is the debt snowball. Look at your statements, pick the car you can pay off the soonest, then scrape together whatever extra cash you can and pay that much extra every month until you have that car paid off. Then take what you were paying on that car, and apply all that money to the other car. After that, apply all that money to the house.

Chances are very good that you can pay all of that off in less than seven years. The biggest reason why is because banks generally won’t loan you more money than you would be able to pay off in that timeframe. The reason for the subprime mortgage crisis was because banks started ignoring that rule and giving loans to pretty much anyone.

If you are a middle class family that manages to pay the bills somehow, some way every month, I’m reasonably confident in saying that you can pay off all your debt in seven years, then dump that car and mortgage money into an index fund and be a millionaire in another 20.

What about cars in the meantime? Drive the paid-off cars as long as you can, then replace them with the least expensive vehicles that are practical. Given a choice between driving a Lexus and looking like a millionaire, or driving a Toyota Corolla and being a millionaire, personally, I’d choose the latter.

So this gets you roughly halfway there. Let’s see if we can nickel and dime our way to the other half.

Step two: Live off one salary. If you’re married and your spouse works, try as much as possible to live off one salary and bank the other. This was the strategy my in-laws used to pay off their debts (rather than the debt snowball). If one of you brings home \$26,000 a year or more after taxes, that gets you the other half immediately. Congratulations.

If step two is impractical or impossible, or doesn’t quite get you there, here are some smaller steps to get you there.

Step three: Put your raises and windfalls towards savings, rather than lifestyle changes. Someone I know was talking just yesterday about a job opportunity that paid a cool \$30,000 more than he makes currently. “Lifestyle change!” he said excitedly.

Personally, I’ve never been able to make that kind of a jump, although I’ve made a couple of much smaller jumps since 2006.

Unfortunately it’s often difficult to get much of a raise from a current employer–the money comes when you change jobs. If you’re able to, say, move to a new employer and get a raise of around 10 percent, that takes care of a few of your 52 weeks. Do that every 2-3 years, and you can work your way towards the goal.

This strategy can take care of about four weeks.

Step four: Bank your tax refund. If you get a tax refund every year, instead of using that money to buy something, put it towards the goal.

In most cases, I would think the tax refund takes care of anywhere from 1-3 weeks.

Brown-bag your lunch. Early in my career, I ate out pretty much every day. My day started with a cup of coffee and a doughnut in the cafeteria (\$2), and on a good day, lunch cost another \$5. Eventually I realized these habits were costing me almost \$1,400 a year. Brown-bagging isn’t free, but I figure brown-bagging every day costs less than \$400 a year.

That’s another week, or possibly two.

Cut the cable and phone. My local cable provider charges up to \$70 per month for some of its packages. Basic cable costs \$40, which is still outrageous. If you can live without cable altogether, you can get anywhere from half a week to 3/4 of a week right there. If not, cut back as much as possible.

So how do you live without cable? My wife and I rent movies from Red Box about once a week. It costs a dollar. Other than that, we watch over the air TV. Sometimes there’s nothing on, but when I visit people who have cable, a lot of times there’s nothing on at their house either. The DTV changeover means there’ll be more local channels–many PBS stations are broadcasting on several frequencies, and DTV stations have a range of about 120 miles, so there’s a decent chance you’ll be able to pick up stations from nearby cities that you couldn’t get before.

So try it. If you can’t live without it, cut back as much as you can.

By cutting back on cable and phone, most people should be able to save another \$996 a year.

Take a long, hard look at the cell phone. Do you have two cell phones with \$99 ulimited talk plans? Do you really need two?

Cricket offers an unlimited talk plan for \$35 a month. But you may be able to save even more by cutting down the number of cell phones you have, or just getting pay as you go phones for emergency use and sharing phones as much as possible.

And keep in mind that a landline lets you make all the local calls you want. Ditching the land line and going all cellular may be trendy, but it’s not always economical.

My wife and I have one cell phone with a plan that costs us \$30 a month, plus a pay-as-you-go phone that we refill as needed, for \$25 a pop. It ends up costing us \$10 a month, on average.

I can see how someone could potentially save another week’s worth by getting stingy with the cell phones. Maybe more.

Save on your utilities. Buying a programmable thermostat and setting it to not work as much at night and to minimize heating/cooling during the hours when we’re not home saved us a bundle. To the tune of \$100 a month.

Weatherproofing the house helps too. Put film on the windows during the winter, and put weatherstripping on all the doors. I also went into my basement, where the utilities come into the house, and found a number of holes for wires that are much larger than they need to be. I filled those in with putty to keep the elements out.

If you really want to be a stingy Scottish miser, invest a few hundred dollars in a whole-house fan. These fans can replace all the air in your house in a matter of minutes. So in the morning when it’s coolest, you can open some doors and windows, run the fan for a few minutes, then shut off the fan, close the house back up, and give your air conditioner a big head start.

Also, for some reason society says we should keep our houses at 70 degrees in the summer and 80 degrees in the winter. Why? We keep ours at about 75 during the summer and between 70 and 75 in the winter. Once you get used to it, it’s comfortable. The savings aren’t exactly peanuts.

Using fans can help keep the air moving, making those temperatures more tolerable.

Squeezing the utilities ought to take care of another week or two.

Go out less. I know some people who easily spend \$100 a week going out on Friday nights. Rent a movie from Redbox, have a couple of drinks at home, and save the difference, which is five weeks’ worth.

Cut the Starbucks habit. Do you start off your day with the stereotypical \$5 cup of coffee at Starbucks? That’s \$1,050 right there. Bank \$996 to cut off another week, and you have \$54 left to buy a coffee maker (if you don’t have one) and a year’s worth of reasonably good coffee.

Cut the bottled water habit. If you drink three bottles of water a day, that’s commendable because it’s healthy, but you’ve also fallen for the biggest scam in recent memory. Cut the bottled water, buy a water filter, and bank a thousand bucks.

Cut back on expensive hobbies. I’d rather not think about what I used to spend on my Lionel train habit. I know some people spend five figures a year on theirs. I was never that bad, but at its peak I know I was spending more than \$1,000 a year on it. I’ve cut back, and the last two or three years I’ve probably spent a couple hundred.

I think it’s safe to say that most households have at least one or two expensive hobbies that could be cut back and still be enjoyable. Buy less and try enjoying what you have. Or buy used instead of new.

Or perhaps they could (gulp) be eliminated, for the time being at least.

Call this one another week’s worth.

Use the library. I know someone who is a voracious reader, which is admirable. She reads a couple of books a week, easily. That’s admirable, but the problem is she buys all these books at retail. A book collector might perk up and call it an investment, but there’s very little collectible interest in Nicholas Sparks and Nora Roberts. She buys the books, reads them once, and then they sit on the shelf until she gives them to someone.

She probably could save \$1,000 a year by using the library instead.

Eat out less. Eating out once a week at \$20 a pop easily works out to \$1,000 a year. Cut that back, whether it’s by eating somewhere less expensive or just eating out one less time, and you’ve got another week’s worth of \$996.

Use public transportation to go to work. The average person commutes about 20 miles a workday. That’s \$2,436 a year if you go by the IRS standard mileage rates, which factors in depreciation and maintenance on top of gas. The savings wouldn’t quite get me a full two weeks’ worth due to the cost of a monthly pass, but it would get me close. Call it two weeks.

Buy used and generic when possible. I’ve read that the poor are less likely to buy generic than the wealthy, out of fear of being ripped off. The fear is usually unfounded. Generics usually are made in the same factory right alongside one of their brand name competitors, and the only difference is the label that gets put on in the end.

But let’s talk used. Last week my wife and I bought my son about \$80 worth of toys, but we paid \$4 for them. They came from a church rummage sale. They were a bit dirty, but we ran them through the dishwasher to clean and sanitize them (they’re plastic). The swing was missing the strap to strap him in, but we replaced it with a belt from a thrift store, which cost another dollar. It fits perfectly.

At the same rummage sale, I bought myself a button-down shirt for a dollar. It looked new. I remember paying \$20-\$25 in a store for something comparable.

I bought the shoes I’m wearing right now at an estate sale. They didn’t look like they’d ever been worn, and I checked the fit before I bought them. I’ve been wearing them for more than a year now. I paid \$3 for them. They would have cost me \$50 in a store.

Most people buy a new computer every three or four years. I buy off-lease business computers every three or four years instead. They’re better built so they’re less likely to break (I’ve never had one break on me), and a \$100 business PC that’s a few years old will be about as fast as a new computer that costs about \$500. So I figure this practice saves me about \$400 every three or four years.

I once saw someone in line ahead of me at a department store try to drop a thousand dollars on new clothes. He had several nice shirts, some nice pants, socks, some nice ties. I was pretty impressed with his haul. The problem was he tried to buy them on credit, and was denied. My work clothes mostly come from secondhand sources. They don’t look as nice as what that guy had, but what good does it do to look nice if you can’t pay your bills?

I figure it’s pretty easy to save a thousand or two a year by buying generic and used stuff.

Be careful with the flex-spend account. Back when I was single, I was annoyed because every year HR made us attend a meeting trying to coerce us into signing up for a Flexible Spending Account (also known as a cafeteria plan). These plans made no sense for me whatsoever. Some years my medical expenses were \$100. Some years they were \$200. Otherย years they were \$20. So if I put \$1,000 in, as they tried to convince me to do, I would have been wasting a lot of money. Being in the 14% tax bracket, at best I stood to save \$28 if I had a \$200 year. But if I put in \$200, then I might turn around and have a \$20 year and waste \$180.

Now I’m married and my wife is diabetic. In this case it’s a no-brainer. We sat down and figured out how often she goes to the doctor, and what she spends on supplies in a given month. Her expenses are predictable, and high enough to make it worth doing. Between her expenses and having a son, I put the maximum in, since babies are always needing various FSA-eligible things, and they go to the doctor on a regularly scheduled basis.

If you’re in the 28% tax bracket and you put \$3,000 into an FSA, being able to use pre-tax dollars for those medical expenses saves you about \$840 a year. Not quite a week’s worth, but close. You can probably scrape up the other \$156.

But if your medical expenses are always really low, you can save a bundle by not putting anything in such a plan. Employers love these plans because people frequently don’t track them very well, and anything left in the kitty at the end of the year goes to the company. It’s a great way to steal from your employees, frankly, and that’s why HR departments push them so hard. If you don’t need one, don’t put the money in, and pay yourself instead.

I think it’s safe to chalk up judicious use (or non-use) of an FSA as another week’s worth.

Be careful with AFLAC. AFLAC is a similar thing. My employer’s HR loves to push AFLAC on us. “I have three kids. I know I’m going to make at least one trip to the ER every year, and that pays for my AFLAC,” the pitch goes.

Think it through. I have a peculiar talent for injuring myself with sharp objects. But I’ve found that my best bet is to go to urgent care when it happens and put it on my FSA. Urgent care always gets to me faster than the overburdened ER, and it costs half as much. I did the math, and AFLAC just didn’t make sense. One trip to the ER didn’t cover a full year’s worth of AFLAC.

Maybe when my son gets older and starts playing sports and stuff, AFLAC will make sense. I’ll revisit it then. But do the math yourself, rather than just taking HR’s pitch. They’re salespeople. Their job isn’t to help you, their job is to make the company money by taking back as much of your salary as possible.

Making the right decision on AFLAC isn’t going to save you a full week’s worth, but it can make up for a shortfall.

Get a side gig. I’ve come up with more than 26 week’s worth of common ways to save \$996, but not all of them will necessarily apply to everyone. Having a side gig is a good way to make up the shortfall. I can tell you to mow lawns or fix bicycles or make quilts, but I’d rather let you find something more ideal, since the best thing for you to do probably isn’t the best thing for me. Here’s a series of questions to ask yourself to help you find a side gig.

What do you enjoy?
Is there some service that you can provide at a better value than your potential competitors, whether it’s because you’re cheaper, or because your work is higher quality?
Is there some product that has resale value that you know how to find and then resell some way, after making any necessary repairs?

Basically, you need to find a product or a service that you already know well and enjoy that allows you to add value to it. Don’t quit your job to do it; do it on weekends or evenings with the goal of making a bit. If you can make \$50 a week, that works out to \$2,500 a year. That’s a reasonable early goal, then build it up from there. Some side gigs grow into full-time jobs but others don’t. Your chances of succeeding are much better if you don’t try to rely on it as a full-time job.

Start small, then let it grow (hopefully) to fill whatever number of \$996 shortfalls you have in a year. And as you gain skill and experience, it could potentially grow beyond that, either allowing you to reduce some cutbacks, or achieve the ultimate goal more quickly.

So there you have it. Not everything in this list applies to everybody. But I would say the majority of these things do apply to anyone who can call themselves upper middle class. Such a family can take this list, find 52 things, and join the ranks of the wealthy in a decade or two, if they’re willing to let savings take priority over keeping up appearances.

But I also suspect that pretty much anyone who owns a home and two vehicles can probably take this list and find lots of things they can cut. They might not be able to find a full \$996 a week for all 52 weeks of the year. Soย it will take them longer, but it’s possible. Making some sacrifices now in order to have financial independence later is worth it.

The most important thing is to put everything on the table. The year 2005 was my turning point. I lost my job, and it seemed like everyone who needed IT people couldn’t afford them. Stretching the pennies was necessary for us to stay afloat when I was in between jobs. Eventually I found one. The cutbacks that allowed us to make ends meet while my best source of income was doing odd computer jobs also allowed us to pay off our house early after I regained steady employment.

With the house out of the way, financial independence certainly is my next goal. I’m not sure that this formula is precisely what I want to follow in order to get there. But it’s important not to dismiss such formulas immediately just because they seem difficult or nearly impossible.

The key to success, financial or otherwise, is to take difficult problems and find solutions, rather than dismissing them immediately as impossible. One strategy is to break the problem down. This problem conveniently breaks down into 52 smaller problems. I’ll admit I had to sit and think a very long time to come up with 52 smaller answers.

I just have one more thing to say. Please try. I’m currently reading a financial book written in 1975 that said the average U.S. household headed by someone aged 24-34 had \$2,500 in savings. In today’s dollars, that’s a shade over \$10,000. Today, the average household has zero savings and around \$10,000 in credit card debt, on top of car payments and rent or a mortgage. That has a lot to do with why our economy is such a wreck right now. We can’t buy any more stuff because we’re paying too much in interest.

It’s not too late for one or two generations to rise from these ashes and buy our country back. So let’s do it.

## Shut up, McCain. Obama is right this time.

McCain’s camp is mocking Barack Obama’s suggestion that people need to inflate their tires to save fuel.

It’s not like the senator from Illinois said let them eat cake. It’s actually good advice.The biggest problem with Washington is its disconnect with reality, such as the time Bush I went grocery shopping as a publicity stunt and marveled at the scanners at the checkout as if they were something new. Well, newer than unleaded gasoline, perhaps.

Perhaps my biggest frustration with McCain is his lack of understanding at chipping away at a problem. I have news for him. Chipping away can be very effective. I nickel-and-dimed my way to paying off a mortgage in 6 years, partly by doing things like inflating my tires and changing my air filter and using synthetic oil. Besides that, I bought a programmable thermostat, bought compact fluorescent light bulbs, and brought my own coffee to work.

Take small amounts of savings here and there and make them work for you, and you can accomplish something a lot bigger than you might think.

Too bad it’s been seven years since Washington tried to chip away at its deficit. But that’s another issue.

If every U.S. citizen did the routine maintenance that helps improve gas mileage, it would have the dual effect of reducing demand (and therefore prices) slightly, and putting a little more money in consumers’ pockets, so they could better afford the market price.

McCain would rather encourage voters to wait for Washington to fix the problem.

Tell me, which one of these guys is the Republican and which one’s the Democrat? I’m having difficulty telling them apart.

So if a McCain supporter offers you a tire gauge, take it. And by all means use it.

On this issue, Obama is right. As in correct. And conservative, apparently.

## Time to winterize the house…

We had a day last week where we topped 80 degrees and set a record, so small wonder I never thought winter would actually get here.

But we’ve had our first good freeze and it looks like that’ll be a weekly thing from here on out (assuming we don’t get multiples every week), so it’s time to winterize the house.I learned about plastic film window insulation when I was in college and lived in a drafty old barn–it wasn’t really a barn, but it felt like one–where the inside temperature was rarely higher than 60 during the winter and space heaters were strictly prohibited. It’s best to buy the stuff at the end of the winter and save it for next winter, but if you’re like me, you always underestimate how much you need.

The tape that came with one of my kits seemed strong enough to hold a car together, while the tape that came with another kit isn’t suitable for wrapping a present, let alone holding plastic to cold aluminum window frames. I ended up using packing tape to hold part of the plastic to a window, since I ran out of good tape.

Of course when I was finished with one package, I ended up with three odd-sized pieces, none of which fit any of my windows. So I tried an experiment. Out came the packing tape and the scissors. I taped together the odd-sized sheets to make one suitable for one of the windows, then I put it in the window. It held together just fine when I hit it with the hair dryer to shrink it into place. I don’t think this method will get wife approval, but it works. I guess I can tell her that Red Green would have used duct tape.

I also changed my furnace filter. My size was sold out at all of the usual places I buy them, but I happened to find them at Big Lots for \$1.79 each. They’re rated for two months instead of three and they probably don’t catch as much, but they’re definitely better than the clogged filter that was in there. I don’t know when the last time was I changed the filter. Shame on me. For \$1.79 I need to be changing it every month because it’ll save me a lot more than that if I don’t do it, at least in the summer and winter months.

I also went looking, without success, for insulation pads for electrical outlets and light switches. I have some double-sized ones and other oddities that I didn’t have a good fit for. When I came home I still didn’t have a good fit. So I ended up removing the plate, taking a styrofoam meat tray, and cutting my own with a hobby knife. It’s not quite the same material commercial insulators are made from, but it has good insulating properties and it’s hard to beat the price.

Of course I’m looking for other ideas, but these three things are a good start. I installed a programmable thermostat about two years ago and it paid for itself in the first month. The basic models cost half as much now.

Addendum: After sealing the sliding glass door and two of the three largest windows in the house, last night after the programmable thermostat kicked down I noticed that the temperature in the house dropped by about a degree an hour. The temperature inside the house started at 70, and the low overnight was around 30. I know under similar conditions earlier in the week, the temperature was dropping at least two or possibly even three degrees an hour.

I think that plastic is going to pay for itself very quickly.

## Tonight I did something I’ve never done before

Tonight I did something I’d never done. I went out with a group from my church that gives blankets, coats, candles and batteries, and hot food to the homeless.

It was eye-opening.I’ve written before about how my standard of living is much closer to that of a billionaire than it is to the people who live in some parts of this country. But this was scarcely 10 miles from where I live, and probably fewer than four miles from where I work.

I heard stories. Lots of stories. There were the expected can’t find work, family kicked ’em out types of stories. One came here from Washington, spent all her money to get here, found out the person she came to see wasn’t here, and ended up on the street. One guy admitted he had drug problems. I think he told me he’d been clean for a few days. One guy told me he was out there because he felt sorry for others who were homeless.

It was 18 degrees tonight. The last group of people discussed amongst themselves which of them would be able to get into Larry Rice’s shelter.

I was cold too. I wasn’t as smart about the way I dressed as they were. But when the night was through, I had my three-year-old Honda Civic with a moonroof and power windows and power locks and cruise control and, most importantly tonight, a good heater, and it transported me back to my house in the suburbs where I can turn my heat as high as I want. The temperature in my house may drop to 56 degrees tonight, but only because I’m a cheapskate. If I wanted to put the thermostat on 90, I could put it on 90, and when that bill came, I could pay it.

Some of the people I met tonight won’t have much more than the blankets we had on hand to give them to keep them warm.

I found myself wanting to understand the problem and solve it. The first part is possible; the second, less so. Familiarity is a difficult hurdle to overcome. When you’re homeless, those problems are familiar. The problems of living somewhere, although much more minor to you and me, could be scary, I suppose.

Those of you who pray, please do me a favor and pray for Ernest. Ernest has an appointment in the morning to get assisted housing. If all goes well, tonight was his last night on the streets. It’s going to cost him \$1 a month. He told me he makes \$250 a month. I should have asked him what he was going to do with the \$249 a month he had left over. I didn’t think of that.

Ernest impressed me. He had a lot of book knowledge, including knowledge of scripture. Obviously he had some education. He had plenty of drive, too. But drive can be fleeting. And as I watched Ernest’s behavior, while I saw loads of promise, I also saw the potential to relapse. He asked me for a quarter. I didn’t have any money with me at all. For all I know, he may have wanted money to make a phone call, or he may have wanted money to buy something he shouldn’t be buying. I hope it’s the former.

I’d be surprised if Ernest turned out to be someone who could change the world, but if his potential could be fulfilled and his energy focussed, he could certainly make big changes in the community where he lives. I’m certain that people are going to follow him. The question is whether he’ll lead them someplace desirable, or someplace they don’t need to be going.

The people with the biggest potential also face the biggest challenges. So that’s why I’m asking for prayers for Ernest tonight. I think these next few days could prove to be pivotal. He needs for what I saw tonight to be real and lasting. He needs fire and he needs drive. The things that he said tonight need to be not only in his head, but also in his heart.

If those things happen, chances are the next time I see Ernest, he’ll be handing out hot food on the same streetcorner where he used to receive it. That’s what I want for him.

## Nickel and dime your way to prosperity

An old friend and I have been talking a lot about debt elimination these past few weeks. With any luck, both of us will be completely debt-free by age 45 at the very most, and probably sooner.

The trick is to dump as much money as possible into debt retirement. As recently as November, the interest on my Honda Civic was costing me \$1.40 a day. Think what you could do with that \$540 a year you’re paying in needless interest.

The challenge is finding the money to use to retire debt.Some of these tricks will only save you a few cents. You must get yourself over the it’s-only-25-cents mentality. That quarter can either work for you or against you. A quarter paid at the beginning of a 30-year mortgage saves you more than a dollar by the end of the loan. Can you find a safer way to quadruple your money? I doubt it.

If and when you have no debt, dump those pennies, nickels, dimes, and quarters into an index fund. An index fund just buys you the same stocks that are in the Dow Jones Industrial Average, or some other index. Historically, these funds double in value every seven years. Great Depression, Schmeat Schmepression. Dump a quarter into an index fund and don’t touch the investment, and in 28 years, it’s \$4.

So let’s find some creative ways to get some quarters.

1. Pay your bills online. This potentially does more than save you the 37 cents in postage. My gas and electric companies both have arrangements with checkfree.com to allow online payments free of charge. I was invariably late in paying them, which subjected me to interest payments. The other nice thing about Checkfree is that it schedules the payment for the due date. So if by chance you have an interest-bearing checking account, that money can work for you until the last possible day. You probably won’t save more than a couple of bucks a month this way, but that’s \$25 over the course of a year. If someone offered you \$25 without any strings attached, I doubt you’d turn it down.

2. Make car and mortgage payments as soon as possible. I may be showing my ignorance here, but interest paid to me on most accounts I’ve had is calculated monthly. Interest on my car is calculated daily. So, making that payment as soon as my paycheck shows up in my checking account reduces the principle, thus reducing my interest payments by a few pennies a few days early. It’s only pennies? I’d rather they be my pennies than Honda’s.

3. Use credit wisely. I remember one day a few years ago, I was at the grocery store and instead of pulling out my debit card, I pulled out a credit card accidentally. I thought how awful it would be to have to pay for life’s necessities on credit.

But if you’re disciplined, and you have a credit card with rewards–and we should be talking cash here, not merchandise–then it makes sense to pay for life’s necessities on credit. Take a look at my Discover Card bill, and you’ll see the bulk of it is things like gasoline, groceries, my telephone bill, and \$20 trips to Kmart, which means I was probably buying stuff like toothpaste and deodorant and other household necessities. I pay the balance in full every month, so the result is essentially some bank paying me to buy the things I’d need to buy anyway. This nets me about \$80 a year. I never see a dime of it–I apply it directly to the card’s balance.

4. Buy a programmable thermostat. The cheapest programmable thermostats cost about \$30. They can easily save you that much in a month. During my 8-hour workday, my thermostat only heats the house to 56 degrees in the winter time. It cools it to 82 in the summer. During waking hours and on weekends, it keeps the house at 70 degrees in the winter and 75 in the summer. During sleeping hours the temperature raises or lowers by 5 degrees depending on whether it’s summer or winter. I used to have \$300 heating bills in the winter months. Now I have \$175 bills. That’s still ridiculous, but it leaves me money to actually do something about it.

5. Cut out the sodas and snacks. I used to routinely spend \$1.50-\$2.00 a day at the vending machine and the cafeteria at work, buying coffee, soda, and snacks. Over a 240-workday year, well, do the math. The 34.5-ounce can of coffee in my fridge (it lasts longer when stored there) is marked 9-26, the date I bought it. I expect it will last me until the end of the month. So that can of coffee will last me five months. I buy the off brand, so I can sometimes get one of those cans for between \$3 and \$3.50. So my morning coffee costs me 2.3 cents. I quit drinking soda entirely and I pack a granola bar in my lunch. Over the course of the past year I am sure I’ve saved \$300.

6. Pack your lunch. Lunch at a sit-down restaurant almost always costs you \$7. Fast food usually costs at least \$5. The cafeteria at work is usually \$3-\$4. Sometimes I pack leftovers that would otherwise get thrown away, so they’re essentially free. It’s fairly easy to pack a lunch for \$2. Again, do the math over 240 days. Do you want to spend a house payment on lunch every year, or do you want to spend a car payment instead?

7. Eat out less. A couple of years ago I was dating a girl who had to eat out 3-4 times a week, at least. Usually it was places where I was lucky to get out for under \$20. I always paid, of course. I couldn’t figure out why I didn’t have any money. But with a little creativity, it’s entirely possible to make dinner for two for \$4. You can make a fairly impressive dinner for two for \$10.

8. Shop the cheap stores. St. Louis has five different chains of grocery stores. At the top of the ladder is Dierbergs, followed by Schnucks. A third local chain, Shop ‘n’ Save, generally beats the Schnucks and Dierbergs prices by a few percent. But now I do most of my shopping at two stores that white-collar professionals rarely visit: Aldi and Save-a-Lot. In most cases the quality of the product is the same. But when I can get a loaf of bread for \$.99 versus \$1.59, the difference adds up quickly. For the things Aldi and Save-a-Lot don’t carry, I still go to Dierbergs, but I rarely spend more than \$10 at Dierbergs now, unless they’re running a big sale on something.

8. Buy generics. A lot of people are afraid of generic products because they feel they might be getting ripped off. You’re actually a lot more likely to get taken with a costlier brand name. I’ve found the quality of most generics to be as good as the name brands. When it isn’t, I try a different generic the next time. Eventually I’ll find a generic that’s as good as the big name brand, and save a bundle. I’ll buy the name brands when they’re on sale, but aside from that, my pantry is full of generics and I don’t care who knows about it.

9. Don’t spend a dollar to get 14 cents. A common excuse for not paying down your house is that the interest is tax deductible. That may be, but you’re getting pennies on the dollar. My car payment was costing me \$1.40 a day until I paid it way down.

It’s tax time. That means you have a piece of paper that tells you exactly how much interest you paid on your house last year. Are you paying \$14 a day to inhabit a house you supposedly own? That tax deduction only reduces the net cost to \$12. I can think of better things to do with \$12, and I’ll bet you can too.

10. Don’t spend your windfall all at once. Are you getting a tax refund? Did you get a bonus? Have you been working a lot of overtime lately? It’s OK to reward yourself and/or your family. But don’t blow all of it indulging yourself. Spend 10 percent of it, tithe 10 percent of it, and use the rest to retire debt, and dream of the day when you have no mortgage payment and no car payment and every paycheck is a windfall.

11. Save your pennies. Coinstar, the makers of those change-converting machines in grocery stores, says the average household has \$90 in loose change scattered about the house. A fairly painless way to save money is to dump your change into a jar at the end of the day, rather than spending it on frivolous things. At some point, convert the money into a more usable form, then apply the windfall rule to it.

12. Cascade your debt. I pay extra on my car every month. When the car is paid off, I’m going to start adding that amount to my mortgage payment every month, except in case of emergency. I estimate I can have my house paid off in about five years by doing this.

13. What will I have to show for this purchase? This is key. Before you spend even a quarter, consider what you will have to show for it by buying it. Just because you walk past a candy store in the mall doesn’t mean you have to go in and buy something. If you’re lucky, all it’ll do is rot your teeth and make you fat. You could have paid that quarter into your mortgage and turned it into a dollar.

Some purchases are unavoidable. In a couple of months, I’m going to need new tires. I can think of a million things I’d rather do with that money, but I need it. That’s OK. I’ll have it.

The trick isn’t to live in total self-denial, but to exercise restraint. Most of us live like millionaires, but the problem is that we’re spending our million dollars instead of letting it work hard so we don’t have to work as much. And it’s killing us.

## This is a so-you-know-I’m-alive post

I don’t expect my daily doings to be interesting to anyone. I mean, c’mon. Who wants to read ordinary? But since I haven’t posted in forever, I’ll post what I’ve got, which is this.I’m getting a lawnmower today. That’s good because I can’t get anyone to mow my itsy-bitsy yard for less than \$25. For that kind of money, I’ll do it myself.

A friend is coming over this afternoon to help me install a programmable thermostat. That’s good because my utility bills are out of control. If I’d done it in December, I’d be about \$400 richer right now. I’m also looking at some other creative ways to knock utility costs down, like compact fluorescent light bulbs, which use about 1/5 the wattage of a standard bulb and have about 10 times the life expectancy. They claim to save you about \$30 in energy costs over their life expectancy. Multiply that by the 20 or so bulbs around the house that they’d be suitable replacements for, and you’re talking some real money.

My DSL connection has been sporadic the last couple of days. It seems to finally be stable. I’d get better reliability by upgrading to a static IP, but that won’t happen before summer. I’m still dealing with those unexpected expenses that creep up on new homeowners, and, well, I’m young. I don’t have the kind of resources someone 10 years older than me would have.

If I can find a steady writing gig, that’ll help.

I’ve got a couple of tape backup issues to look at for work. And that’s pretty much my day.

I wrote what I thought was a decent piece on bleeding-edge hardware. But somehow I managed not to save it. I may get time to rewrite it tomorrow, depending on how productive I am today.

Oh, and, tee hee hee, my Royals are 8-0. The last team that started the season 8-0 won the World Series. It was the 1990 Cincinnati Reds, who beat an awfully good Oakland Athletics team. And there’s reason for hope: The Royals have been doing it without Carlos Beltran (leg injury), and yesterday they won in spite of half the team battling the flu. Beltran and Mike Sweeney are the Royals’ only star players.

But the 1990 Reds only had two bona fide stars too, in Eric Davis and Barry Larkin.

Do I really think my Royals will win the World Series? Not yet. But I think this is going to be a fun year.

## 01/12/2001

Let’s talk about wealth. When I was 15 or 16, I was sitting in English class and the teacher stood up and told everyone that the American Dream is dead. We would be the first generation that would have it worse than our parents did, she said.

I didn’t argue, though I should have. I figured I’d at least be the one to buck the trend, if what she said turned out to be right. A couple of years before, my dad had actually bothered to sit down with me at the kitchen table, candidly tell me the mistakes he’d made in life, and then he told me it didn’t look like I’d make those same mistakes. I trusted my dad’s judgment.

But when I look around today, I wonder if my English teacher might have been right. Wealth isn’t  about money or possessions, after all. In that regard, she’s very wrong. There’s a high school next  to one of the buildings I work in. Most of the cars in that parking lot are nicer than the cars in the parking lot for the building I work in. And there are plenty of highly paid IT professionals like me in my building.

Am I better off than my dad? Well, let’s see. In 1981 my dad decided he’d made it, so he splurged. He  bought a luxury car: a Chrysler LeBaron. It wasn’t the swankiest of cars, but it was far and away the  most loaded car he’d ever owned. The only features it was missing were a tape deck (not sure if  Chrysler was offering that in 1981), the famous Corinthian leather, and speech synthesis (which I think they  were offering that year). I thought it was a nice car.

Today, nearly 20 years later, I drive a Dodge Neon. That car has everything that 1981 LeBaron had, plus some things it didn’t. By today’s standards, it’s not a luxury car.

Ten years later, my dad bought a 1980 Chrysler Cordoba, which he let me drive most of the time. That was the swankiest car Chrysler made in 1980. Leather seats, everything adjustable… It was still  awfully nice in 1991. The car my sister drives puts that Cordoba to shame. Leather seats, but these are heated. And my sister’s car isn’t a luxury car either. It’s mid-range.

I can’t quite afford the last house my dad bought. Give me a couple of years. I could afford the  next-to-last house my dad bought pretty easily. I don’t see the point–I’d just fill the place with computers and books, and I’d have to drive longer to get to work. I like where I’m living now.

Compared to my dad, I’ve got it good. Real good. And my dad was no pauper. He was a successful doctor. Not a high-priced doctor like a brain surgeon, but he did fine.

This weekend, I was talking to my good friend Tom Gatermann. He was talking about a friend who’s  about to marry a girl from the former Soviet Union. Her hometown is just south of Siberia. His friend was talking about living conditions there. Indoor plumbing is a luxury.

I spent a couple of weeks on a Navajo reservation in 1998 and 1999. Out there, a telephone is a luxury. Sometimes electricity is a luxury. Usually, those who go without budget so they have  electricity during the hottest parts of the year, then shut it off during the mild months.

For me, budgeting involves raising or lowering the thermostat by about 5 degrees if I’m going to be  gone for a few days. Or if a month looks like it might be particularly tight for some reason, I’ll  move my thermostat and turn off all but one of my computers. I did that last year, around tax time. Comparatively, that’s not a big deal.

No, wealth isn’t about possessions. I learned that in New Mexico. Wealth is about gratefulness. My  friends down there are much wealthier than I am. They’re grateful for just about everything they  have. I take my car, my computers, my phone, my indoor plumbing, my lights… I take all of that for granted pretty much. I complain when my DSL connection isn’t working right. Meanwhile, miles away, there’s someone walking half a mile to use a neighbor’s telephone, or someone walking outside in the dead of winter to an outhouse.

My generation’s spoiled. The generation after mine is even worse. We take everything for granted. Those younger than me take everything for granted and many of them want it handed to them. And if we  don’t have something we want, it’s always someone else’s fault. Eight years ago it was George Bush’s fault. Now it’s Bill Clinton’s fault, or those mean-spirited Republicans in Congress. Or maybe it’s Bill Gates’ and Larry Ellison’s and Warren Buffett’s fault, because they’ve accumulated all that  money and won’t share.

My cubicle neighbor agrees. We talked about that the other day, and he asked me the same question my  mom asked me last week: How do we fix it?

I remember my grandmother was grateful for everything she had, which by today’s standards, was zilch. But she never thought of herself as poor. Never. She lived through the Great Depression. People who  lived through the Depression looked at things very differently.

So I told my cube neighbor and my mom the same thing: We need a good, long, hard depression.  Capitalism gave us everything we ever wanted. But we changed the rules and said it wasn’t what we  wanted. We don’t know what we have, and we won’t all make a pilgrimage en masse to see how great life  is in Siberia. The only way for us to find out what we have is to struggle for a while.

So, was my English teacher right? Are we better off than our parents? NO.

I’m very sad to say I couldn’t prove her wrong.