Datasheet: Financial Habits for Single Guys

Why bother learning good financial habits?
Taking care of your finances makes life less stressful. If you have a decent-sized pile of money saved up, emergencies become way less frequent, you feel less inclined to put up with bad working environments, and you are in a position to help people around you. Your insurance won’t shell out to fix your car? No problem. You lose your job and can’t immediately find a new one? No problem. Want to buy a motorcycle? No problem.

If you have money, you don’t have to worry about it. And even Christ didn’t want us wasting our lives worrying about money. It takes about three months to build the habits and get on the right track.

What should anyone listen to you?
I’m by no means an expert, but I’ve done decently and I’ve learned from my own and my friends’ mistakes. I’ve been supporting myself since I was 18. Started with a couple thousand in the bank from summer jobs and a used car that I still drive. Between my bank accounts and investments, I had over $100k before my 23rd birthday, despite living in supposedly expensive places on moderate wages.

What are the basic steps?
1. Do not spend money you do not have.
This means no taking out a home loan, no buying new toys on credit, no going into debt for a degree. If you can’t pay cash for it, you don’t buy it. If you use a credit card, pay it off at the end of each billing cycle.

2. Track every penny you spend.
This might be the most important step.

I used to do this by using a credit card or checks for all purchases, then adding up everything on my bank statements at the end of the month. It worked, but daily tracking is better. Get an app that tracks your spending, and immediately after you purchase anything type in the dollar amount. This way, you’ll see how much you’re spending as you go, and you can use that information to guilt yourself into spending less. I like the “spending tracker” app because it doesn’t make you sign up, but there are a bunch that work.

By tracking like this, putting the information into excel at the end of the month takes just a few minutes, and you can see how your spending changes month to month. Treat it like a game and try to beat your score from the last month. Like golf, you’re trying to hit the low numbers.

3. Don’t waste money on anything that’s not important to you.
If something’s not important, quit spending on it! If you’ve got app subscriptions you don’t really care about, cut the subscription. I pay for spotify and simplypiano, because music is important for me. I use both of these like crazy. On the other hand, I started audible and got rid of it after two months because I didn’t really mind living without audiobooks.
Lots of little expenses add up really quickly, like coffee from coffeehouses, meals from restaurants, drinks at bars, cigarettes, any kind of subscription, vending machine food, and many other things you can probably go without.

4. Save on the big dogs.
Live in the cheapest place you can find that meets your needs, and shop around like crazy. Scour the internet and call rental agencies when you’re close to the end of your lease. Shop around like crazy. Same goes for buying a car. Many people I know could easily have more than a thousand extra dollars per month if they had a cheaper apartment and a used car. I cannot stress this step enough. You can buy all the Raybans and giant televisions you want if you live somewhere cheap and have a cheap car.

5. Buy and cook your own food.
Resturaunt meals are a special treat, not a daily event. And organic food is for millionares. Any food you need to buy, buy the cheapest version available. Only once you have built the habit of buying cheap food can you learn what to splurge on (I buy overpriced but infinitely tastier Jimmy Dean sausage, and pretty much everything else I get is store brand.)
And learn to cook. Start with simple recipes. The basics of cooking take a thread of their own, but it is not hard. Scrambled eggs, steamed rice and vegetables, and any type of crockpot meat is stupidly easy to prepare.

6. Buy quality.
While store brand food is usually exactly the same as name brand food, this is not the case for some items, particularly tools, electronics, guns, or jewelry. If you’re buying something that ought to last a lifetime, lay down the money and buy the version that will actually last a lifetime. Buying crappy stuff that you have to replace constantly is a financial liability and also contributes to the landfill, hastening the day when real life is like WALL-E. This is not to say you need to buy it all brand new; quality items abound in pawn shops, craigslist, facebook marketplace, and even thrift shops.

7. Have inexpensive friends.
If your friends want to do expensive stuff, suggest something else. Dinner and a movie will run you upwards of $30. You can watch a movie at home and cook homemade pizzas for a dozen people for the same price. And at home you don’t have to squeeze past a bunch of strangers to go pee, or hide your alcohol in your girlfriend’s purse. If your friends won't do anything that's not expensive, get new friends. Hiking, disc golf, home dinner parties, home movies, art shows, community events. You can hang out with friends without paying a bunch of money.

Rule 7.5. Avoid spendy women like the plague. Paying constantly for expensive dates will drain your wallet, and if you end up marrying her you are screwed financially for life.

8. Invest
Save up an emergency fund of $10k, then start looking for a place to invest your money. I like index funds, because they’re cheap and they work. If you want to buy individual stocks you can, but it’s a lot riskier. Do not trust anyone who claims to know how any particular stock is going to do in the future.
If your company has a retirement plan, contribute some to that, but keep in mind that money in an IRA is difficult to access before you’re 65.

Conclusion
If you do all of the above, and you make decent money, you’ll be set. I can clarify any of the steps if anyone has questions. In the meantime, you can learn a lot from these resources:

Earlyretirementextreme.com
This blog shows is what real frugality looks like. The dude lives on four digits a year. I read it sometimes for ideas, but mostly to remind myself how extravagant my own lifestyle is.

Mrmoneymustache.com
A much more moderate approach than the above, but still very solid advice. Also has detailed recommendations for index funds, phone plans, etc.

I Will Teach You to be Rich by Ramit Sethi
Explains exactly what to do: how to open up a credit card, how to talk you your bank on the phone, etc. Extremely valuable especially for clueless 18 year olds.
 

Snag87

Robin
"1. Do not spend money you do not have.
This means no taking out a home loan, no buying new toys on credit, no going into debt for a degree. "

I had a similar outlook. However the one exception I made was home loans. As long as the mortgage was easily affordable and you put a minimum of 25% down.

Why do you think they're always a poor investment?
 

BlueMark

Woodpecker
Gold Member
On the flip side, don't forget to improve your lifestyle as your income goes up. I do this by measuring spending in terms of how much money I am saving per month.

e.g. If I make $3000 per month post-tax, and I have living expenses of $2000, then I save $1000 per month. If I splurge on something and pay an extra $200, it is measured as 20% monthly savings.

But if my income increases to $4000 per month, and I keep my living expenses the same, then I save $2000 per month. Now that $200 becomes 10% of monthly savings.

In practical terms, this means when I decide between a more expensive choice and a cheaper choice (e.g. what kind of hotel or hostel to stay in when traveling, or where to travel), I measure it in terms of how much it affects my savings rate.

If I spend 5 nights traveling, and I have to choose between a $80 hotel and a $20 hostel e.g. in Singapore, the difference is $400 - $100 = $300. This is 30% of monthly savings in my earlier example with $3000/month income, and 15% with $4000/month income. At those levels, it's still significant either way, so I go for the hostel.

But if I travel to someplace cheaper e.g. Cambodia and the choice is between a $20 hotel and a $5 hostel, the difference of $75 is 3.75% of my monthly savings if I make $4000/month. At that level of income/savings, I would choose the $20 hotel over the $5 hostel as long as I am not taking such trips every month, because it makes such a smaller dent on the rate at which my savings grow.

There is no hard and fast rule to follow here. It's just a way of looking at your marginal spending choices in terms of how much it affects the increase of your savings.
 

Dr. Howard

Peacock
Gold Member
Great advice OP

The only part that I would have is "have a plan". Don't plan to be ultra frugal forever or you will hate your life or become a weirdo like Warren Buffet. It also makes the frugality easier.

For example, setting a goal like "I will live an ultra frugal lifestyle, in a crappy apartment until I save X amount of money to get a down payment on a house"

If you are able to really start putting away cash and don't yet have a family I would recommend aiming straight for early retirement. Don't go for a house purchase. Why? because a house is also a time suck. You have to do maintenance on it and/or pay for upkeep. Living in an affordable apartment gives you more free time and the freedom to build a predictable routine. If your stove blows up, just call the landlord and move on. If the stove in your house blows up, learn how to fix it or buy a new one, both eat time.

If you have a family, you likely dont' want to raise kids in a not so safe, moderately unsanitary area of town where you can usually find cheap apartments.

My advice for the family route is aim to buy an affordable house and pay it off as quickly as you can. Then aim for retirement. A paid for home gives you security to take other risks like home schooling and self employment.
 

gework

Pelican
Gold Member
Good advice.

Due to technical aspects of the economy and demographics, we are moving from a period of great opportunity (our parents) to one of increasingly less (millennials down). Generally speaking.

Someone posted a factoid in the Groyper thread showing millenials have about 25-33% of the net worth of boomers at the same stage of their life. This is in part due to the technical aspects mentioned, but it's probably more down to millenials careless and poor life decisions, spurred on by their careless boomer parents.

The antidote in an environment of decreasing opportunity is to be more conservative. There are huge numbers of people heading towards few friends, no family, no home, no meaningful possessions, no pension and so on.

This can be mitigated by living as the OP did.

For me a big mitigation was living with my parents for longer than it takes to be considered a flaming faggot. In such a decision I essentially sacrificed my entire early adulthood, but the other side of the bargain is I secured my adulthood before many had started trying.

I knew another guy that spent roughly the same period living with his girlfriend and her mother. And rather than being frugal and working for the future, he blew a giant deposit on a house on weed and now has nothing but a mind which in his own words is ruined.

For a few years my general expenses were less than $1,000.

Recently I totted up my accounts for the last seven years and found I'd spent on average $70,000 on personal expenses, including buying a house and living in about 15 countries.

I think it's best to forgo all the excitement that can be had in your 20s and work for the future. Now I am early 30s the tables have shifted. Those who don't have their house in order are sinking rapidly and those that do are rising in status.

Two things I would have done differently in hindsight are: put all money into funds and traveled around churches, which would have been the only place I would have found an appropriate girl. But with the said, if you play your cards right, you will have far more options as a successful 33 year old than a frugal 23 year old with potential.
 

vuko225

Pigeon
BlueMark said:
On the flip side, don't forget to improve your lifestyle as your income goes up. I do this by measuring spending in terms of how much money I am saving per month.

e.g. If I make $3000 per month post-tax, and I have living expenses of $2000, then I save $1000 per month. If I splurge on something and pay an extra $200, it is measured as 20% monthly savings.

But if my income increases to $4000 per month, and I keep my living expenses the same, then I save $2000 per month. Now that $200 becomes 10% of monthly savings.

In practical terms, this means when I decide between a more expensive choice and a cheaper choice (e.g. what kind of hotel or hostel to stay in when traveling, or where to travel), I measure it in terms of how much it affects my savings rate.

If I spend 5 nights traveling, and I have to choose between a $80 hotel and a $20 hostel e.g. in Singapore, the difference is $400 - $100 = $300. This is 30% of monthly savings in my earlier example with $3000/month income, and 15% with $4000/month income. At those levels, it's still significant either way, so I go for the hostel.

But if I travel to someplace cheaper e.g. Cambodia and the choice is between a $20 hotel and a $5 hostel, the difference of $75 is 3.75% of my monthly savings if I make $4000/month. At that level of income/savings, I would choose the $20 hotel over the $5 hostel as long as I am not taking such trips every month, because it makes such a smaller dent on the rate at which my savings grow.

There is no hard and fast rule to follow here. It's just a way of looking at your marginal spending choices in terms of how much it affects the increase of your savings.

Great approach and more moderate than extreme frugality. I believe the balance is in moderation and occasional, thought over splurge ( if your finances are stable). I like and agree with most of what the OP wrote as well but I don't let's say strongly disagree with buying the cheapest food. That's one area where you don't need to save if you make decent money and are smart in many other areas of your expenditures. Now, I'm not saying go out and blow lots of cash on food you don't need but I'd say buy quality food. Occasional eating out is a solid treat as well

Target should always be increasing your quality of life( it means diff stuff for diff people) but as the quoted author wrote - always measure this extra spending or increase in lifestyle against your anticipated and planned savings. I'm also ot against extreme frugality for short periods of time even in cases when your revenue/income increases especially when you are saving up for something big eg a downpayment or an exotic trip.
 
Snag87 said:
"1. Do not spend money you do not have.
This means no taking out a home loan, no buying new toys on credit, no going into debt for a degree. "

I had a similar outlook. However the one exception I made was home loans. As long as the mortgage was easily affordable and you put a minimum of 25% down.

Why do you think they're always a poor investment?
In most of the US you can't really own property; you just rent it from the government. And I don't trust most state or local governments in the US to keep property taxes reasonable. I think if you live in a sane place with a low chance of Californication, like Alaska or Wyoming, it can be a reasonably safe to buy property, and I can understand why someone would want to invest in property. I also don't think a home you live is really an investment - depending on the location, current economy, and pretty much the phases of the moon you stand to lose a lot of money if you try to resell thirty years later.

Even college might be worth some debt in certain circumstances - like if you're good at math and decided to get an electrical engineering degree. You'll be able to pay it off quickly. I wouldn't go into debt for it, but I think someone who does certainly isn't insane.

But as a general rule, assuming that you'll have money in the future to pay for something is very risky.
 
BlueMark said:
On the flip side, don't forget to improve your lifestyle as your income goes up. I do this by measuring spending in terms of how much money I am saving per month.
Dr. Howard said:
The only part that I would have is "have a plan". Don't plan to be ultra frugal forever or you will hate your life or become a weirdo like Warren Buffet. It also makes the frugality easier.
I think there's definitely something to what you guys are saying here. I think of my spending as a percentage of my income, and the lower I can keep the percentage the less time I'll have to sacrifice to my job.

The level of frugality someone wants to do is definitely up to the individual, and as long as you have some money stashed away and you don't put yourself into debt, I definitely don't see a problem with buying what you want. For example, I spend about 45% of my income right now, but I think someone is just fine spending 80% of their income as long as they understand they're going to have to work a lot more. And for someone making big bucks, I don't see why spending a lot is a problem as long as it's a reasonable percentage. There's no reason for $200k/year doctor to cook every meal at home.

I buy a lot of things that aren't really absolute necessities, especially when it comes to food. I could eat beans and rice all the time for very little money, but instead I eat meat on the daily, driving the cost way up but I can afford it. I look at it as a luxury expense, and it's one I'm happy to pay for.
 

BlastbeatCasanova

Kingfisher
Good tips for sure. I track all my expenses daily in an excel spreadsheet; I was definitely feeling guilty when I saw that I spent $200 on alcohol in October...shameful. Spent way less in November. It’s great for stuff like that.

I disagree about food. You say buy the cheapest food available, and then you say buy quality objects...if it’s going in your body it should be high quality. As they say...pay the farmer or pay the doctor, an ounce of prevention is worth a pound of cure, etc etc.
 
Snag87 said:
Inexpensive food can be healthy. Rice, legumes, fresh fruit and vegetables. What's the issue?
Agreed. Food quality is important. It’s why I specified the cheapest version available for the food you need, not the just cheapest food available. No one should be eating Ramen or garbage like that.

But buying brand name foods rarely makes a difference in the nutritional makeup, and often (not always) they even taste the same. If I need red beans, I buy the store brand for half the price of Camellia’s. If I need eggs, I buy the big five dozen packs at 30% less per egg than the one dozen packs.

For meat, I go with whatever’s on sale, or chicken drumsticks if there’s no sale going on. Choosing less expensive options doesn’t mean eating poor quality food. I can eat piles of tasty, nutritious food for less than I’d have to spend living on pop tarts and frozen pizza.
 

Easy_C

Crow
One dumb thing people do is spend a shitload of money on organic groceries from a market like Whole Foods where you're just paying for grand name.

There's no reason to. It's the same shit or better if you buy Organic at your local Aldi or even Trader Joe's.


Which reminds me of one small tangent. Trader Joe's box meals are the shit if you're looking for a cheap office lunch. They're not as cheap as bringing in a bag lunch obviously but compared to what you'd pay at even a company cafeteria you're generally saving at last half because those things cost $3 a pop.
 

Easy_C

Crow
Another one I see is clothing:

More expensive is NOT better. If you're in any kind of professional occupation you should have at least one custom fitted suit, shirt, and pants combo with a nice set of hoes and tie to go with. That does NOT mean you go out and buy the $2,000 suit because the custom-cut $300 IndoChino suit will usually look better. There's also no reason to buy a $200 Hermes tie (I know of multiple boutiques who will sell you a better and more stylish one for $80 with lifetime fixups provided) or the $5,000 Rolex (an Apple Watch looks more "hip" and costs 1/20th of the cost).

You'll have one or two outfits like that will spend most of their lives in the closet and ONLY come out when events or people who can change your life are involved (like you set up a coffee chat with a vice president at company you want to work for). The rest can be bought at discount retailers or often even thrift/consignment shops.
 
Yeah, I should’ve mentioned clothing. You can get flannel shirts at basically any thrift store in the country for a fraction of the regular price, and buy thrift store jeans and get them tailored to fit perfectly for less than the price of a new pair off the shelf.

I don’t wear much else, so clothing gets a little outside of my area of expertise. But I’m with Macklemore on the awesomeness of thrift store clothing.
 

Dilated

Robin
Good thread.

On debt-
I think reasonable, effective leveraging is very important. Rich guys get rich and stay rich using other people’s money.

Rather than paying cash for that $15,000 used car, finance it at 2.9% and put the money you would have spent in investments at 7%. That’s a 4.1% margin to the good.

Here’s a financial goal of mine- invest more money in a year than I make from my job. Will take low expenses and significant income from investments. Something to shoot for.
 

Snag87

Robin
15k for a used car? I thought this was a thread that prioritized frugality. You shouldn't be paying more than 2K for a car unless you're wealthy.
 

monsquid

Woodpecker
Snag87 said:
15k for a used car? I thought this was a thread that prioritized frugality. You shouldn't be paying more than 2K for a car unless you're wealthy.
Drove a beater for more than 10 years but the constant repairs and breakdowns eventually pushed me over the edge and I ended up buying a certified used car for $14k. If I can get 10 hassle free years out of it then I'm happy. If you're busy with work and other hustle in a big city, having to deal with car repairs is not worth the extra couple of hundred dollars you save in a year by owning a beater.
 

Snag87

Robin
The average American vehicle operator drives roughly 13K miles per year. You're expecting 130K trouble free miles out of a used car?

You may not be American, but my point stands for U.S. drivers.

I've owned 3 cars the past 2 years.

Car 1: bought for $600 and drove 4K miles before it broke down. Scrapped it for $250

Car 2: paid $750 and got 9K miles before it broke down. Scrapped for $200

Car 3: paid $1060 and have driven 8K miles. Still running well (knock on wood)

A lot of cheap cars are junk but eventually you'll stumble across a gem that will run 30K miles trouble-free.

I don't repair my cars unless it's an extremely cheap repair. Of the aforementioned cars I've only done regular maintenance and bought a tire.

Furthermore insurance is cheaper due to not needing full coverage. Additionally you can get great deals throwing lo-ball cash offers at owner sellers on Craigslist. Sellers are tired of the run-around and will just give a deal to anyone who's respectful polite and serious.


Buy 'em cheap.
 

Easy_C

Crow
That's not a bad strategy.

Buying New, I think it's reasonable to expect a 5-7 year useful life out of a $25,000 new car. Amortize that and it comes out to $3k/year counting maintenance.
 
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