The best things in life are not things at all

I saw this on a bumper sticker on a car in front of me. This was on the way to work this morning and I completely agree with it. I have realized that material things are just that. In the end they mostly mean nothing. Some of them you need to survive but the majority of the crap we have is not necessary.

The things I value the most:

• People: friends, acquaintances, family, and so on. People are what make life what it is.
• Experiences: All of my best memories are from travel. I will continue to travel for as long as I can.
• Food & Drink: This brings people together. The food itself is not as important as the company that comes with it. It is a tool to bring us together
• History/Culture: Another reason I travel. I read about all sorts of interesting history and places to visit. When I actually get there it definitely adds to the experience to know the background behind it.
• Freedom: without it we cannot do as we please. I will viciously fight anything that tries to impede it.

Remember all of this the next time you think about buying more clothes, a new car, or an expensive "toy" that you want because of some marketing you were subjected too.  Does that object have more importance than the above? My guess is no.

How much savings will make you sleep better?

That is the question I am trying to answer. I am still saving for my emergency fund and have been back and forth in my mind on a target number. I have now decided:

I need 1 year's worth of bare bones bills saved up to not worry about job loss or some other life event.

That changes my new target to roughly $20,000.00. That seems like a lot but to live an entire year, 365 days without income, is a nice safety net. That is also the amount I would need in order to attempt starting my own business or going to consulting/contracting full time. This target represents that goal.

My main goal in life is to be financially independent enough to not have to work 40 hours per week. That leads to other goals like travel and part time contracting to fill the gaps. The more I have in savings the less I actually need to work in order to live. I don't want to quit working completely at this point just not have it be the focus of my entire life.

Having time to do what I really want is the most important. I don't need a Mercedes, 18-bedroom house, or 67 plasma TV's. Just time to do what I like (mostly travel at this point). Without having to work 40-60 hours per week I can enjoy myself more. That is the real aim here.

I know that if I had a savings account that could cover my bills for the next 365 days I won't be as worried about losing my job due to some unforeseen event. I can focus on other things and move forward. My patience is thin but I am getting there. Hopefully another year or so and I will be in a much better position.

Cutting back on going out is working!

I am finally getting to a point where I am going out a lot less and staying home more. At first boredom was an issue but I am finding ways to fill me time. I am also learning more and earning more points as a result!

That is not to say that I never go out. At this point I am trying to limit my going out to around once per week unless there is some special occasion I must attend. I still have to maintain a social life to be sane.

My budget numbers reflect the success and have certainly slowed the financial bleeding that was taking place for a while. I am cooking more at home and learning a lot more about food which is something I truly enjoy. This frugality paired with raises will lead to more travel opportunities and doing what I truly love to do: see the world!

I am also working on side projects to bring in extra money. Instead of being out spending I will be at home earning. That is a double win! I have to stick to my goal of a 1-year emergency fund if I am ever going to get out of the 9 to 5 rat race. I am moving in the right direction and it feels great.

Points are another form of currency

To this day I still cringe when I see someone using a debit card--or worse cash--to buy things. I am both thankful and appalled that people can't see that they are leaving money on the table each time they do this. I suppose I have different priorities than most but with the wide variety of programs available people should be earning points for everything!

The best example I have are my trips to Asia in First/Business class for around $100-200 out of pocket. People are always in awe when I say it but I am doing nothing complicated. I simply learn the rules of points programs use them to my advantage. Every time I spend money I make sure my points balance increase somewhere. It is simply a state of mind!

Even if you don't want to travel at all you should at least be using some sort of cash back credit card with no annual fee. If you could save 1% of every dollar you spend with no extra work on your part why wouldn't you? You simply spend like normal using the credit card, fill out a form online, and get a check in the mail. Takes you 5 minutes. Amazing how lazy people have become in this country!

While I am appalled I am also happy. Too many people doing this will create inflation. Too many points "printed" will mean that they eventually will lose value and be less worthwhile for me. It is a double edged sword I suppose. It goes back to the old adage that laziness and convenience equate to money lost. There is a reason why we have so many convenience stores that make a profit every year! The wants of now trump the needs/wants of later. This is America after all...

New Spending Psychology: Focus on what matters to me

I did a quick skim on my spending over the last year and I seemed to have phases. For a while I would eat out a lot. Then spend a fair bit on travel. Then I would buy a few gadgets or things for the house. It was based on whatever "mood" I was in at the time. This, in the end, but a damper on getting closer to my goals.

I now vow to be more focused.

Overall my major personal interests are travel, food, and finding excellent deals on the first two. I am going to follow this school of thought: spend on what you are passionate about and skimp on everything else. Easier said than done as I learned from last year's spending data. The good news is I am much better than 2010 at it.

My budget has now evolved where I save money for travel specifically. I use that money not only to have while I am on the road but also pay for taxes for award tickets, annual fees for points earning credit cards, and the odd long weekend away on a cheap airfare domestically. This part of my budget will certainly grow with my income. Travel is top priority in my life!

I have a larger than average food budget for a few meals out and so I can cook less boring stuff at home. Cooking is something I am doing a lot more of as of late and intend to continue. It is a skill that is never bad to have and from what others tell me I am pretty good at it! A friend and I are always experimenting and sharing cooking ideas. It works well for me.

Finding deals on travel and food spawned from the first two. The biggest being credit card churning. I sign up for cards with large initial bonuses, use them, and then cancel the cards and repeat. This has gotten me a lot of points and as a result some awesome trips. For food I mostly look for the best price/quality ratio for my cooking ingredients. I also keep an eye out for discount coupons for my favorite places around town. They are rare but do come up now and then!

I find that when I spend on things I truly care about I feel better about it. If I spend $100 on airline taxes for a flight to Bangkok I have no problems. If I spend $100 on a night out with friends I most certainly regret it for the rest of the month and beyond. Breaking the bad habits so I can keep the good ones is my key to success. Now let's see if I can actually pull this off...

Looking like a busy quarter!

Things are heating up at work and that means more travel for me. I already have New Orleans this month for pleasure as well as a definite trip to Baltimore/Maryland at some point. It is also looking like the possibility of North Carolina, Virginia, West Virginia, Mississippi, and some other irons in the sales fire.

Today was a particularly busy day of year end and quarterly stuff we have to do around the office. I get to go to work at 2PM tomorrow since I have to do the server upgrades when no one else is working. I will use my morning off to run errands and have lunch with the girlfriend. I am not looking forward to being at the office late but life gets in the way sometimes.

I am already tired of the cold weather and am reminded of why I am working in the first place: to save enough money to get away from the cold. I don't mean Florida. More like Asia, South America, etc. Travel is where it's at. Work is just a necessary evil to get there.

Stressful work week complete!

I can now say that all is well with this mess of a project at work. I got everything fixed today and the client here is happy. It took a lot of long work days, no days off, and some careful planning to make it all happen at the last minute. I have had a long talk with my boss to ensure this does not happen again.

I am attending their grand opening tomorrow and I can do this without worry. This was my last big hurdle before vacation and now it is mostly over with. It will be great to truly be able to relax once I get to Thailand and take my mind of work. I am looking forward to the beach, a cold beer, and my book that I am saving for the trip. I am ready for the Land of Smiles!

They are forecasting over 12 inches of snow here in Hartford so I hope my flight gets out tomorrow. It will get nasty out there but I have to go with the flow. Getting upset over weather doesn't get anyone anywhere. It would be nice to get some time at home though!

The psychological battle of being back home

I got home from traveling in 2007 in April. Needless to say I had no idea what I wanted to do or where I wanted to live, work, or if that was even going to be in the USA. Two months later I landed the job I have now in Atlanta. I have been on several great trips since then but it is just not the same. I still, to this day, miss the road.

World travel is an addiction with only 2 cures: travel more or death.

Option 2 does not appeal to me so I am left with 1 cure. Not a day goes by where I am not daydreaming about being back out there, with my backpack and the only material items I truly need, seeing the world one day and one place at a time. I cannot put in words the great feeling of arriving in a new place with new people, new smells, new sights, new food, and new cultural quirks. It doesn't ever get old.

The only way I can keep going is to keep my eyes on the goal of getting back out there on a more long term basis. Saving all that I can and shaping my life around that goal is my current work in progress. Unfortunately it is going to be a very long slog to make that happen but I have little choice in the matter. Just push through and hope for the best.

The days are moving slower!

This is the beginning of week 2 off the road. I must admit that when I am traveling the weeks seem to go by faster. I miss that and the welcome change of pace versus being in the office all week. That said it is good that I am here as I have a lot of prep work for upcoming larger projects that I need to tend too.

This past weekend was entirely too short--a sign of my burnout catching up to me. I feel tired a lot more often as of late and this reminds of around this time last year before my trip to Cambodia. I have found that a year, at least in my line of work, is too long to have essentially zero time off aside from the odd holiday.  Next year I will do a week in April and then hopefully 3 weeks in November again.

Mondays are always the most hectic. For whatever reason things seem to come to head every Monday. Slows down some mid week and picks up again on Friday. My weeks seem pretty even split between slammed days and slow days. Such is life when you rely on a lot of other people to get things done.

Staying ahead in tough economic times

The bad economy in America is old news. We all hear about it day in and day out. A friend of mine was laid off recently. Things at my own job have been wishy-washy lately too. We have been busy but it seems when we gain ground we lose it elsewhere. All of this has renewed my focus on an adequate emergency fund.

My emergency fund is growing nicely but not as fast as I would like. I have lost a roommate and the income from that so I cut expenses as much as I sanely could and also am working on a side business. The slowness of my savings growth frustrates me to no end but there is no quick fix. I find myself very irritable lately and impatient most of the time. Nothing like the feeling of being stuck to put you in a great mood...

Another annoyance that is bothering me is the fact that I am going on 3 years without a raise in an already sub-par paying job. Costs have gone up on all fronts, especially food, over the past 3 years. Bundle in inflation and I am actually losing ground in real terms. I fear the days are numbered before I get completely fed up with it all.

Therefore I am going to start seriously looking for something else. One can only tread water for so long before change is imminent. It seems I need to find a larger company with more stability and hopefully a more interesting position available. Some benefits, such as health insurance, would also be nice. I need change. I am bored and stagnant where I am now. There has to be something better out there!

Work is catching up to me...

Today I am really starting to feel the sting of fatigue from quite a long stint of work with no vacation to speak of. Sure I have been on a weekend cruise to the Bahamas and a long weekend in Myrtle Beach. I consider those more of a long weekend fun trip. Vacation is when your mind is 100% off work. That has not happened since Cambodia in November 2010.

I remember a similar feeling this same time last year. A long slog from one extended vacation to the next. I have roughly 2 months until I depart for Bangkok via Europe. I am very excited and very much looking forward to it! The problem is that I am 2 months away from that day and I am tired.

This feeling is what keeps me working and saving as much as I can to earn enough money to not have to work full time and on someone else's schedule. Going 2 straight years without a raise doesn't help matters much either. I suppose I should be happy to have a job but at the same time things have to improve.

I am pushing through to November 5th for now and am saving/reading/dreaming about leaving. One of the best feelings I can think if is that feeling the day before a long trip to a fun place. It is a drug, a rush, and an emotion that I am addicted too. If I cannot travel and see new things then what is the point?

Back in Baltimore (very busy!)

Today and tomorrow I am back in Baltimore for work. I spend the entirety of today traveling up to BWI and at the job site working. This has been a trying day to say the least!

The good news is that tomorrow should be a lot smoother and easier. I have some finishing touches to put on the project and then will have some down time to catch up on other work things before catching the flight back home to ATL.

Even though today was a tough one this actually part of why I prefer the travel aspect of my job. When I am on the road I get to run into new challenges which are annoying at first but satisfying once overcome. All the while earning miles, seeing new people and places, and not being stuck at my desk in a downtown highrise. The grass is always greener on the other side!

The 10 pillars of being a Frugal Backpacker

Since hitting my 500 post milestone and I have been thinking about my thought processes, my goals in life, and how that has molded this blog. As a result I have come up with 10 things that move me towards my goals. These can be applied to anyone's goals no matter how different form mine they may be.

They Are:

1. Spend your time and money on what you are passionate about. Go as cheap as possible on everything else.
2. Time is your most valuable asset of all. Manage it well and use every advantage you can.
3. Get and stay out of debt. Build and emergency fund and eliminate all debts as fast as possible including mortgages.
4. Pack Light. I lived for 18+ months out of a backpack that weighed 30 lbs by the end of my trip. Taking less with you makes travel so much easier and more enjoyable
5. Have a cash buffer. An emergency fund is one of the easiest and most powerful things that you can have for peace of mind and insurance. Start with $1,000 as a minimum and build from there
6. Know who your friends really are. Keep in touch and help each other when you can. No matter where you live in the world everyone needs friends. Life alone is a miserable existence.
7. Take advantage of rewards programs. I preach a lot about points and miles here. These programs, when used correctly, can save you a lot of money and give great experiences on top of that. Keep and eye out for bonuses and promotions that you can profit from.
8. Invest in experiences--not material items. You will get a lot more joy and a great memories from skydiving versus buying a Mercedes. Things come and go. Memories are for a lifetime and can never break or be stolen.
9. Invest all long term savings. Simple savings accounts and CD's won't outpace inflation. You need a diverse portfolio of stocks and bonds to truly get ahead and to be able to stop working someday.
10. Pursue your hobbies and dreams in your spare time. Make it a priority to do the things you wanted to do as a child and adult. Make a "bucket list" and get to work on it!

These are the ideas and goals I live by. I consider them when making all sorts of decisions including money, housing, where to live, where to work, how much to spend on each area, and so on. Following the above has made me much happier with life overall and is continuing to do so. By focusing on what is important you get to reap the benefits of them and increased happiness. 

Emergency fund philosophy - what is an emergency?

I have a good sized emergency fund. In order to come up with my target number I had to ask myself: What is an emergency? How much do I need?

I consider the following a financial emergency:

- job loss
- medical care
- car repairs
- house repairs
- emergency last minute travel

From that list I come up with an amount of money to cover each category. I total them to come up with the target number. In my case the total was $10,000.

I use ING Direct savings accounts to put my money for each type of emergency. My monthly contributions are divided among them until each goal is reached. At this point they are all funded except my target for job loss (the largest one!).

I'm almost there! I'm considering doubling the target once I fully fund retirement and still have more to save. With 20,000 I could cover nearly 1 year with 0 income. I really like the sound of that!

Using the above breakdown will help you find a target number that makes you feel secure. Create your target and get started with that first dollar today! It's hard to explain the stability you feel when you have a good buffer.

Big Office Move Tomorrow

I made it through one hell of a week. We are officially moving servers and workstations over to our new office in Downtown Atlanta tomorrow morning. Hooray for unpaid overtime!

I will actually come out ahead overall in this move. I will get to start taking the train to work therefore saving gas and more wear and tear on my car. I will also be in a much better neighborhood with lots more to do near work. I can take the train to the airport on travel days if need be also.

My office will be a corner office with windows and in a much quieter and nicer building. I have a lot more food options and and interesting place to walk around when I am ready to pull my hair out after a meeting. It will certainly be a welcome change of pace after 4 years in the dump of a warehouse that we were in.

Now if I could just get a raise!

Fighting burn out with mini vacations

Living in the USA vacation time from work is a premium. Most people get 2 weeks off. I am one of the lucky who gets 3. I also negotiate with my boss a little, toss in Thanksgiving holiday, and I can make that a month. I try to do this each year.

That said it leaves me with a long slog from November to November where I get very little or no time off. I have looked at my pattern of travel and realized that I jam in a couple 2-3 trips when possible. I realize that this is because I have to save my sanity somehow!

I realize now that these trips I take are to maintain sanity and keep me from getting too bored and spending on other things such as more gadgets or a new computer. If I am going to spend the money anyway I want to be sure it is spent on experiences and not stuff. I am at a constant war with stuff!

Examples of my mini vacations over the past couple of years:

• Weekend in New York City
• Memorial Day Weekend in New Orleans
• 2-day Bahamas cruise
• Weekend in Vegas for a friend's birthday

The list goes on for a bit. The point is that I take trips so I can keep going and save the majority of my time off for November. So far I have focused on Asia and don't see that changing for a while. I really love that area of the world with it's diverse people, food, and awesome sites to see. As a result of these long trips November has become my favorite time of the year! (for obvious reasons!)

My advice to those who want to travel is to plan one "big trip" each year that you save for and plan for well ahead of time. As great deals or opportunities for short trips arise do them too! I found that mixing these two is a great balance to work life (at least for me). It makes the year between trips seem a little shorter and less bleak and mundane.

Turn your checking account into a cash management system

As a former financial planner I implement and use a tool called the Cash Management System. This idea is more of a cash flow diagram that utilizes your primary checking account as the main source of your income and expenses. It incorporates your budget and gives you the "big picture" of your monthly cash flow.

The purpose of the Cash Management system is to have a plan for your income and a guide you can refer back to and adjust as needed. The basic formula for the system looks like this:

Income = Monthly Expenses + Savings Transfers + Debt Payments (if any)

It also assumes that by month end the account balance will be $0. This means that every dollar that comes in will have some purpose. It guides you so that if you have lower expenses one month you can transfer it to savings such as an emergency fund, retirement, vacation savings, and so on. By keeping your "extra" money out of your checking account you won't be able to spend it as easily.

This system only works if you carefully track and budget your money. You have to look at your income versus expenses each month and make transfers accordingly. You should also set up automatic transfers to savings each month so you are sure to save something. At the very least you need a percentage budget (such as 50% needs, 30% wants, 20% savings) so you can calculate the amounts and set up transfers.

Secondly you have to maintain some sort of self control. If you get a windfall, gift, bonus, etc. you need to be able to not spend it or immediately move it out of the cash management account. Personally I take extra income and immediately add it to my savings account(s). In December I examine my tax situation and transfer money to retirement accounts that give me the best overall tax advantage (Usually a Roth in my case). The point is to get it out of your spending account ASAP.

Once you get the hang of things the cash management system is a simple, helpful tool that keeps you on track and also keeps you aware of how you spend or save every dollar. It takes some getting used too but the time investment is worth the return of peace of mind and not worrying about paying rent or buying gas next month. Invest in your future!

Focus Reminders: The basic principles

I write a good bit of very specialized and specific posts here. I realized that sometimes it is good just to get back to basics. I have compiled a simplified list of principles that drive my financial decisions on a daily basis. I realized I never put them all on one post to summarize.

Principles that I believe in:

• Pay yourself first: Add up your life sustaining expenses, set an amount, and save it first. Then remainder is the budget for incidentals and "fun stuff". Payday is a good time to transfer to savings.
• Set goals. You cannot get anywhere if you don't have a defined direction to go! You have to take the time to workout where you want to be, financially and otherwise, and create goals and a deadline to get there. Chances are most of the goals require money at some stage and financial planing to reach them.
• Exercise frugal practices: Find a second use for everything (food containers, shopping bags, etc.). Use coupons when you can. For going out use sites like groupon and half off depot to save money. Be sure to use up all gift certificates so they don't go to waste!
• Save for and invest in experiences. This is the big one. Stuff costs us money. More than just the price tag. Storage, electricity, gas to go buy it, etc. Experiences create memories and conversation topics. My favorite is world travel. I do it as much as I can. You will certainly enjoy skydiving way more than an iPad or the $300 boots you want.
• Track your spending. This is probably the most important principle! In order to get and stay out of debt and save money you must track every penny you spend. There are tons of options that range from paper and pencil to Quicken to the various online tools. None of the other stuff matters if you cannot see where your money is going and do something about it!

These are the most basic principles that drive everything and I do.  I curb spending by reminding myself that "If I buy this then it ultimately slows down my goal of traveling the world and not having to work full time." In my case this is an easy sell for me as I would rather be out there enjoying life instead of sitting at a desk!

Seeing the light: Happiness is more important than money

I am in Romulus, Michigan today (near the DTW airport) for work travel. I went online and found a local restaurant/bar that had good reviews from other business travelers. I gave it a try and am very glad I did! I scored a half pound cheeseburger for $3 and $2 beers. Dinner + drinks = $11.66. Nice.

I also met an older gentleman (soon to be 50) named Mike. We had casual conversation about various subjects and money and happiness came up. He is retired from the Army after 30 years and now works as a prison guard in Detroit. He lives nearby the airport and is into local rental property. He seems quite savvy with his money and makes good choices.

He moved around a lot in the army and owns a few homes as a result. He rents them out and uses the rent proceeds to pay for his 18 year old son's college. He is looking into buying another as he has a tenant waiting for a place and is bidding on local forclosures (as low as $4,000!) and would make a tidy sum from renting it. He said he plans to use the money to save for his yearly vacations with his wife.

He then told me about a neighbor of his who is a former NBA player. He said while he was in the NBA he would have lavish parties, throw around money, and got caught up in the fame and fortune of the NBA salary. He went on to say the guy now is retired and realizes that he does not need all the fancy stuff and big parties. Instead of a Porsche he now has a Camry and has sold most of his high end jewelry, cars, etc and is happier. He specifically mentioned that he wants to sell his $35,000 Rolex as it will "collect dust in the drawer."

One thing that I really liked about Mike is his view on television. I mentioned it to see how he would react and he said he doesn't watch TV except for sports and sometimes weather reports. I am glad someone agrees with me! A TV is just a devices that forces commercials down your throat. News is just crap to get you to watch commercials. Moving along...

Mike and his friend are 2 people that "get it" in my book. They understand that people and experiences are the most important things in life. They also understand that money is required to have these experiences (and sometimes to visit the people) and therefore channel their money towards it. They don't have BMW's and 8,000 inch plasma TV's. They save a lot of their money and use it for their goals instead of running up credit cards.

Mike said it took him years to get into the idea of saving and not simply spending the paychecks as they come. I personally attribute this to television, society, consumerism, and flat out horrible job of the education system of teaching people about money. If everyone had to take a personal finance class in order to pass high school I think a lot of good could come of it.

I am glad to say that I "saw the light" on what's important with money a few years ago. I took me a lot of internal struggle and being resilient with habit changes to get to where I am today. The tide is turning and I see my assets finally moving into the positive. I bet we all could still learn a thing or two from people like Mike. Focus on what's important (and getting more stuff should be nowhere on the list of what's important!).

Snow Day in Atlanta

Today I awoke to 4 inches of snow/ice in my yard. I had the choice of either going to work or burning a vacation day so I chose work. Needless to say it was an interesting commute in a city with essentially zero infrastructure for handling snow or ice. I avereaged 20 mph and it took me around 45 minutes to go 9 miles to the office.

All in all I think this was the best choice for me. It made financial sense to not burn a vacation day playing video games at home and instead saving it for my planned vacation this coming November. I am looking at Asia again as my boss said getting another month off is not completely out of the question!

The down side of the snow days here are the ignorance that runs a muck. People drive crazy, the number of accidents approach 1000 in a single day, and you cannot get bread or milk or eggs at the grocery store. I partially blame the media for making people go overboard. One advantage of buying groceries in bulk is so that you have enough to make it for a few days in a bad storm such as this.

It is supposed to continue tomorrow. My boss offered to pick us up from the train station which I will take him up on. Why risk an accident in my car with costly damage or worse injury. I will even get reimbursed for the fare so it is a no brainer! Life must go on!