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The pros and cons of becoming a rideshare driver

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With so many possible side hustles available in today's gig economy, how do you decide which to choose?

Today, I want to make the case that driving with for a rideshare company is a plausible choice for several reasons. But there are also some major distractions that you should be aware of before signing up.

My name is Josh Overmyer. I've completed over 2900 rides as an Uber/UberEats driver-partner since 2014. I know what you're thinking: “That's a lot of rides!” It is. And I've learned a lot in that time.

Here are my biggest takeaways from four years as a rideshare driver.

The Pros of Becoming a Rideshare Driver

Here's the good news. You likely already have the knowledge and equipment necessary to be a rideshare driver!

Josh Overmyer's Uber ProfileAll of these services are app-based and run on a smartphone, by drivers like you who successfully navigate their communities daily. You probably already know where the popular hang-outs are located, how to get around on your city’s streets, and maybe even alternate routes when roads are backed up.

The particulars of the vehicle will change depending on which service you're signing up to drive for. But for passenger trips, you usually need a four-door vehicle, while food/parcel delivery may be possible with a two- or three-door car. (Drivers are subject to a criminal background check and a driving record check.)

As with any independent contractor gig, the amount and timing of the hours you drive are completely up to you, within regulations.

  • Some people will be comfortable driving the late-night crowd, which can be lucrative for rideshare drivers because of increased demand when passengers may have been out drinking.
  • Other drivers may stick to daytime hours and handle a more business-like crowd of people heading to/from jobs, doctor appointments, church, the grocery or the airport. Since your pay will generally be influenced by the number of trips you complete, when you need to make more money, you'll probably want to drive more hours.

Some of the networks now allow the driver to set a destination and get trip requests heading in the same general direction. This helps you to maximize both your time and mileage driven for the maximum possible gain, since you'd be driving those miles with or without a rideshare app running on your phone, such as your daily commute or when you are running errands.

Speaking of maximizing time and costs, driving rideshare could allow you to turn certain everyday life expenses into qualified business expenses.

As I mentioned above, you'll need a smartphone with a data plan, which you probably already have. Now it could be a deductible business expense! Miles driven or other driving expenses could be deductible as well, but you'll need to keep meticulous records.

The Cons of Becoming a Rideshare Driver

There are some downsides to becoming a rideshare driver.

  • Simply driving with a rideshare company means extra wear and tear on your vehicle. Every additional mile you drive is one less mile that your car will last over the long-term.
  • Extra driving means more fuel costs, more wear and tear of consumables such as tires & brakes, and you'll need more frequent oil changes.
  • As a result of all these extra costs and wear on your vehicle, you may face the additional cost of replacing your vehicle sooner than you had previously planned.

A good way to think about rideshare is that you are force-depreciating your current vehicle, which is to say you are extracting value out of your current vehicle to hopefully put money away for your next replacement vehicle.

Here's another thing to consider: inviting total strangers into your personal vehicle.

Josh Overmyer as Uber driverFrom my experience, most passengers will be normal, everyday people just going about their lives: trips to school or work, to the grocery store, church, or to the airport (or beach in my community). But they are still complete strangers, getting into your personal space, and often strangely sitting right behind you, the driver. It can be creepy!

Even worse are the strangers getting into your car who are not on their best behavior. Some are simply loud and obnoxious, and you get used to that from the young twenty-somethings. Some have spent hours at a cigar bar and reek of cigar smoke that permeates your car’s interior and the smell can linger for days.

Worse yet are the drunks who can’t handle their liquor; sometimes you'll be lucky and they'll give you enough warning to pull over to the side of the road — but other times they'll make a mess in your car.

You might have read the last two paragraphs and decided that you don’t want to deal with unruly passengers but would still like to run a side business doing food or parcel delivery.

I've delivered some food orders with Uber Eats, but I ended up with very smelly foods that would stink up my car just before a typical passenger Uber trip, and I had orders that included ice cream or milkshakes that weren’t sealed properly by the restaurant, resulting in a sticky mess.

I had a trip that took me upwards of 40 minutes to complete from the time of food pickup to delivery because the restaurant didn’t have the food ready and the recipient’s phone was dead, and for my troubles I made $6…before costs.

Also remember that you're purposely placing yourself in traffic, which we all hate.

Not only do you sit there idling, wasting time and fuel, but it drives up your blood pressure and stress. You’re also more likely to get involved in a fender-bender when there are more vehicles on the road, and when you are rushing to a pickup or trying to find a convenient parking spot near the food establishment, so you don’t waste too much time circling the block.

Even when you aren’t in bumper-to-bumper traffic, you may experience eye strain from constantly searching for obscure addresses or watching for pedestrians in congested areas such as downtown, at concert venue, or in entertainment districts. Combined with low-light situations, this makes you more likely to end up in an accident.

The Bottom Line

That's a long list of pros and cons. After all of that — and after four years of driving rideshare — what's my overall impression of this side hustle?

Rideshare is a pretty easy gig to get started in — but it won’t make you rich, despite what the radio and TV commercials were telling us all a few years ago. After all operational costs are considered, almost anything else you could think of trying would pay more!

That said, rideshare driving could be a good fit for someone in a temporary cash crunch and who isn’t worried about the longer-term impacts to their transportation budget.

As for me, I stopped driving rideshare after I got a new higher-paying day job last year. If you'd like to read more about the ups and downs of my 2,900+ trips as an Uber/UberEats driver-partner, check out the three-part series about my first side hustle, and why I ultimately decided to quit.

Spare change: Awesome articles from elsewhere

The million-mile club: The world's longest-lived cars

How Americans make and spend their money

Financial literacy: An epic fail in the U.S.

Lawyers take aim at percentage-based real-estate fees [perhaps an unpopular opinion but: good]

Less stuff, more freedom: Thoughts after several years of living in an RV (and boat)

Inflation is the silent killer of retirement dreams

The power of seeking contrarian viewpoints: Why you should understand and appreciate differing viewpoints

Success in life (and money) isn't about making "winning moves"; it's about avoiding obvious mistakes

The poor have always been with us — but charity has not [long, interesting essay about philanthropy in the ancient world]

Calculating your lifetime wealth ratio

Find an archive of all past spare change links on Pinboard.

Small leaks sink great ships: How little habits can have large consequences

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If you've spent any amount of time reading money blogs over the past fifteen years, you've heard of the latte factor. In fact, you're probably sick of hearing about it.

This concept — put forth by David Bach in his best-selling The Automatic Millionaire — is based on the idea that daily spending on small things has a big impact on your future wealth.

“We don’t even realize how much we're actually spending on these little purchases,” Bach writes. “If we did think about it and change our habits just a little, we could actually change our destiny.”

The latte factor is nothing new. More than 200 years ago, Benjamin Franklin cautioned, “Beware of little expenses. A small leak will sink a great ship.” Jesus urged his disciples to not let anything go to waste. The stoic philosopher Seneca the Younger wrote, “With parsimony a little is sufficient. Without it nothing is sufficient. But frugality makes a poor man rich.”

Yes, the best way to spend less is to cut back on the big stuff. Yes, it's important to earn more money. But frugality is an important part of personal finance too.

Today, I want to share a real-life example of how small, daily habits can have a powerful effect on your ability to build a wealth snowball.

A Tale of Two Brothers

I've been back at the box factory for over two months now. It's been fun. (It's also been hindering my ability to work on Get Rich Slowly, but that's another story.)

One of the best parts about going back to work has been interacting with other people. Working from home is a lonely, lonely endeavor. I've enjoyed reconnecting with my brother and cousin and our company's employees.

The daily chit-chat has proved a rich source for future article ideas. As people talk about their daily lives, money is a frequent topic. Plus, we all observe what our co-workers are doing and how their choices affect their financial health.

Here's an example of how a seemingly innocuous choice is costing one of our workers a couple of thousand dollars per year.

  • To encourage employees to get to work on time, we use positive reinforcement at the box factory. If you clock in by your start time every day in a pay period, you get a $50 bonus. We run payroll semi-monthly, so this adds up to $100 per month or $1200 per year if you're on time every day.
  • Two of our employees — let's call them Joe and Gus — are brothers. They've both been with us for nearly twenty years. They're good guys. Right now, Joe and Gus live together in a house that's roughly twelve miles (and twenty minutes) from the shop.
  • Despite living together, Joe and Gus drive to work separately. Why? Because Joe likes to get his on-time bonus. He's always on time (and, in fact, often early). Gus, on the other hand, likes to sleep in. While his brother always clocks in by 7:00 (and frequently by 6:45), Gus usually doesn't show up until 7:05 or 7:10. He's getting an extra twenty minutes of sleep each morning.

On the surface, this isn't a big deal, right? Gus likes to sleep in, so he's willing to sacrifice $100 each month to do so. In reality, I think Gus is paying too much for a few minutes of sleep each day.

Let's crunch some numbers. [Read more…]

Financial advice from my father (when I was nineteen)

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Dad at work in his shop“Who was there for your father when he died?” Kim asked me a few moments ago. She's interested in becoming a death doula, so she's reading a book about end-of-life care.

“It's odd you should ask that today,” I said after I told her the story of my father's six-year battle with cancer.

“Why?” she asked.

“Today is the equivalent day in my life as the day when Dad died in his,” I said. “It's ten days until I turn fifty. Dad died ten days before his fiftieth birthday. So, it's a somber day for me. I'll be thinking of him all day.”

Actually, I've been thinking of Dad all week.

It started when I published Naomi Veak's story about how she learned to stop feeling hopeless about money. In that article, Veak shared a letter her mother sent her when she was nineteen years old. Veak was a poor kid at a rich school, and she was struggling to figure out finances. Her mother offered some words of wisdom.

I had the exact same thing happen to me at the exact same age at the exact same college. I was a poor boy at this rich school. During my sophomore year at Willamette University, when I was nineteen, my father wrote me a letter filled with financial advice.

Today seems like a good day to share it with you folks. [Read more…]

How I learned to stop feeling hopeless about money

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J.D.'s note: Last week's talk by Vicki Robin was hosted by the School of Financial Freedom, a Portland-based organization I'm friendly with. At that talk, I met Naomi Veak, one of the school's coaches. She and I have a lot in common (grew up poor in small towns, attended the same college, etc.). I asked if she'd share her story with Get Rich Slowly readers. She agreed.

Have you ever thought how different your life could have been if you’d taken someone’s advice? What if I told you it may not be too late?

I recently rediscovered a letter my mother wrote to me when I was 19, attending a small liberal arts college in another state.

Letter from Naomi's mother

Towards the end of the letter, she told me to save it, so I did — even though reading it left me angry and frustrated, and not a single word sunk in. You see, she was giving me financial advice after another tear-filled plea for money.

“Don’t expect your thinking to change overnight,” she wrote. “Give yourself time to feel the inward peace of mind that will eventually come.”

This “inward peace of mind” took me 25 years to achieve! How did I finally get there? My name is Naomi Veak, and this is my story.

A Poor Girl at a Rich School

I was a poor girl at a rich kid school.

It was a school I couldn’t afford, and I was surrounded by lifestyles I was ashamed that I couldn’t pay for.

This was only the beginning of a long struggle with finances, where the same money scripts — unconscious beliefs about money that drive our behavior — played themselves out again and again. (For more about this idea, see J.D.'s article about how your money blueprint shapes your world.)

I wanted money. I just couldn’t hold onto it.

Naomi (on the left) in Seattle, 1994

Shortly after college, I became homeless. One friend after another was put to the test when I crashed on their couch for too long.

A year later, my boyfriend and I were living out of his truck on the cold and rainy Oregon coast. I remember sitting in the cab, crying as I counted our last handful of change. He later wrote about stealing a sandwich to split with me in a short essay he titled “Desperation and a BLT”.

Overwhelmed by credit card debt, I made an appointment at a debt settlement company to help me get things under control…only to continue charging to the same account a couple of months later.

Then my student loan debt doubled when I returned to school for another degree. [Read more…]

By the numbers: My spending for February 2019

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One of my goals in 2019 is to get back to basics. I feel like I've succumbed to lifestyle inflation, so I'm taking the time to track my money in detail (using my fave tool: Quicken 2007 for Mac) in an attempt to identify problem areas. When I find money leaks, I need to decide whether to eliminate them or accept them.

While I'm skeptical that sharing my monthly spending report has any real value — and it invites unnecessary judgment (I'm already judging myself!) — popular opinion from GRS readers seems to be: Do it!

You folks like looking at my struggles with money haha.

So, here's a quick look at how I spent my money in February — the good, the bad, and the ugly.

February Spending Report

In January, I spent $4819.27 to support my lifestyle. In February, I spent $4556.49, a decline of $250.

That's great! But it still misses my target: $4000 per month. While this is an arbitrary goal, I think it's a good one. I feel like that's a sustainable level for the future. (If my income from Get Rich Slowly and other sources increases, then I can consider boosting my target spending.)

Here's a quick run-down of how I spent on certain key categories:

  • I spent $726.00 on food in February, up $24.99 from January. Of this, $146.41 was spent on dining out, which is extremely low for me. I spent $373.31 on groceries and $189.75 on HelloFresh. (For more info, see my recent write-up of two months with HelloFresh.) In 2018, I averaged $1038.03 per month on food (and spent $1104.97 in February of last year), so I'm happy with the decline so far in 2019. I'd like to see this drop even more, though.
  • Pet spending dropped from $186.63 in January to $112.14 in February. That still seems like a lot. As a point of comparison, I pulled up the numbers from last year. In 2018, I spent an average of $121.40 per month to support our one dog and three cats. Apparently, that's just how much it costs to feed and care for our beasts. (And they're certain they could eat more than we currently feed them.)
  • In January, I spent $326.08 on sin, a category I use to track how much I spend on alcohol, tobacco, and marijuana. (Pot is legal in Oregon. I don't often use it recreationally, but I use it nearly every night to help me sleep. A couple of times per year, I buy cigars and/or clove cigarettes.) In February, my spending on sin dropped to $117.15. This is primarily because I went four weeks without touching a drop off alcohol. And since I resumed drinking, I've been much more moderate in my consumption.
  • As I mentioned at the end of the year, the iTunes store is a dangerous spot for me. I have a tendency to browse and buy a lot of movies. In January, I spent only $3.99 on the iTunes store. Last month, I spent only $39.94. That two-month total of $43.93 is far below the $356.33 I spent at iTunes during the first two months of 2018. Progress!
  • In January, I had $1034.40 of one-time expenses. At the time, I worried that every month would have one-time expenses. That's still a worry. In February, I spent $376.80 to replace the bald tires on my new 1993 Toyota pickup. I also spent $1340 to renew our subscription to Broadway Across America (two tickets for seven shows throughout the year).

Despite spending $4556.49 in February, my net worth increased by $24,276.77 (or 1.78%) — and that's after a 2.29% increase in January. My net worth has grown $54,894.68 (or 4.11%) during the first two months of 2019.

I wish I could say my increase in wealth has come because I'm so damn smart, but that's just not the case. All credit goes to gains in the stock market. If we enter a rocky patch — or worse, a recession — my net worth is going to fall fast. When that happens, I want to be ready to cut spending, if necessary.

Final Thoughts

After two months of updating Quicken daily, I'm noticing some patterns. For example, my spending falls into four broad categories.

  • Fixed expenses (such as pets, insurance, and utilities) come to roughly $1100 per month.
  • Variable spending on necessities (such as food, haircuts, and home + car repairs) comes to about $1200 per month.
  • Variable spending on luxuries (such as books, sin, and the hot tub) comes to about $700 per month.
  • One-time expenses (new pickup, theater tickets, and the like) are totaling about $1500 per month.

I consider roughly half of my spending to be necessary; the other half is (mostly) indulgent.

The fixed expenses are obligations. They're not going away and they're unlikely to change. Variable spending on necessities can be altered, although there's going to be a floor for each expense. (You've been watching in real-time as I toy with my food spending, for instance.)

Variable spending on luxuries is by definition an indulgence. I could absolutely cut these costs, if needed. And, in fact, I have my eye on some of these. Finally, the one-time expenses are a mixed bag. Some, like the 1993 Toyota pickup, are necessities (or close to necessities). Others, like the theater tickets, are absolute luxuries.

I suspect that I'll want to re-evaluate some of my one-time expenses by the time the year is over. Some are more like annual expenses than “one-time” expenses, and I'd probably profit from determining which to continue…and which to cancel.

Kim and I enjoy our theater excursions and our Portland Timbers season tickets, but if we truly want to cut costs, some of these indulgences may have to go. We'll see. For now, I'm content tracking them and flagging them for future discussion.

What is money for? An evening with Vicki Robin

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Your Money or Your LifeWhen I was a boy, my heroes were athletes and astronauts. I dreamed of playing pro football one day. Or, better yet, walking on the moon.

As an adult, my heroes are more mundane. They're the people who make personal finance accessible to average people. Long-time readers know that billionaire investor Warren Buffett is one of my heroes. So too is Dave Ramsey, who has helped countless people — including me — get out of debt.

But perhaps my biggest hero is an unassuming 73-year-old woman in cat-eye glasses who lives on Whidbey Island in Washington's Puget Sound.

In 1992, Vicki Robin (and her partner, Joe Dominguez) published Your Money or Your Life, a book designed to help readers transform their relationship with money. In 2004, the book transformed my relationship with money. It rocked my world. It inspired me to seek financial independence, which the book defines as “no longer having to work for money”.

Fast-forward fifteen years.

Today, in 2019, I'm awe-struck to actually be exchanging email with Vicki Robin, discussing the past, present, and future of financial independence. And this week, when she came to Portland, I not only got to hear her speak in person, but also got to treat her to dinner.

Your Money or Your Life

Last night, Douglas Tsoi, founder of the Portland Underground Graduate School and the School of Financial Freedom, hosted a talk from Vicki Robin. A few dozen money nerds — including some GRS readers (Hi, Scott! Hi, Brandon!) — gathered to hear Robin's thoughts about financial independence.

For the sake of clarity, I've taken some liberties in what follows. I haven't changed any of Robin's ideas, but I've shifted some topics and quotes in order to create a smoother, more coherent flow for the blog. I've treated Robin's Q&A responses, for instance, as if they're part of the main talk. A real journalist would be mortified. I am not a real journalist.

Some folks in the audience were unfamiliar with Your Money or Your Life, so Robin started by briefly recapping the book's message.

The goal of Your Money or Your Life, Robin says, is to transform your relationship with money in order to liberate your most precious resource, time. The book's nine-step program is meant to help readers track the flow of money and stuff in their lives, guided by both self-interest (“does it work for me?”) and higher values (“does it work for the world?”).

It's natural that we act in our own self-interest. If we aren't right with ourselves, it's tough be of service to others. But Robin worries that too many people get stuck in the self-interest side of things and never move beyond that, never see how achieving financial independence gives them the freedom to leave a lasting, positive impression on the world.

Like me, she wants people to “live on purpose”. [Read more…]

Two months with HelloFresh: A quick look at the cost and quality of HelloFresh recipes

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When I published my first HelloFresh review last June, I liked the popular meal-delivery service. Kim's employer had given us a one-week free trial. The three recipes we received were fun and tasty. In the end, we chose not to sign up with HelloFresh but resolved to remember it for the future.

At the end of 2018, as I was evaluating my spending patterns, I was shocked by how much I was spending on food. It's embarrassing to show the following numbers, but facts are facts and truth is truth. I was spending over $1100 per month on food.

2018 food spending

“Something needs to change,” I told Kim. “Maybe we should try HelloFresh again to see if it can help us cut costs.”

“Do you think so?” Kim siad. “Isn't HelloFresh kind of expensive?”

“It's not that bad,” I said. “Besides, if having meals delivered can keep us from dining out so often, and if it can keep me from splurging at the grocery store, it might actually save us money.”

I signed us up.

For two months — January and February — we received three HelloFresh recipes each week. Based on our experience, here's a new, revised review of HelloFresh. [Read more…]

Saving regret — and how to avoid it

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In November 2018, the National Bureau of Economic Research published a paper called “Saving Regret” [here's the full PDF version]. Once you wade through the study's academic language, there's some interesting stuff here about why people do and don't save for retirement.

Saving regret, the authors say, is “the wish in hindsight to have saved more earlier in life”.

Obviously, you can suffer from saving regret at any age. When I met 31-year-old Debbie for dinner last week, her issues boiled down to saving regret. She wishes she'd saved more when she was younger. But for the purposes of this paper, the authors turned their attention to folks aged 60 to 79, people of traditional retirement age.

The researchers found that two-thirds of those surveyed said they should have saved more when they were working: “66.6 percent said they would save more if they could re-do their earlier life.”

As you might expect, the authors found that high-wealth and high-income people experience less saving regret. (I'm pleased that the researchers recognize that there's a difference between income and wealth.)

But what causes saving regret in the first place? Why don't people save more? Let's take a look at what the study found.

Saving Regret -- and How to Avoid It

Sources of Saving Regret

In their survey of 1590 people, the authors asked about education, personality, and what they term “positive and negative shocks”. (The latter is basically trying to to determine how unexpected events affect saving.)

After compiling the results, they reached these conclusions:

  • “We found only modest evidence for a relationship between our measures of procrastination and the desire to re-optimize saving.” Yes, procrastination is a factor in saving regret. But it's not as big as you might expect.
  • Failure to anticipate negative shocks — underestimating their probability and effects — has a greater effect on saving regret.
  • Overall, “a substantial percentage of respondents view their economic preparation to be adequate, yet they nonetheless express saving regret.” In other words, as many GRS have experienced, even when you think you have enough saved, you often wish you had more.

“Saving regret is high at the time of or shortly before retirement but is much lower at older ages,” the authors write. They believe there are two reasons for this. [Read more…]

Twenty years of U.S. government inflation data

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Inflation is the silent killer of wealth. Year after year, the purchasing power of your dollar (or pound or euro or yen) gradually erodes. My father was one of those “hide money under your mattress” type folks because he believed that was the best way to keep his cash safe. He was wrong.

If you sit on your money, it doesn't maintain its value. It loses value.

At his Carpe Diem blog, economics professor Mark Perry recently published a new version of the following chart, which visualizes the effects of inflation on certain consumer goods and services.

21 Years of Inflation (from Carpe Diem)

As you can see, this chart tracks 21 years of inflation data: from January 1998 to December 2018. (Perry uses official Consumer Price Index data from the U.S. Bureau of Labor Statistics.) He writes:

During the most recent 21-year period from January 1998 to December 2018, the CPI for All Items increased by exactly 56.0% and the chart displays the relative price increases over that time period for 14 selected consumer goods and services, and for average hourly earnings (wages). Seven of those goods and services have increased more than average inflation…The other seven price series have declined since January 1998.

In the chart, the black line indicates average inflation over the past 21 years. Red lines indicate items that have increased in price at rate faster than inflation; blue lines have decreased in price relative to inflation.

If you read the accompanying blog post — and especially the comments that follow — you'll see that people are quick to jump to partisan conclusions regarding this chart. “The more expensive stuff is a result of socialism and government regulation!” “The less expensive stuff is open to free market competition.” (These comments aren't surprising considering the blog is published by a conservative think tank.)

I believe these responses are overly simplistic. Besides, they miss the really interesting stuff.

For instance, look at the price of televisions. According to the CPI, the price of TVs has declined 97% in the past 21 years. I think we all know that's not actually the case. TVs have grown more expensive, along with most everything else. So, why does the data state otherwise?

According to the frequently asked questions about the Consumer Price Index:

A fundamental problem for the goods and services in the CPI sample is that their characteristics, not just their prices, change over time as the retailers introduce new versions of items and discontinue the older versions. In many categories of items, this is the primary time when price change occurs. The new version of the item may provide additional benefits or, in some cases, reduced benefits. This change in benefit is quality change.

To measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change.

To compensate, the CPI uses a technique called “hedonic quality adjustment”.

As new features are added to existing products, economists attempt to model what the new features are worth if broken down to their constituent parts. In 1998, your television was a boxy beast. In 2018, it's probably a big, slim wall-mounted display with dozens of nifty features. Each one of those features has a value that gets included in the inflation calculations.

If you could have purchased a modern TV in 1998, it would have cost a small fortune. And in 2018, an old CRT TV would only cost a fraction of what it did back then.

It's also interesting to note that the cost of manufactured goods (like cars, toys, and TVs) has declined more than the cost of services (such as medical care and education). I'm not sure why this is the case, but it's true.

When I look at this chart, I see something else. It appears to me that those things that are most useful or most necessary have had the highest price increases. Those things that are least necessary have seen the biggest price drops. If I had more time, I'd dig deeper into the data to see if this is actually the case.

Inflation statistics are one thing. Actual experience is another. When Kim and I complain about prices, food is what bugs us most. Nowadays, dinner in an average restaurant runs about fifty bucks. That would have bought a fancy dinner in 1998. Even my standard two cheeseburger meal at McDonald's costs more than $5 now. (I don't get it very often, but it seems like it should cost $3.) Groceries show similar increases.

Home prices seem outrageous in Portland still. Health care prices also seem crazy. We also think most entertainment options — movies, sporting events — are exorbitant. I think books are spendy too. (Do I sound like a grumpy old man yet?)

Meanwhile, clothing seems cheaper to me than it did two decades ago. (And I say this as a guy who used to shop at thrift stores!) Now that we're preparing to buy a new car, vehicle prices don't seem that bad — at least not for the low-end models we're considering.

As a final note, I'm puzzled by the items the chart chooses to track. They seem arbitrary. Why show toys and televisions but not energy or transportation? Why, specifically, cell phones? Why not entertainment and recreation? And so on.

I'd love to see a similar chart with a more robust set of data. (Maybe this is a job for Zach from Four Pillar Freedom?)

Case study: Deep in debt but scared to take action

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Last night, as I do from time to time, I met with a GRS reader. Actually, Debbie doesn't read this site but her sister does. And Debbie means to. Although I met Debbie's sister last year at a Camp FI event, I'd never met Debbie before.

“So, what's your situation?” I asked after our waiter had brought us each a glass of wine. “What do you want to know about money?”

“Everything,” Debbie said, laughing. “I feel like I don't know much at all right now. I guess deep down, I know what I need to do. I just don't do it.”

I nodded. “I'm like that with fitness,” I said. “I know what I need to do, but I just don't do it. I know I need to exercise. I know I need to stretch. I know I need to eat better food. But for a lot of people — people like you and me — there's a barrier between knowledge and action. It doesn't matter if we know how to do the right thing. It's the action that matters.”

“I buy books about money but I never read them,” Debbie said. “I have Dave Ramsey and The Millionaire Next Door.”

“Those are both good books,” I said. Then, I shifted gears.

Looking for Purpose

“This might seem odd, but let's talk about your goals. What do you want out of life? What are your big plans?” Our waiter brought Debbie a bowl of mussels and me a plate of pasta.

“I want to make the world a better place,” Debbie said. “I'm young. I work for a huge multi-national company. But I don't believe in the company and I don't believe in my work. I get paid $20 an hour to bring people coffee and water all day. I have a bartending gig on weekends. I want to do something that matters. Maybe improve our food system, for instance. I hate how people eat. I want more people to have better access to high-quality food.”

“That sounds like a noble goal,” I said. “How do you get there from where you are now?”

“I don't know,” Debbie said. “It seems impossible. I have $80,000 in student loans but they're in deferral. I don't have to pay anything on them, but they still accumulate $600 in interest every month. How can I ever hope to catch up?”

“Yeah, that's rough,” I said. “I used to be in a similar position. Twenty years ago, I had over $35,000 in credit card and consumer debt. That's not the same as your $80,000, but it'd probably be equivalent to about $50,000 today. I carried that debt for a long time, just treading water, never getting ahead. I felt like I'd never get it paid off.”

“But you did it?”

“I did,” I said. “I did it by creating a gap between my earning and spending. Fundamentally, there are only two things you can do to improve your situation. You can make more money or you can spend less. Ideally, you'd do both. You want as wide a gap as possible between what you earn and what you spend. Right now, it sounds as if you don't have a gap. You have a deficit.”

Debbie nodded. I slurped down some noodles.

Two Familiar Foes

“How much is your rent?” I asked.

She looked sheepish. “I pay $1200 for an apartment in northeast Portland,” she said. She gave an address near where I lived after my divorce. “I know I should have roommates but I don't. I don't want the complications.”

“And what's your take-home pay?”

“Just over $2000 per month,” Debbie said.

“Yeah, your rent is pretty high,” I said. “I mean, it's not high compared to other places in Portland — it seems about average — but it's high compared to your income. Nearly 60% of what you earn is going to housing. That's a lot! The average American spends about one-third of their take-home pay on housing. So, that's a great place to try to cut costs. Maybe not right now, but over the long term.”

“I like where I live,” Debbie said, prying open a mussel.

“You might want to consider roommates,” I said. “Aside from your housing costs, it doesn't sound like the rest of your spending is outrageous. Honestly, if I were you, I'd try to find ways to boost your income. Especially since you hate your job.”

“I know,” Debbie said. “I've thought about that. I have a marketing degree that I'm not using. My current company offered to give me a raise and a promotion, but I turned it down. I would have been doing work that I hate even more. It would be difficult for me to be in a position where I had to represent a company I don't like.”

“Why don't you quit?” I asked.

“I did once,” she said. “But then I went back right away. I was scared to apply for new work. I don't have much self-confidence. I mean, I'm 31 and have a marketing degree, but I don't have any experience. Who would hire me?”

“I get the lack of self-confidence,” I said. “I totally get it. I struggle with that every day.”

“You do?” Debbie said. She seemed surprised.

“Yes,” I said. “Every day. Even today, I've been dragging around with my head full of negative self-talk. But here's the thing: I've learned to just do the stuff that scares me anyhow.” [Read more…]