Every Monday morning, Tom and I have a Zoom call to discuss the coming week's priorities for this site. For the past couple of months, we've been focused on behind-the-scenes stuff as we prepared to launch the redesign. (That, and I was working on my course for Audible.) Now that the redesign is (mostly) finished, we've begun talking about content. What sorts of articles do we want to write in coming weeks?
"You know," Tom said this morning, "it wouldn't kill you to write about the financial tools you use. You love your credit card, right? And you use Personal Capital? If you were to write about this stuff, we could make more money."
As I've mentioned many times, Get Rich Slowly earns little compared to other sites its size -- especially other financial sites its size. Expected earnings for GRS are probably on the order of $20,000 per month; we bring in about $5000. (And right now, because of the coronavirus, our revenue is lower than this even.)
Believe it or not, the current coronavirus crisis is affecting Get Rich Slowly too. Things are slow around here. Traffic is down. Revenue is down. Production is down. Plus, I have a big deadline at the end of the month. My project for Audible and The Great Courses is due on March 31st.
So, just like the rest of the world, we're going to press "pause" for a couple of weeks. I will return next Wednesday with my annual birthday article, but you'll have to scroll down to see it. I'm going to pin this post to the top of the front page.
The break will allow me to focus my full attention on the FIRE course. Meanwhile, my partner Tom can work on behind-the-scenes stuff (including the nearly-completed site redesign!) without worrying that I'll mess things up haha. And, best of all, maybe we can get ahead on our publication schedule for once. We have two new staff writers. I have some articles planned. Tom has some articles planned. It would be great to resume in a couple of weeks with a backlog of material!
"What a crazy day," Kim said yesterday after she got home from work.
"Coronavirus?" I asked.
"Yeah," she said. "My schedule fell apart, which I figured it would. But I did see three patients in the morning. All three were doctors. Obviously, they thought it was safe to see the dentist. A lot of others stayed home though. Staff too. Meanwhile, people are pissed."
"What do you mean?" I asked.
"Well, it looks like our practice is going to have to shut down for a while. The Oregon Dental Association sent everyone a letter today that explained we're in high-risk professions. They recommended shutting down except for emergency procedures, except for cases that involve pain. So, our office is probably going to close for a while, and that means nobody's going to get paid."
"That makes sense," I said.
"It does," Kim agreed, "but people aren't happy about it. Some of the people in the office need each paycheck. They can't pay their bills if they don't get paid. They think the dentist should keep paying them -- out of his own pocket, if necessary."
"Whoa!" I said.
"I know," Kim said. "They don't understand that if we don't see patients, the practice doesn't make money. And if the practice doesn't make money, it can't pay employees. They just figure dentists are rich, so he should be able to pay us anyhow."
Naturally, this will have a ripple effect.
- Fewer people are going to the dentist (and the O.D.A. has recommended closing anyhow), so the practice isn't making money.
- The practice isn't making money, so it can't pay employees.
- Employees aren't being paid, so they can't buy things. Some can't even pay their bills.
- And, of course, the businesses that rely on payment from the employees then lose revenue -- and cannot pay their employees.
This morning in The New York Times, Neil Irwin calls this the one simple idea that explains why the economy is in great danger. "One person’s spending is another person’s income," he writes. "That, in a single sentence, is what the $87 trillion global economy is."
It's as if the global economy is a perpetual motion machine. It's a virtuous cycle. I buy from you. You buy from Jim. Jim buys from Jane. Jane buys from me. In a very real way, money makes the world go round.
When money stops changing hands, the world stops spinning. Markets crash. People panic. It's as if we've stopped the motor of the world.
How quickly things change.
Last week, the coronavirus (or Covid-19, if you prefer) was a distant problem. It was something other people in other places had to wrestle with. Sure, there was a looming sense that maybe this runaway train was steaming our way, but it still seemed distant enough that maybe it'd stop before it reached us.
Not anymore. Now it's clear that the coronavirus isn't just headed to the U.S., it's already here in our communities.
Can you feel it? There's panic in the streets! We're in the middle of a stock market crash and the hysteria is starting again. As I write this, the S&P 500 is down six percent today -- and 17.3% off its record high of 3386.15 on February 19th.
Media outlets everywhere are sharing panicked headlines.
All over the TV and internet, other financial reporters are filing similar stories. And why not? This stuff sells. It's the financial equivalent of the old reporter's adage: "If it bleeds, it leads."
Here's the top story at USA Today at this very moment:
But here's the thing: To succeed at investing, you have to pull yourself away from the financial news. You have to ignore it. All it'll do is make you crazy.
Spring has sprung here in Portland, and that means yard work. I'll spend most of March completing my project for Audible and The Great Courses -- which means things around here may be slow for a few weeks -- but when I'm done hacking in the word mines each day, there's plenty of mowing and pruning and digging and weeding and planting to do at home.
"I'll be glad when everything looks pretty back here," Kim said last Saturday. We were lounging at the bottom of the yard, soaking up sun and sipping beer. We'd spent the afternoon trimming blackberry vines and moving yard debris. Now, our three cats and one dog were with us, enjoying Family Time.
"Me too," I said. "This back yard is a jungle. It was a mess when we moved in, and it's only gotten worse in the past three years. My goal for 2020 is to clean it up completely, to create a space where it's fun to hang out with our friends."
My girlfriend recently bought a new car. After 23 years, she sold her 1997 Honda Accord to a guy who's more mechanically inclined than we are. Kim upgraded to a 2016 Toyota RAV4, and she loves it.
One of her primary considerations when searching for a new car was the cost to drive it. In her ideal world, she would have purchased a fully-electric vehicle but it just wasn't in her budget. The RAV4 hybrid was a compromise. According to fueleconomy.gov, it gets an estimated 32 miles per gallon. (And actual users report 34.7 miles per gallon.)
Kim's quest for a fuel-efficient car prompted me to revisit apps and online tools that help users track their driving and fuel habits. I've written about these in the past -- and, in fact, this is an updated article from 2008! -- but haven't looked into them recently.
Here's a quick look at some of my favorite driving cost calculators, tools, and apps.
Last Monday, I got an email from Spotify saying that somebody in Brazil had logged into my account.
I checked. Sure enough: A stranger was using my Spotify to listen to Michael Jackson. I told Spotify to "sign me out everywhere" — but I didn't change my password.
On Wednesday, it happened again. At 2 a.m., I got another email from Spotify. This time, my sneaky Brazilian friend was listening to Prince. And they apparently liked the looks of one of my playlists ("Funk Is Its Own Reward"), because they'd been listening to that too.
I signed out everywhere again, and this time I changed my password. And I made a resolution.
You see, I've done a poor job of implementing modern online security measures. Yes, I have my critical financial accounts locked down with two-factor authentification, etc., but mostly I'm sloppy when it comes to cybersecurity.
For example, I re-use passwords. I still use passwords from thirty years ago for low-security situations (such as signing up for a wine club or a business loyalty program). And while I've begun creating strong (yet easy to remember) passwords for more important accounts, these passwords all follow a pattern and they're not randomized. Worst of all, I maintain a 20-year-old plain text document in which I store all of my sensitive personal information.
This is dumb. Dumb dumb dumb dumb dumb.
I know it's dumb, but I've never bothered to make changes -- until now. Now, for a variety of reasons, I feel like it's time for me to make my digital life a little more secure. I spent several hours over the weekend locking things down. Here's how.
For the past six weeks, I've been hard at work writing my "introduction to financial independence and early retirement" project for Audible and The Great Courses. It's been challenging -- and fun -- to rework my past material for a new audience in a new format.
Naturally, I'm emphasizing two important points in this project: profit and purpose.
- I believe strongly that you need a clear personal mission statement in order to find success with money (and life).
- I also believe that the most important number on your path to financial freedom is your personal profit, the difference between your income and your spending. (Most people refer to this number as saving rate. I prefer the term "personal profit" because it's, well, sexier.)
That last point is important.
Too many people want magic bullets. They want quick and easy ways to get out of debt and build wealth. They believe (or hope) that there's some sort of secret they can uncover, that somehow they've missed. Well, there aren't any secrets. Money mastery is a combination of psychology and math. And the math part is so simple a third-grader could understand it. Wealth is the accumulation of what you earn minus what you spend.
There are only two sides to this wealth equation -- earning and spending -- but a disproportionate amount of financial advice focuses on the one factor, on spending, and that's too bad. Sure, frugality is an important part of personal finance. And if you're in a tight spot and/or have a high income and still struggle, then cutting expenses is an excellent choice. But the reality is, you won't get rich -- slowly or otherwise -- by pinching pennies alone.
Last year wasn't good for me. Depression and anxiety reigned supreme. By objective standards, my life was pretty good. But subjectively, life sucked. Going into 2020, I decided I needed to make some changes. I'm pleased to report that the first five weeks of the year have gone swimmingly. Life is grand.
I've made three specific changes that I believe have contributed to this improvement:
- I've rented office space outside the house. My office is for work only. I do not allow myself to play games (or engage in other shenanigans) at the office. Zero tolerance.
- I've begun getting up early. I tend to be an early riser anyhow, but early for me means about six o'clock. This year, I'm generally rising at 4:00 or 4:30, which means I'm at the office by five.
- I've curtailed my drinking. In fact, I didn't touch a drop of alcohol during January. I've had a few drinks in February, and it's been interesting to see how it affects me, both in the moment and then for days after.
Taken together, these three changes have mitigated my mental health problems and made me more productive. I love it. Over the next six weeks, I plan to integrate two additional changes into my life: I'm going to begin exercising regularly and I'm going to cut back on videogames. I expect this to provide an additional boost to my well-being.
There's been an unexpected benefit to my quest to become a better version of me. January was -- by far -- my best month with money in years.
My January 2020 Spending
As you know, I track every penny I spend. I've been doing this since 1993 (with occasional breaks). It's a valuable practice.
Earlier this decade -- after my divorce but before my RV trip -- my monthly spending averaged about $4000. After returning from our cross-country adventure, that number spiked. From 2016 to 2018, I was spending closer to $6000 per month. This led me to push for austerity measures last year, measures that worked. My 2019 spending averaged $4221.27 per month.
In January, I spent $3212.24. This is a fist-pumpingly fine number, one that I'm proud of. But I'm even prouder of how I achieved those cuts. My top financial goal for this year is to spend less on food. I did that. And because I didn't drink, I spent nothing on alcohol.
Because I was curious, I decided to explore my spending over the past few years. I think you might find it interesting too. Here's a snapshot:
This spreadsheet shows monthly spending in select categories during the past five years. This spreadsheet does not show all of my spending. The 2016 numbers are for December only (because that's when I resumed tracking after our RV trip). The numbers for last year are only for the first half of the year. And, obviously, the numbers for this year are only for January.
- Generally speaking, my vehicle costs are low. They were high in 2017 and 2018 because my 2004 Mini Cooper needed repairs. They were high last year because I spent $1900 to buy a 1993 Toyota pickup.
- My entertainment spending is dominated by three specific expenses: my Portland Timbers season tickets, our subscription to Broadway in Portland, and my iTunes movie and TV purchases. The theater tickets are a one-time expense each February. The Timbers tickets (which I may not renew this year) are a one-time expense each August. I continue to work to keep my iTunes purchases under control.
- I spend more on our pets than I thought. A lot more. I love our dog and three cats, but wow! I paid $142 to support them last month, and there were no vet expenses in January. Much of this spending is for pet-sitting when I travel.
- Look at my food spending! Holy cats! I've been pushing hard to reduce this over the past five years, and January was a shining example of what I can get this down to if I try. Kim and I didn't feel deprived. We just made smarter choices.
- Finally, when I'm not drinking, my spending on sin -- which includes alcohol, occasional tobacco, and legal pot -- falls off a cliff. Obvious, but also wow.
I know I'll spend more in February than I did in January. Our theater tickets renew and that's a $1500 expense, for instance. Still, I expect that I'll continue this trend toward reduced spending, and I'm glad. It makes me happy. It's yet another way that 2020 is off to a better start than 2019.