How cheap are you outside investing?

[adesigar]

I don't know if this is "cheap", but once I have sold my current apartment, I don't think I will ever own property again.  Reason?  Over the long term, I target 12% + from my portfolio.  Why own property when (long term) it can't return much more than nominal GDP plus a bit.  In the UK, as of last week, a married couple can invest £30k tax free, it was around £22k. 

 

Thoughts?  Does anyone else have this attitude.

 

It always depends how much you pay and the location. Real Estate can far outpace stocks IF you buy at the right place at the right price.  Example of my current house. using numbers adjusted to 100,000.

 

Purchase price - 100,000

Down payment 10,000

Current price - 140,000

So equity went from 10,000 two and half years ago to 50,000

Assume it increases at 2% ie 2,000 per year that's 20% on my initial investment.

Mortgage+HOA+Insurance+Maintenance is less than rent so principal is accumulating as well.

 

Explain how that's a bad investment?

[adesigar]

On the way back from the airport I once asked the cab driver to pull over, still a mile away from my house. I couldn't stand watching the meter rise anymore.

 

 

We have a winner for the cheapest guy on the COBAF message board.  After reading your message, I feel like I'm not worthy!

 

 

SJ

 

LOL I disagree. He decided to get a cab instead of renting a car, asking a friend/family member to pickup or using a airport to home shuttle service.  Now if he had hitchhiked home that would IMO qualify for cheapest guy. :P

[ZenaidaMacroura]

I don't know if this is "cheap", but once I have sold my current apartment, I don't think I will ever own property again.  Reason?  Over the long term, I target 12% + from my portfolio.  Why own property when (long term) it can't return much more than nominal GDP plus a bit.  In the UK, as of last week, a married couple can invest £30k tax free, it was around £22k. 

 

Thoughts?  Does anyone else have this attitude.

 

It always depends how much you pay and the location. Real Estate can far outpace stocks IF you buy at the right place at the right price.  Example of my current house. using numbers adjusted to 100,000.

 

Purchase price - 100,000

Down payment 10,000

Current price - 140,000

So equity went from 10,000 two and half years ago to 50,000

Assume it increases at 2% ie 2,000 per year that's 20% on my initial investment.

Mortgage+HOA+Insurance+Maintenance is less than rent so principal is accumulating as well.

 

Explain how that's a bad investment?

I think you may be taking for granted the assertion that "Mortgage+HOA+Insurance+Maintenance is less than rent."  I find in many places the mortgage already surpasses rent by a fair amount (15-20%).  I find that when the rent is more than the mortgage+et al then appreciation is pretty stagnant 5 years going out.  Just empirical though, not a huge sample.

 

Then you have to lump in the frictional costs of buying and selling, as your property value increases so do the corresponding taxes etc... 

 

You may have chanced upon a rare case.  Incidentally there are (at least to me) more bargains in equities and distressed debts than there are in residential real estate because while some people will shun stocks until the absolute zenith of the bull market, almost everyone is in the market for a house if the price is right.

[randomep]

On the way back from the airport I once asked the cab driver to pull over, still a mile away from my house. I couldn't stand watching the meter rise anymore.

 

 

We have a winner for the cheapest guy on the COBAF message board.  After reading your message, I feel like I'm not worthy!

 

LMAO

SJ

[randomep]

On the way back from the airport I once asked the cab driver to pull over, still a mile away from my house. I couldn't stand watching the meter rise anymore.

 

 

We have a winner for the cheapest guy on the COBAF message board.  After reading your message, I feel like I'm not worthy!

 

 

SJ

 

LOL I disagree. He decided to get a cab instead of renting a car, asking a friend/family member to pickup or using a airport to home shuttle service.  Now if he had hitchhiked home that would IMO qualify for cheapest guy. :P

 

Give him credit, it was a lapse of judgement to take the cab and he came to his senses 1 mile from home!

 

[stahleyp]

On the way back from the airport I once asked the cab driver to pull over, still a mile away from my house. I couldn't stand watching the meter rise anymore.

 

LOL!  That's hilarious.  Cheers!

 

Oh man. I'm glad you quoted that, Sanj. I missed it the first time. JBird wins!

[one-foot-hurdles]

You have to be careful with frugality, and weigh it against the income you would make with the time spent saving money. 

 

For example, a lot of these behaviors have become habit for me over two decades, such as cutting coupons when I buy groceries every week.  But as time went buy, I realized that if I spend half an hour cutting coupons that will save me $5, but in that half hour I earn $100, it's probably not the best use of my time.

 

So a lot of frugal behaviors that I carry out now, I always weigh them against the value of that time.  If I'm not doing anything, then sure I'll save that $5, or research that discount on phones, cars, furniture, etc.  I'm not the most handy of individuals, so I'm never going to spend hours remodelling my kitchen myself.  So I'll seek out deals, haggle, etc and get great work for a fair or cheap price.   

 

What I've found is that I can get better discounts by simply calling up the retailer and haggling with them on the phone.  That's what I do for my smartphone, computers, furniture, cars...just about most things.  If you ask or haggle, generally you will save a fair amount of money without wasting too much time.  Any fee or bill I receive that I don't like...I phone them up and seek a reduction or haggle for a fee removal.  Cheers! 

 

Took the words right out of me Sanj. This is exactly how I've learnt to think.

 

I am frugal by nature, but I've learnt that Time is a scarcer resource, and sometimes there is a high cost associated with a low price. 

[eggbriar]

 

 

LOL I disagree. He decided to get a cab instead of renting a car, asking a friend/family member to pickup or using a airport to home shuttle service.  Now if he had hitchhiked home that would IMO qualify for cheapest guy. :P

 

Ha ha, I used to hitchhike home from the airport all the time!

[beerbaron]

 

 

LOL I disagree. He decided to get a cab instead of renting a car, asking a friend/family member to pickup or using a airport to home shuttle service.  Now if he had hitchhiked home that would IMO qualify for cheapest guy. :P

 

Ha ha, I used to hitchhike home from the airport all the time!

 

I'm so cheap that even when my employer is paying I take the cheapest thing on the menu.

 

I'm so cheap that when I was 20 Years old. I went back home from the video store to get some change because I did not want to break a 50$ bill.

 

I'm so cheap that when I eat lunch I can eat under 5$ most of the time.

 

I recently found out why I don't really like to travel. Because the pain of having useless expenses is greater than the pleasure of being in vacation. The above applies to almost anything I buy.

 

However, I'm not cheap when it comes to having friends and family over tough, good food and good booze makes people happy to come back another time.

 

BeerBaron

[stahleyp]

$5 for lunch? Dang. Mine is usually about $1 (or less).  8)

[beerbaron]

$5 for lunch? Dang. Mine is usually about $1 (or less).  8)

 

Which restaurants offer anything under 3$?

 

BeerBaron

[stahleyp]

$5 for lunch? Dang. Mine is usually about $1 (or less).  8)

 

Which restaurants offer anything under 3$?

 

BeerBaron

 

I bring my lunch. ;)

 

I do it for a couple reason. Obviously, to save money, but also to avoid crap like hormones, antibiotics and GMOs.

[beerbaron]

$5 for lunch? Dang. Mine is usually about $1 (or less).  8)

 

Which restaurants offer anything under 3$?

 

BeerBaron

 

I bring my lunch. ;)

 

I do it for a couple reason. Obviously, to save money, but also to avoid crap like hormones, antibiotics and GMOs.

 

Ahh, I eat out most of the time, making my own lunch the night is not worth the trouble if you consider that to make a submarine myself costs 4-5$. Plus, half the time at night I eat at my parents... its one thing to go eat their food it's another to take the leftovers and bring it to work the next day. Lol.

 

BeerBaron

[adesigar]

I don't know if this is "cheap", but once I have sold my current apartment, I don't think I will ever own property again.  Reason?  Over the long term, I target 12% + from my portfolio.  Why own property when (long term) it can't return much more than nominal GDP plus a bit.  In the UK, as of last week, a married couple can invest £30k tax free, it was around £22k. 

 

Thoughts?  Does anyone else have this attitude.

 

It always depends how much you pay and the location. Real Estate can far outpace stocks IF you buy at the right place at the right price.  Example of my current house. using numbers adjusted to 100,000.

 

Purchase price - 100,000

Down payment 10,000

Current price - 140,000

So equity went from 10,000 two and half years ago to 50,000

Assume it increases at 2% ie 2,000 per year that's 20% on my initial investment.

Mortgage+HOA+Insurance+Maintenance is less than rent so principal is accumulating as well.

 

Explain how that's a bad investment?

I think you may be taking for granted the assertion that "Mortgage+HOA+Insurance+Maintenance is less than rent."  I find in many places the mortgage already surpasses rent by a fair amount (15-20%).  I find that when the rent is more than the mortgage+et al then appreciation is pretty stagnant 5 years going out.  Just empirical though, not a huge sample.

 

Then you have to lump in the frictional costs of buying and selling, as your property value increases so do the corresponding taxes etc... 

 

You may have chanced upon a rare case.  Incidentally there are (at least to me) more bargains in equities and distressed debts than there are in residential real estate because while some people will shun stocks until the absolute zenith of the bull market, almost everyone is in the market for a house if the price is right.

 

I was just giving the example of my current home. My Mortgage+Rent+Insurance+Maintenance is less than rent.  Also even though taxes increase its much less than increase in rent.  I just wanted to point out to ukValueInvestor that real estate can do much better than equities IF its bought at the correct price at the correct location.

[stahleyp]

$5 for lunch? Dang. Mine is usually about $1 (or less).  8)

 

Which restaurants offer anything under 3$?

 

BeerBaron

 

I bring my lunch. ;)

 

I do it for a couple reason. Obviously, to save money, but also to avoid crap like hormones, antibiotics and GMOs.

Plus, half the time at night I eat at my parents... its one thing to go eat their food it's another to take the leftovers and bring it to work the next day. Lol.

 

BeerBaron

 

I actually had leftovers from my mom today for lunch!  :D :D

[rukawa]

I have a wife and kids. Owning our own house give my wife peace of mind. Wanna put a value on that return???

and I hate cheap people. Frugal is a far nicer term to use...

 

I prefer the word cheap. Frugal is a word that gives in to the dumb culture around us.

 

And about the wife...seems to be a frequent occurrence

http://www.businessinsider.com/but-my-wife-made-me-buy-this-crappy-overpriced-house-2009-5

[oddballstocks]

You have to be careful with frugality, and weigh it against the income you would make with the time spent saving money. 

 

For example, a lot of these behaviors have become habit for me over two decades, such as cutting coupons when I buy groceries every week.  But as time went buy, I realized that if I spend half an hour cutting coupons that will save me $5, but in that half hour I earn $100, it's probably not the best use of my time.

 

So a lot of frugal behaviors that I carry out now, I always weigh them against the value of that time.  If I'm not doing anything, then sure I'll save that $5, or research that discount on phones, cars, furniture, etc.  I'm not the most handy of individuals, so I'm never going to spend hours remodelling my kitchen myself.  So I'll seek out deals, haggle, etc and get great work for a fair or cheap price.   

 

What I've found is that I can get better discounts by simply calling up the retailer and haggling with them on the phone.  That's what I do for my smartphone, computers, furniture, cars...just about most things.  If you ask or haggle, generally you will save a fair amount of money without wasting too much time.  Any fee or bill I receive that I don't like...I phone them up and seek a reduction or haggle for a fee removal.  Cheers! 

 

Took the words right out of me Sanj. This is exactly how I've learnt to think.

 

I am frugal by nature, but I've learnt that Time is a scarcer resource, and sometimes there is a high cost associated with a low price.

 

This can go the other way as well.  I know a guy who manages a VC fund, he values his time very highly.  So he outsources everything possible in his life.  He compares his 'wage' with what he'd lose if he wasn't working to do some everyday task.  It's beneath him to do anything but work since that's the highest valued item.  It's a strange concept, it works well in theory, but he can't shutoff.

 

He would say he's frugal or cheap because he's paying a maid and working, but when you look at his life he's living a very nice lifestyle that's unobtainable for most.

[LC]

I agree with Parsad about the time it takes to be really frugal. At some point it's just not frugal. I really like the outdoors and cooking, so that has the side benefit of cheap vacations (lots of camping/hiking/fishing), cheap meals (I love cooking dinner and making food myself such as fermenting pickles and other veggies, aging my own steak), and a green thumb growing all kinds of things. But if I didn't enjoy these processes, it wouldn't be worth it.

 

On the other side, I always tip service people (waiters, bartenders, baristas, etc.) really well, especially if I think I will go back. It usually pays off: they let me in on social things they are privy to and such. Plus it almost guarantees excellent service.

[bookie71]

"This can go the other way as well.  I know a guy who manages a VC fund, he values his time very highly.  So he outsources everything possible in his life.  He compares his 'wage' with what he'd lose if he wasn't working to do some everyday task.  It's beneath him to do anything but work since that's the highest valued item.  It's a strange concept, it works well in theory, but he can't shutoff.

 

He would say he's frugal or cheap because he's paying a maid and working, but when you look at his life he's living a very nice lifestyle that's unobtainable for most."

 

Dang, and I've been taking down the paneling and putting up sheet-rock in the basement. The amount of time I'm spending is enoromus, but I'm having a blast and impressing SWMBO, which isn't easy to do after being together for over 50 years. 

[oddballstocks]

 

On the other side, I always tip service people (waiters, bartenders, baristas, etc.) really well, especially if I think I will go back. It usually pays off: they let me in on social things they are privy to and such. Plus it almost guarantees excellent service.

 

I do this as well, but for a slightly different reason.  In my view a dollar is worth more to them than it is to me.  We don't frequent anyplace enough to be recognized (this is the cheap thread after all), but at the local diner I know the waitresses aren't making much.  By leaving a bigger tip their hourly earnings might increase by a measurable percentage, whereas I won't notice the loss of a few extra dollars.  Especially since I'm overpaying to begin with.  If I were dogmatic about being cheap I'd never step foot in a restaurant, I'd always make my own food.

[oddballstocks]

"This can go the other way as well.  I know a guy who manages a VC fund, he values his time very highly.  So he outsources everything possible in his life.  He compares his 'wage' with what he'd lose if he wasn't working to do some everyday task.  It's beneath him to do anything but work since that's the highest valued item.  It's a strange concept, it works well in theory, but he can't shutoff.

 

He would say he's frugal or cheap because he's paying a maid and working, but when you look at his life he's living a very nice lifestyle that's unobtainable for most."

 

Dang, and I've been taking down the paneling and putting up sheet-rock in the basement. The amount of time I'm spending is enoromus, but I'm having a blast and impressing SWMBO, which isn't easy to do after being together for over 50 years.

 

When I did my basement I didn't think about the time, because like investing I really enjoyed the process.  I also rationalized that if I were to lose my job I could probably get a construction job to pay the bills, I was learning a skill!

 

It's fun to build something yourself, I love it.  The impression factor is nice too.  It's cool to have friend over and hang out and know that I created the place on my own.

[Parsad]

"This can go the other way as well.  I know a guy who manages a VC fund, he values his time very highly.  So he outsources everything possible in his life.  He compares his 'wage' with what he'd lose if he wasn't working to do some everyday task.  It's beneath him to do anything but work since that's the highest valued item.  It's a strange concept, it works well in theory, but he can't shutoff.

 

He would say he's frugal or cheap because he's paying a maid and working, but when you look at his life he's living a very nice lifestyle that's unobtainable for most."

 

Dang, and I've been taking down the paneling and putting up sheet-rock in the basement. The amount of time I'm spending is enoromus, but I'm having a blast and impressing SWMBO, which isn't easy to do after being together for over 50 years.

 

When I did my basement I didn't think about the time, because like investing I really enjoyed the process.  I also rationalized that if I were to lose my job I could probably get a construction job to pay the bills, I was learning a skill!

 

It's fun to build something yourself, I love it.  The impression factor is nice too.  It's cool to have friend over and hang out and know that I created the place on my own.

 

Not only are you learning a skill, but it's a very creative process...for you and many others!  I never liked shop in high school and I don't like fixing my hardwood floors or fridge today.  But I do love technology, computers, business, etc. 

 

My point was that frugal makes sense to a certain extent, including when you enjoy the process of an act and it saves you money, but at some point, your time spent elsewhere doing something you enjoy that is profitable, will offset the cost of someone else providing a service for you for a fee.

 

When I first started the funds, I hardly ever ate out and brown-bagged my lunch every day for several years.  I did not want to take the chance that any extra dollar I spent could jeopardize my future to run the funds if I eventually ran out of money.  I sold my other car as well...my beloved Mini...just to make sure costs were low monthly.  I used public transport weekdays, and only drove on weekends most of the time.  Cut coupons all the time, travelled only for fund business (Toronto & Pabrai Funds meetings) and even gave up some of the sports I enjoyed like skiing, Canuck games, etc. 

 

But as the fund's future started to look better and better, I could relax a bit, because I knew I wasn't going to run out of money any time soon.  In fact, things started going dramatically the other way.  My investments did well, the funds did well, my house appreciated dramatically, the website was doing well, my other business interests were doing well, etc. 

 

At this point, I work from my home office 2-3 days a week, and I'm in the office downtown 2-3 days a week.  When I go to the office now, I don't brown bag it anymore.  This is for three reasons:  One, because I'm in the downtown office less now, so I don't leave my desk for the 6-7 hours I'm there on those days...I don't have time for anything other than work.  Two, I can easily afford to spend $10 on a cup of coffee and freshly made sandwich for lunch.  That fear in the back of my head when you start down the road as an entrepreneur is no longer there.  Finally, the cost of not brown-bagging it, is now offset by me eating lunch at home in my home office half of the time.

 

So the point is that it's good to be frugal on things, but everything has an innate value...a sandwich, a repair job to your porch, your hourly rate of earning income and even your free time.  Like buying stocks, it only makes rational sense to weigh those things against one another.  At different points of your life, those values will vary.  But if you enjoy doing any of those acts, then that adds to the innate value...such as working on your own house, painting, taking photographs, watching a sports event, etc.  Cheers!         

[james22]

OPB (Other Peoples Boats)

[jouni1]

"This can go the other way as well.  I know a guy who manages a VC fund, he values his time very highly.  So he outsources everything possible in his life.  He compares his 'wage' with what he'd lose if he wasn't working to do some everyday task.  It's beneath him to do anything but work since that's the highest valued item.  It's a strange concept, it works well in theory, but he can't shutoff.

 

He would say he's frugal or cheap because he's paying a maid and working, but when you look at his life he's living a very nice lifestyle that's unobtainable for most."

 

Dang, and I've been taking down the paneling and putting up sheet-rock in the basement. The amount of time I'm spending is enoromus, but I'm having a blast and impressing SWMBO, which isn't easy to do after being together for over 50 years.

 

When I did my basement I didn't think about the time, because like investing I really enjoyed the process.  I also rationalized that if I were to lose my job I could probably get a construction job to pay the bills, I was learning a skill!

 

It's fun to build something yourself, I love it.  The impression factor is nice too.  It's cool to have friend over and hang out and know that I created the place on my own.

 

the thing is, if your employer lets you work unlimited hours and pays you well, it makes no sense to do stuff around the house.

 

i understand fixing stuff up around the house when retired or doing just 8 or 9 hours a day, but if you have a chance to work 12+hours for 7 days a week, it's just stupid spending countless hours trying to learn a job a pro would've done in 20 minutes (usually with better results).

[rkbabang]

$5 for lunch? Dang. Mine is usually about $1 (or less).  8)

 

Which restaurants offer anything under 3$?

 

BeerBaron

 

I bring my lunch. ;)

 

I do it for a couple reason. Obviously, to save money, but also to avoid crap like hormones, antibiotics and GMOs.

 

Exactly.  This is one of the reasons I bring my lunch and almost never go out to eat period.  You just never know exactly what you are consuming. Not only hormones, antibiotics and GMOs, but also, pesticides, high omega 6 oils, transfats, added sugars/corn syrups, grain fed meets, farmed fish, ..... on and on and on.  99% of it is junk food even at the most expensive restaurants. I don't want any of that crap in my body (or my kids' bodies) on a regular basis.  Once in a while is fine, but not every day, or even every week.  All that and you pay more for it.