How to setup a budget

We’ve referenced the important of having a budget under multiple occasions: link, link, link. A budget is not to limit you, but to shed light on some areas of your spending. You may be shocked at the results. A budget serves to show where you are as far as savings/net worth as compared to where you want to be, should be, or need to be based on your goals.

We figured it would be fun to detail what you should probably include as the basic necessities in your budget, along with unveiling the ridiculousness of the WinningWilliams “budget” which contains over 20 tabs in an Excel worksheet!

Many people use YNAB and find great value, but basic Excel skills, result in a free option for maintaining your budget. 

Minimum Budget Needs:

• Your “Income Statement” tab. This is the breakdown of all your EXPECTED sources of income, expenses, and then (better be) leftover savings. Note: your ACTUAL expenses will likely differ. See the next bullet/tab to understand how much to allocate to expenses.
  • Income – detail all sources of cash coming in – salary, bonus, side projects, investment income, rental income, etc.
  • Expenses – again detail ALL EXPECTED items, even items such as taxes (if you didn’t use after-tax income above), health insurance, and everything in between. Also, you should be included reserves of big-ticket items such as car maintenance and future car purchase savings (since you will never finance a car purchase by the way), home maintenance, property insurance, taxes, etc. Some expenses do not occur every month (or whatever time-period you are using), but should be accounted for as they will occur at some point into the future. In accounting this is an accrual. Fun fact.
  • Savings – whether 401K / IRAs / traditional savings account. This is the amount left over subtracting all expenses (and accruals) from your income sources.
• Expense Tracking tab. This is crucial for those starting out. You MUST track and categorize all expenses for several months to get an idea of how much you are spending. There are likely several items you had no idea how expensive certain recurring costs were. Make sure your actual expenses you are tracking then match up with your expected expenses on the income statement tab.
• Net Worth tab. This shows at a point in time (perhaps end of month or end of quarter) how much you have saved in each of your accounts. Those with debt should also list how much debt is outstanding and aggressively eliminate it as soon as possible. Take your savings accounts, investment accounts, and subtract all outstanding debt to arrive at your net worth.

That’s it for a basic budget: you’re tracking where your actual spending is going, how much you are saving, and how much you have saved for rainy day funds, retirement, etc.

The WinningWilliams Budget:

This is what works for us, you don’t have to get this detailed unless you really want to. Many items don’t really relate to a budget, but they are continuously used and referenced items. Therefore the WinningWilliams budget is not only a financial revelation, but a life revelation… or something like that! Without further ado:

• Tab 1 – Financial start – shows credit score over time, when the last credit report was pulled, and how much social security is claiming they will pay me at various retirement ages. Credit Score is more important here! We use Credit Sesame for our monthly credit score approximation along with the formal annual credit report provided for free from the main credit bureaus (TransUnion, Experian, and Equifax).
• Tab 2 – Income Statement – Shows all of our income less HSA and 401K savings to arrive at our pre-tax earnings. We then subtract expected taxes and Roth IRA contributions to be our Net Income line. Our Net Income then subtracts our expenses (broken up into House related, rental expenses, general expenses, and other accruals). Those expenses are detailed so we can see where most of our expenses our going (38% house – rent, utilities, etc.), (12% rental/investment house – insurance, taxes, reserve accrual, HOA), (8% food – groceries and dining out), (9% health – health insurance and general expected health costs from doctor visits, etc.), (12% travel), (11% car –insurance, gas, tolls, maintenance, future car fund), and many smaller percentage items that make up the remaining 10%.
• Tab 3 – Tax planning – monitoring all of our income sources to verify our tax rate, MAGI (modified adjusted gross income), and make sure we are eligible for IRA contributions at the end of the year
• Tab 4 – Expense Tracking – We love this one. We track and categorize all expenses. The end of the month we can see where we ended up and if we need to make any changes to our spending habits. While it does take some time to input, by updating it frequently, it takes quick updates.
• Tab 5 – Net Worth – We break up our Net Worth into a few sections:
  • Short-Term Accounts (savings accounts, checking accounts, online savings)
  • Investment Accounts (what we have in our brokerage and HSA accounts), and
  • Long-Term Accounts (401K and IRAs – Retirement Accounts).
  • These total into our Net Worth. We also include estimated home equity to arrive at a secondary Net Worth calculation which includes the value of our home equity. (Note: we do not provide any value for car, furniture, or other assets. These are depreciating assets that won’t likely provide any material value to us. We also don’t have any debt, which is of course why we can have a blog called WinningWilliams ☺ )
  • This tab also includes all accruals, yep those items that you save for that you will need to pay for in the future. We have accruals for car repairs and savings, home repair (including roof and future A/C fund), emergency fund, travel fund, and among others). These items are conservatively held in our Short-Term Accounts (primarily online savings). While this may serve to be overly cautious and result in a high-level of non-invested cash, these are all items that could come up and require cash-on-hand. We could be more aggressive, but have chosen the more conservative route.
• Tab 6 – Graphical tab – This shows our net worth (excluding home equity) per quarter. It also shows how much we would have to live on using the 4% rule if we retired today. Hello Ecuador retirement!!
• Tab 7 – Summary Tab – Originally established for a meeting with a financial advisor (relax, this was a free service offered by my credit union just to double check our thought processes). It is a more detailed look at our Net Worth including looking at where our retirement accounts are invested and where our asset allocation stands (excluding Cash it is 79% equity, 16% fixed income, 5% REITS).
• Tab 8 – Details our equity trading activity (purchase price, shares, etc.). It also shows potential ideas/indexes/etc. We will follow-up with more information on our investment strategy.
• Tab 9 – Asset Allocation 2– Yet another look at our asset allocation, but much more specific broken out and color coded between cash, fixed income (domestic, international, government, corporate), equity (domestic, international, small, mid, large, emerging, etc), real estate and commodity, and speculation.
• Tab 10 – Utility – Yep, we actually track what our electricity, water, and internet bill has been on average for the last several years. For 2015, our monthly average electricity spend was $54.09, water was $24.31, and internet was $54.43.
• Tab 11 – Credit card / travel hacking info – We took a class on travel hacking. This spreadsheet shows what cards we have open, closed, potential next applications, limits, bonus info, dates to consider closing. Since we know we will NEVER carry a balance and pay interest, we know there are significant value to sign-up bonuses and travel rewards. Just for reference, we’ve tracked related expenses of $174.25 with a rough value of $1,805. This does not include tens of thousands of additional points that will increase our value in the future. Side note, my credit score has increased since going through this process!
• Tab 12 – Travel Logins – This shows all of the reward information for all of the different airline and hotel programs and when any of the miles expire. Can’t have that!
• Tab 13 – Rental Income – This tab shows all income and expenses related to our rental property for tax purposes
• Tab 14 – Charity – As part of this New Year’s goal, every month we need to contribute to charity or give back in some way. This could be through a time commitment or monetary commitment. This is just a simple tracking log to ensure and hold us accountable that we contribute each month.
• Tab 15 – Blog ideas ☺
• Tab 16 – Book List –  As others recommend books I add them to “the read” list. I’ve also started making notes on the books I’ve read and enjoyed the most so that I can revisit them at a later date. Also best book ever my Mrs. WinningWilliams 
• Tab 17 – Birthday List – Why not have a nice reference for everybody’s birthday in a convenient location?!
• Tab 18 – Vehicle tracking – This tab tracks my car repairs, costs, mileage, etc. Could be helpful for resell, if that day ever comes ☺
• Tab 19 – Movie List – Tracks upcoming movies that we want to add to the library list when they become available. As previously mentioned, we are a huge proponent of our library system, they offer new movies as they are released on DVD and will even ship them to our local library for pick-up. Pretty darn close to Netflix, but for free (well, included in property taxes)!
• Tab 20 – Website Reference – As a travel lover, personal finance lover, blogger, there are many many great websites and great articles for reference. This categorizes some of the best articles for future reference.
• Tab 21 – Entertainment ideas – Breaks down a local to-do / to-visit list. This is primarily for us to be great hosts when we have friends and family in town. We can quickly reference the list for all sorts of potential ideas!
• Tab 22 – Local travel ideas – We also checked out one-tank trips from Tampa. It’s nice guide-book that lists off-the-beaten path locations to visit that are all supposed to be within one-tank of the Tampa, FL area. We did Tarpon Springs for New Year’s. Yay, sponges!
• Tab 23 – Travel summary – Starts our outside travel list, specifically summarizes where we’ve and key highlights from the trip (since 2011 – Washington D.C., Philadelphia, Las Vegas, New York City, New Orleans, Ft. Lauderdale, Miami, New York City (again), Costa Rica, Key West, Philadelphia (again), Italy, Nashville, New York City (again x2))
• Tab 24 – Our travel bucket list – This is definitely important for everyone to not only look at what is important for them to accomplish, but to start taking action to make them happen. We break things up by priority: 1) bucket list, 2) highly preferred, 3) Tier 2, 4) Other. Our bucket list has dwindled to Iceland and the Grand Canyon, but others are starting to creep their way up from the lower buckets!
• Tab 25 – Upcoming travel S.W. U.S. – As we travel plan, we save links, articles, expected costs, and any other relevant information onto tabs related to the destination. Tab 25 relates to our trip to the Southwest U.S. which will occur at the end of April and into May. An Epic 16-day journey traveling from Arizona, through Utah, and out of Colorado! Stay tuned for how we cut costs on this trip significantly.
• Tab 26 – Upcoming travel Iceland. Tab 25 and 26 makes sense for the aforementioned bucket list!

There are also more tabs that have been hidden or are completely irrelevant. If you somehow made it this far, CONGRATULATIONS! YOU ARE AWESOME! Now stop procrastinating and start your budget!

The Mindset to Be Debt Free

When we started this blog last year, we did so with the aim to help others. All around us we could see people in varying states of distress over their current situation. 90% of the time they had complete control over their ability to change it, but they just couldn’t make the changes required. We thought that if we shared some of the ways in which we are able to save and the techniques that have allowed us to become debt free and thus, follow our passions, that we might be able to help.

But we aren’t the only people who have thought of this. There are many great blogs about personal finance, budgeting, investing, minimalism, and all of the nuanced topics in between. Everyone with internet access can also work off of Google Sheets to keep a budget on a spreadsheet. More than ever people are connected to the collective knowledge of the internet. Yet the simple solutions, or the recognition thereof, remain elusive for so many.

Data showing that people, in general, are in financial trouble even with a wealth of available knowledge online:

• The average US household in 2015 had over $15,000 in credit card debt
• 63 percent of Americans say they’re unable to handle a $500 car repair or a $1,000 emergency room bill

So what gives? The simple credo of “Spend less than you make, and save the rest” doesn’t seem to be connecting. What could be standing in the way of such simple logic? How can the elegance of minimalism elude so many?

The answer is this: consumerism. Or consumeritis. Whatever you choose to call it, our society is constantly telling us to buy something to look better, or to buy something to fit in, or to buy something because we won’t be complete without it. We find that this mindset is not conducive to leading the life of freedom (financial or otherwise).

What we have come to realize is that most people can intellectually understand the basic concepts of saving. The problem is lack of commitment to living that mindset.  

Here is our zen philosophy of anti-consumerism. If the numbers and statistics won’t sway you or help you to make the changes necessary to get out of debt, perhaps a change in mindset will help you get there:

 

• We have released ourselves from the compulsion to spend.

 

Even if something is 70% off, or on clearance, or the best deal ever, we automatically think “don’t buy.” Then we may consider the costs and benefits and only if a compelling need is presented will we make a purchase.

 

• We find joy from pursuing our passions and searching for our purpose.

 

We enjoy a good comedy from time to time, but we have made a habit of focusing on our passions. We haven’t had a regular TV show that we make a point to watch in a long time. We aren’t required to sit in front of the TV for hours on end ‘catching up on a show.’ But we do feel that we have to pursue our dreams and grow our mind and keep our bodies healthy. All of those items keep us plenty busy and it turns out that most of those activities cost us nothing.

 

• We have a clear goal in mind to work towards.

 

We both are lucky enough to have jobs that we genuinely enjoy going to every day, but we know that we want to see the world and experience life beyond the confines of our office. We have a goal of retiring early so that we can travel and contribute and live life on our terms. Small material items don’t compare to this goal and it makes it easier to resist the lure of consumerism.

That is our philosophy. What works for us may not work for you, but spend some time thinking intentionally about what you want your life to be and what is standing in the way of getting there. Is it your debt? Is it your mortgage? Is it your mountain of stuff that is keeping you in one place? Whatever it is, once you have that philosophy in your mind it will be easier to take the steps necessary to make the change of your life.

 

Be Debt Free in 2016!

Happy 2016 from the Winning Williams! We had an incredible 2015 and we hope that you did as well!

 

For some, the New Year is a time to reflect on what they want to change about their lives and take action steps towards those goals. If you want to take control of your personal finances in 2016 we applaud your effort and we want to help!

 

2016 Financial Goals

We have developed a very robust and downright bad-ass budget and expense tracking sheet using excel. We still utilize it so that we can continue to focus on whether our spending aligns with our personal priorities.

 

We have developed a list of financial goals that you can use to help you become financially independent and debt-free. If you are just starting out, start with the first. Perhaps you have already mastered the first goals listed and will try a later option. These simple steps can lead you to a more rewarding 2016!

 

• Total spending for the year– We track every single cent that we spend. Parking fees- tracked. Contribution to a gift pool for a coworker- tracked. One-off expenditures and regular monthly expenses are all tracked in our sheet. This gives us an idea as to where our money is going and lets us review on a quarterly and annual basis where we need to either pull back spending or realign our priorities to match. 

Do this for yourself, we are only 18 hours into the New Year. Track everything that you spend and you will start to see some patterns and some areas where you can curb your discretionary spending to focus on your overall financial goals.

• Budget– If you haven’t already read most of our posts, we highly recommend having a budget. When you are starting out it is important to maintain and update this frequently to establish the habit. Once you have developed a habit of updating and checking against your budget, you can start to better plan for the payments that you know that you will have to make in the future. Knowing what you are going to spend on your housing, transportation, food and utilities will give you a better picture of what, if any, income is left to spend on other items.

 

• Get Out Of Debt– For many years we saw this as the most important goal. After we invested in our 401k, we diverted every cent that was not going to our monthly expenses into paying off our debt and just before New Years Eve in 2012 we did just that! All student loans (Mrs Winning Williams) and the mortgage on the house (Mr. Winning Williams) were paid in full. This was an amazing feeling to know that what we had been paying monthly towards these bills would now be extra money to put… well we didn’t know where to put it. It look us some time to figure out what we wanted. Should we just keep saving or plan lots of trips? What was the end goal of all of our saving? Then we realized that we could retire early, and a new big goal was set. To get there we would need to improve on our spending and focus on increasing our net worth.

 

• Increase Your Net Worth– This is where we are today on the saving spectrum. We look each quarter at what we have added to our net worth in terms of online savings accounts, mutual funds, brokerage accounts, tax-advantaged retirement accounts, and most recently our HSAs. Based on the 4% Rule we know that we need to reach a threshold level of savings so that we have enough to live on based on our annual rate of spending.

 

We wish you luck as you work towards your New Year’s Resolutions and we will be happy to answer questions to help you become Debt-Free in 2016!

Credit Card Churning Part Two: First Trip

A few months ago we wrote a post about Credit Card Churning as a means of gaining reward points offered by credit cards, hotels, and airlines, that can be used to earn free/reduced cost travel. Mr. Winning Williams took a class on the topic, and after thorough research and interaction with the course instructors, he set out to try his first churn.

*As noted in our previous post, you should only look to do this if you are already out of debt, paying off your credit card in full every month, and have an excellent credit score.*

New York City

This trip was already partially subsidized as Mr. Winning Williams had to go for work. Mrs. Winning Williams booked a flight to accompany him in New York City. Because the required work aspects ended on a Friday morning, we decided to stay through the weekend. This is how much we spent, and saved, on a 3-day weekend in New York City:

Big Savings #1: Hotel

What could have been a trip that cost over $1,600 ended up only costing us $430. The biggest savings was from our two-night hotel stay in the Hyatt Times Square.

Why would we, such frugal awesome savers, elect to stay in such a pricey hotel? We got to stay there for free! The first credit card sign-up that Mr. Winning Williams did was with Chase Hyatt Visa Credit Card. By spending $1000 in the first three months we were able to earn the two free nights in a Hyatt property of our choosing (unfortunately the Grand Hyatt NYC was booked and unavailable). We actually spent this amount in 6 weeks by paying ahead on our electric and water bill, ISBN’s, and other normal expenditures.

 

Big Savings #2: MoMa Fridays!

The MoMa houses many masterpieces of modern art. We were able to visit on a Friday afternoon without paying for our tickets. The museum offers free entry every Friday afternoon to those willing to brave the crowds and the line. We arrived to find a long line, but were still able to get the tickets and saved $50.

Big Savings #3: Food

While we did enjoy some great food with friends, we continued to opt for less expensive options when we were dining by ourselves. Our first afternoon in the city revealed a long line in front of a small food cart. After a few more blocks of walking we went back to this cart because it was the clear local favorite, and a much less expensive option! We enjoyed great local and non-chain restaurants, we do occasionally spend money on going out to eat, but this usually only happens when we can meet with friends and experience a meal together.

 

Big Savings #4: Experiencing the City

Since we had both been to New York before we had seen a lot of the great sites that the city has to offer. This trip allowed us to focus on time with friends which included a morning run in Central Park. A friend informed us of a great deal with a local juice company that allowed us to get free delicious pressed juice just by posting our photo to Instagram during the run. We were able to experience Central Park in a new way and had a delicious snack to help us recover from our workout! We also visited and walked the high-line from start to finish. This provided a variety of amazing views of the city from different angles. We were able to use the least costly means of transportation (walking), stretching our legs and avoiding the busy streets of the city!

We are planning a trip in 2016 using more credit card churning and frugal tactics. Our aim is to get a trip for less than $430, we will let you know how that goes!

How we eat on $4.42 a day…

If you come across any personal finance blog you will see the following articles from each:

• Remove your small and recurring expenses (AKA “The Latte” Article)
• The Big 3:
  • Housing
  • Transportation
  • Food

Well, it is time for our “Food Article”- we are going to break down what we spend on our food and how we stay on course for our early retirement goals by keeping this cost down. We will provide some helpful tips that you can incorporate as well.

 

The Winning Williams Monthly Food Cost: $225 average groceries + $40 average dining out

-We are still working to bring the dining costs down, but also know that we enjoy time with friends and family by dining out in social settings.

-This includes all alcohol expenditures (which we try to keep to a minimum) and incidentals (paper towels, Tylenol, etc.)

 

Cost per person per day: $4.42

 

How does this compare to the national average?

According to the USDA Food Cost Report from October 2015, the average monthly cost for a family of 2 (that’s us!) ranges from $390.90 on the thrifty end to $778.70 on the liberal budget end. Sorry, USDA but you’re going to need to reevaluate your definition of thrifty. We have you beat by $165.90, meaning we spend $49,770 less over a 25-year period.  (And for those who are spending on the ‘liberal budget’ we spend $166,110 less on groceries over a 25-year period) WINNING WILLIAMS!

How do we keep our food cost so low?

We aren’t just eating spam, supplemented with rice and beans (although we do enjoy rice and beans as a side item to our entrees). We are eating lean and healthy meals filled with nutrients, vitamins, and plenty of meat! How can we eat so well and on so little?

ALDI!!!!! We will continue to endorse this amazing no-frills, low-cost grocery store. It has helped us to step up our salads with their great prices on fresh produce. Yes, the selection is limited at times, but that is because the items available are those that are in season. They also stock less items, so we are less tempted to buy things we simply don’t need. We don’t need lots of snack food items or a fancy shopping experience. Just quality food at a great price.

We do occasionally supplement mid-week with a small trip to Publix (We eat a lot of bananas and usually need a THIRD bunch by mid-week) and keep our purchases there to absolute essentials (bread and bananas) and buy-one, get-one deals. However, we have sometimes seen that ALDI has beat Publix on their prices even with the BOGO deal factored in!

We rarely do couponing; we have just focused on the foods that are good for us!

Time Investment (aka Meal Prep)

We try to never let any food go to waste. We believe it is the right thing to do; however, it does also help us to stay frugal. This means that we often assess what food we have on the shelves and in the refrigerator, when it will need to be consumed by, and how we can incorporate it into our meals. Mr. Winning Williams has been known to snack on chopped onions or chopped peppers when we have a small surplus. Sometimes we eat the same meal for dinner and lunch; good thing we make delicious meals!

We spend a decent amount of time (at least one hour) on Sundays chopping, cooking, steaming, packing our food for the week, and then cleaning the items used to prepare such food. It is a great amount of quality time that we get to spend together, working in concert and sometimes listening to good music. We can better control the ingredients for what goes into our food and appreciate the effort to make that goes into fueling our bodies. It takes a little effort, but the result is more time together during the week when our dinners are easier to put together and the satisfaction of not spending what could be funding our early retirement.

We Don’t Buy Prepared Meals

This one is a staple on all personal finance blogs, because it is a universal truth. Bringing your lunch to work saves you money. Not going out to dinner or buying a fancy breakfast sandwich, saves you money. Keep in mind that what some people spend daily on their ‘morning latte’ we spend for all of the food that we eat in a day! How’s that for a “latte effect’. (Disclaimer: if you enjoy your coffee that is fine, just understand the longer term impact when you want to retire early).

There are always a few exceptions: a group of friends is getting together at a local restaurant; someone invites you to a special work lunch. It happens. And we have a small budget each month for dining out. We don’t religiously measure each dime spent on meals out, we are just conscious of what is “convenient dining” and what is an experience dining out with friends and family.

So what can you do to start saving on your food costs:

• Save your receipts and look them over when you get home. Scan for the highest cost items on the list and make a mental note of what the most expensive items on your list were. You’ll start to get an appreciation for what those expensive items are and figure out if it is worth the cost. (High protein, high cost- probably worth it. High sugar, no nutritional value and a high cost- cut it out!)
• Find the ALDI closest to you (link to google maps) and start shopping there. https://www.google.com/maps/search/ALDI/
• Take an afternoon to start preparing your meals for the week. The first few times it will take a bit longer, but after a few tries you will become more efficient at it.
• Start tracking your “convenience dining” and see where you can cut it out. (HINT: if you are preparing all of your meals it should start to really drop!)
• Clean out your pantry- try to go as long as possible before making the next grocery trip. Try to go through every item in your cabinet. This means getting creative with new recipes and making the most with what you have. You become more grateful for the array of foods that you have access to after just a few days with a limited variety. (Which pales in comparison to some who live without any food… but that is another topic altogether.)

Personal Finance 101: Get a Bank Account

In some previous posts we have discussed the need to create a budget or how to reduce your time to retirement by saving more. Those items come naturally to us, so we felt a little silly writing them. Well, this next topic, also seems natural to us. But with the proliferation of pay-day loan establishments, it seems that many people are being advised to not open a bank account. So here is a basic primer of why you should have a bank account:

 

Why is it a problem to not have a bank account?

Banking is a personal preference. Some people prefer to not have an account because their parents never had one and the idea of going to start one seems foreign and an inconvenience. Maybe they have a fear of putting their money into an institution and not having it at a moment’s notice. Here are the problems that arise from not having a bank account:

1. Your money earns 0% interest, which means it is constantly losing it’s value to inflation. Granted, the amount that you can earn in a standard savings account is only a little more than this, but you protect yourself minimally against inflation. Online savings accounts offer a better alternative. (More on that later)
2. You have no banking relationship, which means that one day if you want a loan to purchase a house or a car you have no way of proving that you are trustworthy with the bank’s money.
3. Fees upon fees upon fees. Those who live without a bank account tend to rely on Pay-Day loan establishments to cash their paychecks and then they purchase prepaid giftcards to pay for their bills (most of which cannot be paid for with cash). While prepaid giftcards have helped us with our travel hacking, it is a planned expense that we allot for in our travel budget. One reporter, Lisa Choi, lived for a month without her bank account and estimated upwards of $100 in fees each month from that lifestyle.
4. Security & Security. Keeping liquid cash on hand is just plain risky from a security point of view. Once you reach a certain threshold, whether consciously or not, you will be more likely to spend that cash. No bank to securely save it, it’s likely being spent on items that you haven’t budgeted for.

Ultimately those who live without a bank account end up paying more in the long run.

 

Keeping liquid cash on hand is just plain risky from a security point of view

 

“But not everyone can afford a bank account…”

That excuse is rubbish. Here’s why:

1. One of the most common reasons provided by Pay-Day loan establishments in the form of marketing and propoganda is that bank accounts are expensive. Obviously it hurts their business when someone has a bank account because they are no longer providing a service of cashing a paycheck, providing money orders for bills, and because money is stored in accounts, it leaves their customers with less of a need for a pay-day loan.
2. Banks do have fee structures. They usually require a minimum deposit ($100-$250) and have maintenance fees of checking accounts. However, if you maintain a minimum amount in your account, you can usually avoid these fees. The Winning Williams have NEVER paid a single bank fee. We read through the fine print, we asked the necessary questions and have avoided any potential fees.
3. Part of budgeting requires pre-planning. This pre-planning includes making sure that there is enough in the bank account to avoid any overdraft fees. Living without a bank account means that when the money runs out, it runs out. With a bank you can enable overdraft protection which means that once you spent everything in your checking account you can pull from your savings account to cover the difference. Just be sure to replenish your checking account before the monthly statement comes or you risk a fee.

 

You should never have to pay a fee for your money.

 

For those that live paycheck-to-paycheck this can seem daunting at first. But recall, living without a bank and relying on Pay-Day loan establishments can result in upwards of $100 in fees per month. You should never have to pay a fee for your money. There are simple ways to avoid paying a fee when you have a bank account, you can’t avoid the fees when you rely on Pay-Day loan establishments.

 

When there are no big banks in the community

While Bank of America, Chase, Citi and other nation-wide banks may seem to be on every corner in some areas, there are others where they are scarce. These communities tend to see more Pay-Day loan establishments to meet the demand for financial services in the area. Fortunately there are great alternatives:

1. Local Credit Unions– Not only are they more grounded in the community that they serve, but they offer every service and benefit that a standard bank would offer and can often provide better interest rates and lower fee accounts. While they may not have a variety of convenient locations, usually you can find several ATMs that operate in conjunction with multiple credit unions to provide easy access to your account. If you are considering opening a bank account or a credit union account, review these articles to get a better understanding of the differences. Be sure to do research on all of your local options:

How Credit Unions Differ From Banks

Credit Unions v. Banks: 4 Major Differences

Credit Unions v. Banks: Differences, Pros and Cons

5 Pros and Cons of Credit Unions

1. Online Banks– With the dawn of the internet has come the rise of online banks and online banking accounts. This is something that we actually use to earn higher interest rates on our savings accounts (4%+ guaranteed). Because online banks don’t have the overhead costs of a brick-and-mortar bank, they can offer better fee structures and provide better interest rates. There are some banks that are 100% online, such as Ally. Or you can find online accounts through traditional banks as well.

 

Predatory Tactics of Pay-Day Loan Establishments

If all of the benefits and minimal costs of having a bank account haven’t convinced you, then perhaps the hard truth about pay-day loan businesses will. Effectively, they make money off of the fact that consumers are in dire straights. A quick search reveals multiple public announcements, explanations are warnings from the FTC (Federal Trade Commission) with recommendations on how to avoid using Pay-Day loan services all together. They have even filed cases against the businesses using predatory tactics to bully consumers out of their money.

If you have read through all of this and are now convinced that you should get a bank account- great! Be sure to do some research on banks in your area to find out which ones are the most convenient for you based on where you live, work, shop and what their fee schedules are so that you know how to avoid those fees. We hope that this has empowered you to take a step into banking and leave the pay-day loan services behind for good. It’s your money, you should be able to take ownership of it so that you can take steps towards financial independence!

Our Life Without Appliances

Being as frugal as we are, friends and family often balk at the common conveniences that we live without. While we are not living like hermits, we aren’t letting machines do all of our work for us either. If you are thinking of living a more frugal and simplistic lifestyle, try removing these appliances first:

Television– The one television that we have stopped working about a month ago. After trying to fix it and having no success it has been unplugged and taking up room in our living room ever since. We have never had cable so we are only challenged when we want to watch a DVD from the library. (And since we have no cable we have no DVR, TIVO, or other associated gadgets) Thankfully we have laptop computers so we can still enjoy our movies together, and have an extra excuse to sit close together. By not having a functioning TV we have read more, made great use of our kayaks, started having candlelight dinners, and upped our fitness routine.

Dishwasher– We have lived in a home and now an apartment with a dishwasher but have not used one in over 5 years. That’s right- we wash every single dish by hand. This takes maybe five minutes for small meals, ten for large meals and we wouldn’t want it any other way. There are arguments that could be made that hand-washing is less efficient than a dishwasher, but we won’t be changing this anytime soon. In our move this year, we reduced the number of plates, bowls and cups that we have. This helps us to continue to justify hand-washing because we would never have enough items to fill a dishwasher (and of course would never run one not full).

Air Conditioning– Guests who have stopped by to visit have likely not noticed this, as we only turn it on for their benefit. Even though we live in balmy and warm Florida we go as long as we can each year without turning on the A.C. and when we do it is only turned on in the evenings, never below 80, and NEVER runs when we are not at home. We make use of fans and enjoy the beautiful view from our balcony on warm evenings. We do enjoy the A.C. provided by the gym in our community, but we are also getting pretty warm when we work out. Where some pay $200-$300 monthly each summer, we easily pay half of that.

Washer/Dryer (SORTA)- During our grand scale downsizing when we moved earlier this year we sold some of our larger items of furniture, including our washer and dryer. Both machines were older and still in good working condition, but the thought of lugging them up to our 3rd floor condo and then back down was not appealing. We now do our laundry when we visit our family- The Winning Williams Senior. They don’t seem to be put out by this and we have brought our own detergent. We fold and stack all of the laundry ourselves and it gives us one guaranteed visit per month. That is right, PER MONTH. We have fewer articles of clothing than our colleagues but we make sure that we have worn these items before washing them. Given our healthy workout routine, those items get stinky pretty fast, but most other items stay pretty clean during the course of the day at work.

You may wonder why we opt to live without these modern machines. Give it some thought the next time you get home and instinctively reach for the remote to the TV. Could you be doing something else with your time? What about when a meal is finished, do you rush to throw your plates in the dishwasher so that you can get back to the TV? We’ve found that we don’t miss any of these items and challenge you to give it a try. Go for one week, or one month without using a TV or dishwasher.  In the summer, see how long you can go before turning on that wonderful but highly costly air conditioning (or heat for the northerners in the winter). Try to limit your laundry to once a month.

Silent Killers of Your Net Worth

Every personal finance blogger posts about the big items (housing, food, transportation) that can hinder the growth in your net worth. These are repeated so often because they are truly universal. We decided to take a moment and think of the things that aren’t often highlighted, the silent but deadly factors that are wreaking havoc on your net-worth. Taking control of these items can be just as impactful to helping you keep your money and make it work for you.

Car Depreciation

While transportation was noted as a big item above, one of the less obvious costs of car ownership – depreciation – is talked about much less. Depreciation is a factor of: initial purchase cost (factor in fees/taxes/etc.), the number of miles driven, and amount recaptured at the point of sale of the vehicle (again factor in fees/selling expenses/etc.). This is the ultimate reason not to purchase a new vehicle. The average transaction price of a new vehicle in the U.S. in 2015 was $33,560.

Depreciation example: If you drive your vehicle for 5 years, an average 18,000 miles per year, and then sell it with 90K miles on it (this doesn’t include how expensive potential repairs could be!) for $10K. The car depreciated $4,712 per year or $0.26 per mile. Replicating that year-in and year-out, you would need to budget $4,712 per year for your next car purchase; this is of course on top of gas, car maintenance, insurance, registration renewal, etc. While you can’t avoid gas, maintenance, insurance, etc., depreciation is a more controllable expense.

1) Buy used and buy older, letting others depreciate the vehicle in its most expensive stage

2) Decrease your mileage driven (get closer to work, combine trips taken, and question whether there is an alternative method for short trips).

How the Winning Williams mitigate against Depreciation:

We only go grocery shopping once per week and combine that when we go to the library next-door. Not only is more efficient from a cost perspective, but we save time to do things we enjoy with only a little planning ahead, save frustration dealing with traffic and REALLY BAD drivers, technically

Gifts

They say that giving is better than receiving, and certainly, we all feel great when we see someone enjoy and make use of a gift that we have given to them. But when there is a sudden spree of showers and parties with gifts to be given, it can take a hit on your budget. A thoughtful gift doesn’t have to be an expensive gift. Take a moment to tally up what you have spent on every gift you have given in the last 12 months (this includes associated cards and wrapping materials).

The Winning Williams made personalized gifts last year for the holidays. While the package was small and weighed very little, the time and effort and planning that went into the gift was great. We thought of how people might like or love our gift and thought of something that everyone would truly enjoy. Before just handing over money to the office pool or buying anything to just say that you got a gift for someone, stop and take the time to reflect. You may stumble upon a better way to show that person your appreciation and a more cost-effective one as well.

Entertainment

This one is also a commentary on our culture, or lack thereof. How much do you spend each month on entertainment? This includes cable, internet, electricity association with powering your TV and computer, movie rental subscriptions, magazine subscriptions, evenings out on the town, etc. Tally it up, while you are at it add up the time you spend being entertained. Now ask yourself how long you think it would take you to accomplish your goal.

Mrs. Winning Williams published a novel this past month and she had been working on it for 3 years. But the majority of the work on it was completed in the last 8 months- why? Focus. Not being distracted by the things our culture calls “entertainment” allowed her to reach this major milestone. Is a weekend marathon of a TV show worth sacrificing your dreams? Or missing out of the opportunity to have the experiences you want? Are you a zombie to the computer or are you a living person who doesn’t need cheap entertainment to say that you are having a good time.

Not earning interest

If your money is sitting in a standard savings account, it is losing purchasing power each day due to the impact of inflation. The average savings rate is practically 0%. If you utilize an online savings account, maybe you can approach 1% APR. This is detrimental if you have any plans to get ahead and desire an early retirement. Don’t trust the stock and bond markets? In Winning Williams opinion, you have no choice but to put faith into a system that thankfully has worked for decades. Enter at your own risk. If it stops working, well, we all have much bigger problems to worry about!

After saving for your emergency fund (covering 3-6 months of expenses) and other reserves (we probably keep too many reserves, for items such as car repairs and savings, roof/AC reserves, travel, etc. on top of the emergency fund), all other money should be invested at an asset allocation that you feel comfortable with.

For simplicity, let’s say you save $20K per year for 25 years and invest it at 0% return (under your mattress), 3.5% (bond return long-term assumption), and 7.5% (stock return long-term assumption). At 0% you’ll have $500K stuffed under your mattress (or at a bank basically at current rates), which will have much less purchasing power than at today’s dollars; at a 3.5% average return you’ll have $778,997; and at a 7.5% average return you’ll have $1,359,557. The power of compounding and interest more than doubled your wealth compared to the scenario of not investing. Say you want a cool million to retire? Stuff $20K under your mattress for 50 years OR invest it and if you get close to the historical stock market return, work for 22 years.

Now that you have some more information on how to stop these factors from ruining your efforts to save for retirement, let us know what questions you have on how to be debt-free!

Our Impulse Buys

OK, we talk a big game. But we are just as susceptible to consumerism and marketing as the rest of us. So here is our confession post- our impulse buys. The items that we purchased on a whim and how they did or didn’t turn out for us.

 

Worst Impulse Decisions

Let’s get the worst ones over with…

1. Signing up for and then cancelling a cruise ($776)– In early 2013 we booked a cruise for December of that year. Living in a port city we knew that we could easily book a trip and get to and from the cruise without much extra cost. We planned on having this be a birthday + holiday gift combo for each other. Not 4 months later Mr. Winning Williams proposed and after discussing a European honeymoon the cruise was cancelled and money lost in an effort to conserve vacation days for a longer honeymoon. Well the honeymoon ended up being a shorter trip to Costa Rica so we could have taken the cruise after all. We cancelled too quickly and lost money in the process (money was gone and we didn’t have the cruise experience). But we had a blast in Costa Rica and did eventually make it to Europe.
2. Gifts (A lot over a lifetime)– This is an open-ended black box of  money spent that we are making a conscious effort to remedy. Each year at the holidays we feel the pressure to purchase goods totaling a certain dollar amount to show our loved ones how much they mean to us. This isn’t at all what Christmas or any other major holiday is about, but we all do it. It feels wrong to say “Here Mom, thanks for your unending love and support, this gift is worth $10.” So we spend. Last year we made an effort to do something different. Instead of buying stuff that our family may not even want or need we made them homemade chocolates. This was something that they all enjoyed and we felt that the time and effort that went into this gift for them was more valuable than just picking anything off the shelf. (This also relates to our decluttering initiative- article to come soon)

Best Impulse Decisions

And now for all the times that it has worked in our favor…

1. Bread Machine- Goodwill $8: We like to eat bread. For all of our healthy living and eating we genuinely feel that we cannot remove bread from our diet. It’s amazing and delicious. On a whim we purchased a bread machine from Goodwill. It was only $8 so if it didn’t work we would only be out the money spent. But the machine did work and it has created dozens of delicious loaves of bread, soft pretzels and dinner rolls. Best $8 spent ever!
2. Kayaks– used from neighbor (oars, locks, whistles and one fishing rod stand included) $300: We had investigated the cost of purchasing kayaks in the past. After we saw the cost of even the smallest kayaks and the oars (some places had $100 for one oar) we held off. But when a neighbor of ours said he was looking to sell a pair of kayaks for $300 we knew it would be a great deal. Money was exchanged and we were on the water for a beautiful sunset. This one time cost has a health benefit and will allow us to enjoy these kayaks and our local waterways as long as our arms can last.

Kayaks on Tampa Bay

And that’s about it folks. We planned to post this last week but held off so that we could rack our brains for more examples, but we just don’t do impulse buys. We carefully evaluate each purchase and ask ourselves “will this bring me joy?” It seems simple but consider asking yourself the same question the next time that you see something catch your eye.

 

Questions to ask yourself

Will it break your budget?

Will you use it in the next month?

What are three concrete examples of when you will use this item?

What would the Winning Williams do?

Is this item worth working X more days before retiring?

Retirement Advice v. Retirement Excuses

Mr. and Mrs. Winning Williams are known to get a little fired up about 1) people’s lethargic response about saving for retirement, and 2) media’s attitude to appeal to the masses. So when you add these two items in a single article, you bet a response is warranted. It also makes us wonder, when did the people of America lose our tenacity? When did we lose the desire to continue to learn, contribute to society, and take responsibility for our own lives?  

Here’s is a link to the article featured on The Atlantic ( we almost don’t even want to reference, but you must know what riled us up the other day). After a first read our initial thought was “this has to be a satire right?” , but it wasn’t. SMH. The article has several key sections: Actual Research, A Foray into Exotic Excuses Land where There are No Banks and The Government is Good at Everything, especially Money. Outline and obvious criticisms are below:

 

Actual Research

The article starts out with a research study that highlighted personality segmentation and how this related to individuals savings habits. This we can understand. If your parents had bad spending habits, then you likely learned some of those. If you are a goal oriented person then a savings challenge would probably incentivize you better than a doomsday warning about savings. Got it. Makes sense.

 

Into Excuses Land

Then the writer of the article goes on to explain that telling people to save more is unlikely to do anything since personality traits are basically fixed. Also the article mentions that blame should be placed by the nation’s savings institutions and not each of us individually. Say what?! Did they just wrap this unqualified advice in a thin layer of research- YUP!

Facepalm

You can absolutely change your savings and spending habits. It will take some effort, maybe a little work, but it can be done. If you don’t want to have to work until the day you die, then learning how to save and invest is a skill that you will need to cultivate so that you can retire. It seems that every day there is a new article infantilizing the newest generation of adults providing reasons why they “just can’t save”.

The mindset espoused in the Atlantic article that started our blood boiling is what we see as the issue. This article is essentially saying that you’re not responsible for your own savings- sorry to be the bad cop here, but you are. America was built by a group of individuals with hard work, dedication, and a focus on the future. These founders did not have savings institutions to rely upon. Their success hinged on their own personal and tangible accomplishments. Moving forward to today if you want to be successful, emulate those around you who gained success. Whether it was through education, ingenuity, networking, or just old fashioned hard-work, success was likely found not through the reliance on others or expecting someone else to take over their responsibility. If you want to retire, then you need to save.

 

There are no banks apparently

Further into this quality article the author goes on to say that even if you have access to an IRA or 401K, it is difficult to save given bills or relatives who need financial help. No it is not difficult, your priorities are out-of-line. If you have a family member that needs financial help and that is your priority, then I guess daily lattes, expensive cable and happy hours are going to be taking a break for a while. (After reading through the comments the same issues popped up. “People just don’t make enough to save money to retire”- seriously? Let’s check in on all the couples that are happily retired or well on their way to it because they set goals and priorities. Go Curry Cracker, Mr. Money Mustache, Budgets are Sexy, etc. etc. )

But then the article gets better saying that only half of workers have access to such plans so for those half of the population, savings is even more difficult. Say what?! I’m not going to question what percentage of the population have access to a traditional workplace 401K plan. But all because your company does not offer a 401K DOES NOT MAKE IT MORE DIFFICULT TO SAVE. The possibilities are substantial:

1) Traditional IRA

2) Roth IRA

3) back door Roth IRA (if high level of income)

4) SEPs (Simplified Employee Pensions)

5) SIMPLE IRAs…

Google is your friend to check for individual eligibility.

 

Also there are no resources for anyone to learn anything new… ever

Perhaps you are living paycheck to paycheck, or your family members instilled a distrust in financial services. Maybe you saw your parents lose their retirement funds in the recent recession (well only if they sold during the recession, but that is for another post). OK that explains some fear of investing. But you can still open a FREE checking and savings account. You can open up an online savings account that provides a significantly higher interest rate than a standard savings account. Then once you feel comfortable test out some investments with that earned interest. That way you can try these options. There are amazing options to learn how to invest and manage your money wisely these days (ex. Learnvest , JL Collins and Master Money Class)

 

The government is the best at everything they do, especially when it comes to money

After having read through this article and the excuse-advice provided there was another recommendation. A “universal savings account, modeled on Social Security. If all workers were automatically enrolled in a savings account that couldn’t be tapped into until retirement (or disability, if that came first), they wouldn’t be burdened with investment decisions. The various proposals for such an account assume a similar structure: The government would let workers contribute to it directly from their paychecks, and it would be managed for them by an independent, government-appointed committee, much like the Pension Benefit Guaranty Corporation or the board that oversees Social Security.”

Say what?! Oh my.

“Burdened with investment decisions” – it’s called being an adult. Know what money you have coming in, know what is going out, look to maintain a balance in your portfolio. It is not rocket science.

If we are automatically enrolled and forced to contribute?  Hello, this is Social Security and well… it does exist already. Or do we select how much to contribute? Hello, this is currently available to all consumers through the various retirement based accounts listed above. Or worst case, fund after-tax dollars into your brokerage account.

When American’s are already failing to save for retirement and depending on current government programs, the last thing I can imagine helping would be further reliance on an additional government backed system. The Winning Williams are already counting on not having Social Security as a safety net because of multiple issues and reports of the service going down before we reach retirement age. Maybe it has been mentioned before that sometimes our government does not have the most efficient operations… (doesn’t matter what party you belong to, the system is slow) meaning money would be lost in transaction fees and bureaucracy. Also, each person has a different risk tolerance. Forcing someone into an investment that they have no control over is borderline totalitarian.  America, let’s get back to work (ah crap now I sound like a politician)!!!

 

You tell ‘em teacher!

The worst part was that this was written by an Economics professor. When Mrs. Winning Williams was in college- studying Economics- she was never told by her professors that she would need to find excuse after excuse to not save for retirement. She had professors telling her to count on Social Security being gone and that it was her sole responsibility to save. How many students are now being told that they can rely on these excuses? Guess what- you can’t pay for food with these excuses, you can’t pay for anything with them.

So much facepalm in one article

 

Be smarter than the people handing you excuses

Basically, if you come across any online article that says “no, it’s totally normal to not save or have anything planned for retirement,” realize that they are duping you. The article is pandering to your insecurity about investing and trying to get as many likes and social shares as possible. You are smarter than that and you should be able to roll your eyes at these kinds of articles thinking about how much you are making and how hard your money is working for you. Focus on spending your time reading books and articles that will inform, empower and inspire you!

 

Winning Williams way to success

• We set aside our money – currently saving around 60% – 70% of our income. We use 401K’s, IRAs, HSAs, and Brokerage accounts.  Without losing out on:
• We experience – within the last few years we have traveled to Italy (& Switzerland briefly), Philadelphia, Key West, Costa Rica, New York, Miami, New Orleans, and within the next couple months we’ll be in Nashville and back to NYC. Travel is our priority so we save for it (and we’ll be getting better deals through Travel Hacking)
• Mrs. Winning Williams just published a book.
• We’re running a half marathon in December and Mr. Winning Williams is running a full marathon in January.
• We define our happiness – we find joy in the company of each other, our friends and family, and the simple things (whether it be a beautiful sunset, a hard workout, etc.). We don’t need to purchase goods and services to make us happy. We have defined and control our future as much as God is willing to let that be!