Welcome to the BiggerPockets Money Podcast Show number 47 where we interview Jim Wang of Wallet Hacks, the great uncle of personal finance blogging.
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It’s time for the new American dream that doesn’t involve working in a cubicle for forty years barely scraping by. Whether you’re looking to get your financial house in order, invest the money you already have or discovering new paths for wealth creation, you’re in the right place. This show is for anyone who has money or wants more. This is the BiggerPockets Money Podcast.
Scott: How’s it going everybody? I’m Scott Trench. I’m here with my co-host Ms. Mindy Jensen. How are you doing today, Mindy?
Mindy: Scott, I’m having a really great day. I’m so excited for this interview because I’ve known Jim Wang forever. Like you said, he’s the great uncle of personal finance blogging and he’s an all-around really interesting person and a super nice guy, very knowledgeable. I feel like we say this every single week, this episode runs really long because he had so much great things to say. So many great things to say?
Scott: So many great things to say, yeah. He has a great story as well where he has really built a great business. He’s a pioneer not just in personal finance and understanding all that kind of stuff but also the entrepreneurial side of that. He built a personal finance site called Bargaineering, which he then called it liquidated, sold at a big profit. So he was a very successful entrepreneur and has made a large number of great decisions across his career and had a couple of big wins as well.
He’s going to share that story with us and then we’ll go into some of the tips that he has collected. His top tips for helping you move towards a better financial future across his many years of blogging in the personal finance biz.
Mindy: One of these tips was really, really, really amazing. I mean they’re all great but one, I’ve never heard before and makes perfect sense once you explain it. But you know, all of these finance stuff, if you think about it, you don’t think about it. Then once somebody brings it up, you’re like, oh my god, of course they should totally be doing that.
So let’s not give away the whole show though. Let’s let him tell the story.
All right, I have to interrupt for just a moment to remind you that Thanksgiving is almost here. Which means Black Friday and Cyber Monday are also almost here and we are going big this year. Up to 75% off the BiggerPockets book store. No joke! Get ready to take your real estate investing up a notch by saving serious money. Visit biggerpockets.com/store starting next Friday.
Scott: All right, Jim Wang, welcome to the BiggerPockets Money podcast. How’s it going today?
Jim: It’s going great. How are you guys doing?
Mindy: We’re doing good. I’m doing good. I shouldn’t speak for Scott. Scott, how are you doing today?
Scott: I think we’re all doing fantastic. Why don’t we go ahead and start right from the beginning. Jim, can you tell us a little bit about your background with money and what that was like?
Jim: Growing up, my parents were always frugal because they were immigrants to the US coming over from Taiwan. My dad came over with an education visa and then my mom was able to come a year later. And so we were always very frugal, saving our money because he wasn’t earning a lot. But then also, every few years, we wanted to go back to Taiwan to visit family. And so life was a lot of frugality, doing trade-offs because we wanted to save up. Flights back to Taiwan were, even today they’re expensive. Back then, if you think about it, it’s even more so.
So I just grew in a very frugal family even though we were probably middle class. My parents owned our home, we were living fairly comfortably. I think just psychologically, we just had to keep it frugal in order to go back to Taiwan and buy four tickets every three or four years.
Mindy: So what sort of work did your parents do?
Jim: My dad was a civil engineer and my mom was, she took on jobs that gave her the ability to take care of us after we came home from school. So I remember when we were really young, she was a nanny like when I was an infant. She was a nanny and she was able to take me with her whenever she was taking care of the other kid. And then as we got older, she worked in the lunch room of my school. So that when her day was done, then we were done because obviously her shift ends before the end of the school day and she would be home by the time we were home. And so that’s sort of what they did.
My dad worked at Brookhaven National Labs for his entire career. First in civil engineering and then eventually, when a lot of those jobs are sort of being phased out, he moved over to data base administration. And just did that until he retired a couple of years ago.
Mindy: What did college look like for you?
Jim: College… I went to Carnegie Mellon. I studied Computer Science. I was there for a few years. It was a fun experience. I mean it’s kind of a nerdy school and you know, we found ways, we still find ways to have fun. And actually, you know with a lot of people talking about side hustles today, back then in college, you have more time really, than anything else. I mean maybe people who were smart studied more and worked harder at their classes. But I was all about side hustles, finding things to resell on EBay and just different little things you could do to make some beer money or video game money or things like that. And my money journey is just about creativity and tapping into that probably started around college.
Scott: Do you have any specific big wins that you remember from those side hustles?
Jim: Yeah there was. This might sound a little weird, but before they outlawed playing poker online, before they outlawed the financial transactions supporting playing poker online, I actually gambled a lot online. And by that I mean, I played poker and I realized I wasn’t particularly good at that because I just didn’t have the patience to wait for good hands. Like I knew what I was supposed to do and I would just get bored.
So alternatively, what I found out was that a lot of these shady online gambling sites, what they would do is they would give you money if you deposited money and you just had to put into play a multiple. And in the beginning, the multiple was 4x. So you deposit 50 bucks, they give you 50 bucks. If it’s a hundred, you have to put 400 into play and you withdraw all the money after you put enough into play.
And eventually, I think smarter people realized the number of 4 times wasn’t enough and I kept doing that. We were making thousands of dollars. Eventually, the number because 20x. And at 20x, it was no longer profitable to run these little, sort of, hacks or whatever, side hustle, gambling. I was playing black jack, you did not have to play optimally. I knew a little cards. You’re playing at a computer, not at a table. So you just have that little card that tells you what to do and your goal is to not lose money. Or whatever you put in, as long as you lost less of whatever they gave you, then you’d come out ahead.
You didn’t need much. In college, if you got fifty bucks, that’s a huge win for all. But we were getting to a point, I remember this one time, this is horrible, I put a thousand dollars on a hand of black jack and I lost it. And I felt sick. I’d only put a fifty bucks, a hundred bucks into it and it would just run up so much so I was like, oh why not, I might have been drinking, I don’t know. It wasn’t the most responsible decision but I did it. This is horrible, I’m never doing it again. Until the next time it happened again. And that time, I won. And I said, I’m done. We’re not doing that again. And that time, I stuck with it. And I did.
It was not responsible. It was just taking advantage of the system being inefficient and just sort of having a flaw. And being in college, there were really no…it’s not like I graduated without a student loan debt. Keeping the thousand would have been way smarter and that’s what I should have done. But you’re in college, you make mistakes. And if that’s the worst one I made, I feel like I made it out pretty well.
Scott: So what was your financial position coming out at college then?
Jim: I had a good job working for Northrop Grumman in the defense industry. So I graduated in 2003, I was going to graduate 2002 and with a computer science degree, you know, I was thinking, it might be pretty good, that was right after the dotcom bubble burst, so I stayed an extra year to do graduate school and started working in the defense industry.
It was a good job, it was a stable job. I moved to the DC area, got and rented an apartment with a friend and I didn’t have too much in savings because I’m still on student loan debt. But at 3% at that time, it didn’t seem, I think it was $30,000 in debt. $30,000 in student loans, it feels like a lot but it’s not compared to say even $10,000 in credit card debt. And so it felt like my position was pretty strong and I tried to grow up from there.
Scott: When did you kind of began seriously pursuing the creation of wealth and accumulation of assets? When did that kind of happen in your career?
Jim: What’s interesting was so I started my personal finance blog around 2004. I think 2004-2005. And I started to earn a little bit of money and that was the first time I got the sense that I wasn’t forced to stay on a track for my career, for my life in general. Growing up, my parents were strict but they were very open-minded. Very much like you go to school, you get good grades, go to a good college, get good grades, you get a good job.
You know, you live your life, support your family. That’s sort of the main line track. And I saw my parents doing it and it was, we had a very good life. We still have a very good life. And I thought, this was the track that I’m on and I’m totally fine with it.
Then I start working. And I was working at a very large organization. The defense industry is enormous. Billions of dollars, hundreds of thousands of people. And I thought this is what I’m supposed to be doing and I’m fine. Then I start writing all these little blogs and my friends are like laughing at me like, “How’s your little journal diary going?”, and I was, “It’s going great.” And I’m learning a lot when I started because I wanted to understand what this 401K, what am I supposed to do?
And I started to earn money and I was like, oh, this is sort of off schedule. This is all extra money. So that extra money went to paying student loans and all that. And I was oh, this is great. Then I started making more and I realized that the track I was on was the safe track. I was just walking on a safety net. Granted, it may be not the most perfect analogy for it. but I realized, I can do this life and it will be a very good life. Very stable career, you know, provide for my family.
It’s good. But here’s this other thing where as you’re accumulating more income and assets and you start investing and it starts to grow far faster than what you can earn at a job by just adding more hours and what not. I just realized that the track is fine but there’s this whole other thing that you can pursue if you have the support structure in place to do it. So that’s why I decided to go in that direction.
For the first few years, if anything went badly I could have gone back. I’ve gotten, you know, the right security clearances that are harder to get. And so I can go back and go do the job again as long as I didn’t get too far out of the industry. And I’ve decided to go for it.
Mindy: So this other thing you’re pursuing, you’re talking about financial independence and not having traditional employment anymore.
Jim: Yup. Just like the whole entrepreneurship route. In financial independence, there’s a bunch of different routes and entrepreneurship being one of them. I think I stumbled onto entrepreneurship and then discovered financial independence and the fact that you don’t have to do and get all the things that they say that you should get that marketing has taught you that you need to be happy.
Mindy: So how long were you working before you figured this out? It looks like you got your job in 2003. Did you go straight from college to Northrop Grumman?
Mindy: And you started your blog in ’04-’05. What was the name of the blog?
Mindy: Bargaineering. That’s right. For some reason I was thinking it’s Wallet Hacks but that’s the new one.
Jim: That’s the new one. Bargaineering doesn’t exist anymore.
Mindy: Oh well, it doesn’t matter because it doesn’t exist anymore.
Mindy: I’m sorry, Scott, were you going to say something?
Scott: I was going to ask if you started 2004-2005, when did you leave your job?
Jim: So I actually left Northrop to go work in Booz Allen about three years in. For a lot of jobs, taking a big bump, you either have to get promoted or you move to another company. And so I did the move to the other company and I worked at Booz Allen for about a year and a half before I decided I was going to do the Bargaineering, the whole, that was my main gig. That was 2008. It’s actually when we got married too, which was convenient because that meant I could go on my wife’s health insurance, which you know probably is a big problem. It’s a big headache to sort of overcome.
Jim: When working for yourself.
Scott: So what did that look like? What about entrepreneurship, you know, was the site producing revenue at that time? Were you feeling comfortable with that? What were the financial circumstances that allowed you to move into full time entrepreneurship besides the health care?
Jim: In your book, Scott, you wrote about the financial runway. That’s the term that you use. I had the same exact thought. That this site was earning an income that was building. It was actually replacing income that I would be earning in the future. And so I thought to myself, if I had a number of years saved up of income that I would just try this. So this side income bought years of full time work.
But now, instead of doing that side income stuff from 7 to 11 at night, I could do it from the 9 to 5 during the day when I’m freshest and I’m able to think the best and be creative. So at that time, I don’t know the exact numbers but I had probably 7 or 8 years runway that I built. I need that much. I remember I talked to my dad. I was like, “hey dad I’m thinking about quitting my job to go do this blogging thing full time.” And my dad was,”Are you sure?” and I said, “I was until you asked me a simple ‘Are you sure?’ question.”
So my plan was, you know, give myself a number of years. If it works out, that’s great. If it doesn’t work out, I can go back. Nothing prevents me from going back in a couple of years. If it looks like it’s not going to work out, it’s just like a one-time thing. Because if you think about it, back then, there weren’t that many people earning a living entirely online and they certainly weren’t talked about. They weren’t in the newspapers or whatever. And so, you didn’t really have a model to say, oh well that guy did it or that girl did it so it’s easy, it’s not easy, but it’s possible. Just sort of like a guess. And so it’s worked out.
Scott: How did the, you know you said it was 2008 when you made this transition, right? How did the market conditions affect this? Were you kind of riding high on years of gains that helped support your financial runway or were you like, hey the market is actually going down right now and I’m still able to support it and it’s still conservative for me to be able to do this?
Jim: So I wasn’t, I didn’t have a lot invested by 2008. I was saving it all. A lot of it was cash because I thought I needed this runway that if it doesn’t work out then I need to get access to it. I don’t want to put it into any sort of, I might’ve put it into some 1-year CD’s just sort of like a holding pattern. And so when the market actually went down, I started accumulating a lot. Because I had this emergency fund or career emergency fund or whatever, this pile of cash, and this site was generating income. So if it’s generating income, I need to find a place to put it.
I started getting into the market which turned out great. I managed to accidentally buy on the low when you’re not supposed to. You’re supposed to always, constantly on schedule, dollar cost average, whatever. But by luck, because I was comfortable with the cash cushion, I could then contribute more from the cash flow of the business. So it wasn’t financial independence in the sense that I’ve had a bunch of you know, or a pile of retirement assets. I was drawing that down. I had a little bit. I had aggressively saved into a 401K at work and I felt that was good enough because that was my retirement. I didn’t put more because I feel as if I was ahead of schedule. And if was ahead of schedule, I don’t need to be piling more. I could wait.
You don’t really lose much by waiting a couple of years to see. I felt like it was sort of a turning point in my life. This decision. And I wanted to give myself as much flexibility as possible. So if things went bad, I did not have to liquidate anything. I could just draw on a cash reserve. So that’s sort of how the picture looked like.
Scott: I just like this kind of concept and when I comment on it, that you saved up this money, behaved financial responsibly for a period of years out of college and your career. You accumulated a large amount of cash but weren’t necessarily investing that aggressively in the market. You were putting up a financial cushion for you.
And that turns out, you know, not to ruin all the future stories we’re getting to, but to give you a chance to take a chance and you know, be an entrepreneur, make an investment that has the potential of exponentially greater returns that you can get by investing passively, or continuing that work, or that story in the work force. And I think a lot of people underestimate the power of having tons of cash saved up even without other investments there because it gives you those other options now and flexibility.
Jim: I think if you’d know what you’re going to do for the next 20 years, then you want to invest that money if you’re following a track. If you need flexibility, it’s kind of like buying a house, if you believe that you’re going to be in an area for 20-30 years, and you want to set down roots, then yes, maybe buying a house is for you. If you’re transient, moving around every few years, then you should wait because there’s no rush to do either things. You just have to make a decision on what you want to do.
Scott: Yup. I mean, there are certain people out there who are big spread sheet nerds, here’s my 20-year plan, I am going to put this much in every year. This is my annual raise, I’m going to follow it to the t. And that’s great. It will probably work but you’re locking yourself into a 20-year journey when you could, after 5 years, take a huge lump sum of cash and a little bit of passive income and go ahead and take a big shot and maybe accelerate that journey by a decade or more if you’re able to get lucky. And maybe have a little bit more fun doing it.
The thing is, how did your entrepreneurship journey go with Bargaineering?
Jim: It was good. Just grew the site, kept growing it. The personal finance community like everybody else was growing their site and it got to a point where I was able to liquidate in 2010. And it was good. I don’t know if the large cash cushion, it’s funny, like anything else, you don’t know what the different factors are that go into a particular success, and there are going to be so many. But having a cash cushion, it gives you, it’s like insurance, it’s self-insuring and you don’t know how important it is until you need it. And I never needed it but it also gave me the confidence to be able to push harder for what I wanted.
I just kept growing. Being able to be work full time on it was great because a lot of creativity happens when you have downtime. You can work around and think and you’re not trying to force yourself to find the solution. And in a business where the path forward is 100% clear, you need that creativity to find the areas to go into. And I think going full-time was extremely helpful. And having that support, whether it’s cash cushion or family and friends, the ones that weren’t making fun of me, was good.
Mindy: What did your wife think of this when you said,”hey I want to quit my job.” Was she like, “Mmm. No.”?
Jim: I quit before she was my wife technically and then we got married. Actually, my last day was the Friday before we got married. When we talked about, so she had seen the site grow and grow. And originally I said it would be fun if this site would pay one vacation a year. This was before kids and vacations were not particularly expensive. It would be great if we could just have a little bit of extra money that we can play with and have fun and not have to be responsible with it. And we jokingly, to this day, say this would be fun if this paid for one vacation a year and now it would be an absurd vacation which is good but you know, it’s just a funny phrase that we say.
She was supportive. I think she knew or she believed that I knew what I was doing. She was, oh man, that’s awesome, you knew what you were doing and you just went out and did it. And the reality is, no one knows what they’re doing. And after the fact, they try to frame the narrative that fits this epic journey. She was along for the ride. She saw that I was doing well and the income was there and the support to buy those years. And I told her the same thing that I told my parents, It’s going to buy me 7 years. I won’t use all 7. If things go south when we get 3 or 4 years in, then we’ll find something else. But you know, I feel like we bought this cushion and it’s time to take the shot.
And like what Scott said, if it works out, great. If it doesn’t…if it works out, you know you accelerate by 10 years. But if it doesn’t work out, then I can go back on that same safe track and it will be fine. Everybody’s happy. I’ll still be a couple years ahead and I’ll at least won’t look back with regret.
Mindy: That’s amazing. So time for my favorite quote, Joel from FI180 was on our show, I think that was back at episode 11 and his quote is, the first he said it I was like, oh my god, that’s brilliant. He said, what’s the worst that can happen when I quit my job and go try this thing? The worst thing that can happen is that I’ll have to go back to work. My worst-case scenario is everybody else’s everyday life.
I like how you added to it with, oh, at least I tried and I’m not going to have regrets. I think that might be one thing that’s missing from Joel’s quote. But I used that quote in almost every single episode because it’s so inspiring. What’s the worst that can happen? Nobody’s going to come and shoot you because you didn’t do it right. Oh, you made a mistake and it didn’t work out. Well, here you go, go get another job. It’s not that big a deal.
Jim: I never really thought about the worst that could happen but I suppose I was. I was thinking at worst I could go back and get another job. I have to remember that quote.
Mindy: It’s fantastic. Joel from FI180. I always feel the need to attribute him. Everybody who’s been listening has been hearing that and has been kind of sick of it. Let’s move on. This isn’t the Joel from FI180 episode anymore, this is the Jim Wang episode.
So you ‘ve been writing about finances for kind of forever. You know some people call JD Roth the godfather of blogging. I would certainly say that you’re at least the great uncle and JD Roth was going to be the godfather.
Jim: He’s not that much older than me. Just a little bit.
Mindy: Jim said that, not me. So let’s look at some of the top tips you’ve learned about getting your finances in order. That you’ve learned over the years of blogging.
Jim: So in talking to a lot of people, getting emails, there’s always a lot of angst and emotion tied into money. People feeling like they don’t have enough, not doing the right thing, or whatever. And I always ask them, you know it sounds so simple, but “are you budgeting?”. Are you just doing the simple task of recording the way you spend? You don’t have to do it manually or with tools like Mint and whoever. You can pull in all that data automatically then you know. I earned this much, I’m spending this much. I have this cushion.
If they have those numbers and they’re still anxious about it, then that’s a totally different issue. But so many people don’t know. All they see is, they don’t see where their income is going because they direct deposit it. They aren’t entirely sure what their take-home pay is. What they see all the time are their bills because it gets mailed to them, it’s emailed to them, they’re constantly paying them manually, maybe automatically, whatever it is. They’re getting notifications of their bills not their income.
And that causes stress because all you see is you spending money. You pull out your credit when you go to the store or whatever and you don’t know. And with that knowing, the emotion comes in because psychologically, you’re like, well I must not be doing well if I’m spending more than I earned. So just budget. Learn something simple where you track and you get the knowledge.
From there you can start making decisions on whether or not you need to cut your Netflix subscription or do any of the other things you feel guilt about. So many people, they make decisions without that data and it’s because so much of our life, we make decisions without perfect information. Whether you have to decide if you should try to merge into this lane right now or wait until that car that seems to be going fast go by.
Well here’s a case where you have data and it’s telling you, if you want to save 20% of your income, you know what that number is. You know how much you’re spending in other areas. What do you need to adjust here or there to get you to that 20%? And people just don’t because it feels like a lot of work and it causes so much angst. But the number one thing is just get data.
Peter Drucker, the management guru guy said whatever gets tracked gets managed, whatever gets measured, gets managed. You need to do that and some people don’t and I don’t understand now with all the tools. I’d understand it before if you don’t want to track down every penny, but now, everyone should do it.
Scott: What’s your favorite tool for doing that?
Jim: So I think you should use whatever is the simplest. I know a lot of people like Mint because you can tie it all in, you can break up transactions. You can do all that. Personally, I use Personal Capital because it has an investing portion to it that I like a lot. And our finances are beyond the point where we need to track every transaction but it has that. It doesn’t have forecasting or planning. So if you want to do something like…
So the first thing is to track all your expenses. Second one is to sort of adjust your budget. So that let’s say I’m not saving enough and you want to make these changes. Things like you need a budget are good for establishing you know, I want to spend x in these different categories. I want to fit and move it all in.
I looked at Every Dollar the other day because David Ramsay is pretty popular and it’s an easy tool to get into. It’s free if you don’t pull in transactions if you want to do it manually. But then you’d have to pay. I think a lot of them you have to pay if you want to get automated transactions with the exception of Mint.
Mindy: So you said a minute ago that people think that it’s going to be a lot of work that’s why they don’t do it. Let’s go from starting from zero. I’ve never tracked anything before, now I’m going to start tracking it. How much time do you estimate it would take to start up and how much time do you think it would take to just continue monitoring it once you’ve already set up? Let’s use your favorite Mint. I’m sorry, your Personal Capital.
Jim: I mean either one, they do the same thing in terms of tracking. If you’re starting a budget, I would recommend Mint first because it has better budgeting tools. You just go in and you link up your credit cards and it starts pulling it in automatically. Then you know your total spend. It’s pretty smart about categorization but sometimes you have to adjust that too, play with that. But I don’t know how long. It kind of depends how many credit cards you use, how many bank accounts you need to link up. But it can’t take more than 15, 20 minutes.
Scott: I use Mint personally. That’s how I track my finances. It’s very easy. You just, exactly plug in. You literally just log in your username and password to each of your credit cards and your bank accounts and any other investment things you want to put on it and then you’re done. It just imports all your transactions every month and spend a little bit of time adjusting what this expense here is labeled. My local liquor store is called Sportsman’s so it’s not an athletic gear.
You know, you need to adjust these expenses to what they actually are but then after that, it will pick up pretty quick and you’re good to go. So it takes five minutes a month to literally have every transaction categorized appropriately. And I’m a huge nerd. So one thing that Mint doesn’t do is it doesn’t give me a month by month breakdown of my spending across all my categories over time. So I had to download that spreadsheet and play around it a little bit more. But that’s more than most people.
But Mint is perfect for all this. It just aggregates all that data into one really convenient place and I think it’s just a fantastic starting point.
Jim: And it’s fast. Like Scott just explained, just minutes and you have data that you didn’t have before, that you had trapped in your head in bits and pieces that you assigned probably a lot of emotions if you feel that way about your spending.
Scott: What other thing that’s powerful about this is you see your spending and you can see what the levering in your financial model is, right? So you may not have that in your head. It may be, hey, I know I went out to eat a couple of times last month but that ended up being $300. Oh wow. I could cut that in half easily next month and come up with a 150 more dollars. That’s the lever I can pull from my finances next month.
And you see it and you have visually categorized. It’s a skill. It’s not a skill. It’s work to categorize that and a little bit of a skill to present it in a way that you can make decisions easily from. Once you do that, man, it’s so easy to see exactly what you need to do for the next leap forward each month. And you can make dramatic progress within a month or two.
Mindy: So I said this before and I’m going to say it again. The first time that my husband and I started checking things, we didn’t even have Mint. It was just a piece of paper that I left on the counter and I drew a little bit of lines, the date, where I spent the money, how much I spent and the general category. And I was shocked to see that every single day I went to the grocery store because I went to the gym every day and on the way home there was a grocery store and oh, I just need one thing. And one thing turns into six things.
And that’s not a big deal if you do it once but that’s a huge deal if you’re going every single day. 6 times 7 is, who are my math majors out there? That’s a lot of extra things that I didn’t need just because I was stopping at the store every single day. I read this book from Steven, The Econometus. We go grocery shopping like once a month or something like that and it just blew my mind.
Could you go grocery shopping once a month and they gave a whole story about how they did it. I mean I’m thinking of milk and fresh fruits and vegetables and they said, yeah, we do have these fresh fruits and vegetables but I don’t know what they did with milk, maybe they froze it, I don’t remember, it’s not important. You can still go to the grocery store for milk.
But they would eat bananas that go rotten first or then oranges take a lot longer to go bad. Carrots last forever. And they would eat stuff based on when they were going to go bad. They always had fresh fruits and vegetables. I can’t go a whole month without going to the grocery store but I’ve gone significantly less just by keeping track. And you know, those six things might be, let’s say, $20. And that’s $20 every single day.
So you know tracking really gives you a good idea of what you’re doing. I didn’t even have to wait the entire month. The next week I was like, “wow, I go every single day?” I wasn’t even considering that.
Jim: Yes, especially if you write it down manually on a piece of paper. When I first started doing it, my friends said to me you should go do a budget bible. And it was just a spread sheet. You just put in all the, it was very basic, every month you just entered in all your transactions. I had to do everything manually. It was not that much fun but I was young and so I had a lot of time and I wasn’t spending a lot.
I was going to work and going home and going to work. I realized how much I was spending when I was going out to lunch and happy hours. I spent a lot on happy hours. Just after work, just going…
Jim: And you start adding it up and you’re like, oh. You know you go and get a couple of beers, 15 bucks. It really did not seem like a lot. And then you realize how many times you go. And now you’re like that’s probably not a good idea. I should just cut one, do it slowly, adjust your habits. Maybe just go do something else. You can find other fun things to do. It’s just easy.
My coworker would say, hey you want to go to the bar and I’ll say, sure I can go hang out but there are other fun things that you can do. But writing it down, it’s hugely important. I don’t think a lot of people do that because they’re so busy. Just getting that pen and a piece of paper is huge.
Mindy: Yes it’s just eye opening. And I always thought I was good with money and I am good with money. But I’m also really good at spending it when I’m not paying attention to what I’m doing with it.
Scott: Let’s go ahead and move on to the next tip here. What’s your second tip?
Jim: So it’s actually related. It ties too nicely with the writing things down. I say keep a time journal. When you want to save money, the best way, if you don’t want to spend a ton of time, if you brown bag your lunch and you have to do that every single day. Forget it a couple of days and sort of fall off the wagon. But you’re spending a ton on all these fixed monthly costs like your Netflix, whatever, your gym, things that maybe you’re not using as often as you are.
And so we still have cable and realized we are spending 12 bucks a month for cable box for a tv that we weren’t even using. Like the kids would watch every so often but they were just watching random cartoons. They did not need the cable box. But what I did was I started keeping a journal of what I actually watched and we watched a lot of Netflix, a lot of Amazon Prime movies and videos. We didn’t watch that much regular TV.
And so we cut out that cable box, replaced it with a Roku that the kids know how to use. Roku is, I don’t know, 30 bucks. So in three months, it paid for itself. And just that simple act of writing that down, now I can decisions as data driven. Now, I can decide all right, I only watch live TV really for sports and nothing else. I should be able to cut this $100 a month. I don’t know how cable got to be so expensive. I can cut this $100 a month bill. Really, what am I giving up, sports? How often do I watch sports? Well if I look at this log, I could add it up.
The gym? Now I go to the gym enough but our gym is cheap. A lot of gyms you can go a la carte. You can go for like 10 bucks. I think our gym you can pay 10 or 15 bucks to go. And there are some gyms that are charging 150 a month and they’re going not at all. If you write it down, it kind of hurts if you’re not going enough.
So you kind of now that you just pay a la carte so you don’t have to be paying this monthly fee all the time. And it happens with any bill you can think of.
Mindy: Every single gym owner right now is thinking, shut up Jim, just shut up. Jim Wang, not the gym membership. Every one of them because that’s how they make money. They know you’re not going to come. You sign up at January for their ridiculously low price and then it goes up because you know you get the one month free and then they’re billing you for every single month that you’re not going. There’s something like 10% of all gym memberships are actually used and 90% of people never ever use it. If everybody were to go to the gym there would be not enough space because literally they have all these people that never, ever come.
Jim: And what’s funny is that our little gym is run by the county and they have maybe four or five of them spread out. One of them closed for renovations for like six months and all those people came here. First of all, the number of people in the gym didn’t grow by that much. It was not like suddenly there were hundreds of people, no. It went from forty to eighty. It was miserable. You had forty people at that…because you know, you got to have that habit. You go on Monday, Wednesday, Friday or Tuesday, Thursday, Friday or whatever it is.
And so you see the same people and suddenly there’s a whole batch.
Scott: And they’re always going to be more athletic than you.
Jim: You always have the handful of enormous guys that take all of the 45’s and stack them all up. The problem is, when there’s only one or two it’s fine. But when there’s four or five, suddenly it becomes a big problem. And it’s not that much more people. You just added just a handful more people and everyone’s schedule is off.
Scott: Two important things about the time usage that are interesting to discuss is one, aside from just tracking what you need to spend money on, I think you can also track where your time is going, that’s your other major resource that you can do that could help you move towards financial freedom. And sometimes it’s a surprise to see how much time you wasted that you can just re-deploying in a different way that could either make you happy or a profitable use of your time. Versus time that you’d think is just a complete waste that you could’ve done something completely better and feel better about it.
And then second, I think you can see some things that may seem like large expenses that maybe aren’t large expenses. Like my computer for example, I spend eight hours a day on this thing. Maybe more sometimes. Even though it’s the most expensive item I’ll ever own, or at least the most expensive item of this size, that’s a pretty low dollar per hour item, I think.
And I don’t know, maybe I had a conversation with you at one point about this that gave you that kind of way at looking at things. Is that the way you kind of use to analyze your purchases?
Jim: Yes, you know a lot of it is per use. There are a lot of items that are high dollar that you use all the time like your shoes or your mattress. If you spend a little bit more, it will last hopefully a little longer and your experience will be a lot better. I think the interesting thing is I had a conversation, I was on the train going somewhere with this guy and he was telling me about suits. He made suits.
And I asked him, I still know very little about suits, why are Italian suits so expensive? And he says the difference is the material. It’s just more comfortable. And if you’re spending an 8-hour day wearing the same thing, you want it to be a little more breathable. You want it to be a little more comfortable. And then also, they last longer through dry cleaning.
And so this suit that is thousands of dollars, it fits you better, it makes you look better, it gives you more confidence and all of that. But also, it will last longer. And it’s hard for say a young person to invest because if you need to get three different suits, you’re not going to be able to spend that much money. But as you get older, you can now put an investment. And this is sort of one of the other tips that I am starting to talk about, I call it upgrade and save. Being able to spend a little bit more now and make an investment because these things are going to last longer and you don’t have to replace it as often.
I think what you were saying about the high dollar and maybe you feel guilty about spending that much. If you keep a journal, or just even if you just more intentionally think about it, you won’t have that guilt because yes, the computer is expensive but I’m getting this much value out of it. My dad actually says this. I didn’t use my first computer until I was a teenager. And it was a very old computer. These numbers may not make sense to Scott but Mindy will get it.
When Pentiums were out, my dad got me a 286. He got me a 286.
Scott: This is all foreign language to me.
Jim: And at 80 pegs on the hard drive. And I had to uninstall programs to install new programs. So in order to use one perfect, another word that Scott has never heard before, I’d install Lotus notes because that was the spreadsheets. So you had to do these juggling acts. But then my dad jokes around and was like, “yeah, but all you do today now was play on the computer and you make a living off it.” So, it was an expensive purchase certainly, it was thousands of dollars back then but it was worth it because you looked down the road you are, oh, well it resulted in this.
Mindy: I had the 286, my boss upgraded to 386 and I was so jealous because she had the fast computer.
Jim: I would load programs and walk away for five minutes.
Scott: But going back to your tips though, budgeting and time usage, these are fundamentals of long term success. And I love the second point maybe even more than the first. That time usage versus budgeting. I have actually personally kept a log. This is how nerdy I am. I’ve kept a log of daily activity broken up by, I’m not perfect so it’s not every day, of the last four years. Most days, the vast majority of them, I have a daily log that I’ve literally said, here’s my accomplishments of the day, here’s what I’ve set out to do, these are what I did early morning, late morning, early afternoon, late afternoon, early evening, late evening. Every single day for years.
I just kept it stacked in my thing and it has been really, really productive and helpful for me to make sure that I’m not, that I’m using it either towards something that I enjoy or is a profitable use of that time.
Jim: Can you think of one thing that you’ve learned that maybe recently…
Mindy: Hey, hey, we ask the questions here.
Jim: I want to learn too.
Scott: One thing I’ve learned from that? Whenever I shy away from that, I tend towards really, like for me personally, if I don’t have anything to do, if I take a vacation and don’t do that or it’s a weekend and I don’t do it, I will just binge on something unproductive the entire day like video games or sometimes it’s nice, like I’ll read a book or whatever. But, I’ll always come out of a period of refocusing myself, feeling like I didn’t work out, or ate healthy, or all that stuff. So I think that’s, for me, I need to structure and coach myself in order to get things going along.
Jim: It’s like a time cheat day.
Jim: No, I mean budgeting, that’s why, before all the different tools, budgeting is hard because you have to constantly write down transactions and it’s sort of a cognitive load, and you get tired and you don’t feel like doing it, then you fall off the wagon. You know like anything else, maybe you need a break. But with the tools now, it will take care of it for you. Maybe you don’t look at it every single day and give yourself a break. It’s still powerful stuff just to maintain.
Mindy: Yes. When you’re getting into the habit, I would recommend taking a day off because it’s so easy to just not do it the next day either. But this time usage journal, I think it’s brilliant. I’ve never heard this before and I read a boat load of blogs and you know I’m kind of in the space. But that’s really, really brilliant because I’m not using my gym membership either but I just signed up for a half marathon so I guess I’m going to be doing that. And it’s getting cold so I’m going to have to run inside. Are you laughing at me, Scott?
Scott: No. Yes. A little bit, yes.
Mindy: I did not get my current body by working out. I will fully admit that. I’m ok with that. But if I have kept a time journal, I would totally gotten rid of the gym membership.
Scott: Before we move on, do you have any tips for which journals or how to actually practically go about starting any of these journals? If you have a product that someone can use, Jim why don’t you start doing that.
Jim: No. So it’s just two things. If you want to track what you’re doing, for a while I was doing that just to see what my day looked like because I was always asked what you day looked like and I would not know. I just go into Excel and put rows for each hour and scribble something and that was it. I didn’t use any products. But actually, one thing, you were talking about more hours on the computer. Is rescue time still around? It basically, you know the new iPhone will tell you where or what you’re doing. I forgot the name of the feature, you turn it on and then…
Scott: The screen time.
Jim: Yes it’s like how many hours you’re spending on social media when you’re on your phone. But there are similar tools for the computer and then it will tell you which websites you are going to and categorize whether they’re leisure, social, news, etcetera. But you can do that to just track and think about how many times you’ve checked Gmail unnecessarily during the day.
For the usage journal, I just keep a sheet of paper, just a little throw-away notebook. So for the TV, it was on the table next to the remote. I just put a little tick every time I use it and how many times I did not use it at all. And just near whatever. The gym, you know when you go to the gym. Just think back. Everyone knows. But I think the act of writing it down and recording it will give you the sense that hey, you’re spending a hundred bucks or whatever it is and you’re going twice.
But then start thinking about, this may be getting a little bit off topic but let’s say you want a little more, you want to think about the road blocks that you now created for yourself. So I used to not like running. I couldn’t run because now I know this, I was just running too fast and so I was just getting exhausted. I run better now. And part of the reason was I did not like running because one, I didn’t know what I needed to wear.
And so now, based on the temperatures, I have a little sheet. Just a little paper that says, when it’s anything above 60 degrees I have to put on shorts or whatever. When it drops down to about 15, whatever, I would just bring a long sleeve shirt under or I needed to put gloves for my fingers and I always put a little beanie on or whatever. I was always running in the neighborhood, so if I wanted to take something off I could just throw it somewhere and put it back and just pick it up on my way home.
And I put that next to the clothes and they’re all in bins in our foyer area and it just made everything simple. So I did not have the excuse like, “aaw, I have to go find..” or “where did I put that shirt?” I have 20 shirts all in this little bin, 20 shorts, 20 gloves, everything. Make it as simple as possible. And then you’ll go more. Find the things that are road blocking you.
Mindy: Wow that’s a good tip.
Jim: There is, I forgot the name of this guy, he’s from Stamford, it’s about, he talks about creating habits but it’s the thing called the motivational wave. When you signed up for that race, your motivation was really high. As time goes on, your motivation is going to diminish, diminish, diminish. So it’s becomes harder to overcome those road blocks. And so what happens is, when your motivation is the highest, make the rest of the actions as simple as possible.
So at that time, I wrote down the temperatures, put it all in there. So if I want to run, I just got up, take a shirt from this bin, shorts from this bin. If I need gloves, whatever, from this bin and I’m out the door. When my motivation went down months later, I was like, “Ah, I don’t feel like running.”
Scott: So you got to walk through your house in your underwear to get to that point?
Jim: It’s right outside our bedroom.
Scott: I love it. But if you are listening and want a time journal and those other things, a couple of places are one, excel spreadsheet. Two, piece of paper. Three, make yourself a word document. That’s what I do. I just have a word document way back that I created for myself. Here’s what I want to do today. Here’s the time that I’m chunking out and here’s to track my progress. I hand-write it with a pencil.
And if you want to pay for some resources too that might be a good thing to check out will be the 12-week Year. I forgot who that’s by but that’s got a good breakdown to hit quarterly goals. And then I also have used in the past the book called Living Your Best Year Ever by Darren Hardy which will be a good resource as well if you’re looking to start budgeting your time in pursuit of your goals and all that kind of stuff.
Mindy: And is the 12-week Year an app or is that a book, a journal, what is that, Scott?
Scott: It’s a book.
Mindy: Ok. And we’ll have links to all of this on the show notes. Scott, do want to share your Word Document and your notes as well so people can download that and use that so they don’t have to start from scratch?
Scott: Yes, absolutely. I mean it’s just a little piece of paper like I have a couple of goals and all that. But yeah, I can share that. For sure.
Mindy: Maybe that’s a road block for somebody to not get started is that they don’t have the document. So you’re helping them out.
Mindy: Yes, I am fully aware that my motivation is going to wane. I am writing about it on my blog and I am going with a friend and my daughter wants to do it too. So, sure it’s going to be awesome.
I keep track of my own work hours just for my own self so that I know that I’m getting in 40 hours a week every week. And I keep track of that on MyHours.com and it’s a free app if it’s just you. And I think if you want your whole company to sign up, it costs money. But it’s just me. So that’s another way to keep track, start when you’re doing something, stop when you’re done. It’s another great way to not have to write it down by hand especially if you’re on the computer.
Ok, so I think we’ve covered this one. I really, I’ve never heard keep a time journal before but that’s just fantastic. That’s the best tip you’ve ever said in your whole life, Jim. So top that, what’s the next one?
Scott: Tip number 3.
Jim: I think we’re done.
Mindy: We’re done. That’s the end of the show.
Jim: So this is less about data driven and more about just about being smart with your time and how you try to save money. And any fixed contract that you have with anybody is negotiable. So any subscription, any service, anything. And you should be aggressively negotiating in getting them down as much as possible because chances are, you don’t need it as much as they need you as a customer.
So we recently bought, well not recently, it’s been five or six years since we bought a new car. And it comes with a Sirius FM radio and afterwards if you want to subscribe, you get it free for I don’t know how long and then afterwards if you want to subscribe, it’s $30 a month or something like that, which doesn’t sound all that expensive until you realize, if you don’t subscribe, they will ask you, do you want it for five months for $25?
All you have to do is you have to cancel because once it renews it will go up to the $30 a month. You just have to cancel and then pay again. 25 bucks for 5 months over and over and over again. And like anything else, they have no marginal costs to deliver the products to you. You already have it in your car, it’s part of your radio. And you’re being subsidized by people who are paying 30, 40, however much they’re paying.
Negotiate everything. And the phone call doesn’t even take that long because the customer service reps are used to it. Anytime you cancel, he goes to retention department. They want to retain you and they will give you a deal. And if you don’t like the deal, cancel it. Like you don’t need cable TV, you don’t need internet, you don’t need Sirius. You don’t need some of the ones you can’t negotiate with are your Netflix or your services where there’s just no one to call. And then they don’t really care all that much. But yeah, just cancel and try to get them to retain you.
Scott: This seems like a good tip to implement after you’ve done the exercise earlier about budgeting your time and being able to quantify how much benefit you can gain from these services before.
Jim: Yes. We weren’t using Sirius. We don’t have it now even if it were $5 a month, we wouldn’t get Sirius in the car because we don’t listen to it. Most of the time we listen to these little kid’s science podcasts that the kids want to listen to. So podcasts, you just download them at home or even when you’re out and they just listen to that and they’re far happier. They don’t need 90’s on 9, 80’s on 8 or 20’s on 2.
Mindy: I had Sirius FM for a while and it had 80’s on 8 and I loved it very much. But I was listening to, oh God what’s his name, Clark Howard. And this guy called up and said, you know you always say negotiate or shop around or whatever. And he said, I got a renewal notice from my car insurance and it had gone up to $400 or whatever.
So I called them up and I said this is ridiculous. This was not that expensive before, I’m going to go someplace else and he dropped his insurance price by 40% just because he threatened to leave. To which I say, well if they were going to raise you every month, you’re going to find somebody else who’s cheaper anyway. But yes, how many times does your insurance go up and it doesn’t go up dramatically. In this case they raised it too much for this guy to be happy with it but your insurance was 600 last year and this year it was, you know, 610. Oh whatever, I don’t want to shop around. Shop around! Because maybe, it’s not that expensive.
Kind of on the same lines as this comparison shop is, specifically for insurance, look at your deductible. My deductible when I was young and had no money was, what is the lowest, like $250 a month or something like that. Now I can comfortably accept a $2,000 deductible. So I had that and my insurance was like nothing. I think at one car it was $60 a year or something like that because it’s a low mileage vehicle, on and on and on. But there’s a lot of different ways to get your costs down if you can accept the blow like that as well.
Jim: You can ask the insurance agent. Are there discounts that I can get that I don’t already get? What do I need to do to get them? I remember talking to someone at Geico and he said they have this thing that if you’re a part of an affiliated organization, they’ll give you 7% off I think it was. And one of the organizations that you can join is the National Military Families Association which you don’t have to be in a military family. You just join the organization. You pay the $40 annual fee at the time. That’s what it was at that time and I got 7% off my Geico insurance.
Mindy: Which is more than…
Jim: The 7% was more than the $40. Well you get the discount as long as you’re with Geico, you don’t have to remain a member of the National, NMFA to get it. But that organization got $40 that it wouldn’t have otherwise gotten to support its mission and then I get a discount so everybody wins.
Mindy: Everybody wins.
Jim: Because the Geico rep told me, you can look at this list of organizations are you in any of them? And I was, “oh, I’m not. Yet.”
Mindy: Let me go look at these organizations. It took a few minutes of your time and you save, what’s their thing? 15 minutes can save you 15% or more on Geico. I’m a Berkshire Hathaway stock member and they’re a member of the Hathaway families. So I get that discount.
Scott: So what are some of the biggest contracts that you think that your normal person that are listening to the show that have reviewed their finances in a couple of months, what are some of the things that you probably think stand out as like a checklist to go after?
Jim: Cellphone, cable, internet, insurance. I think people know that they’re fixed costs, they should know that they’re fixed costs. You can negotiate rent, you can negotiate any of these things. It doesn’t hurt to ask and you should just give it a shot.
Mindy: What’s the worst thing that they could say? No? They’re not going to shoot you.
Jim: I mean think about rent. Most people don’t even consider to think that they can negotiate rent. And if you’re renting from a private individual, you want to say, or maybe some people do know, because this is the BiggerPockets Money podcast, but they don’t turnover as a big pain. And so if someone says can I get a break from rent if I sign a two-year, a three-year lease? Maybe a three-year lease is a little too long but maybe they can knock a little bit off the rent or I can pay this way or that way or sooner or faster. You can always…there are different levers you just have to add a little bit of creativity to try to find it. And it never hurts to ask, is there anything I can do like I did with the insurance agent which I didn’t even think about.
Scott: Yeah. I love it. So what’s your next tip after that?
Jim: So what had happened was I heard all these things about the latte factor and brown-bagging your lunch. It sounded, those are all great ways to save money but it don’t get to the fact that, it doesn’t make your life too much easier. And so the thought that I had and what I actually did was I call it Upgrade and Save. It’s making an investment early on to make your life a little easier and potentially save money in the process.
And it goes back to the running. The motivational wave. You want to brown bag your lunch. You want to stop buying coffee. What can you do? Maybe that means investing in a Kuerig and having coffee that’s instantly available when you go as opposed to a drip coffee maker, which is the most economical way to do it but you have to remember to fill it with water, make sure you have enough coffee grounds, make sure you have the filter, program it because it’s not ready in 30 seconds, it’s ready in like a minute and a half.
And it sounds absurd but these are all little hurdles that get in the way. So what happened was we had an espresso machine somewhere. And espressos, they’re just pods. Each pod is 40 or 50 cents but they make great espresso coffee in what feels like literally 30 or 40 seconds. And there’s no preparation. If what you need is caffeine in the morning just to get going, and to skip the line at Starbucks, get one of those machines. It costs money. I think brand new, it’s really cheap now, like $80. It’s not a zero. It’s not as cheap as a drip coffee maker. But it’s ready. You will never have the excuse of like, oh I forgot to program it, I’m just going to stop by Starbucks instead of fumbling and figuring out how much water do I need for whatever scoops of coffee.
And it sounds silly but if you make a lot of these investments up front, if you’re going to the gym is a pain because you don’t have the right shirt, just buy a couple shirts, buy a couple shorts. Buy all you need, throw them in, never thinking I want to go right now but I can’t because the clothes that I would normally wear are in the wash. And it’ll save you money, it’s counter intuitive; you have to spend a little bit upfront but if you do the math with just coffee alone it’s really easy.
And you don’t save everything. You say it costs hundreds of dollars to get coffee every day, you’re not going to save all of it but you don’t need to save all of it. You just need to save a little of it so that you have more than you did when you started and you can get probably better coffee.
Scott: And I would say great tip on this kind of stuff is to join one of the social groups around the Phi community, I don’t know, I’m in the Chi So Phi Facebook group, Pestacians Group on Facebook, a couple of those on there.
And when you post one of these types of decisions there for whatever reason people love to give you advise on how to make the best long term decision around this petty decisions like which coffee maker to get, what kind of mattress to get but you get a huge amount of crowd source feedback to help you upgrade and save if you just post it on the right the right social media group, or site, or forum or anything like that- quick tip there.
Mindy: Yes you know you said something to me Scott once that really changed the way I looked at a lot of things. You said make trivial decisions quickly. It’s one of your leadership styles. If it’s not going to make a big difference like time wise, money wise, whatever, do it and move on. Don’t waste a lot of time on this stuff.
I think that’s something like Steve Jobs did that. I don’t want to have to choose what to where so I have thousands of pairs of jeans, a thousand black turtle necks and that’s all I have to wear and I don’t have to worry about it. And you know make trivial decisions quickly. This is fairly a trivial decision. I like this espresso and I want an easy one so I’m going to spend 80 bucks so now my life is better.
Scott: Well I almost would disagree, I would say these are the important decisions right, like this espresso machine that Jim has is a really important decision for him right? That’s impacting your overall day so you made a very thoughtful choice about which one to get there. Then everyday can be trivial after that. Right is that where you’re getting at with this?
Mindy: Ok yes that’s a better every day can be trivial after that. Now I got to find an espresso machine and convince my husband to give me $80 to buy it.
Ok and Jim you have a whole article on this right?
Mindy: This upgrade and save strategy. So we will include…
Jim: Because coffee is like it’s just a very hot, I don’t know so much in real life, as much as it is what people write about being out there but it’s something that’s very easy to understand and easier to math out or calculate out the math and sort of see the savings. It’s harder to do something that’s more qualitative in nature if you’re spending a thousand dollars on an Italian suit or something like that. But you know it has its other examples of you know things you can buy for life, things in that nature.
Mindy: Oh that’s something that Mr. Pop, mister planting our pennies, told me at the BIFL, the buy it for life. And he showed me this pair of shoes that he had, he’s a sales person so he needed to dress up and look nice. And he has a pair of shoes that were $400. I’m thinking to myself I don’t think I can spend $400 on a pair of shoes but he wears them all the time. He wears them every single day. Every time I see him.
I think he bought them two years ago and they look beautiful. They always look brand new and you know that’s not something I think a lot of people in this space think about when they see $400 I would never spend that much on shoes. Well now he doesn’t have to buy another pair of shoes like every once in a while he just has to get those resoled. But even then there’s such high quality to begin with they’re not those cheap, crappy plastic shoes with plastic bottoms.
We will link to your article The Upgrade and Save Strategy on wallethacks.com in the show notes for the show which can be found at biggerpockets.com/moneyshow47.
Scott: I think it goes to the point you were making out earlier. Like hey that pair of shoes is an important decision. That’s something that he put a lot of energy and time into a beautiful pair of shoes and that’s just a decision I never have to make again. And that’s what you’re talking about here in Upgrade and Save. Make a quality decision because that’s what you’re going to use a lot, every day. It’s going to have a huge impact on your day to day life but once it’s done and its quality you don’t have to worry about it anymore.
Mindy: Yes now it doesn’t seem trivial.
Jim: Now you don’t have to think about shoes.
Scott and Mindy: Yes.
Jim: You just go and put these on every day.
Mindy: And they go with everything, beautiful.
Jim: What’s funny is that I either say you spend a lot on something or you spend as little as possible, there is no in between. So with shoes, my shoes are either, mine are not $400, they’re either nice 150 or not nice 30 bucks and I got that on sale sneakers. I got beat up sneakers all the time and you don’t want to spend a lot because they’re going to get muddy and dirty, ripped and it’ll be fine but I don’t want to spend $100 on a pair of sneakers because that’s in the middle and I could rip them on something in a week and get upset.
Mindy: Oh see now I do spend $100 on sneakers. I buy last year’s model on Amazon but I do spend a lot because when I run and I don’t have good sneakers on it hurts. I get shin splints or something.
Jim: So that’s a functional issue. Yes you don’t want to buy shoes that will make your feet hurt but you know if there were $30 shoes that functionally perform the same and it didn’t last as long, for me personally, I would go for those instead of a hundred that may be last a little bit longer.
Scott: So let’s go to the last tip. What’s your fifth and final tip here?
Jim: The fifth and final tip is sometimes you need to do things ahead of when you need them. And we’re trying to think of a big money win. A lot of folks they only think to look at their credit when they think they’re going to need their credit like with a loan or something. That’s something you have to be doing on a regular basis kind of like budgeting, you’re not thinking oh I’m going to retire now how much should I save, by then it’s probably a little too late.
And the reason why I thought about this is when I was younger I wasn’t really paying attention to my credit. I’ve gotten a credit card in college by signing up and getting a Frisbee or a t-shirt or something stupid. I wasn’t thinking about buying a house, I wasn’t doing anything and what happened was I was getting background check for a security clearance and they go naturally pull your credit if you’re a financial risk and if you can get bribes or whatever for state secrets.
I had no state secrets but I did have the wrong, they had somehow listed a cell phone with the wrong address because Jim Wang is a fairly common name so they had that. And they had my social security number wrong. So the credit file had two social security numbers. And obviously one of them was not mine. And that was the one associated with the bill, the cell phone bill and the address.
So I submitted where I lived, everything for the security thing and then they come back and they go Mr. Wang, this guy was trying to catch me in a lie and I had no idea because I was the perfect liar. He was like have you ever lived in Harrisburg, PA? And I went to school in Pittsburgh. And I said no I’ve never lived in Harrisburg. So he said what is this? I never even had a cell phone with whatever company it was. And I had to go and fix it while they were trying to do the security clearance check.
And it was the most stressful thing because obviously it’s not a loan for a car. If you don’t get the loan you wait a little bit and that’s fine. This is job related and I can’t do anything until the clearance goes through. So I was all stressed out. So eventually, not everyone is going to get a background check but eventually someone’s going to get a loan for something. You need to be on top of all this background stuff, all the credit making sure that one, it’s correct and two, if you’re taking the right stuff to improve it because all that stuff takes a long time.
But if could get your credit score just a little bit higher sometimes you can get yourself in that sort of excellent tier and you’re interest rate is lower. So for the next fifteen or thirty years for house or for the next five years for car loan you’re paying a lower interest rate just because you did these steps early on to fix any mistakes or to give yourself a little boost.
Scott: Love it. Or even if you have a very bad score you can make a dramatic improvement in six months to a year if you just take the right steps. Get current on everything and start paying them off. Or be smart start paying dues ahead of time about what’s going to have consequences or what’s not. Basically how you approach those bad debts and stuff. I think he’s exactly right, get this right before you go get a loan and battle with the consequences.
Jim: And if you have to wait six months to buy a new car you can probably try to figure out a way to do that if you’re going to save money on your monthly payments for that car just by waiting a little bit longer.
Mindy: Yes and so I want to share now annualreport.com the government has decided that you have access to it once a year for free. The credit reporting agencies, the three big ones, have to give you this for free. Experian, Trans Union, Equifax will give you their credit report and a company might only report to Equifax of only to Experian so your credit report is going to be different from each one. And each one only have to give it to you one time a year for free.
Most of the big companies will report to all three or at least two of them. One thing I have seen recommended that every four months you get a different report. So instead of getting all three in January you get Experian in January and then four months later you get Equifax and then four months later after that so you’re still monitoring your credit all year long but for free.
Scott: And another good tip is that if you’re looking to do this go to creditkarma.com and Mint will give you, we talked about Mint earlier in the show. You also have a soft credit report, credit number, and credit score on Mint.
Credit Karma is a great resource that will give you information on the accounts outstanding and all that kind of stuff. And give you suggested ways to begin tackling that.
So if you’re worried about credit and want to improve that, that’s probably a good way to start alongside these other reports.
Jim: They’ll give you a number. Most of the time they give you a vantage score. They’ll give you your credit score which isn’t necessarily the official Fi-co but I view it like your temperature where you, if it goes up or down, you don’t know drastically it might be you, and you didn’t open a new credit card, you didn’t do anything or miss a payment; that might be an indication that something’s going on. You might want to dig a little deeper.
Mindy: Yes and I want to piggy back off of that. I wanted to say that they give you a number that isn’t necessarily the exact number but let’s say they give you a number of 715 it isn’t like you’re real number is going to be 400. The 715 might actually be 695 or 725. It will be in a range and one point will not make a big difference on your score. It’s the big swings that will make a difference.
Scott: Yes they’re just good resources for beginning to improve your situation if you’re starting out and you have a past score and want to improve it.
Mindy: Jim this was fabulous it really exceeded all of my expectations. I knew you were awesome because you’re the great uncle of blogging that we were going to officially call you great uncle.
Scott: Great uncle Jim!
Jim: I’m not sure if that’s a good one.
Mindy: Before we get to the famous 4. Is there anything else that you want to cover?
Jim: No I think we touched on it all.
Mindy: Yes I think it was a pretty good overview of all of this. You know I want to point out that while this was really awesome and I love the keeping a time journal usage that’s a new tip I’ve never heard before. I hear a lot of the same tips over and over again because this is what works.
Keeping track of your spending isn’t necessarily fun and you know like ripping off the band aid you have to take a hard look at what you’re doing but if you want to make changes in your finances you can’t keep doing the same thing. So that is just a really, really awesome tip, the time usage journal blew my mind. That’s fabulous and now I’m going to go home and see how much time we’re watching on TV. I do need the internet I’m not going to be able to cut that but I still really got a good deal with that.
So ok now it’s time for the famous 4. These are the same 5 questions we ask all of our guests. We don’t have a little jingle for it.
Scott: The last one is a command, it’s not a question.
Mindy: I’m sorry this is the same four questions and demand that we ask everybody. Question number 1: What is your favorite finance book?
Jim: Favorite book was The Millionaire Next Door. I think when I read it, it really opened my eyes and up until that point I always thought millionaires were rock stars, musicians; they were always famous. And I think that book told me that actually the world is much bigger and just because it doesn’t get much press in our life doesn’t mean that it doesn’t exist.
Meaning the people that are diligently saving, smart about investing, there’s just so many different ways to build wealth and it’s not always something that you’ll be able to see. And it’s totally possible through very boring principles if you’re willing to stick with them.
I really enjoyed that book it’s not hard to read it’s all these bunch of stories and it unveiled a whole new world to me.
Scott: It’s a great perspective and it’s got a bunch of great anecdotes and like you said great stories. And it’s also backed by real, hard numbers that were really professionally and academically researched; classic book there.
Mindy: And it’s an easy read. You can put it next to your bedside table or put it with you in the bathroom if you want to talk about that.
Scott: That’s where you put your jokes, your book of puns and jokes.
Mindy: A book of really terrible jokes.
Jim: And a Millionaire Next Door.
Mindy: And a Millionaire Next Door.
Scott: Alright what was your biggest money mistake?
Jim: Money mistake was buying a first house. It wasn’t the fact that we bought the house, it was that we listened to all the experts and just did whatever they said. And it wasn’t until much later, I bought it when I was 25, you’re used to this idea that you have teachers, bosses, they tell you how it works and you go ok this is how it works.
And there was just a lot of this little things, someone who was more in charge of the process would have pointed out and said hey wait a minute I don’t like this. They were small things here and there but when you add it all up it was like there was something with the roof so the home inspector looked at it the inside of the roof and it had this fire retardant, whatever, coating and it’s supposed to protect you in going out in flames. But when it activates it deteriorates the material, the plywood and it can activate when it gets super-hot which in this case there isn’t so much airflow in the attic.
These are all things that if someone would, if I were paying more attention I would know that this roof was in a little bit of a trouble. The home contractor said it’ll be fine meaning it won’t collapse as in the fire retardant has been activated and now the constructional integrity of the roof is a little bit weaker.
No one’s going to be walking on it, there’s not going to be hale or that type of issue. But it’s going to be needed to be replaced. He didn’t say it’s going to be replaced in the next X years.
Just things like that they add up. I don’t know what the total dollar amount was but there was all these fees that I could have negotiated away that in some places ok sure we don’t take away that like in some places they take away that document fee and whatever.
But the broader lesson was I’m in charge of my life, I’m in charge of my money. I could take their expert advice into consideration but I shouldn’t take it as gospel. And everyone learns that in life and I just leaned it a little later than what I should have hoped.
Scott: I think this is the case for every single field. One of the other ones that I think I got off of this is medical. I hurt my foot and they misdiagnosed it in the ER. And then I looked it up I had what I thought it was and they were like no this is not it’s a different injury and then finally two months later they correctly diagnosed injury. It was called Liz Franklin injury, it’s a rare condition.
But even in every field here’s the experts opinion, do your own research and make sure you agree with it and if you’re not self-educated your handing and abdicating control. And you’re at the mercy of someone else’s opinion. You use a professional but then you do your own research; I love that. Sorry.
Mindy: I don’t know if I would self-diagnose medical injuries.
Scott: Oh I’m not saying self-diagnose medical injuries, I’m saying that it goes across- legal, accounting, all of these stuff. If you don’t understand your situation, you cannot find the correct specialist that can go ahead and help it right? Hmm maybe this is not where I want this to go.
Jim: An expert may not have all the information specifically with let’s say your foot. They might be able to see it visually but if there’s like soft tissue that they didn’t look in the x-ray so all they see is the bone. There is maybe information that you didn’t convey. The things that they don’t see in any expert field and so they don’t it’s not that they are negligent it’s just that they didn’t make the right pick based on the information they have.
But in the end you are responsible. You are the last line of defense for anything that involves you and I just didn’t know that. I just thought these people are in charge, they tell me what to do and I do it. and then I turn around and I’m like oh my car now needs 4 new tires and a belt, new engine, whatever, I’m not a mechanic. Oh ok maybe they don’t have my best interest all the time.
Mindy: Yes definitely do your own research on that.
Scott: To clarify we’re not saying self-diagnose your medical stuff. I’m just saying that I always take the expert opinion, I go to the best professional health care to help me out about these types of situations and then I make my own decision just like Jim is saying you should have done with the housing situation here.
Jim: Alright Dr. Scott.
Mindy: Ok moving on from Dr. Scott. Jim what is your best piece of advice for people who are just starting out?
Jim: Take risks and don’t be afraid to mess up. Because Mindy like you said what’s the worst that could happen? You’ll be working your job whether it’s entrepreneurship or anything else.
I think that one of the reasons I was able to pursue entrepreneurship when I was younger is because I took the risk when there wasn’t a tremendous amount at stake. I think it would be different if I were 38 right now, 3 kids and I had a job supporting me and everything was good. So I said I want to quit and do this blogging thing. That would be a far harder choice to make with that much on the line.
I think at 25, I was getting married; we were fine we were going to figure it out. There wasn’t so much responsibility so that’s the time to take risks. So I would just say go out and try to take risks when you can and don’t be afraid. Just go for it.
Mindy: Yes that’s excellent.
Scott: Love it. Alright what’s your favorite joke to tell at parties?
Jim: Maybe for kid parties. What’s the difference between a crocodile and an alligator?
Scott: I don’t know.
Jim: One you’ll see later and one you’ll see after a while.
Scott: Nice, perfect!
Jim: You laughed I saw you guys laughed.
Scott: We’ll roll with it.
Mindy: That’s very cute.
Scott: Tell us where people can find out more about you. That’s the command.
Mindy: Tell us where people can find you.
Jim: I’d love it if they would come check me out at wallethacks.com I share strategies for getting ahead in life and financially. And just shoot me an email say hello, I’d love to chat and meet new people.
Scott: Awesome great site, you have some great site contributors on their so it’s been fantastic.
Mindy: Well Scott did you contribute an article to wallethacks.com?
Scott: Oh no…maybe.
Jim: Now he’s set for life!
Scott: Well awesome! Definitely check wallethacks.com like we said Jim is the great uncle of blogging in the personal finance space so a lot of wisdom accumulated over a long period of time. And thanks for all you do Jim.
Jim: Thank you guys this is a lot of fun!
Mindy: Thank you for your time today I know you’ve got a big busy of doing nothing being an entrepreneur.
Jim: Yes just scribbling on my journal.
Mindy: Make sure you put an hour and a half for today. An hour and a half very well spent.
Jim: Yes it was. Was that a good joke?
Scott: That was great.
Mindy: That was a great joke. I don’t normally laugh at them because they suck. Scott is the king of terrible jokes.
Scott: I love alligator jokes so I think it was great.
Mindy: That was fantastic. Alright Jim thank you so much and we will talk to you soon!
Jim: Alright thanks very much! Take care guys!
Scott: Alright that was Jim Wang from wallethacks.com. What a great story, what great tips! What did you think about the show today Mindy?
Mindy: Oh my goodness that whole thing about keeping a time journal. I said it in the show and I’m going to say it again, I’ve never done that before, I’ve never heard that tip before and you don’t know what you don’t know. That didn’t even occur to me to do but I’m so doing it.
And it didn’t come up while we were discussing it but I think the waffles on Wednesday couple had an article about making your own spending journal. You can very well make your own time journal using a Google document or a Google form where you just fill it out- ok this is what I did, this is how much time I put out – and put it all on a spread sheet so you can look back at it over the month. And you can see wow I really do watch Netflix all the time or go hey I could maybe never watch Netflix again and be ok. And that’s just a really great way to get your finances even more fine-tuned.
Scott: Yes I love it and this is a practice that I practice regularly for years and I find it to be of great advantage to my pursuits I’m going after. And just keeping track of my time, not exactly the same format as Jim, I just list my accomplishments out and schedule out what I want to do. Six periods that I bucket throughout the day early morning, late morning, early afternoon, late afternoon, early evening, and late evening.
I try to make progress or spend that time happily or help somebody else. And if I’m not doing one of those three things I’m wasting time which is just like wasting money although worst.
Mindy: I will say and I think that you and my husband fall into this category a little bit. It’s ok to take time for yourself. It’s ok to read a book or play a video game or whatever. Take a few minutes for yourself.
I don’t think it’s necessarily the best choice to play video games all day long but if you’ve gone hard core for a huge chunk of time and now you’re you know you want to have a down time and you choose the whole day to play video games, go nuts. It’s not the best choice for your whole life but it’s ok to take time for yourself and accomplish nothing and do nothing, that’s not a waste of time. Mental down time is definitely necessary.
Scott: I love my video games and I do not consider that as a waste of time because I am happy doing that. What is a waste of time for example is scrolling the news for an hour while not getting out of bed in the morning or being on Facebook and getting lost for an hour. Those are the kinds of things that you should cut back on and you can deploy that to more productive and happier use.
Mindy: Yes that is true. Ok Scott shall we get out of here today?
Scott: Let’s get out of here.
Mindy: Ok from episode 47 of the BiggerPockets Money Podcast this is Mindy Jensen and Scott Trench and we’re leaving.