Showing posts with label Lifestyle. Show all posts
Showing posts with label Lifestyle. Show all posts

Sunday, August 13, 2017

California vacation: being frugal can cost you more

We recently just came back from a trip to the west coast. It was a week long vacation with lots of driving between different cities within the state of California. I had to be careful not to overspend. I may be a millionaire, but keep in mind that it's 2017-- a million bucks won't even buy a decent house in San Francisco (maybe a shoebox, but that's not an option unless you don't mind smelling like a shoe).

Just some background...

California, pronounced by its ex-governator Arnold  Schwarzenegger as Ca-li-for-nia, is easily America's richest state by Gross Domestic Product (GDP). This is not surprising because it is the most populous state in the United States and the third largest in terms of area. The fact is, according to Forbes, there are more billionaires in the state than any country, with the exception of the U.S. itself and China. The state is a magnet for wealthy people. Immigrants and non-immigrants alike are flocking to California ever since gold was discovered there in 1848.

Rodeo drive, where the rich and wanna-look-rich shop.

So when I got invited to attend my 30th high school reunion in San Diego (see Katy Perry spraying me with foam @ 2:27 of the video), I knew it was the perfect opportunity to visit the Golden State. The last time I've been there was in 2011, but that was mainly in San Francisco area. I figured it was my chance to re-explore other cities.

Because I'm bringing my entire family with me, there are other goals that we need to accomplish. Unfortunately, mining gold is not one of them.
  • Bring my wife to her mini college reunion in American Canyon
  • Pay my physician sisters a visit in Sacramento
  • See the Hollywood Walk of Fame in Los Angeles

While we did accomplish all our goals, one thing that I can conclude, time and time again, on every vacation is that being frugal can sometimes cost you more.

Here's why.

Booking a cheap flight

So far, the best way to search flights is through Google Flights. The site showed me the available fares to Los Angeles for the selected dates. You can also track prices by enabling email notifications if you want to. I could have flown to San Diego, but it seems cheaper to fly to Los Angeles if you're coming from Philadelphia.

Since we had a flexible schedule, I chose to leave Philadelphia on a weekday, particularly Wednesday. That's usually the best day to travel if you're hunting for bargain deals.

In the end, I found an American Airlines flight that will bring us to LA for $195 and a $186 Spirit Airlines flight for the return trip, for each per person. I purchased the tickets through my Expedia account where I get to accumulate reward points.

As it turned out, the Spirit flight costs more. The fares may be cheaper, but the fees can add up quickly: $50 for a carry-on bag, $9 to reserve a seat, or $5 for a bottle of water. My impression is that if they can charge a separate fare for your soul, they would. It's just not worth it unless you're a backpacker.

Being frugal can sometimes cost you more.


Renting a car

I originally booked a Mitsubishi Mirage, a subcompact car, along with my flight on Expedia because I want to stay within my budget. But after arriving in Los Angeles, it dawned on me that I want something that is safer as the city has some of the worst drivers in the country.

Sorry, Mr. Money Mustache, but safety is an expensive illusion only until you get into a major accident. I don't want to take any chances, especially when my entire family is involved.

I've survived being sandwiched between two bigger cars on my subcompact before, but that was really a minor one in spite of the lawsuit.

Also, I wanted to have a more comfortable ride as I can easily accumulate over 1,000 miles travelling back and forth from one city to another:
  • Los Angeles to Sacramento to Los Angeles, 770 miles
  • Sacramento to American Canyon to Sacramento, 110 miles 
  • Los Angeles to San Diego to Los Angeles, 240 miles


So I quickly realized that I need want a bigger car. Besides, this is supposed to be a vacation-- I've already been driving a Prius C all year round.

I end up upgrading to a bigger car for an extra $188 for the entire week. It would have been cheaper if I booked a full-size car outright.

Again, being frugal can sometimes cost you more.

Drive from Sacramento to Los Angeles

Airport parking

It's a common dilemma for frugal people about to fly-- where to leave your car while vacationing. Once upon a time, I asked my neighbor friend to go with me to the airport so he can drive my car back home. In this way, I don't have to pay airport parking fees. Everything was good until the moment when I boarded the plane. That's when I realized that my car keys were still with me!

My poor friend had to commute to get back home (probably cursing me along the way) and I had to pay the short-term airport parking rates, which was about 4x the rate of regular economy parking. Fortunately, I was gone for only a few days.

The lesson is that being a cheapo and dumb at the same time can cost you even more!

For this trip, I opted to use Philadelphia Airport's economy parking for a flat fee of $11 per day. I'm sure there are cheaper alternatives, especially with online coupons. But we're only going to be away for a week. It's simply not worth my time.

Hotel stay

My gracious sister owns stupid timeshares that she seldom uses. So she ends up offering it to relatives and friends. I gladly accepted the offer because it will surely save us some money as we get to stay there for 2 nights, absolutely free.

A decent hotel, but 60 miles away from my reunion venue.

It turns out that the hotel was 60 minutes away from the event that we're attending and the traffic on I-5 can sometimes go into a grinding halt, which it did. Had we stayed in downtown San Diego, we could have used the time to bring the kids to Balboa Park or Seaport Village. We could have used the time to socialize with friends.

It did save us money, but it cost us a lot of time.
And since time is money, being frugal can sometimes cost more!

We stayed at my sister's place in Sacramento for the rest of the trip. So we end up paying for just 1 night stay in a fancy hotel in LA for $160.

Finally relaxing in our LA hotel, tired and exhausted.

Total cost of trip

All in all, we didn't over spend. We managed to stay below our budget of $3,000 dollars for the whole trip.


Regardless of the cost, it was all worth it. We had a fabulous time together. I'm looking forward to  visiting California again in the near future.


I know what you're thinking. Keep in mind that the guy is 6'2".


Excited to see Ironman in Hollywood



Greystone Mansion in Beverly Hills


Thanks for visiting.


Saturday, October 22, 2016

When buying a hybrid car make sense

 I've recently received an email from the Toyota dealer where I bought my Prius from. The email states that it's due for its 80,000-mile scheduled maintenance.



I replaced my Honda Civic with a Toyota Prius C in 2012 hoping to save a ton of money because I have a long commute. My eldest son who was in college also needed a car at the time and my old Civic was the perfect car for him.

A Prius C is a subcompact version of the regular Prius. It was the most fuel-efficient hybrid car available in the market when I bought it, probably still is. It has a smaller battery and is supposedly more economical than a regular Prius when driving in the city.

I have driven to the moon

My workplace is approximately 40 miles away from where I live. So each and every working day, my car's mileage goes up by about 80 miles. I've been doing this commute since we purchased our home in 2004. Things like this happen when you love where you live and equally love where you work.

To put this in perspective, the miles that I've accumulated over the past dozen of years would have been more than enough for me to reach the moon!

vs

260 work days * 80 miles / work day * 12 years =
 249,600 miles

Is switching to a Prius worth it?

I've always wondered whether buying a Prius C is worth it as opposed to a relatively gas-friendly Honda Civic. I'm fully aware that this is not really an apple-to-apple comparison because I'm comparing two different car segments (compact Civic vs subcompact Prius). But am I better off buying a non-hybrid Civic instead, considering that it costs about $2000 less than the Prius?

Let's try and find out.

Obtaining historical gasoline prices

The first step is to research gasoline prices. So I went to gasbuddy.com to get the last 4- year historical information for my area:




From the above chart, I was able to obtain the average prices in the last four years. Notice the dramatic decrease in gasoline prices in 2015 and 2016 due to weaker global demand and increased supply, mostly due to OPEC members refusing to cut production pushing the supply to the highest levels.

Average gasoline prices and miles driven

Researching fuel efficiency of cars

My next step was to visit the fueleconomy.gov website to research the fuel efficiency of all the cars that we've owned throughout the years. There you can compare side-by-side the city/ highway or combined fuel consumption of the chosen vehicles.

The set of vehicles below is a very good selection because they happen  to represent 4 distinct markets according to size (sub-compact, compact, mid-size, and SUV).




Given the data that we have so far, I'm able to summarize the hypothetical cost of driving each vehicle for a total of 80,000 miles within the past 4 years in my area. For simplicity, we'll be using the combined MPG of the vehicles.


Gasoline savings matrix

From the above, I'm able to create a gasoline savings matrix that can easily tell me how much I would have saved (or not saved) when switching from a specific type of car to another. For example, this table tells me that I would have saved a whooping $8,684 when switching from a Honda Pilot to a Prius.


The same table tells me that I've already recouped the $2000 extra that I've paid for buying the hybrid because the resulting gas savings for driving the Prius in lieu of a Civic amounts to $3,256, which is substantially more than the premium.

Note that hybrids generally cost $4000 more than the non-hybrid counterpart. I've actually downgraded to a subcompact when I replaced my Civic with a Prius C.

Conclusion

Buying a hybrid made sense for me only because of my very long commute to work. Most people don't drive 20,000 miles in one year so it takes double or triple the amount of time for them to recoup their investment. Do not buy a hybrid car for the purpose of saving money on gas unless you plan to keep the car for a very long time.



Monday, September 19, 2016

How to become a millionaire

Some of you may wonder, how exactly can I become a millionaire?

One route is to have a fabulous income. Rock stars, movie stars, or famous athletes may have no trouble achieving this status the first time they get their paychecks. Those that fall into this category achieved their success through a combination of luck, raw talent, and perseverance.

Another route is to become a successful entrepreneur. Many people became millionaires this way. However, the failure rate is very high. According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months.

Others achieved the status through less than stellar means:
  • Marrying into money
  • Inheriting money, if they're lucky enough to have wealthy parents.
  • Defying the odds by winning the lottery jackpot.
  • Becoming an ambulance chasing lawyer in America (see related blog)
  • Stealing taxpayer's money by becoming a politician in the Philippines

For the rest of us, becoming a millionaire while keeping your day job seems like a fantasy. But nothing could be further from the truth.

Thanks to inflation, being a millionaire is now easier than ever. It is definitely achievable if you follow these steps:

Make yourself marketable

You need to have a good education to become marketable. Formal education is a must but not to the extent that you end up drowning in debt. You don't want to be that person with $150K of student loans just to get an English degree from a private institution.

My wife and I went to less prestigious schools in the Philippines. We can both attest that all our present and previous employers care about is that you're doing your job and that you're doing it right.

Good name schools and high GPAs only matter when competition is tough, and you're fresh from college. Once you've acquired experience, prospective employers will be looking at your skillset and track record. I know because I myself conducted many technical interviews of potential hires for my company. It's very important to keep learning and get your skillset up-to-date.

Establish a very strong work ethic

Having worked with people that came from Ivy league schools, many of them are smarter than me where I work.

But it is I who established a reputation for being a hard worker as my bosses often see me burn the midnight oil. It is I who is willing to work during weekends without being asked.

Over time, my employer became so dependent on me that I always get significant raises and bonuses. Over the span of 5 years, my salary doubled from $55K to $110K a year. I even had a bonus as large as $30K, which is unusual for a regular rank and file employee like me.

Live below your means

My wife and I didn't spend a dime when we got married. It's more like $400 dollars, and that includes the registration and cost of the reception. Our only other guest, besides the officiating minister, was his wife.

But we did have the money. We had over $50,000 in cash saved at the time. Instead, we chose to use it as a down payment for a house a year later.

When picking a house, we made sure that either of our incomes can afford it so that there's a cushion in case one of us suffers a job loss. As a result, our house payment, including property taxes, is less than 1/4 of our net income. In contrast, your local realtor will probably tell you that you can afford roughly twice or thrice your household gross income.

We avoided getting into debt or using a line of credit when doing home renovations. I managed to do most of the work myself saving us thousands of dollars in the process. I knew nothing about home repairs and improvements initially but was able to equip myself with the necessary skills and knowledge through reading and watching YouTube videos.

We brown bagged our lunches and drove modest cars. We spent substantially less than we earn.

Save wisely and aggressively

It is important that you save wisely and aggressively. When my wife and I receive salary raises, we didn't change our life style. Instead we invested the difference:
  • She contributed 20% of her salary to a 403B retirement account
  • I contributed only 15% of my salary to a 401K retirement account but fully funded a ROTH IRA instead.
  • $800 goes directly to a money market account, which serves as our emergency fund. We maintain 3-6 months' worth of living expenses.
  • $500 goes to the kids' college fund
  • The rest ends up in my brokerage account as 'play money' for buying stocks
Invest majority of your money in highly diversified stock mutual funds. Over time, you'll be heavily invested in the market. So it is important that you STAY THE COURSE. Stocks can provide the long-term growth-- but only if you're invested.

That folks is how regular people like you and me become millionaires.