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Cost of living: Why you should choose a cheap place to live

While visiting Raleigh earlier this month, I spent a morning with my pal Justin (from the excellent Root of Good blog) and his wife. As we sipped our coffee and nibbled our bagels, the conversation turned to cost of living. (Money nerds will be money nerds, after all.)

“Things are cheaper here in North Carolina than they are in Portland,” I said. “Food is cheaper. Beer is cheaper. Hotel rooms are cheaper. Your homes are cheaper too. Last night, as I was walking through the neighborhood next to my hotel, I pulled up the housing prices. I was shocked at how low they are!”

“Yeah, housing costs are lower here than in many parts of the country,” Justin said.

“Take our house, for instance. We bought it in 2003 for $108,000. Zillow says it’s worth around $198,000 right now. But I’ll bet that’s a lot less than you’d pay for a similar place in Portland.”

He’s right. Justin and his wife own an 1800-square-foot home on 0.3 acres of land. Their place has four bedrooms and 2.5 bathrooms. There’s only one place for sale in Portland right now that matches these stats and it’s going for $430,000 — more than twice the price the same home would fetch in Raleigh.

Housing is by far the largest slice of the average American budget, representing one-third of typical household spending. Because of this, the best way to cut your costs (and, therefor, boost your “profit margin”) is to reduce how much you spend to keep a roof over your head.

One obvious way to cut costs on housing is to choose a cheaper home or apartment. But if you truly want to slash your spending, consider moving to a new neighborhood. Or city. Or state. If you’re willing to change locations, you can supercharge your purchasing power and accelerate your saving rate.

Cost of living is one of those factors that people seldom consider, but which can have a huge impact on the family budget — sometimes in unexpected ways. According to The Millionaire Next Door:

Living in less costly areas can enable you to spend less and to invest more of your income. You will pay less for your home and correspondingly less for your property taxes. Your neighbors will be less likely to drive expensive motor vehicles. You will find it easier to keep up, even ahead, of the Joneses and still accumulate wealth.

It’s one thing to talk about the effects of high cost of living, but another to actually experience it.

How to shop for high-quality clothes

I’m in Florida for ten days to attend a couple of weekend early retirement retreats. At Camp FI, about 50 or 60 people gather for three days of what Mr. Money Mustache calls “crazy rich people talk” — real estate investing, travel hacking, gift card arbitrage, 70% saving rates, and the rewards of frugality and thrift.

One afternoon, the conversation turned to clothing. Given that so many people in the room had a net worth of more than a million dollars, a surprising number of us still bought our clothes at thrift stores.

Cheapskate Millionaires

“I can’t bring myself to pay more than ten dollars for a t-shirt,” one guy said. We all nodded in agreement.

“I don’t pay anything for t-shirts,” said another fellow. “I travel a lot for work. When I go to conferences, I often come home with three or five or ten t-shirts. There’s no point in ever paying for them.” Throughout the weekend, I noticed that a lot of us wore t-shirts we’d picked up for free. (Because we’re money nerds, Choose FI t-shirts were prominent.)

“But what about quality clothes?” asked one woman. “I get why we’re all so cheap on the everyday stuff. But sometimes, I want clothing that looks good, that I can go out in.”

“I’m a long-time thrift store shopper,” I said, “and it’s taken some effort to allow myself to shop in regular stores. For quality stuff, I think it’s important to find a store with styles you like where the clothes also fit well.”

“I’ll give you an example. In the fall of 2016, I made a trip to New York City. The forecast was for warm weather, so I took warm weather clothes. Turns out, temperatures were much lower than expected. And it rained. I was unprepared. My hotel was next to a J. Crew store, so I stopped in. I had never shopped there before in my life, but I discovered I liked the stuff they had and their clothes fit me well. I didn’t like the prices, but I managed to find a few things on sale, so I bought them.”

I paused and looked down at the clothes that I had on. “Ha,” I said. “Right now, I’m wearing the dress shirt and sweater I bought that day in New York.”

Beyond Cheap

“I don’t shop at thrift stores,” said the man standing next to me. “I don’t like to have a lot of cheap clothes. I like simplicity and minimalism. So, I’m willing to pay more for my clothes because I buy only a handful of items and expect them to last a long time.”

“Can you give some examples?” somebody asked.

“Take this shirt I’m wearing now,” he said. “It’s a wool t-shirt from Icebreaker. And this jacket is from the same company. It’s more expensive — probably a lot more expensive — but it lasts a long time, looks good, and is very versatile. Merino wool is warm when it’s cold and cool when it’s warm. Plus, I can wear it for days on end without it stinking. I think that J.D. likes Icebreaker stuff too, right?”

“I do,” I said. “I brought two of their wool t-shirts with me on this trip. And because it’s freezing here in Florida right now, I brought an Icebreaker jacket.”

“I try to keep a small wardrobe too,” said another friend. “For me, that means always wearing the same thing. I have like four or five of the same t-shirt. I have two pears of pants, and they’re both the same. And all of my socks are the same. I don’t even fold them. I just throw them all in the drawer loose since it doesn’t matter which ones I pull out.”

Sidenote: I didn’t mention it during the conversation, but you can find quality clothes at thrift stores. They’re more expensive, sure, but not nearly as expensive as buying them new. The key is patience. Sort through the racks. You might only find one or two items per trip, but that’s okay. To increase your odds, find a thrift store in a nice neighborhood. Kim and I, for instance, recently discovered a consignment store near us called Simply Posh. It has lots of nice clothes at great prices.

The Quest for Quality

“You know, I read a great article recently,” I said. “I just shared it with the Get Rich Slowly mailing list. It’s all about how to shop for high-quality clothes. One of the points it made is that quality doesn’t have to be expensive — and that expensive doesn’t always mean quality.”

Which new car would you buy?

Last week via email, reader David Hatch asked:

If you were going to buy a new car, what would you get do you think?

I wrote a short email reply…then decide this topic is worth a deeper dive (of only for my own personal edification).

You see, Kim and I have been talking about cars lately. Mine is fifteen years old and hers is over twenty. Although both are running fine, we realize that we’ll have to replace one (or both) of them in the near future. When we do, what will we buy? What kind of new car is right for Kim? What kind of car is right for me?

Let’s start by looking at the cars I’ve owned in the past.

Every Car I’ve Ever Owned

I am not a car guy. Even though I can appreciate nice cars, I don’t have any desire to own them. I’m not sure why. Maybe it’s because my parents never had nice cars when I was a kid. They had practical, serviceable vehicles that got the job done.

During my 33 years of driving, I’ve owned five cars.

In high school, I inherited my father’s 1980 Datsun 310 GX. I drove that little red beast until it died during my senior year of college. I had a lot of fun with the Datsun, but I treated it poorly. The best part about this car was that I could perform a lot of the maintenance myself — even though I don’t have much mechanical knowledge. (Driven from March 1985 to March 1991 — six years.)

After the Datsun died, Dad bought me a $1000 Ford Tempo as a college graduation present. It was a POS from the start. I drove it for less than six months before giving up on it. (Driven from March 1991 to September 1991 — six months.)

When I landed my first job (which turned out to be the worst job I ever had), I also bought my first new car: a 1992 Geo Storm. Naturally, I bought it on credit…before I’d even received a paycheck. I loved that $12,000 car the entire time I owned it. (Driven from September 1991 to December 2000 — 9.25 years.)

On 01 December 2000, a semi sideswiped my Geo Storm on the freeway during morning traffic. The car spun 360+ degrees before striking an overpass guardrail, deploying the airbag. The car was totalled; fortunately, I wasn’t hurt.

After the accident, I purchased a brand-new 2001 Ford Focus from a friend who worked at a local dealership. I paid $15,000. I hated that car from Day One. It was awful. (I should have read the Consumer Reports reviews before buying; I would have steered clear!) I bought that vehicle with a loan too. (Driven from December 2000 to April 2009 — 8.25 years.)

In 2009, after years of dreaming about it, I realized I could afford to buy a used Mini Cooper. By this point, I’d been writing GRS for three years, so I put my own advice into practice. I shopped around. I bought used. I paid $15,000 cash. I’ve owned that 2004 Mini Cooper for more than nine years now. In fact, as of this month, it’s the car I’ve owned longest in my lifetime.

As you can tell, when I buy a car, I tend to drive it for a long time. I rarely (if ever) get the new car itch. I wish I could say this was because I’m rational about my car-buying decisions, but that’s not it. I’m just not a car guy. (Computers, though? Well, I want to upgrade my computer every year. I am a computer guy.)

But David didn’t ask about the cars I’ve owned in the past. He asked what car I’d buy new.

Does the American dream require a big American home?

This is a guest post from Steve Adcock, who writes at Think Save Retire, a blog about early retirement and Financial Independence. Steve and his wife retired in their mid-thirties to travel full time in an Airstream trailer. For more info, check out their YouTube channel.

One of the most deeply-embedded pieces of the “American Dream” is the desire for a large, spacious home with lots of sitting rooms, corners, nooks, and crannies. Large dining rooms and other entertainment spaces! Wrap-around porches! Two- or three-stall garages and one heck of a master suite!

To many of us, a large home is a mark of success. A big house indicate status, and the more space we’re able to call our own, the more successful we look and feel.

But, what if I told you that most of us don’t use even a fraction of that space? That’s not just me talking. A research team affiliated with the University of California studied American families and where they hung out the most inside their homes, how (and where) clutter builds, and the general stress level associated with living big.

The findings were overwhelming: The majority of the space in our homes is wasted.

How We Use Our Homes

As J.D. shared on Saturday, researchers at UCLA conducted a detailed study of 32 dual-income families living in the Los Angeles area, one of the first studies to document so vividly how we interact with the things for which we’ve paid good money. The findings were not pretty. In fact, they helped prove how little we use our big homes for things other than clutter or objects that hold little intrinsic value.

From the press release:

The researchers doggedly videotaped the activities of family members, tracked their every move with position-locating devices and documented their homes, yards and activities with reams and reams of photographs. They asked family members to narrate videotaped tours of their homes and took measurements at regular intervals of stress hormones via saliva samples.

When I originally wrote about the study, I took special note of where families spent the large majority of their time. In the following UCLA-published diagram of one family that was studied, we can easily observe a truth that’s probably common among so many of us: We tend to congregate around two primary areas of the home: food preparation/eating and television.

While this diagram only represents a single family, the results of the study suggest that this family is very typical of most of those studied, and the majority of traditional homes.

HelloFresh review: Is a meal delivery service worth it?

“Hey,” Kim said one day last week as she was leaving for work. “There’s a package coming today from one of the doctors I work with. To thank all of his hygienists, he’s sending us a trial of HelloFresh.”

“What’s HelloFresh?” I asked.

“It’s a meal delivery service,” Kim said. “Anyhow, it’d be great if you could bring in the package and put the food in the fridge. And it’d be even greater if you made one of the meals for dinner!”

I kissed her good-bye, then promptly forgot what she had told me. (This is par for the course.)

How Does HelloFresh Work?

That afternoon when I returned from walking the dog, a package from HelloFresh was waiting on the porch. I took it inside to open it. The box contained three brown paper sacks, each with a different meal from HelloFresh.

“Oh yeah,” I thought. “I’m supposed to make dinner from one of these. I wonder what they are.”

I opened the bag labeled Pineapple Poblano Beef Tacos. Inside was an illustrated recipe card and a set of pre-measured ingredients. “Seems simple enough,” I said to the dog. Tahleuqah just looked at me as if I were supposed to feed her. That dog is always ready for food.

When Kim got home from work, I made the tacos. They were amazing. I’m not joking. They were delicious. (The dog agrees.) “You know, I should have taken photos along the way,” I told Kim. “I should write about this at Get Rich Slowly.

“Well, you could always make dinner for us again tomorrow night,” she said. So I did. And this time, I did take pictures.

For round two, the dog and I prepared Sweet-as-Honey Chicken. Here’s the bag and recipe card:

Here are the ingredients from inside the bag and the other side of the recipe card (with actual instructions):

Here’s some of my meal prep:

And here’s the final product:

“You know what my favorite part of this is?” Kim asked as I served her dinner. “It’s that you can use the paper sack to dispose of your trash while you prep the meal.” (I’m kind of messy in the kitchen.) The dog looked hurt. She’s always happy to help us dispose of kitchen trash.

While not quite as delicious as the tacos, the chicken was still very good. And simple. (The HelloFresh recipe cards estimate 20-30 minutes of prep time; for me, that was more like 30-45 minutes. But then I’m always slow in the kitchen.)

How Much Does HelloFresh Cost?

“How much did this cost?” I asked.

“I’m not sure,” she said. “The doctor paid for it. But I think it’s something like $20 per meal. So, since he sent us three meals, that’s about $60 for the week.”

“That seems expensive,” I said. “I should research the numbers.” So, like a good money nerd, that’s exactly what I did.

Christmas on a budget: How to save money on Christmas gifts (and still have fun)

HO HO HO!

Just like that, the holiday season is upon us!

This year, I intend to do most of my Christmas shopping during a three-week tour of Europe with my cousins. We’re deliberately visiting as many Christmas markets as possible, so I hope to find a variety of interesting and unusual gifts for my family and friends. (They need to be small, though. I don’t have much space to carry things home.)

While I’m buying new (and possibly expensive) gifts this year, that’s not normally my style. I’m a fan of keeping Christmas frugal.

Being a frugal shopper doesn’t mean you can’t give thoughtful gifts though. In fact, my experience has shown that it’s often more fun and rewarding to impose limits on gift-giving. These limits breed creativity and inspiration. “Christmas on a budget” doesn’t have to mean “Christmas without fun”.

This article contains some smart ways to save money on Christmas gifts while celebrating the season. (These tips are great for Christmas, for Hanukkah, for Kwanzaa, for Festivus, or for whatever feast you celebrate this time of year.)

It’s an amazing frugal Christmas savings spectacular!

What Kids Really Want for Christmas

I have this idea in my head that kids become mercenaries at Christmas, demanding the newest, most popular toys. I’m not sure how I’ve arrived at this notion because that’s certainly not how my brothers and I were when we were younger. Sure, we wanted cool stuff, but we never made demands.

In fact, Dad used to tell the story of how ashamed he was one Christmas when he and Mom were going through a particularly rough patch. They were always poor and struggling with money, but this year was especially bad. They couldn’t afford Christmas presents for us three boys. Rather than cry about it, we went through the toys we already had, wrapped them up, and gave them to each other.

I have only a dim memory of this myself, but Dad used to talk about it often.

This bit of personal family history reminds me of Unplug the Christmas Machine by Jo Robinson and Jean Coppock Staeheli. This book urges readers to escape the commercialism of the holiday season, to make it a “joyful, stress-free” time for the family. In a chapter entitled “The Four Things Children Really Want for Christmas”, the authors write:

One concern voiced by most parents is that of shielding their children from the excesses of holiday commercialism. While adults can mute the TV when the ads get annoying, children are defenseless against the onslaught of ads. As early as the age of four or five, they can lose the ability to be delighted by the sights and sounds of Christmas, only to gain a two-month-long obsession with brand-name toys. Suddenly, all they seem to care about is how many presents they will be getting and how many days are left until they unwrap them.

Many parents find it a challenge to create a simple value-centered Christmas in the midst of all the commercial pressure. But the task is made much easier when parents keep in mind the four things that children really want for Christmas.

Robinson and Staeheli argue that children don’t really want clothes and toys and games. The four things they actually want are:

  • A relaxed and loving time with the family. Children need attention. During the holidays, normal family routines are temporarily set aside for parties, shopping, and special events. It’s important to slow down and spend quality time with your kids.
  • Realistic expectations about gifts. Kids enjoy looking forward to gifts and then having their expectations met. The key is to manage their expectations. You might try, for example, to educate your children about advertising in an attempt to mitigate its effects.
  • An evenly paced holiday season. The modern Christmas season starts months before December 25th, when the first store displays go up, then things end with a bang on Christmas day. The authors suggest beginning the season late in the year. Get out the Christmas music on December 15th, then get the tree on the following weekend. Schedule some low-key family events during Christmas week. Stretch the season to New Years Day.
  • Reliable family traditions. When I talk to my friends about what Christmas was like when we were children, it’s not the gifts that we remember. We recall the things we did as a family. I remember sleeping next to the tree every Christmas eve, but never being able to catch Santa in the act. I remember seeing the cousins. I remember decorating the trailer house. Your kids will remember the traditions, not the gifts.

Because I don’t have kids, I don’t have first-hand experience with their expectations around the holidays. Other folks in the GRS community do, though. A reader named PB, for instance, emailed some similar thoughts. She writes:

We keep our children’s expectations realistic by following an old tradition — that Santa fills the stockings and only the stockings — nothing under the tree. This limits the size and quantity of gifts. Plus, because they’re all relatively sure what they can and cannot wheedle out of parents for tree presents, their expectations are kept in check.

We buy one new outfit for each, usually a special piece of clothing that they really want, and spent only about $100 per child. I also shop all year long and get some real bargains.

We also emphasize doing a lot of things with our church — food delivery to the elderly, singing at nursing homes, and service to others. Our ongoing tradition is a big Christmas eve dinner with lots of friends and then the midnight service, where we all play an instrument or sing in the choir. This is what the kids talk about — not about what they receive.

It seems that the key to keeping kids happy at Christmas is to manage their expectations. But what about exchanging gifts with other adults?

Quality versus crap: Why I bought $80 pajamas

Yesterday, I spent $80 on a pair of pajama bottoms. (Or, as the company calls them, Alaskan guide lounge bottoms.)

On the one hand, this feels like an insane amount to spend on sleepwear. On the other hand, my last two pairs of pajamas — both $20 specials from Costco — have lasted no longer than a year because they’ve quickly fallen apart. They were cheap garments cheaply made.

Herein lies a question I frequently face: When does it make sense to pay more for quality?

Beating the latte factor: One money nerd’s quest for the best cheap coffee

Like J.D., I’m a recent convert to coffee. For most of my life, I preferred to consume my caffeine cold in the form of Diet Coke. And then…fate intervened.

Four years ago, when my family moved to Oklahoma, my sister-in-law gave us our first Keurig coffee maker. I thought, “That’s an interesting gift for a family that doesn’t drink coffee.”

But a set of sample k-cups came with the machine, so we started trying them.

The kids liked the sugary cups which were more like hot chocolate than coffee. And I found that I liked the taste of coffee now and then. I played with combinations of coffee, sugar, and milk until I found out I liked it a lot. I later dropped the sugar and went straight for the coffee/milk combo.

Within a month or two, I was hooked. But I started wondering: “We’re drinking a lot of coffee. Is this the best deal? What are my options for finding the best cheap coffee?” Because I’m a money nerd, I decided to find out.

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