(Mostly) Uncensored Confessions of a Money Weirdo’s Wife

I thought it would be fun if my wife were to write a guest post about her take on our finances. After all, this whole money saving thing wouldn’t work without her buy-in, and I’m extremely grateful that she’s on board with the whole thing. My questions are in bold. Her uncensored confessions follow. My rebuttals to her responses are in italics.

*** My pregnant wife in a freezing cold Seattle apartment.

 

On discovering your husband was a money weirdo (super frugal dude):

  • When did you find out?
    • I think The Professor’s frugality came gradually. I definitely don’t remember him seeming particularly frugal while we were dating. Maybe I should have had some clues when on our honeymoon, instead of eating out, we went to a grocery store and bought oatmeal, sandwich stuff, and strawberry cheesecake ice cream, and that’s what we ate on our honeymoon. 🙂 And also, we were poor college students, so it’s not like we had tons of money to begin with. I think I kind of discovered the extent of his frugality over the first few years of our marriage.
  • How did you find out?
    • Right after we got married, I had a job as an elementary school teacher intern (I had my own classroom, but hadn’t graduated college yet, so I just got paid a half teacher salary). My salary was about $1000/month. That doesn’t seem like a lot of money, but to The Professor and me, we felt like kings! We did a “we’re in the money” dance every month on payday. As we looked to the future, when we would have jobs that paid much more money, The Professor and I had many conversations about how happy we were living as poor college students and how we needed to continue to live that way for the rest of our lives and we could save tons of money. I thought that sounded pretty reasonable. And then he said, “And let’s take all of the money we have right now and put it in a Roth IRA. It will be great!” I was pretty terrified of the stock market, and thought that putting our money under our mattress seemed like the safest option, but I listened and in the end, it worked out (of course). That was about the time that I realized The Professor knew way more about the financial world than I did, and that I should probably just go along with whatever he suggested money-wise.
  • How did you feel about finding out?
    • When I left for college, I asked my dad if he had any financial advice for me, and he responded, “Don’t do what I did.” Knowing that my husband was smart about money was pretty comforting to me. (Although some of his more frugal tendencies did take some getting used to.)

On the upsides of your husband being a money weirdo:

  • What was your husband right about, particularly if you disagreed at first?
    • Getting rid of our cell phone plan, for sure! When he first suggested it, I thought he was crazy! But I have never regretted it for a minute, and have loved the money savings!
    • Putting our money in Roths was a good idea, even though I’m still pretty terrified of the stock market (I should never have watched Cinderella Man).
    • Living with four kids in a two bedroom townhome during his phd seemed a little crazy, but it was actually fantastic.
  • What are some things we do that you think everyone should do?
    • Definitely the cell phone thing! No one should be paying as much as they do for cell phones. It’s insane.
    • I love our cheap and free hobbies! Time together doesn’t mean spending money. I love board games, watching movies outside, hiking, bike rides, etc. I think everyone can find ways to save money by finding inexpensive hobbies that they love!

On the downsides of your husband being a money weirdo:

  • What are your biggest regrets?
    • I used to miss eating out, I don’t anymore.
      • Why not?
        • Because I feel guilty eating a meal for $20, when I know I can eat one that’s almost as good for $1 or $2. (There are other things I would rather do with that money.) Also, health benefits.
    • Sometimes I feel sad that The Professor is the voice in my head (like a little Jiminy Cricket) telling me not to buy things, but it’s usually for the best. 🙂 Honestly, every time I make a purchase I think, “Oh man, now I have to explain this to The Professor…. It will end up on the blog…”
      • I feel the same way about making purchases. It will end up on the blog. It’s a great accountability mechanism. I think we would all make more prudent financial decisions if we were held accountable to external parties.
    • I do secretly wish we could just take our whole family on a cruise, but I know The Professor would hate it, so it wouldn’t be any fun.
      • For the new reader of the blog, my wife just got back from a cruise with her sister & parents. I don’t find the idea of short term travel very appealing. The largest expense when travelling is airfare. In terms of economics, this is what we call a large fixed expense, and the variable expenses of lodging, etc is relatively small. I’m currently pushing Mrs. Frugal Professor to live abroad with me for a few months (Costa Rica?) rather than spend a similar amount of money for a 5 day cruise. I would much rather have my family experience an immersive experience in a new culture than a phony alternative reality on a few day cruise.
    • For the most part though, I feel very similar to The Professor about most money-spending activities, and so I don’t regret not spending money. I appreciate that I understand and value saving money, because of the good things I can do for others and our family as a result. Before I buy anything, I think about what I’m giving up by doing so. Sometimes it’s worth it, but often it’s not.

Please humiliate the frugal professor

  • I love food. A lot. The Professor does not like eating out for many reasons, his frugality just being one of them. Over the many years we’ve been married, we’ve mutually agreed to not eat out very often, and I’m okay with that. However, every year on my birthday I get a bunch of free meals (I love birthday freebies!). The Professor used to come with me to my meals and just watch me eat because he didn’t want to spend money on himself. Eventually, I just told him to stop coming and I would bring a book.
  • Along those same lines, sometimes we’re invited to go out with friends and The Professor will always eat a meal before we leave, so that way he can just “share with me” at the restaurant. We even had a gift card to a restaurant once, and he still just chose to watch me eat, because he was too cheap to even buy himself food for “free”.
  • Sometimes I’ve suggested that we get some ice cream for a date night, and he will always suggest that we just bring a spoon to the grocery store, buy a half gallon of ice cream (for the same price or cheaper than an ice cream shop) and eat it at the store. (The grocery store we did this at had a café with tables, so we at least had somewhere to sit.)
  • When we moved to a new state for The Professor’s first job out of college, the company he was working for allowed him a per diem for food and would pay for any hotels we stayed in. He learned however that if we didn’t actually stay in a hotel or eat out, he would still get the money. So, we slept on the floor of one of his friend’s apartments (which was the dirtiest place I’ve ever seen, with no toilet paper (and I was pregnant)) and ate macaroni and cheese, so that he could save a couple bucks.
    • “A couple bucks” = $$$/day.
    • In my defense, I did not know my friend’s place was such a dive before asking to crash there. Had I known, I would have not done it.
      • I bet you still would have.
  • In our first apartment, the AC was not very cost effective and The Professor preferred that we didn’t run it very often, so I would walk to the library every day to sit in air conditioned building for a few hours. (I was pregnant.)
  • Along those same lines, in one of our apartments, the heater wasn’t very cost effective, and so we hardly ran it (this was when I was pregnant with our first child, so we didn’t have kids at home to worry about) and just bundled up instead. The Professor would often come home from work to find me cooking dinner in my winter coat and beanie. (In fact, one day we woke up to the water being off, and we were terrified that we had busted a pipe by not having our heat on. In the end, it wasn’t our fault luckily.)
  • I censored this comment. Suffice it to say, I subscribe to the “if it’s yellow, let it mellow” philosophy. I justify this because I’m a tree hugger. Perhaps that’s a great decoy for my frugality.
  • The Professor has also been known to take cold showers to save money on hot water. I have never been frugal enough to do that. Sorry, Frugal Professor.
    • In my defense, there are non monetary reasons to take cold showers. I find it to be a great form of voluntary hardship and a way to empathize with those who are less fortunate. I lived abroad for a few years and knew that many people bathed in cold water. I wanted to experience what they did even though I could afford not to.
      • That sounds nice. Every time he told me that story it was, “I wanted to save some money, so I took cold showers.”

 

Frugal Professor’s Response

I’m a tree hugger. I cannot fathom why people crank the heat up so high during the winter time that they are forced to wear shorts inside. Nor can I fathom why people crank the A/C down so low during summer that they are forced to wear a sweatshirt indoors. I find central heating & air to be extremely inefficient. If you think about the volume of air in your home, the only air that matters for your physical comfort is the few millimeters of air around your skin. And it’s much easier to heat this few millimeters of air through capturing body heat in a sweatshirt. I find it inexcusable to use central heat without first putting on a sweatshirt. I also find it inexcusable to use A/C without first being at the cusp of sweating. Modern life has turned us all into a bunch of pansies.

Looking back at the early stories from Mrs. Frugal Professor, it is evident that I have become significantly less cheap over time. I used to be cheap, now I’m frugal. The tipping point was when I bought a plastic t-ball set from Walmart for $10 instead of a rubber one from Amazon for $25. After buying the plastic t-ball set, the tee broke on the first or second swing. I returned the piece of junk to Walmart and bought the rubber tee from Amazon. Almost a decade later, the rubber tee is holding up great. And that is how I transitioned from cheap to frugal. I see a similar transition with my thoughts on usage of central heating/air conditioning. I used to think it was stupid to use heat without first putting on winter coat and beenie. Now I think it’s stupid to use without first putting on a sweatshirt.

For as much as I’ve transitioned from cheapeness to frugality, I still don’t think it’s rational to eat at restaurants. It costs at least 10X the amount of money, much more time, and is much less healthy to eat out.

I spent $1,322 on 984 golf balls and I don’t like golf

*** the title initially had the wrong number of balls; it’s now corrected.

My father has always loved to golf. For those unfamiliar with golf, it is best described as “a good walk spoiled.” It’s a sport in which rich old men waste away their time, money, and sanity chasing the ever elusive perfect round of golf.

In my teens I worked at a little 18 hole par 3 golf course within walking/biking distance of my home. I got paid to drive around in a golf cart. I got 50% off food at the clubhouse (probably around $2/meal after discount if I remember correctly). I got to golf for free. It was a pretty good deal.

Golf is as addictive as cocaine. This, I believe, is why it appeals to the best athletes from all sports. One of my parents’ best friends in college was a star QB who went on to play in the NFL and even win a super bowl ring (which I got to try on as a kid; a fun memory). The dude is as avid of a golfer as I know.

Over time, I become less interested in the game. It’s expensive. It’s frustrating. And it takes up your whole day. As a single dude it didn’t matter much, but as a father of many children I can’t justify being away from the family for an entire day to hit a white ball in a hole.

Costco is within walking distance of our home. They received a special shipment of Kirkland Signature (their generic brand) golf balls the other day, which are currently out of production due to litigation from Titleist. These Costco balls are apparently as good as Titleist’s well known ProV1, a ball that sells for 3X the price.

I spent $1,322 on 41 boxes of them (984 balls total). And might go back for more. Why? I present a few possible explanations.

1.) I am insane.

Plausible. I won’t rule this out.

2.) I wanted to use this as an experience to teach my 10 (and 9) year old daughters how to make money.

One of my favorite parenting tactics I’ve learned/developed is to empower my kids to make financial decisions. Want that toy or special treat? Then buy it with your money. Don’t have money? Either 1.) make the money yourself or 2.) put it on “the Christmas/birthday list”. Our kids have long ago learned not to whine when they see something they want. They simply deal with the fact that if they want something that they will either have to “put it on the list” and hope to get it later or buy it with their own money.

I have never done retail arbitrage before, nor do I think it is a particularly worthwhile endeavor. But I thought that this could serve to be a useful teaching moment for my oldest kids. The balls currently sell for 2X Costco’s price on eBay. After selling and payment fees, there is probably a $5-10/box potential profit there. As a 10 year old kid, $5 is not a trivial amount of money. Especially if they made that $5 themselves through the magic of entrepreneurship. My oldest daughter put in $200 of her own money on the deal. I’m excited for my daughter(s) to go through the process and see how to 1.) list something, 2.) decide on an appropriate price, 3.) calculate profits after fees, 4.) understanding the value of having capital for investments.

3.) Given how much my father likes golf, yet manages to lose a dozen balls per round, why not make it a less costly endeavor for him?

The man buys regularly buys golf balls at $3/piece. The Costco ball is roughly 1/3 the price. So when he loses 10 balls per round, why not help him to minimize the cost of his hobby?

 

I’m not sure the exact reason why I spent $1.3k on golf balls over the past few weeks, but I think it’s a tie between #2 and #3. Worst case scenario I call it a gift to my father, which perhaps indicates that I’m crazy (#1).

 

Opportunism

Speaking of opportunism, I passively monitor deals and think you should too. I use two tools: RSS and CamelCamelCamel.com. If I’m looking for a used bike on Craigslist, I’ll place an RSS feed on the product (for a given keyword men and “mountain bike”, for example) and have it show up in Feedly whenever a new bike pops up. If I’m looking for something specifically on Amazon, I set a price alert on CamelCamelCamel.com and wait for them to email me. Just this morning I purchased a smart irrigation controller that was 35% off. It was a deliberate purchase, one that I have been considering for well over a year. Last month I purchased 25 quarts of full synthetic motor oil for $13/5qt after rebate. I found out about this deal through the site SlickDeals.net. My specific query at that site was “0W-20″ rebate. Here’s the URL to the query: https://slickdeals.net/newsearch.php?q=%220w-20%22+rebate&pp=20&sort=relevance&previousdays=-1&forumid%5B%5D=all&forumid%5B%5D=30&r=1 and the corresponding URL to import into Feedly: https://slickdeals.net/newsearch.php?rss=1&q=%220w-20%22%20rebate&pp=20&sort=relevance&previousdays=-1&forumid%5B%5D=all&forumid%5B%5D=30&r=1. Most sites, such as CraigsList and Slickdeals have RSS links. Simply perform your query, then locate the RSS link. Copy the jibberish URL it produces into Feedly, and Wham, you’ve just created yourself a passive way of monitoring deals. The only active effort required on your part is to sort through the listings that come your way. If you want less junk in your RSS feed, lean to develop more pointed search phrases. One of my favorite querying techniques is using quotes around exact phrases, such as the “0W-20” in my motor oil query.

For those thinking I’m irrational for changing my own oil, I have a few responses. 1.) It’s dirt cheap to do it yourself (< 1/3 the cost of having it done), 2.) It’s easy to do yourself, and 3.) It’s time efficient to do it yourself. You don’t have to drive across town, leave a car somewhere, etc. You just do it in 30 min at your home.

 

Speaking of bulk purchases, we have 5 kids and it seems that they are often invited to birthday parties. I think it was after our first child was invited to her second party when we realized that frantically shopping for birthday presents before a party sucked. Since then, we’ve methodically hoarded cheapish presents we liked. A few days ago we purchased seven “Loopin’ Chewie’s” from Walmart for $9/piece, not because it was a particularly good sale, but rather because we simply didn’t want to have to deal with this again for a while. For the board game nerd, this is a well made knock-off of the cult classic “Loopin’ Louie.” For the non-board game nerd, the original game was written about in the WSJ a few years back: https://www.wsj.com/articles/how-looping-louie-found-new-life-as-germanys-favorite-drinking-game-1415833949. It’s a fun game for kids and adults of all ages. But it’s this little life hack that greatly simplifies our lives. Birthday party? No problem, we’ve got the gift covered. No thinking. Just grab the box, wrap it in newspaper, slap a home made card on the sucker, and there you go. No panicking. Life simplified.

 

Sorry for the unintended rant on the Frugal Professors purchasing behavior. If you can take anything away from this rant, I hope it’s the following:

  • Use RSS readers. Seriously, this is perhaps the biggest life hack I employ. It’s often the highlight of my day. I probably have around 50 feeds I’m subscribed to, some of which only publish once per year while others publish daily. For my own blog, I’m shocked that email subscribers outweigh RSS subscribers. If you don’t use RSS, sign up for Feedly today. The wonderful world of RSS awaits you.
  • Buy items you use in bulk when the price is right or simply to not have to worry about it. Motor oil, birthday presents, laundry detergent, etc. If it’s not perishable and you have room for it, stock up.
  • Automate your life. I don’t actively search deals. I simply create systems for informing me of good deals and I act on them when they pop up. It’s way better than looking at weekly ads and being induced to buy crap you don’t need in the first place.
  • Give financial responsibility to your kids. Have them buy their own crap. It is of the best parenting decisions we’ve made.

The Bank of FrugalProfessor

One more Easter egg in the blog post. The below is how we manage our kids finances. If they get birthday money from grandma, or a dollar from the tooth fairy (none of that multi dollar nonsense****), then it goes on the sheet. If they buy a toy at the store, the expense goes on the sheet (with sales tax, of course). It’s fun to see the history of their financial decisions. My oldest daughter is old enough to recognize that most of her past purchases are junk toys now (kind of like me reviewing my purchase history at Amazon). I’m hoping that this teaches her to purchase less in the future; we’ll see if it catches on. Oh yeah, they earn 8% interest (compounded annually) in the bank of FrugalProfessor. A hilarious entry occured in May of 2017 and is noted as “room swap” for Megan and Emily. The two were sharing a room and it was a disaster. We ended up doing a major reshuffling of children in our house and we imposed an ultimatum. One of them had to leave. The one that stayed had to pay the one who left. I started the bidding off at $5, then $10, and so on. The first one to accept the offer would receive that amount from her sister in exchange for changing rooms. The final price that Megan accepted was $20, a net $40 swing for her (having avoided paying $20 in the process). Is this maniacal? Perhaps. I’ve spent far too many years in college learning about economics to not try to implement a few ideas in my home. Another funny entry is in March of 2016. I think 3 or 4 of my kids pooled together their money to purchase Jelly Bellies at Costco in bulk. It was a brilliant maneuver on their end, since the cost of infinite candy is really cheap. It was of the few times in my parenting life that I lamented the fact that my kids got a good deal. I’m not sure why this feat hasn’t been repeated in recent months, but I hope they don’t remember their genius plan. Oh yeah, the other time I lamented my kids smart shopping was when they realized they could purchase infinite stuffed animals from thrift stores for almost free. And now these near infinite stuffed animals are overtaking our home, but we can’t get rid of them because they are beloved family members.

**** Our oldest daughter recently went to the dentist, who told her that he’d have to pull a tooth if she didn’t lose a baby molar in the next few weeks. Apparently the adult tooth was coming in and it was going to be problematic if the tooth didn’t come out. I don’t know the exact cost for professional tooth extraction, but I made a rare exception this time and tried to incentivize my daughter with $2 extra dollars ($3 total) for pulling out her own tooth. Well, the tooth came out two nights ago. Not sure if the incentive had anything to do with it, but I’m happy to not be paying the dentist for an extraction.

Proposed tax reform: What does it mean?

The much anticipated GOP tax bill is hitting the news (link):

Summary of changes to individual taxes:

  • Massive standard deduction ($24.4k) makes itemizing irrelevant for most the US
    • New 10k limit on property tax deduction (this is a big deal if you’re in a state with exceedingly high property taxes (bay area, CA))
    • No deduction for state income tax payments (this one is huge)
    • Therefore, it would only now make sense to itemize when: min(property tax, 10,000) + mortgage interest + charitable contributions > $24.4k.
    • Only 30% of American’s itemize today, but with the above changes this number would plummet to < 5%?
    • Goodbye alternative minimum tax (AMT)

Summary of changes to corporate income taxes:

  • Slashing of top corporate marginal rate from 35% to 20% to make the US more competitive globally
  • Reduce top marginal rate of pass-through businesses from 39.6% to 25%
  • Ceasing to tax income on multinationals earned abroad (leading to hoarding of cash abroad)

Overall, I’m elated with the proposed changes. If I ruled the world, I would further:

  • Eliminate interest deduction for individuals and corporations
  • Eliminate property tax deduction entirely
  • Lower rates to reflect increase in revenue from the two above bullets

 

What does this mean for normal people?

  • I just ran some numbers to match the WSJ article. My updated spreadsheet matches the numbers in the article perfectly for a married filing jointly with 2 kids making $60k/year.
    • Proposed bill: $472 taxes owed
    • Current Law: $1,608 taxes owed
  • You can play around with my spreadsheet to see how you fare. We still don’t have any details on how the EITC will look, so the new plan looks harsh on low income families but this is simply a function of not knowing more details on the new plan. The new plan will likely have some sort of EITC feature.
  • Overall, here’s what my sheet says. Assumes currently takes standard deduction & will do so in future. Assumes all kids <= 16:
    • Married w/ 0 kids => new plan results in lower taxes above $0k in income
    • Married w/ 1 kid => new plan results in lower taxes above $40k in income
    • Married w/ 2 kids => new plan results in lower taxes above $46k in income
    • Married w/ 3 kids => new plan results in lower taxes above $49k in income
    • Married w/ 4 kids => new plan results in lower taxes above $48k in income
    • Married w/ 5 kids => new plan results in lower taxes above $47k in income
  • I have seen a lot of angry commentators indicating that the plan will raise their taxes. This is simply not the case if they were to do the math. Higher income individuals will benefit more as the sheet shows.

Download the sheet here

 

It is difficult to be objective when considering tax reform. After all, people tend to support legislation that benefits them personally and oppose legislation that hurts them personally. My take on the proposal is that it will directly help most people and will stimulate the economy.

 

Cliff notes version on how to calculate taxes under the new proposal:

Deductions = max(standard deduction, itemized deduction)

Standard deduction = $24.4k if MFJ; half if single

Itemized deduction = min($10k, property tax + state income tax) + mortgage interest + charitable contributions.

Gross income – Deductions = Taxable Income.

Tax table is as follows
12%; 0-45k if single; 0-90k if married
25%; 45-200k if single; 90k-260k if married
35%; 200k-500k if single; 260k-1M if married
39.6%; >500k if single; >1M if married

Compute taxes owed using above table using taxable income. Tax credits = $300 per adult and $1.6k per child.

With $200k gross income, MFJ, and 5 kids, here’s how it would look.

Deductions = Standard of $24.4k.

Taxable income = $200k-$24.4k = $175.6k.

Taxes owed (before credits) = $90k*0.12+($175.6k-$90k)*0.25=$32.2k

Taxes owed (after credits) = Taxes owed (before credits)  + # adults*$300 + # kids*$1.6k = $32.2k – 2*$0.3k – 5*$1.6k = $23.6k.

This is exactly what my spreadsheet computes as the new tax liability. As shown above, it’s really easy to compute. No AMT nonsense. Just dumb simple math.

In contrast, the current law (once updated for 2018 values), gives a tax liability of $32,832, so the new plan is $9,232 less in taxes for this particular scenario.