Monday, November 24, 2014
Rather than a single topic today, let's cover a few bite-size ideas that I like, but don't deserve their own blog post.
Travel Hacking, and Return on Your Dollars
For a long time, Mrs. Done by Forty were big on cash back rewards because, hey, cash can be used for anything. Getting 1% or 2% back was simple, too: if we put $10,000 on our cards in a year, then we'd get $100 or $200 we could use on anything we wanted. Two hundred bucks is a lot better than a punch in the face, after all. Then we learned from Brad at Richmond Savers that we could try something else: we could spend that same $10,000 on a few different cards, and get, say, two free flights to Europe and sixteen free hotel nights on a trip to five different countries. (A future post is coming on this trip, which we're taking with friends this spring.)
Bottom line, we could have $200 in cash and some simplicity, or manage a few cards and get a great vacation on the cheap. The value of the flights and the hotels seems to be somewhere between $4,000 and $5,000. For us, it was an easy decision, and a bit of an eye opener. Sticking with our status quo had some serious opportunity costs. Travel hacking involves a little work, but gives us a much better return on the dollars we spend.
Spending Rate, not Savings Rate
I woke up in the middle of the night a few weeks ago and wrote down those words: spending rate, not savings rate. It seemed a lot more profound at the time, but my basic point was that savings rate doesn't account for all the good things you might be doing with your money (like paying down your student loans, or, if you're so inclined, paying down your mortgage). But, typically, we financial bloggers focus on someone's savings rate. That means that a person who's putting 50% of her monthly income towards debts might not initially look that impressive, compared to some guy who's renting and is debt free, but has a 12% savings rate. In my opinion, the woman putting 50% of her income towards debt is on a much better trajectory, even if she's not saving anything at the moment. So, the savings rate metric can have some gaps.
A focus on savings rate also creates an unnecessary distinction between those of us focusing on debt repayment and those of us focusing on saving or investing. If we just assume that any dollar not being spent must be doing something good (invested, put towards savings, an emergency fund, paying down debts, or going towards a mortgage) then all we really need to know is someone's spending rate. It gives a simpler, fuller picture.
Remember, this Friday is Buy Nothing Day
This Friday, instead of leaving the company of your loved ones to stand in the cold and then compete, perhaps physically, with your fellow man for the chance to own another flat screen television, I'd ask that you avoid the apex of consumerism and just spend the day without buying anything. I'd first heard of Buy Nothing Day from Adbusters (a rag so hilariously liberal and anti-corporation that I used to love in my twenties, but now cannot take seriously). But the day seems to have taken hold internationally. This idea of buying nothing, admittedly, can be hard. You might need to put gas in your car (though that's a good reason to use a bike, walk, or, hey, just stay in). You might need sugar for cookies you're baking (though you could also engage in the heartwarming practice of borrowing a cup from your neighbor). Anyway, I don't want to judge those who are going to brave the lines this Friday. If that's your thing, do what you do. But if you're on the fence this Thanksgiving, the Done by Forty household invites you to join us in the simple act of buying nothing.
Have a great week, and thanks for being a reader.
*Photo is from Brave New Films at Flickr Creative Commons.