March 2017 - Smart Money Seed

3/27/17

Have Your Cake and Eat It Too... Just Don't Eat The Whole Cake

3/27/2017
It's okay to enjoy a night at the bars-- especially with a great $2.50 beer of the month deal!

Do yourself and us a favor and make sure your grandma isn't reading your screen right now. And if you've been listening to your grandma's frugal financial advise your entire life, you might want to sit down for this one. We have a profound idea that hasn't been widely accepted since before The Great Depression. Ready?

You are allowed to enjoy your money. Just don't be an idiot about it.

Contrary to your reaction to that idea, no we are not prophets. We simply have a solid understanding of reality and realistic expectations for humanity. Now we're sure we know what's going through your mind. That's great, but what exactly constitutes "being an idiot"? The best way for us to illustrate what we mean is to run you through some examples in our lives.

Have a Little Fun

Like many college graduates, we decided to take a trip during our downtime between graduation and starting work. We went to the east coast with a couple of friends to watch baseball in New York, Philadelphia, Baltimore, and Washington D.C. It was the experience of a lifetime, but we took some important steps to stay within our means

  • We drove Christian's car instead of flying or renting a car.
  • We were fortunate enough to only stay at a hotel for 1 night of the entire trip! Thanks again, Pelletiers and Alan! The Pelletiers even doted on us to the point of making us breakfast and dinner during our stay with them in Maryland.
  • We bought cheap tickets to all 4 games. We generally abide by this principle when we go to games.
We both purchased cars before starting our full time jobs. Many financial experts would be enraged at the thought of signing up for car loans with our financial numbers at the times that we did. But again, we weighed our options and limited our risk to a great extent. Also influencing our decision was the fact that the combined age of the cars we had previously driven was higher than our combined age.

  • Christian purchased a used Ford Fusion during his junior year of college. I purchased a new Ford Focus which was more or less necessary for my sanity and peace of mind during my impending 45-minute work commute. 
  • We both ran our numbers and knew exactly what we were comfortable with for our loan amounts, loan terms, and monthly payments. 
  • Again, we bought a Focus and a Fusion. Not a Beemer, expensive F150, or even a Taurus. Our cars accomplish exactly what we need from them, and we both spent under $20,000 to purchase them.

Enjoy the Small Stuff

Those are a couple of large examples of luxuries we enjoy without going overboard. Our brains are wired to evaluate our daily decisions using this same principle of enjoying our money but just not being idiots.

  • We can often be found at the bar on a Friday or Saturday night (see picture above). But we're not afraid to take advantage of a good deal. You'll never catch us looking to the top shelf for a drink. There's just something about a $2.50 Killian's pint that tastes just right!
  • When we go to an Indians game, which we've been known to do up to 10 times per season, we almost always opt for the cheapest seats available.
  • When planning travel, we scour the internet for flight and lodging deals. We are big proponents of Airbnb; HOWEVER, we wouldn't recommend staying at a sketchy place in LA just to save a few bucks. We did feel somewhat safe having 4 guys in the room, but it probably wasn't the best idea.
  • I generally don't buy my workday lunches more than once a week.

 What Can You Do?

Take a look at your financial tendencies outside of the necessities. Think about what you value the most and where you could make some sacrifices to stretch those dollars a little further. Would you rather go to a fancy steakhouse once a month or a sports bar once a week? Would you rather take 1 expensive vacation or bargain shop for 2 cheaper vacations? Can you cut out some small purchases that don't even provide you much benefit in the first place?

Whatever your answers are to those questions, it's okay. You should be making the financial decisions that provide you the most benefit and joy. The point is that you should be thinking about that benefit and joy, or the value your spending actually brings in return, and avoiding throwing money away on things like mindless, reccuring small purchases. Our goal is just to equip you with the tools you need to start thinking about your options and potential tradeoffs.

So go ahead and have a little fun! Just don't go crazy. You can tell your grandma that Smart Money Seed officially granted you permission to enjoy your money. 

3/20/17

Do You Really Need That?

3/20/2017

Small purchases are deceitful little bastards.


"A $2.00 coffee is harmless, right? Such a small purchase doesn't even move the needle of your bank account. It's only $2.00!" - an insincere small purchase out there somewhere

This is exactly what small purchases say to us all the time. Who cares if I spend $2 on a coffee, it's not like I'm buying a new pair of shoes or going out to eat. Small purchases make us think it's no big deal, but this is just part of their cunning act. 

A story all coffee lovers can understand.


Most of the legwork for Smart Money Seed's initial launch was
completed at Mission Coffee in Columbus. Our attempt at an
artsy photo didn't go quite as well as we hoped.
I pledged my alliance to coffee during my sophomore year of college. Since then, I can't remember many mornings that haven't started out with the bold, beautiful beverage. Soon enough those crooked small purchases discovered my addiction and haven't stopped harassing me. Starbucks, Tim Hortons, McDonalds... all of these coffee options at my fingertips waiting for me to indulge on my favorite morning drink. So why is this small purchase such a bad thing? Let's do some quick coffee math.

If I were to buy a $2 coffee everyday for a year, that's $730 down the drain. Throw in a few cappuccinos each week and that easily takes me over $1,000. I can find round-trip flights to Colorado for less than that! I can't give up coffee cold turkey, but there has to be better options. 

What does the math look like for coffee grounds? According to Cafe Milagro, I can make about 34 cups of coffee from a 12 oz bag, which means I need about 22 bags of coffee per year if I want to have two cups a day. This equates to about $200 a year if I want to drink Starbucks coffee. Even if I upgrade to K-cups I can still stay close $500 for the year. Either way, I still have enough savings for that trip out to the Rockies.

Despite my love and passion for coffee, I am able to curtail a lot of those small purchases by making most of my coffee in my pot at home or my Keurig at work. It's okay to still treat yourself to a nice coffee every now and then. In fact, this blog's first start was at a coffee shop in Columbus! I know, how basic are we? 

Guilty as charged.

I'd love to give you another example of me triumphing over those terrible small purchases, but I must admit that I am currently losing a battle of my own.

One of the cool perks of my job at Battelle is a cafeteria located just a few steps away from my office. Tons of tasty lunch options are available everyday, and they even serve breakfast! The convenience of grabbing a hot meal and being back to my desk within 10 minutes is very nice, but it comes with a price.

When I first started working, I only used the cafeteria for very busy days when I didn't have time to pack, but oddly enough, I soon found that I never had time to pack. I gave in to the convenience and no longer had the drive to pack a sandwich ahead of time. I tried to break my buying ways by bringing tortillas, turkey, cheese, and mayo to work to make wraps in my office, and it worked... for about a month. After 4 consecutive weeks of turkey and cheese wraps I was burnt out and went back to buying.

Too much of anything can be a bad thing. There is no excuse for me to buy my lunch 5 days a week, but that doesn't mean I need to pack everyday. Similar to coffee, my new goal is to only buy lunch once a week. This will certainly force me to sharpen up my packing habits, but it will still allow for me to enjoy the convenience of an easy, hot meal. Now wish me and my wallet some luck!

We're in this together.

Embarking on our journey for Texas in George.
I'm still not sure I've had better barbecue and 
spicy fried chicken in my life. 


Christian decided to fess up, so I might as well come clean too.

In the summer of 2014 I had an internship at Marathon's Galveston Bay Refinery. That meant a 19 hour drive in my 1994 Toyota Corolla to my apartment in League City, Texas. My dad, doing one of those things that dads just have to do sometimes, graciously volunteered to drive down with me. I guess I shouldn't say have to do because we both really enjoyed those few days we spent on our road trip despite his insistence on playing songs specifically about every major city we drove through. My ability to talk Dad out of stopping at any of the scenic overlooks along the way definitely aided my sanity.

Somewhere along the way, we got into one of those deep conversations just like you'd see in the movies. I want to preface this by saying that my dad grew up with loving parents who worked hard to provide for him and Uncle John, but he certainly wasn't born with a silver spoon in his mouth. My dad is the epitome of a self-made man. Although my family has never lived an extravagant lifestyle, my parents have worked incredibly hard to provide a comfortable life for us.

Dad, did you ever think that you'd live this life? Are there ever times that you step back and think "Holy shit, how did I get from where I started to where I'm at now"?

Yeah I actually do think about that sometimes. Especially when I can treat myself to something outside of the basic necessities, you know?

Is there something specific that makes you feel that way?

When I can buy something to drink while I'm driving, that makes me feel really rich.

As I reflected on this revelation, I realized that I also got a lot of enjoyment out of having something to drink while I drive. It also reinforced my understanding that my dad and I are quite simple men. To this day, I'll pop into a gas station for a Vitamin Water if I'm heading off for a drive any longer than about an hour and sometimes shorter.

I know I should buy these drinks in bulk at the grocery store, and that's something that I'm working on doing more often. I'm sure the extra $0.50 per bottle I'm paying at the convenience store has added up to something substantial over time, and I really don't get any extra benefit from this buying pattern.

A lesson from our past life.

What if someone dangled a Snickers, Slim-Jim, or Speedy Freeze, in your face all day while you worked? You'd probably be tempted to give them a try, right? Welcome to our prior lives delivering ice for Home City.

Walking in and out of gas stations and grocery stores all day takes a toll on your wants and needs, and before you know it, that Speedy Freeze becomes something you can't live without. This is just another great example of how small purchases play tricks on us and steal from our hard-earned cash. Believe it or not, however, we didn't spend our entire paychecks on candy bars and pop.

Our tried and true method for fending off those wants that seemingly become needs is simple; make a rule for yourself and stick to it. Save the Speedy Freezes for tough days, only buy Slim Jims on Friday, or limit yourself to 2 Snickers a week. The key is to make a rule that is realistic and achievable. After that, you just need to hold yourself accountable!

Disclaimer: This is a finance blog, not a food blog. We know some of our eating habits are questionable.


So what is the point? 


The message is simple: plan ahead and stand your ground. Pack your lunch, brew your own coffee, or make a list before you go to the store... whatever it takes to get rid of those bastard purchases. I'm not saying to never treat yourself to a bold Starbucks coffee or a refreshing Speedy Freeze, but just indulge in moderation.

Whatever your small purchase is, I challenge you to stand up and kick it in the teeth. Stop giving in to its devious ways and re-gain control of your money!

3/15/17

Hey Millennials: It's Okay To Live With Your Families!

3/15/2017
Millennials are being nicknamed the Boomerang Generation for our tendency to move back in with Mom & Dad after college. But as you can tell by Mya's look of contentment, she didn't mind having 2 extra hands around the house for petting!

As you can probably tell by now, Christian and I really enjoy money. We don't necessarily enjoy having the actual physical dollars and cents, but we enjoy the freedom and experiences that money allows us to have. Who wouldn't?

The level of financial freedom we are lucky enough to experience does not come easily. We have both made decisions along the way that haven't exactly been our top choice but that have gone a long way to helping us to achieve the level of financial freedom we currently experience. In fact, we both made a very similar decision which helped propel our financial lives forward for about the first 20 months of our working lives.

High Rollers

Christian and I graduated college with business degrees in May of 2015. We were hotshots who had accepted positions at large companies and who were about to start earning regular full-time incomes for the first time in our lives. The first decisions we made were, of course, every young college grad's dream:

Christian moved in with his sister, and I moved into my parents' basement.

I know what you're thinking, but rest assured, just because we're way cooler than most does not mean that we've completely lost touch with reality. We have somehow remained grounded despite our envious living situations.

Motherly Love

I can now say with 100% certainty that regardless of the fact that her child has been living on his own for the past 4 years, a mother never loses that strong motherly instinct. I mean, how else would I remember to do things like drive safely, stir my fruit, or clean my room without a loving reminder?

Sure, at times the jerky teenager left in me would lash out with a snarky comment. But somehow those sweet motherly reminders don't bother you quite as much when you can reinvest some of your rent savings to go to the sports bar to watch the game and grab a beer. Oh and by the way, the free dinners most nights of the week dulled out the regular thud of 3 or 4 pairs of my shoes being spitefully hurled down the basement steps. Somehow, leaving my shoes in the middle of the living room wasn't such a big deal in college.

Although I was actually quite content with my living situation and never saw myself as your prototypical lives in his mom's basement kind of guy, the people around me did not take that golden opportunity lightly. I'm a pretty fun-loving and sarcastic guy, but one quick jab at a friend or coworker, and I was left scrambling to recover from the strong left hook of some variation of a you live in your mom's basement joke.

Not Your Average Siblings


I might not have been able to convince them to play a lot of baseball in the backyard, but I at least got them to come to my high school graduation. Which sister do I look like the most? (Left=Chelstin, Right=Rachel)

For many people the first stage of sibling companionship begins as a playmate. Someone to play cops and robbers, catch, or hide and seek with. Someone who shares similar interests and can help pass those good, old-fashioned long days of summer. Growing up with sisters five and six years older, however, was a little different. For some reason, an 8 year old sports obsessed brother didn't have a lot of luck persuading his 13 and 14 year old sisters to play baseball in the backyard. This led to me becoming an expert on how to play all nine positions on both teams, umpire, and announcer all at the same time.

Despite the fact that my sisters were not the prototypical playmates for a young boy, we still remained close. Sometimes we would make indoor tents with bed sheets for "camping" excursions, and if we really worked up enough courage, we would attempt outside sleepovers in our play fort (this was a big deal for wimpy city kids). As we grew older I began to recognize that my sisters were very apparent role models in my life. While they both taught me many lessons that have helped shape who I am today, two fundamental qualities jump to the top of the list: Rachel demonstrated the importance of diligence and hard work in school, and Chelstin showed me how to be independent and live in the big city on my own. 

Similar to Alex, I was not off the hook for some friendly jabs regarding my living situation after college graduation. Moving in with my sister was not the cool, sleek apartment in the Short North or Arena District, and sometimes my friends reminded me of this. I can take the jokes though; I wouldn't change a thing if I had the chance.

Why Did We Do It?

No, we didn't always dream of spending our first 2 years of semi-bachelorhood living with family. The most important reason we made that decision was because of the close relationships we have with our families. Even we understand that life isn't all about money, and we are incredibly grateful for our relationships with our families. We both understand that we would not be where we are today without amazing home lives with which we have both been blessed. The luck and privilege we have both experienced throughout our lives have not been lost on us.

And yes, there was obviously a financial component to all of this. As much as I love my parents, a 1.5-hour commute came at both a financial and a lifestyle cost. That cost, however, paled in comparison to the savings associated with free rent and food.

Christian paid $200/month to live in Clintonville which is just north of Columbus. I paid $0 to live in Bucyrus which is in the middle of nowhere. Actually, Bucyrus claims to be the small town in the middle of everywhere, but you do have to drive about 30 minutes to find the closest sign of real civilization. I love my hometown, but again, not exactly the ideal spot for a 23 year old who spent the last 4 years in the heart of Columbus.

We each held our respective living situations for about 20 months. That amounted to a whopping $4,000 for Christian and.... let's see... $0 for me. According to the site Rent Jungle, the average monthly rent for a one-bedroom apartment in Columbus is $822. Again according to Rent Jungle, the average in Findlay is $656. That equates to an astronomical savings of $12,440 for Christian and $13,120 (plus food) for me!

Just do us a favor and please don't share those figures with our families. We don't need to have any lawsuits or back rent requests coming our way.

Laugh All The Way To The Bank

You've heard it all before: millennials are lazy, they're financially irresponsible, they can't handle living on their own and supporting themselves. The fact is that over 25% of millennials are living with their parents. Sure, not all of those millennials are making sound financial decisions. But what if a quarter of them are? What if our generation can become so financially savvy that half of those people living with their parents are using that as an opportunity to succeed for life? That could have a huge impact on each individual's life and ultimately on our economy as a whole.

If you have the opportunity to live with your family and save a little cash, you hereby have been granted permission to do so by the wannabe financial professionals at Smart Money Seed. Take your lumps when people make fun of you, make smart financial decisions to capitalize on this opportunity, and laugh all the way to the bank. You'll thank yourself later. 

3/7/17

3 Horrible Financial Mistakes You MUST Avoid

3/07/2017

On the train from Long Island to Manhattan, May 2015. We swear we only had 1 each. We'll explain later.

Unlike the crotchety old man down the street, we truly believe in our generation's ability to succeed. Unlike the guy you graduated high school with who refuses to get a job because he doesn't want to work for "the man," we truly don't believe success will be handed to us.

The easiest way for our generation to become the most financially successful generation ever is for all of us to stop screwing up. So if you're doing any of these 3 things, you need to get your shit together, like, yesterday.

1. Not Investing for Retirement

The most powerful financial tool all of us have the opportunity to take advantage of is the power of compound returns. The best way to illustrate this is to provide an example.

Let's say you're 25 years old and your gross (pre-tax) annual income is $30,000. If you are able to save 10% of your income for retirement, you can retire at age 65 with $1,327,778 assuming a 10% annual return on your investment (which is the approximate average of the S&P 500).

$1,327,778 is a shocking number. Who wouldn't want that in their bank account, right? Well the next detail is even more shocking. Over the course of that 40 years, you invested $120,000 of your own money (3,000 per year). That means that the market and the power of compounding returns made you $1,207,778 during your working life! That is actually more than your total income during that time ($30,000 x 40 years = $1,200,000).

Just because we can't  express enough the importance of the time value of money and compound returns, check out the graph below. The blue is the money you paid into your retirement savings in this scenario. The green is the interest you make from the market. Pretty crazy, huh?


Chart and graph courtesy of MSN Money


Our point? Invest now. 

2. Not Taking Advantage of Employer 401k Matches

Many employers match employee 401k contributions dollar for dollar up to a certain amount. Most employer matches are around 3-4%, but some companies match even higher. If your employer matches your 401k contributions, you need to maximize that incentive. If your employer matches 3%, you are guaranteeing a 100% return on the first 3% you invest for retirement.

Let's get back to the analytics. Let's suppose again you are the 25 year old with the $30,000 salary. You still save 10% of your income, but in this case your employer matches the first 3% that you contribute. That increases your monthly savings from $250 to $325. That change increases your savings amount at age 65 to $1,726,111. Again, you have contributed $120,000, this time your employer has contributed $36,000, and the market has now made you $1,570,111!

3. Taking on Bad Debts

Bad debts like payday loans or past due credit cards can be catastrophic to your financial success. The interest on these types debts can range from about 17% on a decent credit card to about 400% on a payday loan. If you don't have the money for whatever it is you will use your credit card or payday loan for, then simply do not spend money on that thing. You will pay the price for that decision for years. 

We bet you could've guessed we were going to throw some more numbers at you. Let's say you have a $1,000 charge on your credit card. We won't bore you with the formulas credit card companies use to calculate minimum payments, but let's just assume you're making minimum payments (about $25) on this balance. It will take you 5 years to pay off the debt and you will end up paying $486.20 in interest! What if you have $5,000 in credit card debt and pay minimum payments? It will take you over 18 years to pay off your balance, and you'll pay $6,151.54 in interest! 

That's an enormous waste of money that you probably would've rather used on a couple nice vacations or about 12,000 Natty Lights. OR if you're too high class for Natty like we are and don't need 12,000 beers, you could get some Steel Reserves while you're on vacation!

Get It Together!

If you're committing one of these mistakes, the good news is your eyes have now been opened to the errors in your ways. It's never too late to get your act together and get your financial life back on track. So pump up those 401ks or IRAs, take advantage of your employer matches, pay off your entire credit card balance each month, and NEVER step foot into a payday loan business. Follow those rules, and you'll be well on your way to long-term financial success!