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When Does The Commute Ever End? Hopefully, Before You Retire.

Location. Location. Location.

Where you live can make or break your bank. When deciding where to live, I argue that these factors should top the list:

  1. Location relative to your work.
  2. Location relative to your grocery outlet.
  3. Cost.

Commutes are time, money, and soul sucking. I worked a job once where the commute was an hour each way. I lasted six months.

Never again.

Since then, I’ve worked jobs close to home. Today, I work four jobs, all from 2 to 10 minutes away.

We’re moving to Boston in a few months. Honestly, I felt anxious about the fact that Boston’s average apartment rent is the 3rd highest in the USA. I told my SO I refused to pay more than $1,000 for rent, even if that meant living further away from the city. With a list of the cheapest surrounding suburbs in hand, I looked for apartments 40 minutes away! We tend to think that living further away and commuting is cheaper. It’s not always true. In this case, one option was living in our own studio across from Boston University. Another option was living in Medford, 40 minutes away, with a roommate. This is how the numbers played out:

 Expenses Boston University (300 ft2 studio) Medford, MA (915 ft2 2br apt)
Rent $1,500.00 $1,000.00
Basic Utilities $0.00 $117.00
Internet $0.00 $38.00
Commute (SO) $0.00 $75.00
Commute (Me) $0.00 $84.50
Auto Ins. (State Min.)* $74.00 $76.00
Parking $50.00 $0.00
Total $1,624.00 $1,390.50

*Auto insurance included, as insurers factor in the zip code. In this case, it didn’t matter.

As you can see, yes living further away is cheaper. Living on campus costs $233.50 more per month. But the question is… is $233.50 worth the time saved from not commuting 40 minutes each way? Our answer was an absolute YES.

What does not having to commute mean? It means…

Time For Other Things

The potential commute was 40 minutes x 2 times per day x 5 days per week. That adds up to 6.7 hours per week or 26.7 hours per month. That’s almost a whole workday every week. What could you do with that time? Develop personal hobbies, network, join an organization, volunteer for a nonprofit, take a class, add a side hustle, and other things. By spending your time this way, you can increase your social and cultural capital which may even potentially increase your economic capital, aka make more $$$.

More Sleep, Free Transportation and Exercise

You can wake up later! And living 1 – 2 miles from your workplace, you could either walk or ride a kick scooter. Live 3 miles away? Ride a bike. By making exercise a lifestyle, gym memberships may be optional. And with the blood pumping through your body and your brain, you feel alert by the time you start work. Meanwhile, your coworkers slug through the day with $4 Starbucks coffees.

Less Convenience, More Intention

Let’s face it. When you have little free time, busy running around with your head chopped off, you pay for it in other ways. You pay for it by eating out more because you don’t cook. Do you still want to cook? Then you pay for meal-kit subscriptions boxes or frozen meals filled with preservatives. You pay for wash-and-fold laundry service. You take a cab because it’s faster than the subway.
To drive my message home, let’s look at the real price of having a large pepperoni pizza delivered from Domino’s Pizza.

Carryout Delivery Charge
Pizza (Carryout Special): $7.99
Sales Tax: $0.66
Pizza (Regular Price): $10.99
Delivery Charge: $2.99
Sales Tax: $1.15
Tips: $2.00
Total: $8.65 Total: $17.13

Customers pay twice as much for delivery, and they don’t give it much thought. And they don’t order one pizza; they order three! They pay a premium for convenience without even realizing it.

Final Thoughts

Perhaps your commute isn’t as bad as 40 minutes. I had a client who commuted 32 miles (42 minutes) round-trip every day, so around half of my earlier example. She spent more gas in a week than I did in an entire month. Although we made the same hourly wage, her real hourly wage was less due to her commute. I’ll write more about real hourly wage in my next newsletter.

I want you to carefully reflect on your current commute in relation to your other relevant circumstances. If commuting time is a loss, is it a justifiable one in comparison to the gains? Depending on your circumstances, you might be better off in the long run by making the needed changes.

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It’s Official! We’re Moving To Boston.

Hi everyone,

Handrio got accepted into a Ph.D. program at Boston University. We will be moving to Boston in late August. I’m excited because the sky’s the limit for my future income! Lubbock’s low and stagnant wages means I work four jobs right now.

While I’m excited to finally move to a large city, I’m also anxious about how we will afford this. To put the cost in perspective, right now we pay $420.00 for rent in Lubbock. We researched rents in Boston the past two days. Every place is at least $1,500. The only difference is the amount of space that price will get you, which varies by neighborhood. For $1,500, we get a 297 ft2 studio across the street from BU.

We can bring the rent down to $1,000 by sharing a 2BR with a roommate. The problem is that most ads for single room occupancies state “No couples or families.” That’s made the apartment hunt very difficult for us.

On top of the outrageous rents, moving is expensive. The average interstate move costs around $4,300. The average intrastate move costs around $2,300. These numbers looked high until I crunched the numbers.

Here’s the budget for the Boston move:

Description Price
First Month Rent, Utilities Included

$1,500.00

Security Deposit

$1,500.00

Renters Insurance (1 Year)

$216.00

Mattress and Bed Frame

$260.00

Furniture Replacements

$200.00

Vehicle Registration Fee (2 Years)

$60.00

Vehicle Title Fee

$75.00

Vehicle Inspection Fee

$35.00

Driver License Fee – Handrio (5 Years)

$115.00

Driver License Fee – Annie (5 Years)

$115.00

Moving and Shipping Supplies

$60.00*

Shipping, via Amtrak or Greyhound

$160.00*

Meals (4 Days x 3 Meals x 2 People)

$240.00

Gas and Tolls (2,036 Miles)

$160.00*

Hotels (4 Nights)

$280.00*

Total

$4,983.00

You can see we must save close to $5,000 by September 1, not including emergency funds. We’ve been preparing for this since October and already have $1,495 saved. We still have a long way to go.

We cannot cut the prices down any lower. This is already low, considering the following:

We are minimalists, yet we will be downsizing our possessions even more. I’ve scanned and shredded all my paperwork. That’s one less box to pack. Gradually, we will sell and donate our stuff. We refuse to hire a moving company or rent a moving truck. To haul our possessions across 2,036 miles, a moving truck rental would be at least $800. We are going to fit as much as possible into our sedan and ship the rest.

We are going to ship our remaining possessions via Amtrak or Greyhound. There is no Amtrak station in Lubbock, so I’ll have to ask my friend to drive to Dallas to drop our stuff off there for us. The hassle is worth it, considering the weight of our packages. Last week, I shipped a 5 lbs. package via FedEx Ground for $46, which was outrageous. I can ship a 100 lbs. package via Amtrak for only $49. The insurance is dirt-cheap too. The only downside is I have to pick it up from Amtrak’s Boston station.

We will be claiming the moving expense tax deduction for 2018. Everything listed with an asterisk (*) is tax deductible because we meet the distance and time test. The most important thing is to keep receipts.

It is very difficult to land a job through a long distance search. To make the transition smooth, I already have a job lined up at Domino’s Pizza! My current supervisor knows the franchise owner in Boston and said, “You’re hired!” Granted, I’ll be making $11.00/hour, but it’s still something, which is better than nothing. We could eat and pay the bills with that. I’m going to network and continue job searching while working at Domino’s in Boston. I have a good feeling I’ll land something that pays at least $20.00/hour within three months.

Some of my fellow readers plan to move within the next two years. You must make a moving budget once you know when and where you are going.

I’ve included this excel template for you to use as a moving budget guide. Click here to download the file. It has every possible expense so you that don’t overlook anything. It also has links to resources to help you make an accurate budget.

Once you know how much money you need, start saving. Keep in mind, you need that much money, plus an emergency fund of at least two months worth of expenses. I know people who didn’t do that and they went into credit card debt after moving.

Stay tuned for the next post, which will be on apartment hunting.

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Death and Taxes: You Can’t Control Death, But You Can Control Your Tax Liability.

“In this world, nothing can be said to be certain, except death and taxes.” Benjamin Franklin was right, but he never said you must hire a third party to do your taxes. According to the IRS, the majority of Americans do not do their own taxes. Instead, they use professional accountants or software programs.

I used to be that American. I handed my W2s to my parents, which they passed to their accountant. I never understood taxes because the professionals took care that. I never met their accountant either so I couldn’t ask questions. I didn’t know the difference between a W2, 1099, and 1040. What’s a deduction? Is that the same as a deductible for car insurance? Taxes were like a confusing, jumbled knot I didn’t want to untie. It’s embarrassing, as it’s an area of personal finance I knew I should learn about but avoid anyway.

My mindset changed last year. In the 2016 fiscal year, my parents no longer claimed me as a dependent. Because of that, they used their accountant to do my taxes and then handed me an $85.00 bill. That’s the first time they made me pay. I didn’t like it. If I had known, I would have tried doing it myself first before opening my wallet.

The 2017 fiscal year return is different. I’m putting my big girl pants on!

I looked into different software programs. Because I had a few jobs but was also self-employed, my only TurboTax option was the Self-Employed for $119.99. The reviewers wrote about how it made reporting their income and expenses super easy.

I considered buying it but reasoned I’ve only been doing financial coaching for a year. My income/expenses were not complicated. Plus, I’ve done professional bookkeeping, so my own business records were very organized.

I ended up researching which forms I needed to complete (1040, Schedule C, Schedule SE). I downloaded the PDFs from the IRS website and looked at them. At first, I had a case of FOMO—serious! I had a terrible FEAR that I would make a mistake or miss out on a deduction because of my lack of knowledge. But it turns out they were very easy to fill out. I literally plugged in numbers from my Excel sheet onto the form and then added and subtracted. After a day and a half, the tax return was finished, double-checked, signed, and mailed.

Lessons Learned:

  1. You have the most at stake when it comes to your finances, not anyone else. Do not throw numbers into a black box and trust what comes out on the other side. Accountants aren’t on the lookout for every credit/deduction you could claim. In 2016, my SO and I was eligible for the Earned Income Tax Credit. My parents’ accountant completely overlooked it and I only noticed it last week. According to the IRS, 25% of taxpayers who are eligible for the Earned Income Tax Credit fail to claim it. I now have to file an amended 2016 return to get the $510.00 refund.
  2. You don’t know what you don’t know, and that can screw you over. The issue with not doing your own taxes is you don’t know all the credits/deductions out there. If you don’t know, how will you make good financial decisions and limit your tax liability too?

In 2016, I paid for my undergraduate tuition using the 529 plan my parents opened for me. I did the right thing: I withdrew the exact amount needed to pay for qualifying expenses. I made sure to avoid paying the 10% penalty.

But I could have made a better decision! I could have paid the first $2,500 from my savings and then the rest from the 529 plan. Doing this would have allowed me to claim the American Opportunity Tax Credit, which is free money. I lost out on the opportunity to get $1,000 more in refunds from the IRS and it’s too late for me to do anything about it now. It’s unfortunate I only found out about this after I graduated college already.

Whenever you make a major life decision and have to pay for it, research the tax laws first.

Tips To Make This Easier:

  • Save and organize your receipts throughout the year.
  • Use last year’s tax return as a template.
  • Read the IRS instructional guide for forms you don’t understand.
  • Realize that if you make a mistake, it’s okay. You have three years to submit an amended return. If the IRS says you made an error, learn from it!

Try doing your own taxes this year. Of course, there is nothing wrong with using an accountant, so long as you check it line by line afterward. I actually encourage it if your financial situation is complicated and if you make more money with the time that you save.

What do you think? How have you done your taxes in the past?

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My Obsession With Saving Money

Orgasmic. That’s the greatest word to describe my non-sexual, unhealthy obsession with saving money. For years, I saved 50 cents out of every dollar I earned. Now that I’m married and need my husband’s approval on finances, I’ve compromised down to 25 cents.

I am the type of person who picks up every penny I find on the ground. I cut my own hair for free. I use canvas bags at the grocery store to save 5 cents. When my phone company surprised me by lowering my bill to $19.00, I screamed like a little girl at the top of my lungs.

My best money saving idea was in 2013. I worked at a massage parlor making $3.00/hour. The MTA (which stands for Might Take Awhile) increased the monthly MetroCard fare again. I couldn’t afford to ride the subway to work, so I bought a foldable adult kick scooter. Every day, I kicked myself to work and back. I hit the jackpot with this one. Not only did I save money, I never dealt with morning train delays again.

Last April, soon after the David Dao fiasco, United Airlines lowered their prices. Being money-savvy, I bought a round-trip ticket from Lubbock to NYC for $396.60 from United. Later, I wanted to change the departure date, but United wanted to charge $200.00, plus the difference for a new ticket.

I said no.

I bought a one-way ticket for much less, planning to still use my original return flight. I thought I was genius—until the day before my return flight. Since I didn’t take my original flight, United canceled the itinerary. I wasted $400.00 on another new ticket. Meanwhile, United sold my original seat to someone else, making double the profit!

Something in me snapped.

I felt like starting a national movement to boycott United Airlines. That’s how angry I was.

It wasn’t just about the money. It was about how little control I had over the situation due to their ridiculous policies. It was exactly how controlling my parents were while growing up and how helpless I felt. The whole reason I saved every dollar was to break free from their control.

A significant moment in my life was when I fell in love with Matthew. He was my Aladdin; he showed me the world and how to order food from McDonald’s since my parents never allowed me to do that. I realized how much freedom I lacked.

My parents attempted to separate us by confiscating my cell phone. That didn’t work. I started paying my own phone bill and got a second-hand phone. This gave me a taste of freedom that even my parents couldn’t take away from me.

From then on, saving money meant total freedom from my parents. Now that I’ve moved out, my obsession with saving money is about achieving total freedom in life.