Wednesday, September 21, 2016

Compare Your Income to the Average Global Income: Global Wealth and Gratitude

At my day job, we often refer to the concept of 'perspective shift' in pointing to that moment when someone gets it. It's the moment the light bulb comes on, and they are able to see the problem or concern from a new angle. Troubled coworkers, are often referenced as needing a 'perspective shift' in order to come on board with the team. It has become so ubiquitous, I heard the phrase used the other day as its own verb. One of the reasons that I think it's such a powerful visual tool, is it isn't indicating that there is anything wrong with the person or the team. Each individual has everything they need already- the knowledge, the passion, etc., it's just how they view the world around them, that needs to shift ever so slightly.

If you think hard enough, you may be able to find a way that your perspective has shifted on a belief or value of yours over the past few months. Maybe it has been reconsidering a political perspective or how you view a relationship with a family member. So what does a perspective shift have to do with frugal finances? Quite a lot, actually.

If you have really taken the road to frugality- it's taken a perspective shift. If you are committed to living large while spending small you likely needed to make some changes. It may mean driving your car less, and using your bike or walking to get you to and from. It may mean opening that retirement account and starting a budget. You may have made financial goals for 2016. Or perhaps a combination of several of these.

A few days ago, I was in the need of a perspective shift. Working in social work, I am often reminded to be grateful for what I have. On this particular day though, I was feeling a bit down regarding some of the recent high ticket expenses that have come our way, like needing a new roof. Ouch- talk about a big ticket purchase. These items have caused us to readjust our some of our plans to do further projects around the house. Needless to say, I had lost some perspective and was disappointed.

That's when Mr. FR heard a podcast talking about global income levels and asked me about it.  Something he said shocked and stuck with me. The average US household, is in the highest percentage of the global income. Not being a person to take this at face value- I did some research, and found this wonderful calculator by the Pew Research Center on global income levels, which indicated that many of us in the developed world are in the top 7% of global income.

The calculator takes your household income and it compares it to levels of income- not just in the Western, developed world, but globally. The study looks at homes in poverty, low income, middle income and high income. In looking at global income, the Pew Research Center indicates
"...people who are middle income, globally speaking, live on $10.01-20 a day, which translates to an annual income of $14,600 to $29,200 for a family of four."

Let that sink in for a minute. Globally, any income levels over $30,000 a year is considered high income, compared with the rest of the population. The Pew research study breaks down the other categories here: "The poor live on $2 or less daily, low income on $2.01-10, upper-middle income on $20.01-50, and high income on more than $50." What that means is that for most of us, earning over $30,000 a year, puts us globally in the high income category- and in the top 7%.

It is all too easy in our society to adjust to the world as we see it. A world where we take for granted the many luxuries we have. Where living in a safe community, with electricity, and being able to easily afford the food and clothing we need puts us in the upper income levels internationally. It can be easy to view other people around you and think about the items that they have, or the concentration of wealth for other people. It is easier to forget how privileged you are to have been born with, what may look to the rest of the world, as that silver spoon in your own mouth. It may be time for a perspective shift, not to feel guilty for what you have, but to have a new appreciation for the life you lead.

Give the calculator a try for yourself by clicking here. Leave a comment about what you think of the calculator or if you have had any shifts in your thinking about finances recently.
Thanks for stopping by!

Tuesday, September 6, 2016

Frugal Rock Travel: Be a Tourist in Your Own City

If the web traffic from the photo heavy post on Frugal Backpacking was any indication- you folks like to hear about frugal travel. I'm back with what may be the most frugal traveling of all- staying in your own city! Or is it?

Having some back-to-back out of town guests this summer inspired me to be the frugal traveler in my own city. The 'staycation' has been a phenomenon through the recession brought on by individuals who didn't have the money they were used to due to wage freezes, unemployment (or underemployment), etc. As a result of the tightening financial times, more people didn't have the cash to spend on fancy vacation- or even relatively cheap ones. Since you are on a frugal finance site, I also probably don't need to tell you why you should NOT put your vacation on credit cards (unless you are doing it to just earn points and can pay it off right away).

In researching average vacation costs, most often, the calculated expenses were done by credit card companies, who have more then a vested interest on what you spend for vacations. These companies weighed in with average amounts that seemed very high to me. American Express recently estimated just under $5,000 for a vacation. So if you don't have the money for a vacation or just don't like to travel, having an 'at-home' vacation and being a tourist in your own city may be the way to go.

There are some big pitfalls to avoid so keep reading for a) frugal ideas for a great staycation, and b) secrets to making it a success. Note- every city is so different that instead of giving you exact sites or places to check out, I've collected several vacation activities to look for when planning a staycation.

1. Do something that locals typically don't do in your city.

In our city, the lakefront is always teeming with locals- jogging, walking, roller blading and biking. It's always a popular spot. But there are also some 'touristy' things, like renting a paddleboat in a nearby lagoon. The lakefront also boasts a kite store, which hosts an annual kite festival each year. I haven't flown kites since I was a child, let alone at the lake front. It was a fun way to spend the day and try something in my city I hadn't done in years and made me appreciate the same views and parks, but in a different way. Think about the common spaces in your city- what are some areas or activities that you haven't tried (or haven't in a while). What can you do to make those spaces part of your 'staycation'?

Let's go, fly a kite!

2. Take a tour.

Is there anything more touristy, then taking a city tour? Always one of my favorite parts about discovering a new city, there are plenty of options. Many historic districts will have architecture tours, walking tours, or food tours. Food tours seem to have become very popular lately, with stops at many area eating (and drinking) spots. Some cities even boast more offbeat tours. In the last few years, Mr. FR and I have done two different ghost tours in various cities, where you visit sites of 'intrigue' in the community or areas where scenes from horror movies were filmed. This past summer, we also did two tours that were new to us in our own city. While we come from the land of beer- I discovered our city also boasted a soda (and beer factory) and a distillery. Both of these made our list of tours to try when we had company. Slightly less frugal options for tours may include a bike or bus tour- or even more ritzy, many cities will offer views of the city by boat or by Segway.

3. Go out for a nice meal in a new area of town...linger.

One thing I do when I travel is look up Yelp or travel reviews to find the places where locals what do you do when you are a local? Make a reservation at a place you wouldn't typically frequent- maybe a type of food that's out of your comfort zone or explore a different area of town then you normally would. If you are anything like me, you develop favorite places, and frequent them mostly. This is your chance to try something completely new.

While at dinner- don't rush! While we don't eat out nearly as much as we used to, it can be a stop on the way somewhere or doesn't feel special if you are in a hurry out of there. When traveling, I normally find I take my time, linger over a appetizer or a coffee at the end of a great meal. Maybe have a cocktail. Try to channel that when you are local and slow the heck down.

4. Get Outside!

The best free activity out there is exploring local parks, trails and rivers. Now is your chance to go further and devote a whole day to spending time in the woods. Maybe this is the chance that if normally you hike, you try doing some canoeing or kayaking around that favorite spot. I recently learned that many of the county parks in my area have Mountain Biking trails, you better believe that the next long weekend I have, I will try and conquer some of these!

Shadow Selfie

5. Take Advantage of Free/Cheap Local Events or Festivals

Want to plan a great staycation? Try planning your vacation around a free or reasonably priced festival in your area. Many cities have live music for cheap to check out. Not a live music person?  How about a sporting event? No need to go expensive- it's often the experience that makes the event good. Think baseball, basketball, or maybe something more exotic like cricket or futsal.

Baseball by Moonlight

Secrets to a Great Staycation

1. Set good boundaries.

So the hard thing about vacationing at home (can you tell that I kind of hate the word staycation??) is that the world can - and probably will try to interrupt at anytime. I recently attended a meeting at work where someone who was on a 'staycation' came in because they felt the meeting was important. While it was important, if she had been across the country traveling, she would have felt guilt-free about skipping the meeting. If you are vacationing at home, make sure that you don't get your work email, answer calls or heaven forbid, attend work meetings.

The boundaries aren't just about work though. Think family and friends- if your goal of the staycation is to spend quality time with your spouse, how will you respond to requests to make plans (since you will be in town) without offending people. How will you let people know if they stop by that they are not exactly welcome? This would be infinitely harder to do if you have children who may be requesting sleep overs, friend dates, etc. during your family staycation.

The secret may be clear communication. Ensure that everyone in your household knows the plan for the staycation and what the boundaries are. Be clear with individuals requesting your time, whether that be work, personal or other obligations that you are not able to assist. Know that it's okay to take that break, even from people you care about.

2. Give yourself a budget.

I had a long weekend about a year ago, where I decided to forgo the weekend trip away to visit a friend and save money. I decided to spend that weekend at home doing a mini-vacation. The problem was that I didn't give myself a budget or an amount that was okay to spend. As a result, I found myself feeling guilty for every spending item, or conversely, forgoing fun things that I love doing, in order to not spend. If your vacation is being replaced by staying in your city- it's okay to splurge a little, but give yourself some parameters.

You may have the opposite problem-  what all tourist hotspots know is that people will spend money on vacation on things they never would have considered otherwise, like knick-knacks or a ridiculously overpriced drink- because you are on vacation! You deserve it! I still have a seashell frame somewhere in my house that says 'Cozumel' on it. Can't remember why I thought I would want to display that- so I am clearly guilty of that as well.

In researching this post- I came across a great article that included some really interesting research out of the UK, in surveying over 1000 people, they actually found that travelers spent MORE dough on their staycations then when away. I would hazard an educated guess about why this may be. When I feel like I have been good, and ate healthy for a few days, I'm much more likely to eat a whole giant pizza by myself- because I have earned it. In the same way, if you feel like you are forgoing something, like a big international trip, you may be more likely to 'spend away' when you are at home.

3. Get off Social Media- but Take Photos!

I didn't say get rid of your phone for the whole time, that would be just about plain impossible, BUT, many of us when on vacations are too busy 'doing'  to post or cruise other's social  media feeds. In some countries our internet or cell service may be spotty when we are vacationing and it turns into a blessing in disguise to keep those other distractions at bay. Give it a try during your staycation- maybe start small and turn off your push notifications. Maybe leave your phone at home (if you are with others, I'm sure someone else will have their phone to navigate or take photos if needed), or for the strong willed- stay off Twitter, Facebook, Instagram, SnapChat and all the others for your whole staycation. That being said, while you aren't instantly posting photos of your staycation, don't forgo taking pics altogether. Vacation photos are often fun to look back on for years- just because you are staying local, doesn't mean those aren't important and great memories that you may want to capture.

On last parting note:

For those of you reading State Side, we should take a note from our international brothers and sisters out there and use our vacation time. Americans are the WORST at taking vacation and many leave vacation time on the table. This leaves us more over-worked and more stressed then are European friends. Get with the program folks- and use that vacation time.

Have you ever done a staycatation? Did you love it, or hate it? What were the things you did to ensure it was still a 'frugal' option?

Monday, August 29, 2016

Haters gonna Hate

Have you ever experienced this? You decide to go on a diet or start a new exercise regime, and immediately there's that one friend who comes out of the woodwork to tell you about all the times they tried (or someone they know tried) and failed at it. While hopefully not malicious, the story is told to you to point out how hard it is. Is it motivating?? Absolutely not! Is it aimed at encouraging you or inspiring you to be your better self? Nope. So why do people do this??

It's a mystery to me, but lately this has been happening when I've been chatting with people about our long-term goals (yup, I've turned into that person- but only when people ask about the blog!) of paying off our house early or trying to re-think the two 40-hour-a-week jobs. I do appreciate that a few years from now we may have a major shift or change in our perspective of how we want our lives to look. The things is- I don't see being debt free and financially independent as goals I want to grow out of or toss out the window. I think it's here to stay.

So what's the most asked question that get's thrown my way these days? Here it is:

 I know a lot of wealthy people out there that can't retire early-
if they can't do it, why do you think that you can?

This is such a common one, and is built on misconceptions! Saving and retirement is not just about income. Don't get me wrong- if you don't have an income, you can't save money- but don't let your income define who you are. You do not need to be making 6 figures, working 60 hour weeks in order to save for retirement. Truly, it's about expenses and how you choose to live your life. An example: basic retirement advice is that in order to retire in your 60's you need 8x your annual salary. This assumes a few things about you and your lifestyle, the most major of which is that it assumes that you will need 80% of your annual income in retirement. This is a common assumption, based on the fact that most people spend about all of their income on their expenses. If that's the case the 8x your annual salary is a good way to ball park your retirement number (or what you would need to have saved before you retire).

BUT...what if your spending rate is lower than 80% of your income? Spoiler: you don't need to save as much for retirement. Another way to think about it is how much your yearly spending is. By determining your retirement 'number' off of that figure your number may be lower then traditional wisdom would suggest. This would likely be much more accurate- as it takes into consideration what your actual lifestyle needs are.

The math is actually very simple when it comes to saving- it's the saving that's the hard part! I recently have been loving this blog- Go Curry Cracker. The author simplifies things even more, 'if you save 10% your income for 9 years, you can not work for 1 year and still support your lifestyle. If you save 90% of your income for 1 year, you could not work for 9 years'. I'd take a 9 year sabbatical- would you?

So if the math is that simple why are there so many wealthy people who can't retire early or even seem to save? It goes back to lifestyle habits. I know people who live in our neighborhood, in reasonable sized homes, with used vehicles that probably have portfolios to put mine to shame- and I know others with large houses, generous incomes who barely pay their bills on time. I bet if you thought about it- you know people like that too.

With reasonable expectations, good habits, and some good luck in finding jobs that meet our needs, the Frugal Rock home is trying hard to stay on track with our spending/saving goals! And if you were wondering- there are A LOT of success stories out there from individuals who worked hard to become financially independent and chase their dreams. Here are a few of my favorite blogs on them:

Frugal Rock OUT.