What Should a Millennial Spend on Rent

Rents have been steadily increasing throughout the United States over the past decade.  Ever since the financial crisis, people have somewhat shied away from home ownership and opted to rent.  With the demand for rentals on the rise, a sharp increase in monthly rents has been a clear side effect.  The old rule of thumb used to be 30% of one’s income should be spent on rent; however, we are now seeing a burden like never before.  What should a millennial spend on rent?  The simple answer is as little as possible.Image result for what should a millennial spend on rent

Millennial’s are those born from the late 1980’s to the early 2000’s depending on who you ask.  These individuals tend to have a high burden of student loan debt, which makes it all the more concerning that they are spending high amounts on their monthly rent.  A recent report came out showing that millennial’s will spend close to six figures, yes, $100,000 on rent before they turn 30.  That is a staggering amount considering that most are also in the process of trying to pay off student loan debt.

3 WAYS TO NOT SPEND 6 FIGURES ON RENT BEFORE 30

  1. Get a roommate.  Sharing a two bedroom with a friend is a simple and easy way to save money every month.  Sure two bedrooms cost more than a one bedroom, but when you split it two ways, it comes out to about a 30% savings versus living on your own.  This isn’t a long term solution, but it is a good way to free up additional income every month.
  2. Move in with a significant other.  While some will shy away from this advice, there are many benefits to doing so.  I knew a couple who had to live apart until the day they were married for various reasons.  They chose to do this in order to respect the wishes of others.  However, they were basically spending an extra $1000 a month on an additional apartment that got little to no use, all to please a few.  They could have used that money to build up an emergency fund or increase their down payment on a future house.
  3. Buy a house.  While buying a house requires more responsibility and obligations than renting, it is also a good choice to lower your monthly expenses and build equity.  For example, a $200,000 loan on a property with 20% down will give someone a monthly payment of approximately $1250 a month.  Depending on the area of the country you live in, it will almost certainly be cheaper than paying someone else to rent.

CONCLUSION

While some see a benefit to renting, there are also many drawbacks financially.  Although we can’t exactly put into numbers what should a millennial spend on rent, there are ways to reduce your monthly expenses.  Whether you are able to implement one of the solutions above into your situation or not, living costs will be your largest expense every month.

Budget Smart, Invest Wise

 

Ibotta App Review

I was recently on vacation in Denver, Colorado, when a friend of mine who lives out there told me about this cashback app called Ibotta.  He was head over heels for the app which happened to be created out in Denver.  I downloaded the app and immediately saw how one could benefit.  In the following Ibotta app review, I will go over just how simple it is to start getting cash back on purchases you already make.

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Ibotta App Review

IBOTTA HAS MANY TOP STORES

Most Americans find themselves shopping at the big box stores for everyday items.  Stores such as Target, Walmart, Best Buy and others are some of the top stores in the Ibotta app.  Many of these stores offer cash back for just simply taking a picture of your receipt.  They also have coupons for many items you purchase including Gatorade, salsa and even beer!

THE APP IS EASY TO NAVIGATE AND USE

Ibotta App Review
Ibotta Screen

Unlike some apps that take a while to figure out, Ibotta is pretty straightforward.  From the home page you can select your favorite stores, choose any coupons you might be interested in using, and start earning cash back.  The picture to the left illustrates what one will see if they click on Target as a store of their choice.  You are presented with a list of coupons available.  Towards the top, you are able to segment the products based on the category you want to search for.  In this example, if you wanted to get $1.00 back on Gatorade G2, simply click on the red plus sign and it is added to you offer list.  It’s that simple!

RETRIEVING YOUR CASH BACK IS EASY

The whole point of a cash back app is to actually get cash back.  In this Ibotta app review I am here to tell you that is exactly what you get.  Withdrawing your cash is a super simple process.  The only requirement is that you have at least $20 in your account to withdraw.  You can withdraw the cash via PayPal, Venmo, or for one of the many gift cards they offer.  Never have I had such a hassle free experience withdrawing earnings from an app.

HOW TO GET STARTED WITH IBOTTA

  1. Download the app using the following link (Receive a welcome bonus of $10): https://ibotta.com/r/ycvfdfl
  2. Search through the list of selected stores you shop at and even ones you don’t.
  3. Find coupons you can use and add them to your “My Offers” section.
  4. Once you shop at a store, you can use your camera to make sure the item qualifies for the cash back by simply scanning the barcode.
  5. Take a picture of your receipt and confirm you purchases.
  6. Watch the cash add up.  There is no limit to how much you can have.

Budget Smart, Invest Wise

15 Year Mortgage Pros

A little over five years ago I made a financial mistake that I’m not proud of.  I purchased my first home.  No the purchasing of the home isn’t the financial mistake, the mistake was going with a 30 year mortgage instead of a 15 year one.  Many times throughout the year I often wonder why I didn’t even consider a 15 year mortgage.  Don’t make the same mistake.  If you have the financial ability to do a 15 year mortgage then by all means go for it.  I will discuss a few of the 15 year mortgage pros and why I wish I could go back in time and do it all over again.

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15 Year Mortgage Pros #1

The easiest difference to distinguish between a 15 year and a 30 year mortgage is the interest rate.  15 year mortgages have a significantly lower rate than their counterparts.  The shorter the amount of months a company has to lend you money, the more likely they are to recoop their costs.  A 15 year mortgage tends to have an interest rate of 0.5% to 0.75% lower than that of a 30 year.  Although that might not seem like a significant number, it will ultimately equal many thousands of dollars in savings over the life of the loan.

15 Year Mortgage Pros #2

Simply put, you build equity faster.  Because you are having to pay the full amount of the loan in half the time, your monthly payment will be more; however, that also means you will become the full owner of your home in a shorter period of time.  Many people, myself included, choose a 30 year mortgage because the payments are less on a monthly basis.  Had I chosen a 15 year mortgage, my payment wouldn’t have been much more a month and I’d own the home outright in half the time.

15 Year Mortgage Pros #3

The final pro is that you have the opportunity to eliminate your largest monthly expense.  This is especially important as one approaches retirement.  People sometimes talk themselves out of a shorter mortgage because the higher monthly payments mean they have to forgo savings for other things such as retirement.  Can you imagine owning a house free and clear in retirement and not having the stress or monthly expense of a mortgage payment?  Plus you can also free up more capital if you decide one day to do a reverse mortgage.

Conclusion

The majority of housing loans issued are in the form of 30 year mortgages.  This has been the case for a while.  I messed up when I bought my first home, but I can assure you I won’t make the same mistake for my next.  A 15 year mortgage is ideal for individuals or couples who have stable jobs, and are good at budgeting their monthly expenses.  The opportunity to save money on paid interest and build equity fast will be too much for me to pass up again.  That is why the 15 year mortgage pros strongly outweigh any cons.

Budget Smart, Invest Wise

4 Ways to Save on Valentine’s Day

February 14th, a day of love that comes around once a year.  It’s a time to celebrate the love of your life, or in your life, but the celebration of that person can sometimes get quite expensive.  There’s flowers, chocolates, stuffed animals, dinner, gifts, etc.  Add them all up and a random Wednesday can easily turn into a $250 event.  Listed below are 4 ways to save on Valentine’s Day.

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4 Ways to Save on Valentine’s Day

Go To Dinner A Day Other Than Valentine’s Day

Many couples prefer to go out to eat for Valentine’s Day, but most of your nicer restaurants tend to have set menus that often carry a high price tag.  Try celebrating at your favorite restaurant the day before or after.  You can usually order from the regular menu and avoid the preset and inflated Valentine’s menu.  Valentine’s Day this year happens to fall on Ash Wednesday.  Many couples will decide to celebrate the day after due to the start of Lent.

Bring Your Own Bottle of Wine to Dinner

A cheap bottle of wine at a nice restaurant will easily be anywhere from $28 to $35.  See if you can bring your own bottle and pay a corkage fee instead.  Corkage fees tend to be much cheaper than purchasing a bottle from the restaurant, and you can bring the bottle that will go perfectly with your meal.  A nicer $80 bottle at the restaurant will typically sell at a local store for half that.  So in essence, you can drink an $80 bottle with your meal for $40 + corkage fee (~$10).

Send Flowers Differently

Waiting until the last minute to order flowers can be a costly mistake.  Local and national flower company’s often raise the price of delivery the closer it gets to the date you want it to deliver.  They also charge additional money to get them not only delivered on Valentine’s Day, but early during the day.  Instead, opt to have the flowers delivered to the office of a loved one a day early.  By doing that, the flowers can be present for the entirety of Valentine’s Day and you will avoid additional charges.

Order Gifts Ahead of Time

As like any other holiday, planning can be the key to saving money.  Ordering gifts early can help you not only save on shipping but also gives you time to find the best deal.  Some companies will offer free two day shipping just before major holidays, but often times won’t accept other promotional codes.  Additional charges on shipping can also add to your Valentine’s cost.  For example, a friend recently had to pay an extra $9 for two day shipping where it could have been for free had he planned a week earlier.

Conclusion

Whether you are celebrating Valentine’s Day or not, the holiday is one that many people love, or dread, each year.  If you are celebrating, then I hope you are able to use these 4 ways to save on Valentine’s day to put a little extra money in your pocket at the end of it.

Budget Smart, Invest Wise

 

Annual Costs of Owning a Dog

They are often referred to as man’s best friend.  As a dog owner, I can assure you this statement is quite true.  Each day when I come home from work, I look forward to seeing the wagging tail and the kisses that come upon my arrival.  Owning a dog is great, some would even say fantastic; however, despite the kisses and tail wags, one’s wallet can take a hit.  The size of the dog does play in to a lot of these factors.  My dog weighs 35 lbs and is considered by most to be a medium sized dog.  The numbers that follow for annual costs of owning a dog are based on a medium sized dog.  Smaller dogs tend to be cheaper, while larger dogs tend to be more expensive, so please bear that in mind.  A budget is the easiest way to track your expenses when it comes to your pet.

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My dog Vera

Dog Food & Treats

The most common and never-ending expense of owning a dog comes down to the dog food one has to purchase.  The price of that food can vary depending on the brand and type.  For instance, I feed my dog Purina Dog Chow, which is by no way the most expensive, but also isn’t the cheapest.  I usually am able to purchase a 36 lb bag for $25.  I estimate I go through 4 of these bags a year for my dog so $100 in annual cost for food.  When it comes to treats, I like to reward my puppy with a rawhide, various snacks, peanut butter and Dentastix (or similar).  I estimate that my yearly cost spent on treats comes out to $75.

Total Annual Cost: $175

Medication/Shots:

It is moral and also the law to give your dog the necessary vaccinations that they require in a given year.  I’ll first begin with medication.  My dog requires heart worm and flea protection just like any other dog.  For this, I use an all in one preventative treatment called Sentinel.  A year’s prescription of this treatment costs $100 for my dog.  Dog’s are also required by law to get a list of shots to maintain good health for the dog and other’s around it.  These can include the rabies vaccine among others.  The shots typically run me $150 a year when it is all said and done.

Total Annual Cost: $250

Boarding/Daycare/etc.

Every person’s situation is different.  If you like to travel and you have a dog then be prepared to spend around $25/night for boarding.  I tend to use friends and family to watch my pooch and usually pay them back with beer, a meal or an IOU.  Daycare is also another popular cost among dog owners.  Many view their dogs as an extension of their family and thus like for them to be well-cared for and interact with other dogs.  Daycare for dogs can run anywhere from $12-$25 a day on upwards.

Total Annual Cost: $250

Annual Cost of Owning a Dog: Final Results

If you total up my three previous sections, the total annual costs of owning a dog for me comes out to $675.  Again, this can vary depending on the lifestyle of the dog, what type of food you buy, and a number of other factors.  This example is only meant to give potential dog owners an idea of what to expect.  At the end of the day, my dog is priceless and whatever I can give her to make her happy and see her tail wag is worth it’s weight in gold.

Budget Smart, Invest Wise

Is a $250K Net Worth at 28 Possible?

I often write a number of net worth pieces on athletes, coaches and other famous individuals, but what about the rest of us who aren’t worth millions?  Your age and net worth should have a positive correlation, the older you get the better the opportunity to build your net worth.  That is why I pose the question, is a $250,000 net worth before you are 30 even possible?  The answer is yes!

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Net Worth Formula

We are familiar with young stars such as Justin Bieber, Rihanna, and Andrew Wiggins having a net worth in the high millions, but what about the rest of us?  Let’s first talk about what net worth actually means.  As is illustrated in the image above, net worth is calculated with a simple equation.  You take all of your assets (house, retirement accounts, cars, etc.) and from that you subtract all of your liabilities (mortgage, debts).  The resulting equation will equal one’s net worth.

As previously stated, net worth tends to increase the older you get.  That is why I am looking forward to my future net worth.  At 28 years of age, my net worth already exceeds a quarter of a million dollars.

How have I been able to build a $250k net worth?

There were a number of smart financial decisions I made in order to build my wealth in such a short period of time.  When I began my first job at the age of 23 (just five years ago), I had a negative net worth.  There were student loans I had to pay back, and after being in college for four years I didn’t have a chance to save much money.  I focused on paying off my debts, in this case my student loans.  Getting out of debt is crucial to building one’s net worth.

The next thing I focused on to build my net worth was by budgeting and investing.  The focus of this blog today is still the same as it was when I began it three years ago, budget and invest.  You can still download a free monthly budget template on this site.  Budgeting allowed me to focus on paying off my debts while also helping me determine how much money I could save in a given month.  This process helped me towards my $250k net worth that I am seeing today.

The final step was focusing on my earning potential.  I switched jobs a couple times, each time to a position that paid me more than the previous.  I also, turned my house purchase into a cash flow positive rental property.  By increasing my earning power and paying off my debts I have now been able to save more than ever before.

Each person’s financial situation is different.  There are plenty of individual’s in their twenties who are worth a lot more than me and there are also plenty that are worth a lot less.  I was once told long ago that you cannot focus on someone else’s earnings and net worth, you have to focus on your own.  After all, only you can control your financial decisions.

Budget Smart, Invest Wise

 

Hakkasan VIP Bar Card Review

When it comes to great night life a city that is always at the top of the list is Las Vegas.  Also known as Sin City, Vegas attracts both the rich along with the average American and tourist.  When it comes to nightlife, very few cities hold a candle for what Las Vegas can offer.  In terms of the club scene, Vegas’ Hakkasan rules them all.  Located inside the MGM Grand Hotel & Casino, the nightclub always attracts top DJs and performers.  I recently traveled to Vegas and knew I had to see what Hakkasan was all about.  To make sure I had the best time possible, I bought a Hakkasan VIP Bar Card.  While promoters can sometimes get you in for free to the club, the Hakkasan VIP Bar Card review that follows will let you know if planning for your trip in advance is well worth the money.

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Photo courtesy of Vegaster

Cost

How much does the Hakkasan VIP Bar Card cost?  It depends.  Depends on what?  The performer, day of the week, etc.  The biggest performers tend to play on Friday and Saturday nights, so you can expect to pay a little bit more during those days.  For ladies, the bar card tends to cost what the bar card costs, which is $100.  For men, the overall cost tends to be either $100 or $115 (Friday’s and Saturday’s).  This cost for men also includes a $100 bar card.

How to Use the Bar Card

The Hakkasan VIP Bar Card is very easy to use.  When you order your bar card online, you will receive a barcode that you show at the door.  This will tell the bouncer what all you receive, in this case admission and a bar card.  You are then handed a physical card that you can use much like a debit or credit card.  It’s important to note that the card is only good for the event you registered for.  If you don’t use the total balance on the card by the end of the night, then you lose out on the remaining value.  If you do use the full amount of the card (which is easy to do considering beers are $10, and mixed drinks start at $17) then you can simply toss the card out.  It is also important to point out that you can not reload the card.  After you have used up the value in its entirety you will have to pay for remaining beverages out of your pocket.

Hakkasan VIP Bar Card Review Conclusion

So now for the final determination, is the Hakkasan VIP Bar Card worth it?  Simply put, yes!  Whether you are male or female the VIP bar card has great benefit.  Firstly, you are in a VIP line and thus aren’t forced to wait in the main line.  You get expedited entry.  Secondly, if you are male, your admission is discounted on what it would be if you didn’t pay for the VIP bar card.  Admission for men can sometimes be as much as $40 just to enter.  Finally, the value of the card is substantial enough for one to enjoy themselves, but not too much where you will have unfinished funds at the end of the night.  So next time you venture to Sin City, take advantage of the Hakkasan VIP bar card.

 

Nick Murray: Simple Wealth, Inevitable Wealth

I got my first “real” job at the age of 23 and could not wait to begin investing.  I knew that if I was going to achieve wealth I had to start young and with my parent’s financial advisor.  Turned out I was wrong.  I only had thousands of dollars to invest, and my FA had clients who had hundreds of thousands, even millions.  I paid fees to the FA, still to this day I’m not sure what they were, that were at least 1%.  I took the advice of my advisor believing they were the “expert”.  Eventually I learned they weren’t.

A friend of mine introduced me to a book that forever changed my life and investment philosophy.  That book was Simple Wealth, Inevitable Wealth, Revised Edition.  In the past four years since being introduced to this book, I have read it many times, bought copies for friends and family, and seen my net worth increase dramatically.  I have the confidence to say that this book alone will allow me to achieve millionaire status before I reach the age of 40.  I am also confident in the fact that this book will help me achieve wealth that I never once dreamed I would have been able to.  I will dive into the three most important aspects I gathered from the book and how they will benefit my wealth creation.

1. INVEST IN STOCKS, NOT BONDS

Most advisors will tell you that you need an appropriate mix of stocks and bonds, especially the older you get.  Why do they tell you this?  Bonds have a lower volatility than stocks, but that lower volatility also means lower returns.  Nick Murray states in his book, “You should be an owner not a loaner”.  A good FA will allow you not to freak out and sell when the market turns south.  By owning stocks and not bonds, you ensure the highest possible return on your portfolio.  After all, the S&P 500 has returned an average of over 10% per year for over the past century.

2. GET A GOOD FINANCIAL ADVISOR, OR CONVINCE YOURSELF NOT TO SELL

Nick’s reasoning for a financial advisor is that he or she will make sure you won’t sell equities when times get rough.  He uses the following example in his book:

“Warren Buffet’s net worth declined over six billion dollars between July 17 and August 31, 1998.  His net worth decreased by six billion in 45 days, but how much did he lose?  The answer is zero.”

Times got tough during those 45 days for equities, but since Warren didn’t sell he didn’t lose.  The natural tendency of people is to sell when the market heads lower and buy when the market goes up.  If you can wrap your head around this philosophy that markets will go down and up, but keep in mind the long-term investing horizon, I say there is no reason for an FA.

3. INVEST CONSTANTLY AND FOR THE LONG TERM

Stocks may not return 10% in the short run, but the best predictor of the future is the past, and over the long-run they should return about 10%.  Invest with a long-term horizon and invest on a constant basis.  Investing on a constant basis means every week, paycheck or month, add to your investments and let compound interest work its magic.

Finally if you get a chance I definetly reccomend that you pick up a copy of Murray’s book. Its available on Amazon for around $20 bucks. Thats a lot, but its definetly worth the investment. Click here to get it.

Budget Smart, Invest Wise

Financial Spring Cleaning

Spring is finally here, regardless of whether it feels like it outside or not.  Around this time of year, many see it as their obligation to go through their homes and rid themselves of unnecessary items that clutter the place up.  The idea that a clean and happy dwelling is a rebirth and a new start.  Why not take this same approach to your finances?

At the start of every calendar year, I always suggest creating a new budget for the upcoming year.  Mapping out your income and expenses presents saving opportunities and fiscal responsibility.  We are now almost three months into the new year and expenses sometimes change.  That is why I always do a financial spring cleaning.  Below are my favorite three ways to do a financial spring cleaning:

Financial Spring Cleaning Tip 1:  This first tip is directly related to a normal spring cleaning of the house people already do.  Go through your closet and determine which clothes you don’t need anymore.  Maybe you have shoes you don’t wear, pants you’ve outgrown, DVD’s you no longer watch because of a Netflix subscription.  Or a lot of cravats and bow ties that are now out of style, or men’s bracelets that you aren’t using any more.

Gather up these items and donate them to a local shelter like The Salvation Army.  Not only will you eliminate these useless items from your place, but you will be giving to those who could benefit from such items.  The best part about all of this is most of the times you can receive a tax deduction for your donations.  This can lead to a higher income tax return for the 2017 year.

Financial Spring Cleaning Tip 2:  Clean out unnecessary clutter in your budget.  For example, maybe at the beginning of the year you signed up for a gym membership you no longer use.  Cancel it.  Go through the various categories in your budget and see if they are relevant to the remainder of the year going forward.  Perhaps you dedicated a portion of your budget to pay off debt, but now you no longer have that debt.  Eliminate that category.  Eliminating categories in your budget makes it simpler and much easier to read and track.

Financial Spring Cleaning Tip 3:  Review the dollar allocations in your budget.  Say at the beginning of the year you were eating out lunch every day, but now you realize the many health benefits and cost savings of bringing your lunch to work.  See if you can slash $30-$50 a month off your food budget.  Shop around for car insurance.  Perhaps you find the same coverage with a different company for $15 less a month.  Eliminating a little bit of money from a few categories adds up and helps boost your savings potential.

Financial spring cleaning allows you to revamp your finances for the remainder of the year.  Even if you haven’t done a good job of sticking to your budget, it is never too late.  A financial spring cleaning can allow you to set up your financial priorities for the remainder of the year and gives you a clear financial conscious heading into the spring and summer months.

Blue Apron Free Trial: Review

Let’s be honest, many of us lack the time or the money to cook unique, cost-efficient meals today.  Whether you are a couple or a family, it is sometimes easiest to just eat out.  Eating out on a regular basis can get very expensive.  I recently received a Blue Apron free trial.  I was eager to try and cook my way through a new and adventurous meal, something I wouldn’t normally eat.

As this was a Blue Apron free trial, I had nothing to lose.  I had three meals delivered right to my door.  All of the packaging was recyclable, and it came with a couple of nice reusable freezer packs.  Here is my experience:

Meal: Chipotle-Glazed Meatloaf

Blue Apron Free Trial: Chipotle-Glazed Meatloaf

What I expected: Blue Apron said the prep time for this meal was just 10 minutes with the cooking time of the meal being between 35-45 minutes.  The card (included in the picture) came with a quick description of the meal along with all of the ingredients for the meal.  Each ingredient listed even came with a picture in case you weren’t sure.  The flip side of the card came with step by step instructions on how to prepare the meal and also some pictures to assist you along the way.  I laid out all of the ingredients on top of my counter along with the card and began.

The Good:  You have all of the ingredients you need to create a unique dish.  If you tried to go to the grocery store and buy all of the necessary items to create something similar, you would spend way more than $10/meal.  All of the items looked fresh and appeared top notch.  Everything from the beef, to the potatoes, to the garlic looked like it had been prepared just mere days before.  Finally, Blue Apron also pairs each of the dishes with a wine.

The Bad:  While the meal card said the prep time was just 10 minutes, this was not the case.  It took me about double that time to prepare the meal.  The only way someone could have done the prep in 10 minutes is if they were highly experienced in the kitchen or if they had prepared this meal before.  The meal also lacked a side of vegetables.  While this might seem quite minor in the details, some healthy vegetables to go along with this meal would have made it complete.  I ended up cooking some green beans to go along with the meat and potatoes.  You also needed some cooking experience to help guide you through.  I don’t believe these meals are for the complete rookie.  For instance, you had to mince garlic, slice potatoes, and needed a few kitchen accessories to complete the meal.

Chipotle-Glazed Meatloaf Dish

Conclusion

Ultimately my Blue Apron free trial was a success.  I was able to create a delicious, unique meal all by myself.  At just around $10/meal, it is also a great value because the same ingredients would cost much more if you purchased them at the store.  Downsides would be that it requires some basic kitchen knowledge and elementary kitchen items.  This meal service is great for a couple who enjoys cooking together and wants to spend some time create different dishes and bonding over the experience.

Are you interested in Blue Apron? Get $30 off your first week using this link.

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