Friday 27 October 2017

Budget Reboot Challenge: Good Ol' Fashion H20

Hello Budget Reboot, have you tried turning it off and on again?

Money saving posts are always the same - stop doing this, stop buying that, stop having any fun and live a sad deprived life while watching the numbers in your bank account tick up and up. Of course, they don't frame it that way, but when someone asks you to give up something you love in the name of money, we get pretty defensive.

Instead of 'giving up' let's try something new. Hit the refresh button on your spending habits with this Budget Reboot Challenge.

This month's challenge: Replacing all your bad habits with a glass of water

Did you try last months Budget Reboot Challenge: Fast Fashion?
Asking you to replace a bad habit with a glass of water sounds like a joke, and not a funny one at that. However there are plenty of things to consider, starting from the mundane to the obscure.

Firstly you can replace expensive drinks with water. Sweet teas, fruit juices, soft drinks, and especially energy drinks add up to hundreds of dollars marching out of your wallet each year. However water (and I'm talking about water from the tap, not expensive bottled water) is just a few cents per kilolitre.

Replacing habits with water

If you are tired and need a pick me up it's easy to reach for a coffee, an energy drink or something sugary to try and spike your energy. But if you are dehydrated you'll only experience a small rush, followed by feeling even worse than before. If you are dehydrated a couple of glasses of water will be a better pick me up than an energy drink.

More than replacing drinks with drinks, you can reduce other expensive unhealthy habits as well. If your dehydrated, your brain will send hunger signals. Rather than buying an expensive packet of chips from the vending machine, first have a glass of water.

To truly stretch this experiment - can water help you quit smoking? Maybe. If you're smoking is an excuse to walk away from your desk and go outside, consider swapping one cigarette a day for a glass of water. It may satisfy that need to step outside, to fidget with something, to have a break.

Reducing needs by drinking enough

There are other things that are indirectly connected to how well hydrated you are that are costing money on a daily basis.

I have three different moisturizer tubs - one on my work desk, one in my bag, and one in the bathroom. Despite this I have been dealing with dry cracked hands for more than three months. The moisturizer is covering up the symptoms, but the cause is that I am dehydrated.

Just as I carry two lip balms around - instead, I could be carrying around a bottle of water.

Lastly, I very rarely take painkillers for headaches. For small pains I drink a glass of water and go on with my day. For bigger aches I have a couple of glasses and a nap. Only when the pain is bad enough that I can't nap I take painkillers. I only need to use painkillers once or twice a year - in most cases an extra glass of water solves the problem.
Click to embiggen!

Turn it off and on again: Bad Habits vs. Water

The point of the Budget Reboot Challenge isn't to force you to change your ways, but to commit to something for a set period and see what it's really like. Turn off snacking, smoking, your moisturizer reliance, and turn on water instead, and at the end of your commitment, ask yourself if you really need to add that habit back in again?

How long can you replace a habit with a glass of water? One Week? One Month? One Year? How much can you save doing it?

I can commit to drinking two litres of water a day for a month!

At the end of that; well to be honest this is a habit I'll probably keep. I have been using a lot of moisturizer as my hands have been extremely dry and scaly. In the last week drinking two litres of water a day I've already noticed an improvement. I'm hoping that by simply drinking more water, I can stop moisturizing every day.

Whatever you're replacing with water, ask yourself at the end of the month:

Do I need my old habit?
Do I feel healthier?
Did I save money?

Budget Reboot September, how did you go?

Back in September I asked you to try buying less clothes, or even none! I committed to buying nothing, except for one costume. And I have to say, I failed. Wondering what I bought? What super exciting item was it that ruined my plans. What glitzy, glamour piece caught my eye? Nothing exciting, I bought socks... wheee!

Total cost of socks? $8 which I will wear until the holes are so big they don't stay on my feet.


Tuesday 17 October 2017

Miniature Homesteading: I got worms!

I dream of a home in the country, with sprawling green meadows filled with cows. A dog or two sprawled at my feet and hens clucking in the distance while I drink fresh coffee with a dash of today's milk. I picture an orchard with every kind of fruit tree, with my hens running and digging under the trees. I dream of a wide open space where I can walk the dogs for an hour without leaving my own land. In my mind we have our own pond for fishing, and a creek full of frogs that dries up in summer leaving behind a bed of washed pebbles.

But right now I live in the suburbs on a teeny tiny 140m2 block. This doesn't mean I've put my homesteading dreams on hold.
Day one - 50grams of foam, 50grams
of mealworms, and the wheat bran
they were packaged with

I got worms, they're multiplying!

I read an article recently that said mealworms could digest styrofoam and turn it into usable fertiliser. This coincided nicely with realising that I'd love to have quail, but most commercial feeds don't high a high enough percentage of protein so I'd need to supplement their diet.

Of course, considering I already have chickens, getting another kind of poultry on my tiny property is probably a bad idea. Impulsively buying a half dozen quail would have been a bad idea, but impulsively buying a batch of mealworms was great!

Set up and start up costs

Foam is delicious!
Back in September I started with one small five liter container ($3), 50 grams of foam (free) and a double handful of rolled oats ('free' from my pantry). I bought 50 grams of mealworms ($8) and set them loose in their new home. 

I very quickly found myself having foam donated by my zero-waste friends, and discovered the meal worms will eat husks from bird seed and unpopped popcorn. For the first month of feeding I've spent $3 to purchase a back-up bag of oats so they aren't living entirely on foam. I've also started washing foam trays from meat packaging as another free food source.

Turns out 50 grams of mealworms don't eat much, but they grow super quickly. I've already split them into three new containers to prevent overcrowding, and I spotted my first couple of beetles yesterday!

Wait, beetles, I thought they were worms?

Meal worms aren't actually worms, they are the larval stage of Darkling Beetles (Tenebrio molitor specifically, for the latin buffs). After hatching mealworms take about three months to grow to their full size, when they then pupate. Kind of like cocooning,  meal worms become dormant for a few weeks while they transform into beetles. Approximately two weeks after becoming beetles they start laying eggs. Each female Darkling Beetle lays more than 500 eggs in its lifetime. In warm weather this entire process speeds up.

One month in - big fat worms!
So what does this mean in short? I bought 50 grams of meal worms. They've started turning into beetles so in a couple of weeks I will have 50 grams of beetles, which (if I ask google) will be close to 200 beetles. Given six months to complete a full life cycle, my 200 beetles will lay 100,000 eggs leading to (if my maths is right, and 100% of the eggs hatch) close to 25kg of beetles. In one life cycle!

Realistically this won't happen, because meal worms will prevent overpopulation by, well to put it bluntly, cannibalism. And because nature isn't perfect, so there is no way 200 mealworms will all reach adulthood and have 100% success rate their eggs hatching. Oh, and half the beetles are male and they won't lay eggs ;) However since I will be running at least 4 tubs of meal worms, I expect to end up with a couple of kilograms a month.

Cashed up with bugs

Because this is a personal finance blog, it would be remiss of me not to considering the financial benefits of these little guys. 

All the pupae slowly growing
into beetles
I purchased 50 grams of meal worms for $8. If I can find buyers for my meal worms, I can sell roughly a kilogram a month without depleting my stock. Of course, I will be selling them cheaper than a pet store (to encourage people to drive to my house, rather than a convenient pet store) so I expect I could sell a kilogram for $100, or 50 grams for $5.

Outside of the pet food market, there is also the possibility of selling them for fishing bait, or as recyclers for anyone interested in reducing their waste output - what other creature do you know that can break down Styrofoam?

Worst case scenario? I'm out $11 of supplies, plus approximately $3 a quarter for food. In return I receive an endless supply of chicken treats for my girls, high quality fertiliser and creepy crawly entertainment.

Getting rich while I sleep?  

I might not become horribly wealthy selling meal worms. If I'm lucky I'll cultivate enough regular customers to bring in a little extra money each month. While I don't plan to retire on my insect empire, I look forward to knowing that I have an asset growing in a few storage tubs, literally while I sleep.

I recently swore off side-hustles that take hours of my time and return little money, and even less enjoyment. So far my meal worm colonies haven't made a cent, but they have provided plenty of entertainment for me and my cat, grossed out my friends, fertilised my blueberries, and let me be insufferably smug about my ability to recycle polystyrene.

And in the event of a worldwide crisis (read, Zombie Apocalypse), perhaps people will start wanting mealworms for their own dinner. I should probably wean them of the Styrofoam first though.


Tuesday 10 October 2017

DRP drip your way to riches

Investing can be tricky, daunting and just plain hard. In many cases the struggle doesn't end when you finally buy an investment, because then you need to manage it. You watch the value of stocks, make sure rentals have a good tenant and deal with the constantly changing value and cashflow.

One way to get the most out of your investments with minimal effort is with a Dividend Reinvestment Plan (DRP)

When I was working in a fast food store, and studying at university I wanted to buy an investment property (over achiever!), but I didn't have the money or the income. Instead I sat down and started buying investment bonds. My first purchase was Primary Healthcare Limited (ASX code: PRY) . For $2,000 I bought 20 Bonds, which at the time were returning more than 7% p/a.

I held these for a little over three years, where they paid dividends quarterly like clockwork before the bonds were redeemed and my initial investment returned. In three years I made $420. As my first investing venture this was pretty amazing! In those three years I bought Bonds with other companies, and ended up with a portfolio of $20,000.

This would be a great success story. Except... I have no idea what happened to those dividends.

The final resting place of the under-utilised dividends

While I've moved away from Bonds and into investing through Vanguard, RateSetter and Acorns, I once has a collection of bonds paying roughly $200 quarter. As a less than 20 year old, this is an amazing amount of money being brought in from a completely passive investment. However, I didn't reinvest it, and it never grew. 

Payments were made quarterly into my bank account and absorbed into my every day spending. The problem with corporate bonds such as the ones I was investing in is that they have no automated reinvestment schemes - the only option for dividends is to have them paid directly into your bank account.

While it's wonderful seeing money come into you account every three months, it's hard to partition out such small amounts.

Dividend Reinvestment Plans

When investigating new investment now, I have a few things I check, but one absolute necessity is stress free reinvestment. I don't have the time or energy to watch my investments and make sure that when I am paid $11.17 (or some other obscure amount) that I portion out that money into a new investment. It's far too easy for that money to disappear into my every day spending, and it's really hard to find an investment that let's you make such small contributions.

The majority of stocks that pay dividends allow you to enroll in a Dividend Reinvestment Plan - commonly written as 'DRP'. I love these plans for a few reasons, but mostly because I'm a lazy investor and want to do as little work as possible to earn my money.

How it works

Dividend Reinvestment Plans are super simple. To sign up you fill out a couple of online forms that takes less than five minutes. Once these are completed, rather than receiving cash dividends, your money is automatically reinvestment in the company. Without even lifting a finger, you receive more and more shares of a company each quarter. The only involvement you have is reading the statements and feeling smug about your good choices.

Discounted purchases

One of the companies I own shares in (from before I learned about Vanguard and bought individual stocks) has just announced their quarterly dividends. For everyone enrolled in the DRP they are offering a 3.5% discount on the share price. Put simply, the shares are currently worth $2.10 each, but I'll be buying new ones with my dividend for $2.02. If I was to sell them immediately, I would make 18c on each share - which is great considering the dividend they are paying is only 4c per share. 

Of course, if I wanted to sell these new shares, I'd need to pay brokerage.

No brokerage fees

One of the biggest kicks in the teeth when buying shares is the brokerage fees. When I was investing, the cheapest fees I could find was $30 a transaction. Absolute madness! When buying $3,000 worth of shares, I would immediately be behind 1% because of the transaction costs. There are new systems available that only charge $6 a transaction, which is much better, but still a fee I'd like to avoid. With a dividend reinvestment plan, you don't pay brokerage - which is money back in my pocket. 

Automation

I am such a millennial - my favourite part of DRP's is that they're automatic. I am lazy. Whenever I have to think and plan, I get tired and I want to nap instead. I have a finite amount of brain function each day, and I love doing absolutely nothing to recharge.

Having a completely automatic reinvestment plan is great.

DRiPping my way to riches

Dividend Reinvestment Plans are amazing for the lazy investor, because they create a set and forget path to wealth. The quarterly distributions remind you that you own a piece of a company and should keep an eye on it just in case, but otherwise there is nothing to do. Historically some of the most successful investors have been the ones who simply forgot they had investments, and uncovered them years later.


Tuesday 3 October 2017

The Year of Investing - September 2017

September went so well I set myself an investing stretch goal! It may have been a quiet month on the blogging from, but the weather has turned wonderful, my accounts are trending steadily upwards and life feels good.

A quick 2023 check-in

I have been away for a tumultuous 12 months. I made a lot of changes. I changed career, I removed my birth control, and I very nearly ended...