Turn Your Alcohol Budget Into Investment Gains

Turn Your Alcohol Budget Into Investment Gains

I used to have the mindset that retirement was something I didn't have to worry about until after I got my first 'real' job. You know, when you get that job that you consider an adult job that makes everything simple because you'd be making a ton and paying off student loans while saving for retirement - no problem!

Well I didn't land that adult job until I was in my upper 20's. I went to grad school twice, and was in that gray area where I had jobs but didn't think I had crossed that magic threshold somehow into adult job land. (Side note: Adult job land sounds like the name of a porn staffing company website).

So could I have been saving for retirement all along? Of course! I was living modestly, except for my entertainment budget. I would eat tuna and ramen noodles, then go drop $40 at happy hour once a week. Then, between eating out and my bar tab, I'd spend another $60 each weekend. That's $400 a month out the window!

Let's see what could have been different if I had invested that money instead. I'll try this two different ways. Since I got my first job with benefits in 2008 I could consider that my first adult job and calculate from there. But investing from 2008 to 2015 wouldn't be a typical period in the market since in hindsight that would be the perfect time to start investing right after the financial crash. So I'll calculate my "invest your bar tab" experiment with historical returns and with typical returns. (Here's a really nice Compound Interest Calculator).

Initial investment: $400
Regular investment: $400/month
Compounded: Annually
Start date: 08-08-2008

Ok, starting with no principal chunk of change, just saving my bar money every month, let's see how things would shake out.

After 15 years with a 5% annual rate of return, my investment would be worth $107,192.98

With a 7% rate of return, it would be $126,249.13.

The actual historic Annualized Growth Rates for the S&P 500 (from the calculator on MeasuringWorth.com) for the period August 8, 2008 to December 2015 we're looking at about 6.85%, so my estimates are in the right ballpark. Of course, nobody knows what the returns will be in the next few years.

You can see that the bulk of the money is coming from the simple act of disciplined saving, but the interest does really start to add up after a while!

Putting away $400 a month with 6.85% annual return after 15 years

I chose to show 15 years because I think it's easier to imagine what you might be doing in 15 years rather than when you're about to retire. This same $400 a month carried out over a career of 42 working years would be a whopping $669,666.13 even with a pessimistic 5% return.

I'm Hooked, Facebook Pay Is Amazing

I'm Hooked, Facebook Pay Is Amazing

I've been waiting for the day when I could conveniently (this part is important) pay friends back in exact change instantly. Sure, PNC has had it's POP pay feature for a while, but my friends would have to open an email and register through a website just to accept the money. Then if they wanted to pay me back, they probably had a different bank or something and it was annoying.

Then Snapchat added SnapCash and everybody thought it would change the way people pay each other back. But my friends are in their 30's and only downloaded Snapchat as a novelty to see what the college kids were raving about. And I don't know any college kids who actually use the SnapCash feature.

Now Facebook Pay is here, and I was instantly skeptical. Would I have to enter my bank and routing number and all that, and then have my friends open an email and register? I tested it out by sending my friend Kenny $1. All I had to use was my debit card. It was so simple! I was hooked. We started Facebook paying each other back and forth for little things. Sure there is a 2 day delay in actually receiving the funds in your account, but at least you can settle up instantly.

I introduced my brother to it and split a carryout order with him by paying him back. He was instantly hooked too. We talked about what college would have been like if we had the ability to instantly pay people back exactly what we owed them. Imagine how hard it would have been for that mooch friend to say "ooh, I'll get you back next week" or you buy my $11 movie ticket and I'll buy you a $4 soda -- even right?

The Best Compound Interest Calculator Widget Online

The Best Compound Interest Calculator Widget Online

Ok, this is pretty sad to admit, but I didn't know what compound interest was until about 3 years ago. I knew what interest was (that $0.02 addition to my savings account every month), but I didn't understand the power of compounding interest over time. I'm pretty sure my brother still doesn't know what it means, because he told me it didn't apply to stocks.

I think this might be a similar issue with millennials overall, or anyone who got their first 'real' job during or after the recession. I only have a vague memory of the time when savings accounts gave more than 1% APY. And I owned a mutual fund in the late 90's that basically did nothing, until I cashed it in for a 10-speed mountain bike (which seemed much more important at the time).

I'm sure I'll devote much more time to compound interest in the future, but for right now I wanted to share the best compound interest calculator widget I've come across on the internet. I was even thinking about buying a subscription just to embed it on my own site. It's very simple to use and doesn't just spit out a balance, it shows the balance over time in both a graph and a table.

Head over to CalculateStuff.com to check it out!

Peer Pressure is a Tide, Not a Bully

Peer Pressure is a Tide, Not a Bully

When I was in middle school my teachers told me my friends would try to blackmail me into drinking. They called it “peer pressure” and told me to beware the horrible consequences. “Drink this beer or I won’t be friends with you.” I waited for my friends to hold our friendship hostage in exchange for getting me hopelessly addicted to alcohol. But it never happened. What gives?

In real life, peer pressure is sneaky. It’s nothing as obvious as an ultimatum, a bribe, or an older kid in a leather jacket. Studies in psychology reveal that we have a strong subconscious desire to fit in, to seek social approval, and to mirror the behavior of people with high social status. Peer pressure isn’t a fork in the road, it’s a tide gently pulling you and everyone around you toward the most influential group. Peer pressure isn’t your friends out to get you, it’s falling asleep on a raft and waking up a mile from shore – sometimes you don’t even notice the change until you look back to where you started.

When it comes to alcohol, things get a little trickier. Social desirability isn’t only based on majority rules – if that were the case, high risk drinkers would feel the pressure to cut back in order to match the vast majority of students who drink more sensibly. Furthermore, because students tend to over-estimate the amount the typical student drinks, there is a social pressure to drink more in order to fit into this imaginary majority of heavy drinkers. Combine this false perception with the alcohol industry’s multi-billion dollar marketing campaign and it’s easy to see just how strong this invisible force can be.

Invest Your Bar Tab, A Self-Improvement Mindset

Invest Your Bar Tab, A Self-Improvement Mindset

Invest Your Bar Tab is a sort of over-simplified mantra for self-improvement that touches on a lot of important areas, and generally has to do with self-control, humility, motivation, and financial literacy.

It's a mindset. It's a personal philosophy. These 4 words are a simple and memorable way to frame your choices, and re-evaluate your entitlements, unproductive behaviors, and ignorance.

I spent my early 20's living it up like a rockstar, taking spontaneous trips to Boston and Los Angeles, buying rounds of drinks for my friends, or pizzas for an entire party. I loved the attention, and embraced the you-only-live-once lifestyle (although the term YOLO didn't exist yet). I fell into the middle class consumer trap, I believed I needed these things, or even that I somehow deserved them. I bought a new TV, Playstation, drumset, a dozen tattoos, and lived in a 3 bedroom townhouse by myself.

I figured when I got a 'real' job, I'd have plenty to pay it all back. I graduated with a master's degree and expected a job to fall into my lap, and when that didn't happen, I racked up $19,000 on personal credit cards.

The point of this post isn't to make myself into a martyr, but to provide some context about why this stuff is so important to me. It's more than one of those "if I knew then what I know now" posts. There is an entire culture of bad advice out there. I've seen so many blog posts encouraging recent college grads to spend their student loan money on a trip to Europe, or videos trying to convince us that the only way to live a good life is through music festivals and VIP rooms. It's all a sham!

I hate to break it to you, but the secret to a happy life isn't a secret at all. Eat a balanced diet, save your money, work hard (but not too hard) and relax in moderation. 

Ok, so the rest of this blog will probably be a lot less personal, and hopefully more informative - but sometimes I get pumped up, and I might jump in with an occasional rant like this. Thanks for visiting, and if you disagree with everything I'm saying I'm more than happy to discuss in the comment section.

List of Investment Options Available in the Stash App

List of Investment Options Available in the Stash App

This post isn't a formal review of the Stash Invest app (aka simply "Stash"), but in brief I'll say the app features the ability to invest in mostly ETFs with as little as $5. It allows you to buy partial shares of a handful of investment products - so you get to specify the dollar amount you want to invest, rather than being limited to the price per share of the actual fund.

There are no trading fees, but they do charge $1 per month (taken from your bank account, not from your investments) for accounts with less than $5000 invested. Above $5K they'll start taking 0.25%. Very reasonable, and if you make more than 1 trade a year, you could end up saving money compared to other companies that charge between $5-$10 per trade. This makes it easy to keep adding small amounts of money as you wish, rather than saving up to make your expensive trade worthwhile.

So I mentioned there are a handful of investment products to choose from in the app. They are all given catchy names and plain English descriptions - but sometimes I find myself just wanting to browse the underlying funds themselves. A couple of them I already owned in my Roth IRA and didn't realize it because the more descriptive name didn't sound much like what the actual fund description had.

So, here is a list of the funds that match up to each of the more millennial-friendly names that you see in the app.

Stash Name	Real Name	Ticker Symbol	Expense Ratio**
Do the Right Thing	iShares MSCI USA ESG Select Scl Indx Fnd	KLD	0.50%
Home Sweet Home	SPDR S&P Homebuilders ETF	XHB	0.35%
Data Defenders	First Trust NASDAQ CEA Cybersecurity ETF	CIBR	0.60%
Clean & Green	iShares S&P Global Clean Energy Index Fd	ICLN	0.47%
Defending America	iShares U.S. Aerospace & Defense ETF	ITA	0.43%
Live Long & Prosper	Health Care Select Sector SPDR Fund	XLV	0.15%
Small but Mighty	Vanguard Small-Cap ETF	VB	0.09%
Water the World	PowerShares Water Resources ETF	PHO	0.62%
Robots Rising	Global Robotics and Automation Index ETF	ROBO	0.95%
Equality Works	Workplace Equality ETF	EQLT	0.75%
Slow & Steady	PowerShares S&P 500 Low Volatility	SPLV	0.25%
Park my Cash	PIMCO Enhanced Short Maturity Active ETF	MINT	0.35%
Moderate Mix	iShares S&P Moderate Allocation Fund ETF	AOM	0.29%
Copy the Experts	Global X Guru Index ETF	GURU	0.75%
Roll with Buffett*	Berkshire Hathaway Inc. Class B	BRK.B	--
Aggressive Mix	iShares Core Growth Allocation ETF	AOR	0.30%
Conservative Mix	iShares Core Conservative Allocation ETF	AOK	0.28%
Delicious Dividends	Schwab U.S. Dividend Equity ETF	SCHD	0.07%
Blue Chips	Vanguard Mega Cap ETF	MGC	0.11%
Internet Titans	First Trust DJ Internet Index Fund (ETF)	FDN	0.57%
Enjoy Yourself	PowerShares Dynamic Leisure and Entertainment Portfolio	PEJ	0.63%
American Innovators	Vanguard Information Technology ETF	VGT	0.12%
On Cloud Nine	First Trust ISE Cloud Computing Index Fund	SKYY	0.60%
Wireless Wonders	Vanguard Telecommunication Services ETF	VOX	0.12%
Retail Therapy	SPDR S&P Retail ETF	XRT	0.35%
Social Media Mania	Global X Social Media Index ETF	SOCL	0.65%
Money Machines	Vanguard Financials ETF	VFH	0.12%
Global Citizen	Vanguard Total World Stock ETF	VT	0.18%

* The only individual stock available to purchase through Stash at this time
** Expense ratio as of 11/20/2015