August 19, 2011

Payday Challenge #6: Get Minted

Save by Thomas Hawk
source: James Broad

According the country’s leading expert on wealthy households, Thomas J. Stanley, about 80 percent of the top 5 percent of wealthy households (about $1.5 million in net worth) are first-generation affluent. Meaning these households did not inherit any significant portion of their wealth. It was accumulated typically by investing in their own private businesses or the stock of publicly traded companies. How were millionaires able to allocate enough funds to investments that would allow them to become wealthy?

Millionaires (and those likely to become millioniaires) live on a budget.

For every 100 millionaires who do not budget, there are 120 who do have a budget. According to Stanley via his book The Millionaire Next Door, those who do not use an official budget, “create an artificial economic environment of scarcity for themselves and the members of their household”. (In other words, they adhere to an imaginary budget.) The millionaire non-budgeters employ the “pay-yourself-first” strategy. And both the millionaire budgeters and non-budgeters save at a minimum of 15% of their gross income and did so even before they were wealthy. Thus, the reason they became wealthy in the first place.

So you might think Payday Challenge #6 is create a budget. It isn’t. (But I’m giving myself away regarding a future PDC.) Instead it’s about setting you up with a tool to make budgeting easy. Payday Challenge #6 is “Get Minted”. is a financial aggregator and budgeting site owned by Intuit, Inc. makers of Quicken and Quickbooks. Although there are plenty of aggregators out there and many work well, I like Mint because a) it’s free, b) it offers a mobile app, also free and c) it offers tools many others do not. For instance, Mint allows users to compare their budgets and spending habits to the typical habits of its other nearly 3 million registered users by city, region, age and other demographic factors. Additionally, since Mint is a part of the Intuit family, its privacy and security measures are tops in the industry. All your information is encrypted.

I want you to use Mint and get familiar with it now because it is one of the best budgeting tools I have seen. You may be someone who has seen budgeting as a waste of time. Hopefully the information regarding millionaires’ budgeting habits will change your mind. Or perhaps you’ve tried to do it, but have not displayed the mental stamina to keep up with it. This tool, addresses both those dilemmas. After you have connected your financial accounts to the Mint website, you’re up and running in seconds.

Then there are those of you who are fastidious budgeters and are unwilling to change your system. “If it ain’t broke don’t fix it”. My parents, more specifically my mother (Yes, I’m calling you out ma!), fit this category. You may recall I wrote of them:

…on a teacher’s and painting contractor’s income, they have been able to save and invest where their capital will kick off enough income in retirement as they earned when they were working. They live modestly but do not need to. They could actually increase their lifestyle substantially if they wanted, but are satisfied making cookies with my daughters, their grandchildren, and going on the occasional vacation.

My parents have an elaborate paper system of shoe boxes, binders, check books, hand-written spreadsheets and envelopes that make up their budget. With such an elaborate system, it takes them and hour to account for a $5 purchase at the corner bagel shop. If my parents were to use Mint, it would essentially perform all those financial gyrations for them in the blink of an eye. Alas, I have not been able to convince my parents to “fix what ain’t broke” by adopting Mint. While their paper system gives them a sense of control over their budget, it is hardly efficient.

While I urge you to follow my parents’ example (and the example of the typical millionaire household) by actually having and following a budget, do not follow their lead regarding their system. Get Minted instead.


"Volatile Stocks to Leave Lasting Scars on Fund Investors’ Psyche" by Laura Keeley; Bloomberg

Cash holdings are at the highest levels since the record in March 2009... The average investor tends to hold large amounts of cash when the markets are at a low and thus miss out on gains, JPMorgan’s Andrew Goldberg said. The previous high of cash as a percentage of portfolios was in October 2002, right before the start of a five-year bull market.


Two year chart of Coach (COH) vs. the iShares S&P 500 ETF (IVV)

Coach Declares Quarterly Cash Dividend , source: Coach, Inc.

"Coach falls on worries rich will slow spending" by AP; Businessweek


"Myth-Busting the Black Marriage 'Crisis'" by Jenée Desmond-Harris; The Root

"World of Class Warfare - Warren Buffett vs. Wealthy Conservatives" by The Daily Show with Jon Stewart

 Subscribe: Email | Reader | RSS | | Email this Email | Print This Print

August 12, 2011

PDC #5: Change Your Own Oil, Earn $400,000

A favorite Benjamin Franklin axiom is “Small strokes fell great oaks”. Meaning small actions, done over and over again over a long period of time, can have a meaningful and substantial impact. This is certainly the case when it comes to personal finances. Small savings here and there add up, or I should say, compound up.

One of the things I feel anyone can do to save a few bucks, here and there, over a long period is to change your own oil. It’s really a simple thing to do once you learn how. So today’s Payday Challenge is to change your own oil.

Before I get into the financial benefit of changing your own oil, let me address the most common argument against doing it: time. The common belief is going to get your oil changed at a quick lube place or a local service station saves time. Really? ‘Cause that is simply not my experience. The closest quick lube is a few miles from my house. The ride alone takes 10-15 minutes and that’s if I don’t catch any red lights on the way. Once there, for some reason the “10 minute oil change” advertised on the side of the building never seems to pan out. There’s typically a line and by the time the technicians have finished upselling me on some “Executive Service” of wiper-blade changes and new fuzzy dice for my rear view mirror, I’ve been there a half hour or more. When I have finally returned home, I’ve spent nearly an hour of my day.

A semi-experienced do-it-yourselfer however can change her own oil in 5 and certainly no more than 10 minutes without ever leaving her driveway. Now, that 45 to 60 minutes spent going to and from the quick lube spot may be worth it not to have to get a little dirty. But there’s always soap and water to remedy that situation.

Time savings aside, there is a real money savings to changing your own oil. The way I figure it, a regular oil change, with no added services typically costs about $40 in my area. On the other hand, I can purchase a 5-liter jug of Castrol High Mileage for $25 and change the oil myself. Now a $15 savings may hardly seem worth it. I mean 15 bucks barely buys a large buttered popcorn and small Diet Coke at the movies. But if you were to forego the movie popcorn and instead place the savings in a well-invested portfolio of stocks, it would make a hearty difference in your wealth over the long haul.

How long do you plan on being a driver? For most people, it’s at least 50 years. If you were to change your oil 4 times per year, invest the $15 savings in a general stock mutual fund (which return about 11% historically), at the end of your driving life, you’d have saved over $100,000. That’s the price of two or three luxury-ish cars over that period. If you were lucky enough to find an advisor or fund able to get you returns in the 15% annualized range (not unheard of), you’d have saved about $433,000 over your driving life.

Would you be willing to get a little dirt under your nails for $400,000?

Yes, fifty years is a long time. But that misses the point. Small savings, in several areas of your life, whether it be changing your oil, reducing the minutes on your cell phone, clipping coupons, foregoing a night out drinking or whatever - small changes over time mean a lot and when added together can amount to substantial savings in relatively short order. Imagine you could find 10 other cost saving actions of equal measure. Now we’re talking $4 million. Nothing to sneeze at.


"Why I'm Still Buying Stocks" by Knight Kiplinger, Editor in Chief, Kiplinger publications


Forest Laboratories Sends Open Letter to Shareholders

"Forest Labs: Proxy Firm Backs Its Entire Board Slate" by Wall Street Journal

"Forest Labs CEO Won’t Be Barred on U.S. Government Contracts, Company Says" by Jef Feeley; Bloomberg


"Sesame Workshop: Bert And Ernie Just Friends, Have No Sexual Orientation" by Eyder Peralta; NPR

"How Obama Can Win The Fall" by Andrew Sullivan; The Daily Beast

"Whatever You Do, Don't Buy an Airline Ticket On …" by Scott McCartney; Wall Street Journal

 Subscribe: Email | Reader | RSS | | Email this Email | Print This Print

February 11, 2011

Payday Challenge #4: Know Your Number

Ormon calculator by faasdant
source: faasdant

Aren’t you curious about where you stand? Whether you got a B+ on the test? Or maybe this time it was an A. Aren’t you the wee bit interested in knowing if your few weeks on the P90X program has budged the needle on the scale? I bet you can’t wait until the spring when you’ll find out if your tomato garden will grow taller than your neighbor's this year because of the new ingredient you added to your fertilizer the autumn before. Is it not informative to know if your blood pressure is in the high, normal or low zones? Of course it is.

Comparative analysis is a great tool. And when it comes to your finances it is no different. Most of us are, and if we’re not we should be, curious to know if our daily financial happenings are moving us closer to financial independence or further away? Well that’s what Payday Challenge #4 is all about - “Know Your Number”. I posted a PC on Twitter and Facebook a few weeks back of similar ilk,

Payday Challenge #4: Know ur numbers. 3-parts. 1) $$ for financial independence, 2) ur savings rate, 3) the return...

We’ll get to those numbers later, but for now I am remixing that PC. The “Number” we’re concentrating on today is where each of us should stand in terms of wealth given our age and household income. I gave you the formula in the last post, “Your Wealth Ratio”. In case you missed it here it is again:

The Brick Wealth Ratio© = [(Age * Age) / (22 * (100 – Age))] * Income

If you’re math phobic don’t fret. I’ve also provided a calculator that can also be found in the previous post. All you need to do is plug in your age and income and presto, it spits out whether you have been good, bad or just plain ugly (Mom always says, “No one is ugly.”) at accumulating wealth.

But that’s not all I want you to do. The second part of the challenge is to share your results with me. Privately of course. (I am bound by privacy laws.) Are you a BA/PAW? If so, how did you do it? I want to learn from you. Was/is it diligent saving? An unexpected inheritance? What? Maybe you’re an IA/UAW. Even if you are, I still want you to share your results. Let me know why you think you might not be doing as well as you could. Do you have a plan to improve? Let me know what it is. I want to learn from you as well.

And I’d like to share, those of you who allow me, your story with others as well. Anonymously of course (Again, I am bound by privacy laws). Let’s all learn from each other. Just email me at and in your own words let me know about your financial successes and your financial hiccups. I may write a future post, with names, dates and specifics appropriately altered, with lessons learned from what you tell me. Maybe some of you might share one great tip or two which can posted on Twitter or Facebook. My vision is that everyone can be better off financially. What better way to learn from each others’ “goods, bads and uglies”.

But a few ground rules should be presented:

  1. If you do decide to share, all I really need to know is what category on the Brick Wealth Ratio you fall into – IA/UAW, AAW or BA/PAW - and how you got there. Minute details are unnecessary for me or the rest of us to learn from one another.

  2. When calculating your net worth figure, anything inside your house doesn’t count as an asset. No furniture, no jewelry, not even your car. Personal financial assets, business assets and real estate are all that count, however,

  3. ALL your liabilities count. For instance, although your car doesn’t count as an asset, the debt on that car does.

  4. If your income has greatly fluctuated over the last few years, use the average of say the last three.

That’s it. Payday Challenge #4 - Know Your Number and share your story.

 Subscribe: Email | Reader | RSS | | Email this Email | Print This Print

November 05, 2010

Payday Challenge #3: Get Drunk For Cheap

Wine Shop by Paul Goyett
source: Paul Goyette

Most of us get a cash infusion into our bank account every other Friday and promptly do things with our money that are ill-advised. At least for those of us who’d like to be financially independent one day. But so many of us feel to do anything other than spend our money like it will self destruct in seconds if we don’t, makes us the 21st century version of Scrooge. Very few of us realize there is a vast difference between frugal and cheap. Frugal will eventually make you rich. Cheap will have the ghosts of Christmas Past, Present and Future visiting you in the middle of the night.

So few of us understand the power of thrift, saving and investing for the rainy (or even the sunny) day. Having “it” now is the only thing most of us know. Waiting for the proverbial “it” is simply boring and most of us are unwilling to be bored even if in the long (sometimes not so long) run we are far better off. The truth is getting wealthy is not boring. And the art of wealth getting has always been earn, conserve, invest, repeat. Heck, Benjamin Franklin wrote of the same formula in The Way to Wealth about 250 years ago in one issue of Poor Richard’s Almanac:

"If you would be wealthy, says (Poor Richard), think of saving as well as of getting: the Indies have not made Spain rich, because her outgoes are greater than her incomes. Away then with your expensive follies, and you will not have so much cause to complain of hard times, heavy taxes, and chargeable families; for, as Poor Dick says, 'Women and wine, game and deceit, Make the wealth small, and the wants great'."

What Benjamin Franklin, through Poor Richard, espoused was simply living frugally and investing the difference. Does living frugally equate to living like a pauper? Nothing could be further from the truth. Some of us just need a little education, need a little information, for us to understand we can enjoy ourselves without disturbing the “way to wealth” formula. We can actually have a little fun in the process. So a couple of weeks ago I starting posting a Payday Challenge on Twitter (link) with the goal of informing about saving and investing with the hope we might all be able to see the process of wealth getting can be fun along the way.

The first two Payday Challenges on Twitter were:

Continue reading "Payday Challenge #3: Get Drunk For Cheap" »

 Subscribe: Email | Reader | RSS | | Email this Email | Print This Print

Subscribe with: 

Subscribe in a readerSubscribe By Email:
-- subscribe to get updated headlines and full length posts delivered right to your email address.

or subscribe by:

Reader | RSS

About Brick Financial Management, LLC

Blogged by Brick Financial

51 JFK Pkwy, 1st Fl. West
Short Hills, NJ 07078
Email Us

Brick Financial Management, LLC is a Registered Investment Advisor specializing in providing investment management services to individuals, families, organizations and institutions. We implement highly focused stock, bond, and balanced portfolios using an investment approach commonly referred to as value investing. Disclosure


ShareThis -- ShareThis lets you instantly access all of your profiles, blogs, friends, and contacts for easy sharing and updating on sites like Digg, Delicious, Reddit, Facebook and MySpace. For more about ShareThis, click here.

Digg! Digg -- submit this item to be shared and voted on by the digg community. For more about digg, click here.

Delicious -- mark an item as a favorite to access later or share with the community. For more about, click here.

Facebook Facebook -- share an item with users of Facebook, a collection of school, company and regional social networks. For more about Facebook, click here.

Ben's Latest Tweet

    Follow Ben on Twitter