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Goodbye, Car. Hello, Sharing Economy.

I’m scared. Over the last two or three weeks, I’ve been biking everywhere — sort of as a test. I barely drove my car over the last three weeks, and most of the driving could’ve been avoided. It was clear: I needed to sell my car. Today, I say goodbye to “Blue Blazer.” Yes, my slick coupe is going into safe hands, but parting ways never feels easy.

See, even though I’m on this frugal journey, I feel frightened to say goodbye to my car. It’s a total extra and creature comfort in my city, but it’s hard letting go. A bunch of what if questions seep into my head. What if I need a car? What if I need to get somewhere fast? What if…?

Today, we part ways like old friends. Ol’ Blue brought me to Iowa safely when I moved. We saw a few girlfriends and took great road trips. There’s history between us. In a weird, consumeristic way, a car is comparable to a relationship. When you spend years with something, it’s hard not to feel attached (even if you cannot communicate with that inanimate object).

Well, in a couple hours, I hand over the keys. It’ll be bittersweet. Many good memories. I’ll miss the wild independence that comes with the possibility to jump in my car and drive off to… Wherever. The idea of a momentary craziness where I just drive off into the sunset must fade; at least, for a little while.

There’s a cliche that every goodbye is a new beginning. That’s helped me part ways with my car. See, selling my car opens me up to new opportunities. I’m officially joining the sharing economy.

Essentially, the sharing economy asserts that we no longer need to be burdened with individual ownership. Rather, people can come together and share what they have. Everyone won’t need a car, drill, ladder, or lawn mower. Everything from RelayRides, ZipCar, Airbnb, TaskRabbit, Craigslist, and CouchSurfing offer the ability to share with others. Everything is more affordable this way.

Without a car, I’ll be entering a new world where I’ll need to rely on the sharers — corporate or personal. But American society emphasizes a fierce independence and control — one without reliance on others. That always seems to be the end goal for wealth, too. Make enough money and you’ll never need to rely on another person — you can own whatever you need. Buy the house, fill the garage, park the two cars out front. That’s not going to be my life.

For all my concerns and worries, there’s an excitement for the unknown. I don’t know what it will feel like to be without a car — maybe a little naked at first. But I do know I’ll stay out of lengthy DMV lines, stop worrying about insurance, depreciation, and completely remove my gas expenditures.

As much as I worry about losing my freedom by not having a car, I’m now freed to save, travel, and stay out of debt.

I couldn’t be happier.

10 Unexpected Benefits Of Buying A Bike

By Frugaling 17 Comments

Last week, I bought a bike. It’s the best decision I’ve made in a long time. Economical, healthy, simple, and everything in between, my bike is the embodiment of this website and my frugal journey. After two weeks of riding, I decided to write up the 10 unexpected benefits of buying a bike. Enjoy!

1. Feel like a kid again

The breeze is blowing through my helmet — cooling my scalp. Sometimes I let go of the handlebars and feel free; albeit, for shorter periods than when I was a kid. It’s been too long since I raced my self — pushing to reach the top of a hill faster or make that light.

Or, how about zooming down a hill, with your head tucked, and chest near the handlebars? That rush! Hands wrapped tight around the grips — holding on for dear life. It’s a physiological thrill that never gets old. My bike calls me to jump off a sidewalk or climb a hill. There isn’t one path, only your path. Just don’t forget your helmet, kid.

2. Save money on commutes

Bike Path — The bike path less traveled…

Last semester, when I had my car, I consistently missed the bus. This timing and planning error would always result in a simple, but costly decision to drive. Even though the commute to school was only about 4-5 miles each way, that adds up really quick.

The federal government suggests that driving costs on average about 50 cents per mile (after you account for insurance, gas, depreciation, etc.). At that rate, I was burning serious dough with my poor planning. Potentially, my commute would cost me about $5 round trip, and even more when including parking (at $1 per hour).

This was a leaky part of my budget, and buying a bike patched that right up. I don’t have an excuse to drive. I never worry about missing the bus. I just hop on my bike!

3. Save time on car or bus commutes

I plan on riding my bike far more often. Frankly, I’m actively avoiding the bus, which takes a circuitous, tedious route all throughout the western part of my city. All I have to do is snap on my helmet, hop on my bike, and 7-10 minutes later, I’m at school, work, etc.

Despite living about 4-5 miles from campus, my bus commute takes about 25 minutes. I’ve grown to like the route and bus, as it’s afforded me down time and an opportunity to read. But now I get the best of both worlds: the bike takes about 10 minutes at most — saving me 15 minutes in commute time — and offers meditative exercise. The extra time is now mine to enjoy.

4. Get healthy and feel more positive

Sweating bike commute healthy — Get this man a towel!

Despite living in the midwest (read: flat), my city is hilly. Biking to and from campus is a nice little workout. By the time I make it, I’ve got a nice sweat worked up.

Yeah, I probably need to apply more deodorant now, but I’m feeling exceptionally healthy by biking. In a way, biking to and from work offers me a period of time to get in the zone and let loose before undetermined periods of inactivity. The benefits extend far beyond anything physical, visual. Biking has honed my mind, and I feel better focused at work.

5. Put extra funds into retirement accounts

It turns out that the secret to securing the rich, leisurely social life depicted in car ads is to not own a car. –Sydney Morning Herald

Every day I ride my bike is more money in my pocket. Between car loan payments ($196), insurance ($42), and gas (about $35-40) each month, I suddenly have a tremendous budgetary surplus. I’m shocked that as a meager graduate student, I’ll begin saving about $300 per month.

Building a savings and surplus is wonderful, but what I do with the money is essential. I can’t just start spending more on eating out, vacations, and discretionary goods. Over the last couple months I’ve restructured my retirement accounts to benefit from increased income, but also to prepare for a significant end-of-year self-employment tax.

With about $300 per month, I’ll be using commission-free ETFs within a traditional IRA to maximize my 2014 tax refund, while minimizing trading costs on small trades. As the budget settles, I’ll make the payments and trades automatic to benefit from regular, compounded interest — finally!

This is all possible because I downgraded to a bike. But suddenly, it doesn’t feel like a downgrade at all.

6. Slow down your pace of life

Unlike driving or taking a bus, my pace and speed is my own. The independence is empowering. Oftentimes, I use it to slow down and become more mindful of the world around me. I appreciate every moment much more.

Even if I’m commuting to work, the bike ride is a break from it all. There’s a peace as the wind passes over my ears. I guess I didn’t realize how calming it would be — nor did I realize how relaxed I’d feel after a long adventure. Life slows down ever so slightly when phones aren’t checked and the watch is left at home.

7. Develop an environmental awareness

It’s a cliche of biking and green communities, but I definitely feel like I’m helping the environment by opting for a bike. The carbon emissions produced from riding and maintaining a bike are miniscule compared to a car. I’m contributing to a positive change: reduced impact.

After reading countless articles about climate change, I felt compelled to make a serious individual change. It motivated me to sell my car and change my spending habits. Buying a bike is one of the final steps.

The world would look very different if everyone just rode bikes, but our economy is not designed for this singular transportation method. Nonetheless, I realized that the city I live in would allow for this switch. I jumped at the opportunity to change my lifestyle.

8. Join a community of cyclists

In my first two weeks of ownership, I’ve already gone on two longer bike rides with friends. I wasn’t doing this with my car. It costs nothing to bike around the city with friends.

There’s a friendly respect between bikers — from the head nod, wave, or “hello.” This doesn’t happen in cars (see point 10). Vehicles are impersonal by nature, and bikes are open. Your face can be seen.

In a way, biking links you to a community of riders without ever formally signing up. The personal nature helps connect the group and you can trust that if something went wrong, fellow bikers would likely pull over to help you.

9. Your body is the fuel — treat it right

No more trips to gas stations! Gas prices on an individual level are no longer important (yes, they are still important on a macro level as they affect food prices). I’m not spending time squeezing the handle of a pump for a few minutes every couple weeks. I’m done going out of my way to find a station or check for the cheapest prices.

More than fossil fuel savings is the greater joy of realizing that my body is being used. Afterall, we are incredibly complex, biological machines. Producing energy from our food intake is necessary for a long life. My muscles activate when I bike. It’s a simple realization: I need to take care of my body — it’s the only fuel source I have. Better treat it well.

10. Build an empathy for others on the road

This is a positive and negative point. Sharing the road with cars is inevitable, but it’s almost always a horrible experience. Cars don’t give you enough room, trail too close behind, and stories of road-ragers hating bikers are scary. Sitting in your two-ton vehicle, riding a bikers ass is a terrible assault. Whenever I feel that pressure, I feel like slowing down even further.

It’s been a while since I was on a bike this much. By joining the ranks, I’ve quickly developed an empathy for the many people who share the road. We’ve all got to make it work. If only the horrible drivers decided to bike more often, maybe they’d realize what it’s like to be on roads with rain gutters, potholes, and drivers crowding the shared road.

Productivity Apps Don’t Make You Productive

By Frugaling 4 Comments

I need context when I'm writing, this productivity app scares me. — I need context when I’m writing. This productivity app scares me.

“There’s an app for that.”

Apple trademarked this phrase about the diversity of applications available for iPhones. They might be right. Limitless button pressing is at my fingertips.

Wade through the fart and fake aging apps, and you’ll find a palatial collection of productivity applications (Android users: this goes for you, too). They get their own section of the App Store.

Do you run a business that needs a productivity boost?
Are you a frequent shopper of the household?
Have you thought about writing your first novel?

Yes, there are apps for every niche. Browse through the many apps present, and you might begin salivating over the productivity porn. Look at all of the opportunities to save time, money, and life — how enchanting!

Download a productivity app and you’ll travel into a rabbit hole. Hours may go by without any work. Every productivity tool has a learning curve. It takes time to learn skills and make them habitual. Trying something new is rarely, if ever, seamless. Apps are fun to manipulate and play around with — the interaction feels natural and it is.

Maybe you switch to another app — there’s another, better feature. Maybe the app you originally downloaded gets an update. Maybe you decide to downgrade back to another productivity system. Maybe you are struggling with syncing issues — the productivity app information is no longer across devices. There are a lot of maybes — I know — but something is inevitable. The learning curve never stops — you’re never freebasing productivity.

It’s easy to imagine productivity apps as a superhero’s cape. Put this on, and you’ll instantly be able to fight your assignments, organize your life, and win at work. The reality is that capes bog you down, aren’t aerodynamic, and take more time to put on. You’re busy fixing app changes, looking for the latest options, and browsing for new methods of saving time, as you pour it down the drain.

Time is limited. It motivates us to become more efficient. We’re desperate for more down time. I struggle to start difficult projects, but finding, downloading, learning, syncing, and beginning to use a new app is an illusion of productivity. It feels purposeful, but isn’t.

Wake from the productivity dream. You’re the only tool needed to complete your projects. That’s because productivity rarely comes from addition — only subtraction. Every computer contains all the productivity programs necessary: a word processor, calendar, and calculator. 99% of my tasks can be completed within these programs. When I’m desperate for a productivity app, it must be something that doesn’t require any interaction (i.e., IFTTT). When you add more to this system, you are significantly risking your total time.

I’m a writer. There are limitless productivity apps for my kind. But simplification and frugality don’t come from a $20 writing app for iPhone. Nothing more than a basic word processor is needed. I simply need to start typing.

Prepare For Your Biggest Tax Deduction

By Frugaling 1 Comment

2014 Tax deductions preparation — My chicken scratch as I calculate and prepare my taxes for 2014

I owe how much?!

I used to love filing taxes. There was a generous reward and refund each year. As my income sources changed, so did the tax benefits. Nowadays, with the “business” of Frugaling and various self-employment taxes that result, the tax refunds have ended.

Last year’s tax filing led to a nearly $1,000 payment to federal government. That was the first time I ever owed money. I was a significant budgetary hit.

This year is shaping up to be another rough payment. I believe our tax system is flawed, but I want to do my part — my fair share. But there are various ways to ease that burden. I’m already beginning to prepare and save.

Accounting for 2014 taxation

Self-employment taxes

Based on everything from 2013’s taxes, there will be a steep tax for my business income. My business income — from Frugaling.org — is considered self-employment, and is taxed as such. Essentially, it is paid tax free (medicare, medicaid, and social security taxes are not withheld initially) by companies and then I must report the income to the federal government. This year, I’ve estimated my total earnings to better save for the payment.

Tax deductions and credits

Along with business income preparation, I’m looking at current education expenses with a critical eye. Despite being a graduate student with an assistantship (aka, “job”), there are various student fees that aren’t covered.

With tuition and fee inflation/increases, this total will soon reach nearly $5,000 per year for my doctoral education. Thankfully, the federal government subtracts this value from my income — considered a tax deduction for the adjusted gross income (AGI).

Investment contributions

The last piece is where I’m spending increasing time: retirement accounts. I’ll be able to significantly reduce my tax burden this way.

Before this year, I had a near-dormant IRA that was underfunded forever. Unfortunately, I didn’t understand the traditional IRA contribution benefits. I deposited $1,000 into a Roth IRA, which doesn’t benefit from the contribution.

The best thing I could’ve done would be to open a traditional IRA — seek a contribution deduction and retirement savings contributions credit. Now I know! Since then, I’ve deposited about $1,000 into a traditional IRA, which will will net me $1,000 in deductions to income, and an estimated $100 in contribution credits. That will seriously reduce my tax burden and get me saving faster.

Preparation pays off in the end

I spent the last 6 hours calculating how to reduce my tax liability (legally — come on people!). Based on my initial calculations, I’ll save about $2,000 on my final tax payment by contributing more to my traditional IRA, realizing all business deductions and expenses, and saving everything I can. That’s about $333 of savings per hour! Not too shabby.

It’s difficult to save money from the tax man. Preparation and prevention doesn’t necessarily feel as important as making more money, but without taking serious action, you won’t be saving much. There’s no sense working like a dog and not being able to take advantage of the tax code.