How I Spent My Last $100
Musings on Lyfts, Life and Spending in the City
My last $100 was mostly spent on Lyfts.
Three years ago I moved from sunny San Diego to the Windy City. The company I am working for paid for my relocation, which included my car. I was hesitant to bring it because it’s not a necessity in Chicago. In San Diego, you drive everywhere. Public transportation is basically nonexistent so your commute to work requires you to sit in traffic each way. In Chicago, my commute is different. I take the L-train to and from work twice a week, and then work from home the other three days. If I drove to work I would have to pay for parking, which would be over $20 daily, four times more than my round-trip train ticket. And it wouldn’t even be in my office building!
Before I was fully committed to selling my car, I broke down the costs to determine financial impact. Here were my monthly costs for owning a car in San Diego. We don’t have toll ways, so I thought these amounts weren’t bad:
Car Payment: $420
Total Liability Insurance: $98
Gas: $140
Total: $658 (That is not including regular maintenance costs or if I got in an accident. If you broke it down by day, it costs about $22 per day.)
And here are what my monthly costs would be for owning a car in Chicago:
Car Payment: $420
Total Liability Insurance: $98
Gas: $140
Covered parking in structure: $180
Total: $838.
I couldn’t justify $838, so I sold it to Carmax a week after it was delivered. (That cost was paid by my employer. Muahaha.) This results in a savings of $658 per month, and if you multiply that by 12, that is $7,896 for the year. And I had three years worth of payments left, which totals $23,688. The savings are great, but I was earning a not-so-great 0.01% from my bank. What a waste of all that cash. Guys, this is an awesome problem to have, but it was still one that I wanted to fix. To give you perspective, inflation in 2017 was 2.1%. Last year, any interest earned was less than the decrease in value of my cash.
So what if I invested that cash instead and left it for retirement? I could increase my 401k contributions or just invest it in the S&P 500. It’s better than keeping it in the bank earning pennies. For funsies, I calculated how much this would be in 30 years, using an average annual return of 7% a year. I would have about $180K in 30 years if I invested the $23,688! If I use an average return of 8%, then it would be approximately $238K! Very interesting.
So I invested my money. I decided to use robo advisors, which are automated platforms that create tailored investment portfolios that fit your personal financial needs and goals. It also incorporates how comfortable you are with risk, and automatically updates to optimize performance. I don’t know much about the stock market, so this seemed right up my alley. Last summer, I invested $1000 each using Betterment, Ellevest, Wealthfront, SoFi. I also invested using Fundrise (not a robo advisor), which looks at real estate. And last but not least, S&P 500 ETF, to compare the robo advisors to market performance. (You can see my results for March here).
What did I do with the rest of the 18K? I used it as a down payment to buy real estate with my brother. We went halfsies, and now he is living in it and paying the mortgage, while I just watch it appreciate.
If I break down my Chicago car costs down by day, it costs about $28 per day to own, regardless of how much I used it. I really wanted to justify keeping my car, but I just couldn’t for that much. However, by looking at the opportunity cost of the car, the cost of the potential gain by investing that money, it was a no brainer. Peace out, car.
When I owned a car in California, I never thought twice because it was non-negotiable, and I understand that most cities in the U.S. are like that. Now, I’m grateful to have the luxury of public transportation and to live in this heavenly age of ridesharing. When I add up transportations savings (and net out the rideshare costs), I am still saving an additional $6–7K a year, which is insane. But what is crazier is the potential gain in 30 years. So now when I look at my Mint app and see line after line of Lyft and Uber, I don’t sweat it.
Lyft: $60
My Lyft ride was about 30 miles to the suburbs. Unfortunately for me, it was a peak time, but it was still a little cheaper than Uber. This amount includes tip and a roundup because the change from my rides go to a charitable cause.
As for the rest of my hundo, it was split between delicious pastries from a Korean bakery and random purchases at Marshalls:
Marshalls: $31.21
I buy my shampoo and conditioner there because, dude, that’s name brand stuff for low low prices! Ha! It’s also really close to my house. This time I only needed shampoo since I bought conditioner about a month ago. I also buy a 15 pack of individually packed trail mix and a bag of Sriracha flavored veggie sticks (chips).
Korean bakery: $11.39
I stopped by a Korean bakery and got a chocolate croissant, a tomato and olive pastry, and a bomb ass chicken salad sandwich. The chicken salad sandwich was my dinner, the chocolate croissant was my breakfast the next morning, and the tomato and olive pastry was a snack. Win.
Total: $102.60
What have we learned to help you improve your money IQ? First: always optimize your expenses to suit your circumstances (i.e. take advantage of public transit if you’re able!). And second: you can make modest, safe investments without being a finance whiz. Your savings account isn’t always the only or best way to “save” money, so don’t be afraid to get creative with your extra cash.
Money IQ is a publication that aims to provide simple, no-nonsense personal finance advice. We’re here to dispel myths and demystify personal finance for our readers.
