Getting the Most Out of a Buffet: the Contrarian Approach

Last month, I dined out at two different buffet restaurants, spending $6 each. I had not eaten any paid meal at restaurants for many years, so this was quite a splurge for me. I always love a big feast and $6 seemed a low price to pay for a new all-you-can-eat experience. 

While cheap, delicious, and healthy, eating just pinto beans, oatmeal, and peanut butter everyday was getting a bit monotonous. I felt that a low cost buffet is a efficient and fun way to add some variety and get additional nutrients for my diet.

I love buffets! There is something irresistible about all you can eat. No limit! Total freedom! I hate going to a restaurant, or anywhere for that matter, eat just a plate, and leave still feeling hungry. You turned on your digestive system and left it unfulfilled. It's like a tease. It would have been better not to eat anything at all.

Furthermore, you don't need to leave a tip at a buffet, unlike most restaurants where a tip is expected.

So, I ate at a Chinese buffet for $6 and an Italian buffet for $5.93. The former was a dismal, while the latter was heavenly, and I learned some valuable lessons along the way, which I will share with you below. My advice is a bit contrarian, because the goal here is to maximize the intake of nutrients, rather than the food items with the highest market prices, as many others might recommend, if you just do an online search about how to eat in a buffet.

Some rules about getting the most out of a buffet are universal. Here is a quick summary of these uncontroversial rules:

1. Do your research first. Look for the best buffet deals. Check the prices and menu online if available. Read online reviews, and look at posted pictures of the buffet offerings. A picture is worth a thousand words and can help you rule in or rule out a buffet.

I Made a Change to My 529 Plan. Here's Why...

In my previous post, I wrote about why I opened a 529 plan in anticipation of the SECURE Act allowing tax free 529 withdrawals for student loan repayments. Due to laziness, I simply opened an new account with Merrill because I am already a customer and their plan seemed reasonable, charging only 0.18% expense ratio for an S&P 500 index fund.

After doing more research on 529 plans by different states, however, I came to the conclusion that a better plan is available than the Maine 529 plan offered by Merrill. I eventually narrowed down to two options: Fidelity's NH plan and Vanguard's NY plan. Both are a vast improvement over Merrill's ME plan with much lower costs.

I Have Written My First Book!

I have read hundreds of books related to finance, investing, and money, but have yet to come across a simple guide to achieve a seven-figure net worth and financial freedom.

Some of these books are too dense. Some are impractical or too demanding for everyday people. Worse yet, some are really advertisements in disguise for their authors' lucrative money management services aim to transfer your money to them.

I started with zero net worth back in 2010 when I started working full-time and gradually built it up to a seven-figure net worth seven years later in July 2017. You can track my annual balance sheet here and the latest updates on my net worth here.

Looking back over these seven years, I realized a few things. I was fortunate to have gotten a good education and reasonably well-paid job. A high savings rate is paramount. Prudent investing of these savings is crucial. I could have achieved seven figures sooner if I had known how to accomplish these things earlier.

Hence, I decided to write this book. Herein is a simple roadmap in seven steps that anyone can follow to achieve seven figures and financial freedom. This is the book I wish I had read when I was a teenager.

Don't "Pay Yourself First". Think Like an Owner and Pay Yourself Last.

Too many financial gurus are expounding on the virtues of "paying yourself first." The idea is that many people find themselves not saving enough (or any) from their paychecks after paying their monthly expenses, and that the solution is to "pay yourself first", by automatically deducting a portion of your paycheck toward your savings before using any of it to pay bills. Is that smart?

Absolutely not.

You must pay your debts first. If you prioritize savings and pay yourself first even at the expense of defaulting on your debts, your debt accounts will go into collection and it will eventually cost you a lot more money, most likely far more than you could earn from your savings. Plus, paying your debts is the honorable thing to do. You promised to pay when you first incurred the debt, and now you must live up to the promise.

Moreover, if you have credit card debt charging 17% interest rate, and you only make 5% on your savings, what good will paying yourself first do? Instead, pay the credit card company, as much as you possibly can in this example, and you will make the equivalent of a risk free 17% on your money.

Your income and expenses are not fixed month to month, but can fluctuate widely. For example, if you budget 50% of your income for fixed expenses and 30% for pleasure spend money, you might autopilot a pay yourself first program by automatically deducting 20% from your monthly paycheck. That in and of itself can serve as a disincentive to save more. After all, you have already saved money that month, and you even paid yourself first! Now what if your actual total expenses in a particular month drop to only 40%? You might decide that since you paid yourself first and then everyone else as well, whatever is left is free to spend away as you wish. That mentality just cost you a whopping 40% of your paycheck that month. On the flip side, unexpected expenses do pop up from time to time. By paying yourself first, you are effectively reducing your flexibility to meet these unexpected expenses, which may even cost you to go into debt and setting you back in your financial journey.

What should you do instead? 

Think like an owner. Take a look at any income statement, such as 3M's for example. Do businesses pay themselves first, by fixing a particular profit from revenue before any expenses are deducted? No honest business would do that. Instead, you see that from the top line, total revenue, the business would then deduct all sorts of expenses to include debt and taxes, before finally arriving at the bottom line, net profit. That's right, real owners pay themselves last. Everything that remains after you pay your creditors belongs to you. Your job is to maximize that bottom line.

Your task is to fix your expenses to as low as possible, so they don't rise with your income, or at least not nearly as much. By paying yourself first, you are essentially treating yourself as just another creditor among many. That mentality leads to enslaving yourself to whatever you end up splurging your residual income on. You owe it to yourself to pay yourself last.

Paying yourself first is forced savings. And by experience we know that no good ever comes by force. You must learn to save willingly. That is how pay yourself last works.

Track every penny you earn and spend each month and record them in a monthly income statement for yourself. Here are mine as an example. Each month, you don't know exactly how much you will end up in your bottom line, your savings. Instead, you try to maximize your top line, gross income, and minimize each line of expense. Each month is a new adventure for you. You compete with yourself each month to see if you can top your savings rate from the prior month. You will see how your savings grow month to month, then year to year, and how they will eventually outpace the growth in your expenses. 

Remember, debt is fixed, and the sky is the limit for equity. If you pay yourself first, you are but a debtor. If you pay yourself last, you are truly an owner.

Saving money on the phone bill

My phone expenses will go up in December, but it will then come way down. The reason is that I had been paying $5 per month for an 80-minute calling plan, plus $34.95 per month for unlimited plan with puretalk USA, for a household of two. Then I found Republic Wireless which offers unlimited plan at $10 plus tax per month and decided to switch on December 1. I paid $116.63 for a Republic Wireless Moto E phone (shipping and tax included), and $12.92 for first month's bill (tax included), for a total of $129.55. Add that to the $5 per month plan, and my December phone expense will come in at $134.55.

However, looking forward, I will only pay $17.92 per month for cell phone expense. That is a saving of $22.03, or 55%, from the prior $39.95. The phone will pay for itself in under six months. Assuming the phone lasts at least 2 years, my phone expense over two years will be $546.71, which is a saving of $412.09, or 43%, from $958.80 under my old $39.95 per month plan for two lines.

That surely puts a smile on my face. Just today, I came across an article saying the average monthly cell phone bill has soared in recent years to well over $100. Spending $100 per month means $1200 annually, which requires $30,000 capital to produce at 4% interest rate. Is your cell phone really worth $30,000 to you?