This morning I had the opportunity to give a forty-minute presentation about personal finance basics to a Penn State freshman seminar class.  One of my (many) long-term goals is to fix the lack of personal finance education at the high school and college level, so I jumped at the chance and dragged myself out of bed at 3AM to prepare a presentation.

I gave and recorded the presentation using Google Hangouts On Air:


The presentation is here and the spreadsheets referenced in the video are available here.

Unfortunately the audio on the other end wasn't working, so I was not able to do the question-and-answer session that I had planned.  In lieu of that, I'll follow up with the students using a Google Form to collect their questions and I'll post the answers here.

I have been subscribing to a lot more YouTube content lately, and I like the concept of preparing a series of short personal finance videos to add at the top of my posts here.  These videos could give the tl;dr version for people who prefer the sound of my voice to my writing style (what a choice!).

My public speaking needs work, but to be fair this was 6AM my time...

Knowledge is Power

If you know how electricity prices vary over time, you may be able to use this to save money.

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The Theory

The electrical utility system is designed with a certain base output power that is sufficient to meet the demand for electricity almost all of the time.  On hot and humid August afternoons when everyone is blasting the AC on high, electricity demand may spike above what the base capacity can supply.  The utility company then has a couple options:

0) Do nothing.  The grid line voltage will drop, a state called a 'brownout'.  This may successfully reduce power consumption, but it could also cause some types of equipment to malfunction or sustain damage.

1) Manage demand with rolling blackouts.  Demand is pruned by cutting off power to some areas of the grid; which parts are shut down is 'rolled' on a schedule, announced ahead of time if possible.

2) Supplement the base supply with additional power by activating 'peaking plants'.  These power plants may use designs that are less efficient and cost-effective than the base supply plants, but they can be quickly switched on and throttled, like a jet engine, to match fluctuating demand.

And last, but not least:

3) Manage demand with good old economics.  If the utility company can collect time-of-use data with a smart meter and consumers are informed ahead of time that the price of electricity will be higher on certain days ('critical peak pricing') or at certain times of day ('time-of-use pricing'), they may adjust their behavior and temper peak demand.

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In Practice, with Pacific Gas & Electric

If you are one of Pacific Gas & Electric's 5 million+ electricity customers, you can take advantage of two peak demand reduction programs: the SmartRate Add-On and the Time-of-Use Base Plan.  I started taking advantage of these last year and it saved me 30% on my summer power generation costs.

It's been almost exactly two years since I waxed poetically about Mint (mint.com) for expense tracking.  Mint connects to your credit card, bank, and investment accounts and automatically pulls in and—with decent accuracy—categorizes your transactions.  I still use Mint on a weekly basis and recommend it without reservation.

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Expense Aggregation with Mint is Awesome

The Mint team has also added billpay, a free credit score, and budgeting tools, but the transaction aggregation is the killer application for me.  With a glance at the site or the Mint app (Android, iOS), I can check the cash in my checking account and verify it covers the total charges sitting on my credit cards.  I can skim my recent transactions for unexpected fees, errors, and easy-to-forget repeating subscription charges.  I can even download my entire transaction history, all the way back to January 2012 when I started using Mint, as a .csv file for further analysis in a spreadsheet or Python script.

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Travel Back In Time

Mint keeps track of your account balances on the last day of each month and this data is also exportable as a .csv file, so it's easy to look back in time and generate a net worth graph:
Mint usage automatically makes you more aware of what's happening with your money, and this increased awareness inspired a reformation of my spending habits... and the transformation of this site into a full-fledged finance blog. 

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OneReceipt Makes Mint Even Better

The one piece of information that Mint doesn't capture is what you actually bought in a given transaction.  This is sufficiently annoying to me that I anticipated it would annoy enough other people to rapidly precipitate a solution, so I've been sealing each month's receipts in a plastic bag and tossing them in a shoe box under my desk.

All of my receipts.  Since August 2011.

FINALLY, a startup called OneReceipt has solved this problem.  According to the timeline on the bottom of their homepage, they too have been thinking about this since 2005.

∴ I am not crazy.

OneReceipt roots through your inbox and scrapes electronic receipts, and their iOS app takes photos of paper receipts and uploads them to a server for optical character recognition (OCR) and processing.

Turn THIS...




































...into THIS



It got all of the items right!  It sees discounts and tax!  It can even get the timestamp!

It gets better.  Install the OneReceipt Chrome Extension, fire up Mint, and:




And of course, since this is obviously my early birthday present, you can export all of your receipt information as a .pdf or .csv.

Oh hell yes.

Thanks OneReceipt!

Follow the team on Twitter or Facebook or Google+ or whatever.

When we looked at the expenditures of the Average American and the Average Grad Student, I asserted that it was possible to do much better.  To see where I find my savings, first let's break down the model UC Berkeley budget.

Adjusted to include taxes and cover a full 12-month year:

UC Berkeley, 2012-13		Monthly	Annual
Rent & Utilities	49%	$1,160.00	$13,920.00
Food	29%	$684.00	$8,208.00
Personal	7%	$161.00	$1,932.00
Transportation	13%	$312.00	$3,744.00
Total Living Expenses	98%	$2,317.00	$27,804.00
Books	2%		$702.00
Health Insurance	---	(covered)	$2,306.00
Tuition & Fees	---	(covered)	$12,876.00
Total Graduate Budget	2%	$3,640.67	$43,688.00
Total Expense to Student	100%	$2,375.50	$28,506.00

As previously mentioned, this budget leaves you with nothing saved, or worse, a small deficit.  That's not good.  But we can do a lot better than this!  So much better, in fact, that I save and invest half of my graduate student stipend.

How?

Yesterday, we took a look at how the typical American household spends their money.  Half of all expenditures go to housing and transportation; the next quarter goes to food, entertainment, and healthcare.


Today, we'll take a look at what universities believe are reasonable budgets for their graduate students.  These budgets, published on the universities' websites, are also used by the federal government in federal student financial aid calculations.

The United States Bureau of Labor Statistics publishes the Consumer Expenditure Survey, an excellent collection of data tables that cover, in excruciating detail, the spending patterns of the US population sliced and diced by every possible variable.  In 2012, over 120,000 'consumer units' (households, essentially) were surveyed.  These data are self-reported... so do take them with a grain of salt.


The information in this publication identifies where the average American spends their money, which can serve as a basis of comparison with your own budget.  While everyone's situation is unique, the dominant categories may offer the most room for improvement.