Net Worth Update: August 2016

Oh my gosh. Is it *really* that time again? I cannot believe the month is over. I took a short trip with my housemates, and spent a lot of time working really hard (teaching started last week; I only have one class, but it’s big and it’s taking up a lot of time). But I still feel like the month shouldn’t have gone by quite as fast as it did. Another one in the rear view mirror.

Here’s my spending for the month:

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Nothing too outrageous. The travel spending was expenses for the trip I took with my housemates to a music festival — basically I paid for a tank of gas ($20) and the rest was for food. We stayed with friends local to the festival, which was free, and I paid for my ticket months ago.

Slush spending was mostly at grocery stores, now that I look at it! And I bought some stamps. Medical was my share of having two fillings in my teeth (after insurance paid for part of them.) Clothing, a pair of sandals; professional expenses, membership in a professional association; and gifts, $100 to a gofundme for a friend whose husband was seriously injured in an accident. All basically pretty normal stuff.

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This is super boring! It’s a good thing I have my automatic retirement contributions because otherwise there’d be hardly any movement at all. The markets were essentially flat for the month; the increase in the EF is a little big because I moved September’s contribution over a few days early. My income is temporarily lower than usual because I don’t start getting paid for the class I’m teaching until September, so things are tight — I cash-flowed the month, but didn’t have much extra to put into savings. I’m glad I managed $100 into the life fund as well as the planned EF contribution, though. Anyway, I did have an increase, even if it’s not thrilling, and September will hopefully look better!

I’m not really budgeting right now…

…and I can’t decide if it’s a problem, or rather, how much of a problem it is.

If you’ve been around for a while, you know that I’ve been a big fan of YNAB. I stopped linking to it with my referral, because I didn’t have any interest in making the transition to their subscription-based web service; instead, I’ve continued to use the desktop software, and still love it.

One of the things that’s great about it is that it lets you allocate income into a variety of sinking funds. You can set up your own categories, but I have things like “personal/health,” “maintenance/repairs,” and “travel.” So, if I make say $1000 in a month, I have to allocate $400 to rent, but I could spread the other $600 out among these sinking categories and not necessarily spend it, but let it build up until I’m hit with a car repair or whatever. Some people do this kind of thing with a million savings accounts, which also works, but I do like the simplicity of letting the software handle the categorization instead of spending a lot of time transfering $$ from one account to another. (I do enough of that with the savings accounts I DO have.)

But despite my recognition that this is a superior budgeting system, last year I quit doing it in order to build up what I was then calling my down payment fund and now call my life fund. Instead of letting the sinking categories build, I diverted any spare cash to that savings account, and cash-flowed all my expenses every month. I’m still doing that, because I want to keep building up the life account, and I don’t have enough income every month to do that AND the sinking funds. Actually, it’s been an expensive enough summer that I’m not even really doing the life buildup. I put $300 in last month and am putting $300 in this month, which is way off the pace I wanted to be going at. But if I decided I was ok with keeping the life fund at around $10,000, I could actually go back to budgeting the YNAB way — I could take that $300-500/month of ‘give’ in my budget and spread it out to the sinking funds. I guess I’m a little worried that doing this would encourage me to spend the money on things less essential than a car repair or (this month’s big expense) dental work. It’s a lot easier to subtract $50 from the maintenance budget and move it into slush to cover an entertainment outlay, than it is to actively take $50 out of my savings account.

On the other hand, when I think about budgeting properly, with sinking funds, instead of just putting all available cash in a big savings account and spending the rest, I feel more grown-up. Maybe I should let that guide me?

About Those Savings Accounts

Whoa, look at this, a post that’s not just a net worth update! Haven’t done one of those in a while. It’s been busy around here this summer, what with all the canning/preserving and with my having some big projects at work coming to completion this fall — and what with all the presidential election stuff going on, though we probably shouldn’t start talking about that on our PF blogs, really 🙂

But I have a quiet moment and I want to talk a little bit about my cash savings accounts. I have three. One is for travel, though I’ve been using my budgeted travel money at a pretty good rate, so I haven’t actually bothered to transfer cash into that account in a while.

The second is for emergency savings. My emergency fund currently consists of roughly $1000 in a taxable account at Vanguard, which I’d rather not touch but which I do consider part of my EF, and a savings account at Capital One 360 (<–referral link, just in case there’s anyone in the universe who doesn’t already have one.) Longtime readers of this blog will recall that for about a year I worked on getting this account up to $5000, by dint of putting in $500 every month. I succeeded, but I found the whole process amazingly boring. Then I raided it and put $3000 in my Roth IRA and $1000 into that taxable account, leaving only $1000 in cash. This year, I decided to try to make the savings more interesting by doing the 52-week savings challenge (that thing where you save $1 the first week, $2 the second week, and so on until you get up to $52 in the last week of the year, for a total of $1378 over the course of the year.) I’ve actually been doing a transfer every month instead of every week, but so far I’m on track to complete the challenge and it is actually more fun than just moving  $120 over every single month, which would result in about the same amount of savings, but is boring.

By the end of the year, I’ll be up to about $3500 between the two accounts — plus or minus $100 depending on how the taxable account is doing. My intention is to do another 52-week challenge next year, except in reverse, so I save $52 in the first week of January, $51 in the second, etc. Just for some variation. If nothing intervenes and I don’t have to use the money, by the end of 2017 I’ll be back up to nearly $5000, which for right now I consider fully stocked. It doesn’t really bother me that I’m re-growing this account slowly, since I also have a pretty healthy stock of cash in the third savings account that obviously I could draw on if necessary.

That third fund is what for a while I was calling the down payments fund, and then switched to calling the “Life Fund.” It was up over $13000 briefly earlier this year, but I decided to start filling up my Roth IRA for 2016 since I hadn’t touched that yet, so right now it’s at $10120. I’m trying to add about $500 a month to it for the foreseeable future, but since at the moment I don’t have a specific goal in mind for it, I’m not as motivated to hit that number every month. Last month I ended up putting in $300, and this month I think I’ll put in about $350-400 — saving during the summer is difficult for me since I love buying fresh produce and going to festivals and whatnot. Once things cool off and the farmer’s market isn’t so abundant anymore, I shouldn’t have trouble hitting that $500 figure again.

So, what is it for? Like I say, I don’t exactly know right now. I can envision several uses for $20,000 (the figure I envision getting up to with this fund, although circumstances could change that.)

–I could buy a car

–I could put a down payment on a house after all

–I could move somewhere and fund my basic expenses for a while as I get established, get a job, etc

–I could put down a security deposit on an apartment and buy furniture

–I could buy a bunch of stock if the market crashes (on top of what I invest normally every month through my retirement account)

You know, life.

What I don’t want to do with this money:

–travel

–donations

–basic medical expenses, car expenses, clothing, entertainment

I just want it to sit there until I want to do something really big — I don’t want to put it down on smaller expenses, even though they might be worthy in and of themselves.

For the moment, I’m keeping it in another Capital One 360 savings account. I could envision moving all or part of it into a CD ladder, except the CD rates are so awful right now that there’s just no point. Of course, I could also put all/part of it in the market. But I feel like I’m probably going to want to use it for one or more of those big things within the next few years, and so it would be more risky than I want to move it into my Vanguard account. So unless I can think of anything better to do with it, it’s just going to plug away earning $7ish a month for now.

Curious: do any of you all have an analogous account that’s not for emergencies but also not in the market? Are there any big life expenses I’m missing that you’ve spent on?

Net Worth Update: July 2016

networthupdateWOW, what a month. This just happens every now and then — nothing spectacular went wrong, and yet I still spent $$$$$$$$$$$$$$$$$. If the markets hadn’t had such a good month, I would actually have had a loss, for the first time since I started tracking. But: they had a great month, and here we are, including even inching across the $50,000 mark! Want to know all the messy spending details? Read on!

Continue reading “Net Worth Update: July 2016”