Steady As She Goes: Goals for 2016

As I wrote my four-part review of 2015, one theme stood out to me: both 2014 and 2015 were BIG YEARS for me, where I kept a very tight budget first in the name of paying off debt, then in the name of hitting big-time savings goals. In 2016, I want to stay the course with the habits of frugality, savings, and conscious spending I’ve been developing, but I also want to be a little more relaxed. I’m in a good, though certainly not great, financial position, and while maintaining focus I also want to let my hair down a little more by increasing my slush/entertainment/gifts/clothing budget. Just a little more, though, not a ton. With that in mind, here are my 2016 goals.

Continue reading “Steady As She Goes: Goals for 2016”

How and Why I’m Going to Save (for right now)

When last we spoke, I was discovering that saving in a slow and steady way is, like, totally boring. But I was a teeny bit mysterious about what I planned to do next. Hannah wanted to know if I was going to spend $500 on peaches (reasonable guess! But I ran out of canning jars last week, so, no.) Kate pointed out that being adult means letting money flow to multiple goals (true!) DoubleDebtSingleWoman’s congratulatory post had me remembering how lucky I’ve been to have nothing major go wrong this year that would have interfered with reaching my goal (she’s had health issues lately, sigh.)

As probably everyone has guessed, though my next project is building up my “down payments” fund. To recap, this is not necessarily money that will actually be used for a down payment. I might also use it for a car, should I need one in a hurry, or for an apartment security deposit, or whatever. It’s for Major Purchases or Emergencies That Aren’t Actually Emergencies, I dunno. “Down payments” is good shorthand.

I’ve only been putting $125 in it every month, and I haven’t had it all that long, so it’s not very big. But I decided that in the aftermath of my incredibly boring march to $5000, I wanted to do something different and flamboyant and really go for it with this fund. I want to see how much I can do in how short a time, while not being totally irresponsible about other important goals like retirement and money to travel to see family and very close friends. So, after a lot of back and forth and soul searching, here’s the arrangement I came to with myself.

(1) I’m going to snowball my former emergency fund savings payment of $500 onto my old down payment account contribution of $125, for a basic $625 contribution each month.

(2) This is the controversial part. Since I started this job, I’ve been contributing $1000 a month in pre-tax dollars to a retirement account. I’m dropping my contribution to $500 a month on a temporary basis; I didn’t want to stop contributing altogether but I also really wanted to build up my accessible cash. This isn’t actually all about my impatience, by the way. It has a lot to do with my increasing worry about having so much of my income being funneled away into inaccessible accounts at a time when I have a lot of uncertainty in my life. By next summer, my immediate future (for the next 5 years or so — after that of course it’s anyone’s guess!) should be much clearer to me, but right now it’s not, and I feel like I’d feel better with an extra-big chunk of cash on hand than with a bigger 403(b). I also suspect we are not going to see much market growth, if any, in the next year, so although I could obviously be wrong, this doesn’t seem like a horrible time to roll my contributions back.

Anyway, after tax withholding, this move will net me an additional $400 a month in my paychecks, bringing my basic down payment savings to $1025.

By the way, this change still has me contributing 12.5% to retirement, which isn’t, of course, the awesome 25% rate I had going before, but is also not utterly appalling. I did actually submit electronic paperwork to drop my 403(b) contribution to $0, but ten minutes later I thought better of it and reset it to $250/paycheck or $500/month.

(2a) …When you say ‘temporary basis’ what do you mean? Good question, and honestly I’m not completely sure; my main point is that I don’t regard this as a sufficient retirement contribution going forward. There’s probably a 1-year limit on this arrangement in my mind; next summer everything will change anyway, whether I’m moving to a new city or getting a new salary. However, if in five months I decide I’m definitely not going to buy a house this spring, I may re-up my retirement contributions then. (Or if the market crashes so bad that I have no choice but to get in on the low-buying, which hopefully won’t happen, of course.)

(3) Lastly, up until now I’ve been letting any balance left in my various budget categories roll over to the next month. For the same duration of a lowered retirement contribution, whatever that ends up being, I’m going to stop doing that, and instead transfer any extra to the down payments fund. However, that means that when I have a month that’s more expensive (eg a car repair or a medium sized medical expense like needing to buy contact lenses) I might make a smaller contribution.

To sum up, I’m going to approach this savings account less like I did the emergency fund, and more like I would being in debt again — instead of a measured march to a set amount of money in a set amount of time, I’m going to throw whatever I can at it (barring a [smaller] retirement contribution and my travel fund savings). I’m hoping that, therefore, I’ll find this a more satisfying and motivating experience than saving for the emergency fund was. With my minimum monthly $1025, I ought to be past $5000 by the new year and over $10000 by the end of May, which is about the earliest I’d be doing any house-buying. I’ll be reassessing as I go, of course, based on what happens with my job situation, but whatever happens, a giant bucket of cash doesn’t seem like a terrible outcome.

Growing Net Worth With a Lower Income

Growing Net Worth Lower IncomeI’m going to put “lower income” in quotes here, because, for heaven’s sake, I make $47500 in base salary, plus side hustling that is probably going to amount to $1000-$2000 this year. That ain’t a low low income; it’s not all that far below the median household income for the United States.

But it’s certainly not the kind of income that many PF bloggers have, either through successful freelance businesses, or just because they’re in much better paying fields. Even at under $50K income, and despite a few emergencies, my net worth is steaming along at a respectable pace at this point. I’ll run exact numbers at the end of June, after exactly one year at this salary, but most months I manage a net worth growth of around $1800-$2000, on a gross salary of $4000. Obviously, I’m keeping my expenses low — something people routinely comment on when I do a monthly net worth update. Continue reading “Growing Net Worth With a Lower Income”

Long-range financial goal setting

I did a thought exercise the other day: where do I want to be in terms of finances and possessions in ten years? In thirty years, when I’m 66? I have some possible retirement housing options in mind, but I also want to think about how to get to a point where I have $40,000 in yearly income (in today’s dollars). That plus Social Security should give me a very comfortable life; right now I’m only spending about $17000 a year on life stuff! Add to that $10000 a year for travel and general fun, and I’ll be all set. 🙂 (The rest is for taxes and medical care, of course, and also because I assume I will not end up paying the equivalent of $400 a month for housing forever.) Continue reading “Long-range financial goal setting”

The Bare Bones Budget + How Big of an E-Fund Do I Need, Part 898678050

I feel like I just keep circling back around to this topic! For a while last year I was wondering if I needed an e-fund at all — after all, I have no dependents to provide for and if financial disaster really struck, I’d be able to give up my housing (which is just a rented room with no lease to break) and move in with friends or family. Everyone shouted me down on that, and I was convinced 🙂 [Side note: at that time, five comments was a huge number on one of my posts. On a day to day basis I don’t feel like I’ve made huge progress at growing the blog, but looking back at those early posts they look so lonely! Thanks for reading and commenting, y’all, every single one of you makes my day.] Continue reading “The Bare Bones Budget + How Big of an E-Fund Do I Need, Part 898678050”

Zero Food Waste 2015, Week 5: Ordering Less

zero food waste challenge 2015I’m pre-writing this post because I’ll be traveling on Wednesday. Actually, I’ll be traveling most of the week! As a result, I wrote last week about stretching out my normal weekly shopping trip to cover nine days instead of seven. That went quite well, although I had a few dicey moments; I barely managed to get through the last of the kale and avocados before they went bad, but I did it (only tossed a few slimy kale leaves) and I also used up all of the pearl barley I’d had in my pantry for a year or so, per Alicia’s clean-out-the-pantry project. Having moved this barley twice I thought it was really time to eat it before I potentially might have to move it again this summer! Continue reading “Zero Food Waste 2015, Week 5: Ordering Less”

Zero Food Waste 2015, Week 3: Sharing

Fzero food waste challenge 2015or anyone just dropping by, I’ve taken a vow to stop wasting food, and I’m doing a weekly series where I track how that’s going and give a recipe. This week: no-waste food tip #2 (sharing); my grocery shopping (much better than last week!); and a recipe for polenta with vegetables and eggs. Continue reading “Zero Food Waste 2015, Week 3: Sharing”

Why I Don’t Percentage-Budget

BudgetUpThere seem to be two schools of thought on budgeting. One suggests certain percentages of your monthly net income to allocate to certain categories: no matter how much you make, spend 30% on housing, 30% on life expenses, 10% on saving, etc. So, with a net income of $1000 monthly, you’d look for housing costing $300 and save $100; with a net income of $5000 monthly, you’d look for housing costing $1500 and save $500. Continue reading “Why I Don’t Percentage-Budget”

December 2014 Net Worth Update

Well, this month started off with a bang and ended up with a schlumpf. Towards the beginning of the month, I paid off the last of my debt (although it took me until the middle of the month to be able to announce it.) Then I got hit with a huge bill for new glasses and contact lenses, and had to pull some money out of my emergency fund along with cash-flowing part of it. So the end net worth results for this month are not too impressive, although I got a last-minute boost via a $200 Christmas gift directed to my travel fund.

To the numbers: Continue reading “December 2014 Net Worth Update”

2015 goals

Finally, the long-awaited [ed. note — sure, sure] 2015 goals post.

I’ll probably revisit these at some point — for one thing, my job situation might or might not change over the summer. I’m either going to be at the same job, with the same income, for another academic year, or be changing jobs with all the resulting unknowns from that. But for the purposes of this post I’m assuming that I’ll be at my current job through all of 2015.

I’m trying to keep these simple: instead of a dozen goals, I’m making only five, focused around my current priorities. Some of these are more under my control than others — for example, I can definitely contribute $1000 a month to retirement because I’m already doing it and it’s automatic! But the net worth goals are trickier, because they rely in part on things well outside of my control, like whether I have a medical emergency or what the markets decide to do. I’m also setting a pretty aggressive target for monthly cash savings; if I stick to this plan, I’ll be living on about $1150 a month, roughly 1/3 of my net income. I’m going to try this for a few months and see how it goes, but if I’m feeling deprived by the time I do my first-quarter review at the end of March I may have to re-evaluate. Continue reading “2015 goals”