I’m As Optimized As I’m Going to Get (for now)

So for those of you who don’t follow my twitter, some of the random budget angst from last week turned out to be a little premature. Turns out — ha ha! — I had accidentally hidden a category in YNAB, which happened to have $250 in it, so when I found it I relaxed some and also moved the $$ into my down payment fund, which now stands at $5250. I’ll just have to hustle back the $750 that went into my Roth IRA last week to make it back to the $6000 it was at.

Wait a minute, why hustle?

Continue reading “I’m As Optimized As I’m Going to Get (for now)”

Should I have stretch goals?

Happy Monday everyone!

I’m slowly settling back into home after a long month of travel. In fact, right now I’m in bed with my feet tucked under my housemate’s dog…which is a good thing since last I looked it was around 7 degrees (farenheit) outside. Brrrrrrrr. Yesterday I made bread and went to church, and today’s agenda includes such exciting action points as “do laundry” and “write blog post.” It does not include anything like “buy plane tickets.”

So what I’m saying here is the cozy factor is through the roof around here. Naturally, this state of affairs led to an hour Saturday evening which caused me to tweet this:

Continue reading “Should I have stretch goals?”

The Savings-to-Self-Respect Feedback Loop

Finally, I get to write a post about an emotional benefit that saving has had for me! I’ve been complaining ever since I paid off my debt that saving doesn’t feature that same high that comes when you throw $2000+ at a loan on a single day. I used to feel like a warrior making those big payments, and socking cash away just doesn’t carry the same excitement on a month to month basis. It mostly made me feel like I was running on some kind of Sisyphean treadmill, looping around every month between direct deposit and savings account with nothing interesting, like a debt-free letter, to show for it.

However, I think I’m starting to “get it.”

Continue reading “The Savings-to-Self-Respect Feedback Loop”

Checking In; And, Being Minimalist Does Not Equal Being Frugal

I’ve been so tired the last couple of weeks — not in a bad way, necessarily. Things at work have just been really absorbing, to the point where, when I don’t have an evening event (we’ve had several since the semester started), I tend to just stagger home and fall over with the dog. Also, I’ve been reading a really fantastic book that a friend gave me recently, Sacred Trash: The Lost and Found World of the Cairo Geniza. It’s beautifully written, fast-paced, and even made me meditate on some classic PF topics, like the value of “stuff.” The word geniza, as the authors explain early on, can have a lot of different meanings, but it came to mean a hidden place where Jewish communities would put worn-out sacred books, something like an above-ground burial. For some reason, around 1000 AD, the Jewish community of Cairo started to store not only scripture, but anything written with Hebrew letters, and when the geniza was emptied out in the late 19th century it turned out to contain a thousand years’ worth of letters, business records, and other documents that in and of themselves were nearly meaningless in their own time, but now tell us modern people what it was like to be a medieval Jewish resident of Cairo like nothing else could. (The geniza also contained sacred texts like the original Hebrew version of Ben Sirah, which people had thought for centuries did not exist.)

Historians tend to rely on pack rats of various kinds to do their work, but I am not a pack rat by nature at all; I’ve actually intentionally destroyed things like the letters I wrote back and forth with friends as a teenager, because I’m terrified I’ll turn up in a history book hundreds of years from now sounding like an idiot 🙂 But sometimes I do think I have a tendency to let things go too easily. I kind of like the idea of the geniza — you can get all the stuff out of your own house and just pile it up in a hidden room at the synagogue….

The other problem with my natural minimalism is that it really does not equate to natural frugality. I’ve been struggling with this a lot this summer. Take my skin care routine. I have pretty sensitive skin, and have never found a drugstore product that didn’t feel too rough or make me break out a bit, even supposedly gentle lines like Burt’s Bees or Neutrogena (though I do use Neutrogena sunblock.) I never wear makeup, of any kind, so that’s pretty frugal! But I do plenty of damage to my bank account with what I spend on a facial cleanser, a facial moisturizer, and an eye cream. I get them all from Fresh (well, actually, I get them from Sephora these days, using ebates to spare myself a little financial pain (<–affiliate link for ebates, just in case anyone isn’t using them yet, seriously, they are amazing and I can’t believe I didn’t sign up earlier) but they’re made by Fresh) and they are pricy. They do last a long time, but still, $38 for a facial cleanser? $42 for a moisturizer? It’s a lot. My medicine cabinet is nearly empty with just a tube and two jars in it, but I could have basically half the drugstore for that.

It’s not just the skin care stuff either. I’ve been struggling all summer with the cost of buying all the fruit and vegetables and interesting other ingredients I want, and the cost of doing things like going out to dinner a bit more and buying tickets to shows, but I haven’t been doing a great job and it’s really caught up with me now. For the last few months I’ve been borrowing ahead from the next month’s budget, vowing to be really cheap the following month and get back to baseline, and every month I’ve failed to be cheap enough to do that — plus I’ve been frustrated by putting off purchases like face cream and a few other things. It’s just annoying. I started September $140 in the hole, and I think I’m going to end it about $100 over budget.

Sigh, I dunno. I really wanted to make it to the end of the year with a 50% savings rate, both because this is supposed to be the Year of Saving and because, hello, I want to save up a down payment by early next summer, why am I buying $42 face cream on the internet???????????????????????????? I’m at exactly 50% right now on the year, and it turns out that secretly I really wanted not only to “officially” save 50% of my income in savings accounts and retirement accounts, but also to “unofficially” rack up slush reserves. And that’s just not happening as of right now. I know I should be really happy with my “official” savings rate, but somehow it’s hard not to want to blast that out of the water with a 60% or even 70% savings rate.

Blah blah, you are all at FinCon, probably nobody is even reading this right now 🙂 Back in a couple of days with a more cheerful post about my visual motivation for the down payment savings.



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.

My Emergency Fund is Officially FULL!

Screen Shot 2015-08-14 at 10.30.59 AMMy paycheck hits today, and so does my automatic transfer of $500 into my Emergency Fund savings account. That takes me, in 18 months, from a person who’s never heard of an emergency fund, to a person who was sure that the idea of saving six months’ expenses was impossible, to a person who…has saved six months’ expenses.

[Yes, yes, I was 35 and had never heard of an emergency fund. Live and learn!]

Here’s the thing, though, although I want to be all happy joy joy about how good it feels to have this done — and it does — my predominant feeling is that I kind of hated saving like this and don’t want to do it again. Continue reading “My Emergency Fund is Officially FULL!”

Where Does My Paycheck Go?

[I’m traveling for work this week, so this post is pre-scheduled. Responses to comments might be a bit slow. Hopefully by the time you read this, I will be enjoying good weather and not inventing new ways to spend money.]

I got oddly fascinated by the breakdown of my paystub the other day. Sometimes I feel like no sooner do I get paid, than it’s all gone, you know? So, I decided to do a little math. In a standard half-month period (I get paid twice a month), here’s what happens to my paycheck:

  • 10% goes to income taxes (6.6% federal, 2.3% state, and 1.2% county — state/local taxes are way lower here than they were in my previous two jobs)
  • 7.4% goes to FICA (6% Social Security and 1.4% Medicare — interesting, I would have guessed Medicare ate up more of my paycheck than that.)
  • 2.6% goes to health insurance premiums (medical, dental, eyesight).
  • 25% goes to retirement savings

At this point we are up to 45% that disappears from my paycheck before I ever see it! No wonder I feel like it all goes so fast!

The other 55% gets direct-deposited, and that’s what I work with for my actual budget, so at this point I moved away from the paystub and looked at my budget and did more math.

  • 22% goes to various savings accounts (emergency, travel, down payment) — now I’m down to only 33%.
  • 10.7% goes to rent and utilities
  • 7.5% goes to cash for groceries and so on
  • 2.5% goes to transportation (car insurance, gas)

That’s a total of 20.7% for essential monthly expenses, so after all’s said and done I have just 12.3% of my paycheck for spending money and things like medical care, car repairs, clothing and so on. I usually put 2.5% in my slush/free spending account, so there’s just under 10% available for the other stuff.

I actually can’t tell whether that’s a lot, or a little. If anyone feels like doing some similar math, I’d love to know where you’re at.

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”

Rethinking The Way I Allocate Side Hustle Income

When I first started writing this blog, a little less than a year ago, I was really concerned about two things: finishing my debt payoff, and starting to save for retirement. At 35, I felt there was really no time to waste; I’d already missed out on all the big gains of the post-crash years, too, so I couldn’t expect the market to necessarily be much help. (Mind you, it’s helped some; at this exact moment, I’m showing a $750 gain above what I’ve invested.) Recently, however, I’ve realized I need to make a change to my financial plan. Continue reading “Rethinking The Way I Allocate Side Hustle Income”

Why I Budget 4 Ways for “Miscellaneous”

This post is pre-written; I’m away for a few days at a conference. I should still have internet access but responses to comments will probably be slower than usual.

I’ve been refining my budgeting strategy for a while now — as those of you who’ve been following know, since I can’t shut up about it — and there’s one thing I started doing in January that I really like. If you look at my budget categories, you actually see four that could be filed under “misc.” I take out $300 in cash every month; I have a line item for “gremlins” (more on that in a sec) that I’m now putting $100 into every month; I have $500 going into the emergency fund kept in a separate account; and I also have a line item for “slush” that is currently getting about $120 a month. Continue reading “Why I Budget 4 Ways for “Miscellaneous””