Weekly update: false uglification

The numbers look sooooo bad right now on mint, but they will improve a lot by early next week (probably Monday.)

Spending, April 20-26:

Travel: $31.50 for a ticket to be used during my CA trip; $138 for plane tickets

Food: $75 — again a bit of a guess, since there was some cash for coffee etc here and there. Didn’t have to buy groceries this week so this was all meals out, drinks at a conference. They do add up, huh.

Phone: $178.62. This is literally for the phone, plus a month of the plan.

Car insurance: $53.50

Gas: $118.12 (reimbursable) (Most of this is for a conference I’m attending, a 10-hour drive away from home; this is a TON of gas, way more than I usually get in month.)

Stupidity tax: $20 (parking ticket)

Student loan payment: $2418.88 (KILLING IT, this student loan is no more — soon to be followed by its brother. Or, well, within the next few months anyway.)

Weekly total (without the student loan payment: $614.74, of which $116 is reimbursible, making the real total $498. This still seems like a lot — except for the week I pay rent, I feel like my weekly expenses should rarely be more than a couple hundred bucks — but maybe not. Maybe there’s always something; food is a constant, but something else, a utility bill, something I need to buy, is always coming up.

Payday at last

Of course it’s all going right back out the door 🙂

But the first thing I did this morning when I woke up was head over to student loan lender #1 and click on “Pay off loan.” I’ll give numbers in the weekly and monthly update, but this is just a short little note of cheering!

Also: I looked at the old repayment schedule. If I’d taken ten years to pay it off, I would’ve paid about $4000 in interest over the life of the loan. Instead, by paying it off almost a year to the day after graduation, I’ve paid around $300. (Have to add up the exact amounts; again, will do that later.)

So striking.

Single and sighing

This article is geared towards Canadians, but I still found it interesting: “Going It Alone: Retirement for Singles” (2011).

There were a few things in it that made me think about my own situation:

(1) It confirms my sense that there are tradeoffs involved. I pay higher tax rates and have higher housing costs than if I were splitting a 1-bedroom apartment. On the other hand, I’m not paying for children, and I bet that will easily save me the $250,000 the article mentions over the course of a lifetime. I could see how it could be more — you need a bigger housing situation, medical care, school stuff, clothes, food, and then eventually college plus, if they’re anything like I am myself, they then need financial help while they figure out what they’re doing in their adult lives!

(2) It reminded me that nothing is certain. The sisters they interviewed had both been married; then one was divorced and one was widowed and they were right back where they started! Even if I were married, the odds would have to be at least 50-50 that the other person would die before me.

(3) Yeah, I have to seriously get going on this savings thing. I feel (and am) so far behind.

A new goal for 2014: Side Hustling My Way to Retirement

I’m in a little bit of a panic about retirement. I’m way behind where I should be at 35! If I had a guarantee of a steady income for a while to come, I could relax. But I don’t; I have a guarantee of two more years, at a rate of pay significantly below my rate this year. And I’m actually looking at a lifestyle crunch, because while my student loans will be paid off, that’s all I did this year: pay my loans and live. I only managed to save a couple thousand on top of that. So it’s a damn good thing my cost of living is going to drop in Indiana, because my pay will be dropping and I need to get really really serious about this retirement thing.

I’m starting a 401(k) at my new job in July, and I’m going to have $1000 a month held out of a (gross) $4000 paycheck, which is, I know, a lot, but seems necessary because I’m playing so much catch-up. I’m not sure exactly what my take-home will be like, but I’m guessing it’ll be around $2000, once the 401(k), taxes, health insurance, etc, are removed. I’ll have monthly fixed expenses (rent, utilities, phone, car insurance, grocery budget) of $650. That leaves a lot of discretionary income to save for travel, future housing costs (down payment fund), medical expenses, gas/car stuff, clothing, and just plain fun…except that if I’m going to fully fund a Roth IRA for 2014, I’d need to keep back $900, which would leave me with only $450 for all those savings goals plus slush/fun money. Not a lot.

Conclusion: I need more income, and that income needs to not disappear into the black hole of the slush fund. It needs to go directly into a savings account that I use to buy Roth shares whenever it hits a certain amount, say, $250.

So, here’s a goal for the remaining 7 months in 2014: $5500 in extra income, all of which will be directly routed to the brand-new savings account I just set up, no excuses, no exceptions!

Other income I intend to route this way, if I can pick up any of this:
–interest from savings accounts (not likely to be much, but still….)
–author royalties
–honoraria for speeches (I’ll be lucky if I can land one of these this year, but….)
–usertesting.com
–ebay and amazon and craigslist
–freelance editing (I hope this will be my main source; I need to start getting some gigs though)
–babysitting? tutoring?
–promotions, like “open a new credit card or checking account”

I’m starting it out with $68.96 I just made through a combination of ebay and usertesting.com. Only $5411 to go!

It’s Sort of Fun To Talk About Spending: A Weekly Update

As I mentioned yesterday, I’m sort of obsessed right now by money. This hopefully will not last forever — I would like to get back to thinking about other things — but there you go. Right now it is actually fun to look at my mint.com account and my bank account and everything and just see, you know, what did I spend? Where did it go? So I decided that I’d do a weekly spending update. I don’t know how much I’ll really learn from this but…why not, basically 🙂

So, April 13-19, how’d we do?

Food: $125 [This is a bit of a guess; my mint.com transactions on groceries, two meals out, and so on, added up to $75. But I know for a fact I spent $25 yesterday in cash at the farmer’s market and another $16 in cash for dinner out, and I also spent some money on coffee and so on in cash throughout the week. Oh my God, I *have* to get my food costs under control, because this is a very typical week, frankly — which means I could easily be spending more like $500 a month. On food. For one person. Well, I guess this is what they mean by a wake-up call.]

Car: $96.18. This was an expensive week; gas, but also $35 to my EZ-Pass account and $27 to get the oil changed.

Travel: $219.13. Round trip tickets to California (I also used points, so this is not nearly as high as it could be, but still.)

Reimbursable: $155 for a conference registration and $573 for moving costs.

Student Loan: $88.34. This is the minimum payment on my Sallie Mae loan, which I’m making monthly while throwing huge amounts of money at the Great Lakes loan which has a higher interest rate.

Federal Taxes: $8.00 [seriously]

Other: well, it hasn’t actually been charged yet, but I bought a new phone. My cell phone bill has been bothering me for a while; I have an ancient (4 year old at least) flip phone, but I pay $55 a month for talk and text, and that just seems HUGE. So I decided to try Republic Wireless, a company where you use wifi for calls and texts when you can, and 3G when you can’t. It’s $10 a month but you have to buy the phone. So I was waiting until they released a cheaper phone, which they did on Thursday; it’ll be $150 out of pocket but with no plan or whatever, and obviously if it works I’ll be back in the black after just a few months because the plan is so much cheaper. It has a 30-day money back guarantee, so I’m going to keep my old phone/plan until I find out if this new one really works.

So I guess I won’t count that in my total because (a) it hasn’t even been charged to my card yet and (b) I’m not sure if I’m really keeping it.

This means my expenses for the week were…holy shit…$1264, of which $728 is reimbursable, meaning that I have to pay for $536 of it (plus the phone eventually.) Wow.

On the upside, even though I have more plane tickets to buy, next week pretty much *has* to be cheaper! Nowhere to go but up!

Waiting for payday

Right now, I’m having some psychological trouble — we get paid once a month, and literally since the end of last month I’ve been counting the minutes until I get paid *this* month, so I can throw a lot of money at the student loan. I just want it GONE, and it can’t be until I get three more paychecks.

This is weird, because, like, in the meantime I’m supposed to be living my life — doing my job, not just waiting for a check to come in! It’s been hard to focus on anything but my net worth this month, though.

(Although that is not going to look pretty at the end of April, for two reasons: I decided it was silly to count my car, since that just doesn’t seem to qualify as an asset. It’s not like I’m going to sell it, after all. So I took it off mint.com. And second, I just put a ton of stuff on my credit card: I had to book movers, and nearly all of that will be reimbursable, but in the meantime it’s going to sit on my card (which luckily has an 0% rate for the next year) and look ugly, until at least the end of July. And also I bought plane tickets for my May/June expedition to the West Coast, so there was a bigger expense than I usually have in a month, here. We should be in positive territory anyway by the end of the summer — debt paid off, moving expenses reimbursed, plane tickets paid down — but things are going to be weird for a while.)

But, psychologically, I’m going to have to get over just sitting around waiting to get paid, or realistically, I won’t get paid for much longer!

Cutting Costs for the Already Pretty Frugal

I both have and have not been good at managing money in the past. I’m about 12 years past the point at which I wish I’d started saving something, anything, for retirement. There’s also one really, really big expense I wish I’d cut: I wish I’d accepted the necessity of a cheap apartment a few years longer. I lived in my very very expensive grad school city for that entire twelve years out of college, and for the first eight of them I lived within my means. I cycled up and down through credit card debt when I was freelancing, but never carried a balance longer than a few months at a time, as I prioritized paying it off when I had a work project going. (This left me with amazing credit, by the way.) I lived with roommates and/or in dirt-cheap parts of the city (sometimes both) and took on second jobs while in grad school.

But during the last four years, I had had enough of living in a part of the city that was incredibly inconvenient for my social life. It took me nearly 2 hours to travel from the neighborhood where I lived to the neighborhood where most of my friends lived, and as a result I rarely saw them. So I moved, and then I moved again to a different place in the same neighborhood. My social life *definitely* improved, but all my expenses went up — rent, food, transportation, everything. This is where the majority of my $19K student loan went.

So ANYWAY, I regret not working harder at finding a much more affordable living situation in New Neighborhood (I don’t really regret moving in the first place — maybe a little, but not much.)

But really — all things considered — I have lived a damn cheap life, which is why I’m not in much worse financial shape after all that grad school time. Here are things I don’t do:

(1) have cable
(2) have a smartphone
(3) drink (mostly; I’ll have a glass of wine every now and then)
(4) “shop” — not that I never spend money on books, clothes, or music, but going out looking to buy stuff isn’t a hobby. Good thing too since I move so much.
(5) wear makeup or engage in a lot of beauty routine stuff — I get my hair cut, which is probably my biggest personal care expense. (For several years I did it myself, too.)
(6) go to a lot of concerts or other non-free entertainment
(7) drive a car that is even new-ish

There are other things I spend money on that do feel like necessities:

(1) some clothing
(2) therapy, at the moment
(3) cell phone
(4) travel. I don’t live in the same place as any of my friends/family. Plane tickets and gas add up.

This leaves things I probably could stand to cut back on:

(1) food — sigh. Yeah. I spend a lot of money on food. I do bring lunch a lot, but not every single day. When I’m at work, I generally buy a cup of coffee in the afternoon, which runs around $2. I buy nice produce. I buy in cash at the farmer’s market a lot so I honestly don’t have a great sense of what I spend even with using mint, but I wouldn’t be surprised if food added up to $300 a month or more. For one person. Ouch.
(2) …internet? I guess?

And it also leaves things I *could* cut back on but just *really don’t want to*. Things like the occasional movie/CD/book, or nice shampoo, or buying a new kitchen item.

So, with the big pay cut arriving in July (to go along with my loans being paid off, so things will more or less even out), I agreed to move in with a friend in New City. New City is already extremely cheap even without sharing space, and monthly rent/utilities expenses should drop to $350-400 depending on time of year — which is to say, literally in half from what they are now. All of that cash is going STRAIGHT into my IRA.

I’m not sure how long this will last — probably a minimum of 6 months, but maybe not more than that. We’re just going to see how we do with each other, and maybe I’ll end up in more expensive housing afterwards. But that’ll be an extra $2000 or so to add to the world’s tiniest retirement fund, and I guess every little bit helps.

(Also, sigh, I need to get serious about controlling the food budget.)

The Rent Is Too Damn High

One thing that does concern me about the PF blogosphere is that in some quarters there’s a lack of…sympathy? understanding? of the crunch that the realities of costs/income in the United States today create. For example, the infographic here makes it seem as if Americans’ money troubles can mostly be chalked up to buying expensive purses. While “living beyond our means” is definitely a problem for *some* — including me; the reason why I had the $19k of debt a year ago is primarily that I didn’t stick strictly to a budget and seek out the cheapest housing available as a grad student in a very, very expensive city; I could have found smaller, cheaper rooms in less desirable neighborhoods and probably avoided some or all of that debt — moral failure doesn’t really account for the bad ratio of spending to income that we see there.

For most Americans, the two biggest costs are health care and housing, followed in short order by commuting. Then there’s child care, and of course food. For decades, real wages have flatlined or declined in most sectors of the economy, while health care and housing (especially) have skyrocketed. In any one given case, the problem might be spending too much on vacations, drinking, or flat-screen TVs, but in the aggregate, the problem is much more structural; people working precarious jobs in a part-time, freelance, relentlessly anti-labor and cost-cutting economy are having a lot of trouble affording the basics.

This is “the decline of the middle class” in a nutshell. I’m 35 and single. I’m not talented in any of the areas where people still make a lot of money — computer programming, finance. I might get a job pretty much anywhere in the country, and that job will probably fall within a narrow salary range; at the low end, around $50K, at the high end, around $65K. In my current town, $65K for a single person buys a pretty nice life; housing’s not dirt cheap or anything, but it’s very affordable. Even on $50K it would be a pretty nice life! However, let’s say the job is in Philadelphia, Chicago, or Los Angeles — or, God forbid, New York or San Francisco or Washington DC (all places I would love to live, by the way.) Salary likely to be on the high end of that range, but in terms of housing? I can’t see how I’d avoid having to either have roommates, or find some kind of wacky S.R.O. arrangement with a hotplate (which, by the way, don’t really exist anymore), or live in a place that required a massive commute. Rent for a 1br in DC or NYC, in any kind of central location not requiring hours on public transportation, is running anywhere from $2500 to $5000 *a month*. So…not happening.

The point is that even people willing to “go where the jobs are” and to work very very hard and to live very very frugally (I don’t drink, rarely travel, use the public library, do virtually all my own cooking, hardly ever buy clothes) can *still* find themselves in a situation where the basic cost of housing is almost out of reach. And this is discounting medical emergencies, which are still the #1 cause of bankruptcy in the United States.

So, to sum up: I don’t discount the role of personal responsibility and the need to live frugally. People in debt *do* need to figure out some kind of personal solution. But I feel pretty strongly that we ought to acknowledge that rent, medical care, child care, and transportation can eat up a hell of a lot of a normal salary — and when you work at Wal-mart or McDonald’s? Well, forget about it.

[ETA: This very interesting post (and interesting comments) from Impersonal Finance gets at some of this.]

Interest

I learned about interest in sixth grade or so, like everyone else, and then more or less forgot about it. But I’m kind of obsessed with my student loan lender’s website right now — I’m waiting around for my April paycheck (end of the month) so I can pay off loan #1 entirely, as it’s down to an amount when I can do that. So I kind of like going over there and looking at the balance and thinking “soon! soon!”

Today I looked at the “level” vs. “graduated” numbers though, because they were there and I was bored. This refers to the two possible payment plans they offer. On the level plan, I would (if I weren’t going to pay the loan off entirely this month) pay $95 a month for the next 28 months (just over two years) and end up paying just under $200 more in interest. That actually doesn’t sound so bad; if the damn thing weren’t so annoying, I’d consider doing that, hardly noticing each payment, and bulking up my savings accounts instead. (It is annoying though, so I’m not going to.)

On the “graduated” plan, meant for people with lower incomes, I’d make payments of $25 a month now, rising to $34 over the course of 115 months (or not quite 10 years.) This would be even less noticeable from my monthly budget. But I’d end up paying $940 in interest, or over 1/3 of the current total value of the loan. (Let’s not even talk about what these numbers would look like if I hadn’t been aggressively paying the thing down for six months.)

The difference between these two might as well come with a big flashing sign saying “the lending industry punishes poor people.” The big difference — the ability to make either triple or quadruple the minimum payment — results in a payment time of around 75% less, and also an interest payment only 21% of the other. (I did actual math for that last number.)

And whose interest is that in?

Early ups and downs

One of the things that I’ve really liked about reading around the personal finance blogosphere is how committed people are to reaching their goals — and how open they are about how hard it is to keep it moving on a day to day basis. I’ve only been at this blog for a week, and only had my big “must have a retirement fund now” moment a couple weeks before that, and yet already I can see this pattern.

Objectively I’m not in a terrible spot right now; the guy in his late 50s whose retirement savings are wiped out after a year of unemployment (just featured in the NY Times) is way worse off, and so are, like, billions of poor people the world over. I am determined to wipe out my debt this summer and not get back into it unless I need a car loan (in case mine dies, not because I plan to upgrade) or a mortgage. I have a guaranteed income for the next 15 months. I have wonderful friends and family members that would back me up in a second if I needed it.

But despite these good things, I feel…wobbly. Maybe because none of my financials are going to budge for nearly a month now, until my next paycheck? That might have something to do with it. It’s exciting to see my net worth jump so much at a time, and to pay off a big chunk of loan, and to open a retirement account. Waiting around, doing my job, for a month, until the next one comes in…that’s a lot of days of “one foot in front of the other” where nothing is happening!

So, I guess I have to work on both moderating the spike in my mood when I something good with money, and also on moderating the low I feel on a day like today, when I’m convinced any effort I make is for nothing.