Archive for the ‘Saving’ Category

Net Worth Update Mid-2019
July 16, 2019

Since we bought our house, I’ve found Net Worth to be slightly less of a useful number than more liquid assets, so I started tracking them separately.

Until a house is sold, that’s not easily accessible money.  There’s also the question of realtor’s fees – an immediate hit of 6% of whatever the house sells for.  And with our time horizon for staying in our current house – a handful more years, or until we retire? – I feel nervous even counting on the sales price of the house.

I’m still deciding whether or not I feel comfortable sharing actual numbers (I mean, you could track my #’s down if you really want to know), so what follows is a summary based more on percentages and trends (as inspired by StackingPennies and Revanche), at least until I’m as brave and badass as Save.Spend.Splurge.

I’ve been tracking my net worth for a LONG TIME – it’s fun to see the growth, although I supposed I also have to thank the longest economic expansion in history.  Up until 2009/2010 it’s just my accounts, which might account for the numbers increasing while the stock market was tanking.

NW_jun2019

The Real Estate values above use the purchase price of our house minus 6% realtor fees and the mortgage balance.

  • According to Zillow, our house is now worth about 10% more than we paid 3 years ago, but there’s no guarantee that this will be true when we move.
  • I expect this to tick up fairly regularly over time, at least until my ultra-conservative brain decides to take the guaranteed 3% return.  Or until we stop having to spend money on childcare and I can throw that annual $30K toward the balance.
  • It accounts for ~15% of our net worth.

Cash & Investments includes everything else: retirement accounts, cash savings, taxable investment accounts, bonds, etc.

  • Over 80% of this number is in Retirement Accounts – 85% of that number is in 401Ks, with the rest in Roth accounts. These accounts are mostly in S&P500 or total stock market index funds, with a small % of international, small cap, and bond funds mixed in.
  • 11% is in cash, CDs, or bonds.
  • We have a comparatively small amount in taxable investments – stock shares from my last company and a mutual fund that Husband invested in early in his career (with a 1% fee, whyyyyyyy!) that would be a substantial tax bill if we sold now.

We are 40-60% of the way to financial independence… there is a pretty wide range of possible FI numbers depending on how conservative I try to be with our annual spending and withdrawal rate.

Do you track your net worth?  Do you find it to be a useful metric, or is there a piece of it that is more interesting?

July Finances = Decimated
July 28, 2010

I’m not looking forward to reconciling expenses for July.  We took a vacation to the beach for 4 days, and though it was pretty inexpensive, all things considered, it’s still a huge chunk of money!

$387 for the hotel
$100 for miscellaneous fun spending on the boardwalk
$85 for golf_______________________________
$572 total

Plus, we bought some tickets for Penn State football games this fall (my cousin gets season tickets and sells them to us for face value) for $220, and paid for some of my sister’s since she wasn’t there ($440, to be reimbursed in August, hopefully).  Ugh, and there’s still one more game we need tickets for!

Chad and I also had a failure of communication this month and managed to pay part of our credit card bill twice.  It’s not a ton of money, but still. Very sloppy.

Realistically, I know we planned for this vacation, I know we’d have bought the football tickets anyway, and the extra $50 we paid toward the credit card will be taken up by normal spending by the end of the week, but everything crammed togethr into one weekend is still a little much for me to handle!

How is your July going?

What’s a good buffer?
June 7, 2010

I try to keep a decent buffer in my checking accounts.  I figure it’s easier to keep some extra money in there rather than worry about bills being paid too early or too late.  However, I’ve always struggled with the question of how much buffer I needed.

Right now, I try to keep at least $2,000 in my personal checking.  This is enough to cover about one month of expenses, even though we pay for almost everything out of our joint checking account.  The buffer amount doesn’t include my fudge factor amounts, where I budget for stuff like gifts over several months (to spare myself the pain of coming up with, say, $600 for gifts around Christmas).

In our joint checking, we have a big buffer – it’s our rent + about $2,000 ($3500 total).  I’m more comfortable keeping a big buffer in this account, just for those months where the first paycheck is later or if I make a mistake and pay off my credit card through the wrong account (it happened once! naturally, it was on the CC bill that had a few thousand dollars in charitable donations, and not my normal $10 charges…).  With two people spending out of one account (plus rent, plus everything), it just feels safer to keep a big buffer.

Anyway, I’ve been thinking I should cut back the buffer in my personal checking.  First of all, we take care of normal expenses out of our joint checking account, and money from my paycheck goes directly into that account.  The only regular expenses I pay out of my normal checking are my cell phone bill and my student loans (< $200 together).  If there was an emergency and we immediately needed money, the joint account would probably cover it;  Chad has a personal checking and a savings account linked online, so we could get a little extra, if needed.

Having a big buffer never really bothered me, just because interest rates are so low that I’d be missing out on less than a dollar of interest. Now, though, I think it might be better to cut down, maybe to $1,000 buffer.  An extra $0.83 will add up (over a hundred years or so), and it will give identity thieves less money to work with, should they bother trying to steal the identity of a person who check account balances everysingleday. I don’t know if I’m adventurous enough to keep the minimal buffer that some of my blogger friends do, even if I will earn $0.12 more in interest!

How much of a buffer do you keep in your accounts & why?

Time vs. Money
April 19, 2010

Sorry for the lack of posting recently!

I was loaned out to another group at work for a few weeks, doing work on some 24/7 operations.  I was staffed on a 2pm-10pm shift, which is awesome since that closely matches my normal sleeping cycle.  I was looking forward to sleeping in and getting to help out with a different phase of our operations.

Of course, nothing is ever that easy.

Shortly after I’d switched shifts, the excrement hit the proverbial fan at my real job.  Some of my coworkers who had been loaned out to the same group were immediately called back.  The manager of the other group insisted that some of us stay behind to support the activities that were already taking place, and I was one of the people chosen to stay.  Oh, and I’d get to work the 10pm-6am shift that pays more, but is absolutely brutal.  My boss reluctantly agreed, but encouraged me to keep track of all of the work we were doing to respond to the emergency at my real job.

So this is where the real question of time vs. money comes into play.  Do I stick with working just the one job, and only keep up with the PowerPoint charts the other team is making so I can talk intelligently about it?  Or do I try to get involved in the emergency response work, to keep up visibility and impress my boss with my dedication to the team?

So far I’m choosing the latter, which means I’ve logged 24 hours of overtime in 3 days.  The money is nice, but things are starting to unravel in other areas: I ate chocolate cake for lunch yesterday, eat candy all night to stay awake, am so constantly hopped up on caffeine that I can’t sleep once I get off work at 6am, and my apartment is a mess.

I guess the thing that makes this all worth it is that the work itself is really interesting, and I’m actually sort of excited to wake up and charge in to help.  I’m not offering myself for tasks that are too taxing or time-intensive, but for the grunt work that no one else really wants to do.  (You would be amazed at how much people love it when you’ll type up meeting minutes and timelines for them.  Bonus: your name is on all of the emails when you send it out.)

Supposedly things will slow down by the end of the week.  I’m just hoping I get my sweet 2pm-10pm shift back.

We are now inextricably combined!
January 19, 2010

If you looked at the little chart of my net worth recently, you might have seen it make a huge jump up, essentially doubling.

No, I haven’t won the lottery. Chad and I just finally combined our savings accounts, and he has granted me permission to obsessively track his accounts in addition to my own.

Luckily, he is as good with money as I am, although he is less neurotic obsessive organized than me.

Why am I maxing out my 401K?
December 17, 2009

I mentioned in my 2009 Review that I had come close to maxing out my 401K this year.  I plan to try to do the same next year. 

But a recent post at Punch Debt In The Face (it is worth clicking through just to see the picture at the top of the post) made me stop and consider why I wanted to max it out. It just.. has always been something I wanted to do, and I don’t know if I ever honestly believed I’d get there.

PDITF cut back his 401K contributions, with the reasoning that he wanted more money to plan for the short term & midterm future. After all, you can’t touch that money until you turn 59.5 so once it’s gone, it’s gone. He’s also maxing out his Roth IRA, which means he’s still contributing the recommended amount to retirement (about 15%).

It’s not like he’s going to be spending the money, either – his plan is to invest/save that extra money for the short term.

Quite frankly, it sounds like he has thought out his plan. And for a minute, it threw me for a loop. After all, didn’t I whine about how much lower my cash savings rate would be next year? Maybe I’ve been so fixated on this goal of maxing out all of my retirement funds that I never bothered to ponder the alternatives.

So I did. And I’m going to stick with my plan to max out my 401K next year, because…

1. I will be saving enough cash next year.
It’s going to come out to about 25% of my take-home pay. That’s double the suggested savings rate. It just doesn’t seem like “enough” to me because I’m used to saving so much more than that.

2. I’m saving for two.
Chad can’t contribute to a retirement account if he’s not working. (Although this is misleading, since if he was working, I’d probably have him max out his as well.)

3. I’m going to have to scale back contributions anyway.
If I keep contributions at 20%, I will put in too much money in 2010. So I’m still going to get a cash bump next year, and that’s not taking into account any raise I might earn.

4. That money is not locked up forever.
I can take a loan out of my 401K if I really need money. I know they preach against this. It’s borrowing from your future! If I’m overcontributing, though, I’m just evening things out. The other argument is that losing your job means you have to pay back the loan balance immediatly or face tax penalties. Because my company is awesome, they do not require you to pay back the loan right away if you’re fired – you continue on your normal schedule. 

5. I could use the tax break.
Especially if Chad does find a job, lowering our taxable income could keep us within Roth IRA limits for a year or two extra.

6. I don’t know what I’ll want to do in my 30s, my 40s, my 50s.
That 15% contribution usually assumes you’ll be working right up until retirement. What if I decide to retire early at 45? I’d miss those last few catch up years. I sometimes toy with moving to a small town and becoming a teacher, but I could only handle that big of a pay cut if I’ve planned ahead. Or, if I do need more cash when I’m 40, I can scale back contributions then. Contributing now, while I can afford it, gives me more flexibility later.

(The most interesting part of #6 is that this is one of the same reasons PDITF decided to scale back. We forsee the same issues – what if I want/need more money before retirement? – but have chosen completely opposing strategies to handle it.)

7. You don’t get to make it up.
When I’m 30 and am positively rolling in it (a girl can dream!), I won’t be able to tell the IRS, “Look, I gave $10,000 less than the max when I was 25. Let me just sneak that in there now!”

8. Contributing now gives me the biggest bang for my compound interest bucks.
There was a blog post a year or two ago where someone did the math and said that a 26-year-old who maxed out his/her retirement accounts just that year would have a million dollars at age 65. Now, I might want to retire earlier than that, and I think the annualize growth on that was a bit high (12%), but the principal stands. To combat the uncertainties (will the market really return 12%? What if I want to retire at 55?), I’ll keep my contributions high for as long as I can.

9. No one ever regrets saving too much for retirement.
As long as I’m enjoying my life, I won’t be on my death bed thinking about how I should have spent more money. (Although, come to think of it, a 1% contribution reduction could get me a Coach purse or something. WAIT I NEED TO START OVER!)

Ramit had a survey where 62% of people in their 40s wished they’d saved more for retirement. I don’t want to be one of them.

10. If I die before I turn 60, I can leave that money to my loved ones.
Here again, the fact that I’m still enjoying my life means that even if I die before getting to use any of this money, I won’t regret it. And I’ll be able to leave it to my (hypothetical) children, to my sisters, to Chad, to my parents, my cousins. And that might be a better use than me finally buying some Marc Jacobs when I retire.

What do you think? Are you changing your contributions? Why?

Also, is it just me, or have I been doing a lot of list-based posts lately?

Leftover Savings
December 10, 2009

I created several savings sub-accounts at the beginning of this year, for gifts, for the wedding, for the honeymoon, etc. Lots of these are cyclic – the honeymoon fund will just become a travel fund, I’ll still need to buy gifts next year. So that’s easy.

Now, my question is about the $700 left over in my wedding fund. Near the end, we just started cashflowing a lot of it, and once I wrote the $7,000 check to our venue, my half of the wedding costs was basically covered.

So what should I do with the extra money that’s left over? I’ve been making a list in my head.

  1. Put in back into savings. After all, that’s where the wedding fund came from, and it’s not exactly like we stayed under budget for the wedding.
  2. Blow most of it on one expensive item. Like a high-end winter coat, a pair of boots, a real leather purse (I have never owned one!), or some sexy Louboutins. I have trouble spending more than like $80 on any one item, so by saying that I have to spend most of it in one lump sum, that could let me get something I wouldn’t otherwise get.
  3. Shopping spree! Spend it all as I wish – probably on a bunch of mid-range retail items. (Or at Anthropologie, although their sales have been getting picked clean lately. It’s almost like the Banana Republic sales where nothing is left except size 00 and size 16.) It could also be used to pad my personal spending budget for next year.
  4. Donate it to charity. I haven’t donated since January, which was really when I donated an extra $1,000 for the tax deduction in 2008 and counted it against January’s budget.
  5. Use it as a “wardrobe rebuild” savings account. Every month I’d transfer the leftovers from my clothing allowance into this account, and eventually use it to replace everything in my closet. This doesn’t appeal to me very much as an option since about 60% of my closet is stuff I wear and like, and I could probably get by with just those items for a while. I don’t need a What Not To Wear cleanout.
  6. Use it to pay off debt. Even though I’m not really worried about that right now, it can’t be a bad thing to pay down the balance a little bit extra here and there.

And of course, combinations of any of these would be OK as well.

What do you think?

Thankful.
November 25, 2009

I was working up my 2010 budget the other day.  I always like to plan for the worst case.  I always like to be conservative.  Part of it is that I need to know  my goals are at least achievable before I try, or I get too overwhelmed.  Part of it is just the security of knowing the worst case, if for some reason I didn’t get that raise, or didn’t get overtime, or Chad doesn’t find work all year.  And part of it is seeing those numbers, feeling disappointed, and finding the motivation to try harder, to earn more, to spend less.

The conservative case, if we spend 2010 with only my base income with no bonuses, no raises, but also no emergencies or big unplanned expenses, leaves me averaging a little more than $1,000 per month to put into cash savings.  This amount doesn’t include my 401K, which I have vowed to max out this year, but does include any money I’d want to put into my Roth IRA.

I’ll tell you, it’s not the happiest of numbers for me.  My goal for 2009 was to max out my Roth, get as close as possible on my 401K, and save an additional $10K on top of that.  In 2009, I’ll be able to save 48% of my gross pay (or more, if I get some extra overtime).  In 2008, I saved over 50%.  In 2010, I’ll manage around 25%.

So I was feeling a little bit disappointed, but then (in the spirit of Thanksgiving), I realized something.

There are plenty of people who would have trouble saving $1000 in a year.  My parents, when they were my age, had 3 kids and only high school diplomas, and they would have been lucky to save anything at all.

For some people, a husband unable to find a job could mean the difference between feeding their kids, paying their utilities, or keeping up on mortgage payments.

And some people have no money problems but no savings, either because they can’t find that mindset or because no one ever tried to teach them.

So I’m thankful.

I’m thankful that I found a job I’m good at, that I enjoy, and that pays well. 

I’m thankful that Chad and I have always been frugal, so we won’t need to make a drastic change in our lifestyle to survive on one income.

I’m thankful that Chad is a better engineer than I am, and that he’ll definitely find a job next year if he doesn’t decide to go back to school instead.

I’m thankful that I’ll be able to save anything at all.

I’m thankful that my father bothered to teach me about money and encouraged my savings. 

I’m thankful that my budget still includes a clothing allowance.

I’m thankful for my blog readers, who will probably not call me a rich brat and instead will offer words of encouragement.

Hoping all my Americans readers have a wonderful Thanksgiving! Everyone else, have a wonderful Thursday! We’ll be in NY visiting Chad’s parents and stuffing as much turkey into our mouths as possible!

Net worth hits six figures!
November 21, 2009

I totally missed this when I updated my NetworthIQ for October, but my net worth has officially hit six figures!  Of course, this is all based on the current position of the stock market, but I won’t think too much about that…

I wonder how high it would be if I added Chad’s accounts in!

Energy thiefs!
November 18, 2009

The weather is getting colder in Virginia, and the past week has been especially dreary.

In California, we didn’t have central heat (or air conditioning), so when the temperature went down, we’d just pile on sweaters and maybe put on the space heater.   The only time it was a problem was at night, but even then, it was a simple matter of adding a few blankets to the bed.

This week, despite the cold temperatures outside, we didn’t put the heat on.  It’s just not something we think to do.  It has been about 65o in our apartment, and that hasn’t been uncomfortable at all.

But it has occurred to me that perhaps there’s more than just our adaptability at play.  You see, we have people living on 2 sides of our apartment, and there is an apartment below ours as well.  It’s likely that those neighbors do have their heat on, and that heat is rising up to our apartment.

We’re comfortable, and we don’t have to pay for heat, but is that ethical?

If we ran our heat, those neighbors would probably save money on their electric bills, and we’d pay a little more.  I don’t know how much of a difference it would make in the temperature since we have high ceilings and we’d probably lose a bit through the roof.  Maybe we wouldn’t need the blankets that we usually have thrown on our laps.

Complicating matters is that sometimes, it’s too warm.  A few nights, even with the wicked cold outside, I slept with the bedroom fan on because it was too hot to sleep.  If those downstairs neighbors are heating our apartment, it’s costing us more money to run that fan.

Furthering my confusion is that this summer, we ran our air conditioning. Those same neighbors probably benefited from that if you assume the same heat transfer mechanisms are at play.

We haven’t met these neighbors, so it feels a little awkward to knock on the door and say, “Hey we think we might be leeching heat off you.  How do you feel about that?”

Is there some sort of solution that I haven’t thought of, or should we just accept that this exchange of energy is an consequence of apartment living from which we are currently benefitting?