The Most Wonderful Time of the Year

Q4 baby, woohoo! The fun starts this month. In September of this year I fully satisfied my social security tax requirement. That means I get a nice chunk of change extra in all of my Q4 paychecks.
That alone makes Q4 awesome.  I also have been wrestling with my health insurance company to get refunded money that they owe me (dating back since May) and I'm hopeful that comes in this month, because then I can finally submit whatever is left from those claims to my FSA account where I will have almost $1,000 that I can pay out to myself. Plus, I'm going to make a big donation to Goodwill, locking in a nice tax deduction for the second most magical time of the year, tax refund time. October -- April is definitely the time of the year when I get paid the most, between social security tax max out, bonus (praise be to the Gods) and then tax refund. And this year I have no big expenses. No house down payment to save for, no student loan to pay off, no crazy transfer taxes around a new mortgage. All mine to save! Woohoo!!!

Not much to report

Not the most exciting title for an update, but it's the truth! I could have sworn though that I posted in August. Anyway, the market is on fire, which is good and bad. I have a bunch of cash that I want to invest, but I don't want to invest now, for fear I will be investing at the high. I know October is usually a not very promising month for the market, so I'll be on the watch for any downturn, no matter how slight, to invest. I saw my Learnvest adviser (or talked to her) recently and we mostly talked about a strategy for investing the cash.  We'll see.  Overall, I"m about 40% in cash, which would be fine if I were 80, but since I am not, I need to put my money to work so it will grow.

The real estate market in my hood is also on fire. There's a place similar to mine on the market for $150K more than I bought mine for a little more than a year ago. So in theory if I could sell my place for that amount, I'd have to bring about 100K less to the closing to give to the bank to pay off the mortgage. Which is nice, but irrelevant because I have no plans to sell.

I've been pretty good on my expenses lately. I haven't bought a stitch of clothing, any electronics, any furnishings or any sporting goods this month, and there's only 10 days left. Would kind of like to keep it that way. My food budget is somewhat under control. Took lunch all but one day this week.

Yawn, sorry for the boring update! But I guess slow and steady wins the race.

Spending Reduction Success

I'm so happy I've finally gotten my restaurant/out of home dining budget down! For the last two months I've spent about half of what I normally spend.

March = $642
April = $787
May = $478
June = $380

I did it by making my lunch and making a big pot of something that I can eat all week for dinner. I also cut back on going out to dinner as much. In June, I was traveling so much for work that a lot of my food expense was covered, so I was able to have a nice sushi night out ($100). If I hadn't done that, I would have spent barely anything at all on eating out.

It feels so good to get my spending in this category under control.

I also did my net worth update for the quarter. Even with the recent market dip I'm pretty much on track for where I want to be. I like to increase my net worth by $25K a quarter. Of course that's not always possible, but that's the goal.

One thing I do not do is include any price appreciation from my apt. in my net worth. Although I paid $450,000 for my apartment one year ago, the same unit in a different building just sold for $600,000!!!! Which I think is the sign that we're in a bubble, but the good news is I don't care I'm just going to keep my head down and keep paying off my mortgage.

How much do you save?

I've been reading Mr. Money Moustache a lot lately. I love his blog and feel like it's really the only PF blog where I am actually learning new things. Anyway, as his readers know, he advocates saving like 50% of your pay. Um, wow. And  I thought I was an aggressive saver!

I've never actually added up about how much I save each month, so I wanted to see what % I save. In various ways (pre-pay mortgage principal, cash direct deposited to my trading account, and cash deposited to my checking account) I save about 15-20% of my monthly income. It's not bad, but it's not great. The only thing that makes me a super saver is my bonus.  I usually get a bonus in December (praise be to the Gods) and it's a good chuck of my income. Last year 50% of my gross was paid out in that one check. And I save the whole thing (except when I spent it on my downpayment for the apartment last year). So in reality I save a lot more than 20%, but I want to try to get better at saving on the day-to-day level. I guess it's just more challenging because so much of my compensation is paid out at the end of the year. It's good practice though for if I ever had to take a lower-paying job. I know I can successfully live on half of my salary and still save 20%.

This month I've been traveling a ton for work which means I save a lot on food expenses. My monthly spending for June had been very low, until I booked an international vacation for December. But the saving wasn't for naught, because I was able to pay for it all out of my salary and not have to touch savings.

I'm curious about doing my networth update for Q2. The stock market was humming until about June. Unfortunately I think I'm going to end up down or flat on my investments for the quarter, and I haven't saved a ton of cash, so I think I'll be below average on my quarterly networth increase, but we'll see.

Boring

I haven't posted in a bit because things have been moving along. Nothing spectacular, except the performance of the stock market. I held out investing my bonus in January, now I wish I had dumped it all into the market and ridden this high. I'm still waiting to see if there's any kind of dip and will invest then. 

I'm still spending too much money on food, but did cut down on lunch spending by going to the grocery store 1x a week and making lunch at work instead of buying it every day. I think that helped offset some food expenses.

I worked out I've been spending about $500 a month on healthcare expenses, in addition to the $200 I put aside in my flex spending. I don't really feel like there are ways to reduce this expense. I'd rather reduce in other areas if I need to.

To date this year I have barely spent anything on clothes. As a result, I feel a kind of pent up demand. I fully anticipate increasing spending in this area in the rest of the year. I had consciously held off on clothing purchases to try to offset my significant healthcare spending.

I'll do a mid-year budget update in early July, along with a networth update.

When does getting a check for $4K in the mail suck?

When you get it because your 401K plan has failed the IRS' non-discrimination test and the amount is being refunded from your 401K contribution for 2012 and will increase your taxable income in 2013!!! Boo. Sooooooooooooooooo annoying.

I do everything right to save for retirement and the government penalizes me at every turn -- my IRA contribution (which I max out every year) is not deductible. Now my only tax advantaged account which I am legally allowed to contribute $17,500 to (or whatever the # is) is reduced by several thousand dollars -- more than 20% of my contribution returned!!! I think the government should encourage everyone to save, and if "high income" savers save more they shouldn't be penalized. In reality, the government probably does not do this because they care about encouraging lower income savers, but because they want to get their hands on as much income as possible from high-income earners so they can tax it.  Ugh. Well, I'm just going to have to save more in my taxable account and spend less to make up for the government's constant blocking of my attempts to save in tax-advantaged accounts.

New Way of Looking at a Goal

So over the last week or so I've gotten really excited about a new strategy that I can use to reach my ultimate financial goal: to payoff the mortgage. When I first got my mortgage I thought I would pre-pay in order to shave years and interest off the mortgage. So I set up auto pre-pay of $500 a month, which essentially doubles my principal payment to about $1,000 a month. However, I also thought I would pre-pay a big lump sum each January post-bonus/end of year. The more I read and talked to my Learnvest adviser, the more I realized that pre-paying the mortgage is not actually the best strategy.  Instead, I should invest the money. I like this idea because it gives me liquidity in case of an emergency. That said, I hadn't found a way to track how much I would need to save over how long a time period to reach this goal. Then this week on Mint.com I was like "wow, what if I just create a mortgage-payoff goal" which I did. I input my mortgage balance as the amount of $ I want to save for the goal and then I linked all of my non-retirement savings accounts to the goal. I have a balance of about $200K in those accounts. I've got about $329K to payoff on the mortgage. Hence I need to save about $129 to pay this off. 

Then today I started thinking about the power of compounding, because this money is invested. Some in CDs, but some in my brokerage account. Sooooo this Mint goal isn't taking into account investment gains/interest. So with my planned monthly contributions and any investment gains/interest, I should be able to reach my goal a lot more quickly. I have a goal of 10 years right now, but when I play with savings calculators, I can possibly reach this goal in 5 years if I earn returns of 5%. Which is a little aggressive because some of this money is in CDs paying 2%.
Anyway, I just feel much more energized about my savings outside of retirement now, because I am saving for a purpose and each month I'll be able to see, thanks to Mint.com, exactly how much closer I am to reaching my goal.

Networth Milestone: 500K!

I'm excited because today I updated my net worth entry on NetworthIQ for Q4 2012 and I've crossed the 500K threshold!!! I also checked back over the last 4 years of net worth entries and realized that I tend to jump by about 100K a year. Which is insane. And only possible because of the generous bonuses I have been receiving. So I'd like to be around 600K this time next year. That would be sweet. Ultimately, I think I'll feel a lot more secure once my net worth hits 1 million (of course it won't all be liquid). Hopefully that will be in about 5 years. That's a great long term goal. Then maybe I'll feel like I can chill out a bit more about life and not have to have such a stressful (but for the most part manageable and sometimes even fun) job.

Getting Serious about Saving

This year was about spending. A LOT of $. Some of that I feel okay about because it was in theory an investment (in my apt.) or at least I view it as prepayment of rent for the future.  The rest of  my spending I feel a little less okay about. I had many one  time expenses that I don't foresee having to replicate next year. The furniture and services that came along with the apt. purchase (although I would like to hire an electrician to install a ceiling fan), a $2600 wedding gift to my brother, new toys for my latest hobby/passion.

Next year, I want to get a lot more disciplined about saving and investing. While I track my budget diligently, I  realize I don't have a target for savings. I just hired LearnVest to help me develop a financial plan for saving and investing and I told my adviser I can commit to investing $500 a month. That is balanced with the $500 a month I prepay my mortgage. Ideally I would like to save another $500 a month in just straight savings. On top of my 401K which I max out, that would put me in a good place, regardless of bonus.

I am finally getting around to reading Your Money or Your Life, which I know has changed many people's lives. So I'm excited to see how that affects me. Maybe it will make me amp up my plan even more.

Financial Advisor

I am finally checking off a big to do on my financial housekeeping list: I hired a financial planner. I am actually working with LearnVest, which seems like a great value and I love that it's aimed at women.  I am speaking to my adviser for the first time tomorrow and can't wait to get started! I really want help trying to figure out if I should tackle the mortgage or invest, although my mom helpfully pointed out that I can do both at the same time. Again, everything in moderation. It's a hard lesson to learn, as I find I want to do something whole hog or not at all.

Net Worth Updated

I had no idea how this would be this quarter, based on adding a big new asset and liability (apt and mortgage) and all of the big expenses like the closing costs of about $17 or $18K.  It turns out I'm down about $19K. If I had done this update even last week it would have been even more, but the market has made a nice little jump over the last few days (at least my accounts have recovered a little of their losses). The stock market remains extremely frustrating. I think if I checked my account balances now versus a few years ago, they would pretty much be the same. Which makes me think, why am I holding these stocks? I've owned the same index funds (for the most part) since 2003. 10 years. Of doing NOTHING. Now that I have a mortgage it seems it would be better served putting the money against that. But I do need some liquidity and I guess I keep hoping against hope that someday my account balances will grow.

This net worth update will be a new baseline/normal. My first quarter as a homeowner. So next quarter I will be able to see how much I am saving/any gains I am making. I shouldn't have any big expenses, just continuing to furnish the apt. but that's basically coming out of my paycheck, not savings. I'm putting off any really big projects like the built in bookshelves I've been considering.

So here's to a fun, low-key, low-spend summer.

Trying to Save, But Spending

Because I didn't know I was buying an apartment until a few weeks ago, I made some previous financial commitments that are coming due now. First, I booked a trip to Central America. I wasn't sure about this because I just went on a trip in November, but I thought what the heck. So that''s about $2K that I'm paying between January and March. In November I told my brother and his wife that their wedding gift would be tickets to Italy for their honeymoon. I bought those this month. Airfare sucks right now and they are going in the high season -- September. So there goes another almost $3K. I can afford all of this but it is very stressful to spend all this $ now when I am going to have to write an enormous check within the next few months. I already wrote a check last week for 10% of the purchase price.

I've been trying to be good in other ways, including making much more of my food, and now I've stopped drinking for a while, so that will cut down on a lot of my restaurant bill. Not that I drink that much, but it's so expensive at a restaurant.

I am also staring down a lot of costs associated with the apartment on top of the actual cost to buy and close on the place. Movers, a new TV, some new furniture, and then the service costs like someone to install blinds and possibly paint. Hence why I am sitting home on a Saturday night after having just cooked soup and baked cookies with not a drop of wine in sight!

Q2 Goal

So reading Budgets Are Sexy today inspired me to set out a goal or challenge for myself. I've decided that I'd like to save $25K by the end of Q2 (end of June). It seems like an aggressive but a doable goal. It's nice to put it down in writing and have a reason to save.

I've been pretty good at the little things this month. Cooking more at home. Stopping my aggressive Oren's habit. But not so good at the big things. A Spanish class. A deposit for a trip in April. Oy vey. I have to get better at cutting out the big things too!

Shedding Those Pesky Zeros from Bank Acct. Balance

The title of my post is pretty much how I feel these days. I'm due to write up my quarterly net worth statement and I am less than excited to do so. This is the first quarter I will have lost money in years. Cést la vie I suppose. Not like I've been doing much saving on my own to make up for my market losses. I feel like if the market is going to wipe out all of my savings, I might as well have some fun with what $ I do have! Next quarter should be better, because as of October 1, I have paid all of my social security tax for the year. That means an automatic raise of several hundred dollars during Q4. And we are inching towards bonus time (thank the gods).

I feel I have made some progress on fighting back the other force of evil trying to suck $ from me, the IRS. I put together a kick ass package for my audit, and there is no reason that I should not be receiving a check for overpayment from the IRS. I actually discovered that I double reported my dividends for the year in question, so I should get back a few hundred dollars. If they do not accept my business expense explication I will so appeal that finding. There is no reason for them not to, but with the government coffers running low I'm sure they are tasked with sucking every last penny they can from the populace. I'm going to fight for my rights and not let them intimidate me.

Cash Money$

As I mentioned, I have a fairly large cash position. While the financial planner made me feel less guilty about not having it invested (he told me there will be volatility soon so it's ok to have a lot of cash on hand), I did want to earn something on it. Again from Get Rich Slowly readers, I learned about the Ally 5k-year CD. The best part about it is you only lose 2 months of interest if you pull your money early. I opened one big one, and now I plan to open several smaller ones. Opening several smaller ones is helpful because if I do have to pull some money, I'll lose less interest. That was another idea from a blog commenter. Yay for learning from others!

Money Stress

I don't normally feel stressed about money. Mostly because I have designed my life's expenses to be way lower than my income. So I have a big cushion every month. This month that's not the case. I have so many obligations -- birthdays, weddings, etc. that I am spending a lot of money. I think it is bothering me because I feel like it is out of my control. Not that I resent my friends for the money I've spent, but I feel like I should be making cuts in other areas to compensate and I am finding that very hard to do. This is making me feel more empathy for those people who don't have a large cushion and feel like their expenses pile up each month out of control. Of course, in reality, I do have control. I don't have to attend all of these weddings and birthday parties. Or I don't have to be so generous with my gifts. But the fact if that I want to do these things, so I just have to give myself permission to spend more this month, and not stress about it because these are one time events. Here's to a more frugal (hopefully) August.

The Great TV Experiment

So I think I've mentioned that I have an old school CRT television. I have lately been thinking about whether I should upgrade and also how I can cut my annoying cable bill, since I basically just watch reruns of a few shows. I decided to buy a Roku box. I just set it up. It is so cute and small and super easy to install. I also installed a wireless router. I love that I can use Roku with my current old TV. I feel guilty getting rid of a TV that works perfectly well for no reason. It's wasteful.
Now I can keep my old TV, but jump into the 21st century w/ Roku. I'm going to get the Netflix on demand and Hulu Plus accounts and see if I can just live off that for TV. If I can, it's bye-bye cable!
I'll still have to pay for an Internet connection, but I'm hoping I can cut the bill down at least in half from about $100 now to $50.

Networth

I updated my NetworthIQ entry for Q1. Things look really good. I almost hate saying that because I don't want to jinx it! But basically since I started to be so super organized with my finances in 2008 (after finishing grad school), I've managed to put away a good chunk of money each quarter. So I guess I can be less superstitious because really it's about hard work, the boring day in and day out of making good financial decisions and staying on top of myself to stay organized and on course. I think anyone who manages to save any money at all should take time to feel proud of themselves, because we all know, it's not easy. Most people don't manage to do it at all.

2010 Spending Analysis

I'm home sick all weekend with a cold, so it's a perfect time to play around with numbers to fend off boredom. Yesterday I sliced & diced my gross income last year to see where it went. It's roughly what I've always thought it is: 1/3 to taxes, 1/3 to savings and 1/3 to spending. This made me feel happy because I live on such a small part of my salary, that if i ever have to get a lower paying job, I can still survive. I could easily cut my spending probably almost in half too, just by moving in with a roommate. Anyway, I made this nice little pie graph to visually represent where all my money went last year:

Boring, But Good

I realized reading over my posts that this blog is probably boring, haha. Lately all I talk about is spending. My goal for the blog is really for myself -- I think of it as an online money diary, but if other people read it and can relate or find any value, all the better. But I also realized that when things are on track financially, money management can be kind of boring. I'm not making any major investments, purchases (just some furniture), or having any big life transitions, so it's just nose to the grindstone, trying to meet my current needs and save for the future. I guess it's a nice place to be, as I'm not stressing about debt or worrying about having enough to meet my current needs. There is always the underlying worry about having enough to retire, but it seems difficult to do much more about that than I already am.