Paying Too Much for What Ifs?

I'm a very conservative person by nature, meaning I like to "protect" myself from possible risks. What I'm realizing is that this means I pay a lot to cover myself in case of what ifs.  This hit home this month because I've spent $1K on these type of expenses:

-- Long term disability insurance: When I started at this job, we didn't get any coverage, so I purchased a private policy. I've lowered the coverage amount, but I still paid $784 this month for my annual coverage. Since I now have coverage through work, I wonder if I need this at all anymore.

-- Homeowner insurance: I increased the value of my house to keep up with the market, so my premium increased this year. I paid $680 for insurance this year. I think it's about $200 more than last year. In reality, I could cover most home emergencies myself, so maybe I should look at increasing my deductible and lowering my premium.

-- HVAC coverage: I have a service repair contract so if anything happens to my HVAC or hot water heater, someone will come repair it for free. I think I even can get a new hot water heater for free under this contract. This expense is $412.

So that's a total of $1196 in expenses I might not even need (disability and HVAC) and then I could probably save at least $200 on my homeowners insurance, so that's a savings of almost $1300 a year or $108. Since I just locked in these contracts for the year, I'll have 12 months to consider whether to cut, reduce or keep these expenses, but I think it's worth considering.

Booze and $

So for Lent I've given up drinking. I feel fantastic (although I have cheated 2x), but it's also cutting back on my restaurant bills, which is great because that's one of my biggest expenses (outside of rent of course).  I think even when Lent ends, I'd like to cut back to drink only 1 day a week. I just feel a lot better, and booze at restaurants is so expensive. I rarely drink at home. In NYC everyone mostly meets their friends out, not at their apartments. So it's expensive. I wish I lived somewhere where people hung out at each others' houses. I would save so much $.

2013 Breakdown

Today I analyzed where my income went in 2014. It's pretty impressive, if I do say so myself. Even Mr. Money Mustache would be mostly cool with it I think. So taxes ate up 36% of my gross income, I saved 37% of it and I spent 27%. I saved 55% of my net income. Not too shabby. Of course some of that is because I get a bonus in December and I therefore end up saving it all because I have zero opportunity to spend it. In reality I don't spend that much of it. This is a pretty standard year in that 1/3 of my gross income usually goes to each of these categories.

F-You Capital One! Hello, Chase!

So this month (post bonus) has been a how shall I call it? hmm. Spending orgy is probably accurate, haha. Anyway, combined with my business travel expenses, I'm about $500 from the $10,000 limit on my Capital One platinum whatever card. I never applied for this card -- it switched over when HSBC sold their card portfolio to C1. So I applied for a credit limit increase. I got rejected!! I was so mad. I pay in full on time every month on that card and every other card. Always have. Never have had a late payment. AND they told me my credit score is 793. I called and got bumped up to talk to a credit supervisor but they're idiots over there and can't tell me why I got rejected.

I had been thinking about ponying up for the Platinum Amex (it has good travel benefits like they reimburse the fee for the Global Entry program which I've been meaning to enroll in for forever because I'm gold on American and they will add me to their TSA Pre list if I do). Anyway, the Platinum Amex is $400 a year. Even w/ the monetary benefits (I figure I could get about $300 worth out of it), I feel silly spending that on a credit card.  Plus, I love getting cash back. I just got a $500 credit added to the C1 card as a cash back reward.

So I went on CreditKarma and found another cash back card. The Chase Freedom (I know anyone reading this now is like duh of course). Credit Karma has some really useful tools. It showed me that barely any of the cardholders have even the limit I have on C1. I think the C1 cards are more for people who don't spend as much, have worse credit, etc. I'm probably ideal for the Amex, but because I want to keep earning that sweet cash, I got the Chase Freedom card. And I'm pretty sure that they gave me a credit limit of $28K, which sadly I actually might need at some point because of all my work expenses (i pay them and then get reimbursed). There's no annual fee on the card, so it's a win-win.

Starting off the New Year

To kick off the New Year, I met with my Learnvest financial planner. I really like her and value her advice. This year I'm tackling the same problem as last year which is getting my cash surplus invested. It sounds ridiculous, but I haven't even gotten last year's increase invested and now I have a big chunk to invest again this year. I can't keep up. I get so nervous about dumping a lot into the market. But once I set up auto investment, I can truly set it and forget it. It's just that to get the cash invested in a timely manner I would have to be making large buys each month. Right now I'm only going in about 10K at a time, which is not doing much to make a dent in my stash.

I have also convinced my planner that I don't need to replace my full income in retirement or even 85% of it. I know the exact number that I spend each year, and what part of that is for housing (almost 40%!), so in today's dollars I need about 60K a year with a mortgage and 36K a year without one. Of course that # doesn't include inflation.  If I used the Mr. Money Mustache formula I would need to save 25x the amount I need each year, so either  $1.5 million or $900K.  I think to be safe I would only be comfortable with the higher #. The planner's target number is going to be more like $2 million, but that's better than the like $4 million she is currently targeting which is most likely never going to happen.

Happy saving!

Spending It

I have some expenses coming up that are discretionary but I really should take care of them. Case in point - new mattress and couch because they are hurting my back. I can only sleep on one side of the mattress now. I'm off today, hopefully to finalize my choice for a new one. Think I have found the couch I want as well. But once I update the couch, I realize that the coffee table is quite scratched and while the matching side table is perfect, if I get a new coffee table it will no longer match. So that's two more pieces of furniture. Also, I don't have overhead lights in almost every room of my apt. So it's dark. The table lamps aren't cutting it. I plan to buy ceiling fans with lights and have them installed. So that all adds up. I'm not really excited about these purchases, but I feel like I kind of need to make them.

I am thinking of making a big "purchase" that I am excited about which is going in on a shared beach house. If I can pay a reasonable amount each month, I plan to do this, probably starting in March or so. That would be money well spent in my view.

I've been reading about the clothing fasts people are doing on the MMM forum. I'm thinking about joining, because that would help pay for the beach house. Yay for intentional purchasing!

Happy holidays to everyone!

More Than Money

My grandmother died last night. I was very close with her, and I see so much of me and my mother in her. For both better and worse.  Especially when it comes to money.

My family has the opposite problem of what I think is the normal issue with money (overspending): we have issues spending money.  Especially on ourselves.  My grandmother lived through the Depression. She worked in factories and then she was a homemaker.  She worked hard all of her life. She and my grandfather saved and saved.  When she died, she received social security and a small pension. She still had more than 500K in the bank (from what I understand) and she was in her mid-nineties. Of course if she had lived for 5-6 more years in a nursing home, she would have spent all of that money. But she didn't.  The problem is (in my mind anyway) that she scrimped so much she didn't let herself enjoy life when she was alive.  She wore rags for underwear and wouldn't let us buy her new ones.  When I would buy her nice  things like new towels, she would simply fold them up and put them in the closet, saving them for god knows what and continue on using her rag towels.

I understand why my grandmother was the way she was and I admire her strong work ethic, thrift, determination and self-discipline that got her through the Depression and all the way to her mid-90s.  That said, I wish that she'd been able to appreciate herself and feel a little more secure and been able to enjoy her time here more.

I was happy today because I was actually wearing a bra that I bought last month (immediately after I posted that I hadn't bought any clothes on this blog, ha). I fretted over buying it for months. I didn't need it, but it was beautiful. Finally it went on sale for $45 (it was normally closer to $100) so I swooped in and got it. I hope that I can live like that -- still finding the joy in little treats and 'pampering' myself, but being practical and honoring my grandmother's memory and never wasting anything.

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.

What do you spend money on?

There is an article in the New York Times Today about how spending money on experiences makes you happier than spending money on stuff (including real estate).  I feel like I've known this instinctively all along. In my 20s, when I didn't save outside of my 401K, I spent all of my money on traveling and going out to dinner with my friends. I had no fancy clothes, purses, furniture or shoes.  Just a lot of fun. This used to depress me. In my early 30s I thought, "I spent all this money and I literally have nothing to show for it." But now I look back fondly on that time and I know I always will savor those memories of early adulthood freedom in NYC.

I've continued the trend (well, not spending all my money luckily) but spending on experiences.  I just took a look at my spending for the year so far. The top categories (outside of the mortgage) are Travel and Food and Dining, with Health Care in 3rd.  Health Care expenses for me are seeing a therapist I really love and learn from and my acupuncturist which makes me feel amazing and helps me keep a chronic illness under control. When I do buy stuff, it's mostly sporting goods I need to practice my favorite sports/hobbies with my friends.

So yay to not spending on stuff, but yay to spending on fun experiences with friends and family and really enjoying life.

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.

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.

Clotheshorse

Lately I have been buying a lot of clothes. The good news is that I haven't been spending a lot of money. I rediscovered a great thrift store, Buffalo Exchange, and for $100 I got about 5 nice shirts. I went back for a second round and spent another $65. In September, I went on an H&M binge which was also a rediscovery, as I hadn't been there in probably a decade. And I bought an expensive jacket on eBay which I got for less than $50. It's nice to treat myself with some new clothes without breaking the bank. I tend to hold onto clothes for years, probably long after I should have gotten rid of them, so I have also been aggressive about purging the old clothes as I get new ones. It's all about balance!

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!

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.

Kicking it 1990s Style

So if a thief walked into my apartment looking to score some sweet electronics, I think they would be highly disappointed. First, they would be daunted by the massive CRT television sitting on my little wooden stand. Who still has those and how could I possibly get that down 4 flights of stairs, the thief might ask, reflecting on how s/he probably has a better TV at home. Sure, I have a laptop. It's actually an expensive one. I didn't know any better and asked my IT guy when I left my job to freelance/go to grad school what kind I should get. So I've got an IBM T60 that costs $1K. Pretty sure it's the most expensive thing in my apartment. But, it's old, as far as computers go. I bought it in 2006. It runs Microsoft Office 2003. Probably Windows 2003 too, I'm not even sure. The only other electronics are an iPod nano, which I carry with me, so my robber wouldn't be able to access it. My mom got me a nice Bose docking station several years ago, to I have that. I also have a small digital camera that was not very expensive.

Overall, the items that I just named I purchased over a 5 year period and cost a total of about $1500 (the TV was free, as was the Bose sounddock).

This year I am thinking about buying some new gadgets -- currently vacillating between an iPad and a Kindle. I really want an eReader of some type, but then I see how expensive the ebooks are and I lose my enthusiasm. I'm a pretty avid library user, so this would add a new budget line item. Right now I pretty rarely buy books.

I also think about ditching the old CRT for a flat screen, mostly so I could cut the cord on cable and just get HDMI cables to watch shows online on my TV. I'd probably subscribe to Hulu Plus and maybe buy a Roku box. I am tempted, but also kind of waiting for the technology to catch up. Also, something about the experience of putting on the TV and just kind of watching whatever I find is attractive to me.

Whatever I do buy, the prices for TVs and eReaders have come down a lot since they were first introduced, so I'm glad that I've waited.

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: