Post Government Shutdown Budgeting

Thankfully, I was not personally affected by the recent government shutdown, but like most people, I was avidly following the news stories about the affected workers struggles to pay basic living expenses after missing more than one paycheck.  If nothing else good comes from this, at least its (possibly) created a bit of a dialogue about personal finance and forced people to examine their saving and spending.  At least, that's what it did for me.

I'm a saver, and always have been.  But when I looked at my accounts and tried to calculate how many months we could last if both of us lost our income, it was surprising.  We live in a very expensive city, and have been primarily focused on reducing debt (which is a good thing!) for the past year or so.  What that means, however, is that our rate of savings has slowed a bit, which is alarming.

By my calculations, it should cost us $3000/month to cover our basic costs.  This includes:

1. Rent ($2300)
2. Electricity (~$120)
3. Gas bill (home $50)
4. Food (~$250)
5. Household (things like toilet paper, etc. $50)
6. Phones ($100)
7. Misc-- ($100) Things like home internet, Netflix/Hulu.  This is an area that we could cut if things get desperate, but there's always hidden costs with doing that as well.  For example, we could cut home internet since we're lucky enough to have a great public library less than a mile away that's open 12 hours a day.  But, reinstalling internet comes with additional fees.  Also, if we were aggressively trying to find new jobs, it would be inconvenient to have to camp out at the library all day, though I recognize that plenty of people do that.

Thankfully, both our cars are paid off, and if we weren't driving to work every day, we'd save about $200/month on gas.  Our car insurance bill is due 2/15 though, so that's a $900 expense that's unavoidable and would really pummel our savings.  Probably my first impulse, if we were in a lost income situation, would be to put that on a credit card to try to buy some time.  I imagine that's what a lot of people had to do.

Because we have a chest freezer, and I have a tendency (compulsion?) to stock up on food when it's on sale, we could probably go more than a month buying very minimal groceries. That number in my calculations is our average food budget. In fact, I'm going to do a pantry challenge in February and March to try to eat down some of my stores of food before we go on an extended vacation in April.

Student loan payments are a bit tricky.  I'm on the Public Service Loan Forgiveness plan (assuming it still exists when my time finally comes), which means that I pay a prescribed amount of money every month, and I can't deviate from it.  I could put my loans into forebearance, if I was really hard up, but my interest rates are so high that that would really cost me a lot of extra money and time down the road, so it's not a very appealing option.  My student loan payment is $440/month, which is almost double our monthly food budget.  It seems incredibly backward to be mulling over whether I would pay my student loans or buy food, but that's a real problem facing plenty of people.

Over all, we're certainly in a better position than many, but not a comfortable position by any stretch.  I've been trying to build up our emergency fund, and doing this audit is making me realize that that needs to be more of a priority.

Where to save:

I have several Capital One online bank accounts, and I LOVE them.  Their accounts are fee free, and have the best rates I've found.  The traditional savings account has a 1% interest rate, which means that we're earning somewhere around $6/month on our current balance of $8600.  That's not amazing, but it's still quite good.  I'll take free money wherever I can get it.  

Their Money Market savings account, which requires a minimum balance of $10,000 has a rate of 2% interest at the time of this writing.  Compare that to my bricks and mortar bank, which has an interest rate of .02%, and earns me about $.20 per year, this is a no-brainer.

Our plan is to keep about $15,000 in a Money Market account so that we have easy access to liquid cash, should we need it.  At the current 2% interest rate, that will earn us about $25 per month in interest. Above and beyond that, I've got my eye on some of Capital One's CDs, that currently have a rate of 2.85% for the three year.  That's a ways down the road, but I want to have a plan in mind for when that day comes!  Plus, it's pretty fun to shop for low stakes investments, and makes me feel very virtuous.

We're going to be feeling the fallout from the government shutdown for a long time, but I really encourage people to take this is a wake-up call to really examine your finances and make a plan.  It's cold outside, and a good time to hunker down with your bank balance.

Maxing out my Roth in 2017

I do pretty well with retirement savings. I get a 4% match from my employer, which helps a great deal, and I try to contribute to my Roth IRA as often as I can.  I am behind in retirement savings, however, because I got a late start, and my mint.com account reminds me of this painful fact every day. 

It makes the most financial sense to really double down on that savings immediately, so that I can get as much interest compounding as possible. I'm planning to increase the percentage I save through work, which will up my match, but my plan for 2017 is to also max out my Roth IRA contribution, which is something that I should be able to do for the first time--maybe ever.

The maximum amount you can contribute to a Roth IRA is $5500/year.  I'm starting this year out with an advantage in that I already have about $2300 in that account because I cashed out a life insurance policy and rolled it into last year's and this year's Roth.  So I just need to find an additional $3200 or about $350/month.  My plan is to divide that amount up into tiny dollar amounts and see how quickly I can snowball it.

My financial goal last year was to be more charitable.  I set up a monthly sustainer donation with NPR, ACLU, got a subscription to the New York Times (which I know isn't a charity, but good journalism is important) and I made donations to a few local theatres.  The amounts donated were small and relatively painless at the time, so I'm going to approach my Roth with the same mindset.

1. Schemes and found money. I have a few ways to earn a bit of extra money, and that had previously gone into my travel fund.  For now, I'm going to re-route all those revenue streams to my Roth until I hit $5500, then they'll go back into my travel fund.
2. Interest income.  I generate a little money every month in interest income on my savings accounts.  Normally I just leave it alone and let the account balance grow,  This year, I'm going to move it into my Roth.  I can't do this every month, since you're only allowed to make five withdrawals from savings per month, but I can move this money over quarterly.  My capital one savings accounts tell me exactly how much interest I've earned in the calendar year, and having that money in my Roth rather than regular savings will help it grow faster.
3. Returns/ Refunds/Rebates.  When I buy something and return it, that refund money is going to go into my Roth unless I absolutely need it.  I have a pair of shoes that I need to return, so that's $60 extra dollars right there. I've also been doing very well with ibotta lately, so all of that money will be funneled right into retirement.  Same thing for my quarterly Big Fat Check from Ebates, which is currently sitting at $34.99.
4. House Cleaning. I have a lot of things I no longer need. There's an older macbook pro power cable that isn't compatible with my current computer, a TV/DVD player that I haven't used in two years but that works perfectly well, etc.  I'm looking  at the things in my house with a critical eye, and listing anything that I don't use, but that someone else could use on craigslist.  I find craigslist generally annoying, but I have four listings that net me enough money the hassle of dealing with people should be worth my time. I also have a gift card that I got as a gift that I am selling on ebay.  I was stressing out trying to think of what to spend it on, when I realized that I don't want to buy anything and I'd be much happier with cash.  Maybe this is tacky, but I don't really care.

We're also approaching a more temperate time of year, so hopefully heating bills will finally go down, and that will free up a little bit of extra cash.  I'm like a magpie looking for that shiny money, and I think I'll be able to make my goal!

Which Costs More!?

My rent is increasing.

Of course it is, I'm living alone for the first time in four years.  Thankfully, I now have a grownup job, which means that I can afford to pay a little more.  I'm also not as picky about climate control, I eat cheaper, and I plan to take this year of living singly as a great way to get back on track with my writing, which is the cheapest hobby there is.

To take a bit of the sting and sticker shock out of knowing that I'm paying a whole apartment's worth of rent myself, I've devised a game called: Which costs more!?  I will use this as a tool to remind myself, that really, honestly and truly, I'm not going to wake up broke in six months.

Rent:
Yes, my rent will cost more because it will be paid for entirely by me rather than split by the two of us, that's a given.  But, rent for my new apartment is cheaper than the place we're currently in, cheaper than lots of places I looked at, cheaper than cheap property in Turkey and cheaper than buying a house.

Internet:
Internet will cost me more because currently BF pays for it.  I'm hoping that my new downstairs neighbors and I might be able to share wireless, but I have to meet them first.

Heating/Cooling:
My new place has gas heat and new, well-sealed windows, and I am not getting an air conditioner (which I may regret).  I don't mind being a little cool in the winter and a little warm in the summer, so hopefully I can keep the climate control costs down.  Plus, I'm on the third floor, which should mean I get a piece of the heat action from the floors below me, and when the summer becomes unbearable, I'll go to the movies and/or take a cold bath for hours and hours.

Food:
I eat significantly less than BF, and I eat a lot cheaper (lentils are awesome!).  I'm keeping the deep freeze, so I can continue to do batch cooking and hopefully keep food costs down.  Presently, we're spending almost $400/month on groceries; I want to get that down to $200 or lower, and do more 'shop the pantry' months.

Alcohol:
I need to cut back on drinking anyway, and we tend to drink more when we're together.  Plus, I have low standards when it comes to quality, and low standards are cheap!

Household Misc:
This should be a bit cheaper for me as well.  I'm out of the house already 40 hours a week or more, and I'll just do what I always do: Use up every last little bit of everything, use more rags vs paper towels, occasionally take the ends of the toilet paper at work.  It's a lot easier to be crazy fastidious when you live alone, because it seems less crazy.

One thing I am looking forward to is an experiment in minimalism.  The plan is to just not have any more than I need, and to not spend on a bunch of new things to fill my space.  I may need to acquire some small furniture pieces, or a rug, but for the most part, I have everything I need, and that's a nice, solid feeling.

Brokedown Palace

When I was in college, I went to a Wide Mouth Mason concert at the West End Cultural Center in Winnipeg Manitoba.  It was a crisp winter day, I was with my bestie, we had a lovely dinner before the show and the band was outstanding.

While we were inside rocking out, someone broke into my car and stole my stereo, purse, coat, and bestie's coat.  Thankfully, we were still in the era where you could cross the Canadian border with your driver's license and didn't need a passport, because my passport and all my credit cards were stolen along with my purse.

We made it back home in the wee hours of the morning, and at a more civilized hour of the day, I called my mother and reported what had happened to me.  Instead of feeling sorry for me, as one should do with a person who has been the victim of a crime, she yelled at me about being irresponsible, chastised me for crossing the border into sinister Canada and failed to understand why I was even there in the first place, "You live in a big city, go to concerts there!"

Then, after that verbal drubbing, she called me back to tell me that I needed to change my locks.  In her mind, she had decided that these car stereo thieves would most likely look at the address on my checkbook that they had stolen, assume I had property worth stealing, and rob me in the night.  Nevermind the fact that Winnipeg was a four hour drive, transporting stolen goods across borders is always a bigger risk than ripping off a car stereo (I assume that thieves are practical people) and my car was worth approximately $2000--not exactly indicative of deep pockets on the homestead.

But I did what she said, went to Home Depot and bought a new deadbolt, then I settled in for a long night of tv watching and feeling sorry for myself.  When I had moved into this particular apartment, I got a cable deal where I would get free installation if I subscribed to Showtime for three months.  I quickly discovered that because I had Showtime, I could also see one channel in the HBO package--in black and white and without sound.  I took to watching Sex and the City in black and white with closed captioning, and on this sad wallow-y day, the movie Brokedown Palace was on.

For anyone not familiar, the plot, in a nutshell: Claire Danes and Kate Beckinsale are pals.  They go on vacation to Thailand, meet some boys, get arrested at the airport for smuggling drugs (unknowingly) and are eventually sentenced to 33 years in a very grim Thai prison.

No luxury in a Thai prison

 You might think that watching this movie in my fragile state would have left me weeping even more, but on the contrary, it gave me the perspective to muddle through my mess.  Yes, I had been robbed; yes, my mother yelled at me in an unjust way; yes, I was out $15 for a stupid, unnecessary new deadbolt but at least I wasn't in a Thai prison.

My biggest concern was canceling my credit cards, which I could do from the comfort of my own home, and getting my car repaired, which was a minor inconvenience compared to what poor Claire Danes went through.

It was on that grim day that I really learned that there's always someone sadder than you.  You may have it rough, but if you've got a roof over your head and access to food, you're still doing better than many.

For those that don't want to gain perspective with Claire Danes, I highly recommend the interactive game Spent.  Frugal living and reducing debt is just as much of a mental game as running a marathon, and you need to remember everything you do have, rather than focus on what you don't.

Things I'm Grateful For--Financewise

I'm an optimist by nature and I try not to get down about things, especially things I have little control over.  I feel like since starting my new job and adjusting to my new rate of pay with health, dental and union dues taken out, I've been a bit down in the mouth.  I feel like I've been playing catchup since January, but I know it could be much worse.  Therefore, I'm going to take a look at the things that are going on in my life, financewise, that really make me happy.

• I don't have a car payment.  That makes me so, so happy.  I haven't had a car payment for a couple years, but every time I hear or read about someone's, I just get really glad that I'm done with that whole thing.  Yes, my car is kind of crappy at times, but it gets me where I'm going and should last quite a bit longer.  Plus, now that I own it outright, I can reduce my insurance coverage and save more money!
• I can walk/bike to work.  I know I bring this up a lot, and I'm not trying to sound braggy, but I'm really, really glad I live so close to where I work.  Yes, walking 35 minutes there and back is sometimes a bit annoying (when I oversleep or when it's pouring rain), but when I look at gas prices creeping up, that makes me want to lace up my fashion sneakers all the more.
• The Mayor of Providence loves libraries.  I've mentioned before, that the financial circumstances in The Ocean State are quite grim, and the city of Providence is presently on the brink of bankruptcy.  As someone who works for a non-profit that gets all of its funding from the (broke) city and the (broke) state, this is a bit scary.  Add to the anxiety the fact that in East Providence, two of their libraries just closed, and last year when the City of Central Falls declared bankruptcy, their library closed (thankfully, it has since re-opened with very limited hours)  But, we're very lucky in the fact that the mayor loves the libraries, realizes their value and has promised to keep our doors open no matter what.
• I have the ability to cut costs.  If I had kids or a mortgage, I wouldn't have nearly as much budgetary wiggle room.  Since it's just BF, Wee Watson and I, we can go down to the bare minimum of spending without risking starving a child or living in a house without heat.  I do whine when I feel broke, but I also went to Old Navy the other day and bought a bunch of sports bras (which I needed and got a great deal on), so broke is just a state of mind.
• I am the picture of health.  I've never really spent much time at the doctor's.  I never had a yearly physical when I was growing up, my parents only took me to the doctor when I was very sick, and as an adult, I rarely have had health insurance.  Thankfully, I've had few times when I really needed a doctor, and I enjoy eating healthily (mostly) and exercising.  Still, there's always that nagging thought in the back of your mind that maybe, even though you feel like you're doing everything all the current wisdom says to do to be healthy, maybe there's some flukey part of your genetics lying dormant waiting to kill you.  According to my recent bloodwork, I'm going to live forever, which has been my plan all along, hence all the retirement saving.  The only number that was high was my cholesterol, and that was only my good cholesterol.  It's nice to have that all sorted and charted out.  It's like my body's credit score!
• I can move without pain.  Sure, this may not seem like it fits with the financial picture, but my recent running/yoga injury really reminded my how frugal it can be to control your own mobility.  I can walk/bike to work pain-free; I can do my job better because I can move around helping patrons which is good for them and the library (positive experience rather than me just pointing to something); I don't have to pay for any more prescriptions; I don't have to drive to the doctor's office or to physical therapy; I can use the gym membership I'm already paying for.  Also, I can run again, which makes me healthier and happier.  I can't imagine dealing with chronic pain or any chronic condition, and I am grateful every day that I'm not in that situation.  Health is the cheapest option.

What are you grateful for?