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!

Clean Slate For 2013

Can you believe that it's almost 2013?  It's just weird--not that another year has passed, but for some reason 2013 just seems like a weird number to me.  It'll take me a while to get used to writing that.  Anyway, my plan for the new year is to start it with a clean slate.  I've been carrying balances on my credit cards for the past month (no late fees or anything like that, just more owed than I would like).  With my next paycheck I'm paying them all completely off and heading into the new year with nothing owed except stupid student loan debt.

I'm also doing a major overhaul of my closet and wardrobe.  Since my closet is narrow and deep, I lose things in there, never have enough room, and usually just let my laundry sit on top my dresser until I wear it again and it goes in the dirty clothes pile.  I'm working on a new scheme to organize my clothing in a way that makes it easier to find things/ put them away, and that makes me not want to scream with frustration.  I'm also getting rid of a lot of things I just wasn't wearing.  Those really nice pants from Banana Republic that have only fit once three years ago?  Yeah, they're going to Good Will and I'm just going to accept that my huge thighs are unlikely to get any smaller.  Strong is the new Skinny!

As far as my Holiday Challenges, I'm pleased to report that I've been going to yoga a minimum of three times a week, even four some weeks!  My run streak sadly didn't stick as well as I hoped.  There were some mornings when I just didn't get out of bed in time, and doing a single mile on the treadmill just became annoying--it took longer to shower than it did to run!  It's not all bad though.  I have run more miles this month than any other month this year, and I've realized that even if I get a late start in the morning, nipping out for a two mile run really makes the day better.  I used to have the mindset that unless I was running at least four miles, it wasn't worth bothering, but now I love my little two mile runs!

For my Financial Challenges, I've been limiting eating out, I've been walking to work though I wasn't able to ride my bike for reasons I'll explain in a moment.  I've gone over budget in the clothing category, but that's just because I paid my Old Navy bill from the previous month--I haven't bought anything new!  My budget is full of no-spend day stars and I'm pretty pleased about that.

The reason I wasn't able to ride bike to work was because my bike was stolen by some nefarious jackanape!

RIP, my bike that I never named

They also stole BF's tire pump--dicks.  It's not all bad though, I put an ad on Freecycle asking if anyone had a bike they weren't using, and a nice lady gave me her daughter's old one!  I need to get it looked at by a mechanic and buy a lock, basket and lights, but it's a nice bike that should last me quite a while.  I'll also be storing it indoors so no one can get their hand on it!

2013 begins with no credit card debt, a new bike and a new diet plan!  I signed up for Taylor's DietBet, which is a fun little online wager.  Everyone who wants to play kicks in $2, and then if at the end of the month you're at your goal weight, you get to split the pot!  It's a nice little incentive to do what I should be doing anyway.

Things are looking up!

Personal Finance Hits and Misses

So far May has been a pretty successful month, personal financewise.  I mentioned before, that it's a three paycheck month (woot!), and I'm working extra hours at two other jobs, so I should be able to sock away some money this month since I've been failing to do so since starting my new (not really new anymore though) job in January.

Hits--Yesterday, I wore a dress that I've had for years, but haven't worn in a while since it was hiding at the back of my closet.  This is a dress that I wear mostly in the fall and spring, since it's knee-length, but has long sleeves, and it looks kind of weird with tights.  As soon as I showed up at work, I got a compliment; as soon as I got home from work, I got another compliment.  It was then that I realized I get compliments every single time that I wear that dress, AND the dress only cost me $3.  True story.  Magic dress.

Misses--This Bike To Work Month, I've barely biked to work.  Instead, I've been driving all the time.  In my defense, my brakes don't really work in the rain, and I could walk, but it's been that really hot, heavy rain with high winds, so I would be completely soaked by the time I arrived at work.  I'm enough of a ragamuffin already, I don't need to look like a completely disheveled ragamuffin.   Thankfully, I'm still driving on that tank of gas that I got $.30 off per gallon.  That comforts me, somehow.

Hits-- New Nuun Dispenser!  Remember when I was agonizing about what to do with all those nuun containers?

I got some good feedback, and I found out that you can recycle them at Whole Foods, but I also went to their website and discovered this:

It's a 100 count box that has a variety of flavors and no plastic!  Double bonus, my house feels a bit more like a pharmacy, and these packets are easier to tuck into my purse for those times when I need an electrolyte boost on the go (that's not really a thing, but I like the taste of this stuff--work with me).  I also discovered a 20% off coupon before I ordered this, so all you need to remember is that I'm awesome.

Hits-- Discovery!  ModCloth, which is my source for most online spending, changed their return options a while back.  Returns are always free, but where you used to be able to drop off packages at UPS, which was on my way to work (old job), they have since changed to Fedex/USPS, which is less convenient.  Thankfully, the post office is on my way to job #2, but since I only work at job #2 once a week, it's still kind of a pain and I end up doing more driving than I would like.  Today, I discovered a Fedex dropbox right down the street from me!

Pretty nice dashboard, eh?

I've walked by this dozens of times, I'm sure, but never really noticed it before.  Now I can walk down the street with my ModCloth returns whenever strikes my fancy!

Hits--Free U2!  I've mentioned before that the librarians who used to have my position were serious hoarders.  To that end, I've been getting rid of all the extra CDs that they've acquired over the years (four copies of REM's Monster, really?), and we're going to have a big CD sale at the library.  I also, took a few bits and bobs for myself since I still listen to CDs in the car.  I've been rocking out to The Joshua Tree for the past couple days, and I feel pretty smart about it.

Misses--Credit Card Balances.  I just got paid today, and it seems like my dream of saving a lot will not come to pass as much as I hoped.  I don't know how it keeps happening, but I just always seem to owe $250 on my Amex, and paying that every time I get paid, means not saving $250, which irks me to no end.  Yes, I just bought two plane tickets, so that's why it's up there this time, but hopefully my May of limited spending will keep it much, much lower and let me save more and more.

How about you?  Any big hits or misses?

That's Why I'm So Broke?

Put those packages back!
You can't afford them!

I've noticed since the "War on Women" started (by started, I mean became something we talk about all the time), that I've been reading more and more articles about how expensive it is to be a woman.  Jezebel had the article This is How Much it Costs to Own a Vagina, an Itemized List.  Then yesterday, LearnVest had a whole list of gendered pricing, which kind of blew my mind.

I admit, I've thought about this before.  Since I'm a girl who does not spend a lot of money grooming myself, I've often wondered how women who do can actually afford it.  I've had one manicure/pedicure in my life and it was done at a beauty school where it was significantly cheaper than if I had gone to a real salon. Sure it was a fun afternoon, but it cost $15!  That was twice my hourly wage at the time.

Add to that the cost of make-up, clothes, shoes, hair (on your head and everywhere else) and I honestly do not understand how some women pay for it all.  Perhaps they're in debt, maybe that's what I'm not seeing.

Looking at BF and I, he has pointed out numerous times that he has fewer expenses than I do.

• He doesn't own a car so does not have to pay for gas, upkeep or insurance.  He does give me a bit of money for use of my car, but I pay the bulk of it.  
• He can wear whatever he wants to work and only owns about four pairs of pants.  Yes, I like to dress well, that's a choice, but I also need to have a lot of clothes for a lot of different situations--work wear, casual wear, fancy dress etc.  He wears the same thing all the time.
• I pay $50 for my haircuts, he pays $12.
• I have to buy tampons, he doesn't
• I have more than one pair of shoes, he doesn't.  Granted, this is a choice, but I can't wear a single pair of sneakers to work every day like he can.
• I buy moisturizer, lotions, body wash, face wash, hair potions, razors etc., he uses bar soap and has a beard that only needs occasional trim with his electric razor.

That's just a short list based on our personal experiences, but I've thought about this in other situations too.  Take the suit thing.  Yes, a good suit is expensive, but it lasts forever.  If a guy wears a suit every day, he only has to buy four and then just rotate them.  If I only had four outfits, people would certainly start to notice.  Likewise fancy occasions, guys can wear the same suit to weddings all season long, but a girl needs a new dress for each one.

One thing that really surprised me about the LearnVest article was the notion of gendered pricing.  I've thought about things like the suit example before, but I did not realize that women pay more for dry cleaning the same type of shirt or more for deodorant that's essentially the same as a man's except for the smell.
"After reading in Marie Claire that dry cleaners charge more to clean a woman’s button-down shirt than a man’s, one of our editors tested it out herself by visiting her local dry cleaner in New York City. Lo and behold, her plain shirt cost $4 more than a man’s would have, because “the machine couldn’t fit shirts from a smaller person.”

I actually noticed the deodorant thing back in college and went through a phase where I wore men's deodorant.  You know what, it worked the same, but I couldn't stand the aggressive smell.  It was so strong that it gave me a headache, and I had to discontinue use.  So men pay less for a wider stick of deodorant with more scent--that's just not right.

Women's imported goods are also frequently taxed at a higher rate: "men’s sneakers were taxed at 8.5%, while women’s were taxed at 10%. Not every garment tariff he discovered was in favor of men, but he did find that women were susceptible to higher taxes on those goods imported to the U.S. at the highest volume. " 

So that's your daily dose of news from the depressing zone.  Has anyone else noticed this firsthand or thought about it before?  I certainly didn't know about the dry cleaning thing, because I don't get things dry cleaned, but all the other incidentals that come with being a woman can certainly add up.

What Angry Birds Can Teach Us About Personal Finance

I'm sure that most people, even if they haven't personally played Angry Birds, at least have heard of it.  I learned about it watching an interview with Jon Hamm on Conan.  A quick rundown for those who may not be familiar: The pigs have stolen the birds' eggs.  The birds are angry.  The pigs create various fortresses to protect themselves, and the angry birds launch themselves at those fortresses to destroy the pigs and reclaim their eggs.

It's a total time suck, and I'm really, really good at it.

As I was wasting away an evening recently, I realized that these angry birds actually do have a lot going for them that can actually be applied to the world of personal finance. Skeptical? Read on!

Be persistent:
The birds do not quit, and likewise, when I'm playing Angry Birds, I keep saying "just one more game..."  Persistence is obviously key in the world of personal finance because oftentimes paying off debt or saving for retirement seems like an insurmountable goal.  But once you start chipping away at the goal ever so slightly, you start noticing progress--debt is shrinking, balance is growing, and then it finally sinks in that what you're doing is paying off!

That little yellow bird is determined!

Know your strengths:
Each of the birds in Angry Birds has a unique talent.  Once you figure out what that talent is, you do better at the game.  Everyone has different talents that can be applied to personal finance as well.  If you're really organized, you can create and maintain a rock-solid budget; creative types have a knack for investing (I have found this to be true).  You may figure out that you're really good and cooking and re-purposing leftovers.  There are really any number of ways that we can each tap into our strengths to save and grow money, but we just have to figure it out.

I like the yellow and blue birds best, but sometimes you need the others!

If one strategy doesn't work, find one that does:
Maybe you make out your budget and think I'm only going to spend $100 a month on food!  Then you go to the grocery store and find that it's impossible to spend that little and not wind up with scurvy or some other 18th century malnutrition disease.  Always re-evaluate.  That's why monthly roundups are so important.  Take a look at your spending for the month, examine where the money went and determine whether it was just an expensive month for a particular need, or if you need to change some numbers around.

Get help from your friends:
The Angry Birds don't work alone and neither should anyone else!  That's why I love the blogosphere so much.  Maybe I haven't met a lot of the people who read my blog or whose blogs I read, but I feel like I know them, and I've learned so much over the years.  Sometimes all it takes to figure something out is just asking the right person, or having a conversation.

Examine the angles:
In order to beat most of the levels of Angry Birds, you have to hit your target just so.  We've all seen financial advisors who advise people to start saving even while they're paying down debt.  At first that seems crazy and counterproductive, but when you think about it from another perspective, you realize that if you focus solely on paying down your debt and then have a crisis of some kind--medical, car accident, house fire etc., you're completely wiped out again and all your hard work was for nothing.

Don't be afraid to try new things:
I certainly never thought I'd be eating as much barley as I have in the last year, but I tried it, I like it, and it's totally frugal!  Experiment with new foods, new budgeting tools, new ways to get around.  Just be open and look at personal finance as an adventure!

I'm not advocating you try to make an Angry Birds dress, like
the wife of a Rovio executive did, but it is a little awesome...

Crowdsource:
The Angry Birds know that it usually takes a number of them to take down a piggies' fortress, likewise, it takes a number of people working together to understand the ins and outs of personal finance.  For instance, your financial view of the world is significantly different when you are a 19-year-old vs. after age 30.  What you need to know changes.  As I advance in levels in Angry Birds, I often get stuck and can't figure out the trick to beat the level and move forward.  I know that nerdier people than me have created youtube videos explaining every way to beat every level.  As an individual forging your way through the world of personal finance, it helps to remember that there are nerdier people than you out there who know exactly what you need to know--find them.

The little blue birds break glass and ice!

If you decide that you want to waste hours and hours or your life playing Angry Birds, you can do it for free through google chrome.  But you've been warned.

Financial Literacy Month

Apparently, April is Financial Literacy Month--who knew? I got my daily email from Learnvest.com, which sounds like an educational clothing company, but is actually a pretty awesome resource for tips on frugal living, investing etc. I'm a fan.

For financial literacy month, the LV staffers went through their financial goals for 2011. It's funny because some of their goals were sensible--start to track spending, save more, etc., and then I stumbled across the five-year-plan.

The notion of trying to figure out where I'm even going to be in five years is daunting and actually impossible, but I remember that this is actually something I used to think about--in an abstract way.

It seems like the five-year plan, at least to me, is a bit of a relic of the past. I used to hear about it, and haven't for years. This may have something to do with the current economy--it's hard to plan when you're not sure what's going to happen next; but maybe people just don't make five-year plans anymore, or they don't talk about them as much.

The most I've ever done is a two-year plan, and even that was very loosely-formed. Maybe this is something I need to think about more, or maybe, like menu planning, this is just not for me. It's interesting to ponder.

Does anyone out there have a five-year plan? How does it work for you? Is it just a financial plan, or a life plan? It seems like it would have to be a life plan, but it's possible I'm waaaaaaaaay overthinking it.

Figuring it out

I did a presentation a few years ago when I was in grad school about personal finance for teens. My group and I tried to tackle as many issues as we could, and I ended up with the topic of "real world expenses." It's interesting because, in a roundabout way, I actually did pick that topic, but as soon as I got home and started thinking about it, I had no idea what to say.

The problem is, despite my parents near constant personal finance counseling--usually in the form of talking about credit score, I was still ill-prepared for the cost of real life. No one really talks about how much the day-to-day is going to cost you. People drop percentages like, "you shouldn't spend more than 60% on housing." That's fair, but then when you're a college student making minor ducats but living in an expensive town, you look at that percentage, say "well that's not anything I can change, best say screw it and just get through this phase of my life. I'll start making money once I graduate."

As more and more people are finding out (myself included), that may not actually be the case.

My high school did something when I was a senior, which I can honestly say was one of the most effective educational experiences of my life. It was called the Real Life Fair, and I don't think they told any of us about it beforehand. Just one day, we seniors showed up, and they hustled us into the gym. We drew a career, education level and income from a bucket, and then learned about all the expenses we would have to cover with that income.

They listed cost of living like rent and utilities and that was non-negotiable; they drove in a variety of vehicles and told us how much insurance would be, and the monthly payment for the vehicles. They talked about insurance and investments, student loans, pretty much everything and it was really effective because they gave us actual numbers.

So what is the point of this long, drawn out story? The point is that I had all the tools at my disposal to be a responsible, financially savvy gal, and I still screwed it up because it was all theoretical and I didn't have any hard numbers. If someone had said to me, "You will be paying $400/month in rent, $200/month for food, $100 a month for utilities, $100/month for beer (this was college) and you'll make $5.75/hour at Barnes & Noble where you'll also probably go a little nuts buying books and CDs--that would have given me a bit of pause.

That means that if I was working 40 hours per week, making $5/hour after taxes, I'm taking home $800/month. That's already spent just looking at the figures above, and I really shouldn't have been working that much because I was a full-time student.

I didn't want to hear it at the time, but no one was telling me either. Because I didn't want to hear it, I certainly didn't seek out this information and make a list like I just did. Instead, I charged everything, and convinced myself that with my BA in English, I'd be raking in a healthy salary soon enough.

This is why I advocate complete honesty when it comes to your personal finances. This is why I write every single number down, no matter how painful. This is why when I'm planning a Real Life Expenses lesson for teens, I tell them to look at Craigslist listings for apartments in their area so they know approximately what their rent is going to be; to go onto the local grocery store's delivery site and fill a cart with what they would probably buy regularly at the store and note how much it costs; try to figure out how much gas they'll use and factor that in, etc.

I need numbers to keep myself on track. Percentages don't cut it. And I need to know how much real life costs.