As I look forward to the end of my student loan debt, I'm kind of relieved, but also kind of intimidated. I think that years ago when I imagined being out of school, with the loan paid off, and employed, I was also imagining feeling less broke -- like I could travel without guilt, for example.
Well, nope.
The thing is, I MUST get serious about remedying years worth of not saving. I've committed, beginning in July, to sending 25% of my pre-tax income to a 401(k) and any and all "extra" income to a Roth IRA. This is a rate far above what most people recommend, but what else can I do? I'm not getting any younger, and that's not even going to get close to maxing out for the year, anyway.
On top of that, I need to put something aside every month in a housing fund (maybe a down payment, maybe just a future security deposit); in a car-replacement fund because I'll likely need a car within the next 5 years, given the age of mine, and I'd want a decent down payment at least; in a medical-emergencies fund. I need some new clothing pretty soon and I'd like to have the money for that put away rather than have to have everything on the credit cards.
The reason why I'm sounding glum rather than excited about this is that I just decided I can't go to a friend's wedding this summer. It's on the opposite coast, and a round trip flight is over $500, plus lodging and assorted other (transportation from the airport, probably some meals out, etc.) And the friend isn't a close one; a college friend I always liked and would love to see get married, but I just think I can't justify the cost of it.
It's bumming me out though because I wasn't thinking I'd be more income-restricted as an employed person than as a grad student. When you want/need to route basically all your income to savings, though.... I think there's just not going to be much extra for a while. Maybe a long while. And it's kind of a downer.
Wednesday, April 30, 2014
End of April Update
The end of April, the end of the semester, the time for single people to pack up and head on the road to see their friends who can't travel because they all have toddlers :) Aside from a massive student loan payment, my biggest expenses this month were all travel-related: lots of gas from driving around to see friends and family and to a conference, and booking plane tickets for a trip to California I'm making next month. This month doesn't look so awesome from a net worth perspective because of how much is currently sitting on the credit cards (plane tickets, moving expenses) but I'm majorly excited anyway because of one big goal met:
That right there is student loan #1, showing a balance of $0 yesterday! The gory details of its history:
I started making payments on it two months before it came out of its grace period. In total, I ended up paying only $161.88 in interest on a $10,197 loan! That's even better than I thought I'd done when I ballparked it yesterday for Girl Meets Debt.
To be continued with student loan #2, currently sitting at -$5086.47....
So, April spending:
Student loan #1: $2418.48
Student loan #2: $88.34
Car expenses (gas, oil change, tolls): $482.35: OUCH. Wow. So, uh, I traveled a lot this month. All by car. It added up. Eesh. Luckily about 1/4 of that is reimbursable and I've already submitted the receipts and everything.
Rent and utilities: $1061 -- this includes buying a new smartphone to replace my four-year-old flip phone and get on a much cheaper plan (if it works) by joining Republic Wireless -- we'll see how this goes; there's a 30-day-back guarantee so I might end up returning the phone.
Travel and entertainment: $392. Not bad for a round trip to Los Angeles, another RT from LA to San Francisco, and a concert ticket. It all has to go on the 0%, cash-back credit card and be paid out of later paychecks because of the debt payment...but I just wasn't willing to not make this trip.
Food: Well mint.com says $171. Hah! If only! Since I'm not yet tracking every penny (I am going to start in on that once I've moved, started my new job, and have paid off the student loans) I have no idea how much went out in cash that isn't covered by that figure. I'm guessing that the real food costs for the month were easily $400 and that's what I'm going to count here.
Misc: mint.com says $146. This includes a tax bill, the pharmacy, and some money withdrawn for cash spending. Seems about right.
Totals:
Money applied to debt: $2506.82
Money spent on everything else: $2481.35
Grand total: $4988.17
And...yeah, that's more than came in this month, which explains the state of the credit cards, currently sitting at -$1794. (Some of that is reimbursable and -- I'm reminding myself -- all of it is at 0%, so <i>focus on the student loans</i> remains my plan.) A budgeting revolution is definitely on the horizon.
<b>Debt total: -$6834, a change of +$870 from last month
Net worth total: -$3343, a change of +$1177 from last month</b>
This being honest with yourself financially thing is exhausting! So much math!
That right there is student loan #1, showing a balance of $0 yesterday! The gory details of its history:
I started making payments on it two months before it came out of its grace period. In total, I ended up paying only $161.88 in interest on a $10,197 loan! That's even better than I thought I'd done when I ballparked it yesterday for Girl Meets Debt.
To be continued with student loan #2, currently sitting at -$5086.47....
So, April spending:
Student loan #1: $2418.48
Student loan #2: $88.34
Car expenses (gas, oil change, tolls): $482.35: OUCH. Wow. So, uh, I traveled a lot this month. All by car. It added up. Eesh. Luckily about 1/4 of that is reimbursable and I've already submitted the receipts and everything.
Rent and utilities: $1061 -- this includes buying a new smartphone to replace my four-year-old flip phone and get on a much cheaper plan (if it works) by joining Republic Wireless -- we'll see how this goes; there's a 30-day-back guarantee so I might end up returning the phone.
Travel and entertainment: $392. Not bad for a round trip to Los Angeles, another RT from LA to San Francisco, and a concert ticket. It all has to go on the 0%, cash-back credit card and be paid out of later paychecks because of the debt payment...but I just wasn't willing to not make this trip.
Food: Well mint.com says $171. Hah! If only! Since I'm not yet tracking every penny (I am going to start in on that once I've moved, started my new job, and have paid off the student loans) I have no idea how much went out in cash that isn't covered by that figure. I'm guessing that the real food costs for the month were easily $400 and that's what I'm going to count here.
Misc: mint.com says $146. This includes a tax bill, the pharmacy, and some money withdrawn for cash spending. Seems about right.
Totals:
Money applied to debt: $2506.82
Money spent on everything else: $2481.35
Grand total: $4988.17
And...yeah, that's more than came in this month, which explains the state of the credit cards, currently sitting at -$1794. (Some of that is reimbursable and -- I'm reminding myself -- all of it is at 0%, so <i>focus on the student loans</i> remains my plan.) A budgeting revolution is definitely on the horizon.
<b>Debt total: -$6834, a change of +$870 from last month
Net worth total: -$3343, a change of +$1177 from last month</b>
This being honest with yourself financially thing is exhausting! So much math!
Monday, April 28, 2014
The Stupidity Tax
I forget where I got this term from, but it is meaningful in my life. It's the phrase I use when I wind up paying a fee I shouldn't have, or paying more for something than I should have because I didn't do enough research.
In this case it's (ANOTHER) $20 parking ticket. I just had one last week! They're both from forgetting to check the street cleaning signs to see where I could/couldn't park. I did this twice when I first moved here, and then vowed "never again" -- and kept that vow until last week when I didn't check, and today when I didn't check. I guess I've had a lot on my mind, but I'm just so mad at myself for being so flaky. This is $40 I definitely could have spent in better ways.
Including the $20 bill I dropped somewhere on the ground at the farmer's market earlier this year, I think this brings the stupidity tax total for the year to $60 (two parking tickets, one lost $20). I suppose in the grand scheme of things it could be worse, but...still.
The worst is that I know they do not need to "street clean" this often and it's not even clear they *do* street cleaning. I think it's mostly a convenient way to raise a lot of revenue that the city then doesn't have to get from other sources who would be even less happy about it (businesses, income taxes.) This way the burden falls most heavily not on the richest, but on the dumbest.
Including yours truly, I guess. Sigh.
In this case it's (ANOTHER) $20 parking ticket. I just had one last week! They're both from forgetting to check the street cleaning signs to see where I could/couldn't park. I did this twice when I first moved here, and then vowed "never again" -- and kept that vow until last week when I didn't check, and today when I didn't check. I guess I've had a lot on my mind, but I'm just so mad at myself for being so flaky. This is $40 I definitely could have spent in better ways.
Including the $20 bill I dropped somewhere on the ground at the farmer's market earlier this year, I think this brings the stupidity tax total for the year to $60 (two parking tickets, one lost $20). I suppose in the grand scheme of things it could be worse, but...still.
The worst is that I know they do not need to "street clean" this often and it's not even clear they *do* street cleaning. I think it's mostly a convenient way to raise a lot of revenue that the city then doesn't have to get from other sources who would be even less happy about it (businesses, income taxes.) This way the burden falls most heavily not on the richest, but on the dumbest.
Including yours truly, I guess. Sigh.
Saturday, April 26, 2014
Weekly update: false uglification
The numbers look sooooo bad right now on mint, but they will improve a lot by early next week (probably Monday.)
Spending, April 20-26:
Travel: $31.50 for a ticket to be used during my CA trip; $138 for plane tickets
Food: $75 -- again a bit of a guess, since there was some cash for coffee etc here and there. Didn't have to buy groceries this week so this was all meals out, drinks at a conference. They do add up, huh.
Phone: $178.62. This is literally for the phone, plus a month of the plan.
Car insurance: $53.50
Gas: $118.12 (reimbursable) (Most of this is for a conference I'm attending, a 10-hour drive away from home; this is a TON of gas, way more than I usually get in month.)
Stupidity tax: $20 (parking ticket)
Student loan payment: $2418.88 (KILLING IT, this student loan is no more -- soon to be followed by its brother. Or, well, within the next few months anyway.)
Weekly total (without the student loan payment: $614.74, of which $116 is reimbursible, making the real total $498. This still seems like a lot -- except for the week I pay rent, I feel like my weekly expenses should rarely be more than a couple hundred bucks -- but maybe not. Maybe there's always something; food is a constant, but something else, a utility bill, something I need to buy, is always coming up.
Spending, April 20-26:
Travel: $31.50 for a ticket to be used during my CA trip; $138 for plane tickets
Food: $75 -- again a bit of a guess, since there was some cash for coffee etc here and there. Didn't have to buy groceries this week so this was all meals out, drinks at a conference. They do add up, huh.
Phone: $178.62. This is literally for the phone, plus a month of the plan.
Car insurance: $53.50
Gas: $118.12 (reimbursable) (Most of this is for a conference I'm attending, a 10-hour drive away from home; this is a TON of gas, way more than I usually get in month.)
Stupidity tax: $20 (parking ticket)
Student loan payment: $2418.88 (KILLING IT, this student loan is no more -- soon to be followed by its brother. Or, well, within the next few months anyway.)
Weekly total (without the student loan payment: $614.74, of which $116 is reimbursible, making the real total $498. This still seems like a lot -- except for the week I pay rent, I feel like my weekly expenses should rarely be more than a couple hundred bucks -- but maybe not. Maybe there's always something; food is a constant, but something else, a utility bill, something I need to buy, is always coming up.
Friday, April 25, 2014
Payday at last
Of course it's all going right back out the door :)
But the first thing I did this morning when I woke up was head over to student loan lender #1 and click on "Pay off loan." I'll give numbers in the weekly and monthly update, but this is just a short little note of cheering!
Also: I looked at the old repayment schedule. If I'd taken ten years to pay it off, I would've paid about $4000 in interest over the life of the loan. Instead, by paying it off almost a year to the day after graduation, I've paid around $300. (Have to add up the exact amounts; again, will do that later.)
So striking.
But the first thing I did this morning when I woke up was head over to student loan lender #1 and click on "Pay off loan." I'll give numbers in the weekly and monthly update, but this is just a short little note of cheering!
Also: I looked at the old repayment schedule. If I'd taken ten years to pay it off, I would've paid about $4000 in interest over the life of the loan. Instead, by paying it off almost a year to the day after graduation, I've paid around $300. (Have to add up the exact amounts; again, will do that later.)
So striking.
Wednesday, April 23, 2014
Single and sighing
This article is geared towards Canadians, but I still found it interesting: "Going It Alone: Retirement for Singles" (2011).
There were a few things in it that made me think about my own situation:
(1) It confirms my sense that there are tradeoffs involved. I pay higher tax rates and have higher housing costs than if I were splitting a 1-bedroom apartment. On the other hand, I'm not paying for children, and I bet that will easily save me the $250,000 the article mentions over the course of a lifetime. I could see how it could be more -- you need a bigger housing situation, medical care, school stuff, clothes, food, and then eventually college plus, if they're anything like I am myself, they then need financial help while they figure out what they're doing in their adult lives!
(2) It reminded me that nothing is certain. The sisters they interviewed had both been married; then one was divorced and one was widowed and they were right back where they started! Even if I were married, the odds would have to be at least 50-50 that the other person would die before me.
(3) Yeah, I have to seriously get going on this savings thing. I feel (and am) so far behind.
There were a few things in it that made me think about my own situation:
(1) It confirms my sense that there are tradeoffs involved. I pay higher tax rates and have higher housing costs than if I were splitting a 1-bedroom apartment. On the other hand, I'm not paying for children, and I bet that will easily save me the $250,000 the article mentions over the course of a lifetime. I could see how it could be more -- you need a bigger housing situation, medical care, school stuff, clothes, food, and then eventually college plus, if they're anything like I am myself, they then need financial help while they figure out what they're doing in their adult lives!
(2) It reminded me that nothing is certain. The sisters they interviewed had both been married; then one was divorced and one was widowed and they were right back where they started! Even if I were married, the odds would have to be at least 50-50 that the other person would die before me.
(3) Yeah, I have to seriously get going on this savings thing. I feel (and am) so far behind.
Tuesday, April 22, 2014
A new goal for 2014: Side Hustling My Way to Retirement
I'm in a little bit of a panic about retirement. I'm way behind where I should be at 35! If I had a guarantee of a steady income for a while to come, I could relax. But I don't; I have a guarantee of two more years, at a rate of pay significantly below my rate this year. And I'm actually looking at a lifestyle crunch, because while my student loans will be paid off, that's all I did this year: pay my loans and live. I only managed to save a couple thousand on top of that. So it's a damn good thing my cost of living is going to drop in Indiana, because my pay will be dropping and I need to get really really serious about this retirement thing.
I'm starting a 401(k) at my new job in July, and I'm going to have $1000 a month held out of a (gross) $4000 paycheck, which is, I know, a lot, but seems necessary because I'm playing so much catch-up. I'm not sure exactly what my take-home will be like, but I'm guessing it'll be around $2000, once the 401(k), taxes, health insurance, etc, are removed. I'll have monthly fixed expenses (rent, utilities, phone, car insurance, grocery budget) of $650. That leaves a lot of discretionary income to save for travel, future housing costs (down payment fund), medical expenses, gas/car stuff, clothing, and just plain fun...except that if I'm going to fully fund a Roth IRA for 2014, I'd need to keep back $900, which would leave me with only $450 for all those savings goals plus slush/fun money. Not a lot.
Conclusion: I need more income, and that income needs to not disappear into the black hole of the slush fund. It needs to go directly into a savings account that I use to buy Roth shares whenever it hits a certain amount, say, $250.
So, here's a goal for the remaining 7 months in 2014: $5500 in extra income, all of which will be directly routed to the brand-new savings account I just set up, no excuses, no exceptions!
Other income I intend to route this way, if I can pick up any of this:
--interest from savings accounts (not likely to be much, but still....)
--author royalties
--honoraria for speeches (I'll be lucky if I can land one of these this year, but....)
--usertesting.com
--ebay and amazon and craigslist
--freelance editing (I hope this will be my main source; I need to start getting some gigs though)
--babysitting? tutoring?
--promotions, like "open a new credit card or checking account"
I'm starting it out with $68.96 I just made through a combination of ebay and usertesting.com. Only $5411 to go!
I'm starting a 401(k) at my new job in July, and I'm going to have $1000 a month held out of a (gross) $4000 paycheck, which is, I know, a lot, but seems necessary because I'm playing so much catch-up. I'm not sure exactly what my take-home will be like, but I'm guessing it'll be around $2000, once the 401(k), taxes, health insurance, etc, are removed. I'll have monthly fixed expenses (rent, utilities, phone, car insurance, grocery budget) of $650. That leaves a lot of discretionary income to save for travel, future housing costs (down payment fund), medical expenses, gas/car stuff, clothing, and just plain fun...except that if I'm going to fully fund a Roth IRA for 2014, I'd need to keep back $900, which would leave me with only $450 for all those savings goals plus slush/fun money. Not a lot.
Conclusion: I need more income, and that income needs to not disappear into the black hole of the slush fund. It needs to go directly into a savings account that I use to buy Roth shares whenever it hits a certain amount, say, $250.
So, here's a goal for the remaining 7 months in 2014: $5500 in extra income, all of which will be directly routed to the brand-new savings account I just set up, no excuses, no exceptions!
Other income I intend to route this way, if I can pick up any of this:
--interest from savings accounts (not likely to be much, but still....)
--author royalties
--honoraria for speeches (I'll be lucky if I can land one of these this year, but....)
--usertesting.com
--ebay and amazon and craigslist
--freelance editing (I hope this will be my main source; I need to start getting some gigs though)
--babysitting? tutoring?
--promotions, like "open a new credit card or checking account"
I'm starting it out with $68.96 I just made through a combination of ebay and usertesting.com. Only $5411 to go!
Sunday, April 20, 2014
It's Sort of Fun To Talk About Spending: A Weekly Update
As I mentioned yesterday, I'm sort of obsessed right now by money. This hopefully will not last forever -- I would like to get back to thinking about other things -- but there you go. Right now it is actually fun to look at my mint.com account and my bank account and everything and just see, you know, what did I spend? Where did it go? So I decided that I'd do a weekly spending update. I don't know how much I'll really learn from this but...why not, basically :)
So, April 13-19, how'd we do?
Food: $125 [This is a bit of a guess; my mint.com transactions on groceries, two meals out, and so on, added up to $75. But I know for a fact I spent $25 yesterday in cash at the farmer's market and another $16 in cash for dinner out, and I also spent some money on coffee and so on in cash throughout the week. Oh my God, I *have* to get my food costs under control, because this is a very typical week, frankly -- which means I could easily be spending more like $500 a month. On food. For one person. Well, I guess this is what they mean by a wake-up call.]
Car: $96.18. This was an expensive week; gas, but also $35 to my EZ-Pass account and $27 to get the oil changed.
Travel: $219.13. Round trip tickets to California (I also used points, so this is not nearly as high as it could be, but still.)
Reimbursable: $155 for a conference registration and $573 for moving costs.
Student Loan: $88.34. This is the minimum payment on my Sallie Mae loan, which I'm making monthly while throwing huge amounts of money at the Great Lakes loan which has a higher interest rate.
Federal Taxes: $8.00 [seriously]
Other: well, it hasn't actually been charged yet, but I bought a new phone. My cell phone bill has been bothering me for a while; I have an ancient (4 year old at least) flip phone, but I pay $55 a month for talk and text, and that just seems HUGE. So I decided to try Republic Wireless, a company where you use wifi for calls and texts when you can, and 3G when you can't. It's $10 a month but you have to buy the phone. So I was waiting until they released a cheaper phone, which they did on Thursday; it'll be $150 out of pocket but with no plan or whatever, and obviously if it works I'll be back in the black after just a few months because the plan is so much cheaper. It has a 30-day money back guarantee, so I'm going to keep my old phone/plan until I find out if this new one really works.
So I guess I won't count that in my total because (a) it hasn't even been charged to my card yet and (b) I'm not sure if I'm really keeping it.
This means my expenses for the week were...holy shit...$1264, of which $728 is reimbursable, meaning that I have to pay for $536 of it (plus the phone eventually.) Wow.
On the upside, even though I have more plane tickets to buy, next week pretty much *has* to be cheaper! Nowhere to go but up!
So, April 13-19, how'd we do?
Food: $125 [This is a bit of a guess; my mint.com transactions on groceries, two meals out, and so on, added up to $75. But I know for a fact I spent $25 yesterday in cash at the farmer's market and another $16 in cash for dinner out, and I also spent some money on coffee and so on in cash throughout the week. Oh my God, I *have* to get my food costs under control, because this is a very typical week, frankly -- which means I could easily be spending more like $500 a month. On food. For one person. Well, I guess this is what they mean by a wake-up call.]
Car: $96.18. This was an expensive week; gas, but also $35 to my EZ-Pass account and $27 to get the oil changed.
Travel: $219.13. Round trip tickets to California (I also used points, so this is not nearly as high as it could be, but still.)
Reimbursable: $155 for a conference registration and $573 for moving costs.
Student Loan: $88.34. This is the minimum payment on my Sallie Mae loan, which I'm making monthly while throwing huge amounts of money at the Great Lakes loan which has a higher interest rate.
Federal Taxes: $8.00 [seriously]
Other: well, it hasn't actually been charged yet, but I bought a new phone. My cell phone bill has been bothering me for a while; I have an ancient (4 year old at least) flip phone, but I pay $55 a month for talk and text, and that just seems HUGE. So I decided to try Republic Wireless, a company where you use wifi for calls and texts when you can, and 3G when you can't. It's $10 a month but you have to buy the phone. So I was waiting until they released a cheaper phone, which they did on Thursday; it'll be $150 out of pocket but with no plan or whatever, and obviously if it works I'll be back in the black after just a few months because the plan is so much cheaper. It has a 30-day money back guarantee, so I'm going to keep my old phone/plan until I find out if this new one really works.
So I guess I won't count that in my total because (a) it hasn't even been charged to my card yet and (b) I'm not sure if I'm really keeping it.
This means my expenses for the week were...holy shit...$1264, of which $728 is reimbursable, meaning that I have to pay for $536 of it (plus the phone eventually.) Wow.
On the upside, even though I have more plane tickets to buy, next week pretty much *has* to be cheaper! Nowhere to go but up!
Saturday, April 19, 2014
Waiting for payday
Right now, I'm having some psychological trouble -- we get paid once a month, and literally since the end of last month I've been counting the minutes until I get paid *this* month, so I can throw a lot of money at the student loan. I just want it GONE, and it can't be until I get three more paychecks.
This is weird, because, like, in the meantime I'm supposed to be living my life -- doing my job, not just waiting for a check to come in! It's been hard to focus on anything but my net worth this month, though.
(Although that is not going to look pretty at the end of April, for two reasons: I decided it was silly to count my car, since that just doesn't seem to qualify as an asset. It's not like I'm going to sell it, after all. So I took it off mint.com. And second, I just put a ton of stuff on my credit card: I had to book movers, and nearly all of that will be reimbursable, but in the meantime it's going to sit on my card (which luckily has an 0% rate for the next year) and look ugly, until at least the end of July. And also I bought plane tickets for my May/June expedition to the West Coast, so there was a bigger expense than I usually have in a month, here. We should be in positive territory anyway by the end of the summer -- debt paid off, moving expenses reimbursed, plane tickets paid down -- but things are going to be weird for a while.)
But, psychologically, I'm going to have to get over just sitting around waiting to get paid, or realistically, I won't get paid for much longer!
This is weird, because, like, in the meantime I'm supposed to be living my life -- doing my job, not just waiting for a check to come in! It's been hard to focus on anything but my net worth this month, though.
(Although that is not going to look pretty at the end of April, for two reasons: I decided it was silly to count my car, since that just doesn't seem to qualify as an asset. It's not like I'm going to sell it, after all. So I took it off mint.com. And second, I just put a ton of stuff on my credit card: I had to book movers, and nearly all of that will be reimbursable, but in the meantime it's going to sit on my card (which luckily has an 0% rate for the next year) and look ugly, until at least the end of July. And also I bought plane tickets for my May/June expedition to the West Coast, so there was a bigger expense than I usually have in a month, here. We should be in positive territory anyway by the end of the summer -- debt paid off, moving expenses reimbursed, plane tickets paid down -- but things are going to be weird for a while.)
But, psychologically, I'm going to have to get over just sitting around waiting to get paid, or realistically, I won't get paid for much longer!
Thursday, April 17, 2014
Cutting Costs for the Already Pretty Frugal
I both have and have not been good at managing money in the past. I'm about 12 years past the point at which I wish I'd started saving something, anything, for retirement. There's also one really, really big expense I wish I'd cut: I wish I'd accepted the necessity of a cheap apartment a few years longer. I lived in my very very expensive grad school city for that entire twelve years out of college, and for the first eight of them I lived within my means. I cycled up and down through credit card debt when I was freelancing, but never carried a balance longer than a few months at a time, as I prioritized paying it off when I had a work project going. (This left me with amazing credit, by the way.) I lived with roommates and/or in dirt-cheap parts of the city (sometimes both) and took on second jobs while in grad school.
But during the last four years, I had had enough of living in a part of the city that was incredibly inconvenient for my social life. It took me nearly 2 hours to travel from the neighborhood where I lived to the neighborhood where most of my friends lived, and as a result I rarely saw them. So I moved, and then I moved again to a different place in the same neighborhood. My social life *definitely* improved, but all my expenses went up -- rent, food, transportation, everything. This is where the majority of my $19K student loan went.
So ANYWAY, I regret not working harder at finding a much more affordable living situation in New Neighborhood (I don't really regret moving in the first place -- maybe a little, but not much.)
But really -- all things considered -- I have lived a damn cheap life, which is why I'm not in much worse financial shape after all that grad school time. Here are things I don't do:
(1) have cable
(2) have a smartphone
(3) drink (mostly; I'll have a glass of wine every now and then)
(4) "shop" -- not that I never spend money on books, clothes, or music, but going out looking to buy stuff isn't a hobby. Good thing too since I move so much.
(5) wear makeup or engage in a lot of beauty routine stuff -- I get my hair cut, which is probably my biggest personal care expense. (For several years I did it myself, too.)
(6) go to a lot of concerts or other non-free entertainment
(7) drive a car that is even new-ish
There are other things I spend money on that do feel like necessities:
(1) some clothing
(2) therapy, at the moment
(3) cell phone
(4) travel. I don't live in the same place as any of my friends/family. Plane tickets and gas add up.
This leaves things I probably could stand to cut back on:
(1) food -- sigh. Yeah. I spend a lot of money on food. I do bring lunch a lot, but not every single day. When I'm at work, I generally buy a cup of coffee in the afternoon, which runs around $2. I buy nice produce. I buy in cash at the farmer's market a lot so I honestly don't have a great sense of what I spend even with using mint, but I wouldn't be surprised if food added up to $300 a month or more. For one person. Ouch.
(2) ...internet? I guess?
And it also leaves things I *could* cut back on but just *really don't want to*. Things like the occasional movie/CD/book, or nice shampoo, or buying a new kitchen item.
So, with the big pay cut arriving in July (to go along with my loans being paid off, so things will more or less even out), I agreed to move in with a friend in New City. New City is already extremely cheap even without sharing space, and monthly rent/utilities expenses should drop to $350-400 depending on time of year -- which is to say, literally in half from what they are now. All of that cash is going STRAIGHT into my IRA.
I'm not sure how long this will last -- probably a minimum of 6 months, but maybe not more than that. We're just going to see how we do with each other, and maybe I'll end up in more expensive housing afterwards. But that'll be an extra $2000 or so to add to the world's tiniest retirement fund, and I guess every little bit helps.
(Also, sigh, I need to get serious about controlling the food budget.)
But during the last four years, I had had enough of living in a part of the city that was incredibly inconvenient for my social life. It took me nearly 2 hours to travel from the neighborhood where I lived to the neighborhood where most of my friends lived, and as a result I rarely saw them. So I moved, and then I moved again to a different place in the same neighborhood. My social life *definitely* improved, but all my expenses went up -- rent, food, transportation, everything. This is where the majority of my $19K student loan went.
So ANYWAY, I regret not working harder at finding a much more affordable living situation in New Neighborhood (I don't really regret moving in the first place -- maybe a little, but not much.)
But really -- all things considered -- I have lived a damn cheap life, which is why I'm not in much worse financial shape after all that grad school time. Here are things I don't do:
(1) have cable
(2) have a smartphone
(3) drink (mostly; I'll have a glass of wine every now and then)
(4) "shop" -- not that I never spend money on books, clothes, or music, but going out looking to buy stuff isn't a hobby. Good thing too since I move so much.
(5) wear makeup or engage in a lot of beauty routine stuff -- I get my hair cut, which is probably my biggest personal care expense. (For several years I did it myself, too.)
(6) go to a lot of concerts or other non-free entertainment
(7) drive a car that is even new-ish
There are other things I spend money on that do feel like necessities:
(1) some clothing
(2) therapy, at the moment
(3) cell phone
(4) travel. I don't live in the same place as any of my friends/family. Plane tickets and gas add up.
This leaves things I probably could stand to cut back on:
(1) food -- sigh. Yeah. I spend a lot of money on food. I do bring lunch a lot, but not every single day. When I'm at work, I generally buy a cup of coffee in the afternoon, which runs around $2. I buy nice produce. I buy in cash at the farmer's market a lot so I honestly don't have a great sense of what I spend even with using mint, but I wouldn't be surprised if food added up to $300 a month or more. For one person. Ouch.
(2) ...internet? I guess?
And it also leaves things I *could* cut back on but just *really don't want to*. Things like the occasional movie/CD/book, or nice shampoo, or buying a new kitchen item.
So, with the big pay cut arriving in July (to go along with my loans being paid off, so things will more or less even out), I agreed to move in with a friend in New City. New City is already extremely cheap even without sharing space, and monthly rent/utilities expenses should drop to $350-400 depending on time of year -- which is to say, literally in half from what they are now. All of that cash is going STRAIGHT into my IRA.
I'm not sure how long this will last -- probably a minimum of 6 months, but maybe not more than that. We're just going to see how we do with each other, and maybe I'll end up in more expensive housing afterwards. But that'll be an extra $2000 or so to add to the world's tiniest retirement fund, and I guess every little bit helps.
(Also, sigh, I need to get serious about controlling the food budget.)
Friday, April 11, 2014
The Rent Is Too Damn High
One thing that does concern me about the PF blogosphere is that in some quarters there's a lack of...sympathy? understanding? of the crunch that the realities of costs/income in the United States today create. For example, the infographic here makes it seem as if Americans' money troubles can mostly be chalked up to buying expensive purses. While "living beyond our means" is definitely a problem for *some* -- including me; the reason why I had the $19k of debt a year ago is primarily that I didn't stick strictly to a budget and seek out the cheapest housing available as a grad student in a very, very expensive city; I could have found smaller, cheaper rooms in less desirable neighborhoods and probably avoided some or all of that debt -- moral failure doesn't really account for the bad ratio of spending to income that we see there.
For most Americans, the two biggest costs are health care and housing, followed in short order by commuting. Then there's child care, and of course food. For decades, real wages have flatlined or declined in most sectors of the economy, while health care and housing (especially) have skyrocketed. In any one given case, the problem might be spending too much on vacations, drinking, or flat-screen TVs, but in the aggregate, the problem is much more structural; people working precarious jobs in a part-time, freelance, relentlessly anti-labor and cost-cutting economy are having a lot of trouble affording the basics.
This is "the decline of the middle class" in a nutshell. I'm 35 and single. I'm not talented in any of the areas where people still make a lot of money -- computer programming, finance. I might get a job pretty much anywhere in the country, and that job will probably fall within a narrow salary range; at the low end, around $50K, at the high end, around $65K. In my current town, $65K for a single person buys a pretty nice life; housing's not dirt cheap or anything, but it's very affordable. Even on $50K it would be a pretty nice life! However, let's say the job is in Philadelphia, Chicago, or Los Angeles -- or, God forbid, New York or San Francisco or Washington DC (all places I would love to live, by the way.) Salary likely to be on the high end of that range, but in terms of housing? I can't see how I'd avoid having to either have roommates, or find some kind of wacky S.R.O. arrangement with a hotplate (which, by the way, don't really exist anymore), or live in a place that required a massive commute. Rent for a 1br in DC or NYC, in any kind of central location not requiring hours on public transportation, is running anywhere from $2500 to $5000 *a month*. So...not happening.
The point is that even people willing to "go where the jobs are" and to work very very hard and to live very very frugally (I don't drink, rarely travel, use the public library, do virtually all my own cooking, hardly ever buy clothes) can *still* find themselves in a situation where the basic cost of housing is almost out of reach. And this is discounting medical emergencies, which are still the #1 cause of bankruptcy in the United States.
So, to sum up: I don't discount the role of personal responsibility and the need to live frugally. People in debt *do* need to figure out some kind of personal solution. But I feel pretty strongly that we ought to acknowledge that rent, medical care, child care, and transportation can eat up a hell of a lot of a normal salary -- and when you work at Wal-mart or McDonald's? Well, forget about it.
[ETA: This very interesting post (and interesting comments) from Impersonal Finance gets at some of this.]
For most Americans, the two biggest costs are health care and housing, followed in short order by commuting. Then there's child care, and of course food. For decades, real wages have flatlined or declined in most sectors of the economy, while health care and housing (especially) have skyrocketed. In any one given case, the problem might be spending too much on vacations, drinking, or flat-screen TVs, but in the aggregate, the problem is much more structural; people working precarious jobs in a part-time, freelance, relentlessly anti-labor and cost-cutting economy are having a lot of trouble affording the basics.
This is "the decline of the middle class" in a nutshell. I'm 35 and single. I'm not talented in any of the areas where people still make a lot of money -- computer programming, finance. I might get a job pretty much anywhere in the country, and that job will probably fall within a narrow salary range; at the low end, around $50K, at the high end, around $65K. In my current town, $65K for a single person buys a pretty nice life; housing's not dirt cheap or anything, but it's very affordable. Even on $50K it would be a pretty nice life! However, let's say the job is in Philadelphia, Chicago, or Los Angeles -- or, God forbid, New York or San Francisco or Washington DC (all places I would love to live, by the way.) Salary likely to be on the high end of that range, but in terms of housing? I can't see how I'd avoid having to either have roommates, or find some kind of wacky S.R.O. arrangement with a hotplate (which, by the way, don't really exist anymore), or live in a place that required a massive commute. Rent for a 1br in DC or NYC, in any kind of central location not requiring hours on public transportation, is running anywhere from $2500 to $5000 *a month*. So...not happening.
The point is that even people willing to "go where the jobs are" and to work very very hard and to live very very frugally (I don't drink, rarely travel, use the public library, do virtually all my own cooking, hardly ever buy clothes) can *still* find themselves in a situation where the basic cost of housing is almost out of reach. And this is discounting medical emergencies, which are still the #1 cause of bankruptcy in the United States.
So, to sum up: I don't discount the role of personal responsibility and the need to live frugally. People in debt *do* need to figure out some kind of personal solution. But I feel pretty strongly that we ought to acknowledge that rent, medical care, child care, and transportation can eat up a hell of a lot of a normal salary -- and when you work at Wal-mart or McDonald's? Well, forget about it.
[ETA: This very interesting post (and interesting comments) from Impersonal Finance gets at some of this.]
Thursday, April 10, 2014
Interest
I learned about interest in sixth grade or so, like everyone else, and then more or less forgot about it. But I'm kind of obsessed with my student loan lender's website right now -- I'm waiting around for my April paycheck (end of the month) so I can pay off loan #1 entirely, as it's down to an amount when I can do that. So I kind of like going over there and looking at the balance and thinking "soon! soon!"
Today I looked at the "level" vs. "graduated" numbers though, because they were there and I was bored. This refers to the two possible payment plans they offer. On the level plan, I would (if I weren't going to pay the loan off entirely this month) pay $95 a month for the next 28 months (just over two years) and end up paying just under $200 more in interest. That actually doesn't sound so bad; if the damn thing weren't so annoying, I'd consider doing that, hardly noticing each payment, and bulking up my savings accounts instead. (It is annoying though, so I'm not going to.)
On the "graduated" plan, meant for people with lower incomes, I'd make payments of $25 a month now, rising to $34 over the course of 115 months (or not quite 10 years.) This would be even less noticeable from my monthly budget. But I'd end up paying $940 in interest, or over 1/3 of the current total value of the loan. (Let's not even talk about what these numbers would look like if I hadn't been aggressively paying the thing down for six months.)
The difference between these two might as well come with a big flashing sign saying "the lending industry punishes poor people." The big difference -- the ability to make either triple or quadruple the minimum payment -- results in a payment time of around 75% less, and also an interest payment only 21% of the other. (I did actual math for that last number.)
And whose interest is that in?
Today I looked at the "level" vs. "graduated" numbers though, because they were there and I was bored. This refers to the two possible payment plans they offer. On the level plan, I would (if I weren't going to pay the loan off entirely this month) pay $95 a month for the next 28 months (just over two years) and end up paying just under $200 more in interest. That actually doesn't sound so bad; if the damn thing weren't so annoying, I'd consider doing that, hardly noticing each payment, and bulking up my savings accounts instead. (It is annoying though, so I'm not going to.)
On the "graduated" plan, meant for people with lower incomes, I'd make payments of $25 a month now, rising to $34 over the course of 115 months (or not quite 10 years.) This would be even less noticeable from my monthly budget. But I'd end up paying $940 in interest, or over 1/3 of the current total value of the loan. (Let's not even talk about what these numbers would look like if I hadn't been aggressively paying the thing down for six months.)
The difference between these two might as well come with a big flashing sign saying "the lending industry punishes poor people." The big difference -- the ability to make either triple or quadruple the minimum payment -- results in a payment time of around 75% less, and also an interest payment only 21% of the other. (I did actual math for that last number.)
And whose interest is that in?
Friday, April 4, 2014
Early ups and downs
One of the things that I've really liked about reading around the personal finance blogosphere is how committed people are to reaching their goals -- and how open they are about how hard it is to keep it moving on a day to day basis. I've only been at this blog for a week, and only had my big "must have a retirement fund now" moment a couple weeks before that, and yet already I can see this pattern.
Objectively I'm not in a terrible spot right now; the guy in his late 50s whose retirement savings are wiped out after a year of unemployment (just featured in the NY Times) is way worse off, and so are, like, billions of poor people the world over. I am determined to wipe out my debt this summer and not get back into it unless I need a car loan (in case mine dies, not because I plan to upgrade) or a mortgage. I have a guaranteed income for the next 15 months. I have wonderful friends and family members that would back me up in a second if I needed it.
But despite these good things, I feel...wobbly. Maybe because none of my financials are going to budge for nearly a month now, until my next paycheck? That might have something to do with it. It's exciting to see my net worth jump so much at a time, and to pay off a big chunk of loan, and to open a retirement account. Waiting around, doing my job, for a month, until the next one comes in...that's a lot of days of "one foot in front of the other" where nothing is happening!
So, I guess I have to work on both moderating the spike in my mood when I something good with money, and also on moderating the low I feel on a day like today, when I'm convinced any effort I make is for nothing.
Objectively I'm not in a terrible spot right now; the guy in his late 50s whose retirement savings are wiped out after a year of unemployment (just featured in the NY Times) is way worse off, and so are, like, billions of poor people the world over. I am determined to wipe out my debt this summer and not get back into it unless I need a car loan (in case mine dies, not because I plan to upgrade) or a mortgage. I have a guaranteed income for the next 15 months. I have wonderful friends and family members that would back me up in a second if I needed it.
But despite these good things, I feel...wobbly. Maybe because none of my financials are going to budge for nearly a month now, until my next paycheck? That might have something to do with it. It's exciting to see my net worth jump so much at a time, and to pay off a big chunk of loan, and to open a retirement account. Waiting around, doing my job, for a month, until the next one comes in...that's a lot of days of "one foot in front of the other" where nothing is happening!
So, I guess I have to work on both moderating the spike in my mood when I something good with money, and also on moderating the low I feel on a day like today, when I'm convinced any effort I make is for nothing.
Wednesday, April 2, 2014
Just Do It
I think maybe the most important thing I've gotten out of the last few weeks of reading is the message on retirement savings: just start. Don't pay attention to the series of objections I always had:
1) I don't have any spare cash
2) My life is so unstable right now; if I do have spare cash, it should be in emergency savings where I can get to it fast
3) I don't have enough spare cash; don't you need thou$ands?
4) I don't know how [ok, this was a big one]
5) There's nobody pushing me to do it and no obvious beneficiary if I die before I can use the money [this is where singleness comes into play]
6) Shouldn't all available money go towards the student loan instead? [This is why I didn't open a 401(k) with my current job -- although there would have been no match, which mitigates that choice a little. Still should've asked for $200 a month to be taken out or something.]
Instead: just start. Even if it's small. Even if it's $25 a month. Even if you have to take the initial deposit ($1000 at Vanguard) out of emergency savings. Whatever. Just start.
It seems sort of like having a kid (nb, I do not have a kid, so YMMV) in that you never quite feel "ready" to take the plunge. Instead you have to just...start.
(An article I found useful on this is at Investopedia, by the way.)
1) I don't have any spare cash
2) My life is so unstable right now; if I do have spare cash, it should be in emergency savings where I can get to it fast
3) I don't have enough spare cash; don't you need thou$ands?
4) I don't know how [ok, this was a big one]
5) There's nobody pushing me to do it and no obvious beneficiary if I die before I can use the money [this is where singleness comes into play]
6) Shouldn't all available money go towards the student loan instead? [This is why I didn't open a 401(k) with my current job -- although there would have been no match, which mitigates that choice a little. Still should've asked for $200 a month to be taken out or something.]
Instead: just start. Even if it's small. Even if it's $25 a month. Even if you have to take the initial deposit ($1000 at Vanguard) out of emergency savings. Whatever. Just start.
It seems sort of like having a kid (nb, I do not have a kid, so YMMV) in that you never quite feel "ready" to take the plunge. Instead you have to just...start.
(An article I found useful on this is at Investopedia, by the way.)
Tuesday, April 1, 2014
Fear and the Future
So, in an earlier post I mentioned the relatively well-paid but temporary nature of my job. This happens a lot to early-career academics; I know some people who've gotten a permanent job right out of school, but just as many, if not more, who've had several temporary stints first.
I'm fortunate in that my first temporary job has been excellent; great location near family, compensation generous enough to allow me to live pretty well while also aggressively attacking my debt. My second temporary job...well, it'll be ok. It'll start this summer, and involves another move (groan) which fortunately they're paying for. It'll be in a city where the cost of living is even lower than here, but which will be more expensive to leave; if I want to go anywhere it pretty much means flying, not driving. And worst of all, I'm taking a pretty huge pay cut for it.
The thing is, my current job is so well-paid by the standards of my field that almost anything was going to involve a pretty huge pay cut. That's just the reality; I was enormously lucky this year, and can't expect that luck to continue indefinitely. And along with the dip in compensation is coming a dip in teaching responsibilities, so I can focus much more on writing than I've been able to do this year.
But I still have concerns.
*It'll be the second post-graduate year in a row where I've had access to a 401(k) or 403(b), but no employer match due to the temporary nature of the job, so there's not much incentive to contribute. (As far as I can tell, without an employer match it's better to do IRAs rather than a 40...plan.) I'm kind of annoyed about this, and also worried; what if I never get to the point where an employer is finally putting something in? I'm getting old, from the point of view of compound interest.
*Ugh did I mention the really big pay cut?! (Offset substantially by the projected retirement of my debt, but I'm still going to have to go to real budgeting and/or get a second, freelance job in order to keep up with my new retirement plan.)
*Since it's another temporary job (albeit a full year guaranteed, with health insurance) it's still very difficult to project a future path. I can budget for the next 12 months, but I have to simultaneously prepare for the very long term, while also prepping for the possibility that I'll be moving AGAIN come next summer, or, worse, unemployed.
In short...I'm kind of afraid. What if I can't make it work on the new salary? What if I can't land something else next year? What if the "something else" I land has even worse pay, or security? (You'd be surprised at how many people have been laid off in higher ed in the last few years, as colleges have either closed due to financial problems, or cut the supposedly uncuttable faculty.) Lots of what ifs, and one very tiny retirement fund staring them in the face.
[Update on the very tiny retirement fund: it has grown by $20 in the last two days as the market went up again! I know, I know, day to day stuff is basically meaningless, and I don't want to get as depressed if it loses $20 tomorrow, as I am happy today to see the $20 there...but still, it's making me smile.]
I'm fortunate in that my first temporary job has been excellent; great location near family, compensation generous enough to allow me to live pretty well while also aggressively attacking my debt. My second temporary job...well, it'll be ok. It'll start this summer, and involves another move (groan) which fortunately they're paying for. It'll be in a city where the cost of living is even lower than here, but which will be more expensive to leave; if I want to go anywhere it pretty much means flying, not driving. And worst of all, I'm taking a pretty huge pay cut for it.
The thing is, my current job is so well-paid by the standards of my field that almost anything was going to involve a pretty huge pay cut. That's just the reality; I was enormously lucky this year, and can't expect that luck to continue indefinitely. And along with the dip in compensation is coming a dip in teaching responsibilities, so I can focus much more on writing than I've been able to do this year.
But I still have concerns.
*It'll be the second post-graduate year in a row where I've had access to a 401(k) or 403(b), but no employer match due to the temporary nature of the job, so there's not much incentive to contribute. (As far as I can tell, without an employer match it's better to do IRAs rather than a 40...plan.) I'm kind of annoyed about this, and also worried; what if I never get to the point where an employer is finally putting something in? I'm getting old, from the point of view of compound interest.
*Ugh did I mention the really big pay cut?! (Offset substantially by the projected retirement of my debt, but I'm still going to have to go to real budgeting and/or get a second, freelance job in order to keep up with my new retirement plan.)
*Since it's another temporary job (albeit a full year guaranteed, with health insurance) it's still very difficult to project a future path. I can budget for the next 12 months, but I have to simultaneously prepare for the very long term, while also prepping for the possibility that I'll be moving AGAIN come next summer, or, worse, unemployed.
In short...I'm kind of afraid. What if I can't make it work on the new salary? What if I can't land something else next year? What if the "something else" I land has even worse pay, or security? (You'd be surprised at how many people have been laid off in higher ed in the last few years, as colleges have either closed due to financial problems, or cut the supposedly uncuttable faculty.) Lots of what ifs, and one very tiny retirement fund staring them in the face.
[Update on the very tiny retirement fund: it has grown by $20 in the last two days as the market went up again! I know, I know, day to day stuff is basically meaningless, and I don't want to get as depressed if it loses $20 tomorrow, as I am happy today to see the $20 there...but still, it's making me smile.]
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