competing priorities
From this month’s Net Worth Update:
“I did OK, I guess. It’s home improvement season, so I’m not sure how much progress I’ll be making in the coming months. We got some landscaping done (paid in full up front), and we bought some furniture (No money down, no interest for 12 months – we plan to have it paid off in the next couple months, and yes, this does mean that I have another credit account – but I wanted it, because we’ll be buying quite a bit of furniture this year). But we’re still saving for the future (wedding, baby) and I’m paying down my student loans – about $300 more than the minimum payment per month (The $300.00 comes from the payments I was making on other bills that I have now paid off.) My car payments are mostly principal at this point, which is great. And all that money in “cash” includes money we’re saving to spend on the wedding (the planning/spending for which is already under way), so I’m not sure how much stock you should put in that number. And oh yeah, how ’bout that bear market? I’m down about 10% from last month.”
I’m still up about$400, but it would be so much better if I hadn’t lost that amount in the market, and if we hadn’t bought furniture. But look, we need furniture. Our hand-me-down furniture has literally fallen apart. My room is atrocious. That’s bad for my peace of mind. I’m not too worried about the additional debt. We’ll be paying it off in the next few months. And still, that doesn’t really matter, because after it’s paid off we’re getting carpet and more furniture.
The good news is, we pay for this stuff with the money that’s left over after we contribute a big chunk of our money to our various savings goals and the household expenses. The other good news is that we’re only buying one home improvement at a time. We know we can’t afford do everything at the same time while continuing to save, so the one-at-a-time approach will keep us able to continue saving and paying down debt. I have no interest in being miserable and completely dissatisfied with the decor of my house just so that I can boast about being debt-free. I will spend my money on things I want to have – I’ll just do it as responsibly as I can think to do it. We have savings and steady work, so now is the time to take advantage of being dual-income-no-kids.
Although, I’ll admit that I hate it when my net worth graph doesn’t shoot up in the air.
pleasant surprise
I updated my net worth (with a few minor details yet-to-be-updated, like the big reduction in my student loan amount and the actual amount of my stocks’ value) and lo and behold, there was a $6,000 net worth increase sitting there staring me in the face! Wow. Praise God!
This progress, despite my newest material acquisitions – clothes, a smart phone, a data plan, weekly visits with a personal fitness trainer – is nothing short of amazing.
Here’s my latest net worth explanation:
“The amount shown in my net worth is incorrect because I’m having technical difficulties with one of my student loan accounts and with my ShareBuilder account, so I can’t see the actual balances. Until I can get these numbers, the amounts shown here are incorrect.
I used my tax refund to pay down some student loan debt. I made my last medical bills payment in April. Yay!!! That is why my “other debts” category has gone down. Another reason it’s declined is because I’m paying back the $7,500 tax credit from 2008 through payroll deductions, since 2010 is the first tax year in which Uncle Sam will start getting his money back from the homeowners who took the 2008 home buyers’ tax credit (i.e. “loan”) – which, in my case, is sitting in a bank account collecting an insulting amount of interest (when are the rates going to go back up?!?!?) and augmenting our emergency savings.
Mister Ant and I have been saving for our wedding expenses and for start-up costs for a family (no, we’re not trying yet!).
The credit cards get cleared by the end of each month, and I’m pretty much using them for rewards points. My main priority is to use the payment amounts I no longer have to pay to the medical bills to pay down my smaller student loan. I’m really excited about seeing that final 0.00 balance when I log in one day! I hate this loan with a passion.
I haven’t been saving much in my IRA, because so much of my money is going towards wedding/household savings and debt reduction. Apparently I lack the drive/discipline to contribute regularly to the fund, but at least I am saving something somewhere, and next month after open enrollment, I’ll start contributing to the 401K at work, since I become eligible this month. I looked into converting the IRA to a Roth, but it’s really not worth the initial tax costs to me right now.
Someone dinged my car, but not so significantly that it would have been worth paying my $1000 deductible, so I took some value ($500) off of the car, since the body is no longer in “excellent” condition.”
But, perhaps most importantly of all – my net worth has broken the -20,000 mark and I feel like I’m oh-so-close to going positive! I was so excited to see that, and then my jaw dropped when I saw that I’m 77% closer to a positive net worth than I was when I started this journey three-and-a-half years ago back in 2006. Oh joy! Negative 87K seems so far away now. I mean, what’s another 16K? I’ve already improved by about 70. This is so awesome!
algebra?
Mister Ant and I are putting our finances together. For us, that means checking our credit reports, figuring out how a joint account could benefit us, and working together on debt reduction (mostly student loans and the mortgage) and savings for long-term goals. I actually had to do some algebra! We now know what percentage from our respective checks is enough to take care of household expenses. It’s a different dollar amount for each of us, because we have different salaries, but it’s the same percentage, so neither of us gets burdened more than the other – or in other words, a fifth is a fifth, a quarter is a quarter, or a third is a third for either of us. Our percentage is 32%. This means that 1/3 of our collective net monthly income pays all the household bills, so if each of us put 32% of our income in a joint account, it would cover things like the mortgage, household incidentals, utilities, entertainment, etc. This would leave us with 2/3 of our net monthly income to divvy up for savings, debt reduction, and a spending allowance.
That’s just the beginning, though. We should also have to figure out a percentage for joint savings goals, once we nail down a joint debt reduction plan. The days of splitting bills like roommates are over. Soon, our joint checking account will be paying our bills, instead of one of us reimbursing the other for their share of paid bills. But this takes a while, with all the other things we’re busy with to distract us. There’s lots of scribbling, and lots of communicating. But it will all be worth it. Our opinion is that money should be the last thing we have to worry or argue about as a married couple if we’re proactive and smart about our money management.
Mister Ant is happy I’m blogging again. He wanted me to tell you guys Hi!
*sigh* happy new year
Oh the horror!
The triumphant spirit I had this time last year has given way to contrition this year. If I don’t want to feel like this in 2011, some things are going to have to change.
I made a deal with myself that I could keep my head in the sand until the end of December. I allowed myself to turn a blind eye to the hard numbers, buy whatever Christmas presents I wanted, eat lunch out if I felt like it, ignore contributing to my retirement account or my stock purchases, ignore my debt reduction goals… I did all of that. I am done with that. This has been such a mediocre year! I feel like I haven’t moved forward and like I’ve abandoned my goals.
I’ve been so busy with my new work hours and other activities, and I used that as an excuse to slack off on my diligence with checking the numbers and blogging about my progress or the lack thereof. I even finished 2009 with credit card debt because of a house improvement and a very expensive engagement gift I wanted to buy.
Which brings me to my newest motivation – marriage and babies are only as imminent as my (our) ability to handle our money correctly and progressively. I have a renewed commitment to debt reduction. The credit card debt will be gone by the end of the month. The medical bills will be gone by June. The car note will be gone by June 2011, and only because we have to save for our ceremony, since we will not incur debt for it. by June 2011 – mark my words – my only debt will be the mortgage and the student loans, provided the Lord helps us to avoid emergencies.
Regarding savings, I have found that it’s harder to keep the money I save. This year, I wound up spending what I saved so that I can avoid using credit cards and avoid raiding the savings I had already. I’m not completely uncomfortable with this, but I would like to increase my savings. So, I’m counting on the 7.6% raise I got at the end of the year and the 401K program at work, which kicks in for me in a few months, to help me feel like I’m making saving progress.
My challenges to debt reduction and savings will be home decorations (we’ve made improvements/repairs but hardly any decorations) and the wedding ceremony. I hope to do everything for the cheapest prices we can get, and I’m willing to compromise on those things in order to achieve the goals I want. I have to use better time management and abandon my excuses if I want to do that! So here goes…
Oh and one more thing, I told myself that I would only update the value of my home once a year, so there it is. My actual net worth progress has been kind of stagnant, and the bump seen this month is due primarily to the increase in the market value of the house (which I listed conservatively last year).
real food is expensive
Real food is expensive, as opposed to dog food. In my quest to not eat dog food when Mister Ant and I are old people, I have set a personal goal to save enough each month so that I can actually top off my IRA. Depending on how many other things I want to do, the expense of meeting my monthly savings goals – for the e-fund, the IRA, the wedding… can wipe me out. I’m really feeling it today as I debate about how much I have to contribute to the wedding fund, given that I just put a big chunk in the IRA. But as priorities go, I’ve put the IRA pretty high. I’m going to be 30… I have only a few thousand in my retirement savings. I’ve got to catch up… you know, so when I’m old I can eat people food.
let’s get it started
That was a nice blogging vacation. Sorry I was out, I needed a break.
Here’s what’s on my financial mind:
I’m getting married this year. We are eloping, then saving for a second ceremony and reception, to be held when we can afford to foot the bill up front.
I’m finally going to get my bedroom decorated – everything but the furniture. We are not buying furniture until after we get the eloping out of the way.
I’m paying off those stupid medical bills. I found out that I am responsible for the balances on those bills. I won’t let that debt hang over my head any longer than I have to.
I’m making some necessary improvements to the house. We’re getting quotes from a contractor. These include porch updates, a new back door, and an automatic garage door opener.
Because of all of the above – except the bedroom decorating, which isn’t very expensive – my goals from the beginning of the year will be compromised. I like the idea of doing what I set out to do, so I will not be happy when I look up on December 31, 2009 and see that I still owe money for things I thought I would have paid off, or that I don’t have as much in my retirement account as I expected to have, but sometimes life calls for a little flexibility. So, here I am, being flexible. Besides, I will be happy to spend New Year’s Eve with my husband, one year after celebrating New Year’s Eve as a homeowner. I’ll be happy with my refurbished porch and my nifty back door and with another year of no consumer or medical debt hanging over my head. I’m eager to get started.
paperwork
I won’t even annoy myself by trying to figure out how much time I spent trying to fill out all my benefits paperwork. There was the W4, the I9, the various insurance papers, the direct deposit form, gym waiver, health savings account papers. They had me calling my parents for SSN’s, looking up my doctor’s insurance number, and trying to figure out what I think I might spend in the next year on health care costs – a first for me. My gosh. I don’t want to have to do any of this again. And yet, I already know that when I’m married, I’ll have to. Arrggghhh!
I read through the entire Health Spending Account explanation and packet. I was skeptical at first, ’cause I already learned about the “use-it-or-lose-it” provision. In my imagination, I was thinking of some blogger (was it Mapgirl?) schlepping to the drugstore to buy miscellaneous stuff near the end of her Flexible Spending Account period to keep from “losing it.” I didn’t want to withhold too much money from my check. But it would be nice to take advantage of some tax-free dollars. I’ve done it before with transit vouchers and it was pretty cool – more money in my paycheck, knowing I paid less in taxes… So, I made some estimates of how much stuff would cost me over the course of a year and decided to give it a shot. Guess we’ll see how it goes.
no crystal ball
I was trying to use paycheckcity.com and the IRS Withholding Calculator to figure out how to budget my check and set up my direct deposit over the weekend.
Impossible.
My tax situation is simply not the same as it was last year. I will make less money this year than last. I will itemize for the first time, so I have no idea how much my deductions will be – since it’s only May, and since I’m still learning what all is deductible. My job offers a Health Savings Account, and I don’t even know if or how that may affect me. Oh – and I anticipate being married by the next time I file taxes. Which totally changes my filing status. The tax changes to unemployment benefits threw me off, too, since the withholding calculator doesn’t account for that. I can’t even effectively use the withholding calculator this year.
However, this is what I did: I divided the $5000 IRA contribution limit by the remaining pay periods between now and March 2010 (since I have until April 15 to finish contributing for the 2009 year). That helped me set a goal for how much to invest per paycheck to that account, and you know I need to, ’cause my retirement savings has suffered for a while now. Then I looked at what I paid in taxes last year, because my salary on this job is similar to what I made last year – that looked like it was 16% of my gross income. So I played with the paycheck calculator to see which number of exemptions claimed would result in at least 16% of that amount being held by the end of the year. Looks like two. Since I’m itemizing, I’ll have more deductions, and I’m making less than last year, I still think that I would over pay with two exemptions, but I’m not sure. It’s impossible for me to make an apples-to-apples comparison. But if my withholding is going to be off, I’d rather get a refund this time than owe – I’m erring on the side of caution. Beyond taking two exemptions, and sending enough to my IRA to max it out, I’m going to keep a separate “allowance” account on the side for guilt-free, non-necessity related spending. I will automate as much of this as I can. I figured out roughly how much I should be able to put towards saving, and how much for debt reduction – if my estimates are correct, I should be finished with the student loan progress bar by fall!
But all of this is speculation. I haven’t even received my first check yet. But I noticed that my mind was running – thinking of ways to spend the money I don’t even have yet. Sitting down and taking a realistic look at what I actually have the means to do was necessary, in order to keep my expectations and my goals in check! Better to plan now than spend willy nilly and miss chances to invest, save, and pay down debt.
planning helps
I have a wedding semi-planned on virtual paper, saved in my computer. It’s nice to start arbitrarily saving for your wedding, but I imagine it makes sense to, at some point, figure out what you want and how much it will cost. I always do better when I have a defined goal to reach for. I don’t have a defined number yet, but actually having the skeleton of a plan on paper is a good first step to getting me there.
off the deep end
Mister Ant and I haven’t been groceries shopping in weeks. Last night I shopped, putting $135 worth of groceries in the cart. To save money, we try to buy more ingredients than processed meals, buy generic whenever that’s practical, buy certain items only when they’re on sale, buy sale items in quantity, and take advantage of the store’s sales for store discount card holders. At the register, the discounts came to about $50, so the groceries were about $85. Not bad for two weeks’ worth of food for two adults and getting a few staples in stock.
But I couldn’t help thinking that I could have done better. I heard on the supermarket loudspeaker that they accept their competitors’ coupons. And maybe, if we used coupons, we wouldn’t have to buy generic as often as we do, and we might even come out spending less. I keep seeing these shoppers who are coupon mavens, who teach others their magic coupon ways so that they can get stuff for free or for cents on the dollar. They even teach coupon classes (for a fee – I’m so jealous of their hustle). I keep thinking to myself, “I’m too normal for that. That’s not for me.” I’m deterred by the chore of finding, clipping, organizing, and strategizing. But really, I’m unemployed right now – what is so time consuming, with no job or kids, that I can’t at least look into it? We can use the extra money – we have household expenses, and we’re saving for a wedding. Despite what I asked yesterday about going too far to save money, is there a such thing as saving too much money?
My mantra, since starting this blog, is every little bit helps. Maybe I need to start taking my own advice.
