I’m learning French for less than $20!
For reasons I can never seem to articulate, I loved Paris and I want to see more of France. The food, the wine, the culture – I just love it. I’m suddenly a francophile. Still, France is the only place I can think of (off the top of my head) with a special word for people who love the culture/country/etc., so I feel comforted that I’m not the only one.
I’m planning on/considering taking a real class in May, but I downloaded a few iPhone apps to get me started and to see how serious I was. I have dilettante/scanner habits when it comes to my hobbies, so I’m careful taking on new things. My favorite are Duolingo and MindSnacks French. Duolingo has a variety of lessons, including matching, spelling, speaking, and identifying what you hear. MindSnacks is not as formal, with a variety of simple and fun games. MemWords and BrainScape are digital flashcards. I use MemWords quite a bit too, but I prefer the more interactive/game-like apps. Penyo Pal seems like it is more for little kids and I”ll probably delete it.
I’ve been mostly doing this on my daily commute, and it is such a great use of that time! These apps were free, but I had to pay in one or two to download more “lessons”. The class I want to take is about $300 for 16 weeks, a few nights a week, so this is a great start. Part of me thinks I should learn Spanish or Chinese, but I’m not interested right now.
Work is progressing!
I’m constantly doing an Engineering Job vs. Business Consulting Job exercise in my head, although it really isn’t a good use of my mental energy. I’ve made my choice and I’m not likely to turn back. I’ll share my thoughts on this if anyone expresses interest (and maybe even if no one does).
One thing I’ve noticed – I’ve never thought this much about working relationships and how to manage the people/political side of things. Some things are not exactly the way I want them to be. I’m trying to balance being patient with making sure I communicating my desires (at an appropriate level).
My first race of the year is coming up. I’m not in shape for a PR, but maybe I’ll do a repeat half marathon in early summer to go for it. I also organized a RAGNAR race with some friends: 12 runners, 207 miles, a Friday morning to a Saturday whenever. I got a hook-up on a really great discount for the whole team from a casual friend – it never hurts to ask! I’ve wanted to do this for quite some time, and was wishing someone else would organize it. Finally, I decided to organize it myself. I actually told my friend that I would do it if she would organize it, then I got really excited about the idea and started organizing it myself! Oooops?
Artwork / Framing
We have a lot of wall space in our new place. The ceiling is really pretty cool, it is probably 20 or 30 feet tall in the center of our apartment. We also have a lot of art. Some purchased (prints), some created by my talented husband, much of it not framed. And much if it in non-standard sizes! Custom framing seems like such a major scam. The custom framing market is due for some disruption! How expensive can it be for mat board and some wood of specific lengths? I’m not really looking for a high quality ornate frame – just something functional and simple! Even my go-to solution for everything, The Internet, didn’t have a solution that I thought was a good value.
Art stores do sell frame pieces of everything, allowing you to build your own of any dimensions. But that isn’t THAT cheap, and the selection is more limited. However, I find a work-around! I measured all of the art I want to frame, and figured out how to buy a custom mat with an opening for the picture and a border that makes it fit in a STANDARD frame size (sizes they sell everywhere OR what Ikea sells, which seems to be their own set of sizes). I’ll let you know how it works out, but I’m pretty hopeful.
Did you think I was going to talk about sports? Hahaha. Both of the universities I attended (grad & undergrad) were in the Sweet 16, but I only watched part of one game. I have a lot of interests, but sports just isn’t one of them. No, I’m talking about tax brackets!
Leigh made a comment on my last post about how marriage affects taxes, and could play into her future (hypothetical!) decision about whether or not to marry. This took me slightly by surprise, because it has been a long time since I thought about how our marriage affects our bottom line from a tax perspective. In my mind, the main implication it had on my taxes was that they became complicated. I used to file a simple 1040EZ until we got married! T’s was constantly earning income in other states / contracting income / grad school funding that sometimes had taxes withheld and sometimes didn’t.
It also surprised me because it was not something I considered at all in our pre-marriage days. I never considered not getting married. She points out, there aren’t huge benefits. There’s health insurance, but if you both work, you may not save much money there. There’s kids… but you don’t really have to be married to have them and raise them. Then comes down to the more rare things: being let into the hospital, inheriting a deceased spouses money, and maybe some other things. It made sense, I just hadn’t really thought of it from that angle. (Plus, T helped my tax bill when we first married.)
Doing some simple math that is somewhat representative of our marriage, I want to see a) how much we’re paying and b) if filing separately might help. We never considered separate filings, but a quick Google told me that if you have roughly similar incomes, it could save you money. We are no longer eligible for a Roth IRA, so I don’t see any drawback to filing separately.
To keep it simple, let’s say we make the exact same salary of $130k, and we each save 17,500 in a pretax 401k. The standard deduction is $6,200 per a person, no matter what, and the personal exemptionis about $4000. We typically can’t find any other deductions, so we have $102,300 in taxable income each.
As two single people, we’d each pay $28,896. Or $57,792. OMG, that is so much money!
Married filing separately, we’d each pay $29,344 again. I guess there is no reason to file separately for us under these assumptions.
So, at our current incomes, it isn’t a big deal. I mean, nearly $1,000 is a good chunk of money, but calculating that didn’t make me want to cry.
Once you start having more of your income in the higher and more uneven brackets, it would make a bigger difference. For another example, if you have $200k of taxable income per a person, you are looking at about $4k each (Federal + CA). For $150k,you each pay roughly $2,200 more.
Thoughts? Can any of my friends from other countries tell me how it works in your country? Would you consider delaying or eliminating legal marriage with someone you intended to be your life partner to avoid a marriage tax?
Taxes. We owe ~$3000. We both claimed 0 exemptions, but I guess we should be a little more sophisticated in our calculations and use one of those online calculators. When we were single, claiming 0 always was good enough to get a refund! And despite what is truly best financially, I would prefer to give the gov’t the money as we go and get a little refund.
T had some income from some occasional advising he did throughout the year that he hadn’t paid any taxes on. It was all paid in the 4th quarter, and we didn’t have a penalty – but it contributed 2/3 of the tax bill.
We also have to front California about $2500 and while we wait for a similar amount as a refund from another state. While T spent almost no time in the other state, it was technically his employer, so all his taxes were withheld there. Multi-state income is kind of a pain, but we’re basically experts at that by now.
We did try some software (HR Block and TurboTax) to double check our manual calculations, but we ended up not using them to file. Since we have to file in 2 different states and file a couple extra forms, it was well over $100 for the luxury of e-filing. No thanks.
(actual tax form from our living room floor)
I got some socks to try to alleviate the blister I keep getting on my right 2nd toe. It turns out that there is a NAME for having a longer 2nd toe (Morton’s toe) and some people consider it to be a deformity! I didn’t even know it was abnormal!
We started a cleaning service! It is only once per a month, so we are still doing a lot on our own (in theory…), but I’m so grateful!
I made this! Here is the tutorial I used, it is apparently Anthro inspired. Also a pair of earrings! I’m slowly trying to get into jewelry making as a hobby. I tend to be somewhat of a dabbler / scanner, so I’m refraining from buying any fun tools, like a torch. Not that i need a torch, but it seems fun. (Also, clearance sweater from Gap for $8. I thought it was $12, but it was even MORE on sale!)
Just researching… I’m old school and like books for this sort of thing. Also featured in the background, a new couch. Remember how our old one didn’t fit up the stairs? The new one is pretty awesome.
Just a few of the many things that have been eating our money lately!
Her Every Cent Counts linked to a post over at WealthFront, that made the claim that a couple making $250k gross couldn’t “make it” in Silicon Valley without also owning equity in a company that generated another ~200k/year.
At first glance, the couple in the article sounded eerily similar to T and I. Age 30, generous salary, 2 kids and a home, high cost area… Yet, I’ve had faith that we not only could “make it” on our current path, but that we could live the good life, and that we’d even have options as we got further along. Was I wrong about that? The headline was depressing, but I was skeptical of the results and dug into the assumptions.
Here’s the assumptions they made and how I changed some of them for our situation:
- Assumption: $60k non-kid spending EXCLUDING rent/mortgage (their sample budget)
- My reality: With hardly any efforts to reign in spending, our projected spending is at $70k this year… but that includes over $26k in rent! We spend more in several categories, less in others. One notable item is $12k/year in cars. I just calculated that we spend $6.7k/year on cars. It is important to realize the impact of choices like being a one car family can have on the big picture! I’ll put this at $44k, assuming someday we’ll spend LESS on dinners and wine, but more in other areas
- Assumption: $1,000,000 with 20% down.
- My reality: This is a reasonable assumption for the area, and we certainly could do that. However, my goal is to keep housing under $750k, even if we have to make some sacrifices. I’ve seen some recently sold houses in this ballpark, so as long as we don’t jump in at the worst time, it isn’t just wishful thinking. We’ll be putting 20% down. I added $300 to monthly payment they calculated to cover some of the costs that I don’t have now that they included in general spending (home insurance & upkeep, etc.). $1M may be more realistic for Silicon Valley.
- Assumption: College savings are a higher priority than retirement savings, and you should save $1,100/mo per a kid (based on this calculation)
- My reality: Yes, if possible we’ll save this much, but it is NOT higher priority than retirement. I didn’t change anything about how this assumption was used, because I found I didn’t need to in order to make the numbers work for me.
Cost of Kids
- Assumption: $22k/year on top of housing, based on national average of 22k/year including housing. Housing was arbitrarily assumed to be excluded from the $22k number with the simple justification that it is a high cost area. I don’t think that is a good assumption. Housing makes up $8-$10k/year per a kid! It may cost a bit more than the average, but that seems like an excessive amount of margin.
- My reality: For now, I subtracted out $8k for housing, since that is accounted for elsewhere. Certainly we could spend more per a kid… but only if we were adequately funding everything else.
- Assumption: Unless I missed something, this theoretical couple making $250k didn’t save anything in retirement until they had their first kid at the age of 30. That assumption seems deeply flawed. They have that $250k for a downpayment, but weren’t they funding retirement? Why not?
- My reality: We are approximately 30 (we average to 30!) and we have about $270k in retirement between us. T only started saving aggressively this past year, and we plan to add over $50k/year until we have kids. Plus growth! This makes a huge difference.
- Assumption: $250k gross, plus inflation
- Reality: That’s close enough. It is almost right on if I make an “average” bonus, but could be +/- a bit. I also am not sure we’ll maintain these salaries consistently forever until age 65.
- Assumption: 45% (federal + state)
- Reality: Seems a bit high, considering property taxes are separate… but I didn’t change it.
That’s a lot of assumptions! This is why I am not the biggest fan rent vs. buy and retirement calculators. I can use them to bound the problem, but each small assumption can have a big impact on the results.
The theoretical couple can’t save anything for retirement from the time their 2nd child is born until that 2nd child has been in college for a year. However, at that point they can save a lot for retirement from age 52 until they retire at age 65, and they indeed are able to retire and fund themselves until they are 81. (Clearly earlier funding for retirement combined with student loans would make sense for this family.) The calculations stop at 81, but they still have $over $3 million (in future dollars) to last beyond age 81. They are drawing down about $220k/year, assuming their pre-kid spending rate has grown accordingly with inflation.
My theoretical results show that we’re able to save for retirement all the way through the kids’ childhoods, dipping down to 20k at the lowest year. Working until we are 65 would give us over $10 million dollars, and by age 81, we actually have MORE money because the returns on our investments beat out what we are withdrawing.
Obviously this isn’t going to be my reality. There is no way I’d work at a consistantly high paying job until 65 if I had plenty of money to retire. Other expenses will pop up, and we probably won’t both have the same salaries indefinitely. Still, it is interesting to look at these calculations, which claimed to have generous assumptions, and apply them to a possible situation for me.
We are going to be just fine. No matter what. Unexpected things will come up, life may turn out completely differently than I sketched out here, but we’ll be fine.
What do you think of my assumptions? Did I miss anything in the original post that makes my calculations flawed?
Footnote: After reading that post and picking through assumptions, I wondered why the author would skew the results so much. WealthFront is some sort of investment management company. I haven’t read all the fine print, but their fee model looks legit. They charge .25% and only deal with low cost index fund ETFs benchmarking their fees favorably to Vanguard. Obviously you could go direct through Vanguard, but they help out with investment decisions for what seems to be a modest fee. I’d even consider that, honestly. I’m not sure what the deal is with the assumptions made here, particularly the no retirement savings at age 30 one. They justified in the comments that it isn’t typical to have $200k cash and retirement savings at 30 w/out equity/inheritance, but it also isn’t “typical” to be making $250k. Couldn’t they delay the kids 1 -2 years and make a big difference?
Krystal got me thinking about cars and commuting. The decision on whether we should have a car is not up for debate, so it is something I simply don’t think much about. I was curious to see the numbers of how much it was costing us to get where we need to go.
I have a few options when it comes to commuting.
- 1a) Park at public transit ($2), ride public transit there and back ($7.50 round trip).
- 1b) Or ake the bus instead of parking for $4 round trip (usually don’t)
- 1c) Walk 20-25 minutes to transit. Sometimes I do this one way, but rarely.
- 2) T drops me off, or I park in a lot 2 blocks from public transit. The round trip price is $8 from that stop, and parking is free.
I generally can work from home on Fridays, but office face time is important too. Let’s estimate I go into work at least 2 Friday’s a month, and that a month is exactly 4 weeks. That is 18 days of commuting and $144 dollars. Not too bad, actually! I have commuter benefits, and once I figure out how to access them, this money will be tax free. That would probably drop me to $100 or so, since my tax rate is pretty high if you include state & federal.
T’s commute is has no non-car costs. He usually bikes, but car usage for commuting is small enough that we can just lump it in with general car use.
We also share a car. Including rough assumptions for initial cost, 10 year ownership, selling price, insurance, fuel, and parking, I estimate the costs at $460 a month. Excluding initial cost and looking just at cash flow, it is just under $300 a month. If we owned a home or lived somewhere with parking included, it drops nearly $100/month. Then again, we might buy this pass anyway, since it is useful for T’s job.
This is a good reminder that we should stay a one car family for as long as possible or forever! It is pretty common here, but in the Midwest where I grew up, nearly everyone has 1/car per an adult, sometimes more!
Adding It Up
All in all, T and I cash flow $400 a month on transit expenses, and $560 a month actual cost. Per a person, this is $200/mo and $280/mo.
I don’t see any easy ways to reduce this. Our jobs are far enough apart that one of us will have to pay for transit (or drive), and life without a car is not an option. Moving closer to transit would save us limited money, but about 20 minutes a day of my time. If we keep the car longer, the actual cost goes down.
How does that compare to you?
When statistics come in saying that only 29% of American women would describe themselves as feminist – and only 42% of British women – I used to think, What do you think feminism IS, ladies? What part of ‘liberation for women’ is not for you? Is it freedom to vote? The right not to be owned by the man you marry? The campaign for equal pay? ‘Vogue’ by Madonna? Jeans? Did all that good shit GET ON YOUR NERVES? Or were you just DRUNK AT THE TIME OF THE SURVEY?
Thank you to Caitlin Moran for the above quote.
I’ve read a lot of good post on women and money over the past week. Yet, I can’t help but look at the topics covered and feel a little disappointed that these are still primarily discussed through the lens of women’s issues.
Work life balance isn’t just a women’s issue. It is a parent’s issue if we are talking about childcare and flexible hours, it is everyone’s issue if we are talking about simply having a full life outside of work.
What kind of topics would you suggest as issues that really are focused on women? I’d suggest the wage gap, the lack of diversity in executive positions, how to gain respect at work if you are young and female, the lack of women in the sciences, or the “costs” of being a woman (societal pressures to spend money on appearance) and whether or not you follow them. Women could share how the work around the current system and how we can all try and shape the future system.
I really appreciate the efforts and opportunities provided to highlight and to share women’s stories via Women’s Money Week. However, as a career driven childfree woman with a traditional job, the topics didn’t resonate with me. Most of the topics fall under “topics of interest to parents regarding managing work and kids through traditional or alternative means.” Friday’s topic on traditional careers was the most relevant, but the list of ideas included “What careers are good for women?”. I know I’m overly sensitive to the topic, but as someone who has been in two careers that are not known to have a lot of women, this made me bristle a little bit.
What about you? Did the parents reading resonate with more of the topics? What do you wish we would have talked about?
This post is part of women’s money week for the Bonus Day post.