You are currently browsing the monthly archive for February 2008.
I updated my NetworthIQ page in mid-February, but I updated it again today (slightly downward) to reflect my “end of month” state for consistency. I also quit including “short term savings” in my calculations. That money is earmarked to be spent, and now paying for things like car insurance won’t have much effect. I can see reasons to include it, but the whole point of net worth calculations is to track progress, so it really doesn’t matter a whole lot.
So, let me just say this. I wrapped up 2007 with 13k net worth. After dipping lower in January, I’ve rebounded to almost 15k! The reasons have to do with my new job–I received $2000 in relocation money and $3000 in a signing bonus. Taking that into consideration, the increase isn’t all that impressive. I also probably spent about $600 on random moving in stuff (dresser, file cabinet, cleaning supplies, food, power drill, new art…) Anyway, progress from here on out should be more linear.
March goals
- Follow my budget. If I do that, I’m simultaneously meeting every spending/savings goal I have for myself. I do reserve the right to adjust my 401k withholding by 1% this month and adjust the budget accordingly.
- Get my work development plan in really good shape before my meeting with my manager and find out (specifically) what I need to do to be promoted next year.
- Continue to run 3 times a week (or more)
I’m excited for March, because this is the first month of really using a formal budget! I hope that I can be successful at it!
I’m not certain that my budget is sustainable long term. Ultimately, I would like to spend more on travel and have more room in the “Misc” category. However, my favorite travel partner is a grad student and probably can’t afford big vacations anyway. There has been some rumblings of some friends meeting in Vegas, but I think I can fit that into my current budget. I’d also like to visit a friend in Portland at some point, but the main cost there would be the plane tickets (not too much). I also would like to seriously start saving for a newer car next year, and $100-$150/mo isn’t going to cut it there. I guess my idea is, if I end up having to increase my budget, I will, but if I can stick to this one for awhile, I’ll really get a boost to my savings.
I spent an evening last week at a Boys and Girls club in the area promoting engineering to middle school girls. While I think they were a bit young to really get much out of our presentation, they had a good time building towers out of balloons!
The girl that drove us there sent an email stating she’d be driving a silver BMW SUV. I thought to myself, wow, BMW? I’m not sure how old she was (not too much older than I) but let me just say, I don’t drive a BMW. When we got in the car, someone commented on her SUV, and she said that she crashed her smaller car so her parents got her this large car so she’d be safer. I wish my parents bought me a BMW! Of course, she also went to a fancy big name school and I’m pretty sure that she didn’t pay for it. I face this all often (more often now that I’m out of the Midwest) and I’m somewhat used to it, but sometimes my jealously surfaces.
Another girl who rode with us mentioned that she came to USA from Thailand, and worked as a waitress for several years when she arrived, despite having a Thai engineering degree. She went for her masters at one of the universities around here, and found employment in her field. While working, she completed many classes towards her PhD, and is a really successful engineer. Again, I thought to myself, wow. How inspiring and impressive!
I can find reasons to be jealous of the financial advantages some of my peers have had. However, I can also be humbled by the fact that many people few advantages have made such successes of themselves. There are a million people on both ends of the spectrum, and there is no use complaining about the cards i was dealt (which really weren’t all that bad anyway).
I noticed that the “Budgeting” category of this blog was becoming one of my most frequent topics, while “Travel” has scarcely been mentioned. That makes me sad, because travel is my passion and budgeting… well, it is just a tool to help me follow my passions. In case budgeting doesn’t pan out, I optimistically entered this sweepstakes–you can too, if you are 26 or under! My four countries? Cambodia, Italy, South Africa and New Zealand. (It doesn’t matter what you pick, the real prize is a $12,000 travel certificate).
I spent a lot on travel last year–at least it seems like a lot to me. According to Yodlee, I spent roughly $2,500 between march and December. This was spent on a trip to North Carolina, to New York City, and two pre-move trips to Los Angeles, plus a nice New Years Eve vacation (also to LA). I think I also included money spent on trips back home (500 mile drive) and a short weekend excursion we took to Madison, WI. Considering all the fun I had and places I went, that isn’t that bad of a price. I always stayed with friends, so that saved a bunch on hotel costs. Plane tickets were the largest portion, running about $320 for most trips and up to $460 (yikes) for the holiday trip. In 2006 I spent even more, finishing my last semester in Hong Kong and visiting Thailand, Malaysia, mainland China, Taiwan, Singapore and Bali. I’m glad I don’t have the numbers for 2006 readily accessible, but I can say my plan ticket to/from Hong Kong was about $1300 alone. (I did get a $5000 scholarship though.)
Doing the math for last year, I spent an average of $200/mo on travel. I only budgeted $100 each month for this year. I was in a long distance relationship for part of the year, so two of those trips were due to that. Thankfully, the distance has been reduced to about 7 miles, so no plane tickets necessary (just gas and patience with traffic). I now live in a new part of the country, so I don’t feel the need to buy plane tickets to explore because there are a lot of great things to see within driving distance.
Despite the fun to be had around here, we are planning a short trip next month. San Fransisco, here I come! Plane tickets should be pretty cheap, about $120 round trip or less, but we might take the train one way just for (11 hours of) fun/scenery. It is the same price, roughly. Again, we won’t pay for lodging–my parents are currently living/working a ways outside of the city, so a free place to stay and quite likely a lot of free meals and stuff too. The expenses probably will just be some wine tastings and any other activities that cost money.
My tips for cheap travel? Visit friends/family! If you have a place to stay, your costs will be a lot lower. That really is my only tip, anything else I add would be even more obvious.
Travel is the one area in which spending money never pains me the way it does with other expenses. Though I’m scaling back my travel spending this year, I am always going to make it a priority to go new places and see new things. This is what money is for, at least in my case.
Now, though this isn’t strictly personal finance related, I leave you with a favorite poem:
where we are
i envy those
who live in two places:
new york, say, and london;
wales and spain;
l.a. and paris;
hawaii and switzerland.
there is always the anticipation
of the change, the chance that what is wrong
is the result of where you are. i have
always loved both the freshness of
arriving and the relief of leaving. with
two homes every move would be a homecoming.
i am not even considering the weather, hot
or cold, dry or wet: i am talking about hope.
-gerald locklin
Money can buy me a lot of thing that I really like, but there are also a lot of free things that I enjoy in my life. Here is a few that I enjoy on a regular basis
National Public Radio: I’ve been a huge fan for years–I originally discovered it when I started making long road trips during a long distance relationship. You really can only listen to music for so long, especially if you aren’t that into music. These days I listen to NPR in the car on the way to/from work to stay on top of the news. love the non-news programming as well: This American Life, Science Lab, Marketplace (especially Marketplace Money, which inspired my initial pf love), and a ton of other great shows (available as podcasts too!). Technically, this isn’t free–they rely on contributions from listeners like me, as they like to remind me during pledge drives!
Public Library: We all know about borrowing books, but don’t forget that most libraries also will loan DVDs and music. You can catch up on your magazine reading there rather than subscribing, or surf the net if you don’t have your own connection. Many cities also let you download audiobooks (though good luck getting them onto an iPod legally/free) for your enjoyment. Again, paid for by your taxes, but essentially free.
The Ocean: Coming from the landlocked Midwest, the ocean still inspires awe in me each time I visit it. I’ve already gone several times, though it hasn’t been warm enough to go in.
Reading: I quit pleasure reading in college (too much school work) but now that I have free time again, this is a great way to stay entertained and to keep your mind sharp. This ties in with the public library, but I also read a lot of blogs which is also free. I do pay for internet, but in theory you could use publicly available wi-fi (see library).
Running: You do have to buy the shoes, but other than that, there is no cost. This is a love/hate relationship. In theory, I hate it, but when I do it, I love it. Similarly, there is also the option of swimming, rollerblading (so 1990s) , hiking, oga and long walks on the beach. 
Other: I also love walking around the city, good conversations, writing, and I just adore sitting on my balcony (though if you add a cup of coffee, there is a small cost).
What free/frugal things do you love?
Technically I’m not starting my budgeting until March, because I came up with it halfway through February, and am just getting used to new job and new expenses… In the meantime, I have been being frugal anyway and trying to stick to the weekly amounts for gas/groceries/fun.
However, I really want to buy a couple things for my apartment, and it seems best to buy them now before the budget stats…. I sound like one of those dieters: “I’m going on a diet…. Tomorrow!”
- Toilet Brush ~$3
- Old English Wood Cleaner/Scratch hider ~$5 (A picture frame needs a small repair)
- Noise reducing headphones ~$75
- Ear plugs ~$2
- Patio table ~$20
- Hummingbird feeder $10-$15
- Scrabble $10-$15
Alright, the headphones aren’t really going to happen. They aren’t one bit necessary and can be replaced with the $2 earplugs. The cleaning stuff I need for obvious reasons, but that could be taken out of the march “home” budget. You don’t want to know how much I spent in February on “home” items (dresser + art + power drill + lamp + file cabinet.) Scrabble can easily be taken from the entertainment budget.
I need really want the patio table because my favorite part of the whole week is enjoying coffee in the weekend mornings on the balcony. I love my balcony. Target has some for $15, but the ones for $20 would be worth the extra money. The hummingbird feeder is in honor of the little hummingbird I saw yesterday–I’m hoping to see some of his friends. However, I am not sure how large the hummingbird population around here, so it could be a complete waste. The only food it would need is sugar water.
I have in my possession a $35 refund check from my cable company in my old town that I could cash and buy a lot of this with… I also got a $1000 tax refund this month, and my Net Worth has rebounded thanks to the relocation money coming in. Actually, I updated it weeks before I usually do, just because it improved so much. I’m a dork. I’ve totally talked myself into these purchases, but that is what I do with budgets–I make exceptions. They just don’t work if every month I make exceptions.
So, in Suze Orman style, I ask you, readers… Can I afford it?
I received a notice on my door today saying that I had a $30 credit on my account with my apartment, and instead of $1425, I get to pay only $1395 this month! I assume this is from the application fee being credited towards my rent.
After receiving some comments on my budget that my rent was high for my income, I got curious about how “out of line” I was with my rent. Still, there isn’t a lot I can do about it, but I really didn’t think it was such a stretch to think a young professional could afford to live in a tiny apartment in a safe neighborhood.
First, don’t get me wrong here–I’m not trying to pretend my rent isn’t absurd. I still have sticker shock each month I write the check. I sit on my balcony in the weekend mornings enjoying coffee with T, and think to myself “Wow. I pay almost $50 each day for this!” Today a cute little humming bird flew up next to us like a tiny little helicopter, and it almost felt worth it. (We don’t have hummingbirds in my home state.) Almost.
My original idea when I was looking to move here was to pay $1000/mo, but the only places I could find in that range were in neighborhoods I would not feel comfortable in, as a scrawny 25 year old girl who still occasionally gets carded at R rated movies. I’m just not very tough, even with my pepper spray. Where I live, my commute is super short, and in a city known for congestion, I’m thankful of that every day. Roommates would have been the only viable option, but I decided to pay for the luxury of living alone over finding a random on the internet, at least at first. I toured a couple places, and I could have saved maybe $100 or even $200 by living further from work in an even tinier apartment. It just didn’t seem worth it.
Anyway, so I made up a little poll over in the forums at Get Rich Slowly to hear what people who are at least a little interested in personal finance paid. I asked specifically for what percentage of gross income went to rent/mortgage. Here are the current results, though 50 respondents is hardly a statistically significant sample. (Note the flawed poll options… the second to last one should have said 40-50!)
- 0%: 5 people, 10%
- 1-10%: 8 people, 16%
- 10-15%: 7 people, 14%
- 15-20%: 11 people, 22%
- 20-25%: 12 people, 24%
- 25-30%: 3 people
- 30-40%: 1 person
- 30-50%: 3 people
- over 50%: No one (whew!)
Mine is right around 24% without including any bonuses, slightly less if I do. Which is high and it stinks, but it doesn’t seem to be so abnormal. I recently moved from Iowa, where I was paying just 12% of my rent to a nicer and larger apartment (I have my old kitchen table in pieces under my bed). It is an adjustment, that is for sure! Still, I don’t mind cutting back on things like clothes and expensive meals in order to live here. As my salary increases, I don’t think I’ll feel the need to move into bigger and nicer places. Even if T were to live with me, we both don’t mind a small cozy place. I actually really like it–less to keep clean and less stuff I need to buy to fill it up.
I’m not sure if this is the city we will live in forever. There are a lot of great cities that just aren’t so darn expensive, and we kind of want to go abroad for awhile. For now though, it is a great place for me to be. Late this afternoon I drove 1 mile to the beach and went for a run next to the ocean (yes i know I could just run the mile, but I feel safer and happier running on the path by the water). The waves came crashing in, the sun was starting to dip, and I felt really lucky to live where I do. I may hate paying so much in rent, but I can’t say that I regret it.
After recently being shocked by my estimated yearly gift budget (I’ve never added that stuff up!), I found myself at Target yesterday evening shopping for my sister’s birthday. Which, by the way, was last month. With the move, I’m way behind on…. everything. She still loves me though.
I usually spend $50 a head on both Christmas and birthdays for family, but I am now thinking that $40 sounds like a better number this year. I had a $20 gift card parents sent for Valentines day, but I used most of it on necessary toiletries and the birthday cards (what a rip off). I collected some things I knew she’d like that added up to roughly $40 and headed home. I searched my email archives to find her address (who needs an address book?) and the first thing that popped up an order for a birthday present I’d already sent her! It was a partial present for about $20 that I’d sent earlier, and forgotten about because I’m never early!
Now what? I spent $20 too much on her! For a second I though “cool, I can use some of this stuff for myself!” Which is totally silly–it isn’t anything I need, just little treats that aren’t in my budget anyway. Then I thought I might return a couple things and get a toilet bowl brush (I really need one) and perhaps a new towel (it is a little sad that I’m buying a single towel at a time!). Then I thought maybe I should just stop being so money focused (or as some might say, “cheap”) and send it all anyway. It was money I thought I was going to be spending in the first place. This last approach is slightly unfair to my other sister, who recently received a birthday gift that was about $45, though she’ll never know.
So, what would you do?
(PS- it took my like five tries to spell dilemma… I will never be a spelling bee champion)
The guy next in the cubicle next to me at work (yes I live in cubicle world) spent over an hour on the phone asking someone if he could get a charge number for the work he did, so he wouldn’t have to charge it to overhead. Talking really LOUDLY, making me want to toss something over the wall.
I’ve been really interested in getting some in-ear noise reduction headphones. I’ve been thinking of spending about $70 (!) on them. The problem is, though amazon reviewers may give them 4/5 stars, some people hate them because they are uncomfortable. I want to find a store that will let me try them out, but then again, what kind of store lets you stick headphones inside your ear canals (ew?) just to see if you like them. It’ll take me quite awhile to squeeze them out of my budget, so I don’t want to get something that isn’t great. Even if they’ve been in my amazon cart for months.
Reality is that in this case, a pair of simple ear plugs would suffice. (But if anyone has headphone advice, I’m all ears.)
By the way, cubicle phone etiquette: Don’t yell into the phone! Talk softly and increase your volume if the person on the other end has trouble hearing you.
I’m still open to suggestions on my budget, but taking into consideration comments, I’ve already made some tweaks. For those items that are more “occasional” I still want to set aside an average monthly cost.
Here it is, as it stands now:
| Net | $3025 |
| Expense | Budget |
| Rent | $1425 |
| E-fund | $150 |
| Roth IRA | $325 |
| Cable/Internet | $60 |
| Student Loan | $133 |
| Utilities | $30 |
| Restaurants | $75 |
| Grocery | $120 |
| Gas | $110 |
| Entertainment | $60 |
| Clothes | $50 |
| Home | $20 |
| Personal | $20 |
| Gift | $75 |
| Travel | $100 |
| Insurance | $110 |
| Car | $150 |
| Left | $22 |
Suggestion: Reducing dining out budget by bringing lunch to work.
I already bring lunch, but I realized that dining out and entertainment were used quite similarly–for dates with T, occasional outings, and perhaps beer/wine now and then. I left dining out at $75 giving us about $25 for the two of us each week, he pays once a month. Or bi-weekly if we want a more expensive meal. In light of that, I reduced entertainment to $50. Unless I do decide to join some classes on my dime, that’ll be enough for now.
Suggestion: Reduce/Eliminate Home budget
The “home” category has been sliced from $50 to $20. I have gotten settled into my apartment and should be able to spend just $20 month on things like cleaning supplies, new towels, and random stuff I want to finish decorating. Also, I still need to do laundry! I do need this money, and $20 might not even be enough. But I’ll try it out for now.
Adjustment: Added $20 Personal budget
However, I realized I have no budget for haircut/shampoo/make-up, which on average will also be $20/mo, assuming relatively cheap haircuts and no more highlights. So I added a “personal” category. I already think I need to increase this a bit to be realistic, but I won’t yet.
Suggestion: Reduce the cable by $30 by getting rid of it.
I’ve debated this heavily (with myself) since I ordered it. The cable is a really good deal right now–all channels+DVR for just $30/month. I’m leaving it for the moment, but I do think I’ll cancel it. Once it is for sure canceled, it’ll be removed from budget.
Adjustment: Gifts increased to $75/mo.
I did a quick rundown of what I expect to buy in gifts this year, and $50/mo won’t cut it, unless I ignore Christmas. Actually the total was more like $90/mo. but that seems so ridiculous that I won’t budget that much for now.
Adjustment: Car Fund decreased to $150.
I probably won’t be buying a new car anytime soon, but I do want to get a fund started. Some of the “extra” paychecks might get a portion diverted this way. This will also cover maintenance so I really won’t build up much over the year.
I really would like to have $100 in the “Misc” category just to give some breathing room. I’m going to reduce the 401k contributions to 14% for now, which still gives only (estimated) $22 in leftover. If cable goes away, that is $52, which makes me pretty happy. If that is still too tight of a budget, I will decrease it another percentage. My original 2008 plan only had 10% withholding, so 15% is quite an increase. I like to figure out how much I can afford to withhold in this way–shoot high, and adjust lower if necessary.
I’m saving more than I did last year, both as a percentage of income and dollar amount. I don’t think 14% in 401k contributions in addition to 5k in a Roth is at all cheating myself out of retirement, especially since I’m starting nice and young. If I do start grad school in the fall, the $133 student loan payment will disappear, and perhaps I can up the contribution by several percentages for the last few months of the year.
To avoid constant budget updates in the main content of my blog, I am going to track my budget in my fancy new budget tab each month. It is up for February, but not quite accurate yet. I think this will really help me to understand if I’m coming within my budget. I’ve set budgets before, but I have a really hard time actually making use of them…
Tomorrow is payday, meaning today is the day we look at our paychecks online! This is my first paycheck with 80 hours and all the appropriate deductions. With taxes and all other things taken into consideration, my paycheck was a little less than I expected/hoped.
The main thing I miscalculated was that I took what I expected to be my net pay and divided by 12 and made a monthly budget off that. Really I should have divided by 13. This would give me two “extra” checks, but giving me a more realistic view of my monthly cashflow. Then the “extra” I’m sure will easily find itself diverted to various savings–efund, gifts, travel, or car funds. There never is actually any extra.
This means my idea of putting 20% of my paycheck into my 401k just wasn’t realistic. My original goal of 15% may not even be realistic, but I’m going to try to work with that and see where we get. Secretly, I thought 2008 might be the year I maxed out my 401k. It was quite a ridiculous thought. Even if I could afford it, my new employer only lets us do up to 20% pre-tax, and 20% of my pretax salary is less than $15,500. Clearly 2008 will not be my year. Not only can I not afford it, it is mathmatically impossible! Perhaps 2009, but at the very latest, once I get my M.S. degree (2010) I should be in a better position. By then, who knows what new savings goals I’ll have come up with!
My budget isn’t quite working out–I can’t get the numbers to come out the way I want! I just am not seeing anywhere I want to cut back that I’ll honestly be able to stick to. Travel seems high, but even if I don’t budget for it, I’ll spend it, so I have to save for it. Otherwise I won’t be able to go home, ever. Rent can’t be helped, at least until next year, and even then, only if I wanted a roommate. Which I would be fine with, if the roommate was the boyfriend, but tentative plans on that are over a year away. The car fund is both for maintenance, and also to (very very slowly) start building up for a new car in the distant future.
2 Paycheck income: $2932
Monthly Expenses:
Rent: $1,425
Efund $150
Cable/Internet $60
Roth IRA $325
Insurance $110
Student Loan $133
Utilities $30
Grocery $130
Restaurant $75
Gas $110
Clothes $50
Entertainment $70
Home $50
Gifts $50
Car Fund $200
Travel Fund $100
Leftover/Misc -$79 (Calculated by income – expenses)
Any ideas? If not, I’ll decrease the 401k savings until the budget works out. (Of course, no less than 8% for full match.)
(By the way, I updated the retirement savings sidebar with my expected contributions for tomorrow.)
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