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2017 Savings Goals

January 16, 2017

Our goals this year are really simple – minimize spending, then allocate the savings that results from that!

1.  Retirement accounts maxed for each of us.  I plan to front-load mine to the first half of the year, and T’s will be spread throughout the year evenly.  There isn’t a real reason behind this strategy, but it is what I did last year and I liked it.

2. Mortgage prepayment of ~$30k.  This is a little more than 2016, but it seems to be the right thing to do.  Owning a home in a super expensive market drives this choice.  We have been doing our best to mitigate that now so that we’ll have flexibility to afford kids here in the future. We’ve talked about other options, but it is pretty unlikely we’d leave T’s job.

3.  General increase in cash/liquid reserves of $20k.  Some of this might be allocated to a home maintenance fund (we’ll need an expensive roof at some point in the next decade), the rest will go to general long term savings / cash reserves.  My targeted savings fund for when we may have a kid in the future is already nominally funded to cover unpaid time off, although I should double check my calculations. It also would be a good idea to optimize my strategy for where we hold the cash.

4. Split any remaining savings 50/50 between mortgage and cash savings. The amount in this bucket will depend on what our overall spending turns out to be. I want to set a spending goal of $90k, but our plans (travel, home projects) aren’t firm enough to know if that is achievable. I’m thinking I’ll have another $10k, but it could be more or less.

2016 Spending Summary

January 15, 2017

dollars

Our total spending in 2016 came out to be $105,025, compared to $104,900 in 2015 and above my 2016 target of $100k.  Spending included $10k in auto spending that wasn’t initially slated for 2016 (due to Volkswagen scandal our timeline was accelerated) – the target excluded this.  I was nominally successful at reducing our spending in other areas by almost $10k, even though I missed our goal.

screen-shot-2017-01-15-at-11-18-54-am

Reductions in spending compared to 2015 – Home Maintenance, Pets, Food/Drink

The biggest reductions were in Home Maintenance (which is a fluctuating category) and Pets/Pet Care (which I expected).  We also spent slightly less on groceries, $900 less on restaurants, and purchased less wine. Although I like the wine club we are a member of, I’m thinking we may quit this year.  We haven’t had the time/desire to go to Napa anymore, and we don’t really need any more wine for our “collection”.

Increases in spending compared to 2015 – Clothes, “Home/Misc”, and Travel

The biggest increase was in Transportation, which was due to the new car.

We spent more in the clothing category, with big ticket items including some boots that I wear to work almost every day, two high quality raincoats, a Lo&Sons OMG bag, and replacement hiking boots for T.

Electronics spending increased and included an iPhone SE to replace my busted iPhone 5 and Bose Noise Canceling headphones.  Home spending increased and included some more blinds, some dining chairs, and lots of miscellaneous stuff.  I suspect a detailed look into this category would reveal several mis-categorized charges, but it isn’t critical to me to dig into it.  The “other” category includes a used bike for me ($400).

Our insurance costs went up, but this is mostly due to paying insurance for the new car in December when our regular car insurance bill wouldn’t have been due until 2017.

We did the minimum traveling in 2015 (visiting family), but in 2016 we added on to a conference and went to Portugal and Barcelona.  It was a frugal trip, but still cost money.  We also bought flights to visit our families and did some other very small weekend trips.

Spending Plans for 2017

1) Better Tracking.  I didn’t do a good of a job of tracking spending as we went, so I took dumps of all of our transactions and categorized them after-the-fact (often 2+ months later).  This year, I think I will go back to manually entering transactions as they occur, and using electronic logs to double check.  This should give us better categorization.  I have a big category of “other” and “home” and such, and I know what kinds of things that might include but I don’t have insight into the details.  I know we spent more on Gifts than indicated, but they were categorized as purchases for ourselves.

2) Reduce Home/Other spending.  This goes with the item above, but I want to reduce that category in general.  Tracking it more closely should help out a lot.

3) Reduce Food/Drink spending further.  As I said, I’d like to cut out the wine club and also reduce restaurant / grocery spending some small amount.  Although going out to eat and buying whatever we want at the grocery store are both things that we really enjoy, there is some room for improvement that shouldn’t impact our lives too much.

4) Monitor the rest.  The other categories are not too concerning to me.  Clothing is higher than I’d like but in family with previous years.  I’ll monitor it. I expect pet spending will drop, although we’ve been talking about some private training lessons again early this year.  We will likely spend a bit more on home maintenance, but the plans aren’t settled and major projects aren’t anticipated.  I refinanced my student loan with Earnest to an even lower rate this year.  When I think about it, I’m tempted to simply pay it off with cash on hand.  Yet it is a lower rate than my mortgage, so it doesn’t make sense I keep holding onto it. I allow myself to pay $100 extra each month as a compromise.  We’re still paying for earthquake insurance, which is very expensive and probably not the best use of funds – but it gives me peace of mind.

Accounting for the new car

January 6, 2017

We bought a new car in December to replace our VW Golf, which was part of the Volkswagen emissions scandal.

Using rounded numbers, let’s say the new car cost $30k (out-the-door). We intended to pay cash, but couldn’t pass up a 0% interest loan when offered.  We put down $10k just because, and a $20k to be paid over the next 4 years.  Our VW buyback will net us $20k, so the total net cost of replacing the a car is $10k.

How do I account for this in spending?  I see several options.

1) Count $10K of car spending in December 2016, put the $20k buyback money in an account, make payments from that account, and don’t factor any future car payments into my spending analysis.  Track the car loan and depreciation in net worth as normal.

2) Count $10k of car spending in December 2016, treat the $20k buyback as a windfall, and count the car payments as part of our spending for the next 4 years.

3) Count $10k of car spending in December 2016, count a credit of $20k in car spending once we receive it (next month), then count the car payments as part of our spending for the next 4 years.

4)  Do some math to figure out how long I expect to keep the car, how much it will be worth when we replace it, and “bill” myself for a car over X number of years.  This seems overly complicated.

I’m inclined to do #1, which allows me to take advantage of a 0% interest without “feeling” like I’m adding a recurring payment.  It’s also dead simple.  Yet, it puts the cost of the car all in a single year, even though I get benefit for it for many years.  That is also how I handled our first car, which was because we did pay cash up front.  I liked #2 because it is conservative and we are getting use out of the money for many years – but perhaps overly so.  How do you bookkeep your car spending?  Or do you just not care?

 

2016 Money Summary

January 2, 2017

While many agree 2016 was a generally crummy year, our finances did pretty well.  I haven’t finished analyzing my spending for 2016 in detail, but I will. I’m not that interested in the day-to-day information for purposes of control, but I like to have the breakdown for my own introspection.

At the highest level, our money looked about like this:

2016-money

Spending:  We were coming in around $95k in spending (well under my goal and less than last year), but we replaced our car before the year ended.  This could be its brief own post, but the shortest version is that Volkswagen is buying back our 2011 VW Golf Diesel for way more than it is worth, and we replaced it with a Subaru Outback.  After taxes and such, we’re out about $10k for the difference.  We took the 0% financing to increase our liquidity – although we will keep the full balance in savings and mentally note it as “spent”.  If not for the emissions scandal, we would not have replaced the car yet (6 years).

Home:  Seeing the impact of the mortgage prepayments on the year-end statement was fun, especially as I didn’t actually make the 2015 ones until early 2016, so it was pretty big. The total mortgage is still a big number, but it is shrinking!

The major project of the year was the earthquake retrofitting, which was extraordinarily cheap after tax incentives.  We bought another couple blinds and 8 dining chairs (STILL no table), but we still are pretty behind the game when it comes to having a fully decorated house.  And I’m completely fine with that.

I’m bookkeeping the tax-assessed value, which in California is limited to go up some smallish percentage each year.  The “market value” is already quite a bit more, but since that may fluctuate (bubble?!) and it isn’t anything we can cash in on without moving to a cheaper market, I don’t see a benefit in tracking it.

Overall Net Worth:  We had another strong year, thanks to increases in the markets and our savings.  It’s been a long time since the markets had a really terrible year.  I haven’t reported our numbers in a long time, but I will say we STILL have not hit the million dollar mark (unless we take advantage of market value of our home).  This could be the year, but only if the markets do well again (only if we don’t devolve into world war III / end of democracy / global recession).

What next?  I’ll make a more detailed post on this, but our strategy for next year is largely the same as this year.  We’ll do another ~$25k mortgage prepayment.  I’ll shoot to have my retirement account maxed by end of summer, with T’s on track for even contributions throughout.  We’ll end the year with spring property taxes & insurance in the bank.  I’ll target a modest tax refund of $1-2k.  The remaining money will increase liquid savings until we know what is next.

2016 Financial Savings Priorities Wrap-up

November 29, 2016

I didn’t set explicit goals for the year, but I ranked my financial priorities.  Now that most of the money is in for the year, I can say how I did on them.

Financial Priorities

  1.  Retirement savings:  At minimum, each max out a 401k/403b at $18k  We’ve talked about whether this is enough, because I’m used to saving >20-25% of our income in retirement accounts. Yet, we both have pension accounts building (and pulled from our salaries to do so). Our retirement is on a fine trajectory.
    Result:  Done!  not much to say here.
  2. Set aside 6 months  worth of my take-home pay in baby fund (assuming SDI)
    Result:  Done!  The changed the SDI (short term disability) benefit this year, and I think it is worse now.  I really really hate how this benefit is structured, because it seems to be set up to explicitly minimize any benefit for the most common use of it (maternity) while still charging for it.  I’m so annoyed with the lack of good parental leave options in this country.  We can afford to take care of ourselves, so we will – but it isn’t ideal.  And what about those that can’t?
  3. 25k mortgage prepayment (on top of the 25k that was hanging out in cash earned last year).  I’d like this to be our baseline goal every year, with the option to skip it if we have a bad financial year.
    Result:  Done!  Yay!  
  4. More retirement savings
    Result:  We didn’t do this.  I set aside even more cash instead to build up our buffer in the face of uncertainty, and this is probably the right thing to do.  

My list for 2017 will look similar, although I think I’ll increase our baseline cash reserve fund and bump up retirement for T.  It is mighty tempting to throw all excess dollars at the mortgage, but that really isn’t the most sensible thing to do.  Sticking to $25k/year (until another priority comes along) is a good balance, lets me feel like I’m doing something “big enough” to not try to constantly one-up myself.

2016 Major spending planned:

  • Vacation to Europe this summer: We went to Portugal and Barcelona, and it was really cheap for a Europe trip due to miles/points.  Yay!
  • Dining room table: We are still in limbo here.  We did buy 8 chairs, but have yet to find the table.
  • Patio furniture:  Bought it late in the season, and happy with it.
  • Earthquake retrofitting:  This was underbudget due to tax rebates and such.

The two big things (vacation and retrofitting) were way under budget, which was nice.  I don’t think we spent a lot on any other single thing, but did an average amount of purchasing in regular areas (food, home, etc.).  I haven’t checked up on our goal to keep all spending under $100k in months, so I should also tackle that this month as well and do some sort of overall wrap up.  It is kind of daunting to think about since I’m so far behind.

November Gloom

November 19, 2016

It hasn’t felt appropriate to post a normal monthly wrap-up, or any other posts I have in draft.  I assume you all have better places to go for links, and if not,  you can try here or here for links.

Like many, I was devastated on election day. I woke up excited, thinking “This is finally it!  A highly qualified woman will hold the nation’s top office for the first time.”  The night ended in tears.  I went to bed hoping that all the news outlets were wrong, that I’d wake up in a different world.  I woke up, and cried again.  This was not supposed to happen.  “But… we’re always so lucky” T said, implying that things were supposed to go our way.  Our luck does not extend to global-scale politics.

I had a day or two of devastation, a day or two of “well, let’s at least see what the transition looks like, maybe it won’t be so bad.” Now I’m very worried and wondering… what can I do?  How can I make it be known that THIS IS NOT OK WITH ME, but in a way that does something more?  Trump can have a chance if he does reasonable things, but so far he has not provided any evidence that he will do reasonable things. He has picked unacceptable people for important government roles and has not addressed the huge conflict of interests between his business and his presidency.  How is this real life???   This can not become the new normal.

The other day I woke up with the thought – what we would do with our dog if we had to flee the country?  We can’t flee with a pet, but we can’t abandon him. We’re not target groups at this point, but we could certainly be classified as liberal elites in ivory towers.  We don’t have anywhere in particular to flee to anyway.  I really HOPE I’m just being dramatic here, but I am not 100% convinced.

Financially, I haven’t made any big changes. To preserve cash, I’m halting mortgage prepayments.  We hit our 2016 mortgage prepayment goal already anyway – I was just tempted to send a little bit more. We’re delaying taking action on the Volkswagen diesel buyback lawsuit (because we expect to potentially spend slightly more than the buyback on a replacement) – but we probably wouldn’t be doing that until January anyway. Cash seems like a good idea.  Both my job and T’s job are tied to government funding of research, albeit in very different ways to very different already small pools.  Neither would appear to be in immediate jeopardy, but who knows where Trump’s priorities lie?

I’m listening to liberal leaders and liberal friends whom I respect, and I’m prepared to take action. This isn’t acceptable.  I believe that there are enough of us out there to stop the doomsday scenarios playing out in my mind – but only if we all are committed and don’t allow ourselves to accept it.

Blue Apron Review – Personal Finance Perspective

October 17, 2016

This post is unsponsored.  There have  been a ton of posts in the blog world about Blue Apron, but I don’t think it is a coincidence that they haven’t bothered with a sponsored campaign in the personal finance blogger world.  We are not their target audience.

Despite not being in their target audience in the blog world, I’m in their target demo in the real world. I tried Blue Apron for two weeks.  The first week was with a hefty discount that anyone can get, the second week was partly because I didn’t cancel soon enough and partly so T would have some good food while I was out of town.  I was traveling for part of the second week, so I tried five out of the six meals.

Things that I really loved:

No meal planning!  I generally enjoy meal planning, but my stress had reached a peak and I just wasn’t able to do it.

New recipes I really liked: I liked all of the five meals that I tried, and really liked several.  Some I will make again, others I would make again but they had some unusual ingredients that I’m unlikely to buy.  I don’t cook a lot of meat and fish at home, and when I do, its the same few dishes/cuts.  In fact, I don’t think I’ve ever cooked salmon or roasted pork. This is mostly because when I’m looking for new recipes, I don’t think that I’d like a salmon dish or a pork dish as much as some other dish that I’m more comfortable with.  Blue Apron helped me branch into a few new areas.  I also really liked some of the different flavor profiles.  I’m a huge fan of trying new dishes, and Blue Apron made it super easy.

They also give you the recipes when you skip a week.

I like cooking and eating home cooked food:  If you don’t really care for cooking, this option doesn’t make a whole lot of sense.  Yes, just get your takeout.  For me, this setup is much more appealing than it would be to spend the exact same amount of money on takeout.

Less grocery shopping: It only covered us for 3 nights, which doesn’t eliminate the need to go to the store.  Still, it allowed me to plan something very simple for a few nights, and have something yummy the other nights. Since we’ve been doing such a poor job of meal planning lately, we’ve sometimes ended up at the store more than once a week.  This is a problem that I know how to solve, I just hadn’t had time/energy to solve it.  Blue Apron was nice in this pinch.  The second week, I came home from traveling late Thursday, and we still had 2 meals left for Friday and Saturday.  It was such a relief to not have to worry about shopping until I’d had time to decompress, yet we still got a good home cooked meal.

Things that I didn’t like:

Price is high:  This is the big deal breaker.  Without a discount, the pricing is about $10 per a plate.  That is a lot for home cooked food!  I did find the portion sizes a little bigger than what I’d serve myself (one dinner actually was designed for 3 portions), but still.    It is just not reasonable for anyone who has frugal values.

That said, it isn’t completely insane.  Some people say they could just get takeout for this price. For us, getting takeout actually takes more time than cooking, unless we pay a premium for Seamless/delivery.  Where I live, I can’t get cooked food for two delivered to our door for $20, and it is at least a 45 minute errand to pick it up (and still a bit over $20).  I can’t remember the last time we went out to eat at a proper restaurant for <$20. We don’t really do much “fast food”, and even Chipotle is closer to $20 than to $10.  Restaurants are really expensive here, even more than they were in LA/Santa Monica.

No leftovers:  With the exception noted above, I found it annoying to do all of the cooking work and not have leftovers for the next night or for lunches.

Unfriendly packaging:  Their website does tell you how to recycle everything, but there is a lot of packaging.

Quality Control: The first week was perfect, but the second week was missing an ingredient (!) and had one of the wrong recipe cards sent.  The recipes are available online, and we just made the recipe without the missing carrot – but we’re paying a price for the convenience, which makes this completely unacceptable.  We’ll be contacting them with a complaint, and I’ll report back on what they say.   I haven’t seen anyone else complain about mistakes, so maybe we just had bad luck.

Bottom line:

The price is just too high for me.  Honestly, I liked it so much that I might add it in occasionally (once per a month or less) to change things up, despite the cost. The next month is slated to be busy at work.  If  weekly menu sounds really appealing, I’ll probably do it.  I’ll likely eventually cancel all together, because this just isn’t a good financial deal.  I can see why people love it, but I can’t imagine doing this on a regular basis as a primary source of our food.  The only possible way it will save you money is if you are already eating lots of dinners out at places that are >$10 per a serving.  And if you are doing that, you are probably not that concerned about cutting your food budget.