Today is payday.
Funny how I always wake up insanely early to check my bank accounts for direct deposits on these days.
Good news is that my 403(b) deductions have finally started. The deposit is down $200, from $995 to $795.
Bad news is that direct deposit hasn't switched from ING to BoA yet, and they are still deducting taxes, even though I faxed in new forms instructing them not to. And I don't see the 403(b) in my Vanguard account yet.
Maybe by the next pay cycle...
Archive for September, 2006
Today is payday.
So my grocery budget from yesterday that I killed...
Well, I killed it even deader now.
I think I just mentally gave up on it. I was just like, "Screw it, it's the end of the month, I have to go shopping, and I'm over budget anyway," and just went ahead and got everything that I wanted.
- buttermilk: $1.19
- grapes: $3.39 ($1.29/lb.)
- cucumbers (2): $0.41 ($0.69/lb.)
- daikon radish: $0.97 ($0.69/lb.)
- nappa: $1.97 ($0.69/lb.)
- onions (3 lb. bag): $1.49
- potatoes (5 lb. bag): $1.99
- broccoli (2 stalks): $1.29
- apples (3): $1.08 ($0.89/lb.)
- celery (1 stalk): $0.99
- bell peppers (2): $1.01 ($0.79/lb.)
- scallions (1 bunch): $0.69
- watermelon: $1.05 ($0.39/lb.)
- garlic (2 heads): $0.49 ($1.69/lb.)
- avocados (3): $0.99/each
Spent $20.94 on produce today. I did get a fair amount of food, and I should be set for weeks, but... d'oh.
$96.49 for the month of September. Budget allows for $60.
But! I am *not* shopping again until after my trip to Atlanta, 10/14 - 10/18. And we get an allowance of up to $50/day for food during those five days. And food is the only expense for which we do not need a receipt for reimbursement.
If I can keep my food expense down those five days but still get reimbursed for $250 total, I should be able to, erm, make up for this month's... indiscretions. And since breakfast is included with my hotel, I can load up on it and coast through the rest of the day.
Got to go to a proper supermarket for the first time in two months.
So I shopped like I wasn't going back for another two months. Plus, I'm entertaining the SO this weekend, so it's my turn to provide meals for two.
But I ended up going over my grocery budget for the month.
Oops. Oh well. I'll make it up next month.
Anyway, here are the goodies:
- chickpeas (5 cans): $0.50 each
- lentils (2 lb.): $0.75/lb.
- blackeye peas (1 lb.): $0.99
- all-purpose flour: $2.00
- Nestle chocolate morsels: $4.99
- all natural peanut butter: $2.00
- matzo ball soup: $1.99
- flour tortillas: $2.29
- mozzarella (2 lb.): $7.49
- day old Italian bread: $1.34
- Colgate toothpaste: $2.79
It looks like what did me in was the mozzarella--but that stuff keeps for months, and I really need the calcium. The chocolate morsels were an indulgence for chocolate chip cookies.
Oh, and the matzo ball soup, blackeye peas, and peanut butter were all impulse buys, although I refuse to feel bad about buying peanut butter. I've always liked matzo ball soup, and I wanted to try blackeye peas.
But on the bright side, the toothpaste is eligible for rebate. I just have to remember to send it in.
I still have to go shopping for scallions, cucumber, avocados, and buttermilk before this weekend. But I'm going to a different store that's cheaper for produce.
What'll be interesting during October is that I'm going to a conference. My PI is providing $50 per day for food, for five days.
I wouldn't even know what to *do* with $50 per day! People keep saying that you *need* this much, and I won't have a kitchen, but I get free breakfast at my hotel, which leaves $25 each for lunch and dinner.
We'll see how that goes.
In parts I and II, I talked about my accounts and usage.
Now, we get to cashflow.
I get paid via direct deposit biweekly. That meams eight months per year with two checks, and four months with three checks.
But for the expenses that come out of checking--namely, rent, student loan repayment, utilities, and credit card bill (for groceries, transportation, and miscellany), I'm pretty sure I can subsist off of only one paycheck per month.
So what I think I'm going to do is keep the first paycheck of every month in checking, and transfer the others out to income savings immediately upon receipt.
My income savings account gets debited weekly for Roth IRA deposits to Vanguard. Right now, I'm putting in $170/wk until next March (to max out this year's contribution and get on track for next year), but afterwards, this drops to $76.92/wk.
I've also set up auto-transfers to my various subaccounts.
My car fund receives $200/mo. This will pay for my lessons, license, and registration. After a year, I hope to have enough to buy a car (~$2000). Now I may not actually get a car summer, but I want to be *able* to. Afterwards, this fund will pay for insurance, gas, maintenance, and the like.
My emergency fund also gets $200/mo. With a goal of $5000 for (6 months of expenses, sans car), it'll take me two years to build. I think this fund will eventually get moved to a higher yield money market account.
My house fund currently gets $50/mo. I know this won't actually get me anywhere, but I want to start saving regularly for this. Once my monthly expenses stabilize, I'll adjust this amount. This money will probably go into either high yield CDs, or mutual funds (probably the latter).
I haven't set this one up yet, but I think my medical fund will also get $50/mo. I know that my birth control pills will cost $130/yr.
I think I'll put off the "grad school application fee fund" for a year.
I guess what's left over will go towards discretionary spending (a bike comes to mind), although knowing me, I'll probably throw everything that's left at my house fund. I'd like to have $40K for a down payment by 2015. More on this later.
The SO finally called the bus company to inquire about commuter discounts for the bus between New Haven and Middletown.
(52 weeks/year) * (5 weekdays/week) / (12 months/year)
= 21.67 weekdays/month
=~ 22 weekdays/month
At the standard fare of $3.60 per way, that's $158.40/mo
There is a 10-ride discount fare of $32, or $3.20 per way, or $140.80 per month.
There is also a monthly pass for $122.
This decreases the estimated monthly car maintenance cost to $200 to $250 per month.
I did Part I a long while ago. Eek. Well, time the catch up again.
Last time, I talked about what accounts I have. Now, I'll talk about how I'm using them, and what changes I might be making.
Bank of America
Bank of America checking is by far the most convenient checking account available. It has the closest (and most ubiquitous) ATMs, which is necessary for my periodic cash withdrawals and check deposits. All of my co-workers also have BoA, so it also makes money transfers easier.
For these reasons, I think I'm going to stick with BoA checking.
However, I'm going to downgrade this account from Regular to MyAccess. To remain free, Regular Checking requires a minimum balance of $750 in checking, or $1500 in savings. Both amounts are rather too large for my liking. $750 is just too random a figure for me to remember to stick to, and $1500 is way too much to hold in such a low-interest savings account.
MyAccess, on the other hand, is free with direct deposit, and has no minimum balance requirement. Perfect. So I've requested that my direct deposit be switched from ING to BoA checking, and once it goes through, I'll downgrade.
I wonder if I can still get the $50 sign-up bonus, though. Will have to keep that in mind.
With my checking free, I can finally ditch this savings account. No more $1500 earning 0.5% interest and me losing value each year due to inflation. Everything will be going over to ING.
Power Rewards Visa credit card
I'll keep this card around for the credit history and insanely high credit limit, but I've been lusting after a decent CashBack card for a while. I just don't know if I route enough money through my CC to make any of the available offerings worthwhile.
ING is fine and dandy.
And I've been having fun with their subaccounts. Right now, I've set up five.
First and foremost is my "income" subaccount. Money from my current job's salary goes here. The reason why I'm keeping this separate is to make sure that I can live off of my income alone. No living above my means. If I'm going over, I want to see myself actively borrowing from my other subaccounts.
I also have a "seed" subaccount. All of my college work-study wages go here, as well as four years worth of unspent allowance money. My father is the joint holder of my ING account, so he'll also occasionally toss money in. I'm trying to get him to stop doing that (yes, I did say "stop"; I'm an odd one).
Anyway, I have around $15K in this subaccount. This money is eventually earmarked for investments (to grow into a house down payment?), but for now, I'm keeping it around as a backup emergency fund while I feed my actual emergency fund from my current income.
I also have subaccounts for three savings goals: emergency (aka unemployment) fund, car fund, and house fund. I might also start a medical fund for prescription medications, co-pays, and deductibles. And one for grad school application fees?? What about attorney fees? Should I be getting a will/living trust set up, or sign one of those official "don't keep me alive if I'm a vegetable and for goodness sakes please donate my organs and let first year medical students dissect me in anatomy class" forms?
I'm also quite tempted to open an EmigrantDirect account. The APY difference is no longer small change, and the credit card might also be worth a look. Maybe I'll switch my seed account over?
I guess Vanguard is now the home of my investments. I have over $6500 of Roth IRA principal invested in their Target Retirement 2050 Fund, and my 403(b) starts going in this Friday into the same fund. Which probably means I should switch my Roth into a different fund.
I'll talk about my investment thoughts in a separate post, though. Still not quite ready for this yet.
I finally went ahead and transferred $2,393.61 from my Bank of America savings account to my checking account. I left the minimum $1500 in savings to keep my checking free.
And from there, I transferred $1,393.61 to my ING account.
I held $1000 back because my co-workers were registering for a course that our PI was supposed to pay for, but they couldn't find him in time. So who's Ms. MoneyBags in case they had to throw down a check anyway?
Yours truly, apparently.
That is just wrong on so many different levels.
Thank goodness I didn't actually have to loan them the money. Actually, I would have been loaning my boss money. How weird is that? And it's not a trivial amount, too.
Anyway, after work, I attended an International Student Welcome Dinner with two labmates. I would be getting a free meal, and all I had to do was...pretend to be an international student. It was amusing and rather stressful, because although I knew I looked the part, I also knew that if I spoke one lick of English, my perfect American accent would give me away instantaneously.
So I did a lot of smiling, nodding, enthusiastic gesticulating, and fakely-accented single syllabic responses. Anything to convince people that I wanted to communicate, I was trying to, but I couldn't speak enough English to carry on a full conversation.
Yeah, it was pretty hilarious.
The food was good, though, and totally worth it--eggplant parmesian, salad, and pizza. And I got to take home a free box of donuts because they had too much left over. Score!
Then, I went to B&N to read. I finished half of Rich Dad Poor Dad. Fascinating book, I'll need more time to absorb it.
On the way home, I passed by a help wanted sign. Didn't have the guts to go in and ask about it, though. Why am I such a wuss?? I guess I just hate confronting people (this is why I retreat to the internet). I just freeze up and end up talking myself out of it.
Maybe next weekend, when the SO visits, I'll have him accompany me as I go door-to-door. That might, like, actually force me to go inside and ask.
I'm also thinking of getting certified as an EMT, and then doing that as my part-time nights and weekends job. All this, because I'm afraid to walk into a store and ask about their help wanted sign.
Self-confidence? What self-confidence?
Sorry, I just feel like ranting today. Parts are only marginally financially related, so feel free to ignore. I don't mean to waste blog-space.
Roommie just applied for, and got, a new American Express Blue Cash credit card. He got this card specifically so that he can buy a new $2000 widescreen LCD projector to replace/upgrade his television. The whole point is to pay it off slowly during the introductory 15 month 0% APR rate.
Fine. I know he won't stop at the projector, but he's limited by the $3700 credit limit, and in the end, that's his issue. And he can brag to me about great this projector is, and all the market research he did to find the best deal, and how nice it'll be to have a bonafide home theater system. And he can even mope to me about how he can't afford something like this without the credit card.
What confounds me is the fact that he's leaving the country next summer, so he'll either have to sell his toys, or ship them overseas. He's been a postdoc in my lab for three years, and the maximum term is four years, unless you get promoted.
And I can tell you right now, without a modicum of doubt, that he will not get promoted. He wanders in hours late, leaves hours early, citing "exhaustion" (yeah, like those of us working 10 hour days), fails to show when our PI ("principal investigator" aka the boss (wo)man who pays your salary) is not around, and goofs off when he is at work. He has done two experiments in the three months I've been there, and has no new data or results to show for it.
I'm surprised that our PI hasn't fired his ass. I bet he wants to, but he's just too nice/tolerant to do it. Or he's not aware of the full extent of the situation.
He *could* look for a new postdoc position. But he's not. He knows that our PI doesn't want to renew his visa. He also knows that he won't be getting a good letter of recommendation, so it'll be tough to land a new position. But most of all, he's simply not motivated enough to care. He's just going to run back home and let his mommy take care of him.
In the meantime, however, he'll just waste our PI's grant money on $2000 LCD projectors, instead of generating the data our PI needs to get the grant renewed next year.
Now even this I wouldn't bother myself with, if it's truly his own damn business (and our PI's).
Except that it's NOT.
I'm quite peeved that he doesn't feel threatened by the prospect of losing his job, when MY OTHER, PERFECTLY HARDWORKING CO-WORKERS ARE. The other tech was hired in my lab after her PI couldn't get a new grant, and had to let her go. She's afraid the same thing will happen again. And the postdocs are saying that no, PIs will cut *them* first, their salaries are higher, they're higher maintenance, and they're not protected by a union.
I feel so bad for my co-workers. I'm pretty sure my PI won't fire me--his wife was my professor, and he won't downsize his wife's A+ student unless he was really desperate--but even if he does, I've been promised another tech job by a professor at my alma mater. And I'm *frugal*, so I can live off my savings and emergency fund for months, if I need to.
My co-workers aren't so lucky. They have families to support. They can't run home to mommy because they ARE the mommies.
I could go on for ages, but I won't. But I guess financial irresponsibility *does* carry over into *general* irresponsibility.
And I am no longer amused by the antics of my roommate. I am positively livid.
I watched "The Sixth Sense" a while back, and I remember this scene from it (don't worry, no spoilers).
Anna is showing an antique engagement ring to a young Indian couple.
ANNA: It's Edwardian. Beautifully worked. Entirely platinum with a mine cut diamond and an actual color Burmese Sapphire... It's timeless.
YOUNG MAN (looking wide-eyed and somewhat horrified): You got anything a little... plainer?
YOUNG WOMAN (brimming with indignance): Plainer? You want a plain ring to go with your plain fiance. Is that how it is?
YOUNG MAN (knows he's in trouble now and backpedalling furiously and hilariously): No, baby. Don't get in a tizzy. It's just... you're so beautiful... you're like a Burmese Sapphire all by yourself. You don't need all that.
YOUNG WOMAN (neither impressed nor appeased): Uh-huh.
I remember being very amused by this scene because I sympathized with the man.
And then there's a story that a friend told me, about her friend who recently got married. It wouldn't have been quite so big a deal if the girl wasn't just 19, and dating for all of three months before becoming engaged (and married 9 months later).
Oh, and then there's the Ring. A 1.5 carat diamond, surrounded by 0.5 carat diamonds, with 0.25 carat diamonds going all around the band. The stones were already in his family, so he just had to spend $2000 getting them set in the band.
My friend estimated the cost of the stones to be at least $20,000.
I wouldn't have believed this, except I actually *saw* a $25,000 diamond engagement ring in the Costco jewelry display case the other day.
Actually, I thought it cost $2500 until I realized I missed the extra 0. It did seem to *sparkle* more once I realized my error.
Anyway, these recent events have caused me to reflect upon the nature of EDAs--Expensive Displays of Affection. I know it's not Valentine's Day, but I've made my peace with V-day when I turned down a gift of an iPod shuffle two years ago.
I don't know if this makes me a horrible person, but a $25K ring would simply horrify me. I'd probably be more likely to dump the guy than accept the engagement offer.
I know different people value different things, but EDAs never impressed me. Maybe it's because it is such a transparently manipulative marketing scheme--the product of a consumerist culture that tries to place a price tag on everything, including "love".
And since "love" is supposedly "priceless", you can charge whatever you want for it, since the main emotional value of EDAs come as a direct consequence of their high monetary costs. How convenient!
Furthermore, this marketing scheme shamelessly capitalizes on the "If you truly loved me" mythology, which is ultimately meaningless because you can use it to justify just about anything.
"If you truly loved me, you'd get me this ring."
"If you truly loved me, you wouldn't need a ring to prove it."
Two polar opposite statements, and both are "validated" by the "If you truly loved me" myth. This is the main reason why I never use this expression.
Now this does not mean that I don't have any romance in my soul, or even that I don't like pretty rocks. Actually, I love pretty rocks. I find their molecular crystalline structures and indices of refraction to be sexy as heck... in the name of chemistry and physics.
But if you must pop $25K on something to display your affection? Don't buy a ring, or even a fancy wedding/honeymoon.
Put it towards a down payment on a house that we're going to buy together. *That's* true commitment, to me.
Now if only the SO read my blog... Heh.
Walked to the store, and I remembered to bring my backpack this time!
- 5 lb. sushi rice: $3.99
- 1 lb. dried shiitake mushrooms: $9.99
- potatoes: $1.04 ($0.69/lb.)
- onions: $1.40 ($0.59/lb.)
- green bell peppers: $1.19 ($0.99/lb.)
Having to carry everything for ten blocks on one's back really keeps the hands from wanderin'.
I also got $5.50 worth of nori last Friday (40 sheets). It used to be $4.50, who says inflation doesn't exist??
Grocery subtotal so far this month: $45.50.
I'm currently reading David Bach's "Smart Women Finish Rich."
Don't have many thoughts on the book yet, as I haven't gotten too far, but I did enjoy his "values ladder" exercise. It was definitely a perspective I hadn't considered before.
Ask yourself the question, "What's important about money to you?", and keep reiterating with, "What's important about _________ to me?" Then, use that answer to realize how money can make your life *better*.
What a concept, right?
So, what's important about money to me?
Security. I want to know that if anything happens to me or my family, I'll be all right. Whether it's unemployment, an injury or medical emergency, a natural disaster, or even a death, I don't want to live in fear of what the future may hold.
Independence. I want to be completely self-reliant. I want to have my own job/career so that I can support myself. I want to have my own car and own a home. I want to answer to no one--not the landlord, not the debtors, not anyone.
Freedom. I want to be able to make choices that make me happy. I want to choose the career path that I desire, without having salary be a limiting factor. I want to be able to have children if I decide I want to raise them. I want to be able to reconcile the two.
How am I heading towards those goals? I'm medically insured, and I'm starting an emergency fund. At some point, I'll need to know the financial ins and outs of my family. A will or a trust would be good to set up and have.
I'm relatively self-reliant now, but I need to get my driver's license, so that a car becomes an option. I do like the freedom of not having a car, but I want the option to be available. I'm saving towards a house down payment.
I've made tentative plans for the next four to five years regarding saving for retirement. If I can match my projections, that will free me up to pursue graduate school and a possibly risky academic career, worry-free.
I'm not quite sure how to financially prepare for the prospect of creating little ones, but I'll start with saving for a house, and figure it out from there.
Financial planning is so much more fulfilling when you have concrete and heartfelt goals in mind.
Goal: bump myself down to the lowest federal income tax bracket through my 403(b) deduction.
Gross income this year from current job: $17,617.25.
Add in work-study and round up a bit: $17,850.
- $5150 (standard single)
- $3300 (personal, non-itemized)
Taxable income after exemptions: $9400.
Total 403(b) deductions: $1865.33.
Taxable income after 403(b): $7534.67.
Lowest federal income tax bracket: $7550 or below.
Wow, that's really kind of cutting it close. Especially since my math kind of gets fuzzy at certain points.
Maybe I should up my deduction.
As for income taxes, I've already had $1407.97 withheld from my paycheck this year to date. 10% of $7550 is $755.
Yes, definitely no more taxes this year.
Just some bookkeeping...
I found out that my 403(b) deductions will start coming out on 9/29. Hurrah! I need to verify that this will drop my taxable income down to where I want it to be.
I faxed a revised version of my W4 form to the business office, stating that my annual income is below the level where they need to withhold income tax. I think I've already overpaid this year's income taxes, anyway. I need to verify this, as well.
I transferred my direct deposit from ING to Bank of America. Once it switches over, I'm downgrading my checking account to MyAccess, and moving all of my savings over to my ING account.
Switched Vanguard's auto-withdrawals for my Roth to weekly, for real. Because apparently, it didn't register the first time I did this. Urg.
On the bright side, I got my $5 Pinecone check. Heh. I'm amused.
Got my direct deposit this morning, and still no sign of my 403(b) deduction. I need to call the benefits office again to figure out what's up. If I get anyone besides voicemail, that is.
My total gross income this year will be around $17,500. With a total exemption of $8450, that leaves my taxable income at around $9000.
I really want my 403(b) to kick in so that it'll bring my taxable income under $7,550, which will drop my federal income tax rate to 10%.
And then I can get my tax withholding dropped from 18% to 10%.
In other news, I tried to send my roommate my share of the utilities through Bank of America's online bill pay. I added him as a payee, and sent him $10, just to test.
A week later, he gets a check in the mail for $10. Not exactly what we wanted, or were expecting.
Finally, we figured out that "Transfer Funds" did the instantaneous electronic transfer that we were looking for. So I transferred him the full amount, he destroyed the check, and I thought we were done.
I just checked my transaction history yesterday, and I got debited $10. For the check that was destroyed and never cashed.
I sent them an inquiry. If I don't get my money back, I'm going to be seriously peeved.
ETA: My 403(b) kicks in on 9/29. Rock.
I went to the Hong Kong Grocery today to buy some munchies.
I made a very interesting observation.
As I was browsing for noodles, I was of course looking for the best price per pound value. Certain packages were $2.60 for 2 lb.; others were $4.60 for 4 lbs. I was about to go for the latter when I happened to glance down at the lowest shelf.
There were 5 lb. packages of noodles for $3.60!
Realization dawned: they put the more expensive noodles at eye level, and hide the cheaper ones on the lowest shelf!
I wonder if other stores do the same. I have to be on the lookout for this from now on!
Thank goodness I'm short and have no compunction against squatting down to get my noodles!
Okay, now, onto the bookkeeping:
- 5 lb. bag of oriental noodles: $3.60
- daikon radish: $0.80 ($0.69/lb)
- 2 packs of tofu (18 oz.): $0.99 each
- miso (17.5 oz.): $3.60
- Shanghai bok choy: $2.18 ($0.99/lb)
- mushrooms: $1.25 ($1.89/lb)
- orange gummy balls: $3.99
That last item is for the SO--he takes me out to restaurants, I buy him weird Asian junk foods. It works out in my favor, really.
Recently, I've had my first major spat with my SO of nearly two years.
We've lived in cities 30 miles apart since mid-June. While this probably seems like No Big Deal, neither of us has a car (I don't even have my license and he has "issues" with cars), the public transportation sucks, and as a result, our relationship has essentially become long-distance.
I wanted to fix this by buying a car and moving in with him (since he's neither capable nor willing to move in with me). Initial estimates placed the cost at $5K for the car and at least $400/mo maintenance; after more research, I was able to get the price down to $2.5K for the car and less than $300/mo maintenance--by only driving car to a bus that would take me to/from work every day.
The snafu came when it became clear that he expected me to 1) pay for the car itself, 2) pay for the monthly car maintenance, and 3) split his rent and utilities with him 50/50. This would put me over my current monthly expenditure by $200, and does not include the tripling of my commute time.
I was looking at buying a car in an attempt to bridge our long-distance relationship for the sake of both of us. And he wanted everything to come out of my pocket (because he "didn't want me to do anything that I would not have done without him"), and then enjoy the 50% rent and utilities reduction that comes with having a roommate.
I never explicitly asked him to contribute, but I was greatly peeved that it didn't even cross his mind to, you know, offer *something*. After all, I'm on a shoestring budget, and he makes $20K/year more than me. Why should I be making all the sacrifices while he does not lift a finger?
Finally, I suggested that maybe we should roll the car maintenance cost into the total household expense, and split *that* 50/50. That would only put me $50 above my current monthly expenditure, and still save *him* over $600/mo. And I'll still save and pay for the car myself, and deal with the commute.
Apparently, suggesting that we "split household costs" hit a major nerve, and he completely flipped out. It was unacceptable, too much commitment, why did I have to do this when he was perfectly happy with the long-distance arrangement. When I pointed out that a relationship should be a partnership/two-way street, he replied that he doesn't see anyone except himself in his future.
I'm sorry, but WTF? I couldn't take it anymore. I broke it off. And it wasn't even really about the money. How the hell was I supposed to react after being told that splitting household costs was unacceptable because he didn't see me as part of his life? Smile, nod, and go along with it? I wasn't looking for a free ride or an engagement ring, just... MORE THAN WHAT HE WAS GIVING, that was for sure!
And then a few days later, he gets his act together, and totally regrets what he said before.
It took me a while to get over what happened, but we are trying to work things out again, and this time, his offer was very different.
1. He'll float me an interest-free loan for the entire cost of the car when/if I buy it next summer. This removes the car fund from my budget, and takes a lot of pressure off of me for the upcoming year.
2. I will be repaying him for the car in lieu of paying rent until the car is completely paid off. Yes, he's giving me free rent up to the cost of the car, in exchange for my buying it and putting us back together.
3. My monthly expenses will NOT increase. Since I'm paying just shy of $600/mo for rent and utilities now, that's the maximum I have to contribute. This eliminates any financial risks I might be taking by moving in with him.
4. He doesn't even care if his own monthly costs do not decrease. He's not interested in using me to save money. I think he's even willing to pay extra to have me around.
5. He wants us to put down in writing the explicit terms of our cohabitation. It will guarantee that even if our relationship goes south, I won't be hit with any extra costs until I can move out.
I am so stunned by this 180 degree turnaround. It's not like I'll ever hold him to #4, since it essentially implies that I can get away with just paying for the increase in utilities that I'll be invariably causing, plus the car purchase and maintenance.
I haven't decided what I'll do yet, but I'm bouncing around some ideas. I might accept free rent for half of the price of the car. I might also go with the "pay equal shares" approach, where we contribute equal percentages of our salary towards joint household expenses. That will end with me paying 40% of the bills, and him paying 60%. That comes out to be around $500/mo for me, and $760 for him. I save $100/mo, and he saves $200.
I'll post a more explicit budget when it's not 4am.
I think this *might* work.
Nothing terribly interesting to report today, but in the spirit of using this blog to log all my expenses, here goes.
I went to Costco today and picked up five large avocadoes for $4.99.
I sense a sushi and miso soup day in the near future.
I wanted to get a 6 lb. bag of pretzels (for $3.49), but my roommie saw me hesitate, so he got it instead.
Great, now I'll not only be unable to buy it in the future (because we already have it), but I'll also feel guilty eating it because I didn't pay for it.
Offering to pay for half wouldn't work because I know he wouldn't accept. I've already tried with the natural gas bill--it went up significantly after I moved in because I'm the main cook in the house, so I told him I'll pay for the whole thing, or he can contribute a fixed $5 per month as his share, since that was how much he was paying before I moved in, but he wouldn't hear of it.
Maybe it's odd to be frustrated with someone else's generosity, but I do feel really bad. I like to be fair. That means splitting everything down the middle, and not taking charity. Otherwise, I feel like that is crossing the line from frugality into cheapness. But I can't stop him from spending money *for* me.
I bet lots of people would kill to have this "problem", but we've already established that I am something of a freak of nature.
I've gone and made a spreadsheet projecting my retirement fund from now until 2049, which is when I'm 65.
Voila! (Link must be opened in Firefox 1.5+ or Internet Explorer 6.)
I'm assuming an average annual rate of return of 8%.
I plan on maxing out my Roth IRA every year until I retire, including my grad school years, if they come to be. I know max contributions will rise, but I just kept it at $4000/year since I don't know when it'll rise, or what it'll rise to.
I also plan on contributing $10K/year to my 403(b) for the next two years, and $15K/year for the following two years, and then stopping (for grad school?). I don't pick it back up at all in this set of projections, although I probably will in reality.
At the end of 2049, I will have earned $1.88 million tax-free dollars from my Roth from an input of $184,377.96.
I will have over $900.000 in my 403(b) from a total input of less than $35K.
The net worth of my retirement fund at 2049 will be $2.79 million.
Someone please pinch me?
Repayment starts today on my $17,125 Stafford principal. (My Perkins is still in grace.)
I gotta crunch the numbers to figure out whether I should accelerate repayment.
Mind you, I may not currently have the funds to accelerate repayment even if it turns out to be advantageous, but it's still an interesting exercise to go through. While I do find it psychologically painful to be in debt, I'll stick with debt if the numbers show that it actually helps my bottom line.
As it turns out, there's no clear-cut BETTER. It all depends on how you work the situation. But let me start at the beginning, with the background on my Stafford loan.
I owe a principal of $17,125. I consolidated the interest rate at 4.75% at the end of June, and got it reduced to 4.5% by activating auto-debit. After 36 on-time payments, my interest rate drops another percentage point, to 3.5%. I do intend on this happening, since I've got the auto-debit.
I'm on the standard/level repayment schedule, which is 180 months, or 15 years. My monthly payment is $133.72. Taking the two interest rate drops into account, I'll actually pay the loan off in 176 months.
If I pay nothing but the minimum for the entirety of the 176 months of repayment, I'll pay a total of $6360.52 in interest over the life of the loan.
But say I up my monthly payment to $200, which means I pay an extra $66.28 towards my principal per month. The repayment period drops to 104 months, or 8 years and 8 months. For the extra $6870.51 I pay over those 104 months, my total interest paid gets reduced to $3652.39, for a savings of $2708.13.
But I also ran a parallel calculation, where I take the extra payment amount of $66.28, and invested it instead. Over the course of 104 months, I'll earn more money from the investment, so long as the fund's rate of return exceeds 7.35312%. If the stock market gives a long-term average return of 8%, I'll earn $3006.86, which is a few hundred more than the savings in interest.
However, there's a big catch to this. Extra payments to the loan pays down the loan itself; it's like making a future payment today. Extra payments to the investment does not pay down the loan--you still have to cough up the money for the loan itself. So actually, you want to earn back the total amount of the extra payments, AND exceed the savings in interest. I'd need to earn at least $6870.51 (extra payments) + $2708.12 (savings in interest) = $9578.64.
If that's the case, I'll need a rate of return of 18.13% to break even in 104 months. If I want to break even in 176 months instead, I'll only need a rate of return on 8.3%, which is much more reasonable.
However, there's another angle to consider. Any extra cash thrown at the loan will only result in a lump-sum savings in interest. Extra cash put into a mutual fund, however, will compound for as long as it is invested. And you can keep it invested for longer than 104 months, or 176 months. And the longer you keep it invested, the more you'll earn.
I think the conclusion to be drawn is that accelerating repayment is advantageous in the short-run (e.g. over the loan repayment period), especially if you pay a good chunk extra on the principal each month. But if you don't pay as much extra, or if you're thinking long term, that extra money is better off in a mutual fund.
I think I'm not going to accelerate repayment. I'm fine with delaying immediate gratification in favor of better long-term returns.
And it's much easier to justify not paying extra when you don't have the funds, anyway.
In light of all the investment talk of the past few entries, I have a confession to make.
I used to be scared of investing.
Oh, I "knew" that it was the "smart/right" thing to do with your extra money. And that if you do it "well", your money can "work for you", and theoretically multiply itself into unimaginable proportions.
But I didn't trust it in my *gut*. I didn't feel comfortable or confident. What does it mean for money to "work" for you, anyway? You're the only one who can do *real* work. Earning money from the stock market seemed so... intangible. Abstract. Fake, even.
And I've never been much of a risk taker. I've always preferred to play it safe. When I *have* money, I want to *keep* it, and *know* that it's there in the bank, not in perpetually fluctuating share prices. When it earns, it's not real to me, and when it loses, I feel sick.
Interest from a bank--now that's concrete. That's real. That's dependable. And if I have to sacrifice possibly higher returns, then so be it. After all, I'm a frugal person. I can work hard, and make what I earn be enough. I'm not a spendthrift who can ever spend a million dollars, nor do I need to make that money off the stock market. I just gotta keep chugging and saving.
That was me, all of one month ago.
What made me change my mind? Simply the following train of thought.
Assuming that I start work at age 20, retire at age 65, and die at age 90, I will work for 45 years, and be retired for 25.
That means I'll be retired for 25 / (45 + 25) = 35.7% of my adult life. Thus, I'll need to save 35.7% of my salary if I want to keep cash flow and standard-of-living consistent during my working and retirement years.
That seems a bit high, but okay. I'm capable of saving that. Heck, I'm probably capable of saving more if I put my mind to it.
But hang on a second, what if I plugged in some real numbers? Say I wanted to have $40K/year income during retirement. This isn't an extravagant or unreasonable figure, especially considering inflation. Over 25 years, that adds up to...
...one million dollars.
Yup, it's one million all right. "I'm not a spendthrift who'll ever spend a million," eh? Well, I sure am eating my words now. But at least it's better than eating them at age 65 when I have, um, nothing else to eat.
That realization caused me to set my retirement goal at one million. And actually, that's a conservative goal, because not only am I concerned about inflation, I'm also worried about the increased medical care costs (such as prescription drugs) associated with being elderly. I may not be happy about degrading health as one ages, but I'm not in denial, either. So I'd actually like to have two million in order to feel reasonably secure.
Well, can I reach that goal? Let's see...
I'm making $32K/year. At that rate, $1.44 million will pass through my hands over the course of my entire working career.
That's not enough to put away one million, but I won't be staying at this job forever. My income will surely rise if I become a professor or go into industry. But it'll also decrease if I go to grad school, and remain the same if I do the postdoc grind.
No matter how I played with the numbers, even the most optimistic lifetime earnings projections never hit three million.
And this was assuming NO time off for children (and the costs associated with raising them!), unemployment, medical emergencies, or personal/natural disasters.
Oh, and it's also before taxes and living expenses are taken out. Since those are, you know, totally minor.
I also analyzed the situation from a different perspective.
If $40K/year is 35.7% of my annual income, my annual income must be...
But in that income tax bracket, I'll be losing around 45% of my income to taxes. If I'm saving 35.7% for retirement, that leaves me... 19% of my income to actually live on.
That's slightly over $20,000 per year. That's actually how much I've got now, after taxes. Buy a house on this income? I'm dreaming.
That's when it truly hit me. I *can't* save enough to properly fund retirement. It's just not feasible. If I make $2.5 million during my lifetime and take out $1 million for 25 years of retirement, I'll have $1.5 million left for 45 years of PRE-retirement. Or I'm going to have to somehow raise my annual income to something much higher than $112K/year, and do it, well, NOW.
It's just not going to work.
I *need* to invest. Without those returns, I won't make it. It's as simple as that. I know you can also use real estate, but that's a form of investment, as well--one that takes more capital than I'll have in a very long while.
So... that's why I am investing. It's risky in the same way driving motor vehicles is risky--yes, you can crash, but the vast majority of the time, you'll get where you're going. And if you do crash, chances are, you will recover and not die, especially if you've buckled up (diversified).
How far I've come in just one month. Now if only I can convince my mother that I haven't gone bat sh*t insane... She harbors my old view on investing, and she's horrified by what I'm thinking/doing. Oy.
I've been trying to get a handle on all the different investment terminology, and in the process, I've learned a new concept.
Dollar cost averaging (DCA).
When you make small, periodic investments over time, you tend to buy more shares at a lower cost.
In light of this, I've changed the auto contribution for my Roth to weekly instead of monthly. At $170 per week until April 9, 2007, this should max out my $4K 2006 contribution, and also put me on track for my 2007 contributions. I'll have to calculate whether my year-to-date income savings can handle this rate of deduction, though. I'll do that this weekend.
I also feel better (somewhat) about the fact that share prices (for the Vanguard 2050 Target Retirement Fund where I've invested my Roth) have fallen in the past couple of days. Losing over $50 in the first week of starting my first investment is not exactly encouraging, although I know intellectually that it doesn't really matter.
But still, I should look into who's managing the fund, and possibly switch out. My 403(b) will be going into the same fund, and I'm thinking fund diversification is probably better.
I'm going to start building a Fund Watch list. I have over $10K in seed money that needs to go somewhere. I should be able to buy two funds with this money, although I think I'll only get one, at least until my emergency fund ($5K goal) is built up.
Oh, and FYI... I just calculated my net worth, and against my expectations, it is actually positive, even with my $22K in student loans. I'm worth nearly $5K, baby.
I just discovered this as I was browsing craigslist for local waitress openings...
Under the "for sale" section, there is a link named "free".
WHY DIDN'T I FIND THIS BEFORE?
There's even a post for bunnies! BUNNIES! Hutch included!
I think I know where I'm getting my furniture from now on.
I got two letters from Vanguard yesterday.
My Roth IRA transfer went through! The money came out of my checking account this morning.
I also got charged $10 for being under the $5000 minimum.
Um. The check was for $6188.39. It must have been the delay between my opening my account (8/23) and the time it took for my check to get there (8/31)?
I'm kind of annoyed that I have to add "Call Vanguard and get fee taken off" to my to-do list. But I'm happy that this is done, and I've set up my monthly auto-transfer of $333.33 on the 15th of every month.
Natural gas: $35.04
Cable modem: $46
Cell phone: $10 (family plan, father won't let me pay)
In exchange for living on the futon for six weeks for a total of $75, I am paying 2/3 of the utility bill for August and September. (It's a somewhat convoluted situation.)
So, I owe $106.61. I guess my guestimate of $100 for utilities was pretty accurate. I was hoping I'd overestimated. I think it'll drop next month, though.
Does running two incandescent ceiling bulbs for 6-ish hours a day, plus a desktop computer with an LCD monitor for 12 hours a day, over the course of 2 weeks, actually add up to $30 in electric bills?? Because besides my clock radio (which I need for my alarm), those are the only additions I have made to electric consumption in this household besides, like, turning the bathroom light on when I'm in it.
I'm kind of annoyed.
I'm expecting the gas bill to jump because of me (probably from $10 to $30 - $40), but I had no idea I had that big of an electrical footprint.
I tried, I really did. Because I actually have TWO OTHER COMPUTERS THAT I NEVER EVEN PLUGGED IN. Argh, this will majorly suck.
To start off, I just want to point out that I posted my e-mail address and AIM screenname. It's over to the right, below my Bio section. So e-mail or IM me! I'm bored and lonely!
Now, onto the primary order of business...
I'm realizing that I've been putting in 10 hours of work a day for 7.5 hours worth of pay. And this is, in fact, normal, approved of, and even occasionally expected.
While I do like my job and stay late because I get sucked in, I am starting to get irked at the lack of compensation.
So I've been thinking. Maybe I should get a second, part-time job in the evenings. This will force me to leave (normal) work on time, and even provide me with compensation for the extra time that I would have spent working, anyway.
Yes, I know this is backwards and demented. I'm thinking of working more in order to, um, work less at my normal job. Someone please come and screw my head on straight.
I've been contemplating my options. Keep in mind that I have no experience in any of these positions.
I know the base pay for waitressing sucks, and I'm not sure what it'll be after tips. But the possibility of free food at the end of the day is enticing. But I bet the job itself is mad frustrating. I've done customer support. *shudder*
I like books and bookstores, so maybe I can find a job in one. It'll be nice and mellow? This might be better for a weekend position?
- Baby/house/pet sitting/walking
This is a nice possibility because this could go under the tax radar. I'll have to find clients, though. Not really sure how to go about that.
I'd like to avoid this possibility, but there are many subjects that I can teach. I just don't like dealing with *people*. And I kind of want a mindless-robot type job where no thinking is required. So probably not this one if I can help it.
I'm thinking 10 extra hours a week should bring in about $100 a week (probably a little less)?
It's not like I have anything better to do with my time, anyway.
Besides, um, blogging.
To continue with my reflections on "The Millionaire Next Door"...
One thing that really surprised me was its report on doctors. Apparently, despite the fact that their average income is four times the average American household's income, two-thirds of them are Under Accumulators of Wealth (UAWs)--they don't have as much wealth as expected (p. 74).
Why? Some of the reasons I've already discussed in the preceding post--namely that they have more educational debt and a late start in generating income for saving and investing.
The other reasons were more unexpected. Doctors hold a higher societal status, and thus must maintain higher domestic overhead in order to keep up appearances and respectability, by living in nice neighborhoods, driving nice cars, wearing nice clothes, etc. (pp. 75-76).
Another reason is that they are generous, both with their time and their money. They're so busy tending patients that they don't have the time or mental energy to do financial planning. And they give away larger portions of their incomes to "noble causes". And because everything assumes that doctors are rich and don't need money, doctors don't receive as much in inheritances (p. 77).
The reason why I thought this was interesting and relevant is because I've been told, and sometimes repeatedly, that:
- I should go to medical school and become a (rich) doctor.
- I should marry a rich doctor.
Was this the wrong advice all along? When parents want their kids to pursue high income, high status careers, thinking that it will help their kids get by comfortably, will it backfire unless they also teach their kids the drawbacks of such careers?
Personally, I have no interest in med school (I hate dealing with patients, I much prefer lab animals--animals bite, patients sue ). The fact that I hate keeping up high-maintenance appearances will probably doom my practice to failure, anyway.
Anyway, I found this tidbit interesting, and thought I'd share for posterity's sake.
...unless I'm seriously proactive about this wealth-building business.
That was what was running through my head during most of "The Millionaire Next Door".
To start off, I'm a gal. Big disadvantage, right then and there, in terms of earning potential. The statistics show that women earn 50% - 60% of what men earn (p. 181), regardless of field or level of experience. Fabulous. Oh, and I live longer, so I need to save more for retirement. Double-whammy. (Not complaining about the longer life expectancy, just... makes things marginally harder.)
Next, many millionaires are self-employed entrepeneurs. That's something I'll never be. What am I? An academic. A research scientist. One of those chronically underpaid thankless professions fueled by love and passion rather than monetary returns. (Again, not complaining about my chosen profession, just... this is a statement of fact.)
Right now, I'm making a little over $30K/year (pre-tax) as a technician. If I stay in academia, I'll need to spend five to six years in graduate school, getting my doctorate. During that time, I'll be living off an extremely low stipend ($20K/year?), and possibly getting more into educational debt.
After I graduate, I'll be floating around, doing postdoc after postdoc for around the same salary as I'm making right now. None of the postdocs in my lab are saving for retirement. I'm the ONLY ONE. Granted, most of them are foreign nationals, but even the ones who are here for good are putting off contributing to their 403(b)'s.
And then if you're incredibly lucky, you might land a position as an assistant professor. Your salary jumps to, oh, $65K/year. But by then, you're 35, at the very least. And if you don't get tenure after a few years, you must leave your university, move on, and start all over.
And this timeline hurts, financially. A lot. The book states:
"For all high-income earners (those earning at least $100,000 annually), the relationship between education and wealth accumulation is negative. High-income PAWs are significantly less likely than UAWs to hold graduate degrees, law degrees, or medical degrees." (p. 74.)
"Well-educated professionls get a very late start in the earnings race. It is difficult to accumulate wealth when one is in school. The longer one stays in school, the longer one postpones producing an income and building wealth." (p. 74.)
It doesn't help that professors don't even earn in the "high-income" category.
So where does that leave me? Totally screwed, financially, if I choose the academic path. Either I aggressively save and invest now, during my two years of employment before grad school, and hope that time is on my side enough to grow this seed money, or I bust. It doesn't matter if my dream career is to be a successful research scientist. I'm not exactly willing to starve for the privilege of having my name on landmark papers published in Science or Nature. Am I?
Alternatively, I can put off graduate school for longer--until I'm 30 or so--and earn during my prime saving and investing years. I feel like the more I earn now and invest, the better off I'll be. I need to find the formulas and crunch the numbers for some concrete projections, but this seems to be the case.
I can also give up academia, and go into biotech. The salary there is $65K/year to start, although I may need a Master's to qualify for those positions. Then, I'll have a good ten year head-start on the folks heading down the professorial path, and that's a significant difference.
None of this even *begins* to take into account a possible family life. I don't even want to think about it.
But tons of people who are in this field *are* making it, right? And I know I don't necessarily need to measure my success by whether or not I make it to millionaire status--because honestly, what would I *do* with all those assets--but I'd really prefer to have too much than too little.
Damn, this is going to be harder than I expected.
I'm about three-quarters through The Millionaire Next Door.
I am so, so glad I read/am reading this book.
There are so many tidbits that I felt in my *gut* to be true, but either wasn't reflected in "conventional" knowledge, or I didn't have the hard evidence to support. This book not only articulated these gut feelings, but also confirmed many of them with the objective analysis of concrete data and statistics.
Take, for instance, the book's definition of wealth:
"Ask the average American to define the term wealthy. Most would give the same definition found in Webster's. Wealthy to them refers to people who have an abundance of material possessions.
"We define wealthy differently. We do not define wealthy, affluent, or rich in terms of material possessions. Many people who display a high-consumption lifestyle have little or no investments, appreciable assets, income-producing assets, common stocks, bonds, private businesses, oil/gas rights, or timber land. Conversely, those people whom we define as being wealthy get much more pleasure from owning substantial amounts of appreciable assets than from displaying a high-consumption lifestyle." (pp. 11-12, my emphasis.)
If you were to ask me what a "rich" person looked like, I probably would have said a person living in a big house (or several houses!), drives expensive car, and wears name-brand designer clothing. Why? Because that's what you see when the media covers the life of the Rich and Famous.
But from the people that I know in person, this is not true at all. My roommate is the perfect example. He looks rich, but is flat broke.
And he constantly mocks (but in a friendly way so I don't take it personally) my frugal tendencies. For instance, one time, he was ooh-ing and aah-ing over a display of watches. My comment was that the only watches I ever owned were bought from street vendors for $20, but now, I don't even have a watch, since my cellphone shows the time beamed from the cell tower.
His response was something along the lines of: "Well, if you just use watches to tell time, then of course that's what you would do. But for me, a watch is a piece of jewelry. That's why I like fancy watches."
(I guess this explains why I also don't care much for jewelry (although I'll admit that they *are* pretty and sparkly). My ears aren't even pierced, and I don't plan on piercing them. Because then I'll have to get earrings, and why would I want to do that?)
He has the same feelings regarding cars. He considers himself a connoisseur, and is proud to drive a big fancy luxury sports car (it has really good acceleration, don't know if that makes it a sports car?) that he bought new. And when he's on the road, he will always comment on the inferiority of the other cars he sees.
I commented that my car will be a small, fuel-efficient, used car that can hold its own on the highway (hey, not crashing to death is worth something, even to me ). His response was: "Aw, come on! What if you need a big car? It's better to have that just in case! But I guess that's fine for you--you just see a car as a method of transportation. You'll be perfectly happy with a Honda Civic. But not me."
So imagine my vindication when I read the following:
"It is unfortunate that some people judge others by their choice in foods, beverages, suits, watches, motor vehicles, and such. To them, superior people have excellent tastes in consumer goods. But it is easier to purchase products that denote superiority than to be actually superior in economic achievement. Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement." (p. 28.)
"Most [millionaires] are frugal. And few could have ever supported a high-consumption lifestyle and become millionaires in the same lifetime." (p. 29.)
I think I prefer the >$10K I have in savings over costly status symbols. I can't even tell what's a status symbol and what's not, actually. But I sleep better at night, knowing that I'm not living paycheck to paycheck with precisely zilch in savings.
Oh, and I don't have to worry about being robbed.
I'll continue to write about this book in segments. It's a little much to discuss all at once. But I'm taking notes, so I'll eventually cover everything.
And just as an amusing aside: under Appendix 3, which is a listing of business/occupations of self-employed millionaires, there is one that caught my eye.
BOVINE SEMEN DISTRIBUTOR.
Sorry, I just had to. *guffaw*
Argh, so much to take care of today, and only 90 minutes to do it before I have to leave for work.
It turns out I'm visiting the (ex-?)bf this Labor Day weekend. He offered to pay my travel expenses, but I'll also be eating his food for three/four days, so I haven't decided if I'm accepting the reimbursement. I'm using the CC for Amtrak, but I have to make sure I have the cash for the shuttle bus. (Yes, I do, but only in coins unless I break a $10. Good enough.)
I have to pay the rent. I can't remember if it's $70 or $75, but I'll leave a check for $75. Long story short, my lease technically begins today, but I've been living on the living room futon at my current apartment since mid-August, and will continue to do so until the end of September. This is because 1) I had to move in early, and 2) my roommate's old roommate wanted to stay an extra month. But I get reduced rent for September. (Done.)
I just paid my credit card bill. $35.19. I always do this on/near the first of the month, along with the rent, so I never forget and court late fees come the 12th.
I got my direct deposit, and it doesn't look like they took out for my 403(b). I need to call the Benefits Office and see what's going on with that--maybe the forms haven't gone through yet, or there's an error. I also need to switch my direct deposit from ING to Bank of America. Probably can't get that done today, though.
I need to pack clothes for this weekend. I'll probably bring a load of laundry (there are no laundry facilities in my building). I'm also bringing two books: The Millionare Mind, and YF&B. (Done, and done.)
I'm not sure when utility bills come in, but soon? Not looking forward to this AT ALL. Especially since the roommate insists on running the AC all day, even with it's 60 - 70 degrees out, and then complains that I don't always dim the living room lights, or shut off my computer at night. Argh. Oh, and I've probably contributed significantly to the gas bill. Double-argh.
Shut off alarm clock for the weekend. (Just did it.)
Check food perishables. Refrigerate or eat or bring. Do my dishes. (Done, done, and done.)
Want to shower before I leave, but might not make it, time-wise. (Hey, I made this one too! Go me!)
- $75, rent
- $13, round-trip Amtrak tickets
- $1.25, shuttle bus
- $1.25, shuttle bus (not paid for by me)
- $4.99, Costco
- $17.40, HK grocery
- $5.50, HK grocery
- $1.25, shuttle bus
- $6.00, Amtrak ticket
- $17.61, HK grocery
- $30.05, Shaw's
- $20.94, M&M farms