Well, I've been doing some research into checking account fees, and man, they are everywhere! I wish I could do an all-online account (Capital One has 1.01% APY on their checking accounts!) but without the luxury of direct deposit, I just can't make it happen. So I had to find a brick-and-mortar bank with ATMs I could shove my paycheck into every two weeks.
I must be very lazy, because my criteria for looking into brick-and-mortar banks was those with locations near my workplace. Chase has a location across the street, but their fees are offending me, so I looked into my other options. These included Citibank, US Bank, and Bank of America. In the end, I decided on BoA's e-banking checking account, which doesn't levy a fee if you make deposits and withdrawals at an ATM and elect to receive electronic statements. They also allow you to visit a teller for free when you need a service the ATM cannot provide (coin deposits/withdrawals, cashier's checks).
I am pleased with my decision. I can still walk down the block to deposit my paycheck the day I receive it. I don't have to make a certain number of debit card purchases or keep a minimum account balance. My oldest credit card account is with BoA (10 years) and I've never had a problem with their customer service.
I have no misgivings about leaving Chase. In fact, I'm thinking of closing my credit card with them, too. But that's because I just applied for a Discover More Card, which offers $100 cash back if you spend $500 in the first three months. Easily done, and free money. Now, my struggle with which rewards cards to keep is fodder for another post!
05 December 2010
03 December 2010
Free checking, a thing of the past
Well, I've finally been cornered by the fee-based checking account. Chase sent me a letter informing me that my checking account will now come with a $12/month fee, unless I meet one of the following requirements:
Have one direct deposit of $500 or more made into my account each month.
Keep a minimum balance of $1,500.
Keep an average balance of $5,000 in my checking account AND a "qualifying" deposit or investment account linked to the checking account (who knows what a "qualifying" account would be).
Pay $25 each month in other Chase checking-related fees.
The simple solution would be direct deposit. Sadly, my small company does not offer this. The next solution would be to move money out of a savings account and hold it in my checking account, to meet the minimum $1,500 balance. This is not appealing. I'd much prefer seeing that money earning interest rather than lying like a lump in my checking account, doing nothing but staving off a rude and ridiculous service charge.
So, I did a little research. Turns out the Chase Total Checking account I am being rolled into is not the most basic option available to me, although the letter I received from Chase certainly makes it appear this way. After speaking with a telephone operator who didn't know what was going on, then IMing with an online support specialist who seemed to, I learned I can switch to a Chase Basic Checking account, which carries a $6/month fee that is waived by meeting one of the following requirements:
Have one direct deposit of $500 or more made into my account each month.
Make 5 debit card purchases per month.
I think we have a winner. I can make 5 debit card purchases each month; I come close to this anyway, at the grocery store, when I need cash for laundry or swimming. And if I don't meet the requirement naturally each month, I will just buy my last set of groceries individually, paying for each item separately with my debit card. Sounds like a plan. I would rather put these charges on my credit card, which has rewards, but I think I can find a way to minimize the damage here.
However, this fee-based checking account phenomenon is quite disconcerting. Thus, I am researching other options. The main problem is my employer's inability to provide direct deposit. If that happened, I would just open an ING Electric Orange checking account. I mean, that thing has interest! Maybe I will open one anyway, to feel it out and decrease my reliance on Chase. If could stand the waiting between getting my paycheck and seeing it post to my account (as it meanders through snail mail) it could work. Although it makes me incredibly nervous to rely on the USPS every two weeks to keep me solvent. Seems I would need to keep a brick-and-mortar account, like Chase, to make ATM deposits each pay period. Then I could transfer the money into ING after it posts. This is an extra complication, but I'm sure I could handle it. Hmmm, this is a head-scratcher. I will continue to mull it over.
Have one direct deposit of $500 or more made into my account each month.
Keep a minimum balance of $1,500.
Keep an average balance of $5,000 in my checking account AND a "qualifying" deposit or investment account linked to the checking account (who knows what a "qualifying" account would be).
Pay $25 each month in other Chase checking-related fees.
The simple solution would be direct deposit. Sadly, my small company does not offer this. The next solution would be to move money out of a savings account and hold it in my checking account, to meet the minimum $1,500 balance. This is not appealing. I'd much prefer seeing that money earning interest rather than lying like a lump in my checking account, doing nothing but staving off a rude and ridiculous service charge.
So, I did a little research. Turns out the Chase Total Checking account I am being rolled into is not the most basic option available to me, although the letter I received from Chase certainly makes it appear this way. After speaking with a telephone operator who didn't know what was going on, then IMing with an online support specialist who seemed to, I learned I can switch to a Chase Basic Checking account, which carries a $6/month fee that is waived by meeting one of the following requirements:
Have one direct deposit of $500 or more made into my account each month.
Make 5 debit card purchases per month.
I think we have a winner. I can make 5 debit card purchases each month; I come close to this anyway, at the grocery store, when I need cash for laundry or swimming. And if I don't meet the requirement naturally each month, I will just buy my last set of groceries individually, paying for each item separately with my debit card. Sounds like a plan. I would rather put these charges on my credit card, which has rewards, but I think I can find a way to minimize the damage here.
However, this fee-based checking account phenomenon is quite disconcerting. Thus, I am researching other options. The main problem is my employer's inability to provide direct deposit. If that happened, I would just open an ING Electric Orange checking account. I mean, that thing has interest! Maybe I will open one anyway, to feel it out and decrease my reliance on Chase. If could stand the waiting between getting my paycheck and seeing it post to my account (as it meanders through snail mail) it could work. Although it makes me incredibly nervous to rely on the USPS every two weeks to keep me solvent. Seems I would need to keep a brick-and-mortar account, like Chase, to make ATM deposits each pay period. Then I could transfer the money into ING after it posts. This is an extra complication, but I'm sure I could handle it. Hmmm, this is a head-scratcher. I will continue to mull it over.
25 November 2010
Thankful
Happy Thanksgiving, void. I am so grateful for the financial changes of this year; thankful that I realized what mistakes I was making, and thankful that the knowledge I needed to right those wrongs could be found in the personal finance blogs of others. And of course, I am thankful for the windfall that made so many of my financial dreams come true and accelerated my progress beyond my wildest dreams. But windfalls cannot be counted on, and should never be expected. Thus, I look to the future knowing that only hard work, sacrifice, and dedication will bring my financial goals to fruition. No one can fix this but me. And I have to say, I am thoroughly enjoying the journey!
21 November 2010
A more concrete breakdown of the finances
As noted in my previous post, I bring home $2,548 each month. My exorbitant rent is my biggest expense. Here is the more specific breakdown of my monthly budget.
Rent: $1,150.00
Car Insurance: $118.82
Student Loan #1: $93.64
Student Loan #2: $87.18
Cell phone: $66.76
Internet: $52.31
Water/Trash: $25.00
BoA: $19.00
Gas: $15.00
Netflix: $9.87
Total invariable expenses: $1,637.58
Subtotal remaining funds: $910.42
Ally Emergency Fund: $100.00
Smarty Pig IRA Fund: $100.00
Smarty Pig Electric Bill Fund: $30.00
Smarty Pig Car/Renter's Insurance Fund: $25.00
Total savings payments: $255.00
Subtotal remaining funds: $655.42
Variable expenses:
Groceries: ~$250.00
Car Gasoline: ~$75.00
Socializing: ~$75.00
Swimming: ~$30.00
Total variable expenses: ~$430.00
Remaining funds: ~$225.42
Somehow, though, I never have this leftover. In the past, it's because I've been diminishing my checking account cushion, either through extra credit card payments or infusions to my savings accounts (such as preparation for my Ireland trip).
Now that I don't have CC debt to pay down or international travel to save for, I will be curious to see if I actually have remaining funds each month. With Christmas coming up, including both air travel home and gift purchases, I doubt I'll be padding the checking account with remaining funds any time soon. But come 2011, when things settle down, I look forward to seeing monthly variances in my budget settle down as well.
(My electricity costs go into a savings account each month. This is due to a mixup with the electric company; I haven't seen a bill in over a year. They are trying to get the paperwork straight, but in the meantime, I am saving for the very large bill I know will eventually be coming. From past experience, I know my electricity costs run about $15 a month, but I am saving double that as a safety net.)
I look forward to putting that ~$225.42 to good use in my savings accounts in the upcoming year!
Rent: $1,150.00
Car Insurance: $118.82
Student Loan #1: $93.64
Student Loan #2: $87.18
Cell phone: $66.76
Internet: $52.31
Water/Trash: $25.00
BoA: $19.00
Gas: $15.00
Netflix: $9.87
Total invariable expenses: $1,637.58
Subtotal remaining funds: $910.42
Ally Emergency Fund: $100.00
Smarty Pig IRA Fund: $100.00
Smarty Pig Electric Bill Fund: $30.00
Smarty Pig Car/Renter's Insurance Fund: $25.00
Total savings payments: $255.00
Subtotal remaining funds: $655.42
Variable expenses:
Groceries: ~$250.00
Car Gasoline: ~$75.00
Socializing: ~$75.00
Swimming: ~$30.00
Total variable expenses: ~$430.00
Remaining funds: ~$225.42
Somehow, though, I never have this leftover. In the past, it's because I've been diminishing my checking account cushion, either through extra credit card payments or infusions to my savings accounts (such as preparation for my Ireland trip).
Now that I don't have CC debt to pay down or international travel to save for, I will be curious to see if I actually have remaining funds each month. With Christmas coming up, including both air travel home and gift purchases, I doubt I'll be padding the checking account with remaining funds any time soon. But come 2011, when things settle down, I look forward to seeing monthly variances in my budget settle down as well.
(My electricity costs go into a savings account each month. This is due to a mixup with the electric company; I haven't seen a bill in over a year. They are trying to get the paperwork straight, but in the meantime, I am saving for the very large bill I know will eventually be coming. From past experience, I know my electricity costs run about $15 a month, but I am saving double that as a safety net.)
I look forward to putting that ~$225.42 to good use in my savings accounts in the upcoming year!
16 November 2010
The living situation
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| Is this revealing too much about myself? |
It is possible to live in Los Angeles for less than this. I did it for 15 months. Three months with a roommate when I first arrived in LA. That was $975/month for a nice apartment in a safe neighborhood with no dishwasher, no A/C or heat, no garbage disposal, and no parking space. However, I honestly prefer living alone. And I'm 30, which is a bit too old for a roommate, in my personal opinion.
Then I lived alone in a slum. $995/month for a 400-square-foot studio with no parking in a shady neighborhood. No dishwasher, no A/C (but a small space heater), no garbage disposal, no security in the building (front door didn't even lock), no laundry on premises, and a rowdy bar out back. Cockroaches, loud neighbors, overflowing dumpster, and, at the very end, mice. MICE!
Thus, I am more than willing to pay an extra $150/month to live in peaceful, quiet, safe, and sanitary conditions. We all have our priorities, and my home being a haven is mine. I pay for it, but it is money well-spent, in my opinion. I could save myself $200 a month and move in with a roommate. I could save $100 a month and live alone somewhere that I'm unhappy. However, it's not worth it to me. It's just that simple.
I hate that 45% of my income goes to the roof over my head. I am a house-poor renter. LA isn't easy. I pay a premium for the diversity of people, thriving art scene, and beautiful weather I enjoy year round. This is a choice I have made, and I am happy with it. There are those who cannot endorse my lifestyle. I don't blame them. But I have never been happier than here in LA, and I am over the moon about my apartment. This is my home, and it puts me at peace.
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| Sunset over the Pacific Ocean |
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| (Not my house) |
15 November 2010
Goals revisited
I'm feeling grateful for the change in my financial picture, and I think it's a good time to revisit the goals laid out back in August:
Short term goals
Enjoy Ireland without creating new debt (October 2010): ACCOMPLISHED
Pay off my AMEX card (March 2011): ACCOMPLISHED
Long term goals
Pay off BoA card (before 0% APR ends in June 2011, or ASAP after that): ACCOMPLISHED *in spirit*
Build E-fund to $1,500 (August of 2011): currently at $608. At $100/month, I am on schedule to meet this goal.
Create SmartyPig sub-account to grow the $3,000 required to open my Vanguard Roth IRA (end of 2011): currently at $1,525. At $100/month, I am just shy of meeting this goal. Leftover funds each month will be added to make it happen.
Long, long term goals
Build E-fund to $7,000: still a long, long term endeavor
Fund Roth IRA to max of $5,000 each year: ditto the above
Aggressively attack student loans: ditto, but on track to prioritize this
I am feeling good about my progress and have renewed energy to make the sacrifices required to accomplish my long term goals. However, I cannot deny that windfalls like my holiday bonus make all the difference in the world.
Short term goals
Enjoy Ireland without creating new debt (October 2010): ACCOMPLISHED
Pay off my AMEX card (March 2011): ACCOMPLISHED
Long term goals
Pay off BoA card (before 0% APR ends in June 2011, or ASAP after that): ACCOMPLISHED *in spirit*
Build E-fund to $1,500 (August of 2011): currently at $608. At $100/month, I am on schedule to meet this goal.
Create SmartyPig sub-account to grow the $3,000 required to open my Vanguard Roth IRA (end of 2011): currently at $1,525. At $100/month, I am just shy of meeting this goal. Leftover funds each month will be added to make it happen.
Long, long term goals
Build E-fund to $7,000: still a long, long term endeavor
Fund Roth IRA to max of $5,000 each year: ditto the above
Aggressively attack student loans: ditto, but on track to prioritize this
I am feeling good about my progress and have renewed energy to make the sacrifices required to accomplish my long term goals. However, I cannot deny that windfalls like my holiday bonus make all the difference in the world.
14 November 2010
Net worth update
Alright, let's do this.
Liabilities
Student Loan #1: $10,382.79
Student Loan #2: $5,646.58
AMEX: $0.00 (yippie!!!!)
BoA: $1,862.00
Total debt: $17,891.37
Savings
Ally E-fund: $608.65
SP BoA payoff: $1,748.00
SP Roth IRA: $1,525.00
SP Car/Insurance: $300.00
SP Electric Bill (oops, haven't mentioned this one yet; next time): $155.59
SP Christmas fund: $100.00
Total savings: $4,437.24
Overall net worth: $-13,454.13
Positive change since last update: $4,900.94
Wow, I can't quite believe so much has changed since August 25th. As previously mentioned, I am a lucky gal.
Now that I'm not funneling hundreds of dollars a month toward my most toxic debt, I am refocusing my funds to tackle the goals laid out in my August 26th post. To that end, I have upped by Ally e-fund automatic transfer amount from $45.81 each month to an even $100. I also have an automatic debit of $100 a month into my SP Roth IRA account and $30/month into my SP Electric Bill account (again, more on this later).
Next, I'm going to figure out my student loans. I don't have plans to eradicate this debt any time soon, but I would like to see my monthly payments going primarily toward my principal, rather than interest. I need to contact my loan provider to discuss this. I will report back.
With the burden of my credit card debt lifted, I feel lighter. Everything is easier. Saving is more feasible. Using my paychecks to benefit my future has never felt simpler. I will never go back. Never. Next thing I want is a Dyson vacuum; I will save for one, and it will never gather interest on a credit card. Barring some horrible, unforeseen circumstance (which I am trying to prepare for with my e-fund) I will not incur any new debt. Come to think of it, my current car should last me at least five more years. I should start saving for the next one now, shouldn't I? Honestly, just imagining setting up a savings account for an expense years and years away makes me really happy. Into the future!
P.S. I forgot to mention, I went to Ireland and paid off every dime immediately! Brilliant. And one of the best weeks of my life.
Liabilities
Student Loan #1: $10,382.79
Student Loan #2: $5,646.58
AMEX: $0.00 (yippie!!!!)
BoA: $1,862.00
Total debt: $17,891.37
Savings
Ally E-fund: $608.65
SP BoA payoff: $1,748.00
SP Roth IRA: $1,525.00
SP Car/Insurance: $300.00
SP Electric Bill (oops, haven't mentioned this one yet; next time): $155.59
SP Christmas fund: $100.00
Total savings: $4,437.24
Overall net worth: $-13,454.13
Positive change since last update: $4,900.94
Wow, I can't quite believe so much has changed since August 25th. As previously mentioned, I am a lucky gal.
Now that I'm not funneling hundreds of dollars a month toward my most toxic debt, I am refocusing my funds to tackle the goals laid out in my August 26th post. To that end, I have upped by Ally e-fund automatic transfer amount from $45.81 each month to an even $100. I also have an automatic debit of $100 a month into my SP Roth IRA account and $30/month into my SP Electric Bill account (again, more on this later).
Next, I'm going to figure out my student loans. I don't have plans to eradicate this debt any time soon, but I would like to see my monthly payments going primarily toward my principal, rather than interest. I need to contact my loan provider to discuss this. I will report back.
With the burden of my credit card debt lifted, I feel lighter. Everything is easier. Saving is more feasible. Using my paychecks to benefit my future has never felt simpler. I will never go back. Never. Next thing I want is a Dyson vacuum; I will save for one, and it will never gather interest on a credit card. Barring some horrible, unforeseen circumstance (which I am trying to prepare for with my e-fund) I will not incur any new debt. Come to think of it, my current car should last me at least five more years. I should start saving for the next one now, shouldn't I? Honestly, just imagining setting up a savings account for an expense years and years away makes me really happy. Into the future!
P.S. I forgot to mention, I went to Ireland and paid off every dime immediately! Brilliant. And one of the best weeks of my life.
11 November 2010
Windfall
So, I have been hesitant to post, as something lovely and unexpected happened to completely alter my financial landscape: a very generous holiday bonus. How much? $5,000. More than 10% of my annual salary. This was wildly unexpected and, while of course certainly appreciated and joy-inducing, not in the spirit of this blog, which was designed to track my progress slogging toward the goal of fiscal fitness slowly, methodically, and through great sacrifice and dedication.
I started this blog because I knew I could count on no one but myself to solve my problems. I wanted to put it all in writing and hold myself accountable. Laying out the financial picture for no one but me to read was designed to encourage me, provoke me, and, in the case of progress, elate me.
And now, suddenly, someone else has solved a huge portion of my financial difficulties in one fell swoop. I will have to elaborate on how this affects my fiscal worldview in another post; I can't quite wrap my mind around it at this moment. But for the time being, I will lay out how I have used my miraculous bonus to tackle my debt.
$1,139.56 to end my AMEX debt
$1,547.00 to fulfill my Smarty Pig LASIK savings goal
$1,525 to start a Vanguard Roth IRA Smarty Pig savings goal
$300 to start a registration/insurance Smarty Pig savings goal
$100 to start a Christmas shopping Smarty Pig savings goal
Total spent: $4,611.56
Leftover: $388.44
Thus, my credit card debt is *essentially* erased. As previously mentioned, my LASIK costs incur 0% APR on my BoA credit card until June 8, 2011. Thus, I have saved enough to pay off the debt once my 0% APR runs out, excepting my $19.00 a month in minimum payments. Rather than pay off the debt right now, I am letting the $1,748.00 earn 8.5 cents a day in interest in my Smarty Pig savings account. It's free money, why pass it up?
The $300 Smarty Pig account is actually designed to cover an onslaught of May 2011 expenses: car registration, AAA membership renewal, and renter's insurance. Last year these totaled $375. Thus, I plan to save at least that much before all these costs come due again in May.
The $100 Christmas account will earn a bit of interest until December (less than a penny a day, at this time) until I load it onto an Amazon e-gift card, which at Smarty Pig comes with a 3% cash boost, meaning if I load $100, I actually get a gift card with $103 on it. Again, free money. And because I don't get to fly home for Christmas until Christmas Eve, I usually do most of my shopping on Amazon and have it shipped to my parent's house, where it waits for me to arrive. Super convenient.
Smarty Pig rules. I cannot recommend it enough. (I am not compensated in any way for saying this.)
I will do a net worth update next post. But for now, know that the bonus has been put to good use. And I did allow myself a few indulgences: drinks out with friends twice this month, buying lunch for a colleague, new curtains for the living room, and a charitable contribution. I am a very lucky girl.
I started this blog because I knew I could count on no one but myself to solve my problems. I wanted to put it all in writing and hold myself accountable. Laying out the financial picture for no one but me to read was designed to encourage me, provoke me, and, in the case of progress, elate me.
And now, suddenly, someone else has solved a huge portion of my financial difficulties in one fell swoop. I will have to elaborate on how this affects my fiscal worldview in another post; I can't quite wrap my mind around it at this moment. But for the time being, I will lay out how I have used my miraculous bonus to tackle my debt.
$1,139.56 to end my AMEX debt
$1,547.00 to fulfill my Smarty Pig LASIK savings goal
$1,525 to start a Vanguard Roth IRA Smarty Pig savings goal
$300 to start a registration/insurance Smarty Pig savings goal
$100 to start a Christmas shopping Smarty Pig savings goal
Total spent: $4,611.56
Leftover: $388.44
Thus, my credit card debt is *essentially* erased. As previously mentioned, my LASIK costs incur 0% APR on my BoA credit card until June 8, 2011. Thus, I have saved enough to pay off the debt once my 0% APR runs out, excepting my $19.00 a month in minimum payments. Rather than pay off the debt right now, I am letting the $1,748.00 earn 8.5 cents a day in interest in my Smarty Pig savings account. It's free money, why pass it up?
The $300 Smarty Pig account is actually designed to cover an onslaught of May 2011 expenses: car registration, AAA membership renewal, and renter's insurance. Last year these totaled $375. Thus, I plan to save at least that much before all these costs come due again in May.
The $100 Christmas account will earn a bit of interest until December (less than a penny a day, at this time) until I load it onto an Amazon e-gift card, which at Smarty Pig comes with a 3% cash boost, meaning if I load $100, I actually get a gift card with $103 on it. Again, free money. And because I don't get to fly home for Christmas until Christmas Eve, I usually do most of my shopping on Amazon and have it shipped to my parent's house, where it waits for me to arrive. Super convenient.
Smarty Pig rules. I cannot recommend it enough. (I am not compensated in any way for saying this.)
I will do a net worth update next post. But for now, know that the bonus has been put to good use. And I did allow myself a few indulgences: drinks out with friends twice this month, buying lunch for a colleague, new curtains for the living room, and a charitable contribution. I am a very lucky girl.
10 September 2010
Odds and ends
SmartyPig lowered their rate, from 2.15% to 1.75%. This is still above and beyond what anyone else is offering, but I am disappointed nonetheless.
I am currently negotiating my rent. My lease is up next month and I am trying to get my monthly expenses lowered. I haven't yet discussed my rent on this blog (I will), but it is appallingly expensive to live alone in Los Angeles, so I can use all the help I can get. Send good thoughts and well wishes my way, universe.
I have already come up against a few unexpected expenses this month; a wedding present, and a Labor Day cookout where I was asked to contribute a 12-pack of beer. All told, almost $40 of atypical expenses. I am also in need of a haircut, which isn't normally part of my monthly budget. In LA, a woman's haircut runs around $50-$100. Ridiculous. So I go to SuperCuts, where I pay $21 plus tip. (Once a year I go to a good stylist to give me excellent layers for my SuperCuts stylist to copy at each trim.) I won't be winning any modeling competitions soon, but frugality has its costs.
Happy weekend!! Fall is coming to LA, and it makes me positively giddy!
I am currently negotiating my rent. My lease is up next month and I am trying to get my monthly expenses lowered. I haven't yet discussed my rent on this blog (I will), but it is appallingly expensive to live alone in Los Angeles, so I can use all the help I can get. Send good thoughts and well wishes my way, universe.
I have already come up against a few unexpected expenses this month; a wedding present, and a Labor Day cookout where I was asked to contribute a 12-pack of beer. All told, almost $40 of atypical expenses. I am also in need of a haircut, which isn't normally part of my monthly budget. In LA, a woman's haircut runs around $50-$100. Ridiculous. So I go to SuperCuts, where I pay $21 plus tip. (Once a year I go to a good stylist to give me excellent layers for my SuperCuts stylist to copy at each trim.) I won't be winning any modeling competitions soon, but frugality has its costs.
Happy weekend!! Fall is coming to LA, and it makes me positively giddy!
09 September 2010
Checking account cushion?
How much of a cushion do you keep in your checking account? This is something I struggle with, as my conservative side definitely acknowledges the safety and security that comes from having money instantly available. (And a checking account is instant enough for me; I don't really buy into the idea that I should have a couple hundred dollar bills stashed in a coffee can.)
However, I also prefer to have my money working for me, in the form of gathering interest in my savings account or reducing interest charges on my credit card. Return for the money is rather important to me, given that I have so little discretionary income with which to bring my net worth out of the red.
To this end, I have only about $150 cushioning my checking account. And honestly, I only keep it this high because my $118 car insurance automatically debits from my checking account on the 16th each month and I don't want to risk my mid-month paycheck not being there to cover it.
So, am I insane, walking a tightrope without a net?
However, I also prefer to have my money working for me, in the form of gathering interest in my savings account or reducing interest charges on my credit card. Return for the money is rather important to me, given that I have so little discretionary income with which to bring my net worth out of the red.
To this end, I have only about $150 cushioning my checking account. And honestly, I only keep it this high because my $118 car insurance automatically debits from my checking account on the 16th each month and I don't want to risk my mid-month paycheck not being there to cover it.
So, am I insane, walking a tightrope without a net?
01 September 2010
End of the month
My budget and I are close. Really, really close. We know each other intimately. Yet at the end of each month, I pull away. I dread visiting my Excel spreadsheet and let receipts pile up in my wallet. Sometimes I won't open the document for days on end.
This only happens in the last few days of each month. The rest of the time, opening my budget document is one of the first things I do after dinner. I use the spreadsheet to record literally every dime that comes in and goes out. I add up my savings contributions, my credit card payments, my grocery costs, and the money I spend on social activities (last month I ate out once and went out for cocktails once; more on my lameness in another post).
I relish the freshness of a blank slate at the start of each month. I input my regular expenses in advance and then play with my discretionary income. What if I put this much toward AMEX? How about I throw this amount into my emergency fund and then this little bit into my LASIK repayment account?
Even if I haven't spent any money that day, I will almost always open my Excel spreadsheet at night. Sometimes I'll play with the figures, and other times I'll simply look at the data. Yes, I may be obsessed, but that's why I have this blog: my personal finance outlet.
But at the end of the month, I dread seeing a negative number. For instance, during the month of August, I decided to lower the cushion in my checking account and move an extra $80 into the emergency fund (my checking account cushion torment is another post entirely). However, I tracked this in my monthly budget, meaning even if I only spent exactly what I made, I would come out $80 short. So when I found myself in the hole $15 I shut down. The $50 of expenses I accumulated in the final week of August were evidenced on receipts that I kept in my wallet but refused to enter into my spreadsheet.
Irrational and silly, yes. But dangerous as well. I had a vague grasp of the implications of my spending on my budget, but I didn't have the accountability that my daily data entry normally afforded me. I thought I knew where I stood, but I didn't have a concrete understanding of my finances.
What strikes me as especially funny about this is that the end-of-the-month distance I had from my financial picture was exactly the relationship I'd always had with my money. I knew it came in, I knew it went out, and I knew that I never overdrew my account or bounced a check. But beyond that, I was pretty clueless. And I certainly wasn't worrying about only paying minimums on my credit cards. Ah, to go back in time and slap myself....
So, according to my August budget, I spent more than I made. The negative number in my "leftover" column taunts me. Every month I dream of finding a positive digit in that column, after I've already made one extra credit card payment or sent another $50 into my Ireland savings account.
Sadly, this rarely happens. Because while I believe in "paying myself first" in the form of doling out my credit card payments and savings deposits at the start of each month, I also cannot completely predict my life. If I want to try a great new recipe and need some fresh veggies or chicken to do it, I will probably go to the grocery store. If an old friend comes into town and wants to meet for brunch (like the other day) I won't turn her down.
Apparently, I'm not perfect or infallible, as much as I may claim otherwise.
31 August 2010
Adios, cable TV
In my endless pursuit to cut costs and funnel my money towards my debt, I decided to wave goodbye to cable this weekend. I am back to broadcast channels, but still have wireless internet in the house (there are some things I just won't live without).
According to the customer service rep I spoke with, my bill will go from $96.32 per month to $50.51 per month, a savings of $45.81 each month. Woo hoo! This may not sound like much to some, but over the course of a year, this adds up to be just shy of $550. I decided to set up an automatic transfer of $45.81 into my Ally e-fund savings account each month. I will still try to add more when I can, but I am pleased to see this money being put to good use.
I will miss a few things from cable programming, though. Property Virgins on HGTV, Top Gear and The Inbetweeners on BBC America, The Closer on TNT, and Futurama on Comedy Central. Thus far, I have yet to find online viewing solutions for these programs. I'll just have to wait and rent them from Netflix once they're released to DVD.
According to the customer service rep I spoke with, my bill will go from $96.32 per month to $50.51 per month, a savings of $45.81 each month. Woo hoo! This may not sound like much to some, but over the course of a year, this adds up to be just shy of $550. I decided to set up an automatic transfer of $45.81 into my Ally e-fund savings account each month. I will still try to add more when I can, but I am pleased to see this money being put to good use.
I will miss a few things from cable programming, though. Property Virgins on HGTV, Top Gear and The Inbetweeners on BBC America, The Closer on TNT, and Futurama on Comedy Central. Thus far, I have yet to find online viewing solutions for these programs. I'll just have to wait and rent them from Netflix once they're released to DVD.
27 August 2010
One debt at a time
As promised, here is a bit more background on that Bank of America debt and my plans for it.
I had LASIK three months ago, prior to my fiscal awareness awakening; thus, the cost went onto a credit card (I know, I know). I put it on my Capital One Venture card, as I had just opened the account (to accumulate reward points for my trip to Ireland) and I would earn 10,000 bonus miles if I charged $1,000 in the first three months. Thus, my $1,900 LASIK surgery accomplished the task and earned me $100 worth of travel costs reimbursed.
But, I didn't want to carry over the balance, and I couldn't find a way to scrounge up the money within the month. So I called up my oldest credit card, which I keep open because it holds my longest line of credit (10 years), and a long history with one lender is beneficial for my credit score. The card had carried a zero balance for years, and in their haste to secure my debt, BoA offered me 0% interest for 12 months.
However, all is not as rosy as it seems; the balance transfer came with a 4% transfer fee, meaning BoA would get an additional $76 dollars from me. A few years ago, balance transfers with no interest for a year also came without transfer fees. Hence, college students and other chronic debtors could choose to transfer balances each year without ever paying a dime in interest or fees (I knew a few who capitalized on this practice). Sadly (or not?), those days are gone, and most credit cards levy a 3-5% fee for balance transfers. So, while I wasn't happy about the 4%, it was the best option for me at the time.
Knowing what I know now, I would have saved for the surgery BEFORE having it done, rather than borrowing and paying it back. I had my reasons for rushing the procedure, but that doesn't mean it made any fiscal sense.
My BoA card charges me minimum payments of $19 a month. My 0% APR runs out on June 8, 2011. By that time, with the minimum payments, my balance will have done from $1,976 to $1,748. So, why am I not making more than the minimum monthly payments?
Because I have opened a SmartyPig sub-account dedicated to this debt. Why not earn interest while I build the $1,748, rather than just funneling it into my credit card? With today's interest rates, this doesn't amount to heaps of cash, but I still prefer earning 2.15% in my SmartyPig account to the nada, zip, zero, zilch I would earn sending it straight to BoA.
What do you think? Not about the initial line of credit; obviously this was a mistake. But with regard to the savings account, is this a dangerous practice, in which I become too divorced from the debt and risk not saving all that I owe by the time the interest kicks in? By the way, the default interest will be 14.99%—OUCH! I have no plans to swim around in that for long. But, if I come in $200 short and have to carry the balance, with interest, for a month, does this amount to a cardinal sin in the eyes of the financial gods?
P.S. Regarding Blogger formatting, why does a carriage return sometimes create single-line spacing but double-line spacing at other times? This is driving me bonkers.
I had LASIK three months ago, prior to my fiscal awareness awakening; thus, the cost went onto a credit card (I know, I know). I put it on my Capital One Venture card, as I had just opened the account (to accumulate reward points for my trip to Ireland) and I would earn 10,000 bonus miles if I charged $1,000 in the first three months. Thus, my $1,900 LASIK surgery accomplished the task and earned me $100 worth of travel costs reimbursed.
But, I didn't want to carry over the balance, and I couldn't find a way to scrounge up the money within the month. So I called up my oldest credit card, which I keep open because it holds my longest line of credit (10 years), and a long history with one lender is beneficial for my credit score. The card had carried a zero balance for years, and in their haste to secure my debt, BoA offered me 0% interest for 12 months.
However, all is not as rosy as it seems; the balance transfer came with a 4% transfer fee, meaning BoA would get an additional $76 dollars from me. A few years ago, balance transfers with no interest for a year also came without transfer fees. Hence, college students and other chronic debtors could choose to transfer balances each year without ever paying a dime in interest or fees (I knew a few who capitalized on this practice). Sadly (or not?), those days are gone, and most credit cards levy a 3-5% fee for balance transfers. So, while I wasn't happy about the 4%, it was the best option for me at the time.
Knowing what I know now, I would have saved for the surgery BEFORE having it done, rather than borrowing and paying it back. I had my reasons for rushing the procedure, but that doesn't mean it made any fiscal sense.
My BoA card charges me minimum payments of $19 a month. My 0% APR runs out on June 8, 2011. By that time, with the minimum payments, my balance will have done from $1,976 to $1,748. So, why am I not making more than the minimum monthly payments?
Because I have opened a SmartyPig sub-account dedicated to this debt. Why not earn interest while I build the $1,748, rather than just funneling it into my credit card? With today's interest rates, this doesn't amount to heaps of cash, but I still prefer earning 2.15% in my SmartyPig account to the nada, zip, zero, zilch I would earn sending it straight to BoA.
What do you think? Not about the initial line of credit; obviously this was a mistake. But with regard to the savings account, is this a dangerous practice, in which I become too divorced from the debt and risk not saving all that I owe by the time the interest kicks in? By the way, the default interest will be 14.99%—OUCH! I have no plans to swim around in that for long. But, if I come in $200 short and have to carry the balance, with interest, for a month, does this amount to a cardinal sin in the eyes of the financial gods?
P.S. Regarding Blogger formatting, why does a carriage return sometimes create single-line spacing but double-line spacing at other times? This is driving me bonkers.
26 August 2010
Into the future
I don't have a lot of discretionary income, so tackling this debt won't be easy. I will get into my budget in future posts, but for the time being, know that I live in Los Angeles and make $40,500 a year. Yowza!
I am currently only sending the required minimum payments on my student loans, which amounts to $87.18 per month to Loan #1 and $93.64 per month to Loan #2. I hope to tackle these debts more aggressively in the future, but for the time being I will see a greater return on my money by funneling it toward my credit cards. I am also building my emergency fund with whatever I can manage each month.
My AMEX card has an interest rate of 5.99% and my BoA has an introductory rate of 0% until June 2011. Thus, my energies are focused on AMEX and I only pay the minimum $19 a month on my BoA card (I also have a SmartyPig sub-account dedicated to the BoA debt; more on that next time).
However, this is where things get tricky; I am also saving for a trip to Ireland in October. I am going for a friend's wedding and am SO excited for the eight-day trip. The plane ticket is paid for, as are $200 worth of hotel costs. These hotel costs were paid by reward miles from my Capital One Venture card, which I use for all my purchases and pay in full each month. I am trying to save $600 for the rest of my travel expenses. I currently have $275 in my SmartyPig sub-account allocated for Ireland, and I plan to throw $300 more in there in September. Thus, my AMEX pay-down will suffer until November, when I can start putting even more toward it. I anticipate only having $125 available to pay it in September.
Short term goals
Enjoy Ireland without creating new debt (October 2010)
Pay off my AMEX card (March 2011)
Long term goals
Pay off BoA card (before 0% APR ends in June 2011, or ASAP after that)
Build E-fund to $1,500 (August of 2011)
Create SmartyPig sub-account to grow the $3,000 required to open my Vanguard Roth IRA (end of 2011)
Long, long term goals
Build E-fund to $7,000
Fund Roth IRA to max of $5,000 each year
Aggressively attack student loans
I am currently only sending the required minimum payments on my student loans, which amounts to $87.18 per month to Loan #1 and $93.64 per month to Loan #2. I hope to tackle these debts more aggressively in the future, but for the time being I will see a greater return on my money by funneling it toward my credit cards. I am also building my emergency fund with whatever I can manage each month.
My AMEX card has an interest rate of 5.99% and my BoA has an introductory rate of 0% until June 2011. Thus, my energies are focused on AMEX and I only pay the minimum $19 a month on my BoA card (I also have a SmartyPig sub-account dedicated to the BoA debt; more on that next time).
However, this is where things get tricky; I am also saving for a trip to Ireland in October. I am going for a friend's wedding and am SO excited for the eight-day trip. The plane ticket is paid for, as are $200 worth of hotel costs. These hotel costs were paid by reward miles from my Capital One Venture card, which I use for all my purchases and pay in full each month. I am trying to save $600 for the rest of my travel expenses. I currently have $275 in my SmartyPig sub-account allocated for Ireland, and I plan to throw $300 more in there in September. Thus, my AMEX pay-down will suffer until November, when I can start putting even more toward it. I anticipate only having $125 available to pay it in September.
Short term goals
Enjoy Ireland without creating new debt (October 2010)
Pay off my AMEX card (March 2011)
Long term goals
Pay off BoA card (before 0% APR ends in June 2011, or ASAP after that)
Build E-fund to $1,500 (August of 2011)
Create SmartyPig sub-account to grow the $3,000 required to open my Vanguard Roth IRA (end of 2011)
Long, long term goals
Build E-fund to $7,000
Fund Roth IRA to max of $5,000 each year
Aggressively attack student loans
25 August 2010
Into the void
You know, I am really excited about sending my story out into the world. The act of journaling has always been therapeutic for me, and there is nothing like going back and reading over my own words years later. The amount of time I used to spend dissecting and analyzing the "signals" being sent by my high school crushes is incredible. They may not have even known I existed, but if they dropped something while walking past me in the lunchroom it must have meant they became nervous in my presence and secretly pined to hold my hand between classes. My deductive reasoning was flawless! No wonder I went on to study psychology in college.
Unlike a journal, this is a blog, meaning I don't need these thoughts to remain private (as all my high school rambling must). I realize this blog could very well remain private; no one may ever find this and my inane rambling could fall on deaf ears. I am fine with that. Or maybe, two years from now, someone will read my most recent post and decide to delve through my archives. Hello from the past! How's the future? Please tell me all reality television shows based on the state of New Jersey have disappeared. Is Ed Hardy out of business? Or did the guidofication of our country continue unfettered?
One thing I do know is my blog post two years in the future will present a much more pleasant financial picture than I'm about paint. Let's crunch some numbers:
Liabilities
Student Loan #1: $10,495.34
Student Loan #2: $5,787.51
AMEX: $1,169.59
BoA: $1,919.00
Total debt: $19,371.44
Ugh, looking at that number makes me tired.
Savings
Ally Emergency Fund: $416.12
SmartyPig Account: $600.25
Total savings: $1,016.37
Overall net worth: $-18,355.07
I am choosing not to include my car (valued around $9K) in these calculations. I am also not including my work-provided retirement fund, as I am not fully vested in our profit sharing plan yet (no 401k at my small business).
Tomorrow, some background on these haunting numbers.
Unlike a journal, this is a blog, meaning I don't need these thoughts to remain private (as all my high school rambling must). I realize this blog could very well remain private; no one may ever find this and my inane rambling could fall on deaf ears. I am fine with that. Or maybe, two years from now, someone will read my most recent post and decide to delve through my archives. Hello from the past! How's the future? Please tell me all reality television shows based on the state of New Jersey have disappeared. Is Ed Hardy out of business? Or did the guidofication of our country continue unfettered?
One thing I do know is my blog post two years in the future will present a much more pleasant financial picture than I'm about paint. Let's crunch some numbers:
Liabilities
Student Loan #1: $10,495.34
Student Loan #2: $5,787.51
AMEX: $1,169.59
BoA: $1,919.00
Total debt: $19,371.44
Ugh, looking at that number makes me tired.
Savings
Ally Emergency Fund: $416.12
SmartyPig Account: $600.25
Total savings: $1,016.37
Overall net worth: $-18,355.07
I am choosing not to include my car (valued around $9K) in these calculations. I am also not including my work-provided retirement fund, as I am not fully vested in our profit sharing plan yet (no 401k at my small business).
Tomorrow, some background on these haunting numbers.
24 August 2010
The wake-up call
After spending my life sleepwalking through my finances, the eve of my 30th birthday brought a rather rude awakening. My story is not unique; like it has for countless others, this milestone birthday prompted some intense self-reflection. I took stock of my life, my goals, my career, my friends and family, my treatment of others, my outlook, and my place in the world. It's something we all do, every day, but on this occasion I did it with more focus and clarity than normal.
It's hard to believe, but this was the first time I had ever seriously considered life after my career (and my career isn't all that glamorous, honestly). I had just spent so much of my time and energy moving toward this particular moment that I hadn't really bothered with what came next. But I really enjoyed envisioning myself after 60. There will be lots of travel. There may even be an RV (I love camping). There will be lots of cooking with family and friends, whether grilling seafood at the beach with a glass of wine or tucking into French Onion Soup at a ski lodge in Canada. Retirement is something to look forward to, plan for, and get excited about. I'm not saying that the next 30 years won't be FULL of amazing experiences, life-altering mistakes, love, and laughter, but I've always known and trusted that. Now I realize there is even more to look forward to than I had previously considered.
And then, I woke up. "Oh crap, I'm gonna need a retirement account to fund this, aren't I?"
My online search for information about retirement plans led me to so many wonderful and insightful pieces of financial advice, mostly written by bloggers simply sharing their personal experiences. I began to relish each new tip and suggestion, and I loved seeing the budgets of others laid out before me. Plus, I finally knew the difference between a 401k and an IRA (and a Roth IRA, nonetheless).
What these bloggers showed me was how to start moving toward the future, rather than treading financial water. Debt has to go. Money I am throwing at my debt should be getting thrown at my retirement. Priorities have to shift. I feel like my eyes have finally been opened; knowledge is such a powerful tool.
I'm not proud that it took me this long to get myself together. I currently have a negative net worth, comprised of student loans and credit card debt. But I'm sure this story has a happy ending. I'm making a plan and setting goals. Tomorrow, we'll get down to brass tacks and examine the numbers. Thus begins my journey to fiscal fitness. It will be slow going, but I'll get there.
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