Tuesday, November 6, 2007

October Update

My net worth went up last month, but just by a smidge, no thanks to the dismal performance of my Rollover IRA. I'm really thinking about ending my stock picking experiment and just finding some nice index funds to park that money in. On the spending front, Mint (which I'm loving by the way), says I was in line in most categories, and actually did great on restaurants AND groceries.

That was offset by quite a few things:
  • my car insurance payment, which luckily fell to only $600 this year. A lot less than last year's $1000, but still a good chunk to come out all at once
  • shopping, both for myself and presents, this included a winter coat, a dress for my upcoming 25th birthday, and jeans (which I can wear to work), all probably too expensive, but I think I'll get lots of wear out of them
  • personal care, manicures, pedicures, hair, and waxing: it's kind of a known weakness of mine, I feel like I need to keep myself looking good as a young professional woman, but that tends to be both expensive and time consuming
I'm looking at three more months of pretty heavy spending, between my birthday, my mom's birthday, 2 grandfathers' birthdays, my boyfriend's birthday, the holidays, the ski season, braces and business school apps coming up, but I guess winter's just always worse for my personal finances.

On the bright side, I got the promotion and will be getting the raise that comes with it on January 1st, plus my company's stock has been going through the roof, and if it stays where it is until the end of the month, I'll have a very nice profit on my stock purchase plan on the 30th.

Sunday, September 30, 2007

September Net Worth Update

Looks like I had a bigger increase than last month, but I think that's more due to the markets being less volatile this month than much of anything else. Also, I'd actually be getting larger increases if I didn't include my car (since it's a depreciating asset), but like I said before, I'm choosing to leave it on until the loan is paid off. At that point I'll take the hit and remove it from my calculations.

I did manage to spend a lot less on dining out in September than I had in August, in large part by resolving to buy my lunch at work no more than once a week, but that's actually not reflected in my September net worth, since due to the fact that I use credit cards for almost all my expenses, most things take a month or two to impact my net worth. I did spend a lot this month on presents for various people and occasions and for theater tickets for my entire family for September (part of which will be given to them as presents and the other part I'll get reimbursed for), but those are things that are important to me, and I'll miss that money much less than I would if I had spent it on restaurant meals.

Wednesday, September 26, 2007

New York Times Does It Again

Every once in a while they'll come out with an article that just strikes a chord with me. One that makes me wish I was a subscriber, until I remember the mountains of unread paper that come with being one and not being able to keep up, of course. This particular article was not only particularly apt, but also very timely for me.

As a girl that's had a "real job" since I was barely 21 I've always struggled with this. My boyfriend is a PhD student, so his current income is definitely a lot less than mine, but he could potentially make a lot more than me in the future, which sort of balances it out. But what if he doesn't? Or I end up with someone else that never will? Is that something that I would be ok with? As my income keeps inching towards 6 figures, I have to keep asking myself these questions. The higher my income gets, the smaller my pool of eligible men, if I'm only willing to consider those that make more than me. It seems silly. And yet, as much as I tell myself that it doesn't matter, it keeps turning out that it does in many small ways. If my high-earner boyfriend pays for me, I feel grateful and treated. But when I know the treat is coming out of a student's stipend, I feel guilty. Sometimes when I look at the price tag of a gift I want to give him, I change my mind because I know he couldn't afford to spend as much on me.

Is it weird that when I was offered the opportunity to apply for a large promotion at work on Monday I hesitated for a split second because I thought the associated raise might price me out of the dating pool? (It was only a second people... I'm interviewing for it on Friday.) I guess at least this article, while it offers no solutions, has convinced me that I'm not alone.

Wednesday, September 5, 2007

August Net Worth Update

Life's gotten the better of my blogging over the last couple of weeks, but I've still been keeping an eye on my net worth (if not controlling it as closely as I'd like). I've made a couple of big decisions that will likely affect my financial life in the next couple of years, but more on that later. For now, just the standard garden-variety net worth update.

The good news is even without being too careful, I'm still up just short of $1000 this month. It would have been more, but I decided to downgrade my car from "Excellent" to "Clean" condition because it ended up going off-roading a little during a recent camping trip. I'm pretty sure it's fine, but Jettas aren't really designed to off-road, so I decided to take that hit. It's about $400, but I guess I have a car so I can drive it, not stare at it and wonder how much it'll sell for. I'll do better financially by driving it to the ground than selling it anyway (not that I won't need to take good care of it for that).

The stock market kept taking a hit, so the $100 gained there is sadly just the part of my contributions that wasn't eaten by losses. Other than that, I spent a little more than I would have liked, and kept plugging away at my debt. I'm thinking about starting up a few new 0% balance transfers within the coming months, but I won't track those in my net worth.

Goals for September are pretty simple. I think I'm going to try to go out to lunch not more than once during the week and curb extra spending. Somehow a ton of my friends were born in November, so that always ends up being an expensive month for me and I'll need to build up a cushion for that and my own birthday in January (not to mention the braces, and my other plans mentioned above).

Thursday, August 16, 2007

Watching a Down Arrow

Like many people with any money in the stock market, I've been watching my investments go into freefall mode over the last couple of weeks. I am comfortable with losses since all the money I have invested is in retirement accounts, and therefore extremely long term (40+ years) but when you start seeing numbers like -11%, even with that long term outlook it takes some deep breathing and repeating of the "i don't need this money for another 40 years" mantra to not hit that sell button. What goes down must come back up eventually, right?

Wednesday, August 1, 2007

Hello Unexpected Medical Costs

As someone that is young, well insured, and generally fairly healthy, I don't tend to give much thought to medical costs. Even if something were to go wrong, my medical insurance has no deductible and covers just about everything except a co-pay ranging from $15 for routine medical visits to $50 for hospitalizations. I thought I was pretty safe. What I didn't think about as much was my dental insurance, which at $1,500/year of coverage each for dental and orthodontics with only a $50 deductible is also very good. Saturday at the dentist's office, I heard what every parent of teenagers dreads hearing - I need all 4 wisdom teeth removed and braces! It was even more of a surprise because I had braces for 4 years when I was a teenager.
I still have no idea how much the wisdom tooth surgery will cost (though I do know some of that will come out of my pocket), but the first estimate I got for the cost of the braces was $6,500. With the $1,500 that insurance will cover, that still leaves me at a whopping $5,000 that I have to pay out of pocket (or at least out of my pre-tax flex spending account). I'm doing the frugal (and best for your health!) thing and getting more estimates, but that first one gave me a bit of a reality check. I thought braces were maybe $3,000! Then again, I haven't had them in 8 or 9 years, so what do I know?
I know it could be a lot worse. People get stuck with paying tens of thousands of dollars for surgeries all the time, so in the grand scheme of things $6,000 (if I end up spending $1000 on the wisdom teeth) isn't that bad. It will pretty much wipe out my emergency fund, but I guess this is the type of thing that I have one for to begin with.

Tuesday, July 31, 2007

My First "Real" Net Worth Update (and Stock Sale!)

I had a few personal finance firsts this week.

First, my net worth update. I'm at $40,688 right now, which is probably a bit inflated because I have $1500 worth of bills (most of it is my rent) being paid tomorrow, but it sure does feel good to see a number over that magical 40 mark, if only for now. I'm also realizing that as long as I stay consistent, always doing these updates on the last day of the month, that slight inflation won't matter. I'm really looking to track month-to-month change, not the actual numbers and my bills tend to be due around the same time every month, so as time goes on, my method will still give me a good idea of how I'm doing.

Second, it was my first time actually losing money in the market. That's right... from 10% up at the beginning of the week, I am now actually slightly below my initial investment. I made a deal with myself that this was money I could "afford to lose" (since it's retirement money and I'm still a long ways away from retirement), but it's still a little disheartening. I'm still sitting tight and waiting for the recovery, but it doesn't feel so great to look at all that red.

On the bright side, my company's stock actually skyrocketed through the slump. Since the price was good and I'm going to be way overvalued in my company's stock if I hold on to everything, I decided to sell. I made some money on the deal, but this also means that 2006 was my last year of simple taxes. Come next April, I'll be learning all about short and long term capital gains whether I like it or not.

Thursday, July 26, 2007

Buckets and Automation

I don't know if it was nature or nurture, but it seems that I've been more or less automatically frugal ever since I've had money. It's not so much that I'm the perfect saver or never buy frivolous and unnecessary things, but I do have some natural sense of net worth preservation. Pretty much ever since I've had a bank account (I think I was 16), my balance was always growing, and ever since I've had a credit card (I was 14), I've paid it off every month. I didn't plan or budget much intentionally until I was out of college, but I always had enough of an instinct to watch the balances and make sure the general trend was upward. Nothing was ever planned or automated.
Of course, that was also when the net worth in question was usually under $10,000, and I didn't really need it for much. Times have changed, and now my plan is changing as well. I've split my general savings into 3 accounts, all paying 5%+. There's my down payment account (let's call it DP), my emergency fund (EF), and my "fun fund" (FF). The FF is kind of a slush fund for big expenses - mostly vacations, but anything that's not long term or short term will come out of that. Because of account minimums, I'm starting DP at $10,000, EF at $6,000, and the rest (about $4,000) in FF. There's also a rent fund (RF) and daily fund (DF) for month to month expenses. I'm also thinking about setting up some automatic transfers, but I haven't really decided how yet. I've already fully funded my Roth IRA for 2007, but in 2008 one of the automatic transfers will be into that. I'm thinking about some automatic transfers into DP and maybe FF as well, but I haven't decided on the amounts yet. For now, the plan is to just move the (monthly? biweekly?) excess from my daily accounts into the FF and then move the extra from there into DP, but maybe I should set some more concrete goals. I'm going to leave my retirement accounts mostly out of this, although in reality having my Roth IRA go towards my down payment is a possibility.
I've already got a budget, so it's not that I'm not planning at all, but this is a new step. Also, while working out the buckets, I realized that between my company's stock purchase plan and my Roth IRA, it turns out I'm already putting away $12,000/year that can go towards a down payment, in addition to the 10% of my salary (7% mine, 3% employer match) that's going into my 401(k), it turns out my savings rate is over 25% of my gross pay, even before I put anything extra into any of my 3 new buckets. So I guess I was doing a bit of automatic savings already after all...

The Cost of (My) Gas Frugality

So yesterday I was proud of myself for finally going to the no-name gas station across town because it's cheaper than the (still moderately priced) local Shell that I normally use. That is, until I realized that the cheap station charged me for 14.8 gallons of gas... for filling up my 14.5 gallon tank! At today's gas prices, getting charged for even an extra half a gallon makes up for the price difference, but even if it didn't, I'd rather not feel cheated every time I go to the pump. I guess I'm sticking to Shell from now on...

Friday, July 20, 2007

What's It All For?

All this talk about money is making me think. Why do we need all this money anyway? Or, more specifically, why do I need it? What is it that really motivates me to save, and why should I do it? For me, money isn't really the goal in itself. I do not need a big pile of it just to prove something to myself or anybody else. Sure, seeing a 5 or 6 digit bank account balance would make me happier than seeing a 0, but beyond that, I can't say I care that much. Beyond a certain point, more just stops being better for me, unless I have a specific goal in mind (do I have enough for a condo? that vacation? a new car?).
I do like nice things, and money is a way to get them. But there does seem to be a certain level that I'm happy with there too. I like to have a nice car, but I don't really have any desire for a Bentley or even a Porsche. I like nice clothes, but I don't need a closet full of designer labels. Maybe a piece or two every once in a while would be nice. I'd like to buy a place, but with the market where it is right now, I'm willing to wait. When I do buy, I don't need anything terribly large - a 1 or 2 bedroom condo would be fine with me now and until I have a kid that's big enough to want their own room. I figure that's at least 5 or 6 years out. Aside from the apartment, I have pretty much everything I want right now - my car's newish, my place is finally pretty well furnished, and there aren't any gaping holes in my wardrobe.
So what am I saving for? I've come up with a few things:

Travel - It doesn't really matter how expensive plane tickets get or how much the dollar falls. I have a need to go see the world. I'm always frugal about how I travel, but it adds up no matter what. And I don't mind that one bit.

Hobbies - As a commenter mentioned on a previous post, some of my hobbies aren't cheap. Everything from lift tickets, to ballroom shoes, to wetsuits can end up costing an arm and a leg. I feel like my youth is a unique opportunity to go out and do all that fun stuff, and I don't want to lose out on that because some things can be expensive. Besides, my main hobby (managing my finances) definitely helps pay for the others!

Security - Yes, sometimes it's just about peace of mind. I like knowing that if I needed to move at a moment's notice, had some unexpected medical expenses, or tottalled my car, I'd most likely be able to take care of it without asking for help or going into debt.

Freedom - I don't ever want to be tied to a location, a possession, a relationship or a place of work by money. If I am ever in a situation where I am truly unhappy with something, I want to be able to leave. Having enough money to give myself that flexibility is important. I am grateful that I can choose to live independently of my parents, for example.

Education - This is for both me and any future children I may have. While I'm not sure where I stand on sky-high tuitions and parents that empty their bank (and retirement!) accounts to send their kids to the "right" school, I do think that an education is the most important thing my parents have given me, and the most important thing I can pass on to my own children.

Wednesday, July 18, 2007

Birthdays: Happy for Who?

I went to a close friend's birthday party this weekend, and had a lot of fun. Unfortunately, today, my wallet is smarting. What happened? First of all, the present. I went the frugal route and went in on a present with some other friends. That way, we don't break our banks and she can still get something she really wants. That was $40, not cheap, but reasonable. So far so good. Then she decide to celebrate by renting a limo bus and having us take it to a club. We were warned that the bus would be $35 per person, but I was willing to accept even that, since club admissions, cabs, parking, and gas can easily add up to that much in a night anyway.
The trouble started when we got to the club. Since we were such a big group, they wouldn't let us in, even if we were on the free guest list (we were) unless we bought a table. Since the table wasn't reserved in advance, they could charge however much they wanted, and it ended up being $25 per person. Then I guess some people ordered drinks for everyone without asking, because on the bus back, we were asked to hand over another $25 per person for drinks, of which I had one and my boyfriend had none. Since he wasn't drinking at all and the party was for my friend, not his, I felt obligated to pay for my boyfriend's "share" of the drinks as well. So, I went expecting to have an expensive night at $75, and I ended up being forced to spend $150. I'm sure that would blow the budget of just about anyone that has one.
Now, don't get me wrong, I'm not against spending a fun night out with my friends, even if it is expensive, but I don't like being forced to, especially without warning. If it had been a regular night (not her birthday) I could have chosen not to go, but since it was a birthday I felt obligated. If I had at least known the full cost ahead of time, I could have planned for it. I'm lucky enough to have enough of a cushion that this won't put me in major debt or anything, but she doesn't know every one of her friends' financial situations in detail. What if this was a huge problem for somebody?
I wasn't sure how to handle the situation, but ended up just paying that night and mentioning my concerns to my friend the next day. I'm not sure if that was the right way to react or not, but I didn't want to cause a confrontation on her birthday night. The whole thing is making me consider paying for all of my own party outright. Sure, it won't be cheap, but I can at least rest assured that my celebration isn't putting a strain on any of my friends. Because that's not what birthdays should be about.

Wednesday, July 11, 2007

8 Things

It's my very first meme! I was tagged by SF Money Musings to write 8 random facts about me. Since this is a personal finance blog, I wasn't sure whether I wanted to make all of these personal finance related so I went half and half. The first 4 are just about me, the last 4 related to my finances.

1. In high school, I was always last picked for the team in PE and didn't understand the point of working out. Now I whitewater raft, ski, kayak, rock climb and hike for fun. Guess we just didn't do the right things in gym class.
2. At one point I was a semi-professional dancer (which means I didn't get paid for it, but I didn't have to pay for classes and costumes). I even performed in Las Vegas and went on tour to Israel. I still love it and will take a ballroom class every once in a while for fun, but the competitive/performance dance world just isn't my thing. Too many big egos.
3. I actually know a decent amount about cars, but unfortunately very little about how to fix them. When I was shopping for my car, I'd walk into a dealership and they ask me what color I'm looking for and I'd start talking about the engine and handling. It always threw the dealer a little, and they thought it was pretty funny.
4. I majored in computer science in college, but haven't written a single line of code since I graduated.
5. I don't have cable TV, and haven't in 3 years. Partially, it's that I haven't watched very much TV since I graduated from high school so I don't really miss it. But it's also because at $40/month it's a huge expense for someone living alone. I do have the $6/month Blockbuster Online subscription, which scores me 5 movies every month, and my computer is connected to the TV so I can watch shows from the networks' websites on the big(ish) screen.
6. Both of my boyfriends since I've graduated from college have been students, which means I've actually never been in a relationship where the man made more than me. I'm more used to making 3 times more than my boyfriends. They both still insist (or insisted) on paying for me.
7. I've never negotiated a salary. It's not that I think I'm being underpaid, but sometimes I wonder what would have happened if I tried. Especially after I heard that my lack of negotiation could be causing part of the male/female wage difference.
8. I have a good foundation and generally manage my finances pretty well, but I've made some mistakes. I had one 60-day late on my credit record once because I moved and forgot about a bill, then didn't get the next one. I did the right thing and paid it, along with all the fees, then disputed it - and all 3 credit bureaus actually ended up removing it from my reports.

I'm not going to tag anyone on this one, but if you'd like to do the meme or already have, please leave a comment and I'll head over and read your responses.

Monday, July 9, 2007

The Driving Debate, Part One

Anybody that's read a few personal finance blogs or websites knows the conventional wisdom: buy a used car, or if you can avoid it, don't use one at all. Use public transportation, walk, bike. In short, do everything you can to avoid owning an expensive depreciating asset - especially with those rising gas prices! Anybody that's seen An Inconvenient Truth or ever spoken to an environmentalist has heard pretty much the same advice. I usually think of myself as pretty good at the personal finance thing. And I generally try to do what's good for the environment. So I have a confession to make. I drive. Daily. And I own a 1-year old car that I bought brand new.

Why have I chosen to commit such personal finance sins? For me, it turned out to be all about the numbers.

New vs. Used

My last car was a '99 Audi A4, which I bought in July 2004. It was super low mileage and just out of warranty (due to age, not mileage). And best of all, it was only $10,500, plus the $3,500 in repairs that I knew it would need right away. The mechanic that checked it out told me that at $14,000 the car was a great deal, and all my research confirmed that. Unfortunately, it was also in the shop almost every month for the entire 2 years I owned it, cost me an average of $200/month in maintenance and repair costs, and used the premium gas, which is, let's say 20 cents per gallon more expensive than the cheap stuff. With its great, fun to drive V6 180 hp engine, it also got horrible gas mileage, especially for a small car.

Let's assume 3 14-gallon tanks of gas per month at $3 each and do the math. My old car was costing me, on average $14,000/24 + $200 + $3x14x3 = $909/month over the 2 years I owned it. If I factor in how much I sold it for $6000, I still average out to $659/month.

Now, let's talk about my new car. It was a brand new '06 Jetta, a little bigger than the last one, and has almost as good of an engine a V5 with 150 hp. To me, it's just as good, but it's also under warranty, uses the cheap gas, and gets better gas mileage. We've already skipped the gas mileage in our calculations, so let's stay with that. With the car spending less time in the shop, I probably drive it more anyway. The car was $18,880, which ends up as $506/month over 3 years with 1.9% financing. So let's see, over the first year, we have $506 + $2.80x14x3 + $100/12 = $632/month (The $100 is the cost of my very expensive artificial oil change, which I need only once every 10,000 miles). The car isn't paid off yet, but according to Edmunds, it's current "true market value" is $16,000, while the amount owed on my loan is around $14,000, so I'd make $2,000 on a sale... or another $167/month, making my cost for the car $465/month.

Sure, my old car ended up being a bit of a maintenance nightmare, and I sold it pretty cheap. And my new car was bought at a very good price and has kept its value well. But that's not my point. My point is that the conventional wisdom is great, on average. But it's always good to run the numbers for your own individual situation. It's not always the same as the "average" or "typical" one. My discussion for driving vs. public transportation is still to come, but is essentially another exercise with the same theme and method.

Thursday, July 5, 2007

What is Net Worth Worth?

It seems like pretty much a given for personal finance bloggers to provide a net worth, and since I'm a big numbers fan, it was one of the first things that I added to my own site. But trying to calculate it did raise some questions for me about it's real value. Sure it's useful as a yardstick, and if I stay consistent in how I calculate my own it can be a great comparison tool from month to month. But considering all the questions I came up with while I was calculating my own, I'm not sure it's a good way to compare against others. I'd be curious to see what some people decided on the following when calculating their own worth.
  • Does the car count? I chose to include mine because it's newish and represents a good chunk of my assets at this point. Beyond that, on one hand it's a depreciating asset, on the other, if I was in a real crunch I could sell it for some good money. So which way to go? I'm thinking about leaving it while I pay off the loan and getting rid of it once I'm done, but that'll mean a drop.
  • What about other belongings? I didn't think I had anything else quite as valuable and easy to sell, but all of my furniture taken together, for example, might be worth $1000-2000. I chose to leave it out.
  • How do you classify retirement funds that are invested in mutual funds, stocks, etc... are they all lumped under retirement, separated into investment type, or something else?
  • Where do employee stock purchase plan stocks go? They're not really just like "stock" because of the tax implications, if nothing else, but I don't see another good category for them. Also, they accrue for 6 months before a purchase date, so they will cause me to have a bump every 6 months.
  • What do you include under credit card debt? Are revolving balances you pay off every month included? Mine seem to vary a lot so I chose to include only my one revolving balance (it's at a lower APR than my bank account, don't worry).

Beginner's Luck

I'm using a retirement account, a rollover IRA from a previous employer with about $12,000 as my 'play money' to learn about investing on the individual stock level. My justification for this was really threefold:
  1. It doesn't feel like "real money" since I can't withdraw it for another 45 years. This means I'm not as risk averse with it, because the time horizon is so big.
  2. Since it's a tax advantaged account, I don't have to worry about the tax implications of my actions. One less thing for me to worry about while I'm learning.
  3. It's just enough money that I can pick a few stocks and see what happens, but not so much that I'd be ruined forever if I lost it all.
So far it seems like a great way to get my feet wet a little and decide if this whole stock picking game is for me. Although maybe it seems that way because I'm up 8% over 2 months and have my very experienced investor father taking my stock tips. Maybe I'll be singing a different tune when the beginner's luck runs out? Just in case I'm keeping my other money in mutual funds, ETFs, and plain old high yield savings for now.

Tuesday, July 3, 2007

You Should Already Have a Roth IRA

No, really, if you're young, you qualify, and you don't have one yet, you should run, not walk to your nearest brokerage! I opened mine up today and am really kicking myself for not having done it before.

Here's all you need to qualify:
  • be over 18
  • have an income under $95,000 (for a single filer in 2007)
That's it! So if you're reading this, you probably already qualify.

This I already knew. The part that makes me stupid for not opening one earlier is this:
  • You can have any investments within a Roth IRA. This includes CDs, money market accounts, mutual funds, ETFs, individual stocks, etc. Literally anything that you might have your regular money in, other than a checking account.
  • Your earnings grow interest free. This is great even if you're choosing safe options like CDs and money markets, but you can also avoid short-term capital gains tax this way if you're into the whole day trading thing. Score!
  • You can withdraw your contributions any time for any reason with no penalty. This means that you can have your money work for you tax free for a while, then take it back out if you need it - and your earnings are still yours, tax free, until you retire.
  • Or, better yet, you can take out interest and earnings with no penalty for major medical expenses, home purchase, or college. And let's face it, what are most of us saving for anyway?
The only catch is, there's a maximum yearly contribution - $4000 in 2007, which goes up to $5000 in 2008, so you can only get all of these great benefits on a limited amount of money. There's also the income max, which you might be exceeding before you know it if you're in a fairly lucrative field. Which is why you should start now - and I should have started 4 or 5 years ago. Oh well, better late than never!

E*Trade's Roth IRAs have no minimums and no fees if you get statements all-online. Their trades might be a bit pricier than others ($12.99) but I don't trade much, already have other accounts with them, and get $5/trade because my employer's stock purchase plan is administered through them, so it works for me.

Saturday, June 30, 2007

The Setting

I'm lucky enough to have a family that could both teach me great financial habits and provide me with the means to graduate from college mostly debt-free. My dad is the money manager in the family and my financial mentor, and he's helped me do everything from open my first bank account to pick my first stocks, but my mom, who knows very little about her own finances (she lets my dad handle that) probably gave me the most important piece of advice. She told me that a girl should always be able to rely on herself. So I'm not waiting for a guy to come around and sweep me off my feet, at least in the financial sense.

My financial education probably started my sophomore year of college, when instead of paying for all my costs, my parents started just handing me a check for a certain amount every month. I had to figure out how to make that amount work for my rent, food, and anything else I wanted to do. They covered all "essentials" like tuition, books, car expenses, and most clothes at first, so that I couldn't mess up too much. As time went on, I became responsible for more and more of my own spending categories, until my dad got laid off in my last semester and I offered to start taking on all my finances myself. That's why I have a tiny amount of student loan debt, but since I was lucky enough to graduate in one of the record-low interest rate years, it's at 2.6%.

I make a very comfortable salary for someone my age (between $70-75k/ year with bonus) and because of that, allow myself to live fairly comfortably. I have my own 1 bedroom apartment at $1050/month + utilities, and a 1-year old car which I could have bought outright but chose to finance because it was at 1.9% which I currently pay $506/month for. My life also includes some nice clothes, nice restaurants, and great vacations. I do not, however, live above my means, and I'm a big believer in frugal living and conscious spending. Sometimes I'm better at it, sometimes a bit worse.

In the 3 years I've been out of college, I've saved about $15,000 in retirement accounts and $26,000 in regular savings. My retirement accounts are all in stocks and mutual funds, but I haven't started to invest my regular cash in anything more risky than high yield savings (5%+) or CDs yet. That's probably my next step. I already have a new car (which I plan to keep for a good, long while) and more than enough for an emergency cushion, so my next goals are to start a Roth IRA, invest my non retirement funds, and save for a down payment. The last part is a bit daunting since a 20% down payment on a 1-bedroom condo in my area will run somewhere in the $80,000-$120,000 range. I'll probably get some help from my parents, take advantage of first time homeowner programs in my state, and possibly borrow from my retirement accounts all of which could allow me to put less than that down, but those are still some pretty big numbers.

A monthly payment on a condo like that is likely to run me somewhere north of $2000 including principal, interest, property tax, and HOA fees. That's more than double my current rent and about 50% of my current take-home income. Also known as: a pretty scary thought.

There's 2 other options I can consider, both of which would involve buying a 2-bedroom apartment and having a roommate. In one, I would buy the apartment and rely on a roommate to help me make part of the mortgage payment. In the other, my parents are looking to get an apartment for when they retire - we'd go in on it 50/50 and I'd live there with a roommate. I'd pay my half of the mortgage and the roommate would probably pay my parents to cover part of their share. It's better for my parents than trying to find renters and having to maintain the place themselves, and it would help me build equity so I can buy the next place myself. Then either I'd move out and my parents would buy me out, or I'd buy out my parents (more likely the former).

So anyway, I'll have some options, but right now the name of the game is getting a whole lot of money saved up, most likely trying to get to 6 digits. That'll involve balancing my lifestyle with my savings goals. I want to continue to live comfortably, but from now on I've got to realize that the more I spend now the longer it'll take me to get into a condo of my own. There's always a trade off.

Friday, June 29, 2007


I've been interested in personal finance since the day I graduated from college. I've certainly learned a ton since then, and I am lucky enough to have a few people in my life who I'm comfortable sharing my finances with to some degree. These people have both accompanied me and guided me on this journey. Still, I have come to realize that many people do not feel comfortable sharing financial information with real-life friends and acquaintances, and too many others just aren't interested and don't understand why I am. I've always wanted like minded people to share information with and get advice from, but I never really knew where to find them.

It never occurred to me that I could solve the problem with a blog until I stumbled on Ramit's personal finance blog for young professionals www.iwillteachyoutoberich.com, and through it some very financially savvy young womens' blogs including Thoughts from a SF renter, Give Me Back My Five Bucks, and An English Major's Money. And I started thinking... hey... these girls are as interested in this as I am - we could learn from each other! At first I thought I'd just become a reader, communicating with them by leaving comments on their blogs. But the more I read, the more I was inspired to write for myself. So here I am.