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.
Showing posts with label General. Show all posts
Showing posts with label General. Show all posts
Wednesday, July 11, 2007
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.
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.
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.
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
Introduction
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.
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.
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