A sweet New Year to those who celebrate (and those who celebrate alongside us).
A quick update here on my life:
My debt load is down to about 96K, 10K down from last December and close to where it was when it took a spike up with the HELOC last October. I keep on running projections for myself and am still optimistic that I can wipe out the non-mortgage debt by the time I am 60 (4 more years) and the mortgage by age 65. I don’t think I’ll ever again earn as much as I earned in my last position, but as long as I earn enough to repay my debts and cover my current living expenses, I’ll be ok.
A baseline rule of thumb for retirement income is to have at least 8 to 10 times your annual income in retirement accounts; this provides for a withdrawal rate of 3 to 5%. Now I don’t have 8 times my recent high level salary in my retirement accounts, but I do have 8 times my expected future salary in there, so as long as I don’t have to draw too much down before retirement, I’ll be fine. (Why would I draw money before retirement? Because part of this money is in inherited IRAs, which come with Required Minimum Distributions (RMDs). Ideally, pre-retirement, one takes the RMD, pays the taxes at one’s ordinary income rate, then rolls the money into a Roth IRA (so that you don’t have to pay taxes on it again). But these difficult years, I have been using the money to pay down debt at the beginning of the year. When I can also save for retirement through pre-tax deductions at work, these two amounts pretty much even out, but there have been years where it all ends up just being a paydown of debt without sufficient corresponding contributions.)
Bottom line: as long as I earn enough to cover my current expenses, I am fine. Being able to earn enough to save more for retirement would be ideal--I'd love to be able to retire with 12-15 times income in my retirement accounts (and will probably have to work until age 70 to do this)--but as long as I don't have a net withdrawal from the retirement accounts until actual retirement (as long as I am able to save at least the amount I take in mandatory RMDs) I have enough to survive retirement barring any black swan events (and I do have a long-term care insurance policy to cover the most likely black swan).
The biggest question mark in here is health insurance coverage. The COBRA plan offered to me was $762 a month so I instead went on the Health Care Marketplace and got myself a Bronze plan for the rest of the year at $524 a month. I may well go for a Silver plan next year if I don't have a job that provides any insurance, but hopefully I will. The idea of 8 to 10K out of pocket a year for premiums, deductibles, co-pays, and co-insurance is daunting. Having once owed additional tax for getting a subsidy and then in the end not being eligible for it, I will from now on avoid opting for the subsidy paid in advance (the Premium Tax Credit) and instead take it when I file my tax return after all is said and done.
In terms of my projected debt reduction, I have so far reduced my debt load about 8K this year. It had reached a recent peak last November at 108K and is down to about 96k (roughly 66K mortgage and 30K non-mortgage debt; by January, it should be down to 94K. Then I am hoping to reduce it by 12K a year thereafter. Once the non-mortgage debt is gone, I’ll be able to increase retirement contributions, and I’ll be able to up them even more once the house is paid off.
Presuming of course that I am back at work.
I am feeling hopeful about that at the moment. Things have really picked up the past couple of weeks, and I’m onto second conversations for planning jobs—these would be with insurance rather than investing oriented firms, but I’m actually eager to learn that side of the business. Then there’s a position that would involve being a rotating consultant working out of a staffing firm—I’d be an employee of the staffing firm with benefits, and they would try to keep me working on short-term assignments typically of a few months. They would keep me on the payroll for up to a month after each short-term assignment ended and try to find me another assignment (hopefully going seamlessly from one assignment to the next); if they weren’t able to find me another position within that time frame, it would be back to unemployment. But at least I would be eligible for unemployment and even if the pay would be less working for a staffing firm than it would be working directly as an employee of the client company, someone else is doing the heavy lifting in terms of getting me interviews. And often enough, the client company decides they want to keep you and makes you a more lucrative offer. In addition, I’m interviewing for a part-time holiday season job at a local department store two miles from my house.
Also, I had lunch with one of my former colleagues and learned that they are NOT seeking to replace me, but instead have streamlined and eliminated part of what I was doing and are outsourcing the rest of it, so I can honestly say that my job was restructured out of existence, rather than that I was let go for making mistakes (which is what my boss said to me when he let me go). As I am prone to shame and self-blame, learning this has been very helpful to my state of mind.
On that note, currently reading Brene Brown’s “Rising Strong” about dealing with failures in a resilient fashion and finding it helpful.
Well, I need to get some documents prepared for tomorrow and try to make an Eruv Rosh Hashanah dinner (I’m skipping the service, alas), so—Happy New Year to you !
A sweet New Year to those who celebrate (and those who celebrate alongside us).
I recall doing this activity once several years ago on this site. I'll do this now, then see if I can find the old list and compare.
1. I've been on SA for a decade.
2. I'm on my third career: psychology professor, tax accountant, and most recently, financial planner.
3. I've lived in ten residences during my life: 8 apartments (6 of which were in old houses that had been divided into units) and two houses, the one that I lived in from age 5 to 21, which my sister now owns, and the one that I've lived in for the past decade that I own (along with the bank).
4. These residences have been in California (Los Angeles for 21 years and Palo Alto for 1), Michigan (Ann Arbor), Vermont, and Pennsylvania.
5. I love basset hounds but for now and the foreseeable future, I am owned by cats (thanks to my beloved Henry, whom I used to tell, "Your middle name is 'Retirement," sad but true).
6. Some of my career dreams from my youth: being a writer; being a flutist with an orchestra; being a recombinant DNA biologist; being an anthropologist, being a journalist.
7. When I was 14, I wrote an investigative paper for journalism class on the problems with nursing homes. My grandfather, a retired attorney, was very active in advocating with politicians for changes favoring seniors. With my current career (as well as personal) interest in navigating the financial issues of retirement, I feel like I am coming full circle.
8. Someday I hope to write a book--another way of bringing life full circle (back to my childhood dreams of being an author).
9. And yet a third way I want to bring life full circle is to become active in musical performance again some day. There's a local division of the "RTO," Really Terrible Orchestra (started in Scotland by author Alexander McCall Smith and with branches over the world) that I hope to make the time to join some day.
10. I've been to 40 of the 50 states, mostly by way of traveling most of the lengths of I-90, I-80, I-70, I-60, I-50, and I-40 (plus a trip to Alaska).
11. On the other hand, the only foreign country I've been to is Canada.
12. I hope to visit the remaining 10 states and do a little foreign travel, probably during my 60s.
13. I once spent 7 weeks in the hospital during which I did not (could not) eat (I was fed directly into my bloodstream via TPN).
14. I have walked two half-marathons.
15. I am phobic about anything to do with tools or equipment--something I got from my mother. I wish I could be more self-sufficient but it isn't in the cards. The fact that I can fill my own gas tank, plug together the components of my computer, and once even reattached a spark plug that had gotten loose is as far as my mechanical skills are likely to go. I contemplate taking a bike or car repair class--but there are so many more interesting things to learn that I don't expect to get around to this for a while.
16. Almost all of my friends are older than me, some considerably so. My best friend is 16 years older than me and my oldest friend is 92.
17. This makes me feel like I need to make an effort to make friends who are younger than me just so I have friends in 20 years!
18. I was brought up as a Reconstructionist Jew, learned about Lutheranism from a boyfriend who I went to church with several times, about Buddhism from an anthropologist friend and my own extensive readings, about Quakerism from my several friends who are Friends, and made my way back to Reconstructisonist Judaism after attending a Buddhist retreat.
19. I have had a meditation practice of one sort or another--not long sessions and sometimes with long gaps between sessions--for over 40 years.
20. I am semi-agnostistic about the existence of God, but like the ideas of Abraham Joshua Heschel, who wrote a book "Why God Needs Man." The idea is that God created people with free will and needs us to act ethically of our own free will in order to bring good into the world.
Bonus #21. I have met one fellow SA blogger, but on another website (now defunct) that I was also very active on for many years, I have met half a dozen people. That one was a discussion forum about walking on a diet website.
I suspect this is quite a bit different than the last time I answered this list! Update: actually, much less so than I thought--the original entry from 2006 is at http://dido.savingadvice.com/2006/11/19/late-list_17556/.
After reading Monkey Mama's post about her blogaversary, I had to check mine. Missed it back in June! Interesting to look back at the early entries.
Like Monkey Mama, I also note a perspective shift: Back in 2006, I was blogging more frequently and with much more of a day-to-day savings focus; nowadays there is more of a longer term goal focus and an eye towards retirement.
On the other hand, it's also the case that "the more things change, the more they stay the same." Back in 2006, some things I blogged about a lot were my pets (especially my much beloved and much missed Henry), my job struggles, and my efforts to reduce my food costs. And I *still* tend to write a lot about my pets, my job struggles, and my food costs!
But the pets are different now: senior kitties Buffy & Bridget, replacing the trio of Basset Hound Henry and kitties Phoebe & Teddy. The job struggles are different too--I'm in a totally different career. In fact, I've changed careers twice, if you count the shifot from tax accountant to financial planner as a shift (and it is, albeit not as big as the shift from psychology professor to accountant). I was at a seminar dinner earlier this week and shared a table with a woman about my age; I told her about my career shift (she had an interesting one too: from restaurant manager to long-haul truck driver!) and she said, "you realize how amazing that is? How few people actually go through and succeed at making a big career shift like that?" which made me feel really good for the first time since losing my job.
And finally, the food struggles are interesting: I still wish I spent less, but when I look at what I was spending a decade ago, it's actually about the same as now, so given that there must have been some inflation, that's a cut. And looking at WHAT I ate, I see a LOT more prepared foods than I eat now--in fact, my old diet looks pretty much like garbage compared to the present. So that's at least a positive development.
And looking at my net worth: my liabilities are actually fairly similar in amount (though back then it was just home mortgage debt; now I have more home equity but also some other loans) but my assets are more than double (and a chunk of that is due to an inheritance). Back then my net worth was under 150K and now half a million is in sight, though it will probably take me another couple of years to get to with this latest transition.
It's been about a month since I last updated, so I'll check in here. Still unemployed, still in shock over it. My activity has been up and down. I did a presentation for my group of unemployed professionals about informational interviewing, so that spurred me to go out and do some. It seemed like that led to one possible job interview, but the person said to call him back after he returned from vacation, and I haven't heard from him yet. I'll have to check in again; he went to Australia and that's a 12 hour time difference so he's probably still adjusting (he got back to the states on Wednesday). I also went to an interview with the Accountemps agency. Some weeks I seem to do a lot and others just minimal. I need to ramp it up: according to one recruiter, the best months for getting hired are September (nearly gone), December, and January.
The area where I have felt productive and competent is in health: I've lot 15 pounds since being laid off and am back to walking 10,000 steps many days during a week. I've also been doing a lot of cooking. The walking and the cooking are basically the things that make me feel good right now.
On Friday, I checked my credit card statement and found a $163 charge that I didn't recognize, so I had the card cancelled. This was the card that I use to autopay several expenses, so I have been going through and cutting many of those.
I also have been looking at health insurance. I am covered through the 30th on my employer's plan; my options after that are continuing the employer plan through mini-COBRA for 102% of the premium, which is about $750/month, or switching to private insurance (either on the marketplace or off). I'm just looking on the marketplace. I won't qualify for a premium subsidy this year, but perhaps next (I pray NOT). I'm on an HDHP plan with an HSA, and to maintain the tax benefits of that I have already reaped through the HSA, I need to keep an HSA in force through end of the year. Fortunately there are now individual HSAs on the marketplace; I don't think there were in 2014 when I last had marketplace insurance. With the HSA, a chunk of my annual long-term care insurance premium becomes deductible even though my medical expenses aren't above the 10% of AGI threshold, and, now that I am unemployed, I can deduct those premiums as well as long as I am either receiving unemployment benefits or paying COBRA. I'll do that for the remaineder of this year, then reconsider for next year (information about the 2017 plans will be available on November 1).
This week is another busy week: I have three professional education seminars and networking opportunities plus two other meetings for my unemployed professionals group plus lunch with a former co-worker. I need to fit time for applying for jobs in there!
So it is just over a month since I was laid off. I have basically spent the past month trying to absorb the shock and personal sense of devastation while focusing on the non-work domain, which I really let go in order to focus on the new job and career. I have also "gone through the motions" with regard to some basic steps in preparing for a job hunt, without my heart really into it yet. That needs to change.
I've spent a lot of time over the past month with the friend whose dog was diagnosed with cancer the same day I lost my job. The good news is that whatever is wrong with the dog is NOT cancer after all and he has improved but there is still something wrong that remains undiagnosed. But at least the threat of 4-6 months remaining lifespan has been removed. And we've watched the Democratic convention, the Olympics, and several DVD movies. It's been very good to have someone there for me, living alone as I do.
My biggest focus has been on my health, which I felt suffered during the time I was at my job. Not only did I gain back the weight I had lost during the year previous to starting at the job, but my exercise plan, which I started investing in last summer, got derailed by a foot injury the beginning of March. I had started a course of physical therapy, so I finished that out during July and then went back to the gym, which I have been continuing to go to twice a week (I have a one-year contract which will get me through October and then I can no longer afford this gym), plus this past week I started walking and even doing a bit of jogging again now that the injured foot is 99% healed.
I also started to follow an Intermittent Fasting (IF) eating plan. A friend of mine has been doing this for a year and has lost some weight. After talking with her I read a book on the topic by Dr. Bert Herring and then started in on the plan, while continuing to do some research on my own both on the plan and on myself. There are several versions of IF eating; the one that I am following is the idea of time-restriced feeding, in which you start by limiting the timing of your meals, so that each day is divided into an eating window and a fasting window. Dr. Herring recommonds a 5-hour eating window and 19 hours of fasting, while another popular protocol (LeanGains) suggests 8 hours of eating for men and 10 for women, with corresponding 16 to 14 hours of fasting. While my daily eating window has varied between 2 and 8 hours since I started this on August 1, my average has been about 6, usually from 2 pm to 8 pm. And I am down 4-6 pounds since starting (the scale is bobbling a bit this week), plus I lost some weight just from the shock of the job loss decreasing my appetite, so I am down about 10 pounds altogether. Another six will get me to where I was when I started the job, and I hope to continue on to see if I can finally take off the excess weight which has gradually crept on over the years.
So far I find doing this very sustainable. Surprisingly, eliminating breakfast has meant basically eliminating mid-morning hunger, and it's usually pretty easy to delay lunch until 2. I drink lots of water with lemon before breaking my fast plus one or two cups of black coffee as well. Then during the eating window I usually have two meals, with the largest one being the earlier of the two. Not only do I end up eating less but there is both a time savings from not having to prepare breakfast and will eventually be some money savings as well as I eat less.
Exercise is what Charles Duhigg, in his book "The Power of Habit," terms a keystone habit--one which, when adopted, tends to lead to one making other positive and beneficial changes in one's life. Hopefully that proves true.
In addition to work on the health front, I also have done some work on the home front--a bit of organizing inside the house and redoing the front garden patch with the extensive help of a retired neighbor.
I've also been attending the weekly meetings of the local networking group for unemployed professionals as well as joining their training committee, plus I went to a networking meeting of a group of business women that has led to some useful connections that I am still in the process of following up on, including the possibility of an interview. I also reconnected with a fairly new acquaintance in the business who was unemployed herself last year and who has connected me with another person in a similar position. Ironically, the possible job interview is for her old job. We will be getting together later this week. So--good progress in networking but I really need to work on updating my resume further and developing different versions of it for different jobs, as well as getting together my "exit story" and documenting the job stories I can use in answering behavioral interview questions. I'm not feeling ready for an interview yet.
Plus I need to start investing more in studying for the online CFP course I am enrolled in. So far I have attended virtually all of the live webinar classes but I have not invested much in going through the printed materials online.
I also have a lot more decluttering to do. I've got my living spaces livable, but that doesn't mean that my kitchen is optimized. Too many things I don't use and should get rid of. Plus, as always, too many books, too much clothing, and then there is the whole second bedroom, which has become a "storage room" rather than a guest room or study over the years.
Lots to do, and lots more people to contact.
I just need to get over myself and the feeling of shame and humiliation and keep on keeping on.
A little bit of fun first. My birthday is later this week and today, three friends are taking me to lunch and then we are hanging out at the swimming pool that one of those friends has.
I was let go from my job this week--the perfect dream job that I could hardly believe my luck to land back in November 2014. I was lucky enough to have 20 months of excellent income and entry into the new career that I set my sights on a decade ago.
The main problem was this job being not just a new job, but a new career--and my firm being a small firm, where I was the only one who did my type of work. Communication was a related problem--in retrospect, there were things that my boss didn't say (because he assumed I already knew them) and/or I didn't ask (because it was a new industry and I didn't yet know it was important to ask). My boss held my hand the first six months--and then dropped it. When left to doing things totally on my own, I made a couple of errors. This year--the second time around--I went by SALY ("same as last year") as the guiding rule--but there were a couple of things that my boss had done in my stead the previous year while I was learning the ropes, so following SALY was misleading and I found myself behind and rushing to meet deadlines. If I had had a timeline written out for me of “what to do when,” that wouldn’t have happened, but I was left to infer much of what I needed to do, rather than being explicitly told. I learned a lot by doing things on my own, but I learned some of them by the process of making mistakes, unfortunately.
The errors I made mostly occurred back in tax season. At the time, there was about 6 weeks where things were extremely tense at work and I was waiting for the other shoe to drop. I formalized some workflows and checks and wrote out a timeline for myself of what needed to be done by when, and things actually went smoothly for second quarter, so I thought I was over the hump. But then last month, I had one project that required me to use our software in a new way, and my boss caught was essentially a proofreading error (before the project went out the door). I’m pretty sure that was the straw that broke the camel’s back and sealed my fate.
I learned a HUGE amount on the job and for that will forever be grateful. I also had the best income that I have ever had. I made some improvement to my financial situation as a result, but, after having lived on a shoestring with part-time and temp job income for five years, I was also a lot more “spendy” than I might otherwise have been, so, while my debt is better structured and my assets and net worth are up, the net improvement from when I started the job is only about 35K, and it could have been 10-15K more if I had reined in my spending more.
The feelings haven’t kicked in yet--I’m a classic repressor and things end up eating me up from the inside out and I eventually get sick, rather than my being able to feel anything. Actually, I’ve been feeling extreme exhaustion the past several months and I’m finally going to the doctor on Monday to get that checked out while my health insurance is still in effect.
My best friend’s dog was diagnosed with cancer the same day I lost my job, so I have been spending the evenings at her house, cooking dinner together and watching movies--misery loves miserable company. This is very sad but has also been helpful to us both.
I’ve already been to the local group for unemployed professionals and have a plan written out for next week which includes updating my resume and job stories and revamping my elevator pitch, getting active again in some local networking groups, and reactivating my job search leads on Indeed and Monster.
So far I have mostly told just a few close friends, but I have one former academic advisor who has become a friend whom I emailed, and I will be talking to her in about an hour, and I have a list of several friends to call and tell what happened and get some support and advice and keep them on the alert for any potential connections.
There is also a weird element of relief in that my health has deteriorated while working at this job--I never could get used to a job starting at 8 a.m. when the entire 25 years of my career before this, I worked at jobs that started at 9 or 10. (Yes, I know how lucky this is. One way of looking at what has happened to me is that it is a lot easier to take the academic out of academia than it is to take the academia out of the academic. Excessive but late-starting working hours are what I have done my whole career.) I have worked a lot of evenings and weekends for months, so the idea of being able to sleep in a bit and take the time to go to the doctor and get myself tested to see if my exhaustion is anything other than lack of sleep, and to also go back to the gym regularly (which I stopped doing back in February), is welcome.
Unfortunately unemployment is one thing I have learned all too well how to cope with (at least for short periods, as I have never been really long-term unemployed), so I have a well-worn routine to draw on for now.
On a side note, the only person from this blog who I have met in person is Patient Saver. We have both been on this site for a decade now, and over that time, our lives and careers have seemed to have a lot of odd parallels in terms of when we have gotten and lost jobs and dealing with family issues--so when I saw a couple of weeks ago that she had been laid off, I had this feeling in my gut that I might soon be sacked too. Just a wierd coincidence, but it added to the feeling of not being surprised when I was actually let go on Wednesday.
Well the link works but I can't remember how to share the picture so it just shows up here.
Anyway, the link is to a picture my sister sent me last night of me on college graduation day, standing in front of our house before we headed off to the ceremony.
She sent it to me, I guess, because last night I had dinner with my college boyfriend, who I hadn't seen previously in 28 years.
It was wonderful to see him, and the four hours we were together just flew by. An hour of conversation at my house first, then a little bit of a scenic drive up South Mountain to the Lookout, a spot where you can see the whole Lehigh Valley spread out before you with the Poconos in the distance, and then to dinner at a Greek Taverna nearby, where my old boyfriend showed off his knowledge of wine in picking out a bottle for us to share, and I introduced him to the fun of saganaki, the classic Greek flaming cheese appetizer, always introduced with a "Ooopa!"
Then I drove him through downtown, pleasantly lit with old gas lamps year round, to show off my city a bit.
It was fun to reminisce about fun during our college days--going to see the Rocky Horror Picture Show at a midnight showing at a movie theatre on Sunset Strip, his teaching me to use chopsticks at a Chinese restaurant, our student government days--and to talk about our families and the one mentor from college we have both kept in touch with, still teaching there part-time at age 76--and to share stories of some of the life experiences that have shaped us since the time we last met back in 1988, when he was working in D.C. for a year and I had a job interview in the city in the morning and a free afternoon. Back then he had been married for just a few years and was childless; now he has three grown daughters.
It was also enjoyable to learn about how we have both grown and changed--in simpatico if not similar ways. This isn't always true. Later this week I will be returning a phone call received from my very first childhood crush (at age 10), someone whom I never dated but whom I have been close friends with, whom I still adore, but whose life has diverged from mine in directions that it is easier for us just not to talk about (politics, for example).
I am usually one to look forward rather than back, but I am feeling a little heartsore this morning--glad to have had the chance to reconnect, sorry it was so short and that there will not likely be many chances to meet up again as we live on opposite coasts. (Not there is any romantic possibility here; just the rekindling of an old friendship and the disinternment of some old long-buried memories.
I saw a pop-up ad on this site for the above-mentioned card when reading some entries about debt and clicked through to the offer. 6% back on groceries (based on up to $6,000 of spending, which is close to my grocery budget for the year), as well as 3% on gas and select department stores, 1% on everything else and 1% on everything after the $6,000 spending limit is reached. That's quite good, and NerdWallet had a postive review. My credit score has rebounded back to 814 after dipping down below 800 when I opened the HELOC six months ago, so this seemed worth it--even though there IS a $75 annual fee. There's also a $250 joining bonus if you get the right click-through ad AND spend $1,000 on the card within the first three months. No problem for me to spend $1,000 on groceries over 3 months, unfortunately--my average for the past year is $380 per month, or $1,140 over 3 months. Even if I just use it for groceries, with the 6% cash back and minus the $75 fee, that's net positive $200 over the course of a year, PLUS the $250 signing bonus if earned. So we'll see. Still waiting on approval--although the site says a 30-second decision, I received a screen asking for me to call in at the end of my application--and then, because I called in after 4:30 pm on Saturday, I'm stuck waiting until Monday for the decision.
I find that more and more I'm segregating spending for certain items onto certain cards: I have a debit card linked to a checking account that I keep at a low balance (and not linked to my main checking account, given the potential limits on debit card reimbursements if the card is stolen) which I use to give myself an eating and entertainment budget. Then, if approved, the AmEx will be used for groceries. I buy at least half my clothing at LLBean and I use their Visa card for that, in order to earn the $10 coupons. (The LLBean card also had great 0% balance transfer offers back during the few years I was using those heavily.) The rest of my CC spending--my monthly gym fee, gasoline, professional association dues, my monthly phone and cable bill, and shopping, goes on a Visa card through my main bank and give me a $25 credit towards my mortgage for every $2,500 I spend on that card. So I'll probably earn $50 less in mortgage credit by moving the grocery card spending to the AmEx account, but I'll definitely be using the cash bonus to pay down debt so it's all to my new benefit.
I had never heard of such a thing before, but came across the term in my reading and discovered there is in fact such a thing. One company that offers it (not sure how many do) is called Income Assure. This is something I would be tempted to do, or at least research more intensively, but alas, I don't and won't qualify. You cannot have been unemployed within the past two years ( which won't be true of me until December) and the company you work for has to have at least 20 employees (which won't ever be true of my company). Also it only applies to W-2 employees, which is currently true of me. But with luck and some growth in the company, I could eventually be offered a small ownership stake and would get my earnings reported on a K-1. That's still a couple of years down the road, though. Still, supplemental unemployment insurance would be something I would check into if my circumstances were different. At least I finally got a good *disability* policy by joining a professional association. None is offered thru work. Lower quality benefits is a downside of working for a smaller employer. But on the positive side, we also don't have bureaucracy ourselves, only with the institutions we deal with.
Just home from an overnight B&B trip in which I met up with fellow SA blogger Patient Saver.
This is the second time that PS and I have met in person. The first time was five years ago, when I was driving home from a cousin's Massachusetts wedding. We've known each other through this site for about ten years, though, and we are of similar age and demographic, and we've had career and personal ups and downs that are similar to each other, so this was a nice chance to chat more personally than one does on a public website.
We met up yesterday around noon at the B&B, an old house sitting along the Delaware River at the PA/NY border. Unfortunately yesterday's weather was gray and gloomy, which constrained our activities, but left plenty of time for conversation. After spending an hour drinking tea while sitting out on the front porch, we asked the Innkeeper for a lunch restaurant recommendation in the artsy town of Narrowsburg NY. The restaurant was very nice and the town was interesting, but because it was still the weekend BEFORE Memorial Day, at least half of the stores, including the relatively "big" arts center in the town, were closed--as was the riverside restaurant we had originally planned on for dinner. We ended up at an adequate Italian place (more pizzeria than restaurant) which we felt we could easily find our way home from in the dark along the narrow, not particularly well-marked roads in this sleepy part of New York state.
This morning, we were running at different speeds--something that could be predicted by looking at our typical weekend blog entries on this site. PS's are full of things that she's done during the day, while mine are, admittedly, boring, since I am all about sitting, reading, and reflecting and not so much about acting, when I have some time to myself. After a lovely breakfast at the Inn, we decided to check out and tag-team drive to a town 20 miles away and tour Gray Towers, the home of US Forest Service founder, conservationist, and two-time PA Governor Gifford Pinochet. We wandered around there for about an hour or so before going our separate ways.
Our conversation during the day we spent together was more personal than our blogs here, focusing more on details of our personal and relationship histories and less on the financial. No surprises--I think we both tend towards the reserved-yet-open. Just a chance to get to know each other a bit better than is possible online in a public forum. If we do such a trip again, we should schedule it for a more likely to be sunny time, when we might be more likely to be able to do something like kayak (something which I won't do on my own, but enjoy doing with friends). And while it was lovely that nothing was crowded, also going before Memorial Day meant that many things were closed.
Take this test: http://app.keysurvey.com/f/989930/d74e/
Links to a test developed by two psychologists who have written books on the subject (which I own but have not yet had a chance to read). The test measures four money scrips: money avoidance, money worship, money status, and money vigilance.
I'll report my scores in the comments. I suspect that many of us on this site will score similarly, by virtue of the fact wer are here!
After having had my debt spike back up to the low 6 figures after my 7 month period of unemployment back in 2014, I am pleased to announce that I am finally back down to 5-figure debt ($99,195). This includes my mortgage.
For part of the time that my debt spiked, I was moving things around from 0% balance transfer credit card to new 0% balance credit card when the old term expired. Then a year ago, I decided that the debt would be easier to get rid of--at least psychologically--if I had a steady schedule of debt repayments which I then could try to exceed. So one year ago next week, I took out a 20K personal loan from Discover Bank, technically at 10.99%.
I paid it off yesterday and today, the account has even disappeared from my login page. Over the year, I ended up paying a total of $21,757.04 on the loan, making the effective rate actually 8.79% because of early and extra payments.
Some of that amount is a real decrease in my loan balance, but the rest has been transfered to lower rate loans collateralized in part by my house and by another financial account, so at lower rates (3.67% and 4.44%).
I prefer loans to zero percent credit card balance transfers because there is a predictable schedule to the loan payoff, which I can make a game of beating. Currently, I believe that can have the non-mortgage debt ($32,045) paid off by the end of 2019, and the mortgage ($67,150) paid off by the end of 2024. Technically, I could take longer to pay off the non-mortgage debt, but there's no point to that. My required minimum payments are now lower, giving me a bit more liquidity in the case of short term needs.
I am trying a new way of eating this month. It's a Paleo variation on a vegan diet called the Whole 30, and it's basically a whole foods diet that eliminates, for 30 days, added sugar, dairy, grains, legumes, and processed foods. I already eat very little dairy, so that's not a problem, and I'm not too much of a sweets eater (other than fruit, which IS allowed on this) so that's pretty manageable too.
The big changes are eliminating grains and legumes, as well as processed foods. It's only for a month; then one adds the eliminated food categories back one at a time to see if one has reactions to them--and ideally one breaks any "addiction" to sugar during this time, so that will be lower aftwards too.
So far the biggest challenge is breakfast, since I've long been a cereal eater. For now, I'm doing a couple of eggs most mornings, along with some veggies and fruit, and the occasional smoothie or chia pudding. (Chia pudding is also something I am keeping on hand for desserts too--it's chia seeds and almond milk and I sweeten it with chopped up dates and some other fruit.) Then for lunch and dinner I have some kind of meat (a turkey burger, piece of chicken, or some fish) and a couple of vegetables--usually at least one sweet potato or piece of winter squash each day to help with satiety. And a couple of times I've had a package of almonds for a snack (along with an apple).
Hopefully this will be good for the budget too--my food spending always nicks upwards during tax season as I end up eating out a lot, so reining it back in will be good for the pocketbook as well as the waistline. The main intent is to get me to eat more healthy, home-cooked meals. Not that I eat all that badly, but I've been indulging in commercial thousand island dressing on the salads I buy for lunch at the deli across the street and other, or getting a taco salad at the Mexican restaurant and eating part of the fried shell...foods that have an excess amount of unhealthy fat.
There's another bit of incentive: in a month, I will be seeing my college boyfriend for the first time in 28 years. He will be out east on a business trip and we will get together. He's happily married, so this is not a romantic prospect, just me wanting to look better than I currently do in front of a man I've known since I was 18 (with long hair and 60 fewer pounds on my frame).
Cutting away at the debt...over 3k down so far this year. I'll be moving some debt around this month, paying off the personal loan I took out with Discover a year ago but will take out another loan at 4.44% (rather than 10.99%) to do so (and the loan balance will be 10k, not 20k!!) I still have north of 30k non- mortgage debt and north of 101k total debt, but by mid -year, I expect to be down on both. Debt reduction is still the main focus here, but I think by next year, I might be able to think about increasing the savings as well. I'm currently saving 10% per pay to retirement and I'd like to increase that to 12% and ultimately 15%, but with the debt load, I'm not there yet.
I do a monthly net worth calculation. Last year, my debt crept up a bit the last quarter when I spent more of the money from the HELOC I took out than I had originally planned to spend. As of this morning, my debt ratio (liabilities to assets) is back down under 20% (19% to be exact); a month ago, it was at 23%. That will go down further when the April mortgage and loan payments hit the accounts this weekend. The big goal for this month is to get the 20K loan I took out last May down to 10K (it's under 12K at the moment) and then use another loan from my 403b at a much lower interest rate (4.58% rather than 10.99%) to transfer that debt. I'll then lower the payments slightly to build up the emergency savings fund a bit and give myself more liquidity. I'm still feeling confident that I'll have the non-mortgage debt paid off by 2019 and the mortgage paid off by 2024, well in advance of retirement sometime between 2027 and 2030.
The weather was almost balmy today--high of 76, and I went home for lunch. Tomorrow it starts dropping and the lows early next week are back in the 20s with the arrival of another polar vortex. Hopefully no snow, however!
Tomorrow I'll stop at the annual Home Show--I need a bit of landscaping done once I finally can get my taxes filed and get my refund (see my Health care marketplace entry for why I haven't filed yet).
And Sunday there are a couple of activities at my congregation I will attend, and a friend from there will bring me an electric mower that his neighbor gave him that he doesn't need. Just in time as the last lawn mower I was gifted seems to have some problems and I was getting ready to take it into the shop!
I've lived in my house a decade and this will be my third hand-me-down mower. Haven't had to buy one myself yet!
Very glad that Friday is here this week. Going home now to go to bed early--never really felt awake all day.
I am finally starting to do some long-delayed decluttering. In the process, I came across a little balance wheel exercise I had done almost exactly five years ago (3/29/2011).
A balance wheel is an exercise used by life coaches, etc, that has you rate yourself on a series of life domains. You put your ratings on a circle that is divided up into a series of pie slices (You can see one at http://www.innernorth.com/links-resources/life-balance-wheel/). Then fill in the pie slices to the depth that corresponds with your rating. That is, if you have rated "Family" a 10 out of 10, you would fill in the entire pie slice, but if you rated it only 5 out of 10, you would draw a line horizontally midway along the spoke and color in a slice that filled up half of the slice. (There's a completed example here: http://www.innernorth.com/links-resources/life-balance-wheel/).
So, having come across this from five years ago, I had to re-do the exercise and compare.
Domain, 2016, 2011, change
Physical Environment, 3, 7, -4
Career, 8, 2, +6
Finances: 5, 2, +3
Health: 6, 5, +1
Friends & Family: 6, 7, -1
Sig. Other: 0, 4, -4
Personal/Spiritual Growth: 3, 6, -3
Fun & Recreation: 6, 6, 0
Gains in Career (+6), Finances (+3), and Health (+1); Losses in Physical Environment (-4), Romance (-4), Spirituality (-3), and Friends & Family (-1).
Overall net rating change: -2.
Just goes to show that things balance out. Five years ago, I was at the start of what proved to be an arduous career change and was only employed part-time at a temp job, my mother was dying, but I had more time and energy to spend on personal reading and with friends. Now, I've found a full-time job that satisfies me, but I have let a lot of things in my personal life go as I make the transition. This year I am focused on getting the CFP certification, but after that is done, I think I need to focus more time and energy on my personal life again.
OK, back to decluttering--maybe I can move that Physical Environment rating from 3 to 4 today and back to 7 before summer.
I had my health insurance through the Health Care Marketplace during 2014, since I had a seasonal job from January thru mid-April, then was unemployed mid-April through mid-November. I could have had employer paid insurance for December, but I had already paid my December premium and there was no way to cancel my December coverage and get my money back. So I had my employer coverage start on 1/1/2015 and called the marketplace in December to make sure that my policy was cancelled for 2015.
Despite the cancellation, I kept on receiving bills from the insurer for the first several months of the year. There was nothing the insurer could do about it; the cancellation had to come through the marketplace. After several phone calls, I finally got them to do an "escalation," and I received notice in May that the policy had been cancelled effecteive January 1.
Imagine my surprise then when I received a 1095-A form indicating that not only had I had insurance through the marketplace all year in 2015, but that I had also supposedly received a Premium Tax Credit (subsidy) for it (which I *had* had during 2014). If it were just the coverage, it wouldn't have been a problem, but the credit would mean extra taxes on my return for a benefit I never received.
So I called in mid-February when I discovered the problem, received assurance of another "escalation" and was told to expect a corrected 1095-A within 30 days. It never arrived. I finally had to call again, spoke to someone one level higher in the hierarchy, and found that, even though they had documentation in their files of all of the above, they had not yet started the process that would result in my receiving a corrected form. I received yet ANOTHER escalation, and the 30-day clock started all over again, although this person indicated that it would probably be less than 30 days. I hope so, since I would love to file my taxes before the April 18th deadline, rather than have to file an extension. In the meantime, my tax return sits there waiting to go, and my two thousand dollar refund remains unclaimed.
I will be really glad when I am done with the Health Care Marketplace for good!
In total lifetime earnings, that is. Not savings, not by a long shot! I just went on Social Security.gov and downloaded my lifetime earnings. Adding to that this year's salary and I finally will reach one million earned so far in this lifetime in 2016. That's what comes of delaying my earning years pretty much until age 30 (29, actually), by virtue of the better part of a decade of grad school and post-doc work.
It will still take me another 2 years or so to get to half a million net worth, and if I want to have a million in the kitty when I retire, I'll have to work until 70 and have reasonable luck with the markets. Hoping I can maintain the good health to keep working another 15 years!
Last year, having found stable employment after several years of instability, I decided to stop rolling debt from one balance transfer credit card to another. So first I got a personal loan, then later in the year, a home equity line of credit. I already had a small loan against my 403b account, so since November, I've been paying three loans plus a mortgage. I had incurred some additional expenses during the year, so I wasn't able to use the HELOC to fully pay down the more costly personal loan, only partially. With one more payment, that personal loan will be down to half the original balance. At that point, I'm going to take out another 403b loan at less than half the rate of the personal loan. Then I'll be back to two loans plus a mortgage. The 403b loan doesn't decrease my 403b balance, just possibly affects the balance in the annuity portion I have in the account. It's only 10k against a much larger diversified balance, so I'm ok doing that. I'll reduce my monthly debt payments and give myself back a little liquidity, decrease the interest rate on that 10k, and only add a year to eliminating the non-mortgage debt totally: 2019 rather than 2018, which still works in terms of my plan to pay off the mortgage and be completely debt free by 2024. I've been feeling a little pinched even with higher income because I have been aggressive about paying down debt. Time for a little more liquidity at the cost of an additional year.
On another money front, today I'm sending in a check to finish fully funding my HSA for the year. Means less into the Roth, but since I can pay my long term care insurance premiums in a tax-advantaged way this way, it helps on the taxes since I no longer qualify for a traditional IRA deduction.
A year ago today (as it turns out--this was not planned), I wrote an entry here about planning for debt reduction. While my intentions were good, I didn't make the kind of progress that I had planned. I did reduce debt over the first part of the year, but then increased it back to its starting point (and a little bit beyond). In the end, I more moved debt around than reduced it. I *did* reduce my mortgage by $4,000 (more than double the reduction that would have occurred if I were still plodding along with my original mortgage, and over a thousand ahead of where the refinance would have had me if I had not added in additional payments), so that part is good. But the non-mortgage debt, I ended up mostly moving around, from being mostly on 0% credit card balance transfers, which I kept on moving around from card to card as the 0% rate expired (kicking in a balance transfer fee of 2-4%) to being more on loans...first a personal loan and then a HELOC. The debt increased a bit with some personal investments I made in my health and my career. At the moment, the total is about 35K. I just want to use this post to lay out some targets for reducing this. If I were just following the loan amortization schedules, this would be a several year project, but I can do it in three years. Overall acccording to the amortization schedules, I'd be paying about $400 a month on the non-mortgage debt; in actuality, I pay about a thousand, so Target #1 is getting the non-mortgage debt to 30K by mid-year and to 25K by year end. Mortgage debt at year end should be down to 65K, so that's a total of 90K total debt by the end of 2016. I can cut the non-mortgage debt in half during 2017 and get the mortgage debt down to 61K, for a 2017 ending debt balance of 73.5K. Then in 2018 I can pay off the rest of the non-mortgage debt and get the mortgage down to 56K total debt. At that point I can really accelerate the mortgage payoff to have the mortgage paid off by sometime in 2025, two years before I reach full retirement age. Then I can funnel that money to a final push to accumulate two years' worth of cash for living expenses to have in my accounts before I retire sometime between 2027 and 2030.
One of the things about financial planning is that it is never done--one always has to revisit it as one's personal circumstances and the economy change. But one doesn't achieve one's goals if one doesn't plan for them, so planning is hardly fruitless.
I'll revisit my debt progress...hopefully a decline, even though I am planning some additional long-delayed household expenses this year...as the year progresses.
I finally had a chance to tally my 2015 spending.
Back when I first joined this site in 2006 (!), I was an avid user of YNAB and tracked spending regularly, but once I left my regular job to embark on my career change in 2009 and first my dog and then my mother in short order became seriously ill, regular tracking (and regular filing and sorting and decluttering at home) all went out the window, so now I content myself with an annual review based on the useful year end summaries provided by my financial institutions.
My overall spending is up by about 6K compared with last year--which is fine given that my earned income is several times higher this year, since I was unemployed for 8 months last year.
Rather than looking at things microscopically, I will report here in terms of the categories developed by Senator Elizabeth Warren and her daughter Amelia Warren Tyagi in their 2006 book All your Worth: The Ultimate Lifetime Money Plan.
They suggest three macro-level categories for spending: Needs, Wants, and Saving/ Debt Repayment, and recommend that 50% of spending go to needs (e.g., mortgage, groceries, transportation, utilities, healthcare, insurance), 30% go for Wants (discretionary spending) and 20% go to Saving & Debt Repayment.
My spending this year is fairly close to these targets: 47% Needs, 34% Wants, and 18% Savings.
Needs 47% of my expenditures were for Needs. Nearly half of this was house-related (mortgage, insurance, taxes, repairs & maintenance), and another 21% was health related. The health expenses are down from last year, though. I took on a hundred-dollar-a-month prescription that makes a big difference in my quality of life, but I no longer have to pay all of my health insurance expenses out of pocket. Groceries are always a struggle for me to cut, at 17% of the needs category (8% of total). Transportation and expenses for my two cats round out this category.
Wants 34% of my expenses were for Wants. Other than not having to pay for my own health insurance now that I am fully employed, this is the biggest change in my spending. Basically, I spent 5K less on health insurance and 5K more on fun and recreation, including joining a premium gym (which I use a lot more than the el-cheapo gym I used to belong to), eating out, taking three short vacations, going to the movies and the theater, and buying books. As my best year of income ever, perhaps I went a little bit overboard here (since I am above the 30% mark), but not too drastically so. In particular, I want to cut down on the Dining Out, for health as well as budgetary reasons. And I will not buy subscriptions to two theatres next year but will be a little choosier on which plays I attend (4 instead of 7). One big expense in this area, which I will probably be reimbursed for, is that on December 31, I enrolled in a CFP program (before the fees went up by $500 on January 1). Actually eliminating that one expense alone brings the total down below 30%. I will be taking online classes for the next 10 months and will take the certification exam sometime between November 2016 and July 2017.
Savings & Debt Reduction Finally, 18% of my money out was for Savings and Debt Reduction. I reduced my mortgage balance by nearly 4K and added about 12K to my retirement accounts and HSA (this number is higher than the last entry because of the HSA contributions). The other personal debt was more moved around than paid down. It started the year mostly on credit cards, as I spent about 4 years transferring debt from one 0% balance transfer offer to another, moved to a personal loan mid-year, and finally to a HELOC by year end. This next year will be another big debt reduction push. It currently looks as though I will pay the non-mortgage debt off by mid-way through 2017, at which point, I will further accelerate mortgage payments so that my house is paid off by the time I reach 65.
So, all in all, even though I felt quite un-frugal in some areas this year (definitely NOT in a mood for penny pinching after having done so for the past decade!), I kept my spending in reasonable check. I expect next year to be similar, although next year's discretionary spending will be less for eating out and the theatre and more for hiring some help with decluttering, home organization, and cleaning.
In Sum The last time I did an annual spending re-cap was in 2011, and I see that my spending percentages have not really changed that much--there's less on expenses related to the house and health and pets percentage-wise, but my overall priorities seem about the same.
This entry is mostly nonfinancial, tho I will note that I decreased debt by $7,630 and added $7,975 to my retirement accounts during the year, so over 15K total to the good.
I've gone ahead and updated my side panel for my 2016 goals--fewer than in previous years, with the hopes that I'll make even more progress on each.
Here are my goals/results for 2015.
Job Performance: Completed 1 of the CFP classes, gained familiarity with the top 40 clients, improved efficiency, and earned a raise mid-year.
Organization: very little progress at home, made a start at office organization. I did improve my financial organization by moving my non-mortgage debt from credit card balance transfers to loans (first a personal loan and then a HELOC at a better rate, which I used to partially but not totally pay off the personal loan, and partially for some capital improvements). This will be a big area of focus for 2016 now that I have one year at my new job under my belt. Making big improvements here will enable improvements in other areas in future years.
Health: Joined a gym mid-year and have gone 2-3 times a week pretty consistently since; kept my weight fairly steady; and got my chronic bronchitis under control by going on FloVent. But I am suffering from fairly severe fatigue and need to work on improved sleep/decreased fatigue in 2016, as well as keeping up with the gym and decent nutrition.
Social/Recreational: Took 3 short vacations (first since 2011), saw half a dozen plays and about two dozen films, participated moderately actively with my congregation--but did not manage to entertain at all. I'll get organized in 2016 and make having people over a goal in 2017.
Professional development: Went to about two dozen Board meetings and/or networking events, joined a new professional organization, wrote one entry on my professional blog.
All in all, not a bad year, even if I fell short of my ambitions. But better to aim higher and fall short than to aim too low and not perform up to my best.
Yesterday was my one year anniversary at my new job. So far, so good! Absolutely loving what I do--which is not to say that it is a low-stress job. In fact, we are coming up on the highest-stress time of year for me. I am now the tax planner at a financial advisory firm and year-end is when you can do the most (and most good, hopefully), so it will be a busy few weeks for me. Then things continue busy until after April 15, but not nearly as busy as in a CPA firm!
Since I knew year end would be stressful, I took a weekend in October and went to a bed and breakfast again. Very enjoyable. (Patientsaver, if you read this, this is the one that I had mentioned to you via email.) I was really in the mood to mostly sit and read and write (and take a few walks), but I did force myself out on one sight-seeing expedition: to the Museum at Bethel Woods, which commemorates the Woodstock Festival (which was actually held in Bethel, NY, not Woodstock). I bought a mood ring as a memento--had one back in the 60s, too.
In other happenings: I've now been going to the gym regularly for 5 months. I definitely feel better and look a *little* better, but weight loss progress is slow--about a pound a month. And it's not something I'm going to stress myself out going into busy season. The gym has a holiday deal, which I will go in on: give them an extra $25 next week and weigh in, then weigh in again the first week of January. Maintain your weight or lose over the holidays and you get your $25 back. But gain and your money goes into the pot to be split between the top male and the top female loser (in terms of body fat percent). Who couldn't use a little extra incentive to keep on track over the holidays?
And I took out a HELOC (home equity line of credit) last month on my 10 month anniversary of buying my home. I had some work done on my roof, and in the spring, I need some professional landscaping to restore the area damaged by digging to repair a broken sewer pipe a couple of years ago and to repaint my house, but mostly I am using it to pay down the personal loan I took out earlier this year, since the HELOC is at a better rate. I still will have about 23K in debt to get rid of in the next year & a half before I do any interior cosmetic changes (the kitchen and bath both really could use a refresh), but it's nice to have a bit more liquidity there should I need it.
I'm hoping to feel enough ahead of the game next week to be able to take off the day before and after Thanksgiving (as well as Thanksgiving itself, of course) to give myself some uninterupted time at home to work on decluttering and home organization. That is the goal for the year that I have made the least progress on, and I'd like to keep the needle moving on all five fronts. After that, I'll be working through to year end, with Christmas and New Year's Days off, and half-days on the eves of those two holidays.
In 2015, virtually all my time off was in the second half of the year--I had one sick day in February, and I took off the day after Memorial Day, but all the rest of my time off was July or after. Next year, I'll try to balance it a bit more evenly throughout the year, leaving time again for a one-week vacation in the summer. Next year will probably be to Los Angeles, my hometown, as it is four years ago on Thanksgiving since I saw my sister, who has been having a bit of a rough time herself, so she has not been traveling either.
Certain classes of "Expenses" are also "Investments," not in the traditional sense, but in oneself.
There are a few key categories of these self investments: one's "human capital" or job skills/performance; one's relationships; and one's health. And one invests in these not just with money but with time.
Looking at my sidebar goals, there are two that have been lagging the others--taking better care of myself and getting my house in order.
I want to make progress on both of these by year-end.
I'm starting with health. Or, I should say, I started with it back the end of June. I joined a gym and also an online nutritional coaching program.
That gym I really liked, even though it was more expensive than my previous Gold's Gym membership ($75/month vs $19/month). It was worth it, though, for the first two months. The classes I were taking were the "Lite Intense" classes, which tended to be smaller than the regular classes at the gym (maximum class size in any case is 10). And all the trainers are certified, and the gym uses a heart-rate monitoring system to motivate students and make sure they are working out appropriately--every student wears a heart rate monitor and one's heart rate is displayed on a tv screen.
Then in mid-August the trainer that I was working with went back to college, and the gym decided that, since the "Lite Intense" classes were less popular, that they would stop offering them (at least at the times of day I could go...they still have one such class each weekday at 10 a.m.). They still had classes, but "Intense" ones, and the class sizes were longer, and the exercises were harder. And although the instructors were VERY good at modifying the exercises for me and my fitness level, I still found myself doing a lot of social comparison and negative self-talk and coming out of class depressed at my performance--even though my heart rate showed I was working harder. I have a degree in psychology; I understand this; but I still do this. And it was seriously undermining my enthusiasm for going to the gym.
So I began to look for another gym, and I found one--but at another step up in price. But, not only do they have the advantages of the other gym that made it so appealing--certified instructors, heart rate monitoring on a tv screen, but the membership that I am going to go for involves "Semi-Private" classes, maximum class size four, which is just right. Private training is too expensive and when you DO private training, the trainer ends up standing around a lot while you put in the reps; with semi-private, you get personal attention and the trainer stands around a lot less as they go from person to person. When there are only four people and sometimes they are doing different routines, there's much less opportunity for the social comparison/negative self-talk trap that I fall into. And they also have a larger group class called "Foundations," which is for people who are just starting out, to get you READY for the intense classes, which they also offer. I went to this class on Saturday and it is a good fit--I am NOT the heavest, slowest, and oldest person in the class :^). They also have body fat/lean body mass percentage testing with an impedence monitor every six weeks so you can see if you are getting results. They also have a monthly social gathering outside the gym and encourage the gym members to be a community. I already know more names of members there after one week than I did after two months at the first gym.
I know myself, I know that I have spent hundreds on exercise equipment and DVDs, and I know that what works for me are classes where I can get personal attention. If I cancel the online nutritional coaching (which is good, but I find that I am not making the time to participate), my net health expense outlay for each month will be the same. Also the gym is having a weight loss challenge starting the beginning of October leading up to Thanksgiving, so that should motivate me to start putting some of the good nutritional habits and principles I've learned more in to practice. My weight has crept up a bit in the new job as I am sitting at my computer so much....it will be 15 pounds down to where I was last year (not that that is all I would like to lose, but that is my target for by the end of the year).
I've only been at the job eight months, but the boss likes to keep everything on the same schedule for everyone, and July/August is a slow time for the business and most vacations are in August, so July for salary review it was. The boss said that they made the "right choice" in hiring me, that my strong points and my weak points are just as he anticipated when hiring me, with the weak point being getting me integrated into the Team, who have worked together for several years...I am the only new person in a group of 5, the last of whom joined about a decade ago. And I tend to be self-sufficient and reluctant to ask for help, and the rest of the Team hasn't really gone out of their way to get me up to speed, so it's something to work on on both sides. But generally, he is pleased with my progress, said that he hopes I finish my career with the company, and that he regards me as the firm's greatest "untapped asset," so all that is good. And I have a $2,500/year salary increase as of August 1. All in all, a good result.
Just looking at my balance sheet today compared to six months ago (11/30/2014). Overall I have a nearly 25K net increase, of which half is in retirement savings (and that increase is pretty evenly divided between new contributions and capital appreciation).
Of the other half, 5,000 is a net decrease in debt (which has been transferred from credit card balance transfers to a personal consolidation loan) and the rest is an increase in savings (some ready cash and the rest in my HSA).
Nice to see progress and especially to feel like it is progress that will continue, rather than a few steps forward and a few steps back. Of course, we'll see if there is any big market correction this year, but at least for the factors under my control, I am feeling positive.
Also, for those of you who have seen me on here for a long time, yesterday was the five year anniversary of Henry's passing. Hard to believe it has been five years. I always told him his middle name was "Retirement," since during the 4 years I had him I ended up putting the amount that I otherwise would have put towards retirement towards medical expenses for him--but he was well worth it for the love and purpose he gave me during some pretty tough years.
I was struck yesterday by the comments I received about my debt consolidation loan, with people uniformly concerned about the interest rate.
10.9% is, indeed, the *nominal* rate, but that doesn't mean that it is the *effective* rate--the rate that I will actually pay. *That* depends on how quickly I pay the loan off--and I won't take the full 5 years.
In fact, this morning, I worked out on paper a plan by which I can have the loan paid off in *2* years. If I pay the loan off in two years, under my plan, I will pay $2,509 in interest rather than the $6,085 in interest under the full amortization schedule. That works out to an effective annual interest rate of 6.96% per year for two years, for an unsecured loan. And *that's* not bad.
For those of you who were worried about my slowing down contributions to retirement--I'll contribute less than I would have without any personal debt, but a heck of a lot more than I have contributed for the past six years of underemployment. Counting the 3% employer match, I'll have 12,000 added to my retirement contributions this year and 15,000 next year. I have a SIMPLE plan, so the maximum contribution for 2015 is 12,500 + 3,000 catch-up contribution for being over 50, so a total of 15,500. (2016's total allowable SIMPLE contribution will probably be 16.5K). So while I'm not quite at the maximum retirement contribution allowable, I'm most of the way there, and in two years, when the loan is paid off, I'll definitely be at the max.
Also, the debt is there--it's a sunk cost that needs to be repaid in any case. I could punish myself by denying myself some pleasures in order to try to maximize my retirement contributions, but the only CERTAIN time one has is the present, and I'm not the type to unnecessarily restrict myself today for a tomorrow that may never come. Planning and reasonable retirement contributions given income, yes, but tightening my belt now, when I am earning 50% more than I ever have in my life? Absolutely not. I'm on good track to have a million in my retirement fund by the time I turn 65, and I'll probably retire when I hit 1.25 million, which I anticipate happening when I am 68--just beyond my Social Security Full Retirement Age of 67. But just in case I don't make it there--I'm going to enjoy my life as much as possible while I can!
I think it is important to think about WHAT you are buying when you take out a loan. You are not just buying the use of money (with the interest rate as the purchase price). You are also buying time and flexibility and the peace of mind that comes with having a clear pay-off date. I certainly haven't had the peace of mind while transferring debt from 0% balance transfer deal to 0% balance transfer deal. And while I'll pay approximately twice the amount to the bank under the terms of this loan than I would if I continued the balance transfer approach, I'll also buy myself that precious peace of mind--plus flexibility if the worst should happen and I lose this job or have a major home repair expense.
Is that peace of mind and flexibility worth it to me? It certainly is, or I wouldn't have chosen this approach.
Rules of thumb, like minimizing or avoiding debt, are well and good, but they are a starting point, not an ending point. If someone is financially unsophisticated, yes, encourage them to avoid debt--but keep in mind that taking on debt should be a calculated risk. If the person is unlikely to be able to pay that debt off, then the first tack should be cutting expenses. But if the person has the wherewithall to pay the debt off, then one should consider the psychological benefits that one is purchasing with the debt and ask the person whether they are willing to pay for that peace of mind and flexibility.
Debt is also leverage, folks, and what one buys with money is not just material objects but psychological qualities too.
Confession here: I fell off the debt reduction horse during the past few crazy, unstable years. My net worth has grown, but whereas I was out of debt in 2009, I accumulated, at a peak, 30K of non-mortgage debt (currently $25,667). For the first time in years, my income is stable and no family crises loom, so it's time to get back in the saddle. First step was getting back to posting income and expenses with YNAB, which I used to do. Nice upgrades to the program during the past 5 years since I last used it. Second step was consolidating the credit card debt with a personal loan-20k, 5 years, 10.9%. I'm tired of juggling 0% balance transfers. And it won't take me 5 years to pay...but I have flexibility with a longer term, just in case. And step 3 was to temporarily cut my retirement savings to 3% in order to add $420 a month to emergency savings. I've been living with too small a buffer, which is why the debt accrued. Increase the buffer, pay down the debt, max out retirement savings once I have more liquidity...and hopefully not only keep the job but eventually get a raise. My net worth is currently 27K higher than it was 6 months ago when I started the job, and hopefully the market and luck are with me and I'll do at least as well in the second six months. Overall debt to equity is currently 20.7%. Aiming to get it lower still.
While the first two months at work were about mastering software and physical systems (like the phone and alarm systems) as well as preparing year-end tax projections, the second two months expanded my work into the financial planning domain with calculation of annual trust distribution amounts (many trusts distribute for prior year within the first 65 days of the following year) and preparation of my first retirement and educational funding projections and my first client meetings. This next month, until April 15, it's back to tax--this time reviewing client returns rather than preparing them.
Looking at my goals for the year (see the sidebar), I see that I've done pretty well at #1 and #5, adequately at #3 and #4, and a mediocre job at #2.
As far as the job related goals (1 & 5) go, I'm happy with how much I've learned, even though I've put studying for the CFP exam on hold for the moment. There has been too much to learn to deal with particular client issues and questions, like 401K to Roth conversion or whether the exercised stock options were showing up properly on the tax return (they weren't, fault of the broker who didn't calculate basis correctly), or looking ahead to optimal social security claiming strategy for a married couple. But all of this is what I'll need to know and learning it on an as-I-go basis will make the formal classes, when I do complete them, that much easier.
And while it's been a cold winter and I've spent most nights huddling under the covers with my kitties, I am on two boards (one for my congregation and one for the local chapter of a professional organization), and participating in activities of those groups means that I'm out one or two evenings a week most weeks, which satisfies both goals 4 & 5. There's also a recorder group that I play with monthly, and I've become friendly with another person who has an odd mix of professional backgrounds (she's a lawyer & former philosphy professor with an interest in bioethics) and the combination has made her more successful in her career than the success she was able to achieve with either career taken separately (which is what I'm hoping for for myself).
I haven't been exercising--too cold--but I did walk to work once this week and hope to make that an almost daily practice as the weather allows. That one time felt really good. As I regain some very basic fitness, I'll try to build on it by getting back to the gym again.
Also with regard to goal #3, I've been consistent at meditating thanks to an app called Insight Timer. I don't meditate for long periods--more like 5 minutes a day rather than the 20 I aim for--but I am very consistent at the moment, thanks to the "gold stars" the app gives you for each 10 consecutive and 100 total days completed.
With regard to #2, getting my house in order, one aspect of that is satisfactory. I have reduced my debt by about 7.5K and increased my assets by 12K since I started work, 19.5K to the positive. This is because I have been paying about half of my earnings to either increased savings or increased credit card payments.
Four months in to this, though, I am beginning to feel a little bit pinched. I make my payments right after each paycheck comes in, so that there is almost never more than $200 in my checking account. Spring is here, and I'd like to hire someone to clear out the yard, have my hair professionally colored, and go away for a weekend after the end of tax season.
Feeling just a wee bit more secure in my job, I've decided to handle my debt in a different way than I have been. For the past few years, as the debt accrued due to the combination of un- and under-employment plus additional expenses due to playing "pet hospice" for three beloved pets, I've been transfering debt from 0% credit card offer to 0% credit card offer, sometimes paying one off, but then needing to do another balance transfer when another pet hospitalization arose. Now, as soon as I get my tax refund, I'll pay down a little bit more on the credit cards and then take out a consolidation loan. I'll take it out for 4 years but hope to pay it off in 3. This will allow me about $400/month more in my budget, which I can use for current spending and to add to the emergency fund, which is down to $825.
It's time to get out of the "deprivation"/"I don't deserve this" mindset and allow myself some room for current spending as well as paying off old debts from the past and saving for retirement in the future.
So I've done an ok job at getting my financial house in order, but the PHYSICAL house itself is a mess--I've been too cold or tired evenings and weekends to work on it. I'm hoping to get a much better handle decluttering in the next six weeks!
I've drafted my tax return. I would have completed it, but I'm having problems installing the state module, so I need to wait for tech support to get back to me.
My income will be changing a lot between 2014 and 2015, so I wanted to figure out how to get the most benefit by saving, while also continuing to whack away furiously at my accumulated non-mortgage debt.
This will be the last year that I can get a deduction for putting money into a traditional IRA (for singles, the ability to deduct money put into a traditional IRA phases out between 60K & 70K this year). So I played around with my tax software to figure out the optimal amount to contribute--the amount where my total refund will be just about equal to the contribution. I figured that out back in January and have been putting aside money from each paycheck to make the contribution (which has meant paying less on my credit card debt). As soon as I've got my software glitch figured out, I'll make the IRA deposit, file my return, and then use the refund to pay more off on credit cards. If all goes according to plan, I'll have managed to lower my nonmortgage debt by about 10K by sometime in March by a combination of using my required minimum distribution from my inherited IRA and the refund, plus some regular payments.
After this, I'll continue to pay off the debt at about $1000 a month. A lot of this debt is on credit card balance transfers (12 to 18 month) at 0%; but two of those expire in June, by which time I figure my total non-mortgage debt will be about 18K. At that point, I'll need to determine whether I'm going to look for another balance transfer or possibly find a low-interest loan. I'm thinking about taking out a 36 month loan (of course, depends on the interest rate). If there's no penalty for early pay-off, I can then think about whether I want to keep paying at a thousand a month, or whether I want to halve that and start saving $500 a month to build my emergency fund back up.
In any case, getting the debt down by 10K after I get the refund will feel really good. I had no non-mortgage debt back in 2008 and 2009, and I'd like to get back to that place as soon as is feasibly possible, while also working on my other goals (paying for the certification program I am in, rebuilding emergency savings, having a little money to do things like hire a personal trainer for a couple of months and go on vacation for a week, now that I once again earn enough that those are reasonable things to consider).
Balance. It's all about balancing goals over time.
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