Financial Update: May 2015

I know it’s been a while since I gave everyone an update on my own finances. The reason for this is that shortly after getting engaged, my fiance and I combined finances, and my Mint account was therefore a huge mess of “Is that mine or yours? What category is this Amazon transaction on your account from two months ago?” We then proceeded to move on buying a house, which means a lot of uneven spending on things like inspections. Now that things are a little more settled, here are the highlights of the last three months of my finances:

  • We spent $800 on home inspections. Man, did that hurt. We initially had one house picked out that was a bit of a fixer upper. Spent $400 to get it evaluated and learned it had serious foundation problems, decided we couldn’t deal with that (which meant we also lost our $200 in option money, booo). Moved on to the house we’re now planning to buy, spent another $400 to get it inspected. The $400 we spent lead to negotiations which got us $1,000 back in closing costs from our sellers, so that was money well spent! If you ever buy a house, spending some money on a trusted, thorough inspector is definitely something I recommend. I don’t regret it.
  • Spent $1917 on food including eating out and groceries for two people. That’s about $640 per month for the last three months. I know, it’s pretty high… cut us a break, we went out for a really nice dinner to celebrate our engagement!
  • Spent $1215 each month for rent. Luckily, we found our house just in the nick of time so we don’t have to go month-to-month on our lease while we continue to search! If we’d needed to do that, rent would have been almost $1400 for those months.
  • Got an “A” in our grad school class! Hello, several-thousand-dollar tuition reimbursement!
  • Spent $313 on car stuff–soon to be much less! No university parking fees over the summer, and we sold our second car since we figured out we get almost no use out of it!
  • Spent $550 or so on utilities. Yeah, we could maybe stomach leaving the AC off a little more frequently, but for the most part this was an OK expense for us.

In general, we’re continuing to spend at a rate amenable to high levels of saving. We’re both maxing our Roth IRAs and Roth 401ks and beginning to build quite the nest egg! Things will continue to be messy next month due to closing on and moving into the house. Lots of random expenses like buying refrigerators and necessary furniture and etc. On the bright side, we’re doing the low-cost option of “bribe your friends with pizza” to get all our stuff moved from our apartment to our new house! I’ll keep you all posted as my situation continues to shift.

How Minimizing Your Paycheck Can Maximize Your Savings

As beautiful as Ben’s smile may be, whisk him away into savings and you’ll be happier than ever. The old man himself agrees with me: “A penny saved is a penny earned!”

You just got that big promotion, or that new job, or that solid yearly raise. “Score!” you exclaim. “Now I can buy all the junk I ever wanted!” But taking a step back, you realize that while a small amount of that money can be used to buy that fancy new video game or purse, most of it should probably be saved toward the bigger things in life. But it’s so tempting seeing those extra couple Benjamins hanging out in your checking account…

In this post, I’ll show you how to shrink your paycheck so you’re never tempted to spend money you should be saving. Make yourself feel poor so you can get rich!

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A Nice Mint Mojito

Mint.com is not always as good as it could be, but there is hope on the horizon!

If you don’t already use the Intuit web software Mint.com, you should strongly consider it. Mint is the best tool I have found, by far, to keep good track of your spending in a relatively hands-off manner. The highlights are:

  • It automatically pulls data from all your accounts (credit cards, checking, savings, investments) and allows you to view their balances all on one page
  • It auto-categorizes all your transactions, and is pretty O.K. at it.
  • It offers beautiful visualizations of all your spending
  • It allows you to set budgets and goals that it helps you track

Mint, however, often leaves much to be desired. Sometimes the interface is a little clunky and doesn’t do quite what you want, and the developers don’t update it as often as the users wish. As an avid Mint user, I was excited to find the Google Chrome Extension, Mojito. It has several awesome features, like allowing you to sort your accounts from highest balance to lowest balance, hide credit cards that have a zero balance, and pulls your recent transactions onto the homepage. He also finds ways to make the ads on Mint less obstrusive, and combats Mint’s way-too-short page timeouts. It’s a really great extension and makes my frequent Mint-using experience much better!

The developer is just one guy, he even has a wordpress blog (though it’s a little stale), but he put his code up on github which means we might see even more active development. One can only hope. It seems from the comments on the extension that it is being actively updated. What he has done thus far makes Mint infinitely more usable and beautiful.

Reducing Restaurant Spending (and February Update)

My February spending, visualized by Mint.com
My February spending, visualized by Mint.com

As you may have read in my orginial status report, I like keeping this blog updated with the amounts I spend on various things. Here’s my February check-up. Last month, I spent:

  • $600 on Rent
  • $160 on Groceries – pretty standard
  • $200 on Restaurants – Oops, this is a little high
  • $46 on Car-related expenses – Gas and parking for class
  • $78 on Shopping – needed a pair of jeans, some miscellaneous items
  • $29 on Bills – Didn’t pay electric or water yet for Feb. usage

=$1113 spent
For someone who claims to be frugal, $200 is a lot to spend on restaurants in just one month. My excuse is that I went back to my alma mater to visit friends, and being away from home really messed up my usual routine. This is definitely one area in which I need to do some damage control in March, and a challenging aspect of the budget for many people, especially young people. You want to be able to go out with your friends (or maybe you just don’t want to cook), but the costs add up pretty quick.

How do you get a handle on restaurant spending? Keep reading for my suggestions.

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Digit: Intelligently Automate Your Savings

Digit: Save money without thinking about it

A friend recently introduced me to the tool Digit, a “digital savings assistant” which helps you squirrel away money. It works by linking to your checking account and analyzing your spending patterns. When it notices you have a little extra money that you’re not using, it sucks it away into your FDIC-insured Digit savings account.

This smart little service is really great for both meticulous savers, and those who haven’t gotten the hang of budgeting yet.

If You’re a Saver: If you, like me, like to keep immaculate control of your finances, Digit could be a huge help! Every payday, I spend a lot of time figuring out how much I can send to my savings account versus how much I should keep in my checking. Even setting up automatic transfers can be cause for worry. What if I transfer too much and there’s a bill I’ve forgotten about? I could overdraft and get hit with a bunch of fees! Digit has a no-overdraft guarantee to assure you that you’ll never make that mistake. It’s like setting up a smart auto-transfer to savings–one that is guaranteed to never get you in trouble for trying to be responsible with your money

If You’re a Spender: Digit will pull money from your account in small increments when it realizes you don’t need it. If you don’t have the discipline to tuck away that dollar for a rainy day, Digit will help you do that. In turn, this could help you spend less on frivolous things, since you won’t have that big chunk of cash sitting in your checking account!

What else is good about Digit? It has an awesome interface that you can communicate with via text messages. It will let you know how much you’ve saved, and even help you keep track of your bills! If you need to withdraw money, it will have the funds in your account within a day–much faster than conventional ACH transfers. It’s also just as secure as your own bank account.

Any downsides? Well, there’s no interest on their savings account. However, this doesn’t seem like a big issue to me unless you already have a huge amount of savings, with savings rates being what they are these days. Also, if you don’t use texting, you miss out on a lot of the friendly communications the platform offers.

All in all, it seems like a great product that will help me save some dough for my next vacation!

Financial Independence – My Current Status

I shouldn’t lecture you about personal finance without practicing what I preach. In the interest of honesty and transparency, here’s a little bit of information about my own financial situation.

Financial Independence? What’s that?

For those of you unfamiliar with the financial independence movement, it is a radical new way of thinking about early retirement that involves living below your means, saving the extra, and exiting the rat race at a young age. The basic, driving principle is: if you can save 25x your annual expenditures, you can live off the investment returns from that money indefinitely and never have to work another day in your life. When I started my job, I began reading blogs about financial independence and became fascinated with the concept. Looking over my accounts, I realized that financial independence could easily be a reality for me! As a natural saver, I have always put away anything I don’t spend into my savings account, and get a warm fuzzy feeling when I see the numbers in it rising. Having a more concrete goal in mind for all those savings would only motivate me further!

While some followers of this movement tend toward extreme frugality in order to retire at the age of 30, I found that I didn’t really buy in to that lifestyle completely. While I definitely believe in living below your means, I’m fortunate enough that my means are a lot higher than rice and beans for every meal, and I want to be able to enjoy some creature comforts in life. I also feel really passionate about my career, like many others who work in technology. My goals are more moderate–I’d like to commit to a solid couple of decades of rewarding work, and retire around age 40.

My Spending

Part of having healthy finances is keeping an eye on your expenditures. This is especially important for someone interested in early retirement, like me, because increased spending extends the time I will have to keep working! I consider myself a pretty reasonable spender, though I do have my vices. The chart below illustrates some data I’ve collected on my spending and saving habits:

Where every dollar from my paycheck goes
Where every dollar from my paycheck goes

This shows where every dollar I take in as monthly income goes. You can see from the chart that I invest heavily in my 401k, and also put money into a Roth IRA. The “Other Savings” category includes my savings for my shorter term goals, which go into a regular savings account. I haven’t quite figured out what those are yet, but this is something like a “House Downpayment Fund.”

Taxes are what they are. Uncle Sam must have his share! My major expenses that I control more directly are food and rent. Which makes sense! I gotta eat, and gotta have a roof over my head. I have tried to keep my housing expenses low by picking a reasonably-priced apartment and sharing my living space. Lucky for me, Texas rental prices are nowhere near as sky-high as the Bay Area! I’ll be honest, I’m not nearly as frugal with my food spending as some other finance bloggers, but I’m not totally crazy with it either. I get a lot of value out of sitting down with a good friend over a hot meal, and though I often try to host parties at my apartment, sometimes it’s fun to go out!

The remaining categories are things like “Shopping,” which includes clothes, electronics, and other semi-necessary purchases, and “Miscellaneous” which could honestly be retitled as “Travel”. Utilities aren’t huge, I keep my bills as low as I can without freezing my butt off or boiling in the Texas sun. Car expenses can get annoying, but I keep them pretty low.