Tag Archives: saving

10th Anniversary of Her Every Cent Counts and Exciting News

10 years ago, I wrote my first post on Her Every Cent Counts. Well, I missed the exact anniversary date, but it was on May 29, 2007 when I started writing, noting that my networth at the time was $27,000 and that my income was $35,000 a year.

Over the last 10 years, as I started to save money each year, investing in retirement and taxable accounts, I got this crazy idea that I wanted to save $500,000 before having my first child. Given I had less than $100k to my name when this idea popped into my head, it seemed to be an impossible quest.

I ran my networth numbers on June 1 and discovered that due to growth in my portfolio and other savings, I have achieved my goal of $500,000 in networth (before having kids.) It feels kind of surreal – on one hand, it feels like a huge accomplishment, to have saved $500k before my 34th birthday — on the other, as I confront the realities of unemployment and consider changing careers, I wonder if I should fight through life in a role that isn’t suited for me in order to move on to my next goal of $1M by 40 – or, do I find peace with living a simple life, find a job I can actually be good at, and not touch the $500k (outside of educational funds) so it can blossom into a substantial retirement account to enjoy later in life?

There is no one in my real life to be able to celebrate this moment with — so I’m celebrating it here with you, my anonymous and semi-anonymous readers. Thanks to you, I have kept up savings for the last 10 years – have turned down opportunities to live closer to work and in nicer housing, have generally been more frugal than my income would enable me to be, esp in the last few years, and have been heads down on achieving this arbitrary goal that nonetheless is incredibly rewarding to achieve. With 32 years left to retirement, not touching the $ and it growing an average of 5% YoY gets me to my retirement savings goal of >$2M. The trick, now, is not touching that money, and still managing to make enough to live a decent life.

Happy 10th Anniversary HECC, and to all of you who read my blog regularly or occasionally or are brand-new readers, thank you for inspiring me to be a good saver, and for making it possible to achieve this major life goal.

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Are State Sponsored Retirement Plans a Good Idea: California Secure Plan Bill Passes Assembly

Americans are not saving enough for retirement. In lieu of accepting that the standard fiscal state for the majority of retirees is poverty, some states are trying to help people get their financial acts in order. This week, California became the latest of those states (see what’s happening in your state here), with the “Secure Choice Retirement Savings Program” bill to create a state-run retirement plan for roughly seven million private workers passing the Assembly – one step closer to becoming reality. This would make California the eighth state to establish such a plan.

There are 55 million workers who don’t have a way to save for retirement at their workplace, and of those, only 5% take the steps to open an IRA, according to the AARP.

Continue reading

February Wrap Up & Networth Update

February, despite being a short month, was quite a productive one financially. The stock market was going up and up and up, which provided quite a nice bump in my networth.

For the new readers:
My Objective: $500k in networth by 1/1/17, $400k by 1/1/16. First kid by 1/1/18.

Well, despite being in a bit of a funk/depression this February, my bank account looks quite healthy. So healthy, in fact, that according to my bi-monthy networth report, I’m actually ahead of plan. This is extremely exciting to me as this is the first year I’m attempting to see a $100k increase in my annual networth. Being as I hope for a more flexible career when I have children, I have only a few more years to achieve my goal. Including my material assets (namely my car), my networth is now somewhere between $327k and $337k. My goal for 3/1/15 was $316k to be on track to $400k this year.

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Now, not every month is going to be so great in terms of stock growth, and likely my portfolio will see a correction soon. It’s just fun how the more money you save the more it can go up in a month when the market is also going up. Also, I’m fortunate to have a job and lifestyle that enables me to save, save, save. Well, I did go shopping last month and bought a few new items, but overall I feel good about the month in total. Makes up for a fairly flat January.

My focus is really on being exceptional in my work so I can maintain this level of growth without flatlining or seeing a decline this year. This year can really go any which way. I’m hopeful I’ll continue to have good news next month, and be well ahead of plan by mid year.

 

Money is an Easier Goal than Happiness

Since 2007, I’ve been writing, on an off, for HerEveryCentCounts. I was reading another 20-something-year-old’s blog and was massively jealous of her networth that was around $250k. I thought about my massive savings account totaling $7k and how my part-time job and internship were not even making it possible to break even every month. I learned a lot about personal finance and got myself a Roth IRA account. I started investing. I pushed myself to increase my income year-over-year. I got to the point, a few years ago, where I made a goal for myself to hit $50k in networth growth, year over year.

What’s crazy is that, after a lifetime of never focusing on one thing long enough to achieve my goals, and even with my life consistently crumbling around me due to my bipolar depression, I managed to hit my fiscal goals time and again. Nothing else made me quite as happy as seeing my networth increase every month in my OCD spreadsheets. I didn’t really know what I was doing when it came to investing, but I kept on putting money into the stock market, especially when it went down, and I saw my networth grow.

At the end of last year when, on paper, I reached $300k in networth, it felt like the biggest accomplishment in my life. I’ve never run a marathon or won a competition. I’ve never really done anything impressive. Hitting $300k at age 30, which was the goal I had set out for myself when I was 22 – at the time when it seemed completely impossible – was achieved. All of the ups and downs over the years seemed to be, at that moment, worth it. $300k wasn’t enough to retire on, but it wasn’t chump change. Suddenly my also unreasonable goal of $500k in networth before having children seemed possible, if I could just hang in there for a bit longer.

My boyfriend does not share in my money-obsessed ways. He saves a bit here and there, but he hasn’t invested any of his money outside of a Roth I convinced him to open when he turned 31. Meanwhile I’m throwing most of my earnings into the stock market, which is maybe dumb, but so far it’s worked out. As of Feb 15, my networth is ahead of monthly target towards my annual goal of $400k (this is the first year I’m trying to achieve $100k networth growth vs $50k.) As of Feb 15, I have $319k in networth. The stock market has performed quite well for the past few weeks, so this upward trend probably won’t last, and there will be pullbacks, but I’m excited to see that 1.5 months into the year I’m already trending towards my goal.

All I know is that I have to work hard for the next two to three years until I have my first child. There is no way in hell I can do the job I have now with children. I may have to change careers at that point, or at the least, accept a lower-paying job in order to be the mother I want to be. I’m strongly considering leaving my state and moving somewhere where I can purchase a nice house with a backyard for $500k, not $1.5M. My boyfriend is open to moving as well. It would be tough because it takes me a while to meet people, and at the least we have a few friends in the area, but I know if we stay in our region I will have to maintain my level of work and simultaneously raise a family. It’s just not going to happen. I see my friends who are parents who are either not working or working from home part time, and I can’t imagine how I would be able to keep my current job, or something like it, and also take care of a young kid.

While saving money, investing, and seeing my networth grow is exhilarating, at the end of the day, it’s my own little semi-secret. My parents still see me as this ongoing series of failures, jumping from job to job every few years. My boyfriend doesn’t care about my savings, which is good, but I don’t get any sort of extrinsic reward from his acknowledgement of my success. I guess that’s why I keep this blog to begin with, because it feels good to impress someone somewhere with my little fiscal victories, month over month, year over year. When you’re an adult no one really gives a shit about the amount of money you saved every month. I guess that’s why people buy fancy cars and big houses – because then it’s easy to show off your success. I don’t need to show it off, I want to be renowned for being the millionaire next door – one day – for being a woman who, despite suffering from crippling mental illness, has saved enough to be able to take breaks from work when depression hits, or when she wants to spend time with her future children instead of spending 10 hours per day working.

Then, I also realize it’s really dumb to want any sort of recognition for saving. Everyone does it. And my own saving has been made possible due to my parents paying for my college diploma, and my graduating without any loans. I’m too scared to dip into my networth to go to grad school, even if it means finding a career that I would be more naturally suited for, so I just hold my breath and hope I can last long enough to see another paycheck come through. I am well aware that my income, strong as it is right now, is likely short-lived. All I can do is push hard and save as much as possible each month — climbing as quickly as possible to my $500k goal.

I know $500k is an arbitrary number. It’s a lot of money but it really isn’t a heck of a lot of money. What $500k means to me is the ability to take a $60k a year job that is meaningful in a state where costs of living are lower, let the $500k grow and use the $60k to cover basic day-to-day costs, along with the income my boyfriend makes. $500k growing at 5% rate over 30 years is $2.1M. So if I can not touch my principal or the interest income until I’m 65, I’d have $2.5M in retirement. That’s how much I think I need for a comfortable retirement. And if it happens to grow at 8% YoY by 65 I’d have $6.3M in retirement.

So that’s why $500k is the magical number to hit before I can start doing things I actually want to do in my life… like being a mother, working part time building my own business, or writing for a local newspaper, or attempting to write my first science fiction novel. I still need to earn an income that covers my annual expenses, but I believe $500k is my version of financial freedom. I would still have to work, because I couldn’t tap into that money until retirement, but I’d be pretty much set as long as my average rate of annual return was at least 5%.

The exciting part of this picture is that the $500k by 32 IS possible, if I can succeed at my job and maintain my current salary for at least two years. I may come out of that with a head of grey hair and a heart attack or two, but I’ll be able to be the mother I want to be.

Feb 1 Networth Progress:

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2012 Self Operating Plan to save $50k for $200k Networth

This is a big year in my networth saving. I hope to have $200k in all of my accounts by Dec 31, 2012. This will have me on track to $250k by 30; and $500k by 35. Somewhere between 30 and 35 I plan to get married and start having kids, so that will change the story a bit, but I don’t want to get married and even think about having children until I have $250k across my various savings and investing accounts.

Since graduating college in 2005, I’ve increased my networth from $10k to $145k. On average over the last six years, I’ve saved (or earned interest on my savings) an average of $22.5k per year (my income for the past 6 years has been $15k, $25k, $35k, $55k, $65k, $85k, and now $90k.) My goal these days is to save $50k per year, but that remains a difficult feat on my $90k salary. Lately I have been eligible for a bonus of up to $20k, and I hope to hit my objectives in order to achieve a $110k per year salary including a bonus.

In order to reach my $200k goal in 2012, I will have to be very strict with my spending. I’m not sure that amount of saving is even possible (unless the stock market rebounds) but my plan of income vs spending below will need to be followed spotlessly if I am going to achieve my goal in 2012. Continue reading

WSJ’s Ways to Save $10,000 in One Year

WSJ sought to write a provoking article on how to save an extra $10k per year. Their suggestions, sometimes reasonable, sometimes not, are listed below, along with my commentary (full article here.)

Dump the TV
That is a good idea if you live alone and are paying $600 per year on television. With roommates, if we dumped the TV altogether that might save me $60 per year, and I’d have to convince my roommates to dump the TV.

Use loyalty programs aggressively to get discounts on car rental, air travel and other deals
Not a bad idea, but something that takes time to figure out, and if your time is worth  more than this (if you earn $50/hour that’s only 20 hours for the whole year to spent figuring out these deals, signing up for programs, etc.) You’re probably better charging $70/hour and working those extra 20 hours.

Switch Bank Card Companies
Some banks do charge lower fees. The only fees I’ve paid (that I know of) are the few that came when I accidentally bounced a few checks this year, forgetting to transfer money properly into my account. How much do you think you would save if you switched banks?

Reset your weekly expenses to fortnightly.
I already don’t have weekly expenses, except maybe a splurge on eating out every once in a while. My parents, on the other hand, could do with moving their house cleaner to bi-weekly. This is probably the best tip of the bunch, if you have unnecessary weekly expenses. Continue reading

Retirement Impossible

Looking at my various investment accounts, as they fast erase their gains of the last two years and start to go red, I wonder if retirement will ever be possible. I thought a few years ago when we were in a “recession,” my investments at the bottom would eventually equate to some reasonable returns.

It’s so difficult to understand if I have bad investments, if the market is just killing everyone equally right now, and if there are any other places I should be putting my cash right now. Watching about $10k in investments disappear in two months is painful. I understand in a few months it could swing the other way, but right now I’m starting to lose faith in the economy overall. I can see the next 10 years being the lost years of America, and in that time the market will either remain flat or even decline.

I’m one of the fortunate people in America with a good job, who isn’t in debt, who can actually invest my money in the market and hope to see it grow. But, like the few of us left, there is no growth. The only growth is on Wall Street — for the criminals that received huge bonuses from taxpayer bailout money. I’m not political, I’m not walking the streets protesting, but it does seem a bit unfair that Bank CEO pay jumped 26 percent in 2010 after two years of decline (source: good.is) — I’m a capitalist. I don’t believe in loan-free bailouts. Continue reading

See the Future, Wrinkled You and Save More?

Researchers at Stanford believe that the reason so many 20 and 30 somethings don’t save enough during their valuable investing years is that they actually think their future self is a whole other person than the self they are today.

The trick to making us save more, then, is showing us a digitally altered version of ourselves that’s just recognizable enough to shock us into saving more and spending less. Apparently research proves that this works, to an extent.

In one experiment, young people who saw their elderly avatars reported they would save twice as much as those who didn’t. In another, students averaging 21 years of age viewed avatars of themselves that smiled when they saved more and frowned when they saved less. Those whose avatars were morphed to retirement age said they would save 30% more than those whose avatars weren’t aged.

My question is, how fast will these 20-somethings forget how they looked all wrinkled and grey, and return to their spend, not save, philosophy and reality? Hopefully there is some long-term truth to this study, and it can be used to help people my age save more versus waiting until it’s too late to build up a reasonable nest egg for retirement outside of a cushy mid-six figure corporate job. Continue reading

Early Retirement, What it Means to Me

I’ve been thinking a lot lately about the concept of early retirement. From reading blogs like Early Retirement Extreme and Free at 45 I’ve begun thinking about the true meaning of life. Not from an existential standpoint, which I’ve already thought about long and hard, but from a view of what every waking moment of my day is worth from now until my death.

My parents and their friends are getting old now. By old, I mean they’re in their late 50’s and they are really starting to look old. My dad is dying of cancer so he looks even older. When I was a kid, I thought, well, I want to live forever. I never wanted to be young forever. I guess your late 20s is when that thought pops into your head. I don’t really want to be “young” forever. I feel like one’s 30s are the perfect mix of being young and old. And the 40s aren’t bad either. But once you hit 50 your body does start to seriously age. You can definitely work hard at keeping up your body through physical exercise, eating right, etc, but the years take their toll on every body.

When I think about early retirement, I don’t have a dream of retiring to some desolate island and relaxing on a beach. I dream of working hard but doing what I want, when I want. I want to get to a point where working freelance or part-time on my own hours won’t kill my bank account, where my savings are large enough that the long-term stock market gains will provide a substantial portion of my income.

So over the next few weeks, I’m going to work on calculating exactly what all this means from a financial standpoint. What year could I “retire” from 9-5? How much do I need to earn now and in upcoming years to obtain this goal? How much do I need to save? And when exactly can I retire “early?”

My current plan is to try to save $6,000 per month while I’m fortunate enough to have a job that pays well and low living costs. I’m not sure if this is maintainable over the long term. I’ll update in the near future with some further calculations to determine how much I will need to save each month to meet my early “retirement” goals.

Is Grad School Worth It? Financially Speaking.

I’ve been obsessed with the idea of applying to / going to grad school lately. Not for the earning potential post graduation, but for the chance to focus on an area of study and build up my skills so I feel like an expert in an area (at least until those skills are out of date.) But then I wonder… financially speaking, is grad school worth it?

Really what I need to look at is how much I will have when I retire. I figure I should have at least $1.5M in my bank account when I “retire” (although I plan to work at least part-time well into retirement, but at this point I want to be able to travel and freelance and not have to worry if I get sick and can’t work.)
At the moment, if I can live up to my quasi-frugal savings plans for the year and maintain my current job and occasional freelance income (say $70k per year pre tax) and save $20k each year, according to the compound interest calculator if I start with $30k today and save $20k a year for 30 years at a modest average interest rate of 3% I will have $1.052M in savings by the time I’m 56 and $1.65M by the time I’m 66.
It almost seems silly then to add in the cost of grad school, which will put me into debt and for many reasons, not guarantee I will make more than I am now later and certainly will not allow me to comfortably save $20k anytime during or after graduation from a graduate program.
Additionally, if/when I have children, it will also become increasingly difficult to save $20k per year, if not impossible. This variable could effect both the non-grad school and grad school potential scenarios. And since my 27-year-old boyfriend refuses to work a full time job or put an ounce of his occasional earnings into a Roth IRA, it’s likely that I’m saving for the both of us and our families. Which makes that $1.65M, esp with inflation, seem like a few dimes and a penny.
That brings me to wondering if I should just keep living like I’m living now for the rest of my life. No kids (they’re expensive.) Roommates. A small room. Living in an area where heat isn’t necessary. Cheap bills otherwise. Saving $20k per year. Cutting back when needed to make that possible. Retiring single at 66 with $1.65M (some of it would be taxed, of course, but that’s still not bad.)
Then again… why should I be living life to save for retirement? I can’t imagine ever wanting to fully retire — I see my grandmother at 80 spending her days in the casino and I think if I had the mental capacity she does at 80 I’d be working. I might be limited in my job choices but still, I’d be working because I don’t want to be the type who just sits around and “enjoys” retirement.
Going to grad school is probably an easier choice when you’re making $35k or less. But once you’re making $70k it’s a hard trade in. I’m looking more and more at MBA programs (my career counselor seems to decided that I should consider this path and is in awe of my knowledge of social networking and certain aspects of the tech business) but I don’t know. I don’t see myself ever really following an MBA path — working 100 hours a week, traveling more than I’m staying… I could do that maybe for a few years but not my whole life. How much more can I really earn with an MBA vs. 2 more years of experience that I can gain through my current or next job? Alas, these days I’m liking numbers a lot more than I used to… and I think I’d like studying applied math. I like spreadsheets.
The debt truly freaks me out. People go into debt all the time for school but I don’t know if I can. Partially its because I don’t know if it will actually be worth it for me to go to grad school. It would probably make more sense to give a loan to someone more focused than I am and more dedicated to getting a high salary, pay for THEIR grad school, and earn interest on that… then for me to go to grad school.
And, anyway, I read that in 25 years a dollar today will be worth $.32 which means that my $1.65M when I’m 66 will not be enough to get me through retirement (unless natural causes like stabbing myself help me reach those goals.)
How much are you saving for retirement? How much do you think we will need to retire in 2050?