Tag Archives: saving

Live Within Your Means

While being interviewed for a television news feature about frugal living and saving money, I realized that despite being fully aware of ways to save, I’m just not doing enough when it comes to saving money. With gas prices rising, and my rent being what it was, I was breaking even at best most months, or covering the prior month’s expenditures with my next month’s savings.

While that’s better than going into debt, it won’t get me the things I want to save for – getting my teeth fixed ($10k), laser hair removal ($6k?), a condo/house (an $80k downpayment?), and grad school ($120k?). That’s a lot of money I have to save above and beyond the basic emergency fund and other living costs.

As many of you know, my rent was skyrocking up to $1300 this year and while I could pay that with my current income, it would basically cost me my savings plan.

So I left my apartment, without knowing where my next home would be. This month I’m staying with a friend for a measly $350, as she’s being so kind to let me crash in her spare bedroom. That’s helping me make up a little of what I spent on my vacation in Israel… I spent way too much there, figuring I could make it up when I returned and found a cheaper place to rent. That, indeed, is what I’m going to do.

I found a place that I like, and it has a lot of the features I was looking for. And my rent is going from $1050 to about $670 per month, after utilities (except internet/cable). I’ll be splitting the internet & cable bill 3 ways, so instead of it costing me $100 per month, it will be just $30. Total savings, based on last years rent, is about $350 per month, or $3750 per year. Based on the rent I was supposed to pay this year, I’m saving $600 per month, or $7200 per year.

While that’s not the $80k I need for the downpayment on a house, or even the $10k to get my teeth fixed, it’s a lot better than wasting that money on rent.

My new room is small. I’ll be sharing a bathroom. I’ll be paying a bit more in gas to actually get places since it’s close to a freeway but not that close to work. Biking to work is no longer an option. But the place, for the price, is rather nice. It has a washer and dryer in unit, plus a dishwasher, and a nice community pool. The complex is a mix of owners and renters, so the property is well maintained. The owners of the specific condo that I’m renting are supposedly nice (I haven’t met them yet) and haven’t even raised the rent in a while – much better than the money-hungry apartment management company that took over my last complex and those $250 a year rent increases!

So… while my savings has depleted itself a bit during the last few months, I’m confident I can make back most of that money within 12 months. Or at least I hope I can. And then the real saving will begin.

Moving: The Latest On My Decision

I’ve decided to move.*

(*”decided” in the dictionary of me = decided for today. That could change tomorrow.)

I don’t want to live in a super-cheap living space, per say, but there are a lot of big-ticket items I want to buy within the next few years (including cosmetic teeth work and a condo), and spending $1300 a month just means that my dream purchases will not be possible.

I looked at a place for about $960 that I like, but it’s a bit out of the way and I feel like if I’m going to move, I might as well try to get something even cheaper than that. I’m not sure how cheap I can go… The $960 place at least has its own bathroom (just a shower, no bath), and anything less than that will undoubtedly be a shared bathroom situation.

There are plenty of random roomshares on Craigslist for about $500-$700, and some of them even include utilities, but the majority of them do not have kitchen “privileges.” I don’t really understand how using a kitchen can be a privilege, it’s not like you’re at college with a cafeteria to eat at. Not that I use my kitchen all that much other than to microwave something, but I still think I ought to get a place with a kitchen.

It’s looking like I’ll just move out at the end of June and look for a place in July. If I do manage to find a place for “cheap” I’m going to really be careful not to overspend throughout the year and instead to really focus on saving. That way I can save up to get my teeth fixed, maybe get some laser hair removal for my face, and finally one day buy a condo.

Forbes Billionaire’s List and How Rich is Rich Enough to Give to Charity?

A few days ago Forbes posted its annual list of the world’s richest people. While the billionaires gracing the normal list were mostly obvious — Warren Buffett, Bill Gates, etc, the list that I found more interesting was the sidebar “World’s Youngest Billionaires.”

Many of the world’s youngest rich inherited their wealth. Some, like Facebook’s Mark Zuckerberg, are self-made billionaires. At just 23 (he’s only a year younger than me) he’s set for life. And a few other lives, as long as he can reincarnate and claim his savings on his return to earth.

As I’ve been figuring out my budget upon my upcoming raise, I noted that I feel like I’m almost making too much money, and I don’t know what to do with it all.

Of course, that’s not true. Now that I actually have money to put into savings, I can start seriously saving for things I want, like for the down payment on a house.

The other day as I was driving I was thinking about how nice it would be to make enough money that I could donate a substantial chunk of it to charity. Then greed clouded my head and I thought – why donate money when I can save the money? My Roth IRA isn’t maxed out yet, and even then the extra cash put into a SEP Ira, a high interest savings account for the house down payment, a CD or some other saving mechanism would probably be a wiser move.

I always thought that charity should be given in time, not money. If you’re going to be charitable, go do some volunteer work, help build a house with Habitat for Humanity, or volunteer to mentor in-need kids in a local town.

Then I got into the “real world” where I realized time is money and I have more money than time. Yet I still don’t feel like I have enough money to donate yet.

Obviously, given my pay bump I could donate $100 a month instead of putting that to my investments and just pretend it never happened. It would probably make me feel all warm and fuzzy inside, but I don’t know how warm and fuzzy I’ll feel when I retire and the government has run out of money for social security.

At what point in one’s wealth-building career does charity become a necessity? Does everyone donate to charity? How much is the proper amount to donate, percentage wise, of one’s income? What if one’s job is unstable and while he or she is making a good amount of money now (in the $55-$70k range, dependent on how many freelance projects are completed), but in a few months she might be unemployed? What if, as a freelancer, my entire life is lived like that? And then what if I have kids and more than just myself to worry about one day, financially speaking? When do I give to charity and when do I just be selfish and keep all my money?

Hello December

I can’t believe it’s already almost 2008. Seriously, wasn’t New Years for 2007 just yesterday? It’s kind of scary how fast life starts going by once school isn’t around to make everything go sooooo slowly. I want to figure out a way to slow life down. Now that I’m 24 (oh yea, I turned 24 a week ago, happy birthday to me) I need to somehow figure out how to make each day count just a bit more.

Thank goodness my job situation is starting to piece together into a picture I like. Freelancing with steady contract work is obviously the ideal situation for me.

Right now I have three steady gigs, plus some random projects thrown in. My logic is that each extra project I take on is more money I can save, while my steady work is generally for bills and such. Any extra money from my ‘steady’ work goes into savings, either my IRA or some other savings account that I need to set up.

My jobs:

Writing for a Company — 30 hours per week, 3 months, $3300 a month
Assisting at another Company — 5-10 hours per week, $25 per hour
Steady work from uncle’s marketing business — $400 a month retainer

So, I imagine that should turn out to something like $3900 a month. Take taxes out, it’s down to maybe $2800? Then take out $1050 for rent, $200 for bills – phone, internet, TV, gym membership) and $200 for health insurance and potential medical bills. That leaves me with, um, about $1300 for food, entertainment, gas, etc. If I’m lucky, that’ll be enough to save some money too.

What I want to save for…

$3000: Laser Hair Removal.
$1000: Digital SLR camera + lense and accessories
$100,000: Grad School

Time to start saving!

I’ve Been a Bad, Bad Girl

This is why it is a bad idea to live next door to a mall:

9am: Wake up, realize I have no clean clothes to wear to a work event in the afternoon.
10am: Ponder doing laundry, but fail to find clothes (that aren’t dry-clean only) that would be appropriate for said event.
11:20am: set off to the mall to find one outfit ($100 max) to purchase for work.
12:30pm: return home with $370 in clothing purchases including: 2 pairs of pants, 1 t-shirt, 1 jacket, 1 nice button down shirt, 1 cute random $70 bright blue shirt that would be good for, uh, clubbing (do I ever go clubbing?), and 1 sweater.
12:40pm: Put on jacket, t-shirt, and pants, and head out to work event.

Anyway… I’m now trying to figure out if I should return anything. Obviously I can’t return what I wore yesterday. I really like the sweater from Express… and it wasn’t too expensive so I’m going to keep it. Really the only items I could return are the $40 bright blue button down, short-sleeve shirt and the gray dress pants, also from Express. But I always manage to not have any pants to wear. I should return the shirt. I don’t even know if I’ll ever wear it. I’m still upset with myself for buying a dress –on sale–at Macy’s a year ago and then never wearing it and managing to not attempt to return it until it was too late to make the return. That’s $53 down the drain.

In any case, I shouldn’t have spent $370 on clothes! That’s ridiculous and I know it. But clothes make me happy. I’m an addict. And I’ve decided that buying things on sale is a waste… because then I always buy things (like that dress) and never wear them. Well, the jacket I bought yesterday WAS on sale (for $60, compared to its $173 original price tag) but… my new rule is to buy clothing that I am in love with at the store, because i know i’ll get a lot of use out of it. For instance, the $70 purple shirt and $160 jeans I bought last month have already been worn… a lot. I try to buy machine wash and dry clothes now, since my dry-cleaning bin is filled up and I’m too stubborn to spend $100+ getting it all washed. Of course that would be cheaper that going out and buying new clothes.

Hmm. So I think I have a shopping addiction. And it’s pretty bad. I’m depleting my savings, even while making $50k a year. How is that even possible?

Savings Breakdown

Ok, so at least my Vanguard accounts started to gain some money. I just realized that I have no idea how my VGMIX Mutual Fund account will be taxed. Do I get taxed when I take out the money or do I get taxed each year on capital gains, even if ultimately I could lose that money before taking it out of the account? There’s probably a simple answer for this, but as of now I’m clueless.

Diversification?


This isn’t my first blog, nor will it be my last likely, but after randomly falling into the online investment blogging community, I decided it’s a good idea to start tracking my finances and the like via the Internet… anonymously, of course.

So here’s a little bit of info about me to get started: I’m a young professional in her early 20’s. I’ve been out of undergrad for two years now. My income is $35k a year, benefits included, except sans a 401k. Chance of raise/promotion within next year: 15%. Chance of company going out of business: 55%.

I’m fortunate in the sense that I have a decent amount of savings and no college loans. Savings from both my dad putting aside some funds for me for the awkward post-college year, and then extra cash from a lawsuit over a broken arm when I was little. My networth right now is around $27k. So I realize I’m better off than many other people my age, despite the fact that they might be making $50k a year and I’m only at $35k. Or at least our actual income after bills and other expenses is usually about the same.

Since this is an anonymous blog, I feel ok talking about the details of my finances. I haven’t talked about it much on my main blog since it feels weird letting people know about how much I’m worth, or not worth. But finances are one of the things that I really need to talk somewhat publicly about, since I’m unsure of how to handle my money, with the exception of spending it. I’m very good at spending it.

So I recently opened a few random mutual fund/IRA/CD accounts, as I’m attempting to “diversify” my portfolio. I know I’m supposed to be living under my means, but I often fail to do that and spend more per month than I take in. Obviously that’s a bad idea. But i’m hoping that at the least, putting some of my funds in high-interest accounts will balance out my poor spending habits.

Ok, so here’s the breakdown of my accounts right now… (I’m going to try to keep tabs of this, as well as my budget, on here)

$2,143.54 – Checking
$7,421.99 – CD – 3.1 % Interest, matures 8/28/08
$5,510.58 – Maximizer Checking
$1000.63 – Savings
$5,000 – 8-month 5.01% Interest CD
$3,000 – Vanguard Mid-Cap Growth Index Mutual Fund
$3,000 – Roth IRA, in 2050 Retirement Plan fund

Well, the last three of these items haven’t officially been started yet. I signed up for them yesterday. I’m waiting for all of the electronic transfers to go through. I realize investing in a Mid-Cap Growth Index Mutual Fund. Afterall, the smart thing to do is to invest in large caps, right? But I figure if I put $3000 into a mid cap fund, I can also invest in a large cap fund if/when I ever get a raise. I’m $1000 to maxing out my Roth IRA fund.

I don’t understand the Roth versus regular IRA option, being as I know the Roth is all after-tax income and the regular IRA is pre-tax income then invested. But what should I be investing in now? I’m only making $35k a year, so it seems like I’ll most likely be in a higher tax bracket when I want to retire. Afterall, I plan on making more than $35k per year when I’m 55 or 65 or whatever age it is I can retire.

And if I sign up for a Roth IRA now, can I move to a regular IRA at any time? Or am I stuck in the Roth?

Finally, how about my mutual funds – how much will it cost to change them from mid-cap to large-cap if suddenly I realize I ought to be a bit less risky in my investing? Gosh, I’m so confused.