I've been feeling a little bummed lately about my finances. I make good money and had been consistently meeting my goals of putting 10% in my Roth 401(k), a (very little) bit in savings, and a large chunk towards my student loans every month. So, slowly but steadily, my e-fund was building up and my debts were going down. And now I've hit a little bump in the road because of a few things coming together all at once: like English Major, I had a hefty security deposit due on my new apartment on top of having to pay the first month's rent early, getting the utilities switched over led to the realization that we owe some back payments on gas, and last but not least, my computer is nearing its end and will need to be replaced. I have some money coming in from my taxes and I wanted to put most of it towards my student loans and some of it towards my Roth IRA fund. I know the better thing right now would be to put it in my e-fund and push back my loan repayment a month or so but I don't want to! That said, I am still likely going to rethink some of my plan because that e-fund is getting pretty low and as much as I don't want to see my loan repayment slow down, I also don't like seeing so little in the bank. It makes me feel like I have nothing to show for my dedication to financial freedom.
On a related note, I was thinking how things would be so different if I didn't have these loans (and believe me, I know they could be much, much worse). But, a year out of college and over 6 months into the work force, I don't have very much to show for my financial savvy compared to a lot of other people my age who went to less expensive schools or had their parents pay their whole way. I thought, these people may be in the same place that I am (i.e. a year at a well-paying job behind them and not very much in savings) but they have other stuff to show for it: not stressing about how they are allocating every paycheck, nicer apartments, nice clothes, more dinners out, cool trips, and the list goes on. Or, they have been able to save more than I have because they don't have debt and are well on their way to a nice down payment or capital for starting a business. But what I realized is that you can't compare yourself to anyone but yourself and my other "self" could have had all of those "fun" things this past year but she would also have $12,000 more in debt and an even smaller 401(k) balance. I don't have quite the head start that some people have upon graduation but it could be a lot worse and I have to remember that I'm very lucky to have the education, job, and, most importantly, people in my life that have put me in such a good situation. Plus, when I do reach my goals, it will be nice to know that they weren't handed to me, that I worked to achieve them.
Monday, May 19, 2008
Sunday, May 4, 2008
Weekend Recap
I feel like I'm getting a little too comfortable with my credit cards. It's never to the point where I can't or don't pay them off at the end of the month but my cards have statement end dates that fall evenly spaced throughout the month so I can kind of leverage spending and payments - not good! I do try to put as many purchases as possible on my cards for rewards and simplifying my budget but I'm really going to work on keeping my charges on them to just what I would pay with cash. Part of the reason leveraging my payments has been so easy is that my rent goes on one of my cards and then my roommate writes me a check. After I move, that won't be the case so I'll have to change my routine of allocating my paychecks to rent and student loans. Once I figure out the switch, it won't be a problem and I think it will be a good opportunity to start fresh with keeping my credit card spending on track. However, I am a little worried about keeping my budget on track with the summer coming up. I know with the nice weather coming (it's not here quite yet!) the opportunities for going out (i.e. spending money) will be a lot more plentiful than they have been over the past few months. I am still going to aim to keep my student loan payoff schedule on track though. I really, really want to have those gone in September but that could be thrown off by my attempt to replenish my E-Fund after the blow it took from my security deposit.
Saturday, May 3, 2008
2008 Financial Goals
My financial goals for the year are still a little up in the air because some things in my life may be changing between now and then but for now, I'll mention some goals I would like to achieve by the end of 2008 and I can modify them along the way as the future becomes a little clearer.
Roth IRA
I don't know if I can fully fund this by the end of 2008, though I may be able to fully fund it for 2008 by 4/15/09. Regardless, my goal is to earmark at least $3,000 for my Roth in order to be able to buy into a Vanguard fund (most likely in this Target Fund). I'm planning on starting this ING sub-account with some of my tax refund and have bumped down my Roth 401(k) contributions from 10% to 6% (employee match magic number) and will put the difference in there too. This Roth 401(k) adjustment has to do with reaching the $3,000 buy-in for Vanguard by the end of the 2008 and not with market fear.
Roth 401(k)
If the market cooperates (not likely), I think I can get this to $5,000 by the end of the year, even with the adjustment of my contribution to 6% of my salary. It is at around $3,240 right now.
Student Loans
I am currently putting at least $1,000/month on the remaining $6,200 of my loans. They are at 4.5% and 5% and I know there are plenty of arguments against paying them off early but the way I see it is that I know I would not have been diligent about putting $1,000/month in the bank or into the stock market over the past six months. Paying these loans off gave me a concrete goal to focus on and actually sparked my interest in personal finance. So, there are worse things, no? These should be gone by the beginning of September 2008 so long as I can keep up my diligence through the coming summer months :)
Emergency Fund
It's actually at $3,600 right now ($3,300 in an E*Trade account at 3.45% and $300 as a cushion in my Citibank checking account which pays no interest). It was at $4,700 until I had to put down a hefty security deposit on my new apartment. I'm fairly comfortable with this number because I plan to get it back up to $4,500ish in the next month or so and a) I do have people to fall back on in case of job loss and b) I think this will cover expenses (not income) for at least 3 months. I have been putting $100/month in the E*Trade account but may start to funnel that money over to the Roth IRA sub-account (see above) instead. My reasoning for this is that, until I have the $3,000 for the Vanguard fund, I will have access to the Roth IRA money as cash so it can serve as a buffer to my Emergency Fund. And by the time I use that cash to fund the Roth IRA, my student loans will be paid off so I will have quite a bit more discretionary income with which to pad the E-Fund, max out my Roth 401(k), travel the world, etc. This should be the case even if I end up switching to a lower paying job (more on this later...).
Holiday/Gift Fund
I am currently putting $50/month in this ING sub-account in order to make birthday/holiday expenses a tad bit easier to absorb. So far, so good - I have about $100 in this account. It's not a huge amount but when I don't touch it, it grows consistently with every paycheck...hmmm, funny how that works... My goal is just to keep this up. It will obviously fluctuate and I don't feel the need to get it to or keep it at a certain amount (other than one above $0!)
Moving/Computer Fund
As I said, a move is in the future. Moving costs money :( I also have a computer that has come back from the dead numerous times. My guess is that it will need to be replaced within the next year but I'm happy to keep it for as long as it continues to do what I need it to so we'll see... Anyway, $44/month is going into this ING sub-account right now and should help with these expenses when they come up. This will function similarly to the Holiday/Gift Fund - the amount will fluctuate and I'm more concerned with it keeping me from having to dip into E-Fund savings than anything else.
Roth IRA
I don't know if I can fully fund this by the end of 2008, though I may be able to fully fund it for 2008 by 4/15/09. Regardless, my goal is to earmark at least $3,000 for my Roth in order to be able to buy into a Vanguard fund (most likely in this Target Fund). I'm planning on starting this ING sub-account with some of my tax refund and have bumped down my Roth 401(k) contributions from 10% to 6% (employee match magic number) and will put the difference in there too. This Roth 401(k) adjustment has to do with reaching the $3,000 buy-in for Vanguard by the end of the 2008 and not with market fear.
Roth 401(k)
If the market cooperates (not likely), I think I can get this to $5,000 by the end of the year, even with the adjustment of my contribution to 6% of my salary. It is at around $3,240 right now.
Student Loans
I am currently putting at least $1,000/month on the remaining $6,200 of my loans. They are at 4.5% and 5% and I know there are plenty of arguments against paying them off early but the way I see it is that I know I would not have been diligent about putting $1,000/month in the bank or into the stock market over the past six months. Paying these loans off gave me a concrete goal to focus on and actually sparked my interest in personal finance. So, there are worse things, no? These should be gone by the beginning of September 2008 so long as I can keep up my diligence through the coming summer months :)
Emergency Fund
It's actually at $3,600 right now ($3,300 in an E*Trade account at 3.45% and $300 as a cushion in my Citibank checking account which pays no interest). It was at $4,700 until I had to put down a hefty security deposit on my new apartment. I'm fairly comfortable with this number because I plan to get it back up to $4,500ish in the next month or so and a) I do have people to fall back on in case of job loss and b) I think this will cover expenses (not income) for at least 3 months. I have been putting $100/month in the E*Trade account but may start to funnel that money over to the Roth IRA sub-account (see above) instead. My reasoning for this is that, until I have the $3,000 for the Vanguard fund, I will have access to the Roth IRA money as cash so it can serve as a buffer to my Emergency Fund. And by the time I use that cash to fund the Roth IRA, my student loans will be paid off so I will have quite a bit more discretionary income with which to pad the E-Fund, max out my Roth 401(k), travel the world, etc. This should be the case even if I end up switching to a lower paying job (more on this later...).
Holiday/Gift Fund
I am currently putting $50/month in this ING sub-account in order to make birthday/holiday expenses a tad bit easier to absorb. So far, so good - I have about $100 in this account. It's not a huge amount but when I don't touch it, it grows consistently with every paycheck...hmmm, funny how that works... My goal is just to keep this up. It will obviously fluctuate and I don't feel the need to get it to or keep it at a certain amount (other than one above $0!)
Moving/Computer Fund
As I said, a move is in the future. Moving costs money :( I also have a computer that has come back from the dead numerous times. My guess is that it will need to be replaced within the next year but I'm happy to keep it for as long as it continues to do what I need it to so we'll see... Anyway, $44/month is going into this ING sub-account right now and should help with these expenses when they come up. This will function similarly to the Holiday/Gift Fund - the amount will fluctuate and I'm more concerned with it keeping me from having to dip into E-Fund savings than anything else.
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