Does Pulling Out Work?

When I graduated from college last May, my very generous grandparents gave me a nice lump of money that I put into a CD in July.  At the time, I wanted to keep this money separate from retirement accounts and student loan payments so that I could eventually use it for a house or another larger purchase.

I’m now wondering if that’s the best decision.  I’m a ways off of purchasing a home or even figuring out where I want to be more permanently living.  I know that I won’t be buying anything until my loans are paid off, so that money is just sitting in the CD earning far less than my loans are accruing in interest.

Since July, the CD on $5,000 initial investment has earned a whopping total of $3.14.  Bummer.  I double checked and I would essentially have to pay 3 months’ interest as a fee to get out early which would be about $1.85.  However, the initial $5K is safe from fees.

If I pull out now, I can use that money to finish out my Roth IRA for 2013 ($3,907 left to contribute) and put the remainder ($1,093) into my e-fund which, as always, makes me nervous that I’ve kept it so low.

What would you do?  Is it better to take that cash and budget it out or would you keep it in savings for a bigger purchase even though it’s earning less than loans, IRA are costing you?

No Shopping Pact

So far, I’m 17 days into January and I’ve done a pretty great job of being frugal.  I’ve spent about $1,300 which seems like a lot, but $600 went straight to my Roth IRA (yay for trying to max out for 2013!) and $343 has been spent on rent and car insurance.  On top of that, about $300 went to my student loans.  In reality, I’ve bought a tank of gas and pulled a little bit of cash, which is mostly still in my pocket.

I would say I am rocking January, but this is probably because December should have been AWESOME with a Christmas bonus and Christmas gift money, but it was just mediocre.  Two of my girlfriends and I made a pact not to clothing/accessory shop this month because we all needed a break from that spending category after December.  To be honest though, I’m still recovering from all my new purchases as well as my Christmas gifts.  I’ve barely had time to even enjoy those things yet!

I’m really hoping to be able to put more into my Roth than I specified in my transfer plan and I’m definitely on track to do this.  I don’t have any trips planned (this includes the standard visits to my boyfriend which end up costing me at least $50 in gas and usually another $50 or so in food expenses) which means I should have more money left over than I typically do.  I’m also going to try to keep my spending in check when I go out with friends.  We spent a lot of nights at various area bars in December and that drained my purse.  I was paying with my Discover card, which is great because it earns me cash back bonuses, but I also didn’t feel like I was really parting with money.  In the future I’ll have to really think about whether I want to pay with cash or credit for this reason.

Do you adjust certain parts of your budget when you overspend?  Do you usually pay with cash or credit?  Which do you prefer?

January Jumps

My bank accounts are LOVING January!  My spending has been almost nonexistent and it’s looking like my assets are really going to grow this month (specifically my Roth IRA)!

Since today is about the halfway point in the month, I decided to do a check and see how I’m doing on reaching my goals this month.

·         January 16:

o   Assets: $9,375.44

o   Liabilities: $(24,485.92)

o   Net Worth: $(15,110.48)

o   Bottom line: + $943.38

This is an awesome jump for me and I’m not even at the end of the month yet!  I’ve already made my student loan payments for the month as well as paid my rent and car insurance, so my big ticket inevitable are out of the way.  I still have one paycheck coming next week and half of that (hopefully more) is dedicated to my Roth.

When I made my January budget, my goals were more focused on my loans, but I’m switching this over to focus more on my savings.

·         (new) January GOALS:

o   Spend no money in the clothing category (I typically budget $250/month, but I went overboard in December.  I am going to buckle down for this month to balance it out!)

o   Achieve a net worth of $(14,500.00)

o   Contribute $1,300.00 toward my Roth IRA

o   Build my assets to $10,000.00

Since I’m on a shopping cleanse this month I have more room to play with my budget, but much of my typical “shopping money” may have to go to new glasses and doctor visit copays.  Bummer.

How is your January?  Are you on your way to meeting your goals?

Flippity Flopper

For those of you who have noticed that I change my short-tern financial goals at the bat of an eye, I want to explain why I do it and why I think it’s okay.

Every time I change my mind about how much money to contribute to a fund or loan or when to do it, I try to explain the reasoning behind my decision.  Usually I try to look at the numbers or give a real justification, but sometimes I just don’t have one.   The thing is THAT’S OKAY.

My personal finances can change all the time and for any reason I choose.  That’s part of why we call it personal finance.

If you wondered if I ever regret my decisions (i.e. pouring money into loans for most of 2013, then realizing I should have been contributing more to my Roth), then I guess I can tell you that I don’t.

Even though I change short-term goals, my long-term goals are probably never going to change.  That’s because they’re so simple:

1.      Spend less than what I bring in.

2.      Increase my net worth.

These two things seem so simple, and, to be honest, number 1 fits into number 2.  Whether I contribute to my Roth or pay down my loans, I’m still increasing my net worth just in different ways.

Do you flip flop on your financial goals?  Does this happen with long-term or short-term goals?

Tracking Net Worth

When I first graduated college, I was trying to keep an eye on and keep building my savings funds (emergency, 401K and Roth IRA), but my bigger focus was paying down my debt, and that definitely showed in the financial decisions I made.

Now that I’m about six months into life in the real world, I was getting discouraged.  I found that I’ve increased my savings accounts by more than $3,500 and that I’ve decreased my debt from nearly $30,000 down to about $25,000.  This seemed awesome until I realized that if I’d put that $3,500 into my debt instead of savings, I’d be down to $21,500 – pretty aggressive pay down if you ask me!

While it’s really tempting to say screw it and stop contributing to my savings accounts, I also know that I can’t be solely focused on just one financial goal.  To really look at my financial growth as a whole, I started tracking my net worth.

As it turns out, I get even more excited for this number at the end of the month!  Since I’m a huge nerd and I like to see comparisons of data, here’s a table that shows my change in debt and my change in net worth every month.

	Change in Debt	Change in Net Worth
July 2013	$169.66	$169.66
August 2013	$470.38	$770.58
September 2013	$473.15	$1,096.17
October 2013	$1,144.65	$2,092.39
November 2013	$2,628.56	$3,399.86
December 2013	$291.70	$1,302.68

You can see how exciting it was for me to be paying down my debt, but once I started factoring in how much I was growing my savings, I was ecstatic!

Do you track your debt progress so you can look back?  What about your net worth?

Flights Breaking the Bank

I mentioned this in my December budget update, but I really want to focus on how expensive it can be to fly.

I have two trips (that I know of) coming up, so I booked flights for those.  Unfortunately, one of them is a baby shower in Atlanta and I had little more than a month advance notice.  Since I was booking so late, I ended up scrambling to find a ticket that was relatively cheap.  I prefer to fly out of Philadelphia for two reasons: this is the closest large airport to my house and I can almost always get direct flights anywhere.  For this Atlanta trip it is somehow less expensive for me to fly out of Harrisburg, PA through Philly to Atlanta.  Go figure.

Regardless, I ended up paying a little under $300 for a ticket.  I made the same trip (Philadelphia to Atlanta) about 15 months ago for $170.  Talk about disappointing, but this is one of my closest friends from my sorority so to her baby shower I must go.

The price I got on my flight for my next trip (to Detroit over July 4^th weekend to visit my boyfriend) was AMAZING!  Seriously, I paid $134 including fees for my round trip ticket.  How did I manage this?  Well, I am taking a chance and am flying out of an airport in Wilmington with Frontier Airlines.  This is closer to my office/home and the security check is supposedly much faster than at larger airports.  This all adds up to greater convenience for me.

This doesn’t come with a downside though.  If my Thursday night flight gets canceled, there isn’t a backup.  My next option would be to fly out Sunday, the day I’m expected to return.  Also, if my Sunday return flight gets canceled, I won’t be able to get home until Tuesday!  Talk about a bummer!  Since I’ll be flying this route in the summer I doubt I’ll have any weather problems that would delay a flight more than a few hours and best of all I won’t have to worry about missing my connection!

(For those who wonder why I didn’t try to fly to Atlanta out of Wilmington, it is cheap, like $123 round trip cheap, but Frontier isn’t starting that until April.  Maybe I’ll do that once the baby is born!)

Do you look for low air fare or minimal connections?  How do you determine when/where to fly?

Goal Schedule circa 2014

After much internal debate, I think I’ve finally figured out my 2014 financial goal schedule based on how much I prioritize each thing.

My first goal is to pay off the remainder of my smaller loan.  I have about $2,500 left on this one, so it’s definitely doable in the next 2-3 months.  I’m prioritizing this goal as number one for a couple reasons.  I really hate being in debt.  Realistically, I can get this out of the way pretty quickly and then move on to bigger and better things.  I also find it annoying to be paying to two lenders, so eliminating one completely would be awesome as well.

Second, I’m going to focus on maxing out my Roth IRA.  Since the maximum contribution this year is $5,500, this will definitely take me into the summer, possibly into the fall.  This is a high priority for me because of the amount I’ll gain between 2014 and retirement.  Assuming this money earns 8% annually, that’s more than $130,000 earned by the time I turn 65.  While putting this money toward loans could save me a couple thousand dollars in interest over the long run.  I’ll gladly take a $2,000 hit for that $130,000 later.  Until Goal 1 is completed I will still be automatically contributing $200/month.

Then (third) my focus will be on building up my e-fund.  I can always take that money and put it toward my loans later, but I definitely won’t be able to get it back once I send it off to the lender.  Additionally I have $5,000 in a CD due in July.  I have decided that when it’s up, I’m going to use that money to finish out my Roth and my e-fund.  I’m not really earning enough in the CD to justify not putting it toward loans or other financial priorities.

My fourth and fifth financial goals are to contribute $3,000 to my 401K and $4,000 to my larger loan.  My 401K contribution is automatically taken out of my paycheck, so I really shouldn’t even have to think about that.  I have 6% of my pay taken (>$3,000) every check and my company will match 50% of that.  How rad!

As for my larger loan, this is the lowest priority.  While I am aiming to contribute $4,000 to it this year, about $3,000 will be required in minimum payments.  Most likely, my Christmas bonus or gift money will end up making up the difference.

Do you lay out a schedule for your financial goals?  How do you decide to prioritize your money?

Contribution Distribution

As the new year has started, I’ve been thinking about the allocation of money throughout the year.  With any project I like to have a plan of attack before I start, and my finances are no different.  I know my financial goals for 2014 and I know that I usually set individual goals for each month as I go along.  However, I want to have a plan for how much and when I contribute to my different funds.

Obviously, I have to make the minimum payments on my loans, so that is a no-brainer.  I know that I’ll make more than the minimum over the course of the year, but the question is do I contribute evenly throughout 2014, or do I pay the minimums now while I max out my Roth IRA and build up my e-fund?

Until now I’ve been religiously paying down my loans with every penny I have while contributing smallish amounts to my e-fund and Roth IRA.  Now, I feel like it’s more important to be absolutely sure I max out my Roth and have contingency money on hand in case I end up finding a house and have to spend a ton of cash on moving.

What do you think?  Do you plan or figure it out as you go along?  Do you contribute evenly or change contributions to different funds every month?

December Cashback Rewards

After spending most of my built up Discover Cashback Rewards on gift baskets for family and friends who live far way, I used the remainder of my 2013 dollars on Amazon to offset the cost of a Fitbit activity tracker.

I’ve been wanting an activity/calorie tracker for a while and finally decided that for less than $100 (minus the ~$46 from my rewards), I could definitely try this one out and see if I like using it.

What I forgot about was how much BANK I would be making in December in Cashback Rewards!  I just checked my December credit card statement and I got 72.82 in Bonus Rewards.  This is the highest I’ve ever achieved in one month and is approximately 2/3 of what I earned in all of 2013.  I attribute this to a few things:

1.      20% 1800Baskets.com – Even though I only actually paid $5 on my Discover card ($100 cashback rewards gift certificate), I did navigate to the site through Discover.com first.  This got me 20% back on the WHOLE purchase (~$105), earning me $21.00.

2.      10% The Limited – I again was diligent enough to navigate to TheLimited.com through Discover.com first, giving me 10% back on my purchase, earning me $13.41.

3.      5% Online Shopping – The Discover promotion for October, November and December was 5% back for online shopping.  As I did all of my clothing purchases and many of my Christmas purchases online in December, I earned $29.41 in this category.

4.      1% Everywhere Else – This is great.  Even when I don’t navigate to Discover.com or get a special reward somehow, I can always guarantee I’ll build up at least a little something.  I earned $9.00 this month.

I definitely overspent a bit this month which made my bill a little bit high, but I ended up putting $1,374.69 on my card and got back $72.82 in bonuses.  That’s 5.30% back in total.  This was definitely AWESOME news to get after my crazy spending.

While I typically use those rewards to get discounted gift certificates, I’m actually considering using just this month’s to pay down my bill a little.  What do you think I should do?

Monthly Budgeting

I went a little budget crazy yesterday and set up preliminary budgets for every month of 2014.  I know this is overkill and that I will end up changing each one as I go along, but I felt so at peace after making sure all of my expected bills and such are budgeted in.

I incorporated my transfer plan for the month into each one, but am hoping that the reason I’ll have to make adjustments is that I’m blowing away my goals!

I’m a big fan of the monthly budget and having monthly goals.  I like that I can monitor as I go along and I can really feel like my efforts pay off and help me to achieve something.  As for my yearly budget, I don’t really create one the same way as I do a monthly.  This is my first “year’ in the “Real World,” so for me it just makes sense to set some realistic, yet still tough to attain, goals for 2014 and figure out what I need to do each month to get there. 

Do you set up monthly budgets?  What about annual?  How do you mix and match your budgeting strategy?

Net Worth December 2013

December ended up being a pretty mediocre month when it came to my finances.  I definitely spent less than I brought in and I actually didn’t use up my entire budget.  I’m debating whether I should be putting more money into my emergency fund right now or paying down my loans.  I’ve been looking at houses to rent with some friends and more money in the bank would definitely help with that.  However, I love seeing the negative part of my net worth get closer and closer to zero.  It helps me to really visualize the payoff date.

Reasons December was Financially Awful

1.      Christmas gifts – Even though I set aside a good amount of money for this in November, I still somehow managed to go over budget in this area.

2.      Gifts to myself – The issue with online shopping for Christmas gifts for my family is that I often find things for myself.  My spending on myself (in regards to clothing and accessories) was WAY up.

3.      Social spending – I took vacation time which meant I was able to spend more time with friends and that meant eating out and buying drinks at the bar, definitely not good for my discretionary spending.

4.      Travel – Usually I come in way under budget on fuel/train tickets, but this month I just barely squeaked by.  Additionally, I ended up buying plane tickets for two different trips (one in February and one in July).  I was able to get pretty good prices, but still spent a little over $700 that I don’t typically spend.

5.      Student loans – This month I only paid about $150 more than the minimum, which is well below my target.

Reasons December Finances could be Moderately Recovered

1.      Christmas money – The good news is that pretty much all of the money I spent on gifts to myself was recovered through Christmas gift money.  While it’s sad that I can’t imagine all of the possibilities for that money, I’m very pleased with all of my already purchased items.

2.      Travel – While I spend $573 on my trip to Atlanta, that was actually the cost for both my girlfriend and me to go.  Therefore, I’ll get an unexpected income of $246.50 in January or February when she reimburses me!

3.      Student loans – I was still able to pay more than the minimum this month.  I didn’t pay as much as I normally do, which is a bummer, but I should be able to recoup that with my friend’s plane money and by cutting my shopping and other spending this month.

4.      Savings – I managed to put my standard $267.20 as well as an added $350 into my emergency fund savings account.  I decided to put this toward my savings instead of my loans because I foresee an eye doctor’s visit and new glasses on the horizon.  Additionally, I want to be putting money there to get ready for LASIK surgery.  I’m (sort of) hoping to do this by the end of 2014, but more realistically will be getting it done in 2015 or 2016.  Regardless, I feel more comfortable having that money on hand in case I need it.

Let’s see how I did.

·         December:

o   Assets: $8,653.04

o   Liabilities: $(24,706.90)

o   Net Worth: $(16,092.97)

o   Bottom line: + $1,302.68

·         December GOALS:

o   Contribute $200 (instead of the usual $100) to my Roth IRA

o   Achieve a net worth of $(16,000.00)

I did manage to contribute $200 to my Roth IRA, so I’m glad I hit that goal.  I hope to max that out for 2014.  I didn’t hit my net worth goal of $(16,000.00).  While I’m disappointed that I didn’t make it, I love when I get to see that get closer and closer to the zero mark.

What I really love is that fact that my total net worth for 2013 increased $8,831.34!  My gross income for 2013 was $27,763.13.  Taxes, social security, health insurance, etc. took $7,278.71 out of commission, which means that my total spending for the year was 11,653.11.  While I feel really great about this number, I also feel like it could have been lower.

Since I’m starting my goals for January of 2014, I’m also going to do a goals list for the whole year of 2014.  Hopefully I can make it!

·         January GOALS:

o   Spend no money in the clothing category (I typically budget $250/month, but I went overboard in December.  I am going to buckle down for this month to balance it out!)

o   Achieve a net worth of $(14,500.00)

o   Contribute $1,200.00 toward my student loans.

o   Build my assets to $9,000.00

·         2014 GOALS:

o   Have a positive net worth!  This is a pretty hefty and overarching goal.  The reason I believe I can achieve it is that I would need to increase my net worth by $1,333.07 per month.  I’ve proven in September, October, November and December that I can meet, or at least get close to this goal.  Additionally, if I really buckle down in those three paycheck months (May and October this year!) then I really think I can balance out my low gain months.  I want to still be aware that I may be missing one paycheck at some point during the year as I’m hoping to do some international travel and may have to use unpaid vacation time.

o   Pay off my second AES loan, leaving me to only make payments on my MGL loan.  I really hope to do this by April of 2014 at the latest, but I recognize that contributing to my Roth IRA and my emergency fund may not allow this until later in the year.  That’s why I’ll make it a monthly goal when I have a closer idea of when it will be realistically achievable.

o   Contribute $4,000.00 to my MGL loan.  If I only make them minimum monthly payment of $256.62, then I would contribute $3,079.44 over the course of 2014.  To up this to $4,000.00, I would need to contribute $333.33/month.  I’m hoping that this is realistic, but I’m not sure with all of my savings goals.

o   Max out my Roth IRA.  I’m able to contribute up to $5,500 this year.  I plan to max this out, and I’m hoping to do so by September, which means I would need to contribute about $611.11 every month.  I’m not sure how this will work out or if I’ll even contribute evenly.  For now I’m keeping my automatic monthly payments at $200 and I’ll reassess later on.

o   Contribute $3,000.00 to my 401k.  If I take no unpaid time off and work no overtime, I would contribute $3,182.40 out of my pocket.  Therefore, I’m assuming that even if I take two full unpaid weeks (~$122.40 in contribution) and no overtime, I can still meet my goal here.  Since there’s a possibility I’ll be doing some international travel, I want to make sure I’m accounting for at least one totally missing paycheck.

o   Get to $5,000.00 in my emergency fund.  I’m currently at $2,017.23. My automatic monthly contribution is $267.20.  At that rate, assuming no interest growth as it’s so low, I will make it to $5,223.63, so I should be able to meet that goal easily.  Obviously, it’s nice to have the excess, but that “extra” money might go toward loans or one of my other goals.

I’m trying to think of a good way to consistently remind myself of my financial goals throughout the year as well as throughout the month.  Last month I definitely lost sight of my net worth goal and that obviously contributed to my lackluster financial performance.  Do you have any ideas of how to keep your financial goals a top priority?