• Restaurant Whoops
• Expensive Tastes and My Job
• Crying Over Spilled Meat
• Going Out to Eat: How Much Should We Spend?
• Friday Food – 24 Courses, $175

I’ve been super busy at work and that hasn’t left me a lot of time to be active on twitter, but I did see some interesting tweets on money and relationships.

I hope you all have a great Memorial Day Weekend!

Related posts:

1. Tweets of the Week of February 26
2. TurboTax Giveaway Winners! Favorite Tweets!
3. Interview at Credit Card Assist, Personal Finance Tag Responses, and Favorite Tweets of the Week

Why Are You So Expensive?

Recently, my husband stumbled onto a bit of fellowship luck for part of his graduate program. As a result, our loan burden for the coming year is somewhat reduced. Obviously, this resulted in much rejoicing, in large part because we won’t have to worry about the lack of interest deferment on Stafford loans in the coming year (I had a whole post on this planned, and it was going to pulse with rage). We can do a lot with this news, including an accelerated repayment schedule for the loans we DO have for his graduate program.

But shortly after we found out about the fellowship, my sister emailed me to let me know that she would be remaining in Israel (where she is currently living and working/studying) for an additional year. We had put off visiting her this year for a number of reasons – prohibitive cost to the Middle East, lack of vacation time, and a previously planned trip to Spain to visit my husband’s sisters on their study abroad semester. But in light of this new financial situation, we started to consider a trip to Israel a possibility.

And then I started to look at plane ticket prices. Because this would be quite a bit of a distance to travel, and because in addition to my sister, I have family members scattered throughout the major cities in Israel, we want to spend a significant amount of time over there. After all, there’s a lot to see (in addition to family); my husband and I come from two religions that have many interesting (and different) points of interest in Jerusalem, and we’re not likely to repeat the trip anytime in the coming few decades. We would like to make it a substantial escapade. This means looking at tickets over the holiday season, when we both have a significant amount of time off. This also means that tickets are SO, SO EXPENSIVE.

Obviously, once I saw the upwards-of-a-thousand-dollar price-tag on tickets during our travel time of choice, I started to brainstorm ways to save. It’s so much cheaper to travel over Thanksgiving! We could definitely stay in the Zurich airport for 22 hours to save on travel, whatever! It will be fine! Slowly but surely, a creeping sense of stress and panic overcame me, and I confessed to my husband that nothing about planning this sounded fun anymore. After regarding me like I was insane, he asked me what was wrong.

“Tickets are SO EXPENSIVE over Christmas. But if we go over Thanksgiving, we won’t have any time and it will be rushed and miserable and we’ll be jet-lagged and it will just be a stressful misery.”

“Then let’s go over Christmas.”

“But THE MONEY! THE MONEY!”

“Abby . . . we have the money. It will be fine.”

And he’s right. As he correctly pointed out, this is the best time in our lives to take this trip. We’re financially sound (knock on wood), we have the time, we’re young and childless, and enough people are over there and happy/willing to host us and see us that if we don’t do this trip now, we’ll regret it. My sister will not be there for much longer; and sometimes, you need to value your life experiences over an unnecessarily accelerated loan-repayment plan. Sometimes, the extra few-hundred dollars to ensure that you get the most out of an experience, and aren’t rushing through it with an underlying sense of panic are worth it. Therefore, I am going to push the guilt-monster associated with spending more cash than I should, and taking two international trips in a year, deep down inside me (where I hide the rest of my feelings), and look forward to planning the (or at least, a) trip of a lifetime.

How do you prioritize spending when a great opportunity arises?

image: oatsy40

Related posts:

1. Proactive Parent Protection
2. Australia is on Sale!
3. Here Boston, Take My Money

Expensive, But Necessary

May has inadvertently turned into a month of “Getting Things Done.” While I would ordinarily begin doing a type of spring cleaning (although let’s be real, I’m obsessive compulsive and every week is spring cleaning week in my apartment), the fact that we are being moved out of our apartment (for renovation purposes) has had a compounding effect on the number of spring-related errands I’ve been running and, as a result, my bank account.

This past weekend, for instance, I had a list to complete. It’s finally getting warm up here, so I decided I could take my coats in to be dry-cleaned. My boots won’t be worn for another few months, so now is a great moment to take them to a cobbler and repair all the damage I’ve done as a result of wearing them essentially daily in horrible weather. I have a couple of summery dresses that I’ll need for upcoming weddings that fit me not-quite-right in a few areas, and I’ve been putting off doing anything about them for a while. So boots and coats in hand (and arms and bag), I went off to drop everything in its respective location.

First up, the coats. It will cost $20 per item for them to be cleaned. That’s a bit of a hit to the wallet, but unavoidable considering how many things I’ve spilled on myself/sat in while wearing these coats. They’re good, sturdy items, and I’d like to keep them for a while, so a cleaning once or twice a year to get the stale, dried beer off of them (thanks to a clumsy moment in a bar) is worth it.

Next, I marched to the cobbler. I had three pairs of shoes with me: a nice pair of black leather boots that I’ve worn away after a year of scraping my heels (a terrible habit, I know); brown Timberland boots that are one of my greatest joys, and whose lining has been super-glued by me I don’t know how many times; and a pair of dainty, pointed heels that I consistently scrape against staircases as I go up them (I can’t avoid this, no matter how diligent I try to be). The total came to $75 for repairs and shining. The cobbler tried to talk me into replacing the heels on the brown boots as well, but they’re not terribly worn down and I’m fairly certain I can get another year out of them before incurring that $40 cost. It’s expensive, but do you know what’s more expensive? Replacing really nice boots. So down went the credit card in my attempt to keep my nice things nice.

There are net positives to this kind of seasonal overhaul. I went through my wardrobe and found a number of clothing items to consign locally, which should mean a nice-sized check in my future. I’ve gotten to reassess what I own, and take care of items that need it so that they look like new (because nothing helps with spending than getting a pair of repaired/cleaned boots and clothing to make you feel like you have something new when you don’t). It’s money I don’t mind spending.

What kind of costs are involved with your clothing upkeep? Does a big event like a move prompt you to take care of neglected items?

image: David Harris

Related posts:

1. Putting a Stop To Spending
2. Saved My Watch, Saved Some Money
3. A Tale of Two Electronics

Tastes Good Regardless of Location Consumed

My husband, Brad, is in the midst of his last school-related work before his summer (of more working) begins. He’ll be done on Friday, and the other day we had the following interaction:

Abby: Hey, since you’ll be done on Friday, do you want to go out for drinks to celebrate?

Brad: Maybe.

Abby: What if we just go to [NAME OF NEIGHBORHOOD BAR] and get some dessert and a beer?

Brad: I guess.

Abby: . . . or do you just want to sit in the apartment and drink the beer we have in the fridge and eat a sleeve of Thin Mints?

Brad: Yeah, that sounds perfect, actually.

Sometimes, I read personal finance articles and the comments associated with them, and wonder how these people, most of whom are my age, spend so much money on going out. What are you doing? I think. Why can’t you just drink a beer at home? And then I realize – not everyone has the advantage of living with one of the few people they can stand for long periods of time. Don’t get me wrong – I like to dress up in something other than $6 men’s sweatpants from Target, and enjoy a nice gin cocktail with people to whom I am not married every once in awhile. But most of the time, my husband and I are each other’s company, and we like it that way. The added benefit, which we often don’t consider, is how much money it saves us. Consider some of our favorite activities:

• Ordering takeout from the exceptionally delicious pasta place near our apartment and consuming it in our apartment.

• Sitting with (nice – we do spend a little on our home-bound alcohol) beers in our apartment, while I watch something on Netflix and Brad half-watches, but mostly catches up on college sports blogs.

• Ordering takeout from the great Taiwanese restaurant nearby and eating it in our apartment (sensing a trend?).

Besides our penchant for carb-heavy takeout for which we don’t have to change out of sweatpants, we spend a lot of time hanging out with each other in the apartment (particularly in the colder months up here, which is almost all year long). And the natural consequence of this is that we don’t go out as much as we would if were single. We don’t feel compelled to head to a local bar that often, because the beer we would get there is the same beer we can consume in the comfort of our home, as is the company.

As I said, this doesn’t mean I never get out. There are work happy hours, friends to meet with over a glass of wine, and potlucks that I attend. But after reading that some people my age go out on a near-daily basis, I can see how my generation can become mired in credit card debt after an accumulated however-many drinks consumed. It gets pricey, and we’re lucky to be cutting our expenses through our anti-social/homebody/married tendencies.

How do you manage your social expenses?

image: Jeramey Jannene

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This year my mom made brunch reservations, waited for me to ask her to brunch, and then told me where we were going. Awesome. Here’s a few more links to my mom’s craziness:

• How Much Do You Tell Your Parents?
• Give Us Advice On How To Help Her Out With My Mom
• Keeping Up With The Joneses: Mom’s Ring Finger
• (Un)Happy Mother’s Day
• My Parents Keep Up With The Joneses
• Raise your children to rely on them – Asian Culture And Finances

It’s been a little while since I’ve done a Twitter roundup because I’ve been really busy at work and haven’t been too active on Twitter. Here’s some of my favorite tweets from the past month or so.

Have a great weekend!

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Would You Declare Bankruptcy for This?

My husband and share the same frugal-to-the-point-of-stupidity tendencies. We will skimp on nearly everything, and not always for the better (see: my recent bout of food poisoning in Spain, when we should have just headed to a clinic, but spent a morning slowly re-hydrating me instead). I can always go to him to validate my monetary decisions when it comes to miserly behavior, and he knows I similarly share his mindset.

Except when it comes to our cat, Norman. While I might be happy to contemplate the necessity of a hospital visit while I am the person lying on the bed in the fetal position, slowly losing feeling in my limbs after seven hours of vomiting and wondering whether that’s reason enough to incur an international hospital bill, there is no cost too high for our cat. He is the light of our lives, the greatest purchase (i.e., donation to a shelter) we ever made, the most wonderful thing we could have done together. And if anything were to happen to him, we would pony up the cash like there was nothing to it.

Compare our mindsets when it comes to spending money on ourselves:

“Brad, don’t you think it’s time for a new pair of glasses, as you cannot see out of the ones you have?”

“Ugh, the expense.”

“OH MY GOD NORMAN IS CLEANING HIS EAR MORE THAN USUAL DO YOU THINK SOMETHING IS WRONG? SOMETHING IS PROBABLY WRONG. LET’S GO TO THE VET.”

We have been incredibly fortunate (knocking on ALL THE WOOD) that nothing catastrophic has happened to him. But I know that if something were to happen, and our vet were to tell us a cost that might seem extreme, that cash would flow out of our emergency fund instantly. Part of this is a commitment I feel people should make when they adopt animals. Indeed, part of the reason we haven’t adopted a second cat is the knowledge that we would absolutely want to finance their health issues, and our concerns that while we might be able to do so with one cat, we may not with two.

And part of it might be an inherited behavior. My family brought home a sweet, beautiful yellow Labrador when I was ten years old, and in her older years she developed diabetes. After using canine insulin on her for a few weeks, we realized she wasn’t responding, and the vet told us she would need human insulin. I watched my mother (who once had me drive myself to the emergency room at 3 AM, because she didn’t think the granite I had lodged in my eye precluded me from driving myself there) get down on her knees twice a day, and deliver the wildly expensive human insulin to my aging dog herself. “I can’t just let her DIE,” she would say, syringe in hand. “She’s our family.”

I feel the same way about Norman. I once asked my husband if he would cry when Norman dies. “Oh,” he said, “I’ll cry like a baby.” And that kind of emotional attachment allows for a financial commitment I don’t mind making.

What are your thoughts on expenses for pets?

image: MowT

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I Do Not Have to Own All the Clothes

While I generally think of myself as someone incapable of mindless spending, over the past few months I realize that I’ve been putting more money towards a variety of purchases than I would have liked. This has something to do with my current occupation – as I’ve written before, my current (and relatively new) job requires that I dress much more nicely than I’ve previously needed to, and as a result I’ve found myself spending money on clothing, if not quite willy-nilly, then close to it. Yes, there were the justifiable expenses – five identical black turtlenecks from Ann Taylor for winter work attire (I lack creativity, get cold easily, and spill food on myself with such frequency that these have already paid for themselves several times over); black boots from L.L. Bean that are real leather, great for the office, and even better for going out in my freezing cold New England city when I’m meeting friends for dinner or drinks; a few very much on-sale dresses that I can wear for the upcoming onslaught of weddings. But then there were the little things that I could “justify” if I tried, and which, added up, made me uncomfortable with where my spending was going. I may be trying to buy only things that I love and that will serve me well in many capacities for a long time, but that doesn’t mean I have to own all of those things at once.

What finally made me reassess my spending was a Lilly Pulitzer dress I’d had my eye on for a while. This purchase was partly inspired by my lifelong quest to transform myself into someone who at least has the wardrobe, if not the life, of an old-money WASP, and partly by my desire for a cute beach cover-up for the summer. For those of you familiar with Lilly Pulitzer, I can assure you that it was on the low, low end of that clothing line’s cost spectrum. But after I bought it, I thought to myself, “Did I really need this now? Was this something I should have considered a bit more before making the purchase?” I worried that I had purchased it when I did out of a momentary desire to own a Lilly Pulitzer dress, as well as the lure of free-shipping. These motivators, while understandable, should not be my reasoning for making a big purchase.

Spawned by my discomfort, I considered my closet. I feel that over the past few years I’ve made good choices – I’ve bought things that I like, that I really wear, and that will look good for some time. I try not to make frivolous or impulsive purchases. But the fact that I’d bought a few more unnecessary items than my closet needed – and that I’d done so somewhat thoughtlessly – prompted a decision. I won’t be buying any clothes for a few months. I could be less of a coward about this, and say, “I WILL SPEND NO MONEY ON CLOTHES FOR FIVE MONTHS,” but I worry that a rule like that will just breed a self-resentment that will end up in a cranky moment in J.Crew, feeling sorry for myself and pulling out my credit card for something unspeakably useless and expensive. So instead, I’ll be doing my best to be much more thoughtful. When I try to justify that purchase of a dress for a friend’s wedding, I’ll remember that I already have more than enough from which to choose. When I covet that pretty new J.Crew bracelet (sometimes I think J.Crew should pay me for all of the times I mention them on this website), I’ll remember that I have plenty of pretty bracelets that I don’t wear enough as it is. It isn’t about denying myself – it’s about considering what I have.

Have you ever put yourself on a spending hiatus?

image: _e.t.

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Friendly service, indeed.

When I started grad school, I also decided to start being “financially responsible.” See the quotes? That means that I had not idea what that actually entailed. I thought that the best way to start this new life was to take control of my debts. I owed a few hundred dollars to a friend and a few thousand dollars across multiple credit cards. The plan was to completely pay back the loan from my friend and to consolidate the debts I had on my credit cards by paying off the ones with low balances. Since I didn’t actually have the money to do all of that, I hatched a brilliant plan to pay it all back: Borrow more money!

Since I had an assistantship, I was paid a monthly stipend; therefore, I thought that I could easily pay back any loan. However, the assistantship paid only about $24,000 gross per year. It was the most money I ever made up until then. I thought I was untouchable so I started getting the plan in action.

The university that I attended had a short-term loan program that was available to students. As a graduate student, I was allowed to borrow $1,000 without interest for 30 days. Fantastic! I would get the maximum, pay my debts and then pay back the loan, with no real cost to me (other than a paltry $3.00 service fee). But things didn’t work out that way.

When I received my first paycheck, I realized that after my monthly expenses were paid, I wouldn’t be able to repay the interest-free loan in full. The interest rate on the loan would be a paltry 1.5% per month (18% APR) on the unpaid amount. I didn’t want to pay that interest, so I looked for…another loan. A PAYDAY LOAN.

If you’ve never had a payday loan (most of you, I hope), it works like this: you present to them your latest paycheck stub so that they can determine the maximum amount that you can borrow. You write a check to them for the loan PLUS the service fee. After 14 days they cash the check. I ended up borrowing the maximum of about $800 as that’s what I needed to repay the remainder of the university loan and get by for the rest of the month. The fee to borrow the money was $12 for a 14 day loan, which meant that the loan was AT A RATE OF 391% APR.

And that wasn’t the worst part.

After I got the payday loan, I walked out to my car, which of course was locked. I reached into my pocket to get my car key…

…but it wasn’t there.

I patted down all of my pockets, but no keys. I ran back inside the payday loan shop and looked around. No keys. I asked the customer service person. No keys. I went back outside and looked into my car…

…to see that the key was in the ignition. I had locked myself out. In front of the payday loan shop.

I was deflated. I needed to call a locksmith, but the payday loan place didn’t have a phone book (remember those? this was before even cell phones were popular). I can still remember the look of pity the customer service person gave me as she handed me the employee phone so that I could call Her (who was my girlfriend at the time [now wife, bless her heart]) to ask if she could call a locksmith for me. She didn’t pick up the first time because after looking at the caller ID, she thought she was getting a call from a bill collector who had been trying to collect debts from the person who previously had her phone number. After I called three times she finally picked up, and upon hearing my voice asked, “Why the hell are you calling me from a payday loan place?” She eventually did call a locksmith for me and even drove to the payday loan place to give me a good ribbing and some moral support. Probably the most disheartening thing was handing over $200 of my newly-loaned money to pay the locksmith. I was so ashamed of myself and embarrassed that this all happened in front of my future wife.

After all was said and done, I still ended up paying the university loan in installments. And since most of my next paycheck was going to repay my payday loan, I was back at square one and had to use credit cards to get me through the next few months. In the end I did end up “achieving“ my goals of paying back my friend and consolidating my credit card debt, but at an enormous cost.

Today we’re free from credit card debt and have been since June 2007. Too bad I had to take such a humiliating route to get there.

This was originally posted on the ImpulseSave blog and an edited version has been republished here with permission. If you want an ImpulseSave account (see my review here), I have two invites remaining in my account, so let me know. 

image: taberandrew

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2. Warning: Danger Ahead
3. Stupid Mistake: Missed Travel Insurance Deadline

There Is No Price Too High for Delicious Cake

Image: Cat

When I was younger, I never dreamed about my perfect wedding. Rather, I spent my adolescence imagining the day I could become a reclusive editor in New York City, living in my fabulous apartment with my multitude of cats, free from the limiting requirements of “marriage” and “other people.” So you can imagine my surprise when I found myself engaged rather young (for people of my generation/education level/geographic area), and confronted with the reality that no, we could not just go to city hall, because my husband has lots of family that would like to see us get married and eat cake.

I’m not big on having feelings in public, or spending money, or having people look at me unless I’m doing something very funny or charming, so the whole idea of a wedding was slightly abhorrent to me from the get-go. My own issues aside, my then-fiance and I knew that we wanted to keep a strict budget (graduate school stipend and non-profit salary for the win). Luckily, he is from an area of the country that is infinitely cheaper than our current city, which made the planning process a whole lot simpler. Once we had a public park reserved and the save-the-dates in the mail/email, we got into the nitty-gritty details, and that’s when I found out just how ridiculous the whole process can be. Take, for instance, this scene from a local rental company we visited:

Abby: Hello! We are getting married, and will need some chairs for the ceremony. What are the cheapest chairs you have?
Rental Store Employee (RSE): These are our white wooden chairs.
Abby: Yes, but are these the cheapest chairs you have?
RSE: These are our white plastic chairs.
Abby’s Internal Monologue: DID I STUTTER?
Abby: Yes, but WHAT ARE YOUR CHEAPEST, UGLIEST, CHEAPEST CHAIRS?
RSE: Well, these are our cheapest chairs. They’re brown.
Abby: We’ll take them!

And even those were far, far more money than I wanted to spend on plastic chairs that people would be using for all of ten minutes. To the point that my husband and I had a legitimate argument where I told him that we only needed ten or so chairs for the older folks who would need a place to sit, and he made the (correct) point that if we were asking people to travel to this inconvenient rural location for our wedding, at the very least we could provide them with a place to sit, and could I please stop being so miserably cheap about these things?

At this point, almost a year out, there are things I wish I’d done differently. We kept to our budget, and had a really nice little wedding, if I do say so myself. But my stingy tendencies did, I think, get in the way of enjoying certain things. For instance, I was very strict about not purchasing anything for other events. And do you know what? I regret not splurging a bit on a nice new dress for my bridal shower, or that fancy clutch for my wedding. These are purchases that wouldn’t have broken me, and would have added some frivolity to an event that I otherwise imbued with a sense of obligation and financial stress. You might notice a pattern emerging in my behavior – I tend to be strict to the point of purposeless unhappiness in certain financial areas. While our wedding was lovely, I could have loosened the reigns on my spending, and it would have been fine.

Have you had to juggle the budgetary delight that is planning a wedding?

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Oink oink

One of the financial skills that we’ve kinda let lapse over the last few years is saving money. Pretty basic, but we’re terrible at it.

What we’re really good at is impulse spending. We should get a medal or award for it.

Well, from here on out, we’re going to change that. And we’re going to use ImpulseSave to help us.

What is ImpulseSave?

You know how when you’re out and you see something awesome like a CHOCOLATE CHESS PIE WITH A WHISKEY RYE CARAMEL SAUCE and then you HAVE TO HAVE IT NOM NOM NOM???? Then you realize ohmygosh it’s $28 for a pie? But then you remember that you have some ice cream at home? Awesome, you’ve just SAVED $28!! But how do you really SAVE that $28??

With ImpulseSave, it’s as easy as texting “Saved $28 on ridiculously tasty but expensive pie.” Boom! $28 is moved to a savings account. Not only can you save by text message, but also by Instagram (!), going on their website, and soon by an iPhone app! That’s how ImpulseSave makes saving easy and awesome.

Goal-oriented Savings

In addition to making savings easy, ImpulseSave also has features that make saving meaningful and even…fun. First, you can set goals like “Startup company fund to mine asteroids” or “Box of kittens”. When you save, you can specify which goal you’d like to put the savings towards. Then, you specify how much you want to automatically save per week, minimum of $5, towards that goal. Why autosave? Let’s face it, if you can’t put at least $5 weekly into a goal, you’re not going to get serious about saving. (Don’t worry, you can pause anytime, but you should only do so if you REALLY need to!)

To keep you updated and accountable towards your goals, ImpulseSave will send you weekly updates on your goal progress. Each time you save, you’ll get a little cheer from ImpulseSave to keep you on your way. Also, you can save socially by letting other people know when, how much, and for what you’re saving! It’s pretty awesome and when you sign up for an account through our website, we’ll be ImpulseSaving together!

Sign Up and Security

Signing up is easy, and dare I say…fun. Everything is done electronically, including sending over a copy of identification to open up a savings account. It’s pretty cool that I could just hold up my ID to my laptop camera and be on my way – welcome to the future! There’s no fee to join, nor are there any pesky balance transfer fees. All of your information is securely stored under Fort Knox-like conditions, and the bank is FDIC insured.

If you sign up and stall out somewhere in the process, you’ll get friendly reminder emails to get you to finish. To my surprise, one of the emails was the following from Alysa Seeland, the community manager at ImpulseSave:

I noticed you haven’t finished opening your ImpulseSave account, so I thought I’d take a minute to share my story.

My husband and I are newlyweds, aka newbies to this whole finances thing. Despite our lack of knowledge, we saved $2,800 in six months with ImpusleSave – ka-ching!

The best part is, ImpulseSave is FREE, social and totally fun: you and I can share saves, challenge someone to a save-off, or just make like the Little Engine That Could while ImpulseSave encourage us all the way!

I think that this is awesome. These emails could have been lifeless and boring, but it is a nice personal touch.

A Video Is Worth A Thousand Words

Don’t feel like wading through a review? Watch the video below to learn more.

How It Works from ImpulseSave on Vimeo.

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Learn to Say "No"

Image: 401K

Drawn in by all of the media hoopla, I recently found myself watching the first episode of Lena Dunham’s new show “Girls.” Early in the show, Dunham’s character explains to her parents that their decision to cut her off financially (in her mid-twenties, two years after graduating from college) is unfair and unrealistic, because all of her friends receive financial assistance from their parents.

My views on the show aside, that was the (first) point where I stopped and thought to myself, “Ha ha, what?” Because while it might be realistic – I spent my first year out of college working with a great many twenty-somethings in New York who are at least in part supported by their parents – it makes me pause and consider how my generation handles finances.

As readers know, I lived at home for a year in order to save up some money and pay off my college loans in full. For this, I’m very grateful to my mother – many parents wouldn’t agree to this arrangement. And yet the moment I moved out, it never would have occurred to me to ask my mother for money, for anything, ever. Indeed, while I was living at home, when her financial situation changed for the worse, I started paying a small, but not insignificant, amount of rent. I view the situation in this way: my mother helped pay for college, which is an incredible help; she allowed me to live at home to make my post-college financial transition easier; she has her own finances to deal with and no large sums of money to throw about; she does not “owe” me anything, and to expect some sort of financial contribution to my adult life would be – here comes the judgment! – profoundly selfish and spoiled.

That said, I can sympathize with taking money when it’s offered. I grew up in an affluent area, and as a friend from a family where finances are generally not an issue once told me, “It’s hard to say no when your parents are offering you things.” I get that! Why would any sensible person turn down a hand-me-down car, or a spot on a family vacation, when it’s being offered? But I think a key issue for our generation to prove that we are functional, financially independent adults is to learn to say no, particularly when we know that we should. A different friend once confided that her parents had offered to help her pay for law school. “But didn’t your parents have to take out loans for you and your sister to go to college?” I asked, “And didn’t they take out a second mortgage on their house to finance those loans? And didn’t you tell me that they have credit card debt? Do you really think they can afford law school tuition right now? Have you talked about their retirement with them?” My friend agreed – it was generous, but unrealistic, and a prime example of knowing when it’s time to cut your financial cord.

My husband is in a similar situation – his parents helped him to pay for college, and thereafter he was/is on his own, in part because he views this at as the adult thing to do, and in part because his parents are now putting his sisters through college and, like my mother, do not have large sums of money to send our way. How does this affect our finances? The main issue revolves around our emergency fund and other savings accounts. If something catastrophic were to happen, we are on our own, financially. Many of my friends, on the other hand, could turn to their parents with the knowledge that they have the money to help them out. And when we want to buy a house one day? We’ll be footing the bill independently – no stowed-away down payment fund waits for us later on (unless I have a very rich, heretofore unknown relative who would like to fund my dream colonial).

Of course, like so many financial matters, how your parents do or don’t support you can vary greatly given the circumstances. But if Warren Buffet can teach his children how to handle their money, and push them out of the financial nest, then I don’t think it’s unfair to expect my generational cohort to support themselves as best they can.

What are your views on early financial independence? How do (or would) you plan to support your children?

Related posts:

1. My Parents Keep Up With The Joneses
2. Should You Pay Off Student Loan Interest While In School?
3. Raise your children to rely on them – Asian Culture And Finances

Don't spend it all in one place.

image: J Wynia

What would you rather tell people: your favorite sexual position or your salary? Which would you rather people knew?

Of the topics of conversation that seem to remain forever taboo, revealing how much you make will always be controversial. If you make more than your companions, then they might think that you’re bragging. On the other hand, if you make less than them, you’ll forever be sizing them up and comparing yourself to them. However, there’s got to be some people in your life who know how much you make.

Does My Wife Know How Much I Make?

Of course Her knows how much I make. Lately it has become a point of contention because my salary has doubled in the past 7 years and she has only received modest pay raises of 25% of her original salary in the same time period. While Her has one more Master’s degree than I do, our fields of work are vastly different. Her is beginning to feel like she’s not pulling her weight in this marriage, but I don’t feel that way. Our paychecks are combined into one pot of money so it doesn’t matter whose dollars are going where.

Do My Parents Know How Much I Make?

No way. Well, if I told my dad probably nothing would change and he would soon forget. But I’ve written extensively about how my mom asks me how much my bonuses are, tried to ask Her financial questions when I’m not there, buys herself a huge post-engagement ring, expects too much at Mother’s Day, buys wine she doesn’t even like, and expects money because we’re asian. She already snoops around my life too much, and if she knew exactly how much my salary is or how much my bonuses are she’d be waaaay up all in my business.

Do My Friends Know How Much I Make?

None of my friends know how much I make. In fact, I’m not even sure what my friend’s ballpark estimates of what my salary might be. This can be good or bad depending on which group of friends I’m with. I think that we all can guess by our living situations, the stuff in our houses, our cars (or lack thereof), and our vacations. I think that this is the category of people I least care about knowing my salary. Friends should be friends, no matter if I’m unemployed or if I’m a 1%’er.

Do My Coworkers Know How Much I Make?

Nope. I work at a small company and gossip is king. Everybody seems to be in everyone else’s business, and not in a good way. My coworkers all seem to talk about each other behind each other’s backs. Once during happy hour (oh the pre-parenting days) I got our office manager to divulge the information that new hires generally start at $30,000 per year. She didn’t seem to regret telling me this as she didn’t really get along with the new hires. Another time a senior executive accidentally left his W-2 form laying around and someone else found it. It turns out that this senior executive was making significantly more than the other senior executives at my company, and everyone thereafter tried to give that guy the shaft. He still works with us.

What about you? Who knows how much you make?

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Bringing Home the Bacon

Image: cookbookman17

My relationship is not unlike many in my age-group. This is the time for figuring out your career, for going to graduate school, for living cheaply and on different sums of money depending on where you are. My husband and I try to base our relationship on a degree of equality – his graduate school is no more important than my career, for instance, and vice-versa. In a while, I’ll be doing a part-time graduate program for a masters, and for a summer (or two), he’ll be working at various positions that supplement the household income.

We have varying levels of income – I work a full-time job, with benefits, and he’s currently in a program that alternately pays him to do research, and requires that we take out loans for his tuition. We’re in a luckier position than many, given our living situation, but we still have expenses and savings goals. And the fact that I work, and he is dependent on tuition loans, means that for the time-being, I’m the breadwinner.

To be perfectly honest, I love being the wage-earner in the house. I love having disposable income, and feeling in-control of finances, and like a useful, contributing member of society (this is an entirely fabricated feeling, I know, and graduate students are also useful, contributing members of society, but allow me my irrational feelings). It’s not a power issue – I don’t feel that I’m in control of my husband, or that I get “power” over his finances or need to give him an allowance. Our finances are, for the most part, shared (another post, to come), and what isn’t shared is disposable on each of our parts. What I have leftover I can use for what I like, and he can likewise use his money (earned from tutoring and other related stipends) as he sees fit.

And yet I know this feeling of “control” comes from a place of inequality. I’ve done a great deal of reading on feminist history, and have particularly strong feelings about women and money, and how we can take control (financial and otherwise) of our lives. I’m of the (unpopular, at times) opinion that it’s essential for women to have their own livelihoods and income sources, particularly in marriage and where dependents are concerned, because you never know what’s going to happen (divorce, death, layoffs, financial crisis, etc.). I like making money, and being able to put lots of it towards our savings. At the moment, I’m the one contributing to our savings accounts for a future home, for vacations and car expenses, etc. And this, perhaps, is where the equity comes in. My long-term career goals are lofty, but I work in an industry where the upper pay-ranges are not incredibly high. My husband, on the other hand, will likely ultimately earn more than I will at the height of his career, based on his industry. In a way, I’m comforted by the fact that when we buy a house, it will be with mostly money I’ve saved (even though, for all legal intents and purposes, all of the money going into our household is “our” money), because I know that there will likely come a time when many of our expenses will be covered by my husband. As warped a feeling as it is, I’m glad I have this decade to do my “part,” because I know he’ll be doing his one day (not that he isn’t now, in a different way – clearly there’s no way for me to write about this without putting my foot in my mouth).

Is this a totally sensible feeling? Not really. But we’re part of a generation navigating changing terrain, with different careers and incomes and financial support systems.

How have you navigated the “breadwinner” issue in your relationship?

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George Keeps an Eye on Me and I Keep an Eye on Him

Image: Paul Sapiano

Confession time: I am horribly selfish with money. Well, maybe not selfish – just particularly cautious. In my adolescent years I watched my parents’ marriage implode, and with it the sense of financial security I’d maintained for most of my childhood. I also learned a few legal lessons regarding what happens to combined finances in a marriage, and what happens to women (although I’m sure this happens to men, too) who aren’t the main earner, or financier (this is the fancy term I’ll use for “people who pay the bills and keep an eye on the savings accounts”) of their household.

Needless to say, when my then-fiance, now-husband and I were moving in together, and later getting married, how we were going to deal with finances was a top point of discussion. I’ve read a number of items on how couples combine money now, and I know there are a variety of ways to go about it, but there seem to be three most-popular choices – total combination (one joint-checking, all joint-savings, etc.); total separation; and a little bit of both.

Obviously, how people combine their money is a wildly differentiating and personal decision, which should be jointly-agreed upon depending on your circumstances. My personal disclaimer is: what works for us may not work for you, and the MOST IMPORTANT THING is that you have this conversation before you start pushing money around anywhere. That said, there were a few things I knew going into money-combination-time:

1. I really like having my own money, in my own name
2. We have savings goals that we’re working towards together (travel, houses, etc.) and it makes sense for us to have singular accounts for these things
3. Husband is a graduate student and I have a full-time job, which means we have separate retirement funds, and that is fine.

Since we’re relatively young and unestablished, and neither of us come from money (sorry Mom – I tried to marry up), our finances were relatively uncomplicated. We decided to stick to the “bit of both” plan, and combine what made sense to us. This meant that we opened a joint checking account (which we’d actually opened when we moved in together) to which we each add enough each month to cover ongoing expenses like car insurance, gas, and cat food, and fun things, like drinks and dinners. The joint checking account has also been useful, budget-wise, because there’s a clear rule: when the money is gone, it’s gone, and there will be no more drinks or dinners or things that cost money.

We also have joint savings accounts that make sense for our situation – one “Emergency Fund,” one “Future House Fund,” and one “Travel and Car Fund” (for fun things, like travel, and not-so-fun things, like that time I took our car to get inspected and it took the mechanic five seconds of hearing it run to know that he wouldn’t be able to pass it without an exhaust replacement).

As for what isn’t combined? We each maintain our own checking accounts. Sure, we could have closed these when we got married, but I like having my paycheck deposited into my own account, and then pulling money out for savings/joint checking. It allows me to see what kind of money I have leftover, and to maintain a degree of autonomy. The same situation applies to my husband – his stipends and occasional paychecks go into his account, and he puts money in the joint checking account accordingly. This also means that I don’t have to care how much he spends on video games, and he doesn’t have to care that I just bought a J.Crew sweater I’ve been eyeing for a while.

We also have separate retirement funds – this might change one day, but for now it’s the simplest way for us to save (read: I am too lazy to figure out if we should combine money into another IRA or not). Is it a perfect system? Probably not, and the nagging concern about “What Will Happen” if something goes wrong (divorce, death, etc.) is always there, but I think it would be there regardless of our situation. For now, we both keep our eyes on the money (because that’s just good sense, not because we don’t trust each other), try to save smartly, and will plan on adjusting as circumstances change.

How have you navigated combined finances?

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Automatic Savings is the Balls

We suck at the whole willpower thing, so we increased our employee-sponsored retirement plan contributions to make up for it. It seems like it’s working well. See my SIMPLE IRA? Oh yeah, almost doubled in two years. I increased my contributions to 6% in 2011, and to 10% in 2012. My employer matches 3% of my contribution, so a total of 13% of my income is being contributed to my SIMPLE IRA.

Her increased her 401(k) contribution to 10% a few years ago as well, and her employee matches 40% of the first 6% of her contribution (that math is dizzying), for a total of 12.4%. However, Her’s 401(k) balance is taking a mean hit because some of our more volatile stock holdings are in that account. We use a joint retirement portfolio where we’re diversified across all of our accounts, so individual account performance is less important than the portfolio as a whole.

Capitalizing on Our Side Hustle

Believe it or not, this website makes us money. In fact, it made us really f***ing good money for a few years. We were able to pay for a wedding without incurring debt, travel to Australia, not to mention pay off all of our revolving credit card debt. In order to avoid paying taxes on that money, we stuffed a bunch of it into a self-employed 401(k) plan we started a few years ago. Last year around this time we made a large contribution to it to shelter our 2010 earnings, but unfortunately we didn’t have much income in 2011 to put into that account.

Our Car is a Decade Old

This year our car turns 10 years old. It continues to get older, have more missing parts, incur minor cosmetic damage due to my poor driving, and rack up more mileage. Since the little one was born, we’re driving to work everyday instead of taking the train and our lives suck all the more because of it. I never realized the actual cost of having a car in the city, but it is a lot. Gas (almost $5 a gallon in Chicago), parking, and maintenance take up almost $500 of our monthly budget. Ugh. The good things about it are that it’s a reliable small Japanese car with decent gas mileage, it’s completely paid off, and insurance premiums are relatively low.

No New Debt…

While we’re still using our credit cards, we pay them off every month. Lately, we’ve gone to a more cash-based system to curb spending so the average monthly balance is relatively low. I’ve done a first-pass run of our taxes and it looks like we’re going to owe again, so the number is just an estimate. But, it is quite a hefty expense. The student loans continue to decrease steadily; we’ve increased the amount we’re paying on the 1.99% for life credit card to which the loan balance was transferred and it should be paid off by the end of next year. The federal loan payment is automatically withdrawn from our checking account so we don’t worry about it.

…Be We Can’t Save Worth Sh!t

I’ve been tooting my own horn for the last few paragraphs but overall our savings is pretty dismal. A $4,000 increase in two years is pathetic considering that we’re making a combined six-figure income. No excuses here – we really spent a lot of money on our hedonistic impulses the last few years. Combined with the ridiculous cost of good-quality daycare, we’re in a bit of a money crunch these days. We’ve started to take measures to remedy this, but it’s going to be difficult. We’ve been thinking of getting out of our ridiculously low-rent apartment and buying some real estate, but don’t have enough for a sensible down payment. We’re really going to have to hunker down and prioritize what’s really important to us so that we can move forward towards those goals.

Wrapping Up

I can’t believe that it’s been almost two years since I’ve checked our net worth. In postponing it, I’ve managed to turn a blind eye towards our finances for the past few years. But now that we’re parents, the stakes are much higher in terms of the consequences of our decisions. I was worried about our finances, and that’s why I started writing on the blog again. I hope that I can spark the momentum and enthusiasm that we had about our finances in the past few years. Because if we don’t, we’re screwed.

Related posts:

1. April Net Worth – Indifferent
2. April 2007 Net Worth – Slightly Drunk Edition
3. Our 2007 Goals Status, Part 6: Did We Reach Our Net Worth Goal?

Time Enough for This AND Retirement Savings!

Image: Kurman Communications, Inc.

Despite reminding my husband constantly how amazing I am, and how lucky he is to have me, I do, in fact, have a number of flaws that I try to correct (when I can remember them). Besides an anal-retentive need to keep things organized at the expense of the sanity of others, a propensity for nagging, and something of a temper, my greatest flaw is how exceptionally judgmental I am. It’s not something I’m proud of (except for those rare moments when it translates into a useful form of sass that gets things done) – “let he who is without sin cast the first stone,” etc. But it’s a habit that’s hard to break, and it’s one I find largely directed at financial matters.

When I started writing for “Make Love, Not Debt,” I purported that I wanted to disprove the stereotype of the financially inept millennial. And it’s true! And as a result, there are moments when I want to drop kick some of my 20-something counterparts for their nonsensical financial decisions. An example: a coworker and I were recently discussing a variety of financial things. I mentioned our company’s retirement plan, and their match. “It’s great to have a 403b with a match,” I said.

“What?” he replied.

“Our 403b – it’s nice that [COMPANY NAME] puts a match in.”

“What’s a 403b?”

Readers, this company sends tons of emails about our benefits. When you start working, at the MANDATORY ORIENTATION, they run through all of your retirement plan options, and discuss the basics of a retirement plan, how to contribute, what the company-specific options are, and how you can make investment decisions. You get gads of mail reiterating all of that information. Not only does this company match – it puts money into your account whether or not you’re contributing. It is FREE MONEY. And this co-worker, who is a few years older than I am, and has been at this company for about a year longer than I, had no idea what I was talking about. He had no idea that he could be contributing to a retirement fund – nay, he seemed to have no idea what a retirement fund is. He had no idea that he has free money sitting in an account, courtesy of our employer. At that moment, I was judging the heck out of him. You’re 28! You work for a company that goes out of its way to explain its retirement fund to you! Why do you have no idea what I’m talking about? Why are you not taking advantage of the pre-tax contribution options? What is wrong with you?!

Granted, this is the same friend who has upwards of three-digit student loans, and still spends more money on clothing than I do. So I have lots of judgment to go around with him.

Alas, this is a common theme among my acquaintances. A 29-year old graduate student I know (who has the same stipend as my graduate student husband, and lives in the same rent-free housing that we do) once told me, “Oh, one day I’ll have enough money to put in a retirement fund!” And within the next breath, described the $180 pair of jeans she had just purchased. I realize that this prevailing sentiment comes from a place of procrastination. People think that they’re young, and that there will be lots of time later on to sock money away from retirement, when they “have it.” For now, there are nice jeans and happy hours and trips to spend that money on. I get it! I understand the allure of cocktails and trips and jeans. I’m young, too, and I like having nice things. But how do we get my generation to realize that all of that money doesn’t just appear later on in life – you have to start early. How do I drill into the young minds of my peers that the power of compound interest is amazing, and if you do even a little bit right now, it will make a world of difference? How do I convey the simplicity of designating a pre-tax contribution to your retirement fund? And how can I avoid making my judgment face throughout it all?

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Sunshine = Spending Spree

Image: Rachel Kramer

We’ve had a spate of gorgeous weather here in the Northeast, and normally bundled and home-bound citizens have been venturing out in the sunshine. I’ve noticed that with nicer weather comes a trend: spending money. I’m less content to sit inside and drink tea or a beer with my husband; I’d rather be on a roof-deck with friends sipping sangria, which comes at a higher cost.

I’d scheduled a haircut months back, and found myself walking to the salon in the stunning weather. The salon is located on a busy shopping street, and there were huge quantities of people out and about, wearing skirts without tights and shorts and dresses for the first time in ages. After getting my haircut (a not-inexpensive endeavor itself), I thought, “Why head back home just now?” My husband would be in a meeting for a while, and I had nowhere to be.

It was lovely to take a long-awaited walk in some nice weather (my city generally has two months of summer, and many, many months of wintery misery), but SHOCKINGLY (note the sarcasm) I stumbled on a myriad of ways to spend my money. I resisted the allure of the many stores with pretty window displays of sundresses and shoes; I managed not to stop for ice cream at the multitude of shops advertising new and exciting variations on chocolate. But when I saw the open door to a nail salon, I channelled my inner Tom Haverford and thought, “Treat yo’self.”

Twenty-two dollars and one appropriately summery nail shade later, I emerged.

Would I have spent that money had it not been blindingly nice outside? If I hadn’t felt like walking the avenue and seeing what caught my eye? Probably not. I would have hurried home to greener (or at least warmer) pastures, and thought about painting my nails myself before deciding that my time was better spent watching re-runs of “30 Rock.” Is it worth beating myself up over the unforeseen expense? Not while I’m on this vitamin D high it isn’t.

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Your student loan repayment strategy should go far beyond getting a job and making your scheduled payments. Given the amount of debt the average student has — which typically adds up to tens of thousands of dollars — it’s vital to consider all your options in order to manage your post-graduation finances and achieve overall financial health.

Here are a half-dozen student debt management strategies that you might consider:

1. Consolidate multiple loans. Many students take out loans from multiple sources, including government student loan programs, lines of credit and student loans through banks and other financial institutions. Managing individual payments can be time-consuming, confusing and costly, so if you have more than one loan to repay, consolidation can simplify the process. With loan consolidation, you essentially get another loan, which is used to pay back all your various creditors. Then, you are responsible only to one creditor, which can save you a lot of money in interest, not to mention a great deal of time and a lot of hassles. [ed. note: please don't do it like I tried to with a payday loan]
2. Purchase appreciating assets. Most students don’t think about using their loans to make investments, but if you have the capability, you can really get ahead by using some of your student loan money to finance assets that are likely to appreciate in value over the duration of your education. The classic example of this approach is to use some of your student loan money to make a down payment on a house, and live in the house as you go to school. When you graduate, your house will likely have appreciated in value to a significant degree, and you can sell it at a profit and use the proceeds to pay back your loans. If you want to explore this option, you may have to enlist the help of your parents to come up with all the money you need, not to mention the income and credit rating necessary to secure a mortgage.
3. Know your repayment options. There are four main types of repayment schedules: standard, graduated, extended and income-dependent. A standard schedule requires fixed payments over a specified period of time (typically 10 years). Graduated payments are lower at first, then move up as you secure higher levels of income. Extended repayment plans are like standard plans, except that they are spread over a greater period of time; this will result in more interest charges, but it will also decrease the amount of your month payments, making them more manageable. Income-dependent repayment plans base payment amounts on your income and typically come with longer amortization periods.
4. Adjust your repayment schedule. In addition to knowing your repayment options, remember that you may qualify to change them if necessary. For example, you might move from a standard repayment schedule an income-dependent or extended one if you are having a hard time meeting your monthly obligations.
5. Consider the military. If you join the military, either during college or after you graduate, you can also qualify for unique payment postponements, deferments or even debt forgiveness. You can learn more about special options available to military servicemen and women through the Federal Student Aid website.
6. Look into deferment and forbearance. As an absolute last resort, you can defer your student loan payments or apply for forbearance status if you meet certain income and debt load criteria. However, you should only use these approaches if you have no other option. Interest will continue to accumulate while your loans are deferred; all a deferment does is buy you some time to get your financial house in order. Forbearance can have an adverse effect on your credit rating, which can significantly inhibit your financial future.

With post-graduation debt loads becoming a fact of life for more and more students, taking the time to create a plan will pay dividends down the road. If you properly manage your student loans, you can save a great deal of money in interest and protect your credit rating, enabling you to finance other essentials if you take care to live within your means. Above all, remember that your student loans are an investment in yourself and an investment in your future. The standard rule of thumb is that a college education translated into $1 million in lifetime earnings, so don’t let the rising costs of education prevent you from pursuing knowledge and building towards a better future.

This is a guest contribution from Bill Hazelton, CEO & Founder of CreditCardAssist.com, an industry leading credit card comparison site, providing tips, advice and information on balance transfers, zero interest promotional offers and the very best cash back rewards programs.  You can subscribe to his RSS feed or find him here on Google+, Facebook and Twitter.

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Such an innocent-looking money suck.

Image: Rob

This weekend, I surveyed the damage done. How much would it cost, I wondered? Surely more than I wanted to pay. Did I have to do it? Yes, I did – any attempts to solve the problem on my own would only result in a more costly expense. So I steeled myself, and readied my wallet for the inevitable blow.

Am I referencing a horrible home expense? A disaster of epic proportions that needed to be paid for? No – my apprehension relates entirely to an ongoing expense that I can’t get rid of, no matter how hard I try – dry cleaning.

Before I started my current job, I worked in professions where “business casual” wasn’t so much the required attire as just “casual.” I could throw on some nice jeans and a blouse, and be considered well-dressed for the job. Now, however, it’s suits, pencil skirts, and blouses, all day, every day. While I’ve enjoyed building a wardrobe an adult can be proud of, I’ve been floored by the expense of upkeep. Even with careful maintenance – ironing skirts and pants that can be worn a few times without cleaning, machine-washing those items that clearly aren’t necessary to dry-clean – there comes a point where I just have to take things to be cleaned, and then I get to drop my jaw at the $16 cost of cleaning a dress, or the miserable discrepancy between laundering my button-downs as opposed to my husband’s (it’s $4 more to clean a woman’s shirt, apparently).

My husband has also joined in on the horror. He has interviews and conferences to attend, and as a result, has a far higher dry cleaning bill than he ever did as a hapless undergrad. He makes a similar effort – hanging up pants, ironing where he can – but at a certain point, it’s unavoidable. I know some people who apply a Darwinian method to their clothing – throw it all in one washing machine and dryer, and whatever comes out alive deserves to be worn. While it’s tempting, I just can’t bring myself to throw a $300 three-piece suit into the washing machine. What if it shrinks? (And it surely will). I also have to admit that my sad ironing attempts pale in comparison to the dry cleaner’s – I can’t seem to get that sharp crease in the pant that they can.

This is also an area where we won’t tally up our yearly costs. I like to try to cut expenses where I can, and sometimes looking at a huge number can be a useful wake-up call (I spent how much on eating out? Etc.). But with dry cleaning, I know it would just depress me.

Is there an expense in your life that’s unavoidable but depressing?

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Source: goodfinancialcents.com via Jeff on Pinterest

We’ve joined over 140 other bloggers to promote the Roth IRA Movement. Thank Illinois Certified Financial Planner Jeff Rose for this awesome idea!

How We Found Out About Roth IRAs

According to my statements, my Roth IRA was opened in 1996. I was in high school at the time and got into a good amount of trouble for a teenager, so I was grounded a lot. Some of those Friday nights were spent with my mom, aimlessly flipping through channels for something to watch. One night, we came across a show on finances, with a host being a fiery woman with the name that wounds like MOVIE DOORMAN. It was she who introduced our family to the Roth IRA.

We completely bought into the numbers that the financial personality was throwing at us: if we contributed the maximum amount (which back then was $2,000) for a few years, then by the time I was to retire I’d have a GAJILLION DOLLARS for me to by a private island and retire. She didn’t say exactly how the money would multiply, but that didn’t matter to us. So my mom opened up an account for me and put in $2,000. She gave me free reign as to what I could do with it.

I didn’t have a single clue as to what I should have done. So I did what any slacker teenager would do: Nothing.

Getting Started With My Roth IRA

Fast forward a few years and my mom had contributed an additional $500, while I did nothing. She called me one summer day when I was in college, and told me to pick some investments. I logged into the investment brokerage, and I stared at the screen. I. Knew. Nothing. So I did what any Generation Y/Millenial would do: I called the customer service hotline for help.

When I was connected with the rep I told him the history of the account and that I had no idea what I was doing. The guy was nice enough to stay on the phone with me for about an hour while he explained the basics of mutual fund investing – large caps vs small caps, stocks vs bonds, mutual funds. I am supremely grateful that he spent so much time with clueless me. Honestly, I don’t know if what that guy did was even legal.

When I got off the phone, armed with the very basic knowledge that I could obtain about investing, I went and made my first investments: ASCVX (which was originally owned by the bank I was with at the time) and FSLCX. Woo!

My Roth IRA Today

While those weren’t the brightest of investments, it got me started. The promise of a GAJILLION DOLLARS by the time I retired was again being pursued. Over the years in my Roth IRA I owned individual stocks of GE, CVS, and AMD, along with some other winners and losers.

Today, my Roth IRA is a part of a comprehensive family retirement investment portfolio. While I haven’t updated our list of holdings in our Roth IRAs since 2007, they do still have the same investments in them – a REIT and a bond fund, both which round out our portfolio.

Looking to the Future

We’ve unfortunately not contributed to our Roth IRAs in a few years as we’ve increased the amounts we put in our employer-sponsored retirement plans. We would like to change this in the future as tax-free growth is something that we should be taking advantage of and we would like to remain tax-diversified.

One future possibility for our Roth IRA is to help fund a first/investment home purchase. Current regulations allow us a lifetime withdraw limit of up to $10,000 for the purchase of a first time home. If we both did this, then we’d have $20,000 in real estate, or about 17% of our portfolio. It’s a fantastic benefit of having a Roth IRA, but we must weigh all the options to see if it is right for us.

Do you have a Roth IRA? How have you used it in your life?

Related posts:

1. Our 2007 Goals Status, Part 1: Contribute 50% to Roth IRAs
2. Investment Mystery Update
3. Identify This Investment