All You Need Is Enough

New Blog Address

2014-01-13T17:13:00.001-06:00

I've picked my blogging back up, but moved to a new location. You can find all of my old content (plus my new posts) at Phoebe's Journey.

Thanks for reading,

Phoebe

Under The Dome

2013-12-17T06:00:00.000-06:00

Last weekend my husband and I watched the first season of Under The Dome in its entirety. It wasn't the best show I've ever seen but it was a bit addicting. It was a cross between The Walking Dead and Lost, and starred Dean Norris who played Hank on Breaking Bad which is a big plus in my book.

The series is based on a Stephen King novel and the basic concept is that a giant clear dome comes down on a small town. They are cut off from the outside world completely and there is no way to get through or even hear anyone on the outside world. Since they are all completely cut off many people panic, some people take advantage of the lack of law enforcement, and some keep focusing on how to get the dome to disappear. Don't worry, if you haven't see it I won't be giving away anything else, so feel free to read on.

Watching this show (and anything post apocalyptic or isolated) is very interesting because in these situations money becomes useless very early on. Money is a great form of currency for our global economy when money is flowing in and out, but in an isolated situation where no money is flowing in, and even if you have a lot of it, that won't keep your kids fed, other skills become far more important.

In these types of shows people that have the ability to grow food, possess physical strength and skills such as bartering, rise up and become successful. Those that have more modern expertise in areas such as banking, real estate, and law quickly become futile. It really makes me wonder how I would fare given that I also have a very modern skill set. I'm pretty sure that knowledge of a very specific type of software and some presentation skills will be less than crucial if zombies take over some day.

But there are some intangible skills I've developed from my work such as leadership, the ability to stay calm under pressure, and problem solving that might come in handy. But I really think I'd have to thank my outdoorsy dad for helping me survive if money suddenly became useless. I am physically strong (for a woman), know how to fish and hunt (assuming I had a gun but I could probably learn to use a bow), and have been taught numerous wilderness skills (my father's favorite book is To Build A Fire by Jack London).

Aside from just wondering how I'd fair though, it's even more interesting to think about how we would survive as communities. I live in a smallish suburb of around 18,000 people. While I do know some through my church, we haven't really gotten to know many of our neighbors very well. My husband has some work colleagues, but that's about it as far as social connections go. It makes me sad when I think about this because I dream of someday having neighborhood block parties or inviting all the kids in our area over for an ice skating party with my kids, but it seems that people have become more isolated.

In The Overspent American, the author describes that we now have less personal time to spare to help others, and more money at our disposal, and so we pay for other people to handle our issues instead of asking for favors. Thus we have become an isolated society with very little "social capital." If a huge dome were to come down right now I wouldn't know who I could even barter with in order to get basic necessities like food, while providing the skill set that I possess. I'd have to get really friendly with those around me really fast, and it makes me sad.

There are people out there looking to change this. People setting up sustainable communities, sometimes even off the grid, where community and lending a hand are top priority. It's interesting that my "ideal place to live" (yes, it's fictional) is a little town called Star's Hollow from the TV show Gilmore Girls. In this little town people regularly offer to help one other. They chip in to help someone move, mow their lawn, fix something broken on someone's house, and offer to participate in the many town fundraisers and events. You can feel the community and it's as if the family unit has extended to include everyone in the small haven.

I know it isn't real and I'll probably never be able to find that exactly, but I'm realizing that this sense of community is part of what I disparately want in my life. In a way this doesn't seem all that tied to FI, but I think it very much is. FI is about freedom. Freedom to spend my time as I please doing favors for others. Freedom to move to a smaller community even if the job prospects are smaller. Freedom to perhaps open a small store that won't make much money but will connect me with the people in my community.

I'm not sure how I plan on executing on this just yet, but I feel invigorated having identified something that I very much value and want to prioritize in my life.

Phoebe

Book Review : The Overspent American

2013-12-16T06:00:00.000-06:00

This weekend I read an awesome book that anyone on a similar financial journey to mine should read. It's called The Overspent American, written by Juliet Schor. It was a recommended read to anyone that enjoyed The Millionaire Next Door (one of my favorite books) by someone on the Mr. Money Mustache Forums (you can check out her inspiring Tumblr here).

First of all, don't you just love the cover art? It makes me chuckle every time. But beyond that this book is amazing. It's written by a Harvard Professor, and at times it shows. She collected a lot of data and performed a lot of analysis to come to her conclusions. Thus it sometimes gets a little dry, but push through it because there are some golden nuggets here.

What I found was that she put a name to a lot of things I have felt, and she also explained the reasons why. It seemed that every few pages I would put the book down and go find my husband to share my newfound bit of wisdom. Most of the book is constructed around how Americans overspend and why, and then the last quarter of the book is around intentionally downshifting and simplifying. It was music to my ears. Let me share a few of the golden nuggets that I got out of this book.

Each of us has a "reference group" that we want to identify with. In prior decades this would be those Jonses down the block with the new Chevy, but in today's world it's far more likely to be linked to your education, occupation, etc. than where you reside. Where you fall on the income scale in your chosen reference group will greatly influence how you spend. If you are low on the scale you'll likely overspend to keep up, and if you are high you'll likely save like the Millionaires Next Door. This rings really true to me. We currently reside in a small town and primarily socialize with my husband's colleagues who each make less than $50K annually, often supporting an entire family. We feel very comfortable with our modest lifestyle in this scenario, but I can quickly become uncomfortable speaking to my colleagues, who make more than I do. about my 16 (almost 17) year old car.
Remember when I was thinking about buying a new sofa and next thing I knew it I was going to purchase a new coffee table, TV stand, and side tables to go with it? This is an actual documented effect. It turns out we crave uniformity and so when we "upgrade" in one are of our lives we have a hard time not upgrading things around us to conform. This leads to an ever upward escalation of upgrading. The author suggests that we keep this in mind as we make new purchases.
Many of us overspend on gifts. Giving to others doesn't seem selfish and so we feel comfortable splurging. The other person will then likely feel compelled to give a gift of similar price, and in the case of spouses, this can easily become ingrained and expected. Spouses will then often begin telling each other what kind of lavish gifts they would like, and gift giving then becomes a guilt free way to upgrade your life. We suspected we would have a hard time not giving lavish gifts like diamond rings and expensive watches for our anniversary and so we decided to just do a fancy dinner out instead. While we spend a lot ($360 last year) I'm glad to know that we won't continue to increase our level of gifting each year.
There are different kinds of luxury items, and the author breaks them into 2 categories; visible and invisible. The visible items are a house, car, and clothing. Invisible are your furnace, bank account, and products you only use privately like face wash. People are far more willing to indulge in visible luxury items than non-visible because they convey status. Now this doesn't mean that everyone is going around saying "gee I really want that pretty home because my friends will think I'm rich." The author contends that while we actually are thinking that in our subconscious, we justify our purchases with practicality. We say that it's a safe area with good school and a strong sense of community. This just smacked me in the head when I read it. You have all read about my struggles with doing well financially but not feeling successful in the eyes of others. It's because my luxury items (bank account, financial security) are not visible. While this is still something I struggle with, understanding "why" gives me a great sense of freedom.

There are a ton more golden nuggets in this book, but I'll let you read them for yourself. Go to your library and reserve The Overspent American today. And if your library doesn't have it (my library system didn't) just ask them if it's available outside your library system and they can do an inter library loan. Trust me, it's worth it!

Phoebe

December Allocation Update

2013-12-13T06:00:00.000-06:00

It's that time of the month again, time to give you an update on my asset allocation. As a reminder, here's where we were this time last month:

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As you can see, we were still very heavy in cash when you look at our total allocation. We weren't overly concerned about that though because we knew we'd be moving large amounts of it into the market through the end of 2013 (we're still putting money back into the market that we made in September by selling company stock). But when we removed cash, we saw that lo and behold, we actually had a little too much in U.S. stocks and are looking a little light on bonds and foreign stocks.

Our plan though was to sit tight and continue with our automated investments through December. At that point all of our money from the stock sale would be in the market and without those huge $13,000 investments ever 2 weeks (on top of our normal $6,000 per month) we'd feel like we could get a grip on our investments and course correct to get ourselves more into bonds and foreign stocks going forward.

We're halfway through the month, so with $16,000 left to invest this month, here's where we stand.

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I'm starting to feel a bit better about our investments. We started out with over half of our money in cash, and now we're getting closer to a third (maybe by the end of the month). We still have problems with being only 10% invested in bonds overall, and just 3% in foreign stocks. When you remove the cash our numbers are starting to look a little better, but they still need improvements.

Up until now we have been investing $2,000 in U.S. stocks (index funds) twice a month (so $4,000 in total) and $2,000 in bonds once a month. Our 401K's also have a mixture but I'm pretty sure they are self balancing and so for the time being we're just going to focus on our taxable investment accounts.

In order to invest more in bonds we'll just have to increase the amount we're already investing, but it will be a little trickier to invest more in foreign stocks. The only ones we're invested in today are part of our blended 401K's so I have no experience selecting them. I'd like to find something similar to an index fund for foreign stocks but I'm not sure they exist and I hear terms thrown around like "emerging markets" and am not sure how to address all of the options.

So my goal by the end of December is to spend some of my down time doing research into a suitable investment that will allow us to become more diversified into foreign markets, and then reset my automated investment schedules so we start 2014 off on the right foot, improving our asset allocation.

If you'd like to read my previous allocation updates, or how I came up with my target allocation, click here.

Phoebe

End of Year Finance Issues

2013-12-12T06:00:00.000-06:00

Sometimes I don't know how anyone is expected to manage their finances. I consider myself reasonably intelligent, plugged in, and on top of things, and I feel like I'm barely hanging in there at the moment. The end of the year poses unique challenges and unfortunately I seem to be running into them all.

There are two issues that I'm struggling with at the moment. First, I've been waiting on my accountant to figure out what taxes we owe for selling a large chunk of company stock at the end of September. Right after we sold it I thought our accountant would figure out the tax implications and we'd send off a check within the week.

After not hearing about anything for a week I called the accountant, and he told me that there was no rush, we actually just had to get the taxes filed by sometime in January. That helped me to relax, and I knew that he would be busy with people filing their taxes in October so I didn't even think about this until last month.

Mid-November I decided to follow up with our accountant via email, asking nicely if he had had a chance to address our taxes yet, and if he needed any other documentation from us. I didn't hear anything back and a few days later sent another email. A week after the first email I called the accountant and he was very nice. He told me that the best way to get a hold of him is by calling, and that he just hadn't gotten a chance to respond to my emails yet. He said that he would look at my taxes and see what we owe to make a payment in December and then we may also owe one in January (I was a bit confused, but figured I'd wait until he came back with more detail before asking in depth questions).

Well I made a mistake. I really should have asked for a specific date that our taxes would be completed by. As is I simply think about this every day and fret that we're running out of time, especially if our accountant decides to take time off during the holidays. I also don't want to be rude and keep following up, so I feel stuck. Yesterday I sucked it up and sent an email (I know, he probably won't be responsive, but a call seems a bit too aggressive) asking when he planned to get around to our stuff, and mentioned that if I didn't hear back in a couple of days I would call. My plan is to call on Friday if I don't get a response.

Part of me also wants to stop working with this guy. His unresponsiveness (via email at least) is off putting, but the fact is that when I call I always get through to him right away, he is really nice and thorough with his explanations, and I was very happy with the stock analysis he provided for us in September. I think I just need to learn to manage this better, and hopefully we can get back on track. I should also mention that I abhor that idea of trying to find another accountant, so I am committed to making this work.

The second issue I'm dealing with is actually even more annoying. Two weeks ago I logged into my HSA account and had a big red warning message saying I had over contributed past the IRS limit for 2013. How does this happen? First, I asked our payroll department to contribute me to the maximum and they did the math. On top of that I assumed that similar to my 401K, when my HSA was fully funded, contributions would cease even if I had some scheduled. I emailed my company to see what had happened and they said that I would have to get in touch with my bank and ask them for a form that would allow us to return that overage (a little less than $30) to my company who would then take out taxes and deposit the money with my paycheck.

I called my bank, got the form, filled it out, and emailed it to them. That wasn't too bad. But then I got another email from the payroll department at my company, and they said that their records show that I'm actually around $500 below the 2013 limit with my contributions so far, so the bank must have made a mistake. I email the bank, and sure enough a deposit for that exact amount was made on January 4th, 2013 and it was coded for 2013 even though it should have been coded for 2012. They asked if I wanted them to fix the mistake and I said yes, and please also disregard the form I had sent 15 minutes earlier asking them to return the $30 overage.

Sure thing they said, they would do both of those things, and the transaction would be processed in 2-3 days. Five days later it still wasn't processed and so I emailed that same person, and another person responded. It seemed like we were starting from scratch, but they said they could help and re-code the January 2013 charge, and again, it would take 2-3 days. Yesterday morning I then logged into my regular checking account (which is through the same bank as my HSA account) and I was shocked to see the $30 overage deposited into my checking account.

Not only did I ask them to disregard this request (and I was told they would) they returned the money to my account instead of my company so this is now an illegal distribution because I took money out of my HSA that is not being used for medical purposes. When I saw this I wanted to pull my hair out. If the transaction had simply been processed (rather than disregarded) I would have just let it go, I don't care too much about those $30, but now I had a new problem I had to deal with.

So I once again called my bank and explained the situation. The January charge hadn't been re-coded, so the nice guy on the phone said he'd process that (after leaving me on hold for 20 minutes) but said he'd have to see if they could reverse the distribution charge to my bank account. He said he'd respond via email.

About an hour later I got an email saying they couldn't reverse it, but I could fill out a contribution form, indicating that it was for "distribution error" and they could put the money back in. So I went ahead and filled that out (which involved printing it out, filling it in, and then scanning it) and sent it back. A few hours later I then got a phone call from yet another customer service representative. She said she had processed the re-coding (which I later confirmed - yay!), but that they needed me to send in a contribution form and a check for the $30.

I told her that I had just sent in that very form that another person asked me to send in, and she said that wouldn't do. Instead I would have to fill it out again and mail it with a check. I told her that I was concerned about how long that would take given that we're late in the year, and asked if we could do it another way since I have both my HSA and regular account through their bank. She said that I could process the contribution electronically and in a few days it would appear so that she can then flag it manually (she needs to do this so that it doesn't count towards the 2013 limit twice).

I'm trying to remain hopeful that this will actually work, but after all of this, I don't have a lot of faith. I've found myself wondering how severe the IRS penalties really are for less than $30. At this point, it might be easier to just take the hit. I hope you all aren't running into these same kinds of issues.

Phoebe

Keep Your Money In Your Pockets Tip #42 - Cook From Scratch

2013-12-11T06:00:00.000-06:00

This year we've been really successful with our $350 monthly food budget. Last year, with only $300 each month we went over quite a bit and then had a free for all, spending over $400 numerous times. But this year we've managed to stay within that limit each and every month.

While we've been successful thus far I'm always focusing on doing better for our finances, our health, and our happiness. When I say happiness, I mean that if we can find ways to bring the grocery bill down a bit we can splurge on Chipotle a bit more often.

So lately I've been trying to buy and make more things from scratch. I love looking into our shopping basket and just seeing whole foods that need to be prepared instead of pre-packaged things you simply heat up. Here are some changes we've made:

Popcorn - Instead of buying the microwave bags, we've been buying whole kernels and popping them in our hand me down air popper. I didn't realize that the popcorn would be fluffier, you can never burn it, and it's so much better with a little melted butter and salt. This is healthier, tastier, and much cheaper!
Cinnamon Bread - About once a week I make a loaf of cinnamon raisin bread in my bread maker. We eat it for breakfast and for snacks, and it's delicious. When I first started making this I'd use a bread mix from the grocery store but now I use flour, salt, etc. and it tastes even better.
Pizza - Years ago when we wanted pizza we'd call up Dominos, but last year we had frozen pizzas regularly. I still love me some frozen pizza, but my husband's homemade crust is way better! He makes a delicious wheat thin crust dough, we top it with fresh veggies (and meat on his side) and a large serving of mozzarella. It's delicious!
Spaghetti - It sure is easy to just get a jar of sauce from the grocery store and dump in in a bunch of noodles. But lately we've been toying with alternatives. My husband makes yummy tomato sauce using tomato paste and spices, and lately we've been making this one pot pasta regularly, which includes its own sauce.
Beer - My husband really enjoys brewing beer at home. Since he likes the fancy shancy kinds that cost a ton, brewing his own saves a lot of money. There is a lot of equipment involved, but he considers it a fun hobby and didn't mind investing.

Bit by bit we keep trying to move more towards homemade items. Here are a couple things I'd like to attempt in the near future:

Granola Bars - We buy a big box of granola bars every few weeks from Sam's Club. These are easy, relatively healthy snacks, and I don't think we could survive without them. It does seem like I should be able to make these myself though. I think we could just make a pan of them, and slice them up into individual bars. They probably wouldn't last as long as our store bought ones though, and it's nice that the store bought ones come individually wrapped, so we might have to get creative.
Sandwich Bread - While I do make cinnamon bread each week, we buy about 2 loaves of wheat bread each week for sandwiches. It may be a bit unrealistic, but I'd like to start making homemade bread instead. To make this easier I've asked for a bread cutting guide and a bread keeper. Hopefully I get them!

But then there are a few things that I'm not sure we'll ever be able to make from scratch:

Pasta - I know people do this, but I've never seen it done in real life. In cooking shows it doesn't look terrible, but you do need some equipment. I'm okay with boxed pasta for now.
Ice Cream - We don't even have an ice cream maker, so this is a big reason why we won't be attempting this in the near future. But even so, I've heard this is a lot of work, and I love my ice cream and like to buy a carton or 2 every week. I also happen to really like Kemps' fat free frozen yogurt in cookies 'n cream and I think that would be really hard to recreate.
Buns - Even though I'd like to bake my own bread, I'm not sure I can make buns. We eat Sloppy Joes and pulled pork on hamburger buns regularly, so they are a necessity. Perhaps all I'd need would be a special pan, but I'm not sure.

Have you cooked any of these things from scratch? Do you have any suggestions?

Phoebe

We're Going To Hawaii!

2013-12-10T06:00:00.000-06:00

We are so excited! My husband and I are both turning the big 3-0 this spring and we wanted to do something big. Our usual annual vacation is to Las Vegas which we love, but since it's possible that we may be pregnant at that time (we usually go early summer for our anniversary), it's possible that we won't go (there's a bit too much smoke).

So, we wanted to not only go on a great vacation this year (which means doing it soon as pregnancy would put a crimp in our plans), celebrate our 30th birthdays, and perhaps even call it a BabyMoon if we get lucky.

But where to go?

Our first thought was on a trip to my college town. I went to school on the east coast and my husband has never been there and thought it would be fun. It would be relatively cheap (we'd use miles for flights and about half the hotel stay) but we'd go to some more rural areas where we couldn't use hotel points and we'd have to rent a car. Still, we were super excited about this option because we're dorks and thought revisiting my college years would be a blast.

But then we realized that it might be a good opportunity to go on a trip that we won't feel comfortable taking once we have a little kiddo. Going to the east cost would be pretty easy with a kid, and so we could simply push that one of until next year if we want. Plus it didn't exactly have the thrill factor we were looking for when celebrating the dirty thirty.

So then we thought we should perhaps go International. My sister in law is spending a year in China so our minds went right to that. It sounded great! We could go somewhere exotic that we've wanted to visit for a long time, we could see my husband's sister who we haven't seen in ages, and we could have one last international trip together. But then we started to consider the downsides. It's possible I'll be pregnant at that time. It's completely possible to go to Asia while pregnant, but let's face it, I'm a worry wart. I will find myself stressing about possible diseases, and accidentally eating something with raw fish and even if it doesn't do a thing to our baby, it would make the trip pretty stressful for me.

We also considered what we would do if we needed medical attention. Again, I know it's completely possible to get health care in other countries, but it just doesn't sound that fun to be pregnant, scared of something being wrong with our baby, not speaking the language, and trying to find someone who could help us. China could wait.

So then we started to consider other locations that had a long plane ride that we might not want to take with a baby, but still provided peace of mind, and Hawaii seemed like a great fit. I still think we could take a baby there, and maybe we will, be even if we're not checking off the box for "taking a trip we'd never do with kids before we have kids" it meets all of our other criteria very well.

First of all, it's warm! It is so cold here, and in the spring we know we'll be even more sick of it and a tropical getaway will sound amazing. Secondly, it's a long plane ride that does sound a bit tiring with kids, and it's in the US so I'm not worried about healthcare, not speaking the language, or eating something that I shouldn't.

Once we decided on Hawaii we then had to pick an island. I've been to Kona and Oahu, and my husband has been to Maui and Oahu so we decided to do something different and give Kauai a try. We'd heard such great things about it; that it's more natural and less densely populated with tourists which sounds perfect. We found a hotel that is right next to the beach and has an amazing swimming pool, so that we can splash around in it wile still enjoying the ocean view. I am beyond excited and can't wait to officially book it (once my husband gets the okay for the days off).

Money wise this is going to be a remarkably inexpensive trip. We're going to use airline miles for the flights so it will cost just $20 for the fees, and we'll use points for our 8 night stay at a hotel that is normally $269 per night. I think we will have to pay a resort fee of $25 a day, and then we'll have to pay for food, fun stuff and a car rental if we want to go exploring one day, but all in all I expect it will be less than $1,000.

Not too bad!

Phoebe

Most Valuable Possessions

2013-12-09T06:00:00.000-06:00

I just watched an episode of Modern family where they are raising money for a family that lost everything in a fire. They then went around and each named their most prized possession.

This reminded me of something I've seen a few time on Hoarders. If you haven't seen that show, it's about people who have a problem with hoarding possessions and they often have a hard time distinguishing from something truly valuable and something that is simply adding clutter to their lives (think the cotton that comes in the top of pill bottles).

In order to help the person start to develop the ability to distinguish between clutter and valuable items, their psychologist will often perform an exercise. They will tell the person with the hoarding problem that there is an emergency (they make it clear there really isn't one) and they have 5 minutes to grab their most prized possessions. It's so interesting to see them running around grabbing things, and later be surprised by the outcome. All of those pots and pans, or articles of clothing didn't even come to mind, so how important can they really be?

I think this is a good exercise for everyone to do, not just those struggling with hoarding. It helps us to see what really matters in our lives. So here are the top 10 possessions I would save in a fire (let's assume that my husband and cats already got out just fine):

1. Stuffed Animal - I know, I'm almost 30 but I can't help it. I have this old tattered bunny rabbit that I've had since I was 3 months old and I still sleep with it to this day (I have a very understanding husband). It looks pretty rough, and I've been told it doesn't smell all that hot either (I find it very pleasant myself), but I simply love it. As a child we did have a real fire and this was the only thing I was worried about and luckily it came through unscathed.

2. Great Grandmother's Vase - I've written before about how close I was to my grandmother and how much I still love and miss her. Luckily I have a small and beautiful vase in my bedroom to remember her by. The vase isn't valuable or anything, but she always used to give me a piece of candy out of it every time I went to her house, and I just treasure it. I'm a big fan of having one item to remember someone by, and this vase does just the trick.

3. Church Marriage Certificate - Our official marriage certificate is of course very important, but it's the one from my church that I value the most. The Pastor who officiated our wedding has known me all my life and he passed away about a month after our ceremony. The certificate the church gave us have beautiful artwork on it, and Biblical quotes, but it's his signature that I treasure most.

4. Wedding Guest Book- We decided to go a different direction and instead of having a traditional book for people to sign we created a variation on a Quaker wedding certificate. This beautiful scroll has our vows on it, and beneath them it asks all of our friends and family to sign, indicating their love and support for our union. We were so pleased that all 65 people who RSVP's actually showed up since there were just as many signature lines, and when we ended up a couple signatures short we paid a visit to those guests and asked them to sign it before our first anniversary. I had no idea that this last minute detail wound wind up being one of my favorite things from our wedding.

5. Wedding Rings - I sometimes where these to bed, but I sometimes don't and leave them in my little ring stand. If I awoke to a fire those would be the first things I'd grab. Compared to the things I've already listed my rings are actually fairly easily replaced (and insured) but while we picked out my setting together my husband picked out my diamond and that means the world to me. I told him I'd like somewhere around 1 carat, but was fine with less if it was cheaper and he got 1.0 anyways, which the OCD part of me just loves. It also happens to be the prettiest diamond I think I've ever seen (but I might be biased).

6. Christmas Ornaments - As I mentioned last week, my husband and I have received ornaments from our parents every single year since we were born. Those ornaments are comforting to us and represent different times in our lives and would be impossible to replace (particularly the ones that are from people that have since passed away). I know these are technically many items, but it would be a single box so I'm counting them as one.

7. Song Journals - I've been writing songs for as long as I can remember. I never kept a traditional journal, but I was always consistent in recording my thoughts and feelings in songs. They aren't very good or anything, but they're mine and they represent a lot of time and memories. I would be heartbroken to never see them again.

8. Wedding Dress - I could survive without the dress that I only wore for one day but I would be really sad about it. It wasn't expensive or anything, around $350 at David's Bridal, but I love it so much and have dreams of my daughter wanting to wear it someday. I know she probably won't want to, but I just loved it so much I couldn't get rid of it. I actually spent around $350 (about the same as the cost for the dress itself) having it preserved in a special box.

9. Wedding Pictures - Our wedding was the best day of my life and we were fortunate to have amazing photography. Because of that I immediately gave a thumb drive with all of our photos on it to my in laws and my parents. So in the event of a fire, we could technically reprint them, so these wouldn't be the first items I'd grab, but if I had time I would snatch up my album and bring it with me.

10. Wedding Video - This was the last time I ever saw my Pastor, and it means so much to me to have his kind words captured forever. On our anniversary we always watch this and I can't even describe how emotional it makes me every time. Again, we could probably replace it, but it is one of my very favorite things in the world.

Looking at this list I wouldn't save a single thing just because it was expensive. I wouldn't save our flat screen TV or our expensive sheet set. And I wouldn't save our DVD collections.

I would save the things that remind me of people and events that I treasure and I can't re-purchase. My wedding rings are really the only valuable items that I would save, and many of the items like my song journals and stuffed animal are only valuable to me. It helps to remember that the things I value most money can't buy. And the saying "you can't take it with you" is true, but who really cares? We don't need it anyways.

Phoebe

Done With Christmas Shopping!

2013-12-06T06:00:00.000-06:00

We did pretty well this year. We went shopping on Black Friday evening, after my family had gone, and got about 80% of our Christmas shopping done. We then purchased a few more things on Saturday, and ordered one last thing on Monday, and now everything is wrapped under the tree and ready to go.

I wouldn't normally be this on top of things but I needed to be because I am out of town this week, home next week preparing for a big presentation at work, and then on the road the following week. When I come back it will be Christmas week and we'll be on the road to see our families. This way I'll get to enjoy the bit of time that I'll be home this month and won't have to stress about shopping.

As you know we already set a Christmas budget, which we largely stuck to. The one major change we made was how we gift to my in laws (husband's siblings). One of them is unmarried and the other is married with two kids (and one on the way). Previously (and before the last kid) we simply gave the same dollar amount per person, but we started to feel like it was a bit unfair since the unmarried sibling is buying a gift for both me and my husband and we were just giving her one. Instead we decided to gift by family. We took $20 per person, multiplied it by the total number of people (5) and then divided it in half. So each family is getting $50 worth of gifts.

Here is what we got:

1. Phoebe's Dad (budget: $100, spent $99.02) - DVD of a series of his favorite TV show (originally $49.99 purchased for $13), CD of his favorite singer, DVD of the movie "42" (on sale for $8), DVD of the movie "The Internship," annual subscription to "Field and Stream" magazine and this month's copy

2. Phoebe's Mom (budget $100, spent $99) - DVD of the movie "Parental Guidance," texting Isotoner gloves (originally $45, 40% off), annual subscription to "Dwell" magazine and this month's copy, a set of headphones with a built in mic, and a $35 gift card to their local movie theater (plus a free $5 snack coupon) for my parents to share

3. Phoebe's Sister (budget $60, spent $60.01) - Cardigan, Fleece Sweatshirt, Long Sleeve Athletic Shirt, Light Athletic Jacket from Old Navy. We had a $20 off coupon when you spend $50 and everything was 50% off so we only spent $30 on all of that clothing (and saved $78!). We also bought her a gift set off fancy lotion, body wash, and body scrub.

4. Mother and Father In Law (budget $150, spent $150) - 6 month subscription to Craft Coffee (gourmet coffee of the month), $15 Starbucks Coffee gift card

5. Family 1: Brother and Sister in Law (budget $40, spent $40) - $40 gift card to Once Upon A Child (they have another baby on the way)

6. Family 1: Niece #1/Godchild (budget $30, spent $30.28) - This niece is one of two who are part of "family 1" who we wanted to spend $50 on in total. We wanted to give them a good amount of money to Once Upon A Child because we knew they could use it, and thought we could find creative less expensive things to buy for the kids. For this niece, she already was getting $25 into her 529 because she is our godchild, and so we then bought her a new toy from Once Upon A Child. When we got our gift card for her parents we got a free $5 coupon, and there was a big sale, so we got a cute toy that was originally $13 for $5.28.

7. Family 1: Niece #2 (budget $5, spent $5) - Our niece really wants a fish for Christmas, specifically a purple one. We actually got her a fish last year which has since died (it was a red one so who really cares, right?), so she has the bowl and stuff. This year we purchased her a fun glow in the dark plant thing and we'll be picking up her pretty purple fish on Christmas Eve.

8. Family 2: Sister in Law (budget $50, spent $50) - My husband's sister is in China this year so we're sending her money (to be deposited directly into her account by my mother in law). We'll be sending a fun gift certificate that we made plus some weird Harry Potter jelly beans (I haven't read the books but my husband says she'll love them) in a package my mother in law is sending over.

Overall we budgeted $535 for our families and we spent $533.31 and I'm really excited about what we got. Our gifts very much reflect how our families celebrate. My family gives a ton of gifts and spends all day going around the room taking turns watching each person open, and so we got a lot of smaller things. My husband's family says "go" and tears into everything at the same time, so in the past I've gotten frustrated by the lack of appreciation for all the time I put in.

So this year we got gift cards and subscriptions for the adults in my in-law's family and I actually think they'll like them better, and it was much easier on me. They still felt thoughtful because the gift cards were for specific stores or experiences, but I didn't have to fight the crowds in the mall.

I also completed the Christmas shopping for my husband, but since he reads my blog, I won't divulge the details here. However, I will tell you that I budgeted $100 and spent $102.93 on him.

All in all it was a success!

Phoebe

Holiday Decorations

2013-12-05T06:00:00.000-06:00

It looks like Christmas threw up in our house, and I love it. When it comes to Christmas I think more is more and we have everything up, ready for the holidays. Last weekend we went and got a tree, decorated it, put out lights on the outside of the house, and put up all of our inside decorations.

It was so much fun getting it all set up. We started the evening by making hot chocolate, getting our coats on, and heading out to a Christmas tree lot. I know that buying a fake tree would be a more frugal choice, and a bit easier to be honest (especially since you can buy them pre-lit) and we seriously considered it, but decided to once again buy a real one. Unfortunately the lot we went to last year was gone, so we drove down the road and found another cute lot to try.

It was so perfect. The lot was lit up with plain white bulbs, and while the trees were a bit more expensive, we thought it was totally worth it. The lot was run by a sweet family that wished us a Merry Christmas half a dozen times. They cut the bottom off for us (last year we had to do that ourselves with a hand held saw and it caused a few tense moments), we got a free ornament, and when we went to pay they tied the tree to the top of our car.

Driving back we were so happy we went to this lot and vowed to come back next year. In total it cost us $62 (we left a $3 tip for the cute kid who helped us), so it was more expensive than buying a fake one we could use multiple years, but the experience got me thinking. If we had a fake one we would have gone down to the basement and brought it up, but instead we spent a fun evening sipping hot cocoa, enjoying a crisp chilly night, interacting with some wonderful people that put us into the Christmas spirit.

The holidays are very important to me and thus I am willing to spend a bit more to make them magical and memorable. While we spent a bit more on a real tree, the rest of our decorations are pretty frugal.

First, for the Christmas decorations, we didn't buy anything this year. Both of our parents had a tradition of giving us an ornament each year, and thus we had over 40 by the time we got married. I also bought some glass bulbs, a star topper, a tree stand, and a skirt the first year I was out on my own and I've used them ever since. We use simple while lights on our tree, and each year after Christmas we purchase a few more strands. This year when we opened the Christmas boxes we had 2 new strands and I'm really glad we did because only one of the old ones worked.

In addition to all of these ornaments we tend to get a few more from family each year, we sometimes buy them on our vacations to remember a special time, and I also have a number of ornaments my parents passed down to me when they decided to scale back their own decorating. I really treasure these. Some of them are ones I made as a child, which I think will be fun for my own children someday, and some are extremely sentimental. This year I looked closely at an ornament I've seen many times, but had forgotten where it was from. I glanced at the tag and saw it was to "my darling Phoebe" from "Grandma Elaine" who was my great grandmother. I was really lucky to have a very close relationship with her, and I think about her often even though she passed away when I was 12. That ornament means the world to me.

As far as our other home decorations go these were all either gifts or hand me downs. I love Christmas decorations to have sentimental meaning, so I never purchase them for myself. I often ask for them for Christmas (last year I got a nativity set that I love) and our families have passed down many items that we remember from childhood. At this point we actually have a little too much, and so we didn't put it all out this year, but decided to save it for someday when we have a larger home.

Lastly, we had a really fun time putting out Christmas lights on our front railing. We were surprised when we opened our Christmas boxes to find that we had purchased some multi-color light up snowflakes. We forgot that we bought them the day after Christmas last year. We put them up after having to reset a circuit, and they are really fun (they change from white to colored!). Each year we put out lights and I just love it even though it isn't very frugal. We had to buy the lights, the extension cord, and pay for additional electricity, but to us it's more than worth it. We're participating in our community, bringing the holiday spirit to the neighborhood, and adding some fun sparkle to our own lives.

Have you gotten your holiday decorations up yet?

Phoebe

10 Not So Frugal Things About Me

2013-12-04T06:00:00.000-06:00

When you read a blog, there are things that you miss. I try to be an open book with my financial journey, but I naturally am inclined to focus on areas where we've spent a lot of time optimizing. So today I want to point out the big fat flaws that I have, and 10 not so frugal things about me.

1. Our iPhones - My husband had a flip phone forever, and I was rocking a really old model Blackberry when we finally had enough. My husband thought a smart phone would help him at his job, and since I work in technology my boss flat out told me that having such an outdated phone looked unprofessional (ouch!). So we decided to get iPhones. Still, we didn't go crazy, and each bought the older iPhone 4 model for $99 each. We have a plan with Verizon that costs about $182 per month. Luckily my work reimburses me for $125 per month, so we only pay $57 per month. Still, I know there are cheaper options out there, and we sometimes talk about giving them a try, but we just haven't gotten around to it.

2. We drive a lot - I really admire Mr. Money Mustache and other bloggers out there who bike year round. Given my health and fitness goals, it would make a ton of sense to get on this band wagon, and while I plan to I just haven't gotten around to it yet. The thing is that we live in a cold climate and I just can't see myself biking for many months of the year, we don't live in a particularly bike friendly area (for example, we could get to an expensive grocery store quite easily, but can't get to our favorite fairly priced one without crossing a highway), I'm pretty efficient with my errands anyways and work from home, and my husband needs to drive for work regardless. But I know these are all excuses and other people have found ways to overcome them so I hope I one day can as well. But in the meantime, we're driving our cars, sometimes even just for fun (gasp!).

3. We drink pop (soda for all you non-Midwesterners) - This is a bad habit I'd like to break. My husband and I have a routine of picking up a few two liter bottles of soda every weekend and drinking them just between the two of us. We tell ourselves that diet soda helps us eat healthy because we can sip it instead of snacking. But this weekend we both said we'd love to drink less, since we have this vague feeling that we're rotting our insides. We do really love lemon water, tea, and iced tea, so I think we can break this one. A New Year's resolution perhaps?

4. We pay people to move our stuff - As a young married couple we've moved twice so far and we've moved about 6 times combined before getting hitched. Before getting married my husband and I each moved ourselves or enlisted friends without too much trouble. But now that we're married we have a ton of stuff and I've developed a bad back so we pay movers to do it for us. If we lived near friends and family we might be able get by, but I have to tell you, paying someone $300 to get the horrible task done is more than worth it to us.

5. We go out to eat frequently - You may think that we are constantly making beans and rice with our $350 per month food budget and no budget for eating out. But the truth is that we could probably get our food budget down to $250 per month (remember, it's just the 2 of us and we don't include household items) if we wanted to. We live in the Midwest and our groceries are pretty cheap, so we fit in a few meals out each month. Now, we don't go to real sit-down restaurants very often (around here that would be Applebee's, etc.), but we do hit up Chipotle pretty regularly.

6. I wear diamonds and carry a Coach purse - I wear my diamond rings, earrings and necklace everyday. Combined these items cost over $13K, which are hardly frugal ($12K of that is for my wedding rings alone). I don't wear a lot of jewelry though, so I wanted to invest in classic pieces. I bought my diamond necklace this year, purchased my diamond stud earrings to wear for my wedding day, and of course my wonderful husband bought my wedding rings. I also carry a little across the body leather Coach purse that I love. I got it for Christmas (and have another Coach purse I keep in my suitcase and use just for work). On top of that my husband has a Coach leather wallet and his wedding band cost about $2K. We are not wanting for jewelry and handbags in the Phoebe household.

7. We love TV - I so admire people who say they never watch TV, or better yet, don't even own one, but we are not those people. We love love love TV! Especially in the last 5 years - it has gotten so good! We have a great flat screen TV (gifted to us for our wedding), and we used wedding money to also buy a fancy blue ray player that has Netflix and Hulu Plus built in. Even though we love TV we don't pay for cable, but if any of our fancy equipment failed we would replace it immediately, we pay for Netflix and HuluPlus, and we regularly rent DVD's of TV shows (last week the last season of Breaking Bad!). There are other costs to watching TV like an increased waistline and seeing commercials, but by and large we get a ton of value out of our TV and we can't live without Heisenberg, Dexter Morgan, and Rick Grimes.

8. We have more house than we need - We have a pretty low rent of $675 a month, so those of you living out on the coasts (I used to live in California) may have a hard time believing that we could live with less, but it's true. We currently live in a townhome with 2 bedrooms, 1 bathroom, a large living room and kitchen, a laundry room, and a large man cave. With just the two of us and our two cats we could have easily lived with less. The second bedroom is used as an office currently, which is nice since I work from home but hardly necessary. My husband is always out for the day so I could work from the bedroom, and even as is, I work from the couch pretty often. We also like having the man cave downstairs, but it doesn't get used all that much and is mostly due to the fact that we had a hard time getting rid of stuff when we got married (thus two living room sets). Hopefully we'll having kids one of these days, and staying here will make up for us living large as a couple of DINKS.

9. We go to Las Vegas every year - Yep, we go to Sin City, where you lose money just for the fun of it. It's the place that is designed around overindulgence and we take them up on it. Sure, we don't go to clubs or gamble thousands of dollars, but we roll pretty big by our standards. We always see at least two shows, we spend a lot of time gambling, and we have fun ordering fruity drinks by the pool and visiting the endless buffets. This is possibly our favorite place on earth, and I'm not ashamed of it.

10. We celebrate with lavish dinners - We started a tradition of going out to dinner instead of buying presents on our first anniversary. It just seemed like too much pressure trying to show how much we loved each other in the form of gifts, and so a fancy shmancy night out seemed like just the trick. It has now become one of our favorite traditions. This year we spent $360 on our anniversary dinner, and had the best time. It might seem a bit wasteful to spend so much on one meal, but I know we spend way less than we would on physical gifts for each other, and we always have the most amazing time and create great memories. We repeated this tradition for our $500K celebration this year, and may have to extend it for other events as well.

So now that my secret's out, what not-so frugal things do you do?

Phoebe

Dying Like A Millionaire Next Door

2013-12-03T06:00:00.000-06:00

Last week my family came to visit me for Thanksgiving. We had so much fun eating, playing games, and enjoying each other's company. I'm so fortunate to have a loving and supportive family.

After dinner my mom and I did something that we really enjoy. We drove around and looked at houses, talking about the pros and cons, and which ones would be the best for me and my husband to purchase one day. We don't even know if we'll be living in this city when that time comes so this is pure fantasy and we both know it. We just like discussing the different options.

Should we buy the huge luxury home on the golf course and have a huge play area where kids can bring friends over? Should we buy a fixer-upper in the older part of town where there are cute neighborhoods and we'd live close to the schools? We never really settle on a definitive answer, we just enjoy the process of deliberating and brainstorming.

At one point though, we were looking at these huge houses that were about $700K and my mom said "you know, if you're going to be a billionaire, these homes are nice, but if you're not, all you really need is a decent size that you love, and the rest is just all frosting on top."

I couldn't agree with her more, but something about how she said that made me uncomfortable. This happens from time to time, where someone in my family makes a statement about what they consider wealthy. In this case, being able to buy a $700K house was the example. And it always makes me cringe when I realize that my family would consider us extremely wealthy right now.

My family knows we have savings but I'm absolutely sure they have no idea that it's more than half a million dollars. Particularly because I have a hard time believing it myself sometimes.

But often times I dream about what having a few million dollars in the bank will look like for us. It may be a fancy $700K home, or extravagant trips that we take, perhaps extravagant trips for my whole family, or large donations to my church and university. But then I have a moment like this with my family and realize that I don't want anyone to know about our wealth.

Ultimately, I think it would make my parents feel ashamed that I have more wealth than they do. It might even make them feel a little angry because they sacrificed so much to pay for me to have a wonderful life including fully funding my fancy private college degree, when their own retirement savings are non-existent. My parents often talk about their lack of money, and it is extremely painful to me. They are such wonderful parents who I love with all my heart. In fact, when they are feeling bad about their finances they often say "our goal in life wasn't to be rich, it was to raise great kids, and we did that."

They did, and that statement leaves me with a ton of gilt. They sacrificed their own happiness for mine. But then I have to think of reality. Yes, they spent a ton on me growing up. I grew up in a very affluent area. I had lessons for every sport imaginable, I had tutors when I needed them, and I was given extravagant gifts at times. But my parents made a lot of money (over $500K some years) and spent a lot on themselves as well. My parents have had many new cars, many boats, fancy hunting guns, horses, dogs, a new house, multiple lake homes. And everything was going well until the recession. Then it all went away. My family lost a ton of money in the stock market (this weekend my mom told me it was around $400K) and thus they've never invested again. Their home and lake home dropped in value and my dad lost his job.

Now they look at me and say that their money issues are because they chose to spend it on me, which is true, but there were other costs as well. And even though I know that, I can't help but feel guilty as well. I always think about using their credit card when I was in college to pay for dinners out that I didn't need, or to get my hair done. It was reckless of me, but at the same time, I didn't know any better, I was a child. My family was still living a very affluent life at the time, and these kinds of expenses were the norm. I didn't know how much my parents made, or owed, all I knew was that these charges were acceptable.

But in hindsight there was so much waste. And I was fortunate enough to come of age right after the recession. If it hadn't been for that, I would have lived my life the exact same way. We didn't respect money because there would always be more, and making yourself happy in the moment was the name of the game. If I had done that, things would have felt balanced. Yes, my parents spent extravagantly on our family, and now I would spend extravagantly on my own, and be tight on cash in the same way.

But I didn't follow that course. Instead, I feel like I consumed when it wasn't my money and am now being tightfisted with mine.

But I learned and I grew, and my parents are constantly telling me how proud they are of me, and that I'm handling my money so well. They don't expect me to spend needlessly, since they also learned from the recession and have made significant cutbacks. But they also don't know we have $500K in the bank, and I think that if they did they might change their tune. They are already pushing us to buy new cars since ours just had a series of breakdowns. My dad also said that I should just go and buy my husband a new TV for his Playstation if that makes him happy. So if they knew how much we had saved as well, I'm pretty sure they would think we are downright cheap.

And so I may decide to live, work and die like the Millionaires Next Door. If you haven't read that book, please do. It's amazing. And this one part of it kept coming to mind last week. These people live simple lives, they work hard, and they save their money. They often times donate a huge estate to charity upon their death, shocking everyone who knew them, since they didn't appear wealthy while living. These people often give upon their death rather than while they're still alive because they don't want people to know. They would be embarrassed if anyone knew the truth and so they live their quiet happy lives and give astonishing amounts when they die, like this man did.

Sounds like a pretty good plan to me.

Phoebe

Networth Update #15 - December 2013

2013-12-02T06:00:00.000-06:00

This was a commission month for me, but just a modest one (about $3,000). In addition to that it was a 3 paycheck month for my husband so our income was a bit higher than usual. I also decided to track our investment gains for the first time this month and the results were pretty astonishing. We actually made $7,781.47 which is more than double our expenses for the entire month.

All of these things combined allowed us to increase our networth by a decent amount, but our accountant is figuring out how much we need to pay to the IRS this month for the company stock sale we made awhile back. This could be as much as $50,000 so I'm mentally preparing myself for a drop in our networth in December. You'll also see that our cash decreased and our investments increased substantially, and that's because we're still moving the money from the stock sale into index funds. We're doing it over time using dollar cost averaging, and we'll be done by the end of 2013.

Here's where we stand today:

Cash: $214,867.42 (-$26,084.90)
Investments: $218,091.12 (+$37,174.44)
Retirement: $116,717.17 (+$3,057.37)
Life Insurance: $2,250 (+$0)

Total Networth: $551,925.71 (+$16,396.92)

This represents a 3.1% networth increase from last month. A reader suggested I also track the number of years I could live off of my networth at my current saving/spending rate. Today we could live off of our networth (not accounting for future gains) for 13.8 years (+3.72 months since the last update).

This month we spent a bit more than usual since we bought our couch and also hosted Thanksgiving. Still, it wasn't our most expensive month in 2013, coming in at $3,413.84. We're feeling pretty good because even though Christmas is next month, we budget for it and save money for it throughout the year.

Here is our Networth Chart were red indicates networth, blue indicates liquid, and green indicates cash. This month I decided to remove the dots since it was getting a bit hard to see:

Click to view larger image

Here is our Wall Chart inspired by Your Money or Your Life where the blue indicates take home income and red indicates expenses. Previously green indicated potential investment gains, but I decided to change it up and track actual investment gains instead. Unfortunately I hadn't been tracking these values monthly, but I had been tracking them on a yearly basis. So I then went ahead and spread the yearly amount for 2012 across those months, and the year to date amount in 2013 across January through October. The value for November is the actual amount we made in our investments and going forward I'll continue to track these real amounts. Again, I removed the dots because it was hard to see:

Click to view larger image

Click here to see our previous Networth Updates.

Until next time,
Phoebe

December Goals

2013-11-29T06:00:00.000-06:00

Since this is my last post in November I thought it might be good to go through some goals that I have for next month. With Christmas around the corner, this month poses unique challenges, and I think it will help me to stay on track if I address them upfront.

1. Stay Healthy - I always have a really tough time staying on track this time of year. I just ate a ton yesterday and we have leftovers that we'll be eating for the next couple of days, but then I need to get back to eating healthy and exercising. Since I know that Christmas parties are going to come up, part of me just wants to throw the entire month down the drain and binge throughout, but then I'll end up 10 pounds heavier. Sure, I probably won't lose weight this month, but staying at my current weight will be a huge accomplishment. This may seem like it has nothing to do with finances, but spending on treats and going out to eat is a big temptation for me, so if I simply stay the course and keep eating our healthy food at home I'll save money and my waist line.

2. Buy Gifts Once - Each year I seem to buy a bunch of presents early and then change my mind, return them all, and re-buy. This usually costs me a little money because the original presents were bought on black Friday during sales, and it also costs me money in gas from taking double trips. More importantly, it is completely exhausting and frustrating. This year I vow to be thoughtful, purchase gifts for each person, and then be done with it. No second guessing, and no back tracking.

3. Wear What I Have - When I'm feeling insecure I often go out and purchase a new outfit. This time of year can be tough because I usually go to a few parties where I see people I haven't seen in about a year. It seems that each year I think I should have lost 20 pounds and when I haven't I feel ashamed. Getting a new outfit seems to give me the confidence to attend with a smile on my face, but the fact is that I have plenty of clothes that all fit me and look great. This year I vow to be happy in who I am, and shine with joy, and wear what I already have.

4. Don't Buy Any More Decorations - I really love Christmas, and as a newlywed couple I went all out the last few years buying decorations. In addition to what we bought we also have a lot of hand me downs from family, so we have more than enough to give our home the holiday spirit. Last year I had't planned on buying any more decorations, but when I came across a few things I just couldn't help it. I'm actually not sure where we're going to put everything this time around, and so we have to be done. I found myself yearning for a wreath last weekend, and I almost bought one but then thought better of it. It is so easy for me to justify this stuff because I say that it is creating memories for our family, but we already have tons of stuff that will achieve that goal.

5. Spend Time Enjoying The Season - This year we're going to have an extended Christmas break because I have a family wedding only 2 days after Christmas. Because of this we'll be staying with family about 5 days instead of 2 and so there is a chance that we'll get over extended and be exhausted by the end of it. To fight this I want to be intentional with setting aside some quiet time for my husband and I to have a cup of tea, take a walk, or just spend some quiet time alone, enjoying time together and reflecting on this wonderful year that we had. I'm also going to keep my eye out for anything that we should cut from our traditions in 2014. I already identified one thing and that is writing Christmas cards by hand. I always thought that sending photo cards without a unique message was cold, but I was so burnt out my this year's writing that I am now okay with it.

What are your goals for December?

Phoebe

Giving Thanks

2013-11-28T06:00:00.000-06:00

Today I got up early to start cooking stuffing and get the turkey in the oven. My family will be coming over in just a little bit and I can't wait to see them. I can't wait to cook with my mom, watch football with my dad, and Christmas movies with my sister.

Today I am feeling incredibly grateful for all that we have. This year has been very wonderful in many ways, but also challenging. Something I haven't shared on this blog is that my husband and I have been trying to get pregnant for 6 months without success.

There are times that I worry that I've been so blessed in so many ways, that of course it's time for me to have a significant blow dealt to me, and perhaps this is it. I know intellectually that 6 months is no big deal (especially since I travel and have been gone during some key days) but it's still got me worried.

In some ways it helps me to focus on what's important. I can see that having millions in the bank will mean nothing to me if we can't have a family. But on the other hand, when I'm feeling down and worried about our ability to conceive I feel grateful that we have the resources to do IVF or adopt if necessary. There are many different ways to create a family, and while I know I would grieve if I couldn't carry a child myself, as long as we can have a family in some way, we'll be very happy.

So today I give thanks for all of our many blessings. I'm thankful for finding my soulmate, someone that I can be my true dorky self around, who loves me and supports me unconditionally. I am thankful for my family and my in-laws who I am fortunate enough to see often and be very close to. I have many people that love me and I can count on. I am grateful for having a job that I enjoy, and colleagues that I like, respect, and am constantly learning from. I am grateful to have enough. Enough food, clothes, and a roof over our heads. I am grateful that we have enough that we can give away to others in need.

And while we haven't yet gotten pregnant I feel grateful to have a husband who wants to start a family with me, and a faith that God will help us create a family in some way in the future.

I am also grateful for this blog. I'm grateful that a little exercise that I decided to give a whirl over a year ago turned into a place where I can connect and build friendships with supportive people. Thank you for being a part of my life and my journey.

Phoebe

The 10 Best Moves I Made To Attack My Debt

2013-11-27T06:00:00.000-06:00

Over the last 4 years I've been making progress slowly but surely. I started out with serious financial problems and have figured out how to pay off debt, save money, and eventually invest. Looking back here are my 10 best financial moves I made to attach my debt.

1. Tracking My Spending - There was a time when I had no idea where my money went. In fact, I didn't even know how much I truly owed. I had a credit card with a balance but thought that I'd be able to pay it off with reimbursements from work, a tax refund, or some other future windfall. It wasn't until I started to track my debts and my spending that I saw that I had a problem, but also saw where I could make cuts. If you're feeling overwhelmed and don't know where to start, tracking is a great first step. Seeing how much you spend on something over a month can be very illuminating (i.e. I spend $1000 on going out to eat?!).

2. Reducing Recurring Expenses - When I first started attacking my debt I didn't feel that I had a lot of areas I could cut. After paying my bills I only had a couple hundred dollars left over, and while I was trying to save as much of that as I could, I wasn't making as much progress as I wanted to. I realized that I had to reduce those recurring expenses that I previously considered a given. I looked at every bill I had coming in and evaluated its need. I wound up cutting out my monthly $114 gym membership, my $140 cable/DVR/internet service, cutting out my hair care regimen, and reducing my phone and insurance bills. This allowed me to throw an extra couple hundred dollars at my debt each month.

3. Coming Clean With Friends and Family - For a long time I was trapped by how I wanted others to view me. I wanted to seem successful, happy, and in control and so I would live lavishly. I would take spur of the moment trips, pick up the restaurant tab with friends, and over gift to family. When I realized how much debt I was in, I hoped that I could get it under control without anyone having to know my deep dark secret. But trying to keep up appearances is exhausting and expensive. After spinning my wheels for a year without making any progress I came clean with everyone in my life. I didn't go as far as telling them the amount of debt I had, but I told them that I was watching my money and needed to cut back. Everyone was extremely supportive, and some people confided in me that they were in similar situations. We were then able to support each other through the process and suggest alternative frugal activities.

4. Using The Envelope System - Once I tracked my expenses there were clear areas where I could make improvements. One area that I saw a lot of waste in was food costs but I didn't feel like I could stick to a goal of spending within a certain amount when I was charging on my credit card. All that changed when I started using the envelope system. At the beginning of the month I would put my monthly grocery budget in cash in an envelope (I used a bowl, but same idea) and when I went shopping I would take that money with me and once it was gone, that was it for the month. Even though we now have a better handle on our spending and money in the bank we still use this system because if not, we'll buy treats and go over our goal.

5. Learning To Cook - One of the reasons I used to overspend on food was because I couldn't really cook and would have to purchase convenience items. I'm still not a gourmet chef, but I have a few recipes that I have mastered, most of which I make using the slow cooker. These recipes are healthy, delicious, easy to make, and budget friendly. Cooking at home saves us so much money, is healthier, and even tastier most of the time. Somehow learning to cook did more than just help out in our food budget, it helps with our frugal mentality in general. When I see that I can create something delicious from scratch it gives me the energy to try to tackle other tasks I hadn't thought I was capable of.

6. Tracking My Progress - Eventually saving money and paying down my debt became a fun game. A big component of that was tracking my progress. I had a spreadsheet where I would track what I owed, had paid so far, and my estimated freedom date. Seeing those totals go down and the date pull in closer were so motivating and kept me searching for fat to trim.

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7. Keeping My Lifestyle Low - As I was making progress on my debt I started to feel like I had a little bit of breathing room. Getting my credit card debt paid off was a huge milestone and I considered taking a pause there. I had more cash flow because I no longer had minimum credit card payments to make and my remaining debt was low interest student loan debt and zero interest debt owed to my parents for student loans they took out on my behalf. On top of that I got a significant raise and it made me feel like I deserved to increase my lifestyle and stop living like a college student. But as I was considering that my dad got laid off and I decided to push to pay my parents back as quickly as possibly (and that debt payoff chart is listed above). To this day I still drive my 16 year old car that I have driven my entire life, we live in a $675 per month apartment, and my husband and I get $100 each per month for fun money. Never increasing your lifestyle is so much easier than having to decrease it.

8. De-cluttering - We are living in a really unique time in history. Items are relatively cheap and as a society we make more money than humans ever have in history and thus we can afford to purchase many items that are not needs. All of a sudden issues like hoarding arise, and more and more Americans are drowning in clutter. When I got married I was shocked to see how much we owned. Not only did we join households which meant that we had duplicates of many items, our parents also decided to give us all of our childhood items they had been storing. As time goes on I can see how quickly we could require a 4 bedroom house just to hold all of our belongings. And thus I have been ruthless with de-cluttering. I regularly go through our possessions and sell things we no longer use and give other items to charity. In addition to requiring less space to house our things, keeping a de-cluttered house allows me to keep track of important items like financial documents, and keeps me from re-buying things I already own.

9. Accepting Myself - A lot of what I used to spend on was to transform me into the person I wanted to be. Every six weeks I would spend over $200 cutting and dying my hair, I would buy new clothes from Target almost weekly, and I would get regular manicures and pedicures because I thought they made me seem put together. It was hard for me to stop spending on these things, and I was only able to do so when I finally accepted myself as I am. I'm intelligent, funny, and caring and those are the traits that my friends and family love about me. They don't care about my hair color or my shirt, and so I had to give up caring as well. I still try to look nice, but I am trying to be the best version of myself with my natural hair color, healthy body, and fun spirit not hampered with stress from being in debt.

10. Changing My Mindset - I never bought expensive fancy things like jewelry, sports cars, or handbags, but instead I mostly spent on "self help" items. I would purchase gym equipment to get myself in shape or cooking equipment because I wanted to start eating better. I would justify these things because they were "necessary" in order for me to be happy and healthy, and I would tell myself that they would pay off in spades when I would perform better at my job and in my life. Ultimately I had to see that I wasn't actually "helping" myself at all. My new matra became "I deserve to be free" and when I felt the need to spend on a purchase that I thought would make me happier I repeated this to myself. At this point my mindset is completely different and I rarely have to repeat this phrase. I like to think it's because I'm now actually free.

What are the best moves you have made to get out of debt?

Phoebe

Developing Into A Frugal Couple

2013-11-26T06:00:00.000-06:00

On the Mr. Money Mustache boards, where I peruse daily, there is a "Personals" section where people can place ads for a romantic partner with similar thoughts around frugality, saving money, and financial independence. When I met my husband I had about $13.5K of credit card debt (around $40K in total) and so I didn't even consider "financial mentality" a criteria for selecting a mate. Somehow though I wound up with a supportive husband who is just as committed to our financial goals as I am. Did I just get lucky?

Not exactly. While I had $13.5K of credit card debt when I met my husband he wasn't in great shape himself. He had some student loan debt (as did I) and he had one credit card that was maxed out at $1,000. Each and every morning he would get a call from his credit card company and he would answer it once every couple weeks and agree to send a bit of money just to appease them.

So how did two people if rough financial shape get it together, and both get committed to the same goals?

The number one factor was our commitment to each other.

When we were dating we lived in different states the entire time. At one point my husband (boyfriend at the time) was in New York and I was in California. I went to visit him for a week and we had a wonderful time but I mostly remember the pit in my stomach when he called me a few days later saying he was shocked that he spent $700 while I was there. Immediately I knew that meant I spent at least $1,500. $1,500 that I didn't have and would be added to my ever increasing credit card bill.

That experience pushed me over the edge and I finally had the courage to come clean to my boyfriend. He was planning on coming out to California for the summer to be with me and I told him that I had credit card debt I was trying to pay down and needed his help. I was so afraid to tell him this. Up until this point I felt that I had him fooled into thinking I had it all together. I was confident, successful, and strong. So letting him in on my dark secret was humiliating but freeing as well. He was more than understanding and immediately said he would do whatever he could to support me in my goal.

I was so fortunate to have such an understanding and supportive boyfriend. He is one of those wonderful people that goes all in, and when we met he immediately knew we were going to get married someday and so he didn't play games or try to have power over me. He just loved me and wanted the best for me. So we spent the summer having movie nights in my apartment, cooking at home, driving minimally, and packing lunches whenever we took a day trip.

Over time as I was making progress he started to take notice. I really didn't try to "fix" his financial situation since I knew he wasn't ready yet to address it, but I did try to share what I was learning. I can remember a turning point when he read a part of a Suze Orman book I had checked out, about FICOH scores, and he suddenly realized what ignoring those calls from the credit card company was costing him.

So he became a bit more motivated to get his financial life in order. He wanted to get his credit card paid off, and worked hard to get it down to zero within a few months. Next he focused on paying off the engagement ring he bought me, which he was adamant that he pay for himself. I had already paid off my credit card debt as well, and so the year of our engagement, while he focused on the ring, as I paid off all of our student loans, paid for our wedding and honeymoon in cash, and saved a $20K nest-egg.

Then we got a bit complacent. We were married, we were saving money, and we had no debt. It seemed that we were doing pretty great, and while we vaguely knew that we'd someday want to buy a home, we didn't have any concrete goals to work towards. But I was also feeling stressed. I didn't anticipate how much pressure I would feel as the main breadwinner and it was wearing on me, and also my husband who was feeling stress worrying about how we would support us if I were to get sick or not be able to work for some reason.

And all of a sudden our goals became clear. We were committed to one another, and realizing that our financial situation was causing us both stress, we decided to aim for a new goal of financial independence. It wasn't always smooth sailing though. There were times that I wanted to push a little harder and my husband felt resentful, and there were times that he wanted to stay the course when I wanted to jump ship, but we've kept supporting each other all along. We've made compromises and changed the plan, in order to make sure that we're both happy, and ultimately it's our commitment to each other and the life we envision that has kept us going strong.

The reason I share this is to give any of you out there trying to pick a mate, hope for the future. Neither my husband nor I were good at money when we met. We didn't decide to address our money issues at the same time even, but we have been extremely committed to each other and each other's happiness. If you meet someone who is good with money, you have a head start, but if you meet someone who is terrible at money, don't count them out either. If you are fully committed to each other, committed to each other's happiness, and open to change, you can grow and learn together in many different ways.

Phoebe

Black Friday Shopping

2013-11-25T06:00:00.000-06:00

This week many people are creating a game plan to best optimize the deals on Black Friday, which starts even earlier this year on Thanksgiving evening. It's rather funny to see how many people say that stores like Walmart and Target are ruining this family holiday, but then head out to the stores to snatch up a flat screen TV or tablet.

I have participated in Black Friday before. A couple of years ago my husband and I decided to go out at around 9:00 pm Thanksgiving night to get in line at Best Buy. The store was opening at 10:00 pm and when we arrived there were about 100 people in line ahead of us. This meant that the TV or whatever amazing deal was on that year was going to be snatched up by the time we got there, since there were only 50 available, but we didn't care. It was a really cold night but my husband and I had a nice chat while we waited. It wasn't as bad as I had anticipated. The line was orderly and there didn't appear to be any people cutting and it was cold, but not freezing.

Then 10:00 pm came and everything changed. All of a sudden people were running, there were elbows flying, and in the confusion I noticed people cutting into the line right as we were entering the doors. Inside the store was even worse. It was a complete frenzy. As we were coming in there was already a huge line of people paying for items (they must have grabbed them in about 90 seconds) as I'm sure they were trying to get out of there fast and get to the next store. We didn't have anything particular in mind that we wanted to buy. Our plan had been to look at TV's since we knew we wanted to buy one for my parents for Christmas, but the deals on the size we wanted weren't all that great, and we left with nothing.

That was the one and only time I have ever participated in that frenzied shopping and I don't plan on doing it again. The next day we were reading the local paper which always covers the event, and I was not all that surprised to read that most people shopping on Black Friday aren't buying gifts for other people, but rather for themselves. Folks see something on sale that they've been eyeing and it's a great chance to snap it up.

I understand this, but the problem is that the allure of a good deal can often cloud our judgement and force us to spend money on something we shouldn't (even if it's on sale). This has happened to me many times. I'm out shopping for something practical when something pretty catches my eye. I find that Target is the worst for me. I may be getting say a new cat collar, when I notice some gorgeous throw pillows marked 40% off. These seem like such a great deal that I feel like I'd almost be wasting money if I don't go home with them. But the fact is that I hadn't planned on buying these pillows and the ones I have at home are just fine, so I still spent money that I didn't need to.

The scary thing about Black Friday is that big tickets items like electronics are often the items up for grabs, and the frenzied atmosphere where everyone around you is buying like mad can get your adrenaline pumping, urging you to buy more.

Now while we don't participate in the frenzied part of Black Friday, my husband do have a little tradition of shopping the day after Thanksgiving. My parents are kind enough to drive out to spend Thanksgiving with us each year. They tend to leave sometime Friday afternoon and after they've gone we head out to the mall and do our Christmas shopping. The door busters and amazing buys are often gone by this time, but most stores still have sales going on. It seems that in the afternoon the really intense shoppers have completed their runs hours ago and are at home taking a nap and so we always find the mall quite quiet and calm.

We then take out our lists and walk around buying gifts for our family members. We're able to get them a bit more than usual because of the sales, and we get all of our Christmas shopping done long beforehand.

I am very much looking forward to this year's shopping excursion as well, but I am far more excited about spending a quiet Thanksgiving evening at home with my family, full bellies, and a Christmas movie.

Phoebe

Wealthfront Investment Management

2013-11-22T06:00:00.000-06:00

Yesterday I read an article on Yahoo about a wealth management firm that many of the "new millionaires" from Silicon Valley (such as those who work at Twitter and have significant stock packages) are using. I was intrigued and so I checked out Wealthfront for myself.

Wealthfront is a wealth investment firm that sets out to cut out the middle man. Their value proposition is that wealth management is overdue for a disruption from the software industry, and they plan to do it. They have automated the logic used by wealth management advisers and systematized it so that they can charge much lower fees (.25% compared to the standard 1%), have a much lower minimum ($5K vs. the traditional $1 Million) and provide value to the "mass affluent."

Here's how it works:

You start by completing a risk assessment questionnaire (similar to the ones I completed when I first tried to determine my ideal asset allocation).
Wealthfront tells you what your ideal allocation would look like based on the results and you can tweak your risk tolerance to play with the percentages.
If you want to move forward you invest a sum of money.
Wealthfront takes that money, and spreads it across the appropriate investments to achieve your asset allocation.

So far, pretty straightforward, but this is where I think it gets really exciting. Wealthfront then monitors your account, rebalances periodically for you, and performs tax loss harvesting if you have $100K or more. I had heard about loss tax harvesting before, but wasn't clear on what it was.

Here is the definition according to Wealthfront:

Tax-loss harvesting is a technique used to lower your taxes while maintaining the expected risk and return profile of your portfolio. It harvests previously unrecognized investment losses to offset taxes due on your other gains and income. You can reinvest these tax savings to significantly grow the value of your portfolio.

Wealthfront developed software to make this service, traditionally only available to accounts in excess of $10 million, available to taxable accounts with at least $100K. Between 2000 and 2011, our research shows tax-loss harvesting would have increased your after-tax returns by more than 1% a year. Over the next 20 years that could add more than $54K to your $100K portfolio.

Sounds pretty great to me. If you can't tell already, I'm pretty jazzed about all of this. I am all for DIY and saving money, but with over half a million dollars I'm starting to feel the heat. When I first brought up Wealthfront to my husband he said "but we're doing so well on our own." Actually, I told him, we're not. The market itself has been doing really well and so we've been along for the ride, but I feel anxious all the time about what will happen to us if things take a turn. I don't feel certain that we have the right asset allocation goals since the calculators I've been using aren't very sophisticated and don't include the many categories of investments that I know to exist. I also haven't figured out how to re-balance, let alone tax loss harvesting.

My husband isn't the one feeling the heat, and so he felt no need to consider this, but once I explained he understood completely. We've long discussed "someday" having a wealth manager, when we have significant assets (say $1 Million) but I never really felt comfortable with that. First of all, the fees were crazy. I didn't want to pay $10,000 (1% of $1 million) to have someone do what I had been doing myself and I didn't trust having a person at a bank to work with us because I know they are often incentivized to push certain products that aren't necessarily best for the client. I also didn't want to pay trade fees to have someone log on to a computer and do what I can myself.

But with Wealthfront many of those things go away. We wouldn't have a person pushing a specific set of products at us, we wouldn't have those high fees (no trade fees and we'd pay only $2,500 on $1 million) and they would handle the stuff that I've been having trouble with and give me piece of mind.

Still, we would be paying for something that we could do for free. It is hard to give in to that, but what I've learned on this journey is that you have to know when to ask for help. It was really hard to pay an accountant $365 to help us with our tax situation when selling my company stock, but it gave us the piece of mind we needed to pull the trigger and allowed us to come out thousands of dollars ahead. I believe with Wealthfront we will come out ahead even with the fees, and it will allow me to sleep well at night. To me this feels like a perfect balance between DIY and full blown wealth manager.

Now there are some details you should be aware of if you're considering Wealthfront (their FAQ page was very helpful) and you can go ahead and walk through the risk assessment questionnaire to receive your own asset allocation results without committing a thing. I highly recommend you do this because it will answer many questions you may have. Here's ours as an example:

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Notice that they use primarily Vanguard funds which is a big plus in my book. There are other wealth management firms that offer similar services (i.e. Betterment) but I haven't found one yet that is as sophisticated and uses Vanguard funds.

Finally, you pay no fees for the first $10K you invest. So that's what we're doing. We've invested $5K to give it a try and if we like it (which we think we will) we'll continue to invest more. No, I'm not being sponsored by Wealthfront, I just liked what I saw and wanted to share with you all.

Phoebe

Picking Our Health Care Plan for 2014

2013-11-21T06:00:00.000-06:00

My company is currently in the open enrollment period, and so my husband and I have been reading all of the plan materials, trying to decide which plan is right for us next year. For the last few years we've been enrolled in a high deductible plan, and have set up an HSA.

We really like this plan, and it has saved us a lot of money overall. The major difference is that while the HSA has a high deductible, you only spend that money if you actually get sick. With our alternative PPO option, we would pay a monthly premium regardless of if we actually get sick. For a young healthy couple in our 20's the HSA has paid off as we've primarily had preventative care appointments where the deductible is waived.

For my first couple years of employment I was not signed up for the high deductible plan, but once I found myself drowning in debt I switched over to increase my take home pay. Unfortunately I didn't get around to learning about an HSA until years later and paid the full deductible on a surgery without the tax savings. It still makes me cringe thinking about it.

But now we're a little smarter. We think it's likely that we will get pregnant sometime next year (but who knows) and therefor we wanted to re-evaluate our plan to see if it would still be the one we would choose if we knew we were going to pay the full deductible, and if we knew we'd be adding another person to our household.

Here's the breakdown:

PPO Plan (all numbers assume we use in network providers):

Annual Premiums: $4320 ($2894.40 out of pocket)
Annual Family Deductible: $750
Out of Pocket Family Maximum: $4000
Co-pays on many services

HSA Plan (all numbers assume we use in network providers):

Annual Premiums: $0
Annual Family Deductible: $5000 ($3350 out of pocket)
Out of Pocket Family Maximum: $6000 ($4020 out of pocket)
No Co-pays

So first of all, I had to do a little math to get the numbers I have above. Starting with the PPO plan I took the monthly family premium amount and multiplied it by 12 to get the annual premiums. Next I wanted to calculate the true "out of pocket" values for the premiums, deductible and out of pocket maximum by taking into account the fact that these can be paid with before tax dollars. To figure this out I looked up the tax rates for 2014 and estimated that we would fall into the 33% tax bracket (this is quite a range so I feel fairly certain that's where we'll end up). I then multiplied the premiums, deductible (HSA only since the PPO deductible would be paid for with after tax dollars), and out of pocket maximum values by .67 since that is the amount of after tax dollars we are actually contributing.

Alright, now that we have some numbers, what do they all mean? As I mentioned above, premiums get paid monthly regardless of whether or not medical attention was sought. The deductible is what the policy holder is responsible for before coverage kicks in, but what is the out of pocket maximum?

I had to look this one up to figure it out. I am not an insurance expert, so please do the research for yourself and your own particular plan, but I searched Blue Cross Blue Shield (my provider) and found a great example on the Louisiana site. If you scroll down just a bit to the section called "How Health Insurance Works" you'll see the example I'm referencing. I'm not from Louisiana, but I think the example holds true for other states as well.

As I understand it, I will be responsible for paying the deductible in full, and then at that point I will be responsible for a percentage of my care until the out of pocket maximum is reached. So if I give birth next year and need and C-section or some other expensive treatment, it's likely I will hit that maximum.

So if we just compare premiums, deductibles, and out of pocket maximums, this decision is actually pretty easy. Using the PPO plan I'd be paying $4320 in premium, which would be $2894.40 in after tax dollars and an additional $4000 out of pocket maximum for a total of $6894.40. For my HSA plan we'd be paying no premiums and an out of pocket maximum of $6000, which is only $4020 after tax savings. If we keep our HSA plan we will save $2874.40 over the course of the year.

But what about co-pays? I didn't really factor that in anywhere thus far. For routine preventative care, both plans waive the deductible and require no co-pay (they want to encourage you to stay healthy after all). Now beyond that things get a bit tricky. For "hospital/medical services" the PPO plan has a 10% co-pay. So that means that if I was in the hospital to give birth and in total it cost $5000, I'd have to pay $750 for the deductible, and then 10% of the remaining charges which would be $425, for a grand total of $1175. While that is a lot less than the $5000 deductible with the HSA plan, remember that I'd still be paying monthly premiums for the PPO plan so that doesn't tell the full story.

So then I went in search of some kind of calculator that would let me plug in my plan information, estimate my costs if I were to give birth, and make an estimate based on that data. I'm happy to say that I found just what I was looking for. At a site called MVP healthcare I was able to access a calculator that let me input data from my HSA and non-HSA plan. It was pretty straight forward, though I did have to guess a bit when it asked about the co-pay costs for specific types of services since my documentation did not use the exact same terminology. I tried my best to find something comparable, and made sure to be consistent across the plans I was comparing.

In addition to plan information you also enter in how much you will contribute to your HSA, your tax bracket, and finally, the amount of care you expect to receive. I estimated 6 office appointments, 2 prescriptions and $16,000 in care. I looked up how much an average birth costs and it is about $10,000 for natural, $16,000 for a C-section (which my mom had) and can be even more (around $30,000) if you have a premature birth. Based on that I thought $16,000 was a pretty good number for me to use.

Here are my results:

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It looks like we'll come out ahead with the HSA plan (called HDHP/HSA above). I was hoping that would be the case because I really love my HSA and all of the benefits it provides beyond health care, plus we don't know for certain that we'll have a baby next year, but I wanted to make an informed decision as well. All in all, it took me a few hours to sort through this all, and while it may only save me a couple thousand dollars, I find the piece of mind that I get from researching it thoroughly to be more than worth it.

Phoebe

What's On My Christmas List

2013-11-20T06:00:00.000-06:00

If you're a long time reader, you probably already know that I keep a year round Christmas list. Throughout the year when I think of something that would be nice to have, or I see something that I think my husband would like, I put it on the list. I have the list divided into three sections; one for me, one for my husband, and then one for the both of us (board games, cooking utensils, etc.).

This has made Christmas so much easier for us because our parents always want a list of items we'd like to get. Each year we would have a terrible time trying to come up with things, get a bunch of junk that we thought up on the fly, and then regret it in January when we realized that there are a ton of things we need and forgot to include.

So because our list is already set to go I've sent it out to our family. First we look at the list and take off anything that we plan on buying as well as anything that is too expensive or we wouldn't feel right asking for, and then I split it into two and send one to my in-laws and one to my parents.

Here are some of the things on my list:

Magazine subscriptions (Money, Oprah and Real Simple)
New Can Opener
Devotional Book
White tube socks
Silver baking bowls
Travel jewelry case
Suitcase
2014 Calendar
Headphone splitter (this will allow us to plug two sets of headphones into my laptop and watch a movie together)
Ladle
Air popcorn popper
Stainless steel measuring cups and spoons
Clear hand soap dispenser
Walking Dead board game
Potato peeler
Label maker
One Pan, Two Plates cookbook
Headphones with microphone
Indoor herb garden

You'll notice that we don't have big electronic items on our list. As a teenager I always wanted the new thing like an iPod, cell phone, computer, etc. Instead of asking for huge things we ask for a lot of little fun things that we don't have to have but would make our lives a little more fun. We purposely keep things vague if possible (i.e. suitcase) so that while we are asking for specific items, the person making the purchase can still pick out the color, type, etc. and surprise us. I make a point of not returning items unless it's clothing that doesn't fit, because I like to keep what a loved one picked out for me even if I wouldn't have selected it myself. I get to think of them every time I use it and that makes the gift so much more special!

When it comes to splitting the list up to give half to my in laws and half to my parents I put items on that I think that family would enjoy buying. For example, my mother in law loves to garden so I put the herb garden on her list, and my mom loves to cook and so I put the cookbook on her list.

We always have items left over and so we will often use gift cards that we receive to purchase them, or we save them for next year.

Phoebe

The Shopping Snowball Effect

2013-11-19T06:00:00.000-06:00

Last week my husband went to Walmart at midnight to pick up his pre-ordered PS4. He saved up the money to be able to purchase it with his fun money and he was so excited to be one of the first people to buy one. He stayed up until 2:00 am that night playing and it seems he is going to get a ton of fun out of it.

The only problem is that it doesn't have a cord that will hook-up to the TV in his man cave. Sure, the TV is old (his friend got it in highschool and then gave it to my husband about 5 years ago) but it still works great. It hardly seems old at all, and up until now we haven't had any problems. His XBox and his Wii both hooked up to it just fine but his fancy new PS4 has an HDMI cable and his TV doesn't support it.

So we went to Radio Shack to see if we could get a cable that would convert the signal and they don't have one. After a bit of research on Amazon we found that a simple cable wouldn't do the trick but a converter may. The converter costs $35. Not a terrible price, but it made us wonder if we should perhaps buy a new TV instead, for a small amount more, especially with black Friday around the corner. For example, we could buy a $98 32 inch TV at Walmart, though we would have to brave the terrible crowds and purchase it between 6 and 8 pm on Thanksgiving. I find the practice of opening stores this early grotesque, but it is a really great deal.

To top it off, one of the activities my sister and husband enjoy together is playing video games. It warms my heart to see them having a blast, especially when I feel like I've let them both down by not being into sports and video games, and they can fill that void for each other. When we saw my sister last weekend she was really excited to hear about the new PS4 and it got us thinking about purchasing another controller so they can play together. It will cost about $60.

All of a sudden we're looking at spending another $158 on an already very expensive purchase. This isn't the first time I've watched a purchase snow ball like this. When we first looked at our couch in June, we passed because our $700 investment doubled when we decided we'd need a new coffee table, end tables, and TV stand as well.

There's something funny that happens to us when we make a big purchase. The flood gates open and our resolve goes out the window. I think it's because you mentally get on board with spending a certain amount that spending "just a little bit more" seems like no big deal. The PS4 cost $400 so what's another $60 for another controller that will make it extra fun? We're already going to purchase a $700 couch so what's another $100 for a coffee table that makes the room look amazingly fashionable?

The problem is that often times there are multiple complementary items that arise, and it can be really easy to wind up spending more on them than the original item. I even found myself looking at TV's around $170 since they would be such higher quality. I find that the best was to combat this is to simply take a break. Once you're on a spending spree the momentum is working against you, and so stepping back allows your adrenaline to go back down and you can think a bit more clearly.

Once we stepped back we decided not to buy a new TV or controller at all. My husband can currently play his PS4 in our living room just fine. Since I travel he plays video games primarily when I'm away and he prefers to use the big TV. The only time he plays downstairs is if I'm home as well, and on those rare occasions he can play his Xbox or his Wii. He could even play the PS4 on a computer monitor we already have, though it's a bit small. When my sister comes over on Thanksgiving they can take turns playing the PS4 or they can plug in the Xbox or Wii and play together.

They won't get to play against either other on the new system but they will still have a great time together and may have wound up playing the other systems anyways since my husband only has one PS4 game so far. This seems like a very reasonable solution, and I feel good knowing we didn't follow the momentum and spend more than we had intended.

Next time we make a major purchase, we'll make sure to consider all the costs, including complementary items. But in the meantime I'm glad we were able to side step the snowball effect while still letting my husband enjoy his new video game system.

Phoebe

Not Making Money The Center of Our Universe

2013-11-18T06:00:00.000-06:00

This weekend we spent a lot of time with family. One of our nephews had a birthday party and while we were in our hometown we met up with some of my relatives as well. It was really fun to see them and we enjoyed catching up. Throughout the weekend money came up on numerous occasions and there were many things that piqued my interest.

For example, one of my family members started talking about how cheap and obsessed with money my cousin is, which sadly has become a common topic of discussion. My cousin got this reputation from making spreadsheets that predict his expenses down to the penny. Funny, he sounded pretty sane to me, but it spurred me on to try to understand why my cousin was getting this reputation (especially since my family doesn't seem to see me this way, and as far as I can tell he is far more spendy than I am), and I came up with a few ideas.

But first, let me tell you a bit about my extended family to provide you with context. My extended family consists of four sets of uncles and aunts. They all made pretty good money being accountants, computer programmers, and the like. But one set of aunts and uncles was a bit different. They appeared to have all the same lifestyle components like a cabin, new car, nice clothes, etc. but they talked a lot about shopping for deals, were notorious for spending less than the agreed upon amount for gifts, and would interrupt Christmas dinner to tell someone they were owed money for the bag of chips they brought.

Through this, I saw how my extended family valued money and spending and it was clear that the verdict was that this family was cheap. Some of the examples I shared may actually be fairly accurate representations of someone who is cheap, but there were other times they were lambasted for things that I now think of as being extremely reasonable, like not having cable TV. So my extended family goes beyond valuing "not being cheap," they value spending to make you and your family happy, even if that means robbing yourself of a secure future.

So with that context, back to my cousin who is getting the same reputation as the family I discussed above. Why is it that he's getting the same flack when he has a brand new mini-van, a new four bedroom gorgeous condo, and brand name clothes, purses, etc. for he and his wife?

First, he talks about it a lot. My cousin is always talking about how he has predicted how much diapers will cost and how he has his wife's lip gloss for the next five years budgeted down to the penny, and for the average person (alright, any person) this seems a bit extreme. While we may have a few crazy spread sheets of our own, we don't talk about them in public, and we don't budget out lip gloss.

Second, my cousin still wants the finer things in life, and just wants to find a way to get them for less. On the surface, this doesn't sound all that bad, and in many ways we follow the same principals, but there is a slight difference in our thinking. For example, I have a 16 year old car and I love it. My car is just right for me, and even though it may not turn heads it is just enough for me and makes me very happy. My cousin on the other hand, wants the fashionable car that will elicit envy from everyone around him. He will therefor buy the new car, but after extensive research, and will tell anyone who will listen about how he got the payments down to a certain level.

Somehow, the way he talks about his things doesn't come off as contentment. Instead, it seems that he very much wants prestige and brand name items, but wants to pay as little for them as possible. I'm still having a hard tie articulating it, but in the end I think it comes down to attitude. If you seem happy with the things you have, you seem content, and if you're always looking to score a deal on the next greatest thing you seem endlessly searching. And if you then complain about costs and are always discussing how to get a better deal on a completely unnecessary item, you may come off as cheap as well.

Another component is that my cousin and his wife don't seem to be on the same page. Everyone in the family has witnessed embarrassing fights between them over small amounts of money. I've seen them argue about buying a small popcorn at the movies, and whether or not his wife used the correct coupon for the pizza, and the way that he chides her makes everyone feel sorry for his wife. It's clear that he's willing to shame her publicly for a few dollars, and thus the value he places on savings seems a bit out of whack.

But my cousin isn't a bad guy at all. He wants to save for his family's future, and so he watches his money just like we do. But I feel that he has some deep seeded insecurity that drives him to endlessly search for validation with external measures of success. I've been there, and it's not fun. But the good news is that my cousin has recently spoken about this and seems to be aware of it. He's mentioned that he has focused too much on material things and flashy items, and so he's trying to take the focus off of it, and his family life seems much better for it.

Being a personal finance blogger, I'm endlessly searching for the balance of respecting money but not making it the center of our universe. It can be tough, and you can very easily slip into worshiping the mighty dollar sign in a very unhealthy way. For me, it's about focusing on the time and security that money will allow our family, rather than the material possessions. And I have to keep reminding myself that as I sometimes find myself drooling over million dollar mansions. All you need is enough.

Phoebe

November 2013 Allocation Update

2013-11-15T06:00:00.000-06:00

Now that we've figured out what our ideal investment allocation should look like, I'm going to start checking in on our progress monthly and giving an update. If you recall, we decided last month that we wanted our allocation to look something like this:

MSN Money

And last month our allocation looked like this (the first graph includes cash and the second does not):

Click to view larger image

It was quite obvious that we had way too much money in cash. Our ideal investment allocation diagram above does not actually include cash, and to be honest, we're not sure right now how much we want to keep on hand. But we're liking our current investment returns and having so much money sitting in the bank doesn't feel good. However, we already had plans to invest a large portion of it.

One of the reasons we had so much in cash was due to selling my company stock. In October we set up automatic investment intervals to move the entirety of that money into index funds by the end of 2013, and so we've been investing at a staggering rate. We also knew that we needed to invest more in foreign stocks, but we first wanted to move that money into index funds, and then re-evaluate, and here's where we are today.

Click to view larger image

As expected, we had a large decrease in cash, and large increase in US Stocks. Not including cash we now have 76% of our money in US Stocks, and we're starting to look a little weak in bonds and very week in foreign stocks. We are going to keep on with our plan through 2013, but we want to spend the next couple of months identifying funds that we want to invest in going forward, and update our automatic investing starting in 2014.

When I wrote about this last month, I said that I didn't understand why people would "re-balance" by selling off funds instead of just investing more in another area going forward, and I now get it. It's really hard to get this right because you can't predict what the price of your funds will be and as soon as you start to get your percentage right in one area (i.e. stocks) it can negatively affect your other percentages (i.e. bonds). I still am going to try to get this right without re-balancing, but I now see that in order to do so I'm going to have to create some projections. My goal is to have those done and have a plan in hand by the end of 2013.

Until next time,

Phoebe

2013 Christmas Budget

2013-11-14T06:00:00.000-06:00

Last year our goal was to spend $1000 or less on Christmas. We tried our best, but didn't meet that goal and wound up spending a total of $1204.61. Even though we didn't meet our goal, we felt pretty good about what we spent overall, and know that planning ahead and diligently tracking allowed us to keep our spending down.

Here's a recap of our spending last year:

$32.07 spent 12/26/11 on Christmas cards, wrapping paper, and bows
$36.00 spent on stamps to mail xmas cards
$12.00 spent on an extension cord to display lights outside
$42.99 spent on our Christmas tree and "tree bag"
$37.37 spent on decorative items (a ceramic house village)
$31.60 spent on Christmas movies (we finally bought A Charlie Brown Christmas amongst others)
$82.30 spent on gifts to my direct reports at work (3 people, this includes the shipping)
$15.00 spent on a gift certificate for a friend that checked in on our cats when we were away
$20.00 spent to pay the boy next door to shovel our sidewalk while we were away
$516.57 spent on gifts for family (10 people)
$300.62 spent on gifts for each other
$58.09 spent for hostess gift, wine and beer, and 2 white elephant gifts for a Christmas party

Grand Total: $1204.61

After taking a look at this and making some tweaks, we came up with this budget for 2013:

Click to view larger image

We decided to make our goal to be to spend $1000 or less on Christmas for each other and our family. We're not worrying about work gifts because that is a bit out of my control this year. We had a manager leave and so myself and all of the other managers have decided to purchase gifts for the entire team so as not to leave people out who don't have a manager. I think it will wind up cost a bit more than $300 and so we've budgeted for $400 just in case.

Since that work cost is a bit out of our control we've instead focused on the personal spending and in total we are aiming for $976.67. As you can see above, we've spread that amount among all of the costs we are predicting. Compared to last year, here are some changes we'll be making.

We plan on spending about $25 more on family this year than last year. This is because one of our nieces is now our god-daughter and so we are putting an extra $25 in the 529 we opened up for her. Other than that, the amounts we're spending are remaining the same.
We're going to spend $50 less on each other. Last year we started out with a goal of spending $100 each on gifts for each other and then both wanted to spend more. This year we're sticking to our budget.
Cards/Wrapping Paper/Bows - For the last two years we picked up these things at Target the day after Christmas. I guess we weren't as diligent last year because we spent $90.67 instead of $32.07. I'm already thinking of ways we can bring this down next year (perhaps making our own cards!).
Last year we bought a bunch of things we don't plan on buying this year such as a tree bag (pretty useless for us), an extension cord, ceramic houses, and Christmas movies. I'm a sucker for all things Christmas and so we indulged a bit last year getting our house ready, but this year I think we'll be all set.
Last year we didn't plan ahead of time for our Christmas absence and factor in the gift card we gave to the person who checked in on our cats and the $20 we gave to the boy next door for shoveling our sidewalk. This year we factored that in.
Finally, last year we were heading to a Christmas party thrown by my husband's friend when my husband told me we needed to bring a gift. I had no idea so we stopped at a liquor store and spent way too much. This year I know about the tradition so we'll be spending less.

Overall we're pretty happy with this plan, and mostly like how tracking our money has made us feel more in control these last few years. But we're not completely happy. We've already made peace with the fact that we spend more on my family members than my husband's, because my family spends more on us and when we give more expensive gifts to his it makes them uncomfortable. But we're starting to feel uncomfortable with the inequality between my husband's siblings. In my family, we give gifts based on "families." This means that my parents spend the same amount on my unmarried sister as they do on my husband and me combined. My sister will also get my husband and I a $30 gift each and we'll give her a $60 gift from the both of us, which seems fair to me.

But on my husband's side of the family gifts are per person. This didn't seem like a big deal when we gave a $20 gift each to my husband's unmarried sister, his married sister, and our brother in law. But now the married sister has two kids (one of which is our god-daughter) and one on the way. If we look at our spending per family we are spending $20 on one sister and $105 on the other, which will be $125 next year once their baby is born. It's just starting to feel off kilter and we wonder if we should be spending more on his unmarried sister. I think for now we'll leave it as is, but we may be approaching the age where we no longer give gifts "per person" to the adults and instead give family gifts or draw a name to gift a single person.

Are you getting ready for your Christmas shopping?

Phoebe