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Net Worth Update: March 2013

By Stephanie, updated April 2, 2013 4 Comments
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Happy April Fools Day yesterday! Sorry about misleading you — Mortimer is completely fictional, and there is no new author coming to PoorerThanYou at this time. You’re stuck with just me, for now! 😛 If you’d like to see my pranks from years past, follow these links:

April Fools 2010
April Fools 2009

Now that we’re back to normal, let’s tackle my month of March update:

Change: +$914 or +5.45%

Love it! Debts went down, as did my cash-on-hand, but that was alright because most of that went into my retirement account, which grew a little on its own, too. My car actually regained a good chunk of its value (+10%), which certainly helped!

Positive Net Worth Quest

How does this factor into my personal Positive Net Worth by September 2014 challenge? When we checked in last month, I updated the numbers and we saw that I need $932/month to get there. So I missed it, but only by a tad.

Still, I’ll have to work hard to make that happen. March was the last month where “expected windfalls” like tax returns or work bonuses factor in for me. From here on out, it will be an uphill battle. I probably won’t make it most months! But I can try to get close, and hopefully knock it out of the park once in a while to make up for the sluggish months.

Savings Snowball Update

While we’re here, let’s check in with le’ savings snowball! I manage my savings the same way many people manage their debt: with a “snowball plan!” If you are not familiar with snowball plans, they work like this:

You list out all of your debts (or goals, in my case) in a priority order, each with a minimum payment that you have to contribute each month. Then, you take any extra money you have each month, and throw it at the goal on the top of the list, until that goal is entirely eliminated.

Once the top goal is gone, you contribute everything you can into the next goal on the list, and so on and so forth, your monthly payments “snowballing” and growing as you move down the list.

Last time we checked in on my Savings Snowball in October, it looked like this:

Name	Goal Total	Progress	Monthly Payment
Emergency Fund	$5,000	$3175	All that I can
Travel	Rolling	$1142	$150
Weddings	Rolling	$631	$75
Future Car Fund	$10,000	$175	$50
Charity Fund	Rolling	$275	$30
Retirement	$5,000/year	$4772	$0

Some updates since then to each category:

Emergency Fund

Somewhere along the way, I changed my mind about how much I wanted to keep in my E-fund. I think it had a lot to do with my Positive Net Worth by September 2014 challenge. Extra money sitting in an E-fund savings account doesn’t earn much interest, so it doesn’t really help me with that challenge.

So I dropped the goal back down to $3,000, which dropped it off the list as completed!

Travel

I’ve taken a few trips home to my family in Upstate New York, and also used some funds to see the Cirque du Soleil show “O” while on a business trip to Las Vegas. Work paid for everything else on that trip, but I did lay out the money for the show to have some fun with my coworkers while we were out there (my first trip to Las Vegas!).

I think I might take a big trip sometime in the next year or so (maybe someplace international even, if I get my passport renewed), but until I make real decisions and plans regarding that, I’ll just leave the funds as they are and contribute the minimum amount. So that keeps it from being the top goal in the snowball.

Weddings

No new weddings attended since the last update, but there’s at least 2 coming up this summer, which I’ve already started buying outfits and gifts for. Somehow, it’s that time of year again already!

Retirement

I hit $5,000 for the year early last year, but then the counter restarted on January 1st! Around the time I did my taxes this year, I made a $1,600 contribution to my 2012 Roth IRA, since that option was still open to me. (You can contribute to a previous year’s IRA up until April 15th the next year, assuming you haven’t hit the dollar-amount contribution limit, which I haven’t yet for 2012.)

For my own purposes of contributing $5,000/year to my IRA, I’ll count that $1,600 for 2013, as well as everything that’s been deducted from my paychecks for my 401(k).

New Top Goal…?

The problem now, of course, is that none of my savings goals really stick out as a “top goal” right now — the one that sits at the top of the snowball and gets every extra dollar I can throw at it. The way I see it, there are really two ways I could go:

Weddings vs. Lending Club

The “Weddings” fund is the most promising candidate out of what’s currently in the snowball list. There’s plenty of them every year now, and maybe someday I’ll have to lay out a much bigger chunk of cash to throw one of my own (there are no solid plans for that yet, though, so don’t get excited, Mom). That will require more money than what I’m currently putting in with the minimum payment, so maybe it should spend some time at the top of the snowball.

On the other hand, I’ve been investing a good chunk of money in my Lending Club lender account to help on my Positive Net Worth by September 2014 challenge. So really, the challenge is the goal, and Lending Club is just the specific tool. But since all of my savings accounts count toward the goal, Lending Club is the only concrete account that embodies that specific goal.

I haven’t made up my mind about this yet, so rather than reveal what my Savings Snowball looks like now, I’m opening up this decision for comment — what do you think my top goal should be right now? My Weddings fund, or my Lending Club working-toward-a-positive-net-worth-by-September-2014 fund?

Please leave your thoughts in the comments section below!

Savings Snowball Update – October, 2012

By Stephanie, updated October 13, 2012 6 Comments
This post may contain affiliate links

I manage my savings the same way many people manage their debt: with a “snowball plan!” If you are not familiar with snowball plans, they work like this:

You list out all of your debts (or goals, in my case) in a priority order, each with a minimum payment that you have to contribute each month. Then, you take any extra money you have each month, and throw it at the goal on the top of the list, until that goal is entirely eliminated.

Once the top goal is gone, you contribute everything you can into the next goal on the list, and so on and so forth, your monthly payments “snowballing” and growing as you move down the list.

Here’s my Savings Snowball, with my progress back in January and now at the middle of October compared side by side:

Name	Goal	January	October	Monthly Payment
Emergency Fund	$3,183	$2140	$3175	All that I can
Future Car Fund	$10,000	$2,192	$175*	$50
Travel/SPACE CAMP	Rolling	$90	$1142	$150
Weddings	Rolling	$852	$631	$75
Retirement	$5,000/year	$150	$4772	$325
Charity Fund	Rolling	$60	$275	$30
Occasionals	Rolling	$545	$208	$110

*Car fund: That’s $175 and a new car, mind you!

Alright, not bad. Definitely some real growth happening — especially that retirement contribution!

The Future of the Future Car Fund

This was a point of debate (with myself) just after I bought my Camry in July. Should I keep contributing to this account? Or should I be putting that money toward the auto loan that I just took out in order to get the Camry?

The math lends itself in favor of paying off the loan: I have a higher interest rate on the loan than the interest rate I earn on the savings account. But the straight interest-rate-for-interest-rate math doesn’t tell the whole story.

The rate on the car loan is only 1.99% — less than what inflation is usually calculated at. And my student loans have comparably much higher interest rates — above 5%. If I have extra cash, it should be going toward paying those down. And of course, if we’re taking all interest rates into account, then we have to take the expected interest rate on my retirement contributions, which is even higher still than 5% student loan interest.

So really, I shouldn’t be saving for a new car, paying off my auto loan, or paying off my student loans at all — extra cash should all go into a retirement account and that’s that. Right?

But if I did that, there’d be no snowball. And there’d be no new cars, no traveling, no charity contributions, no weddings… because a goal that’s more than 40 years off still would be taking precedence based on its interest rate alone, which is just silly.

So I continue to contribute to the new car fund — not because the math supports it (it obviously doesn’t) but because of the simple fact that in 10 years or less, I will be car shopping once again.

Changes to the Snowball

I can’t do an update without doing some tweaking. It’s just my nature. So here goes!

Emergency Fund Goal +$1,817

Even though I’m within $10 of my previous Emergency Fund goal, I’m not stopping now! My rent was just raised, so the previous goal wouldn’t really cover 3 months of living expenses any more. It’s time to bump the goal up to a solid $5,000.

Travel Fund, Minus Space Camp

I’m not as excited about going to Adult Space Camp as I once was. I purposefully missed registering early because I wasn’t so sure anymore. They also seem to have removed the week-long adult program, and are only offering the long-weekend version. So this fund will now be for more non-specific travel, until another opportunity comes up.

Weddings Monthly Payment +$50

The number of weddings I’ve been attending (and traveling for!) has only been increasing. Everybody gettin’ married up in here! That’s why this fund’s “progress” has gone down — I’ve taken more out to attend weddings and buy gifts than I’ve managed to put in!

But I love attending the weddings of my family and friends, so the answer is simply to contribute more each month — that way, I can keep on going.

Retirement Monthly Payment: GONE!

I had to think this one through for a while, but I will hit my goal of $5,000 in contributions this year, without any further contributions. Wait, WHAT? How does that work?

First, I had to define what “contribution” means. I decided a few years ago to measure my progress on this goal by my own contributions to my retirement accounts, not the total account balance. I didn’t want to punish or reward myself for the swings of the stock market.

Secondly, do the contributions I make straight out of my paycheck (and the match from my employer) count as “monthly payment” for the purposes of this snowball? I decided that since they come straight out of my paycheck with no effort on my part, this answer is “no.”

With those definitions in mind, I will hit my $5,000 goal for 2012 in November with just my paycheck deductions. So I’m done for the year! The monthly payment on that goal is suspended until January!

Occasionals — Removed

My “Occasionals” account is where I keep money for regularly occurring (but not monthly) bills, like my annual renters insurance or my semi-annual car insurance. Though I still plan to fully contribute what I need for these bills to this account every month, it’s not really a “snowball” goal. I have no reason to increase it beyond the exact amount required to pay those bills.

Result

With those changes, and a little rearranging on the priority of some goals, the Savings Snowball now looks like this:

Name	Goal Total	Progress	Monthly Payment
Emergency Fund	$5,000	$3175	All that I can
Travel	Rolling	$1142	$150
Weddings	Rolling	$631	$75
Future Car Fund	$10,000	$175	$50
Charity Fund	Rolling	$275	$30
Retirement	$5,000/year	$4772	$0

A leaner, cleaner snowball plan with refreshed goals! We’ll revisit again in January, when I restart my monthly retirement contributions and reevaluate everything else.

Net Worth Update: January 2012

By Stephanie, updated February 1, 2012 31 Comments
This post may contain affiliate links

You know, I can remember being in ninth grade Global History class, learning about the Mayan calendar and the urban legends about the end of the world, and thinking “Gosh, in 2012, I’ll be 25, turning 26! I’ll be a real adult by then!” Ten years later, I’m figuring out that being 25 and being a “real adult” are two completely different things.

But in the spirit of trying to be a real adult, let’s look at how the numbers have panned out for this month.

Change: +$70 or +0.26 %

Alright, still recovering a bit from my emotional spending and insane moving costs. I went a little crazy before running the numbers for December. But, all in all, I’m recovering anyways and made just a tiny inch of progress forward this month. Up, not down, is still good… and hopefully I can do better next month.

Since there isn’t a huge amount to talk about monthly-progress-wise, now is a good time to have a looksie at future plans. Longtime readers will be familiar with the idea of my Savings Snowball, but if you’re newer around these parts, here’s a quick explanation:

In order to fulfill multiple savings goals over time, much like a debt snowball, each goal has a minimum payment that gets paid every month, no matter what. Any extra money I can scrounge up goes to the goal on the top. When the goal on the top is met, every dollar that was getting sent to the accomplished goal “snowballs” down into the second goal, and the minimum payment for that goal continues. Therefore, the snowball gains momentum as it goes down the list.

Here’s how things looked the last time I futzed with the snowball:

Savings Snowball as of April 2011

Name	Goal Total	Progress	Monthly Payment
Future Car Fund	$10,000	$1096	$50 + All that I can
Travel	Rolling	$0	$90
Weddings	Rolling	$1140	$75
Retirement	$5,000/year	$3,714(total)	$150
Charity Fund	Rolling	$95	$30
Occasionals	Rolling	$361	$110
Emergency Fund	$3,000	$3,183	Achieved!

Now, let’s tweak the numbers a bit here.

First of all, Emergency Fund needs to move back to the top. It’s not pretty, but in the last two months I’ve borrowed from it to avoid carrying credit card debt in my irrational spending spree. Yeah. That happened. So first priority is getting it back up to $3,183.

Secondly, I’m increasing the contributions on Retirement. Not only am I getting a company match on my 401(K) now, but I’d also like to see my contributions inch closer to 10% of my gross salary. It’s not going to happen right away, but I’ll work my way up.

Third, the travel fund needs to be plumped up. Way up. Back in July or August, I started batting around the idea of attending Space Camp with one of my coworkers. We pinky-swore we’d do it in 2013. The cost of the advanced 6-day course is about $999 and it would need to be paid before this time next year (as I see many of the courses are already booked solid for 2012!). My current contribution of $90/month would get me there, but it wouldn’t allow any wiggle room for any other travel this year. And I’m just too young and crazy not to travel as much as I can reasonably manage!

With those things in mind, and updates to the progress I’ve made since April, the Savings Snowball now looks like…

Name	Goal Total	Progress	Monthly Payment
Emergency Fund	$3,183	$2140	All that I can
Future Car Fund	$10,000	$2,192	$50
Travel/SPACE CAMP	Rolling	$90	$150
Weddings	Rolling	$852	$75
Retirement	$5,000/year	$150 for 2012	$325
Charity Fund	Rolling	$60	$30
Occasionals	Rolling	$545	$110

(The $325/month for retirement includes both the automatic deductions from my paycheck for my 401(K) and the manual contributions I make to my Roth IRA.)

So there it is! All neat and tidy and updated, and a little depressing. I made very little progress on goals since April, and I backslid on my Emergency Fund. But, the good news is that I should be able to fully fund that E-Fund in February, and then progress down the snowball into Future Car Fund again.

We’ll see if I’m right about a month from now! Happy February, everyone!

Net Worth Update: December 2011

By Stephanie, updated January 23, 2012 13 Comments
This post may contain affiliate links

Hey guys! So remember that time I stopped writing for more than six months?

That was funny, right? Hahahaha… ha… ha.

Sorry about that. Let’s get back to business.

Change (from the last update in April): +$2323 or +8.63 %

That’s a pretty respectable climb (more than 1% per month!) in numbers, but the graph reveals that there was also a bit of a backslide in there. So what gives? Just what has happened these last 8 months?

Traveled the country as a NASA groupie. When we last left off, I had tried to go a NASA Tweetup for the STS-134 shuttle launch, but the launch was postponed. Following that, I ended up attending three more NASA Tweetups: one in Pasadena, California at the Jet Propulsion Lab just days after my brother’s wedding in Upstate New York; another launch Tweetup for the very last shuttle launch, STS-135 (which did go off on time — huzzah!); and finally another one right in my area at NASA Headquarters in Washington, DC (which was actually the same day as a White House Tweetup… which I also attended). Yeaaaaaaah… all really awesome opportunities that were worth every penny I spent in travel and accommodations, but also a bit of a blow to the old wallet!

Transferred $750 into my Roth IRA. In August, some sort of craziness was happening in the stock market. Honestly, I don’t even remember which crisis it was, but stocks were dipping down pretty low, and I had money sitting in my savings account, already earmarked for retirement savings. So, I transferred it. No better time to buy stocks than when they’re on sale, which is usually when everyone else is freaking out and selling theirs.

My car went kablooey. Yeah, that’s the technical diagnosis. On Labor Day, it just decided not to start. Replacing the battery (which was leaking acid everywhere — fun!) didn’t fix it, and neither did replacing the dead starter. Once my friends and I covered everything we could replace ourselves in my parking lot, I took it into two separate shops for more help. Between the parts we replaced ourselves and the ensuing repairs, I spent just shy of $1500 to get my car back on the road.

Oh, and did I mention this was the month my inspection, registration, and car insurance were all due, as well? It was a really fun month for the Oldsmobile! Considering the entire car is worth about $1750 or so now, these will be the last major repairs I put into her. I’ve bought myself about six months (hopefully a tad more), but it’s getting to be about time to put her down.

Got a promotion! And a change of department, even! This was also in September, on my birthday, in fact. I turned 25 and started a new job at the same company, with a pay bump. I’m also salaried now, as opposed to hourly, so my paychecks have become clockwork-predictable.

Moved out on my own. I had moved down here to Northern Virginia in 2009 because the guy I was dating got a job here. Unfortunately, that relationship came to an end. So for the first time in my life I moved out on my own, got my own apartment, and am now fully supporting myself. I shopped around for apartments, and actually managed to score a great deal on a cozy one-bedroom with all the amenities I wanted and more (in-apartment washer/dryer was a sticking point for me!). Lucky? Yeah, a bit. But my housing/utilities costs more than doubled, so I’m stretching things a lot thinner nowadays.

Spent way too much on new furniture and Christmas presents. I’ll admit, I didn’t know I could be an emotional spender. Because of doing The Compact and not buying anything the last time I was in severe emotional stress (long-time readers will remember this as the time I dropped out of film school right before the economy tanked!), I didn’t really give myself a chance to be an emotional spender the last time around. This time? The end of a relationship plus living in an apartment alone meant I dropped a significant amount of money all at once on things that suddenly seemed so very important.

Sure, of course I needed to buy myself a bed — sleeping on a futon mattress piled with three sleeping bags on top of it was not ideal. But I went a little… uh… nuts. If you have a look at the graph above, that is exactly what the big drop around November was. I’m still in recovery from that, unfortunately.

In fact… I stopped keeping track of my finances altogether. I didn’t updated my spending tracker spreadsheet. I didn’t do my net worth updates. I barely glanced at my bank accounts for longer than it took to pay my bills. I didn’t contribute anything to savings aside from automatic transfers. In a lot of ways, I was a whole different person for a couple of months.

It took a really long time to straighten out the mess (and deal with the enormous pile of receipts) in order to get back on track, update the spreadsheets, and fill out my net worth tracker. But here I am — up to speed and finding that somehow, I’m alright. Not great, but recovering steadily and without any permanent damage.

Only, it isn’t really a case of “somehow” — it was the systems I had put in place over the course of this blog. I had safeguards, fail safes, and finally an emergency fund to save myself from… well, in this case, myself. It wasn’t a good thing, by any measure — putting off saving for several months and having to borrow from my emergency fund to bridge the gap one month — but I didn’t go into any additional debt. In short, I dodged a bullet.

New for 2012

My employer has started offering a 401(K) match. Woot! I was already contributing a small amount to my company 401(K), but without a match, I had been mostly focusing on my Roth IRA for retirement savings. Now that there’s a match, I bumped up my contributions to take advantage of the full match. Still, I’m going to increase my contributions to the IRA as well this year — I just don’t feel like I’m saving enough for my retirement yet. Sure, now I’m trying to support myself completely on my own, and socking even more away is just going to make things tighter, but…

If I don’t worry about my retirement savings now, who is going to? And when? This is all on me.

So we’ll just have to see how that goes!

If you have any questions about my net worth or how it is calculated, feel free to ask them in the comments.

How Big Should Your Emergency Fund Be?

By Stephanie, updated February 10, 2010 34 Comments
This post may contain affiliate links

Last month I announced some changes to my Savings Snowball, including dropping the goal for my Emergency Fund from $10,000 to $5,000. No one said anything about that, so it must not have been a huge controversy. But I don’t find myself especially comfortable with either of those numbers. Why? Because nailing down how big an emergency fund should be is not easy.

Experts love to give you rules of thumb like “3-6 months living expenses,” which is certainly as good a metric as anything. But if your current living expenses are inordinately high or low, that’ll throw the whole thing off.

The truth is, your emergency fund should be big enough to exactly cover the cost of true emergencies in your life, but no bigger. Obviously not having enough money in your emergency fund is bad, but too much money isn’t good either. You might be tempted to use your E-fund for non-emergencies if there’s too much money in there. And extra money in your E-fund isn’t being put toward other goals in your life, which will slow those goals down.

The truth is that the only way to know exactly how much money you’ll need in your emergency fund is to be psychic. And I’m going to go ahead and assume that if you’re psychic, your emergency fund consists of “already knowing the winning lottery numbers.” So for us mere mortals, we must rely on the old metrics of “3-6 months expenses” or simply picking a nice round number out of thin air, like I did.

Some tips on keeping your emergency fund big enough, but not too big:

Remember to adjust the amount for life changes. When you first move out on your own, you’ll need a bigger emergency fund than you did when you lived with your parents or at college. In general, the size of your emergency fund will have to grow as you go through life.
Credit cards and other available credit can help in a pinch, but don’t rely completely on them. Relying solely on credits cards as your “emergency fund” is stupid. But if you have a credit card with a good limit and a low interest rate, it can be used once your cash reserves are tapped out, as long as you have a way to repay it later.
Personal relationships should also be a part of your emergency fund. Don’t be a mooch and go running to friends and family for every little thing that comes up! But do work toward strong ties with people so that you have people to rely on in a true emergency. The flip side of this is that you have to be ready and willing to help out with their emergencies, as well.
Avoid tapping your emergency fund as much as you can. If you can pay for minor emergencies or not-really-emergencies out of pocket, then you won’t need to keep as much in your actual emergency fund to cover the real-deals.
Keep your deductibles for insurance in mind. If nothing else, your emergency fund should have as much in it as your highest deductible — be it auto, home, or health insurance. Best case scenario would be enough money to cover all of your highest deductibles.

Don’t sweat your emergency fund too much. Yes, you should have one and you should follow the tips above to choose the size of it. But slow and steady wins the race — putting aside any money every month into an emergency fund is better than not. In fact, half of Americans have no emergency fund at all, so if you put anything away at all, you’re already “above average.” Just don’t let that go to your head, hotshot!

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Net Worth Update: March 2013

Positive Net Worth Quest