One More Day of 2010

Image from: www.geeks.pirillo.com

Lately, I've been reflecting on this year and the past decade (technically, the past eleven years, but I digress). It never ceases to amaze me how quickly time "flies by." My sister warned me that "after 21, it's all a blur." Blur or no blur, I'd like to review some of my accomplishments and a few things I am looking forward to in the new year.

 

What I'm Proud of... 

• Procuring a higher-paying position with an organization I admire and a wonderful group of colleagues. 
• Making massive additional payments to eliminate my car loan debt.
• Reining in credit card spending and managing the account so that I have a small balance (i.e. less than 30% of my credit line) or zero balance.
• Sharing my financial experiences with the world [wide web].

What I'm Looking Forward to...

• Increasing my savings and investing amounts (including maxing out IRA and getting on track to save $10,000).
• Increasing my net income.
• Finally eliminating my car note...and increasing my principal payments to my student loan debt.
• Consistently paying my credit card balance in full.
• Expanding my knowledge about insurance, taxes and investing.

What was YOUR biggest financial accomplishment of 2010?

P.S. HAPPY NEW YEAR!!! Have fun and be safe!

Hooray for Tax Cut Holidays!!!

2011 is right around the corner and with it, our paychecks will have a little something extra. As part of the deal extending the Bush-era tax cuts, a number of employees will receive a 2% reduction in payroll taxes. As of now, this reduction is temporary (it will last only a year). What does this mean for me and likely for you? Mo' money! $40 'extra' per paycheck in my case. I used a nifty calculator at Kiplinger's website to confirm my own calculations.

Naturally, the first thing I did was update my 2011 spending plan to reflect this anticipated increase (too soon?). Then I started thinking about what I would do with an extra $80 a month. It isn't much, but it kinda is (with the price of gasoline going up, I think these few bucks will definitely come in handy!). At any rate, I'd like to plan how I would spend it. Here are my ideas:

• Add to my car payments
• Use for travel (particularly airfare to see the beau; I haven't budgeted for this for the first quarter of 2011 and I need to purchase airfare for February and March).
• Add to my savings (I did say I want to save $10,000 in 12 months, didn't I?)
• Add to my Roth (I also said I wanted to max out the ol' IRA...)
• Go shopping...a little

The last idea is inspired by my long-held desire to dress more stylishly. Undoubtedly, this is also what is expected of us, as this tax cut is labeled a sort of "stimulus package."

What are your plans for the few bucks additional to your 2011 paychecks?

Financial Goals for 2011

In my most recent post, I shared that I'd been organizing my finances (reconciling savings plans, debt reduction plans and budgets). Naturally, the next thing for me to do was to think about what my goals are for the upcoming year and what I need to do to make sure these goals are achieved. Below, you will find my goals and the steps I intend to take to make them a reality:

• Zero credit card balance: My goal is to end every credit card billing cycle without a balance. This is one way to ensure that I don't spend above my income. I can make regular purchases, such as gasoline and groceries, with my credit card. In fact, I've been considering a rewards card to earn points for ___________ (<<that means I don't know, yet >). This year, I paid $68.21 in interest charges.  That's enough money for gas (and then some), a nice dinner with my boyfriend, an outfit, or a small contribution to my savings plan (after all, it all adds up!).
• Max out my Roth IRA: You already know that I've been kind of obsessed about paying off my car note. As such, I don't have much money left over to max out my IRA. With a projected payoff date of April 28, 2011, I have May 2011 through April 15, 2012 to contribute $5,000 to my individual retirement account. What do I have to do to make this happen? Contribute $454.55 each month to the account. With two "extra" paychecks in 2011, I may have the flexibility to reduce the monthly amount, but this requires that I'm diligent about redirecting a sufficient amount of those checks to the IRA. Knowing me, I'd like to set a few bucks aside for fun =)
• Pay off my car note: Originally, I planned to pay off my car note by June 2012, that is, until I ran the numbers on my beau's proposition of significantly increasing the principal payment amount. Currently, I am on track to achieve this goal by the end of April 2011, especially if my assumptions about my anticipated tax refund are correct. If they are less than I estimate, I may have to postpone the due date for this goal (which, undoubtedly will effect the savings goals). Let's keep our fingers crossed and hope I am at least right :)
• Generate at least $250/ month in extra revenue: Before I took the job that I currently hold, I had a steady goal of generating $3,000 in net income each month. With my deductions for my defined contribution plan, I am short of this goal by $222 each month. For the past few years, I've been toying around with a business idea that promotes personal finance. My goal for next year is to get serious about a web design and marketing plan so I can realize some income. $250/month of income to be exact. To be clear, I'm not looking to pocket all income; undoubtedly, I will reinvest into the business, but having the income will definitely provide some peace of mind.
• Accumlate $10,000 in non-retirement savings accounts by 05/31/2012: These funds would be available for immediate access and as part of my emergency savings. Why $10,000? Frankly, it's an arbitrary amount, but it's definitely a "stretch goal." There are a number of factors at play. Let's start with the not so good possibilities: what if I don't pay off my car by the end of April? What if I don't generate enough additional income? Well, my $10K goal within 12 months will be postponed (by the way, I'd redirect my "car payment" money to this goal). For me to achieve this goal, I need to set aside $833.34/month.  

If you recall, I have $1255 available as discretionary money each month. I'm comfortable spending $200 of this amount for fun stuff. So $1055 - $454.55 (Roth)-$833.34($10K goal)= $-232.89. A girl MUST increase her income to make these goals come true. Even if I sacrificed fun stuff every month (i.e. the previously mentioned $200/month), I'd still be a few bucks short! 

At any rate, these are my financial goals for 2011. What are your financial goals for 2011, if any? How do you intend to achieve them?

Budgets, Holiday Stuff and Revisiting Financial Goals

...and I'm back! I sincerely apologize for being absent last week, but I'm back now =)

So, what's been going on? The usual, the not-so-usual and some more of the usual. Let's get started with the usual.

The Usual

I've been diligently tracking my expenses in my tracker housed on Google Docs. I've exceeded my allocated amount for food and car expenses: footing the bill for my sister's birthday dinner; being a bit impulsive (eating out, mostly); increasing gas prices (is anyone else paying around $3/gallon?); and regular car maintenance (the coupon for my oil change this time around wasn't $19.99 + tax :<).

The Unusual

Holiday stuff. You know, buying gifts and bringing in whatever you signed up for for the holiday party at work. Actually, the work stuff was easy. We had a cookie swap and I brought a non-cookie item to swap: brownies. Had I not been distracted by the massive amounts of sugar tempting my waistline, I would've repackaged the cookies and sold them for income =) The not so easy stuff is holiday shopping. To cover the expense of Christmas gifts without regretting it in January (i.e. financing all purchases with my credit card with no clear way of paying it off), I decided to decrease the amount of my car payment this month to $356.98 (I know, it's a weird amount). At any rate, doing so allowed me to spend $705 of "car payment" money on gifts for my parents, sisters, boyfriend, best friend and godson. Sadly, I've spent $690 and some change and I still have a few items to pick up. Fortunately, I have a few bucks in my "immediate access" savings account (this is NOT my emergency savings account) that I'm comfortable using to cover these items.

More of the Usual

Revisiting goals and planning. I spent quite a bit of time today updating my savings plan [another Google spreadsheet I use to track the balances of my savings account linked to my checking account (see "immediate  access" savings account above), my ING Direct account (emergency savings), my Roth IRA, regular brokerage account and 403(b)] and reconciling it with my 2011 budget. It feels SO DARN GOOD to account for every single penny. Did you get that? EVERY. SINGLE. PENNY. I know where it came from or where it went and for what purpose. Moments like these help me feel in control of my finances, and not vice versa...something that I occasionally freak out about. Nevertheless, I am on track to enjoy my boyfriend's birthday (I've planned a surprise trip for him), my girlfriend's birthday (we're going to be "Bahama Mamas"), a winter weekend getaway in the Poconos with a gaggle of friends, my 2nd year anniversary with the beau, paying off my car note, and my friend's wedding. And all of these things are happening in the first half of the year! To be fair, I am making assumptions about my anticipated tax refund, the bulk of which will go towards principal reduction on the note. Everything else is accounted for (i.e. planned to come from my regular income).

As I prepare for 2011 (and the end of my car note, hooray!), I'm considering the opportunities to save more, invest more, and to be better equipped to pay for travel and entertainment expenses that inevitably have a habit of "popping up." My post later this week will focus on financial goals [and concomitant action plans] for 2011.

How have you been handling expenses related to the holiday season? Did you set up a budget? Are you "winging it?" Have you started to plan for 2011 financially? Have/will you do a "2010 Year in Review" for your finances?

I Needed this LAST WEEK!

Proverbial Wallets from John Kestner on Vimeo.

I'm rather disgusted with how I've spent my money the past several weeks. Thoughtless credit card charges...countless transactions for eating out...blatant disregard for my spending plan. I've got $10 to my name (excluding all savings - easily available and not). Am I happy about it? Absolutely not. Is it the end of the world? Again, no.

So what's next? Buckle down and pay off the credit card balance and remind myself - DAILY- of why I have a spending plan. Then, make a list of things to purchase and stick to it. This should help me achieve some sense of redemption, because reflecting on the past several weeks of spending is not inspiring!

Have you ever gotten "down in the dumps" about recent spending? What have you done to reduce the likelihood of repeating such regrettable spending?

This Way or That?

The very nature of my blog highlights the point that there are often a multitude of ways to achieve one's financial goals. I wish I could say that the motivation for today's post is purely financial, but it's not. Nevertheless, there are many applications of the concept of achieving a task in a variety of ways. For example, you have read my many posts about paying down my car note. Initially, my goal was to eliminate my car note by June 2012 by making monthly principal only payments of $230.89. My boyfriend, who paid off his $30,000+ vehicle loan early, recommended that I see what areas of my budget I could make adjustments to in order to add more to this additional payment. After number crunching with loan amortization tables and a variety of savings projections, I settled on $1245/month to pay the car note (this amount includes the original $269.11 payment), this amount later became $1045/month as a I soon realized that twelve hundred bucks a month left me with no wiggle room.

I've also thought about the variety of advice/information promulgated about:

Investing: asset allocations based on age, how to pick a stock, what indicators to assess when selecting a fund, how much to save for retirement, tax diversification...

Saving and debt management: what debts to pay first, saving a set dollar amount or a percentage of income, what type of savings instrument to use, how much to set aside for emergencies....

Insurance: how much coverage, term or whole life, who to list as a beneficiary or beneficiaries...

The list goes on and on. I can only imagine that as my income increases and my options within financial planning expand that this list will grow even larger! However, I am comfortable knowing that - despite how overwhelming it may seem- I am constantly learning about and taking control of my finances. Regardless of the recommendations, I am ultimately responsible for the consequences of my decisions: to save one way or another, to pick a stock or bond fund because of a certain indicator, or whatever the case may be.

Have you ever received advice about the way you should handle your finances? Was it solicited or unsolicited? Was it more helpful or harmful?

Taking Stock in....um, Stocks

Last night, I had a moment. Another one of those, "oh crap, what am I doing?" moments. This is what spurred it...at the end of every month, I take a look at my balances for my savings account, Roth IRA, and regular brokerage account. I then update the amounts in a spreadsheet I've called "Savings Plan." In reviewing my balances, I looked at the asset allocation of my Roth and brokerage account, and much like it has been for the past umpteen months, a considerable amount has been sitting useless as cash. I call it a "considerable amount" because the amounts I had in cash were close to the amount I've indicated to be "automatically invested,"  at least for the Roth....the regular account had zero cash.

To help you better understand what the heck I am talking about, I should share that I invest using the discount brokerage Sharebuilder (for both the Roth and regular brokerage account). I currently use an automatic investing plan for both accounts, whereby when certain dollar amount is available in cash, Sharebuilder will invest that certain amount in the securities that I have indicated. 

Side note: these securities include a small cap exchange traded fund (ETF), IJT, and a handful of my favorite companies: Johnson & Jonhson, Walmart, McDonalds, Pepsico, Honda, and Microsoft. Each time I purchase these securities, I pay $4 for each trade (i.e. $4 per company). 

Anyways, the "certain amount" I planned to automatically invest was $229 for the regular brokerage account (which holds one security, the index fund) and $1374 for the Roth (which holds the aforementioned six stocks; you'll notice that $1374 = 6 times $229). Why $229? Like I said before, there's a $4 fee for each trade; with that accounted for, I invest $225 in the respective securities. I wanted to be mindful of keeping my investment fees low, so my $4 fee for every $225 invested means I pay 1.7% in fees to invest. Make sense?

Well, last night I moved some money. I transferred $230 to the regular account from my emergency savings account (the savings account balance is now around $950). And I changed the automatic investment amount from $1374 to $1080 (I have $1084 in cash, about $290 short of the pre-set amount; this breaks down to $176 per stock plus $4 each to trade). I decided not to transfer any additional funds from the savings account to reach the $1374 because: 1) I am planning to use some of those funds in the next three months and 2) I don't want to be up a creek without a paddle in the event I need to access some cold hard cash. And yes, I realize that by changing the actual investment amount from $225 to $176 that I will pay about 2.3% in fees. Don't get your panties in a bunch, I'll reset it to $225 after this trade goes through. Besides, I am a bit consoled by the fact that some people pay much more in fees to trade..like those folks who are into active trading (for my account, that would be $9.95 a pop. Yikes!)

Overall, why did I make these changes? Because my accounts have been performing well and I haven't been using the cash in them. It's kind of like the lottery (which I don't play) you gotta play to win and frankly, my money isn't working for me as cash.

Would you have done the same thing? 

Or would you do things differently? If so, how and why?