Networth and Money Confession

Inspite of all the market ups and downs, my networth managed to increase by 3%. Let's take a look at some of the classes:

* Cash: Up 15%. Mainly from monthly savings. Look for this to go down a bit next month, as I'll need to dip into it for travel.

*Retirement: Up 1%. Hey, at this point, I'll take what I can get.

*Credit Card Debt: Up 29%. It's not as bad as it sounds. Last month it ws $23. This month $101. That's from a night out with drinks. The company was great, but trust me, I'm not happy about that tab.

Money Confessions
I've been eating out a LOT over the past two weeks. Part of is laziness. I hate grocery shopping. The other part is that even when I do, my mom hogs all the freezer space, so it gets frustrating in trying to find a place to put my food when I do buy it. Yet another part? Restaurant food tastes good. I'm just keepin' real folks. Chipotle? Panera? That Indian joint by my house? Fantastic! I've been using the cash I'd use for groceries to buy the food, so it hasn't been that bad, but still far more than I normally would. I'm going to have to get back into the habit of eating at home again if I'm going to save the money I need to achieve my goals. I know this. I'm just kinda tired of watching my money so closely. I've been at it for over a year now. I've achieved a lot, however it gets old sometimes. But back to business next week. Maybe I'll spend a little less on groceries next week so I can still have a meal out once.


From insecurity to despair.

House approves housing rescue legislation

I'm sorry, why am I busting my ass to be responsible again?


1. I've been spending a lot of money lately on eating out and gaming. That's gonna have to come to an end really quick. Like, right now. Thanks for my not-going-to-the-grocery-store-and-love-of-gaming behind, I have $7 in my purse and $100 in my checking account to get me through to next week Friday. I know. You're playing tiny violins for me. Clearly not an issue worth worrying about for most, however it's slimmer margin than what I'm used to operating with, and I don't like it.

2. If I'm going meet my goal of saving an extra money until the end of the year, I'm going to have to remember how to live on a budget. I'm a great saver, however not-so-great in the money management dept. But I'm going to have to get great at it, and quick, because with the no overtime rule at work, I'm not going to have much of a fudge factor.

3. Some close family members and friends want to start an investment group. I think it's a great idea and want to be a part of it. They are talking about $1,000 per person. They figure it's a good amount because it's not so much that it would destroy anyone financially in this group, but significant enough of an amount for everyone to care about making it grow. They also mentioned something about making another contribution, for like $200 several months later, but I don't know about that. Next year (the next three or so, actually) are going to be very tight. I'm not inclined to part with another $200. There's going to be a meeting this weekend, I'll have to bring up my concerns. $1,000 is my limit. I'm concerned about the changes going on at my company and how much more things are going to cost me in 2009. I'm already invested in a 401k and a Roth IRA. If I'm required to give more, then I won't join. Trust, I would be than happy to keep that $1,000 in my savings account.

4. Speaking of Roth IRAs, when do we find out what the contribution limit will be for 2009? All I can find is that it will be indexed to inflation in $500 increments. Well hell, the way inflation is right now, that would be a really high number. I budgeted for $6,000, but I'd like to know for sure.

5. I'm just overall worried. I just feel a little insecure. Even though I've made significant progress over this time last year, sometimes I feel like no matter how much I save it will never be enough. Maybe that's why I've been a little free-wheeling with the money lately.


Writing on the wall?

Had a unit meeting at work the other day and found out the following:

1. Our unit clocks the highest amount of overtime in the firm. Mainly this is due to us being understaffed for so long. But we've recently hired enough people to have a full team so the higher ups are expecting overtime to go down. Actually, they are demanding it. We are not allowed to work overtime unless it is absolutely necessary.

2. The leader of our practice sent a note to all the managers stating that we are now in a hiring freeze.

3. About a month ago the powers that be sent out a note saying they were looking at "staffing models" and performance.

Rather than speculate on what may or may not be happening, I will continue to focus on the things I can actually control:

1. Continue to be debt-free.

2. Reduce monthly expenses and unnecessary spending.

3. Increase monthly saving amounts.

4. Update resume.

And that's it, really.

So much for housing becoming affordable

Congress approved a deal to bailout homeowners in trouble with their mortgages. Exactly how this is going to happen without major tax hikes, I have no idea. Personally I was hoping this wouldn't happen so that, if anything, allowing home prices to fall would bring them back to affordable levels (meaning what they cost back in 2000 in my market). With this idea, it seems that housing prices would stay flat where they are. That coupled with the issues Indy/Freddie/Fannie are having (which, again, leans towards tax-payers bailing them out as well, and possibly higher mortgage rates) and I feel defeated before I even got started with buying a home of my own.

All this doesn't change my course though. I'm going to move forward with saving diligently for the next three years and educate myself about buying/owning a home. It may come to pass that home ownership isn't for me, and I'm perfectly fine with that. But I want to be in the financial position to make a purchase if I want to. The current financial climate seems to be making that position more difficult to attain.

Speaking of home ownership, I've added another blog to my list: I Hate My Developer. Arguably one of the most honest, well-written blogs about buying/owning a home.

You know what?

I miss my bi-weekly manicure and brow wax. Before I paid attention to my finances, I used to get a french manicure and brow wax at an upscale spa twice a month. I figured those were two things that helped me look pulled together, and they did. However once I realized my debt was out of control I cut back on spa visits to the point of eliminating them. There are one or two occasions where I'll get my brows waxed, but that's it.

I've been thinking about it lately and I miss those treatments. If I could afford it, I'd bring those treatments back into the budget because they made me feel a little better about the way I looked. I could do my nails myself, but they never look as good. I won't even attempt to do my brows myself and I've tried to find places less expensive, but when it comes to that, I found I got what I paid for.

I guess I'll just have to find another way to feel good about my outward appearance, because for the next few years I have some financial goals that are more compelling and important to me.

Mid-year check on 2008 goals

Now that the second half of the year is officially underway, I thought now would be a good time to do a pulse-check on the 2008 goals I laid out for myself back in January. Personally? I think I'm kickin' ass!

-*-$10,000 of my pre-tax salary went into my 401k.
This is well on track!

-*-My 401k portfolio is aligned and balanced towards my long-term goal of aggressive growth and diversity.
Yep! But as I mentioned in a previous post, while my portfolio is balanced and aligned, I've lost a significant amount of money because of it. I'm hoping this will all balance out over time.

-*-I've evaluated carefully whether or not to keep my Roth IRA with my bank or move it to another broker like Vanguard or T. Rowe Price. In the end I made the best possible decision that aligned with my long-term goal of growth and keeping my overall retirement portfolio diverse.
I ended up moving my Roth IRA to Vanguard who's fees are much lower than the bank I was with before.

-*-I contributed the full amount of $5,000 to my Roth IRA.

-*-I've stayed out of debt.
So far so good!

-*-I reached $10,000 in my unemployment fund, then put it in a CD-ladder.
Assuming all goes as planned, I will reach my $10k goal by August 1! I'm in the process of shopping for the best CD rates.

-*-My health care/deductible fund reached $1,500. That's enough to cover my deductible for the year and one hospital copay. Let's hope I don't need it! I choose to save my money this way instead of going with an FSA because if the funds go unused by the end of the plan year, I would have to forfeit them. This way, if I don't use them, I can put them in a high-yield savings account to earn interest and will be the seed money for the following year's deductible. Makes sense in my head, anyway.
Done! This year, my employer will be offering an HSA, which allows you to rollover any unused funds to the next year. I could effectively use this to save for medical costs for retirement. I'm in the process of researching if this would be of benefit to me.

-*-I set aside $1,000 for travel this year. Just in case. The only thing that may come up would be an extended weekend to visit a friend. If that money doesn't get used this year, it will be seed money for next year's travel fund.
Done! So that weekend with the friend hasn't happened yet, however I can tell you anything you want to know about Southwest Ohio thanks to a new long distance relationship I got into this year. ;) I haven't used the Travel Fund for that yet, but I will moving forward, as well as limiting my travel to keep costs low.

-*-I saved $7,000 towards the purchase of a new computer and kick-ass monitor.
Due to current market conditions and my new-found interest in possibly owning a home in about three years, I decided to retool this goal by increasing the savings by $1,400 and allocating $6,000 as my 2009 Roth IRA contribution and the remaining $2,400 to be used for a new, MUCH less kick ass computer or upgrades for the one I have now. While I'd love to have a new machine and monitor (I REALLY need a new monitor. Jesus Christ must have used the one I have now to research the ten commandments. Seriously.) it's just not as important to me as saving as much cash as possible. In three years I want to be in the position to take advantage of buying a home if I'd like. I know I'll regret it if I don't. Especially if the real estate market ends up tanking as much, and as long, as some people say it will.

So I'm pretty much on course. The big goal right now is finishing up my Unemployment Fund and staying focused and disciplined enough to save as much cash as possible by the end of the year. The current economic climate demands it.

Forget what you heard about saving for retirement

You know how all those online calculators and personal finance books tell you that you'll need to replace only about 70 to 80% of your income for retirement? Hewitt Associates says forget it. You are going to need to replace a lot more of your income. And by a lot, they mean about 126%.

I'll leave you alone for a minute so you can let the marinate for a while.

Still with me? Good. Here's more:

Hewitt Associates is more pessimistic than most. New research that the consulting firm plans to release Tuesday projects that workers will need to replace, on average, 126% of their final pay in retirement. The study, based on 1.8 million employees with 401(k) plans that Hewitt administers, says only 19% of participants are on track to meet their retirement needs. About 67% of workers are expected to have less than 80% of their projected needs.

Sheryl Garrett, founder of the Garrett Planning Network, agrees that typical retirement replacement guidelines "just don't go far enough when you factor in the huge health care responsibility that is shifting from the employer's shoulders to ours at retirement."

Personally, I always calculated that I would need at least 100% of my income in retirement, hence why 20% of my pre-tax income goes into my 401k. I believe I will need at least that for:

1. Health care. Seriously. In 30 years, medical benefits for retirees from your employer will not exist. That means a huge jump in health care costs. I guesstimate that in 30 years, I can expect my health care costs to be close to $500,000. Sounds like a lot, because it is. Also...

2. I'm single with no children or spouse to look after me. That means I'll have to pay someone to do it.

3. I do not own a home. If I don't buy one and have it paid off before I retire, that means I will be renting during retirement.

So while that 126% sounds like a lot, it makes a lot of sense to me and my situation. I think at this point if they want more people invest for retirement, then they need to talk very clearly about fees and the long-term damage it can do to one's portfolio. But that's just me.