It’s Payday!! Non Budgets & Allocations…See Where My Money Goes.

The moment I have been waiting for all month…It’s payday (technically the 20th)!!

Image result for you get a car meme

Ok, Ok – It isn’t quite that much that I can afford to buy you all cars.  🙂

As I have mentioned in previous posts, I get paid only once a month (minus the few month shit show I cursed upon myself).  Because of that, payday is like Christmas around here.  On the eve of, you can often find me baking cookies, caroling from door to door, and waiting for ol’ St. Nick to electronically deposit my check as the clock strikes midnight.  It’s a BIG deal!  But once it’s here, what  do I do with my hard-earned cash?

Well, let’s start with a little confession...I don’t use a budget.  I know, I know – how can I write about FI without a stinkin’ budget?  It’s just not my style.  But, don’t you worry, my finances are not in complete anarchy.  I have a non budget system that has worked pretty good so far and it all started with tracking.

At the end of last year I began tracking my spending.  Every dollar I spent was put into my handy-dandy spreadsheet and tallied up at the end of the month.  I thoroughly enjoyed filling in each blank spot (yes, I’m a nerd) and seeing the grand total automatically tallied at the end of each month.  What I didn’t enjoy was seeing how much money I was wasting shopping all high falutin at Whole Foods and enjoying lunches out with my day drinking gals – the flight attendant life creates many occasions to sip wine at 11am 2pm on a weekday

Personalized Custom Engraved Flight Attendant Good Day, Hard Day, Don't Ask Funny Stemless Wine Glass, Beer Mug, Pilsner Glass, Coffee Mug
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Life was expensive!  Money was pouring out of my wallet, into my glass, and down my gullet.  You see, when your job is extremely flexible, you can pretty much find any reason not to go.  Weather sucks, dog is lonely, boyfriends neighbors sister has a birthday…all great excuses to be lazy.  With a lazy girl schedule comes an emaciated paycheck.  Though I wasn’t scraping bottom, I knew that my days out were time that could better be spent working and making money instead of eating it. Continue reading “It’s Payday!! Non Budgets & Allocations…See Where My Money Goes.”

Savings Bonds – To Cash or Not to Cash

Savings bonds.  The bummer of all gifts when we were kids.  It wasn’t cash, it had 1/2 the value that was stated, and we were forced to lock them up in our parents safe deposit box.  Ugh.   Well, like the little interest we shared back then – the bonds having none and me having less than none – we have both grown exponentially over time.

I have me a stack of 11 crisp Series EE savings bonds ranging from purchase dates of September 1991 to September 2000…any guess what month my birthday is?  All of my bonds are $50 and as of this month add up to  $727.18  in value.  That includes $452.18 in interest!   Here is a break down on the numbers…

Screenshot 2016-08-26 at 10.37.11 AM - Edited
via Treasury Direct

Who knew my little collection of bonds would grow to such a number?  Crazy!  But is it crazy good or crazy bad to keep them??

Continue reading “Savings Bonds – To Cash or Not to Cash”

The # 1 Investment Advice I Didn’t Follow

Though index funds are the #1 piece of investment advice that most follow, including myself, that’s not where this post is going.  Let’s talk about the other main piece of advice…
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Seriously, my decisions in the past few months have led me to quite the predicament for the upcoming month.   You see, up until 4 months ago, I only got paid from my airline gig once per month.  It was a choice I made years ago when I wasn’t working much and didn’t want a “draw” on my paycheck at the start of the month (5th) in the event I couldn’t cover it at the end of the month (20th).  We’ve all heard about writing checks your butt can’t cash – same idea.  
For those who aren’t familiar with what a draw is, in our case as hourly employees, we are paid for a certain amount of hours at the beginning of the month regardless of if we have worked them or not.  When the second check rolls around they calculate our total pay for the month then deduct the draw we had at the start of the month.  It is a great option for those who need help budgeting or for those that enjoy the twice monthly pay…I needed neither.  However, what I thought I needed was to get a hold of my money earlier each month so I could invest it sooner.  

Enter Dollar-Cost Averaging…

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According to Investopedia, “Dollar-Cost Averaging (DCA) ) is an investment technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high. It is also referred to as a constant dollar plan.”

My thought was if I could get my paws on some dough earlier in the month (and more frequently than once a month) I would reduce the amount of volatility and risk my money was subjected to by giving myself better odds at timing the market properly.

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And that is all fine and good – but the amount of money I am investing isn’t worth the amount of hassle my twice monthly paycheck turned out to be… 

As a once-a-month-paycheck kinda girl, my finances were on autopilot.  I knew how much was going to my 401K (20%), HSA, ESPP (Employee Stock Purchase Plan), Savings, Investments, and Checking account.  Whatever was leftover went directly into my savings account never to be touched again.  Easy peasey, had I kept it that way.  But once I switched over to a bimonthly pay schedule the shit really hit the fan!

Here is how it works – I get paid this month for the hours I worked last month.  So in July I am being paid for Junes hours.  With that in mind, I thought that meant they took my 5th paycheck of the month out of the same paycheck for the 20th.  I was wrong.  They took the money I was paid on March out of April 20th’s paycheck.  Example:

  • March 5 – draw $2800 from April 20th pay
  • March 20th – Pay from all hours in February
  • April 5 – draw $2800 from May 20th pay
  • April 20th – Pay all hours from March minus March 5th draw of $2800
  • May 5 – draw $2800 from June 20th pay
  • May 20th – Pay all hour from April minus April 5th draw of $2800
  • June 5 – draw $2800 from July 20th pay

Confused?  I was.  In fact, when I was paid that February 20th paycheck, I called payroll and told them they had forgotten to withdraw the money I had gotten on the 5th.  Yeah.  Right.  Free money?  That never happens (or does it…stay tuned).  She explained it was a draw for the future paycheck and, after her going over it a couple times with me, I pretended to know what the heck she was saying and hung up in agreeance.  I decided I would understand it in due time but, alas, it wasn’t until this month that I truly understood her explanation…more on that in a bit.

So – with a twice monthly pay schedule in place, I now had to change my direct deposit allotments as well.  If I had allotted $300 per month to my ESPP, I now had to change my allotment to $150 so each draw would now equal $300 for the month.  If not, I would continue to get $300 per PAYCHECK in turn purchasing $600 a month in my airlines stock…even at a 10% discount that thought was unappealing.  So I went through and changed all of my direct deposits and automatic withdraws to meet the new pay structure.  Done?  No…  The transition was anything but seamless and had me dodging curve balls for the next few months.  Here is how it all went down…

1.  Somehow, something glitched in payroll and they deposited the leftover savings to one of my accounts but not the one I had allocated it to. 

2.  Then, something went wrong with my ESPP and they didn’t deposit anything!  When I called to inquire the lady couldn’t figure out why it hadn’t been deposited but assured me the next month it would…um, so yeah, I missed out on a whole month of contributions.  

3.  Then, one of my other direct deposits started depositing DOUBLE the amount of deposits and essentially giving me free money.  Yes, free money!  I checked my pay stub against the bank deposits and there was extra money unaccounted for.   *This has since been straightened out but, had I not called again, who knows how long it could have gone on for!!  

4.  And, to top it all off, I had to keep on top of delegating my investment fund monies into the proper accounts now 2x a month instead of the one.  Ugh…first world problems  😉

So, yeah, all of this time and frustration was not adding up to saving me from the volatility I was trying to avoid – whether it were my money or my sanity, I was losing it big time.  I needed to smooth the curve once again.  And so I did.  After a few months of experimenting I decided the 2 paycheck deal wasn’t for me.

On June 20th, I set out to undo everything I had done and went back to the single pay period that I had been so used to.  I put in the request and watched the confirmation number pop up…and I immediately relaxed.  The ride of uncertainty was over –  I was home free!!!  For the past 30 days I have been looking forward to my July 20 paycheck.  I planned ahead with a small cushion knowing the July 5th paycheck would no longer be deposited.  I just had to make it through 30 days and I would be rolling in it.  All was going swimmingly…until the 20th came around and I realized my fatal financial flaw…

 I. Forgot. About. The. Draw.  
 
UGH…Remember that nice lady from payroll that I had spoken with on the phone?  Well, I didn’t.  When July 20th came around, I excitedly typed in my bank name and password and scanned the page for my newest payroll deposit.  There was none.  $0.  Zilch.  I forgot to deduct the $2800 from my monthly pay that I had received on June 5th…in turn, I came up short for that account.

  • June 5 – draw $2800 from July 20th pay
  • June 20th – Pay from all hours in May minus May 5th draw of $2800
  • NO JULY 5 PAYCHECK
  • July 20th – Pay from all hours in June MINUS June 5th draw of $2800.
 
Shit, double shit.  Thankfully I had enough to cover all of my usual savings accounts – HSA, ESPP, Savings 1 and 2, and my investment account.  Basically, though my paycheck was not a large one, I effectively saved 100% of it in those accounts.   Unfortunately, that left nothing to go into my checking.  Nothing.  Not a dime.  I had prepared with a narrow margin for missing the 5th paycheck but I had not prepared for missing that one PLUS $2800 from the next.  Adding insult to injury, in July I had some major expenses such as replacing my car radiator ($434), property taxes ($247) that needed paying, and a round trip ticket to Hong Kong that I couldn’t pass up (seriously, $461!!).  All together hat’s a lot of mazuma!!
So what did I do?  First, I flushed with heat and cursed my stupidity.  Next, I took my $940 in cash reserves (AKA an emergency fund) and deposited them to my checking account.  My taxes needed paying and I wasn’t going to incur a late fee.  Then, I took the $800 in my travel fund and transferred it to my checking so I could pay off my entire June statement balance which, thankfully, was only $251.69…momma don’t pay interest.  After that, my credit card balance dropped to $1041 and, it pains me to say, there it will stay until my next pay period on August 20th.  I refuse to pull from my savings and, since the charges were made after the closing date of the last statement, this balance is technically not due until 8/25.  Phew!!  In the meantime, I now have $1200 to get me through the next month including a 4 day road trip to Washington DC with my 93 year old Nana AND a wedding weekend in Lake Geneva, WI… guess I won’t be replacing my box of wine this week!  😦
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No judgment…via

I have painfully relived this past month for you in an effort to shine the spotlight on the fact that complicating things for a few pennies often times is not worth the time it takes to sort it all out.  Make your life as simple as possible.  Do as I say and not as I did…

Automate everything that you can.
Don’t trip yourself up on little distractions.  

 

Keep it Simple Stupid! 🙂
 
** Have you tried to simplify something that wound up having the complete opposite result?  Please leave a comment so we can wallow in our miseries together…I can’t afford to do much else!  🙂  **

 

Thanks, Money Gods!

One of my money mantras that I constantly repeat to others is simple yet effective:

A MILLION DOLLARS STARTS WITH ONE CENT. 
So in following this, whenever I see a penny on the ground I pick it up. Not only do I pick it up but I also say “thank you” out loud and in earnest.  Of course, if it’s a nickel, dime, or quarter my “thank you” is at a higher decibel and excitement level.  It may be embarrassing to those around me but I don’t much care – this is my form of gratitude to the Money Gods and it feels important to show my appreciation out loud…and let me tell ya, it works!  Tonight they showed THEIR appreciation for MY appreciation by putting me in the way of this little green monster…
Bubbas paws – not mine. 😉

 

Um – yeah – I let out a little whoop!

And this isn’t the only 10 spot I found this summer. A few weeks back after a long and grueling hot hike, I spotted another $10 while crossing the street. Similar to today’s, it was sitting there as if it had been placed just for me!  How exciting!!

So there it is…Be grateful for each and every cent and you will be rewarded with money from the sky.

**  Have you found any bonus money lately?  Do you have a money mantra or ritual you follow?  Drop a line and share your story! ** 

7 Ways To Achieve Financial Independance

I am frequently asked how prioritize my savings.  And I frequently ask myself if I am taking the best course of action.  Well, I think the proof is in the pudding.  

Last year was my first introduction to the FIRE (Financial Independence and Early Retirement) movement.   I’m not sure which blog or blog post I read that lit my own fire, but I know the result was to set some new goals.  First on my list was to challenge myself to max out my 401k.  That was a big undertaking – it isn’t like money was falling from the sky…


It would have been much easier if I had had this stroke of genius at the beginning of the year, however, it took my mind some time to wrap my brain around socking away 18,000 dollars!!  That’s a lot of cabbage!!  I was already contributing 10% but in the last quarter of 2015 I had to up that to 30% to make it work out.  My new goal amounted to a few tough months but they were totally worth the sacrifice in the end.

With the new challenge, I also began saving more in general.  I started unplugging things in the house, I stopped being wasteful of food and other resources, I stopped buying stuff, and in November I opened an investment account with the extra savings.

Here was my financial plan of attack.  There are may ways to prioritize so by no means is the end all and be all, but here is what I suggest:

  1. Get an emergency fund together.   If you have debt as well as no savings, start small with your savings $50 a month or per paycheck until you reach $2k (I know this is double the Dave Ramsey amount) and put the rest towards debt.   Keep this money in a regular bank account or somewhere with easy access should you need it.  Don’t worry about the interest rate and do NOT invest it!!  AFTER your debt is gone – I think it is important to have at least 6 months worth of you monthly INCOME stashed away.  Not 6 months of living expenses.  If you were to lose your job or get hurt, you want to be able to live for 6 months as if nothing has happened to include continuing to build your savings.
  2. Contribute to your 401k.  If your company offers a 401k and a match, meet their match to 100%.  If they don’t offer a match, contribute at least 10% regardless.  If you can’t manage 10% start at 5% and work your way up.  If no 401k is offered then start an IRA of your own – see #5.
  3. If you have debt – start paying it off in earnest.  Pay at LEAST the minimum amounts but add every extra bit to get rid of this monkey on your back.  If it is a lot of debt, call the credit cards directly and try to negotiate a lower balance.  TIP:  If they hear you are thinking of transferring your balance after receiving a competitors 0% balance transfer offer, they will play ball so you better learn to catch! 🙂   Once you are done paying them off, try to only buy what you need.  I prefer to say don’t use credit, but credit is not a bad thing if you pay it off every month in full.
  4. Open an investment account and start to build a nest egg.  Start small – $50/month.  Invest in low cost index funds.  As I already stated, I am somewhat bias towards Vanguard (VTSMX or VTSAX) but also have accounts with Fidelity, TRowe Price, and Schwab.  Opening these accounts may require a minimum deposit so build it in your savings account until you have enough.
  5. Open a Roth IRA (if you qualify) – try to max it out!  $5500 as of 2016
  6. Go back to your 401k and max it out.  18k as of 2016
  7. Go back to your investment account and save save save!!
 
Thing you shouldn’t do that I fell victim to – individual stocks.  There is no point.  The index funds will usually out perform in the long run without fear of losing it all.  Simplify your investment plan so it can run on autopilot.  

That’s it!  I know it can be overwhelming, especially if you have step #3 to deal with, but it can be done.  Just know it will not happen overnight.  They say the first million is the hardest – let’s just start with $100.  Then $1000, then $10000.  You will see how quickly the ball will roll forward.

*** What is your plan of attack to saving/investing?  Still working on debt?  Do you have any tips for other readers on managing debt?  Feel free to leave a comment and share your thoughts! ***