Not Much to Say

It always seems to happen to me. I have a lot to say and a lot to share. Then I come to a point in time where I have a lot of thoughts by no way of getting them from my brain to paper. My husband and I are almost done with our first successful month of tracking most of our expenses. He tends to use cash more than I do, so his records aren't as accurate. I ask him about expenses, but only ever few days so some of the nuances get lost (e.g. was it $2.19 or $2.79).

Many bloggers I admire have specific topics they write about, whether it be weekly financial reviews or book reviews. I admit I'm a paradox. On my annual reviews, often one of my strengths is how detailed oriented I am. Yet in my personal life, everything is organized to a point - then it's all an amalgamation of confusion. I wish I had the discipline to be 75% organized in my life, rather than the 40% I currently am. I'm lucky since I have a good memory and cushions (e.g. extra money in my checking account) which usually keeps my disorganization from costing me money.

I have seriously considered delving more into Getting Things Done. I love lists and love crossing things off my list. But I lack the patience to do more research into what Getting Things Done entails. From what I know, you just make lots of lists so you don't need to make your brain remember things anymore. But what if my brain likes to remember? Maybe it will free my brain up for more creativity. I have accepted that I'm not a creative person. It's not that I don't have new ideas, but I have a hard time designing things. Maybe it's incorrect to categorize myself as uncreative, but more accurate to say that artistic endeavors (drawing, music, etc.) are not my strong suit.

On a side note, can anyone advise on how I can put the tracking bars onto my blog, showing my progress on my 3 goals? I know everyone has them - I just am not computer savvy enough to figure out how to do it.

Failing Miserably at My Goals

The first month of the year isn't over yet, but I can tell that I'm failing to meet what should be my monthly progress on my annual goals. It's sad to be so early in the year and know that I'm going to need to catch up a lot of lost ground in order to be successful. After the end of the month, I plan to do a formal review showing my exact progress. I wish I could say that I had progressed as far as I should have on at least one of my goals, but I don't think that's the case.

This month has been a tumultuous one, with some potential major changes for 2008. I'm not sure if I'll be living in San Francisco for the whole year (I'm already on a project where I travel out of town on a weekly basis). It's a bit too early to say what kind of changes may be in store, but my husband and I want to ensure that we take advantage of our youth - while still living responsibly, of course. This year may not be as frugal as I would like, but it should be exciting.

A Rediscovered Treasure – The Local Library

When I lived in NYC, I found one way of saving on my entertainment costs was to go to the local library. Since the library was only 2 blocks away, it was very convenient to go. Now I need to get into my car to go to the local library, but one benefit is I discovered there’s a smaller less yuppie farmer’s market outside of the main library in San Francisco on Sundays. Here are some reasons I like the library.

1. Most libraries are part of a library system and you can borrow books from one library and return the item to any other library in the system.
2. You can often order items to be put on hold for you at your local library – this means there is a huge collection of books at your fingertips. My library lets me order books online and will email me when they arrive.
3. You can renew items online or over the phone, saving a trip to the library.
4. Most libraries have free internet (this is a very popular feature, so make sure you get to the library early to sign up for a half hour or hour increment – I would not recommend visiting any financial related website on a public computer).
5. At my local library, I can order books that the library does not yet own, ensuring that I will eventually get to read those items. I also have the ability to put my holds on vacation if I’m not going to be around for some time.
6. Libraries have DVDs that you can borrow. If only I could get my husband into this, we could get rid of Netflix!
7. Libraries are a great resource for a lot of things. The main library in SF has some great career sections as well as sections focused on specific demographics.
8. I love reading recent magazines at the library. This is great for me since I can read it and not have to worry about disposing it (I hate throwing magazines away and always think I sohuld bring them to the gym or donate them to a hospital).

I hope my readers also find joy in this public service that their taxes help fund!

Light to No Posting In the Next Few Days

Readers, Please expect light to no posting in the next few days. This weekend I'm visiting some friends in the LA area.

Our Attempt at Tracking Expenses

You hear over and over again in the pfblog sphere and in financial planning articles that you need to track your expenses to get a handle on where your money is going. C and I tried doing this in August, but it was a dismal failure.

This January we decided to try again. I have an Excel spreadsheet that I try to update every night, or at least every other day. It lists name, item, cost, payment method, and a description of the item.

For example, an item like rent is categorized as being spent by the both of us. One area we're having trouble for is accounting for expenses that are reimbursed by our employers. I've been on the road the past few weeks, so I've been accumulating taxi, hotel, car rental, and air travel costs. What we've done so far is not tracked those items since they're fully reimbursed by my employer. But I do track my meal expenses despite my meal allowance since I get to keep whatever I don't spend.

We're halfway through the month and I'm proud to say that we've been able to remember to record everything thus far (at least that's what C has told me). Hopefully we won't be tripped up this weekend since we will be out of town.

It was a pretty hard road to get C to agree to track our expenses. I first brought it up soon after we were married and he was vehemently against it. Throughout our marriage I've slowly influenced him to be more conscious about our spending and to be more willing to do things that he once couldn't believe people would do.

When we were engaged, I showed C an article about Jonathan at MyMoneyBlog and he couldn't believe why someone would want to write a blog about their finances. Actually when I showed him that article, I had already started this blog, but I went on a hiatus after our wedding since I wanted to ensure that he was in agreement with it. He was, it just took some slow steps to work up the courage to tell him about it.

I guess the moral of this story is that you can influence your partner to your way of thinking, but don't try to do everything all at once.

Joint Goal

My husband and I have one major joint goal this year – that is to save $15,000 to go on a 4 week vacation. This vacation is going to span multiple countries and it’s a major vacation we want to do before we have kids in a couple of years. C and I have been talking about this vacation for sometime and only recently did we come up with an estimated dollar amount of what we need to save. $15,000 is a significant amount of money. Our estimate has some cushion for currency exchange fluctuations. One area where I have always struggled with is letting my savings dissipate. If we spend less in one area, we usually just spend it in another area and don’t see any real benefit. C and I are going to do our best to save the $15K by cutting our spending in other areas and putting it towards this goal. C always says that we work so we can enjoy our money and we see this as the vacation of a lifetime.

It’s amazing the number of vacations C and I went on in 2007. We went on quite a few vacations to attend the weddings. We counted anything as a vacation if we had to obtain a hotel room for the trip. Unbelievable to me, we actually went on 10 vacations. Several of these vacations were only for 1 or 2 nights for friends’ weddings. We also each went on a single sex vacation with friends – I counted those two trips as one trip. Another trip was completely free from lodging and travel expenses (other than gas) since we drove to that destination and I was able to use points to get us a free hotel room. Since I travel quite a bit for work, I am often able to score personal vacations for little or no cost. So the total cost of our 10 vacations was . . . just over $4,000. When you consider the fact that airfare was involved in several of those vacations, I think that's a reasonable amount of money. I don’t track our expenses that closely, so this is just a ballpark of how much we spent.

Within those 10 trips, there were a lot of free hotel stays (I did not count the trip where we stayed at my friend’s house) and buy 1 get 1 free hotel stays (this was accomplished due to my hotel status). When I change jobs to a less travel intensive project, there is no way we’d be able to vacation so much with so little money!

I might be able to subsidize some of our $15K trip with hotel points and bonuses, but it’s going to be tough. Airfare alone for the both of us will probably be several grand since we’re planning on going to another continent and we will need to take a few more plane trips to get to the different countries we want to visit.

Wow, writing all of this down makes it seem really extravagant. While I do have a goal of retiring early, I am a big believe in conscious spending. You need to spend money on what makes you really happy, rather than letting it slip through your fingers. Lest you think we are living beyond our means, C and I have minimal debt and we do a good job with our savings. Our only debt is less than $10K in student loans. We both maxed out our 401Ks for 2007 and we’re waiting to do our taxes before determining how much we can contribute to our Roth IRAs. I am almost positive we are below the income limit, but I want to do the taxes to be sure. We also have an emergency fund and a house down payment fund.

How I Became Frugal

My experience with frugality began when I was living in NYC. I was a poor graduate student with family loans, educational loans, and sky high rent. In my prior life, I was a pampered college student that could meet all of my needs and most of my wants, courtesy of my parents.

Living on my own with no income was an eye opening experience. I remember passing up the jazz club with friends since the cover was $15. I wanted to go, but I remember thinking that I needed to make my money last as long as possible. With rent at $1,000 a month and less than $10,000 in the bank, I wasn't sure how I was going to make it through the year.

This was an important time in my life. Had I transitioned from parental supported college immediately to the working world, I may not have gained as much appreciation for the difficulty of managing money and making money. At this time, I found the dollar stretcher, a website that has been an invaluable resource in helping me find ways to save and stretch my money.

Of course, I can't say I'm the epitome of frugality. I think it's all about the choices and tradeoffs that we make. My husband and I are planning on spending an extravagant amount of money on a vacation later this year. We are doing out best to minimize waste in our everyday lives - both for our wallets and the environment. We want to consciously spend our money on items that will bring us happiness rather than let it slip away.

How I Increased My Salary by 37% in One Year Without Changing Jobs

This year, I am very proud of the fact that I was able to increase my annual salary by over 37%. I blogged about my 18% raise earlier, but that was only a portion of my salary increase for 2007.

My company does its year end raises in the first quarter, so I didn't obtain my raise for my performance in 2006 until 2007. I had been unhappy about my salary at the company for some time and I let my bosses know about it. I was not happy with my year end raise for 2006. Although it was more than the 3-4% cost of living adjustments most people were getting, I knew that I was performing much better than average and that I was underpaid. When my boss told me about my pay increase, I thanked him for letting me know, but I also let him know that I was not happy about my current salary. As a high performer for my level, I expected to be paid as a high performer (rather than as an average or low performer).

I kept open communication with my bosses throughout the year. My work performance was fantastic throughout this time. One of my supervisors broached the idea of an out of cycle adjustment - basically a pay increase that was not tied to our annual reviews or promotions. Of course I embraced this idea with open arms, but this took a long time to happen. In fact, I think we first discussed an out of cycle adjustment in 2006, knowing that my year end salary increase would probably put me on par with or even still below my colleagues at my level, rather than near the top. In the end, it took almost a year for the adjustment to be presented and approved. By then, I wasn't expecting anything and I was hoping that my promotion would eradicate any salary inequities.

When I was promoted later that year, I got a good salary increase to go with it, at a higher than expected level.

Here's a summary of how I was able to increase over 37% from January to December. Remember it's a lot easier to get a large jump in salary when you start at a lower salary compared to your colleagues!

1. I started out underpaid and overperforming compared to those with the same job duties.
2. I got a year end adjustment for 2006 performance that was above what an average performer received, but it did not make up for my salary inequity.
3. I did not let my unhappiness with my salary affect my performance.
4. I kept up open communication with my supervisors, helping to lead to an out of cycle adjustment. I talked with my supervisor about what my options were for getting a fair salary in an very open and honest fashion. We even discussed that I might need to leave the company in order to get market value, but I never applied to any jobs last year since I was still very interested in further growth at my current job.
5. I helped the company increase revenue. This was key since there was a fair amount of revenue that could be directly attributable to me. This was rather unusual for someone at my level and it came right around when I was promoted, helping me to earn my atypically large salary bump with promotion. Anytime you can show your boss solid numbers of how you earned the company more revenue or reduced costs, I think that's merits for some sort of reward for you. Revenue is usually looked upon more favorable than cost reduction since you can only reduce costs so much.
6. I was patient and was working there with a lower than market salary for over a year. Sometimes this works to your advantage, sometimes this doesn't. In my case, it paid off with more money, a promotion, more responsibility, and more confidence.

I'm sure others have tips on how to increase your salary. Of course, for most people, finding a new job with a competitor is a sure way to increase your salary. How have you been able to increase your salary?

Carnival of Personal Finance #134

Mrs. Micah did a wonderful job with the most recent edition of the Carnival of Personal Finance posted here. I was honored to be included and I found a huge spike in my subscriptions that day. If you're a new reader who found me through the carnival, welcome!

For those of you who are new to the world of blogging, a carnival is collection of blog posts by different authors. It's a good place to discover new blogs.

I've had this blog for almost 2 years now, but I've taken a few hiatuses. I could bring you to an old intro page about me, but so much has changed, like getting married. I've also experienced a HUGE salary increase in the last year and became the breadwinner. I forgot to blog about how my husband regained the title from me late last year. :) Right now everything I put on here really is a jumble of thoughts, but there's a lot more I want to share. I plan to post more about career and salary since that's one area where I've been able to succeed in the past year (after some time of being very dissatisfied with both career and salary)

Well welcome to my new subscribers/readers and please visit Mrs. Micah's to look for other interesting posts!

If you want to subscribe, please click here

Monthly Savings Needed for My Early Retirement Goal

I used this nifty savings calculator at one of my favorite financial websites, Bankrate to determine what my monthly savings needs to be in order to hit my $25,000 early retirement goal for 2008.

The calculator is great since it allows you to play with the interest rate.

I inputted in the amount I have today, my goal of $25,000, my time horizon, and tried out different interest rates. The calculator tells you how much you need to put in to be on track. I found that even with a 9% interest rate, I still need to accumulate $1,212 a month! Yikes, that is a lot of money!

So far I have added $425 to the account, but most of that is spill over from December. I need to be really serious in order to make this a success!

Wasting Money on Food

I hate it when I spend money on something that I don't need or really want. Normally I love going to restaurants and having leftovers, but not when I travel. I don't have a fridge in my room and it would be considered pretty extreme to bring my lunch to work when I'm traveling, staying at a hotel without a fridge, and pocketing a hefty meal allowance ($64/day).

Have you ever heard of the phase, "your eyes were bigger than your stomach?" Well today my ears were bigger than my stomach since I placed a pick up order. I could have ordered the $9 10 oz appetizer portion, but I was afraid that it wouldn't be enough. So I decided to opt for the $11 16 oz dinner portion. I definitely left more than half of the food untouched! While it's only a small mistake, it galls me since I wasted both food and money!

Next time I'll remember that a smaller portion will usually suffice for me, especially now as I'm getting older and my metabolism slows.

Why I Want to Retire Early

One of my lifelong goals is to be able to exit the full time workforce early - in just 7 years at age 35. My husband and I are planning on having kids in a few years and I would like to have the freedom to stay home with them. In my opinion, how you were raised makes a big difference in how you want to raise your children. When I was growing up, I never felt like I had much support from my parents, despite the fact that neither worked the long hours that my husband and I work (they both normally got home by 6 pm). We even had the dinner together as a family most of the time. Of course, my parents were always there providing for my basic needs, I just felt like I didn't get to spend much time with them.

Thus it's very important for me to be able to spend time with my children. In order to do so, I'm trying my best to think about how I can sacrifice now to spend time with them in the future, when they exist.

I came up with a goal of having $25,000 in my early retirement account by the end of this year. Of course, I'll need much more than this to retire early. My husband and I estimate that we would need at least $60,000 in annual income in addition his salary coming from non-retirement accounts. The details are still fuzzy, but I know I need to acquire as many assets NOW. I came up with $25,000 since I thought that was a do-able goal without taking too much from the joint goals my husband and I have. My husband and I are still planning on saving as much as we can for our home down payment, contributing the max to our regular retirement accounts, and fully funding a Roth IRA, if we're eligible. There's a good chance that we may exceed the income threshold and be unable to contribute next year.

Here's where I'm hoping that $25K will come from:

$9,000 current balance (give or take a few hundred, depending on the market)
$1,200 salary contribution ($50 each paycheck)
$4,000 per diem contribution (Allowance when traveling, mentioned here
$2,000 from online endeavors
$1,000 investment gains (anyone have advice on where to put this? Right now it's in the S&P 500, which is not doing so hot)
$3,000 bonus (this is a stretch - my group is doing great, but my company is not)
$2,000 gym bonus (I have worked out a deal with my husband where he will give me bonuses for going to the gym more than twice a week - this dovetails nicely with my goal of running a 1/2 marathon)
$22,200 Total

The question for me is where is that other $2,800 going to come from? And if I don't get the $3,000 bonus, where is that $5,800 going to come from?

One potential source of additional funds is going to the gym more, but I need to be honest - I don't like to exercise that much. That's why my husband agreed to the incentive!

I'm hoping to increase my online income more than $2,000, but that's pretty difficult. This is an area where I think it takes a lot of effort in the beginning with little or no payoff. In the end it can really have a snowball effect. Right now I can imagine myself getting a tutoring job, knowing that I could probably clear $25-$45/hour. But that would really cut into my free time and it would require one of my most dreaded words "commitment". My job is somewhat unpredictable. Some weeks will be slow and I'll only work about 30 hours, but that's pretty rare. On average, I think I work 50-55 hours, so I don't want to commit myself to something that may impede my primary income.

Does anyone else have ideas of where I can come up with "additional" income? Be on the lookout for a future post on some of my ideas for online income (this is going to be pocket change for most of you, but I think starting small helps).

Thoughts on the Roth 401K and AMT

Recently my company announced that they would be offering the Roth 401K to all employees. I was very excited about this since I had contacted HR asking if they could make this offering available. At first I thought that there was no question that I should contribute and contribute the max to the Roth 401K. Now here are some things I'm considering. I don't have any of the right answers, so if anyone out there has experience or more information on this topic, I would appreciate it.

1. Contributing to a Roth 401K vs. a regular 401K would reduce my take home pay since the regular 401K is a pre-tax deduction while the Roth 401K is an after tax deduction. I should calculate how much this will reduce my take home pay since C and I are aggressively saving to buy a home.

2. Since a regular 401K is an pre-tax deduction, this reduces our overall AGI (Adjusted Gross Income). Does this have implications on whether or not we will have to pay the AMT (Alternative Minimum Tax)? The AGI is your adjusted gross income which is what your federal taxe are based on. The AMT is a tax that was originally supposed to be levied only on the wealthy, but the salary guidelines were not inflation adjusted, hence it's starting to affect more and more middle class taxpayers (I consider my husband and I upper middle class). Some good links to the AMT are here and here.

I don't know what to do and I have no idea how to figure out if the AMT will affect us in 2008. I guess if we have to pay AMT in 2007, that would be a sign that we may need to pay it in 2008, although I expect our income in 2008 to be $30K-$44K higher (I received several pay raises in 2007, but my overall pay in 2007 was probably $10K-$15K less than my ending annual salary plus I should get another pay raise for my overall 2007 performance and C received a higher than expected salary increase). I don't think we will have to pay AMT this year since we don't have a lot of deductions (I think we donated less to charity than the standard deduction), so I'm hoping we'll be safe!

13 Hours Without Electricty

Yesterday, there was a major storm in in the Bay Area. My power went out a little before 8 am, before I got out of bed, and it was out in my house until about 9 pm. One funny thing was that my whole neighborhood had their power restored about 2 pm, while the power on our little street wasn't fixed until 7 hours later. Here are some lessons that I learned:

1. Make sure you know where your flashlights/candles/batteries/matches are. I knew where everything was, but my husband had to ask me for batteries to replace the dead ones in the flashlight he used. Later he wanted to light more candles and he had to ask me where the matches were.

2. Have some food on hand that does not require electricity for preparation. I'm lucky that I had some chicken salad and bread that I had made the day before. I had yummy chicken salad sandwiches for breakfast, lunch, and snacks.

3. If using candles, don't leave them unattended and don't get too close to the flame! I accidentally melted the sleeve of my fleece jacket by getting too close to the heat.

Other things I discovered is that I depend on electricity A LOT to keep my entertained. I worked a few hours in the morning on my laptop, then the battery went dead. I rolled some of our loose change and then I did some reading. By 4 pm, I was pretty bored and it was getting dark! For the last 20 minutes or so, I played a game on my cell phone while waiting for my husband to come home. He brought take out and then we went to see a movie, which we had already been planning on doing. When we got back, our power was restored!

Read about Baglady's storm experience in San Mateo.

Knowing is Not Enough

This morning as I was going through my blog subscriptions, I came across this post from Edith Yeung. Edith in a thirtysome year woman, living in San Francisco, who decided to give up her full time six figure income to pursue her passions - real estate, public speaking, and entrepreneurship.

I really enjoyed the quote below from Anthony Robbins.

"You see, in life, lots of people know what to do, but few people actually do what they know. Knowing is not enough! You must take action."

Two days ago I was struggling to put my thoughts related to this topic down on paper. I have read so much and gained so much knowledge over the years, but most of it is wasted since I never took action and then forgotten since it's hard for me to remember things that I'm not actively doing.

One thing I always appreciated about David Bach is that he asked you to do something in the next 48 hours related to your goal. If your goal was to buy a vacation home, you could start doing research on the area you want to buy in. The next step you took towards your goal didn't need to be big, but you just needed to do something.

So for my three goals, I am planning on showing monthly progress towards them on this blog on what I'm doing. I'm going to try to do something related to achieving these goals DAILY. I would post updates to my progress even more frequently, but I don't want to bore you guys! Here's my progress so far:

1. Earn at least $2,000 from online endeavors
In 2008, I have begun blogging and reading about how to improve my blog. I have also completed one online survey, earning me $5.

2. Get to $25,000 in my “early retirement” account.
I realized that this is going to be a bit harder than I thought. When I made this goal, I thought I had about $10K in this account. After actually looking at the account, the total is much closer to $9K. Darn stock market! I don't think I mentioned it before, but all of the money earned from online endeavors is going to this account, as well as a portion of my paycheck, any bonuses, etc.

3. Run the Nike’s Women’s Half Marathon.
My husband and I went running on New Years Day. I warmed up for 1/2 mile and ran 2 miles. We're planning on going running again today.

Hope your goals are going well in the first week of 2008!

S.M.A.R.T. Goals

C and I were talking about making smart goals for 2008. Apparently I talk about making SMART goals all the time. Whenever I start talking about SMART goals, I also ask C if he knows what it stands for. Most people think of SMART goals as being:

S - Specific
M - Measurable
A - Attainable
R – Relevant or Realistic
T – Timely

We came up with a different type of SMART goal.

S - Subjective
M - Minute
A - Apathetic
R - Regressive
T – Theoretical

Ok, so hopefully your goals are SMART accordingly to the typical definition and not our silly definition!

My Goals for 2008

One problem I’ve had in the past is not clearly defining goals. Or some of my clearly defined goals are too easy for me to reach with my ability to automate things. For 2008, I have come up with 3 goals that will be a stretch for me.

1. Earn at least $2,000 from my online endeavors. This is mostly going to be from this blog (to date, I haven’t earned anything, but that’s partially due to laziness on my part since I was offered one advertising deal that I never closed) and selling stuff on eBay and Craigslist.
2. Get to $25,000 in my “early retirement” account. Right now I have just a bit under $10,000. I plan to discuss this in further detail in the future.
3. Run the Nike’s Women’s Half Marathon.

All three of these goals will challenge me. #3 will be especially difficult for me since I’m not an athletic person by nature. When work gets really busy, exercise is the first thing to get cut out of my schedule.

I plan on creating some sort of pictorial guidance on this blog showing my progress towards these goals, so please stay tuned for more.

This year I decided to only focus on a few goals. I didn't have too many last year (I think it was 5), but it was difficult for me to have goals in so many different areas (financial, personal, exercise, spiritual), so this year I'm trying to keep it simple.

Happy New Year!

I hope everyone has a happy new year.

C and I had a low key night hanging out with friends.

I will post more about some goals in the coming weeks.

To everyone out there, I hope 2008 is your best year ever!