Thoughts on Spending Money

C and I have always been pretty good with our money. We’re not the best and I actually even stopped doing our budgeting by using the Force method since I realized that I could get a higher interest rate in our ING Checking account (referral link) with a balance over $50K. A lot of our savings are as liquid as can be since we’re looking to purchase a house soon. I’ve been busy (read: lazy) over the past few months in tracking how we’re doing.

One thing I did see: my company 401K says that it’s up 10% for the past 30 days and only done 30% for the past 12 months. That’s what the website provided analytics stated, but I’m not sure if that’s looking at the actual investments or just the balance. I hope that’s the actual investments since I’ve been contributing a lot to it over the past year.

So back to the point I was trying to get to: I think we are spending more in this economy than we were before. It might be lifestyle inflation, as we’re increasing our incomes. But I think it’s really because of the great deals that are out there. Travel is our major splurge. I’m a big believe in conscious spending (link). We normally pack our lunches and don’t spend a lot going out, compared to our demographic group (young twenties/thirties couple living in an exciting city). Once I get on a traveling project, I’m traveling every week and it’s easy to take a weekend trip somewhere rather than go back home. C takes probably 5-10 business trips a year. So we try to combine a lot of our business trips into weekend vacations. In 2009 alone, we’ve already taken 4 trips that have been somewhat subsidized by one of our companies.

What’s the point of this? When you life a modest lifestyle compared to your income, you can take advantage of deals when everyone else is hunkered down, trying to avoid all discretionary spending.

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Overhead at my Favorite Clothing Store in the Mall

Salesclerk: “Would you like to open a credit card and save 40% on your purchase price?” (Aside - I’m pretty sure the clerk said 40% - I think it was some sort of promo deal since 40% is a lot!)

Customer buying one shirt: “No thanks. If you can’t pay cash, why buy it?”

I guess Americans really are changing and starting to think about what they are spending. I view this as a positive!

Upping my 401K Contributions

I just decided to up my 401K contributions. The reason I’m doing this is because: I’m going to be ending employment with my company shortly. My division is being purchased by another company. I’m not sure if I’m going to be going to the new company, but either way I will have a new employer since if I don't go to the new company, I'll be laid off.

I hate participating in multiple 401K plans. Also I’m not even sure who my new employer is going to be and they might not have a 401K plan (then again, I might be giving up a great employee match with my future, yet-to-be-determined, employer.

So I just decided to up my contributions to 50% of my salary per paycheck, which is the max my plan allows. If I stay with my company until the mid July, I will put the full $16,500 maximum in for this year. If I get to the end of June. Which is when the sale is supposed to go through, I’ll have put in about $500 less than the max for this year. Not sure what to hope for, but more savings for retirement has to be good!

The House

Ok, so here’s the house that we went and saw. Both C and I love the location and the fact that it’s a single family home. There are not a lot of houses in the areas of SF we would prefer to live in. The areas where we would love to live have a lot of condos and TICs (which seem to be a SF only phenomenon) I still do think prices are going down a bit, but not as significantly as before. Also, there are only so many single family houses in SF. Maybe I'm just trying to justify something that wouldn't be a wise financial decision, but I don't think it'll be a bad one since it will provide shelter and we would get a cash flow positive place if we rented it out. I'm pretty sure that it would be cashflow positive since we would put down a significant amount.

However, both C and I were under whelmed by the house. It is listed as a 4 bedroom with 1 bedroom on the bottom floor. That was fine, but then that room was used as a dining room because the dining table in the kitchen can only fit a small 2 person table. That left 3 bedrooms upstairs. The master bedroom was a good sized one, but the other 2 bedrooms were pretty small.

Originally when I saw the listing, I thought we could rent out the room on the bottom floor to a friend to make the cash flow even better (and affordable if I were to lose my job or want to go on an extended unpaid maternity leave). But the fact that renting out the bottom room would prevent us from having a place to consume meals and 2 of the 3 bedrooms upstairs were small made it not so attractive for us.

Anyways, there was no way we were going to pay anywhere close to the list price. We wanted about a 20% discount, but it’s not worth the effort since we’re ho-hum about house.

It’s very rare for a house to come on the market in this area. It’s even more rare for it to be somewhat in our price range. Here's hoping for a better house next time!