Archive for August, 2008

It’s 1 AM.

I’m still working. Unfortunately, everything is taking twice as long because my brain feels fuzzy, like it’s stuck in a bed of cottonballs.

Currently debating between powering through vs. taking an hour nap. But can I wake up in time?

Just have to remember:

In the short-run: just make it ’til Friday.
In the long-run: this isn’t forever.

Rinse & repeat.


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So my monthly contribution to the Freedom Fund was $1,500. Then I got a raise, and I thought, well, I can bump up my contribution to $1,700, effectively wiping out all (and then some) of my raise.

Me: 1. Lifestyle inflation: 0.

THEN, in a sudden burst of ambition (or blind optimism), I decided to up my contribution even further to $1,800 a month. This means that I’ll be living on less now than what I’ve lived on before the raise.

The best scenario is if I completely forget about the extra money going towards Freedom, and adjust my lifestyle accordingly to the now lower cash level in my bank account. The worst that can happen is that I find out I can’t swing an extra $100 in savings, at which point I’ll need to re-examine my spending habits OR my savings rate. ‘Cause, personal finance shouldn’t make me miserable.

It’s just, you know, I feel like I should be able to have a full and happy life living on less than I do now (not MUCH less, but a little less). I spend enough money that $100 shouldn’t be the difference between “happy” and “miserable”.

I ran some numbers, and found that I CAN save $1,800 a month. I’ve also found that to align my spending with my values (more experience, less stuff), I need to cut back on buying things and increase spending on traveling. Which I love. Even a short weekend trip makes me so happy. Therefore… it should be easy to resist the impulse to buy the next time I see a cute pair of shoes. Right?

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Even Superman had his kryptonite.*

Mine? Dresses & shoes. (Ok. And food).

I love dresses – they are, in my humble opinion, the easiest (and most comfortable) way to look chic and put-together (and you never worry about coordinating colors). I love shoes too. Sling-backs, wedges, ballet flats – everything. I am surprisingly immune to purses/handbags.

Speaking of flats, here is my most recent aquisition.

Calvin Klein Madelyn in Plum, $25 on sale. I think I got the best color of the bunch – understated but not boring. I also like the stone, which gives the shoe a little bit of “bling”.

Now that you know my weaknesses… what are yours?

*Here’s something I’ve never figured out. If Clark Kent is from Krypton, then WHY does Kryptonite affect him so badly? It’d be like… I’m from Earth, then I got sent to Mars. But the boy of my dreams wears a piece of rock around his neck and that’s why I can’t get near him. But… didn’t I come from that rock?

If this has all been explained in the comics, please forgive my ignorance. But enlighten me!

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I don’t think personal finance is about deprivation. It’s really about making the choices that will support your highest priorities – the things or activities that will bring you the greatest joy or the deepest satisfaction.

Here is the newest Ask the Expert question from CNN Money

Question: I just turned 24, and the constant pressure from financial advisers to “save save save” for retirement makes me anxious that I’ll never be able to retire. I contribute 10% of my salary to my 401(k) each year – some of which my company matches – and I recently took on a second job to save for a home. Still, I feel miserable. My friends cruise around in BMWs, but I’m afraid to spend a dime on myself lest I ruin my future. I’ve looked at retirement calculators, but most don’t let you enter an age below 25. So I have no idea whether I’m doing enough, too much or just the right amount. What do you think? Are my worries are justified? —Jessica, Boston, Mass.

I read this question, and my first thought was… personal finance shouldn’t make you miserable. (My second thought? Spending money on yourself does NOT equal ruining your future. If that’s true, my road to cat-food retirement is paved with shoes, dresses, and lots and lots of food!)

I hope Jessica knows how well she is doing. She is saving for retirement, AND taking a second job to save even more. But I believe that if something makes you truly miserable (be it a job, a relationship, or a personal finance strategy), you won’t be very successful at it for very long, and that misery will likely poison other aspects of your life.

If your personal finance is making you miserable – some adjustments are in order:

(1) Expectations: If I expect to be driving a BMW at 23, living in a luxury high-rise, and dining at Spago every week, then yes, I might be pretty miserable in my current lifestyle, which includes none of those things. If I compared myself to friends who have a $100K trust fund set aside for them, that comparison probably won’t make me feel any better. In that case, I’d need to adjust my expectations to make sure that they aren’t making me miserable. Expecting to save 50% of your income on $40,000, while living in Manhattan is probably as unwise as expecting to dress head-to-toe in Chanel straight out of college.

(2) Savings rate: When I operated on a fairly strict budget trying to save 40%+ of my gross income every month, I wasn’t very happy and wasn’t very successful at all. Now that I’ve scaled back (and have pledged to make up part of the difference by saving all of my bonuses), I’m much more satisified with my lifestyle. This also means that instead of failing every month to achieve the 40% goal, I’m succeeding fabulously at saving almost a third of my income every month. This principle can be taken too far (how much more successful would I be if I just aimed to save 5% of my income?!). But if I am honest with myself, I know which goals will allow me to prepare for my future AND live well today, and which goals will make me miserable by neglecting quality of life today.

In conclusion? If you are reading this blog, know the importance of saving, and are doing something to prepare for your future? You are already doing well. Make sure that your personal finance reflects your personal situation and priorities, and please, personal finance should be a source of joy in your life (okay, that might be the PF blogger in me talking), not a source of misery and distress.

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Le petit chef (in training)

CB has agreed to eat whatever I cook.

*evil laughter*

Okay, I’m kidding about the evil part. This morning I made scrambled eggs, and this might sound silly, but they were good (and yes, I’ve made bad scrambled eggs before). I plated the food, set the table, and it was fun. I like cooking – not everyday, certainly, but I like it enough that I want to be good enough at it to plan a special meal for two or host a dinner party.

I’m already planning our meals for Saturday and Sunday.

-> Saturday dinner: roasted chicken breast, mini-mushroom frittatas, and brown rice cooked with chicken stock.

-> Sunday brunch: cinnamon pancakes, bacon, and scrambled eggs.

A stop at Ross or Target is also in order – I need to pick up a couple of placemats and some candles, and maybe even a table cloth (I’m thinking classic white). One reason why I love going to restaurants is the ambiance… so why not try to recreate some at home?

I’m really excited about learning to cook, so I’ve decided that its okay if I spend more money than I normally do on ingredients, as long as I don’t waste food. And I’m doing some research into culinary classes. They are quite expensive, but maybe this can be my Christmas present to myself.

We shall see how this enterprise turns out…

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WWJD (What would Jessica do?)

CNN Money used to run this series called Extreme Savers, detailing the fiscal discipline and ingenuity of people who save a BIG percentage of their income. The profile that still sticks in my mind is that of Jessica Nixon, who started saving at 16 and had almost $50K in retirement funds by the time she was 23.

This is what she said of financial windfalls such as bonuses or tax refunds:

“I don’t even consider it income, I’ll buy one thing I really want and the rest I split it up between retirement savings and shorter-term savings.”

This got me thinking. I recently got a bonus – unless I consciously decide on its purpose, the money will probably just disappear into everyday expenses that I won’t remember in 6 months.

I decided to follow Ms. Nixon’s example and put the bulk of the money into the Freedom Fund, and keep a little bit for myself.

But then difficulty arose: what’s the ONE thing that I really want?

1. I love shoes, but I don’t feel flush enough to splurge on Louboutins or Manolos (just curious – does any of my readers have them? and how much do you love them?).

2. I love food, but I feel like I treat myself fairly regularly as it is – frequent dining out at inexpensive but yummy places and occasional treats at fancier restaurants.

3. I could purchase a new computer to replace the laptop I’ve had since first year of college. But this laptop is still chugging along despite its advanced age, so I’m hesitant to chuck it for a younger, sleeker model. History, people, must count for something.

In the end, I just could not make up my mind on ONE thing (and I feel a little like any luxury that I might want should be paid for by regular income). So I decided to put everything in the Freedom Fund. (But because money is fungible, this means that I’ll feel more lax about spending out of regular income, which means that there probably will be more little “treats” for myself here and there.)

And I am definitely not as uncertain as this kitty!

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Oh yes I did

I took about 3 loads of laundry home.

Yes, yes I did.

My apartment building has a tiny little laundry room away from the main building (I will not walk there after dark). I never use the dryers… they don’t look very clean.

That leaves me with 2 choices: (1) hand wash the items that needs to be hand washed, and (2) go home.

So… I went big (2 full sets of sheets & duvets and a full stack of towels) and I went home.

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Meg had an interesting post on quality vs. quantity (check it out!).

For better or for worse, I’d say most of my wardrobe is quantity-oriented, with good-enough quality for me. I do have several pieces that I really love (the bright yellow vintage coatdress that I got for $40 is a front-runner), but most of the time I happily shop at Ross and Target. Loehmann’s is considered a splurge.

I really would like one piece of a designer product. I like the idea of having something that I’ll treasure for years to come. But the problem is, I have no idea what to get, and at this point in my life, I really don’t crave anything badly enough to drop a quarter of my paycheck on it.

However, if the Luxury Fairy were to suddenly descend upon me and say, “here is $2,000 and you MUST spend it on something luxurious,” I’m sure I can come up with some ideas.

*pause* Oh, here’s an idea: Louboutins. I love, love, LOVE the red sole. A pair will probably set me back $600+. Throw in a Coach bag and a cashmere sweater from Theory, and the money’s gone.

In all honesty, though, I’d probably take that two grand and go on a weeklong vacation, stay at a fancy hotel, and splurge on a spa day. After begging the Luxury Fairy to let me stash half in my retirement account! 😉

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$3.99 per gallon

Never thought I’d see the day.

I think the most I’ve paid for gas is around $4.59 / gallon, and the cheapest is around… $2-something a couple years back?

Are you seeing some relief at the pump?

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Is automatic deposits ($1,500/month) into my Freedom Fund. Seriously.

I’ve been so lax with spending (all the study sessions at Starbucks, the-I’m-sick-of-studying-must-unwind sessions at Ross, the I-need-delicious-food sessions at brunch, etc.) that I can’t even imagine how I manage to save anything.

And now my AAA renewal is due.

I’ll be 25 in less than a year and a half. By that time, I’d like to have saved $35,000 in my retirement accounts. Which means, ~$12,000 between now and then. I could be aggressive and save more (up to $40,000 should be feasible, and maybe even $50,000 if I’m EXTREMELY disciplined), but I’ve realized… I want to go travel, take a couple months off before business school, maybe try my hand out at marketing for a nonprofit, improve my foreign language skills, and send my parents on a little vacation (maybe Vegas? I can book them a couple of nights at a nice hotel and buy them tickets to a show).

Those things take money, money that could go into retirement accounts, but that’s A-OK. Mom always told me that money is meant to be spent – on the people and the things that truly matter.

On a side note, I wonder if the 401(k) or Roth IRA limit will be raised for 2009… I say the 401(k) will go up to $16,000 and Roth IRA will stay put at $5,000.

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