Emergencyopoly! Want to play?

Have you heard? Consumer confidence is down. Foreclosures continue to rise. The whole de-leveraging process is a giant hangover from the debt-fueled excesses of a few years past.

To combat this doom and gloom, I’ve decided to play a little game for the month of November, and I invite all my readers to join in. The game is called: Emergencyopoly!

The rules of the games are simple:

1. For one month, live the lifestyle that you would live if you were to lose your income (for most of us, this would mean our job. For small business owners, it could mean months where you’re in the red and cannot afford to pay yourself.)

2. Approximate to your best abilities any additional expenses you expect to incur as a result of the income loss
– For example, I have great health care through work. If I lose my job, however, I’d have to spend an extra $50-$100 a month buying individual health insurance. This expense is expected and thus must be taken into account.

3. Concentrate on the core expenses (rent, food, utilities, car payment, etc.)
– If you spend $500 every year flying home to Thanksgiving, there’s no reason that you’d have to forgo that for Emergencyopoly (your family might not understand your dedication). Just focus on the core costs that you have to pay month in, month out.

4. Take the money that you don’t have to spend right now because you still have income and funnel it your emergency fund.
– In my case, I should be able to save an additional $225 (individual health insurance and job search expenses) to my Freedom Fund

So I’ve narrowed down my core expenses
Rent + Utilities/DSL: $810
Car Insurance: $105
Student Loan: $160
Gas / Parking: $155
Health Insurance: $125
Food: $125
Job Search-Related expenses: $100
Personal/Misc: $70
————————
Total: $1,650

Take out the health insurance and job search expenses, and I’m down to $1,425.

That’s my goal for Emergencyopoly: to come under budget for every, single, category for the month of November.

Looking at this scenario, I am slightly (but only slightly) comforted by the fact that if I really want to ensure that my cash lasts as long as possible, the quickest way to reduce my burn rate is to move back home. But I’m going to wait until push comes to shove (6 months without a job?) before I make that move.

I think this game will help me figure out how many months my savings can realistically take me.

So, who wants to play? 🙂

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Thank you, Marshalls!

The nice folks at Marshalls gave me a gift card a while back for me to review the new Marshalls Mega Shoe Shop. I FINALLY got a chance to go this Saturday, and, wow.

Let me just say I rarely watch America’s Next Top Model, and I’ve never used Ms. Banks’ go-to word, but when I saw this pair of Nine West heels? I thought, fierce!

These are no dainty Cinderella slippers. These gorgeous heels, I imagine, are made to stomp all over town.

But on to review the actual store – all the shoes are organized by the shoe, then size. Everything’s clean and organized, although when I went it was a little crowded. Great selection of shoes from a variety of brands (including more upper-end brands such as Cole Haan and Sergio Rossi).

I’ve realized that many brands such as Nine West, Steve Madden, Tahari, Jessica Simpson, Calvin Klein, etc. can be found at discount stores such as Marshalls, Ross, or DSW after a while. (A quick google found that the Nine West’s I got first debut in Fall 2007, full price at $80). However, if you see a pair that you really really love, and you have feet that falls on either side of the spectrum (i.e. sizes 4.5-6 or 11+), I’d advise you not to wait for them to come in to a store.

Shoes in those sizes are much more limited in quantity than the “middle sizes”. Fortunately for me, I got my shoes in the right size, and… guess how much they were?

…. under $20 plus tax!! (I used my gift card).

So if you are looking to buy shoes, Marshalls would be a great place to check out. Incidentally, they also have a wide selection of boots right now. I’ll have to exercise utmost discipline not to visit every weekend.

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Less than 3 months left: how am I doing on my 2008 goals?

I’ve set a couple of fairly ambitious goals for 2008, and now that there’s less than 3 months left, it’s time to see where I am.

Short- to Mid-Term

Goal: Save $21,000.

Status: In progress. So far I’ve contributed around ~$17,500 to my emergency fund (for a balance of ~$21,000)… BUT, some of this money is consolidated from old accounts, so money actually saved from 2008 income is probably a couple thousand lower.

If I can save $4,500 to put into the Freedom Fund by the end of the year, I’ll exercise discretion and say the goal is accomplished. 😉

Retirement

Goal: Max out the Roth IRA ($5,000 a year).

Status: Done! I maxed out the Roth in July, marking the third year that I’ve done so. It’s a good feeling to know that I’m putting something away for retirement, even though the value of my accounts right now is 20%-30% below my CONTRIBUTIONS. Must repeat to self: “long-term investment…”

Vacation

This was not a listed goal at the beginning of the year, but I went to Hawaii for the first time this year. The whole trip cost me around $800 thanks to cheap-ish air tickets and a generous friend, and it was money well spent. I really, really loved Hawaii, and I look forward to going back.

Looking forward to 2009

I haven’t really fleshed out my financial goals for next year yet. But, I am currently debating if I want to splurge for a couple of trips sometime before the end of this year and/or in 2009. Together, the two trips will cost me around $1,200. Not a small sum, especially in this (melting) economy. I just keep thinking, if something happens to my income (which I don’t think it will, but at-will employment = you never know), I’ll be so happy to have that $1.2K. But, on the other hand, I’ll be so happy to go on those trips! Oh, to have a crystal ball!

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In ‘n Out and the open road

I was this close to getting In ‘n Out for dinner tonight (read the post for reader comments on why it’s so good). The only thing that stopped me was pure unwillingness to drive 30 minutes round-trip.

Sometimes, laziness can pay off.

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You Only Live Once fund

Most of my cash savings are in the Freedom Fund (held at one financial institution). I do have an online savings account at another firm that I rarely check. For a while I’ve considered consolidating these two accounts, but decided to let them be.

Why?

Because I’m going to make the online savings account my Big Ticket Travel Dreams fund. Some of my big-ticket travel dreams are…

• cruise the fjords in Tierra del Fuego (the southern-most tip of the world in Argentina/Chile)
• luxuriate in the picture-perfect blue-and-white San Torini, Greece
• ride the train to Tibet and butter my toast with yak milk
• pretend I’m Charles Darwin and explore the Galapagos Islands
• snorkel with the fishies in the Great Reef Barrier, and
• shake hands with Mickey Mouse at Disney World

And, I’m sure there are many, many more trips that I want take to before I’m gone.

So, I’m keeping this fund out-of-sight – it’s not a fund for a down payment, or graduate school, or even emergencies (although I imagine in a dire emergency I’d have to dip into it). Rather, it’s my Completely Selfish fund, my Pick Up And Go fund, my You Only Live Once fund.

And… I want to fulfill TWO big ticket travel dream by the time I’m 30. I have less than 7 years left, so I better get on it!

What are your big ticket dreams?

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Warren Buffett is buying, are you?

A few days ago I asked “is now the right time to buy?” Well, Warren Buffett says yes!

Recently I managed to reach the 12-month mark in my Freedom Fund (aka emergency fund). Given the current economic environment, I don’t feel comfortable reducing my cash holdings. I am, however, debating how to allocate my FUTURE allocations.

I can keep saving in Freedom Fund, split savings into 1/2 to Freedom Fund, 1/2 to taxable U.S. equity fund (this fund will serve as a long-term, non-retirement, savings fund. The time horizon will be at least 8-10 years – I imagine it will serve as a “down payment” fund because despite all the upheaval in real estate right now, I STILL want to be a homeowner, and maybe eventually an owner of a small apartment complex), or split savings into 1/2 to Freedom Fund, 1/2 to 529 Plan (that will be holding primarily cash, because I expect to go back to graduate school within 5 years).

Much to think about…

This weekend CB and I went out of town for a wedding. Once again, when I think I’m too preoccupied with personal finance, something – a squeeze of the hands at church, a family gathering at brunch, a nap in the car while we cruise down the interstate – reminds me that at the end of the day, money is just a means to an end.

But then again, love is not all, it is not meat nor drink… and it certainly won’t fund my retirement. So, keep on saving, I shall.

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I won’t actually do it…

But I’d really like to own this pair of ankle boots from Cole Haan. Never mind the $395 price tag.

Apparently when the economy’s bad, I really want to buy shoes. (Who am I kidding, I always appreciate nice shoes. But the economy’s a convenient scapegoat right now). I’d wear this with black tights, a shift dress, and a thin croc belt.

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My little Freedom Fund is growing up

After several months of consistent saving, my little Freedom Fund has finally grown up.

Finally, I have $21,200 stashed away in the Freedom Fund, which will last me just about 12 months, assuming a monthly expenditure of $1,700 (my financial restructing plan).

I still have around $1,000+ lying in various accounts (I should really consolidate them), which will add another 1/2 month if need be. I can move back home. I also can withdraw up to $10,000+ in Roth IRA contributions as an absolutely last ditch method.

So, as I stare down the road at what is likely a prolonged and painful recession, I worry about a lot of things, such as job security and surging applications to graduate schools.

But I know that this too, shall pass (how long it’ll take to pass is anyone’s guess). In the meantime, then, I have adequate cash on hand (experts recommend 6 months of living expenses, though I imagine a job search can easily take longer than that in the current market) and I have a supportive network of loved ones. I am blessed, and I am grateful.

Knowing that I’m blessed, however, doesn’t mean I don’t worry! So even though I achieved my goal of saving 12 months of living expenses, extraordinary times call for extraordinary measures. I plan on continuing to grow the Freedom Fund, so that I am as prepared financially as I can be.

Given these trying times, how many months of living expenses do you aim to save?

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Bitten by the J. Crew bug

If the economy wasn’t so bad, I just might.

Let me just say thank you for the parade of “oh no you didn’t!” comments that would’ve rained down on me were I to actually admit on this blog that I contributed to the economy via gorgeous footwear.

You keep me in check. 😉

What’s your favorite pair? Mine is the pink ones with the rosette – I imagine it’d be perfect with a tweed jacket and a trumpet skirt.

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Is now a good time to buy?

The market has had a brutal stretch, and there’s no guarantee that things won’t get worse before they get better.

BUT – there are many companies with strong balance sheets and cash flows that have fallen dramatically in value as investors shun equities and corporate bonds to flee to the safety of Treasuries, even with the bounce-back of Dow’s 900+ point rally today. Wall Street, the saying goes, is driven by fear and greed. Now, the fear has taken over. By historical standards, many companies are cheap. So, is now a good time to buy?

If I were to buy equities right now, I’d be either (1) buying an index fund through a taxable account (mostly likely Vanguard’s Total Stock Market Index Fund), or (2) buying some select companies for long-term investment (Procter & Gamble, Newell Rubbermaid, etc.) also through a taxable account. I’m looking at consumer staples that have smaller exposure to the credit crisis (though it affects everyone) and pay a good dividend.

So, I haven’t decided what to do yet. Chasing a false bottom is a real danger and any money I put into the stock market right now I’m expecting not to touch for at least 15 years. Can I afford this loss of liquidity if I were to be laid off in this dismal job market? If I decide to invest in individual stocks, I’ll also have to research the best discount online brokers to use, and draft an investing plan to make sure that I don’t let my emotions (fear OR greed) take over.

Maybe I will just wait until January, when I can begin funding the 2009 Roth IRA.

*** Please note that I am NOT a financial expert / stock analyst and PLEASE do not make your decisions to buy, sell, or hold equities based on anything in this blog.

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