2017 Planning

I’ve probably already done this, but let’s redo it for fun.  My paycheck is likely to be $3910.  My January bonus is likely to be $4850.  My tax refund is unknown, but I have quite a few writeoffs:

Writeoffs for 2016:

  • investments losses -$2,384.96
  • hsa $3350
  • ira $5500
  • mortgage interest $2000 ish
  • property tax $2400 ish
  • state income tax $11,693
  • bonus overholding (possibly $700?)
  • livingly stock loss writeoff?
  • total $27,328, assuming 28%, tax return could be $8,352

Of course, the $3350 turns that into $5000.  Let’s just pretend $3000 to be conservative.  That refund would likely arrive in March sometime, because Edward Jones loves being slow with tax paperwork.

Okay so January has $12670, and I estimate expenses of $2400.  Let’s say I can put $10,000 from January into the 401k.

February is much the same.  $5420 available.  Let’s pretend $5000.  So by the end of February, I have $15000 in the 401k.  Tax refund in March brings me to $18000.  There’s a little emergency fund juggling there to fund the 2016 HSA, but whatevs.  After the 401(k) is done, I need the 2017 HSA, 2017 IRA, and of course I need to keep my emergency fund up.  March itself will bring in $5000ish extra, so that can be used to cover the 2017 IRA.  The 2017 HSA would need to be refunded by April 15’s paycheck, or if I’m lucky the tax refund will absorb most of it.  So it’s not really until May that I can get rolling on paying off the condo more.  That’s only 8 months left in 2017.  But if we said I could do $5000 a month in additional principle, that’s a payoff rate of $6k per month = $48k, which is about what the balance is going to be.  If I miss paying it off in 2017, the 2018 retirement junk potentially delays me again until March 2018, but then I should only have $10k left, and that could be killed in a couple of months, so by summer 2018 I’m totally debt free with about $152k in retirement.  Not terrible.  Net worth would be around $500k, with 70% of that in the condo (not a great ratio).  Minimum expenses as percentage of income would be around 20%.

 

Payday

Mortgage payment sent, so now the balance should be $51k ish.  Savings money transferred, so now that balance is $4871.  About $1300 left for the month’s expenses.

I need to send the stupid paperwork to get back my stock option money from a previous company!!!

Big Events

15 November: +$4000 emergency fund [$4500 e-fund total, yay crisis averted] ✓

30 November: +$1707 mortgage paydown + $300 emergency fund[mortgage <$51k, e fund $4800, all December expenses covered w/ this money] 

Ok, let’s test the idea that all my December expenses are covered.

$4205 – $1137 – $1707 = $1361 available in checking

December Expenses:

Name Amount
HOA $315.00
PGE $50.00
AT&T Phone $103.00
gas $50.00
Bird Storage $130
audible $15
spending $500.00
Netflix $8.00
Comcast $140 (nov and dec)
total $1,311.00

Okay, so it’s in the range of doable, but it’s also hella tight.  Absolutely no extra purchases!!!!!!!!!!!!!!!!!

NO EXTRA PURCHASES!

That means no yoga mat, no holiday specials, none of that!  Also, I just realized I got hit with Amazon Prime membership re-up at $108.  That wasn’t planned for in my budget.  I’ll also have to pay for an uber to the airport for my Christmas vacation.

My friend is having a birthday on Friday.  That’s going to screw things up some, but I can probably minimize the impact by budgeting for it.

15 December: +$4500 emergency fund [$9300 e fund total, includes apple watch refund]

30 December: +$2800 emergency fund [$12100 e fund, mortgage <$50k, prepare for the 2017 slog, includes only first half of Jan 2017 expenses]

Fake poverty

But Seriously, Let’s Talk About Millennial Poverty

Because what we collectively think of as “looking poor” does not, in fact, encompass the real face of poverty in this country. As a white, 22-year-old college graduate in a second-hand dress, I did not look like what we think of as “poor.”

Of course, at that exact moment, I had, yes, a college degree and a coveted unpaid (because of course it was unpaid) internship at a public radio station.

But I also had a minimum wage job to support myself, $17 in my bank account, $65,000 in debt to my name, and $800 in rent due in 24 days. I was extremely hungry, worried about my utilities being shut off, and 100% planning to hit up the dumpster at the nearby Starbucks when I was done there. I had no functional stove in my tiny apartment because the gas it took to make it work was, at $10 per month, too expensive. I was at WorkSource to find out if I qualified for literally any program to make my finances less crushing.

You have $65k of debt and you took an unpaid internship?  That’s not poverty, that’s being a dumbass.

I had, like millions of other working Americans and many, many Millennials, no financial safety net.

You will always be able to out-stupid any safety net.  Entitled millennial not handling her shit.

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Showering Privileges

The hot water heater went out in my building, so now all the water is about 55 degrees.  I complained to my friend, but she had not sympathy, as she lives in a place with no hot water.  “First world problem,” say the girl living in a third world country.  Yay for what is possible with the Internet.

I decide to shower at work.  My old office building next to my current office building has a shower on the first floor, but my key card no longer works for it.  I go there with my greasy hair and 2 Trader Joes bags full of clothing and shower supplies.  The first few guys I ask to help me get in say they don’t have a key card.  Finally an older white woman on the first floor tries to buzz me in with her card, but it doesn’t work b/c she’s a girl.  Then she convinces an asian guy getting on the elevator to help me get in.

What if I wasn’t white?  I was just some greasy haired guy with two paper bags trying to get into a building where people make $100k+.  How fragile my routine is.

Saturday Caturday

I went ahead and added the projected 2016 savings if I don’t screw up November / December.  I can beat 2014 and do the BEST EVER.  lol.  That actually does motivate me.  Who wants to do WORSE than a previous year?  Not me.  2016 was prepared to be an insanely good savings year, then in the spring I spent tons of money on vacation, and now 2016 will be merely an okay savings year.  I’ll hit the $58k mark.  Not as good as $60k but much better than $48k.

savings by year 2016 projected.PNG

I woke up kind of sore this morning.  I think it means I didn’t get enough protein last night after the yoga.  I just had 1 scoop instead of 1.5.  I’ve been thinking about forcing myself to make YouTube videos to talk about Financial issues.  Short segments that talk about individual concepts.  Probably the first segment would be the difference between income and net worth?

Looks like Personal Capital is also jazzed about me rebuilding the emergency fund:

personal capital savings.PNG

net worth nov 2016.PNG

personal capital condo 2016.PNG

From Personal Capital’s POV, the net worth has increased $134280 this year, with $91004 of that being from increase in condo value.  I think the condo value increase is fake, so considering that, we’re talking about $43276. This doesn’t include my remaining savings, so that would bump it up to $10.3k, so let’s say $53.6k is Personal Capital’s estimation.  Why is that $5k off of my savings level?

My investing has done 9.54%.  Edward Jones has done 8.14%.  Yuck.  But at least my investments made money!  That’s what they’re supposed to do.  To date for 2016, the S&P 500 has returned 8.87%.  So my advisor is refusing to put my money in a market average fund that performs better than the assets he sells for a commission.  HMMMMMMMM.

Lets break down my savings by account:

mortgage: +$42,273

EJ single: -$28,878.4

EJ IRA: +$11,000

Roth 401k: +$18,000

Lending Club: +$312

USAA Savings: +$4,556

USAA checking: -$11,819

Add them up: $35,444

We can see that not considering the change in balance of my checking and savings accounts is biting me in the ass here.  Boy is this frustrating!  That’s only an average savings of $3375 per month.  This is consistent with earning about 8% on $100k of invested money… i.e. $35k saving +$8k investment earnings = $43k increase in net worth reported by personal capital.  It looks like I basically traded my EJ single account for maxing out retirement.  I spent $8k out of my checking account to pay down the condo, put another $4k of that into savings.  Then out of my paycheck I paid extra on the mortgage every month to the tune of $2400ish.  Lending Club was basically unchanged.  I haven’t lost money from it yet, but I want to get out of it as an investment category.  How can this be so terrible?  The travel, the new computer, Burning Man.  All that stuff really added up.

For 2017 I need to reset the chart, get rid of all the old closed accounts and consider every single account I have.  I need automatic transfers in place.

Legacy Journey

Sales!  Dave Ramsey had a $10 book sale, so I bought Chris Hogan’s Retire Inspired book, and I bought Dave’s “The Legacy Journey” book.  He had a Legacy Journey class first, a followup to Financial Peace University.  More philosophical.  Then more recently he wrote a book covering the material.  I bought the MP3 version of both.

I’m on chapter 5 of The Legacy Journey.  Like Ramsey’s other material, it emphasizes personal responsibility.  It takes a much different approach modeling how we relate to others with wealth than current liberal thinking.

In current liberal thinking, inequality is evil, rich people are evil, and the solution is to redistribute wealth indirectly via a variety of “progressive.”

A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term “progressive” refers to the way the tax rate progresses from low to high, with the result that a taxpayer’s average tax rate is less than the person’s marginal tax rate.

But isn’t it interesting that most people associate progressive with progress?  And that, if we take the opposite of progress and associate it with the opposite party, it’s an insult?

Anyhow, in this book, Ramsey basically argues that individuals are responsible for their own personal development.  First for taking care of themselves and their family, and then for using the extra for short term and long term (e.g. investing) charity.  He emphasizes that people are not perfect, that they make mistakes, but that over time, with hard work a person can improve themselves, prosper, and greatly help others.  In Dave’s view, charitable giving is an act a person does in order to be more like the Christian god, since that god gave his only son, and is (by definition) perfect.

This contrasts greatly with the liberal view of wealth.  In that view, money is to be taken from people by force.  In that view, the money will solve the problems of the poor people it is given to, and there will be no significant consequence to the people it is taken from.  Liberal stories are all about victims, and the resolution to the victims’ plight is to take money from anonymous rich people, and there is no consequence for doing this except that the money solves the victims problems.  Rich people is kind of code for white men.

Let’s back up.  Which version of events is more appealing to me?  Well, Ramsey’s, of course.  In Ramsey’s view, I control my destiny, and I’m not born a villain.

There are a few times in college I remember having a distinct impact on me.  One of those was listening to one of the MIT professors who wrote my mechanics textbook discuss boost phase missile defense.  How difficult it was, and how bad at it we were.  The US government continued funding the program but classified the test results.

Here was this completely brilliant guy, and for everything he new about rocket science, the most important voice in the room was the politician, because the politician had the power to direct the public money wherever he wanted, whatever the science.  That’s the power of sales.  Why be a scientist when a salesman has the real control?

This experience definitely pulled me away from science.  I feel the same way about discussions on race.  If a person studies the history, even if they show their race has been systematically wronged over time, if you can’t convince people who are alive today to give you money, what good is it?

It is this POV that has me thinking about, well not about what is historically true, but about what kind of messages people will respond to.  What kinds of messages will inspire people to act in ways that increase their happiness and the happiness of people around them?

You can say the same thing, and different audiences will hear different things.  If you say different things to different audiences, people will call you false.  What can you do about that?