Mapgirl’s Fiscal Challenge

1. My old company’s 401k plan finally rebounded back to $24K this week. It’s bad that I haven’t rolled the funds over, but I like the international funds available to me there. I think I will wait a bit longer to do the rollover though since I’d like the balance to rebound back up to about $27K before rolling over. (I prefer to sell and move the cash. Then I can reallocate.)

2. I think I’m going to donate $100 each to Doctors Without Borders for Myanmar and China as a one-time donation. My company is doing a matching donation, and gratefully, no one in our China division has been directly effected by the earthquake.

3. The awesome Thai restaurant near my house will substitute tofu in my favorite curry. I swear, I opened the box and it looked just like chicken. The texture was different, but I needed the visual illusion last night. I *almost* ordered meat for dinner, but I’m still trying to eat meat only once a day.

4. I had lunch for $1.05 on Monday. That was for a small soda at McDonald’s. For some reason, boyfriend got some free chicken sandwich coupons in the mail. All I had to do was walk into a store with the coupon and redeem. Very easy. I have one coupon left for a breakfast sandwich. I’ve had them before. They’re really greasy so I’m not sure I will get one, but it’s nice to know I have a freebie if I’m hungry. Maybe I’ll give it to the next homeless guy I see.

Here’s a few more thoughts on the matter.

#1: HC made a great point about waiting for your first paycheck to arrive. Sometimes, you get caught short for a month when you start work because you’re waiting for direct deposit to kick in, etc. I’m rethinking how I budget stuff due to changed pay cycles. I used to get paid every two weeks, which meant I got the fictitious ‘bonus’ check twice a year because you end up with three paychecks a month in two different months. (My stance is that it’s not a bonus. You worked 80 hours for it. It’s yours.) With my new job, I get paid twice a month. It’s taking me a while to get used to it since it’s a radical departure in how I manage my finances. I used to give myself an allowance on paycheck Fridays, but now that payday is a floating day, I have to pay closer attention to my cash flow, lest I run out of money in my checking account. (I generally keep very little in my day to day checking account.)

#2: Remapping the lunch plan. I work in a place with a plethora of food options. However, I have noticed the pricing on lunch is MUCH MORE expensive than before. Because I had access to in-building cafeterias at my old job, the pricing was rather low. Because they were self-serve buffets, I also could control my spending and my calories by dishing out exactly what I planned to eat with no waste. The new dining options pose a HUGE problem for me since I can no longer exercise stringent portion control. This doesn’t seem like a huge issue, but it is. Before I could eat a complete and balanced meal for $4. Now I usually spend about $7 and it’s too much food or else not very healthy. The guys at the office are conditioned to get $2.50 sandwich specials from the local supermarket, but I hate sandwiches and have a preference for hot food. Long term, this will be an issue. I will eat more and spend more. (And no, I will not be packing my lunch. My evening plans are often so variable that I cannot count on cooking anything to take to work the next day.)

#3: 401k plan. Because much of my company’s HR is self-serve, I’m having a devil of a time signing up for the 401k plan. I’m going to have to spend some time making phone calls to get that figured out. Annoying. This also means that instead of the 6% I initially planned to contribute, I have to bump it up so that I can average out 6% over the course of the year since there will be at least two checks with no contribution at all. Frustrating, but not insurmountable. I only mention it because it does represent a kink in my SMART goals.

#4: Public transportation is not reimbursable. I was hoping for this. Most Federal contractors in DC will provide Metrochecks so you can get Metrocards (farecards) as a tax-sheltered benefit. Apparently, that is variable at my company depending on the contract terms with the client. So at this time, I’m spending the equivalent of gas money in Metrocards at the increased fares that began in January 2008. Because of this, I’m thinking I might keep on driving to work as the parking garage fee is only $100 a month and that’s equivalent to Metro. I’ll have to crunch the numbers, but sadly, reducing my carbon footprint might still be a pipedream. (I don’t plan on taking my motorcycle to work in pantyhose. Are you nuts? My co-worker and I were talking about taking our bikes to work, but seriously, it’s a bad idea for me.)

#5: Medical FSA contribution problem. This year you can contribute $5100 a year. Going back to point #1 and the shift to semi-monthly paychecks from bi-weekly, I will now be contributing a lot more to FSA per paycheck. Instead of $192 a bi-weekly check, it’s more like $250+ semi-monthly. I get paid more overall, but since I only have 20 more paychecks left in 2008, I am going to have less cash per check than I initially budgeted.

#6 Medical FSA reimbursement problem. I already had my big surgery this year before my benefits card arrived. Now I have to send in forms. It’s going to be a while for a check to get sent to me. It’s annoying, but at least I am not suffering for the money right now. I could have delayed surgery further, but the timing was good to get it done early during my job transition while my project ramp up was delayed.

So that is all for right now. Sorry for the randomness of this entry, but I’ve been dwelling on these issues in the back of my mind the last few days without much chance to write them down. It’s half a post for you and half a TO DO List for me.

Now that I covered the non-financial side of my departure from my last job, I will cover the financial side as much as I can. Every place is different. Each time is different but I hope I can offer you something here for your next transition.

The first thing is that I was leaving around the holidays. Holidays are paid vacation days, so I made sure that I was going to save up as much vacation time as I could so I could receive a payout on those days from my company. Not every place does it, but a lot do. I took every paid holiday that was available to me, except the floating holiday that I get to use on January 1st every year. That would have been another 8 hours of vacation saved for me to receive as cash, but I didn’t want to ask my boss to approve it and then let me take the day as a 2007 vacation day. That would have been ethically shady. Either way though, I had two days for Christmas Eve and Christmas, two days for New Year’s Eve and Day, and two days post-Christmas. In two weeks, I only worked 4 days. Not too shabby.

The second thing is that I was leaving before bonus season and I had to gauge what bonuses would be like. Would they be a paltry sum or would they be the maximum amount available? Word on the street was very quiet. I couldn’t tell, so I assumed that meant they weren’t going to be that good. I weighed the opportunity cost of waiting with the present value of a higher salary. No, I didn’t do the firm mathematical calculations, but I decided the present value of a higher salary was going to be worth a lot more to me, as well as better benefits with the new firm.

The third thing is what to do with your 401k money. I knew I was forfeiting a decent chunk of my corporate match by leaving before fully vesting, but since the match is so low, it didn’t really matter. In a month or two at my new pay rate, I’ll have made that money back. I am going to pull this money out and roll it over into an existing Traditional IRA I have already. Never leave your money behind at your old company’s plan. You usually have 90-days to figure out what to do. By then you can see what your new company has in equivalent investments and roll your money into the new 401k plan, or into an existing IRA (with some restrictions).

Along with that is to double check if you have restricted funds. I just found out that due to some small transfers into an International fund, I cannot sell without a small penalty. I have to wait 60-days from my last purchase/influx of funds to sell without the penalty. C’est la vie. That’s just a calendar item for me in a few weeks. What I needed to do, was stop contributions to that fund entirely, but hopefully the market will do better anyway before I sell.

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SMART: Specific, Measurable, Achievable, Relevant, Time-Bound

Goal #1
Specific - Contribute to my 401k plan
Measurable - X% of my total salary
Achievable - With each paycheck
Relevant - Yes. Because it will help my retirement funds grow
Time-Bound - All of 2008

I will not get a corporate match for my first 12 months, but my new company will match 100% of the first Y% of my salary, so there are some extra benefits to doing this, but I won’t see them till 2009. That’s fine. Because of other goals, X=Y, i.e. I’m only putting in the minimum to get the match.

Goal #2
Specific - Reduce my credit card debt
Measurable - By 50% or $9,137 (rounded up to $10K)
Achievable - Monthly payments of $762
Relevant - Yes. Because it will help my net worth grow faster
Time-Bound - December 31, 2008

My NCN Network chart/Save-O-Meter number is $18,273 and I have not made much progress at all. In fact, I’m probably going over that when I finish tallying my December net worth numbers. What really burns me is that Tricia has paid off more debt that I have. I’m really proud of her, but dammit. I gotta get moving!

Goal #3
Specific - Reduce my credit card debt on my highest balance card ~$10K
Measurable - By 50%
Achievable - ~$450 a month
Relevant - Yes. Because it’s killing my credit score
Time-Bound - December 31, 2008

This leaves about $312 per month for my other credit cards. Though they have higher interest rates, the balance to available credit ratios are so low they aren’t detrimental to my credit score. I’m not buying anything any time soon, bu I would like to push my score higher for the heck of it. There is an implied goal here of breaking a FICO score of 720.

2008 is going to be very simple. Three goals and three goals only. I am focused on saving for retirement and reducing my credit card debt. That is all. Once I get going on these three things, I feel my larger goal of having nothing but my mortgage will come to me more easily in 2009.

Max out the 401k or pay down debt? (It’s Dilemma #1 in that story)

For me, that’s been my struggle in deciding what to do about this dilemma in 2008. Because clearly, I put a lot of money into my 401k plan in 2007 and hardly paid down debt though I did a good job tackling the dental bills which my insurance declined to cover instead of creating more credit card debt.

So dear readers, I understand that I should both save and pay down debt because I can. Now my problem is that I want to know if I should max out the 401k or not. Matching is all well and good. Basically with matching, I can save 12% of my salary with the minimum contribution to get it. That’s easy. My problem is that to get a grip on all that credit card debt and still live without racking up more debt, should I max out at 20% at the beginning of the year and ease off to have lots of cash to pay off debts in the second half of the year? Hm. That’s a new strategy I hadn’t considered yet. *ponders*

Goal Plan A:
1. I could max out my 401k contribution at X%.
2. I could halve my credit card debt in 2008 with ~$750-800 a month in payments.

Goal Plan B:
1. I could put in the minimum to get corporate matching which would still save me about 12% of my salary annually.
2. I could put $1200 a month towards credit cards.
3. Build back my Emergency Fund to $4k.

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I simply hate budgeting. I only hate it because I can’t keep track of what I actually spend. Even if I pay for it all by credit card and download into Quicken, I still seem to lose track of stuff. I am trying as best I can to move simply to paying for stuff with cash or by debit card only. Budgeting, as a discipline doesn’t actually bother me. I think I make enough and realize how I frivolously spend money to know I can stop buying stuff and not feel deprived. Heck, I checked Quicken and in the last 3 months, I haven’t bought any yarn for me. I didn’t even notice it. (2007 Rhinebeck spending was either ‘Gifts Given’ or ‘Vacation’ budget line items in Quicken, and not ‘Crafting’. The handmade soaps I bought there went over well with my knitting group last night.)

Now, I have to wait till my 2008 paychecks start rolling in, but I think I can get all my monthly fixed expenditures down to one single paycheck. (I usually get two per month.) That means, I can divide the second check in two parts. About $600-700 more to credit cards, and the rest into my pocket to spend on everything else, the variable monthly expenses, savings, etc. so I don’t rack up more credit card debt. Is this a better budgeting path for me?

I dreamed that scenario up because I wanted to see how I could make Plan B work. I am having the absolute worst time figuring out what to do.

The only good thing is that all of this includes doing laser eye surgery as built-in cost for the year with Medical FSA funds. Without question, I have the money for it. My last dental crown will be about $1000, but I’ve decided to wait a tad longer so I can get my teeth whitened first.

Because the market has taken a dip, I put back my 5% 401k plan contributions to get the match, rather than get the match after the January lift the market experiences.

It will ease the blow of the $2-3K in losses I took in November to my retirement account balances. OUCH.

I am going to have to stretch out my dental bill repayment and for some irrational reason, I decided to buy expensive tickets to a show for me and my new boyfriend because I really wanted to go and I sense he does too. Plus it makes a really easy Christmas gift because I’m still figuring him out. (Everybody wave “Hi” because he reads this!)

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Sorry I am posting this a day late. I got sucked into work and forgot.

My company default enrolls new employees into the 401k plan. They sign them up to 2% so they get 1% matched, however, with the new year, the default enrollment will be 3% with a 1.5% match.

The main reason for doing this is to get greater plan participation across all levels. Apparently there is a 401k compliance test that’s done to ensure that the 401k plan is utilized by the entire company instead of just the highest income levels.

I had no idea there was a test till my boss and I got a mysterious email about the test, followed by a friendly email from our delightful CEO. How I do love calling him that!

Anyway some other really cool stuff:

1. I can now defer up to 50% of my salary, which means I can front load all my contributions for the year. “Invest early and often” as the mantra goes. That means I can taper off my contributions at the end of the year. Beyond 20% plan limits for the tax benefit, any further income deferred into the plan is still taxed, so most places don’t recommend actually exceeding 20%/$15,500 for the year. But it’s nice to stuff all the money in early.

2. For people who are automatically enrolled at the default rate, they will slowly increase your contribution rate by 1% annually till you hit 5%, and max out the corporate matching contribution. This is kind of cool, but I’d hate it if I were really young and needed the cash just to pay my student loans at 7-8% interest. Reitrement is great and all, but I kind of resented Safe Harbor clauses in the first 403b I had in my first job. They took 7% when I could scarcely afford it! And they wonder why I left that job early. Harumph.

By the way, if a company chooses Safe Harbor, they no longer have to do a compliance test.

Anyhow, this is just another alert to be on the lookout for changes in your plan and to make sure you know what’s out there in terms of plan options and features about which you may want to inquire.

Lately, the search referrals I’m getting include a lot more “asset allocation international” type searches.

Are you guys also looking to internationalize your investment portfolios? I thought I mentioned this before, I’m bumping up my international portion by reallocating money to a second international fund which is less growth oriented and more blend/value. Seems I never said this when I search my posts, but yes, I’m now holding two international funds not just one.

Unfortunately, I’m not sure I am going to do a full rebalance and sell stuff to buy stuff. I was doing lazy rebalancing by changing my 401K contribution allocations. But that’s a little moot right now since I’ve stopped the 401k contributions altogether for the rest of the year.

What about you? Are you doing lazy rebalancing like me or an actual rebalance into more international funds?

It’s down. But you knew that. I decided to put my dental bill on there as a liability since it’s going to take me several months to pay it off. I sent them $500.00 last week. It’s actually a small ding to the net worth that is offset by my 401k contribution and a recovering stock market. My entire portfolio is up by 9%. That’s pretty crazy if you consider that it’s up 4% because of my contribution. The remaining 5% it’s up is pure market rebound. Of course, I did also have a liquidity event, i.e. dividend reinvestment, on one of the funds.

What’s nice is that I did meet my goal of having $30K in retirement money by the end of 2008. Since I’ve met that goal already, I feel ok with stopping my 401k contributions for the moment.

There’s no way I’m going to meet my total goal of having $60K net worth by the end of the year. I am only focused now on two things:

1) Pay off the entire dental bill by January 1, 2008. This means ~$800.00 a month for the rest of the year. It sucks, but c’est la vie.

2) Reduce my credit card debt. I had a tough goal of $9K in credit card balances for 2007. I know I can’t meet that either, but I would like to nudge my NCN Network graph down again. So I will focus on getting this down under $16K. That might not seem like a lot, but with the Christmas holidays approaching, I have no idea how to pay for planned family vacations other than to dip into my savings. I have pretty much eliminated paying myself first right now. I hate it actually, but to meet goal #1, it had to be done. I’m only saving about $35 a month at the moment. (Considering that I was socking away over $1000 a month at one point, saving less than $50 seems like nothing.)

My family’s been talking about LA/Disneyland for Christmas with the nephews and my parents. My mom would like some new luggage, which is fine with me, but after looking at some of the monster bags out there. I am afraid that she won’t be able to get them into her car without needing some help. Luggage is also crazy expensive, so I’ve been shopping around for a good deal on quality stuff. I don’t want to get her something crappy. I’m being picky, but I think this is one of those areas where value and quality is just as important as price.

Please don’t bug out over the mention of Disneyland. I have a few friends who work for The Rodent and can get discounts for us if we plan properly. What’s also nice is having a frank discussion with my sibling over what to get the babies as presents. I can get them whatever I want and I can spend as little or a much as I want. (I was asking about clothes vs educational toys vs toys vs money.) That’s a relief. I like buying the boys cute things, but I really worry that they won’t have college money with the way things are in the America these days. 15 years is a long time for things to change, but a little extra money at Christmastime for their savings accounts could not hurt.

What’s also nice is that my mom sent a full sweater, shirt and pants outfit for the older nephew’s birthday, and he’s really fixated on the green sweater. He’s starting to exert preferences on his clothing so maybe he’ll like some cute, but frugal clothing I send as presents. I’m really big on Old Navy for kids’ clothing right now. Decent quality and inexpensive. I haven’t been in one in years so I was surprised this summer to find that I could spend about $120 and get two skirts and two dress shirts for work. (But I didn’t. I just *thought* about it.)

ps- I did have a No Spend Day on Saturday. Lunch was provided at my volunteer training gig. My laddie cooked me dinner. And the drink I got at the bar later that night was paid for by my old college friend who was squeezing in a visit with me. As he puts it, “I make enough for three people to live on.” I walked to the training session, rode my motorbike for fun in the parking lot, and drove only to my laddie’s house and to the bar in a series of trips. Not bad.

I have been going through my files and I found my old 401k statements. I had to recreate some of the missing amounts, but basically I started with $289.90 in 401k contributions, and added $38.25-39.02 with each semi-monthly paycheck over 2+ years. My total contribution in cash was $1,890.63.

When I left that company in 2005, I rolled over that money on December 18, 2005 into a Traditional IRA account. It was worth $2,897.47. A 53.25% rate of return!

Almost 2 years later, as of Tuesday, September 25, 2007, it was worth $3,669.48. A 94.09% rate of return on over 4 years of investing! I have added nothing to this account since the rollover. I thought I did, but I can’t find record of it. (Quicken’s Find feature will search all your accounts for you. Nothing. Zip. Zilch.)

I’m not savvy enough at the moment to figure the actual annualized rate of return, but using the Rule of 72, it’s about 18%, which is not too shabby.

So if you aren’t thinking about saving, think on this. I saved about $70-80 bucks a month for about 2 years, did nothing to it for an additional 2 years, and it’s worth $3,669.48 now.