Mapgirl’s Fiscal Challenge

No. I’m not some kind of gazillionaire on WoW. But I did have lots of PoE on Puzzle Pirates at one time. Enough to buy a ship. But alas, my pirating life has fallen prey to the ravenous beast known as blogging. Yarr, matey, ’tis true. Blogging be a harsh mistress.

My financial fantasy life is a bit more mundane than pirating and stealing money from computer-generated ships. The only booty I’ve got is my own backside.

My 2008 goals are mere stepping stones to the things I really want to do. I try not to be too focused on the big picture so I can work on the small things, chip away at them and in the process, get the bigger things done effortlessly. It’s easy to get overwhelmed with the big things, especially when your targets have lots of zeroes behind them.

Another reason why these are fantasies instead of goals is that they don’t meet the S.M.A.R.T. goal metric. Click the link to read more about SMART goals. I don’t want to rehash them here.

1. I would like to have a net worth in the millions.
2. I would like my housing to be cheap or free.
3. I would like my credit cards to be paid off.
4. I would like to remodel my condo.
5. I would like to save 30-40% of my salary.
6. I would like an emergency fund of $15K in cash.
7. I would like pre-tax rates of return in the double digits to make up for taxes and inflation on my retirement accounts.

Doable. All very doable if I stay focused on the small things. For instance, the best way for me to increase my net worth in these sagging times of ours is to pay my credit cards down. All those liabilities eat into my assets, and even though my assets may be falling, they will rise again once more if I hold down my spending and reliance on credit.

If I save 30-40% of my salary and push some of that into my emergency fund, then having $15K stashed away somewhere is not a problem.

If I am wise in my investments and get double digit rates of investment, then I could easily have a net worth in the millions down the road. Asset allocation and portfolio rebalancing is the key thing to look at periodically to make sure I am on track.

But you know, there should be less thinking and more doing.

1. I have 22K in one retirement account.
2. I have another 4K in another retirement account.
3. I have 4K in two other retirement/investment accounts.
4. I own my condo and it has a new bathroom.
5. My car is paid off.
6. I have lots of available credit.
7. I can eat anywhere I want, money no object. (Not that I do.)
8. My closet of clothes is decently maintained. I can buy any clothing I want, money no object. (Not that I do.)
9. I still make regular charitable contributions on a monthly basis.
10. I am saving money by purchasing company stock at a discount.

These are small things. Very small things. But with the market the way it is, I try to ignore the dip in my net worth right now and focus on what has to get done at work. It’s the only way to weather the storm. Losing my job would be the last thing I need. (Not that there’s any danger of that, but I try to do my best whenever I can.)

I mean, I could make a complementary list of the downsides, but who needs being a Negative Nelly right now? I need encouragement, not discouragement.

So no matter how bad it gets, what do you tell yourself in your personal pep talk over finances?

1. I really want to be home at my condo. I miss it. But walking in there while it’s still under renovation depresses me. It also doesn’t help that I nearly had an asthma attack the other night because of all the dust. The contractor did not tape off the hallway as I requested. He left a 3-inch gap at the top. I’m actually quite angry about that. I told him repeatedly that I could not and would not clean up the cave-in and dry wall myself because I feared an asthma attack.

2. Because I can’t be home, I feel like I’m out of control with my finances. I rely on Quicken to help me plan out my spending. I open it up every few days, if not every day, and update the balances. Access to my desktop is key for good financial management. I am veritably crawling the walls because I am addicted to my finances. It’s partially why I am hoarding cash like crazy. I was a little afraid of sending my federal tax refund to my credit card company but I looked a Quicken on Monday night and see that it’s ok. BOOM! That’s $2500 I can pay off this month. All the rest of the cash I’m hoarding is for my contractor.

3. I feel fat. I may not LOOK fat, but I can’t fit into my Lilly skirt (purchased 2 yrs ago). I was hoping to wear it to a beach-side wedding last month, but I had to settle for an odd fitting dress. Way to go. All my pants are cutting into my stomach at work while I’m sitting. I am constantly uncomfortable. I admit, I haven’t made a lot of effort here since frankly I am lazy and exercise isn’t on the menu. My own vanity is getting the best of me and my wallet.

BLAH. June will be better. I can feel it.

I am dreaming of my paycheck. I have a huge surplus of cash right now, which I am saving for the bachelorette party this weekend. I also need to have a surplus going into the next pay cycle when I send off a huge payment to one of my credit card companies. Without reserving a little from the current paycheck, I will be short on the next paycheck. I hate not having a little something in my checking account.

Also, I cannot, for the life of me, find my Lasik receipt. Since I couldn’t see a damned thing for a few days, I put it on my table with a lot of other crap. I thought I had filed it away with some other things, but I cleaned that up over the weekend to prepare my taxes and get organized, but it did not turn up. I’m going to have to call for a copy of the receipt. At least I found the reimbursement forms at work now. (HR with my new company can be a pain in the neck.)

Once that’s done and I get reimbursed, I will be able to cut my credit card balance down by about 25-30%. Woe unto me for my bureaucratic apathy! I’m paying finance charges and interest! That my children, is the cost of laziness.

That’s the headline of a Michelle Singletary article from Sunday helping you set and keep goals.

Honestly, one of the best things you can do is make your goal very visible. Michelle writes about putting up a whiteboard. I’ve heard of writing it in dry-erase marker on your bathroom mirror. I used to keep post-it notes on the mirror so I could see my goals every morning as I brushed my teeth. I had a friend in high school who had a label-maker sticker on her dashboard that asked her if her lights were still on. I drained and jumpstarted so many batteries, I probably should have done that too.

Other suggestions for making your goals highly visible and a daily reminder:

1) Change your cellphone banner with your savings goal number.
2) Hack your software’s splash screen to ask you what your goal is.
3) Put a list on your mirror.
4) Make a daily reminder on your time-management software to review your list (Outlook, UGH.).
5) Write it in masking tape and put it on your shirt upside down, so when you look down at it, it’s right side up for reading.
6) Tell a friend. (Ok, perhaps not a daily reminder)
7) Write it on a card and put it in your wallet next to your driver’s license or regularly used ATM card/grocery card.
Make your screensaver a marquee with your goal.
9) Put a post-it note near your front door knob so you read the goal every day as you leave your house.
10) Take a sharpie and write it on the front of your credit card.

I especially like the last one best because I have found that with gift cards that go unused, it’s best to look up the balance, and then mark it on the front of the card so I can use the darned thing up eventually. I see nothing wrong with writing “HAWAII VACATION” on the front of a credit or debit card to remind me that maybe, just maybe my Hawaii vacation is more important than a cute pair of shoes on sale.

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.

*******

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.

The Dough Roller, not a blog I frequent, but he has some real gems in his blog.

A few weeks ago, I liked this Doomsday Fund article where he delineates exactly what he’d do in desperate times.

What would I do?

1) Cancel my phone service and DSL line into the house. I have a cellphone. Now that I have a laptop, I’d wardrive for a WiFi connection, hit up a free hotspot at Panera Bread, or tote it to a friend’s house and use theirs. Save $50 a month. (It would have been more, by my new phone bill came yesterday and it’s now $10 less! Hooray for calling for a cheaper deal!)

2) I’d ask my mom to pay her portion of the cellphone bill. My folks used to pay for mine, but now I pay for theirs as add-on phone lines to my primary line. Save $25-40 a month.

3) I’d consolidate my bills and loans so I’d have better cash flow every month. (Tried and true since I did this before. Maybe I should do this again?) Save $100-200 a month.

4) I’d get a second job either back at the yarn shop, waiting tables again, tutor kids, or pet sitting/baby sitting. Earn $100 a month.

5) I’d stop dining out, as much as it would pain me to do so. I’m packing lunch more often and I feel like I’m still ‘practicing’ at it rather than actually saving money. Save $200 a month.

6) I’d stop my retirement contributions completely, which I am doing now and it’s working. Save $500-800 a month.

7) I’d start to sell or pawn everything I had of value. In rough order: Books, CD’s, DVD’s. My bicycle. My iPod Nano. My kitchen appliances. My stash of yarns and fiber. Original artwork I’ve collected. My spinning wheel. My motorcycle. A diamond and gold bracelet my mother gave me for graduation which I never wear. My car.

I’d start making things to sell at Etsy.

9) I’d scale back my car insurance. Save $10-50 a month.

10) I’d sell my furniture, then my condo.

11) I’d donate what I could to charity increase my deductions and thereby reduce my taxable income.

12) I’d try to leverage this blog to earn more money.

That’s all I could really brainstorm. I’m doing a few of these things already, like stopping the contributions and packing my lunch more often. It’s working for me, albeit very slowly.

As we head into the holiday season and enjoy today’s holiday of gluttony, I just wanted to take a moment and reflect on the abundance in my life.

During my regular knitting gathering this week, we were talking about S.A.B.L.E., Stash Acquisition Beyond Life Expectancy. For those of you who don’t knit, ’stash’ is your yarn stash from which you can pull to make projects. It’s your warehouse of yarn. For many women, building stash is a comfort. It’s saving yarn for use in the future, like a quick knit baby sweater when you don’t have time that week to run to the store to buy a baby shower gift or pick up a specific baby yarn. For other women, it’s just plain old hoarding out the wazoo.

In 2007, I’ve purchased very little in the way of new craft items. I think I’ve spent less than $150, whereas I might spend $400 in a typical year. Last year I realized that I needed to stop buying yarns and fiber because I spend a lot of time blogging and no longer craft like I did before starting MFC. My stash is overtaking my small apartment.

One of the knitters, Lanea, is on a book buying moratorium this year because she realized that she and her husband have way too many unread books in the house. I know that I could read every book I have in the house and not buy a new one for at least 2 or 3 years, if not more. And that doesn’t include what’s still at my mom and dad’s house. That’s probably another 2 years’ worth of books.

A friend called me one night recently and I started to futz around and clean up my closet. Ostensibly, I was looking for my sweaters since we had our first hard frost of the season on Monday night. But really I was culling my clothing. A storage box of sweaters turns into a box of t-shirts and shorts for the winter and that means a quick inspection of my drawers and closet racks for things that can be donated to Goodwill. I realize that I have lots of spiffy clothes for work, but I was choosing not to wear the silk shirts and sweaters because I didn’t want to spend the money to dry clean them. And yet, I am loathe to get rid of them. Finding them was finding a new wardrobe for work. What is the cost of cleaning them when it saves me money on buying new clothes?

My friend on the phone asked me how many pairs of shoes I had. I thought this was a trap because he’s a guy and I’ve been accused of being Imelda Marcos. But I felt better when I guessed 30-40 and he said he had the same. (I am now going to have to inventory them for my own satisfaction.) As I told him my guess, I was staring at a pair of boots, thinking of the Baby Phat pair that Single Ma wants. My boots are old and out of style, but they’re still in reasonable condition. They will last me another year. Frumperella isn’t going to mind since these boots won’t turn into shoeboxes at midnight.

If you look around your life will you find what you need within the possessions you have? Think about that because at its core is an assumption that you can discern your needs and wants and separate them like sheep from goats. Do you have unacknowledged abundance in your life? Will finding it help you re-prioritize your spending in the next month?

During the winter season there’s all kinds of propaganda about peace on earth and goodwill towards man. There’s pap about transcending material things and putting other people first. It’s all b.s. since everyone goes into a gift buying frenzy. Everything seems like such a damned good deal so it’s ok to spend on yourself a little while you spend on everyone else. But that’s a false correlation. It’s not ok to spend on yourself if it’s going to break your shopping budget.

If you think before you shop about what you really have in your life, you will see that you probably have plenty. I write about material things, but I know the same principle of hidden abundance counts for immaterial things as well. I have my life, my family, my supportive friends. For the first time in many years, I can say have good oral health. My cup runneth over and I didn’t even know it till I stopped to think about it.

Alrighty. I am dragging this post out of my draft archives. I wrote it a really long time ago. But since Plonkee tagged me to write about if I was debt free.

You have to understand though that this is just some homesickness on my part more than it is about debt.

If you asked me what my financial life would be like, this would be easier on me emotionally.

1) I’d max out my 401k Contributions again.
2) I’d save for a Roth IRA.
3) I’d bulk up my emergency/get out of DC fund.
4) I’d get laser surgery on my vision. (Which still might happen! I’m going to refurb this body before I turn 40 dammit.)

But here’s the original post I had written. Reading it serves nothing but to make me sad, which I suppose is why I hadn’t posted it last spring when I wrote it.

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