Wednesday, March 16, 2016

Kid Update!

It's been a while since I did a kid update. I don't even remember if I posted the biggest big news of ever: Pickle no longer has a g-tube! We did a home-based wean back in September and the day after Christmas, we took out the feeding tube for good. She has a tiny scar (her second belly button) and is still petite but to look at her now, you would never guess her crazy history. It's amazing how far she's come. She can read a few words, remembers songs after hearing them only once - actually, her memory is astonishing. She just played a memory game on my father-in-law's tablet this weekend and was doing well in the eight-year-old range. It was crazy! She likes to bake and paint with watercolors.

Baby Bear is a full-on toddler. He's not actually toddling yet, but he could be if he wanted to. He walks around with one hand holding on to something and will take 2-3 steps into my arms, but doesn't seem interested in doing much more than that just yet. Which is fine - I know he'll go right from wobbly steps to a full-out run, so I'm in no hurry. He can crawl like a fiend, manages to go up and down stairs safely, does some sign language, and blows bubbles. He loves to be outside and will go fetch his shoes at the slightest invitation.

Friday, March 11, 2016

Women's Money Week: Investing in Your Future #WMW16

What does it mean to invest in your future?

Is it about taking out crushing student loan debt to finance a degree that's "guaranteed" to bring in a big paycheck?

Is it about buying a house when you'd rather be traveling the world?

Is it about watching the Dow like a hawk, trying to beat the stock market with hedge funds?

I don't think it's any of those things. Investing in your future might look like taking some classes or asking for a raise or even carefully evaluating a potential marriage partner. It might look like clipping coupons or taking the bus or doing an envelope system budget. It might mean up and quitting or it might mean sticking with it for a bit longer.

I've said on this blog several times that I'm so grateful to my former self for decisions that I've made, and I think that's the essence of investing in yourself. I'm thankful that Peanut and I practiced living on one income so that when we needed to, we could. I'm thankful that we didn't buy as much house as the bank told us we could afford, so we had money left over to deal with the emergencies that come with home ownership. I'm thankful that when I was rubbing two nickels together my first year in New York I didn't succumb to credit cards to buy something better to eat than day-old Starbucks markout sandwiches.

I'd be lying if I said that I was so forward-thinking that I knew those decisions were the best. There are more than a few moments in my life where I did not invest in my future self, and I've mulled over the wasted money those actions caused. Probably the most realistic thing I can say about it is that I'm a pessimist and so I tend to make decisions assuming that things will go badly - that's why I have life insurance. But it does seem to have generally served me well - I try to find ways today that will improve my life later on, and that is probably the root of it all. Treat your future self the way your current self would like to be treated, and it'll probably be for the better.


Thursday, March 10, 2016

Women's Money Week: Debt & Saving #WMW16

My former self is shocked at my current self's comfort with having consumer debt. Shocked, I tell you, and probably a little bit outraged. I am accustomed to thinking of myself as debt free, but I haven't been for a while, and probably never really will be again.

We have a mortgage. And a car loan. (And I use credit cards all the time, as my main payment method for everything, but we still pay those off in full every month.)

With my new income, we have the ability to pay off our car loan this year, but we probably won't.

What?! My former self is aghast.

I know. It goes against a lot of what I've said in the past. And what a lot of financial experts say. But I promise, we've done the math and it makes more sense for us to save right now. Here's why:

1. Our car loan is cheap. 1.9%, which made the finance guy do a double take - he hadn't seen a rate that low in months. Paying off the loan in full now vs over time as scheduled is a difference of just under $700.
2. We have non-recurring opportunities that we can put money into right now. Roth IRAs and HSAs have a limit on how much can be put into them each year, and if that deadline passes, you can never go back. Putting $5,000 in a Roth now to earn money tax-free until retirement will definitely earn me back more than the $700 I'd save paying off the car now!
3. Once we manage to fully fund Roths and the HSA, we plan to build our emergency fund back up. We've been treating our Roths as an extension of our emergency fund, but we'd like to have a very nice big cushion in the bank. We have a small cushion now, certainly enough to absorb any of the kinds of emergencies we've faced as homeowners, but we'd like to build that up more before we start funneling money against that car loan.

Truthfully, we'll probably pay the loan off early. With my additional income, we're on track to be on top of these other things in a year or so, with still 3+ years left on the car loan, and at that point, obviously that will be our big focus. It's hard to convince the old LMM of this, but it really does make a little more financial sense to wait on it.


Wednesday, March 9, 2016

Women's Money Week: Budgeting & Spending #WMW16

Dirty confession: I haven't had a budget in years.

I think there are two ways to approach personal finance, and I've done both. One is a zero-based budget, where each dollar is assigned to a category and once you run out of money in a category, you don't get any more until the next pay period or month. The other way is to track every dollar you spend, so you can monitor trends and adjust as needed. Both work very well, if you're diligent, but I think they work for different circumstances.

I did a zero-based budget when I was living paycheck-to-paycheck. I had very little wiggle room and needed to be the boss of all my dollars. I had specific bills in specific amounts and also specific savings goals that I wanted or needed to reach, and that's the only way I can think of to manage that kind of situation. I even did an envelope system for a while, where I cashed my paycheck into certain denominations and kept the cash in envelopes marked "groceries," "eating out," "household stuff," and "mad money." It was hard to borrow from Peter to pay Paul because it was so obvious what I was doing and when I couldn't afford to do it. During this time, I didn't have a credit card, so cash was my only option.

As my financial situation stabilized and I had a bit of cushion in the bank, plus the confidence in my ability to be disciplined in my spending, I transitioned to tracking each dollar instead of specifically budgeting and when Peanut and I merged finances after our wedding, this is the only method we've used. We have had budgets for specific things - our wedding, our cross-country move, our house purchase, traveling - which we've stuck to, but our organizing financial principle now is tracking our spending instead of budgeting.

If you've tried one method or the other and haven't liked it, I encourage you to try the other - budgeting feels very restrictive when you don't really need to do it, but tracking gives you all sorts of awesome data about your financial life.

If you've never tried budgeting at all, however, I also encourage you to do it for a while - it's a necessary skill to achieve any level of leadership in most professions, and my practice budgeting for myself has given me the confidence to manage budgets with lots more zeros than my personal accounts will likely ever see.

Tuesday, March 8, 2016

Women's Money Week: Financial Organization #WMW16

At the end of last year, Peanut and I decided to do something we've never done before: automate our finances. We signed up for autopay on every bill that allowed it (which was pretty much everything besides credit cards), figuring that it would be a lot easier than sitting down and paying everything once a month. It was taking a long time to reconcile our spreadsheet and pay all the bills every month and we just felt like we could get more organized and streamlined by taking advantage of automatic payments.

What a disaster.

We've not been doing a great job of staying on top of it, and this week we narrowly avoided overdrafting our mortgage payment and Roth IRA contribution. Ugh. We caught it and luckily my paycheck hit just in time to save us (in other words, we realized it but couldn't have done anything about it if I hadn't been getting paid when I was). Keeping up with the variable nature of our utility bills and remembering to enter those amounts into the spreadsheet when they were automatically paid was way more complicated than spending an hour a month doing it manually.

So we're taking everything off autopay and going back to doing it manually.

Our system is SUPPOSED to work like this:
We have a master spreadsheet that tracks every account balance as well as the cash on our persons (we round up to the nearest dollar). When we spend any money, we're supposed to input and categorize the data into the spreadsheet. Once a month, we reconcile everything and pay all the bills. We know our net worth on a monthly basis and can see trends over time (we've used some version of this spreadsheet for almost eight years now). It gets a little unwieldy but it works if we enter our expenditures regularly and reconcile monthly.

We've not been great about entering our receipts, though, and knowing that the bills were getting paid gave us no impetus to go in and reconcile anything, so it all fell apart. Going back to manual bill pay will fix part of that problem, and we're going to work harder at entering our expenditures more frequently to make the reconciling side of things easier too.

We've been doing this for so long that you'd think we'd have the discipline to manage it with autopay, but apparently not. We both feel more comfortable being this involved with and aware of our financial picture, so I guess we'll consider bill-paying to be a date night activity and kill two birds with one stone. :-)



Monday, March 7, 2016

Women's Money Week: Making Money #WMW16

What do I want my daughter to know about being a woman, as it relates to money?

I want her to be willing to make money. I want her to believe that every job has dignity and that no job is beneath her. I want her to aspire to support herself, and eventually a family. 

I want her to be able to make money. I want her to be educated and have every advantage to find a career that she enjoys and ca make a living at. 

I want her to be interested in making money. I want her to care about her financial situation. I want her to be curious about investment options and economic theory. I want her to understand that money represents more than paper and coin, but is all about values. 

I want these things for my son, too. But I suspect that they will come easier for my son than for my daughter. I don't think my son will feel twinges of weirdness if he out-earns his wife, the way I do sometimes for out-earning Peanut right now. I suspect Baby Bear will have an easier time negotiating salary or asking for a raise - there is no proven bias against men for doing those things, the way there is for women. 

Part of my reason for going back to work when my children are small is that I want them to see a woman earning money, and not feeling bad about it. I want them to see someone who is able to provide not only for herself but for a family and who is informed about the state of our family's finances. It's weird - and ridiculous - that this is even a thing I have to think about. Does Peanut think that he needs to work in order to set a good example of a man for our kids? No. He works because that's what you do as an adult - people need money for necessities and luxuries and you get money by working for it. 

So I guess that's what it really boils down to: I'd like for my daughter to make money the way her dad does - because it's a thing that adult people do, and not a man/woman thing at all.