Retirement Saving May 17, 2011

The past few months have been incredibly hectic. I’ve been at my new job long enough that I have a lot of work piled on me without much direction of how to do it. (I’m expected to know things now, or at least be able to figure them out on my own.) It’s been interesting figuring out what I’m capable of! About a month ago I got a raise, and thought, “Hey! They’re recognizing how much hard work I’ve been doing!” . . . Then more work started piling on, so it must have been a preemptive move on their part!

Last month I maxed out my 2010 Roth IRA before Tax Day. I’ve also set up my auto-withdrawals for this year to max it out for 2011. I have already been contributing 5% of my pre-tax income to my 401(k) since I started at this job – that’s the max to get the company match. They match 100% of the first 3% and 50% of the next 2%. So my 5% contribution automatically gets me another 4%. This week I raised my contribution to 7%. I don’t really think that my 401(k) is the best place to invest that extra 2% . . . but I also know that it’ll be a while before I get around to doing some research and choosing some stocks to invest in on my own, so I might as well bump up this rather than doing nothing.

Right now I feel like things are pretty solid for my long-term retirement savings. I think that soon, though, I need to start contributing to stocks/bonds or other investments that I can start withdrawing from before retirement age. If I want to be financially free by age 45 (or any other age before 59 1/2 when I can start pulling money from my Roth IRA), I’m going to have to have some other investments to draw from! And recommendations?

Tennis Lessons March 20, 2011

I’ve never played tennis before, but contemplated learning when I moved to Chicago. No one I knew when I lived in Missouri or Kentucky played tennis, and it’s generally considered an “elitist” sport. Something for rich people. However, I now find myself running in “higher” social circles than I have for most of my life. I come from a lower-middle-class background and have always lived in small towns. Now that I finished my master’s degree and have a professional job in a major city, I’m surrounded mostly by people from a much higher socioeconomic background than myself. Tennis is a very popular sport among the people I work with.

When I was younger, I played soccer and softball. I always loved playing sports, but unfortunately it’s very difficult post-college to get enough people together for a pickup game of either soccer or softball. I also haven’t played softball “for real” in years, and have lost most of my skills. Soccer still comes back to me reasonably well, since I played pickup games often in high school and college. Lately I’ve realized that I would like to have a social sport that can be played with a more reasonable number of participants. Since so many people I know here play tennis, it seems like a logical choice.

Another factor in this decision is the fact that my 15 year old brother, who started high school last fall, is interested in learning to play. He plays soccer and basketball in the fall and winter respectively, but doesn’t have a spring sport. His school is currently building tennis counts, and expects to offer tennis for the first time next year. So he is strongly considering picking this up as a spring sport. I am 11 years older than my brother, so having another activity that we can bond over when I’m in town visiting would be awesome. We get along amazingly well giving our age difference, but it can never hurt to have another activity to enjoy together!

All of this considered, I signed up for tennis lessons about a month ago. There is a well-known tennis club near my apartment, and they offer small group lessons. I signed up for one month of lessons, and tonight I had my third lesson. Signing up for lessons included a one month temporary membership at the club, which means I’ve been able to use the practice lanes. I’ve been trying to go at least once a week to use the practice lanes in between lessons, and will probably try to go twice this week since it is the final week. They also do two “tennis parties” for everyone taking classes during the month. These “parties” consist of two hours of cardio tennis followed by one hour of mingling/socializing. If you decide to join the club after the class is over, there is a $200 initial fee, plus $105/month for membership fees. During June, July, and August you can reserve courts for “free,” but during the other 9 months it costs about $40 to reserve a court for 2 hours. Needless to say, I don’t plan on joining right now.

The classes I’m taking right now cost $105 for 4 classes. One class per week for four weeks, plus you get the “temporary membership” (that doesn’t include using the courts, only the practice lanes and gym). I was unsure at first about whether this would be worth the money, but I’m incredibly glad I decided to take the classes. So far I’m having a great time, and hopefully learning more than I think.

Taking classes has also led to some other less tangible results. My goal word for this year is “Connect.” So far I’ve exchanged contact information with four other women who are taking the classes, and we plan to get together to continue playing tennis this summer when the city parks open their courts. I’ve also met a few other people that I haven’t had a chance to exchange contact info with yet, but hopefully I’ll make a few more connections at the cardio tennis party later this week. I’ve had a hard time making friends in Chicago since work has been crazy and I’ve basically been hibernating for the winter. Meeting new people is one of my goals for this spring and summer, so this is definitely helping with that tremendously! My boss took tennis lessons a few years ago at the club, and she highly recommended it to me when I mentioned my interest. She is very athletic and was excited when I mentioned tennis – she offered a lot of advice and told me about a few other clubs and also mentioned where some free outdoor tennis courts are near our office in the suburbs. When I started lessons, she gave me one of her racquets to use while I’m learning. She also asks me regularly how my lessons are going, and is thrilled that I’m enjoying them and meeting people that I can play tennis with this summer.

When I was younger I was always incredibly competitive, and didn’t do things “for fun” very often. I didn’t like doing things that I wasn’t good at, since I was so competitive – I like to win! It’s been a new experience signing up for “Beginner” classes, acknowledging that I don’t know what I’m doing, and being okay with learning slowly. Overall I feel like the $105 I paid for these classes has been an excellent investment. I’ve learned a lot about myself, am excited about learning new things (and can even see myself taking lessons for other activities in the future “for fun!”), and have really pushed myself to use this opportunity to meet new people and start building a social circle in Chicago!

Roth IRA – Maxing Out 2010 March 9, 2011

I have known for quite a while that you have until April 15 of a year to max out a Roth IRA for the previous year. I have made regular contributions to my Roth IRA since opening it but thus far I’ve never actually maxed it out. However, now that I’ve covered all of my moving expenses and am relatively settled in Chicago, I’ve been making plans to back-contribute for 2010 and finally max out my Roth.

(Here’s a link to the IRS website explanation of Roth IRAs for those who are unfamiliar.)

In 2010 I was contributing $200 a month to my Roth IRA, which brings my total contributions for the year to $2400. The maximum you can contribute in one year is $5000, so I am allowed to contribute up to $2600 more for 2010. I contacted a local financial adviser (so I could meet with someone here, since I am never going to be back in my hometown – where I opened the account – during normal business hours!) and set up an appointment in January. I wanted to set up 3 payments of $867 each to cover the remaining $2600. The adviser was more concerned about setting up recurring monthly payments for this year, which he wanted to start as soon as possible. I wanted to first focus on maxing out 2010, then focus on 2011 and going forward. He ended up not getting everything set up in time to have three payments, so instead I’m back-contributing $1300 in March and another $1300 in April. He ALSO set up my 2011 payments, $417 per month, to be withdrawn each month. Since this wasn’t set up until March, I’ll have to play catch-up later in the year for the January and February payments that were missed.

It also means that for March and April, I’ll be contributing $1717 each month to my Roth IRA. That’s over half of my take-home pay! I find this incredibly frustrating, as it’s going to make my budget very tight for those months. (I’m really trying not to dig money out of savings for this kind of stuff.) I’m also concerned because the payments were supposed to be withdrawn on the first of each month, but the March payment didn’t actually process until Monday (March 7). I’m slightly worried that my April payment is going to end up not going through in time! This whole thing has been frustrating enough that I’m thinking about switching companies for my Roth IRA. The only reason I haven’t is because I really don’t have time to deal with it right now.

I’ll be relieved when this is all straightened out and my retirement savings can be back on auto-pilot again!

Profit Sharing February 18, 2011

Early last week someone I didn’t recognize was walking around the office handing out envelopes. I didn’t think much of it, because my company often does stuff for one-year employees, teams who have recently done something well, or other things like that. I did notice that there were a LOT of envelopes, so I figured it was something for anyone who had been there more than a year or something. I’ve been really busy at work, so I really didn’t give it much thought.

A day or two later, my boss stopped by my cubicle first thing in the morning. In a low voice she informs me that the envelops were profit sharing, which the company didn’t do in the past but has for the last two years or so. She said that the cut-off they set was 5 months. Since I didn’t start until September, that means I wasn’t eligible for profit sharing for 2010. She wanted to talk to me about it, because she was sure that people would be mentioning it around the office and she wanted me to know that it wasn’t based on performance and I shouldn’t be offended or upset or anything.

Although I wasn’t offended and didn’t really need reassurance, I really respect and appreciate that my boss stopped by to talk to me about it. A few other new people around the office were not made similarly aware by their bosses, and I can see how it could have led to upset feelings. I definitely appreciate that my boss wanted me to know that it wasn’t performance based, and that I’ll be included next year. That means that she thinks I’m doing well, and that she expects me to be around for at least another year. Don’t get me wrong, there is very rarely turnover by people who have been at the company less than 2 years or so. But I’m so used to working in jobs where the turnover is high, that it’s nice to hear my boss talk about something (and more money in my pocket, especially!) that far into the future.

Long-term Goals: November 2010 Update November 16, 2010

A little over a year ago I created a list of long-term financial goals, the first of which was to have a net worth of $100,000 by two years after finishing my MA program. I remembered earlier today (for the first time in months) that I had made these goals, and now that I’ve started my first career job it seems like a reasonable time to make a progress note.

I’ve been tracking my NW at NetworthIQ.com for quite a while now, and here’s a link to my public profile. Right now my NW sits at $4229. That doesn’t sound like I’m very far toward my 2-year goal! However, there’s some good news. You can see from the chart that my NW has been a bit of an adventure over the past year – grad school really threw me off! I took out about $20,000 in student loans, and I owe nearly that same amount since most of my payments have gone to cover the interest that has accrued over the past year. In early December my first “official” payment is due ($233.44) and I went ahead and set a payment to be deducted from my bank for tomorrow ($500) to cover that. I haven’t received any of the official stuff they’re supposed to send me (not even the emails that I’m supposed to receive regularly), so I’m glad I care enough to log on to the site and make regular payments – had I not set up my account nearly a year ago, I would probably have completely forgotten about when loans come due and would have had no clue how to log on and check, etc. (That’s not true – I would have remembered about them. But I understand completely how other people could forget, and I do think its BS that I haven’t received any of the emails they’re supposed to be sending me. Plus I was a student over the summer while finishing my thesis, but they’re still setting my repayments to begin 6 months after May, which I hadn’t expected since I graduated in August.)

So, is $100,000 NW in two years going to be possible? A part of me leans toward saying no, because that’s nearly my entire salary and I certainly have to live! On the other hand, I do save a fairly significant chunk of my income, my retirements accounts are doing well (and I have an employer match for up to 4% of my salary for my 401(k), which of course I take advantage of), and raises/bonuses/moving to higher paying jobs/etc. are certainly possible within the next two years! So at this time, I don’t think any adjustments are necessary to the goal – I’d rather set it high and miss, than set it low and be content with saving less than I could/should have. I’ll plan to re-evaluate this every few months and keep you all posted!

My net worth is finally positive again! November 6, 2010

I’ve been using Networth IQ to track my net worth for a couple of years now. For the past 6 months or so my net worth has been low and for the past two months its even been negative. Taking out loans for grad school has killed me! But I’ve finally made headway toward re-establishing myself. I have now had 4 paychecks at my job, which has allowed me to get established here and start paying down student loans. I’ve bought a new bed and paid for pretty much all of the apartment things I need, so those initial expenses are out of the way – which means more money for savings and repaying student loans now!

I took out about $21,000 in student loans, and right now my total owed stands at $19801. The payments I have made to this point have mostly covered the interest that has accrued. Right now I’m really torn on how much I want to put toward student loans each month – I really want to get rid of them as quickly as possible, but I also want to focus on maxing out my Roth IRA for this year and building up my emergency fund. I still haven’t done a good job of tracking my day to day spending, but I have actually been saving all of my receipts so that’s a step in the right direction, right?

I need some money-minded friends! October 18, 2010

I have determined that what I really need right now is a few friends who I can sit down with and discuss finances in detail!

I read The Smart Cookie’s Guide to Making More Dough a few years ago and loved the idea of having a Money Group with whom to discuss all things personal finance. Now that i have a stable salary, I want to start making headway on my student loans (about $20k) and save more for retirement. I also know that I need to build up my short term savings, since grad school wiped most of that out. It would be great to find other people around here (surely there are some in Chicago!) who are dealing with similar issues and would want to talk finances!

I’ve been doing a little better about day-to-day spending, but still spend way too much on things to get settled here. Household items and whatnot. And I have three trips to visit friends/family coming up in the next couple of months, which has meant a lot of money spent on plane tickets, etc.

I’ve started a notebook where I can keep track of my paychecks and monthly budgets (I hate doing that stuff on the computer, at least while I’m in the planning stages). This month will be my first month of really testing that out. However, since my checks are direct deposited and I have multiple bank accounts, I have trouble keeping straight in my head what money is “new” money and what is “old” money. I really need to start keeping track of day-to-day spending again, so that I can see exactly how much I’ve spent since my last paycheck. (Since debit and credit transactions take a few days to go through, I don’t use the dates on my online banking to judge how long it’s been since I spent the money.)

So much to think about!

Chicago Plans! August 6, 2010

I have a lot to report, but unfortunately not much time in which to do it! I did a great job of keeping track of all of my receipts and recording all of my spending transactions in July, but not so great of a job on not spending money! If I have a chance I’ll post more on that one day.

But the more important part for right now is that I have a job! I don’t start until early September, and it is contingent on me finishing my MA this summer. That won’t be a problem, I’ve been in contact with my adviser and it will be done by the end of this month. However, that does me I’m going to have very little free time for other things!

This week my friend and I put in an application for an apartment, and we found out today that our application has been approved. I had to have my dad co-sign, since my friend and I both have minimal credit history, so that was sad. But it’s okay, everyone has to start somewhere! I pulled my credit report a few weeks ago and the only things listed are my credit card (4 years of being paid on time every month), my student loans from this year (which I’m not even required to start paying back until 6 months after finishing school), and a utility bill that an old roommate didn’t pay (the last bill in my name, which she told me was taken care of) that I paid off when I found out it was in collections – that was about 3 years ago. Those are literally the only things on my credit report, so I can understand why they felt I have insufficient credit history. It really sucks that when you pay your bills on time, they don’t get reported to credit agencies! But I’m veering off topic here. The company and landlord are drawing up a lease, and hopefully we can sign and start moving in next week!

Between moving, finishing my thesis, and starting a new job I’m not sure that I’ll have time to update again in the near future – but once I finish the thesis and start this job, money will be fun to think about again! I’ll post when I can with more updates.

July tracking and spending – first update July 3, 2010

I got a small notebook (about 3×2) to keep in my purse and record all spending and income. So far my plan is to use one sheet for each day, and force myself to write down each transaction. I have never, ever kept a checkbook register. I’ve never felt any need to – I’ve always been good with my money, plus I log into internet banking nearly every day so I always know my balance within a few dollars. Also, I very rarely wrote checks, so there was never a question of outstanding checks I had forgotten about. Now I never write checks (I haven’t even had a checkbook in years). If I must have a check, I use ING. However, for 99.5% of purchases I have not had any problems paying with cash or credit/debit. So writing down every transaction is going to be a new experience for me!

My grand total for July spending so far: $0.25.

Tomorrow I’m flying to Chicago and staying there for three days. Monday and Tuesday will be spent looking at apartments with my soon-to-be-roommate and hopefully signing a lease somewhere. Therefore spending will probably be somewhat high during the next three days due to transportation and eating out in the city.

I’m also listing income in my notebook register. Or rather, I’m listing hours worked and any cash I receive. If I find money or receive gifts, that will be recorded for that day in my notebook. I think I’m going to make an Excel spreadsheet where I can record all numbers from my notebook once every week or so. I haven’t decided on the best way to do this (or on what categories I want to group spending into), and I expect that it may take a few months before I have any real system in place.

I recently read through this guy’s “Eating Well On $1 A Day” experiement . I’ve never seen the kind of coupon bargains he finds at stores around here, but when I find new grocery stores in Chicago I might give it a go.

It also just occurred to me that since I’ll be getting a job instead of starting a PhD program this fall, I can return to my savings goals for the next 20 years. I’m not sure how do-able having a net worth of $100k in 2 years will be, but I will have a good idea once I am hired in Chicago.

Goals for July June 30, 2010

The past year has been pretty crazy – going back to school, going into debt, not making much money, and not knowing what the future holds.

Starting 01 July, I am going to get back on track! I’ve begun applying for jobs in Chicago, and I will be there for a few days next week to look at some apartments in person.

Here are my goals for July:
*Sign a lease in Chicago to start 01 August
*Find a job in Chicago
*Track all income and spending (I’ve gotten really bad about not doing this!)
*Make a plan for organizing that tracking – since I no longer use Wesabe, I need to find a new method
*Don’t buy things unless absolutely necessary!

I had to buy a new cell phone this week, and bought an iPhone 3Gs. Since the new iPhones are out, the old ones were on close out. Until this week I had never accessed the internet from a phone or had a phone capable of downloading apps. If anyone has suggestions for a budgeting/tracking app (preferably a free one!) that I should check out, please let me know!