Non-Financial Financial Goals Check In

In January, I posted a number of non-financial financial goals for 2008. The end of the first quarter seems like as good a time as any to check in on my progress.

1) Floss. This has been a rousing success. This is now a regular part of the morning routine. Er, the weekday morning routine--my weekend morning routine rarely involves brushing my teeth until about noon. But I can tell my gums are happier.

2) Read one classic, free book once a month. I don't know how "classic" some of these books are, but I have done some serious novel reading, in addition to (finally) catching up on my New Yorker subscription: How The Garcia Girls Lost Their Accents, The Brief History of The Dead, Let The Northern Lights Erase Your Name (possibly the best book I've read in the last year or so), and Ways of Dying (possibly the second best book I've read in the last year or so). All things from the library, our collection, or borrowed from friends. All recommended. I'm right now working on another book I'm enjoying far less, but it was written by a friend of a friend of a friend, so I feel duty bound to give it a go.

3) Maintain a high quality blog. You know better than I do, but I haven't quit yet.

4) Build a pergola. The snow has hardly melted. We've done nothing on this.
A couple of times Shiner has mentioned wanting to sketch out some ideas, but poor thing is awfully busy these days.

Resurrection Sunday--The End of the Compact

Ten points to the first person to identify the musical reference in the post title.

Today is Easter, which means Lent--and my renunciation of retail--has come to a close. How did I do in upholding the Compact?

Well, I wasn't perfect. Here's the tally of what new, nonconsumable items I bought during Lent. All prices are in USD--in the case of those things I bought out of the country, I've approximated the cost after the exchange rate:

a rash guard, for extra sun protection in the water while on vacation. This was one of my caveats from the outset, and the lack of sunburn on my shoulders thanks me for it. About $45, roughly the same as I would have paid in the US.

jewelry while on vacation. OK, two pairs of earrings and a necklace. I did reserve the right to buy jewelry, since it's usually the only souvenir I collect when I travel, but I admit this was overkill, and not really in keeping with the spirit of the original exception. About $60.

trashy magazines, read while (you guessed it) traveling. If I remember correctly, it was two copies of US Weekly, an In Touch, and an OK. For some reason I have trouble reading anything that requires actual thought while in an airport. $US 17.

four yards of a cute fabric that was on sale at reprodepot.com. I don't have a specific project in mind, but I do have two pregnant friends for whom I plan to make gifts, and my fingers had submitted my credit card information before I even realized that I had broken the Compact. $25.

a set of 100 restaurant napkins, bought for the wedding for $75 including shipping--cheaper than renting them. I don't actually know whether these are new or not, since I got them on ebay, but in the spirit of inclusiveness I thought I should list them here as a "maybe."

Obviously I was not 100% successful, but this was definitely a worthwhile challenge. The clear takeaway is that travel bends my iron will in a most embarrassing way.

For the most part, the resolution was surprisingly easy to stick to. I have been really busy at work, which meant very little time I could have been recreationally buying. We also took a two-week vacation in the middle of Lent, when we spent relatively freely, but mostly on experiences rather than on stuff. The few times I have gone shopping during Lent, I have consciously tried to choose consignment, vintage, or resale shops so that my options were necessarily limited to used merchandise.

But when it was hard, it was hard. As evidenced by my abuse of the jewelry exception, when I didn't have a strict limit to stick to it was very easy for me to go overboard. And though I don't shop frequently, when I do it, it's almost instinctive and unconscious. Witness the fabric purchase. As another example, I did have one serious near miss when I spotted a china cabinet and a liquor cabinet online. I showed them to Shiner to make sure he liked it, and when he did, I got fantastically excited that our dining room storage crisis would soon be coming to an end. He said, "you're not going to buy it right now, are you?" "Yes!" I said, giddy, images of magazine-level organization dancing in my head. "But what about Lent?" D'oh. I had completely forgotten. I didn't buy them, promising myself to wait until Easter. I'm not proud that I inadvertently came so close to such a big slip up.

On the other hand, I had a number of what I consider to be successes, too: times when I was sorely tempted to buy and did not. Three of them (apart from the now notorious china cabinet) are especially memorable. First there was my friend's baby shower. I had intended to make her a quilt, but then work exploded and I didn't have time to even cut the fabric, and the night before her shower I still didn't have a gift for her. I very nearly walked to the bookstore and bought her a couple of board books, but instead I whipped up some soft toys with scrap fabric I had in my stash. Then in preparing for our trip, I wanted to buy a couple of new novels that had been recommended to me. Instead, I took a trip to the library and dug into our own personal collection and found four books to keep me busy on the beach. A couple of those turned out to be real gems, too. Finally, and most ridiculously, in following along with the folks over at Apartment Therapy who are doing the Spring Cure, I suddenly felt compelled to buy home decor magazines. I know. They are mostly ads, and I could never afford much of what's in them anyway, but this was like an irrational, all-consuming fever. I had a Barnes and Noble gift card! Surely that's what the cosmos intended me to spend it on! For two days this fever raged, and I valiantly fought back, eventually winning.

It's a little hard to compare my expenses during Lent to my expenses during a regular six-week span. For a third of Lent I was on vacation, which means my spending patterns weren't normal, and that vacation was to a country with a very cash-based economy, so I can't just compare credit card statements to identify exactly how I was spending money differently. But taking those things into consideration, I spent noticably less under the Compact than I do in the average four-week period. For example, the credit card bills that I'll pay at the end of March are less than a third what they usually are, and that's some difference coming from someone who doesn't think she shops very much.

Part of me would like to keep going with the Compact, because I feel like 6 weeks is not really enough time to create new habits, and that's part of what I was hoping to get out of the Compact.

On the other hand, I cannot imagine, say, continuing to plan a wedding while buying only used items. I'm sure it's entirely possible, but I'm trying to make planning less of a hassle, not more of one--the thought of combing ebay or pawn shops week after week to find the right ipod dock and speakers (much cheaper than a DJ, and something we will happily reuse in our home) seems like a special brand of hell.

And then there's the fact that I just don't get off on self-abnegation. I am down with the goal of not buying things just for the hell of it, but when you do have a need or a long-held, well-considered want for something, I have a hard time thinking of it as a party foul to go out and buy it. Yes, I put off ordering the china cabinet for the sake of following the rules of the Compact. But aside from strictly adhering to to rules of the game, I'm not sure I got anything out of delaying that purchase. After a couple of years, am I going to change my mind about needing one by thinking it over for six more days? No. And I am picky enough about aesthetics that I would rather go without that get something that is not really what I want--that's why I've gone without for so long already. So used is not necessarily going to get me there, either. But I do think it would be worth revisting the Compact again in a year or so, after the wedding, after more or less completing our furnishing wish list. I do think there is a point of enoughness to which I am extremely close. I remain very interested in whether I can identify what that point is, and whether I can honestly stop when I hit it.

By the way, I ordered the furniture this morning.

Net Worth Not Impressive: My Coping Strategy

My net worth numbers have been sucking since the end of 2007. Completely crappy. I was getting a fair amount of motivation every month by watching that number grow, and now for reasons mostly not within my control (Hello, stock market! Meet the housing market!), that number has gone haywire, and I don't know when it will right itself. If I can't use net worth progress to track the incremental improvement that I know I'm making, what sort of benchmark am I going to use?

Why my net worth has taken a nose dive
From November 2005, when I started tracking my net worth, until December 2007, I was a freight train, a tigress, a perpetual motion machine, a number of really impressive metaphors. I increased my net worth by $107,822. I don't even know how to calculate the percentage increase because I started $46k in the hole, and high school algebra rules about multiplying and dividing negative numbers were a long time ago. But I know that's not shabby, considering that even at my most indebted that number includes home ownership and law school loans.

But 2008 is a different story. My retirement accounts are down--whose aren't? My debt load has gone up since the end of December when I had to replace my furnace, and I put that on a 0% card lest I chew through the bulk of my emergency fund in one go. I have the money to pay it off but I just don't want to until I've had a chance to rebuild my savings from that hit. But my savings are down, too, and this is truly a pisser. My savings account was nice and fat at the end of 2007, full of various subaccounts (emergency fund, vacation fund, wedding fund, etc.). But now the vacation subaccount has been liquidated to pay for the actual vacation, and the wedding fund is stagnant or even shrinking as I put money in every month only to take it out to pay for deposits on photography, ceremony venue, and the like. It's like pouring water into a bucket with a hole in the bottom. And I just got a notice from the county assessor that my home's assessed value for 2009 will be $18k less than it is for 2008. Even though I know my assessor's valuation is well below market value, that's the number I use for my net worth calculation because I'm conservative in most everything except politics, so that de-valuation will drag the net worth numbers down even farther.

So it's all treading water over here in Feminist Finance land, as far as net worth goes. I'm on target to max out my Roth 401(k) this year, and to once again have four months of living expenses in savings by the end of 2008, and to be able to pay for all of our wedding expenses in early 2009. But with the stock market in the toilet (despite periodic "rallies" like yesterday's, there's no putting lipstick on a pig) and the constant drain of wedding expenses that seem to accrue almost as fast as I save up for them, I can't count on any progress I make to show in my net worth numbers.

With all this going on, how can I track my progress?
What's a savvy woman to do? Throw up her hands and say, screw it, I'll keep on trucking and check in again in 15 months? Nay, gentle readers. I am far to goal-oriented for the ostrich strategy to work for me.

Debt Reduction
I'm going to continue my retirement contributions and direct deposits to savings as I have been doing, but for the next, say, six months, my primary interest will not be in tracking my net worth but in tracking my debt reduction. Since the targeted spending goals are what they are, and since I have zero control over the vagaries of the stock market or my housing valuation, my strategy is going to be to focus on the part I can control: debt repayment. Unfortunately, unlike with credit card debt, making big payments to these fixed-rate loans will not decrease my monthly debt obligations. But they will decrease my total debt load, which has a psychological, if not immediately practical benefit.

I have four debts: my mortgage, my home equity loan, my cosolidated student loans, and my American Express (the 0% card where my furnace expenses--and only my furnace expenses--are hanging out).* I do have other credit cards but those are paid off every month. All but the credit card are fixed rates, though there's a balloon payment on the home equity loan that will come due in September 2010. The home equity loan also has the highest interest rate of the three, at 6.25%. Due to those two factors, that's where I'm focusing my debt repayment energy.

To that end: My home equity loan, which started in Fall 2005 at $44,000, is now under $20k. $19,875, to be precise. Hooray for me.

Living Below My Means
I will also track the percentage of my gross income saved or invested (including extra debt payments), trying to keep that number above 50%. Between automatic retirement contributions, direct deposits to savings accounts, and the extra house payment Shiner contributes every month, I can usually hit this target. Sure, 32% of my monthly savings is earmarked for the wedding or for travel, but most of it is for emergency savings, and a 2008 IRA contribution (which I'll do in one or two lump sums for reasons I'm sure I'll post about later).

Keep Buying Low
Taking a cue from English Major, I am going to start tracking the shares I own in my retirement funds, rather than tracking the total value of those funds. I'm several decades from retirement. I'm not losing money so much as I'm buying low! I'm a freaking genius! Well, she is. English majors unite.

* I have the money to pay off the Am Ex and will do so at the beginning of May, three weeks before the 0% period ends. Three cheers for emergency funds.

Lenten Check-in

When I committed to Compacting for Lent, I made a number of caveats. I was going to let myself buy a couple of beachy items I thought I would need for an upcoming Caribbean vacation: shorts, a swim suit, and a rash guard to keep my pasty skin from burning as we snorkel and surf.

As it turns out, I didn't need all those caveats. The outdoor sports store, unbeknownst to us, stops carrying sunshine gear like rash guards during snowboarding season, so buying one of those here is not even an option. And my shorts do still fit me, as does my one piece bathing suit. I have a couple of bikini bottoms that fit slick, though I could do with a slightly larger bikini top (am I a late bloomer, or just more modest than the last time I wore that thing?) But alas, REI does not sell orphaned tops for two-pieces, and all the tops at Target are those irritating halter styles that always give me a welt where the knot digs in to the back of my neck. Maybe we can find a nice nude beach an obviate my search for a top piece.

At any rate, either through lack of need or lack of opportunity, no pre-trip retail for me. Through no effort of my own, the Compact lives on.

Smart Couples Finish Rich Chapters 6 & 7: Boring Money and Awesome Money

Sundays are State of the Union days in our house, when sweetie and I sit down to talk about how we're doing relationship-wise. Sometimes they're quick check-ins, sometimes we get into a little more depth, depending on what we've got going on. In this year leading up to our wedding, we've decided to make finances a central part of our State of the Union talks. Over the next couple of months, sweetie and I will be reading Smart Couples Finish Rich by David Bach and discussing the latest chapter at SOTU.

OK, so David Bach does not call them "boring money" and "awesome money," those are just the helpful captions I have appended to Chapters 6 and 7. Chapter 6 covers boring money: emergency funds, life insurance, health insurance, disability insurance, and wills (your security basket, in DB's terms). Chapter 7 (your dream basket) covers awesome money: anything your little heart could desire.

I didn't blog last week about boring money because frankly, it's boring. But here's the quick and dirty summary: by the time we get married we will have (unless things go very awry) over three months of expenses in an emergency fund. I'd saved that before the end of 2007 and then had (surprise!) an emergency. And of course, our shared expenses will be higher than mine are alone, with two cars to insure, two sets of student loans, his credit card payments... Both of us have life insurance through work, and some cash value policies that were bought for us by family members when we were kids--not a choice I would have made myself, but also not my money. We both have health insurance through work, and we've got plenty of time to figure out whether we'll consolidate that after the wedding. I have long-term disability insurance (though I could use more), and Shiner doesn't--not something I'm concerned about, though, since I'm the primary wage earner. We need to figure out what we're doing for a will, but I'm willing to wait on that for a few months or a year. Put that on the to do list along with the health care directive.

Now for the awesome money! Awesome money is for all the fun things that aren't strictly necessary but that you want just the same. First on the list is the wedding, probably because we're in the thick of it and it's easy to see the light at the end of that tunnel. Man, it will be nice to acheive a goal. Some of the others are standard: travel, house remodeling projects, certain specific toys like Shiner's dream motorcycle and my dream Vespa, or his ever-expanding homebrew setup that produces delicious things I like to drink.

The one I am most excited about, though, is the cabin. For years, my earth nerd long-term dream has been to buy a piece of land in the woods and build my own small straw bale house to be a vacation home and family retreat, and possibly in time a primary home. Luckily, Shiner is on board with this goal, and bonus points because he's handy, too. First steps will be to buy the land and volunteer one one or two stale bale house-raisings, and then to try it for ourselves. It's a very long-term goal--the biggest, most expensive, and most daunting goal on the list--but one I'm so excited about.

One thing this chapter doesn't do a very good job of addressing is how to balance the competing interests inherent in saving simultaneously for multiple goals. I have been keeping two awesome money goals in the air at the same time: wedding savings and travel savings. I'm also saving for emergency money and retirement, and paying down debt as well, but add in many more goals and all of a sudden it becomes too diffuse. There's so much less money to go around, and progress on any one of them seems so slow. Personally, I do much better focusing hard on a couple of goals in sequence rather than consistently putting smaller amounts of money in lots of little pots. But I have a feeling that's not going to get me my cabin.

Compact Challenge #1

I decided earlier this week to do the Compact for Lent, and not buy any new items between now and Easter. I've been working a lot, so not many opportunities to fall off the wagon. Today, though, I realized that my good friend's baby shower is tomorrow morning and I didn't have a present for her. I know she's been hoping I'd make her a baby quilt, and I even bought fabric for one just before Christmas, but I haven't had time to cut the blocks. But you can't show up to a shower without a present! Presents are kind of the point. Having sworn off retail for Lent, and less than a day to work with, I had pretty limited options. I very nearly threw in the towel a walked to my neighborhood bookstore to buy a couple of picture books.

I guess my craft stash had to pay off some day. I cannibalized some felted wool sweaters I'd set aside for a different project and made some soft toys, just a couple of blocks and a soft patchwork ring. They turned out really cute. I'll still finish the quilt, hopefully before the baby arrives, but I'm awfully proud of myself that I managed to stay on the Compact.

Money Mind Freak

I am one of those people who deliberately sets their alarm clock wrong. Even though I know it's set ten minutes fast, I get a jolt every morning when I look at it and I think Oh crap, it's after 8! I'm going to be late! Shiner makes fun of me for this. He doesn't understand how I could really be tricking myself, since after all I'm the one who deliberately set the clock wrong. And it doesn't make sense. But even so, that trick successfully taps into the reptilian part of my brain that runs on instinct, and instinct is ultimately what prods me out of bed in the morning.

It occurred to me that I do the same thing when it comes to finances. I do lots of things every day in how I manage my money that aren't anything more than mind games, but those games keep me setting one foot in front of the other. A few examples:

I pay myself first. This one is an oldie but a goodie. I direct deposit a portion of every paycheck into an HSBC account in which I track separate sub-accounts for emergency savings, wedding savings, and vacation savings. My contributions to my Roth 401(k) work the same way. You can't spend what you can't see.

I keep my debt at a nice, round number. Every month I make at least three payments to my home equity loan: I make my regular minimum payment, obviously. And I make a second principal-only payment of $500. Then, after both of those payments have cleared, I make an extra principal payment of whatever amount will get me down to a multiple of $25. For example, at the end of December I made my regular minimum payment and my regular principal-only payment, ending with a balance of $21,662.80. Then, applying the snowflake-meets-OCD principle, I sent another $12.80 off toward that debt. Ta-da! $21,650 is so much more aesthetically pleasing than $21,662,80. And the ratchet tightens down just a little bit more.

I operate my checking account on a zero-balance principle. Sometimes I think of this as paying myself first and last. This has two parts. First, I control the amount of money I put into my checking account. Rather than setting my savings goals and letting myself spend everything else, I set my spending targets and try to save everything else. Both of those approaches are forms of budgeting, but withe different frames. I don't live on a miserly amount, but I do create something like an artificial sense of scarcity, which keeps me from feeling like I can spend it because I've got it. Second, at the end of each month, just before my next paycheck hits, I sweep what's left in my checking account into savings or debt repayment. This keeps me always putting "extra" money toward one goal or another. And, because I don't let myself "roll over" what's left from the end of my January paycheck into February, and the roll over February's paycheck into March, my monthly spending ceiling stays constant from month to month rather than creeping upwards.

I buy myself lunch. To save money, I pack my lunch most days. But I realized that unless I was careful about it, I didn't really end up spending less money in the aggregate, because I would just spend that $5 on something else rather than putting it in savings or toward debt. So I started marking on my day planner when I brought my lunch or had it comped. At the end of each week or two, I transferred the money I saved--the number of days I didn't buy a lunch times $5 saved per meal--to pay down my home equity loan. Those savings dont get "lost" anymore.

So what head games do you play with money to keep yourself on the straight and narrow?

Non-Financial Financial Goals, 2008

Since number-related goals will be the focus of next week's State of the Union conversation with sweetie (and the focus of Chapter 3 of Smart Couples Finish Rich), I won't tip my hand in that respect yet. Also, I have slacked off on my 2008 goals and have not set any yet. So instead, here's my list of goals for 2008 that are about money, even though they aren't explicitly about money at all:

(1) Floss. Oral health leads to heart health, and health is wealth. Look it up.

(2) Read one "classic" book each month, either off my own shelf or from the library. Now that sweetie and I have combined our libraries, I've now got a whole stash of great books I've never read just a room away. This is "free time" in the sense that I'm not spending money to read, and when I'm reading I'm not spending money on something else. I have yet to figure out what my list is, it may take me a while to narrow down!

(3) Maintain a high-quality blog. I doubt I'll see much traffic, but what the heck. It'll make me proud, will give me a great push to keep learning and will give me space to reflect about, er, finance and feminism.

(4) Build a pergola with sweetie over the back deck. We'll have to spend money on materials to do this, but we'll keep costs down by doing the work ourselves. A pergola will increase the value of our house, and we'll end up with a nice shady place to sit outside and away from the AC.