A Month of Expenses in a HCOL Area (on a Non-Engineer’s Salary)

As I’ve mentioned about a million trillion times on this blog, I live in a high cost of living (HCOL) area. This area, the San Francisco South Bay, is known for Silicon Valley, computer engineers, and start-ups that make a shit-ton of money. I go to the gym with people who work for companies like Apple, Google, and Facebook (and Z-berg himself showed up on Sunday). The parking lot is full of Teslas, and I recently overheard a guy who couldn’t have been more than 23 talking about buying a house for his mom (which–that’s really nice–but also–23??? Dang!). Lots of people move to this area to take high-paying jobs at these companies. 

I am not one of those people. 

I work in education. And while I get paid more than the average public school teacher* in the United States ($60,483), I don’t make the type of money a Google person does ($112,849 average, as per payscale.com). I thought it would be fun to do a breakdown of what life can be like here on $72k/year.

RENT – $1351/month or $16,212/year (EXTREMELY LOW for this area)

I am very lucky in that I was able to get an apartment in a building owned by my employer.

Although this has come with a number of problems (for example, lying about available parking, having a July 1st lease start date but not actually getting into the apartment until August 8th because the unit was being renovated and no one bothered to double-check the unit # with the new leases, showing up on a Friday afternoon after being assured I would have keys and then waiting to try and hunt down someone who could help us find temporary housing, finally being told we could move in and then being given the WRONG KEYS, having the toilet installed incorrectly–BUT I DIGRESS), the savings in rent more than make up for the parade of problems I had just trying to move in.

I currently pay $1351 a month for a 417 sq ft studio that is walking distance from my workplace (1.3 miles or about 25 minutes depending on traffic lights). The average monthly rent of a studio or one-bedroom within a reasonable walking distance of my job (reasonable = less than 1.5 miles) is currently hovering around $1800 on craigslist. As such, I’m paying about 75% of what I would have to pay if I wanted to move somewhere not owned by my organization

And to be clear, that $1800 would be going to a real piece of work, if you get my drift. I’ve heard horror stories from others who live in the area about what basically sound like dorms owned by slum lords. My unit has at least been newly-renovated, even if I did have to wait five weeks for it to finish. 

This sweet living situation does come with some caveats, though–because of my rank, I’m only technically eligible to have this apartment for one year. Although some of my neighbors in the building who are of a similar rank have been able to stay from three to four years, it’s not something that’s guaranteed. I hope because of the very small size–studio–that not many other new hires will be interested. There are three open units in the same building, and I think they all have at least one bedroom. Because of this, I’m keeping my fingers crossed that I’ll get to keep my apartment for one more year. I should know for sure by June, but I’m making sure I have enough money stashed away to cover moving expenses, just in case. 

If I lose the unit? Well, that just further cements my decision to limit myself to about two years in my present position before moving on to somewhere else. 

Why two years? That’s how long it takes to be fully vested in the organization’s retirement program. If I stay for two years, I get my ten percent–that’s ten percent free money, not even a match, that I walk away with if I stay here for that long. But if I leave before those two years are up? Zero. Zilch. Nada.

I also got paid a moving reimbursement to bring myself over here. And by reimbursement, I mean they took out payroll taxes as if it were a bonus (which, had I known, I would have overestimated–nothing like paying payroll taxes on purchases I paid sales tax on that were bought with money I already paid payroll taxes on!).

Additionally, the phrasing of the moving reimbursement document was something about how I may have to pay back the moving reimbursement if I leave my job before two years are up. I’m choosing to interpret that may as a will.

TRANSPORTATION – ~$1160/year including two oil changes but not including major service or tires

Last month I had the joy of switching over my license and registration to the great state of California. This whole process, from smog check to license fees to registration fees, cost a total of $368. Luckily I won’t have to do this every year, but it was quite a bit more than the $100 it cost me in Colorado. 

Gas is also much more expensive here–according to AAA Colorado, as of last week, gas was going for about $2.73/gallon in Denver (although, since I’m not actually there, I can’t confirm this). Gas at the cheapest gas station in the area here in CA is around $3.90 a gallon. So, it costs $1.17 more per gallon, or about $14 more per tank, for gas. And while I can walk to work, a lot of other places–the gym, for example–require driving. 

I’d love to take the bus more here, but unfortunately none of the routes are very convenient. It would take me an hour and a half with two transfers to get from my work to the gym, but it’s only a 20 minute drive. So, in that instance, driving wins. 

HEALTH INSURANCE – $52/month or $624/year

I get health insurance from my work. I went with an HMO plan, so my options of where to receive care are a little limited. However, one of their super complexes is within a 15 minute drive from my apartment, so making plans to receive care has been relatively painless. This is the second-most expensive plan my organization offers, and I chose it because it has no deductible. 

 Why don’t I have an account that offers an HSA, as many personal finance gurus suggest for healthy individuals? To explain, a Health Savings Account (HSA) is an account that allows you to pay for medical expenses with pre-tax dollars. These accounts are associated with insurance plans that have a high deductible–the idea is that you pay lower premiums in exchange for a higher deductible, but you have the opportunity to save money to meet that deductible. When you contribute money to an HSA, you lower your taxable income.

Unfortunately, only one insurance plan through my workplace offers a high deductible with an HSA option. INTERESTINGLY, it’s a PPO plan–you choose your own doctor, as long as they’re in-network–which are always more expensive. So, in order to have an HSA, I’d been spending twice as much on insurance premiums per month in exchange for a higher deductible, all for the sake of being able to lower taxes. 

I’ll take my half-cost premium with no deductible and $1500 out-of-pocket maximum, thanks. 

And to be fair, I’ve been totally happy with my HMO so far. I’ve had four visits for various reasons, and I’ve paid a total of $20. 

GROCERIES – $200/month or $2400/year

I was surprised at how expensive groceries are here. I remember the first time my partner and I went to the grocery store and being shocked that there were no boxes of cereal that cost less than $4.00. Food and cleaning supplies are significantly more expensive here than they were in Denver. 

After being here a few months, I’ve started discovering the best ways of tracking down my grocery deals. Trader Joe’s is good for packaged items like my coffee, English muffins, and vegan butter, although they never really have sales. Sprouts is good for produce, but only when it’s on sale; if it’s not on sale, but is something I have to buy a full pack of at TJ’s (for example, carrots or mushrooms), it’s also best to buy at Sprouts. Safeway is only good when I have digital coupons. 

One argument against piecemeal shopping like this is that it wastes more gas; however, Safeway is next to my work, Sprouts is on the way home from my gym, and I only go to TJ’s once or twice a month. The savings more than make up for any extra gas or time spent. 

UTILITIES – $30/month for gas and ????/month for electric

My house is heated by gas, and since my apartment has no insulation, I run the gas heater for about 30 minutes on weekday mornings so I don’t freeze to death when getting dressed (I run cold, and my apartment is usually in the low 60s when I wake up. Not exactly Antarctica, but too cold for me!). In the summer, heat was only $9 a month; last month, it was $20. This month I’ve budgeted $30, since I’m using the heater more. 

Electricity is the real question mark. I live in a city where the electric is municipal–this has been great, because we were not subject to the same blackouts that others in CA recently underwent. However, since it is a government agency, things aren’t always quick to happen. I called and set up my account in August; I am still waiting for my first bill. I’ve called twice, and both times I was assured that everything is fine, and that I would “receive a bill soon” that would be “higher than usual” because it would “reflect the cost of service since starting.” This was about three months ago; I’m hoping to get this bill sooner rather than later, because I honestly have no idea how much my electric is going to cost me. I don’t have a lot of appliances, but still…

OVERALL

Overall, the biggest asterisk to my budget is my rent. Because I receive such a large discount, I know my experience in the south bay is drastically different than most others (including most of my coworkers). With my partner overseas, living by myself in this area is a huge luxury. However, it’s a luxury that is not guaranteed to last; as such, I’m trying to keep my budget low enough to cover what rent will be if I get kicked out of my unit. Right now, that budgeted money is going to student loans and retirement; I have the option of re-routing next summer if I need to.

While I’m doing OK, this area is not all it’s cracked up to be. I make $72k/year, but that’s not what the job started at; originally, they were advertising my position as low as $60k (to which I said–there’s no way I could take this job for that money). That’s also the starting rate for a very similar position that my organization is currently trying to hire for.

If someone is moving here without a partner, I honestly don’t know how they could comfortably support themselves on that salary. They’d either have to live with at least three roommates or have a two hour commute everyday, I guess (both things are true of my coworkers). That’s combined with the fact that my workplace wants someone with a master’s–so there’s the issues of student loans as well.  

I know I’m lucky to be able to have this job and live in this area making the amount that I do. However, it’s only possible because of this discount on rent. If I hadn’t been eligible for employee housing and received a pay bump, I would not have taken this job. The cost of living would have just been too damn high.

* I am not a public school teacher, but I have mad respect for those of you who are. I worked in a public elementary school running a tutoring center from Jan through May, and that was more than enough for me!

Know Your Spending Triggers

Y’all, it’s been a spendy month, and it’s not even over until Thursday.

I had a lot of expenses pop up this month. Some planned, some unplanned. And the biggest one is yet to come–on Wednesday, I have an appointment at the DMV to register my car and switch my license over. I’ve used the online calculator on the DMV website, and it’s going to cost a pretty penny. Or about 30,000 pretty pennies. 

I’ve gone over on my grocery budget for this month as well. Last month, I was officially diagnosed with IBS, so I’ve been trying to live that low-FODMAP life. I’m a vegetarian, and protein has always been a challenge for me; now, however, it’s even worse, because I’ve discovered my triggers include beans and soy (and eggs, which I already knew about). So, this month I’ve been investing in more yogurt and pea protein powders, protein bars, etc. than I usually would consume, in an effort to meet my protein goals while also not feeling like my stomach is going to explode (fun!). 

I also got my first haircut in about two years, which put me back about $108*. I got my hair cut at the mall–which was a BIG MISTAKE. BIG. HUGE.

Julia Roberts calling me out for getting my hair cut at the mall.

I’ve been needing a couple new sweaters for work, so I figured I’d just pop into a few places to see if I could find any I liked. Well, I needed socks too (I told myself), so I got a pair of those. And I don’t really go to the mall that much (or, really, ever), so I guess I might as well stop by Sephora while I was in the neighborhood and get a new eyebrow pencil. My eyeliner is a little low as well, so I might as well pick up some more of that too…

You can see where this is going. Please, learn from my mistakes.

If we want to save money, it’s important for us to know our own triggers. 

I have two main triggers that I’m aware of. The first is plunking down a large chunk of money at once, especially at the beginning of the day or month. The second is ‘being in the neighborhood.’

Let’s address the first one. If I spend a lot of money at once, it’s like a switch gets flipped in my brain. I’ve already been bad by spending more money than I had intended; so, at that point, I might as well be as bad as I want to. After spending $108 on a haircut, what’s the matter with throwing $12 at an eyebrow pencil? Additionally, knowing that I’m going to have a big expense at some point in the month–for example, a cool $350 for everything associated with getting my car registered–seems to throw me off the savings track as well. Instead of keeping me ‘good’ for the rest of the month, my brain has gone into ‘fuck it’ mode. ‘Well, fuck it, I’m already spending more than I want to this month, I might as well get X, Y, Z.’ 

Being ‘in the neighborhood’ is also an excuse that I’ve used to much recently. I go through stages of being a hermit locked up in my apartment spending all my time watching Netflix, followed by highly productive phases of going out on long hikes, visiting friends, getting errands done, etc. When I’m in my hermit mode (which is probably default mode, if I’m being totally honest), I’ll start my day or weekend with the best of intentions of hitting up the grocery store after work or finally going to get an oil change. However, by the time work is over or I’m done at the gym, I usually want to go home. I’ll put it off for another day, I say to myself, and weeks go by without me going anywhere unless I have an appointment. I’ve been needing a new eyebrow pencil for a couple weeks now; I haven’t purchased one because I would have to make a special trip for it. However, because I was in the neighborhood, I went ahead and bought one. But then I thought to myself, when will I really be at the mall again? I’m in the neighborhood, so I might as well pick up x, y, z…

Me vs. Sephora, on a bad day.

That’s when whims turn into losses. I’m definitely an advocate of combining errands to save time, money, and fuel, but not when those ‘errands’ turn into ‘grazing,’ a behavior which comes out in full force when I don’t make a list. 

Being in the neighborhood also causes problems in my more extroverted phases. If I’m out and about and find myself close to Trader Joe’s (which is across town from me), I’ll just pop in because I like their english muffins and cheap coffee. I did this the other day, when I was getting my smog check. However, I didn’t really need to buy groceries. I would have been perfectly fine if I had waited until my regular weekend shopping trip. But I was thinking of a mindset of time scarcity–well, I don’t know if I’ll have time to go later, so if I’m in the neighborhood, I can get these things now. Even if I didn’t need english muffins, because I still had half a loaf of bread at home. 

These are just a few examples of my spending triggers. By identifying my issues, I can be more mindful of them in the future. 

In the instance of my car, if I know I’m going to have to spend that much money on such a purchase, perhaps I should consider putting it in a separate account and saving up over time instead of taking it all at once. If I know I’m going to have to make one major purchase in a month, I should consider scheduling other major purchases for the next month. And if I find myself just in the neighborhood, I should reflect on my purchases–do I really need more english muffins, or am I just buying them because I’m feeling a false moment of scarcity provided by locational opportunity? This is where sticking with a list, and with set grocery shopping days, comes in handy.

So how bad was this month, really? Although I haven’t registered the car yet, according to my calculations, I should still technically be in the black for the month, and I’ve already made my trifecta payments. However, if I want to save more for my future, I need to get my spending (and my reactions to my triggers!) under control. 

What are your spending triggers, and how do you avoid them? Feel free to let me know in the comments!

* I just want to say that this was totally worth it, though. The lady who cut my hair did a lovely job, and I’m really glad I don’t have the hair of a neglected third-grader anymore. 

No More Using the ‘B’ Word, or, Changing the Language Around My Spending Plan

For the past two years, I’ve kept a budget.

And by budget, I mean a breakdown of all my monthly expenses, their estimated costs, and lists of every single purchase I’ve made. These lists include information such as date of purchase, whether it was paid for via credit or debit, and whether or not it was in the budget. I also keep a tally of how much money I put each month toward student loans, savings, retirement plans, groceries, and gas, and recently have started listing every single grocery item I buy. If you asked me what I bought on July 11, 2018, how much it cost, and how I paid for it, I could tell you (shitty toll for when I accidentally missed my exit and the highway turned into a toll road, $8.30, credit card)

However, I’ve recently been thinking that the word “budget” just feels too… restrictive. Not restrictive enough to make me stop spending money sometimes (some consumer goods transcend issues of semantics, apparently), but restrictive enough to make me feel like I’ve done something wrong if I spend money outside of my planned monthly bills. 

Some personal finance gurus would say that I have, in fact, done something wrong. Every dollar should be accounted for, and each one of these “little green men” should be put to work. The work could be in a savings account gaining 1.80% interest (thanks for lowering the rate again, Ally) or being used to decrease my student loan debt. The reality is I have hobbies, and I like to spend money on them. I can be interested in personal finance AND make art, damn it!

In the words of Walt Whitman, I am large! I contain multitudes!!!

Does this count as a hobby? Image from pexels.com.

If I want to spend $20 on some new paints and brushes, I shouldn’t have to beat myself up for it. After all, if I don’t cultivate my hobbies now, what the hell am I going to do when I hit my FIRE goal? An article in the Wall Street Journal from earlier this year describes how not having a solid out-of-work life can affect workers when they retire: “Without the purpose of fulfilling work, retirees can feel adrift and become depressed. Without the camaraderie of their co-workers, retirees risk becoming socially isolated. Without the intellectual stimulation that work can provide, retirement can accelerate cognitive decline,” (Although I have to point out this article is from the Wall Street Journal, who probably has a vested interest in squeezing every last drop out of worker bees as possible…).

I think there’s a point between being financial savvy and completely losing your sense of self. 

And if keeping my sense of self requires supplies so I can make art, then I am damn well going to spend that $20. Besides, I’m investing in hours of entertainment and pleasure. 

And I’m not throwing myself completely out the window financially, either. I have my savings accounted for in this spending plan. My trifecta–$500 to my IRA, $500 to savings, and $550 to student loans–is automatically taken out at the beginning of every month. These amounts, combined with the $1351 I spend on rent for my 400 sq ft studio, account for 66.5% of my take-home pay. And that $500 in savings doesn’t include the $100/month I’ve planned to cover any travel expenses; I bookmark this money to go into a special account every month, so when I want to take a trip, I don’t have to feel guilty about using it.

(Although I just bought an $1850 ticket to Germany to visit my partner over Christmas, and having the money in a separate fund didn’t make me feel less anxious about it. Now that the initial band-aid has been ripped off, though, it’s not so bad.) 

All in all, I’m not doing that bad. My spending plan is comprehensive enough that it covers all my bills, including the ones that vary from month-to-month. And I have a tendency to grossly overestimate those, too. For example, it currently costs about $35 to fill up my 2007 Yaris here in CA. I have budgeted $70/month, or two tanks, for gas. However, since I walk to work, I use very little gas. Most of my driving involves going to the gym, a park to hike, or to Oakland to visit my best friend; as such, I very rarely meet that $70. 

However, if I lowered it to the true average–$35–but spent more than that, I would feel as though I had committed some horrible crime against myself. I would be something that I find inexcusable–an irresponsible person

I may be irresponsible in some aspects of my life, but finance is not one of them.

(At least not now, anyway, since I’ve learned how to handle money.) 

And some expenses that would have been labeled as “Out of Budget” on my previous spending plan are actually expenses that (a) I can afford and (b) genuinely make my life, and the lives of others, better. For example, I recently got accepted as a volunteer at a large animal nonprofit in my area. And by large, I mean there’s a volunteer force of over 1000 people. These volunteers all need training (and t-shirts) in order to volunteer with this organization. As such, volunteers are requested to pay $40 when they undergo training. I very happily paid this $40 (plus an extra $10 donation), because I want to help with this organization and I’ll have my time occupied doing something I enjoy for three hours a week for at least the next six months. And if I want to continue my tenure, I can do so without being re-trained. For me, this $40 is an investment that will greatly enrich my life (not to mention allow me to finally love on some animals without violating the terms of my lease). 

This may not have been budgeted, but it does not break my budget. 

So, in sum, I’m changing my budget-based vocabulary to one that frames my money situation as a spending plan

This is how I plan to spend the majority of my money. And as long as I utilize my money in accordance with my spending plan, then I can do whatever the hell I want to with the rest. And what does that look like?
Some months it might all go into savings or student loans. Some months, like this month, it will go toward car registration and a dang haircut. And some months I might spend an extra $20 on fucking paint, because my sanity and joy is worth it. And that’s totally OK.

The Thing About Money, Part 6: Reflection, or, So now what?

(This is the sixth and final post in a six-post series titled The Thing About Money. Click to read The Thing About Money, Part I.)

The last few weeks have been an exploration of my attitudes toward money (Part I), how they were formed (Part 2), the debt issues I am currently facing (Part 3), my fear of being forced to eat cat food in my old age (Part 4), and how tracking my daily spending helped control my money anxiety (Part 5). So what have I learned about myself over the past few weeks?

  • Wanting money makes me feel like a phoney because…
  • I view money as an evil that just makes people emotional/feel bad because…
  • I grew up in a household where money caused people to be upset.
  • I am afraid that my student debt will never be paid off and…
  • I will be poor in retirement because I don’t have enough saved up but…
  • Tracking all of my spending and income kind of makes me feel better, because the situation is not as dire as it seems.

Whew. 

Those are my truths. So where do we go from here? 

Is life really all about the Benjamins???? Image from pexels.com.

I recently stumbled across the FIRE movement, which, if any of you are into personal finance blogs, you will know as standing for Financial Independence, Retire Early. The idea behind the FIRE movement is that you save as much as possible until you have 25 to 40 times your annual salary worth of assets, and then you can RE — retire early — make your grand exit from the world of your nine-to-five, if you so choose. There are several variations of FIRE — fatFIRE, for instance, is for people who want to retire but still live a life of comparable luxury; leanFIRE is for those looking to retire at a lower income; baristaFI is for those who will supplement their income with a part-time job (usually the plan is to “work part-time in a coffee shop,” hence the name) after retiring from a career; etc. 

What particularly interests me is FIOR–Financial Independence, Optional Retirement. This mindset involves saving enough money so that if you wanted to step away from working, you could; but that doesn’t mean you have to. Some people have a weird vision of FIRE–if you do any type of work at all (blogging, building things, selling art, etc.), you haven’t actually ‘retired,’ and you’re somehow lying about your life experience by claiming about being retired (*insert extreme eye roll here*). To me, being ‘retired’ just means that you aren’t chained to a desk/warehouse/counter and unable to make any life-changing decisions because you fear dying in the street of starvation. 

I would like to FIOR, and I can certainly tell you I wouldn’t just put my feet up, sit on some imaginary porch with a glass of lemonade, and watch the world go by*. What I want from FIOR is the freedom to do whatever the hell I want, whenever the hell I want, and it just so happens that what I want to do involves things like volunteering at causes I care about,  enjoying and preserving nature, working on my art and writing, and spending time with people I love. 

What FIRE, FIOR, and all those other acronyms buy is time. Time to not only make the world a better place by serving others, but also by serving ourselves. For instance, I recently went to a volunteer information session about working at a local adoption center for my region’s humane society. I’ve submitted the application and am waiting to hear back on whether or not I’ll get an interview** for a three-hour-a-week shift. In the past, I’ve volunteered at museums and historic cemeteries–all worthy causes that I care about. If I pursue FIOR, I’ll have more time to dedicate to these causes without having to worry about whether or not I can feed myself. 

I would also have time to increase my relationship with nature and move toward a more sustainable lifestyle. I’ve mentioned previously on this blog about how the earth is dying; I’d like to do my part to prevent that. I love hiking, camping, and rock climbing; I love just being in nature and letting its awe and beauty wash over me. I love breathing and drinking without dying. These things–trees, fresh air, the ocean, birds–are worth conserving. FIOR would give me time (and money, depending on how I budget) to help lessen my own impact on the earth (i.e. growing my own food or having time to go to local farmers’ markets, as opposed to going to a grocery store which has had produce shipped in from elsewhere, wasting fossil fuels; stop purchasing/consuming clothes whose only value is to make myself look ‘presentable’ at a job, etc.) and volunteer for causes that help the earth.  

I would be able to pursue my own artistic interests, many of which I have had to stifle due to a lack of resources–both time and money. This may seem like a selfish reason; however, I’m a firm believer in self-care, especially when it results in the self having a more positive and kinder outlook. If you haven’t discovered already, I can get pretty, uh, wound up, which results in what I view as some not-as-kind-as-I-could-be behavior. Right now, after work, I feel so drained that when I come home, I just end up cooking dinner and watching netflix or youtube until it’s time to pass out and start the next day afresh, repeating the same cycle until the weekend. I feel that I have projects bubbling away inside me, but I don’t have the emotional energy to do anything with them (oh, the joys of working in a service-centered profession…).

And finally, I would have more time to spend with my family. I have a small family–my partner, and my mom and her husband***. Not working would let me spend more time hanging out with and supporting these people whom I love. I would have the freedom to move across the country to wherever my partner wanted to work without worrying about the geographic constraints of my own career; I could visit my mom when she goes to her doctors’ appointments. I’ve spent a lot of time in my life using work as the reason I can’t visit (I can’t get the time off, I can’t afford it, etc.). I know that time is going to run out before I know it, and I want to spend that time with my family. 

There are still some hard truths to swallow. For instance, I struggle with the issue of wanting more money when I know that it causes so many problems in the world. This is what I like to refer to as ‘crust-punk syndrome’–I claim that I want to live ‘outside the system’ of work/general economics, but if I’m investing in ‘evil corporations,’ I am still just as dependent on the system as before, but in a different way. Doesn’t this just make me a hypocrite? Is it better to be a hypocrite that can support herself than a hypocrite who relies on the support of others? Is the only effective way to change the system to work from within–for example, investing in ethical companies whenever possible and not spending my consumer dollars on fast fashion and gas guzzlers? Does taking the money I make off of them and using it for good cancel out how it was created in the first place? 

What this all boils down to is the existential dread of living an inauthentic life. I work anywhere from eight to ten hours a day in a traditional job that, while providing essential services to those we work with, also perpetuates a highly inefficient work culture. There’s a lack of innovation and challenging of the status quo in ways that could radically alter how we disseminate our services. Additionally, without being too specific, I am working for an institution that doesn’t reflect my personal values. There are ‘values’ that this organization claims to have, but there are a lot of different viewpoints and incidents that have happened in this climate that I don’t feel reflect my own ideas of what is ‘right’ or ‘just’ (although, to be fair, it’s certainly nothing like, say, an oil company or hedge fund). This, combined with the negative health effects of working a job that is heavily cubical-based, makes me desirous of a bit more freedom, including the opportunity to be able to work part-time in this field****. 

I still have a lot of unanswered questions. Perhaps it’s just my family-ingrained Catholic guilt speaking up; perhaps it’s a fear of being exposed as some sort of fraud. I don’t know, and I don’t know if I ever will know. But what I do know is that money would give me the time and resources to work on projects I care about and would give me the option of not working those that I don’t

So I guess the budget’s worth it. 

* But there’s absolutely nothing wrong with that, and if that’s your dream, more power to you. I just know I would go bonkers with restlessness. 

** This particular organization gets a high level of volunteer interest, so the application process is pretty… intense. 

*** I have a brother and grandparents and aunts and uncles and a biological father and an ex-stepdad as well, but with all of those people, things are… complicated, and I haven’t spoken to any of them in years.

**** I actually quite like the job itself and the field I am working in; it’s just the incessant bureaucracy that really grinds my gears. 

——-
Thank you for reading this series, titled The Thing About Money. What’s your deal with money? Are you working towards FIRE? Do you feel that you are trapped in the capitalist machine with no real options about how to lead an authentic life? Are you just trying to free yourself from the grip of THE MAN? Or are you able to emotionally distance yourself from money? Feel free to tell me in the comments.

The Thing About Money, Part 5: Budgets, or, Knowing where every penny goes

(This is the fifth post in a six-post series titled The Thing About Money. Click to read The Thing About Money, Part I.)

I have tracked every monetary transaction I have made since January 2018.

I had just started grad school and, while not struggling, per se, was stretching to pay the bills. My three jobs covered my living expenses, but I was taking out (a lot of) loans to pay for tuition. I started tracking my spending as an exercise in self-control and to get a more accurate view of what my financial situation was. I wanted to see the cold, hard numbers. Money has always made me uncomfortable, and I have been forever anxious that it would eventually run out. 

Tracking where every dang cent goes. Image from pexels.com.

I also wanted to hold myself more accountable–if I knew I had to put my spending on a spreadsheet, to immortalize my shopping numbers on screen forever and stare at it day in and day out, it would make it a lot harder to drop $50 at Uniqlo every time I felt like I “needed” a new pair of pants to fit in with the full time workers at the corporate office at which I was interning. 

What I expected was to feel trapped. Money has always made me nervous, so having to really stare it down on a day to day basis made me feel a bit… well, queasy. And it did take a while to get into the habit–every time I bought something, I reminded myself to write it down. I tried pen and paper at first and wrote all my sums down in a tiny notebook, but eventually just switched to a google sheet. I made the switch because (a) 99% of my spending is with credit or debit cards, so all the transactions automatically show up in my account and (b) I could use formulas to do the math heavy lifting for me. 

Despite my apprehensions, what surprised me most about tracking my spending was the feeling of relief and freedom it gave me. 

Knowledge is power, y’all. 

Knowing exactly how much I had in the bank lifted the ever-present sense of anxiety that would swoop down even more fiercely when I was in a situation that involved spending money. Every time I was invited to dinner with a friend, I didn’t have to skip drinks entirely, order the cheapest thing on the menu while explaining that I wasn’t that hungry anyway, and spend the whole time praying they wouldn’t suggest that we split the check evenly. I’ve been the last person to get the check on more than one occasion–and, as such, the person who somehow pays $20 more than everyone else despite having the least to eat. This was especially bad when I was still living in New York and a lot of my friends made more money than me. I honestly don’t think it ever occurred to them that I couldn’t keep up with their lifestyle on my nonprofit salary.  

I don’t have to worry about that now* (or at least, not as much). With the power of spreadsheets, my entire financial situation is freely available at my fingertips. Honestly, I don’t even need to look any more–at this juncture in my life, I have a pretty good idea of how much money I have at any given time and in which accounts, in addition to knowing my current net worth (in the negative $20,000 range, y’all. Woo student loans!). I know whether or not I can go out to lunch with a friend. I know how much will be leftover at the end of the  month and how much I can afford to throw at my student loans. 

I know how much every bill costs and have accounted for it. I’ve also been able to start accounting for my future–last year I opened my first retirement account (a little late to the party, but better late than never) and this year I started saving to visit my partner in Germany. Having a budget and recording every single transaction empowered me with the knowledge of when to slow down on my spending and when I can feel good about taking a trip to see a loved one. I also like to spend my time making sample budgets–what would my spending look like if I made two student loan payments in one month?, for instance. 

These days, when I get really anxious and wonder how I will ever be able to pay off my student loans, retire, own a home if I so desire, etc., I take a deep breath and open up my spreadsheets. The numbers are there–numbers that tell me I am not spending more than I earn, and that I’m going to be ok. And yes, my car is twelve years old and over 125,000 miles, but in the event it decides to break down, I can manage it. And yes, my stomach hurts all the time and my joints hurt and I’m getting older and everything hurts, but I have the privilege of affording a doctor**, damn it. Which is actually quite a timely statement, as a medical issue the other night required me to make a doctor visit yesterday morning***. In the past, I would have fretted over whether or not I could afford the co-pay, or, in times I didn’t have insurance, if I could afford even a visit to Urgent Care. Because of my budget, I knew I could afford the co-pay–and it was money well spent to be assured that my spleen isn’t in imminent danger of exploding. 

Here’s the real kicker–I call myself poor. I grew up poor. I identify as poor. I generally believe myself to be poor. But according to the numbers, I’m fine. I’m quite alright. I’m actually doing quite better than a lot of people in the world right now, so what am I bitching about? I am a white, able-bodied, hetero-, cis-gender woman, which means I have a lot more privilege than others. I was born in the United States and have never had anyone question my right to work or even just be here****. I landed a job with insurance, which means I was able to go to the doctor–which means I don’t have to carry the anxiety and mental burden of wondering whether or not I’m going to wake up with organ failure and die alone on the bathroom floor of my apartment. I just need to take a deep breath and trust in the numbers. 

Are you interested in tracking your spending? I encourage you to give it a try–as I said above, confronting my financial situation has made me more prepared to move through life’s monetary obstacles with confidence (or at least knowledge). I’ve made a basic google sheet that provides spaces for expenditures on the left and income on the right. A few simple formulas calculate your totals and subtract your expenses from your income, so you have an up-to-date view of your monthly cash flow. The one I use is very similar, except I also have calculations that show the exact amounts I spend on categories such as groceries, gas, student loans, retirement, and savings (I get a bit extra with my personal spreadsheets, as previously mentioned on this blog).

In theory, you should be able to view this google sheet and make a copy of it. Please feel free to let me know if you have any questions or issues!

Are you already tracking your expenditures? How’s it going for you? Please feel free to leave a comment and share your experience. 

* I actually got a good tip about this the other day. If you can afford it, pay whatever the split is in the moment. Then never go out to dinner with those people again, ha ha. 

** In network, of course. America!

*** Hence why this post is a day late. 

**** There’s a recent debate going around in the FI world about whether or not FI is a “political issue” and whether or not we should be discussing politics when discussing FI. Spoiler alert: IT IS and WE SHOULD BE.

I Met with a Financial Advisor

Image from pexels.com.

Last week I met with a financial advisor.

It was one of the benefits of my job. I work at a large organization that runs a number of “wellness” programs through the HR department. While I ignore a lot of them — house buying workshops, financing your child’s education, etc. etc. — I was intrigued by the one-on-one appointments with an independent financial consultant. So I signed up. Because, hey, it was free, and maybe I would learn something new!

I came prepared and sailed into the tiny conference room with my laptop filled with files and files of conspiracy-theorist level spreadsheets. We’re talking budgets, account totals, and lists of everything I have bought/spent for the last 18 months. As soon as I showed the advisor my screen, his eyes lit up with joy. “I’ve never had anyone come into the first meeting as prepared as you,” he said.

Which, honestly, makes we worry for my coworkers. But I digress.

Before getting really down and dirty with the numbers, he asked me a few background questions. What have I been doing with my finances? What are my goals? Am I married? Do I have student loans? Etc. etc. etc. After getting a handle on my situation, he asked me what my goals were. I said I had two main goals: (1) pay off my student loans and (2) be able to completely retire at 59.5, if I choose to.

One is a truth and one is a lie. 

Frankly, I would like to FIOR (be financially independent and optionally retire–in my case, semi-retire) by 50. Of course, that’s a lie too. I’d like to FIOR by 45. Saying it out loud makes me feel foolish, though, as if it is an impossible dream, and not wanting to have the dream squashed, I told him 59.5, when I can start taking money from my retirement accounts. I’m 32 right now, and thirteen years just doesn’t seem that doable, given my current HCOL area and student loan debt. But it’s there, in my heart (and no longer a secret, since I’m putting it in my blog, I guess). 

We looked at my student loans first. I have two big direct unsubsidized loans from the federal government. Each loan is approximately $20,000, and because I took them out in two different years, one has an interest rate of 6% and the other 6.6%. I’m currently in my grace period, so I don’t have an exact monthly payment amount yet, but I’ve calculated them to be a little less than $500 a month. Of course, like, a full $200 of that is just interest. He suggested refinancing, but here’s where my anxiety creeps in–keeping my federal loans comes with perks, such as hardship deferments and things like that, which I would lose if I refinanced. However, I plan on paying my loans off as quickly as possible anyway, so does deferment availability matter anyway? 

(I’m still looking into this. If I can find somewhere that will refinance me at like 3.5% or less and allows for early pay-offs, I might do it. But that’s for future S to figure out.)

Then, we looked at the amounts I was putting away for retirement and where. I have a traditional IRA, but was advised to switch to a Roth. This is something I have been thinking of for a while anyway, mainly since I learned that you can take out what you’ve put into a Roth* at any time, since it’s already been taxed. This is something that I have worried about–I know it’s sensible to put as much into retirement as possible, but there’s a nagging ‘what-if’ worry in the back of my mind that makes me hesitate. 

“What if my car blows up, and I have to spend my whole emergency fund, and then I get fired?”

“What if my mom’s house gets blown away in the next hurricane and she needs some liquid cash to get back on her feet?”

“What if I get some rare cancer not covered by my insurance and it costs ten million dollars?”

“What if Godzilla comes and smashes my apartment and I have nowhere to live?”

Knowing that this money isn’t necessarily 100% tied up until 59.5 does put me a bit more at ease. Even though I don’t plan on needing it until I am eligible to receive dividends, viewing it as a super catastrophic kablammo emergency fund that supplements my own, normal, less life-or-death emergency fund makes me feel better about putting so much of my cash into it. 

After retirement plans, we spoke briefly about other types of investing. He beamed at me, eyes twinkling. “I usually don’t even talk about this kind of thing in these consultations, but I think you can handle it,” he said, while reaching for an investment brochure. We talked about the different types of funds and asset diversification, and picked out a few things to try–some REITs, Index Funds, Emerging Market funds, etc. 

(I have a list of exact funds**, but this leads us to another issue–how to get my money to these funds. I’ve been trying to get some things set up through Fidelity and Vanguard, but both processes have been mildly frustrating, to say the least. Looks like I’ll have to actually call a human…) 

Overall, I enjoyed the experience, although he was a little pushy in emphasizing “unexpected surprises” like accidently having a kid (“My partner and I don’t plan on having any,” I said. “Well, you never know what nature has planned for you!” he replied. And I bit my tongue, saying to myself “That’s why birth control and termination options exist.” BUT THAT’S A WHOLE ‘NOTHER ISSUE.)

While I didn’t necessary learn anything new in the appointment (I’ve done a LOT of googling, reading financial blogs, etc.), I found it valuable in that it gave me some assurance that I’m already doing some things right. It clarified a few things about my own finances that I still found fuzzy, and it also gave me a little push to pursue some opportunities that I had been thinking about, but that my own risk-aversion (and generally change-resistant nature) had prevented me from already doing. 

All in all, it was pretty fun! I would say if you have the opportunity to take place in a meeting like this, do it. Even if you don’t necessarily learn anything that will make you change your financial goals and methods, it’s always nice to have a second (and hopefully, more experienced or knowledgable?) set of eyes go over your numbers and assure you that you won’t be eating cat food at seventy

* Contributions, not earnings

** I signed a paper that said he and/or the university and/or his company was not to be held legally responsible if I lost all my money, FYI