Optimize Efficiently: Credit Card Rewards

It’s no secret that I love optimizing things. I have to make a strong effort to optimize what I optimize though. Sometimes I get caught up in optimizing things that just aren’t worth optimizing. Lately, I’ve become pretty excited about the idea of optimizing my credit card rewards. I slowly realized that I spend enough to earn something from funneling all my purchases through credit cards, but the less you spend, the less you’ll earn. I’ve been tracking my credit card spending over the last few months in a Google doc. I made a list of the major extra spend categories that you can get credit cards for and made a pie chart of my spending in those areas:

Notice how big the “Everything else” category is in the pie charts? Yeah. So the biggest win will be to optimize there.

Side note: Notice that last year my Restaurants spending was 20.7% in an average month and this year it’s only 8.2%? I’ve decreased it from about $400/month down to $150/month. That’s a pretty good drop! I’m also not spending as much on Amazon.com, which is good too.

My current system is as follows:

• 3% Amazon.com spending (Chase Amazon.com Visa)
• 2% Drugstore, restaurant, and gas station spending (Chase Amazon.com Visa)
• 1% everything else (Chase Amazon.com Visa or credit union Visa)

I could double the Everything else rewards by simply by adopting the Fidelity Investment Rewards American Express Card that gives you 2% back on all purchases. (Thanks to tj and Executioner for recommending it on my last credit card strategy post!) I would be able to redeem the rewards for $50 in cashback every 2.5 months based on my current spending for a reward of about $240/year versus the current $120/year. Not everywhere takes American Express, but many places do. Based on last year’s spending, adding the Fidelity 2% Amex would have netted me an additional $175 in cashback over my current system since that pulls in groceries, airlines, and department stores, as well.

Another option would be the Fidelity Investment Rewards Visa Signature Card, which gives you 1.5% back on your first $15,000 in spending and 2% thereafter. But, my estimate of “Everything else” spending for the year is only $12,000, so I’d likely only get the 1.5% back on everything. You can’t redeem the rewards until you’ve accumulated $50 worth either and the points are separate from the Amex one, so I’m not sure if it’s worth it to go for both. The break-even point would be if > 50% of my “Everything else” spending dollar-wise was done at places that take American Express, then combining that card with a 1% one makes more sense than using the 1.5% Visa card.

I’ve also looked at cards with bonuses for the following categories:

5% cashback at gas stations - That’s a great cashback rate, except that I spend very little at gas stations. Last year, I averaged $40/month and this year I’m at $23/month so far. Getting a 5% gas card would net me an extra $8 this year or an extra $14 last year. That’s not nearly as worthwhile as the $174 jump with improving the “Everything else” category. You also need to be careful to not overextend yourself with credit cards and you can’t redeem the cashback often enough that the points expire. So if I was to get a gas card, it would be the PenFed Platinum Cash Rewards card that automatically credits your 5% cashback each month. The problem then would just be remembering to have it on me when I happen to get gas.

5% cashback on airfare – On every airline! This card is also through PenFed and it’s an Amex, the PenFed Premium Travel Rewards American Express Card. I was kicking myself for not having this card when I spent ~$1,000 on overseas flights a couple months ago since that was a loss of $40 in cashback rewards. Oh well, I did get about $10 in cashback rewards from that at least. I may consider adding this card at some later point, but I think I’ve bought all the flights that I will for this year now.

American Express Blue Cash Preferred/Everyday: This card has some great benefits:

• Preferred: 6% cashback at grocery stores, 3% cashback at department stores and gas stations, 1% everywhere else ($75 annual fee)
• Everyday: 3% cashback at grocery stores, 2% cashback at department stores and gas stations, 1% everywhere else
• Roadside assistance

6% at grocery stores with the Preferred card looks great until you factor in the $75 annual fee. You would need to spend more than $2,500/year or an average of $208.33/month for this card to break even over the Everyday card. And the Everyday card is a $25/year increase in cashback rewards at that level over the 2% Fidelity Amex, with most likely only being able to redeem the rewards twice a year. Honestly, if I got one of these two cards, it would be mostly for carrying the Roadside assistance feature and some of the purchase protection from American Express like extended warranty and return policies. Plus, right now, they’re offering $150 in bonus reward dollars if you spend $1,000 within the first 3 months of opening the Preferred card or $100 with the Everyday card. So I will probably give in and open the Everyday card eventually, mostly for the free roadside assistance and the $100 bonus.

I had been looking for a no foreign transaction fee credit card beyond my Charles Schwab debit card, but it looks like my credit union is in the process of removing the foreign transaction fees from their credit cards, so no action is required on my part to obtain a no foreign transaction fee credit card. That’ll be pretty nice.

I’ve already opened the Fidelity Cash Management account necessary for redeeming the rewards from the Fidelity 2% Amex card, but since my plan was to wait until July to apply for another credit card, I’ll hold off for another month and a half or so. I’ll apply for the Amex Blue Cash card in early October when my current roadside assistance is about to expire.

Hope everyone is having a good weekend!

Fear of Investing: Perfectionism

I’m that kid who had ALL of her money in savings accounts and CDs until she opened her 401(k) and those weren’t options there. Yeah. (And we all know how well that started out.)

For whatever reason, buying stocks and such in my tax-advantaged accounts isn’t nearly as scary as it is in taxable accounts. If I change my mind on something or do the wrong thing, I have to pay taxes on any gains. (My brain seems to forget that paying taxes on gains is better than having no gains at all…) There are also so many more moving pieces investing in multiple accounts at the same time. And I’m totally way overthinking it, which isn’t helping at all.

I’m not even sure it’s a fear of losing money like many people have since I have pretty good cash flow and about 7 months’ expenses in a straight savings account. It’s probably a fear of the unknown and not doing the perfect thing.

My personality is such that it is easier for me to do one thing at a time until that thing is done and then do another thing. Remember my savings snowball? I don’t do well with putting $X/month away for a Roth IRA. I prefer putting $5,500 into it all at once. I don’t like adding little bits to the mortgage at a time – it’s easier to pay the minimum or a ton extra. I don’t like splitting my bonuses up to multiple savings vehicles – I prefer throwing it all at one.

That’s a bit why I’ve just been throwing everything at the mortgage so far since I closed on my condo last June.

I’m not very good at wishy washy things that don’t need to be exact. Asset allocation is a guideline of risk, not a specific science. People who are perfectionist investors are probably not as good as more vague investors as we want to keep everything exactly right, which involves more buying and selling. That’s why my rule is to only re-balance with new money. It results in a lot less fidgeting.

Right now, my asset allocation is at 29% fixed income and 71% stocks, which is a bit overweighted in fixed income from buying the $10,000 in Series I Savings Bonds. When I make my 2013 Roth IRA contribution later this month, it’ll shift to 27% fixed income and 73% stocks, which is much closer to my target.

I spent a few hours on Friday night playing with forecasting spreadsheets and getting really anxious about which decision to make, about which funds to use in which accounts. I eventually came to a strong moment of indecision and decided I should go to sleep. In the morning, I had this strange peaceful rush which helped me to remember that these little decisions, no matter how much I want them to matter, don’t actually matter all that much. They’re incredibly minuscule compared to my savings rate. So far this year, I have added over $21,000 to my investment portfolio. And that’s only four months in. Choosing between putting Vanguard Total (US) Stock Market index fund or Vanguard Total International Stock index fund in taxable is not worth nearly as much as continuing to stash the amount of money that I do – I will add at least another $18,000 to my investment portfolio this year, possibly another $38,000.

So the key is to be tax-efficient, but not let perfect be the enemy of good. We’re are own worst enemies really at doing that.

Readers, what tips and tricks do you have for getting past your perfectionist tendencies?

No Bad Choice

I am already maxing out my 401(k), Roth IRA, and HSA on autopilot. I feel like beyond that, there are a lot of good options, each with their own risk and reward and it’s really difficult to choose between them.

For example, with my RSUs I could:

1. Pay cash for the taxes and keep all of the shares. (High risk, high reward as this is $30,000 to $80,000 per year of shares in my employer. It also requires me to save up the cash to pay the taxes of up to $10,000 on a vest.)
2. Sell shares for taxes, keeping about 2/3 of them. (High risk, high reward as this is $20,000 to $55,000 per year of shares in my employer.)
3. Sell all shares for cash and diversify.

I’ve chosen option 3. It doesn’t seem to be working out that badly so far as I still see the efforts of my employer’s stock doing well with future RSU vests.

With my extra cash flow after maxing out tax-advantaged accounts, I could:

1. Pay down the mortgage.
2. Set the money aside in cash.
3. Invest in index funds in a taxable account.

For the last year, I’ve been doing option 1 exclusively with an occasional dip into option 2. I’m starting to realize that life could change a lot in the next 4 years before my mortgage payoff goal and maybe it would be nice to have some more easily accessible funds. As with my psychological want to have a nice round number in my online savings account ($20,000), I have a feeling that once my mortgage balance reaches some number, I will feel less of a need to pay down the mortgage so aggressively and that’s when I’ll switch to investing in index funds instead or doing a mix. I’m already starting to feel less antsy about the mortgage balance, so I have a feeling that I will hit this number in the next six months or so.

Some numbers at which I think I’ll feel better about the mortgage balance:
a) $228,800: 20% of original loan balance paid down ($14,200 to go – will probably hit June 1st)
b) $214,800: 40% in equity (could hit by end of July)
c) $200,000: a round number (could hit November 1st)
d) $XXX,XXX: my expected gross income for this year including RSUs (could hit by end of November)
e) $179,000: 50% in equity (could hit by end of year, if I make the January 1st payment in December)
f) $150,000: a round number
g) $XXX,XXX: my base salary and what I would probably get somewhere else
h) $100,000: a round number
i) $50,000: a round number
j) $20,000: the balance of my savings account
k) $0: no more mortgage!

My guess is that somewhere between a) and e), I will feel better enough about the mortgage balance that I will start either splitting funds between investments and mortgage or just to investments. My investments have been going up so much lately that that seems like a bit of a scary idea though.

Why do I want to do this? Another 3-4 years is a long time to keep paying down the mortgage aggressively and not build up much of any savings/investments outside of a paid off condo and well-stocked retirement accounts. If I want to go work at a startup and lose my job stability or quit my job and travel the world, I’d like to have some more liquid funds aka a bit of a diversified nest egg rather than the gazelle intensity that I have right now on the mortgage. I can also always cash out the investments and pay off the mortgage, assuming that they haven’t lost value.

Ways I could diversify:

1. Invest with my monthly savings and pay down the mortgage with the RSUs since those are bonuses. (7 year amortization)
2. Invest 50% and pay down the mortgage with 50% of my monthly savings and RSU vests. (9 year amortization ignoring RSU vests)
3. Pay down the mortgage with a specific amount each month to make the amortization over say 10 years (~$2,500 from today) or 15 years (~$1,700 from today) and invest the rest.
4. Pay down the mortgage with the original payment each month (~$1,200) and invest the rest. (~20 year amortization)

I’m leaning towards diversifying by paying down the mortgage with a specific payment each month and investing the rest once I reach either $200,000 or my expected gross income including RSUs for the year.

Readers, do you find that you get attached to magic/round numbers emotionally when evaluating options? How do you deal with that?

April 2013 net worth update (+2.0%)

I apologize to those who briefly saw this post this morning before I pulled it – I realized some of the numbers were off.

	31-Dec-2012	31-Mar-2013	30-Apr-2013	MoM	YTD
cash	$12,100	$12,400	$6,700	-$5,700	-$5,400
savings	$26,800	$25,400	$23,000	-$2,400 -9%	-$3,800 -14%
investments	$74,000	$92,500	$102,700	+$10,200 +11.0%	+$28,700 +38.8%
mortgage	$259,600	$245,700	$243,000	+$2,700 +1.1%	+$16,600 +6.4%
net worth	$211,300	$242,600	$247,400	+$4,800 +2.0%	+$36,100 +17.1%
assets – debts (gap)	$146,700	$115,400	$110,600	+$4,800 +4.2%	+$36,100 +24.6%

Wowee, this was an expensive month, but I was about expecting that! My net worth change was pretty much exactly in line with what I expected (a ~$3k increase), until I realized my April 401(k) contribution had also posted this month. I’m a bit of a dumbo though because I made an extra payment to my credit card in the last few days of the month and it didn’t post until May, so my net worth increase is $1,500 less than it should be and cash is down $1,500 more than it should be. Oops! Sort of like that $200 transfer that I did in March at the very end of the month, but a bit more… I also got a healthy raise on my base pay, which was reflected in my April paycheck. I am getting super close to $250,000 though and I am reasonably confident that it will happen next month!

Expenses: I spent $4,240 in April ignoring work reimbursable expenses, which is a bit more than double my spending goal for the year (under $30,000 $24,000 in non-mortgage expenses), but there were some high, expected expenses. That puts 2013 so far at $10,860 or an average of $2,715/month. This would project forward to $32,580 or closer to $27,000 if you assume those two expenses were one-time.

Some of my controllable expenses broke down as follows:

• $0 Clothing (woo!)
• $0 Cell phone (woo credits!)
• $437 Lifetime subscription for my TiVo
• $135 Entertainment/Social ($140 last month, $216 average last year)
• $28 Eating out by myself ($8 last month, $51 average last year)
• $127 Groceries ($211 last month, $126 average last year)
• $97 Work lunches ($99 last month, $171 average last year)
• $31 Internet (woo!)
• $188 Electricity (boo, but better than February’s $238!)
• $X,XXX Property taxes (not controllable, but listing because it contributed to this month being expensive)
• $15 Health
• $20 Eyebrows
• $60 Sport #3
• $34 Car maintenance (routine oil change, with a coupon)
• $22 Fuel ($19 average this year so far, $38 average last year)
• $X,XXX Flights (overseas trip in the fall!)

Other than the overseas flight and the property taxes, this month wasn’t actually that bad for spending.

I didn’t buy any clothes this month! None at all!! I’m super proud of myself for that. I have so many clothes and shoes in my closets and drawers that I think this is a good experiment. Or at the very least, it should (and is) forcing me to be a bit more conscious with my spending.

I’ve been trying to be conscious of my Entertainment/Social spending while still hanging out with friends and not being antisocial. I think that I’m saving about $200/month by being single because my spending values didn’t line up so well with my ex’s.

I’m kicking myself for not just having paid for the TiVo lifetime subscription when I bought the thing and kicking myself for paying for it now. It would have cost me $100 more than the 3 year subscription to pay for the lifetime 3 years ago. And of course, back then, I couldn’t see that far in the future and figured I might have moved to another country by then and only paid for 3 years. /dumbo At least I found a $100 coupon!

I was doing so well with work lunches in January and February, but I seem to have failed at bringing my lunch to work very often this month again. In my defense, I believe in the value of networking and I prefer to do that over lunch rather than afternoon coffee breaks for productivity reasons. $36 of this is networking lunches, which means that only ~$63 of it is me buying my lunch because I didn’t pack something. At the very least, I have made a good improvement in this category over last year.

Ah, groceries! Feeding only one person that eats very little is apparently not all that expensive :) I have been meal planning somewhat. It’s not that time consuming when anything I cook will last me 2-4 meals! I probably spent about $30-40 on fancy chocolate and ice cream this month though which is included in the Groceries category.

My electricity company bills for two months at a time. $188 is for late January through late March, a $50 decrease from the previous bill. The heating hasn’t been on nearly as much lately, so I think the next bill should be closer to $140 and hopefully $100-120 for the summer months.

My Ting bill for the month of April looks like it’ll be $20+fees, which is pretty awesome considering that I used to be paying $85/month for the same service. I’ll do a post on my experiences with Ting so far at some point.

May I say that I should have gotten on the auto-pay bandwagon ages ago? This is wonderful, so much time saved.

Savings: $23,000 (down $2,400)

Current breakdown:

• $19,200 in an online savings account
• $600 in a checking account that gets free ATM fees anywhere in the world (for a just in case backup)
• $1,500 in a Chase checking account for 6 months ($200 bonus for opening the account!)
• $1,400 Condo furnishing sinking fund (no change this month!)
• $300 in my new Health Savings Account (woo!)

What changed this month? I moved $5,000 from my online savings account to Series I Savings Bonds and then put my “savings” direct deposit back in there.

In case you guys can’t tell, I love fidgeting with my finances. I’m having a hard time deciding on exactly how much I want in savings. That’s why I put this month’s “savings” into my online savings account. My theory is that I don’t like that number being under $20,000 for whatever reason. So I’ll throw another ~$800 in there next month and see if I feel better. Yep, I’m pretty sure that $20,000 in that one account is the magic number that will let me sleep soundly at night.

Investments: $102,700 (up $10,200 or +11.0%)

This includes my Roth and Traditional 401(k), my 401(k) employer matching (fully vested!), my Roth IRA, my taxable investments including stock index funds and Series I Savings Bonds.

You might question my counting my Series I Savings Bonds under Investments vs Savings. I’m counting them here mostly because of their tax-deferred until maturity nature. I also consider them part of my emergency fund, but in reality my entire monetary (i.e. non-property) net worth is my emergency fund, so that doesn’t necessitate it being part of savings.

The increase here comes from:

1. March 401(k) contribution and employer matching
2. Buying $5,000 of Series I Savings Bonds (my second half of the annual limit for 2013)
3. Healthy market gains
4. April 401(k) contribution and employer matching

A fancy milestone: My investments are now worth over $100,000!!! I am super excited about this :) I noticed last week sometime when I logged in to Vanguard to add the second $5,000 of i-bonds that it was hovering around $99,000 something and then yesterday morning I logged in and it was over $100,000 and then this morning I noticed that the April 401(k) contribution had posted as well. Woo!!

Mortgage: $243,000 (down $2,700 or -1.1%)

My mortgage is a 5/1 ARM at 2.5%. Before the refinance, it would have been paid off November 1, 2038. ~$9 less was paid in interest with the April 1st payment versus the March 1st payment and more of the regular payment went to principal than to interest!

The April 1st regular payment saw some extra principal funds from my March paycheck.

I estimate with the extra principal payments in April that the payoff date is down to July 1, 2040, shaving 4 months off of the amortization. I need to send an additional ~$25,300 in extra principal payments this year to stay on track with the five year payoff plan, which I am on track to hit by July/August.

TOTAL: $247,400 (up $4,800 or +2.0%)

I ended 2012 with a net worth of $211,300, so I’ve seen a change of $36,100 or +17.1% so far this year. I’ve set the y-axis on this graph to $315,000 so we can see how my net worth grows towards that throughout the year.

Interesting fact: in June 2012, my net worth was up $32,700 YTD. This year, my net worth is up 110% of that amount only four months in!

From the Other Side

I’ve started and set aside quite a few posts in the last few weeks. Life has been rather uneventful lately, introspective rather than busy. I’ve spent a lot of time on my balcony (it’s been a beautiful spring so far!), baking, being active, reading, and introspecting on life, not money. Surprisingly, this has provided little inspiration for blog posts.

A relationship ending closes a life chapter, but opens a new one. It helps one to re-think what one wants out of life, without thinking of someone else at the same time. I’ve spent a lot of time in the last few weeks thinking about what I want out of life. Financial goals have always been easy for me to come by. They’re easy to define, measure, chart, and feel a sense of accomplishment. But life goals? They’re a bit more wishy washy. They’re harder to measure and to define and you often can’t really chart them, though many of them probably go in a zig zag pattern. I’m at a point now where I feel like I can do almost anything money will buy, it’s just a matter of finding the time. It’s an interesting feeling.

I’m probably missing something, but these are the six quadrants I see to my happiness:

1) Home: Many people told me that I should spend my twenties renting since I don’t really know where life will take me. But for me, my home provides a real sense of contentment that renting wasn’t really giving me. It provides a sense of stability that helps cement me while I figure out the rest of my world. I absolutely hated my temporary place last year by the time I finally moved to the condo. This condo is probably the nicest place I have ever lived in. I feel fortunate every day that I am able to easily afford this place. I love my bedding. I love my bedroom, including the painted wall I color matched to my decorative pillow cases. I love my shower. I love my closets. I love my mirrors. I love the photos I’ve put up throughout the condo of my travels. I love having an office / guest bedroom. I love the windows in all the rooms. I love my balcony. I love my pantry and my kitchen sink and how easy it is to clean my stove. I love the entryway. My patio furniture is growing on me (it’s still pretty new!). I love my neighborhood. It really does feel like a neighborhood and it is quite walk-able. I do miss being a bit closer to work, but I like this area far more than anywhere closer to work. I love that I am paying less per month to own this place than I was to rent a place almost half the size. I don’t like my electricity bill. I will conquer it some day.

2) Fitness: Being single allows me to set my own schedule. The onset of summer provides a lot more flexibility in this as well. I’m still walking to/from work every day, which gives me ~25 miles/week of walking. I also am a huge fan of combining socializing and fitness, so I picked up another sport for the next few months. I like doing more than one sport each week – more variety for the mind and body, using different muscles. There is now enough time to run in the evening, but it’s hard to convince myself to go for a run when I’ve already walked 5 miles that day. Since I’m trying to maintain a certain number of miles of activity each day, I am trying to run on the other weekend day without the extra sport. It’s a bit of a juggling game, but the routine I’ve been developing so far has been rewarding.

3) Social: This is probably the hardest one for me while single. I’m rather introverted and work exhausts a lot of my available social energy. But there isn’t quite enough social in my life right now. So I need to find the energy each week to find people to hang out with each weekend day (Friday, Saturday, and Sunday) for a few hours. The extra sport satisfies one of these, but I still need to fill the other two. That should satisfy my social needs.

4) Career: This one has been a strange up and down lately. I’m still evaluating whether this new job was the right move or not. I’m making a plan for what I want to do next and what I need to do to get there. This thing I’m contemplating, I’ve been debating doing for over three years now and I haven’t actually pulled the trigger yet. If I’m going to do it at some point, now while I’m single and not super interested in traveling is the time to do it!

I’m going to stockpile a bit of extra cash over the next few months in case I need some to help figure that out. This means that I won’t make any extra mortgage payments between now and late July/August. I’ll write about this if I end up deciding to spend some of the stockpile. If I don’t spend the stockpile, I’ll just throw it at the mortgage and not much harm done! (I will be making the mortgage payment from the original loan though, so a bit extra will be going to principal each month AND it’s on auto-pay so I don’t have to worry about paying the mortgage for a few months!!)

I’ve also been debating taking a few months off before starting my next job. My employer lets you take a leave of absence, though it does make many benefits-related things a bit complicated, I think it could be worth it to help reset.

5) Financial: I’ve never really been in a position to worry about money. I enjoy fidgeting with my finances because they’re something that do actually make sense to me, unlike life many days. I only added it on this list because someone told me how fortunate I am that I am figuring life out in my twenties with a steady job and no worries about money.

Oh and neat update: I no longer have to pay for my expensive birth control! Yay for my health insurance plan year resetting!

I’ve been doing well with tracking my spending. It really doesn’t take that much effort when I’m not spending very much time spending money! I was having this need to enter some spending every day even if I hadn’t spent anything, so I added a column for “No Spend Days” and enter the date there if I didn’t spend anything or have any automatic bills go through. That helped with the need to enter something! I’m also not checking my online banking nearly as often as I was since all my spending is funneled through credit cards now. Way easier and I’m actually loving the automatic payments, though I am checking that they do go through. (Comcast forgot about it the first month??)

6) Food: I’m not really a foodie. I included this category because food solves a lot of my problems: migraines, sadness, lack of motivation, grumpiness. I’ve been meal planning somewhat. For just me, it doesn’t take a lot of effort since a meal will last me another night or two of leftovers. So I’m really only planning 1-2 meals a week. This means way less dishes, way less cooking, and more time in the evenings than I had while in a relationship. I’m most of the way through the month and have only spent $80 (!!!!) on groceries. I still can’t believe that. Disclaimer: $20 of that may be fancy chocolate. This $80 number really doesn’t make any sense… I have to be missing a receipt somewhere.

I’ve also been baking more than I was. I’m getting away from the muffin mixes, trying out new recipes. Some are flopping – I think I’ll stick with the mix for cornbread – and others have been amazingly delicious. Everyone is always surprised by some of the things I make from scratch. My parents never used mixes for anything, so that has never been my first thought. I tried them for the muffin mixes to see which muffins I even liked with less barrier to entry.

 

A good relationship would improve the social quadrant, the food quadrant (me not having to do all the cooking, meal planning, grocery shopping, and dishes), the fitness quadrant (adding more social to it), the home quadrant (more social, especially on weekends), and the financial quadrant (some expenses shared, well if I was living with the person).

Notice that travel isn’t on this list. I don’t actually value travel all that much right now. I’m taking a big trip this fall, but I’m not planning any short trips since I don’t find that they’re usually worth the planning stress. I’ve done a TON of travel in the past, in my younger days (haha), and right now, I want to settle in a bit more.

Readers, when was the last time you looked at your happiness quadrants? How are things going for you?

Challenge: No Manual Money Moves in April

I’m a perfectionist. I like to fidget with things. Some times, this can be good, but other times, it can be detrimental. So I’ve declared that April is the month of no manual money moves. Why is this possible?

1. My cable, cell phone, and electricity bills are all on auto-pay, as are my HOA dues and my property taxes. (I set my property taxes up to pay in the online bill pay once I get the bill.)
2. My credit card bills are on auto pay.
3. I have no pressing concern to open a new checking, savings, or credit card account.
4. I’ve already made my 2012 Roth IRA contributions and I don’t know if I can make any for 2013 yet.
5. I’ve already made my April mortgage payment and I will make my May one on May 1st instead of earlier this time. (I usually schedule it once I know the exact amount of my paycheck.)
6. I’m expecting no bonuses or other windfalls in April.
7. I only get paid once a month, on the last business day of the month.
8. My 401(k) contributions and allocations are set up for the year.

Forcing myself to not fidget with things is good. This is sort of like my rule of no selling to re-balance my investments.

I’ve been eyeing another credit card lately. The American Express Blue Cash Preferred looks pretty intriguing. It has a $75 fee, but you get 6% cashback on groceries, up to $6,000/year. I will most likely spend about $2,500/year on groceries, which is the tipping point at which the Preferred card makes sense over the Everyday one that only gets you 3% cashback on groceries. With the Preferred, you also get 3% cashback at gas stations and department stores, versus 2% with the Everyday. The tipping point is that I can buy Amazon.com gift cards at my local grocery store and then use those for my Amazon.com purchases, netting me 6% cashback on Amazon.com purchases instead of the 3% that my current system gets me. The catch on that is that I’m spending a lot less on Amazon.com these days than I was. If you’re just looking at flat-out grocery spending, you need to spend $75 /(6% – 3%) > $2,500/year on groceries for it to make sense to pay the annual fee.

Both cards have sign-up bonuses, $150 for the Preferred card and $100 for the Everyday, if you spend $1,000 on the card in the first 3 months. That makes the cost of the Preferred card in the first year -$75 versus the cost of the Everyday card -$100 in the first year and then $0 thereafter. So you would net $25 more with the Everyday card upfront, but with $25 / (6% – 3%) > $833.33 in grocery spending over the course of that year, the Preferred card would make more sense and then you can always switch to the Everyday one after a year to avoid the fee if you don’t think it’ll make sense going forward. I’m pretty confident that I will spend more than $69/month at the grocery store, lol! I’m not so confident that I would spend more than $208/month consistently though.

Another cool feature is that both cards come with Roadside Assistance. My car offered that for the first 3 years, which will be up by the end of this year. I did resolve though that I would wait 6 months from early January to apply for another credit card and it’s only been three, so I guess that means I need to wait until early July.

BUT I am not making any manual money moves in April. I’m tracking my spending, as per usual. My (bimonthly) electricity bill went down $50 from the last one, which is a good improvement! I’m hopeful that the next one will go down another $50 since I hopefully won’t need to run the heaters for much longer.

The last six months have shown me that life is still changing constantly. In the last year, I have made many life decisions: bought a condo, moved into said condo, started a relationship, changed jobs, and ended said relationship. I’m so thankful that as I navigate my twenties, I now have a stable home environment in my condo and I do have a pretty stable job that lets me not worry about money. With > $2,000 in spare cash flow each month and enough in savings to live off of for 12 months, I don’t really worry about money any more, which is a really nice feeling as I figure other things out.

I’m also trying to stop relating everything back to money. This is especially important as I adjust back to a single person’s social life, in terms of spending habits. I think I should still be able to keep my social spending under control though since my ex and I had somewhat different priorities on how much to spend on various things.

Readers, are you doing any challenges with your money lately?

March 2013 net worth update (+3.0%)

	31-Dec-2012	28-Feb-2013	31-Mar-2013	MoM	YTD
cash	$12,100	$11,800	$12,400	+$600	+$300
savings	$26,800	$36,300	$25,400	-$10,900 -30%	-$1,400 -5%
investments	$74,000	$79,300	$92,500	+$13,200 +16.6%	+$18,500 +25.0%
mortgage	$259,600	$249,900	$245,700	+$4,200 +1.7%	+$13,900 +5.4%
net worth	$211,300	$235,500	$242,600	+$7,100 +3.0%	+$31,300 +14.8%
assets – debts (gap)	$146,700	$122,500	$115,400	+$7,100 +5.8%	+$31,300 +21.3%

At a normal rate of $5,000 increase/month, I would hit a net worth of $300,000 in about 11-12 months with no bonuses! So I wasn’t really expecting a $7,000 increase month-over-month despite my income tax refund (unfortunately) being a bit over $1,000.  The stock market and my savings rate sure do make expenses not seem to matter so much, which is exactly why I’m focusing on expenses this year. I will probably surpass $250,000 sometime in May since April will have some big expenses.

Expenses: I spent $2,800 in March ignoring work reimbursable expenses, which is a bit above my spending goal for the year (under $30,000 $24,000 in non-mortgage expenses). That puts 2013 so far at $6,620 or an average of $2,200/month. This would project forward to $26,480.

Some of my controllable expenses broke down as follows:

• $41 Clothing (hoodie, athletic socks)
• $140 Entertainment/Social ($125 last month, $216 average last year)
• $8 Eating out by myself ($3 last month, $51 average last year)
• $211 Groceries ($146 last month, $126 average last year)
• $99 Work lunches ($48 last month, $171 average last year)
• Charitable donations – increased! I’m working on this one.
• $63 Cell phone (paid my Sprint early termination fee, still working through Ting credits)
• $65 Internet (both the February and March bills, oops)
• $42 Household goods (dishwasher detergent, paper towels, batteries for the garage door opener, rubber gloves, hand soap)
• $43 Health (last month of being past the deductible…)
• $20 Eyebrows
• $XXX Furnishings (a plant, a gardening trowel, various cleaning supplies, and furniture for my balcony, yay spring!)
• $28 Fuel
• $518 Flights (wedding season is coming up!)

I know I said I was going to give up my paid Pandora subscription. I tried it out and gave up after a couple days of getting ads every ten minutes at work. I’m not going to set aside $3/month like I was before – I’m just going to let it come out of my Entertainment budget like it did this month. Another $58 of my Entertainment/Social spending was eating out with friends and I bought one book for $11, one Redbox movie rental at $1, and about $31 in withdrawn unaccounted for cash (although there is still about $26 sitting in my wallet, so that’s really only $5). (I mostly don’t track my cash spending, so I just count it as spent when it comes out of the ATM.)

I was doing so well with work lunches in January and February, but after my relationship ended, I gave myself a bit of a break on meal planning. $99 is still about half of my average from last year, so somewhat of an improvement? I picked up fixings on Sunday for work lunches this week, so I think I will be able to go back to bringing my lunch. If I don’t have many options to eat out for lunch, I’d rather bring my own.

I’ve set up quite a few automatic payments now. All of my credit cards are on auto-pay. My mortgage is set to auto pay on the last day of the grace period, in case I forget to make a manual payment with extra principal. My cell phone bill with Ting is on auto-pay, as are the electricity and internet bills. I’m still checking them, but it definitely makes things a bit simpler and less time-consuming!

The cell phone switch has been good so far. I was “charged” $48 so far in two months. (I say “charged” because I have a bunch of credits.) That’s pretty awesome because with Sprint, I was paying $83/month. This is pretty awesome for not modifying my usage at all.

Savings: $25,400 (down $10,900)

Current breakdown:

• 2012 Roth IRA contribution
• $5,000 in rewards checking account
• $22,000 in an online savings account
• $600 in a checking account that gets free ATM fees anywhere in the world (for a just in case backup)
• $1,500 in a Chase checking account for 6 months ($200 bonus for opening the account!)
• $1,400 Condo furnishing sinking fund

What changed this month? I moved $5,000 from my checking account to Series I Savings Bonds, $5,000 from my online savings accounts to my Roth IRA. The other $900 is spending from my condo furnishing fund. I also consolidated all of the targeted online savings accounts except for the condo furnishing sinking fund into one.

I’ve also done the math to calculate where I would find twelve months’ expenses: online savings account and cash flow, then Series I Savings Bonds, and lastly, 50% of my stock index funds in taxable. Those three (ignoring cash flow) add up to $36,000. Doing that math really helped me to feel comfortable with using cash flow to pay down the mortgage and/or invest.

I’m running out of big things to use my condo furnishing sinking fund for. From my list last July and more, I have bought a futon for the second bedroom, a small table in the entryway, added some color and storage in the second bathroom, a BBQ and other furniture for my balcony, framed photos of my own and hung around the condo, a lamp for the office, a plant, and possibly other things that I’m forgetting. The only things I can think of to still buy are ceiling fans for the master bedroom and the living room, if I’m allowed to in my condo, a wall clock to decorate the front entryway, and to frame my college degree. Those three things most likely won’t add up to $1,400 – I’m guessing closer to $500.

Investments: $92,500 (up $13,200 or +16.6%)

This includes my Roth and Traditional 401(k), my 401(k) employer matching (fully vested!), my Roth IRA, my taxable investments including stock index funds and Series I Savings Bonds.

You might question my counting my Series I Savings Bonds under Investments vs Savings. I’m counting them here mostly because of their tax-deferred until maturity nature. I also consider them part of my emergency fund, but in reality my entire monetary (i.e. non-property) net worth is my emergency fund, so that doesn’t necessitate it being part of savings.

The increase here comes from:

1. February 401(k) contribution and employer matching
2. Contributing the 2012 maximum to my Roth IRA ($5,000)
3. Buying $5,000 of Series I Savings Bonds (half the annual limit for 2013)
4. Quarterly dividends in all of my stock index funds
5. Healthy market gains

A fancy milestone: My 401(k) balance is now over $50,000! It was also really awesome to see the balance of my Roth IRA jump so much since I hadn’t made a contribution in almost two years.

Mortgage: $245,700 (down $4,200 or -1.7%)

My mortgage is a 5/1 ARM at 2.5%. Before the refinance, it would have been paid off November 1, 2038. ~$7 less was paid in interest with the March 1st payment versus the February 1st payment. More of the regular payment should be going to principal than interest each month by May April of this year!

The March 1st regular payment saw some extra principal funds from my February paycheck. I also threw another $200 at the mortgage in early March after zeroing out my February budget and my entire income tax refund. It’s really fun watching the mortgage balance go down in such huge chunks! :D

I estimate with the extra principal payments in March that the payoff date is down to November 1, 2040, shaving 7 months off of the amortization. I need to send an additional ~$27,500 in extra principal payments this year to stay on track with the five year payoff plan, which I am on track to hit by July/August.

TOTAL: $242,600 (up $7,100 or +3.0%)

I ended 2012 with a net worth of $211,300, so I’ve seen a change of $31,300 or +14.8% so far this year. I’ve set the y-axis on this graph to $315,000 so we can see how my net worth grows towards that throughout the year.

Interesting fact: in June 2012, my net worth was up $32,700 YTD. This year, my net worth is up 96% of that amount only three months in!