Archive for May, 2011

Life insurance as a twenty-something with no dependents

When I think of life insurance, I think of a family man working to pay the mortgage and the bills with his wife at home. I don’t think of me – a twenty-something with no dependents – as someone who needs life insurance.

One of my benefits at work is a pretty good life insurance policy, at least as far as I’m concerned.

So who is the rightful beneficiary on my life insurance policy? My parents. What better way is there to thank them for raising me than giving back a good portion of the costs they spent if I was to die in a freak accident?

Some companies allow you to see a slightly larger paycheck for reducing your life insurance policy. My company doesn’t offer that option, however, that could be a good option for you.

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Update on reducing financial anxiety

I think I am off to an okay start. This week:

  • I checked my checking account once – to see if the rent check had gone through. I haven’t written a check for rent in awhile (I was using the auto withdrawal authorization), so I wanted to make sure. I’ll probably believe it goes through next month.
  • I checked my Vanguard account on Wednesday to see if the IRA recharacterization had gone through and it hadn’t, so I checked again on Thursday. On Thursday, it showed as pending, so I set a reminder to convert it back to a Roth on Friday. On Friday, I logged in, converted the IRA and logged out. Today, I checked that the conversion went through and now I will hopefully leave it alone until June 2nd.
  • I logged into a visa account to pay it, a few days after I knew the statement had processed.
  • I just logged into my credit card accounts to see which one I should use for the next few days since it’s getting close to the bill dates and a pair of shoes was credited back to my account almost equal to the dollar amount that I normally spend on the card.
  • I logged into my stock grants account to see if the new grant was there yet and it was. I normally only log into that account when I get an email about a statement.
Next week the goal is to:
  • not log into my Vanguard account
  • not log into any of my credit card accounts
  • not log into my checking account
The following week, I will allow myself to:
  • log into my two credit card accounts that have a statement closing date so I can check the balance
  • and my checking account to pay the credit card accounts

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How I Got Here

I don’t know how I ended up being such a crazy saver, but I’m assuming I can thank my parents. In high school, I saved 80% of my net income and 20% was for spending. This was possible since I had very low expenses (partially due to being a school-aholic), but still. How many high schoolers out there saved 80% of their net income?

I may have only worked 16 hours per week at $6.50/hour, but I saved 80% of that. I also tutored other students at my high school in French, Math, Science, and English, which was quite lucrative at $10/hour, though infrequent. Even though that was paid in cash, I saved 80% of that income as well.

I had a pretty decent sized savings account when I went off to university, despite the minimal amount of time that I had spent working and the fact that I was working at minimum wage.

My parents paid for my tuition, rent, utilities, books, flights home, and long distance to call them throughout university. For my first three semesters, they paid for my food as well.

I took several internships throughout my degree, most of which paid quite well. I continued to save a good portion of my income since my expenses were minimal during school semesters (I never spent more than $1,000 – $2,000) and I lived within my means during my internships.

I chose a degree that would land me a job in the well-paying high-tech industry with only a Bachelor’s degree. I graduated from both high school and university with honours.

I graduated from my four-year university degree with a positive net worth in the low $30,000 range and approximately $7,000 in retirement savings. I managed to increase that by 69% in my first year out of university, despite spending $21,000 on a new car and I am hoping to increase my net worth by 90% in 2011.

So it was one part luck in my parents covering the cost of my university education, but it was many parts hard work – I graduated with an honours degree from a reputable university with a handful of internships under my belt – and many parts diligent saving.

I don’t see my story as the story of a spoiled brat. I didn’t spend my university days partying nor did I waste the money I earned during my internships. I see my story as what parents hope will happen if they provide their children with a university education – I took that and flourished, starting my adult life with no debt.

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Goals for 2011

Save as much as possible:

1. Max out my Roth IRA – done in early April.

2. Max out my Roth 401(k).

3. Bump my emergency fund up by $4,000.

4. Save $3,000 towards a car replacement in 10 years.

5. Save $20,000 towards a down payment on a house.

Have excellent credit:

6. Have a credit limit of $1,000 on my Amazon.com Rewards Visa card.

7. Raise the limit on my primary card.

Reduce financial anxiety:

8. Have only one checking account that I actually use – done in early April.

9. Don’t check my bank accounts daily. (I’ve never overdrawn, so this is a safe goal.)

10. In May, only enter my receipts into my spreadsheet twice – once on the 15th and once on the 1st of June.

11. Only check my Vanguard account on the 2nd business day of the month (when the previous month’s dividends post in my 401(k) account).

12. Make no more trades until January (except to convert the traditional IRA back to a Roth IRA).

And one final, golden goal:

Achieve a net worth of $100,000.

I would say that all of these goals are attainable, but the ones to reduce financial anxiety will likely be the most difficult.

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