Q3 2018 Update: 58.5% FI progress

Savings (~3.3 months + 66.9% of our down payment goal)

Last quarter, we got to 6 months of cash savings and made a bit of progress on our down payment goal. Instead of reporting the down payment fund progress as a % down on our target price point, I’m going to show the % towards our overall down payment fund goal. In this update, I’m showing the % towards our minimum down payment goal, which right now includes our earnest money and some CDs we each opened after selling some index funds. The actual $ amount of the goal will go up a bit as we do some upgrades, but we anticipate being able to get to 100% of our cash goal by the time we close and if we don’t, then we will take the rest of it from our remaining taxable index funds. (Our current plan is to sell the condo after we move and then use that “windfall” balanced between re-investing in taxable index funds and recasting the new mortgage, but we will see how that shifts as the year progresses.)

There was a lot of moving money between buckets this quarter. So far, we have paid 5% in earnest money on the new townhouse. I pulled half of that (so 2.5%) from my money market fund and the other half came from bringing our joint cash reserves down dangerously low (in my opinion with our current cash flow). I’m mostly out of cash now, but my husband has some more cash in his accounts, so we are probably okay-ish on cash, but I’d rather have more. We will, soon, also pay 20% for any upgrades that we choose to do on the new place and then I don’t think we should have any more outgoings related to it until closing or closer to closing.

I’m really excited for the 12 month CDs we found at 2.5%! I’ve always loved CDs. It’s just so fun to get interest payments every month and to watch it definitely go up in value!

Additionally, the 6 months reserve calculation is about 25% low based on current spending, so we will boost it next quarter with the non-salary income, including replenishing it.

58.5% FI progress (up from 53.0% last quarter or 45.0% in December 2017)

Most of the progress this quarter was from the wedding spending dropping off the rolling 12 months of expenses figure, rather than us adding much to our net worth, since it was a relatively flat quarter for net worth. That brings our coast age down to our early 40s, compared to early 50s at the end of last year. Our goal is to get to FI by age 40, so it looks like we are probably ahead of schedule with that at the moment and will see once we change the spreadsheet to use the house instead of the condo.

I plan to continue tracking this figure against the current condo value until we actually close on the new place, to show better continuity of progress. I expect that we will get past 60% by the end of this year. The expenses portion of this figure should only increase by about 10% with the new place – the main increase is from the larger property value than in the non-mortgage housing expenses.

I personally really love this chart! I find it to be much more meaningful than a net worth number.

I have a row in our net worth spreadsheet that estimates the amount needed for FI as the condo value in that column plus 25x the expenses for the last 12 months. This FI progress % is our net worth figure divided by that number. I find this helps to smooth out more expensive months with cheaper months since a lot of our expenses are irregular and also takes into account the fact that I don’t include the mortgage in the expenses, but I do assume the condo would be paid off in the total number we need. I like having this figure re-calculated in each month’s column in the spreadsheet to see how the $ needed for FI changes over time, as well as the progress.

Investments

 

So much activity in this bucket this quarter!

First, we finally opened the joint Vanguard taxable account this quarter! That increased the taxable line a bit and was really emotionally exciting, but then we found a house. Our current cash flow plan involves leaving that account alone.

We each sold some index funds to cover the part of the down payment on the new place. We’re really glad that my husband bought into the condo before we found a new place because that meant I had some liquidity in order to contribute to the down payment! Anyone who says I’m not contributing to this house because I’m not currently working can bugger off because I am bringing half the down payment and own half of our current condo, which I bought by myself when I was single. We picked out the shares to sell in the order of the least tax expensive ones and then set aside amounts we estimated would cover the capital gains taxes in savings, so that we aren’t surprised by the tax bill in April. (I’m not worried about paying a penalty because I know our income has gone up this year versus last year.)

Our taxable accounts are now smaller than our combined 401(k) or Roth IRA accounts. We will fix that again eventually! For now, this category continues to see regular contributions to my husband’s 401(k).

I’ve been debating cashing in one of my 5-year-old Series I savings bonds to make my 2019 Roth IRA contribution because it has a 0% fixed interest rate and I would rather do that than pay taxes on some index funds, except in writing this sentence, I realized I have some index fund shares in taxable that would cost me about $5 in capital gains taxes to sell to fund my 2019 Roth IRA contribution, so I should probably do that instead. I’ll see what things look like in late December. Our agreement with income is that we each get to max out retirement accounts before contributing to the joint cash flow accounts, so any income I find would go towards my retirement contributions first.

Mortgage

6/30/2018 balance: $112,504.52. 9 years, 11 months remaining.

July payment: $823.16 principal, $289.70 interest ($2.11 less than June)

August payment: $825.28 principal, $287.58 interest ($2.12 less than July)

September payment: $827.41 principal, $285.45 interest ($2.13 less than August)

9/30/2018 balance: $110,028.67. 9 years, 8 months remaining.

No extra principal payments this quarter, but that 10 year mortgage sure has a decent amount going to principal with each payment! We paid the mortgage down 2.2% this quarter. We plan to make no extra principal payments now that we know we plan on moving. Looking at our mortgage amortization schedule, the balance should drop to five figures (!!!) with the September 2019 payment and I assume we will still have this mortgage then. I look forward to that day even though we will end up with a new bigger mortgage on the new place! If we weren’t moving, we had planned on paying this off within the next five years, balancing with our investing goals.

Spending ratio – Portion of the ideal annual budget cumulatively

I calculate the spending ratio with expenses in the numerator and the denominator as 4% of our investments plus the value of any redeemed credit card points. The second figure is the cumulative spending so far for the year divided by our ideal annual budget, expressed as a fraction of 12. Both of these figures ignore the mortgage payment.

July – 29.0% – 9.48/12
August – 43.9% – 10.92/12
September – 25.3% – 12.78/12

Q3 – 31.7%

YTD – 44.3%

Q3 was about 85% more expensive than Q1 and about 24% more expensive than Q2. Thanks to not planning a wedding this year, we have spent about 3/4 of what we had spent at this time last year!!! We have spent about 64% of my “low-hanging fruit” “don’t spend more than this large figure” goal, which is awesome! I’ll set a better goal next year since our goal for this year was to have a “normal” year with minimal extra expenses and figure out what that looks like. My “ideal annual budget” figure was clearly far too aggressive though considering that we have spent more than it 3/4 of the way through the year. I expect Q4 to be similar in cost to Q1 and we are on track to spend 15.62 months worth of my ideal annual budget figure.

Our top spending categories this quarter were: housing, H’s personal spending, travel, medical, and my personal spending.

Why was Q3 so expensive? Q3 is when we pay for our big insurance bills: condo insurance, six months of car insurance, and umbrella insurance. We each had a personal trip, a weekend family trip and a week-long vacation. My husband spent 4 months worth of personal spending budget in one month this quarter (he previously had a big buffer). I hit the individual out-of-pocket maximum on our health insurance, which we almost entirely paid for in Q3. We had some legal fees related to the new house and commissioned a beautiful painting from a local artist. Of course, some baby, wedding, Christmas, and birthday gifts were thrown in there too for good measure.

One of our goals with our Donor Advised Fund is to make sure that we are using it to recommend grants on a regular basis. We’ve recommended grants for just about 40% of the amount we’ve contributed to it so far this year. We will add some more to it this year based on this year’s income and then likely not add anything until 2020.

Readers, how was your third quarter?

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Our House Buying Adventure

I’ve always enjoyed looking at houses and floorplans and going to open houses. I get this from my parents who, despite not moving in over two decades now, used to take us to look at random houses that we never moved to (which really confused us as small children and teenagers). So it’s no surprise that I would get automated emails about similar properties to our current apartment on a regular basis, to stay on top of the market. Nor is it a surprise that I have regularly dragged my husband to open houses in the past. If you’re at all considering moving, it’s really helpful to have an approximation of what you think you could get for your current place, which helps to anchor you with prices for other types of places in your area.

Recap of my decision to buy our current condo

I didn’t grow up in a big city and for some reason, I associated owning with owning a house, perhaps because I had always lived in houses that my parents owned and I didn’t know any other ownership model. I thought that all apartments and townhouses were rented. So when in my early twenties, I started to find myself with extra money, I first didn’t even think of buying a house, but I saved money anyways. I really loved living in an apartment, but I also loved the idea of having my own garage directly attached to my place where you could leave your groceries for a few minutes while you ran in to use the bathroom.

My first realization that you could buy not houses was a townhouse, so that’s where I concentrated my search in late 2011. My picture of a townhouse though, wasn’t one in the city – it was one in a more suburban area. The ones I pictured didn’t have direct entrances on a street, street noise, or garages that were at weird angles to get into because they were, you know, larger communities on more land. As a single woman, I didn’t want to live in a city in a place with a direct entrance on a street, plus there were several annoying floorplan decisions that weren’t changeable made in many of the townhouses I was looking at at the time that I now realize was common of that particular era of building. From those big items, I ruled out living in a townhouse and thus buying a townhouse back then.

Next, I realized that you could buy an apartment, which was the most mindblowing amazing idea ever. I loved living in my apartment! I could see myself living in an apartment like mine through the rest of my twenties! So why not buy one? I wanted a full second bedroom so that my office had a window versus the den in my then-apartment, but otherwise, my apartment was great. I looked at many apartments, including one that fell through, and eventually found this one that just felt like home when I walked in. I loved that it had rooms and doors and some separation between rooms. For a single person, it felt like a mansion. (And it still does when only one of us is home!)

How did I decide on budget? I had enough saved to put 20% down and wanted to find a place where the monthly payments (mortgage, condo fees, taxes, and insurance) were similar to what I was paying to rent. I originally started looking at places that were about 70% of the purchase price of the place I eventually picked. They felt more affordable, but I realized eventually that I didn’t want to live in those areas as much. That resulted in me buying an apartment that was about 4x my then-salary income. It wasn’t a big stretch in hindsight since it was very comparable to what I was paying for rent, plus my income did go up and I also had a decent amount of non-salary income eventually, but the mortgage felt so huge compared to my income at the time. I’m really glad now that I stretched to buy this place though it was a bit stressful at first.

How we feel about the condo now

We love: there is space for a king-sized bed in the master bedroom (though we don’t have one yet!), the master ensuite (including the separated toilet), great closet space, and space to barbecue outside. We love the area, especially its walkability. We love how much light there is in the living room. We love all of the little changes that we’ve made, with thermostats, overhead lighting, painting, light switches, replacing a pedestal bathroom sink with a vanity, and putting in quite close toilet seats everywhere. We love the cost, how small this mortgage is and how close we are to FI if we stay in this place. We love all the kitchen storage space. I love that it’s a place I bought on my own and substantially paid off by myself too.

We dislike: the kitchen, other than the storage space. It is beautiful for someone, but not for us. We cook far more than I did when I bought this place and there simply isn’t enough counter space to do the amount of cooking we do. Our kitchen has great square footage, but very little counter space. We have bought a couple of tables/carts to makeshift give us more counter space for appliances that we use regularly enough that they shouldn’t get put away in a cupboard. We don’t have quite enough personal space in our current floorplan – what was a mansion for one isn’t a mansion for two. The condo association won’t replace windows with energy efficient versions (and we can’t either without their authorization, which they won’t give), which is really frustrating when all of the light in our living room is discoloring furniture. The association has also been really poor at both following the rules and maintaining the building.

We’ve put a lot of work into reforming the space to improve its use for both of us, which has helped, but not quite enough. If we weren’t frustrated with the board, would we move over the kitchen and personal space restrictions or would we work with it to avoid moving and save the money? I don’t think we can properly answer that question.

What we looked for this time

Our basic ideal place items are the items we like about our current place, plus a total of three bedrooms (to aid in the more personal space desire), about 50% more finished square footage, an amazing, large house-sized kitchen and dedicated garage space. We’ve looked off and on starting about two years ago, during which time prices have gone up. Location again really impacts price and to be price conscious, we were trying to limit ourselves to at most 1.4x what our current condo is worth, which was requiring us to change neighborhoods. After finding enough places we liked the inside of, but not the neighborhood enough to buy it, we realized we needed to adjust our budget or find a way to become happier with our current place. We also realized that we are really particular about our color preferences (but generally aligned!) in that neither of us are a fan of super dark kitchens, for example. We generally prefer contemporary, modern minimalist decor.

We looked at a lot of different types of places this run. We looked at the occasional three bedroom apartment. We looked at single family houses built last century, townhouses built this century (and ones this decade), and single family houses built this century.

We ruled out three bedroom apartments because they’re hard to sell, difficult to even find, are generally only in smaller condo associations (which is one of our lessons from this place), and their floorplans aren’t often conducive to the additional personal space we were desiring since the secondary bedrooms are so small. They’re typically only about 10-15% larger than our current place and our goal was closer to 50%.

We were really attracted to single family houses because I ideally wanted a single level. (part of why I’ve loved apartments for so long!) The catch with the single level houses was that they weren’t always in walkable areas (or if they were, they were substantially less central) since that requires more land and more central places tend to be more dense. We also realized that we didn’t want the maintenance of a yard and there were some other cons to a yard as well. Newer construction single family houses tended to be about 2500-3500 square feet while the older, remodeled ones were more in the square footage range we were looking (1500-2000 sqft), but they often had weird layouts or parts with ceilings too short for my tall husband or no garage, which was really important to us for the secure bicycle storage. (To get a newer build in our desired size range, you need to

Townhouses (or attached houses, depending on your region) vary a lot in their features. Some have an HOA, some don’t. Some have shared garages, some have their own. Some don’t have garages. Some are really narrow, which I didn’t like! Some have shared maintenance agreements, but no HOA. With townhouses, we automatically ruled out any units that were a middle unit (we love our windows!), attached to too many units, shared a garage with any other unit, or had any shared maintenance agreements without an HOA. We looked at a new construction townhouse a couple years ago that was near us (so we liked the area), but the units were too small and narrow at three levels with only about 15% more square footage than we have now, which really just covers the stairways, meaning the rooms all felt tiny and we hated the colors they had picked. We have friends who own townhouses without HOAs or shared maintenance agreements but functionally share items such as utilities or garage space, which is its own frustration.

What we picked (!) this time

Their marketing worked because I saw a sign showing new construction townhouses near the grocery store one day. The first time I saw it, I thought we don’t want to move, we like our apartment. The second time, I looked it up and thought they were too expensive. The third time, I looked again and really, really liked one of the floorplans and that lower priced one wasn’t so bad of a price. (Which of course, that was not the unit we picked.) I forget at what point exactly I suggested my husband look at it too, but he also thought it was interesting. We actually had a hard time picking which floorplan we liked best because they had quite a few we liked! We drove by the area to see how far along they were and figure out where it was. It turned out to be in quite a good spot! And they were pretty far along with some units, which was helpful because we could walk through a unit with an outside and fully framed to get a feel for the space.

A few days later, we walked into one of the units that was fully framed and immediately felt like this could be home and could work! Both of us!

We picked an end unit! It has a garage, lots of windows, three bedrooms, an amazing, spacious kitchen that we are really jazzing up, a walk-in closet in the master bedroom and a separated toilet with a double sink in the ensuite. The garage has tons of space for working on bicycles and storing them, plus our car. The main entry is on the kitchen level, but the kitchen isn’t right at the entrance. There is a powder room on the kitchen level. (We saw so many places with no bathroom on the main level with the kitchen! That would drive me crazy.) The laundry is on the main bedroom level, which is great. (So many places put it on the garage level and I’m not interested in carrying laundry up two flights of stairs on a regular basis.) We also get to pick quite a few parts of the place: flooring, the neutral interior wall paint color, all of the appliances, countertops, cabinet colors, toilets, sinks, showerheads, faucets, speakers, light switches, networking equipment, etc. It’s been a bit exhausting and overwhelming, but we’re both really excited to pick things out together and to build a house we will love!

The price is the only catch here, which terrifies us a bit. This condo was a really great financial decision and I really hope this new townhouse doesn’t turn out to be a terrible one. I’m really glad that I bought our current condo when I did because that’s a big help in us being able to afford the new place comfortably versus our friends who are just buying places now and are picking different neighborhoods entirely.

We really struggled with how to figure out how much house we could afford. My previous formula of around 20% down and monthly cost should be comparable to renting didn’t seem like the right answer with how much further along we are in our financial lives. We, as usual, were far more conservative in how much house we could afford than any mortgage lender: we tried to keep our maximum house price at most definitely no more than our combined net worth and preferably below our current condo equity plus our cash and taxable account balances. The house definitely costs less than our current combined net worth and it costs about 10% more than the estimated second figure as of our estimated closing date in the future. We don’t want to empty our taxable accounts and want to continue to balance them with paying off the new mortgage by the time we are 40.

Those numbers all feel comfortable with our current household income and we ran the budget with about 60% of my husband’s current income, though the numbers are also definitely larger than what we had been paying. We definitely had to wait to buy a house until we were comfortable using all of our incomes as household to cover life going forward – houses are too expensive otherwise – and we really had to be solid on the no kids plan because otherwise we likely would have picked a very different place. At first we debated if we should lower our travel, giving, or personal budgets because of this. We immediately said no, we shouldn’t lower the giving budget because this townhouse is a discretionary expense, and we’ll keep it as is. We likely won’t contribute to our Donor Advised Fund at all in 2019 though and will push that out to 2020 so that we get the tax benefits of itemizing. The travel and personal budgets will continue to be under discussion since they’re more discretionary than giving.

Our new place costs about 2x what our current condo is currently worth, which feels like a very steep increase. We asked ourselves a lot of questions in deciding that was okay, primarily: how much does it push out our FI date and are we okay with that? Our FI date was near enough in the future that it really does feel like it’s getting pushed out, but buying the new townhouse should still keep our FI date in our 30s, which was a key for us. It feels so weird that we can afford this large number that I keep re-running the numbers just to verify that it’s okay.

Our new place won’t be ready for somewhere around a year or a bit more, which creates some interesting financial planning situations that I’ll talk through over the next year: When should we sell our current place? Should we sell it sooner and rent for a while? How much of our taxable accounts should we cash in versus save up more down payment in cash in the next while? How much should we put down on the new place before we sell the current place? How much should we re-invest versus apply to the new mortgage recast after we sell our current place? How does this affect our overall financial plan? How much cash should we keep on hand?

This feels like a really expensive and delightful planned for splurge and we are both super excited! It’s super fun to watch it be built and to go check it out since we aren’t really moving neighborhoods!

Readers, how did you decide how much house you bought or will buy? How does our formula this time feel to you?

Married Finances: Two Years In

Our finances are in a lot less of an emotional state at this time this year than last year, which is lovely. Talking regularly about money is so, so key to where we are with it.

From the outside, if you look at our cash flow, it now looks like we’ve philosophically combined money. But we haven’t. And it isn’t a black and white combined or not like so many people make it out to be.

My husband says there’s enough money to go around that it’s not worthwhile for either of us to stress about money so he’s happy to share <3

We still firmly believe that the person earning the money is the one earning the money and it isn’t by default shared with the other person. My husband, for example, has had a really kick-ass income year in 2018. He has been choosing to use that income to cover expenses for both of us in our current lifestyle and also to put towards our joint savings goals. I don’t, however, see it as half my income or that I’ve had a part in him earning this income. So many women (even educated, high-earning ones I am friends with) actively see their husband’s income as theirs because they’re married, which is not me. We have talked too about how once we are FI, then maybe he should keep some more of his income to himself, but he’s also said that by then, we will have been together for long enough that it won’t matter.

We do both now own the condo! Well, we signed documents saying we did months ago. We haven’t actually seen the new deed recorded with the county yet though. (It must have gone through because we have been getting so much new mortgage junk mail.) That means too, that we’re sharing the appreciation of the condo, which is a huge part of why my husband is sharing all of his income: 2017’s condo increase was about 25% of our net worth increase versus savings being 35%. This year, we’re forecasting the condo increase to be about 30% of our net worth increase and then savings about 45%.

We both feel really weird about the current financial arrangement. As you can see with the condo appreciation though, it doesn’t feel like there is a better option without shutting me out of the condo. The current setup feels more advantageous to me, but at the same time, there are many benefits my husband has from our financial situation:

  1. I bought this condo six years ago. Yes, he bought into it at full value as of the date we got married rather than my purchase price, but he didn’t pay me any interest.
  2. The condo appreciation over the last six years alone is responsible for a substantial portion of our current net worth. Had I not bought it when I did, we would have had to cover much of that portion with savings instead to buy it now.
  3. I paid off about 55% of the original mortgage before he started paying the mortgage last year. That means that our huge interest years are behind us on this mortgage. Even if we take 10 years to pay it off and the rate resets the worst it can each year, it’ll cost us at most $25,000 in interest over its remaining lifetime. If we had paid 3% interest for 30 years, that would have cost $150,000 in interest. But, we’ve already paid $25,000 in interest and will pay at most $50,000 total over at most 15 years.
  4. He lived here for two years rent free while we were dating, which saved him about $50,000 in rent.
  5. I saved for my retirement pretty aggressively in my twenties. To balance that out, we agreed that all of our retirement account funds are our own. Ideally, no one should touch those until our 60s anyway and I have about enough to cover current expenses at 60 already. Even if I never worked again, it would take him over 10 years to catch up to my retirement savings balance when we got married.
  6. The tax savings of my not working (versus my husband filing a Single tax return) at the moment covers 2/3 of “my” portion of the household budget and accounts for about 5-10% of our forecasted net worth increase this year, which brings the savings portion of the net worth increase down to basically exactly the condo increase.
  7. Lastly, my financial planning has had a large influence on my husband’s as well. This is evidenced by the fact that we have the same US vs international stock allocations and use the same index funds in our accounts.

We understand now how people say that it becomes difficult to measure how much each spouse financially contributed and why many don’t do it.

Even though it’s weird in the short-term, we also both recognize that in ten years, we likely won’t care much about these differences, but also, we have the same long-term goals:

  1. Be mortgage free by age 40. (end of 2027)
  1. Have enough saved for both of us to fully retire by age 40. (again, end of 2027)
  2. To be tax-efficient where possible.
  3. To increase our charitable donation strategy over time. (Currently at 2% of gross income!)
  4. To be able to financially support parents as needed without impacting our own goals. (We expect all of our parents to hopefully retire in the next ten years.)
  • Another exciting development this year is that we opened a joint Vanguard taxable account! It’s small compared to our separate ones. To symbolize what we each did more of when we were single, I am first on our primary residence and my husband is first on our joint taxable account.
  • YNAB has been a huge, positive change for us. We are both super respectful of what the other spends money on, which seems to be the hardest part about combining finances for many couples. We still like having the personal budget category groups though as it gives us each a bit more autonomy and even though we spend similar amounts, we spend them in different patterns, e.g. my husband spent more than half of his YTD personal spending in one of the months, whereas mine is more consistent month to month. This system has given us both similar levels of visibility into the overall spending and into how we allocate the money. We would both prefer to save more money each month, but we’re also accepting of it with our current financial situation and the level of non-salary income.

    I plan on being a tech-departing statistic.

    Note: I graduated with my STEM degree in 2009 and started working full-time in the industry in 2010. I have been working on this post since 2014 off and on.

    Being a woman in a STEM field is a beast.

    This blog is about finances, not about career, though in reality, those two go hand in hand. Over the years that I’ve been writing this blog, people have occasionally commented on my seemingly low job satisfaction and not understood why I assume I won’t make good money forever.

    I don’t know how many of my readers are in STEM or women, but for those who aren’t, there is systemic discrimination against women, undercompensation compared to men (I was reasonably fortunate with my compensation and was not underpaid until I took my most recent job), and little to no training for new managers, in addition to the high stress environment. The tech industry is a burn out recipe for any sane person (somehow other than my husband…), let alone a woman with one or more bad managers or coworkers.

    On compensation: for comparison of AGI figures, when my husband and I first started dating, I outearned him by 10-20% for the first two years, but by the third year when we got married, he earned 70% more than me. That is controlling for two people of the same ethnicity, socioeconomic class growing up, education level, undergraduate program, and alma mater who worked at similarly sized, valued, and located companies. This year, two years since I last held my most recent job, he is on track to earn only just under 10% less than we did combined back in 2016. Granted, there is huge privilege in all of these numbers as our household income has been in the top 1-3% the whole time we’ve been together, even now, but that doesn’t negate the comparison in his earnings versus mine. To me, that makes it even worse because he is earning that much and I really doubt my income will ever recover from the poor job change back in 2015, if I do find another job in tech.

    So yes, this industry pays well. Very well. But is it worth it beyond aggressively saving for financial freedom?

    There is a statistic that 41% of women leave the tech industry within the first 10 years out of college. This is higher than the statistic for men – only 17% of men leave the tech industry within the first 10 years out of college.

    I don’t blame them and I very likely plan to be one of the women who leave within the first 10 years. My female friends and I compare our savings plans, our exit strategies, and when we think we’ll leave, what the last straw will be. My male friends talk about the work they do, not the sexist comments and toxic work environments they’re in. My male friends rant about project deadlines and high work demands or coworkers refusing to work weekends.

    Over the course of my career so far in the tech industry, I’ve had coworkers express an interest in sleeping with me or suggest that I sleep with another coworker; managers treat me differently because I am a woman. I’ve seen management by guilt and humiliation and other such toxic work environments, had coworkers not listen to me because I’m a woman let alone a young looking woman, and had coworkers repeatedly comment on my attire to the point that I stopped wearing feminine clothing, makeup, nail polish, accessories, etc. to work for months. I’ve missed important meetings because they happened over drinks. When the keg comes out, I go home, even if it’s the middle of the day. Whenever I would negotiate, the other side would assume I was bluffing. I had the same recruiter as a male friend at the same level and he had the complete opposite experience – the recruiter took him seriously the entire time and gave him far more money. This is my life and from talking to other women in my level, it’s normal. Do the women who get further ahead get lucky in their work environment or do they have a harder shell to ignore the tiny cuts? (My older friends who are still in tech say it’s both.)

    I want to be financially independent so that I can some day quit the tech industry without ever worrying about money again.

    My plan was to financially plan so that I can quit my job by my thirtieth birthday and be set for life, while career-wise working to build a career that I wouldn’t want to walk away from. I wish I could simply change companies and ditch the systemic issues in my industry. I was cautiously optimistic that my future Master’s degree will help me pivot to a less toxic subfield, but after the multi-month panic attack I had when it came time to look for a job, I’m unsure.

    At the best of times, I’ve felt Othered in my job in that I don’t, for example, play video games outside of work. I don’t fit in. I don’t have my people.

    Whenever I’ve complained about any of my comments in this post in the past, the feedback I usually get is:

    a) The money is good, so you should take whatever crap people give you. Hah. That’s what my nest egg is for. So I don’t have to take the crap.

    b) If you’re underpaid, just ask for more. A lot of studies have been done to show that if you control for job title, the wage gap is smaller. Those studies hide the fact that fewer women are at the higher levels where the men are making substantially more money.

    c) Women ask for the sexism. My response to comments about my attire eventually became “I’ll only accept comments on my attire if you comment on [John]’s attire just as frequently as you comment on mine.”

    d) You shouldn’t complain because women have these problems at lower earning jobs too. Sure, that also sucks.

    I have always been a go-getter, an over achiever, a studious hard worker. I was an oddity – I loved coding from an early age and always wanted to work in this field. Coworkers were regularly intimidated by me in my early twenties, which really countered my looking young. Thankfully I’ve also always been a saver, as has my husband. I thought I was a career lifer, so I keep wanting to try just one more job to see if it might be better. But then the pain comes back. Somewhere along the way, I stopped being so much of a go-getter.

    That’s the why behind my path to financial independence. I want freedom from working in the STEM field. Financial independence means figuring out who I am, letting me define myself as myself.

    My offline friends say I’m happier now than I was in any of my jobs. They want this reduced stress life I have, too. They figure with the amount my husband is earning (ignoring the nest egg that I have…), why should I work too if it leaves me so dreadfully unhappy? So far, the best reasons I’ve come up with to go back to work are for better temperature control than our condo, so I would have my own health insurance, so I can make further contributions to my 401(k), and so I can earn money that is sourced by me by myself.

    further reading: Cate Huston e.g. http://www.catehuston.com/blog/2016/09/15/real-talk-women-in-tech-and-money/

    2018 Goals Midway Check-in

    We made a pretty random assortment of goals this year. Well, by we, I mostly mean me since I’m the goal-oriented person in our family.

    Personal

    1. (Family) One restaurant night per month not related to the theatre

    SUCCESS! We have season tickets to a local theatre, which we love and makes for a great date night. Last year, we always went out for dinner before the show and sometimes slept through parts of the show. So this year, we decided to try and decouple the restaurants out from the theatre. It has been going great! We have been staying awake through the entire shows and the restaurant nights have been way more fun too since we’re not rushing to get to the theatre on time. At this point, I would say that we have successfully decoupled these two things. We have also been aiming for a weeknight dinner out per month, which is super fun.

    2. (Leigh) 100 barre classes

    BEHIND! I set this goal last year and I came very, very close. As in, I was four classes short. I set this goal again this year since 100 is such a lovely round number. My stretch goal is 113 so that I’ll hit 250 total classes with this studio. Due to health issues, I mostly took Q1 off from barre classes. If I had been on track in Q1 to hit this goal, I went enough in Q2 to stay on track, but I wasn’t on track in Q1, so I’m a bit behind. (18 classes behind as of 6/18) Depending on how things go in Q3, I may be able to get back on track.

    3. (Leigh) 10,000 average steps per day

    ON TRACK! I’m going to call this one on track since I’m very close to being on track. January is always a tough month for 10,000 steps a day and then I had a cold in April, so that didn’t go the best either. I was at 9,923 average steps for the year so far as of the end of June, which is very close and substantially better than I was doing at this point in 2017 (about 8,500 average).

    4. (Leigh) Pain-free life

    PROGRESS! I’ve been tracking this in my bullet journal habit tracker since March. January was bad at close to 100%, but February was down to about 50% days with pain. March I got it down to 19%, which was amazing and April was even better at 17%. May and June haven’t been going quite as well though – up to 23% in May and 50% in June. I will not answer any questions regarding the pain, but I do want to start talking about it more as I feel comfortable.

    5. (H) Two bicycle rides per month

    ON TRACK! This is the goal I convinced him to set in January, which was a solid goal for the winter when the weather doesn’t cooperate every weekend. (He tends to not plan things and then we just end up hanging out, so I try to help him plan his priorities into our schedule.) In the summer though, he’s been going weekly. He’s on track to ride about 3,000 miles this year on his bicycles, which is comparable to the number of miles we’ll put on the car.

    6. (Leigh) 12 52 books read (31 so far)

    ON TRACK! This goal started out as 12 books read for the year and I upped it to 52 when I read 11 in January alone. As of June, I’ve read 31, so I’m definitely on track with this one! This is the most number of books I’ve read since I started tracking on Goodreads back in 2014. I read a whopping 11 books in January and 7 in February – reading and Netflix have been my two main hobbies through the pain. My number of books read seems inversely correlated to the number of pain free days, which makes sense, as I’ve been going to barre more and getting outside.

    I love finding personal finance tidbits in fiction books! For finance books, this year I’ve read: (1) Meet the Frugalwoods, (2) You Need A Budget, (3) The Financial Diet (If you’re going to read this book: get the hard copy, not the e-book version as the hard copy was really well designed and looks incredible!), (4) The Year of Less, and (5) Worry-Free Money by Shannon Lee Simmons.

    My favorite fiction books so far this year were: The Shell Seekers (by Rosamunde Pilcher), The Secret Life of Bees (Sue Monk Kidd), Miller’s Valley (Anna Quindlen), and The Atomic Weight of Love (Elizabeth J. Church). My favorite of the finance books was You Need A Budget.

    7. (Leigh) Resume regular journaling habit – 50% of days

    ON TRACK! When I was single, I used to journal every night before going to sleep, to get all of my thinking out of my head. Before I started that habit, it would take forever to get to sleep because I spent so much time getting caught in my thoughts. That definitely seemed to help reduce stress, so I’ve been trying to find new times of day to pick up the habit. 50% of days as a goal seemed like a solid figure to shoot for and it’s been going great! I hit the goal in March, was slightly under in April, and hit it again in May and June.

    Financial

    8. Max out all available retirement accounts

    ON TRACK! We both contributed the maximum to our Backdoor Roth IRAs on January 1st and my husband has been contributing to his 401(k) every paycheck, getting the maximum employer match. He did get a partial refund of his 2017 contribution, but he reinvested it back into his taxable account immediately.

    For simplicity and that the Vanguard money market returns are pretty solid right now, I’ve been keeping all of my personal cash at Vanguard in a money market account. My goal is to have about six months of expenses (by some definition) as a personal emergency fund, plus two years of Roth IRA contributions so that I can continue to make the contributions out of my personal funds without selling any stocks. I turned off dividend reinvestment in my taxable account to help with this too. There’s almost enough funds that a year of dividends should fund a Roth IRA. (Note that my husband and I are filing our tax returns jointly, which allows both of us to make IRA contributions assuming that we combined have $11,000 in earned income. This is a really great feature if only one spouse is working!)

    9. Spend less than $X.

    ON TRACK! We had a couple of spendy years in 2016 and 2017 between some remodeling, getting married and going on a wonderful honeymoon. So I set a low-hanging fruit goal of spending less than $X which is a large number and there’s no way we want to hit that number because if we did, we would also fail at goal #13. We have currently spent a bit under 40% of $X, so it looks like we are solidly on track for this goal, especially since I anticipate H2 being less expensive than H1 this year.

    10. Budgeting

    ON TRACK! Hah, this goal wasn’t very SMART. YNAB has been going great though! We are both very pleased with it. We spend much closer to my husband’s now-biweekly paychecks each month, so YNAB has substantially reduced my money anxiety without increasing his, which seems like a solid success!

    11. Successful more money combining

    ON TRACK! We decided this year after a lot of discussion that all income would get deposited into joint accounts. So far, things have been going mostly smoothly. I was really frugal in 2017, so that means that I’ve had to replace things this year like a worn out backpack that was damaging all of my clothes and too-small hiking boots that were several years old, which has resulted in some negotiation on how much personal money we each need from month to month. We have also been working on negotiating other money goals including joint investment allocations and the mortgage.

    12. Open joint Vanguard taxable investment account

    ON TRACK! We allocated some money for this goal in June at last! So that’s step one of the goal. Step two was figuring out how to allocate the investments in it, which we decided on 50/50 US/international stocks for now since we are also keeping a large cash cushion. Step three is figuring out how we want to title the account. Step four is opening and funding the account. I’m marking this as on track since it seems we should be able to figure this out this year still…

    13. Live on H’s regular paycheck income

    ON TRACK! This seems like a silly goal coming from two people who used to save 50% of their salary income, but when we each made half the salary income, that means dropping to one income means spending all of the salary if we don’t modify anything. So far, we’ve done this every month except January! We were on track to have a reasonable chunk to save each month until his employer decided to start paying him biweekly instead of monthly in Q2. We should still be okay with this goal though and we are saving the rest of the income (which is significant).

    14. Have one month where 4% of investments more than spending

    PROGRESS! This is looking like a stretch goal for this year… We would need a confluence of factors to result in a really low spending month with no irregular large expenses for this to happen. But notice that I didn’t use a possessive pronoun in the goal? So it’s possible that I will hit this personally – I did have a month that credit card rewards + 4% of investments covered 99.1% of my personal spending + half of our household spending. I’ll probably leave this on as a yearly goal until we hit it, and then I’ll increase the number of months of the goal each year. Our best month so far is credit card rewards + 4% of investments covering 80% of our combined spending. Even if we don’t have a month this year where we hit this goal, we’ve been making some substantial improvements over 2017 (our best month last year was 62% coverage), so I would still call it progress.

    15. Reach $Y in investments

    ON TRACK! We reached $Y in monetary assets, which was incredibly exciting! It looks like we could still hit it in investments at some point this year, depending on how the markets go and how much we allocate to cash versus investments for the rest of the year. This number is meaningful for many reasons, but largely because it will mean we are life insurance FI.

    16. Estate planning finalized

    PROGRESS! Ah yes, it seems this is a task that stays on everyone’s lists for too long. We started it originally because my husband wasn’t on the title of the condo. We’ve solved that problem, but we should still finish this. The money to pay for it is allocated in YNAB, we set up a new donor advised fund that is part of the strategy, and we’ve picked who we want to make our medical decisions. So there’s some progress here, but we need to follow back up with the lawyer we had contacted last spring, they need to draft the paperwork, and we need to make an appointment to go in and sign it.

    17. Refinance mortgage

    CHECK! All done. This closed at the Q1/Q2 boundary. We are both really glad we did this as otherwise our previous mortgage might have gone to 5% next year, whereas now we have the rate locked at 3.09% for five years and there are only 10 years left on the mortgage.

    Readers, how are your goals going this year?

    Q2 2018 Update: 52.8% FI progress

    Savings (6 months + 2.37% down payment)

    With a large influx of non-salary income this quarter, we accomplished the goal of having 6 months of expenses in savings. We will re-evaluate later in the year if this is an accurate figure. Halfway through the year, it looks like we should increase it by about 14%. We will re-evaluate this at the end of the year since we have plenty of other cash if something did happen.

    As I mentioned in my homeownership reflections post recently, we decided to start saving towards a down payment. I estimate that we should be able to squirrel away a 20% down payment for houses in our price range by the end of next year. We have now saved a 2.37% down payment. Our plan is to split savings funds 1/3 to our Vanguard taxable account and 2/3 to this down payment savings fund. We’ll re-evaluate twice a year and when we have a 10% down payment saved.

    52.8% FI progress (up from 46.8% last quarter or 45.0% in December 2017)

    Last quarter, I noted our FI ratio for the quarter, which was really solid due to Q1 having lower expenses than other quarters. I realized though that it doesn’t show very good progress as our FI ratio this quarter is quite a bit lower, despite a decent net worth increase.

    I have a row in our net worth spreadsheet that estimates the amount needed for FI as the condo value in that column plus 25x the expenses for the last 12 months. This FI progress % is our net worth figure divided by that number. I find this helps to smooth out more expensive months with cheaper months since a lot of our expenses are irregular and also takes into account the fact that I don’t include the mortgage in the expenses, but I do assume the condo would be paid off in the total number we need. I like having this figure re-calculated in each month’s column in the spreadsheet to see how the $ needed for FI changes over time, as well as the progress.

    We hope to make some solid progress on this figure this year as last year’s expensive months drop off the average, though of course if we move, this number will get recalibrated. We’ve already made some solid progress here – we passed the 50% mark in May and increased it again in June. I expect that we will hit 60% once last year’s wedding expenses drop off in the fall.

    Investments

    We used the remainder of the non-salary income to start a new joint taxable account, once we decided on an asset allocation. (This money is currently living in a category in YNAB, pending setup of the account at Vanguard, so it’s not shown in this chart.) With the large house down payment split of savings, we decided to skip bonds for now. Regular, monthly 401(k) contributions continued. This was a pretty boring quarter for investments since most of the non-salary income went to cash savings this quarter.

    The taxable jump in February (Q1) was pretty exciting though! Both of our taxable accounts are heavier in international stocks, which have been performing poorly this year, so those accounts are down a bit. Both of our Roth IRAs are heavier in US stocks and our 401(k)s have more of a mix. (Can you tell that my husband started investing after we started dating?)

    My Series I Savings Bonds aren’t on this chart, though we do count them in the overall Investments figure. I mostly took them off to make the x-axis less clear. I’ve had my oldest ones for over 5 years now, so they don’t have the three month interest penalty anymore!

    Mortgage

    3/31/2018 balance: $114,535.01. 12 years, 0 months remaining.

    Interest at closing to old and new lenders: $484.38 old and $281.73 new, plus $295 refinance fee

    April principal only payments: $670.85 plus $87.73 in post-closing refunds from the old and new mortgage

    May principal only payment: $670.85

    June payment: $821.05 principal, $291.81 interest ($102.66 less than the last regular payment in March)

    6/30/2018 balance: $112,504.52. 9 years, 11 months remaining.

    We budgeted to make principal payments in April and May to make sure that we were budgeting the full amount we wanted to for the whole year, even though the mortgage company gave us two full months without payments. Those two amounts were about 1% of the March mortgage balance, so that still made a dent. We paid the mortgage down 1.7% this quarter and are at over 60% paid of the original balance now, six years in.

    Spending ratio – Portion of the ideal annual budget cumulatively

    I calculate the spending ratio with expenses in the numerator and the denominator as 4% of our investments plus the value of any redeemed credit card points. The second figure is the cumulative spending so far for the year divided by our ideal annual budget, expressed as a fraction of 12. Both of these figures ignore the mortgage payment.

    April – 40.9% – 4.43/12
    May – 44.6% – 5.81/12
    June – 45.2% – 7.37/12

    Q2 – 43.6%

    H1 – 53.4%

    Q2 was more expensive than Q1 by 50%, similar to last year. We spent about 25% less in H1 this year than we did in last year, which is mostly explained by the honeymoon and wedding spending not happening this year. Most of the increase between Q2 and Q1 this year is explained by the fact that our Q2 housing spending was about 2.5x the Q1 housing spending.

    We are 6 months into the year and we have spent 7.37 months worth of my ideal annual budget for the year. It looks like that was probably a bit too aggressive. I’ll keep tracking in relation to that same figure here for the rest of the year for consistency. We have spent 20% less YTD than we had at this point last year ignoring wedding expenses though, so that is a strong improvement.

    Our top three categories this quarter were: housing, food, and my personal spending. Our three most expensive months so far this year were all in Q2. Interestingly, April and June were in our top three most expensive months last year as well, though not May.

    Housing was expensive because we paid half of our annual property taxes, a special assessment to the condo association, and spent 1.5x what we spent all last year on maintenance, plus Q2 has two electricity bills versus Q1’s one electricity bill. We hired multiple people to do several small projects this quarter: fixed the hinges on one of the bathroom doors, fixed the one shower door so it actually moves, installed a fan switch in the other bathroom (one already had it), fixed a toilet that wasn’t flushing anymore, dealt with a moth infestation (including the dry cleaning bill and super jumbo ziploc bags to store our clothes and other linens), some liquid plumber drain for our kitchen sink issues (just supplies – we did that one ourselves), replaced a light fixture that we hated and could not handle a LED bulb, and separated the bathrooms onto their own GFI systems. Those projects all cost $1600. We contemplated adding another heater, but that estimate was $3000 due to the damage and needing to re-do our circuit breaker so we will probably just not do that. Our oven temperature has been having issues too and our dryer is pretty squeaky… This counted in the Shopping:Furnishings category, but we also bought some shelving for our laundry closet which is working out much better than our previous system of stacking tons of boxes and bins on top of packages of toilet paper until we wanted to use the toilet paper.

    I’m really excited to go to the Cents Positive Retreat in November that Tanja is organizing! It will be exciting to meet some of my internet friends in person! I am also going on a trip with my sibling later this year. In irregular personal spending, I replaced my hiking backpack this quarter because the mesh was worn out and fuzzing up all of my lovely clothes…

    We spent an amazing week on a nearby road trip checking out sites, which was super fun and gorgeous! It was part of our plan to stay closer to home to save money on travel costs but still have fun adventures. We are considering another road trip for the early fall.

    In other spending, we bought a new ice cream scoop after the one I inherited many years ago started leaving peeling metal in our ice cream, replaced our Magic Bullet cups since the plastic was warping and we use it all the time, and bought a new lens for our fancy camera because the kit lens was having a lot of issues even after we repaired it last year. We’ve already spent more money on fuel this year ($243.39) than all of last year ($234.51). We have been driving more, but also gas prices are up from last year. I’ve been using my husband’s free work benefit bus pass and then he has a card we put on auto-reload, which has been working out well – we’ve been spending about $15/month on transit for him. We had anniversary photos taken with our wedding photographer, which was lovely! We hope to do that regularly since we get photos of us together taken so infrequently otherwise.

    YNAB is still going well! We are pleased with it. The two best things about it are: 1) my husband opens the app and 2) it’s super easy to enter transactions at the time I buy something while I’m out with the app on my phone.

    Readers, how was your Q2?

    Adjusting our giving strategy to 2% and a milestones checklist from 2015

    2015 future milestones checklist

    Back in December 2015, I wrote a post entitled “Envisioning the future of my finances”, which I refer to occasionally because I talked about how I planned to adjust my giving strategy in the future. What I didn’t realize until just now is that I have actually hit several of the milestones on this list:

    My pre-tax 401(k) is worth $165,000 today. That is more than my salary has ever been, so I successfully have more than one year’s annual salary saved in pre-tax retirement accounts.

    Withdrawing 4% of my (or our) investments could cover all of my (or our) needs, with a bit of room to spare.

    Our liquid assets far outweigh the mortgage now, by several times.

    My 401(k) grew by $24,420 in 2017, with no contributions by me. That’s more than I can contribute myself, if I currently had access to make such contributions.

    We are millionaires. (I forget what I meant then by “on paper”.) I should be a millionaire by myself soon too, in the next year. I remember eight years ago, running the math and not fully understanding compound interest because I thought I would be 50 when I became a millionaire!

    I used most of my husband’s final condo buy-in money to contribute to my taxable account at Vanguard, catapulting it into the six figures. We are going to start a joint taxable account at Vanguard very shortly too – it’s on our to do list for the month of June. My retirement accounts aren’t worth half a million dollars yet, so I think my projections were a bit off on that part.

    I learned about tax loss harvesting I think actually back in 2015 because my husband had some shares in his taxable account that he could apply it to!

    A new Donor Advised Fund at Fidelity

    Just after we got married in 2016, we opened a Donor Advised Fund at Schwab. It was a painful process that involved filling out paper forms, taking them to a nearby branch, the person we were supposed to meet with not being there, and them taking the wrong shares out of my husband’s Vanguard account. It worked just fine for donating to various charities over the last year and a half, but to make new cash contributions, it wasn’t a one step process – we would need to first transfer cash to the checking account we have at Schwab and once it settled there, we could transfer it to the brokerage account and then we could contribute to the DAF. Plus, we wanted to use the DAF as part of our overall estate planning strategy and with Schwab, you can’t see your succession (i.e. where the money in the account goes if you both were to pass away) settings online and you need to mail/fax a paper in to update them, which isn’t so useful.

    Needless to say, our existing DAF was running low on funds and we didn’t want to contribute anything further to it. We spent quite a while hemming and hawing and I discovered that the Fidelity Charitable website has a demo online account that you can check out! That showed me that not only can you see and update your succession settings online, but you can also make cash donations online from your checking account easily on a one-time or recurring basis and their website is a gazillion times cleaner and easier to use.

    We opened and funded our new Fidelity Charitable account with $5,000 within about 10 minutes online. It was really easy!

    If we were really trying to tax optimize, we would have opened the Fidelity Charitable account in December and saved a bit on our 2017 taxes, but we chose not to as it would have been too much additional work to add in when things were already a bit chaotic with reorganizing our finances.

    Adjusting our Giving Strategy

    In the post I mentioned at the beginning, I talked about how when I paid off the mortgage, I wanted to increase my donations from 1% to 2% of gross income. By my original formula for paying off the mortgage, we would have already paid off the mortgage, so I suggested to my husband that we should increase our charitable donations budget to 2% of gross income! With how much my husband’s income has increased, that actually puts our donation budget for the year at a high four figure dollar amount, which we are both really excited about! With 2% of gross income, we are still pretty far from donating with the new $24,000 standard deduction for married couples filing jointly. My goal is to eventually donate enough that we will itemize again!

    I really like having the donations budget be a % of gross income. It’s easier to calculate than net income because it doesn’t change from month to month and the % allows us to scale it up and down with how income changes quite easily.

    Sometimes it’s simply easier to make donations not from the DAF, so we plan to continue monthly budgeting in YNAB for donations and keep a portion of the money there rather than sending it to the DAF.