How much would I save without RSUs?

When I look at how much I save vs. spend each month, I really start to feel like I’ve been spending too much money. My cash savings projections for the month is only $700* per month, but that’s after my maxing 401(k) contribution and $250 automatic savings to my car replacement fund.

That is only about 40% of my projected net income.

In January, I managed to save about $1,400 for a total of 50% of my net pay.

In February, $1,700 or 55%.

In March, $1,800 or 60%.

Then I go and save 100% of the net of my bonuses. 20% of the gross goes to investments and the rest is snowballed to cash savings.

I don’t know what my rent will be after June. I’m definitely expecting it to go up. Rent is more expensive when you sign a lease in the summer months versus in the winter months, but I didn’t know how long I was going to stay here when I signed the lease in February. If I had wanted to stay for 12 months, I could have gotten it for under $1,500 per month! That would be awesome. But right now, I’m paying about $1,550. I figure it’ll probably go up to $1,700 or more when the lease is up and if I don’t sign a lease at all, $1,900 – $2,100 per month probably. (I would only not sign a lease if I’m planning on buying and moving super quickly. I also won’t give notice until after I’ve closed on a place, so I will probably end up paying a month-to-month rate for the last month or two before moving, which is worth the peace of mind.)

Without my RSUs and this random strange place that extra money seems to find its way into my checking account (I really don’t know how this happens *every* month), I would only be saving about $700 per month towards my down payment. That would make it take 17 months to reach my condo down payment savings goal! But the RSUs** make a big difference. They are also a pretty reasonable part of my gross income for the year. With no raises or more RSUs this year and using an old 52-week low stock price, my RSUs account for just under 25% of my forecasted gross income for the year, or slightly less of my forecasted net. So not taking them into account would make a huge dent in my possible savings.

But then sometimes I feel like I shouldn’t anticipate getting them at all and then feel like those Wall Street people complaining about not getting their bonuses. (I realize that the $ value comparison is a bit of an exaggeration, but the idea is sort of similar…) It’s not like I count on them for spending, but I do quite enjoy them for saving. And if I didn’t get them, would I really let my monthly budget bloat up to the amount that it has (almost $3,800 including travel)? Probably not. But when my RSUs account for about 20% of my forecasted gross income, that is like the difference between a $80k salary and a $100k salary or a $104k salary and a $130k salary, which isn’t a small difference.

My employer sees them as part of my compensation for the year, so shouldn’t I? At the very least, I have used a 52-week low stock price in my calculations of what to expect. That way, when the stocks actually vest, I’m surprised instead of shocked/flabbergasted/upset/annoyed. Of course, that means I re-run the W-4 calculator after every RSU vest (which is four times this year and next!) and after a paycheck with a raise to make sure that my taxes are right. I tried using the current value for awhile but that went up and down so much that it drove me nuts. The 52-week high is a bit of a stretch since it never stays at that value for very long and any rolling average would be complicated to calculate, so I think I’m going to stick with the 52-week low in my calculations.

Readers, do you see regular RSUs or bonuses? How do they affect your savings or spending?

*This post was written before I knew how much my raise would be that goes into effect on my April paycheck. Most of the increase in my down payment savings account that you will see in this month’s net worth update isn’t related to this raise, but the amount saved from my paycheck towards my down payment is far higher than $700.

**RSUs stands for Restricted Stock Units. I have various shares granted that vest on various dates throughout the next few years. Basically, when I got the grant it stated that I get N shares over M time, with a specific vesting schedule. So at the time of the grant, the number of shares I will get are calculated. And then when they actually vest, those shares become mine. I have it set to sell-all, then some taxes come out of the brokerage account, and the rest is mine to use for whatever in cash.

Why I Blog Without a Photo

As a woman in a male-dominated field, I am sometimes noticed for my looks before my brains, probably far, far more often than I notice.

When I started this blog, I contemplated using a male pseudonym instead of a female one, but I’m glad that I did choose a female one.

I am a young, professional woman. I am obsessed with saving money and always have been. In writing this blog without a photo, you, the readers, are seeing me without being able to gauge my physical appearance. You can judge my view on finances objectively.

Why does it matter if I’m attractive or not? Hiding behind the internet, you can’t tell if I’m a 300 pound woman or if I’m petite. You can’t tell exactly how old I am (not that anyone guesses correctly in person anyway), though I do make it clear that I’m in my twenties and a few years out of college. You don’t know what my hair color is, nor my eye color, or how tall or short I am. You don’t know how big my feet or my chest are, or what my ring size is. (Not that I even know what my ring size is.)

What do you see? You see (some of) my spending plans. You see how much I save, how much I invest, and (almost) how much time I spend thinking about and analyzing my finances. You see my income, vaguely. You see my travel spending. But no photo. It shouldn’t matter to you what I look like. That is completely irrelevant to how I manage my finances.

Telling you if I was pregnant or if I had a significant other or if I was planning a wedding, now that would be relevant to how I manage my finances. But I’m not. I’m single and I’m just me, no kids.

It’s pretty nice for once to not worry if people are judging me for how I look. In this blog, I forget about any of those anxieties and just concentrate on the financial anxiety outlook that this is :)

Readers who also blog anonymously, what’s your favorite part? Do you enjoy people not knowing what you look like?

Setting Realistic, but Aggressive Goals

Something I’ve struggled with over the last few years is setting goals that are realistic, but also aggressive. To me, part of the point of setting goals is to motivate me to strive further. I should probably be trying to use the SMART (Specific, Measurable, Attainable, Relevant, and Time-bound) system instead of just setting goals.

First, let’s recap my 2011 goals:

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.

What was good about these goals? They were all time-bound (by the end of the year). They were all specific and measurable. They were all relevant. And they were all attainable, except for maybe the “Have excellent credit” ones since those were really out of my control.

I’m going to throw out there that the ‘A’ in SMART should stand for both “Aggressive” *and* “Attainable”. They should be reach goals.

I’m also going to argue that net worth goals that are time-bound are bad. They are specific, measurable, relevant, and time-bound, but if you have a lot of money in the stock market, reaching them can be out of your control. That’s why for 2012, I didn’t set a net worth goal. What I’ve started doing instead is a) celebrating net worth milestones, like $150k and tracking how far I am until the next one and estimating how long it will take, but NOT setting a goal on it. Last year, I kept coming slightly short of hitting $100k, which drove me nuts. That’s not in my control, so I shouldn’t be worrying about it.

I do, however, really like this concept of a golden goal. It’s the biggest goal and the one I’m striving for the most. Last year, it was achieving a net worth of $100,000. This year, it is preparing my finances to buy a condo so that when I’m emotionally ready again, I can go for it. All of the reasons why I wanted to buy a place last fall are still there. All of the reasons why I picked a condo over a house are still there. I still want a 2 bedroom/2 bathroom place. So all I really need to wait for is being emotionally ready to give it a go again.

I, obviously, want to hit a $200k net worth at some point, but I really don’t think that’s a realistic goal for this year. (Okay, well, I just guessed some numbers for my annual bonus, raise, and my company’s stock price that make it *possible*, but I’m not really going to count on it because those numbers are completely random guesses that could be higher than reality.)

Let’s re-evaluate my 2012 goals against this new criteria:

The golden goal:

1. Find a condo that I want to buy, present a good offer, reach mutual acceptance, go through closing, and move in.

Save as much as possible:

2. Max out my traditional 401(k) – $17,000.
3. Max out my Roth IRA – $5,000.
4. Invest 20% of my gross income, investing beyond the traditional 401(k) and Roth IRA in my taxable investment account.
5. Save $3,000 towards a car replacement in 9 years by automatic transfer of $250 each month.
6. Re-pay the various savings buckets that I borrowed from in December of 2011 to help fund my down payment: taxable investments and car replacement fund. (done in February after closing didn’t happen – total ~$8,400)
7. Re-arrange money to get emergency reserves up to 6 months expenses at a rate of $3,600 in expenses per month. (done in February after closing didn’t happen)
8. Put any leftover savings amounts after paying myself back into my down payment savings account for my future condo purchase, including earnest money deposit returns, income tax refunds, and apartment security deposit returns.

Have excellent credit:

9. Make zero requests to change the limits on my credit cards throughout all of 2012 – let the credit card companies come to me.

Keep financial anxiety to a minimum:

10. Maintain my system of: a) nearby credit union for checking, deductible reserves and 2 months of emergency reserves, vacation savings, and other small and/or short-term goal savings, b) Ally for larger, more long-term savings amounts (e.g. car replacement, down payment funds, and the rest of my emergency reserves).
11. Only check my checking account once per week, to ensure that there were no fishy transactions.
12. 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). Wait until they post to write my monthly summary.
13. In January, create an investment plan for the year and stick to it.

Which ones are specific? All of them. Which ones are measurable? All of them. Which ones are attainable? All of them. Aggressive? #8 isn’t super aggressive, but it does centralize back to the golden goal for the year. They are all time-bound since the timeframe is by the end of 2012. And they are all relevant to my current life plan.

#8 isn’t super specific either, so I’m going to add #8b:

Snowball all monthly savings (after 20% to investments and $250 to car replacement) and net bonuses (after 20% to investments) to the down payment savings fund. The goal for this is about $1,000 per month, with bonuses to supplement this growth.

I’ve actually been pretty happy with my progress on the financial anxiety goals:

• I’ve been super happy with the nearby credit union I switched to partway through last year, as well as Ally for online savings, and Vanguard for investments. Having only three primary institutions and having them categorized like that is awesome. In my head, I know that all of the money at Ally is savings and that all of the money at Vanguard is investments. I have a one-stop shop for seeing my asset allocation and adjusting any contributions. (Have I mentioned how much I love that my 401(k) is with Vanguard yet?)
• I’ve been breaking goal #11 by checking my checking account for fishy transactions daily, but I’m not breaking the spirit of the rule because it doesn’t make me anxious to check it every day.

I actually haven’t really felt anxious about my finances in quite a while, which is an amazing feat. Sometimes I worry that I’m spending too much and that I should be saving more, but I think that at saving > 50% of my net pay, I’m doing pretty okay and I should just stop worrying about it, so long as I’m enjoying what I’m spending my money on.

Setting yearly goals over monthly goals has been working really well for me. I set the system up after I set the goals for the year and then it just goes along happily. As I’m checking in on my food habits for April, I will occasionally set monthly goals, but not very frequently. I’m just not sure what I would set monthly goals *for*.

Readers, how do you set goals? Monthly, yearly, weekly? How did you discover that system worked for you?

Direct Deposit Experiment

I’m going to try an experiment with my April paycheck and see how it goes. Currently, my paycheck goes like this: Amount I see = gross pay – income taxes – medicare tax – social security tax – dental and medical premiums – FSA contributions – 401(k) contributions and that full amount goes into my checking account. I then have an automatic transfer set up of $250 to my car replacement fund and I do a manual transfer to the down payment fund each month. I’m going to experiment starting with my April paycheck and split up my direct deposit as follows:

1. $3,800 (my estimated month’s spending plan) to my checking account
2. everything else to my down payment savings account

I will still calculate how much “extra” is in my checking account at the end of each month and manually send that to the down payment savings account or something similar, but I will set the normal savings amounts on real auto-pay. Splitting my paycheck up seems a lot less complicated than my current system of some manual and some automatic savings transfers for AFTER the paycheck is deposited.

If my rent goes up, then I can adjust how much goes to my checking account. Once I’ve maxed out my 401(k) for the year (with part of November’s paycheck) or I’ve hit the Social Security tax maximum, more money will magically go to the down payment savings account. (When I buy a condo, I will reset the direct deposit experiment.)

I’m really excited to see my down payment savings account go up faster with the raise I’m getting starting this month!

Readers, does your employer let you split your paycheck? If so, do you? How do you split up your paycheck?

April food habits, Week 3

At this point, I’m forcing myself to do this. I think the experiment was good for me though. I’ve been a lot happier with my eating habits this month than the last few months. Then again, things have also been calmer. I’m really proud of myself for not spending any money in the “Dining Out” (aka lazy eating out by myself instead of cooking) category this week! And overall this month, that category has been pretty low. I would say that my grocery spending has gone up to reflect that, which is perfectly fine. I think that the dinners out pattern that I’ve seen so far this month is a healthy balance for me and hopefully I can stick with that going forward.

Sunday, April 15th

• Brunch: out with a friend, cost $16.26 (Entertainment)
• Ice cream out with a friend, cost $4.87 (Entertainment)
• Dinner: pasta at home
• Total day’s cost: $21.13

Monday, April 16th

• Lunch: out with coworkers. Everyone else ordered drinks and I didn’t and then we split completely. Ugh. I didn’t even have time to try to tip less to cover that because one of my coworkers told me a tip amount and to hurry in writing it. There’s no way my $13 meal should have cost $19.02 with tax and tip. Sigh. It’s always with the one coworker that it’s a problem too – when he doesn’t join us, we split evenly.
• Dinner: out with some coworkers, cost $24.39. The place had delicious milkshakes! (Entertainment)
• Total day’s cost: $43.41

Tuesday, April 17th

• Lunch: soup and a sandwich with a friend, cost: $7.65
• Picked up some groceries, cost $11.58
• Dinner: frozen Chinese food from the grocery store and rice made with my rice cooker
• Total day’s cost: $23.23

Wednesday, April 18th

• Lunch: out with some coworkers, cost: $19.42
• Dinner: leftover Chinese food from last night
• Total day’s cost: $19.42

Thursday, April 19th

• Lunch: by myself, cost: $6.44
• Dinner: out with a friend before going to play sports, cost $4.35 (Entertainment)
• Picked up some groceries, cost $9.08
• Total day’s cost: $19.87

Friday, April 20th

• Lunch: with a friend, cost $9.88
• Happy Hour/Dinner with some coworkers, cost: $23.38 (Entertainment)
• Total day’s cost: $33.26

Saturday, April 21st

• Lunch: pancakes and milk
• Dinner: pasta and milk, at home
• Total day’s cost: free!

	Week 1	Week 2	Week 3	Total
Entertainment	$55.43	$4.37	$73.25	$133.05
Dining Out	$19.04	$4.11		$23.15
Groceries	$3.00	$85.18	$20.66	$108.84
Lunches	$22.09	$37.80	$68.85	$128.74
Overall	$99.56	$131.46	$162.76	$393.78

The Cost of Travel

Travel is expensive. But you know what I’ve decided? I don’t care. I’m doing everything “right”:

1. I have 6 months in emergency reserves, plus all of my insurance deductibles set aside. (Total: ~$24,000)
2. I am investing 20% for retirement, including maxing out my 401(k).
3. I have a pretty good picture of my spending.
4. I am making a car payment to myself, automatically each month, to be able to pay for my next car in cash. Even though I’ve only had my current car for about a year and a half.
5. I’m saving about 50% of my net pay each month.
6. My net worth has exceeded my expected gross annual income. (w00t!)
7. I have no family obligations (plus I’m single).
8. I have no debt (and never have).

So I’m planning on taking all of my vacation days for travel, plus weekend jaunts. But wow, are weekend jaunts more expensive! I’m cool with it taking longer to buy a condo if that means I get to travel more in the meantime (the amount of vacation time I have will limit this from really being much of a problem though).

Thus far in my young life, I’ve been to many cities in North America and Europe:

• Austria: Vienna
• Belgium: Brussels
• Canada: Edmonton, Montreal, Niagara Falls, Ottawa, Saskatoon, Thunder Bay, Toronto, Vancouver, Victoria
• Czech Republic: Prague
• France: Paris, Strasbourg
• Germany: Berlin, Cologne, Stuttgart
• Greece: Athens
• Italy: Rome
• Mexico: Cancun, Manzanillo, Nuevo Vallarta, San Jose del Cabo
• Netherlands: some town I can’t remember the name of
• Poland: Krakow
• Slovakia: Bratislava
• United Kingdom: London
• United States: 7 states

Where have I not been that I would like to go or some places that I would like to go again? I’m going to categorize these by the number of weeks I would want to spend seeing them (0 = weekend jaunt).

• Australia (1-2)
• Canada: Rockies (0), Nova Scotia (0), Quebec City (0), Victoria (0 – it’s been awhile)
• Europe: Ireland (1), Scotland (1), Spain (1-2)
• New Zealand (1-2)
• United States: the other 43 states* :)

*I know that that isn’t super clear, but I’m not quite ready for you guys to know which state I live in.

I’m sure that I’m missing many places that I haven’t been, but this is my list for now. I don’t want to overextend myself with travel and sports. Taking a vacation a month in January, February, and March was a bit much. I think that I should look at having a minimum of a month break between trips. I’m not going anywhere in April or in May and then I’m going away for about a week and a half in June. This puts remaining trip slots for the year in August/September and October/November.

As for my June trip, I’ve already paid for the flights and the hotel in full. So all that is left is food, touristing, and airport transfers.

If I go on a trip in August/September with my mom, we will probably go to Waikiki or one of the Canadian weekend trips that I would like to do. If I go with a friend, maybe we would go to Washington, DC, but I wouldn’t do that trip in November with the election.

Soon, I should start my 2013 travel planning! (Mostly for the placement of the 2 week trip so I can plan my vacation days accordingly.)

Readers, any cities that you’re particularly fond of and you think I should visit? :) What is your favorite US city to visit and why?

How I Pay My Bills

You know how your credit card bill is due 25 days after the cut-off of the billing period? Or your cable or cell phone bill is due a few weeks after it arrives in the mail? Some people then think “Oh, I’ll pay it later” and put off paying the bill until it’s past due. With all of the different bills that I have (credit cards, cable, cell phone, rent, electricity), trying to keep track of all of the due dates is annoying.

My solution? Pay the bill immediately when I receive it. Since the balance in my checking account covers all of my regular bills, variable expenses, and has a nice buffer, I know that there is always the money to pay the bill.

For credit card accounts, this helps to keep the balance lower since I never use more than 10-20% of the credit limit before the billing period is over and then as soon as the statement amount is displayed in the online banking, I make a payment as of that day for the full balance. This also helps me to feel like the amount billed on the credit cards is far more manageable since I don’t charge very much on each card every month.

I also read *every* statement. My cable provider often increases the bill slightly every few months and sometimes there are random small annoyances on my cell phone bill as well. By getting the latest 6-month promotion and buying my own cable modem (used and cheap), I’ve reduced my cable and internet bill down to only about $50 per month, which is pretty good.

Readers, how do you go about paying your bills? Do you pay them right away like I do or do you wait until the very end of the grace period?