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/

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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.

Reflections on Condo Ownership: 6 Years In

Rightsizing your space for your needs is so important. We have worried we didn’t have quite enough off and on. Without plans to have children, however, a large two bedroom apartment is really a great size. It’s forced us to change our packrat mindsets and get rid of stuff we don’t need, which is great.

In 2017, this condo cost just shy of $15,000 in housing expenses (mortgage interest but not principal, condo fees including special assessments, property taxes, condo insurance, electricity, and repairs). Despite minimal income from me in 2017, our housing expenses are still quite low compared to our income for the year. That’s the pro side of buying a reasonably priced place when your income is lower. We are currently budgeting about $2,000/month for our 10 year mortgage payment, condo fees, property taxes, and condo insurance, which includes a parking spot, in-unit laundry and a storage unit and sees about $800/month going to principal of the mortgage payment. For a similar rental apartment nearby, we would pay at least $3,000/month before even getting a parking spot. Purchasing this condo when I did was an incredible financial decision and has substantially influenced the wealth that we now have.

Although we didn’t meet my original five year payoff plan, we have made substantial progress on the mortgage over the years. The balance has dropped by $30,715.48 since I last made an extra payment in December 2014. We have now paid off 60.7% of the original mortgage. We refinanced to a 10 year amortization, which means we have at most 10 years left on this mortgage. We have a new plan to pay it off within 5 years from now and should see the balance drop to five figures sometime in early 2019. We also have enough in cash to pay off the current mortgage balance due to our cash holding preferences.

When you’re buying a condo, you read through so many documents. You get access to condo association meeting minutes for the last while, budgets, and nest egg (this is not the technical term, but the technical term seems to vary regionally) information. You do due diligence then. You have to keep doing that due diligence even after you’ve bought. Every year, you should get a budget, updated fee schedule, and nest egg information. You need to ask questions.

People complain about condo fees being “high”. Take a look at what your condo fees cover. Condo associations do need to pay for items that you don’t have to pay for when you own a house, such as filing a tax return and other fees, licenses and permits related to being a non-profit association, management fees, ridiculous costs of photocopying and postage, regular studies on the building’s nest egg, elevators, fire systems, and a phone line for the callbox. Never buy a house with an elevator – they’re expensive as all hell. The condo budget also covers building insurance (why our condo owners policy is so cheap), water, sewer, garbage, cable TV, cleaning of the common areas, outdoor landscaping, roof maintenance, plenty of plumbing, electrical, and repairs of many structures including windows. Those fees aren’t a waste of money, though they surely feel high when it’s one single chunk coming out each month instead of small dribbles.

I remember when I was looking at condos, everyone talked about how special assessments are bad, without much discussion of why they are bad or how they happen. In my experience, they happen when the people running the board don’t plan for the future, but also, when unexpected events arise. Our condo building is now older and needs a fair amount of work done in the next several years. The board in the past had chosen to never save money for future maintenance issues and to only raise money from homeowners each year for the maintenance that they planned to do that year. That turns into a problem when you need to replace the elevator, windows, roof, decks,and siding all at the same time, to the tune of a five figure amount per homeowner (about $25,000 at the maximum).

Thanks to some turnover, this year, the board in our building chose to raise our monthly condo fees by a bit more than 50% to start saving money for the future. They also did a small special assessment (< $1,000 for our portion), though presumably a larger one will be coming in 2019 or 2020 as we still have a low five figure amount to pay according to the last nest egg analysis.

The money part is a smaller portion of the issue to us – coming up with a low five figure sum to pay the special assessment when we've been spending so little on housing the last several years isn't a huge deal. The more frustrating part to us is realizing how much maintenance has been deferred (roof, elevator, windows, siding, as well as ongoing pipe issues – basically all of the major projects), how out of the loop homeowners not on the board have been kept, how little control we have over the general maintenance level of the building, and how much random power the board thinks they have. I spent 2017 on the Board, which increased our knowledge of what was going on, bringing with it, the stress of how chaotic the board was and how no one on the board really agreed with each other other than that all maintenance should be future owners' problems and not current owners' problems. The Board has, on multiple occasions, done work that affected our unit without notifying us or shown up at our door without notice to do work, both of which are against the actual policies the building has.

Well, that future is now. The maintenance is the current owners' problems because it needs to be taken care of.

All of this led us to open houses of small-ish single family homes. You can't, however, find a single family house as centrally located as we are. And then instead of being frustrated with the condo board not doing the maintenance, we would need to take care of it all. A house is a substantial lifestyle change from our current situation. A house that meets all of the requirements we laid out would end up moving us to a new neighborhood, increasing commutes, not necessarily come with a garage, be further from lovely walking trails, and its purchase price would be somewhat more than what we estimate we could sell the condo for at the moment. All to avoid being in a condo association. Is that worth it?

So in the end, which compromises do we want to make about our housing situation?

For now, we concluded that we should work on improving our cash position over the next few years to get ourselves in a position that we could buy without selling stocks, if we wanted to. The financial plan that I drew shows that we could save a 20-30% down payment on our ideal house's price over the next two years, depending on how much we choose to invest and how much income I add to the pot. Our current idea is to invest 1/3 of our available money for savings and save the other 2/3 for a house, which we can adjust depending on how we are feeling as the plan goes along. We'll also likely stick to our new five year mortgage payoff plan as a hedge of staying, it has a small impact on our overall cash flow, and we would roll any condo equity into a house.

Would I have still bought this place if I went back in time? Probably. I would have done more research into state law on condos though and more due diligence each year.

Readers, how have you decided to move in the past?

Is your spouse really “disinterested” in the finances?

Or is that actually an example of personality differences? Just because your spouse doesn’t want to spend endless hours going over spreadsheets, charts, and forecasting, doesn’t mean that they are disinterested in the finances. Or at least that’s the case in our household, where we both had money management systems in place when we got married. I could also imagine that one spouse being intimidated by the other spouse’s financial knowledge could resemble “disinterest”, but I don’t want to speak to that since that wasn’t our situation.

As I said in a previous post: one of the lessons I’ve learned so far about married finances is that the tools and systems that worked for each of you single are not necessarily the same tools and systems you should use when you are working together as a couple. It’s important to take into account both spouses’ preferences when you’re figuring things out.

My husband’s system when he was single was pretty simple. He had Mint connected to all of his accounts and looked in on it every few months. He maxed out his 401(k) throughout the year and had a portion of his paycheck direct deposited to Vanguard directly. He contributed the full (Backdoor) Roth IRA contribution at some point in the year when he felt his cash position had some room to spare. He carefully researched purchases before selecting items. A month or two after his bonus(es) would hit his checking account, he would rebalance his taxable Vanguard account. He would occasionally check in on things and exclaim about exciting milestones! and round numbers!

Does that sound like someone who doesn’t care about his finances? No, not at all.

My systems, in contrast, were pretty complicated. I started tracking my money before Mint started in spreadsheets, and then in software custom built by myself. I would excitedly download my pay stubs every pay day, as soon as I got the email notification a day or two in advance and update my tax spreadsheet with the exact numbers to the penny. (An ex-boyfriend was worried I lived paycheck to paycheck because I was SO excited about pay day!) When I got a raise, I would re-calculate what % I needed to contribute to my 401(k) to max it out with my last paycheck of the year and I would adjust it. I checked in on my 401(k) transactions every month, to make sure they happened as planned. There were months where I would adjust my 401(k) contribution allocations every month, which was completely overkill. I was never a fan of splitting my direct deposit, preferring to split it myself exactly on pay day so I could allocate the updated balance of my savings accounts to that month. I budgeted down to the penny every month for years, checking in on my spending daily for years until I slowly reduced it to weekly, biweekly, and then mostly monthly. I allocated my bonus(es) within a day of them appearing in my accounts, preferring to allocate manually rather than set up automatic savings or investing other than my 401(k).

My level of caring about my finances constitutes a hobby. I like to compare it to exercising. How much time do you need to spend exercising to be reasonably healthy? Anything past that becomes a hobby. If you average 20,000 steps a day and go to the gym daily, exercising is more in line with being a hobby for you than being strictly necessary to be reasonably healthy.

Compromise in any relationship is important! No spouse should dominate the decisions and both spouses preferences and dispositions are important. I was always slightly jealous of unmarried couples who split expenses by both partners regularly updating a spreadsheet! That is not us. I am the spreadsheeter and my husband is not.

Our first attempts at tracking our spending together resulted in me doing my exact single systems for our joint spending and for my own personal spending, which turned out to be a lot of work. I was spending far more time than ever doing the manual work of entering receipts weekly (one hour) and reconciling and pulling into a spreadsheet once a month (at least an hour). It turns out that two people can make a large number of transactions – not a day goes by without us making at least one transaction. We’ve averaged 160 transactions per month (which counts a transfer as two transactions) through April of this year in YNAB, which works out to 40 transactions a week – no wonder it was taking me an hour just to enter them! That was a huge time commitment for very little value. YNAB is far more helpful at accomplishing the parts I do value with less time commitment than our previous system was.

My husband’s employer switched from paying him monthly to biweekly recently, which caused me to suggest that we allocate new money more often in YNAB. My husband said that our current system of allocating new money on the morning of the 1st of every month seems to be working, so we should keep with that. Since we can fund the whole month on the 1st, that seems like a reasonable compromise to me (more frequent fidgeting is fun, but not strictly necessary), though it certainly is difficult to watch the “To Be Budgeted” stay really full for a couple weeks now since all of the May income actually came in around mid-month. I am patiently waiting until the 1st because I would rather allocate the money together than do it by myself now without my husband’s buy-in. In my parents’ relationship, for example, one of them does all the budgeting with no buy-in from the other spouse, which results in the other spouse just spending freely and “blowing the budget” every month, to the frustration of the budgeting spouse. That’s not how we want our relationship to work.

For us, the best money system is one that both spouses contribute to, not just one spouse.

I still have fun with spreadsheets! I occasionally do budget forecasting, but I never save it unless we were doing the budgeting together. I update the net worth spreadsheet on the 1st of the month, rather than throughout the month like I used to. This means a lot less time spent on spreadsheets and a lot more time spent reading books and exercising. Every month, I show my husband the month’s updated spreadsheets and charts and ask him what his favorite of the charts is. In February, the chart he thought the coolest was the one that showed we had lost tens of thousands of dollars of our investments in the stock market.

I spent the time researching mortgage rates and presented all of the options. We made the final decision on which new mortgage to pick together, but I did all of the research. There are plenty of other times that my husband does more research than I do, e.g. the hours he spent researching which new camera lens to buy recently and the hours he’s spent researching a barbecue that he still hasn’t decided between the final two options after many hours of research over the last six months because he just isn’t sure it’s worth spending $X more for a specific feature. To me, it’s perfectly reasonable for one spouse to do more of the research, but both spouses should be on board with which funds to actually allocate their investments in or which mortgage type to choose in the end.

Readers, how do you compromise with your spouse on your money management systems?

Q1 2018 Update: 67.8% FI ratio

I didn’t update much last year as things were so much in flux with how we were managing our finances. I feel like they’ve settled a bit more now, so it’ll be easier to update again. Excuse the dust as I figure out the best way to update on things going forward. Our goals at this point seem to be (1) pay off the mortgage within 10 years before we are both 40, (2) use all tax-advantaged investment space available to us, (3) budget our spending and invest everything else in a Vanguard taxable account once we have enough buffer in savings, and (4) have 25 years of expenses in investments, with at least 10 of those years in taxable accounts, by the time we are both 40.

Savings (0.79-1.1 months)

We spent much of 2017 riding the credit card float, so this feels like a good start. We have a solid cash holding in each of our separate accounts, but we want to develop a solid holding in our joint accounts too. We haven’t decided how many months we want yet, so we will plug away at it until we find the right number. This is our primary savings goal at the moment and then we will switch over to taxable investments once we reach it. As of the end of March, we were sitting at 0.79 ideal months including the mortgage payment as an expense, or 1.1 months once we allocated the March income. That obviously needs a bit of work! We did get a mid-four figure income tax refund (setting your withholding correctly with two people and multiple income streams is way harder than it was with one person with one income stream), which helped jump start that account, among other cash flow items.

Investments

I didn’t really update much last year, but we hit a really exciting milestone last year – our combined taxable accounts surpassed our 401(k) balances in June 2017! That was pretty cool to see. For people who discover FIRE in their thirties or later, they seem to often have much larger 401(k) balances than taxable, but that is not the case with us. (You can see this in the chart – it’s of our investment types over time in 2017.)

In 2017, our combined investments saw a six figure gain! That was pretty cool. In January, they increased by a multiple of our gross income for the month, which was pretty cool. (Of course, they promptly lost most of that in February, which was also the largest drop we’ve seen in one month so far.)

We both made our 2018 Backdoor Roth IRA contributions at 12:01 am on January 1st, from separate cash. Why 12:01 am even though they don’t post until overnight on the 2nd? For fun, because we were awake, and then it was checked off!

My husband has been contributing enough to his 401(k) each month to max out the $18,500 employee contribution and get his full employer match each paycheck. Unfortunately/fortunately, he received a distribution from his 401(k) in March due to being classified as a highly-compensated employee. He invested it, including the taxes they withheld from the distribution, into his taxable account, re-balancing.

Our taxable accounts saw substantial contributions this quarter, as we put some lingering cash to work once we came to an agreement about sharing the condo equity.

We plan on opening up a joint Vanguard taxable account sometime this year. We have been working through many questions:

  1. What fund do we want to use in Joint Taxable for bonds? We’ve both mostly followed the advice to keep bonds in our pre-tax 401(k)s, but since we are in our early thirties, we don’t want to weight our 401(k)s too heavily towards bonds, especially when they are already at 36% across the two accounts. That means that we will definitely be putting bonds in our taxable account and are leaning towards using an intermediate-term tax-exempt bond fund.
  2. Do we want to manage our joint investments as a third portfolio, separate from our existing personal investments?
  3. What asset allocation do we want to use? We both already are at 50/50 US/international stock indices, but one of us has more in bonds than the other, so we need to figure out how to balance that.

Mortgage

12/31/2017 balance: $115,761.14. 10 years, 9 months remaining.

January payment: $786.15 principal, $241.17 interest

February payment: $219.61 principal, $395.23 interest (that’s what re-amortizing to 25 years left at 4.125% and only paying the required payment does. We budgeted for the original payment but only paid the required one to allow for a buffer for closing costs on the anticipated refinance.)

March payment: $220.37 principal, $394.47 interest

3/31/2018 balance: $114,535.01. 12 years, 0 months remaining. (That’s what happens when the interest rate jumps. It’ll go back down to 10 years left in May since we refinanced.)

Spending Ratio – Portion of the ideal annual budget cumulatively 

January – 54.6% – 1.15/12
February – 73.1% – 2.02/12
March – 79.2% – 2.97/12

Q1 – 67.8%

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.

The denominator covered all non-mortgage housing, food, transportation, personal care, and medical expenses throughout all months in Q1! That’s some pretty solid progress. Remaining categories to work through are: entertainment, shopping, travel, life, and his and hers spending.

When you take out the mortgage payment, our top three spending categories in Q1 were food, housing, and travel, in that order. (Is that a good thing or a bad thing that we spend more on food than housing ignoring the mortgage payment?)

In housing, our condo fees are up 50% from 2017 and our property taxes also went up substantially as well. That combination is now about $910/month, compared to $530/month when I bought the place six years ago. Whoever says that housing doesn’t go up when you buy a place is lying.

In travel, we had a weekend getaway and bought flights for a summer wedding. We used UR points for the flights, but we budget for the full cost of trips and then count the amount of any points redeemed to cover a part as spending and then the same amount as income. We don’t see points as free money. We are still hovering around 200,000 UR points, thanks to both of us getting the 100,000 bonus on the Chase Sapphire Reserve, our wedding venue qualifying as a restaurant, and paying cash for all of our honeymoon hotels (via Hotels.com and cashback sites!) and having many UR cards (Freedom, Freedom Unlimited, and one Reserve), despite using UR points to cover our honeymoon flights last year.

In other spending, we made some updates to our postnuptial agreement (and resolved to hopefully never do that again because two lawyers aren’t cheap), bought a lovely leather wedding album and some other prints <3, replaced some sheets after we found a hole in one of our two sets, and spent more on bicycle maintenance than car maintenance. My husband says that’s because the bicycles are the “daily driver” and the car is for long road trips.

Readers, how was your Q1?