Q3 2015 Update

Income

I saw about $7,000 in paychecks in Q3, about 90% of that coming in September, when I finished maxing out my 401(k) for the year. My net income this year is actually reasonably evenly spaced out, pretty close to 25% of it coming in each quarter and each quarter’s net income being with $1,000 of each other, with each being around $28,000 to $29,000.

Saving

In Q3, I saved 64% of my net pay: depositing 96% of my net pay to various savings accounts and withdrawing about 32% of my net pay from savings accounts (mostly selling ESPP and paying fall tuition). My savings deposits were split up to the following accounts:

2015 Q3 Savings Distribution

This quarter, I finished maxing out the after-tax 401(k). My employer has continued to make their matching contributions every paycheck this quarter, even though I finished contributing to my pre-tax 401(k) last quarter. Most of the rest of my savings was tossing money into my general savings account.

Spending

Q3 2015 Spending

All in all, I spent $10,755 in Q3, with education taken out. I had estimated I would spend $7,691 in Q3, so I went $3,064 over my estimate.

Housing: $6,200 I came in over in this category by about $2,000 because I hadn’t budgeted for any of the projects we did: replacing the guest bathroom sink, painting the second bedroom, fixing the fridge, replacing the guest bathroom toilet seat, and buying a SIM card for my unexpected purchase of a new phone. Looking at my history, I seem to spend about $2,000 to $3,000 per year on home maintenance/wants and so I plan to budget for that going forward.

Clothing: $1,200 I hadn’t planned on any of this spending. I am, however, super happy with my closet and will write a blog post about my process at some point. I’m still looking for a few more pieces which I should hopefully find in Q4. My plan going forward is to then keep an inventory of my closet every season to help figure out what items I need to find, rather than budgeting by a dollar amount.

Shopping: $865 None of this was budgeted for either (well except for the cell phone, partially). What did this get me? A gorgeous Kate Spade crossbody bag, two throw pillows for the futon in the second bedroom, a new iPhone 6S 64 GB, and some plants for the balcony.

Transportation: $550 Most of this was car insurance. This was under budget because I switched car insurance carriers and only paid for a six month policy vs twelve. The other $130 was fuel and tolls.

Medical: $400 One visit to the doctor and new lenses in my glasses. Medical stuff be expensive in the US.

Personal care: $395 Monthly eyebrow waxes and the rest was mostly infrequent purchases: my annual chapstick stock-up, shaving gel, multi-vitamins, and hair products. The other bit was trying out some new skincare products.

Recreation: $302 Annual cost for sport #1 and a pair of hiking boots so hiking doesn’t kill my ankles. (You don’t see any costs for hiking here because a) it is cheap and b) since it’s a joint activity, my boyfriend pays.)

Life: Annual cost of my umbrella insurance policy. (Hint: it’s between $200-300 per year.)

Entertainment: $201.67 – I’m about $100 under budget here. This was pretty much entirely eating out with friends. For reference, I spent $212/month on this in 2014. I’m now spending $200/quarter.

Travel: $78 I came in under in this category because my boyfriend covered most of the on-the-trip costs of our summer trip.

Food: $67.13 This is super underbudget – my budget had been $360 for the quarter! My boyfriend pays for the groceries and our date nights / out with friends together, so this is $28.12 me grabbing food when I’m out somewhere and $39.01 work lunches. I’m doing great with this category! For reference, I spent $350/month on food in 2014.

(Note that details on Gifts and Donations are left out.)

With the overages this quarter, I estimate that I am on track to spend $44,795 this year overall, which is about $6,675 over my original estimate or an 18% increase. That is up $2,600 from my Q2 update, which is pretty close to what I went over this quarter. It is still under my 2014 spending of $48,040 though, by about 7%. I seem to consistently spend about $40,000 to $50,000 per year and my boyfriend moving in saves me somewhere around $4,000 to $6,000 per year, so I expect to land in the lower range going forward.

Goals

Let’s check in on my goals from the beginning of the year. I’m doing mostly okay, though I’m definitely going to fall a bit short of my savings goals, which I’m okay with.

1) Enjoy living together! Have an awesome trip to NZ!

ON TRACK! Living together is going great overall. It’s definitely taking some time to get the place to a point where it feels more like things were chosen by both of us, but we’ve definitely been making some good progress on that and on figuring out alone time too.

2) Contribute the maximum to all tax-advantaged accounts available to me. This means $5,500 in a Backdoor Roth IRA, $18,000 in a pre-tax 401(k) and possibly some additional funds to the after-tax 401(k) and possibly my 2016 Roth IRA amount in a savings account ready to deploy in January. This will account for probably about 2/3 of my savings in 2015.

DONE! I’m done with the Backdoor Roth IRA, the pre-tax 401(k), and the after-tax 401(k). I transferred my after-tax 401(k) funds over to my Roth IRA in October.

3) Learn the ropes at my new company and have an awesome first year!

ON TRACK! Things are going great so far. I like my group and things seem to be much less toxic than in my previous company. It’s definitely a different culture though and that has been quite an adjustment.

4) Exercise for at least 45 minutes per day. My phone is really helpful at tracking this for me!

ON TRACK! I’m not really sure how this is going as my phone wasn’t working to tell me this for two months. I did exercise for 49 minutes on average in July. Anyone know how to get an iPhone to tell you how to do this? It tells me my steps and Fitbit seems to get the active time somehow, but my iPhone isn’t telling me that directly and I don’t want to pay for Fitbit premium to get the monthly report that they used to give away for free.

5) Go to the gym (or run) three times per week.

FAIL!This is just a flat out fail. I’ve managed to lose some of the stress weight from my last job and get a reasonable amount of general exercise and outside time (yay city life!), so I’m fine with this. My new goal, especially with grad school is to make it to yoga/running once a week.

6) Contribute enough to a Health Savings Account such that Out Of Pocket Maximum ~= Current HSA balance + Employer contribution + my contribution.

ON TRACK! I ended up increasing this to the maximum once I maxed out my after-tax 401(k). I’ll re-evaluate this each year.

7) Succeed at Operation Bayes – I’ll explain this later.

SUCCESS! Now you all know that this was applying to and getting into grad school, which I did successfully! Yay! Now to kick butt at grad school! So far, so good.

8) Spend under $40,000.

FAIL! I’m now on track to spend $45,000 this year, which is still $3,000 less than 2014.

9) Save 70% of my net income monthly…and 100% of my bonuses. (Yay for a big raise that will allow me to save that much of my monthly income!)

FAIL! Between the ESPP, lump sum contributions to my 401(k), etc. this got far more complicated to calculate in the same way that I was doing before. So far, I’ve saved 68% of my net income overall or 72% if you ignore the withdrawals to pay for grad school. I’m on track to save 69% of my net income overall if you ignore the grad school withdrawals or 63% if you include them.

The main reduction in this compared to 2014 is the income drop. My net income is down pretty much the exact dollar amount that my savings is down by this year, about $15,000. My income is high enough compared to my spending that I chose to reduce savings this year over reducing spending. I expect my 2016 net income to be pretty close to my 2014 net income, which will help with my savings rate next year.

10) Contribute the maximum that I can to the Employee Stock Purchase Plan.

ON TRACK! Definitely doing this.

11) Pay down the mortgage with any funds that are leftover after 2), including the proceeds of 10).

NOT HAPPENING! I’m reasonably confident at this point that I will not make any extra mortgage payments in 2015, mostly due to two months of no income, setting aside money for grad school, increasing my emergency fund, and maxing out my after-tax 401(k). All of those things took….$85,000. Wow!

But, I’m pretty happy with the progress I made paying off the first half of the mortgage in the first 2.5 years aka $143,000 in 30 months. If I don’t pay off the mortgage before the rate resets, my interest rate will currently reset to 3.08% based on today’s rates, which is still a pretty good deal, especially considering that the required payment will reamortize as well, so that would drop my required payment from just over $1,000/month to ~$550/month, making things reasonably manageable if I lost my income.

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Q2 2015 Update

Income

Things were pretty normal in terms of income in Q2. There were no bonuses or missed paychecks. I did get only about $375 in paychecks though! Probably my lowest paycheck amount ever other than unemployed quarters in the past? My net income was about $300 less than Q1.

Saving

In Q2, I only saved 59% of my net pay: depositing 105% of my net pay to various savings accounts and withdrawing about 45% of my net pay from savings accounts to cover spending. My savings deposits were split up to the following accounts:

2015 Q1 Savings Distribution

This quarter, I finished maxing out the pre-tax 401(k) at $18,000. My employer will continue to make their matching contributions every paycheck for the rest of the year, as if I had been contributing each paycheck. I started on the after-tax 401(k) contributions.

Spending

Q2 2015 Spending

All in all, I spent $11,706 in Q2, with education taken out. Housing + shopping + clothing added up to 80% of my spending this quarter. The pie chart cut off the legend for the following categories: personal care, recreation, life, and financials.

I had estimated I would spend $8,548 in Q2, so I went $3,415 over my estimate. $2,429 of this was the refurnishing and repainting of my home office. Most of the rest of the overage was extraneous clothing spending. I came in under my estimate in travel, entertainment, food, and transportation. Housing was right on the dot and was high this quarter because of some extra HOA dues and property taxes. Food and entertainment were mostly under because my boyfriend has been picking up those costs with our current expenses arrangement.

For kicks: I spent $87.37 on transportation in Q2, which bought me two tanks of gas, one Uber/Lyft/taxi ride home from somewhere, and a top up to my prepaid tolls account. Living in the city has some frugal benefits! I also spent a whopping $10.32 on travel and $157.61 on entertainment for the entire quarter. I spent $211 on average in 2014 on entertainment, MONTHLY. My food costs were also about half of what they were in Q1.

With the overages this quarter, I estimate that I am on track to spend $42,190 this year overall, which is about $4,083 over my original estimate or an 11% increase.

I’m not going into too much detail here since you can see that in my monthly reports.

Goals

Let’s check in on my goals from the beginning of the year:

1) Enjoy living together! Have an awesome trip to NZ! ON TRACK! Living together is going great overall. It’s definitely taking some time to get the place to a point where it feels more like things were chosen by both of us.

2) Contribute the maximum to all tax-advantaged accounts available to me. This means $5,500 in a Backdoor Roth IRA, $18,000 in a pre-tax 401(k) and possibly some additional funds to the after-tax 401(k) and possibly my 2016 Roth IRA amount in a savings account ready to deploy in January. This will account for probably about 2/3 of my savings in 2015. ON TRACK! I’m done with the Backdoor Roth IRA, the pre-tax 401(k), and have started on the after-tax 401(k).

3) Learn the ropes at my new company and have an awesome first year! ON TRACK! Things are going great so far. I like my group and things seem to be much less toxic than in my previous company. I’m really optimistic about how things are going!

4) Exercise for at least 45 minutes per day. My phone is really helpful at tracking this for me! ON TRACK! I’ve exercised for an average of 53 minutes per day according to my phone. February was the best month with the traveling!

5) Go to the gym (or run) three times per week. FAIL! This is just a flat out fail. I’ve managed to lose some of the stress weight from my last job and get a reasonable amount of general exercise and outside time (yay city life!), so I’m fine with this.

6) Contribute enough to a Health Savings Account such that Out Of Pocket Maximum ~= Current HSA balance + Employer contribution + my contribution. ON TRACK! I may increase this once my after-tax 401(k) is done for the year, we’ll see.

7) Succeed at Operation Bayes – I’ll explain this later. SUCCESS! Now you all know that this was applying to and getting into grad school, which I did successfully! Yay!

8) Spend under $40,000. FAIL! I’m now on track to spend $42,000 this year.

9) Save 70% of my net income monthly…and 100% of my bonuses. (Yay for a big raise that will allow me to save that much of my monthly income!) NO IDEABetween the ESPP, lump sum contributions to my 401(k), etc. this got far more complicated to calculate in the same way that I was doing before. So far, I’ve saved 69% of my net income overall.

10) Contribute the maximum that I can to the Employee Stock Purchase Plan. ON TRACK! Definitely doing this.

11) Pay down the mortgage with any funds that are leftover after 2), including the proceeds of 10). NOT HAPPENING! I’m reasonably confident at this point that I will not make any extra mortgage payments in 2015, mostly due to two months of no income, setting aside money for grad school, increasing my emergency fund, and maxing out my after-tax 401(k). All of those things took….$85,000. Wow!

Q1 2015 Update

Whew, that was a busy Q1! I quit my job, had ~1.5 months unpaid between jobs, went on an awesome trip for a month with my boyfriend, and started a new job.

Income

Things were actually not too bad in terms of income in Q1. I only got paid enough in January to cover February’s budget, saw no income at all in February, and then saw a full month’s paychecks at my new, increased salary, plus my signing bonus in March. Thanks to the signing bonus, my Q1 net income was (by a small margin) the largest I expect to see this year, though each quarter should be reasonably similar.

Saving

In Q1, I saved 79% of my net pay, which amounted to a bit over $20,000 in savings. I’m hoping I’ll be able to hit 80% overall this year :)

My savings was split to the following accounts:

  • 86% Cash savings
  • 10% Mortgage payment principal
  • 4% Traditional 401(k)
  • < 0% HSA

I made my 2015 Backdoor Roth IRA contribution on January 2nd, so that is done already! Next up is maxing out the pre-tax and after-tax 401(k). I’ll finish maxing out the pre-tax 401(k) in Q2 and the after-tax 401(k) in Q3.

I haven’t made any extra mortgage payments this year and it’s looking like I might not end up making any. I’ll talk about that a bit later.

Giving

I think the idea of Fidelity/Vanguard Charitable is really cool (but expensive at my donation amounts…), so I’m doing something similar with a savings account at my credit union. I have automatic transfers set up for every paycheck and I’ll do manual transfers when I get a bonus. This account’s purpose is to get me to give my money to other people for causes that I deem worthy. I’m trying to let the account build up a bit so that I have enough to pay for my January donation next year instead of not having enough money in the account for a bit to take the donation out and so that I can make larger donations. I plan to increase the % within the next few years.

In Q1, I made my annual January donation as usual and made another couple donations for causes friends were supporting. Not all of my donations are tax-deductible, but that’s totally okay!

Spending

Q1 2015 SpendingWhen you see that I spent more money on Travel than on Housing, you know it was an expensive quarter. I had budgeted for this quarter to be the most expensive of them all.

All in all, I spent $14,271 in Q1, about $5k of which was spent each on Travel and Housing. Another $2k on Clothing and everything else is tiny in comparison to those three. On the plus side, I have no more big travel expenses for the year.

I am going to try to reign in my clothing spending more in the rest of the year.

I was underbudget in a few areas:

  • I only spent $355.09 on groceries, of $600 budgeted.
  • I only spent $136.91 on work lunches, of $344 budgeted.
  • I only spent $63.52 on fuel, of $144 budgeted.
  • I had planned on replacing my passport in Q1, but that got pushed off until Q2. I replaced my driver’s license though, which countered that somewhat.
  • I only spent $13.46 on dining out, of $40.00 budgeted.

I’m still on track to spend under $40k in 2015 (my goal for the year) – I’m expecting the other quarters to be an average of $8k apiece. I’ll check in on that again at the end of Q2.

Readers, how was your Q1?

Q1 2014 Update: Life and Finances

I’ve been pretty silent on this blog so far this year.

I spent most of my energy in the first quarter on work, getting involved in my new job and ramping up. Things are definitely going a lot smoother now and I no longer feel so new – a great feeling! After work, my energy went to cooking with my boyfriend. We’re still tweaking that, but we’ve definitely gotten to a really awesome place with our cooking! And I think we should settle in at around $300-350/month on groceries, which makes me feel a lot better than the first month’s $500.

The second quarter is going to be about finding myself again: getting back to the gym and finding myself (and us) a good routine. I paid for an annual unlimited membership at a gym in December. It’s an amazing gym: fitness and yoga classes, a full gym, and more for a pretty reasonable price. The caveat? It’s a 10 (ZERO traffic) to 35 minute drive, or about 25-30 minutes on average, and it’s always impossible to find parking. So sure, it’s a reasonable price and awesome once you get there and parked, but it’s not super convenient, so once I fell out of my gym routine with my injury in September, I just never got back into my routine. Now, I don’t think it’ll be a complete waste by the end of the year as its effective cost will probably come out close to buying punch cards throughout the year, but it’s still a good lesson.

Fitness

So, my project for this quarter is to re-acquire a fitness routine. I walk to/from work, which gives me about 5 miles of exercise per day, but that’s not enough for me to de-stress from work. I could never have a drive commute – even a bus commute stresses me out. I’m not good at motivating myself unless I have a commitment to a specific time / people, so running only works when I’m meeting friends, which leaves me with fitness classes. I identified several yoga studios and alternative fitness classes such as barre and cycling that are convenient to both work and home and have been trying them out. So far, I’ve tried one barre place, am on a week at a yoga place, and want to try out one more barre place. The first barre place I tried, though convenient to both work and home, wasn’t very me as it was super women-marketed. It’s still not bad for a weekend workout, but I’m hopeful that the barre place close to work will fit me better, though I wish it had yoga as well because then it would be basically perfect! I’m really loving this yoga studio I found!

You know what I hate about fitness places? Trying to decide which membership ‘package’ to buy! Do you buy a month? Three months? Monthly renewal? Annual renewal? 5? 10? 15? 20 class punch card? There are way too many options. Most places have a free session or week or some period of time, which is really great for seeing if it works for you without having to put up any money up front. The way I’ve always looked at these in the past is buying a membership equivalent to how long I want to commit to doing this thing.

Punch card at a place I feel like my friends will drag me back to once a week for a while and the punch card never expires? Go for it!

A place where I don’t know when I’ll return? A single visit.

A place where I feel like I can commit to going enough in the next month for it to be worth it over the longest punch card? Buy one month.

Oh, I enjoyed the first month? Maybe I’ll buy another month or three (depending on the place). After doing that for a few months, re-evaluate the commitment again and maybe buy a year.

It’s much easier to do make this evaluation when you’re just looking at one gym too. If you’re looking at multiple, a punch card is often the easiest commitment. By the end of this month, I’ll be looking at what I want to do going forward after evaluating all of these places.

Where is the budget coming from for these new fitness plans? I have been setting money aside each month to pay for an annual membership in December at my “old” gym aka sport #2, so there is $219 stashed there. There is also $199.76 stashed for sport #3 that I probably won’t end up doing this year. I also have $235 stashed for sports tournaments and with the injury last fall, I didn’t actually play in any! Lastly, I have $134.39 set aside for equipment because I’d been planning on buying something for sport #3 and some maintenance costs for sport #2. So I should be able to re-allocate that $788.15 somehow!

Finances

Okay, now back to what this was supposed to be…my first quarter financial update! So finances consist of income, saving, giving, and spending.

Income

I don’t have any bonuses in first quarter this year, so income chugged along as expected this quarter. I don’t know yet if I will get a raise this year or what it will be, but that would go into effect in April. I’m actually pretty convinced at this point that I will get no raise. Thankfully my bonuses are from prior year reviews and I only live off of about half of my regular pay, so the possibility of not getting a bonus won’t hit me very hard either.

I’ve had some troubles getting my W-2 allowances just right, but that’s always a work in progress, isn’t it?

I’ve been doing pretty well with credit card rewards so far. Between the Barclaycard Arrival bonus and the regular cashback rewards, I saw over $700 in credit card rewards in the first quarter. The Chase Freedom and Sapphire Preferred bonuses should hit next quarter, but things will probably slow down in that department for the rest of the year.

Saving

This is the easy part! In Q1, I saved 61% of my net pay.

My 401(k) contributions have been chugging along, as expected. Since I no longer have a high-deductible health insurance plan as of my April paycheck, I’m going to redirect part of that money to my 401(k) each month to max it out a little bit by the end of November instead of December.

I finished maxing out my Health Savings Account for the prior plan year and there’s a nice balance in there that I can still use for health expenses that I have to pay out of pocket!

I made my 2014 Backdoor Roth IRA contribution on January 2nd, so that is done already! I’m unsure about when I will do the 2015 contribution – I may wait until the mortgage is paid off, so I likely won’t set aside money to do that this year.

I’ve also been paying down the mortgage. So far this year, I’ve paid down $10,575.54, which is about 3.7% of the original mortgage balance. I can’t wait for my next bonus to hit – that’ll make a much bigger dent in the mortgage than I’ve been making so far with my regular paychecks.

Giving

I’ve never been very good at finding causes that I want to donate my money to. In December of last year, after a discussion on the comments on a post at nicoleandmaggie, I made a rash of extra donations. And this year, I am making a conscious effort to donate X% of my income. I’m sure that X% is a lot less than other people might do so in my situation, but I felt like it was a reasonable improvement over where I was. It’s kind of fun researching causes and donating larger chunks of money than what I was doing before too!

Spending

So, spending. I’ve spent a lot more this quarter than I had originally intended.

2014 Q1 Spending

I wasn’t expecting it to quite add up to $1,700 over my estimate. Oops! Some excuses/explanations:

  • Clothing: this was mostly because I found myself with very few items of clothing that fit in certain areas. There were some returns already in Q2, so this should look a little better at the end of Q2.
  • Woo for coming in basically right on on entertainment! Same with personal care!
  • On Food, I did really well on eating out by myself. We’re doing better with groceries now, so we’re going to alternate months instead of reconciling at the end, which means I’ll only have to pay one month next quarter. I have been eating out for lunch every day at work this year, which is part of why this is so high. I’m okay with that decision for now.
  • Housing is a bit under because I’ll pay property taxes next quarter and ‘household goods’ spending has been mostly squashed into groceries with the joint spending. I spent more on internet and electricity than estimated, but that should even out a bit more next quarter. And my mortgage payments and HOA dues were right on par. My property taxes did go up more than expected, so that will show up in next quarter’s report.
  • Medical – I estimated only spending on premiums. Oops – I forgot about bills from the injury in the fall.
  • Recreation – I spent nothing in Q1. There will definitely be more spending here in Q2.
  • Shopping – this one was a killer. I only budgeted for the closets and painting. I didn’t plan on repairing my laptop or buying a new case for my cell phone, but those at least came out of some building up line items. I didn’t plan on any of the general furnishings I bought or sales taxes on the painting estimate. Those all added up to almost $500, oops.
  • Transportation – this was awesome! I bought one tank of gas and paid some toll bills. I’m working on trying to lower my insurance costs so I don’t have a $1,360 cost come Q3. I think I might have found an insurance company that should cut that in half!
  • Travel – annual estimate was $4,000. I don’t anticipate going over $4,000 total for the year, so it should work out okay.

There you have it – I went over my estimate by an average of $600/month in Q1. I don’t feel bad about any of the spending. Q2 should be better – my estimate for now is that I’ll come in under $10,000 for the quarter.

Readers, how was your first quarter of 2014?

Financial Plan for 2014

Simple goals, simple implementation, right?

Income plan

The vast majority of my income comes from my W-2 day job. This is separated into regular salary, which is paid out monthly, and stock of which I will see two comparably sized vests this year. I am expecting my overall W-2 income (before deductions) to be somewhere between $160,000 and $200,000 for the 2014 year. This assumes a modest 2% increase and the 52 week low and 52 week high +20% stock prices for the RSUs. I anticipate my income surpassing the Social Security tax maximum ($117,000 in 2014) with my September or October paycheck.

My RSUs see a flat 25% of federal income tax deducted from them, which isn’t quite enough tax because my base pay alone takes me into the 28% federal income tax bracket these days, so I need to compensate for that with my W-4 allowances. My spreadsheet suggests that at this point in time, I should set zero (0) allowances on my W-4 for 2014. I will re-evaluate this after each RSU vest and raise.

Investment contributions

I plan to:

1) Contribute the 2014 maximum of $17,500 to my 401(k) for the year, spread out throughout the year:

  • H3 = annual base pay (gross)
  • J2 = Yearly max to the 401(k) – $17,500 for 2014
  • I2 = ROUNDUP(J2/H3,2) = the % that I should contribute monthly from my paycheck to max out the 401(k) over the course of the year, e.g. if it is XX.3%, I will set it to XX+1%. I will most likely reduce this by one percentage point for my April and subsequent paychecks.

2) Make my 2014 Roth IRA contribution of $5,500 through the backdoor on January 2nd, taking the funds from my savings account.

3) Continue contributing the maximum to my Health Savings Account until the plan year ends partway through 2014. I will then re-evaluate health insurance plans and whether I will contribute to the Health Savings Account again (depends on which plan works out the best).

4) Set aside my 2015 Roth IRA contribution from my final RSU vest for the 2014 year in a savings account. This will probably either be $5,500 or $6,000.

Mortgage plan

All funds that are not set aside for spending, my 401(k), my Health Savings Account, or my Roth IRA will be thrown at the mortgage. My estimate is that this should be around $2,500/month on average, plus RSU vests.

Investment allocations

This exercise is similar to what I did for 2013. As of 12/12/2013, my investments portfolio is worth ~$130,700. I estimate adding about $25,000 to the portfolio this year, including my 401(k) contributions, my employer match, and my Roth IRA contribution, putting an estimated year end balance at $156,000.

(Note: when I wrote this post last year, I estimated that my end of year balance would be $98,100. It is $34,600 higher than that as of November 30th. Crazy!)

My target asset allocation at the end of 2014 will be:

  • 27% Fixed income
  • 36.5% US stocks
  • 36.5% International stocks

Based on this, let’s calculate my ideal portfolio at the end of 2014 and compare it to where my portfolio is now:

Current Ideal EOY Difference
US stocks $48,500 $56,945 $8,422
International Stocks $47,900 $56,945 $9,073
Fixed Income $34,400 $42,124 $7,773
total $130,700 $156,000 $25,268

I will add my $5,500 Roth IRA contribution to the Vanguard Total Stock Market Index Fund Admiral Shares, which means I only need to add another $2,922 to US stocks for the year. Subtracting out my 401(k) match from there leaves my 401(k) contributions as follows for the year:

  • 4% or $654 to add to US stocks (S&P 500 index fund)
  • 52% or $9,073 to add to international stocks (total international index fund)
  • 44% or $7,773 to add to fixed income (stable value fund)

There, we can set and forget for the rest of the year!

I will re-balance the Extended Market index fund vs S&P 500 index fund amounts in January 2015 when I make my Roth IRA contribution for that year – for now, I just care about US vs international vs fixed income.

Banking plan

I’m going to have my entire pay direct deposited to my credit union checking account and then pay the mortgage from there with the leftovers each month. My credit cards are all on auto-pay from here and all of my bills are on auto-pay to a credit card.

I will continue to withdraw any health expenses from my HSA after putting them on a rewards credit card through the end of this plan year. I will re-evaluate my HSA plans during open enrollment.

My plan for expenses is as follows:

  1. If purchase is in person and < $15, use debit card until I reach N transactions. This should earn me just under $200 in interest for the year, i.e. meets my $100 gain for the year rule.
  2. All Amazon.com purchases go on that credit card (this is mostly automatic, so no big deal), as well as restaurants and in-person places that don’t take American Express.
  3. All non-foreign purchases that take American Express go on the Fidelity Amex card
  4. All other purchases (including possibly foreign ones) go on the credit union cashback visa (I love this one because it does automatic redemption every month, no matter the amount!)

This algorithm should net me about $400-550 in cashback rewards for the year, based on 2013 spending levels.

Based on my spending patterns and my rule that I will only add a credit card if it will gain me at least an additional $100/year in cashback rewards and I think I could use the card effectively for at least two years, I can’t really optimize any further than this. I could add the US Bank Cash+ Visa Signature card for 5% cashback on restaurants, but with my spending levels, that may or may not actually make any sense. My credit history is still new enough at this point that I don’t want to churn yet (under 4 years), but I will re-evaluate that in 2015.

I’m really enjoying how simple this plan is and I can’t wait to let it be implemented! Here’s to an awesome 2014!

“Golden” Handcuffs

NTF wrote a great post on unlocking golden handcuffs. But what do you do when you’re living below your means, you’ve mostly avoided lifestyle inflation, you don’t have a car payment or high student loans, your mortgage is well-affordable, you don’t spend your bonuses, and you don’t really rely on your bonuses?

I’ve been at my company for long enough now that I’m vested in the 401(k) matching, I have great amounts of vacation time accrued, I have lots of deferred compensation waiting for me (projected to be almost 50% of my total compensation for 2013), and I have a good amount of seniority. I’m in a good spot. But there’s part of me that looks at what other companies are doing and I see cool things that other companies around are doing. When a recruiter emails me, I ponder the idea of leaving. When I decided I wanted a change in the fall, I made a promise to myself that I would try another team within my company at the very least until the first RSU vest in 2013, but really until the end of the year. I have a strong suspicion that my next employer won’t have as hearty of bonuses and without them, paying down the mortgage is a much slower process. I also wonder if my deferred compensation won’t be quite as hearty as it will be this year going forward. Then again, my employer is smart and would probably try to avoid that happening to try to keep me for longer.

I’m not addicting to spending; I’m addicted to saving. In a way, it’s the same thing. I’m addicted to the large sums of money coming in. The large bonuses are awesome. I don’t spend my time spending it, but figuring out the best way to stash it in accounts.

I’m trying really hard (I swear!) to spend less time thinking about money. I’m finding projects around the condo and doing those. There are still plenty of those I’ve been avoiding. My theory is that if I think about money less, I’ll be less interested in staying for the bonuses that aren’t mine yet.

My “golden” handcuffs come in the form of Restricted Stock Units (RSUs). I received a grant with my initial contract and then I’ve received more grants every year since with my review. Basically, the grant spells out a schedule of dates on which I get certain numbers of shares of my company’s stock. I sell them all immediately (TFB has a great post on this) because I would never in a million years buy that many shares of my employer’s stock, let alone a single individual stock. Right now, I’m sitting on over six figures in unvested shares. That means that if I leave my company, I don’t see those shares, ever.

Is being addicted to saving my bonuses just as bad as being addicted to spending them? Almost, but not quite. It definitely encourages me to try to change jobs within my company instead of going somewhere else. But is that a good thing forever? I’m not sure. At this point, my plan is to stay at my current company in some role through the mid-2015 for a variety of reasons. I should collect quite a bit of shiny RSUs in that timeframe and who knows what will happen after that!

Readers, have you ever gotten addicted to saving? I have a feeling that a few of you have as well :)

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.