Path to a Million: 2017 Q3

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Another quarter, another net worth update. This time is no different. My laser focus on keeping a tight budget has ensured continuous success with my net worth slowly but surely climbing through a combination of debt reduction and asset appreciation. I’m adding more to liquid savings, increasing retirement contributions in addition to accelerating my debt payments.

The importance of both sides of my balance sheet moving in the right direction at the same time is that it’s an indicator of the fact that I am finding ways to increase my household income. Whether it is a special project, a real estate transaction, a consult or even a travel stipend, our income has not remained stagnant. Often times, you may find yourself only able to move one side of your balance sheet. You can pay debt faster or you can save more but not both. That’s often a sign that there isn’t more income coming in and it takes one set back to undo all your hard work. Incremental changes matter but never miss an opportunity to accelerate your goals.

In any event, I am up nearly $22k for this quarter, a pace which could put me well over the 1/2 million mark this time next year and it motivates me even more. Updating this spreadsheet is borderline therapeutic. It is the balm that soothes any sting I may feel from not buying a new purse, packing a lunch or passing on that watch I’ve been coveting. It reminds me that there’s a greater purpose: seeing that ‘Student Loan’ line item say $0.

 

NW

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Adulting 101: Big Girl Money

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Adulting is hard. It’s even harder for the millennials who came of age during or after the Great Recession. It certainly doesn’t help that financial literacy has always lacked in our society. So I decided to put together a list of 10 things you can do to manage your personal finances like a grown up.

1. Have a budget to help you keep tabs on money.

2. Set specific and realistic financial goals to make sure that you not only have something to look forward to but that you also stick with it.

3. Find a money role model who will give you something to strive for. S/he will make you realize that it is possible to get yourself out of debt, they can keep you accountable and they are a much better influence than your friend who says: “YOLO!”

4. Practice the art of ‘No’. Establishing boundaries protects your wallet as much as your sanity. Girls trip to Bali? Matching designer duds for the bachelorette week end? Expensive steak dinner after work? If you can’t afford it, say no & stay firm.

5. Don’t overspend. It sounds simple but if it were that easy, studies results wouldn’t show that 1/2 of all Americans are struggling financially. There’s no greater sign of maturity than exercising self control & being able to delay gratification.

6. Save, save, save. Emergency funds, retirement, short & long term goals. Save for all of them. Saving will prevent you from spiraling out of control under a mountain of debt.

7. Monitor your credit. There should never be surprises when it comes to your finances. Maybe except for pleasant ones like being ahead of your savings schedule or inheritance from a rich long lost cousin. You don’t want to find out long after you’ve started the process that your mortgage has been denied or after your clunker breaks down that you don’t qualify for a car loan. You should show up for credit applications equipped with enough information to negotiate from a position of power.

8. Be properly insured. When I landed in the hospital in late 2009, I couldn’t have imagined my life would change the way it did. In fact, I did 2-hour street parking outside of the hospital. I ended up leaving 4 weeks later & a month after that, I got $50,000 bill. All but $150 was covered by insurance. As a seemingly healthy 23 year old, I could have passed on coverage to save myself the $250 a month I was paying. Instead, I decided I needed to be properly covered like the adult that  I was & that decision saved me from financial disaster.

9. Start learning investment basics. You cannot save your way to wealth. You can only earn your way to wealth either through wages, investments or some combination of both. You don’t have to become an expert stock picker, but you should learn the difference between some key concepts like 401k v. IRA, stocks, bonds & mutual funds, associated fees & tax implications of different investment types, etc.

10. Track your net worth. Your net worth is a measure of your financial progress. It is also a motivating & financial management tool & that is why I began actively tracking my net worth late last year.

Cash Back Queen

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As much as I hate spending, it’s a necessary evil. Before I moved further away from the city and before I was married, I had fewer expenses and less variables that were determining factors in my spending habits. While my husband and I are on the same page about the basics of money (spending less than you make, saving for retirement, use credit responsibly), it’s harder to convince him to participate in something as restrictive as a “no spend week“.  To a personal finance nerd like me, it’s a fun and exciting challenge. To almost anyone else including him, it’s a annoyance and an impractical habit. So how do I try and bridge the gap? Cash back of course! If I have to spend, I might as well do whatever I can to minimize my net expenses. Here is how I do it.

Ebates – I’ve seen the commercials on TV for years and I never bothered. I always thought it was one of those gimmicky things that you have to pay and sign up for and you may not see much if anything at all. I also assumed that there’d be a lot of obscure stores on the website that I’d never use. I was leaving a friend’s home and she was walking me out when she said “Oh! My ebates check is here!” She’s not the type to sign up for things that will waste her time so that made me curious. I asked her what the largest check she received amounted to and she told me $70. There was nothing to do but sign up and shop. I looked into it as soon as I got home and when I realized that Amazon was on that list, I was sold! I signed up in late May and I’ve already earned $30 in cash back from it, $5 of which was from Marriott. Yes, you read that correctly. You can book hotels and even trips through Travelocity. Sign up today and start collecting cash back on the things you buy anyway.

Bank Credit Card – In addition to the 1.5% cash back my primary bank’s major credit card offers me, I occasionally get bonus cash back for particular retailers. While it cycles between different retailers every few months, there are some mainstays. I can always find some of my favorites in there: Starbucks, Papa Gino’s, FiveGuys, Sunglass Hut, Autozone, Nordstrom Rack, etc.

AmEx – Just like my bank’s card, my American Express also has bonus categories. For example, we just got a notification that we would soon see a $30 statement credit for on my husband’s replacement sunglasses because they had a deal for Oakleys this month. The best part of having those 2 completely different cards is that rarely if ever do the bonus rewards overlap, therefore, there’s always something for us to take advantage on.

Cash back is a great way for our household to try and keep as much of our money as possible. We not only wait for things to go on sale and use coupons, but between ebates and our credit card rewards, we do our best to spend as little as possible.

De-clutter Challenge

are-you-up-for-the-challenge

In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.

Today’s post is dedicated to the de-clutter challenge.

What is it: This challenge requires a little bit of elbow grease, but besides needing some motivation and patience, it  is not very difficult. We tend to acquire a lot of things over the years and the less we move the more we accumulate. Given that spring is in full swing, I think this timing is appropriate. Regardless of your financial goals, I think anyone can benefit from this activity.

This is spring cleaning with a purpose! Make a pile of everything you have not used in 12 months and separate the pile into 2 more categories. One is what you think you will use in the near future (maybe you broke your arm this winter and that’s why you haven’t used your skis, but you’ll be done with rehab soon and will be hitting the slopes for sure in 2018). The other pile what you don’t foresee yourself using, or anything that you have 2 of (newly weds, this is where you will shine! When I got married, I suddenly ended up with 2, if not 3, of everything. Seriously… I have 2 microwaves & 3 toasters). Take very good pictures from various angles (the more valuable, the better the pictures should be) and post your items on various sites for sale. I use Facebook, Amazon and Letgo. While I generally don’t mind ebay, I do not like that their listings expire every 7 days, making me a slave to continuously have to go back and relist the items.

Outcome: Results will vary, but the more items you have and the better the quality, the higher your revenue will be.

Variations: If you’ve already done that, try the same challenge with unused furniture. This will work well if you live in a college town where young students cannot always afford new furniture.

Why I like it: This is a great way to hit two birds with one stone.

If you love cash and your messy garage has been driving you crazy, this is the challenge for you.

Boosting Savings: Auto-Save Challenge

are-you-up-for-the-challenge

In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.

Today’s post is dedicated to the Auto-Save Challenge.

What is it: You set up a set amount to be transferred from your checking to your savings account every month. I recommend a minimum of $100. It helps you not think about the act of saving, thus making it less painful and reducing any temptation you might have to spend the money as it will already be gone.

Outcome: The results will vary but you should at least have $1,200 at the end of the year.

Variations: Some employers that offer direct deposit give you the option of splitting your check into different bank accounts. I once worked somewhere I could split my check across 10 different accounts! If you think you might be tempted to cancel the automated transfers with your bank, doing it with your employer makes it more difficult. You’d have to contact HR, fill out a form and have to wait at least one pay period. If anyone has ever dealt with HR, you know that you’re more likely to give up on the whole thing out of sheer frustration, than you are to pursue the change. Maybe if you wanted to interrupt your savings for an impulse buy, you’ll have enough time to come to your sense.

Why I like it: It’s effortless. Not everyone enjoys managing finances the way I do and if you can find a technique that makes it easier, then it takes away any potential excuse you might have to not save. .

Boosting Savings Series: Coin Challenge

are-you-up-for-the-challenge

In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.

Today’s post is dedicated to the Coin Challenge, also known as the Jar Challenge.

What is is: Just as it sounds, you place any spare change you have in a jar for an entire year. You don’t touch it for any reason and at the end of the year, you roll it and deposit the cash into your bank account. Or get yourself a nice dinner. Your call.

Like the $5 challenge, this is also a more difficult one to achieve as it requires a great deal of cash use. I can’t imagine that it is as popular as the other challenges as we increasing automate our lives. However, it is a fun way to get kids to save as they don’t tend to have credit cards and Apple Pay.

Outcome: Varies.

Variations: Some people do a 5-gallon challenge where you fill up those big blue water cooler gallons. This works best if your whole family is uses cash and the gallon is communal as it will fill up quicker.

Why I like it: As a debit/credit card user and an avid online shopper, I don’t often think of tips and tricks that will benefit the cash fanatics. I like that I am able to find things that will be useful to them.

Boosting Savings: $5 Challenge

are-you-up-for-the-challenge

In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.

Today’s post is dedicated to the $5 challenge.

What is it: This challenge is a little bit more difficult than the others. As we become more and more technology-driven, we are increasingly becoming a cashless society. However some people among us still prefer cash. While that is not the case for me, there should still be a challenge for those who favor the old school way.

Every time you break a large bill, you take out all the $5 bills and you save them somewhere of your choosing for a year. For example, if you buy something for $13 and you broke a 20 to do it, you would get $7 back. Should you get back a 5 and two 1s, you would keep the $2 but save the $5 bill. Say you broke a $50 bill, and got $37 back in the form of a 20, three 5s and two 1s, you would save the $5 bills and keep the $22. Since this it could add up fast, I would recommend a bank account rather than running the risk of losing it by keeping the cash.

Outcome: The results will vary. The more 5s you get, the higher your savings.

Variations: If you’ve already done it, try the same challenge with a $10 bill as a booster.

Why I like it: It is not for the faint of heart. You’re savings are at the mercy of the cashier. If she’s out of 10s and gives you three 5s, the rules require that you save then entire $15s as opposed to having to save $5 if you got a 10 and a 5 back.

If you love cash, this is the challenge for you.