Dealing with Saver’s Fatigue May 31, 2011

Saver’s Fatigue?  Yeah, I made it up.  But basically, I’m getting sick of saving money.

I started automating my savings, transferring money monthly from my checking account to my savings account, back since at least 2007.  Possibly earlier than that.  My bank doesn’t provide my records beyond 2009.  And those were the days when savings accounts were making decent interest.  Do you remember when ING Direct had ridiculously good interest rates?  Man, those were the days.

Now, don’t get me wrong!  I’m really glad I’ve been stashing away money in my savings account these past 4 or 5 years.  I’ve been building up a pretty big emergency fund, and I don’t even miss the money.

Knowing I have money stashed away gives me peace of mind.  And it’s fun logging in and seeing it go up, even if most of the increase in my balance is from my auto-transfers and not from interest earned.

But now what?  I’ve got goals, sure.  But they’re big goals.  Buy a house.  Get married.  Have a few kids.  And I’m going to need money for all of those.  The only time I’ve taken money out of my savings account was when I decided to pay off my car loan 3 years early.  But what am I supposed to do in the meantime?  Just keep up with saving until I eventually have enough for each of these big events?  That’s frustrating and not rewarding at all in the short-term.

I know there are other things I can do with my money.  I could pay off my loans faster.  Maybe that’s a good idea, since I’m paying more in interest than I’m earning in interest.  The mathematical/logical part of me knows I should take a huge chunk of my savings and apply it to my loans.  The emotional part of me just feels safer having more money around, even if it’s costing me something.

I could also put my money into investments with higher returns.  I’m about halfway through “Get A Financial Life” (will have a review on that book soon!), and I now have started considering other ways to earn interest/dividends/etc. on the money I put into savings.  Will have to think on that more.

I have a lot of options for earning more, if I’m willing to take the risk.

But what about spending?

I realized the other day that having savings for non-emergencies is still a valid use of money.  I was getting anxious buying plane tickets and booking hotel rooms for my friends’ weddings.  But then I realized that I’m not going to end up on the streets just for going to their weddings.  My savings provides a cushion for the times when I’m going to spend a little extra.

It’s like AS Green said on her blog post:  “if you are being smart financially (paying off debt, saving for retirement, having an emergency fund) then you should also enjoy your hard earned money.”  She was also referring to Debt Ninja‘s post, where he asserted that “it’s important to enjoy our money”.  I’m not saying you should go buy fancy stuff all the time, or go on 10 vacations a year.  But the whole point of getting on a good financial track was so I wouldn’t have to worry about my future.

So.  I’m going to keep on saving.  I might actually create more “sub accounts” in my ING Direct account so I can assign goals or budgets to different pools of money.  But I’m going to spend a little, too.  I’m going to remind myself that I’m going to have to spend money sometimes.  And I’m going to enjoy that bright blue KitchenAid Stand Mixer I bought for myself when it was on extreme sale 🙂

So, what are you doing with your money?  Do you have specific goals in mind for that money?  And how do you fight off Saver’s Fatigue?

Personal Finance Confessions: I don’t have a “side hustle” April 28, 2011

If you’re into personal finance, then you probably know about the “side hustle”.  For those of you not in the know, the “side hustle” is freelance work outside of your regular 9-5 job.

I was reminded of my lack of a side hustle after reading Ramit Sethi‘s article, Forget Frugality:  Focus on Earning More.  His article pointed out that there are two different ways to “spend less than you earn”:  either spend less, or earn more.  He emphasized the benefits of increasing your earnings through a side business or freelance job.  Some commenters felt that Sethi’s advice was obvious, others were annoyed at his assumption that it’s easier to earn more money than to be more frugal and save money.  Still others pointed out that you can do both!  Earn more AND spend less!

And so here I am, side hustle-less.  And I’ve got plenty of excuses (valid or invalid, you decide)!  I’m pretty sure my employer doesn’t permit us to have additional jobs.  Conflict of interest or some such thing.  I suppose I could look into it to be certain.  I love my current job, so I wouldn’t want to do anything that takes away from that.  Plus, I’m not really sure what extra work I would do.

I don’t have a lot of freelance-friendly skills that I’m aware of.  I guess there are a lot of different things one could do as a side hustle.  J. Money of Budgets are Sexy has been featuring assorted opportunities through his Side Hustle Series.  The most feasible one might be Mystery Shopping.  It seems like it could be a lot of fun, and I could get rewarded for trying new stores/restaurants/etc.  Still, I don’t go shopping very often, so it might add extra stress trying to fit in shopping trips.  I don’t think I’ve got the artistic skills to sell things on Etsy.  Maybe I could sell my old stuff on Ebay?

If I were to do something else outside of work, I’d need a good plan.  And I’d probably have to do something that either is enjoyable or that pays well if I want to make having a side hustle (or two) worth it.  To be honest, I’d much rather avoid or cut back on expenses than commit to an extra job that’s not rewarding (either emotionally or financially).  I could save money (and also eat healthier) if I brought my lunch to work every day instead of depending on the cafeteria.  That’s a change right there that would help me spend less.  I value my free time more than the possible extra money I could be making “in my free time”.

I’d rather stick to one job that I love (i.e. my current career path) and focus on that, than be distracted by other pursuits.

So, what are your side hustles?  Do you find it worth it (in terms of time, money, happiness)?  Or would you rather work on spending less than on earning more?

Next step on the personal finance path October 27, 2010

So, now that I’ve paid off my car loan, it’s time to re-examine my personal finance goals.

First, a fun fact:  When you pay off your car loan they send you the title to your car.  So I got my title in the mail last Thursday!  Even funner fact:  my roommate got her title in the mail the same day!  What are the odds?

My next debt to tackle:  Student loans.

Changes I plan on making to my finances:

Every month, I had paid my car loan with an automatic transfer from my ING checking account.  I’d also transfer a slightly higher amount into that ING checking account every month.  So I’d be slowly stashing a little bit of extra money into savings.  Now that my loan is paid off, I’m going to set the monthly transfer to go to my Down Payment Fund instead.  This means I earn a little bit extra interest-wise.  Plus I’m still keeping the money out of my main spending account.

As is customary in personal finance, I’m now going to pay the amount I paid on my loan each month towards my student loans.

Overall, this means that a different account gets my monthly savings transfer, and a different account gets my monthly loan payment.

Technically, all the money will be leaving my main checking account now (just the way things are in my current system).  But this means I’m still putting money towards a down payment, while paying extra towards my student loans.

Is this the wrong approach?  Should I be working harder to just eliminate my student debt instead of saving for a house?

I just started a Down Payment Fund! November 6, 2009

Well, I decided to do something with my checking account balance.  Most personal finance people I know have the bare minimum in their checking accounts, keeping as much money as possible in interest bearing accounts/investments or using excess to pay off debts.  I’m a bit of a nervous nelly, so I keep more in checking than I need to.  I suppose if I watched all of my accounts very closely, I could figure out the minimum amount to keep in there.  But I think I just need to pare it down.  I’ve decided to do something about that.

I opened a “sub-account” with ING Direct.  To be honest, it’s not actually a sub-account at all, it’s a new account with the bank (and I already had a savings account with them).  But I hear a lot of people referring to them as sub-accounts.  Anyway, I transferred $1000 into my new account (named Down Payment!), and have set up monthly automatic contributions from my lame-o checking to my awesome down payment fund 🙂

Why a down payment fund?  Because I realized I have just been saving for the sake of saving, and if I have an actual “goal” in mind (i.e. buying a house), I might be more motivated to save.  And, well, my older, married sister just closed on a house today.  And that’s pretty darn exciting.  I know I don’t want to buy a house just yet, but I don’t want money (or lack thereof) to be the sole reason for my decision in the future.  Granted, I’ll probably need a pretty high goal amount.  If I want to put 20% down on houses around here (which are at least $250k), I’ll need to stash away $50k.  Well, it’s a start!

Yes, the interest rates on savings accounts aren’t what they used to be.  But just moving that money to an account that provides some interest, and getting into the habit of putting money towards that big goal in the distance is a good start.

(As always, if you’re interested in opening an account with ING Direct, let me know.  I do still have ING referrals. If you open an account with at least $250, you get an extra $25, and I get an extra $10. Free money! Leave me a comment or shoot me an email if you want one!)

What are you saving for? December 7, 2008

I was updating my net worth calculations, and it got me thinking:  What am I saving for?

My current financial goals are not very specific.  Many pf bloggers have noted their short and long-term goals, often using nifty status bars.  They’re saving for an emergency fund, or a new puppy, or a down payment.  And I realized that I’m just saving to be saving.  At least for the short term.

My goals are stepwise.  First goal is to have a positive net worth.   Then I want to eliminate all debts (currently $60k+ student loans and $17k+ car loan).  After that, I guess I’d be saving for a down payment.

I think I’m sometimes just saving for the future, but I have no idea what I’m going to use that money for in the future.  Will I be buying a house?  I hope so, assuming it’s the right time and place for it.  And if marriage and kids are in my future, will I be paying for the wedding?  I’ll need money to raise kids, and maybe consider putting money away for their college education.  But really, I think I’m just hoarding money, with the intent of having it around in case I find myself in need.  It’s almost as if all of my savings is one big Emergency Fund.  The money’s there if I need it, but I don’t really have a plan of ever using it.

I realize that I could probably use some of my savings to pay down my debts.  But I just feel safer having a larger emergency fund than having a smaller debt, even though, mathematically, it’s not the best choice.

Should I start creating a “fund” for everything?  My long-term financial goals seem so far away.  I feel like I’m just saving and avoiding spending, and hoping that it will all fall into place.