Graduated Learning: Life after College

I got my degree, I got a job…now what?

What a difference a year makes January 1, 2011

Filed under: Personal Finance — Stephanie @ 7:44 pm
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Happy New Year!  It’s hard to believe it’s 2011.  One of my resolutions is to get more involved in blogging:  blog more, get more involved in the personal finance blogging community, and maybe even transition to my own domain.  So I guess I should start this year on the right foot with a new post!
After reading this post at Paying Myself, I felt compelled to review my financial standing.  But, because I’m not completely anonymous (my “real life” friends read this blog), I decided to just post the change in each account, as opposed to what my actual assets and debts are.  I know that money is still an uncomfortable topic in social settings, so that’s my reasoning behind hiding some of the information.

So, let’s review:

Assets:

  • Liquid assets (checking and savings accounts):
    +$4319 (would have been higher but used a large amount…see Car Loan below)
  • Car (edmunds.com private sale value):
    -$1,090 (I know there’s a lot of debate over including cars in net worth calculations.  I initially included it to make myself feel better about my auto loan, to balance out the ugly dip in my net worth)

Debts:

  • Student Loans:
    Reduced  payoff balance by $7,127

Change in net worth since last year:  +$43,140

WOW.  I don’t think I ever stopped to realize how well things went this year.  Shoot.  I feel like I’m bragging now.

But looking at this, plus reviewing a lot of the comments on some of my older blog posts (like on I’m okay with being wrong sometimes, Personal Finance Stagnation, and Fighting Lifestyle Inflation), I realized I should be more aggressive with my student loan payoff.  Granted, the interest I’m paying on my student loans isn’t that much higher than the interest I’m earning off my savings accounts, but I think I have enough saved for emergencies, which is always goal 1 when you’re reviewing your finances.  My next main goal after paying off my debts is buying a house, so I do want to have money for a down payment.  But as Big City Beer Budget pointed out here, banks will be looking at your total financial picture when considering you for a mortgage, so the less debt I have, the better I’ll look, and the lower interest I might have to pay.

As you probably could tell from a lot of my posts, I’m always second-guessing myself when it comes to my personal finance priorities.  Reviewing my accounts, I also realized that while I save money at a consistent and steady pace (everything automated at reasonable amounts), I tend to pay debts in a more erratic rate.  With all of my student loans (and before, with my car loan), I paid the monthly bill, i.e. the minimum.  But every once in a while, I realize I should be paying off my loans faster, since paying only the minimum is never the path to getting out of debt.  So I pay a few thousand dollars towards my student loans (or in the case of my car loan, completely pay it off).  But then more months pass, and I’m back to just paying what the banks tell me to, since that’s the way the autopay is set up.

I have to make a plan to get rid of this debt.  I think maybe I should figure out if I can set up an extra or higher autopay for my student loans.  Plus I could also do another lump sum payment with that extra $4k that I built up in my cash accounts.  We’ll see.  I think I’ll try to keep my blog posts shorter in the future (another resolution?) but I tend to have so much to say once I start thinking about something!  Maybe I can start turning these into multiple posts 😛

Happy New Year!!

 

Fighting lifestyle inflation June 20, 2010

Filed under: Careers,Personal Finance — Stephanie @ 12:02 pm
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So I forgot to mention something back when it happened.  I got a raise!  Yeah, it somehow slipped my mind.  But I’m not just bragging about it.  I’ve got a personal finance lesson in here!

Remember when I modified my 401(k) contributions?  I upped my contribution by 1%.  A week or two later, I found out about my raise, and then a few more weeks later, my raise kicked in.  I noticed that, even though I increased my contribution, my take home pay went up with my raise.  I did a little math and figured out the difference between my newest paycheck amount and my old paycheck amount.  Since I get paid every other week, I set my ING Direct Savings account to remove that amount from my regular checking account every other week.  That way, I wouldn’t see the money in my checking account, so I’d be less inclined to spend it.  Plus, I’ve directed this money towards my “Down Payment Fund“, so that is an added bonus.  Only tens of thousands more, and I can afford a down payment! 😛

As I mentioned in my last post, I have been thinking of doing something else with money besides putting it into savings.  So, perhaps, I might redirect the “extra” money from my paycheck towards paying off my loans.  Or upping my 401(k) yet again.  Still figuring that stuff out, but I’ll update with another post soon about what I’ve figured out (or at least what I’m doing so far).

 

I’m okay with being wrong sometimes March 21, 2010

Filed under: Personal Finance — Stephanie @ 1:55 am
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This post was inspired by one of Debt Ninja‘s recent posts (on his awesomely named blog, Punch Debt in the Face).  He wrote about how he’d rather have some debt and more in savings than no debt and less savings.  Basically, he wasn’t comfortable using his savings to pay off his debts and join the magical realm of the debt-free.  Later, when Consumerist ran his post, there was quite a few nasty remarks about what he SHOULD be doing.

I’ve been struggling with this situation for a while:  accelerate my debt payments, using money in savings, thereby increasing my overall net worth (because my debts are at higher interest rates than what I am getting from savings accounts), or just keep building up savings while slowly paying off debts.  Mathematically speaking, I should be paying off my debts.  But in this economy, I’d rather have more savings, with manageable debt payments, than less savings and hoping nothing bad happens.  I’m a worrier.  That’s the problem.

Also, my debt interest rates are pretty darn low.  My student loans are at 3.25-3.5% APR, and my car loan is at 4.49%.  If I ended up paying all that off, but then fell on hard times, I really doubt I could get a personal loan or credit card with rates that low.  I also hate the idea of carrying a balance, or adding new loans (with the exception of a mortgage).  Paying off everything (or most of my debt, since my debt load is more than my liquid assets) would mean that I’d probably pay more in the long run.  It’s that “penny wise, pound foolish” idea.  Yes, I’d be cutting expenses even more (though as it is, I’m NOT a spender), but I’d rather have money in the bank than be completely debt free.

Don’t worry, as of now, I’m working towards eliminating my debt.  It’s a long and painful process.  But I also worry that I may be doing other things wrong.  Balancing all these financial priorities can get me a bit stressed.  Besides looking at the short-term (the savings vs. student/car loans), I know that I’ve got to save for retirement.  I max out my Roth IRA each year, and I contribute to my company’s 401(k) up to the 4% match, but I know I could be diverting more money to my retirement funds.  I could be contributing up to the max, $16,500.  But that’s a lot.  I wouldn’t have to max it out, but just start contributing more.  I checked this 401(k) Savings Calculator, and, even assuming no increase in salary, my retirement account total (at retirement age of 65) increases by more than $100k for every additional percentage point.  I’m still early in the game, so compounding is really in my favor on this one.

So am I changing my 401(k) elections?  Not yet.  Why?  I’m going to wait until my emergency fund hits its magical 2-years of expenses point.  Yes, that’s excessive.  But once it’s there, I promise to up my 401(k) contribution to 5%.  I’ve decided that.  You can hold me to it.  And perhaps we can set another milestone for when I increase my 401(k) contributions to 6, 7, 8% etc. (I welcome your ideas!)  And in the meantime, I’ll be paying off my debts.  And saving towards other goals.  And you can tell me that I should be paying off debts instead of having a 2-year emergency fund.  If you can provide a valid enough argument, you may convince me to change my ways.  But until then, I’m going to continue doing the “wrong” thing.

 

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

Filed under: Personal Finance — Stephanie @ 6:04 pm
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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!)

 

The good kind of impulse spending? February 23, 2009

Filed under: Personal Finance — Stephanie @ 10:55 pm
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I just set up two extra payments towards my student loans.  One to my ~$15k  at 4.5% loan, and one to my ~$44k at 4% loan.  And it was kind of on a whim.  I was visiting my mint page (as I do, perhaps too often) and saw the reminder to pay my student loan bill.  And technically, I don’t have to schedule payments, as I’ve signed up for their automatic bill pay setup (which I believe gives me a .25% interest rate deduction).  But I can still manually set up payments.

Why did I do this?  I think it was due in part to realizing that my savings account at ING is making pretty crummy interest(1.835% (1.85% APY)), compared to back in the heyday (only a few years ago!), though I will admit it’s still much better than the tiny rate I used to get at my brick and mortar bank.  And so my money is going to do a lot more for me (net-worth speaking) paying down my student loans than it would be sitting in savings.  And I actually didn’t move any money out of my savings account, I just took some out of my checking to pay these extra payments.  So I’m not saving any less.

So, while I feel a bit anxious about the fact that I’ve reduced my liquid assets by ~$1k, in the long term, my net worth will thank me.

In the meantime, I’m also wondering if I should start “shopping around” for better savings account interest rates (or signing up for a CD ladder, which I’m still not very familiar with).  I have heard good things about Emigrant Direct, but I’m not sure how much of an impact a slightly higher rate will have on my savings.  What are you doing to counteract this crumbling economy of ours?

 

Dear Fed, October 9, 2008

Filed under: Personal Finance — Stephanie @ 11:06 pm
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Couldn’t you have done this a week ago?

We all know that the economy is crumbling in front of our eyes.  And after that bailout bill and all these other attempts to fix the economy, the Fed and other countries are trying the old interest rate reduction trick again.  You are probably sick of me talking about this every time it happens.  As you may have noticed, we’ve got ING savings interest rates down to 2.75%, and checking interest rates down to 1.5%.  They’ve gotten on that pretty quickly!

But really, my issue with it being this week instead of last week (if it had to happen at all) is that my variable student loan interest rates are readjusted every quarter.  So, October 1st was the first day of the fourth quarter…which means I’m stuck with the same rate for my loans, but lower rates for my savings.  Yes, I complain about these things every time.  And I know that there are a lot of people worse off.  I’m just laying things out there.

That’s really all I’ve got for now.  I’ve been trying to follow a lot of what’s been going on in the financial world, but to be honest, it’s a bit depressing.  Though it’s odd when you think about how so many people are now finally thinking about living within their means and avoiding going into further debt.  Hooray living within your means!