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Archive for May, 2010

my saving goals this year

May 28th, 2010 at 11:05 pm

I've been writing a lot about helping my family lately but today I want to plan my own savings a little. I got paid today! Smile 401k withdrawals didn't start yet ... I guess that will start in July.

Anyway, I'm compressing the $16,500 allowed 401k contribution into 6 months. Starting in July. July is when I'll eligible for the 401k since I'll have been a full-time employee for the required 2 months.

Maxing out the 401k this year was an easy choice: the IRS allows it, my employer allows it, my spending history allows it, and (best of all) it will lower my taxable income significantly. I love that! I'm in a much higher tax bracket now than I expect to be in when I retire.

Depending on how my taxes look at the end of the year, I *might* also be able to max out to my SEP-IRA from my contractor job. That would lower my taxable income too! 2010 might be a very good tax year if I can focus on these retirement savings. Smile

I might be adding almost $20,000 to my retirement savings this year! $16,500 minimum though.

Next year I'm spreading out the 401k contribution over 12 months so I can just leave it alone until the maximum allowed contribution changes.

This paycheck that I got today - about 1/3 of it is going to pay my June rent, and the rest will go into a 6-month CD. The CD will (hopefully) still be there at the end of the year so I can use it for the SEP-IRA contribution. But if some emergency comes up between now and then, I can still withdraw it. The CD penalty is a good incentive for me to leave it alone except for a true emergency.

I reached a little bit of a rhythm

May 28th, 2010 at 03:07 am

Work; sleep; friends; daydream; rest.
Tea at the end of every day.
Mondays: I ride my bike. I pick up my veggie box.
Tuesdays: I have a friend over to help me eat it.
Fridays: "me" night.
Saturday morning: farmer's market, bacon, cheese, fruit. thrift store.
Strawberries are in season right now...
Saturday afternoons: berry feasting and a fruit-induced sugar coma.
Napping until I go to see my best friend.

A strange observation about my spending in May

May 27th, 2010 at 03:34 am

I made a rather strange observation this month.

In May I gave $250 each to my brother and sister. (I'm helping my brother with debt, and helping my sister save for college.) When I add that $500 to the total that I spent in May, I'm on track to spend less in May than I have in each of the previous 5 months.

So basically I started spending less overall when I started helping my family.

I was ruminating on that oddity today. I think I know why it happened. Helping my family gives me focus.

Again and again this month, I found myself contemplating a $50 something or other that I would normally buy. But instead my thoughts wandered to my sister going to college, or my brother travelling around the world once his debt is gone. I started to wonder if really want anything any more. What I really want is freedom and choices for the people I love. What I really want is connecting to the people I love. I already have enough on hand to make food, and be warm, and find love, and relax with a cup of tea at the end of a long day. What more do I want? I want my sister to have a choice about what she does next - that's what I want.

I'm also starting to appreciate the pace of buying used things. I've been discovering again and again how much I like waiting. Eventually the object of my desire shows up at the thrift store. I like to find it there waiting for me, one of a kind, at the end of a month-long search. I love the atmosphere it creates in my home: I'm at the end of all of my searching. I'm there.

Daily budget check-in

May 21st, 2010 at 03:03 am

I'm doing good on my budget so far this month! I'm about $120 "ahead." That means: if I were to hypothetically spend $120 right now, then I would have used up exactly 2/3 of my spending money for the month, and I'm also exactly 2/3 through the month.

So that's pretty good ... especially since I don't have anything in mind that I want to spend that $120 on just yet. I just treated myself to some gourmet tea a few days ago so I don't feel the need to treat myself again at the moment! (The tea is so good btw ... I've been drinking it all evening ... I love it!)

I use that little budget chart at mint.com to help me visualize this... it helps so much. I check it daily. It helps me make decisions about fun purchases - "yay" or "nay" or "later."

If I'm X % through the current month and I've spent more than X % of my budget for the month, then I put a spending freeze on fun, for a few days until I'm "ahead" again.

If I'm contemplating a fun purchase and it would put me from "ahead" to "behind" on my budget, then I wait a few days until I'm ahead enough to cover it.

And of course if I really want something and I'm ahead enough to cover the purchase then I go for it. Smile

On a different note, I noticed the stock market has been down a lot lately. I hope it stays down long enough for me to make my 1st 401K contribution!!!

I've been feeling some impatience getting paid twice a month instead of weekly. Getting paid weekly gave me decisions to make once a week - how to allocate that paycheck. Getting paid twice a month, with all of my savings goals set up as automatic withdrawals, and taxes withheld automatically - yikes, it feels like I'm twiddling my thumbs wanting to decide something about my budget and there's nothing to decide. I like being manually involved in budgeting and making decisions manually. I have to get used to this autopilot thing.

My starting point

May 20th, 2010 at 03:46 am

I just paid off the last of my debt (laptop).

I'm caught up on my taxes (I think). In December I'll review that in more detail.

My other savings goals for this year are:
- Max out my retirement savings ($16,500 to 401K).
- Save $5000 in cash.
- Help my brother & sister $250/month for each of them.

I recently switched from 1099 contractor to full-time employee status. I have to find a different rhythm in my budgeting style because of that. It's a big adjustment for me.

As a contractor I had no taxes withheld, paid all of my taxes manually every quarter, and had complete manual control over all of my savings goals and the timing. I was snowballing all of my savings goals like a monster snow beast with 40-ton snowballs! 2/3 of my paycheck went to one goal at a time - first taxes, then debt, then savings, basically dividing the year into 3 phases where I attacked one goal at a time with the full force of 2/3 of my paycheck. It felt so fast and so satisfying.

Now - every paycheck has a constant slow drain in multiple directions for every goal. Taxes withheld automatically, 401k withheld automatically ... and the amount left over is too small to do my other goals in one fell swoop ... so I have to do my other goals in small monthly installments too. It feels really weird.

Definitely feels like a loss of momentum even though at the end of it I'll have saved the same amount.

I'll probably be used to it in a month or two though ... I just need to give it some time.

My 401K withdrawals start either June 1 or July 1 ... I forget which. Since I started my full-time job in the middle of the year, I'm compressing the maximum allowed 2010 contribution into 6 months. So that'll be my last sweet brush with the snowball method for a while, sadly. Next year I'll spread it out over the full 12 months.