Jaine's Personal Finance Blog

Remember that $300 wig I wanted to buy a few months ago? I had the urge to go out at night by myself, incognito, to music shows. Well, I've been doing just that - minus the wig. Almost every weekend recently, and I love it. I didn't need a $300 wig. I just showed up with my bad self, looking the way I look, and I did what I wanted to do.

I've settled into a very mellow rhythm the past few months, buying used things instead of new. It's more than a money-saving strategy to me; it's a philosophy. It's about contentment for myself, confidence in myself, and respect for the environment.

I felt odd walking through the mall yesterday, to pick up the present that everyone voted to get for my boss. New things have taken on an aura of disappointment and sadness and insecurity. I notice it more and more lately. Maybe it's a little strange. I came home from the mall feeling inadequate for the first time in months.

Old things have an aura of authenticity and contentment and patience and respect; I like to surround myself with those feelings.

This "Buy Used" challenge is helping me so much.

Here are some purchases I've passed up on so far this month, mostly out of laziness, because I wasn't motivated enough to track down a used version of it:

Wig $300
Teapot $40
Vermicomposter $90

The great thing about this challenge is that it allows me to continue saving money even when I'm ahead on my budget. For example, right now mint.com says I'm $240 ahead on my budget this month. (That means: if I were to spend $240 right now, the percent spent in my food/gas/fun category would match the percent of time passed so far this month.) If I weren't on this challenge, that $240 would be spent in a heartbeat on whatever urge happens to come up.

But even though I have $240 "available" for spending, I still don't plan to spend it right now. Why? Because spending it would involve effort. Research. Googling. Car trips to obscure places. I'd rather just relax with a nice cup of tea and enjoy my Sunday.

Buying Used - the best way for lazy people to save money! (I'm kidding of course ... by "lazy" I just mean people who value their time.)

This is a graph of my food spending - including groceries and restaurants - since January 2010. Huge improvement as you can see.



January and February were high because I was buying all of my groceries at Whole Foods - never again.

March was actually a really good month. I switched to farmer's markets and CSA instead of Whole Foods. March is high because it includes the $450 up-front cost of my CSA share, which gives me organic vegetables once a week for the entire summer and fall.

April was a good month for groceries but I was eating out pretty frequently (and my favorite restaurants are usually about $40 per person per meal including tip)

May and June I think I did great. I ate out once or twice a month and continued to buy 90% of my food from local farmers.

Even though I'm halfway through June, I actually don't need to spend anything else on food this month, and I probably don't need to spend anything on food well into July either - I have a freezer full of locally raised, grass-fed meat, and my weekly box of organic vegetables is paid for. Meat and vegetables are the base of the food pyramid for the grain-free, sugar-free eating plan that I'm following, so I'm all set for quite some time. (I'm following the Paleo Diet ... it has done wonders for my health and energy level, and it my completely cured my acne, but that's a story for another day!)

Anyway, I don't need to buy food for a while now. I expect food spending in July to be even lower since I already have so much food on hand.

I also have a variety of nice loose-leaf tea for work and home (which I include in my food budget because it's edible!) I think my tea stash should last a few weeks at least, although I'll probably replenish it in July.

I'm pretty happy with this improvement!

So I have $3000 in cash in my savings account at ING Direct now... a 1-month emergency fund.

To be honest, this $3000 will probably sit there until the end of 2010, and then it'll morph into an SEP-IRA contribution when I do my taxes. Optimizing my taxes is definitely a higher priority for me right now compared to stockpiling cash. I do that a lot ... if I have money lying around, and if it would lower my taxes for it to lie around in a different account, then I move it. Easy decision. Between the 401K and SEP-IRA, my tax bill will be about $6000-$7000 lower than it would be if I were stockpiling cash.

Also, I cancelled the future monthly payments to my brother. I felt so much uncertainty about whether or not I was helping him or making things worse. I wasn't even sure how to tell him "you're welcome" last month when he thanked me.

I do sometimes.

At the rate I'm currently saving for retirement, it's as if I've met the love of my life and we're lying in bed with our toes intertwined. You know how that is. Pillow-talking about sailing around the world when we're 50.

But in reality I have no such dream.

I'm totally, utterly, fundamentally single ... and more than that. I love my job. I love working. I love fixing things and solving problems, putting out fires and feeling respected.

If I picture myself retiring anytime in the foreseeable future, I can't help feeling like it would be boring and lonely.

The only savings goal I feel really excited about is helping my sister pay for college. That gives me a warm fuzzy.

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! 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.

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.

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.

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.

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.

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.

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.