Friday, April 6, 2018

Goal Update: Letting my Intuition Drive

As some of you might very well remember, I posted some goals in my 2018 Goals article.  I spoke a bit about my belief in Law of Attraction and how it has influenced my goals for this year.  I wanted to quickly check in to let you know how it's going so far.

Quick Recap:
You've probably heard that "birds of a feather flock together" or that you should "do unto others as you would have done onto you" or a plethora of phrases of the like.  Well, that's basically the Law of Attraction:  Like attracts like.  When we worry, we attract more things to worry about.  When we feel hopeful and positive, we find things creeping into our lives to feel hopeful and positive about.

Because of the believe in this universal law, I decided that I wanted to set a goal that was related to things I feel really great about.  Every time I make a move that relates to that goal, I want to increase that wonderful feeling.  If like attracts like, it seems as though more positive experiences should be continually coming into my experience by virtue of the fact that I am continually take inspired actions that make me feel really good about a goal that I also have wonderful feelings about.  This is what I call, positive momentum.

The Money Saving Goal:
A few days after I posted those goals, I woke up one morning with a number stuck in my head (for what appeared to be no apparent reason).  I had a feeling that my intuition was guiding me to the dollar amount I should be saving.  This number is nearly four times the amount that I had ever saved in a year before, so to say I had a difficult time staving off my own resistance to it is a grand understatement.  For the next couple of days, I worked on lowering that resistance.  Whenever the question "How" popped into my mind, I would more or less push it back out. "Bad Personal Finance Lady! You should always be concerned about the 'How?' shouldn't you?"  Well, maybe not.  I've already educated myself about virtually every strategy under the sun.  Is it really necessary to worry and stress about each move I make? Or might it be a better idea to trust in all of my knowledge and give my head (AKA my ego) a bit of a break and let my intuition take over for a while. What will happen?  Will my intuition somehow fail to tap into the years of financial knowledge I've build up?  I somehow doubt it, but let's find out.

What happened in January:
I told my partner about this "goal" of mine which basically translates into "goal of ours," and to my surprise, she didn't really have much reaction.  She more or less agreed with me and wanted to know how this would alter the monthly plan we already had in place.  The answer is that it doesn't, not really anyway.  Rather than rapidly paying something down, we are literally going to be dumping everything into one of our savings buckets, which I will monitor to survey it's progress.

Over the next few days, I kept noticing an urge to take a particular action.  It was incredibly strong, and made me feel wonderful every time I thought of it: raising my retirement contribution.  So, I hopped online, logged into my retirement account and raised my Roth 401K contribution by 3%.  The reason I chose 3% was because I didn't want it to feel like my paycheck suddenly changed by a lot (I use this trick frequently).  Ironically, this change kicked in right  as my paycheck "got a little larger" from the new tax plan. I basically had intuitively taken the amount "extra" I would have seen in my paycheck, and moved it to my retirement savings!  Win-win!

We also created a new savings bucket (savings account) and gave it a title that made us both feel super happy when we looked at it.  The goal in doing this was to make ourselves derive as much pleasure from transferring money into this account as possible.  We should all hope to derive just as much pleasure from saving money as many do from spending it.

I also created a savings countdown to hang on our wall.  The idea is to take the number of dollars you want to save, and break it into smaller savings goals that are represented by one digit blown up on a full size sheet of paper, and hung on your wall.

  • For example, if you're currently working on a $1000 savings goal, perhaps you will break that into 10 mini goals of $100 each. Print a piece of paper with the number 1 enlarged on it, then the number 2, then 3, and so on until you reach the number 10.  Stack the papers so that the number 1 is on the bottom, and 10 is on the top.  Hang it on the wall this way.  Make your deposits to savings as you would normally do.  Once you've saved that first hundred, you take of that number 10 paper, leaving only the 9 showing.  This is because you only have to save this $100 nine more times to reach your goal.  Once you save another hundred, you remove the 9 paper, you only have to do this 8 more times...
This strategy can be used on a savings goal of $1000, $10,000, or $100,000.  You can make each singular digit on each piece of paper represent $100, $1000, or any number you want.  The point is to literally watch the countdown and enjoy the anticipation of reaching 1, and then finally removing that number too.  I may also be failing to mention one additional, but important part...  What to do with the piece of paper once you remove it.  Well, in my house, we've torn it; we've crumbled it; we've thrown it across the room.  Anything that makes us happy in the moment really.  These goals are just as much about building emotional momentum as anything really!

Each payday, I've come home gleefully and announced that it was "Paper-tearing DAY!"  Then we both hop on our apps and quickly decide just how much we can eek out of our checking accounts and into our savings accounts, and let the transferring, and paper-tearing begin!

When we decided to go with this goal, we decided we'd aim to achieve it by the end of 2018.  By January 31st, we had accomplished 12.3% of our total savings goal!

Friday, March 30, 2018

"Buckets" of Money

While our current savings goal is one larger dollar amount, the truth is that we save our money into clearly defined buckets so that we keep ourselves organized in terms of the intended purpose of that money.  At this moment, those "buckets" don't actually have their own goals attached to them, so each month in monitoring our progress toward our goal, I total up the transfers that go into each "bucket."

These "buckets" are separate savings accounts, which we name things related to their function, with an emphasis on creating names that make us feel good emotionally (more of that creating positive momentum business I keep talking about).  Another reason why doing this makes me really happy is because I feel like I am supporting my own future desires.  Perhaps the best way to explain is to simply list the names of some of our buckets:

  • Holiday & Taxes
  • Vacation
  • Future
  • Freedom Fund (We each have our own separate version of this long term savings.)
  • Rental Savings
  • Roth 401K (We each have our own.)
  • Roth IRA (We each have our own.)
It makes me happy to know that  when the bill from the accountant comes in, it's payment is a quick transfer away.  I also like knowing that when I see a great deal on airfare to somewhere we've been eyeing, we can jump on it because they cash has already been stashed!  Our rental income direct deposits into the rental savings, and the mortgage comes directly out of it, leaving behind savings that can be used toward any repair or improvement needed.  All of the funds from our side gigs are deposited directly into our individual Freedom Fund accounts, long term savings; Future is where our long term joint savings lives.  Roth 401k and Roth IRA are both retirement accounts.  If I were going to organize it into short, medium, and long term oriented accounts, it might look more like this:

Short Term:
  • Holiday & Taxes
  • Vacation
Medium:
  • Rental Savings
Long Term:
  • Future
  • Freedom Funds (hers and mine)
Extra Long Term:
  • Roth 401Ks (both of ours)
  • Roth IRAs (both of ours)
This sort of system may or may not feel right for you, but in my life, I find that it feels really good to not have to worry about whether or not I am hurting my long term savings by pulling money our for a "shorter term" need.  I plan on going on vacation.  I would feel terrible if I pulled money out of "Future" or "Freedom Fund" to do so, but if the money is sitting there in "Vacation," I feel great about it.  Perhaps this won't matter very much to some people because you could argue that the numbers will come out the same, but to me, the emotional impact and momentum is vastly different.

Do you organize your money into various buckets?  Do you prefer to keep everything in one place?

Monday, February 19, 2018

Landlording & Investing: Circle of Competence

Warren Buffet and Charlie Munger are among the world's best investors.   As are all of the panelists on the popular series Shark Tank.  There is one thing they all have in common when it comes to their investing practices.

They do not invest outside their circle of competence.

In fact, determining your circle of competence is the first step toward becoming a great investor.  What exactly does that mean?  Simple: Determine what you you actually understand or are capable of understanding.  Warren Buffet doesn't invest in technology.  It's just one of those things that are further outside the realm of his understanding than he cares for when it comes to investing.  The folks on Shark Tank frequently claim the same thing.  They say things like "I'm sorry, this is just not an industry that I'm comfortable with, and I can't help you."  If they aren't putting their money in things they don't understand, then why should you?

It's funny.  Today, people are either holding their money in savings accounts that earn them next to nothing, or they throw their money into investments that they don't really understand.  These both sound like fools errands to me.

Right now, my biggest investment is a rental property in Portland, Oregon.  I lived in Portland for many years.  I understand the real estate market there very well.  I have rented there; I have owned there; I have lived there.  I understand how much houses sell for, rent for..  I know which neighborhoods are good, bad, and ugly.  Portland real estate is definitely within my circle of competence.  I would definitely place another investment there if the other numbers made sense, because I am confident in my ability to actually determine whether or not the numbers make sense.  Unfortunately, right now, I don't really think the numbers in Portland real estate make sense for investing purposes (at least not for me; you should make your own determination).

"Circle of Competence" is one of the primary reasons real estate investors are so frequently only really looking into real estate in the town/city where they live.  It makes sense, right?  They live there, and they understand the basic real estate environment.  On one hand, this is pretty smart.  You definitely shouldn't invest in things you don't understand (Hello crash of 2008!).  On the other hand, the numbers have to make sense as well.  I know, I'm not actually telling you what numbers to look at yet, but I don't want this post to become a novel on its own, so we'll do that another time.  Regardless,  my point is that first, you need to understand what's in your circle of competence.  Then, you need to determine what the numbers need to look like to make sense before you pull the trigger.  Then, you wait.  Very little of an investor's time is spent actually making deals.  Most of it is involved in self-education and waiting.  I haven't pulled the trigger on an investment in some time...

If you're looking to determine your own circle of competence start by considering what businesses or industries do you frequent?  Do you understand how they work, or could you?  What cities or towns to you understand well enough in terms of real estate?  Once you have a list, use your smart phone to start following the stocks of companies that fit within your sphere.  Perhaps, you sign up for some real estate notifications so that you can keep up with the market in the cities/towns you understand.    You'll have more research to do, but this is a really great start.

I have determined my Circle of Competence in both real estate and the stock market.  Now, I am researching and waiting.  The brilliant part of this is that the research is helping to expand my Circle of Competence, and when the numbers look right on a piece of real estate or a stock I'm interested in, I will be ready to move!

Sunday, February 18, 2018

Make Every Dollar Count

Every single minute I spend working for money is a minute I am not doing something else.   I really wanted to say this to you all because that opening line represents the basis of my views on money and personal finance.  It also influences the majority of my financial choices and money moves.

Even if you like what you do for a living, there are probably times you'd like to be doing something else.  Maybe you'd prefer to work part-time, work via remote, or not work at all.  No judgement.  Just honest observations regarding the nature of work.  So, every minute you spend at your 9-5 is a minute you are not spending with your family, reading, meditating, or otherwise doing something else.  We're all losing these minutes of our lives, and it's pretty scary when you put it into those terms.  Some of these minutes are being traded for dollars.  Since I'm not being given more minutes, I had better make the dollars I'm getting count!

Every time I buy something, I think about trading minutes for it.  I almost bought gum the other day, but I stopped.  The truth is that even though gum is pretty cheap, I don't really like gum more than I like my minutes, and I don't actually need the gum.  So, it stayed in the store.

Each time I get a paycheck, I feel a tremendous sense of urgency to make a very smart choice with it, because it represents a lot of my minutes, minutes I'm not actually getting back.  The less debt I have, the less minutes I have to trade someone for dollars each month...AND if I'm really smart with my dollars, I can invest them in a way that will create more dollars without me trading any additional minutes to get them.  So, my goal is to need a very minimal number of dollars on a monthly basis.  My other goal is to use my dollars to create enough of a passive income stream to allow me to stop trading my precious minutes for dollars.

Thank you for going down the philosophical rabbit hole with me today.  If you've ever thought of money in this way,  or it made you consider your own philosophy of money, feel free to leave a comment.

Sunday, January 21, 2018

Why you should FREEZE your Credit now!

Earlier this fall news broke of a data breach at credit reporting giant Equifax.  It has been estimated that some 143 million consumers may have been impacted by this epic security failure:  social security numbers, addresses, credit card information, all potentially leaked.  Consumers were then asked to go to a special website set up by Equifax to let them know whether or not they "may have been" impacted by the incident.

Note to consumer:  You were probably impacted.

I don't care what their website says.  If 143 million people were impacted, why would I assume I wouldn't be?  It would be a little naive, wouldn't it? I mean, let's think about it?  The same agency that allowed my information to be leaked in the first place is asking me to trust that they have a handle on knowing exactly who was impacted and to what extent?  Furthermore, I am supposed to blindly trust that they have a grip on cleaning up the aftermath?  Sorry Equifax (not sorry)!

Just out of curiosity, I did use their system to check whether or not my information "might be" at risk.  I wasn't even successful at finding out.  Their system must have been so busy that it couldn't handle all of the consumer traffic it was getting.  So, I didn't actually get an answer.

I was in the middle of a mortgage refi at the time, so my credit was definitely being utilized.  A few weeks down the road, I received a letter from AT&T stating they were "helping with the Equifax investigation" (though they hadn't been hacked themselves), and that I "might have" been impacted.

Gee, tell me something I don't already know!  If 143 MILLION consumers were impacted, I already know I "might have" been as well.

Equifax has oh so generously offered free services to help with the clean up:  credit monitoring services, etc.  If you have credit monitoring, you can use it to lock and unlock your report with the agency.  Sounds great, right?  Not so fast!  While the credit bureaus are pushing the credit lock, I wouldn't be too fast to jump on board.

First off, a credit lock and a credit freeze look like the same thing in basic function.  They make your credit report inaccessible to anyone trying to get credit using your information because you basically locked/froze your report.

A credit freeze is a tool that is guaranteed by the law (yes, the government is involved, so this gives you some further protection.  A credit lock is not guaranteed by the government or law in any way.  It is an agreement between you and the credit bureau.  Which do you trust more:  the law or the credit bureau that did a poor job of handling your personal information in the first place?  Additionally, if you opt for a credit lock, what is that bureau going to put in the fine print for you to agree to?  Did they leave a clause that allows them to change the terms of the agreement on you whenever they see fit?  Are they asking you to agree that you will not hold them responsible (legally) if someone happens to steal your identity?  Do you see where I am going with this?

A credit freeze can seem like a bit of a pain.  You have to freeze it with each of the three bureaus separately, and there may be a fee at each of them.  Those fees are regulated by individual states and are generally fairly inexpensive.  But honestly, does it really matter?  If someone said, "Hey, you can either pay ten bucks or have your credit stolen." Would you actually be worried about the ten bucks?

When you initiate a credit freeze you will get a PIN.  You have to use the PIN in order to lift a freeze when that time comes.  There might also be a fee each time you freeze and unfreeze your credit report.  All of these things might seem unpleasant, but having your credit stolen seems entirely more unpleasant as far as I'm concerned.

Listen, I can't tell you what YOU should do, but I will tell you what I did.

I don't like the credit lock.  I have more faith in the legal status of the credit freeze.  So, I froze my credit at all three bureaus (only after pulling and carefully checking all three reports for free).  In my opinion, it is too dangerous to leave it open at this point.  Too many numbers have been compromised, and I hate to sound paranoid, but it seems more like a matter of "when" someone tries to gain access rather than "if."  I'm not playing around when it comes to my financial future.

As a side note:  I wasn't charged a fee when I performed the freeze.  That being said, I don't know the details of this being free or how long that offer might be available, but I thought it worthy of mention.

Have you used a credit freeze?  Do you plan to use one?  Feel free to share your perspective in the comments below.

Thursday, January 11, 2018

Pet Insurance


Confession Time:  My cat has health insurance.  In fact, Petunia's health insurance even covers some of her dental.  Human plans aren't even that good!  If that isn't confirmation that I've finally joined the middle class, I don't know what is!  But seriously, all joking aside, I think this is a topic worth bringing to your attention.

This past summer, we re-established Petunia's Veterinary Care.  When we lived on the West Coast, we were very well established with a veterinary hospital system, but hadn't done such a great job of getting reacquainted in New York.  Eventually, we found ourselves in a situation where we both had full-time incomes and health insurance.  That being said, it seemed to be the responsible thing to do to make sure Petunia was also being taken care of.

It turned out that the same veterinary hospital system we were using on the West Coast, exists here in NY as well.  Major score!  We called them up immediately and made an appointment.  We definitely felt ahead of the game because they had all of her previous records already in their computers.

We signed Petunia up for a health insurance plan that was a couple of steps above the basic plan.  We did this knowing that there were certain things included in the Optimum Plan that corresponded with her needs that were not included in the more basic versions of the plan.  We pay $40 per month for her insurance plan.  I have to be honest, I really hate having monthly obligations.  I avoid them at all costs.  The less bills the better as far as I'm concerned.  However, there is something I hate entirely more than monthly bills, and that's unexpected, astonishingly large bills...  Petunia's wellness plan is definitely saving us from that!  In August of 2017, we actually saved 61% on her veterinary bill because of her insurance plan.  We just took her back this month, and saved 53% on her veterinary bill.  Even when I added up the dollars saved, and compared it to the dollars we've spent on her services and monthly fees this year, we've still saved 36% this year on her medical expenses by having the insurance plan.  That's a substantial savings! Not to mention, let's be honest. She's getting much better care with insurance then she should without it.  Since she has insurance, we aren't hesitant about bringing her in to see the Vet.  She has unlimited office visits on her plan.  The regular fee for an office visit at her hospital is $80.  We pay $0.  Recently, she got an ear swab.  That typically comes with a $50 price tag.  We paid $0.  Comprehensive feline exams cost $45 typically; we spent $0.  I can go on and on about the things we didn't have to pay for this year, but I think you get the picture.

It's important to me to be a responsible pet owner, and that means providing my pet with basic veterinary care.  That care comes at a cost.  There's no way to eliminate that cost, but I've found that I can minimize its impact on my financial goals by keeping Petunia enrolled in an insurance plan that meets her needs, and eliminates fees for certain basic upkeep.

Do you use pet insurance?  Has it saved you money?  Would you recommend it to others?  Leave your thoughts in the comments below.

Thursday, January 4, 2018

Review: Inbox Dollars

I have to admit, I'm a sucker for anything that allows me to earn money on the side.  I especially love anything that's super easy, and doesn't cost me a ton of time.  I love reading those articles people put out about "20 Fabulous Things" that will allow me to earn money in my pajamas.  Several such articles have sited Inbox Dollars as being a terrific tool to earn extra money.  So, I decided to try it.

Inbox Dollars is a company that pays cash rewards to individuals for completing certain activities.  Those activities include viewing email advertisements, playing games, taking surveys, watching videos, among others.  They give you $5 just to sign up. So, I downloaded the app on my phone so I could easily do this while in transit.

I figured this would be a great way to make money and kill time on my commute home.  I take two buses, and it can get pretty dull.  I thought if I could keep myself entertained, and make a little cash it was an all-around win.   Most articles I had read told me that I could make a couple hundred bucks a month doing this. So, I started off by checking all of the paid emails and taking surveys.  I made two cents per email.   Surveys paid various amounts.  Some a dollar, others a quarter or a nickel.  The app was pretty handy at telling me how many minutes each survey would take, so I would click on one that was listed and go for it.  I started to notice that I would have to answer a lot of questions at the beginning of the survey, only to find out that I wasn't even qualified to take it.  Then the app would send me back to the list to choose another.  Once I would finally find a survey that I was qualified for, it was relatively smooth sailing, though the questions at the beginning ate up a lot of time.  The survey itself might only take ten minutes, but the questions at the beginning to determine my qualifications would take another ten.  On my forty minute commute, I might make a quarter.  Compared to the $45 dollars an hour I make at most of my side gigs, this quarter wasn't very enticing.

Once my total earnings hit $10, I decided to cash out.  That was when I learned that I couldn't cash out until I hit $30.  I was disappointed, to say the least.  So, I kept going.  It didn't take long before I grew tired of the surveys.  I tried out the video watching, but it took a lot of videos to accrue any cash, and it was eating up a lot of my cell phone data, so I fizzled out on doing that.  At this point, I basically just click on the emails because it's really easy.

I finally got to $30, and am eligible to cash out.  There will be a $3 processing fee in order to cash out, unless I accept a "special offer" to wait another 30 days and attempt to get to $40.  If I make it to $40 in 30 days, they'll waive the fee.  Since it's taken me about a year and a half to make $30 on Inbox Dollars, I doubt I will make it to $40 on time.

So, I will probably just cash out, accept the processing fee, and throw in the towel.  Perhaps you can make decent money on Inbox Dollars, but I wasn't highly successful.  Perhaps I am not patient enough for the surveys, or perhaps I just prefer to spend my time doing something else.