Oh, the Bonus Money Dilemma

Was running around the lake with the Guy the other day when he brought up the subject of “what he was going to buy with his bonus money.” Oh, what luxury. Oh, what eye rolling. The Guy makes twice as much money as I do. He owns his place (where I also live, at a significantly subsidized rate), has a reasonable mortgage, and we live a modest lifestyle (thanks mostly to my influence).

Clearly, his question galled me, just a bit. But when I asked him all of the basic saving questions, he had decent answers, and it was clear that he felt pretty safe in his financial condition, despite the chaos around us. He has a four month emergency fund, he has some $60K in investments towards future goals of either starting a business and/or downpayment for a house. Basically he has a remote idea of those goals, and a remote idea of what they could cost, but those are not itemized and he’s not tracking his progress toward them, because: 1) he feels comfortable and 2) these goals are far off.

After reflecting – long after we completed our run – the whole episode just reinforced to me the importance and need for having a detailed financial plan and continually checking-in on where you are. Even though it can be frustrating and discouraging at times, it helps to guide your decision-making in almost every situation, from should I go out for dinner tonight to when should I retire… from where should I put my next $1 to where should I put my next $15,000.

Our whole discussion if of course, quite illustrative of lifestyle inflation as well. The Guy was in part distressed because everyone else around him was making a big purchase or at least saving towards a big purchase, and he has no need for any big purchases at the moment! What a world we live in!

It also made me realize how excited I will be to reset my financial goals post-B-school – when I actually have a higher income and more resources, and when the Guy and I will likely be combining our finances to work towards these things together!

End of Employment Money Wrap-Up

As I wrap up at my current employer and get ready to head back to school, I’m having to learn a lot about the loose ends of my finances as well. I’m rolling over my current 401(k) into a Traditional IRA account – which will be taking a considerable hit, given that I’m giving up the unvested portion (which is currently $5,068) – and thus setting the foundation for all future company retirement plans that I might begin and rollover.

Also, I had 10 random shares of company stocks that were given to me as an award. (As of today, worth somewhere between $580 - $600). I’ve had to go through multiple calls with company HR representatives to have them tell me that I need to contact the designated Shareholder Services company to actually set up an account before I could do anything else. Conceivably, because I don’t have a broker I could hand them off to? Anyway, all of this made me realize just how easy it is to have money lost out there in the ether.

I’m very tempted to cash out the 10 shares completely, so that:
#1) I won’t have random unaccounted company shares hanging out there
#2) the stock is pretty high vs. where we’ve been tracking the past few years, so I’m not convinced keeping my money there is going to provide some hefty return, and
#3) so that I can partially fund the purchase of a new computer for business school without jacking my student loan bill any higher.

All very tempting rationales…. More to come on this!

Does it Ever End? More July Goals

When I think about the personal value I get out of this blog and the personal drive and energy it adds to my life, one of the most important things is public goal-setting. I realize they’ve taken up a larger share of the posts….. but so, be it. One of my best tactics of late is to get more aggressive about setting goals for different time horizons. So in addition to my main savings goal from yesterday, here are my new July Goals.

Daily Goals
Read a minimum of 5 articles in the WSJ (or equivalent) each day.

Weekly Goals (4 of these, 1 for each week)
Read and log notes about Portuguese wines.
Finish reading all of my library books and return them.
Re-read my novel and stories and write a planned writing schedule for August.
Pick up boxes and pack up all books; also make a total packing list.

Monthly Goals
Complete the rest of my 5K Training schedule and find a race in Palo Alto to run.
Complete all B-School prep required (mainly Accounting and Finance workbooks).

Reflecting back on June

NetWorth up to $43,971! +4% from last month, on the strength of my company stock price, and tiny bumps in my retirement fund. I guess I haven’t done so horribly this month – especially given the fact that I made TWO major purchases this month – the IPhone 3GS and a new Schwinn Hybrid from Costco. When I reflect back on my June goals, I feel like I was able to accomplish quite a fair amount, in every single category of my life except for my finances. What I didn’t do this month was to fully fund my ING Savings, so my liquid emergency fund has remained pretty stagnant at this point.

I finished planning the OutWest Roadtrip, Completed 3 weeks of training for a 5K, and brought a good deal more joy into my life… But I did NOT fully fund my ING Savings account (which is putting in my $450 a month contribution).

Not to get myself too down, my #1 July goal is to not only fully fund my ING account the usual $450, but to bump it up another $400 as well. Hopefully my impending month of unemployment will help catalyze me all the way there. The major cuts in spending are going to be coming from clothing (no major purchases), alcohol (I will not enter our premium wine store, nor will I allow the Guy in there… we are drinking what we have!), gas (just filled up my tank at the end of this month + carpooling) and entertainment (my home made fun this month will be packing up our stuff!)

June Books

Continuing on my Friedman kick, I read The World is Flat, which was another very insightful, albeit skimmable tome. Similar to last time, for me, it was worth reading for just a few valuable sentences and concepts

One.
The reminder that despite the repetition of the pundits, that al-Qaeda is not a religious fundamentalist group, but rather a phenomenon of political extremism. They do not focus on communication and interaction with their god at all. Rather, the focus is on a totalitarian utopian skewed vision of a kingdom on earth – i.e. an Islamic state that rules the land.

Two.
I found the connection between terrorism and humiliation quite profound: “Humiliation is the most underestimated force in international relations and in human relations.” After emphasizing the possibility for hope of economic development and financial elements of the flattening world, it was an excellent counterbalance to talk about the ways terrorism… is spawned by the poverty of dignity (not money).

Up next is Malcolm Gladwell’s Outliers, oh, and I’m reading Ted Hughes’ Birthday Letters right before I fall asleep each night. Reminds me how much I miss reading poetry.

Interesting A-Ha's about COBRA

Couple new fun facts I learned about COBRA, in case you’re leaving a company soon… either by choice or not so much by choice.

1.My healthcare benefits are terminated on the last day of the month in which I terminate my employment. I was originally thinking about my last day at work being July 31st, but then I realized that if I worked one more day (August 3rd), I would then have healthcare for the remainder of August. (This was relevant to my Blue Cross Blue Shield healthplan, and I’m definitely not sure that this applies everywhere).

2.The second item does apply everywhere because it’s new legislation just implemented by Obama. Apparently, you can elect COBRA retroactively, up to two months after you terminate employment. So, I can basically not pay for healthcare for the month of August… but if I break my leg, I can go to the hospital and say “I need to elect COBRA to pay for this!” The whole impetus behind the new legislation is making coverage easier for people that are in transition. Awesome, real world implications benefitting me from having all of that hope in the Oval Office.

Vortex of Tide Detergent Choices

People have written about this before, and I know I’m not offering anything too novel here, but I was at the grocery store the other night, in a hurry and very eager to end the shopping trip, when I was remembered the last item on my list – laundry detergent. I have been a loyal Tide shopper as long as I can remember. My parents bought Tide. I buy Tide, even when I was in college. It’s not the most economical brand to buy, but I’m no laundry expert, and it just feels like something you don’t want to mess up with buying cheap – you could end up altering your clothes (far more expensive than the investment in good detergent). But last night, I was overwhelmed with a SEA of tide. Choices in size, scent, cause, intended use – front loaders, high efficiency machines. I was so frustrated. Not least of all was the difficulty to understand the true price/value of their product. So many different price points, with so many different variables left me blind to what was causing one container to be more expensive than another. While I might pay more for the larger size, I am not going to pay more for the scent of Febreze. I was so frustrated, I picked up a very small size of the exact product I had bought last time, but vowed to go to Costco and buy a different brand next time to get the most value. I can stand for some level of consumer confusion – but NOT when it comes to price!