Category Archives: Financial

Credit Card Roll Call

I was taking my credit cards under consideration the other day and realized that I’ve been kinda old school with my use of them. Specifically, I have just a few (or so I thought), rarely apply for new credit, and hold on to them for a very long time. I’ve been taught that these are all good credit habits to practice, but wonder if they’ve caused me to leave money (in the form of rewards) on the table.

Ideas preventing me from opening new accounts:

  • Fear of damage to my credit score (due to too much available credit, too many accounts, or the application inquiries).
  • I placed a freeze on my credit to prevent identity theft, which I would need to lift in order to get a new card.
  • Desire to keep my life (financial and otherwise) as simple as possible.

Back in my college days, I was just happy to have a credit card. I racked up a balance as I struggled to survive financially. Many boxes of mac and cheese were consumed in this period of my life. Over the years, I paid off that debt and have seen rewards cards getting more common. My first of these being with Capital One, who offered me 1.5% cash back on all purchases. And for the past 15 years, I mainly use that card, paying the balance each month and periodically cashing in points for Amazon credit. Not too bad of a deal.

Since starting this blog, I discovered websites exalting the opportunities that travel reward cards can open up. This convinced me to unfreeze my credit to apply for the big fish: the Chase Sapphire Preferred! I got a nice bonus for spending a few grand in the first three months (hello, Thailand) and have been wearing out that card ever since.

This month, my credit card corral has increased by one. I heard about the Amazon credit card a while back; 5% cash back on purchases piqued my interest. I didn’t have to look deeply into my past Amazon Prime spending to know that it’s significant enough to warrant the card. It also offers 2% on restaurants, drug stores, and gas stations and 1% on all other purchases. As an extra bonus, I got $70 credit on my Amazon account instantly upon approval.

Now, I get to be all strategic when choosing which card to pull out of my wallet in order to maximize their unique benefits:

  1. Chase Amazon – Obviously, the huge benefit is for Amazon Prime shopping (5%), but gas and restaurants (2%) are golden, too.
  2. Chase Sapphire – Any travel-related spending goes here (2%). This is another option for use in restaurants (2%). Rewards get a higher redemption for travel purchased through their website (1.25%), which adds some incentive to use this day to day.
  3. Capital One – Good old 1.5% on everything. I’m torn between using this or Sapphire for spending that falls outside of the various bonus categories. The allure of travel is strong, but this one technically gets me more money.
  4. Chase Freedom – The only reason to use this is for the rotating 5% cash back bonuses every quarter. Gas stations are just wrapping up. Grocery stores are next, which I’ll use the shit out of.

The most surprising part of this look into my credit cards is that I have more than I thought (and how much business I’m giving to Chase Bank)! Seven cards seems excessive and I feel compelled to simplify (remember when I wanted to close my oldest card? I guess it’s still a thing). I KNOW! I KNOW! Length of credit is an important factor to my score. To see just how this might affect me, I looked at my last credit report to check the age of my accounts:

  • Card #1 – Sept, 1996
  • Card #2 – Dec, 1996
  • Card #3 – March, 2001
  • Card #4 – Jan, 2004
  • Card #5 – Feb, 2014
  • Card #6 – May, 2016
  • Card #7 – March, 2017

With my first two cards from my early college days being only a few months apart, I think I’ll be OK to close one and just get it off my plate (perhaps #2). Neither offers significant rewards and go unused. My credit score is still high and I have no intention of making any big purchases that might be impacted by a score dip (like a refi or car loan). Is it finally time I make that call and nuke one (or more)? I would be interested to hear your thoughts, dear readers.

(Image: Lee Coursey)

A Look Back at my 2016 Savings

I pride myself on diligent savings habits and reasonable control over unnecessary spending. It feels pretty great to see my net worth rising steadily; I know I’m saving a lot. But I want to know the official number!

What percentage of last year’s income went to my retirement and savings accounts?

This year, how far can I push the limit between a comfortable lifestyle and squirreling more money under my mattress?

Employer 401k
  • $13,950 in 2016 contributions
  • $4,050 shy of the $18,000 maximum
  • I received a small salary bump in the new year, so I up’ed my contribution by 1%. That will bring my annual total to just over $15,000. On top of that, my company paid out a bonus this month, from which the same percentage was taken. That dropped in another $1,300.
  • 2017 projection: $16,300
Roth IRA
  • $4000 in 2016 contributions
  • $1,500 shy of the $5,500 maximum
  • In February, I increased my monthly transfer from $250 to $300. That brings me to $3,550. From my bonus, I moved an extra $1,000 to this account.
  • 2017 projection: $4,550
Betterment (long-term savings)
  • $1,800 in 2016 contributions
  • Automatic transfers have been on hold for the past few months. I saw my balance move past $18,000 and just wasn’t sure how much should live in this investment account.
  • Considering an increased amount of instability at the studio where I work over the past few months, continuing to sock away here would be a good idea.  I also intend to drive my 2008 Mazda until it dies, but it won’t last forever. Building up enough to cover paying cash for my next car would be prudent.
  • 2017 projection: $900 ($100 per month starting in April)
Salem Five (short-term savings)
  • $3,500 in 2016 contributions
  • Since this is my short-term savings, I did make a couple of withdraws to cover expenses for my Thailand trip and property taxes. My monthly automatic transfer is set to $400 at the moment, and I dropped $1,000 of my bonus here.
  • I try to withdraw as little as possible from this account and simply absorb big expenses from my regular pay, but that’s not always possible.
  • 2017 projection: $5,800
Conclusion
  • Total 2016 savings: $23,250
  • Total 2017 projected savings: $27,550
  • If all goes according to plan, I’ve set myself up to save more than 30% of my gross income this year. I find that an acceptable number! Particularly with the unusually high amount of travel adventures I’m taking, which feel indulgent at times, but are worth every penny (or Bhat, or Euro…)

Bimonthly Savings Update – March 2017

This bull market just keeps rolling merrily along, doesn’t it? My net worth has increased by $12,000 in two months (and that doesn’t include any change to my home value). I’d like to say that I’m pleased, but all of this up, up, up must eventually come down. Anticipation of that is keeping me from gleefully running naked down my street. But I won’t take any action. When prices rise, my money buys less; when they fall, it buys more. I keep reminding myself to leave it all alone and let time do it’s thang.

In other news, I’m anxiously awaiting a change to my employer 401k due to our acquisition last year. Word on the street that my measly 2% match will jump up to more than 4%! Hooray for that happening in April.

I also received a tax refund this week! Majority of it is being used to pay the second installment of my annual property taxes. Terribly sensible, I know. But that prevents me from drawing from my savings account as I build it back up after my New Years trip to Thailand and upcoming jaunt to Italy. That makes my checking account inflated at the moment (which is not reflected below). That excess will be transferred into my Roth IRA or Salem Five this month.

Home value: $389,392

Current net worth: $365,362

Bimonthly Savings Update – January 2017

Happy New Year! Thanks for visiting my blog, which has been going strong for two years now! I wish you a 2017 filled with laughter, kindness, and success (with plenty of restful sleep in between).

And now on to the money stuff. Investments have been steadily growing for the past two months since the presidential election, so all accounts are up. I don’t know how long this gravy train will last and am not terribly concerned. I’ll continue to play the long game with good old fashioned dollar-cost averaging. I like things simple.

You may notice, however, that my Salem Five savings took a hit. That was to pay for my fabulous Thailand vacation in December. I’ve got an automatic transfer for $400 a month into that account, so it will bounce back in no time (along with a bit of belt tightening in the new year).

Home value: $390,234

Current net worth: $353,300

Impromptu Thailand Adventure

I did something spontaneous a couple of weeks ago. I booked a trip to Thailand! It’s a bit unlike me to make such significant plans so suddenly, without months of meticulous vacation preparation and budget obsession. But the stars seem to be in alignment, pointing me towards taking time for myself to experience a new part of the world. Here’s a glimpse:

  • It’s been over two years since I’ve taken a big, international trip (safari and climbing in East Africa. AMAZING.)
  • I’ve never been to Asia. This will be my sixth continent (I’ve got my eye on you, Antarctica).
  • My workplace closes for a week around the holidays, so I only have to take four vacation days to cover the two-week trip.
  • Speaking of work, there was a shake-up at the studio last month where a significant number of employees got laid off. I survived these cuts and feel that my position is relatively secure this year.
  • I have the money in my savings, as well as a nice stock-pile of unused travel rewards points.
  • I found a tour company that specializes in trips for single people. Their itinerary falls at the ideal time to a place I’ve been wanting to visit. Strangely perfect.
  • As a single person, I’ve learned over the past 15 years that when a travel opportunity arises, take it. Especially if it’s with a friend, but even if it’s going solo. I won’t be on earth long enough to see everything, but I might as well take a stab at it.

In addition to simply enjoying the exploration of a new land, I have other personal goals for this trip:

Renewed appreciation for my awesome life
  • When it comes down to it, I lead a life of privilege and excess. It often doesn’t feel like it, but compared to most other people in the world, I am rich and have an excessive amount of personal freedom. Travel helps me remember that.
Do not stress about spending
  • As a reader of this blog, you surely realize by now that I’m pretty damn anal about my finances. On past vacations, I’ve found myself getting anxious about money and how much I’m spending, particularly in the final days as the tab rises and the reality of returning home sets in. When similar thoughts creep in on this trip, I will remind myself that the experience is priceless and invaluable towards my personal growth. I am worth every penny. I will make more money, but I will never get this time back.
Minimalist packing
  • Carry-on only, baby! The weather will be hot and humid. I’ll be taking a capsule wardrobe of items that can all be worn in different combinations while still looking fab. I’ll break down my packing strategy in my next post.
Journal every day
  • I usually do this when on vacation, but not in real life. I like taking time each evening to reflect on what I experienced that day. There’s no way I can remember all the details and having them documented for later recollection is priceless.
Eat whatever I want
  • Two words: Fish. Sauce.
And just when you thought that it couldn’t get any better….
Thanks to this trip, I don’t have to buy Christmas gifts for my family! They’re all much more excited to receive Thai treasures, rather than stuff I order on Amazon. My lack of visits to the mall is the best gift they could ever give me back. It’s a win-win. 

(Image: Jared Kelly)

Time for Another Refi?

5583561290_8714669389_zI’m smack dab in the middle of refinancing my condo. Interest rates have been incredibly low for many years now and are poised to increase. I’ve already taken advantage of them in 2012, securing a fixed-rate mortgage at just 4%. I thought I was all good for the long haul; no more refis for this girl! But several recent factors make me think doing it all over again is worth investigating:

  • Los Angeles home values are consistently on the rise, giving me ample equity to avoid PMI. In my last refi, I just barely missed the 20% threshold and accepted a slightly higher interest rate to avoid a monthly PMI payment.
  • My badass credit score (over 800).
  • Availability of my savings to cover potential costs.
  • Referral to a close friend’s broker (and family member) who’s worked with several of my friends and coworkers with positive results.

In addition to the usual internet research, I consulted my financially savvy friends in this decision. I love that we can talk turkey about real numbers without dancing around in avoidance of revealing anything too money-specific. Here’s what I considered:

How much money will a refi save me?

Upon asking the broker about current offerings, she gave the following two best options for 30-year fixed:

A. 3.75% with no costs, reducing my monthly payment by $117.

B. 3.625% with about $1,200 in costs, reducing my monthly payment by $132.

I briefly considered a 15-year term, but the monthly payment would put me out of my comfort zone. I also think that my money would be better spent maxing out my 401k and Roth IRA, rather than shoveling so much into one asset that I plan to hold for a long time.

Is it worth paying up-front costs to get a lower interest rate?

Math required ahead! Looking at the $132 savings of option B alone, it will take me nine months to recover the $1,200 costs. I can live with that.

But in comparing the two scenarios, it will take me much longer to hit that break-even point. Sure, option B saves me $15 more per month, but is that worth forking over $1,200? That $15 savings becomes $180 a year and $5,400 over 30 years. It would take me 80 months (just over 6.5 years) for the savings to reach the price paid. I’ll likely keep the condo at least until then, but so much of this decision depends on the next question…

Does a refi make sense for my future plans for the property?

Rule of thumb for refinancing is the longer you stay in the home, the higher probability of its financial benefits. I have no intention of ever selling this place. Its got so much going for it, mainly being in a desirable area of the San Fernando Valley. It’s in a completely walk-able neighborhood (somewhat rare for So Cal), is in a great school district, and is close to several big film/television studios.

Ideally, I would like to own this condo for the rest of my life. I bought it from a bank at a low price just as the housing market was collapsing in 2008. Even before this refi, my monthly nut (mortgage, property tax, and HOA dues) is just under the average rental rates in the area. I could continue to live here indefinitely, rent it out for a profit if I decide to move, and even return to it as my low maintenance home in retirement. Of course, this could all change in the future, but I have to base decisions on my current life situation, rather than the immeasurable amount of events that might happen someday.

Short-term savings vs. long-term cost

Saving up to $132 each month sounds awesome, but will starting over with a new 30 years cost me more in the long run? After more math, turns out that it will. Despite the fact that my monthly payment will be reduced, lengthening the term from 26 years to 30 years will cost an additional $12,400 (option A) or $6,800 (option B) over the life of the new mortgage. I found this with a super simple “How much does that loan really cost” calculator.

To counteract this, what if I invest a portion of my monthly savings? With option B, let’s say I add half ($66) into either my Roth IRA or Betterment savings each month. Over 30 years with a modest 4% earnings rate, that would be an additional $39,000 in my nest egg (using this calculator). I feel that I’m anal-retentive enough about my finances to do this consistently.

What’s next?

With all of the above in consideration, I am moving forward with a refi and leaning towards option B. My math may not be perfect or taking every small aspect into consideration, but it makes sense to me. And seeing how it’s my home and money, that’s all that really matters.

As of writing this, my loan has been approved, but I have yet to lock the rate and associated costs. That will be key! My broker is watching the ever-fluctuating market (especially since the recent presidential election) and will let me know when the iron is hot. I hope to land the ideal situation for my awesomely humble home.

(Image: Derek Bruff)

Bimonthly Savings Update – November 2016

Just when you thought I may have disappeared forever, I’m back with another savings update! For the last several months, my creative blogging juices have dried up. I was questioning where to go with this project and if it’s worth my time and effort.

Then yesterday, right after my morning meditation (which I’ll tell you more about in a later post), I got inspiration on some new ideas and decided to shit (and not get off the pot)! Future posts will not likely be weekly, but they will keep coming on topics related to money, health, and living my best life. How awesome is that?!

So let’s get back on track with this update! I’m a bit surprised that my investment accounts are down a bit since September, but my overall savings amount, home value, and net worth have minutely changed. My main emergency savings recently took a dip due to paying my property taxes.

monthly_11_06_16

Home value: $389,020

Current net worth: $341,796

Bimonthly Savings Update – September 2016

I’m back after a bit of an absence. Did you miss me much? I thought so. Let’s get up to speed with a savings update! As I would hope/expect, all accounts are up by a good chunk, with the exception of the ESPP account from an old employer. Oh well. It’s nice to see some significant progress in my 401k, which has nearly doubled in value since May due to the 18% I contribute and 2% from my employer. My home value took a $10k hit…whatever.

Monthly_09_01_16

Home value: $388,786

Current net worth: $342,007

Where in the world?

208898190_ba01ee572f_zI now have a shiny new travel rewards credit card and am already more than half way to earning the  50,000 point bonus. I’ve also done a bit of research on round-the-world travel and “gap years”. One great resource I found is BootsnAll. This site will help you plan a trip anywhere in the world for a reasonable price. I signed up for their free RTW30 Sabbatical Edition email series. Every day for a month, I get a new email with step-by-step guidance on how to plan and prepare for my “career break”. I expect them to be extremely useful once I’m ready to plan out my adventure.

But before I can start too much of that planning, I need to figure out where the hell I want to go. Do I want to travel around the globe? Or would taking my time exploring the United States (and possibly Canada) be just as cool of an adventure? I’m going to start out with a good ‘ol “Pro vs Con” list and see what discoveries abound.

United States Travel

PROS

  • Logistically, it would be  much easier. Minimal foreign currency, language barriers, sim card swaps, public transportation, etc.
  • It has the potential to be cheaper, since I could do it all in my car (no airfare, unless I hit up Hawaii or Alaska)
  • Great opportunity to see old friends and family that live across the country (Washington, Idaho, Minnesota, Arizona, Illinois, Alaska)
  • Exploration of places I might want to live in the future. I could see myself ditching the So Cal craziness in favor of a more nature-friendly, slower paced lifestyle.
  • Could I take my cats with me!? Seems crazy at first thought, but it might actually be do-able if I can’t find them a temporary home.
  • Cheaper and faster to get home in case of a family emergency.
CONS
  • I wouldn’t get exposure to foreign people, cultures, and lands (although I can image many places seeming like a different world than Los Angeles)!
  • Some would say it’s less exciting and exotic than seeing the world.
  • Driving around in my car seems almost too easy. I could go anywhere at any time. Something about the limitation of not having a car is exciting.
  • Easier to bail out of the trip early when it gets difficult or lonely.
International Travel
PROS
  • I’d get to see distant places and experience foreign cultures that not many Americans do.
  • How cool that I could literally go around the world!?
  • It would be hard, but in a good way. Taking me out of my comfort zone and facing me with daily life challenges.
  • The experience has the potential to expand my mind and world much more than if I stayed in the US.

CONS

  • International travel has the potential of being considerably more expensive, mainly due to long distance airfare.
  • Added hassles of things I take for granted now, such as medical insurance, money conversion, visas, my cell phone, laptop, wifi, etc.
  • Challenges that come with not speaking the language.
  • I think I would get more lonely on an international trip.

How interesting to see that my pros for US travel is the longest list.  That could be because it was the section I started with…maybe I got all of the good ideas out early and didn’t feel the need to repeat them? Or am I telling myself that’s what I want to do, deep down?

And I am keeping in mind that this is not necessarily the one and only period of extended travel in my life! I could start with the US this time, and then go international in a few years. Or if we’re getting totally wacky, there’s no reason why I can’t do BOTH this first time around! I know that whatever I choose, it will be the right decision. Just gotta make it and commence preparations!

(Image: Hans Splinter)

Dipping my toe into travel hacking

14117602520_7a18a71a97_zI’ve previously mentioned my dream of taking mini-retirements while I’m still young(ish). This sounds much more interesting than punching a timecard for twenty more years before getting a significant break from the working world. However, it will take some careful planning to be sure my MRs are funded, as well as the eventual big-retirement. This week, I’ve taken a step towards making it a reality: I’m gonna be a travel hacker!

Well, having one travel rewards card may not make me a full-blown hacker just yet. Being the anal-retentive gal that I am, I’m not just unabashedly jumping into this. I’ve been prepping myself over the past couple of months.

I’m responsible with my credit card usage and have proven to myself that I can pay off my balance every month. For several years, I regularly utilize the 1.5% cash back rewards on my Capital One card. However, that’s only netting me about $15 a month at my current rate of spending. I have another card with rotating bonus categories, but that too only gets me around $10 back per month. Switching to a travel-specific rewards card could get me a much better return.

On an episode of the Mad Fientist podcast, I learned about Travel Miles 101. There are lots of websites that promise secrets of travel hacking, but I particularly like how Alexi and Brad presented the information. In their free online course, they do a good job keeping the process clear, whether you chose to get into it hard-core, or with just one card. Of course, they make money from the links on the site. The information in the course and their forum is so useful, I’m A-OK using their application link.

I decided to dip into this slowly with just one card: the Chase Sapphire Preferred. It has a strong offer right now, giving you 50,000 points (worth $625 of travel) if you charge $4,000 in the first three months. That’s more than my regular credit card spending, so I’ll need to plan out some purchases and shift recurring bills around in order to hit that target.

But first, I had to get approved for the card! I wasn’t too worried about that, since I have a great credit score and no outstanding debt. But I did have to spend a little money prior to applying. Back in August, I placed a freeze on my credit to ensure that no one pilfers my money or identity. Since the new credit application would trigger a hard inquiry, I had to visit Equifax, Experian, and TransUnion websites to authorize a temporary lift of the freeze. Each transaction cost me $10. Lame, but worth the extra protection and small hassle.

Having lifted the freeze for two weeks, I filled out an online application and within 30 seconds was approved! I was shocked by how fast and easy it was. It may have helped that I already have a credit card with Chase Bank.

My next step will be an interesting challenge: spend $4,000 on that card in three months! In a future post, I’ll get into the nitty gritty of that task. I already have a few bills ready to pay once I get the card. I just don’t want to get into a mind-trap of justifying unneeded spending for the bonus.

(Image: rodeime)