What would you prefer:
(A) $160,000 compensation in a very demanding job with ever-changing deadlines, 60-80 hour weeks, unpredictable schedules, lots of travel, and higher “prestige” and perks
(B) $110,000 compensation in a less-demanding job with predictable deadlines and schedules, 40-hour weeks, no travel, and lower “prestige” and fewer perks
Let’s assume that both positions offer learning opportunity, good coworkers, the usual degree of office politics, and decent benefits.
That’s a choice that a friend was recently talking to me about. Her current job is Job A, and her previous position was more like Job B. We were discussing what’s the better choice, and how that answer might evolve with our personal goals and life stage.
Then I read an article in the New York Times about big investment banks now “requiring” junior bankers to take a couple Saturdays off a month. Most analysts are happy, but some say that they are worried this “less rigorous” lifestyle will result in or is a result of lower bonuses. Back in the boom years, an analyst could make $100,000 or in bonus alone in one year. Now, some say the bonuses are “only” $70,000. The person quoted in the NYT said that most analysts would rather have the bigger bonus than the extra weekends… (I HIGHLY suspect that statement, but who knows. Maybe this is why I wasn’t cut out for banking).
I also found Stephanie’s blog, where she and her husband made the choice to take a lower salary in exchange for decent hours. Instead of making $160,000 in BigLaw and working 90 hours a week, her husband is making ~$35,000 to $40,000 and working more regular hours.
At a certain level, the marginal dollar becomes less important, especially when you are comparing decent numbers. The difference in lifestyle and ability to accomplish financial goals between $30,000 and $50,000 is significant, while the difference between $150,000 and $170,000 is smaller, and the difference between $1 million and $1.02 million is basically a rounding error. Even the same percentage difference, at a higher salary, becomes less meaningful…
I want to set up our life and our finances so that in the future, when we decide the marginal hour is worth more than the marginal dollar, we have the financial wherewithal to act accordingly. In the short-term, that means saving enough money to pay for all of CB’s tuition so we both come out of grad school without debt. That means keeping my head down and telling myself “I can do this” when the hours get bad, and never forgetting the purpose of all of this.
At what point does the marginal dollar outweigh the marginal hour, and at what point does the marginal hour outweigh the marginal dollar for you?
Seattle is a city in which I’ve never lived. I’ve only visited twice, for less than a week each time (and it drizzled, as expected, both times). But Seattle is also a city that gives me the vibe that I’d really LOVE living there. Who knows, perhaps we’ll give it a try in the next 5 years, or even sooner.
Why Seattle might be a pretty good place for us:
- The greenery! The natural beauty! The hiking! Lately, I’ve been making a concerted effort to go hiking every weekend. And the more I do it, the more I enjoy it. And the Pacific Northwest has so much natural beauty and verdant landscape, and that’s something I’m realizing I want, more and more.
- The job market seems OK – the tech sector, while not as big as the Bay Area’s, seems strong enough, and there are several big name companies and lots of start-ups in the area that could be future possibilities for CB and me.
- No state income tax. Enough said.
- People seem really laid-back and chill. And those are our types of people.
- The housing market is manageable – Redfin informs me that we can get a bungalow in a central-ish part of town for less than $400,000. Miracle of miracles!
- There’s public transportation, which is another aspect I will value strongly in a future, more permanent locale.
- Good ethnic food, especially Asian food (albeit probably not as good nor as varied as California’s).
- We have friends up in the area, and we have friends who REALLY like Seattle. And we really like these friends. So I figured if we like them and they like Seattle, well, then, we might like it as well.
- There’s a major airport, this is important because not being able to fly makes me so, so antsy.
And here are the reasons we may not move to Seattle:
- The gray! The rain! The SAD! We can buy UV lamps and book winter getaways, but this will just be something we have to accept if we decide to move here, and having both grown up in sunny SoCal, I don’t know how we’d adapt. I imagine it’s the same for most people.
- Distance from family. All our family live in Southern or Northern California, and it’s going to be hard to be more than an hour’s flight away. I love my folks and I’d want to be closer to them.
- The Seattle-Tacoma Airport is not really a hub for any major airlines – it’s going to be difficult to give up direct flights to lots of locations. I’ve also heard that SeaTac is quite an expensive airport to fly in and out of.
In any case, this is all just daydreaming and thinking out loud.
But I’m curious – do I have any readers who live or have lived in Seattle? What says you about the Emerald City?
Last night, I ordered a $250 Kate Spade patent leather clutch (in the shape of a fan! Be still, my heart) from Bloomingdales.com. Today, I received an email that my order has been cancelled because they need some additional information that I didn’t provide in time (who expects a response to a non-work email / phone call in less than 24 hours?!).
I thought about re-doing the order, then I thought again: this failure to get Bloomingdales to take my money may be a sign from The Universe that I should not spend $250 on a patent leather clutch, no matter how stylish and fancy it is. Instead, I deposited the equivalent amount into my Roth IRA.
Score 1 for the sign from The Universe and Discipline.
Have you guys heard of BrightScope? It’s a company that scores a company’s 401K plan among several dimensions. The 401K, alongside IRAs, is one of the only major tax advantaged retirement vehicles middle class Americans have access to. And with pensions on the decline, it’s more important than ever to have, and use, a good 401K plan.
BrightScope gives every company’s 401K plan a score that depends on the program’s design (total plan cost and company generosity) and performance (participation rate, salary deferrals, average account balances). In short, the company has more control of the design aspects, and employees have more control over the performance aspect – but a good design such as higher company matches can drive good performance such as higher participation rates.
The higher the rating, the better the plan in terms of both design and performance. In addition to the rating, BrightScope provides information on net plan assets, total number of participants, percentile performance compared with all other rated plans or plans of the same size. It’s a very interesting peek into a company’s 401K plan – especially your own!
For example, IBM is doing very well, with a 87 BrightScope rating. There are over 200,000 plan participants, and the average plan balance is a hefty $240,000. Consumer goods giant Proctor & Gamble has a 79: the plans has very low fees and the company is generous with matches, but employees aren’t contributing enough to their plans, hurting the company’s BrightScope rating. The white-shoe law firm Perkins Coie has a 85 rating, and 2,000 plan participants with an average balance of $220,000! I’m guessing that this balance is driven up by all the partners and high earning associates?
My own firm is in the top 15% of firms for company generosity and lowest fees, but participation rates and salary deferral are below average. My mother always said that her plan isn’t very good – and BrightScope supports her observations: my mom’s 401K is rated a mediocre 62 - with middling company generosity and average fees. The good news is that at least people in her company are saving – salary deferrals are above average.
Does the BrightScope rating jive with what you know / think of your own 401K?
Over the long weekend, CB and I went on a mini-hiking trip to Pedernales Falls State Park and Enchanted Rock State National Area in western Texas. As newbie hikers who enjoy our creature comforts, our itinerary of hiking + BnB + hiking + nap fits us perfectly. Pedernales Falls took my breath away. I literally spent an hour saying “this is unreal” while gesticulating wildly in disbelief as I traipsed over the limestone pools of blue-green water in the canyon beneath the Pedernales Falls Rock Overlook.
The next day we went to climb Enchanted Rock, a big pink granite dome that rises out of what feels like the middle of nowhere. At the top of the dome, though, are vernal pools and vegetation, and trees, growing out of the bits of dirt that come from who-knows-where on this giant rock! It makes me think of the Jurassic Park phrase: “life will find a way.”
I’ve written before about how incredible – and what an incredible value – National Parks are. Well, there is so much beauty in our State Parks and Natural Areas as well. Pedernales Falls State Park only cost $6 a person, and Enchanted Rock was $7 a person. So much awesomeness… for less than the price of a movie ticket! Less than the price of a burrito at Chipotle! Less than the price of a wedge of triple cream brie at Whole Foods!
Exploring these State Parks has inspired me to check out other State Parks. In fact, I’m planning a hike in the Big Basin Redwoods State Park for Thanksgiving.
What are your favorite State Parks?
Hello there – it’s been a while! In the weeks since I last wrote, I (1) spent a month traveling to Japan and Europe, spending $10,000 in the process; (2) moved to a new city with exactly 4 dresses, one suit, and 5 pairs of shoes, thereby getting a crash course in minimalist living; (3) started a new job that has a 401K(!!).
Money & marriage – one small step at a time
CB and I have taken a small step towards integrating our money in practice as well as in theory: we set up transfers between our checking accounts. Now instead of me writing him a check or vice versa, we can just use the handy transfer option. We are still aiming to pay for most of CB’s tuition in cash – and thanks to the fortuitous substitution of transferable community college credits for a private university course, we only had to borrow $7,000, instead of the planned $10,000.
Even though Christmas is still 4 months away, I’ve already started planning. I have to get away for the holidays or else I don’t feel that I’ve really taken advantage of the time off. So the plan is for us all to meet in San Antonio, Texas to see the Riverwalk, visit Texas Hill Country, and watch the traveling production of Lion King, my mother’s favorite musical. I’m not sure how much this will all cost, but I imagine the house rental will be $1,000-$1,500 for a week, depending on how fancy we want to go. I’d like to pay for the house rental as a Christmas present for my folks, so that’s something I’ll have to budget for.
The monthly paycheck
Speaking of paying for things – I’m now earning a paycheck! But the paycheck is monthly. I’ve never had a monthly paycheck before, so it might take some adjusting to. Mostly I’m just happy I’ll have income again after two years of graduate school. Do people have any advice about getting used to a monthly paycheck? (Maybe something like – know that money gotta last you the whole month?).
No ‘poo no more
I gave up the no-shampoo experiement and have never been happier with this hair decision. In lieu of not shampooing, I purchased a 100% Pure shampoo that cost $18 and is sulfate-free and detergent-free. It’s SO MUCH better than washing my hair with nothing but water. I resolve to never do that again unless I am forced to by circumstance.
So about that MBA…
After graduation I had some time to reflect back on the MBA experience. The big question is… was it worth it? (I wrote a little bit about it in Corporette). Overall, I had a really good time, I made good friends, had good professors, rounded out my business education, and got a good job. If I could’ve done it more cheaply, though, I probably would have. More importantly, I would have made more of a calculated effort during undergraduate years to get a job in a company that paid for full-time or part-time graduate programs. But hindsight is 20/20… so I’m trying to be generous to the 22-year-old me who did not have that foresight.
I didn’t calculate business school ROI before I went (the shame), but I did calculate my breakeven period once I got my full-time offer. Disregarding inflation and compounding interest of the money I could have saved had I kept working, I will have “made back” the cost of business school if I stay in my current job for 2.5 years. I hope this means that MBA will ultimately turn out to be a financially, and not simply personally, rewarding experience.
Our near-term retirement goal…
…Is for CB and I is to get to $250,000 in retirement funds by the end of this year. This will require me to max out my 401K, max out the Roth IRA for CB and I, and the stock market to not crash and burn. I am hopeful on all three of these points – although if #3 happens I can go on a stock-buying spree.
If a wine-tasting excursion in Italy, snorkeling in the crystal clear waters of Bora Bora or skiing in the Swiss Alps is on your bucket list for when the kids leave home, you’re not alone. Many empty nesters take this time to embark on adventures to parts of the globe they were not able to visit before. If you’re thinking about spending on vacation now that you’re an empty nester, it’s a good idea to create a travel budget that will keep your financial future in mind. From scheduling automatic transfers from your checking account to your savings account to enrolling in online bill pay, use these vacation budgeting tips to help make your dream trip a reality while planning for life in retirement.
Tips for vacation budgeting as an empty nester
The house is quieter than it’s been in years, and you likely have an increased amount of money and free time. Before you spend the extra funds booking your trip abroad, consider opening separate checking and savings accounts designated to spending on vacation. Look at your monthly expenses, including how much you are contributing to your retirement savings, and determine how long you would need to save to be able to travel. Then, use our vacation budgeting tips below to prepare for your big trip:
- Automatic transfers: When you decide how much you can afford to set aside each month, schedule an automatic transfer to move money from your checking account into your vacation savings account. Automatic transfers are also a good way to make sure retirement savings are made.
- Reward points: If you’re a member of a loyalty program or receive points for using a debit or credit card, consider cashing in your points for accommodations or airfare.
- Online travel deals: Many travel agencies feature group vacation deals online. If you have a flexible travel schedule, check online couponing sites for special offers and consider an all-inclusive deal that includes your flight, accommodations, and meals.
- Off-season discounts: For many vacation destinations, the summer is typically a busy tourist season. Consider traveling in the spring or fall, as you may be able to save money on your trip.
Managing expenses abroad
To avoid going over budget, it’s a good idea to track your spending on vacation. Contact your cell phone carrier before you leave home, and purchase an international data plan for your phone. Then, download your bank’s mobile banking app. Whether you’re at the airport, on the beach or relaxing in the comfort of your hotel, mobile banking provides easy and convenient access to your checking account domestically and abroad. If you have bills that are due during the time you’ll be away, consider scheduling online bill pay before you leave to minimize the stress of making sure your bills are paid on time. Also, notify your bank before you leave that you’ll be traveling internationally, and ask if there will be account fees if you use your card abroad. There will likely be ATMs in the metropolitan areas, but you should consider ordering foreign currency before you leave so you have some cash on hand if immediately needed. The exchange rates of foreign currency will likely be different than the U.S. dollar, so make sure you factor in fees and conversion differences while doing your vacation budgeting.
Planning for your financial future while spending on vacation
Now that your nest is empty, you may be ready to go on your dream vacation. While you likely have more spending money now that the kids are out of the house, it’s still important to keep your financial future in mind as you get closer to retirement. As you plan for your next big trip, create a vacation budget that will allow you discover the world without tapping into your retirement savings account. Use vacation budgeting as a guideline for what you can spend abroad, and determine how many nights you’ll be dining out and what activities you’ll want to do while you’re there. You’ll likely want to buy souvenirs, but consider choosing something you or your kids could really use in the future. Open a checking account for spending on vacation, and try to limit what you buy or do to what you can afford from that account. Consider applying these tips to your vacation budgeting as an empty nester, and experience the world in a whole new way.
Sponsored content was created and provided by RBS Citizens Financial Group.
Japan can be an expensive place to visit, but I’ve found it a surprisingly easy place to get cheap and delicious meals. Of course, we purchased snacks and rice balls at convenience stores and had a satisfying breakfast or lunch for under $5 (those rice balls are filling!), but there are times when CB and I just wanted to sit down and relax a bit. The best thing is that even on a budget, Japanese meals are prepared with care and attention – for the same $10, I’d venture to say that the quality of food in Japan tend to be much higher quality than that in the U.S. or Europe. I’ve noted the prices for both Japanese Yen and US dollars, and the information is accurate as of July 2014.
Here are three of my favorite sit-down places to eat- all chains with multiple locations in Japan – where one person can get full for under $10, and definitely under $15. And because there is no tipping in Japan – in fact, the servers will run after you if you leave change – you can be sure that a $10 dish will actually cost you $10. All three are very foreigner-friendly, with pictures and friendly (if not fluent-English-speaking) staff.
This restaurant’s signature dish is ramen kogashi, or burnt ramen (pictured above). The ramen broth is ladled with spoonfuls of lard burnt at 300 degrees… I assume that’s what those black flakes are. Horrible for your arteries, I’m sure, but delicious for your taste buds, I can attest. A ramen kogashi (with your choice of either miso- or soy sauce-based soup) only cost 850 yen, or around $9. One of my biggest regrets is that I only went to Gogyo once. I believe there are 5 Goygos in Tokyo and Kyoto. It is SO GOOD. Go to Gogyo. Go go go. http://ramendining-gogyo.com/shop_kyoto/index.html (unfortunately, it seems like the website is only in Japanese)
Udon noodles with tempura. Udon noodles is the thick white noodles that people often eat with hot soup and tempura batter-fried meats / veggies. CB and I had a fabulous dinner here – two hot bowls of udon and five pieces of tempura for just 1,500 Yen, or under $16. Marugame Seimen has locations all over Tokyo and Kyoto, including two of the most popular tourist spots: Shibuya (http://www.toridoll.com/shop/search/store?id=110441), and Shinjuku (http://www.toridoll.com/shop/search/store?id=110661) http://www.toridoll.com/en/, and you can check out some pictures and prices here: http://www.toridoll.com/en/shop/menu.html. I recommend the classic Kake Udon with shrimp and kabocha tempura.
This is probably the best value for your meal in Tokyo/Kyoto. I went to this place three times in our 10-day trip! For 600-1,000 yen, you get a teishoku set meal which consists for a main dish, a rice, miso soup, pickled radishes, and maybe even a salad depending on the dish. CB’s and my highest bill at Ootoya was 2,400 Yen or $25, because we splurged on an ice cream dessert. When we just ordered the teishoku meals, we spent less than $10 a person. www.ootoya.com
Whether you’re travelling for business or pleasure, it pays to do a little bit of research in advance to get the best deals. Although there are often last minute deals or discount coupons available for hotel rooms, it can be a bit trickier to avoid hidden charges and get a fair price on a rental car. It’s not uncommon to agree to a quoted price only to turn up at the rental counter and be presented with a far larger bill than you were anticipating. The following are a few handy tips to avoid sticker shock and get the best possible car for your money.
Image Source: Mary and Angus Hogg/Geograph.org.uk
Don’t rely solely on comparison websites.
When booking flights and hotels, you probably use aggregators like Kayak.com or booking sites like Travelocity or Booking.com. There’s a wealth of comparison sites and search engines to help you narrow down your choices and find the best deal. However, it’s important to just use these as a guide when you’re looking at rental cars. Car rental comparison sites tend to only focus on the biggest companies, overlooking local operators who might be able to give you a bigger deal. Get a feel for your options with these comparisons, but don’t neglect the small, local companies.
Look at cars before booking.
The type of car you choose will influence your price, but this doesn’t always mean that you have to choose a sensible, medium-sized hatchback. Pricing models will vary between companies, so while one may charge you more for an SUV another would charge you the same price as a family sedan. Part of the fun of renting a car is driving a vehicle that you wouldn’t ordinarily be able to. Splash out on that sports car if the price isn’t much higher than a basic model! You can click here for more inspiration in that department. Just be sure that you know what the price is before you agree to an upgrade.
Buy your own insurance.
One of the biggest unexpected costs of renting a car is the insurance. Car hire firms offer a range of extra policies to choose from, including personal insurance, theft waiver, and collision damage waiver. All of these can cost an arm and a leg, so it’s better to take out your own stand-alone policy rather than buying insurance from the car rental company. Your travel insurance may also cover third-party liability claims or theft, so be sure that you’re not paying twice for the same benefit.
Search for discount codes and coupons.
Social media accounts, online coupon sites, and services like Groupon are all worth checking before you make a booking. You may be able to find a discount code to shave more money off of your car rental.
Make a booking directly from the rental company.
Just as smaller, localized companies may offer you a better deal than the big names, you can also save money by booking directly from the car rental company’s website. Use aggregators and search engines to research your options, pick up a discount code, and head over to the car rental company’s own reservations system to get the very best price. Be sure that your rate quote includes costs such as insurance, sales tax, and airport concession fees or you could be looking at a nasty surprise when you go to pick it up!
Always read the fine print and shop around before you get a rental car, and you’ll be able to choose the best fit at the right price.
In welcoming the second half of 2014, I’m going to shed my Moderator skin and try behaving like an Abstainer for the rest of the year in a bid to max out my 401K and pay for CB’s private school tuition at the same time.
That means that from July to December 2014, I am refraining from less-than-necessary purchases. What are necessary purchases, you ask? Well, I’ve expanded my definition to things that might not be considered truly necessary for survival but that I think are reasonable for me to acquire:
I can spend money on:
- Bed – I’ll be moving into a new place and although I will not die sleeping in a sleeping bag on the floor, I think a bed ranks high enough on the “necessary” list that I can get one.
- Desk and chair – see above.
- Sunscreen, cleanser, and moisturizer if/when they run out.
- Groceries – d’uh
- $25 worth of happy hours & meals out with coworkers and friends per week – I still want to be social and go out.
- Barre/pilates classes if I can get the classes down to below $10/class – Groupon and Amazon Local deals will be my friends.
- 1 flight a month to visit CB and a flight home either during Thanksgiving or Christmas.
- Covered parking at home and work (if I am not traveling for work).
- Hangers – I think if I max out my 401k for 2014, I’d like to get myself a set of petite-sized hangers to celebrate.
I will not spend money on:
- Bedding – I have enough comforters, sheets, and pillows. I may want a new duvet set, but I do not need them.
- Makeup – again, I have more than enough foundations, lipstick, and eyeshadows to last me through 2014.
- Clothes and shoes – I really want a pair of nude wedges, but I’m delaying that purchase until 2015. Also, no clothes means no new dresses for the plethora of weddings I have to attend this year. I do not need a new dress for every wedding, because I have ENOUGH! Must repeat to self as necessary.
- Restaurant meals/takeout/drinks/lattes when I’m by myself – meals out should be a social activity.
- eBooks – the library (and Project Gutenberg) are my friends.
- Any personal technology items – I have a smartphone, a laptop, an iPad mini, and a netbook. I really truly do not need any more personal technology.
Multi-generational living on the rise despite historical stigma
The US has a thing about living alone: moving out of your parents’ home and living without roommates has been long deemed a sign that you have achieved adulthood. I come from a culture where it’s normal, even expected, for folks to live with their parents until they get married – and even then, it’s viewed as a sign of financial maturity to keep living with family until you have saved enough for a down payment on your first home. That’s why my ears perk up every time I see articles about the “boomerang” generation (twenty- and thirty-somethings who move back home) and multi-generational living. I think multigenerational living will be, by necessity and maybe even desire, become a much more common way of life in the years forward.
A new AARP Magazine article on the “changing faces of American families” highlights the Hua-Puiches, a family of four who has moved in to the same house as the wife’s mother. This move doesn’t seem to be driven by finances – one spouse works in software and the other is a writer – but a desire to be close to family and allow the kids to get to know their grandmother. (Vanessa, the mother, also writes a lovely blog called Three Under One that I’m having so much fun reading). I think that idea is grand. Where did we get in our heads that the only way to be successful and “adult” is to stake out our own piece of land? Isn’t there something wonderful and precious in pooling resources and spending time with each other?
Living at home for practical and sentimental reasons
A New York Times Magazine article on Boomerang kids is full of comments by folks who can’t understand why people move home, and who see the move as nothing but utter failure instead of the pragmatism that it can be. If a young person finds job opportunities near their parents and live in an expensive part of the country – i.e. not one of these cities where it’s easy for Millennials to “make it”, why shouldn’t they live at home as long as the parents are OK with that arrangement? Far from being something to be ashamed of, or even something to be merely tolerated, I say multi-generational living should be celebrated and embraced, both for their financial benefits and for the closeness it can encourage within families and communities.
A 2010 Pew Research study shows that multigenerational living is at its highest point since the 1940s, driven both by a weak economy and by demographic changes. It’s no surprise that a household with multiple wage-earners are better able to weather economic downturns and achieve a higher degree of financial resiliency. Furthermore, in families that put three generations under one roof, grandparents may be able to provide emergency childcare (if not full-time care) and kids will get the benefit of knowing their grandparents more closely.
Some cities are fully embracing the trend: Portland, Oregon has made it easy for folks to build a “granny or in-law unit” on a main property so that homeowners can move relatives in or rent out the unit for additional income. That’s an easy way to have a smaller environmental footprint and lower your housing costs, for all involved.
I would live at home in a heartbeat
As I’ve gotten older, my feelings on living with family has evolved from “must be avoided at all cost” to “I guess it’s financially smart” to “I want to buy a complex for my parents and myself and be able to eat my mom’s fried rice every day and live happily ever after!” Right now, I am living on my own because I’m several states away from family. But I have decided to live with a roommate to keep down the costs and to have some companionship. In addition, CB and I have decided that if he were to find a job in a part of California where we have family, we’ll be living with those family while we save for a down payment. It’s the smart thing to do for us, and in the meantime we’ll be enjoying the company of parents and relatives as well as gaining financial security. I have several friends in their 20s, 30s, and 40s, who are living with family right now. When I hear that, I think, “good for them!” and even feel a tinge of envy. I would love to live at home, not even for the financial benefits, but so I am able to see my parents more often.
When I’m older, I hope to participate in multigenerational living of my own (by choice, not because anyone will be out on the streets). While CB and I are still unsure on the questions of kids, I do know that I want to move my parents closer to where I’m at – I envision a duplex or townhouse where we live side-by-side, or house big enough to accommodate all of us.
Do you think multigenerational living is here to stay? And would you want to have all three generations under one roof?
I have very mixed feelings about retirement calculators. Perhaps that’s why although I’ve been saving for retirement since my early twenties, I almost never run retirement calculators. (I think the last time I did it was in 2010, with the Pudding Index). And when I do, I don’t really pay attention to those numbers.
It’s just way too early. I’m almost 30, so at normal/early-ish retirement age I am still 30 years away from calling it quits from the workforce. My goal in terms of retirement savings, ever since I first started as a junior in college, was simply to max out the Roth IRA and then save as much as I can in the 401K.
On the one hand, retirement calculators can provide some guideline answers into the questions: “Am I saving enough?” “Am I on track to retire at age XYZ?” “How much will I have when I stop working?” On the other hand, these calculators are only as good as their assumptions, and when calculators tell me I’m “over-saving” I think, “no such thing!” and when they say I’ll have to eat cat food in my dotage I think “well… still can’t save more!” (Gotta balance retirement savings with shorter term goals).
A lot can happen in 30 years, and given all the assumptions that have to be made to make those retirement calculator projections, I know the numbers from calculators won’t change my behavior today – they won’t make me feel better about saving less, and I can’t/am not willing to save more than I am already, at least not at my current projected income level and anticipated expenses.
To me, retirement calculators (or any personal finance calculator, actually) have two purposes: information and motivation. Bottom-line: my timeline is too long and the assumptions to uncertain for me to count on the information, and I’m not motivated either positively or negatively, by the results I get from the calculators. So I don’t pay much attention to those retirement calculators. I just save as much as I can, try to keep a solid asset allocation, and cross my fingers and hope for the best. It’s a leap of faith, you might say.
However, if you do like retirement calculators, here are the ones that I have the most fun with:
- Fidelity MyPlan - I love the narrator’s voice, for some reason.
- Flexible Retirement Planner - Runs Monte Carlo simulations and gives you probabilities of a portfolio outlasting your life instead of a specific number. This calculator requires Java to run.
- Pudding Index - Fast and simple. Plus, who doesn’t love pudding?
- AARP Retirement - Great because it takes into account your spouse’s retirement savings and expected Social Security as well as your own.
Do you use / pay attention to retirement calculators?
A lot of people say you shouldn’t borrow money from family, or that you should draw up complicated documents or have really in-depth conversations about it. I realized that in my family, this isn’t really the way things go. Siblings lend/borrow from each other to take advantage of real estate opportunities or help out the kids (my generation)’s education. My aunts have borrowed from my mom and my mom has borrowed from my aunts, and my grandmother had lent money to all her children. So far, everyone is still talking to each other.
So with that as the background, I approached my mom about potentially borrowing $10,000 to cover CB’s fall quarter tuition/expenses. I plan to cash flow the rest of his grad school tuition once I start work in August, but as the fall tuition is due in August, there’s a wee bit of a cash timing issue. Fortunately, my mom understood, took a look at her checkbooks, and agreed to lend us the $10,000. In fact, mom has a similar arrangement with my aunt, and she views it as a win-win situation – the lender is helping out family and getting a higher interest than he/she would in the open market, while the borrower is enjoying a lower interest rate than the market demands.
This means a lot, because taking out this family loan will save us money and time. A $10,000 family loan only costs 4% interest with 0% origination fee (and no application required). In August 2015 I’ll repay my mom $10,400. On the other hand, if CB were to borrow the same amount from Stafford loans, we’d have to pay 1.072% origination fee and 6.21% interest. So, I’m very grateful that Mom is helping out our cash crunch. The hope is that CB can also graduate debt-free and then we’ll both greet 2016 without any graduate school loans. At that point, we’ll probably still have ~$10,000 extremely low-interest college loans, but I plan to take our sweet time in repaying those.
My month-long no shampoo experiment started by accident. I finished using my bottle of shampoo a few days before graduation, and I didn’t want to buy another bottle before I had to move. I have also read a little bit about this “no-poo” movement online, and thought it couldn’t hurt to go without shampoo for a week or so.
Then I went on vacation with my parents and forgot to bring any hair products. I don’t like the brand my mom uses, so I just skipped shampoo for that whole trip as well. Then I just kept going, and now here I am, one month after putting nothing in my hair except water.
Here are some things after my one month:
- The first week, my scalp was so oily I almost gave up. I have thick, coarse, wavy hair that is prone to oily roots, and that’s probably the only thing that will cause me to go back to shampoo.
- I almost never blow dry my hair (once a year, if that) and I do not color or highlight my hair either – if I did either of those things, I think it’d be harder for me to do no-poo.
- I never have that ‘squeaky clean’ feeling I’d get after shampooing. I miss that feeling. When I run my fingers through my hair, the strands feel oilier. My hair looks, however, better than it feels.
- My hair doesn’t smell bad. It just smells like hair.
- Many folks swear by the baking soda / apple cider vinegar mix to rinse their scalp and an oil treatment for the ends of their hair. I haven’t tried any of those methods (mostly due to laziness), but I probably will if I keep up with no-poo.
- Based on my completely unscientific powers of observation, I think my hair grew faster than normal during the month of no-poo.
- I want to buy a boar bristle brush as I think that will help distribute the oils in my hair more evenly (i.e. away from my scalp and closer to the ends).
- There were a few days when I thought my hair looked really great, and there were days when I hated the way my hair felt and fell. To be honest, I think my hair looks best the 2nd day after shampoo. I’ve read a lot of posts where people raved that their hair has NEVER LOOKED BETTER and they are never going back to shampoo again. That hasn’t been my experience, but it hasn’t been so bad that I’ve gone back to shampoo.
- I wash my hair once every 2-3 days. I’m hoping to be able to end up in a place where I can wash my hair twice a week.
- During this month I put my hair up in French braids a lot – there’s nothing like a good French braid to keep greasy hair looking presentable.
I’m satisfied enough with Month One that I’m willing to continue no-poo for a while longer, maybe incorporating the vinegar rinse and boar bristle brush. I’m not so satisfied with no-poo that I’ll swear to forsake shampoo forever.
Sometimes, a conversation is better with structure.
CB and I usually talk late at night, when we are both pretty tired from the day, and our conservation isn’t the most scintillating. Then I remembered an idea I read about – the “highlight, lowlight, surprise” structure, where we’ll go over the highlight of our day, the lowlight of our day, and something that surprised us or was unexpected. This has to be an improvement over our typical – “how was your day.” “It’s OK. I’m (insert one: tired, busy, stressed, hungry) or fine”) .
When I brought this idea up with CB, I was afraid it’d sound a little cheesy. But I’m really happy with the results so far. I like the structure that this gives our conversation – it’s much easier for both of us to share something unique/interesting/meaningful with this framework, and it only takes 4-5 minutes. We can go into the details or talk about something else if we have time or we feel like talking. Often times, the highlight/lowlight/surprise will lead to tangents about other topics or food for thought, but even if our call is just for 5 minutes, I still feel great.
This is mine for yesterday:
- Highlight: leaving my barre class (the first in a while) feeling relaxed and optimistic. Exercise endorphins… they are real!
- (Second higlight, just because): finding some 10-year+ photos of my mom and I, looking really happy
- Lowlight: stupid tiff with my dad over drinking glasses
- Surprise: there’s apparently drama among a texting group of Mom’s friends. These people are 60!! I guess drama in texting knows no age limits.
I’m curious to hear yours. (Also, does anyone else use this framework with their friends/significant others?)
I spent the weekend in the iconic City by the Bay, and guys, I think I have a problem. I am falling more and more in love with San Francisco and the entire Bay Area. This is worrisome because I am not, oh, a multi-millionaire AND I’d like to not spend 50% of my income on housing AND I’d like to eventually buy a house someday (and retire).
There are many stories out there about how crazy San Francisco real estate / rental market is. I’m here to tell you – it’s ALL TRUE.
Case in point #1: a friend said she got her apartment in the Lower Haight neighborhood by overbidding on rent. As in, the landlord asked for $x,xxx and she said, please, let me pay you $x,xxx + however much more so you will give me this apartment.
Case in point #2: another friend said she went to every appointment showing with copies of her pay stubs, credit report, previous landlord references, friend references, bank statements, and a checkbook. So she can move quickly before the next guy can even think about whether he wants the place or not.
Case in point #3: a friend who was looking to sublet a room in his apartment had prospective tenants bring him wine, beer, ice cream, and snacks in an attempt to secure the room.
Case in point #4: a friend is paying $1,200 for a small dining room-converted-into-a-bedroom in the Mission district. The room that can never heats up right and she shares 1 bathroom with two other roommates, but she considers it a bargain because it’s rent-controlled. Market rate is at least $1,700, she says.
Case in point #5: CB and I wandered into a couple of open houses in Noe Valley, an especially sunny and pricey part of San Francisco. The asking price for single family homes (3-bedrooms, ~2,000 sq. ft) is $2 million in that area. And, during one open house I overhead another person who looks to be in his 20s or early 30s say “the down is $400K, I have that but I’d have to dig into my savings.” Cue MASSIVE jealousy and despondency, which we then attempted to cure with a jaunt to a chocolate shop.
Do you have crazy real estate stories to share about San Francisco / Bay area? Let’s hear ‘em!
Since my last post I have packed and shipped all my stuff, finished grad school, and went on an AWESOME and not-at-all-frugal vacation with my parents to New York City, Boston, Montreal, and Quebec City. It was their first time to the East Coast and to Canada. I’ve been to Boston and New York City before, but what struck me the most was the picturesqueness of Vieux Quebec, the walled old city. That place is probably as close to a real-life Disney set as there ever is. My parents both loved Quebec City, and seeing my mom’s face light up is my most treasured memory of this trip.
The other thing I realized is that I LOVE being a tourist. I’ve read some bloggers who make a distinction between “travelers” and “tourists” (usually with the implication that travelers are more authentic), but well, being a tourist is pretty great. Apparently, I love doing unabashedly touristy things such as going to see the most significant sights, taking tons of photos, and doing walking tours with people who dress in costumes. My whole family does!
We ate out every night at places and got desserts almost every meal. Speaking of food, we had many great meals, especially in Boston at my favorite place, the Courtyard Cafe at the Boston Public Library, and Montreal. We strolled and walked and took the subway when convenient but also splurged on taxis when we got tired. We sat in the Orchestra section of a Broadway show, and did not stand in line for day-of tickets at the TKTS discount booth in Times Square. We went up to The Top of the Rock observation deck. I hired a private guide to lead us around Lower Manhattan. We took trains when flights would have been cheaper (but less comfortable). My parents bought souvenirs, a few landscape drawings by a street artist from Quebec City and a book from the Metropolitan Museum of Art in New York City.
It was a great trip – a bit hurried as we covered 4 cities in 12 days, but I’m glad we went to the cities that we did. I’m glad we didn’t cut out Montreal as I was considering at the beginning. I was impressed with Montreal – it seems very affordable (our 1-bedroom AirBnB in the center of Le Plateau was less than $100 a night), extremely clean, and the boulevards are beautifully lined with trees, restaurants, and boutiques. Unfortunately I will never live in Montreal because 1. The winters. The winters!, and 2. je ne parle pas français. If only the whole year has May weather – I would be motivated to learn French in that case.
All in all, I calculated that this trip cost a total of ~$7,500-$8,000 for this family of tourists, or an average of $220 per person per day. On the one hand, the trip wasn’t extravagant, or at least, it didn’t feel extravagant in the way that a 5-star hotel suite or limos or first-class flights would feel extravagant. On the other hand, I – and my parents – almost NEVER spend money without calculating fairly detailed budget, and on this trip, while I kept an eye on menu prices and we had breakfast inside our apartments many times for convenience as well as cost, we didn’t count the pennies. Or even the dollars. So that was extravagant for my parents, as this type of spending is probably 4 standard deviations away from how they normally spend. My parents paid while I offered to cover our accommodations ($2,400-$2,500). My dad has always liked to see places, but now I think my mom has caught the bug as well. She has already said she wants to do a family vacation to Europe in 2015.
This is the night view from our balcony in the Condado district of San Juan, Puerto Rico. This was somewhat of a spur of the moment trip – a good girlfriend wanted to go somewhere to celebrate the impending end of our graduate school journey, but she had visa issues that precluded traveling outside of the U.S. So Puerto Rico was the perfect solution. It didn’t hurt that we found roundtrip tickets for $250 and that our lagoon-side accommodation, with a balcony, was only $120/night. Neither of us have been to Puerto Rico before, so this is a chance to just relax, recharge, and lounge!
Isn’t it beautiful?
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