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Spending Goal: $2,000 On My Wardrobe in 2012

Written by WellHeeled on January 5, 2012 · 30 Comments

Most of personal finance is about how to earn, save, and invest money. Yet, spending money with intention is just as important.

Bottom line, I don’t think there should be guilt associated with responsible spending. That is why I have made a goal of spending $2,000 in 2012 on something that is important to me: a wearable, chic, cohesive wardrobe. The $2,000 will cover everything related to editing, building, and refining my wardrobe, including alterations, shoe inserts, bag repairs, jewelry and accessories, etc. I am going to try to limit myself to $150/month, and have a month or two when I can make an extra purchase if I want – such as when I head to Buenos Aires, Argentina in June.

My favorite stores include Banana Republic, Gap, J. Crew, Nordstrom Rack, and TJ Maxx. I also check out sample sites Ideeli and Rue La La quite a bit. Before I make any purchases online, I go through Ebates so I can get 2%-5% cash back on my purchases. That money goes into my Funny Money account. I am a consummate sales shopper who tries really hard to look for at least a 50% discount on the original retail price before I pluck down my credit card. That’s how I am confident that I can get attire that is of good quality (wool, silk, and leather, fully-lined, etc.) at fairly reasonable prices. But at my planned spending limit, Louboutins are definitely out.

Why spending goals are important

When I first started blogging, and even to this day, there’s a level of guilt associated with buying things for myself – things that are not considered “necessary” or “important” (i.e. non-educational items). But we all make money to spend it – what matters is how we spend and on what we spend. And the only right answers to those questions, of course, is responsibly and joyfully and things that we value. With a spending goal, I can structure my expenses so that they are guilt-free, planned, and carefully considered. If I didn’t have spending goals, I may very well STILL spend $2,000 on clothes and shoes. But my purchases wouldn’t be nearly as fun or as planned.

(Also, a confession: I’ve tried to try (and like) the minimalist thing, and I decided that there is a difference between my 3 black wool sheaths, and I do need a 4th. Oops!)

Do you have spending goals for 2012?

Categories: Budget, Goals, Shopping, Spending

2012 Goals: Big Changes Are A Coming!

Written by WellHeeled on January 4, 2012 · 12 Comments

2012 will be a year of big changes for me, personally and professionally. I am heading back to school to pursue an MBA. I will be getting married and then I will likely embark on a long-distance marriage. I’ve thought about the things I like to accomplish this year, and I haven’t gotten them all down yet. All I know is that things will be in transition. I am excited about what the year will bring, and I feel very lucky.

Financial

Income: I am setting a goal to make $60,000 gross, including $25,000 in freelance/blog income. Why $25,000? That number is what I expect my annual MBA living expenses to be. When I go to school, obviously I will be giving up my full-time employment and the corresponding paychecks. The prospect of having NOTHING coming is frightening. But if I can make around $2,000 a month, I can support my own living expenses during my time in school. This means I will be able to reserve my savings for tuition or a future down payment. And that would make this personal finance blogger very happy. $25,000 is a pretty big stretch for me, but I know this goal is possible and I believe it’s a not-unrealistic-goal, as long as I devote the necessary time and attention to it.

Saving: In terms of saving money, our goals (and plan for executing said goals) are fairly simple. CB and I both aim to max out our Roth IRA at $5,000 per person or $10,000 total. For 401K, I am contributing 25% of my base salary and CB is contributing 10% of his salary to the 401K. I will also contribute ~$1,400 to my SEP IRA after the taxes are done in April 2012. That means we are going to save $20,000+ for retirement in 2012, depending on when we leave our jobs for school.

Spending: This ties into one of my blogging goals below, but I’d like to spend $2,000 this year (or around $150 a month) in pulling together a well-edited, professional wardrobe. I have many good pieces, but no coherence. Some of that money will go to nice suit (or two), some for heels, and some for bags.

Blogging

Giveaways: I love hosting giveaways, so I have a goal of hosting at least ONE giveaway every month of the year. In fact, I have a giveaway (hint – it will be something sweet) coming up next week. I just got the new widget Rafflecopter, which will make administrating contests and counting votes so much easier. If any sponsors/PR folks are reading this, please email me! If I think my readers will enjoy your product or service, I would like the chance to feature it.

Facebook: Yes, I have neglected Well Heeled Blog’s Facebook presence. Fortunately, I have finally gotten a vanity URL (http://facebook.com/wellheeledblog), and I have recruited a very capable and talented individual to handle the back-end of the blog administration. And get this – he will work for FREE! Haha. Can you guess who?

More involvement with bloggers: I’ve said again and again that the best thing blogging has given me are the relationships I have built. Now I don’t expect to become BFFs with every blogger I encounter (because that would be weird), but I have made some of my very good friends thanks to this blog. In fact, two of them and their significant others will be coming to my wedding. That means 10%+ of my entire wedding guest list originated from this blog. So I’m going to make a goal of being a little more open to meeting other bloggers, maybe even attending the 2nd Annual Financial Blogger Conference in Denver, CO, and be a more active member of Yakezie and Wisebread communities.

A second blog: I plan to start a personal style blog. It will not be connected to this blog, although I expect some money-related materials might sneak in now and then. My goal is to get this blog up and running by February. I love writing about personal finance, but I also would like a dedicated space to talk about my goal of becoming a more confident and stylish dresser at work without feeling like I’m a shopping enabler. I plan to be a little more public with the style blog, and I look forward to putting my wedding pictures up there.

Personal Goals

Travel: Here are some planned travel – business trip to Las Vegas in February, road trip along Pacific Coast Highway and then honeymoon to Buenos Aires, Argentina in June, perhaps a quick jaunt to China in July? I also want to do plenty in Southern California travel while I am still in the area.

Categories: Goals

Annual Goals vs. Monthly Goals

Written by WellHeeled on January 2, 2012 · 10 Comments

Happy New Year everyone! 2012 is here, and along with the new year comes a rash of goal-setting. I’ve been actively setting annual goals and keeping track of my progress for the past few years, and I know many bloggers also have monthly goals. So here’s my question – are annual goals more effective or are monthly goals more effective?

Get Rich Slowly has said that annual budget goals are the best, because people who construct annual budgets take into account the irregular expenses (potential car accident, Christmas presents, etc.) that can knock a monthly budget off-kilter. On the other hand, monthly goals can help you keep track of your progress so that you are aware of any slip-ups and can quickly correct your course.

Of course, annual goals and monthly goals don’t have to be mutually exclusive, so perhaps the best approach incorporates both. In the past, I’ve focused exclusively on annual goals, but I’ve realized that it’s a good thing to have some smaller, more discrete goals on a monthly basis. I do that for my job, so why not for my personal finances? Krystal at Work is a pro at keeping track of her monthly goals, and I find that inspiring. Given the fact that I have some big stretch goals in the works for 2012, I need to keep an eye on my progress, month-in, month-out.

Do you pay more attention to your annual goals, or are you a fan of monthly goals?

Categories: Goals

Things That Will Cost More in 2012

Written by WellHeeled on December 29, 2011 · 9 Comments

I know I am getting old(er) when I start saying things like “I can’t believe I can’t get a pair of wool pants for $25 anymore!” or “I remember when movies were just $5 a ticket!”. New year, new pricing increases, so I found this article: 11 things that will be more expensive in 2012 from Deal News pretty interesting. Can you guess what’s on the list?

The #1 item on the list is airfare – domestic and international. Because of fuel costs and increased regulatory fees, flying is going to become a more expensive proposition for all of us. According to American Express, prices within North American will increase up to 5% for economy and 7% for business class. I’m not surprised, but for someone who loves to fly, this is a big bummer. I probably have spent a few thousand dollars on flying in 2011 – nothing fancy, but traveling on a short notice (ahem business school visits) can really up the fares. I’ve paid as high as $600 for a cross-country round-trip. Won’t lie, that one definitely hurt.

In 2012, I expect to be spending a fair amount on airfare as well. But I’m hoping that with judicious application of co-branded credit cards, I can subsidize my air travel. For example, our honeymoon flight to Buenos Aires is going to be under $500 for the two of us. Quite proud of that one, I am.

The other items on the More Expensive List:

#2 new digital cameras
#3 hard drives
#4 desktop computers
#5 food for home preparation
#6 mobile device data plans
#7 city-enforced fees
#8 water
#9 gas
#10 gold
#11 shipping

To this list, I’d add a few items of my own:

#12 movie tickets – it costs studios more and more money to produce the big-budget blockbusters that are guaranteed to pack theaters, and so ticket prices are sure to climb as well. 3-D movies also add an additional $3-$5 on top of regular movie tickets. Right now it costs $11-$12 for an evening ticket, and the ONLY reason CB and I are still avid movie goers is because we can buy $7.50 tickets from Costco.

#13 clothes – the price of cotton has been going up for a couple of years, in addition, the costs of labor and transportation have also increased. You know these higher costs of production will be absorbed by consumers in the form of higher prices.

#14 tuition – college, graduate school, you name it, and the prices are probably going up. In fact, the Cal State trustees just approved to raise tuition by 9% for 2012. When I look at the Tuition & Costs page of business schools, all the figures have a disclaimer that goes something like this “costs typically increase 3%-5% per year.”

Take a look at the list and let me know what you find most distressing. What would you add?

Business Insurance Experts Premierline Direct

Categories: Economy, Spending - Tags: retail industry

My Holiday Splurge

Written by WellHeeled on December 27, 2011 · 9 Comments

I hope everyone had a Merry Christmas / Happy Hanukah / wonderful holiday celebration! I didn’t step one foot into a store this weekend, but unfortunately (or fortunately), the easy access of online shopping meant that I’ve made a few holiday splurges. I’ve said it before.. there is something about the holidays that make me loosen my wallet, without fail. According to news of the retail sale jumps and credit card usage increases, I’m not the only one buoyed by the spirit of the season to spend a little (more).

Thanks to a Christmas bonus and Mom’s birthday gift, I found myself in possession of an unexpected $700. Thanks to this boon I went a little crazy with the buying. In addition to a couple of dresses for work, I got a Linea Pelle overnight/weekend bag. The Dylan 24 Hour Overnight Bag retails for $595, but now that it’s out of season I’ve seen it marked down to $300+ on eBay. In a stroke of luck, I found it for just $139.99 plus $10 shipping on Ideeli.

It looks great online, and I’ve heard that Linea Pelle has gorgeous leather, so I am definitely excited about this “gift to myself”. $150 was near the top end of what I would be willing to spend on a bag, but I thought this was too good of a deal to pass up (yes, I actually thought that – too good a deal to pass up! No, please don’t kick me out of the personal finance blogger club). Now I can travel with a little more panache than just with my $10 duffel bag from Ross.

What was your biggest splurge this holiday season?

Categories: Luxury, Shopping

Guess Who Is Going to Business School

Written by WellHeeled on December 21, 2011 · 29 Comments

Apparently, I am.

I have received my first official acceptance of this application season, to one of “the 15 schools who make up the Top 10 MBA programs in the U.S.”*

I am so happy and grateful that all that legwork and homework have paid off. For this one school in particular, I attended their West Coast receptions 3 years in a row, when I first started thinking about an MBA. I visited the campus twice. I talked to probably 15+ people over a course of 2-3 years to try to get an understanding of what is important to me in an MBA program and what is unique about this school. For my other schools, I have done the same thing – multiple visits, many conversations with many folks, lots of hard thinking about what I value and what schools would best fit me and that I can best contribute to.

I’m not sure what the financial aid picture looks like just yet, but my fingers are crossed for some type of scholarship/grants.

It’s such a relief to know that I am actually going to school next year. I have a number of plans and goals for 2012, before the MBA (save $$, get married, travel) and during the MBA (make friends, learn new things, avoid the poorhouse). It should be an exciting year.

*The schools play musical chairs with rankings every year! One spots down, two spots up, and so on and so on. I don’t think you should ignore the rankings entirely, but it’s not dogma. I applied to schools in the Top 10 and Top 20, and I would be happy at any one of them because I know they fit my personality, will challenge me, and will help me accomplish my career goals.

Categories: School - Tags: MBA

Weird Saving Tricks I Use

Written by WellHeeled on December 20, 2011 · 20 Comments

Do you use weird saving tricks? We’ve heard of all the normal ones: automatic deduction from your paychecks, setting aside 10% of your income for retirement, putting your tax refund into your savings account, blah blah blah. I’m not talking about those. I’m talking about the idiosyncratic and really strange little mental tricks you play on yourself so you can squeeze out a few extra dollars of savings here and there. In fact, I have a specially named sub-account for savings from these weird tricks - I call it my Funny Money account.

Here are some of my weird saving tricks:

When I make brunch at home, I put away $15-20 (what it would have cost us to go out to eat). Last weekend, we somehow managed to cook at home not once but twice, so $40 went from my bank account to the Funny Money Fund on Monday. We eat out at brunch way too often, and the funny thing is that brunch is my favorite meal to make, at a time -weekends- when I have time to make it.
When I make a return (a dress that I just couldn’t make work, or shoes that don’t fit right), I take the money I get back and I put it in a savings account. Impulse buys, thou shalt not get the best of me!
When I get a gift card as a present or as a bonus from credit cards, I try to put 1/2 of the face value into my savings account.
When I stay at a hotel for free because of points redemption, I save $10-$40 depending on how expensive the hotel was.
When I window-shop and I make the (frankly very difficult) decision to NOT buy that perfect pair of stacked suede heels or mirrored jewelry box with velvet lined interior, I put the money I would have spent into the Funny Money Account.

I use these little tricks because saving is just as much mental and emotional as it is mathematical. I know I am a spender trapped in a saver’s body – it’d be way too easy for me to overspend if I don’t put a few safeguards in place. So I have the big ones such as 401K deductions, but I also try to make it a fun game for myself and make sure that when I DO overcome those impulse buys or get lucky with gift cards or free stays, I put away a little something too. If the money is just swimming around in the checking account, I know I’m going to spend it.

Do you have any weird saving mind tricks you use?

Categories: Saving, Shopping, Spending - Tags: consumer behavior

Use Picture of Dream Home as Motivation to Save for Down Payment

Written by WellHeeled on December 17, 2011 · 15 Comments

My version of the American Dream still includes home ownership. But saving a down payment, especially in an area with a high cost of living and real estate, can be brutal. After everything that has happened in the real estate market in the past few years, though, a solid down payment of 15% or 20% is more important than ever. The bottom line is that I still want to own a little piece of California for when I retire. Which means the double bottom line is that I need to save for a 20% down payment. For a $500,000 house, that’s $100,000 in cash. Plus money for closing fees, inspection fees, and a myriad of other costs.

I do OK saving for retirement thanks to automatic deductions, but it’s MUCH harder for me to aggressively save for a down payment. Most of the time, I can’t translate my desire to own a home into motivation for the daily, weekly, monthly discipline necessary to saving up the big bucks.

Turn to… The Realistic Dream Home

That’s why I am so excited to find my dream Spanish-style abode in San Diego (be sure to click on the photo gallery so you can see the picture in its full glory). Forget about the $800,000 Hollywood Hills looker, this house is the one I want.

At $459,000 for 3 bedrooms and 2 bathrooms, it is reasonable (by California standards)! The price is within what we could afford once we are both out of school and working full-time, if we save up a solid 15%-20% down payment, if the real estate market doesn’t return to pre-bubble days. Lots of “ifs” – but it’s possible. It’s a realistic dream home, and it is beautiful – with 95% of everything I want in a home. Even though I know this home not meant for me (right now), I am printing out a picture and sticking it on my desk so I can REMIND MYSELF of the dream that is out there. Down payment, I am going to save you up so much.

In the mean time, let me tell you all the reasons why this is the perfect home for me:

It’s in San Diego, land of 355 days of sunshine and blue skies, the city where CB and I have already decided we would want to retire in. I am fine with traveling.
It is Spanish style with white walls and red-tile roof. This is quite possibly my favorite style of houses ever. (Surprisingly, CB isn’t as big of a fan of the Spanish-style architecture as I am. Surprising because that is obviously the best style in California. Obviously). In fact, I love the house so much that I exacted a promise from CB that he will give any Spanish-style homes we look at in the future true and deep consideration.
Hardwood floors. Gleaming yards and yards of hardwood all through the house.
The big window facing the front.
The front courtyard.
The lovely backyard.
At 1,600+ square feet spared over 3-bedrooms and 2-bathrooms, plus a 2-car garage, it’s the ideal size for us. Not too big and definitely not too small.

I don’t know if you guys have a dream home in mind, but if you are in the process – or thinking about – saving up for a down payment, I’d encourage you to give The Dream Home Picture As Motivation method a try. Personally, I find it difficult to save what seems like pittances every month compared to the big money pit that is home ownership, and it’s much easier to just spend that money instead. After all, what can an additional $5 do for me when a house costs $500,000? What is an additional $20 when inflation is going to eat it up so that you are losing money by saving in the short-term? These are discouraging thoughts, and when they strike it’s going to help having a tangible reminder of why you are saving. This is especially important if saving for a down payment will be a multi-year process.

So… do you think it’d be going overboard if I laminated the picture?

Do you use a picture of your dream home to motivate yourself to save for a down payment?

Categories: Real estate

3 Tips for Meaningful and Personalized Gift Card Presents

Written by WellHeeled on December 15, 2011 · 7 Comments

Gift cards can save your life. How? You may ask. Well, there are now officially 10 days until Christmas. Are you done with your holiday shopping? I am not. In fact, I have not even started. And every day that Christmas creeps close is another day that I don’t want to go into the malls and fight over the picked-over displays of rejected items. Even though I may be a very bad procrastinator when it comes to gift-giving, I still want to give something that is of value and interest to my friends and family. The answer, ladies and gentlemen, is “Gift Card.”

I know, I know, many people think gift cards or gift certificates are impersonal. Others say, why not just give cash? But personally, I love receiving and giving gift cards. It’s an enforced way of spending on yourself (you can always save cash, and although you can also sell gift cards online, I’d imagine most people are more inclined to spend it instead). So here are my 3 easy tips for giving meaningful, personalized gift cards that will be used, enjoyed, and appreciated.

1. Get a gift card at a place the recipient likes to eat, shop, or visit. Might seem obvious, but don’t get your friend a gift card to Outback Steakhouse if he is a vegetarian. If your sister loves arts and crafts, a gift card to Michael’s is a great gift. If a friend loves to go to the Cheesecake Factory, a gift card will go a long way in satisfying his penchant for sweets. Book lovers will love a gift card to Barnes & Noble. Spa lovers will love gift certificates to a local spa. Disney lovers will love anything Disney (gift cards especially!). If a friend likes movies, electronics, games, etc., it’s hard to go wrong with Best Buy. If you can’t decide, go for high-impact gift cards that most people will use: places like Target or Amazon, etc.

2. Give an amount where the recipient can get something without spending too much (if any) of his/her own money. In other words, adjust your gift card amount to the retailer’s prices. A $10 gift card to Starbucks, for example, makes perfect sense. A $10 gift card to Neiman Marcus will get bubkus unless the recipient is willing to put in at least $40 more of her own dough. My rule for restaurants is that the amount I give should equal a really big spread for one person or a reasonable meal for two. For example, one of my friends love The Counter (a place where you can customize your own burgers). The burgers there usually go for $9, plus $5 for fries and $6 for milkshakes. I got her a $25 gift card because that should just about cover a meal for two if they have two burgers and share a fries. I would not get her a $25 gift card to Spago in Beverly Hills because that will get them 1/2 an appetizer.

The only place where I’d make an exception would be if you know the person wants something that’s really outside of your price range – for example, an iPad 2. In this case, anything towards that purchase would be fine. A $25 Apple or Best Buy gift card will get your recipient one step closer to the tablet of her dreams.

3. Personalize the gift wrapping / covering, and write a heartfelt message. What’s better than a gift card? A gift card wrapped in something cool! My favorite way to present gift cards would be to put them into a cardboard sleeve (some gift cards, like Express, come in an actual gift-giving box), wrap it up with old grocery bag paper, and then tie a string of twine around it. Add on a card with a personal message that refers to the type of activity the gift card will bring them – “I hope you enjoy those burgers at The Counter! The one with brie and grilled onions is delicious!” or “I know you’ve been looking for a Blue-Ray player. Hope this makes your search a little easier!”

Anyone like to give and get gift cards for their holiday presents? Does anyone have other helpful tips when it comes to gift card-giving?

Categories: Gifts, Spending

The Big 2-7

Written by WellHeeled on December 13, 2011 · 11 Comments

Today is my birthday. Which means that I have officially entered my “late-twenties.” To celebrate, we are going out to the local Cheesecake Factory where I will feast on one of my favorite desserts of all time (although that list is about 50 items long…): strawberry shortcake with fresh strawberries.

When I was in middle school, I read the novel Tuck Everlasting and first learned of the concept of immortality via magical spring water, I thought that 27 would be the perfect age to live forever. See, to a 12-year-old, 27 seems older to be respectable, but still young enough to be… young. But of course now I know that the only way to avoid growing old is dying young. (Also, no such magical spring exists).

I just took another look at my 30 by 30 goals lists I started 2+ years ago and realized time is-a-wastin’! I haven’t quite accomplished too many of those items on my list, but I am in the process to accomplishing a few. I am looking forward to my 27th year – this is the year I am going to get married to CB and have a wonderful honeymoon in Buenos Aires, (hopefully) get into a great business school, study Chinese in an immersion program, max out my Roth IRA for the 6th year, and gain a few more ounces of wisdom. In my 27th year, I am going to make a real push to fulfill some of these life goals on my 30 before 30 list as well financial goals that all good personal finance bloggers have.

But for now… as birthday present, would you take a look at this article I wrote Allstate’s blog and tweet or FB it? Life insurance hasn’t been on top of my mind, and I imagine that’s the case for many folks in their 20s and 30s. But getting married that makes me realize that soon I (and my income-generating ability) are going to be important to more than just myself.

5 Reasons Why Young People Need Insurance

Categories: Blogging, Life

Giveaway: Start 2012 Off Right With A Free Palmer’s Planner

Written by WellHeeled on December 12, 2011 · 23 Comments

2012 is almost upon us… so start the new year off on the right financial foot. Here’s a giveaway to help you do just that. Kim Palmer of Alpha Consumer and Generation Earn fame has graciously offered to send one winner a copy of one of her Palmer’s Planners: the 2012 Money Planner, the Money Planner, the Debt-Free Planner, and the Baby Planner (you can buy it for $4 to $24 on Etsy.com).

If you’d rather spend time on activities other than financial planning, then the Money Planner is for you. Based on Kim’s personal finance book, it is designed to help you meet your big financial goals by breaking them down into smaller steps and thinking creatively about how to accomplish them.

This PDF is a 44-page, color document; you can either print it out, hole punch it, and put it in your favorite binder, or read it on a mobile device such as an iPad or Kindle.

The winner of this giveaway will receive his or her choice of a Palmer’s Planner. You will receive the file within 24 hours of claiming the prize.
Read more »

Categories: Blogging - Tags: win free stuff

Hello Beautiful Dream Home That Is 6x Our Annual Income

Written by WellHeeled on December 10, 2011 · 12 Comments

Check out this beautiful house perched in the Hollywood Hills section of Los Angeles, California. Just go. Click through the slideshow. Be amazed. I’ll wait.

I came across the website when I was poking around the New York Times real estate section amid another burst of I want to be a homeowner! and immediately fell in love with the wide expanse of covered deck that runs the lengths of the house, the gorgeous floor-to-ceiling windows, and the incredible, truly incredible vistas of iconic Los Angeles (including glimpses of the Getty Villa in Malibu and the Hollywood Sign).

I am not usually moved by “the view” because in real estate speak that can mean a slice of an edge of the ocean if you look sideways on 1 day of the month, but the pictures don’t lie. This house has VIEWS and it has them in spades. It also has a $800,000 price tag. For less than 1,000 sq. ft. with just 1 bathroom on the main level. But for that view? I can downsize. Imagine waking up in that bedroom every morning. And because this home is in Southern California, you’ll be able to use it as basically an extension of the indoor living space 300+ days of the day.

I just need to somehow scourge up another… oh… $750,000. But wait – CB did buy the lottery yesterday. The dream is not dead (yet)!

Categories: Real estate

Dear Old Car: 250,000+ Miles and Going Strong

Written by WellHeeled on December 8, 2011 · 19 Comments

The picture says it all, no? In case you can’t tell, I am driving an old car with flaming Sweet Sixteen candles on top of it, crossing over the 250,000 miles banner. The car is also disproportionally big compared to the driver.

My 1996 Honda Accord sedan is running strong, running long after sixteen YEARS and 250,859 MILES. When my dad passed down his car to me when I left college, it was already 10+ years old. Now that it crossed over the quarter-million mark, it’s still doing well with no immediate problems. Can you believe it?

Here’s what I wrote in ode to old cars post back in 2009:

1. An Old Car is most likely to paid off. Which means… no car payment, which means… more money in your pocket. Of course, repairs can cost higher than a new car’s, but in many cases the math still works out in the Old Car’s favor. Even with periodic repairs to the tune of $1,000-$1,500 a year, my Old Car is still cheaper than a New Car would be.

2. Cheaper insurance. Old Cars are cheaper to insure (and you might not need comprehensive or collision insurance for an old car). Added up over the course of 5 years, you can save hundreds or thousands of dollars on insurance if you drive an Old Car instead of a New Car.

3. Less worry of damages. A bump on an 1997 Toyota Camry adds character (or so I’d like to believe), a scratch on a 2009 BMW 335i is a glaring blemish. I have little scratches on my car that I don’t worry about fixing. I don’t want my car to be scratched, of course, but if it happens it won’t break my heart. If I were driving a brand-new car, however, that would be a different story.

4. At this point, it’s become something of a “let’s see how many miles I can put on this car” game. I had one mechanic tell me he has a Honda that topped 400,000 miles. While I don’t know if my car can get that far, I’m hopeful that my car have a few more years in it.

I feel the same way today. I love my car so much. It is a faithful buddy that asks very little: regular oil changes, repairs when needed, and a wash now and then. And it has given me so much in return: ability to get around, freedom from monthly car payments, a reliable and comfortable ride, and 29-30 miles per gallon gas mileage. I would have never been able to save as much as I am for retirement or travel to all those places if I were not gifted with a car. For that, I am grateful. To the car (and my dad)!

How do you keep your car running to the quarter-million mark? According to an MSN Money column, the average car is about 13 years and has 145,000 miles when it’s scrapped. So if you can drive your car to 250,000 miles, your car will have given you 100,000+ more miles than an average ride. The column goes on to give you several tips to make the car lasts longer. I’d say that for me, it’s part luck and part maintenance. Regular oil checks (I do mine at 3,000 miles no matter what anyone says!), a trusted mechanic, and a solid build has helped my car go and go. The lack of serious accidents obviously is a factor as well. Can’t drive a car to 250K miles if it gets totaled earlier.

Do you think your car will make it to 250,000 miles and/or sweet sixteen mark? What’s the make, model, and year?

Categories: Car

What Percentage of Income Do You Save for Retirement?

Written by WellHeeled on December 7, 2011 · 23 Comments

Retirement. The 800-pound gorilla in the personal finance room. You can’t talk about personal finance without talking about retirement. And you can’t talk about retirement without talking about how much you are saving for it.

I was reading on Bruce Bucks when this note caught my eye: according to personal finance expert Liz Weston’s financial rules of thumb, you should:

Save 10% for BASICS, 15% for COMFORT, 20% to ESCAPE. This rule of thumb works pretty well if you start to save for retirement by your early 30s. Saving at least 10% of your income ensures you won’t be eating pet food. Fifteen percent should get you a more comfortable living, while 20% gives you a shot at an early retirement (and yes, you get to count employer contributions as part of your percentage). Wait just a decade to start, though, and you’ll need 15% for basics and 20% for comfort; an early retirement may not be in the cards.

Wow! Those are some pretty big figures… We Americans aren’t exactly known as big savers, and I’d bet that most of us are not anywhere saving near the level necessary to escape into comfort. Recently, some experts are telling folks that they are saving too much money for retirement – after all, we might downsize our homes, we don’t need to buy business wear, maybe we can become a one-car or even no-car household. But I might argue that even 20% is not enough. Even though all these arguments make sense, I never feel that I am saving too much for retirement.

Thanks to my mother’s medical background and her penchant for sharing stories of folks in long-term care or suffering from catastrophic illnesses, I can imagine any NUMBER of ways to go. And it’s never pretty. Or cheap. (Well, if you die instantly it’s not too expensive. But most of us don’t get to choose). With the disappearance of pensions, diminishing Social Security payments, and increasing cost of health care, I wonder if fairly soon the new rule will be “15% for basics, 20% for comfort, and 30% to escape.”

In related news, I just maxed out my 2011 Roth IRA. Which makes this the first (and last, at least for a few years) year I have contributed the maximum to my 401K and IRA. Looking back at my past retirement saving history…

In 2006, I saved…. 39%
In 2007, I saved…. 42%
In 2008, I saved…. 8%
In 2009, I saved…. 17%
In 2010, I saved…. 39%
In 2011, I saved…. 24%

I maxed out a Roth IRA in 2006 with my first “real” paycheck. Since then, my savings rate has bounced up and down – in 2008, I wasn’t able to contribute to a 401K, and in 2009, I was laid off, but retirement saving has always been a top priority of mine. Last year I saved the most money I have to date, and this year I will be able to save around $2,500 more. If you count employer contributions, CB and I are both saving around 24% of our gross salary this year. Here’s hoping that we will have the option to escape to San Diego with mai tai’s when we are retired! For 2012, I have already submitted my paperwork for open-enrollment period at work. I’ll be saving 25% of my gross salary and CB will be putting down 10%, with an additional 10% employer contribution. Then we will max out our Roth IRAs.

On a side note, I like to evaluate my savings progress based on our total, unadjusted gross income. 401Ks are pre-tax, Roth IRAs and Roth 401Ks are post-tax, SEP IRAs are pre-tax but it’s based on 1099 income, etc., so I find it much easier to just calculate everything on the gross income. Otherwise it gets a little messy when you have to adjust for tax deductions.

What percentage of your gross income are you saving for retirement? (Tell us your age, location, etc. to give some context).

Categories: Retirement, Saving - Tags: 401K, Roth IRA

I Cannot Stop Spending At Airports

Written by WellHeeled on December 6, 2011 · 17 Comments

After 10+ flights in the last few months, I have realized something. The airport is SO GOOD at getting money out of me. I suspect that the TSA security screening process scans away whatever spending discipline I had and renders me helpless against purchases.

Magazines. Water. Coffee. Sandwiches. Organic fruit snacks. More magazines. Travel pillows. Coconut juice. Books. You name it and I’ve probably bought it. From $7 Martha Stewart Weddings to $9 pack of chocolate-covered kiwi slices to $14 paperbacks to $20 travel pillows, I’ve handed over my wallet way too many times to keep track. Part of this is that traveling can be so exhausting that I’ve kind of given myself carte blanc to use money to buy some comfort. Part of it is that I recognize all things are marked up in airports, so after a while the outrage has melted away to be replaced by exasperated resignation. Of course that tiny cup of latte costs $5. And that stale ham-and-cheese sandwich? $8.50. Wouldn’t think expect anything less. Here’s my credit card.

I think – and I am sure there is research on this – that when a person is sleep-deprived and bored he is more likely to spend money. And there is no other place that I am more likely to be sleep-deprived (leaving New York on a 6am flight when I am still on West Coast time) and bored (miss a flight and a 1 hour layover becomes 4) than in an airport. So it’s only natural that when I head into an airport my wallet becomes lighter. My body is conspiring against me to spend! That’s my excuse and I’m sticking to it.

I’m not the only one who feels this way, right? Do you find yourself spending a little (or a lot) more in an airport?

Categories: Travel

Does It Matter Who Makes More Money in a Relationship?

Written by WellHeeled on December 5, 2011 · 41 Comments

The progressive, egalitarian answer to the question “does it matter who makes more money in a relationship” would be “no,” right? It doesn’t matter because we should love people for who they are and not how much money they make. It doesn’t matter because money doesn’t define a person’s worth nor his/her contributions to a relationship. It doesn’t matter if it’s the man who makes more or the woman who makes more because we are beyond such gendered roles. Oh if it were only that simple!

Historically, men have done the lion’s share of bringing in income. Our current tax code is based on the assumption that there is one breadwinner in the household. Couples who make wildly disparate incomes often have a “marriage benefit” (i.e. they would pay less in taxes than if they were unmarried), while couples who make roughly similar amounts suffer from a “marriage penalty.”

There are research and anecdotal evidence that says men prefer women who make less money and women prefer men who make more money. When I was young I thought that was silly – especially men who wanted their spouse who makes less money. Why would you want LESS money if married folks combined all their money anyway? (Keep in mind that my understanding of “married folks and money”was based on a sample of 1: my parents). But in fact, my mother once told me that a marriage would be function more smoothly if the man made more money, even if it’s just a little bit more. Now my mother is a very wise woman, and life has proven her right time and time again. But I am hoping she isn’t that right on this issue.

My Personal Take

CB and I met in high school, so we were both as broke as a joke when we started going out. The highlight of those early days of courtship was Krispy Kreme’s free donut hour when the staff passed out complimentary glazed donuts. In teenage girl parlance, I heart delicious fried dough. (Still do!)

When we dated after college, we took turns paying when we went out. When we moved in, we split the rent according to our incomes and divided everything else down the middle, but we never kept very close accounting of who owes whom. Once we are married, we (and the State of California) are going to treat whatever we bring in as ours, not his or hers. Right now I make around 6o% of our income and CB makes 40%, but that hasn’t caused any friction so far.

I’d like to think this is the bottom line: I don’t care much if I make more money or CB makes more money – I just want our little economic/love unit to make more money, period! Haha. In other words, we’re playing on the same team. There will be times when I make more and times when he makes more, but it shouldn’t matter that much as long as we are both doing our best. I can definitely see conflicts, though, if one of us is out of a job without trying hard to find a new one or if our financial situation drastically worsens. Even though things are going fine, sometimes I think about what my mother has said. Am I too much of a Pollyanna? Is there something that my mom foresee that I can’t quite grasp right now?

What My Friends Say

One of my girlfriends said that she looks for a man who will make more money than she does, because she wants to feel that sense of financial security of NOT being the breadwinner. She also wants the option of staying home with kids later on, which would be easier if her income was a smaller portion of the family pie. Her reasoning makes perfect sense. In fact, I think it’s brave and self-aware of her to understand that about herself, because I know many women have conflicted feelings about this issue, but it can be difficult to say that you want your husband to make more money without sounding superficial or materialistic.

I have another friend of mine who has an MBA from a top school and a job making $100,000-plus. One evening, over a bottle of wine, she laid out this dilemma. She said that when she writes her Match.com dating profile, she is torn between three choices: (1) leave the field blank – but she doesn’t want to be excluded from search results that specify an income range, (2) write down her true salary range – but she has found that many men would not contact her because her salary is higher, and (3) lie about her salary, maybe put down a $40,000 instead – but that also feels wrong. What should she do?

Then again, I also talked to a guy friend who says that his ideal woman is gorgeous, thin, and rich as heck so he can enjoy a life of luxury filled with exotic cars and nice vacations. I’m pretty sure he was half-joking, but if a beautiful sugar mama dropped in to his life I doubt he would protest!

I haven’t talked to many men who said that they would view a women taking home a bigger paycheck as a negative. I’d like to think it’s a case of us all being more progressive, but just as it may be hard for women to admit that they want a man who makes more money, it may be difficult for men to admit that they want to be the breadwinner.

I’d like to know what you all think about this topic.

Do you make more than your significant other? How does that affect your relationship or marriage? For the women: do you want a man who makes more money? For the men: does it matter if your wife or girlfriend makes more? Would you prefer to be the breadwinner?

Categories: Behavior, Work - Tags: money and relationships

Are You Financially Insecure?

Written by WellHeeled on December 2, 2011 · 13 Comments

Are you just one job loss, one paycut, and one illness away from catastrophe? Sometimes it seems no matter how much money someone may be able to save or skills they cultivate, it’s a little too easy to fall down the economic ladder. More than 20% of Americans are “economically insecure,” according to the Economic Security Index created by a professor at Yale. The three major criteria for economic insecurity are (1) major income loss (over 25%), (2) out-of-pocket medical expenses, and (3) lack of savings.

Economic insecurity is at a high point, growing from around 17% in 2000 to over 20% in 2008, 2009, and 2010 (source: Economic Security Index).

Unfortunately, twenty- and thirty-somethings are doing the worst compared with all other age groups. The article goes on to say,

Young adults, age 18 to 34, proved to be the most insecure group during the recession, with a rate of nearly 25%. The next most vulnerable folks were those age 45 to 64, with a rate of just under 20%.

How do I guard against financial insecurity? Well, I try to perform well at work, improve my skills, network, network, network, and remain geographically flexible for new opportunities. I maintain a healthcare policy, or at the very least catastrophic health insurance. And I save, save, save, for an emergency fund.

Even though I am not economically insecure right now, I’ve been through a layoff and I get what it feels like to lose most of my income and have to regroup and reinvent myself. I am glad I am in a better place now – making a decent income, healthy, planning for the future with a good dose of optimism.

But those numbers are still disheartening.

Are you financially insecure right now? How are you shoring up your financial security?

Categories: Articles, Economy

New Allstate Blogger Here!

Written by WellHeeled on November 30, 2011 · 4 Comments

Recently, I became a guest blogger for Allstate Insurance’s GoodHands community. One of my post just came out in the last week or so – I’d surely appreciate it if you guys took a read and let me know what you think.

As the proud owner of a 1996 sedan that just tipped over the 250,000 mile mark, I know I may be in the market for a new car within the next couple of years. Having been spoiled by years of payment-less existence and fairly reasonable repair costs, I know that I want to find something similar in my new car. But the sticker price isn’t the only price I need to look at… or else I could in for a sticker shock down the road!

Consider 5 Concealed Costs When Shopping for a New Car

Categories: Blogging

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