A lot can happen in 12 months.

Sorcery

Yesterday, I went all “Who wants to be a millionaire” on you guys and asked the audience a question. It was a simple question:

How has your financial situation changed over the last 12 months?

Of the 333 of you that responded, 240 said things have gotten better. Only 44 readers said things have gotten worse. I wasn’t surprised by the results, considering anyone who voluntarily reads personal finance blogs in their free time, probably tends to care about their finances more than the average joe.

I liked my question because it was intentionally vague. I left it up to the respondent to decide what an improvement in one’s financial situation meant. Maybe that meant getting a fat raise, maybe it meant your retirement funds have appreciated, maybe you moved out of your parent’s basement, or maybe you’ve finally started knocking out that consumer debt that’s been hanging over your head. It was awesome to see the additional insight some of you provided in the comments section, so thanks for that.

While not much has changed in the Ninja household over the last year (expenses and income are pretty much the same), we’ve seen a pretty incredible increase in our net worth.

In fact, I just ran the numbers and it looks like we’ve shot up $55,454 in the last 12 months. In-FREAKING-sane. I honestly had no idea we made that much progress. That works out to a $4,621 increase each month… for twelve straight months.

What’s more, we dropped $12,000 cash on a car upgrade and another $7,500 on MANteresting during this time.

How the heck did we swing this?

I really don’t know. I mean, obviously the markets are responsible for a big chunk, but it really just comes down to boring ol discipline. Investing in our future, saving aggressively for a down payment, not being consumer whores, blah, blah, blah.

Being intentional and proactive with our finances in our 20’s will hopefully set us up for continued success in our 30’s, 40’s, and beyond. I’m taking the words of Spock seriously and doing my best to…

Live long and prosper

I’m so edgy.

I was driving home last night and, out of nowhere, had an amazing idea pop in to my brain. Crazy how things like that just happen out of the blue. Anywhoozle, You know how guys grow mustaches out in November, often calling it Movember or No Shave November? Well, what if Girl Ninja and I did a No Save November?

I mean, it’s pretty common in the PF blogosphere to see a blogger do a no-spend challenge for a week or month. Personally, I think no spend challenges are dumb, but you already knew that. If you have the wherewithal to maintain a personal finance blog, I’m going to assume you probably no longer have a spending problem. In fact, it’s probably quite the opposite, you’ve likely become a frugal fruitcake.

After a few years of very intentional saving, Girl Ninja and I are fortunate to be in a position where we have some major flexibility with our cash flow. We’ve been saving around $3,000 a month for the last 2.5 years.

It’s time we did something a little unconventional. Come November, Girl Ninja and I will implement a very strict No Saving policy for 30 days. That means every dollar we make we in November, we must spend in November. How fun will that be!?

It’s a good thing we’re not rolling this program out until November, gives me some time to make a list of things we should buy.

  • Twenty-six inch spinner rims
  • A new blender
  • A laptop
  • A miniature horse named Chad

Who knows what we’ll end up with! One thing is for sure, I’m excited for November to roll around so we can be the first PF bloggers to ever have a No Save month. Who wants to join the fun and make this a thing? You have plenty of time to prepare!

p.s. As much as we’d like to just spend the money on a big trip, we think that’s the easy way out. No travel expenses allowed is our rule. And I think we will allow X-mas gifts to be permissible expenses.

Keeping up with the Joneses like a boss.

My next paycheck will be a bit larger than the last. ¬†I’ll be getting a slight raise, about $2,500 more per year. While I’m stoked to be getting any raise at all, let’s be real, it’s not a life changing amount. In fact, it only works out to about a $75 net gain each paycheck. Or as I look at it, a free lift ticket each pay period ūüėČ

Since Girl Ninja and I are fortunate to have our income exceed all of our wants, we decided to do the boring/responsible thing and further increase our retirement contributions. Instead of throwing 10% of my gross income in to my 401K each month, we increased that sucker by another 3%, to 13%. My employer matches 5%, so in total 18% of my gross pay will be going in to my 401K plan each paycheck. Is that hot or what?

That's hot

So I get a $2,500 raise, and before I even have a chance to see it in my paycheck, we decide to throw all of it towards retirement. If that’s not keeping up with the Joneses, I don’t know what is!!!!

Since I’m a self-proclaimed PF nerd, I thought I’d run a quick calculation…

If we keep throwing that $2,500 in to our 401K plan for the next 40 years, do you want to know how much extra we’d have come retirement? This example assumes a 6% rate of return.

$416,968

There was really no decision to make. Get $75 extra in each paycheck and blow it on things we don’t need, or have an extra $417,000 waiting for us when we’re old?

Lifestyle inflation is cool and all, but if we are already content with what we have, what else is there to inflate besides our savings account, retirement funds, and our charitable contributions? I’m not going to go run out and buy another TV or laptop just for the heck of it.

Last time you came in to a little extra money, what did you do with it? If you had to inflate your lifestyle in one aspect how would you do it? (We would probably pay for a bi-weekly cleaning service)

Too conservative for my own good.

Screen shot 2013-01-16 at Jan 16, 2013, 11.56.18 PM
I was chatting with a close friend a few days ago¬†about the housing market. Big surprise right? We know what the median household income is in Seattle ($66,000), and we also know the median sales price of a home in Seattle right now is $380,000. What we don’t know is how the crap people can afford a $380,000 house on a $66,000 annual income! There are only a few logical conclusions…

1. They inherited the property

2. They received a financial windfall

3. They are house poor. 

4. They are risk takers.

If they inherited the property, or received a financial windfall, good for them.

If they are house poor, I can’t say I’m jealous of them. Nothing about living paycheck to paycheck appeals to me. I would never want to be in a position where I have to sacrifice traveling, eating out, or skiing just so I can make a mortgage payment. No thank you.

But what about the people who are just willing to take a risk. Debt has a pretty bad rap. Heck, I even named my blog Punch Debt In The Face because I think it’s so dumb. But reality is, debt can be a powerful tool for building wealth; like when one takes out a line of credit to start a business, or when someone finances a rental property.

Sure it’s risky. If the business fails, or the real estate market crumbles, you could lose everything. But how bad is that really? It’s not like you have to worry about going to jail. Maybe you get sent to collections and settle your debt for less than you owe, maybe you walk away from your house and get foreclosed on. Maybe you have to consider filing bankruptcy. While none of these things are particularly enjoyable, they are solutions.

Maybe I’m too conservative for my own good?

I mean, if we bought a $500,000 house¬†last year, we’d have about 15% equity in the thing based on recent market appreciation. That’s a $75,000 gain in 12 months!!!

What did I do? Oh that’s right. I decided to keep saving money so we could easily afford a 20% down payment on a house priced $150,000 under what we are qualified to borrow. At last check, my savings account earned a paltry 0.75%.¬†

Do you see what I’m saying friends? It seems to me that the risk/reward comparison of using debt to leverage one’s financial position often favors reward. Think about it.

We buy a $500,000 house and sell it a year later for a $50,000 profit (after commissions). Or we buy a $500,000 house, watch the markets tank, and walk away from the property and let the bank deal with it (Washington is a non-recourse state). The system is set up to protect one against their own stupid decisions, so much so, that these stupid decisions are no longer necessarily stupid.

Interest rates are low, and house prices are still lower than pre-bubble days. Why not use the depressed market, and government bailouts (quantitative easing), as an opportunity to make some extra dough?

Oh that’s right, because I’m a wuss.

Screen shot 2013-01-17 at Jan 17, 2013, 12.02.52 AM

Being conservative might not make me rich, but I guess it beats the possibility of being poor?

Life’s about to get more expensive.

We’re pregnant! Okay, that was mean. We aren’t pregnant at all. I really need to stop doing that, otherwise you probably won’t believe me when the time comes for a real baby announcement. While there aren’t any babies in our immediate future, our life is about to get a heck of a lot more expensive.

For the first time since I graduated high school, I am going to be in the Pacific Northwest for an entire ski season. I’m freaking pumped. I haven’t skied more than once or twice in a season in nine years. NINE YEARS!!!!

Obviously San Diego living isn’t the most ski-friendly environment. Sure, there is Big Bear, but who the heck wants to drive 4 hours to ski on man-made snow? Not I.

 

Last night, I hopped on the Stevens Pass website to see what a lift ticket is costing nowadays. The numbers aren’t pretty:

Ugh, sixty-five smackers to enjoy a day on the slopes? Is this a joke? I coulda swore in high school the tickets were like $35. And I think gas was $1.23/gallon too. My how the times have changed.

Frick it. 

I’m going skiing…a lot. Even if that means we’ll be $1,000 poorer this winter because of it. Sometimes ya just gotta spoil yourself, ya know? Now I just have to ask the other half if that’s cool with her.¬†The Nordstrom sale is coming up soon, so my guess is she’s gonna¬†negotiate¬†an epic shopping spree in to this deal. Darn you Girl Ninja and your Jedi-mind tricks!

What are some of your “expensive” hobbies? Do you partake in that activity as much as you’d like (rock climbing, yoga, photography, etc) or do you cut back in the name of frugality? How the heck do you people in the midwest survive a cold winter, but no mountain to ski on?!

Here’s a picture of me getting nasty on some skiboards a few years back:

I can buy anything I want.

As I logged in to Mint to give the ‘ol bank accounts a quick check, I realized something. Girl Ninja and I can pay cash for virtually anything we could ever want (excluding a house). Too be honest, it’s kind of humbling. I don’t feel like we can buy a 2013 Porsche Cayenne, but the reality is we could buy two. When the crap did that happen?

I guess this isn’t too surprising because if you DON’T feel like you can buy a Porsche, you DON’T buy a Porsche. Not buying a Porsche leaves more money in my bank account. Simple stuff.

That my friends is called financial peace. It’s been a long journey. A journey that started with a negative net worth of $28,000 and an annual income that was only slightly more than that. There was no windfall or inheritance. My boss never doubled my salary overnight. It wasn’t always easy; I sold my motorcycle to buy GN’s engagement ring because I didn’t want to take money from my savings account.

Sometimes making good decisions hurts. Bad.  

We are impatient people. We selectively forget it took us four years to accumulate our student loans, yet we complain when they haven’t been paid off in six months.

Patience, grasshopper.

You didn’t get in to debt overnight, and you wont be getting out of it overnight. Stay the course. Make wise decisions. Live within your means.¬†Then one day, you’ll be able to buy anything you want.

p.s. part of me wants to go buy a Porsche now. 

p.p.s. Come win $200 over at MANteresting.

Where is my money!

I’ve been a very naughty ninja lately. I’m breaking one of my most important PF rules: Manage your money. For the first time, in a long freaking time, I don’t have a handle on my financial situation. It’s a very odd/disturbing/uncomfortable feeling….but kind of freeing too. I just need to set aside a few hours to check my bank accounts, do a little Mint reconciling, and spend some time with my TI-83. Then I should be back to normal.

Typically, I’m totally obsessed with knowing where my money is going, and when it is going there. This means if I have $5,000 in my checking account and $2,000 in charges on my credit card bill, I would immediately transfer $2,000 to my online savings account so that money can start earning a higher yield than my checking account.¬† This would leave $3,000 in my checking. I’d eventually send $2,000 to my credit card, to pay that bill in full when it came due, which leaves me with my reserve $1,000 for emergencies.

But I’ve been a bad boy, and haven’t initiated any bank transfers lately. I know I have a redonkulous balance on my credit card (travel, travel, and more travel) and an even more redonkulous sum of money in my checking account (approaching $10,000 I think). I know that my checking exceeds my credit card statement, but¬†I don’t know by how much.

Right now, I’m the perfect example of WHAT NOT TO DO when it comes to managing your money. Tomorrow, I’m buckling down and figuring all this mess out so I can ease the financial anxiety I’ve been feeling these last couple weeks.

Am I going to PF hell for letting my finances get away from me? Do even you BUDGET NAZIS get a little lazy sometimes? How do you keep your money moving, even when you don’t have the time to sit down and tell it where to go? What software/method do you use? Slap some sense in to me will ya?!

I know many of you will suggest establishing automatic payments, but auto payments are not my thing…they freak me out.

My favorite nail yesterday (be warned vegetarians): http://manteresting.com/nail/83980