Me vs You

Apparently I am the only person here that thinks there is more to life than saving, investing, and/or creating passive income streams. While those things are great and all, I hardly want to give up what are arguably the best years of my life because I’m chasing some “dream” I don’t really want.

I’m assuming that you all suggest I save more, invest more, and create multiple streams of income so that one day I can have the financial freedom to cut back on work, possibly even retire extremely early. Let me stop you right there. I don’t hate my job nor do I care to be wealthy.

Multiple income streams:

Girl Ninja and I don’t think to ourselves at night, “We need to make more money.” Actually, we are completely content with what we have. Contentment is a beautiful thing.

I understand multiple income streams help protect oneself in the event of a job loss, but she’s a teacher and I work for the fed. Fortunately, this means we have a good bit more job security than those in the private sector. If we don’t need more money coming in, and we both enjoy our rather stable jobs, I don’t see an advantage to an income property or a taxable investment account. In fact, all I see are potential headaches and emotional roller coasters.

Save more:

Could we keep saving until our bank account read $120,000, $150,000, or $200,000? Sure. But what’s the point? I’ve already chronicled why I would NEVER pay cash for a house, so that’s not really incentive (side note: you shouldn’t pay cash for a house either).

I hope you all remember that the only reason we save is so that one day we can spend (or give that money away). Why do we need $200,000 in cash? Seriously, I don’t get it. Part of me thinks people want me to save more cash because it sounds like the responsible thing to do. Let me turn the tables, How many of you have $150,000 in a savings account right now?

Invest More:

I got my job six months after I graduated college. Since day one, I’ve steadily contributed 15% or more to my retirement. Since I have absolutely no desire to retire with tens of millions of dollars in the bank, I don’t really see the need to go crazy. I said I’ll likely up my retirement contributions to 30% once we reach our $100,000 savings goal, but I don’t really see a reason why I should be putting more than that away? Unless of course I want my future dentures, wheelchair, and catheter to be made out of diamonds. Barring some major catastrophic event, I think a 15%-30% investing rate over the course of a 40 year career should be just fine.

Conclusion:

I do realize however, I was being dramatic in my last post and it’s very likely many of you took me literally; Thinking I was going to buy a new flat screen TV every month just for the sake of doing it. That’s hardly the case. That post was simply my way of acknowledging, that for the first time in my personal finance journey, I’m completely content. I’ve stressed about student loans, emergency funds, down payments, and retirement for far too long.

To be clear: We will still put our excess discretionary income in to a bank account (or taxable investment account). We will continue to save for our future house (and the unexpected headaches that come with homeownership). We will make sure we have enough cash on reserves to take care of our not-yet-conceived children. But mark my words, once we reach our $100,000 goal… you’ll see a whole new side of Ninja ūüôā

I want to marry 68% of you.

An updated throwback that should piss half of you off…

I’ll never understand why some married couples keep their finances separate (yes, that is me quasi-judging some of you). Maybe it’s the traditionalist in me, but when I asked Girl Ninja to marry me, I asked her to marry ALL of me. This includes (but is not limited to) my sense of style, my obsessive compulsive behaviors, my smelly farts, my sucky artwork, and of course my finances.

Before our wedding, I wrote a about how Girl Ninja was not only marrying me, but also my student loan (I think at the time I still owed about $10,000 to Sallie Mae). Whether she liked it or not, my debt was now her debt. A handful of commenters, however, disagreed. They felt that since I had acquired my student loans before I even knew Girl Ninja existed, they were solely my responsibility to pay back. One comment read, “I agree also that GN should have no part of your student loan. That was contracted before your marriage and is solely your obligation.”

Alright commenter, I’ll play your game. Going in to the marriage I was making $63,000/year. Girl Ninja was hovering around the poverty line bringing in about $20,000/year. My income was over triple hers. It seems that if I followed the logic of the commenter above and kept our finances separate, I would then have three times as much influence in our financial decisions, or at the very least, should be allowed to spend three times as much on miscellaneous categories like entertainment and dining out. If she has no obligation to my pre-marriage debt, what right does she have to my pre-marriage income? You can’t have your cake and eat it to.

I know Girl Ninja had no legal obligation to my debt, but that doesn’t mean she didn’t have a marital obligation to it. The second she said “I do“, my debts became her debts. My income, became her income. And my love for California burritos, became her love for California burritos…oh wait…not so much on that last one, but you get the point.

I don’t even know how separating finances in a marriage would work. Do you literally say “Alright honey, you need to transfer $50 in to my checking account ’cause I just paid our cell phone bill”? Do rent payments get split right down the middle since you both share space equally or does the larger income earner have to pay a larger portion? How would it have even been possible for me to pay my debts back separately, since any money put towards that debt effects us equally regardless of whether it comes out of my account, her account, or a joint account? What is the point of separating accounts from your spouse?

Someone enlighten me? 

p.s. if you weren’t aware, I actually ended up paying off my student loans about a month before our wedding, so Girl Ninja never had to worry about Sallie Mae ūüôā

p.p.s. I’m super pissed at Girl Ninja right now as she just committed the cardinal sin in the Ninja house. She put the toilet paper on the roll facing the WRONG way! Ugh, it ruined my night ūüôĀ

We need cheap meals.


Oh my goodness. I about had a heart attack as I looked at the categorical spending of our May monthly expenses. Mint told me we had spent $1,095 on “food and dining” last month. Are you fricken kidding me? Four figures worth of food went in to our body? I punched a baby unicorn in the face I was so angry.

But then, on closer inspection, I noticed Mint is just a crappy free budgeting tool that was duplicating a ton of my BoA credit card charges. After spending 15 minutes going through and reviewing every transaction (and marking the duplicates) we managed to get a better understanding of the damage…

Total spent on food last month: $795. 

Holy Frijoles. That just isn’t going to cut it in the Ninja household. That is entirely too much money going to one category. In San Diego, we budgeted around $400ish a month on food and seemed to do just fine, but ever since we made the move to the Pacific Northwest, we’ve struggled to stay under $500. What gives?¬†

As you can see, we spend a TON at the grocery store. Almost $500 last month alone. There is really only one explanation for this. We buy a lot of freakin’ groceries. These high school kids are going to bleed us dry. We’ve been entertaining like crazy having the high school kids over for game¬†nights¬†and bible studies, as well as hosting a few other Youth Group leaders for business-y type dinners. That crap adds up quick and we spent way too much playing host.

All the other food categories were relatively manageable. I should note that “fast food” does not mean McDonalds and Burger King, but places like Subway, Frozen Yogurt, and Teriyaki. Contrary to what you might think, I’m not pounding 43 McChickens each month.

We did great on restaurant spending, considering Girl Ninja went to a $96 bachelorette party dinner one night. Ignore that one freak of nature expense, and our total restaurant tab was only about $135, which is well below average for us.

Long story short. I want to get our grocery budget WAAAAAAAY down this month. We decided we are going to try to incorporate, at minimum, one “cheap” meal per week in our meal schedule. Last Friday that meant breakfast for dinner. I made us scrambled eggs and she made us waffles from scratch. This week we are having pasta with no meat in it (typically we put like chicken sausage in it). Next week is to be determined.

I would love you all forever if you would drop us some of your FAVORITE CHEAP MEALS that don’t suck but DO use relatively common ingredients (don’t want to have to spend $10 on some random spice I wont use for any other meal).

How do you keep your food budget low, when costs start creeping up?

Oh and I know Top Ramen and Macaroni and Cheese are cheap, but we aren’t really interested in eating cardboard, so hook us up with something with at least a hint of nutritional value.

Twenty-two and frustrated.

Got an email yesterday from a PDITF reader (let’s call them Reader X) looking for ways to rid themselves of the paycheck to paycheck lifestyle. The email was much longer than the excerpt below, but I think you’ll get the gist…

First of all, let me say that I adore you and your approach to life. I read your blog with a sense of wistful jealousy and optimism that I too, some day, could have 76k in savings. That number is outrageous to me.

Whenever I read your blog, and other financial blogs, I understand they cater to people who are more… oh I don’t know… established with their jobs. People who could put $500 in savings a month with lifestyle tweaks and frugal changes. The point is, for my age, my salary is commensurate with experience. Meaning, I do not make enough money to have an “aggressive” savings plan like you and others. In fact, I am lucky if I have any money left over to save after my basic living expenses.

Do you have advice for your upstarts like me who are living on the exact amount of money they need to survive? Honestly, I feel terrible about myself because I am just treading water financially. I worry that something catastrophic will happen and my little $800 savings account wont suffice.

Before I get on with helpful advice, I have to rant for just a second and say I take issue with this line in Reader X’s email:

“Whenever I read your blog, and other financial blogs, I understand they cater to people who are more… oh I don’t know… established with their jobs.”¬†

If my blog is catered towards people who are “more established with their jobs” then I have failed miserably. I’m 26 years old. I am by no means established, and I really have no street cred to preach financial wisdom to those that are. I would hope by naming my blog Punch Debt In The Face I am sending the clear message that this IS NOT a place for the “good ol boys”, but regular,¬†everyday¬†folks, who want nothing more than to see a stupid stick figure drawing, and maybe hear a little bit about what I have to say on the topic of personal finance. Moral of the story: I am the 99% ūüôā

I really like Reader X’s perspective on his/her situation. Particularly this line “my salary is commensurate with experience”. There is no entitlement in that statement. Reader X also shared in the email they are living frugally, so typical advice like “find cheaper rent, or cut out your cable bill” doesn’t really apply.

So how does one increase savings, if they don’t have the ability to increase their income at work and they can not really decrease their already low expenses? You don’t. BOOM! How’s that for blunt personal finance?

Don’t be discouraged by this, Reader X. You are only 22 years old and have the rest of your life to pad that savings account. When I was 22, I was making $38,000/year, had $28,000 of student loan debt, and about $600 in my checking account. You have to persevere this “paycheck to paycheck” season as it is just that, a SEASON, a temporary stage of life. As you gain more professional experience, you will be able to market yourself better, which in turn should/could lead to promotions or a new (higher paying) job.

I didn’t go from negative $28,000 to $75k in the bank overnight. It took me YEARS to get to where I am, and it will probably take you a while to get there as well. Instead of feeling terrible for “treading financial waters”, be encouraged that you are not DROWNING¬†like most other twenty somethings. You, my friend, are doing exactly what you need to be doing to set yourself up for success. Work hard. Keep your costs low. Save any discretionary income you can. And smile. This is an exciting, albeit scary, stage of life.

p.s. often recommended ways to increase income are 1) Start a blog (I made $13,000 from this one last year). 2) Tutor (I made $12,000 in 2009 doing this). 3) Find a second job (serving at restaurants, or delivering pizza, is flexible with most day jobs) 4) Be content. One through three all require more of your time, if you don’t want to give up free time, you have to be content with what you have. No one is just going to randomly walk up to you and pay you $2,000 a month to watch TV. Oh, you could always get married. Dual income ROCKS!!!!

 

Losing money like a boss.

Two thousand eleven was a great year for Punch Debt In The Face. I broke all sorts of traffic records, was fortunate enough to be featured in some pretty stellar articles, and was even able to turn $100 of expenses in to a $13,000 business. Not a bad return on investment eh?

This year, however, it appears as though I will be yet again, setting another record. Unfortunately, it’s not a record I necessarily want to set. I don’t know if it’s just my blog or what, but it seems advertising opportunities have pretty much dried up over the last two or three months. January and February started out strong, but since then things have taken a sharp decline. Google did some serious¬†algorithm¬†tweaking and instead of companies asking to advertise with me, they were requesting that I remove the ads they had already paid for (note to people who care, my PageRank actually went up during the recent change). Legitimate ad deals are few and far between now.¬†It seems like the only opportunities I’m being pitched are crappy guest post submissions from people I’ve never heard of.

And that my friends brings us to today’s lesson: You need to diversify your income. This can all be broken down by an uber simple math¬†formula¬†I worked up last night…

You see how that works? The more income streams you have, the less devastating a loss of one income is. Last year, Girl Ninja and I were rocking Triple Income No Kid status, this year, looks like we will have to settle for being DINKs.

“But Ninja, I only have the ability to work one job, and I don’t have a significant other to support me through tougher times.” So the heck what! You ever heard of an Emergency fund? That straight up works like a second source of income in the event you get canned. Booya grandma, problem solved!

We hear people say all the time,¬†“Don’t put all your eggs in one basket.” I’ll take it a step further, “Don’t settle on having just one egg.”

How diversified is your income? If you lost your job, how long could you get by without that income? For my fellow bloggers, have your advertisement opportunities been as limited as mine recently?  

 

Why?

If you’re like me you have a goal to accumulate some pretty substantial wealth. I had a goal to accumulate $6,000,000 over the course of my lifetime. While that goal is lofty, I don’t think it was completely unreasonable. One thing I never did, however, was ask myself why? Why did I need Six Million Dollars?

Truth is, I didn’t need it. I actually didn’t even plan for it. It just kinda happened. I plugged some numbers in to a Roth IRA and 401K calculator, made some estimations for my investments performance, and BAM there it was, six million.¬†While I don’t know if I will actually reach that number, it’s not unreasonable to predict I will have at least a few million to my name when the Grim Reaper pays me a visit.

It’s one thing to plan on being wealthy, but it’s a whole different ballgame when it comes to figuring out what to do with that wealth.

So I asked myself “What am I getting rich for?” Is it so I can buy a $50,000 car every five years? Or so I can have a second house in the mountains when ski season approaches? Or better yet, maybe it’s so I can afford the $30,000 membership fee at the local country club I’ll never play golf at?

Of course I plan to enjoy my later years. I’ll probably take some pretty SWEET vacations, maybe I’ll buy a few man toys (jet ski, snowmobile, or a pet shark), and I’ll definitely upgrade my closet with all Tommy Bahama gear (side note: I love Tommy Bahama, but feel too young to wear it yet). But let me be clear. These are not the reasons I’m accumulating wealth.

When I die, how many people are going to remember how many jet skis I had? Answer: No one! What they will remember is that I donated $100,000 to a Young Life camp. That I paid for my children’s, grandchildren’s, and great grandchildren’s college tuition. That I pulled a “Bill Gates” and donated a ridiculously sizable portion of my net worth to some noble cause or charity. Those are the things that make being wealthy great!

Just to make sure I’m being completely clear, I really only have two purposes for accumulating wealth and they are…

1) To ensure my family is taken care of

2) To give a crap load of that wealth away

Thornton Wilder said it best…

Money is like manure; it’s not worth a thing unless it’s spread around.

So I ask you, what are you getting rich for? What great (or not so great) things do you want to do with your money?

Changing things up.

So Girl Ninja and I established a rule that we will live on my income and save hers. Since she wants to stay at home with our future kiddos (at least until they start grade school), we figure it’s easiest to pretend her income just doesn’t exist. That way, when it goes away, we wont miss it. You can’t miss what you haven’t had, right?

Currently, both of our paychecks are direct deposited in to our primary checking account each pay period. Throughout the month, I will login to our various accounts and pay our bills (most of which are paid out of our checking account). As the end of the month draws near, I’ll take whatever is left in our checking account and throw it in to our savings. Nine times out of ten, this amount is equal to, or greater than, Girl Ninja’s income for that month. Kudos to us, for following our rules.¬†

BUT….

I have to admit, we are kinda breaking one of the most important PF rules known to man. If you paid attention to what I just wrote, you’ll notice we are paying ourselves last, after all the bills have been paid. This has worked fine for us in the short-term, but probably isn’t the wisest long-term solution.

We’ve decided it’s time to be much more proactive in practicing what we preach. Upon our return to Seattle, Girl Ninja will set up a new direct deposit with her school. Instead of her income going in to our checking account (only to be moved to savings a few weeks later), all of her income will go straight to our savings account, as though it’s never existed.

This forces us to be much more aware of our spending patterns. Without Girl Ninja’s income padding our checking account each month, we might realize just how difficult it is managing money on one person’s income.

I don’t imagine much will change since we already have relatively frugal spending habits, but at the very least this forces our behavior to be more consistent with our stated goals: Paying ourselves first and TRULY living on my income.¬†

How many of you do (or plan to) live on one income if/when children come in to the picture? Do you REALLY pay yourself first, or like us “pay yourself first” at the end of the month?

Favorite Nail: It doesn’t matter how old…