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…

Yo bank

It’s time for a Thursday throwback. I’ve been enjoying the heck out of this little vacation and haven’t had much time in front of the computer. I’ll whip up a tasty little treat for ya tonight, so you get something fresh for Friday, but today I thought you might enjoy this post I did one year ago titled “Why do you bank with who you bank with?”

I opened up my first checking/savings account with Washington Mutual when I was 16. I loved WaMu and was not happy when Chase acquired them a couple of years ago. I was a die-hard WaMu fan, but had absolutely no loyalties to Chase, especially once they tried changing the terms of my checking account requirements. As my good friend Snoop Dogg would say “I dropped them like they’re hot.”

I’m kind of an account whore as Girl Ninja and I have a Credit Card with Bank of America, a Credit Card with Chase, a Checking/Savings account with Wells Fargo, and a Savings account with ING Direct. Needless to say, we get around 🙂

When I think about all of the different financial institutions I’ve banked with over the years, few have really impressed me. ING and Wells, however, have been pretty awesome.

ING is the Coolest. Bank. Ever. No joke. They’re hilarious. They have clever marketing campaigns and are always challenging their customers to save. In fact, one of their slogans is “‘No ones ever had savers remorse.”  They offer a competitive APY for their online savings account and are very customer friendly. I’ve used them for my primary savings account for a little over two years and couldn’t be happier.

I’ve had my Roth IRA through Wells Fargo since 2007, but didn’t open a checking account with them until 2010. While I wouldn’t necessarily say Wells is great for everyone, they DO offer a Portfolio Management Account  (PMA) to customers that meet certain minimum requirements. If you are able to qualify for a PMA account, I challenge you to find a bank that offers something better. 100 commission free online trades, no brokerage account annual fee, interest bearing checking, free ATM withdrawals (from other banks too), free checking, free saving, unlimited free custom checks, personalized debit cards. The list goes on and on. I switched from Chase to Wells and couldn’t be happier.

All right so now that I’ve shared why I love ING and Wells, it’s your turn to share who you bank with and why you love them. If you are a creature of habit and only bank with your bank because you have been with them for “X” years, maybe it’s time you start looking for something new. Life’s too short to have a mediocre bank.

(sorry for me extreme lameness as of late).

Consciously choosing to underearn

If you’re anything like me you often set goals for yourself. With respect to personal finance, these goals are often directly or indirectly related to how much one makes. If you have a goal to pay down debt, you have to base your pay down rate around how much discretionary income you have. If you are looking to buy a house, you typically make sure your mortgage payment is no more than XX% of your take home pay. There’s no denying our incomes are crucial pieces of the game that is personal finance.

So what if I told you Girl Ninja and I are intentionally falling short of our maximum income potential? Some might think that’s crazy, but I suspect those that really think about it will admit, they too are guilty of under-achieving.

Here are two ways the Ninja household is saying “thanks, but no thanks” to more money.

Girl Ninja’s Job:

She taught public school in San Diego last year and her contract paid $40,000/year. Last year sucked major vacuum (see what I did there?). She was worn down emotionally and physically which in turn put unnecessary stress on our marriage. So when we made the move to Seattle, we had a few decisions to make. Does she look for a public school contract, a private school contract, or go back to substituting? Ultimately, we decided she should give private school a shot and see if her overall work/life balance would improve. It has 🙂 She makes $11,000 less this year than last, but she is at least $20,00/yr happier. I’ll take that trade any day of the week.

This Blog:

So I mentioned yesterday I made $13,000 last year from PDITF. Many of you are like “Holy cow, you mean you get paid to write this garbage?” Not exactly, it’s more like I write this garbage regardless, and sometimes people give me their monies. I love their monies.

Thirteen G’s sounds like a lot of money to those that don’t understand how blogging works (from a business perspective), but let’s get real; It’s pennies compared to what many other PF bloggers make. You might not realize it but Get Rich Slowly, Bargaineering, The Simple Dollar, and Consumerism Commentary all sold for millions of dollars. Literally. (click link for reference)

(side note: there have been times I’ve wanted to write about how personal finance bloggers go about making major money on their blog, but am not sure if this is something that you care about since many of you are not bloggers yourself. Would love to hear from the non-blogging community as to whether this would interest you or make you want to stab your eyeballs out).

Suddenly $13,000 doesn’t seem like so much. If I was more disciplined (read: If I cared) I don’t imagine I would have much difficulty doubling my blog income in just a few months. There are all sorts of SEO tricks, ghost writers, ad networks, etc that I could use to make this thing more profitable. But frick, I spend about five hours a week on PDITF (an hour for each post) and at this point in my life, I have no desire to spend any more of my precious free time on it. Not even if it means I could make more.

So yeah, money is cool and all, and I’m sure if our income wasn’t as generous as it is right now we’d focus our attention on making more. But in this current phase of life we are chilling out maxing, relaxing all cool, shooting some b-ball outside of the school (fresh prince of bel-air reference). Translation: we are content with our current position.

We have zero desire to work harder just to make another dollar. Money can buy me more stuff, but it can’t buy me more time.

So reader, are you maximizing your earning potential? If not, how much more do you think you could make in 2012? Be reasonable not optimistic. What lead you to the decision to pass that money up?

p.s. I have no beef with people who are maximizing their potential, especially if it’s for life improvements like paying down debt, vacationing more, retiring earlier, blah blah blah.

p.p.s. I’m going to include a link at the end of each article from now on with my favorite “nail” that was recently posted to MANteresting… How to save a life if someone is choking.

Why you so nerdy?

If you read my blog I’m guessing one of four things is true about you. 1) You have at least a moderate level of interest in personal finance. 2) You could care less about personal finance, but you at least moderately enjoy my stick figure drawings. 3) You could care less about personal finance and my drawings, but you have at least a moderate level of interest in my personal life. 4) You ended up here by accident and will be leaving just as quickly as you came (I hate you fourth-category person :)).

Since this is a personal finance blog, and most of us have an interest in the topic, I thought we could talk a little bit about the how we became so stinkin’ nerdy.

There is nothing inherently sexy, or even all that appealing, about money. We’ve already decided money has no intrinsic value, so why the heck do I find it so fascinating? I mean, it wasn’t always this way. Heck, I didn’t even know how to transfer money from my savings to my checking account until I was 22 years old! Twenty-freaking-two. (my mom always made the transfer for me)

In just three months, I went from college student; never paying rent, car insurance, or really any bills for that matter, to a federal agent who suddenly had all sorts of financial obligations and commitments. I couldn’t even spell 401K, let alone understand the importance of one.

It wasn’t until about three months in to my job that I decided I needed a game plan. I had a conversation with a close friend about Roth IRA’s and he gave me a PF book to read, Smart Couples Finish Rich. The book was meant for married couples, but that didn’t keep me from reading the thing front to back in two days. I was immediately hooked.

Who-woulda-thunk-it? Apparently you can get “rich” without having to be a millionaire. In fact, if I manage my money properly from age 22 to 65, I could retire with millions upon millions of dollars. I hopped on the internet, started reading some blogs, and decided to chronicle my own PF journey.

And that’s how it happened. In about seven days time I went from not giving a hoot about personal finance to starting a blog called Punch Debt In The Face. Crazy.

How did the start of your PF journey come about? What motivated you to get your life in order? What keeps you motivated as the initial excitement wears off?

p.s. in other depressing news, Los Angeles Counties Board of Supervisors just gave the okay that anyone who throws a frisbee or a football on the beach can be subject to a $1,000 fine. Never thought I’d have to say to my kids “When I was your age we use to be able to dig holes in the sand.” <—-also a $1,000 fine. Dumbest. Rule. EVER!!!!

Alternative Currency.

Let’s have a little fun today shall we? Have you ever thought about money? I’m not talking about things like saving, paying doubt debt, investing, etc. No, I’m talking about tangible money. I personally am fascinated by it.

Think about it.  A $100 bill is worth ten times more than a $10 bill. Why? Simply because someone decided to print the number 100 on one piece of paper, and number 10 on the other. Money has virtually no intrinsic value. It’s only purpose is to serve as a medium for the exchanging of goods. (side note: did you know a penny costs 1.67 cents to make? how crazy is that!)

In fact money is so worthless that it’s quickly becoming an endangered species. If you’re like me then you get paid via direct deposit. Every two weeks my bank account increases as my employer transfers invisible cash in to my bank account. I can then head to Target and buy a plunger (you know for plunging things) with my debit card. Nowhere in that process did I see a single dollar. It’s this crazy magical accounting system that just kind of is.

So since we can all agree money is pretty much worthless, I figured we could get a little creative today and create some hypothetical currencies. I personally like the burrito factor. If you aren’t familiar with it, here’s a little rundown from a previous post

I can get a California burrito for $5 at the local taco stand. Not only is that sucker scrumtrulescent, but it also fills me up. Now, whenever I go out to eat and look at the menu, I run the burrito factor through my mental calculator. It looks a little something like this… “Okay, this salad is gonna cost me $12.50, which is the same price as 2.5 California burritos. Plus the salad is probably only going to fill me up 50%. So that means this salad is gonna cost the equivalent of 5 California burritos to get full. Death to salad!

So reader, what’s your currency?

image credit

It’s complicated


Let’s get right to the point today shall we? I go out of my way to ensure my personal finances are significantly more complicated than they should be. In fact, I’d even go as far as to say that I sleep better at night because of it. No, I haven’t lost all my marbles, I just hate the idea of automating my finances.

I know I’m probably in the minority here, seeing that numerous personal finance blogs preach the wonders of automating your finances. I won’t try to convince you my way is better (even though it is), but allow me to at least explain myself further. First, I’ll list off all of the regular recurring payments I have each month.

  1. Rent- $1,175 (all utilities are rolled in to this one payment, including cable/internet)
  2. Cell Phone- $60
  3. Car/Renters Insurance- $180
  4. Credit Card(s) – Varies depending on balance (usually around $1,500)
  5. Charitable Contributions – 10% of gross income
  6. Storage unit – $65 (storing our baby grand piano)

I may be forgetting one or two other bills, but for the most part I think that about covers it. I could theoretically set up an automatic withdrawal from my checking for each of these bills, allowing the companies access to my checking account. As the bill comes due, the company would pull the money from my checking account.

Now, I don’t know about you, but that totally freaks me out. Getting married and sharing a checking account with Girl Ninja was scary enough, I couldn’t imagine giving a bunch of random strangers access to my account as well.

I’ve read horror stories about people who thought they set up a $200/monthly payment and were shocked to find out $2,000 was withdrawn instead.

Or how about the person that had their car payment scheduled for the 8th of every month. Well it just so happened that on the night their account was to be debited, their bank was beefing up security protocols and restricted all customers accounts for a few hours. As a result, the payment never processed. But because it’s suppose to be automatic, you never think to check and make sure everything went smoothly. Thirty days later you are dealing with an angry Toyota representative hounding you for being one month past due.

No thanks. Automatic payments don’t sound worth it to me. To be perfectly honest, I actually enjoy manually paying my bills. It reminds me how much money comes in and out of our account each month, but more importantly it makes me want to continually shop around and make sure I’m getting the best deal possible. It essentially keeps me intimately involved in our personal finances. And I need not remind you, making love with money is my favorite kind of romance.

Do you automate your finances? Why or why not?

How you doing? $63K in debt with a six figure income.

Last month I asked for PDITF readers to submit stories about how they’re doing. I was amazed by the feedback I received, overwhelmed even. Far more people expressed interest in contributing to the series than I anticipated. I couldn’t keep up with all the emails and submissions I was getting, so I avoided them instead  (Haha, like a true Ninja right?). I added the emails to my “To Do” list and haven’t paid much attention to them. I’m just now taking the time to look ’em over and get things worked out (sorry for the procrastination).

Today we are kicking the series off with  BR, a woman who doesn’t necessarily agree with her husband on how their six figure income should be allocated…

My name is BR, and I have been married to DH (dear husband) for about 18 months.

Together, DH and I make $100,500 before taxes. After taxes, 401(k) contributions, insurance and all that come out of our checks, we usually take home just over $62,000 a year. We both can get yearly bonuses (last year, I didn’t get one, but my husband got $8,000) and my husband gets a Christmas bonus at the end of each year, usually the amount of one paycheck, but again, this isn’t guaranteed, so I don’t count it as income.

Our debt:

  • Car loan- about $12,000
  • Truck loan- $16,000
  • My student loan- $8,900
  • Husband’s student loan- $26,700
  • Total debt: $63,600

When we got married, we had about $15,000 of credit card debt between the two of us. We set a goal to pay it off before our first anniversary, and actually did it two months ahead of schedule (thanks mostly to my husbands bonus)! We were both really relieved to be out from under that debt, but we completely disagreed on what to do next.

If I had my way, we would never go out to eat or buy anything that we don’t NEED until we have everything paid off. It would only take a year and a half, and then we would be free and clear! My husband feels like this is not reasonable, since all the debt is low-interest (what he calls ‘good debt’) and both our vehicles are worth more than what we owe on them. His bigger priority is saving for a house, since he feels that paying rent every month is throwing away money. He also thinks that going out to eat is fun and relaxing (I think he’s just trying to get out of doing the dishes :)) and he loves to go to the movies.

So, we compromised. We put $900 a month in our house fund, and then I pay whatever extra I can find in our budget on my student loan. We go out to eat once a week, and we each get $20 a week to spend on whatever we want. My $20 usually goes toward my student loan, but I also use it to thrift shop or get a haircut occasionally. While I would love to have my way, I am able to compromise with this, because our debt is no longer at a point where it keeps me up at night, like it did when we first got married. If push came to shove, we could sell our cars and reduce our debt to only student loans. Also, watching the balance on our savings account go up is super fun, and it is comforting to know that right now we could live for two months with what we have.

Really, we are not in a bad place at all. We spend much less than we earn, we save a decent amount, and we are working on paying off our debts. I get impatient, and really want to ‘punch debt in the face’, but at the end of the day I would rather have a peaceful marriage than no debt.

 

Ninja’s comment: If you want to submit your story for the “How you doing” series, shoot me an email.