Retirement

Hope you enjoy a guest post today from none other than my better half, Girl Ninja. 

As of June 13th, 2014, I am officially retired…and it feels so good.  I spent all nine months of my pregnancy looking forward to the days I get to spend at home holding my baby.  I know challenges are definitely coming my way, but along with that I am excited to help take care of a household, without feeling worn down from working all day long.

As Ninja and I transition from a DINK family, to a single income household, I am surprised by the challenge.  It isn’t a tighter budget, more mindful spending or being bored and stir-crazy at home.  It isn’t the guilty feeling of spending money that I am not bringing in.  Instead, it is the surprising feeling that I miss kindergarten.

I love teaching kindergarten.  I’m not sure I really knew how much I loved it, until I left it.  In the frenzy of kindergarten graduation, packing a classroom, and a rapidly approaching due date to meet my little one, I was busy checking off to-do lists.  As I was literally walking out the back door of my classroom, I turned back one last time…cue cheesy slow motion scene with sappy music in the background.  Then the tears came.  I cried my whole drive home.  I cried as I thought back over the lessons I had taught, and the lessons my 5 year olds had taught me.  Inside those four walls, there was safety to try, to fail, to achieve, to be challenged for both my students and myself.  Names and faces poured through my mind, and I was overcome with thankfulness, joy, and sadness to be ending this chapter of life and moving on to something new.

Walking by the “Back to School” sale at Target last week, I had to stop myself from browsing the sales and stocking up for the next year. Rather than spending my days teaching, loving on, and learning with 22 five-year olds from 8:30-3:30 each day, I will be spending my day (and currently my nights) teaching, loving, and learning with Baby Ninja.  Some daily challenges will be similar, some will be different.  I won’t have those 15 minute recess breaks, 30 minute lunch breaks, or that 3:30 end time for each day. September will be hard, as I know my friends and coworkers will be gearing up to set up their classrooms and prepare for a new group of students.

Will giving this part of my life up be worth it?

Yes, I know it definitely will.  I know these are years and days with Baby Ninja I won’t get back, and I can’t wait for each of them.

So, what’s my plan? Am I just going to go through my day-to-day with this back and forth mindset of missing my teacher days, while learning to love being a stay at home mom?

Well, we have a plan.  I am excited to have the opportunity to substitute (saying yes or no to work based on what works for me? Yes please!), and I also hope to begin tutoring a few students next year.  Ninja’s schedule will allow us to make this work without having to pay for childcare for Baby Ninja.

I’m so thankful that my love for being home with my baby boy, and my love for teaching don’t have to be mutually exclusive.  I am thankful for the ways that my career have prepared me, and given me at least a glimpse of what motherhood holds. I am thankful for a husband that works hard to make it possible for me to be home with Baby Ninja during these little years.

We hope you’ll stick around to see how it goes! 

 

 

Why I’m Not One of the Americans Taking on 57 Billion in Credit Card Debt Thanks to Brice Capital

Brice Capital logo for debt consolidation

Consumer debt rose to $57 billion in 2014, a record since last year, marking a 47% increase from 2013. Fortunately, I’m not one of those Americans who responded to the good economy by spending money I borrowed from credit cards to live beyond my means.

Today, I’m pleased to report that I am increasing my wealth, not decreasing it. This wasn’t always true for me. Before the 2007-2008 financial crisis, I spent more than I earned, especially when shopping for things that provided instant gratification.  

Here is the story of how I turned my finances around when I had high debt. 

Debt Restructuring 

Initially, I tried to simply pay off my credit card bills as they came in. But this was difficult to do because I had been in the habit of applying for new credit cards after maxing out on the ones that I had been using. Consequently, I received a regular stream of credit card bills every month.  

Since they were different amounts with different interest rates, I spent a considerable amount of time and effort keeping up with my finances. Gradually, I fell behind in my bookkeeping, either not paying them on time and incurring late fees or just paying the minimum balance and incurring high-interest rates. 

Although I stopped using my credit cards altogether, my debts continued to increase because the credit card companies were now charging interest on the interest. This compounding effect meant that I now paid less on the principal of my debts.

Then something fortuitous happened, something that pulled me out of my despair because I had come to a point where I couldn’t pay down my credit cards fast enough with my current salary. A friend directed me to read a review article about Brice Capital, a debt consolidation company.

The consolidated loan I received allowed me to pay off all my credit cards completely. Suddenly, I only had to write one check a month, an affordable amount to repay the loan. 

Controlling My Spending 

After finally getting a handle on repaying my debt, I realized that the reason I got into debt in the first place was because I only had a vague idea of how much I was spending each month.  

I entertained a rather simplistic idea about personal finance: If I had money in my checking account, then I believed I could afford to buy anything that did not wipe out my bank balance.

So, for example, if I had $400 in my bank account and wanted a pair of high-end sneakers that cost $250, I thought I could afford them. I naively assumed that by the time my next bills came in, important bills for the phone or rent, I would have earned another paycheck to make up for the amount I had spent on the sneakers.

What I failed to consider was how much I spent on small things, such as the money I spent at coffee shops when hanging out with my friends, buying snacks when grocery shopping, paying for a day’s parking at a parking lot, and other such miscellaneous daily expenses. 

Unaware of how to get a grip on my spending, I asked my friend, the same one who had tipped me off about Brice Capital, about what to do. He suggested I sign up for a personal finance podcast. 

I still remember the day when I was driving to work listening to the podcast on my smartphone. That particular day, the host talked about how to create a zero-based budget. I was so thrilled by the idea that I pulled off to the side of the road to make notes.

Essentially, this budgeting system helps you figure out how to spend your money as soon as you receive your paycheck so that you can easily cover all your bills every month and tuck any surplus cash into a savings account. I hope this explanation of how to restructure your debt and control your spending helps you on your personal finance journey.

Analysis Paralysis

If you live in The States you’ve probably been to Costco. While the store is practically busting at the seams with stuff, Costco typically only carries about 4,000 unique products behind its walls. Your much smaller local grocery store, however, carries around 40,000 different products. So what’s the deal? 

Costco understands psychology and analysis paralysis.

If you’re like me, you’ve gone to Costco to get a box of cereal and some chicken, but an hour later you walk out $200 poorer with a cart full of Paydays (best candy bar EVER), pretzels you didn’t even want, and a three-gallon tub of mayonnaise that will expire before you finish it.

It took me almost two years to finally get around to investing for the short-term. I don’t consider myself a lazy person, but when it came to investing outside of retirement, I shut down.

There were too many different avenues to explore. Which stocks, bonds, or mutual funds should I buy? Is real estate going to appreciate over the next 8 years or stagnate? Should I consider investing in gold, silver, or other precious metals?

Instead of answer the questions above, I did nothing.

Did you know that, on average, 401k plans that offer dozens of different investment options have fewer people contributing to them than 401k plans with only a handful of choices.

I bet some of you are guilty of this in one way or another, aren’t you?

  • Maybe you haven’t started paying down your debt aggressively because you feel like you don’t know where to start.
  • Maybe you haven’t contributed a dime to retirement because you can’t figure out which fund you should buy.
  • Maybe you changed your major in college 87 times because you kept re-discovering what you wanted to do with your life.

Has the paradox of choice ever affected you?  If so, in what ways?

Don’t avoid risk, embrace it.

How many of us are guilty of allowing fear to keep us from doing potentially great things?

 

ME! I’M GUILTY OF THAT!

 

I wrote last week about my desire to add a two bedroom rental unit to the side of our house. About 10% of you thought it was a good idea in theory. The other 90% of you thought it was too risky.

 

  • What if I couldn’t find renters?
  • How would this effect Baby Ninja if he is raised in a major construction zone?
  • Where would we get the money?

Of course, these are all things worth considering, and believe me I have. It is my families well-being on the line after all. There is definitely risk in adding a $100,000 addition to our house

But there is also risk in NOT exploring this idea.

  • Our cash savings continues to depreciate since the interest it earns wont keep up with inflation.
  • I forfeit the potential to earn $700/mo profit on a $100,000 investment.
  • Our house will remain less marketable since we only have one bathroom.
  • Etc, etc, etc.

You get the point. 

Whether my accessory dwelling unit idea comes to fruition remains to be seen. I got a ton more calculations to do and people to meet with before I can fully wrap my brain around it. But I’ll be darned if I’m going to let some risk paralyze me from doing potentially great things.

A reader of MMM said it best…

Risk cannot be completely eliminated and trying is a fool’s mission. Focusing on eliminating it in one area pushes it into another. I can completely eliminate the risk of flying by never getting on an aircraft (unless one then falls on my head). But that elimination shifts the risk to train, boat, car or bicycle risk. Eliminate all of those and I’m stuck at home, statistically the place most accidents happen. Life is not certain. Ying and yang are the norm. Understanding the risk inherent in anything and that of the alternatives can then inform our choices. That’s about all you can do.

Preach. 

How do you account for risk when you make your financial decisions? 

Should I take a sabbatical

sabbatical

In college, I remember being jealous of the professors who had earned a sabbatical. They would take a whole semester off, with pay, to basically do whatever they wanted. It seemed like the sweetest gig in the world. Every ten years they worked, they could take a three-month sabbatical.

About a year ago, I asked my boss if sabbaticals were a “thing” in our field. He told me Heck No and laughed in my face. I was bummed to say the least.

But guess what guys! I had another meeting with my boss yesterday, and thanks to future baby Ninja, I can finally take a sabbatical. Okay, not a sabbatical, more like unpaid time off because of FMLA benefits. But hey, I’ll take what I can get. 

My boss explained things like this…

I can take off as much (or as little) time off as I want, up to 12 weeks, immediately after our baby is born. Do you realize what this means! I could take ALL SUMMER OFF!!!! How incredible would that be!? I’m sitting here thinking of all of the different ways I can take advantage of these FMLA benefits. Here’s what I’ve come up with so far.

Option A:

Take the whole summer off WITH pay. I think I have about 550 hours of sick leave banked currently (14 weeks). So if I wanted, I could take virtually the whole summer off, with pay, by exhausting my sick leave. Awesome to take three months off with pay. Not awesome being “sick leave poor”. What if baby has a serious medical complication down the road, or I break my leg six months from now? I’d be screwed if I needed to take more than three weeks off.

Option B:

Take the whole summer off, WITHOUT pay. I am not required to use any sick leave under the FMLA laws. So essentially, I can take up to 12 weeks off, without pay, and keep all 14 weeks of sick leave in tact. Super sweet to maintain a healthy sick leave balance. Not so sweet to forfeit $18,500 in gross pay over those three months.

Option C, D, E, F…

Combine sick leave and unpaid leave. Here’s where things get interesting. As long as I give my boss advance notice, meaning a written plan before baby comes, I can combine my paid time off with unpaid time off anyway I’d like. So for those first 12 weeks I could do something like….

  • Take two weeks off with pay, take two weeks off without pay, work two weeks, and repeat the cycle.
  • Or how about, take every Monday off as paid leave, every Friday off as unpaid, and work every Tuesday, Wednesday, Thursday.
  • Or Take a month off paid, take a month off unpaid, work a month.
  • Or… well you get the point.

Between June 18th and September 18th I can work as much, or as little, as I want. And I can take off as much time as I want, paid or unpaid. It’s a FANTASTIC situation to be in.

Only problem is, I’m not quite sure what to do!!!

I’m seriously dreaming about taking the family to San Diego for three months and eating 10 years worth of California Burritos. Or maybe volunteering to work at a Young Life camp all summer. Or maybe knock out some major projects around the house. Or have four-day weekends, every weekend, for three months.

Put yourself in our shoes. You have a decent chunk of change in the bank, 16 weeks of sick leave banked (about what I’ll have when the baby comes), and the ability to take 12 weeks off.

What would you do?! 

 

Financial laziness.

I’ve been a big sack of laziness lately when it comes to keeping up with my retirement planning. Apparently the calendar has decided to say it is September (when did that happen?) which means I could have contributed to my Roth IRA as early as nine months ago for the 2013 tax year.

Had I just invested the $5,500 Roth IRA contribution limit on January 1st like a good little Ninja, that amount would have grown by $935. Or in other words, basically my $5,500 contribution would be $6,500 right now. 

How lame am I?

Answer: only kind of lame because at least I’m realizing my lameness as opposed to justifying it? 

…Okay, well part of me wants to justify it for the following lame reasons…

  1. I upped my 401k contributions this year quite a bit.
  2. We bought a house, which hopefully will have some investment aspect to it.
  3. I’m lame.

It’s time I give myself a swift kick in the butt and get my Roth contribution in.

Have you needed to give yourself a kick in the rear for being financially lazy in any capacity?

  • Avoiding paying down debt faster than you could/should?
  • Not contributing to retirement when you have the means?  
  • Paying for two cable boxes when you haven’t turned your basement TV on in months? 

We’re getting a human!!!

You all know in mid December Girl Ninja and I will be adding a puppy to the household, but we just found out last Thursday we will also be adding a human to the mix!!! No, no. Not a baby.

A roommate.

We were at a Young Life meeting (a high school outreach we are a part of) last week and one of our fellow adult friends mentioned she was moving out of her current apartment. I jokingly said, “Want to live with us?”.

To which she responded something like “Wait, are you serious?”.

I looked at Girl Ninja, and we did that thing married couples do where we have a whole conversation with our eyes without saying any words, and responded “Yeah, why not!” 

She came over last Friday and looked at the place and she’s all for it. She’ll be joining the family Mid October. Seeing that we want to be the coolest landlords to have ever existed, Girl Ninja and I made a “list of demands” that our new roommate must meet if she wants to stay in our home. Those demands are as follows…

  1. She has to live WITH us. She can’t be all awkward and isolate herself from us. She isn’t renting a room in our house, she’s renting the whole thing. She has just as much of a right to the living room, piano, bathroom, and kitchen as we do. She can come and go as she pleases, and she doesn’t need to check in with us if she wants to have people over.
  2. She can’t sign a lease. We aren’t just renting a room in our house to a random person, we’ve served in ministry with this girl for over a year now and want to keep things friendly. She’ll move in Mid October and she can move out a week, a month, or a year later for all we care. She told us she was thinking she’d crash for about six months.
  3. We will collect rent. We are thinking probably $400/month -all utilities included- would be a good “friend deal”. She is currently paying about $700/month, and while we could definitely charge close to that for our place, we don’t need to. She’s pumped because she gets to save $300 a month. We’re pumped because we get to help a friend save some money. Oh, and we told her that we plan to use her “rent” money for the good of the house. We’ll be reinvesting all of her payments directly back in to making our living space more comfortable. Maybe that means upgrading the dishwasher, adding in some canned lighting, or changing out carpet.

The best part about this whole thing is that she is moving in Mid October, and if you recall, I am leaving for The Netherlands, for six weeks, starting November 1st. That means, Girl Ninja wont have to be home alone while I’m gone! Instead she’ll be making orange mocha frappuccinos, painting her nails, and listening to Celine Dion with one of her good friends. That is what girls do in their free time right? 

So yeah, we are getting a human. We’ve always flirted with the idea of “communal” living and talked about which of our friends we would be cool living with. Now we get to give it a shot.

Would you ever rent a room in your house out?