Tag Archives: saving and investing

Why a $1000 Raise Didn’t Change My Life

 

If you’ve been reading this blog for any amount of time, it’s not a secret that we are now located in the state of North Carolina. It’s been my dream for almost a decade to live in the Research Triangle, and we finally achieved it! I feel blessed every day to be literally living my dreams.

I also happen to have a full time job working for the state of NC. This comes with some lovely benefits like extra paid holidays, pretty decent healthcare coverage, and state-mandated raises. Now, this could be a double edged sword.

As things on the financial playing field of America are in constant flux, and state and federal budgets keeps seeing more and more cuts, the state has the power to enact hiring freezes, salary freezes, or downsize however is needed to balance the budgets. And NC does not have the best history of worker treatment.

However, the good news is, the current Gov. Pat McCrory is supportive of state workers, and knows that to attract and retain good employees state positions must become and remain competitive with the private sector.

In order to keep up with inflation and keep workers happy, NC employees across the board got a small raise in June 2017. For me personally, this meant an extra $1000/year. Hooray!

What would you do with $1000 extra dollars?

For some people, that could be a literally life-changing amount of money. That could get a family of 4 a few months of groceries, or buy all the necessities for a new baby. That could help pay down medical, credit card, or student loan debt. That might be an extra month’s rent payment that you don’t have to worry about. For a lot of people, living at-near-below poverty level, $1000 is a big deal.

Or, you might start planning an epic weekend getaway to a beach to beat the winter blues. That adds up to a whole lot of eggnog and whiskey, or a year’s worth of fancy dinner dates once a month. Some people would scoff at $1000, thinking that is barely enough to make a dent in loan payoff, or their yearly spending totals.

Would you go on a shopping spree? Get some new boots for winter? Or, you know, the holidays are coming, how about getting extra twinkle lights, some cute Santa blow-ups for the front yard, and maybe a couple extra-nice gifts.

You could just let lifestyle inflation creep in, and $1000 higher yearly spending becomes the new baseline. Maybe move into a bigger apartment with more amenities, buy more house than you should, lease a fancier car, and go out shopping every weekend.

But What Did I Do With the $1000?

I did something very boring. Something Americans in general are really bad at doing.

I invested it.

Yup, without even letting it register in my checking account, I funneled that ‘extra’ money right into a target retirement date investment account.

Now, we could argue all day about different types of accounts, tax advantages, Roth vs IRA vs 401K, fees and mutual funds and bonds and stocks etc etc ad nauseum. I am by no means a sophisticated investor. I barely have a clue about the world of finance and shares and dividends. Reading articles about why rebalancing your own portfolio is easy just make me feel sad and defeated.

What I do know?

Having some money invested is definitely better than none over the long term. Will I lose some possible gains to fees over time by using a robo-advisor? Probably. Could I personally do better by choosing my own allocations and rebalancing yearly or quarterly? No way, because I know myself and I just. won’t. do it.

The Moral of the Story

Automate.

Avoid Lifestyle Inflation.

And Know Thyself.

I love automation. I am probably the most forgetful person I know by a long shot. If it isn’t written down, on the calendar, in my phone with at least three alarms set, if probably isn’t getting done. I’ve forgotten my mom’s birthday, both my siblings’ birthdays, the dog’s vet appointments, and more passwords than there are stars in the sky.

To set myself up for success rather than financial crash-and-burn, I automate everything I possibly can. Mortgage. Water bill. Internet. Savings account transfers. Credit card payments. Investments. All set up with a few clicks of a button, and then I don’t have to think about it ever again. Well, okay maybe like once a year or so I make sure it’s still working. But that’s it.

Not giving into lifestyle inflation is really hard. Trust me, I know. I took WAY longer to pay off student loans than I should have, and delayed our now-future-FIRE plans because I chose to take several cruises during grad school, and dropped another 3 grand on LASIK eye surgery (ok that one was actually 100% worth it).

When you’ve spent several years living in dorm rooms, literal garages and attics, eating ramen and tuna noodle casserole, you desperately want to feel like you’ve “made it” as an adult. You want your own space, your own bathroom, a nicer car, you need “business casual attire” for your big kid job, and on and on.

My husband (then-boyfriend) and I definitely could have stayed in a one bedroom apartment for a few more years rather than upgrade to renting a house for $1300/month, and then $1650/month (CT prices though… that number still hurts my soul).

But those choices were made. That money was spent. And we learned from it.

When we decided to relocate to NC, and were looking to finally buy our first home, we set a very conservative budget range. We knew we did not want to live outside our means. And now we have the peace of mind that comes with knowing that even if one of us lost our job (or chose a mini-retirement?) our monthly expenses would still be covered.

That peace of mind is worth every penny we didn’t spend on a bigger house in a nicer neighborhood, or continuing to drive our fully paid off 2004 and 2005 Honda cars. We hope to stay in this house for a very long time, and pay off the mortgage sooner than 30 years. No matter how many raises we may get.

And that is why being given $1,000 did not change my life.

 

What would you do with $1000?

That which doesn’t kill you…

 

You know the phrase, that which doesn’t kill you makes you stronger? I’ve always wondered where that came from, and why it was so popular.

I’m guessing it’s because no one knows what else to say.

When you’re upset, depressed, wallowing in the realization that something has gone terribly, horribly, and irrevocably wrong, all you can do is resort to clichés.

Someday you’ll laugh about this… Life is what happens while you’re busy making plans… The sun’ll come out tomorrow/tomorrow’s another day… (I kinda like this one, but that’s because Annie and Gone With the Wind are personal favorites…)

We all make mistakes, and we all have regrets. Some of us have tiny regrets, like that one time we had three too many margaritas and may or may not have made out with some stranger in a dark corner of the bar. We will never know, because no one remembers for sure, but just maybe…

For others, the regret is a bit more serious… maybe we shouldn’t have done that drug deal that landed us with a rap sheet. Or maybe we shouldn’t have trusted that business partner that fleeced you and nearly (or actually) bankrupted you.  Maybe you should have taken that risk, that year abroad, said “I love you“, dropped that finance class so it didn’t ruin your GPA.

For some of us in the FIRE community, we made smart choices from a young age. Many early retirees realized at their first job at 21 years old that they could live another way. They worked hard, lived lean, got promotions, and socked away 50-90% of their income. And retired before/by/around thirty.

And that’s amazing!!! <insert applause>

But, then, many of us have made mistakes. Mistakes that we admit to and regret now, but know that they happened and now our life is a certain way because of those choices.

For example, I have always lived pretty frugally. I chose apartments with roommates, or weird tiny spaces. I kid you not when I say I have lived in both a converted attic, which had zero insulation such that I put a fitted mattress cover over the door to keep the Ohio winter chill out, and a remodeled garage where there was no bathroom door, and it was so tiny you could literally pee, shave your leg, and flip a pancake all at the same time.

I have never not had a job, since I was allowed to work one, and most of the time I held down at least two. I worked in our campus library and as a waitress all throughout undergraduate and my masters degree, during which I also was a teaching assistant. Even though our stipend was a luxurious $10,000 per year… (I know, I know, the sciences are at least blessed enough that we get a stipend, unlike our sad humanities friends.)

I always drove a used car, purchased outright or from my dad with a set payback schedule (no interest! Thanks Bank of Dad!), never carried a credit card balance, and cooked at home. In fact, this blog began in 2008 as a record for posterity of my journey to learning to cook. I’ve come pretty far but still have much to learn.

Somehow I managed to emerge, after approximately 23 years of school (depends how soon you start counting…) with only $8K in loan debt, and no consumer debt at all. Halle-frickin-lujah!

On the flip side, I had a total of about $2K in savings… how did this happen?!?

Well, while saving and not spending money in my day to day life, I also developed a pretty fanatic love of cruises (which will never die, oh cruises how I love thee), travel in general, and moving.

So. much. moving.

By the time I was married last year, brace yourselves, I had lived in no fewer than 21 different dorm rooms, apartments, and houses, in three different states.

I had 3 month leases in the summer to avoid going home (boo, bad financial decision) so I could keep working my two jobs (yay, good financial decision!). Then I moved way the heck across the country to Colorado to pursue a PhD in neuroscience, which ended up not working out.

On the bright side, that was 4 of the best years of my life and I met my husband… so there’s that. #totallyworth

Hubby was lucky and had no school debt at all, but also nearly no savings. Luckily we both had pretty decent jobs, and together we lived very comfortably for a year or so. But then his job took us on yet another cross-country move to New England. Which was a grand experience, we loved the people and places and food and travel and nearby ocean… but hot damn is it expensive!

Between the cost of living and taxes, no way were we going to achieve our home ownership dreams anytime soon. So between that and the god-awful winter, we agreed the time had come to move yet again, to my fourth and (hopefully) final state, to the land of Dixie, and we said Howdy y’all to North Carolina.

Phew!

So, anyways, here we are, finally living the dream, knocking on the doors of 30. Think we can retire in the next 5 months, on 10 grand?

Go ahead, I’ll wait for you to stop laughing.

So, our dreams of retiring by 30 are dashed, thanks to a wanderlust and general lack of knowing FIRE was a thing until now. But. All that aside, now we know. We are armed with knowledge, and a fantastic array of like-minded peeps on the internet to share stories and lessons and encouragement.

Can we retire by 40?

Step 1: believe.
Step 2: create a budget, stick the heck to it, and save like mad.
Step 3: profits.

Our 20’s did not kill us, and in the end I think it did make us stronger.

We are determined to live life on our own terms, and not according to popular culture or what “Everyone” says is normal and right. We are strong in our marriage, committed to making and achieving our joint goals for our future. And we are set on a path to financial freedom, and all the other freedoms that come with it.

I can’t wait to see what this journey will teach us!

 

 

What about you, what’s your story? Did you dig yourself out of a small mountain of debt? Put a trust fund to good use? Are you just taking the first baby steps or about to cross the finish line? Any and all advice is welcome here!