Financial New Year’s Resolutions

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I know, I know… not another NYE article! This time of year, it seems like every marketing department that ever existed has found a way to turn their products and services into New Year’s resolutions. Some of the especially dry ones include resolutions for medication management, vehicle maintenance, and lawn care. (And for those feeling overwhelmed, don’t worry, there are apps to help you keep your New Year’s resolutions too!)

But on a more serious note, I believe there are three areas everyone can and should be continually working on:

  • Your Relationships (with family, friends, co-workers, etc.)
  • Health (through nutrition and exercise)
  • Your Finances (by paying yourself first)

Even if you’re already pretty good at these areas, there are probably still ways to improve.  To make New Year’s resolutions that stick (and to achieve them), consider the following criteria:

  1. They should be specific (I will pay off $100 of debt monthly versus I will get out of debt)
  2. They should be realistic (I will eat 1-3 servings of fruits/vegetables daily versus I will quit eating meat, dairy, and processed foods)

Overall, I think the best New Year’s resolutions are ones that build upon the things you’ve already been working on, instead of going from zero to hero. Let’s say, worst case scenario, you have ample credit card debt and student loans and nothing in retirement or emergency savings. Instead of tackling all of these in one year – which would overwhelm anyone – try tackling just one of them. “In 2015, I will begin contributing 11% of my paychecks to my 401k” or “In 2015, I will put aside $300 monthly into emergency savings.” Then in 2016, build upon the progress you made by further increasing your retirement contribution, saving for another goal, or aggressively tackling student loans.

I personally have five financial goals for 2015, although I don’t expect anyone to create that many! Two of mine are below:

  • I will increase my 401k contribution to 12% in March
  • I will increase my 401k contribution to 18% for my 30th birthday (quite the gift, I know)

Whatever yours may be, feel free to share them and party with me next December when we’ve accomplished them!

 

This One is for the Ladies

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A few weeks ago, I ran into an old acquaintance from college – someone I haven’t seen in years. He had recently moved into the area, and knowing I also lived in the area, asked which streets I live at.  When I told him, he immediately followed up with, “What does your boyfriend do?”

Already, I’m sure women reading this are nodding knowingly. It happens far too often, and is a conversation I’ve had multiple times with other women. If you’re a single woman, no one asks what you do. If you’re in a relationship, people ask what your husband or boyfriend does.

For some (somewhat) important background, Bryan and I live in the heart of Wicker Park at Hoyne and Division. For those not familiar with the intersection, it’s a beautiful area. In fact, the block we live off of may be one of the most beautiful blocks in Wicker Park – full of mansions and single-family homes. That said, Bryan and I rent – we could never afford to buy in this area – and although I’m certainly proud of our 2 bed/2 bath garden unit, I wouldn’t say our rent is steep.

Still, when I run into acquaintances and they hear where I live, they always ask what Bryan does. We’ve only lived together for 4 months, but this has already happened 5 or 6 times. The first few times, I didn’t put it together. By the 5th or 6th time, I realized they were trying to figure out how we could “afford” the area we live in. And it’s always, “Where do you live” followed immediately by, “What does your boyfriend do?”

For the record, I’m a pretty career-driven woman who loves my job and am proud of what I do! (And if you’ll allow me to brag for a second… I’m also damn good at it). I wouldn’t say I make a lot, but I would say I make more than I ever dreamed I’d make. The next time someone asks me what Bryan does, I’d love to say, “He’s actually not working right now – he quit his job to write a book – something he’s always wanted to do – and we’re actually living comfortably off my salary.” Just to see the guy’s mouth drop. (…This is pure fiction, of course).

But the truth is, I do make a decent salary, and although Bryan is a wonderful, supportive boyfriend, he doesn’t support me financially. Yes, he treats me to the occasional romantic dinner because we’re dating, but we still split our living expenses down the middle.

Regardless of salary or living situation, it’s time that men “got with the program” and started taking women’s careers seriously. We live in a very different world today – one in which both men and women bring home the dough. Although not every guy fails to ask a woman what she does, most do. (If you don’t believe me, just ask your wife/mother/daughter/sister/friend/colleague. I bet every single one of them has multiple stories like this).

As for us women, I think part of the problem is that we sometimes pretend we aren’t as successful as we are – something we must stop doing if we want to be taken more seriously. To circle back to the beginning of this blog, when my college acquaintance asked me about Bryan’s job, I just answered it and the conversation moved elsewhere. But I could’ve said something like, “We actually both started new jobs this year. He joined X, and I joined Y, and we both love it. It’s been a great year.”

To close… I wonder what women dating or married to other women would say about this issue. Do they get asked at all? Or do men take their careers more seriously? If taken more seriously, I say hell yes.

 

Stay Alert Out There, Folks

I’m not talking about while jogging in the dark or during inclement weather, although that’s important.

I’m talking about how corporations are acting pretty sneaky these days. If you haven’t heard, Starbucks is selling $200 silver gift cards. Aka, a gift card made out of silver, with just $50 loaded onto it for coffee. (You can read more about that here).

In addition, Comcast is causing controversy by forcing customers to upgrade their modems. When people click on a link promising more information, they’re hit with the following notice, “Great news! You have already placed an order to upgrade your current modem. Your order will be processed in approximately 24-72 hours and, if eligible, your easy to use self-install kit will be automatically shipped in approximately 2 to 4 weeks.” (More about that here and here).

It reminds me of my own experiences earlier this year with Discover (the credit card company). Now I love Discover, but I haven’t always loved them. I think the company does a lot of great things, such as their 5% Cashback Program. (But more on that later).

However sometime in January 2014, after paying off almost all of my credit card debt, I noticed that Discover was charging me bogus fees under the names of “Wallet Protection” and “Payment Protection.” Um, what? I definitely didn’t remember ever signing up for anything under these names. I also, unfortunately, had never checked my credit card statements, so I never realized that they’d been charging me these fees monthly. (Rookie mistake – always check your credit card statements).

The fees always varied – from as little as $3.99 to $7.99 a month. Still, small fees add up. When I called Discover and politely asked them to “un-enroll” me from the programs, they promptly offered to reimburse me for all of the times I was charged for these programs. Which was great news for me! (I have a feeling I wasn’t the first person to bring this up). Sure enough, about a month later, Discover reimbursed me more than $500 in bogus credit card fees. It kind of felt like Christmas again in February.

But the point is that these fees should never have been charged in the first place, and that it’s important to keep an eye on your transactions – all of them – so that you can catch these types of…. “discrepancies”… when they occur. As for the Starbucks gift card… I’m pretty sure all of us could find a better way to spend $200.

Now go check your credit card statements!! …and let me know if you catch anything.

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The Easiest Retirement Calculator Ever.

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I’m going to be completely transparent here: I did not do the best job saving for retirement in my 20’s. Or even a good job, for that matter. I did an okay job when I was 24/25, but then took like a 4-year hiatus. (My brother-in-law, an actuary, is probably reading this and dying).

Although some of my reasons are legitimate, others are excuses. Yes, I was broke, struggling, and battling credit card debt. But I could’ve done better. Lived below my means. Saved more.

I’m not going to be too hard on myself though. I’ve mentioned it before, but I think it’s crazy that society expects 20-something year-old’s to be so self-disciplined while figuring out their careers, life, love. I certainly don’t judge anyone for the financial decisions they made or didn’t make in their 20’s.

But, for anyone who needs to “make up” for lost time or who just wants to do a retirement “check-up”, the CNN Retirement Calculator is the best of the best. Forget about plugging in a whole bunch of information that just ends up confusing you more. All this calculator asks is your current age, your desired retirement age, the amount you’ve saved so far, your current income, and the percentage rate at which you’re saving. In just a few wonderful clicks, the calculator does the math for you and tells you whether you’re “falling short” or “on the right track.”

For me, as you’ve probably guessed, it was “falling short.” Worse, according to the calculator, I need to consistently save 18% of my salary beginning now until I retire. 18 percent! I was shocked when I found this out, but I’ve since recovered and accepted it.

Remember, since retirement contributions are pre-tax, saving for retirement really isn’t as hard on your paycheck as you might think.

CNN Retirement Calculator

So go ahead, give it a try! Play around with the “Savings Rate” slide at the bottom to see where you’re at, retirement-wise. Then, make adjustments. That’s the most important part: make the adjustments.

Yes, there are a lot of factors involved: The calculator assumes you’ll live to age 92 (you could live longer) and that you’ll live comfortably off 85% of your pre-retirement income. But if you’re like me and math gives you a headache, this is a great, simple way to track your progress.

And who doesn’t love more simplicity when it comes to finance?!

 

How Many Savings Accounts Do You Have?

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I recently learned that my bank allows me to open an unlimited number of savings accounts and give each one a nickname! (Which has made saving way more fun and effective).

  • Emergency Fund? Check.
  • Fairy-tale Wedding? Yes, please.
  • New Bedding Collection? Sure.
  • Holiday Gifts? Check.
  • Travel? Definitely.

There are literally dozens of things you can save for separately—a down payment for a home, car insurance, new furniture—and doing so really does “stretch” your money farther.

However, before you open 6+ accounts like me… a few things to consider:

Fees:

Some banks charge fees if you don’t meet certain deposit requirements and/or if you exceed withdrawal limits. For example, my bank will charge me $5.00 per savings account if I don’t make monthly deposits of $25.00 and if I make more than three withdrawals. So it’s important to make sure you can meet these types of requirements before opening multiple accounts. This is a good thing though! It encourages you to keep making deposits and not take money out.

Investing:

Having multiple savings accounts is great if you’re just starting out or you’re trying to meet short-term goals, like saving for 2015 holiday gifts. But if you’re doing really well and saving a lot (which I hope you are), you should explore investing because that’s where you’re really going to see a return. For more information on that stay tuned, or check out this article.

Noteworthy:

Please, please, please keep in mind that mass savings doesn’t occur overnight. No one wakes up one day with 3-6 months’ worth of salary in an emergency fund, so don’t get frustrated and don’t put off starting. The whole point of saving is to put aside a little now for more later. If it takes you months or even years to reach your goal, that’s great! In fact, that’s perfectly normal.

So if you’re reading this, trust me, open up a few savings accounts and give each one its own goal. You’re going to get great at budgeting, and you might even enjoy it! After all, who doesn’t love to watch their money grow?

 

More Opinions, Please!

My boyfriend brought up a great point the other day. I was telling him about my blog (he hadn’t read it yet) and he asked, “But did you insert your opinion?? Did you add ‘the Nicole DiVito’ flavor to what you’ve learned?” (Funny man). I told him yes, although admittedly, I’ve held back a little… (Don’t want to be so opinionated that I push away readers!)

But his question got me thinking – So many financial experts/blogs/articles spew out cold hard facts without ever giving their own, unbiased opinions. “You should do this. You should do that.” In truth, there’s nothing I’d love to know more than the unbiased personal opinion of someone with a finance or accounting degree! Don’t tell me what I should be doing. Tell me what you’re doing, and why. What percentage of your salary do you save? How do you invest for short-term goals?

Unfortunately, I do not have a financial degree. But I do have passion and the desire to weed out the bad advice and promote the good!

So to circle back to my previous post about spending 5% of your salary on clothing… it’s fine if you want and can do this, but I think it’s terrible advice to follow any of the wardrobe recommendations in this article, such as spending $100 on a pair of sandals and $85 on a satin skirt if you make $30,000 a year. (Really?) I know several people who make more than that and find incredible deals for less.

What other terrible financial advice have you seen?

 

Food for Thought

Did you know that some “award-winning” financial planners recommend you put aside 5% of your paycheck on clothing? (Read more here). It sounds great at first, but when you do the math, you realize – that’s a pretty big chunk of cash! I sure wish I could do this. I put aside a little for clothing, but definitely not 5%. It seems like other things in life get in the way – in the form of oil changes, doctor’s appointments, emergency savings, food….

Maybe I’ll make more of an effort to do this now that the “experts” have recommended it. Though I’m sure it depends on many factors.

What do you think? Are you surprised by this? Is this something you already do? Would you try it?

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Count Your Blessings

During my commute home today, I decided to start a personal finance blog. I was inspired by the sudden realization that something about our system, our way of life, is broken. I’m not sure what – exactly – is broken, but in bumper-to-bumper traffic, I penned the following about how I felt in that moment:

Dear imaginary financial adviser:

You’re saying I have to pay $250 a month, for 18-20 years, just to pay for my yet-to-exist child’s college tuition? One child? For a public, in-state university?

You’re saying I have to save 18% of my salary now through age 67? 

After paying for my two unborn children’s college tuition and my senior-citizen self, what about my present self? Can I afford a vacation? A down payment for a home? An emergency fund? Don’t even get me started on a new wardrobe. New clothes… what’s that?

We live in a world that expects people in their early 20’s to have the foresight and self-discipline to pay for retirement and their future kids years in advance. At the same time, they’re also expected to figure out their careers and save up for weddings and mortgages. If you don’t think that’s broken, you’re either in the one percent or extremely financially savvy. (If you started saving for your kids’ college tuition 10 years before they were born like this author recommends, I applaud you. That’s terrific. But I haven’t. Most of us haven’t).

But after I got home, I realized I was being way too hard on myself. Yes, it’s important to prepare for the future. But it’s also important to live in the present. To enjoy cheap wine and coffee. To count your blessings. I realize I’m one of the lucky ones: both blessed and grateful to even think about retirement, saving for my future kids’ colleges, and emergencies, when so many others cannot.

In reality, life is too short to spend time worrying about money. If you do, take a step back and do yourself and the people around you a favor by indulging in the little things. Nothing matters more than the present and the people you surround yourself with. And nature.