The Workyear Begins

It's a Monday night, and I have it all to myself, as usual. B's out playing games and I'm practicing learning how to entertain myself. You'd think that by 25 a person would know him/herself well enough to do the things he/she likes. Nope, not here. For some reason, I have a hard time enjoying myself these days. I get discouraged easily, defeat plans with negative self-talk, and wonder at what I could be doing or be involved in that would be fulfilling. I am aware of all of this- the trick is to put an end to it. Chill out! Life is good.

Happily, last week I secured a part-time job that will allow me to keep my current one and have me working 40 hours a week. The company is a good deal further away (off 620), but traffic isn't so bad going that direction, and I am sort of excited about the work I'll be doing. 0 client contact, data and operations management, using Salesforce, Basecamp, and Excel to improve on processes and assist in the data entry and project creation aspect. I have some experience doing this, which is what helped me land the job, but in this position, I'll have a more autonomous and independent role. Is this my one true passion? Who knows. But I feel confident enough of my grasp of the software and their expectations that it will keep me pretty occupied. Plus, it gives me another chance to be more creative and reflective in my work, even if it not a "creative field." A good thing to practice in all aspects of life. This is so critical to personal happiness, imo. I start next Monday. In the meantime, I'm gonna bum around and savor my last sleep ins.

One thing that is always on my mind is finances. I can't help it- I worry over the large purchases (necessary or frivolous) and wonder how we could save more. Luckily, we have always been able to pay for emergency purchases, yet I know we could do so much better. Most financial experts say to aim for 6 months of expenses in your emergency fund; this year, due to lack of not much adjusting during my unemployment and kickstarting student loan payoffs, we've never had more than $1000. Naturally, this deeply bothers me. It's so difficult and time-consuming anticipating monthly bills, purchases, and setting aside the extra for savings. The main problem is that we think we have money in the bank (which we do), so we splurge on eating out or getting a new piece of furniture, when that money was saved for a future bill payment. So then we end up having to borrow from savings (really, ourselves), and that's how it stays low. This is hugely frustrating to me, because we don't spend loosely on small things, like most Americans might have used to. A latte here, a snack there, a soda later, a few dollars each day add up over time. We don't fall into that trap. While I am bordering on neurotic about money, B is the opposite. He takes it easy and finds it easy to forgive (himself and) us when we overspend. Psychologically, he is much better off. Yet I don't want to miss out on reaching big financial goals because we ate out too many times a week or kept buying stuff we didn't need our whole lives.

I've been flipping through my copy of Smart Couples Finish Rich. It's a pretty good primer for people (not just couples) interested in getting their finances off to a good start. Nothing in there that I don't already know, but it's good to remind myself to stay on track. One of the points was that as a couple, you need to get together and discuss your dreams and set common goals. I don't think we've really done this beyond occasionally talking about leaving Texas and moving to Sweden one day, which I've realized, will never happen unless we start doing something to make it happen. We also talk about shorter term goals, like visiting my cousin in New York, or taking a road trip out to West Texas, both of which are entirely doable. It takes money to travel and to fulfill some big dreams. I think we need to start putting aside money to make these trips, alongside building our emergency fund. This will take a great deal more discipline and a full-time job on my part to achieve. B, if you are reading this, let's get on it!! Part of the problem has been that I have the vague notion that we should be spending less money, but we have no specific alternate purpose for it.

One thing I have to watch out for is being too extreme. I have a tendency to be very black and white about things, taking frugality to the point of ignoring my wants. Likewise, B has the opposite tendency. I know this is common for many couples, and I really hope we can smooth out our philosophies out and one day make a shared one. Well I really started this post to write about a handful of updates, but I guess it took a turn to the moneysides. What else...

Snorri has been really lethargic these past 24 hours. He didn't move from the couch the entire 9 hours B spent there playing Fallout 3 (that's another topic). Usually he is pretty active in chasing Boyd around or playing with his toys. I decided to take him to the vet today and see what was up. I pushed him into the cat carrier and he yowled mournfully during transit, completely unresponsive to my reassurances. It was really disconcerting hearing him like that. Even though it wasn't walk-in hours, the clinic squeezed us in between appointments and after inspection, the vet declared that Snorri was physically fine. I wonder if something happened during the 3 days we were out of town for Thanksgiving. It's a mystery!

Here is a NYT article I read today about a 91 year old athlete who is super fit. Above is a photo of a similarly fit Japanese octagenarian, Mitsu Morita. The article investigates the link between rigorous exercise and a healthy, long life. All the more reason to take the time to develop a lifelong disciplined exercise regime.

Today I watched part of a debate (Youtube clip) between former British prime minister Tony Blair and author Christopher Hitchens on whether religion is a force of good or evil in the world. We watched a similar debate on the BBC last year, on the Catholic church in particular. In both cases, the audiences at the end voted that religion/Catholicism was not a force for good in the world. Very interesting turn of events from a generation that was largely brought up to be god-fearing. What is not debatable is that many crimes and stupidities have been committed in the name of religion. And that one does not have to be religious to love his neighbor. And it's easy to see politicians driven by their religious fanaticism ruining the landscape of American politics these days, which is truly unfortunate.

Engine 2 and Expense Ratios

I recently stocked up on sweaters when I realized that I only had one sweater that I actually liked. The newly reoffered Bean's Norwegian Sweater (knit in Norway!) caught my eye, but is only available for men, so I shot them an email about making a women's version. So I ordered two boys sweaters, size L, from Lands' End and L.L. Bean. When they came in, they were a bit baggy, short in the arms, and boxy in the torso. That's the trade-off for saving money by getting kids' clothing. That is OK with me, but I was disappointed to see that both pieces were Made in China. I have been feeling convicted lately of buying cheap items manufactured in poor labor conditions. B sympathizes. Can we implement a rule of only buying made in the US clothing? That would make me buy clothes way less often, for sure. Still considering this.

I have never been one to jump on faddish diets. The only one I embarked on was the Lemonade Diet in college, and I was so snack-crazy then that I could only stick with it for three days before cheating at Fresh Plus (post). Another time, spurred by a suspicion that maybe gluten intolerance was making me tired, I went gluten-free for a week, and basically starved for the first couple days, since gluten foods (including many packaged foods) made up most of my diet. I tried out a gluten-free bakery in Westlake and found it very unappetizing (post); all in all, it was an extremely unsatisfying week of eating.

Austin is replete with people who adhere to alternative diets. Vegan, vegetarian, gluten-free, sugar-free, red meat-free, macrobiotic, raw food, the list goes on. I've known people who eat differently than I do for years now. But never once did I seriously consider joining them. Food was just food, and I had more important things to worry about. Besides, the fun level of restriction is pretty close to zero. 2009 was a big year of food thinking for me. Beyond taste, I was confronted with the political, social, environmental and personal effects of what I eat. We began to try to eat only locally grown produce (if not that, then USA/organic), local meat and eggs, and less processed foods. In all truthfulness, the health factor was less of an issue for me than ever, since I had somehow managed to lose ~15 pounds this past 18 months by allowing myself to be picky and let my moods get in the way of eating. I knew I wasn't fit or healthy, but it's so much easier to ignore the question when you look just fine.

About a month before the wedding, B resolved to start working out during his lunch break every weekday. With holiday and sickness-related exceptions, he has dutifully kept up this regimen. Concerned that he wasn't losing any weight (albeit gaining much more muscle), we discussed the impact of our diet, and how it had changed from when we dating. Turns out that he noticed that we ate way less greens because I dislike eating raw vegetables, and he did not want to fight with me. Same with fish. And I eat way less pasta, even though I love it, because he doesn't particularly prefer it. And I eat way more (red) meat, because he considers it to be a hearty and flavorful part of a meal. It was an unbalanced array of foods. You are what you eat, right? In the end, with our resolves armed, we decided to make another positive, all-encompassing change. I had heard of the Engine 2 diet, developed by an ex-triathlete and firefighter in Austin. I did some research by reading articles and reviews about the diet (conveniently located on his site), purchased the book at Book People, and here we are basically turning vegan for 6 weeks!!

The added restrictions of the Engine 2 diet to being vegan are no added oils, added sugars, refined flour, or alcohol. B's challenges: no cheese, no alcohol, no yogurt, no eggs, and of course, no meat. My challenges: eating "plant strong," no regular desserts, no regular baking, no Blue Sky sodas, no fruit juice. The rules are still hazy to me, and it will definitely be a work in progress, but I think it will be a worthwhile endeavor. With most Americans dying of disease, I don't want to meet my end that way and I have many years to get off this increasingly common, downward path. (Although I have to admit that I won't officially start until the weekend, as I don't want to just throw away the bread and lunchmeat that is my lunch for the rest of the workweek.)

A personal project at work is taking the bulk of this week. I'm investigating our 401k plan, specifically the fees associated with each of the funds offered. This comes on the heels of my own conversion of my Traditional IRA to a Roth IRA. My parents urged me to open an IRA (Individual Retirement Account) the year I started working (2007), and I did so begrudgingly. At this age, any amount of extra cash = fun, and it was hard setting aside the money, but I am so glad that I did it. Primer: a traditional IRA lets you put in pre-tax dollars, and the amount is taxed as you withdraw it after you retire. A Roth IRA is funded with pre-tax dollars, and your retirement withdrawals are tax-free. I chose to convert to Roth because I am quite certain that I am in the lowest tax bracket I will ever be in, as the common path is for income to rise along with years of experience.

Anyways, when I converted, I put all of it into index funds. Index funds are like the lazy man's surefire way of gaining interest on a long-term investment. It sounded too good to be true, but as I read more about it, I was convinced. This article in particular stood out to me. The results are based on very long looks at historical market returns. Instead of trying to figure out a way to pick the magic combination of funds, you get a slice of the whole market. There are ups and downs, but overall, it steadily goes up in the long-term. And a big part of that has to do with low fees, since they are not managed.

Anyways, the expense ratio, which is the fee you pay the investment company for a fund, of the particular index fund I chose was 0.18%. High fees and expense ratios specifically will eat away at your retirement fund, to the tune of tens of thousands of dollars (or even hundreds of thousands of dollars, if you earn and put in a lot). Please take a look at this chart. Now I'm no money hog, but I'd like to not lose money if I can help it. In poring through the fund information of my company 401k, I calculated that the average fee was around 1.5%. That is a far cry from the 0.18% in my Vanguard index fund. If you look at that chart, it shows that even a 1% increase in expense ratio for a one-time $10,000 investment over 40 years results in no small relative loss, 33.8% (1.5% ER) vs.12.8% (0.5% ER). All this could be avoided if you shop around for lower fees. The terrible thing is that fees are hidden away from the general investor who does not do his/her research, and they are losing so much interest to such fees. I am in the process of trying to find more funds with lower fees, or even new plans with lower fees to present to my boss. I don't want to go as far as to accuse our company's broker (who is by the way a personal friend of the owner) of reaping in huge benefits from our selection of funds, because that would harm me. Let's just say it happens.

If you don't have a 401k, I strongly advise you to open one if your company provides the option, or just open an IRA at Vanguard or somewhere else. Not doing so is pretty much the most financially damaging thing you could let happen for your future self in retirement, and not to mention your family. Any percentage, no matter how small, matters, because of compound interest over decades. (Side note, this is why I am averse to mortgages.) Lately, personal finance has been a consuming interest for me. Not only because I want to ensure that I am set, but because it pains me to see our culture of financial ignorance and the suffering it causes. I want to educate people my age, especially, about this, so they can take care of themselves and their families, and not be enslaved to the vicious side of money. If you have any questions, I would be more than happy to discuss. This is on my list of possible career paths, although I am told that hobbies don't necessarily translate well into jobs.

Vampire Weekend - "White Sky"

Mp3 source: All Things Go

Credit Crisis!

NYT article about marriage and money It's crucial to find middle ground!

Suze Orman taking questions on the Freakonomics blog!

Economics is fascinating, but I'm way over my head trying to understand exactly what went wrong with these giant failing companies. This author foresees a credit crash and foresaw the subprime mortgage crisis.

Your Money or Your Life

As you may have guessed, I've been on a real finance management kick. I recently sent out a long-ish email to my peers about the urgency and importance of opening up a retirement account right now. I hope that I can contribute to my 401k and IRA each year as I enter through life's more challenging stages. Reading about individuals or couples who have resurfaced after handling unspeakable amounts of debt (think $50k and up!) is encouraging, because it means that you can dig yourself out of nearly any financial situation if you take control. That's what every financial book says- it's just a matter of having a doable plan, time and diligence. I don't ever plan to get into "bad debt" via credit cards (mortgages or student loans do not count) and I hope that my future spouse won't think this is OK in any situation either.

I keep hearing that finances is the #1 cause of divorce, and I am now starting to understand why. I'm not miserly, nor do I have a problem with overspending, but I do have concerns about being with someone who has a more liberal attitude towards spending and debt. I do NOT want to be the person in the relationship always being the "strict" one by curbing spending, and being in charge of all finances because my spouse isn't interested or responsible enough to manage them. Absolutely unacceptable. I can probably do it, but a burden like that takes a real toll on relationships. Learning finances even in a stable marriage is a good idea, not just in case of divorce or being widowed. Typically, from my limited experience, Asians are much more frugal and save a lot more than any other ethnicities. Yeah, it's a more boring way to live (safe is boring sometimes), but how wonderful it is to never experience the weight and worry of huge debt over the majority of your life. That freedom is definitely worth stretching pennies over and resisting rabid consumerism for me. I look at my parents and see that they live simple lives, but have been able to put their kids through college and travel and live comfortably. Of course, they were very poor right after they graduated, and worked odd and low-paid jobs for a while before landing high-paying jobs at booming tech companies. Still, because of excellent planning, I am quite sure they are set for retirement, and even though my Mom is no longer employed and is in school again, they will probably never be in want of money. Even if they did somehow run low on funds, they have an amazing ability to live with few needs and nearly nonexistent wants.

I have yet to develop a balanced attitude about finances, because I am successfully thrifty for a spell, then I go out and splurge on nice things because my bank balance looks healthy. Hopefully I will be able to stick to a budget and also not try to gain so much satisfaction from purchasing things. For all my life up until now, I haven't worried much about money, because I've always had enough and my parents provided for me. One thing I've learned since graduation is that you shouldn't wait for things to happen to you, because they never might, especially when it comes to healthy finances. Instead, actively work towards personal goals. I don't make a ton of money right now, but if I save, tuck away funds for retirement, start an emergency fund, and spend wisely, I will be in a financially secure situation in no time, especially since I have NO debt to my name. Ideally, my future spouse will be in a similar situation before seriously discussing marriage.

Suze Orman article about Marriage and Money
Pertinent when you are not on the same page financially as your significant other:

"In fact, there should be no "I do's" until you and your sweetie both appreciate the importance of living a financially responsible life. If your partner can't see the value in that, then you need to seriously question how this will play out in a marriage.

If you do find you are poles apart, it's time to dig in and work together to resolve any important differences. Don't attack. Help each other grow and learn, through calm conversations and a lot of listening. Quite often, people are financially irresponsible because they grew up watching their parents make all the wrong moves. So they simply never learned how to do things the right way. That's something you can be compassionate about, and help your honey to overcome."

As I was raised in a Christian family, I was warned against putting my security in money (or other things, people), and advised to trust God for everything. I realize that I have to be careful in learning shrewd financial decision-making not to rely on my knowledge to propel myself higher in life. I just think it's a shame that so many of my peers have bad money habits and debt because of their parents; they either didn't support them or modeled bad handling of finances. In this way, my parents gave me a significant head start. They always paid off all their bills in full on time, taught me to never spend money I didn't have, tithe, start off investing low-risk (low-return), and save. I'm still working on the saving part, as it's so tempting to take advantage of being employed and single and young. These days I'm not so big on going out and buying overpriced drinks or paying covers, but it would be nice to own some modern furniture, more artwork, nicer bike parts, nicer kitchen supplies, and lots of books on my to-read list. But with the serious thought of possible debt incurred through marriage to someone in debt plus the wish of wanting to own a nice home and raise kids eventually, my random spending habits seem immature and irresponsible. Everyone else my age who is single is living this sort of good life, so it's difficult to reign myself in, but I'd rather have a head-start than be on the same sad page as everyone else in a few years.

Another part of me is sick of all this money business and not looking forward to the increased complexity of managing finances with a mortgage, family, increased spending, more investments, debt repayment, more paperwork, etc. Can I juggle these matters successfully based on sheer effort and a little research? Maturity seems really difficult, and I hope that I will embrace all the responsibility it entails and not just survive, but thrive.

----- Mom's Response ------

Dear Frances,

Thanks for sharing the blog with us! Now I know more about what you think of us.

Daddy and I don't worry about retirement because
1. we saved
2. we can live real simply
3. as a pastor, daddy can never retire as long as people needs him to teach/preach
4. we trust that as we do our part (#1), God will take care of the rest

It is really a good feeling when we have extra and can share with others, like what some people do to us from time to time. You know what I mean?

Remember the 10/10/80 rule? Tithe 10%, save 10%, spend the rest.

Love, mom