Monday, May 14, 2012


Like many other recent college graduates out there, I wasn't too worried about my net worth when I first graduated - I just assumed that it would go up. In fact, I distinctly remember doing a Microeconomics exercise where we predicted our net worths at age 60. I knew my starting salary by then, and after applying the recommended (and very conservative) salary growth rate, and then  a savings rate, the cumulative savings amount started becoming very very high very very quickly.

There was even a portion of the exercise where we were to calculate an optimal spend rate to adopt during certain years of your life to avoid paying too much estate tax when you die. My results were that I should go into debt the first 10 years of my life in order to even out my net worth and lower my estate tax.

I'll not be going into all the reasons why this exercise was completely wrong to do because 1). I do not have the time to type them all out 2). this is not a microeconomics blog 3). this is not a forum on what institutions of higher learning should be teaching us 4). the logical fallacies will be self evident to most people reading this blog.

Although I have never gone into debt outside of student loans, I have come to realize that the things that I want within the next 3 years are slowly becoming unattainable if I don't control my spending. That, coupled with my BF's halved salary, were enough to make me do the following analysis of my April spending.

Here were the frightening results: 

Yowza! That's a lot. 

Here is my justification and explanation of what happened:

Beverage - We're currently assessing the need for this right now. BF and I currently drink A LOT of coffee each day, and we both only like one brand of coffee that is unfortunately extremely expensive. We order the whole beans bulk - this amount is for 2.5 months of coffee plus 6 months worth of tea, but the coffe portion amounts to $1.10 per person per day, which is still less expensive than going to Starbucks.

Cat - so we have a cat who has a very particular taste for a certain higher end brand of cat food. This food went on sale in April and was 33% off what it normally is, so I stocked up and got a whole year's worth. On average, the cat eats about $0.50/day worth of food and his litter is around $5, so this entire category should be $20/month. 

Cable - this includes internet. Right now Comcast is jacking up our bill every month…and I need to find the time and energy to deal with them.

Electric - This is actually two months worth of electric. Once you split out the two months, I think it's in line with what we've been paying. I'll decide later whether or not there are cheaper alternatives

Makeup/clothes - this is a major problem of mine and I will be attacking this immediately.

Taxes - as many of you know, April is tax month. This year we owed taxes for the first time. There's really no way around this

Supplements - will be talked about in another post

Rent - Will be discussed later.

Transportation - there are ways of cutting this down but it would be less safe. I may or may not write about this later, but right now I am putting this on the back burner.

So in conclusion, April was a disastrous month. One time fees like taxes combined with a double electric bill, then combined with all those clothes/makeup and cat food sales. Obviously the latter is more controllable, and that's what I'm here to do.

Over the next couple of weeks, I want to finalize a budget that I should stick to every month. I think I have a pretty good idea, but I'm definitely open to suggestions. Please let me know if you have any! Tell me where you think I can cut down!

Sunday, May 13, 2012

Wake Up Call


As I said in my previous post, I thought I had been doing fine with my personal finances. I graduated in 2009 with $30,000 in student loans, and paid them off in a little less than 2 years. While I am glad to be done with them, I get so angry with myself when I realized that I had could have completely paid them off in 1 year.

I was being completely wreckless with my money. Anything I wanted I bought, charged it to my credit card, and didn't think about it again. I ordered clothes online without trying them, and when some didn't fit, I didn't bother to take them back. I ate out every night at very expensive places. I took cabs to and from work every day, etc. I could go on for pages. 

Last summer, after I paid off my student loans and credit card bills, my boyfriend took a job in the field of his dreams. It was really risky in that it involved halving his pay. It wasn't until 2 months ago that we assessed our net worth and realized that it had barely gone up in the last 6 months that I decided to take action. We started tracking our expenses and net worth fluctuations from month to month. Right now we only have 1.5 months of data but our second month is already looking better.

We still have a long ways to go though. When I thinking about the future and the things I want and how much they cost, I get dizzy and nervous. I really hope that by keeping this blog I will learn more about myself and make a plan of attack for making my future more attainable.

Save the Introductions

Not sure what to write as my first better to make it about nothing. There's just no way I could (or want to at this moment) paint a coherent picture of who I am from a personal finance standpoint. I only became interested in personal finance a couple of months ago. I am a typical 20-something year old in that I thought I was being responsible financially and setting myself up for a good future. Upon stumbling across the amazing personal finance blogosphere I have just been completely amazed and inspired and realize that I could be doing so much more - and that there's no such thing as too early to start thinking about net worth.

I am still not sure what is to become of this blog - how much time I can devote to it and how much information I am willing to share, but if anything, it can be a tool I can use to hold myself accountable for all the things I say I want to do.

Hopefully, in the next 6 months I can craft my financial story and learn more about myself and my goals while sharing with the PF blogosphere.