Luxury Mindset

As I said on yesterday's post, I am DONE racking my brain about investment and debt payment strategies. At this stage, the only way I can devote more cash to these endeavors is by spending less or earning more.

Earning more is a temptation to be resisted. Sure, there are plenty of ways to bring home more cash, and I happen to excel in this area. Unfortunately, my body is pretty beat up from a decade+ of overwork. I'd rather earn income from a single source, devote my energy to mastering the skills that make me a valuable tradeswoman, and increase my income that way. Which is slow going.

That said, the name of the game is SPEND LESS. Which, luck would have it, is another area I happen to excel in. What I want to overcome is my current emotional response to frugality. My divorce introduced a time in my life of not giving a fuck about eating out, drinking in, and otherwise luxuriating in not needing to take care of another person (or myself). Cooking, baking, knitting, and my other frugal hobbies are so strongly associated with taking care of HIM that I couldn't really approach the kitchen without breaking down. I still did certain things, like hanging laundry, while steadily crying.

I'm healing, however, and these are practices that define me and (at least used to) make me very happy. The time has come to experience daily acts of frugality as matters of self-care and luxury. Basically, I'd like to be so busy doing the things I love that the idea of buying store-bought treats is honestly less appealing than enjoying my every-day process of creation.

The Shift

Okay. I created the Betterment account and spent all of yesterday evening and this morning playing with graphs and calculators. I arranged to have payments automatically deducted from every paycheck to fund a 6-month expenses savings account and a Roth IRA. This meant many hours of accelerated thought on which investment should be most heavily funded. The emergency fund protects me from borrowing. The retirement account serves my future self but is inaccessible until then. And the debt payment APY comes to over twice that of any promised by my investment vehicles.

Add the fact that I can invest as much as $5,500 tax-free into that IRA (twice what I thought), raises the bar. That's a lot of tax-deferred investment. The fact that it will take nine years at my current rate of pay to save a six-months emergency fund is another knot. Once that's saved, it's good and I can relax and just worry about the IRA, right? So maybe I should max out my saving in that area for, say...a year...and go without investing in the smartest available investment this year...no...that's not right.

And the car payment. The car payment which haunts me. The car payment, which if I didn't have to pay, could go entirely to maxing out the IRA without a problem...Maybe I should pay that off before making any other choices. Except it slowly sunk in that APY isn't the only number that matters in this particular formula. Sure, I'm paying twice the amount in interest to the car payment than any of my investments will pay me in the next four years.

But the IRA will be compounding that APY for thirty years whereas, worse case scenario, the car will be paid off in four years.

By paying an $30 extra a month on the car, I save less than $300 in interest over the life of that loan.

If I invest that $30 in my IRA on a monthly basis for the next four years, it will earn over $4,000 in interest by the time I retire.

Suddenly investment is about ten times more interesting than debt servicing! I adjusted my car payment back to the minimum payment (keeping in mind that I am still a month ahead, payment-wise), and increased my retirement draft by that same amount. I maintained a reasonable emergency fund draft.

And now the time has come to walk away.

I've said this about a dozen times in the past four weeks, but this time I MEAN it! I am honestly saving as much as I can afford while still dealing with my medical situation, splitting my dedication between a cushion and future comfort. I am honestly happy with my investment strategy, though eager to up the ante. I have edited my monthly car payment more times than I will probably have to actually make payments. Time to divert my attention elsewhere! I'm going to do my absolute best to resist logging onto these accounts until the next quarter, August, when I will have resolved the medical issues and can start thinking about negotiating a raise.

Getting Better

About five years ago I made the move from bank to credit union. Before committing to a building, I researched every credit union that might accept me as a member in my area. I created a spreadsheet in order to record and rate the various fees and rates offered on various accounts, mutual funds, certificates, and IRAs.

Darling and I went with the third-best option for various reasons. After my divorce, I went ahead and signed up for what I remembered as being the best choice, but, upon checking the spreadsheet today, was actually number two. Humans are dumb.

Except maybe not? Credit union #3, which Darling and I chose way-back-when, is now for all intents and purposes the best in terms of financial return. Actually, it's the best all around.

This raised two concerns. First I wondered about the wisdom of investing long-term in an investment that is in such tight competition and fluctuates in its standing. After all, the only certificate of deposit they offer that's worth half-a-damn is a seven year investment.

Secondly? That certificate of deposit (called a share certificate in credit union lingo, btw), is not worth half a damn at all. The fact is, the credit union is a decent way of cashing checks and saving a month or two of expenses...but not for much else. It is not in any way an investment vehicle.

This is a surprise to absolutely no one, but it's still a tough pill to swallow. I need a better plan. I turned to Google, expecting little more than the standard advice: "save six months of expenses, and then we'll talk about investing the other $2,500 you should save on top of that in a variety of mutual fund blahblahblah..." Yes. I'm trying to save that six months of expenses. I have spent many months caught up in the question of what that number should even amount to, and I have made almost zero progress.

Instead, I discovered Betterment. This is an investment website that designs and customizes various funds specifically to one's individual needs and abilities. Do you know what hooked me? Its first recommended priority: Build a six-months emergency savings.

Betterment did more than offer the stale advice: it created a plan. It gave me a number (sure, fine, whatever. It's more than I've ever had saved at one time, it is therefore good enough). It gave me a savings timeline so I'll know, once everything is set up, whether or not I'm on track. It created a model of stocks, bonds, and the blahblahblah so I can pretend that I know what's going on. It suggested a monthly payment that was reasonable and doable.

I can also create an IRA through betterment that will offer the same tools. It tells me how much to expect to need by retirement, how much to save to get there, and the likelihood of actually succeeding.

I love the clarity of being told exactly what the next step will be without having to surrender control. I can pull out the money or rollover the IRA if things don't work out. But right now the structure looks like a really perfect way to manage my savings in the same way I so enjoy handling debt: exact payments, specific goals, and movable timelines.

Recovery Research

Today I worked my first full shift since having a valve and some surface veins removed from my right leg last Thursday. I've been back on the job since Sunday, but only for six or seven hours at a time. It was slow going, too, and every day I came home and fell directly to sleep.

My days of recovery involved a lot of fantasizing about normal, day-to-day life stuff. Being unable to stand up for twenty minutes at a time really scales down one's desires. The same goes for having spent all of one's money on medical issues.

I made progress on researching savings plans and compared the investment options with both of my credit unions. It seems that my savings is in the wrong account, so that will be switched over in the next week. I also plan on switching to automatically withdrawing a set amount from every paycheck to be deposited into an IRA.

The "%" option got me super-excited about saving. But I can feel burnout coming on and want to shift gears into regularity and routine-building mode. I want to build patterns that carry me through the rough times, and, more important, the boring times. I need some combination of automatic bank drafts and savings plans to portion out my paycheck, set something aside for the future, pay my bills, and leave me with enough cash to get me comfortably through the month. Without thinking about it all the darn time!

I want...But I Want...

Yesterday I sat down and wrote a list of the things I most want. It looked like this:

1. Total Financial Freedom
2. Very Successful Career

I think the list would have been longer, but item number two was paralyzing. This has never been true of me before, ever, except in the wildest dream sort of landscape I've kind of stepped away from. In fact, I sort of equate Total Financial Freedom with the sacrifice of career, or vice versa. Which is probably not how much of the western world operates. I think career and financial success are more often seen as going hand-in-hand than contradicting each other.

Recognizing this is a big step towards overcoming some of my negative thought-processes. See, whenever I'm trying to feel good, I naturally think about my progress towards living the life I want. Which means fantasizing about not having to work any more, and fantasizing about succeeding at my career. My not-working fantasy includes growing my own food, owning rural property, and varying degrees of subversion. My career fantasy includes travelling the world and prestigious certifications. These two lifestyles are not necessarily contradictory. But at some point, I'd decided they were and I had to make an impossible and painful choice. Whenever I thought about the steps needed to take towards one, part of the process involved taking steps away from the other...which would make me sad rather than inspired.

I'm not going to write about how and why I can pursue both of my dreams (and many more dreams). I'm going to ask you to stop and think about what contradictions you've arbitrarily built into your own deep wants. Here are some more examples:

1. I want to lose weight...but I want my family to feel satisfied and well-fed.
2. I want a meaningful relationship...but I want time to myself and self-development.
3. I want to save money...but I want to pay debt.

My goal this week will be to look at how I can blend and pursue my dreams. How do I pay off my debt, build savings, and create passive income while pursuing certifications and courses and otherwise developing the skills necessary to create a name for myself?

I already have ideas.

It's gonna be awesome.

Spring Surgeries Bring Summer Recoveries!

Today I go under the knife for the first of a two-part operation having to do with a minor but uncomfortable vascular issue. I'll be back at work in a few days and have a month of recovery before the second stage. The benefit of all this will not only be improved circulation and reduced risk of blood clots, but a hard-won and long-overdue understanding of how health insurance discounts, deductibles, co-pays, and out-of-pockets work.

Oh, and I'm hitting my deductible.

It only took a couple of months to save for this procedure, during which I also set up a lease agreement for a car and establishing a reasonable (though hardly notable) savings account. Which represents a serious shift in my relationship with money. Remember when I exalted the magic of having a $20 bill sit in my wallet, week after week? That's definitely not how it is anymore. I did have three crumpled dollar bills in my wallet for much of this month, until purchasing exactly that much in gas a couple of days ago.

The second operation will take place four weeks from now, followed by an unrelated oral surgery four weeks after that. THEN I'm going to save for a week-long vacation in Ohio to see my brother and attend a trade convention in the fall. Because I really, really need something to look forward to that doesn't involve recovery!

At this rate, my health expenses should be wrapped up this Summer. If so, I intend to reward myself with a week in Ohio to visit my brother and attend a trade convention this November. It's a pricey endeavor, but will solidify relationships developed in the June workshop and increase my general value as a worker. In other words, it's an investment that will almost certainly pay for itself AND provide something to look forward to.

In the meantime, I think constantly of savings and debt payment. My last post was about setting up a percentage to be deducted from my checking account into savings ever week. Since writing that post, I edited the draft to withdraw 20% of my available balance. I also increased my monthly car payment by 20%.  The former feels almost decorative. As mentioned before, I don't actually keep much money in my checking account. I use it to pay rent (most of the time, sometimes I use cash), my car payment, and my car insurance. All three payments are scheduled to take place a day after my paychecks are deposited, which means there is rarely more than a small cushion in place to account for emergencies or mistakes. This means even 20% should only draft about $10/month into savings. I know that sounds minimal and silly, but it's not.

First off, I'm wrong. Everyone is almost always wrong about their financial situation, humans seem naturally hard-wired against being able to perceive the literal reality of monetary facts...I know I'm wrong thanks to many years of meticulously tracking ever penny earned and spent, and recalling the absolute surprise at my findings every single month and year of tabulations. I know I'm wrong because, one week after setting up the draft, having predicted with the help of a great deal of thought and data, that I would probably save about $10 the first month, and would be lucky to afford that...I saved $60 without feeling it. Unless you have done what I have, and found very different results, do not judge me. Perhaps I am somehow profoundly stupid when it comes to finances, but I am also profoundly experienced. Most important: I now have $60 earning interest in a savings account that otherwise would have converted itself into gas or nachos by now.

The 20% increase in my car payment (which actually amounts to 30% more than the minimum payment), knocks a solid year off of the schedule. How can I resist that?

So surgery today. Surgery next month. And yes, I even have surgery in June.

My New Savings Game

I only have four days to catch up at work before my vascular operation on Thursday. I'm taking a three-day weekend to recover. That and a few other odds and ends are absorbing the rest of my April income. And my savings! I have an exciting new savings strategy!

I was looking at making automatic deductions from my checking to savings account, and struggling with the fact that I don't actually feel comfortable committing to a specific number. I've been devoting more than a quarter of my income to dealing with health issues for over a year now, and that doesn't look due to change in 2016. Now that I'm spending just as much on car payments...well, long-term savings just isn't easy. I've built up a cushion with small, inconsistent piles of cash over the past few months, which is better than nothing. I've also hoarded away the money for my operation. I just haven't enjoyed it. Not enough, at least, to resist suddenly making an extra $500 debt payment on the car. Now that would be fun!

While trying to work up some sort of excitement about an automatic deduction strategy, I noticed the "%" option. My credit union will let me save a specific amount every week (or month, or whatever)...which would be another stressful number to absorb and distract my obsessive attention. Or I can automatically save a % of whatever happens to be in my checking account once a week.

Whhaat? Why does that sound SO amazing?! It's practically random...beautifully random...vaguely dangerous. At the same time, it's as consistent as it is thoughtless. If I forget because I'm stressing out about, say, an expensive upcoming operation, the bank still steps in and moves the money over. I can move it back if I need to. I operate almost entirely with cash, so it's unlikely I'll ever be caught short. At the same time, there are little levels and challenges to attract my attention to make things exciting. A certain amount of money in my checking account will enable it to start earning interest - but maintaining that would mean transferring a healthy (and probably doable) amount into my savings account to earn even higher interest. Then it would only be about six months before I would save enough money to open a decent IRA account at even higher interest! After I save the magic tax-free $2000 to my IRA, I can look to switching to a money market account for even higher interest and then look into other socially responsible investment strategies while I save for land!

If I start to feel squeezed, it would be easy to save a smaller percentage. After a raise or some other windfall, I could increase the percentage. And I have goals to shoot for!

So far, so good. Today was the first automatic deduction, and I enjoyed the "surprise" even though it was a little more than expected (rent check is late cashing). I can afford it, though, by shifting my expectations. Now I look forward to next week...will I somehow save MORE?

Bermed Out

After roughly ten days, and hauling more than a dozen wheelbarrows of soil up the hill, the berm is officially turned. I am exhausted. Now the time has come to load that fresh soil into the corn patch, finish the corn fence, and actually plant the corn and beans.

My Vinegar Geyser

This looks deceptively innocent.

Yesterday I learned to clean out the lines of the tank-less water heater. Austin has super hard water, so my house has tried to be good about doing this at least every six months. Actually, one person has been good about doing this. No one else I know, with our without a tank-less hot water heater, had any idea this is a thing you would ever do or how to do it.

So D talked me through the process, which seemed simple enough. It involves pouring three gallons of white vinegar into a bucket, feeding a hose from the line into the bucket, and attaching hose to to a pump immersed in said vinegar to feed water back into the system.

D went to work, and I faced the chore alone and confident.

I didn't have all the necessary tools. I didn't KNOW I didn't have all the tools. End result was a vinegar geyser that shot up above the second story of the house and also directly into my face while I wrestled with the toggle switches to shut everything off.

Noooo. The actual end result is an (eventually) clean system and having all the parts and components for future maintenance in one place. And a story my housemates will love to tell for the rest of forever. And surprisingly soft (if somewhat stinky) skin. And the pride of pulling the maddest April Fools prank ever...on myself.

Strange Pleasures

Today I set up an automatic payment plan to eradicate my car debt. I'm paying 10% more than required and it starts a month early.

Debt servicing is so perfectly delicious that it took real effort to tear my attention away from the process when it came time to think about something (anything) else. I scanned my calendar, looking forward to future expenses...and old anxieties. After all, having just purchased a car, how the heck am I supposed to pay for those upcoming surgical procedures?

Except...I've been saving for said procedures. And I didn't actually dip into my savings to make the car purchase (the down payment was a birthday gift from my adopted Mom, who hates that I don't have credit. In a way this was all a fairly elaborate bribe to force me to build my score). So turns out that, despite all odds, I still have my savings cushion and the cash to make an appointment with the knife this month. On Monday I'll call the doctor and make an appointment.

Is that a weird thing to be super happy about?

I'm weird.