Life Kit: financial podcasts

Life Kit from NPR recently added some podcasts on finances, namely on getting out of debt, saving, and investing. They are all excellent and I’d highly recommend them to anyone on these topics. Each has an introduction and three episodes that build on each other.

I have used a lot of these tips and agree with just about everything in these podcasts, so they are a great way to start learning about personal finance.

KonMari method… and money?

This winter, I started reading “The Life-Changing Magic of Tidying Up” by Marie Kondo, and started reading some of the sections out loud to my husband. One of the areas where we struggle is definitely living in a small space and trying to stay organized. Marie Kondo’s method struck a nerve with me because it is the exact opposite of every other organization method I have ever found, which is that you don’t look around for things to give away or throw away, you look at every item you own and decide if you love it (asking ‘Does this spark joy?’) and then consciously keeping only the items that you like or must absolutely keep (like old tax documents).

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A drawer before KonMari.

The method also appealed to my husband. Marie Kondo is Japanese, and as such, some of the components of the method sound like craziness, but are rooted in Shinto religion or other Japanese cultural customs. My husband studied abroad in Japan for two semesters in college, and understood the roots of these ritualistic approaches to objects. One such method is helpful when examining items that you feel you should keep, because of their essential utility or joy-giving at a previous point in time (for example, a beloved sweater that no longer fits, so you feel badly about not being able to wear it). Marie says to thank your items for helping you, treat them gently (you can even pat them or hug them goodbye), and then acknowledge that they have served their purpose, and tell them goodbye. “Thank you, dear sweater, for keeping me warm for many winters. You no longer fit me, so you will go to a new home and be loved there. Thank you, and goodbye!” I know, sounds bizarre, right? Well, I have to say, it does a better job of acknowledging what my husband would call that cognitive dissonance of parting with objects when you feel guilty about getting rid of items that are still in good condition. If softens the blow of shoving them into a garbage bag to donate to Goodwill.

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A drawer after KonMari.

The other crucial component of KonMari is the order in which you tackle your objects. Going out of order can set you up to give up, or never finish, the method. The broad categories are clothing, books, komono (or miscellaneous), and very lastly, sentimental items like pictures, scrapbooks, letters or other mementos. We started our KonMari journey with clothing, and found this list of all the categories especially helpful, as well as referring to both the original book, and Marie Kondo’s second book “Spark Joy: An Illustrated Master Class on the Art of Tidying Up”, as she describes not only how to decide if something sparks joy, but with clothing (or anything that can be folded), she tells you how to properly fold items.

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My husband’s t-shirts before, during, after.

Now, I am sure that in most marriages, there are subjects that cause minor irritation. In ours, it is the folding of clothes to be put away into drawers or on shelves. Because I do the laundry, but like to have my husband’s help in putting it away, a difference in folding strategies matters. Things do not fit well in our drawers if folded in different shapes/sizes. The KonMari method solves this by having only one way to fold things–into rectangles that can stand up on their own, to the depth of the drawer or shelf that they will fill. My husband and I can now both fold either of our clothing, and know where it belongs. And best of all, the method of folding incorporated both of our styles of folding, so we both feel that we were almost right.

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My filing ottoman, half done (the right side was full, but was pared down to approximately half of its previous density–the left side is to be be completed).

We are nearly done with our paperwork/filing, but the project has temporarily stalled as my husband is very busy with graduate school comprehensive exams, final projects, finishing up internship hours, and looking to graduation in early May. We hope to pick up the KonMari method again very soon.

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My closet after a major tidying project complete (clothing category).

I believe that this method is brilliant for a variety of reasons that have already been discussed by people smarter than me, but I have to say that this method solves a lot of the issues with just organizing all of your stuff–it’s much easier to sacrifice space, time/energy, and money to house and keep organized only items that you truly love or need to keep (and those that I know spark joy for my husband–even if they spark no joy for me, to see him happy makes me happy). And, if we ever buy a house, I believe that this method will allow us to be more realistic about our true needs and the type of house that would spark joy for us. For me, I cannot be happy if I feel I have overpaid for something expensive, so getting a ‘good deal’ is part of what helps a luxury item spark joy for me, that private joy of the bargain. Lastly, when shopping, I can analyze potential purposes by asking myself if the item will truly make me happier (‘Does this spark joy?’), or I can leave it in the store, and my money in my bank account (which I know already sparks joy).

2015 summary

In terms of finances, 2015 was a pretty great year. We were able to travel to the Netherlands in May. My husband was able to quit his job in late August in order to begin his graduate school internship. We paid the last tuition bill for graduate school in December, without loans of any kind. And we received word that my husband got a very helpful fellowship, which will see him through his last semester of graduate school and into the job market in 2016.

I’m already gathering tax documents for 2015, as well. I adjusted my withholding in late 2015 in order to have a bit more in my checks to see us through that last tuition payment; this worked out well, even if we owe some taxes in April, we’ll have our savings built back up by then.

One thing that’s totally up in the air at the moment is a future job for my husband. We are, obviously, hoping and praying that he finds something wonderful very quickly after graduation, but we have planned for a period of unemployment.

Some of our major savings efforts slowed in 2015, mainly due to paying tuition and living on one income, but we did manage to save a significant amount nonetheless, close to 30% of our income. That percentage will likely drop in 2016, as we will have one income for more of the year, but we have accounted for that in our planning.

We are both looking forward to a trip to Indianapolis later in the year, as part of the fellowship award. We are hoping that I can go on the trip and and find fun things to do while my husband has training during the day. Indianapolis isn’t exactly Amsterdam, but it is the current city of author/vlogbrother John Green, so we may run into him and become best friends.

Here’s to a happy and healthy 2016!

 

On this day

So Facebook’s “On This Day” feature reminded me a couple days ago that I posted this back in October 2009:2009 Dave Ramsey

It’s almost humorous to me now, six years later, to read that. And I want to discuss what a mind shift has taken place in me since then. I spend much more time being intentional about purchases and our overall financial plan, and I feel less anxious about our bigger financial goals.

When we got married, we had budgeted enough to know that we could afford our apartment and living expenses, but hadn’t figured out what to do about debt, savings, retirement, etc. I was 27, and my husband was 26 when we got married in 2008, and I think we were pretty typical in that we’d discussed some financial stuff before marriage and in our first year of being married, but not other things. We both had mounting student loans, since we got married while we were both in school (him completing a second bachelor’s degree, me completing my master’s degree). Even before graduating in May 2009, I felt the pressure to get a good job in order to start paying my student loan debt. My husband’s debts weren’t nearly as large, but 2009 was rough for him in other ways, and he needed a new direction in life, and so we both began new jobs within a couple months of each other. We had no credit card debt and two older vehicles that we owned outright.

But when Steve’s aunt mentioned Dave Ramsey to us in the summer of 2009, we were both intrigued. I got one of his books at the library when we got home, and must have been reading through it and thinking about in October. My first student loan payment came due in November 2009, and I had just started my new job on October 6. If you’ve been reading along with me, or have read the archives, you already know how things turned out. We now have a positive net worth, no debt, and still no mortgage (at least while my husband is graduate school).

The major change is that I feel that I know a heck of a lot more about money and am much more financially savvy now. Dave Ramsey was a great first step, and the snowball method of eliminating debt worked exactly as it does, with people, on average, paying off their debts in around four years. But I’ve done a lot of other reading (and listening to podcasts like Planet Money), and feel confident in most of the financial decision-making situations in which I find myself. For example, open enrollment for health insurance is just around the corner, but I’ve already got a spreadsheet set up and next year’s spending plan laid out, so I can simply plug in some numbers to see what’s best financially for us. There’s no more big question marks looming in our financial picture. Of course, anything can happen, but there’s more security in having a plan and a backup plan than having no plan at all.

 

Reality

This blog may make it seem like everything always goes “our way” and that we never have setbacks or disappointments, and that things are just easy for us because we have good incomes. Well, I’ve been thinking about this a lot lately as we just returned from our trip to Amsterdam and people have directly told me, “I’m so jealous!” or “You’re so lucky!”

I’m not going to go into a lot of detail, but I just want to be clear that my husband and I don’t always have it so easy, we aren’t really any more lucky than the next person, and that the good things that happen for us are usually the result of a significant amount of hard work, planning, and usually budgeting.

We are very lucky to have each other, and to each support each other’s dreams in very tangible ways. A small example of this is that I’ve been talking about learning to skateboard for over two years, and finally, my husband had a co-worker with an unused longboard and he decided to make her an offer for it. He’s now teaching me how to ride, and made sure we both got helmets soon after this photo was taken:

skateboardA larger example is his graduate school experience. We discussed him going back to school for quite a few years before he actually took the GRE, looked at various online programs compared to classroom options, applied, and was accepted to both programs he applied to. We have managed to put him through school without student loans, thanks to many people–primarily his supervisor and co-workers who have adjusted to his changing schedule each semester and worked to help him reduce his hours as he transitions toward full-time student status with no job. He is basically paying his own tuition, and my income covers all of our regular expenses so that this can happen.

But we’ve been through some pretty crummy stuff, too. There have been professional setbacks of various types, personal disappointments, strained relationships, and medical issues. And don’t forget that we started our marriage in quite a bit of debt, with a long period of unemployment for my husband while I was only working part-time. I don’t write about these things, but it doesn’t mean they don’t happen to us, just like they happen to everyone else. The best we can do is try to make better decisions and think of our future selves.

It’s likely going to be a significant amount of time before we can take another vacation that involves getting on a plane, since my husband will (God willing) be graduating next spring and also (God willing) starting a new job sometime (hoping very soon) after graduation. This is one reason we decided to get back to Europe this spring, so soon after our last trip, because school schedules and life are quickly going to get in the way of any trips. And our hope is that we will eventually be able to save up a down payment for a house, maybe by our 10th wedding anniversary. All of this is a long way off, but I’ve always been motivated by long-ranging goals.

Trip to Amsterdam: the details and the budget

I promised I’d write a blog post on the details of our trip, so this is what I hope to accomplish:

  1. Details of planning
  2. Costs
  3. Assessment

After our trip to Europe last summer (Cologne, Germany and Paris), we decided our one day in Amsterdam wasn’t nearly enough to see everything the city has to offer. We made it to the Anne Frank House and the Van Gogh Museum on that trip, and even though we were both recovering from terrible colds, it was a highlight of the whole trip. I started watching airfares to Amsterdam pretty much as soon as we got back from Paris. I did a bit of research and decided we could likely make it back in May, just after my husband’s finals week and just before the tulip season ended (the major garden, Keukenhof, closes mid to late May).

bikeIn October, I got an alert about a low fare from Kayak.com, and almost couldn’t believe it: $838/ticket, with one layover each way in Philadelphia. Compared to the $1,575 we paid for airfare in July, this seemed an incredible price. I decided to snap it up, and also bought insurance for about $50/ticket, just in case we ended up needing to cancel since we had booked so far in advance. Total: $1,776.72 for airfare and insurance.

Next came apartment hunting. We prefer apartments to hotels, since you get a kitchen and laundry, plus a bit more space to spread out and relax, for either less money or similar to a hotel, plus more privacy and the feeling of living like a local. Similar to finding a place to live, you want to maximize certain things and minimize other things. My main tips for searching for an apartment are:

  1. Figure out priorities before even looking at listings. For us, this was: comfortable bed, location relative to sights and transportation while being relatively quiet, and little amenities like a well-equipped kitchen/bathroom and laundry in the unit so we could pack light. I also noticed that women’s apartments generally appear more comfortable and have more of the little comforts that we’d expect: throw pillows and blankets, a real couch vs. a futon, cooking utensils, nice shampoo you can use so you don’t need to pack it, and even a bottle of nail polish remover if you need it.
  2. Look at the location using Google Street view to get a sense of the neighborhood and what’s nearby. By “walking” your neighborhood before you even arrive, you get a great idea of how it may fit your needs. By doing this, we discovered our location was very residential but was just around the corner from an ice cream/coffee shop and a grocery store.
  3. Check out public transportation to and from the apartment, from the airport, from all the locations you hope to visit, etc. Our location meant we got to skip visiting the Central Station on our first day in Amsterdam, which was good as we were both sleep deprived and carrying heavy backpacks. We got to hop a bus that dropped us less than a mile from the apartment. It was also close to two tram lines: one took us to the Museumplein and one took us toward Centraal Station.

We found a balance of these things with a place in de Pijp, the former student area of Amsterdam that’s south of the canal belt. For 11 nights, it cost $1,484 total, with all fees. It was exactly as we expected, and our host was very lovely, meeting us there and explaining how to use the washing machine, the coffee maker, etc.

apartmentNext was our travel budget and daily activities. This is the one area where you really don’t want to scrimp, because you’re there to see and do things, and you don’t want to be thinking, “Ah, I can’t really afford to go to this museum…” Thankfully, many large cities overcome this by offering a discount card of some type, and Amsterdam is no exception. In our guide books and online, we kept reading about the Museumkaart (Museum Card), and how it was about 60 Euros but got you into over 300 museums in the Netherlands, and over 30 in Amsterdam alone. This generally would pay off if you visited five places with the card, and since we were planning to hit all of the major museums (Rijksmuseum, Van Gogh, Stedelijk), plus whatever else struck our fancy on our 11 day trip, it made a lot of sense. Plus, you can use the card as many times as you like for admission to the same museum, so you can visit for a short period of time and decide to come back if you didn’t have your fill. Also, if you didn’t much like something, you don’t feel like you “wasted” the entry cost.

rembrandtSouvenirs is another area where you can either spend a lot or very little. My limit was about 10 Euros for a single item for myself, plus we brought back many little gifts for family and friends, mainly small things like postcards of art, key rings, notebooks, bracelets, etc. My favorite item I got was the little Playmobil Milk Maid after Vermeer’s painting in the Rijksmuseum. It was 4.90 Euros. I also picked up a little seed pearl bracelet at the Hermitage Museum and basically haven’t taken it off. My husband got a few nice art-related things: a journal, some colored pencils, a Museum Guide for the Rijksmuseum, and a book called “Art Is Therapy,” but none of them cost more than about 15 Euros.

milk maidOne area we didn’t economize as much was on food. We ate out about twice every day (breakfast was always at our apartment), and got coffee many times to help overcome to time change. We could have done more meal planning and packed lunches, but Amsterdam prices are similar to the US: if you’d feel uncomfortable wearing jeans into a restaurant, it’s probably too expensive, whereas we stuck with restaurants filled with people in their 20s and early 30s and the menu items were around 5-10 Euros. This meant that our most expensive meal, after we visited Keukenhof and got over 20,000 steps on our FitBits, was a lovely Neapolitan pizza place where we each got a pizza, plus each got beer, and split a large piece of tiramisu for $41.29 total. Most meals were around $20 or less. Lastly, transportation within the city was easy with our OV chipkaarts for the trams/buses and even the train we took to The Hague. We spent $132.40 on our cards and the costs to load them, and we each had a bit of money left on the cards after our trip to the airport, so we can bring them when we go back someday.

tulipsTotal for food/souvenirs/transportation: $1,794.45 (we had exactly 15 Euros left in cash after leaving the Schiphol airport, so we gave 5 to my cousin who just graduated from high school and kept the 10 for our next trip!).

Grand total: $5,055.17. It was worth every penny.

One other thing I should add is that we have the BarclayCard Arrival MasterCard with chip and PIN, which was absolutely essential in the Netherlands–many places ONLY took cards with chip and PIN, not cash. With the rewards we have racked up this year, we have saved $450 so far, and now that we’re back, we have more points and more reimbursements to do over the next three months, so that $5,055.17 is actually $4,605.17 and dropping. Update: as of 6/5, the new total is $4,486.17. Depending on the bills that come in over the next couple months, that will likely drop by another $73.66 for a grand total of $4,412.51. Not too shabby for a lavish 11 day European vacation!

OBA view

Brief update

I’d like to make a brief update to note that my husband and I are still on track with our goals, and things are going well. My husband is more than halfway through his graduate degree, and is receiving a lot of high praise from his professors. The major hurdle right now is obtaining an internship for next year, and while he’s has some excellent leads and interviews, nothing has materialized yet. We are both hoping this works itself out soon so we have a better sense of what his schedule will look like for fall/spring semesters.

We are still planning to pay directly for his tuition without student loans. We discussed maybe taking out a loan for one semester (maybe his very last), but he only qualifies for unsubsidized loans and so interest would accrue and origination fees also are a bummer, so we’ve decided this isn’t a good option.

We also have another big trip planned for the spring. Details and a budget will be shared when we return.

It’s also the anniversary of the Affordable Care Act being signed into law, and I just want to note that this has literally saved us thousands of dollars since I was able to sign up for health insurance via our state exchange. My employer’s coverage was a fairly expensive HDHP, and via the state exchange, MNsure, I was able to get a much lower cost plan and put my benefit dollars into retirement savings instead. It’s also a huge relief for people like my diabetic sister who can rest easy knowing they won’t reach some ridiculous lifetime maximum or be denied coverage due to a preexisting condition.