Where My Money Goes

Unlike in my former life as a corporate worker bee, these days I spend more money than I earn. Not counting the tax hit from the bonus I got when I left my last company (which, after all, came with a bonus), I'm about $2000 poorer (in terms of cash and short-term savings) now than I was a year ago.

I'm not too upset about that. I started grad school with some savings that I expect to partly deplete by the time I graduate. At the same time, considering that I live in a relatively cheap apartment ($675/month) with a roommate (so that my rent + utilities is typically under $400), my TA stipend (about $22,000 a year including the extra summer work) really ought to be enough to live on. Many people are supporting families on such a wage.

I keep track of my finances in Mint, so for your amusement and/or horror, let's take a look at how I spent my money in 2011. First, here is an overview of all of my spending:

A few things really stand out:

1. Wow, I spend a lot of money on food!
2. And shopping!
3. What am I spending all that "Auto & Transport" money on?
4. I wonder what is in "Other"?

(In case you wonder, the Education spending includes $5 of tuition and the rest is books and office supplies. Some of the books are textbooks and others are supplemental reading. I also spent $180 on eBay for the tablet I teach from.)

Let's look at where my food budget goes:

So, it turns out that I eat out a lot. This shouldn't surprise anyone who knows me. And this aspect of my life has proven extremely unresponsive to my attempts to apply budgets to it. It turns out (via the magic of revealed preferences) that eating out, and in general having nice things to eat, is important to me. I'd still very much like to spend less money on food. Over $20 a day seems a bit excessive.

Now, about the shopping:

I'll admit it shocks me that I spent over $1000 on clothes in 2011. I don't think of myself as buying many clothes (even including shoes, which are included here). I'm fine with the money I spent on books. The 'hobbies' money here was the money I spent having the photo albums of my childhood digitally scanned and I don't regret that either.

Now let's take a look at where my "auto & transport" spending is coming from:

The parking is mostly for school, of course. I shouldn't need to spend money on this at all given that I live half a mile from campus, but I started buying parking because I developed chronic foot problems that seem best remediated by avoiding walking. Hopefully over time I can cut that expense. The rest of this is just the normal costs of car ownership.

Let's take a look at "Other":

I'm happy with the money I spend on travel - I think it's money well-spent, relatively speaking. Visiting my loved ones is important to me, and if anything, I wish I spent more money on this. (That is to say, I wish I traveled more. If I could travel more for the same money that would be great too.)

What about that $418 on entertainment?

You might think from seeing this that I buy movies, but that is not the case: if you look at the individual records, it turns out that a few of these are movie rentals and the rest are actual theater tickets. (There is also my Netflix subscription for $10/month.) I hardly ever used to go to the movies, so it's a bit shocking that I apparently saw 25 in the theater this year.

Seeing movies in the theater is a bit of an extravagance, but it results from the social life I have these days that I never used to have. I really relish that aspect of my current existence and don't regret it in the slightest. I will continue to see movies with friends as much as I want.

So that's how I spent my money in 2011. I would like to cut back on shopping and on eating out; otherwise I'm relatively satisfied with my current choices, and very grateful that my life affords me so many opportunities.

Money Fairness Without Marginal Costs

As I mentioned earlier, Ed got his driver's license last week, and I included him in my new insurance policy with Progressive. It's great (even for me) to know that he can now borrow my car and go wherever he wants. I expect this will come in very handy in grad school, where neither of us will commute to school by car, but where we may not live in (easy) walking distance of a grocery store. So far, Ed hasn't taken much advantage of this new ability, which is partly due to a lack of opportunity, and partly because I think the idea of being able to just drive somewhere hasn't penetrated his consciousness yet.

The question that arises for me is, how much (if any) of the car insurance and other car-related costs should Ed bear? I asked him this question, and he suggested that as a starting point, I find out how much extra it costs for him to be on my insurance.

At Amica, this was going to be $400/year, but according to Progressive, it is $0. Having him on my policy does not add anything to the cost. And yet, it doesn't seem that it should be free to him. If I were to move in with Sally, even if she found this desirable and enjoyable, I should pay some rent even though my being there would not affect the rent. People who benefit from a thing that costs something should bear some of the costs.

So he shouldn't pay nothing. If we drive the car about equal amounts in grad school (as opposed to now, when I drive it to work every day), should he pay half? On the one hand, borrowing your girlfriend's car is not as nice as having your own car; I'd have first dibs on the car and thus more convenient car access. On the other hand, I paid for the car and its depreciation falls on me, not him. And, of course, it might be that what I think is fair is more than it's worth to him for me to have a car that he can borrow.

It's hard for me to figure out what seems reasonable in this type of situation.

Auto Insurance

Many years ago, when I first moved to Denver, I had Progressive auto insurance. I don't remember what they were charging me, but when I called up Amica, I got a quote that was something like half as much as Progressive's, and I switched over. I've had excellent service from Amica for about 8 or 9 years now.

Ed got his driver's license a couple of weeks ago, and when I went to add him to my Amica policy, it would have added $400 to the year, and my total insurance costs (for full coverage with fairly high deductibles) were going to be about $1200. In the meantime, I had pulled up a quote from Progressive that was much less - about $700 for the year for the same coverage.

So I switched to Progressive again.

All this is to say that it might be worth checking your insurance coverage every few years to see if you get a much lower rate with another company (and to ensure that you're getting only/exactly the coverage you want).

Christmas in October

This morning when I woke up, everything was covered in a light layer of snow. It looks oddly a bit like a spring snow, since everything is lush and green, but the trees are actually too lush and green for spring, so...well, an early fall snow after a quite wet summer, I suppose.

Ed and I spent essentially all day together. We had lunch out, and on the way home stopped to rent a movie. I mentioned my desire to buy a Wii (which I shopped for but didn't buy the other night, unsure whether I really wanted a Wii more than I wanted the $300 I would spend, including games), and he said, "Want to get one on the way home?" So we went to Best Buy, where I got the console and Mario Galaxy, and he got an extra set of controllers and the Metroid Prime Trilogy (for us to play together).

At home, he checked out some things for work and I hooked up the Wii. The smell of the plastic, computer parts, styrofoam wrapping paper, etc., reminded me of Christmas. And it was a Christmasy day outside, with snow still visible on the trees. I said this to Ed, and he said the day really felt like Christmas all the way around, and somehow his saying it made it so. The rest of the evening really felt like we were living outside of normal time, the way that holidays sometimes do. We didn't give any thought to shopping or chores or homework or any weekend tasks, just played with our new toy. And watched The Triplets of Belleville.

Buying the Wii was also a kind of budgetary triumph. I currently put some money aside every month that I'm officially allowed to spend however I want, but that I have to conserve one month of to cover budgetary excesses. After a few months of doing this, I had more than enough to buy the Wii and the game without hitting this month's savings at all. It's the first thing I've bought with that money. I feel really good that the plan worked out, then.

Ed kicked my ass (unsurprisingly) when we played Metroid Prime - he had played the game before and I had not, and I had a lot of trouble figuring out how to do anything properly while he blew me up a lot of times. But later I got to play the regular game myself and start picking up some skills. (But damn, kids, that game is kind of hard.) After Ed went to bed, I started playing Mario Galaxy.

It was really fun and great to take a day off from life and spend it playing with another kid. (Plus we're having a sleepover!)

Fewer Rights?

Over at the Atlantic, David Indiviglio is arguing that credit card companies are responding to a new law intended to increase debtors' rights by actually removing one of those rights:

The New York Times reports one of the early casualties of Congress' recent credit card "bill of rights" legislation. A few prominent credit card companies are actually taking a right away from many in response to the new regulation: the right to exceed your credit limit.

...

How did [Discover and American Express] do it? Easy. They eliminated their cardholders' ability to purchase anything that would put them over their credit limit, unless the companies allow them to do so for no additional fee. After all, those who cannot breach their limit will never need to pay the fee.

Basically, the law apparently says that credit card companies can't charge you a fee for going over your limit unless you specifically ask for permission to do so and agree to the fee. Discover and American Express have responded by changing their system so that if you try to go over your limit, the transaction is either declined, or accepted with no fee. (They didn't want to go through the hassle of implementing a system whereby one could request permission and agree to a fee.)

I completely fail to see how this is a diminishment of my rights (even taking "rights" in a pretty loose sense). I never actually thought I had the "right" to go over my limit; I thought it was basically a screw-up when it happened, and then I would be penalized. I mean, it's the same thing (in my mind) as overdrawing your bank account - it can happen, but it's not something you're really "allowed" to do, hence the penalty.

I certainly prefer that the transaction is either declined, or accepted with no additional fee.

Are there people who viewed the ability to go over their credit limit in return for paying a penalty as a good thing, a service they enjoyed using?

Is Mint.com Safe?

Yesterday, I wrote about managing my money with Mint.com. Ed asked, in a comment, whether Mint.com can be trusted - is it safe to use the service? Here are my thoughts on that question.

Here is the information I have given Mint:

• my email address
• the names of financial institutions I have relationships with
• the user logins and passwords for those accounts

I have not given Mint, and they have not asked for:

• my name
• my address
• my phone number
• my account numbers
• my social security number

Something important to know is that you can't do anything from the Mint.com website. If someone guesses or otherwise obtains my password and logs in as me, they will be able to see a lot of my private financial information, but they won't be able to withdraw money, move money around, view my login and password information for other sites, or anything like that. All they can do to me is violate my privacy a bit. That doesn't seem very interesting for criminals, and I'm not too worried if someone I know does this. (It's just not that private to me that I have $1200 in a savings account or spent $4.62 at McDonald's last week.)

The only real point of danger I see here is that Mint itself has my user names, passwords, security question answers, etc., stored somewhere. This leads to two question:

1. Is Mint a criminal enterprise?

I would say not. They are so mainstream, have so many reviews from mainstream sites, so many certificates from ratings authorities, that I think we would know by now if they were criminals out to steal our money.

2. Can Mint keep my data safe from other criminals?

By this I mean, is Mint going to be hacked into by someone who will then get all of my user names and passwords and use these for nefarious purposes?

I have reasonably good faith that Mint has adequate security meaures in place to prevent this. I also know that anything you can do through accessing my online accounts takes a few days to actually generate money. (For instance, you could have a card issued to yourself from one of my credit accounts, or set yourself up as a bill pay payee and send yourself a payment, or copy the information from one of my scanned-in checks and use the account and routing number to submit your own check from my account to yourself.) I think that if a major breach happened at Mint, they would know, and enough people would be affected that we'd all know to take steps to prevent a loss.

Ultimately, whether you decide to trust systems like this is a personal question. I (briefly) lost $1300 once when someone broke into my Paypal account, but I was able to recover the money within a few days, and the hassle involved was small. Apparently some people have suffered identity theft crimes that were harder to recover from.

At the same time, using Mint makes me much more likely to notice fraud happening in any of my accounts, because it won't take a billing cycle or two to notice new charges show up on a credit card I don't use, or to spot a suspicious withdrawal from my savings account.

My guess is that, on net, using Mint is safer than not using it.

Mint.com

I've recently been experimenting with managing my accounts using Mint.com, which is free online software for just such a purpose. (They support themselves by giving you credit card, savings account, brokerage firm, etc., offers based on your particulars, under one portion of the website.) Prior to this, I've been managing some of my accounts in Excel, and some not at all.

Mint.com will automatically pull information from your checking, savings, investment, credit card, and loan acounts. (It probably doesn't work for every obscure bank and credit union, but it worked for almost all of mine. One of my 401K's that is managed through an old employer's own website did not work.) You can also enter other financially relevant things like the value of your home (which it will automatically get from some other site, if you want, once you give it the address) or car.

Once you get all of your accounts put in, the overview screen looks like this:


(You can probably get a bigger image by clicking. Also, I tried to blur particularly private areas.)

That stuff on the right is the budget that I set up. Since not many transactions have gone through for August yet, Mint isn't showing me anything about how my budget is going. So far.

The "Transactions" tab will give you output like this, which you can filter by account or in various other ways:


It will attempt to categorize all of your transactions for you. You can add new categories if you want, and you can also tell it to ignore certain transactions (not sure why you would do this) or to consistently rename and recategorize some. (For instance, Mint originally guessed that my monthly payment to Amica was for some kind of financial service, but now it knows it is for car insurance.)

Then you can pull up graphs of what you spend money on. This is what my graph for last month looks like. (The "Shopping" category makes it not totally useful; I've been using cash for most things, and this is how I categorized my ATM withdrawals.)

If I click on the blue segment that represents Food & Dining, I get this sub-chart:

and if I click on the green Restaurants segment, I can see exactly where I went:

The site has a lot of other features as well, like charts for showing me how the various investments in my 401K plans are doing, comparisons of my spending to that of other Mint customers, and so on. Which of these are the most useful (or useful at all besides as a way to waste time at work), time will tell. But I'm enjoying it so far, and hoping it simplifies my financial life a bit.

Being Out of Debt

For something that has almost no impact on my everyday life, it's amazing how much effect being out of debt has on me. I finally, just last month, paid off the very last dribs of credit card debt (the last bit of which was left over from when I switched back to paying cash for everything rather than using a credit card and paying it off monthly), so I owe nothing to anyone.

On a very concrete level, this has no impact. I am able to buy almost exactly as much stuff as before - which is to say, not a house, but a car or anything else I decide to go into debt for. I am not suddenly spending the hundreds of dollars I was sending to debtors every month - it's mostly going into savings (which is a real thing, but doesn't "do" anything until I spend it someday).

But the psychological relief is amazing. I worked on this for so many years, very consistently even if not always very effectively. And now...I'm done. Instead of debt I have a few thousand dollars* in the bank.

Way to go, me.

(* This is actually a slight exaggeration, but not for long.)

Money in the Relationship

The night I met Ed, we ended up having a late-night snack at Denny's, and I paid. He was, after all, a poor grad student.

"I felt weird about it even that very first night," he said recently.

Being as I am not a starving grad student, I have generally paid for most of our restaurant meals and other outings over the course of our relationship. I not only have the money, but am willing to spend it in this way, because I really do like going out.

When Ed first moved in with me, last September I believe, our arrangement was that he would continue paying me the amount he paid for rent + utilities at his previous place, which was less than half of my rent and utilities, though certainly more than he cost me by living with me. I also didn't generally charge him for household things like laundry detergent, toilet paper, etc. Once he got a full-time job, it was understood that he would start paying his half.

Now that he has the full-time job, he is indeed paying his half of the bills, which is awesome for me. And a couple of weeks ago I negotiated that, since I cook meals for us two or three times a week and also buy other items for the household, instead of divvying up all of those bills, perhaps he could just pay for a meal out for us once a week and we'd call it even.

It's an interesting situation that I thought was fair when I proposed it. Say I spent $30 preparing three meals for us, and he then spent $30 treating us to a meal out. Aren't we even? Well, yes, except that I'm still forcing him to participate in eating out, so that we're spending $60 on four meals altogether. And Ed is trying to pay off student loans and maintain his former thrifty lifestyle, so he doesn't like paying for meals out.

Yet going out is important to me. I re-negotiated: I will charge him for half of all the mutual household things (meals, paper towels, whatever - and of course he can charge me half if he buys things like that), and if I want us to go out (which is typically once or twice a week) I will pay for it.

This makes him uncomfortable. Now that he could afford to pay for half of our meals out, he feels like not doing so in favor of paying down student loans is practically the equivalent of taking my money and paying his loans with it. Why should he get treated when he has a good income? And I'm sure the fact that he's the man and I'm the woman doesn't help; our culture doesn't really have a good model of a woman taking a man out to dinner.

But I think we have to resort to some principles here. A partner in a relationship should have the right to be as thrifty as they wish. I want Ed to take the best care of himself financially that he can. Yet, a person with a thrifty partner should not be unduly limited by the partner's thrift, I think. I have a job that pays me reasonably well, I am putting money aside for retirement, I have almost no debt (< $1000 as of this month), and I think I should be able to eat in a restaurant with my boyfriend once or twice a week.

Imagine if I had a rich boyfriend who wanted to fly to Paris with me for the weekend, but I refused because I was unwilling (and, in the long-term, unable) to pay my half. It's no big deal to him - he's happy to pay my half! - and my refusal only thwarts things he'd like to do with his own money, like have an expensive romantic weekend with his girlfriend.

Of course, I would be uncomfortable if I had a boyfriend like that, at least until I gave in and decided to just enjoy the largesse, which I imagine I'd be able to do after a bit. (After all, free money and things is basically good and nice, if you don't let principles get in the way.)

I guess there are two ways you could decide to do this, while dating someone:

1. I refuse to participate in things without paying my half, or
2. I'm willing to let my partner treat me to things that aren't in my budget.

You can take a stand and go with #1 if you want, but I think #2 is generally a nicer way to be for your partner, if you can relax about it a little bit and also trust your partner to keep their own boundaries intact.

If Ed and I get married and decided to handle our money jointly, some of my excessive spending will probably have to go away; I know that not all of it is justifiable from the perspective of what our joint financial priorities should be. But I do think, under present circumstances, that I would press hard for us to be able to eat out more than occasionally.

Finances

My money situation is pretty good lately, so it seems like a nice time for another update.

If you look at my last debt snowball (from November '07), you will see that I should have owed about $9000 by this month. In truth, I've not done as well at paying off debts as I should have. I've spent money pretty profligately this year, partly because of dating Ed. (Ed isn't expensive or anything; it's mostly just that dating him has kind of made me loose and happy and carefree in a way that isn't helpful for budgeting, healthy eating, or other discipline-requiring endeavors.)

However, in May I changed jobs. As a result of doing so, instead of working for a company that is going out of business any day now, I'm working for a company that is doing very well. And although I have the same salary as before, I got a large bonus last month, nearly all of which I applied to debts.

As a result, my total debt this month is about $5,000. This is wonderful and unexpected and I should be completely out of debt by May. The only money I owe now is on my car, which is worth more than I owe on it. So I am feeling really good about that.

Meanwhile, the delightful Mosch moved out in May, and the differently delightful Ed moved in in September. Unlike Mosch, Ed pays me rent, so I have more money on a monthly basis. Ed has also graduated and is now looking for a job; when he gets one, he'll start paying half of the rent and utilities instead of the slightly smaller amount he pays now.

I recently became eligible for my company's 401K, and I am now putting in 15% of my income. I believe there is some matching or company donations of some kind, though I haven't been able to figure it out exactly.

In addition, I am now once again covered by a health insurance plan with a high deductible and associated HSA account. Unlike some people's flexible spending accounts, mine keeps the money in it forever; you can always use the money for medical expenses (including eyeglasses, OTC drugs, vitamins used to treat a condition, etc.), and at retirement age you can withdraw it freely. My current health plan is even more excellent in that regular preventive care is not subject to the deductible, and my company pays half of it every year - the first half! They just put that money directly into my HSA account, so I don't really need to fund it myself at all.

Anyway, things are looking good all the way around.

New Debt Snowball

About a year ago, I posted the results of a debt snowball calculator that I ran on the debts I had at that time. I've just updated it for the debts I currently have, and I'm going to share the results.

I put in that I can pay $1090 per month to my debts (including minimum payments). This is based on the average of what I've paid over the past 11 months, so it shouldn't be an unreasonable figure.

Here are the results (click for an expanded view).



Eagle-eyed readers will note that I have paid off a little over $10,000 in debt over the past year, and I am paying about $86 less in interest every month. You can calculate your own debt snowball here.

Finances

Mine are kind of a mess this month. I usually track them with great glee and diligence, but I let things slide a few weeks here and just now bothered to actually go and pay bills, some of which are late as a result. Once I knew I was fucking things up, I had to kind of fight to go handle them, because once they're fucked up I don't want to deal with 'em.

Also, the credit card that I use for my spending, and diligently pay off each month, I was not able to completely pay off this month. Partly that's because I have already spent, but have not yet received, the $1500 in grant money from that CREU grant project I did last year. Partly it's because I simply overspent by that much money.

For the first time since October '06 when I started tracking it, my net worth actually went down this month, though only by about $250. (This month's is lower than May's but still much higher than April's.) Yuck.

I need to get my act together. So far I've been doing fine keeping up with school work (my one stupid online class) but my diet, exercise, and financial management are going all to hell. Oh well, new relationship stuff, right? It will pass, right? Right?!?

(For the record, everything is all shaped up now - checkbook updated, bills paid, etc.)