Money and Math Mindsets

Greetings, earthlings.  I emerge briefly from my quest to find a position as a financial advisor/planner (so far that is a never-ending story, but boy have I learned a lot about the industry) to offer yet more over-sharing and musings.

I have never heard someone say ‘you know, I’m just not good at reading, so I decided letters and words weren’t for me, and I’m choosing to be illiterate for the rest of life’.  But I often hear people say they’re not good at math and avoid it at all costs, and haha isn’t math gross?

It was pre-ordained that I wouldn’t relate to the math-averse, having two parents that met studying math at university, and who proceeded to teach math at home to me and my brother themselves.  I very distinctly remember middle-school algebra as the first math course where the material was nearly all new.  I grew up enjoying math, but the relationship with theoretical math, specifically, got way complicated in college.  Mostly because I had a fixed mindset.

I cannot count the number of books and articles that have over the years referenced the concept of a growth vs fixed mindset, and I’m very happy to finally be reading the original researcher, Carol Dweck’s, book on the matter.  She observes that people differ in how they view their intelligence/ability.  Those with a fixed mindset see their intelligence as fixed, and success/failure in any area as an indication of their ability.  Performing poorly often makes you question your worth, rather than appreciate an opportunity to grow.  Those with growth mindsets know that working hard, and putting time and effort into a skill is what increases our ability.  Doing poorly does not mean you’re not capable, and that in fact doing something challenging is how you improve.

I ultimately believe that a growth mindset is both more accurate and a healthier perspective.  I can point to taking Multivariate analysis freshman year, and putting lots of time into learning something complicated, then TAing the course two years later.  Of course it’s possible to go from being someone who knows nothing, to someone who’s mastered a topic!  We do that with so many things - building endurance to run a 5K or marathon, progressing to more and more complicated classes in college and grad school, learning to cook, from writing just one blog post to having 90 in 5 years and a reputation among friends as a huge math nerd who can help with investments and making financial decisions.

Math ability seems to be viewed, especially often, through the lens of a fixed mindset.  People are (allegedly) either good at math and get it, or hopeless and best off avoiding the subject area altogether.  That makes me sad, as someone who has had a lot of good times with math, but also as someone who loves money and finance.  I did not get off to an auspicious start - I distinctly remember having a lemonade stand in first grade with my best friend and next-door neighbor Elizabeth, and having literally no understanding of money and how we should price our product.  Nobody in my immediate family talked a lot about money, or seemed to find it particularly interesting.  But for me, it is the most useful and practical application of math.  Understanding technical math concepts has lead me to a healthy perspective on investments and compound interest, and how to accomplish my long-term goals.

I have always liked a measure of autonomy - in elementary school, that came through in my taciturn nature when asked about my day.  As an adult, I cannot have someone look over my shoulder while I’m on a computer, and watch what I’m doing.  Most of all, I have felt that relying on others for income is a point of weakness, and I’m making long-term plans.  Plans to be a great employee and invest my money for future income and stability, plans to eventually be in control of my life and income and answer to just myself (and I suppose my immediate family).  Money is an amazing tool for anyone who wants freedom and autonomy, for whatever reason.  Money gives you power to decline or evaluate opportunities for a good fit, to make time for your priorities and values.  To pursue a life of leisure or passion, to be able to ignore the noise of outside judgements/opinions if they aren’t helpful.

The reason I most love talking about personal finance is because everybody has a level of control and autonomy there, that when exercised, can have an amazing impact on your life.  Being in debt now doesn’t mean you have to still be in debt in the future.  Have a low net worth?  It doesn’t have to stay that way.  I’ve read a lot of books and a few blogs, asked a lot of questions, had a financial advisor when I was fresh out of college, and chronicled my financial progress openly (and imperfectly).  Now, 4.5 years after my first investment of $375, I’m in a very different place financially and in almost every other way.  And I’m very glad that I didn’t feel like my ability to understand money and finances was limited and couldn’t grow as I did.

What do you think of growth vs fixed mindsets?  Do you think everyone can learn how to manage money?

market decline

It's always an odd experience when your country is collectively gripped by fear/sadness/outrage/worry over an event, and you're out of the country, entirely (or almost entirely) disconnected from home, your ordinary life, and social media.  We were in Belize when the Charlie Hebdo shooting occurred, and I never connected with or felt the tragedy as deeply as many others did.  When the US stock market fell in the end of August, I was mostly blissfully unaware, sailing in Croatia.  A couple of friends told me about the declines, and I essentially responded, "Oh?  Well, maybe I'll buy more stock if it's still down when we come home."  It's just really hard to be worried or concerned about the stock market when you're basically in paradise with some of your favorite people.

I jumped in the water after I took this picture.

When we got home from the trip, I tallied up our net worth (which I do at the end of every month) and assessed the damage.  We'd lost 7K over the course of one month.  SEVEN THOUSAND.  It felt like a punch in the gut.  It felt horrible - I'd done nothing and lost all this money.  It was also disheartening - we'd invested a bunch of money that month (as we do every month), and our net worth barely budged.  All that focused effort and diligence, and where did it get us?  I shared the news with Sebastien with a wry smile, then moved on with life.

I may talk more about this in the future, but my master's thesis research involves looking at what people did with their investments during the recent Great Recession.  Over 30% of (representative of the US)  individuals changed their asset allocation in retirement accounts, most away from stocks and into 'safer' investments like bonds.  I care a great deal (as a researcher, but also as a person) about the decisions people make in times of crisis, because otherwise the pull of inertia is strong (doing nothing is easier than doing something), so investment decisions and changes have impacts that carry on for years to come.  Also, because people are often reacting emotionally in these situations, they tend to make  crappy, wealth-destroying decisions.

I mentioned earlier than I tabulated the losses we experienced in the market, then moved on with life.  There was a lot of work and effort and learning involved in getting to a place where I could take a moment to feel sad, then look to see if we're able to increase our planned investments to take advantage of lower prices, then move on and feel happy and not consumed by the loss.  First, there was the very long self-education on investing - mostly from reading personal finance and investing books, working with a financial advisor, and forums like the Bogleheads.  When I first started learning, the jargon was confusing and I didn't understand and absorb everything on every page.  But continually reading new books reinforced what I knew, and built up my basic knowledge.  Now, when I pick up a mainstream book about finances, I expect less than 5 percent to be new information, and the rest reinforcement.

So, the stock market.  Buying a stock in a company means you're becoming one of the owners, and thus getting ownership of a tiny sliver of the future profits.  When you buy funds as opposed to individual stocks, you buy many companies at once.  An index fund or ETF fund allows you to buy, at usually a low cost, stocks of many many companies and so have a broad swath of investments.  In theory, the price at any given time of any given company's stock is equal to what investors in the market believe they will get paid in the future for owning a bit of the company.  So, companies that are expected to have high profits will be more expensive than companies that are expected to have lower profits.  But, there are lots of diverse players in the market with different information, and all sorts of complications to this nice theory.

There's a quote I love, about the stock market being a weighing machine in the long run, but a slot machine in the short run.  Essentially, a business with a sound strategy and valuable product that makes lots of money, will go up in price in the stock market, because people will place a high value on owning a piece of that company.  The opposite can be said for a company that's not delivering a great product or executing its vision well - the stock price will go down, because people won't be willing to pay much to own a piece of the company.  However, in the short run?  Who the hell knows what will happen, or what a stock price will be.  This might be as random (and unpredictable) as a slot machine.  All this is to say that in the long run, stock prices are supposed to be indicative of the value of the company, which is based on its fundamentals, but that in the short run - be careful about reading too much into the price of a company's stock.

The recent decline is just a blip on my radar, because I invest for the long term, and I don't much care about what my investments are worth in the short run (the next month or even the next year).  But wait, why invest in stocks in the first place, if events like the recent decline happen?  The answer to that is that inflation (historically ~3% per year in the US) eats away at the value of your money, and that if you hope to have lots of money to make use of in the future, you need to invest (in part) in stocks.  Stocks are historically the best way to beat inflation.  An investment that is 'safer' and has less movement in price (volatility) but lower returns can do you a lot of harm in the long run if you're not beating inflation, because the value of your money is eroding.

On the other hand, investing in stocks does come at a price.  While the stock market generally tends to increase in value ( a lot), it's not a smooth ride.  Declines can be very quick and lumpy, and predicting them consistently is impossible, or at least - nobody's done it yet.  So if you invest heavily in stocks, there will be losses of 30, 40, or 50 percent at times.  Yes, timeS, plural.  There's nothing you can do about that, but you CAN avoid making poor, rash, decisions (that will leave you poor).  Think before selling your stocks at a time when they are priced lower and effectively 'on sale', and the price may be temporarily out of whack with the actual $ value you receive from owning a sliver of the company.  You will get little money for selling your stocks, and miss out on the eventual recovery that (historically) has always happened, eventually, in spurts that are just as hard to predict or time as the losses.

So what should one do when the stock market (as a whole) falls?  Nothing, just be cool.  It's not easy, but you can set up systems for yourself to prevent emotional over-reactions.  I, for one, no longer check my investments constantly like I used to.  It was so easy - they were aggregated on Mint, and updated whenever I logged in.  But, while I felt slightly happy when the investments were up, I felt way more horrid when they were down.  Now, I only check at the end of each month and so avoid the internal panic that fluctuations stir up in me (before my rational half can tamp them down).

How did you feel with the recent market declines?  How did you handle them?

spending optimization

I'm open with anyone who asks (or spends enough time around me that they can't avoid hearing my talking) about valuing money as a tool.  I invest it so it grows large enough to fund my life in the future, so that working for someone else becomes a choice rather than a necessity.  The people I've interacted with (mostly online) who have similar visions are thoughtful about spending by necessity.  If you have aggressive investment goals, you can't be spending all your money on other things.  You need to buy (lots of) investments and put your money to work!  Many embrace the concept of frugality and thrift, but I've never felt comfortable doing the same.

We just returned from a 9-day trip to Croatia (7 of them sailing on a catamaran with friends).  In total, for the two of us, the trip cost $2,908.81.  That's much less than one could spend for an amazing trip like that, but there ain't nothing thrifty or small about that number (and that's our third, though most expensive, international trip this year).  I don't want to be a fraud and pretend like I don't spend lots of money on things I don't technically need but make my life happier.  I also don't see any inherent value in not spending money - it's yours to be used, whether to fulfill a short-term want or need, invest for your future, or be consumed through housing, travel, and the like.  I'm all about spending optimization, not minimization.

I don't budget at all, but I do track every single expense.  Given a minute to pull up a spreadsheet, I could list off what we've spent on everything (and I likely will, at the end of the year).  I have a sense for what we typically spend, but never a budget.  I've given a lot of thought to what I want, and setting myself up to be able to travel for months at a time, or devote time to a child, or live in new places, or work for myself, or work for little money, or everything else I might desire, is really important.  That requires a big chunk of investments to draw on for maximum freedom and flexibility in choices.  There are lots of little frivolities that, upon consideration,  don't fill me with the same happiness that having complete autonomy does.  Or make me as happy as going to ballets, skiing, traveling, and visiting friends and family (which are all things I choose to spend money on).

My training in economics and my concerted efforts to be more rational about money have left me very comfortable with the concept of opportunity cost and comparison of value.  As I've said before, I naturally tend to spend money - I want to buy everything when I enter a Target or Costco or Staples or dollar store.  There's a reason I don't go into stores for fun - it would be real expensive, and I would ultimately be sad dealing with the clutter I'd brought into my life.  But spending money isn't inherently bad (unless you're spending money you don't have) or good - some things that cost money can bring tremendous joy or comfort, and abstaining doesn't make you better or even richer.  Having lots of money but no purpose or community doesn't sound like a rich life to me.

I admire the thrifty - to be thrifty, you have to be nonconformist and willing to buck trends.  To not spend (as much) money on cars or clothes requires comfort with looking different or not doing what's 'normal'.  To be thrifty, you need to be creative - understanding your unmet needs and finding a solution by using what you have, rather than buying something someone else created, is awesome.  (And better for the environment.)  When internal confidence dictates your choices (rather than fear or reverence of externals standards), and you're thoughtful and creativity in determining and meeting your needs, the conditions are perfect for investing lots of money and building wealth (and thus freedom) at a tremendous speed!  To me that final step is what's valuable - purchasing something that will pay dividends (literally and figuratively) in life is a smart decision worth celebrating.  Not spending money?  I think that only has inherent value if you do something meaningful with that money you didn't spend.

I hate budgeting because I don't think there's a constant optimal amount to spend every month, and budgeting artificially sets a limit and will cause stress or annoyance if you exceed the limit.  If you spend all your money (or more than you make) consistently, then you need to budget (because reality).  But if you make enough and have enough self-control, optimizing rather than minimizing spending is the way to go, for me.  So as much as I dislike budgeting, I appreciate (and swear by) tracking.  If you don't know how and how much you spend, your ability to maximize your happiness or course correct to align spending with values is limited.  For me, it's not stressful to consider every purchase and the value it'll bring to me (but it would be stressful to go over an artificial budget) - for others, using a budget is the less stressful way to meet goals.  Reading Gretchen Rubin's work on habit formation has left me with a deeper appreciation for how different methods work for different people.  And that the same method will work tremendously for one and disastrously for another.

I don't work well with artificial limits (because I feel drawn to argue about them or break them), but an all-or-nothing technique can work wonders for me given my personal limitations.  So I don't budget, but I reason out and think through non-necessary purchases because that's fun for me.  And I don't go into stores for fun (because not buying takes a lot of effort, and my will-power is limited).  When abstaining isn't an option (like with chocolate), I tend to limit the quantity.  I usually buy one small chocolate bar weekly (that I proceed to eat in one day).  When you know what triggers discomfort or irrational behavior in you, you can build a system that works with or avoids them.  I think this is especially important with finances because money triggers intense emotions in all of us, but in different ways, which is why personal finances are so individual despite the math being universal.

Life's all about finding the most reasonable way to meet the goals you have with the constraints life deals you.  (Hmmm ... that kinda sounds like budgeting.)  Do you think there is value is frugality and not spending, or budgeting?  More importantly, what saving or investing techniques have you adopted to enable you to succeed and grow wealthy?  What are your financial triggers (or what doesn't bother you like it does most people)?

Joint Finances

I, like many, am married to someone very different from me.  This mostly works well, as our strengths and personalities are complementary.  Qualities I admire yet lack, my husband has, and vice versa.  Over the years, we’ve learned to understand each other better, and develop life plans with the other (as a partner and equal) at the core.  We mostly have the same views and values in life (which is not to be confused with our families of origin having the same views and values).  According to Sebastien, over the years he has trained me to be better behaved.  On my side, things aren’t working out as well, as evidenced by my husband’s recent trip to the grocery store: no chocolate was purchased, and he doesn’t even remember my favorite brands.  Sigh, first world relationship problems.

This cartoon is wildly sexist - I initially assumed it was the man who was spendy, in fact.

My husband inherently doesn’t spend money.  He’s generous and enjoys spending money to be social, but generally is pretty frugal.  He’s the person who in the past (as a single guy) bought and ate a Costco-sized tuna can, because … cheaper by weight.  I am not naturally frugal - growing up there was always a ton of stuff I wanted, and I never saved my allowance as a kid.  If I go into a dollar store, I want to buy everything.  If I walk through an aisle of mini toiletries, I want them all because they’re so cute.  When I’m in a clothing store, I start fantasizing about how great I’ll look in the clothes.  But, I’m very much motivated by not needing to depend on someone else (an employer) for a paycheck, and in having autonomy and freedom.  That pursuit of freedom lights my fire in a way that elegant decor and possessions (as much as I can appreciate them) simply can’t.

The way our finances work is basically: I’m in charge of everything, I monitor and pay everything, but give my husband regular updates about our net worth or spending (or hitting credit card bonuses).  Sometimes I wish we acted more like equals in this regard, but let’s be honest I love tracking our finances (it’s a hobby, not), and we’re on the same page so things are low-conflict and mutually beneficial.  All of our credit cards are linked on Mint.com, plus checking and savings accounts and Vanguard investments.  Any transactions or paycheck deposits show up in one place, which is handy.  I don’t particularly love mint, but it gets the job done.  Personal Capital, I hear, is the cooler shinier new service that does the same thing (provides free tracking/aggregation for all your accounts).  I transfer all of our transactions to a personal spreadsheet (one for each month, plus a master one for the whole year’s monthly spending), with categories like groceries, eating out, clothes shopping, transportation, misc, fixed (rent/internet/phone).  I have a master spreadsheet on our investments (contributions, net worth, allocation).  Travel of the international variety and charitable contributions get tracked separately.

I’m somewhat uncomfortable with the term ‘frugal’ (which evokes to me an image of someone who enjoys not spending money to the point where they avoid fulfilling activities simply due to the cost).  I try instead to be thoughtful in considering how to spend my money, which doesn’t feel like deprivation.  I’m not motivated by not spending money (a growing savings account … nice but meh) but rather by buying investments that will grow and compound and make me wealthy.  My husband does not operate in the same way (at all).  Take for instance, his Daily Bagel (™ - just kidding).  $1.69 every morning at work, when he works a regular shift.  I see this and think - personally, I’ve found that daily minor food purchases are not that satisfying in the grand scheme of things, I/he might be better off planning and bringing breakfast to work in that situation.  Cheaper and could be prepared the night before, which allows you to avoid the extra time to buy a bagel the next morning, which means you can sleep more.  And I truly value sleep.  I also think, if you buy a bagel every workday and work 48 weeks/year, that’s $405.  What a beautiful amount to add to our investments every year.  But when I mention ‘do you think this bagel is providing you with more satisfaction than it costs?’, he is all ‘woman, don’t control my spending’.  He doesn't spend much (inherently), and doesn't want his minor purchases questioned.  Which, fair enough.  I’m not trying to cut the spending (that's just what it sounds like), but rather to ensure utility derived exceeds the cost.  It’s tough to be married to an economist-by-training, I guess.  I need to let this drop, since my husband claims this bagel thing comes up on a regular basis.  For real, we don’t argue about the big money stuff, but … bagels.

As the tracker, I’m much more cognizant of how much we spend and what we spend it on.  As in most life situations, it’s easier to remember the good things you’ve done for others rather than the numerous things others do for you.  Particularly, our own quirks or mis-steps seem minor in the face of the annoying things we remember that our partner has done.  I think this is largely true even if you’re not particularly petty or inclined to keep tabs.  Does it make me a little glum that in marrying Sebastien, I went from not spending anything on a car, to … spending on insurance, lots of gas, and costly repairs?  A bit.  But, not a productive thing to focus on, since the car isn’t going anywhere, and it also benefits us both.  Similarly, I conveniently forget that I’ve spent over $600 on clothes this year, despite viewing myself as not a big shopper.

After 6.5 years together, you’d think I would internalize our differences and be uber-smart about how to approach getting my husband on board with an idea.  But no: I recently presented him with a fun challenge to reach a certain (stretch) amount in our investments by the end of the year.  That went over … about as well as when I ask about his bagels.  The challenge motivated me, but not him.  There was no clear way to achieve this goal, he was happy with his/our spending (and interested in going out for more dinner dates in fact).  I always think my good influence on my husband will draw him to be more like me, but am forced to constantly realize that he remains his (wonderful) original self.  And that I actually prefer things this way.  See: complementary facets of our personalities, and all the things that attracted me to him in the first place.

For those with joint finances: do you have any big (or small) conflicts that come up regularly or unexpectedly?  For those without: what are the reasons your current system works better than joint finances?  What are the biggest benefits you see to not having joint finances?

Investing: The Beginning

This week I realized that if I wanted to collect all the data on all my contributions to retirement accounts over time, I could, due to the wonder of having everything accessible online.  Because some of my findings were interesting, and because I love transparency, I thought I’d share some details on how my investing career got started.  I’m going to focus on the roughly 3 years between graduating college (wherein I got a job, then went to grad school) and getting married/combining finances/this year.  As you’ll see, sometimes I invested a lot, and sometimes I invested very little.  Mostly, I’ll be explaining why I did things the way I did (sometimes: logic, sometimes: not so logic), in case anything is useful.

We’ll start with … the first job, which I held for about 19 months, before heading to grad school.  Picture it: I’d been enthusiastically reading finance books for about a year (said habit continues to this day), was going to FINALLY be making enough money to invest it, was so eager to get started and to find a financial advisor (I did, and in short it was awesome).  So I was sat down with all the other new-hires on our first day (after a looong day with lots of administrative crap) and was given a list of investments and about 15 minutes to figure things out and basically no information.  It was horribly confusing.  So I set my initial monthly contribution to $375, because … $4,500/year seemed like a good amount?  It seemed doable and not too bad?  No good reason for that particular amount, but what I definitely did right was start contributing.  My employer contributed a set amount every year to my retirement (regardless of my own contributions), and the total (my + their contribution) amounted to about 10% of my salary.  Everyone says to invest 10 or 15%, right?  So I decided that was a good place to start.  If I had high-interest student loans, I would definitely have set to work paying them off instead of contributing, or would have contributed a nominal amount instead.

Here is where things start to get funny: I changed my retirement contribution 6 times over these 19 months.  To do so, I had to email the poor payroll person and ask them to manually change things, which I feel mildly bad about.  This is actually rather unusual - mostly inertia wins out and people continue the way they began where it concerns 401(k)s.  In fact, a 2000 study by Ameriks and Zeldes found that nearly half of retirement account participants made no changes to their plan over the 10-year period.  (Nerd alert: research on retirement savings is my favorite kind of research.)  After 6 months, I increased the contribution from $375 to $500 (nice round number, decent but not crazy increase).  Two months later, I increased it to $1000 (because I could), then 4 months after that to $1416 (which would lead to maxing a 401(k) for that year), then two months later decreased to $1000 (because I felt that was enough?), then increased to $1458 (this makes no sense, regret about prior decision?), then decreased to $541 ( I needed more money/liquidity - we’ll get to that).  I also, after talking to my financial advisor and getting better educated, revised the hastily-made initial decision of which funds to contribute to - basically, there was a ton of learning in these first two years.

The other thing I was able to do was open an IRA (an individual retirement account, which you can open if you have earned income, and is tied only to you and not any employer you have).  I am an impatient person, basically in everything I do, investing included.  I enjoy engulfing myself in a new topic/curiosity or going big when I do something (so like … eat the whole cake instead of a slice).  Thus, in March of 2012 I contributed $10,000 into my IRA to max it out for 2011 and 2012.  There is a yearly limit of how much you can contribute (with the limit being larger if you’re 50+), and you have until April 15 of the following year to do so, which is why I could do both years essentially at once.  This was key because I chose to open my IRA at Vanguard (due to the low-cost index funds they had that I wanted, and their superior company structure and reduced conflict-of-interest).  Many Vanguard funds require a hefty 3K minimum contribution, so they may not be the best choice for someone who prefers to slowly and steadily invest, beginning with a smaller amount.  Given the large minimum fund contributions, I had to work my way to my current IRA allocation, which includes 5 funds (none with expense ratios above .29% and the lowest at .05%).  Yes, Vanguard’s low expense ratios bring all the boys (and girls) to the yard.  They could teach you, but they’d have to charge.  Oh and (naturally) in January of 2013 I contributed the 2013 max of $5,500, because I (sort of) had the money and that’s how I roll.

Now, I have to admit to the reader that (as alluded to above), I probably over-invested in those first few years.  I had a few months between work and grad school, and ended up withdrawing some money ($1,500) from my IRA to fund life.  But that was OK by me, because I chose to contribute to a Roth IRA (and 401(k) as well).  Traditional retirement accounts allow you to contribute pre-tax money, which means the money comes out of your paycheck before you pay taxes, but later, presumably in your old age, when you withdraw money, you need to pay income taxes on this money.  With a Roth account, you put in money you’ve already paid taxes on, but this means that you don’t pay income taxes when you withdraw money later (and so you don’t pay any taxes on the growth of your money).  Having a Roth IRA meant I could withdraw my contributions at any time without penalty and without paying any more taxes.  The discussion of whether to go Roth or Traditional involves a lot of factors (plus most companies don’t offer a Roth 401(k) in the first place, and past a certain income amount, the choice is out of your hands because you’re no longer eligible for a Roth IRA).  In our early years, my husband (then-boyfriend) and I both went with Roth 401(k)s and IRAs, because that’s what I thought was best for us at the time and I was convincing.

Speaking of the husband … let’s make a brief foray (with less details) into his early investment career and first job.  First, let’s acknowledge that I’m the investing-obsessed one, so while he was smart and contributed every month, from the first month, to his retirement, the path and amounts he chose are more typical, but still excellent.  His company contributed a 50% match up to some percentage, I believe 4 or 6%.  So this is what he did - contributed to get the full match.  I mean, who can say no to an instant 50% riskless return?  (A lot of people, unfortunately, but still.)  This is pretty typical - people like to get the full match from their employer, the amount seems doable, and becomes a defacto default for those who want to participate.  I, of course, thought it would be even more excellent if he contributed more.  What’s hilarious is that literally the exact month that I moved in with Sebastien for the time between work and grad school, he goes and increases his contribution by 50%.  I might have been whispering into his ear as he slept, “invest more in your 401(k)!”.  Whatever I was doing, my encouragement was clearly more effective in close proximity.  Then, at the same time that we decided to get married (and become officially engaged), his contribution increased again, to about double his initial contribution, where it stayed for the rest of his tenure at said company.  This data is pretty incredible confirmation of Sebastien’s evolution (with my encouragement & incessant investment talk) into a lean, mean, sexy investing machine.  (Also, I'll say it before you do: correlation doesn't imply causation, but you guys ... I'm pretty convinced!)

One thing I want to make clear is that we haven’t been perfect, nor has the investing path been consistent either.  After my first job, when I was in grad school, I invested nothing in the next 1.5 years except $5,500 to max out my Roth IRA - even then, that wasn’t until August of 2014 because we were spending a bunch on our wedding.  You could say that yearly Roth contribution was my wedding present to myself. ;)  My husband moved to my city and spent a few months looking for a job, then had to wait almost a year to be able to contribute to his 401(k).  Now, in 2015 we’ve gotten into a wonderful pattern of consistently investing more than we spend.  But - what matters most in investing, is starting!  Just start … learning, reading, investing.  We’ve built ourselves a nice base from our investments in the early years, but it’s sticking to our good habits that will really make our net worth grow.

How have your investment habits changed over the years?  Did you make any brilliant (or incredibly stupid) decisions early in your investment career?  Do you feel that starting is the hardest part of investing?  Have you learned anything about yourself by looking at your investment patterns?

Clutter and clothing

I have been steadily attempting to simplify my life, pare down, and feel in control of all my possessions.  I've mentioned this before, but it's basically my nightmare to have so much stuff that I feel like I need a big house for all of it, or a luxe kitchen for my fancy gadgets.  Basically, that my stuff is going to obligate me to spend more money and life energy to store and maintain it.  (If you have really nice stuff, it doesn't feel right to stick it in a crappy apartment.)  I've learned about myself that clutter actually makes me feel worse, and bare surfaces and minimal decor make me feel at peace.  I eventually may want some solid, non-Ikea furniture, but I intend to live unencumbered by expensive things (in the context of already having so, so much luxury).  I want to admire the elegant decor at a friend's place, then come home to my minimal apartment and think about how much larger my investments are for having not bought stuff that doesn't make me happy.

 Clothing is probably my biggest spending weakness - I like shopping for it.  Reminding myself that I like clothes because I like to look good, ergo making sure the body underneath the clothes looks fit and great is way more important.  You can't really dress yourself to look fit if you ain't.  That helps (and I'm starting to develop some abs).  But here's what's embarrassing to admit - in the 7 months this year, I've spent almost $700 on clothes.  I could clarify that I don't intend to buy any more clothing this year, and that I don't actually shop frequently.  About 30% of that ($200) is one dress I bought (sooooo shiny, don't judge!).  I don't think of myself as someone who buys clothes a lot, but ... those numbers don't lie.  I clearly underestimate (in my favor) how much I shop.

In conjunction with my ... not exactly minimal spending, I have been frequently culling my clothes, strongly considering donating anything I haven't worn in several months.  Even the stuff that's perfectly nice but I don't wear because it doesn't feel comfortable, or the stuff I spent good money on that I don't wear because it's unflattering.  Or things that I don't wear, and I'm not sure why.  I actually took a stroll down memory lane and found my previous post on shopping and clothes from a bit over 2 years ago.  I'd say that from my days of owning 6 (yes, fucking 6) black dresses, I've come a long way.  Though the fact that I now own 0 black dresses says something about how fast we discard clothes that, to me, is sad.

I don't know if anyone else is like me and enjoys getting such a deep look into something very personal but so mundane about someone else - but I own 114 pieces of clothing/shoes/wearables.  This list is super honest - I even went through my laundry to count how many pairs of socks and underwear I'd already worn, so I could get the most accurate count.  (I did it just for you, you can thank me later.)  Every single piece of clothing, down to my water shoes, and the newest (and tres important, if you'll remember these newly developing abs of mine) member of my closet - a *drumrolll* crop top!  Is it weird that I was too lazy to meet my friend at a bar and spent Saturday night cataloging all my clothes?  Pretty sure it's really weird and I didn't have to ask.  Also pretty sure the dear readers of this blog are not exactly surprised by this revelation (but maybe wondering why they're friends with me?).  Oh, and my subcategories have subcategories: if you want to know the ratio of warm socks to regular socks to liners, hit me up.

Have you ever pondered how much you spend on clothing?  Or how much clothing you own?  Is it the right amount for you, or have you considered changing your habits?  While I am clearly unqualified to give advice on how not to shop (see the $100/month spent on clothing), for me I find that not going into clothing stores is the best way to not buy clothes.  It may be obvious, but for me it's easier to avoid going in the store entirely, than to manage to leave without a cute new item once I've entered.  Reading Gretchen Ruben's 'Better Than Before', which is all about habits, has made me realize I'm the kind of person for whom making a rule and following it absolutely can be easier than evaluating each specific instance.  Or, it's easier to avoid bringing junk food in the house, than it is to buy it and attempt self-control.  Taking what I've learned from her nifty book, I'll both set a clear goal and make it public (thereby creating a situation where you should shame me if I stray): no buying any clothes for the rest of this year.  I can say that, because with the addition of a crop-top, my closet is now complete. ;)

I'm ba-ack!

Hey guys, remember how I have a personal finance blog?  It's been laying fallow of new words and financial obsessions for too long.  Fear not, I am just as obsessed with personal finance as ever!  I am still capable of (and unstoppable in) talking at length (and way passionately) about student loans, mortgages, 401ks, investing, credit card points, and all that good stuff.  Why yes, my husband and I WERE late to meet friends at a beer garden just yesterday because we got into a heated discussion about the merits of extra mortgage payments vs investing.  My lovely household is as abnormal as ever.  We're experiencing a prolonged period of financial zen.

Which, actually, besides Life Stuff (the capital letters are necessary), is the reason my blog has been empty.  We're doing well - my husband with a raise at a job he loves, me with my generous grad school supporting me as I write my thesis and leave the land of academia behind with a master's.  I've never felt more financially (and thus emotionally) secure in the face of uncertainty (finding employment!  Woo!).  My husband and I are on track to achieve a major milestone this year - investing more money than we spend.  And yet.  And yet.  It feels like being as open about finances as I have been in the past (=too open, according to everyone else ever, except crucially my husband), won't really be helpful.  Won't be interesting, won't be inspiring, won't be motivating, but will be bragging.  It's been hard to figure out how to shift from being ultra-personal to being witty and clear without my life laid out nakedly as a reference.  Not that I have an qualms with sharing (or any shame about it) - I just don't want to be an asshole.  Nobody likes a braggart with a public blog on the internets who saves more money than you.

I've been doing a lot of thinking (and reading) over the last few months and changed my views on several topics.  Namely, I'll be getting a 30 year (rather than 15 year) mortgage if I ever get one, and I now understand why and how married couples can keep completely separate finances successfully.  More on all that later.  I can promise many semi-regular blog posts to come as I grow older (hopefully slightly wiser too) and continue to wonder how I've fooled everyone into thinking I'm adult-ing properly.  Suckas!

PS I just viewed my blog to copy this post's link, and became my own blog's 10,000th view! I'm thinking at least 9,500 of those views were people other than me, which is pretty cool.