I have just been amusing myself perusing Apartment Therapy, the design website. At first, I was happy that they are doing a series of posts that is actually useful --- budgeting and planning and how to think about redecorating while *not* spending money. Alas, it is actually more fun to read them when they are on crack and assuming everybody should spend hundreds on updating their pillows every few months and reupholstering ugly Eames chairs and bringing in fresh store flowers every week. Then I can laugh at them and mock them, which is what I do best.
Instead, they are making posts about budgets and how much money they should be socking away in savings every month. These are things I should be doing, and then I get freaked out that I am not doing them.
First of all, they linked to (I'm tired and don't feel like showing you all their links, ok? Google 'er up if you've a mind to.) a website that suggested you need a 15,000 emergency fund. Awhaaaaa? ?!?!?!?! Ok, it has a slider bar; maybe I can have less. Let me slide this up and down a bit. Hmm. Ok, 6 months emergency funds is still a lot, no matter how conservatively you define "emergency funds." Another money planning site suggests that you build up a bare-bones minimum emergency fund of $1000 while you are in hardcore credit card paydown mode. I have ---- $100 in the savings account right now. Sigh. I guess that plus Operation Dig Out of Hole are all I can afford right now.
Then I guess it's build that EF up to crazytown levels (remember, as a grad student, 15 K was about my yearly salary. Having that much sitting around as accessible money is just insane to me). No wait, fuckit, I'm gonna take a small vacation trip this summer before building up the crazydown EF. Otherwise I will go mad. I will plan out a little budget and try to be as frugal as possible.
Then they have a bunch of posts about determining your retirement needs and nest egg (!! cue hyperventilation now!!!) and making the aforementioned monthly savings plan. (!!!!) Since I have a state plan and have been barred, as an employee in this place, from ever getting any Social Security (hahahaha fooled you lawmaker suckers; I have hardly put anything in! I've been a motherfucking grad student for 10 years!) I ... really have no clue about what that means and how much I should be planning to put away as extra or what. But I know I am doing something totally different than what they are saying about an employer 401k match. I thought I was doing good rolling over my old postdoc 401k into my IRA (lookit how well I throw around these acronyms!). I guess I need to move "go talk to the HR people about what this is" up near the top of my to-do list. Except for that bit where I had trouble with getting the HR lady, who is 23 and was hired at the same time I was, to fix a problem with my paycheck last semester. Ugh.
So I am reading down the page --- emergency fund: check! deal with it later! employer 401k match: check! figure out what the hell I have as a system later! --- and I come to some posts about talking with your parents about safety and accessibility proofing the house before they get too old and start to feel attacked by your every suggestion. Siiiiiiiiigh. Yes, this is so important and yes we all should be talking about it, personally, as families, as communities ... yeah. So, my dad has not been doing well at all, you might know, and he got pneumonia right after New Year's and has been on oxygen ever since, lugging around a tank outside and a very long cord inside. And his memory and cognitive ability have definitely gone downhill lately --- not to the point of impeding everyday survival but he is no longer logical or the brilliant man who was an engineering vp for a major company. And he didn't recognize who my niece was when I was last home.
So, in a nutshell: I am much better at mocking aspirational-living fantasy websites than dealing with reality on my own. Denial! It's a method of planning, in its own way. And maybe I would be better at confronting it if my big bro hadn't just turned 50. Gah. This whole getting older crap is bullshit.
That's awesome that apartment therapy is doing that! Good for them!
The 6 month emergency fund isn't necessary for people in TT kinds of positions-- it's really for people who could lose their job with two weeks notice. Unless you have a house, 1K is a good amount because it will cover most of the small kinds of emergencies that you'll run into.
In theory you could get away with no emergency fund and use the credit card for emergencies, but that's going to depend on your personality type. Personally, when we were making very little and were paying down debt, I kept in the emergency fund just enough to cover any potential emergencies that I would have to pay for with cash instead of being able to use credit card. Plus $200 or whatever the minimum to not get charged interest on our savings account was.
Good for you getting the employer match on the 401K!
Good for you for attacking the debt! The sooner you have to stop servicing it and making interest payments, the sooner you can repurpose that money towards things like trips and future security. There's folks with much higher incomes who are spending the bulk of their money servicing debt and they just can't dig out of that hole. The sooner you get out, the sooner you'll be able to enjoy your money instead of stressing out about it. Good luck!
Sorry to hear about your dad. :(
^^What Nicole and Maggie said, and with my own sympathies for your Dad's health problems.
I always find it depressing when I read the financial stuff that assumes you're making 100K, and so you CAN repurposed 10K to pay off a chunk of debt or whatever if you just give up drinking lattes. Gah.
It's great that you're paying down debt. And if you focus on that, then you'll get to the emergency fund at some point. But yeah, you need a vacation, too.
And yay for the 401K match!
If your institution has any connections with TIAA-Cref I highly recommend their services. They usually offer free consultations and can give great advice. Once I bit the bulletin and met with a rep, I was much calmer about the whole nebulous retirement savings thing. ;-)
As someone who is in the process of buying her first house (!) after a couple of years in a tenure track job, I have a few thoughts that might be helpful. First, it might be worth talking to a mortgage broker or a bank now about what you actually would need to buy a house/apartment in your area. They will know about the different types of loans available, what the minimum down payment realistically is, how much debt you can have while still getting a loan, etc.
Second--and if you are like me you already do this obsessively--play around with the NY Times rent v buy calculator. I've never been a MUST OWN kind of person, but in my new Rustbelt city it's actually only two years to break even on renting versus owning. Knowing how that breaks down for you might help inform what you do with your money over the next few years, and whether saving for a down payment is a useful goal right now or not.
Thanks for the kudos! Good to know I can plan differently for the emergency fund.
Clarification: I had a 401K match and TIAA-cref in my postdoc. Now I get to move them over to my newplace fund, which is a state teacher's retirement system and my own IRA. And, I guess, keep the TIAA-cref just sitting there? Hmm.
Sarabeth: yes! In order to get a safe seeming place I am paying high rent for the area. I could get a fairly cheap place and have a much much lower mortgage, since there are a lot of old cruddy houses for about 100K (and mobiles in the trailer parks for way less), but since this is an area with a lot of meth use and panhandling and theft, I want to be really careful about neighborhoods and areas and such. Plus, you might have cute little craftsman or Sears-kit houses in your area, which are adorable, and the housing in my town completely sucks and is ugly. The little bit of turn of the century housing stock (which I love) that is left here is the really dangerous part of town; the rest is ugly 50s/60s tract housing that I am not fond of.
So, yes, I *could* buy a house pretty easy and pretty soon ... but do I want it? Do I want to stay here? Is there a safe neighborhood where people will not bust into my car? These are all difficult questions.
Do you have to move them? Could you start a Roth or regular IRA with TIAA-Cref and keep your old account without too much effort?
I'd be hesitant to put everything into the state account; I guess I look at Detroit and how folks were treated there, and worry (about my own state plan, too).
I would either leave the money in with TIAA-CREF or call up Vanguard and ask them to roll it over to an IRA for you. TIAA-CREF is good people, so not the worst place to leave a retirement account.
Remember that mobile homes depreciate, they don't appreciate like houses. So buying a mobile home is more like buying a car- you're not going to be able to sell it for what you paid for it.
Sounds like you should wait on a house. Homeownership carries with it a bunch of risks in addition to all the negative things you're talking about. It's even possible that the rent vs buy isn't that different once you narrow it down to neighborhoods you'd be interested in (that's something to look at). That's definitely true in our town-- rent vs. buy varies by type of housing.
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