Learning how to save

Something changed when I got to San Francisco. Even though living in a city for the first time was an incredible challenge, I felt in some ways more settled and more stable than in Santa Rosa.

Thus several chores that had been on my plate for a year or longer suddenly decided they were ready to be done. One of the big ones was saving. I’ve always had a savings account, and I’ve been reasonably good at putting surplus money in it every month, but my saving and spending habits usually follow a pretty predictable pattern. At certain points, usually once or twice a year, my savings account would fill up, and then I (or necessity) would decide I needed to spend it on something. Like a new laptop. Or a car. Or plane tickets. To me this felt like very practical saving. Rainy day saving. The only downside is that occasionally I’d draw it down to near zero—which meant no more rainy days, at least for a while. But I’m young, right?

Then things changed. When I started working for the State of North Carolina, I was required to put 6% of my paycheck before taxes into the state retirement fund. This was the first money set aside that I couldn’t touch for pretty much forever. A few months into my year at O’Reilly, I signed up for their newly restarted 401(k) plan and decided to set aside 15% of my income. I liked the idea of seeing how little I could get by on. The only problem was that my rainy day savings account started to dry up—a few hundred dollars at a time as I paid off my credit card bill each month.

It wasn’t long until I started my current job at Federated Media, and since I expected to be relocating a few months later, I stopped saving for the long term to weather the near term burden of overlapping rent, deposits, and start up expenses. The other end of the bargain (I made with myself) was that I wouldn’t just stop saving altogether. I was pretty insistent that I’d start putting money away automatically again by the end of the year.

In early October I read Jeremy Zawodny’s post, Following Scott Adams’ Financial Advice?. A database geek at Yahoo, writing about how he stacks up against the 9-point personal finance plan devised by the comic-strip artist of Dilbert fame, after CNN Marketwatch ran a piece suggest this advice was worthy of Nobel consideration. What? Talk about stand up and take notice. Surely the best recipe for grabbing [my] attention is passing off the absurd as entirely normal.

Well it worked. It was the kick in the ass that got me learning about what the heck an IRA was (why can’t it be simpler!?), eventually creating both a traditional and a Roth IRA account through Schwab, and finally jumping though necessary hoops to get the money I’d left in North Carolina and at O’Reilly into my new accounts.

But the part I’m most pleased with is that my rainy day savings account has slowly been recovering to the point where I was able to fund my Roth IRA for 2006. It certainly isn’t the same as if I was putting away 15% of my gross salary, but it definitely made me feel like I’d been able to weather all the change and upheaval of the past year while still managing to save a little for the distant future.

Charles Schwab: Talk to ChuckOne last thing. My experience with Schwab so far has been exemplary. I spent close to an hour on the phone with one of their representatives discussing my IRA options. The online account creation process was incredibly smooth, and a few days later I got a call from a person (who gave me his name and extension), welcoming me to Schwab and offering every available assistance as I get started. And they’re a discount brokerage! They sent me the information I needed in order to free my money from North Carolina, and the paperwork they’ve sent me in the mail at each stage of the process has been complementary to their services and helpful. What a refreshing surprise.

Update: Learning how to save, one year later

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