Learning how to save, five years later
Once a year, I like to look back on the financial decisions I’ve made and think about any changes I anticipate making in the year ahead.
Last Year
Financially speaking, not much happened during the first eleven months of 2011, besides the steady evaporation of my travel savings. I did, however, accomplish the few financial goals I set for myself in my last “Learning how to save” post: I increased my exposure to international equity—predictably right before the eurozone economies slumped, I sold off my managed retirement funds, and I rolled over my Roth 401(k) to my personal Roth IRA.
When Stephanie and I returned to the United States in August, we had $10,000 as a post-travel savings buffer, an arbitrary amount that seemed like a reasonable amount to restart our lives. That estimate turned out to be prescient, as there wasn’t much left of it when our first paychecks showed up in the middle of October. It goes without saying that we were both exceptionally fortunate to be offered jobs within a week and a half of our return to San Francisco.
That would be the end of this post, if it wasn’t for something I wrote way back in 2007 (and subsequently acted on), shortly after starting this “Learning how to save” series. In my post, Thinking ahead (about real estate), you’ll find this little gem:
My 31-year-old self would probably want to take my 27-year-old self out for a beer and thank me profusely if he looked at his savings account balance and found $50,000. Of course, between then and now, there’ll probably be a lot of plane tickets and other spontaneous large expenses to account for. So saving $50,000 might take a little longer.
Adventures in real estate, part two
Since starting to seriously look at real estate at the beginning of October, Stephanie and I made a habit of trying to check out at least one or two open houses every Sunday. We weren’t being lazy, it’s just that there wasn’t that much available which met our minimal criteria: a two bedroom flat for less than 700k (preferably much less) in a broad central swath of neighborhoods from NoPa to Dogpatch (and possibly parts of SoMa).
The blue box highlights our general area of interest
Once we’d gotten a good baseline of what was already on the market, and ruled most of it out, we realized that finding a place was going to depend wholly on something new being listed while we were looking. We also knew that the market was going to cool down around Thanksgiving and not pick up again until after the Superbowl. I pretty much expected we’d still be going to open houses in the Spring.
And then, just before the weekend of Halloween, our fourth week of serious looking, I got an email alert for a new listing with the following blurb:
Modern meets Historical in Hip Mission Dolores! This 3BR 1BA completely renovated home features soft & hardwood floors, new electrical, central heating, new windows, period details, wood burning stove in the living room, TONS of storage, chef’s kitchen w/Wolf range, stainless appliances & counters & Scavolini cabinets. A bright sunroom features built in shelves & an eating nook w/custom table for 8-10 people. Ship stairs lead to the attic bedroom which features roof windows, walnut floors & ample storage. On a quiet street with a Walkscore of 94, it’s close to Dolores Park, Bi-Rite, Delfina, MUNI, BART & more! Add to that the active street community with an active Google Group & annual block party and all that’s missing is YOU!!!
Real estate descriptions tend to be pretty formulaic, but something about this one caught my eye. And good thing too, because there were no photos. I pinged our agents for more details, and they said that the photos would be up on Saturday. When I finally saw them, they took my breath away. We went to the open house on Sunday, and it was even better in real life. The kitchen was to-die-for. There was a cute sunroom/dining nook. There were two bedrooms downstairs, a lovely single bath, and an attic-space upstairs that had been converted into a third bedroom. People were crawling all over the place to get a look at it. This was going to move fast.
The obvious appeal and popularity of the condo tempered our initial reaction. Nothing else we’d seen either in photos online or in person came even close to the level of finish and character of this place. We figured we didn’t stand a chance, so we figured, let’s give it a shot. I emailed our agents that afternoon to say we wanted to make an offer. They called back to tell us that someone had made a preemptive offer for more than 100k over list price, well above our price range.
Continue reading Adventures in real estate, part three…
Adventures in real estate, part one
We arrived in San Francisco on September 16, exactly 13 months after we left. I took one look at the rental market on Craigslist and gasped. It seemed that rents had doubled in the time we’d been gone. Well, not exactly, but two-bedroom apartments were going for more than double what we first paid for our one-bedroom five years earlier. Even if we stuck with another one-bedroom, we’d easily be paying $600-800 more per month than a year before.
And so, at the end of our first week in San Francisco, we found ourselves attending a four-hour long first-time home buyers class. We didn’t even have jobs yet! But I knew that eventually we would. In the meantime, I had nothing better to do than get educated. More than anything, I didn’t want to fritter away a year or two of rent hemming and hawing if we pictured ourselves eventually paying into a mortgage. Let’s bite the bullet now (while housing prices have stabilized and mortgage rates are at historical lows).
By the middle of our second week in San Francisco, we both had respectable job offers. So I called up some mortgage brokers and explained our special situation. If we had to wait a year or two to rebuild our financial history, I wanted to know that sooner rather than later. But on the contrary, I got the sense that given our spotless credit, lack of debt, and my remaining savings, our year-long absence from the workforce wouldn’t pose that much of a problem as long as we could provide documentation of our previous salaries, had at least a month or two worth of paystubs from our soon-to-be new jobs, and hadn’t changed careers. This was a watershed moment. If the banks would lend us the money, we could do this.
On our third week in San Francisco, I met with a team of two real estate agents that had been recommended to me by my tax accountant. They seemed professional and straightforward—so I decided to start working with them. That weekend (Oct 9th) we visited more than half a dozen open houses. Nothing really won us over, but we got a good sense of the properties on the market and within our price range. The very next day I started my new job (Stephanie had already been working for a week) and the day after that, we moved into a furnished studio with a month-to-month lease (after having spent the previous three weeks crashing with several very generous friends).
Continue reading Adventures in real estate, part two…
I work for Kiva now!
I keep meaning to post something about having been offered a job, or starting my new job, but now that I’m already in my second week, I figured it was time to just come out and say it:
I’m a software engineer at Kiva.
Officially I’ve joined their “core services” group, which is responsible for the financial and database code that underlies kiva.org. I’ll be getting my hands dirty in the financials to start, but I’m also looking forward to helping tame their ever-growing database.
Update: Kiva just moved from the Mission to SOMA. Here’s a shot of my new desk at Kiva’s new office.
A QR Code for my wunderkammer
This time not mine, but I bought one partly to make sure!
Royal Dutch Mint 2011 Commemorative Fiver (obverse)
The photo above shows a commemorative, silver-plated 5€ coin issued by the Royal Dutch Mint in honor of their 100th anniversary. As a concession to modern technology, the reverse features a QR Code that encodes a URL—apparently the first of its kind. This is a bold move, as coins presumably last longer than URLs (not to mention QR Codes!), a reality that doesn’t seem to faze the designer, Juan José Sánchez Castaño:
Some people are worried about the fact that QR Codes will disappear in the future, or the coin will not be connected or linked any more to this webpage. [The] internet can also change or disappear in [a] few decades, and so [can] the coins, who knows? The Roman Empire disappeared centuries ago, but nowadays we still enjoy their coins and we know their meaning. As Marshall McLuhan said: “the medium is the message”. The QR Code is the message. The representation of the time we are living is the message, no matter what is encoded on it. The QR Code is a part of the design, part of the message and a beautiful way to close the circle of the one hundred years.
Learning how to save, four years later
Note: I actually wrote this back in December to post in January, but there was never a suitable gap in the travelogue to put up something non-trip-related. However, now that the dreaded tax season is upon us, I figured: better late than never.
Background
Once a year, I like to look back on the financial decisions I’ve made and think about any changes I anticipate making in the year ahead. I believe it’s a useful practice, taking stock of the past while looking towards the future. It forces me to be honest with myself, and it acts as a data point that I can look back on, charting my financial growth. Money accrues very slowly, and these yearly posts are a reminder to check the status and adjust the heading of a ship that I can barely see moving. I find most financial advice to be far too one-size-fits-all. Learning how to save is a progression and everyone exists at a different point on that line. This is my way of showing how I’m approaching a long term problem stepwise.
Of course I chose my blog as the venue to record these ruminations because I like that it outs an often taboo subject. People tend to keep money and decisions about money close to their chest. Part of that’s cultural (Americans tend to conflate self-worth with net-worth), but I think a big part of that is pride. Most people are pretty bad with money and afraid of exposing their ignorance. Maybe that’s because open, frank discussion about money is so rare?
Last Year
All that said, last year I wrote about a change I made that I wasn’t completely forthcoming about (on purpose):
Why did I do this? So I could save for the trip that I’m currently on! I just couldn’t disclose that at the time. I wasn’t even sure if the trip would happen. But I knew I needed to bolster my cash savings (which were stagnating at “emergency fund” level) if it were to ever happen. By June of 2010 I also stopped contributing to my Roth 401(k) to turbocharge my trip savings before leaving my job in early August.
Having worked at Federated Media for 4 years meant that my initial grant of stock options had all vested. I’d exercised them periodically as they vested early on, but it had been over two years since I’d exercised any more. So I took a hit exercising the rest of them, and I’ll take another hit on my taxes (grrr AMT!). It’s all a bet that one day they might actually be worth something.
So at age 31 I find myself on a fixed income. Or as I said after our final paychecks: “Now we’re spenders.” Or as my parents jokingly call us: “Unemployed and homeless”. Luckily we planned for this. We have the savings to travel for a year or so, and we have some backup savings earmarked to help us transition out of our “early retirement”.
This Year
Looking forward, there are a few things on my plate for 2011. I’d like to roll the Roth 401(k) I had with FM over to the Roth IRA I have with Schwab. I’m assuming this is possible, and this year would be the best time to do it since I won’t have a full year’s salary (assuming I find a new job in 2011). I would also like to get away from using managed retirement target funds in my IRA and instead mirror the same index fund portfolio I have for my non-IRA investments (partly due to their lower expense ratio). And finally I’d like to update how I’ve allocated those assets based on something that resonated with me from the article, A Dying Banker’s Last Instructions:
Keep in mind that putting anything less than about half of your stock money in foreign securities is a bet in and of itself, given that American stocks’ share of the overall global equities market keeps falling.
Since mid-2008 I’ve had the money invested in three index funds at Schwab, representing an asset allocation of 60% large cap (based on the S&P 500), 20% international, 20% bonds. What I’d like to move to is: 40% large cap, 40% international, 20% bonds. With this I’ll continue to have the same 80/20 stocks/bonds split (a little more risk-tolerant than Scott Adams’ 70/30 rule), but I’ll increase my foreign exposure from a quarter of the money I have invested in stocks to a half. Let’s just hope the rest of the world doesn’t fall off the map (I’m looking at you, eurozone).
Learning how to save, three years later
In December 2006, I wrote a post called Learning how to save which put down in words what I had done to organize my finances the year prior (opened an IRA and rolled my previous retirement accounts into it). Since then I’ve been posting yearly updates (2007, 2008), recording the major financial decisions I’ve made as a way to encourage long-term thinking.
In 2009 I made one change. At the end of July I diverted the money from my paycheck that I was automatically investing in three index funds over to a “high” interest savings account at Schwab. I made this change primarily to bolster my emergency fund. As a plus, the market had risen so much since its low in March, I’d recovered the unrealized losses I’d weathered since I’d started investing outside of my retirement accounts.
Though I could be disciplined and regularly save something like 10% in cash, and 90% in stocks and bonds, in reality, sometimes I actually need cash to buy things, so it’s easier for me to alternate between investing, when that makes sense, and building up a little nest egg when I anticipate some major expenses on the horizon.
My IRA still has quite a way to go to regain lost ground, since most of my investments there occurred while the market was at its 2006/07 highs. Meanwhile, my Roth 401(k), which I began in September 2008, has been doing quite nicely, currently worth about 120% of its “cost basis”. Net-net, across all my investments, I’m about even, which is good, because at the end of 2008 I was kind of wishing my money was all just in savings.
One thing I plan to do in the next few days is rebalance my index fund portfolio, as the mix between stocks and bonds has gotten a little out of whack. And then I’ll probably shift the garden hose back to automatically investing in index funds once the money bin is shored up.
Total cost of living in the city today = $374.25
Or a cascading series of errors
Last night I had a platform release to help with, which begins at 7pm and takes about an hour. I don’t have much to do, but it helps for me to be on hand to deal with any problems that might crop up. It takes me about half an hour to walk home, and I got delayed leaving the office, so I wasn’t out the door until 6:20, which is cutting it pretty close. I figured I’d catch a cab (would be the 2nd time this week!) but every one was dark. Eventually I reached that point of no return (where taking a cab would just be silly), so I just hoofed it the whole way.
The side of the street where I usually park my scooter gets “street-cleaned” on Friday morning between 6 and 8, which means I have to remember to move the scooter to the other side when I get home from work on Thursday night. Then on Friday morning before I walk to work I have to move it back because our side of the street is a commute lane between 3 and 6 every weekday afternoon. This is a well-choreographed urban reparking ballet that I do EVERY WEEK.
Since I was racing home for the release, I didn’t have time to move my scooter across the street, so I made a mental note to ask my dear Stephanie to move it for me (or to do it myself later). Of course I promptly forgot all that after getting into things. Somehow I beat Stephanie home (she had an errand to run)—and even she noticed my scooter on the wrong side of the street, but by the time she made it in the apartment building and up the stairs, she completely forgot to mention it to me.
The release went well, but then we discovered an error in a config file that got pushed out to umpteen servers, so I was chasing down some lingering issues until after 10. Release nights don’t really feel like work, it’s mostly just hanging out online and watching the last 3 weeks of work go live. But it’s still work, so I stayed up a little bit later to compensate, to have some “me” time—which included listening to the Fresh Air program on Shepard Fairey and Mannie Garcia.
So this morning, I was in the shower, and my brain was totally chewing on something that annoyed me about what I’d heard on that program, and I was worried that if I didn’t write it down, I’d forget it all, so I started telling Stephanie the story to aid my own memory. Except this only got me more worked up. She left for work while I was still getting ready, and I figured I had a whole blog post worth of stuff to write. So I decided to take a little bit of time to get it out (I was up late working after all—I can show up a little later).
I pounded out this blog post on fair use, left a comment on another blog, and saw that it was around 10:15. As it takes me half an hour to walk in, 10:45 felt a little too late to show up, so I decided to scoot. Whereupon I discovered my first ticket of the day: $50 for parking in a street cleaning zone. Grrr.
I got down to Folsom where I usually park, and everything had changed. There was a new block of motorcycle parking without meters that was completely full. The several blocks of motorcycle parking along Main were totally gone (while they build the new Temporary Transbay Terminal). And even the little secret free spot where I sometimes park was now painted red. There was no place to park, partly because I was showing up late, so I circled once or twice, and eventually found a promising free spot at the end of some parking meters where another motorcycle was parked. Safety in numbers, right?
Fast forward to tonight, I walked out to my scooter, at the corner of Harrison and Embarcadero, and IT WAS NOT THERE!!! FUCK. I parked in the least obvious commute lane there ever was. Oh, except for that sign right above my head that said no parking from 4-7pm ANY DAY! I walked 3 blocks to where Stephanie was waiting for me on her scooter and told her that my scooter had been towed. How could this happen on the same day I got a street cleaning ticket?! My helmet was in my scooter, so she couldn’t take me anywhere. Eventually I caught a cab ($10) to the impound lot on 7th and Harrison, while she went home to dig up my license plate number.
Cost to free my scooter: $244.25
Ticket for parking in commute lane: $70
Total scooter-related fines: $374.25
Living in San Francisco: Pricey
