Financial Update

I figured I'd give you an update on my financial goal progress, and a little nudge to create your own financial goals if you haven't already. I'm feeling a little discouraged, because money feels tight, but I do think I'm making some (very slow) progress. First, a photo of my current motto "I am a money magnet!" I got this motto from my friend Tea who uses it as a personal mantra in her own quest to get rich. It sounded hokey to me at first but I decided it can't hurt to use it.

A picture of a man in a business suit holding a large magnet that is attracting money. 

Pay Off Car

On track with this. About 12 months to go.

Eliminate Credit Card Debt

On track with this. Should be paid off by September if I opt not to use my tax refund for it.

Eliminate Medical Debt

This goal is going slowly but steadily. Will probably take another two years.

Pay Off Timeshare

Another slow and steady goal. Should take about 5 years max.

Pay Off Student Loans
These are deferred.

This is what my debt looks like to me: Cartoon of a large monster eating money.

Save For Retirement
I switched my Roth IRA to Vanguard and I set it up to automatically debit 5% of my income every two weeks when I get my paycheck. Go me! In case you want to know how I came to the decision, I'm going to launch into an explanation now. I started my search by looking around online and on financial blogs at my options. I also polled my Facebook friends to see what they used and whether they liked it. The most popular recommendations seemed to be TIAA-CREF, Fidelity, and Vanguard. I discounted TIAA-CREF because that's where my initial 403b was before I converted it into a Roth IRA at the Royce Funds. I'd felt the fees were too high at TIAA-CREF and the returns weren't that great which is why I'd switched. More people I knew seemed to be using Fidelity than Vanguard, but it seemed my more well-off friends were using Vanguard. Both seemed to be performing well and both had satisfied customers. I did some research and in general it seems like the two are a toss-up in terms of which to choose. Here's what ultimately swayed me:

Vanguard is owned by the shareholders of its mutual funds. This business model is sort of like a credit union (and I LOVE my credit union and think credit unions are amazing). Fidelity is owned by the company's employees and a series of family trusts. Basically, if Vanguard is profitable the profits go to the shareholders, not outside investors, so Vanguard has no incentive for charging any more than necessary. Fidelity's owners actually do better when Fidelity charges its investors more, so it has an incentive to charge whatever the market will bear. From what I can see, this leads to some price differences where Fidelity has higher charges than Vanguard, which ultimately means lower returns for me as an investor.

Picture of a golden egg in a nest. The word "ROTH" is written on the egg.

Set Up A Rainy Day Fund
My goal is to be putting 5% of each paycheck into a rainy day fund, with the eventual goal of having $10,000 in there. Well, I've tried starting this, but I've been contributing erratically. Also I've been putting it in my savings account and I'm clearly too impulsive for that to work because I keep using it. No good. I really need to automate the contributions and figure out a less easily accessible place to stick them so I won't be tempted to use the money. I'm currently thinking an ING savings account might work until there is enough to put into a CD (Certificate of Deposit) since the minimum at both my credit union and my bank is $1,000.

Once I do have enough to buy a CD, I'm thinking about using a technique I just learned about here called "laddering." Basically the idea is that you have a mix of CDs that have different lengths. The longer-term CDs give higher yields but tie up your money for more time. So using a CD laddering technique lets you earn higher yields on some of your money but also have cash on hand in the meantime. So for example you could get a one year, a two year, a three year, a four year, and a five year CD. Each year when one of the CDs matures, you use the cash to buy a five year CD. In four years you've got all five year CDs but they're staggered so that one of them matures each year. Pretty neat, right?

My other thought is that I can figure out a way to save $1,000 each year and put it into a new five-year CD. Then when my first CD has matured, I can start a second round where I put another $1,000 into each CD. In ten years I'll have $10,000 in CDs.

Graphic explaining CD laddering that I ganked from this website.

Give to Charity
I've started out with $20/week and eventually want to be giving 10% of my income. So far I've given $40 each to: Roxbury Youth Orchestra (an inexpensive learning orchestra for inner-city youth), Second Chance Animal Shelter (a nonprofit no-kill animal shelter that also does low-cost spaying/neutering, and subsidized veterinary care), Youth On Fire (a drop-in center for homeless and street-involved youth ages 14-24), and Trans Lifeline (a nonprofit crisis hotline for trans people). The next one on my list is The Network/La Red, a survivor-led social justice organization working to end partner abuse in LGBT, BDSM, and poly communities with organizing, education, and support services. So basically I'm really happy about this new goal of giving to charity and I think I picked some seriously amazing organizations. I feel happy whenever I think about the organizations, people, and animals I'm helping.