A Tale of Two Budgets

When I moved to this city I did so knowing that the first twelve months would be financially difficult. If I delayed my entry onto the job market, I may have been able to increase my income by $10,000-$25,000/year but I decided not to take that risk. Instead I started working 6 months early knowing that I’d more than likely get a $10,000 promotion in exactly 1 year (and I did!).

One of my friends was fortunate enough to get a higher paying job and started earning $23,000/year more than I did.  We moved to the city around the same, we are both statisticians, have comparable rents  and thus we both should have a fairly good grasp about the importance of financial planning and budgets. But what shocked me was the realization that she finds it extremely difficult to live on her income and her income equates to roughly $1,000/month more in take home pay.

From our conversations, I gathered that on a good month she was able to tuck away $600 into savings, basically the amount of money I was managing to tuck away on my income prior to promotion!  Where her money is going is beyond me, but I’m beginning to realize that intentionally starting off at a lower income for one year may actually have been a savvy financial move.

Now that I’ve received my promotion, I’ll still be earning about $10,000 less pre-taxes than my friend. But I’m already seeing this as a year in which I can max out my Roth IRA and 401K plan while tucking about $200/month into a regular savings account . I’m definitely patting myself on the back for a job well done on this one. Even though I do manage to fall short of some of my goals on some months, overall, I’m still doing very well.

Net Worth Update – October 2016

Assets Sept-16 Oct-16 $ Change
Cash & Savings $2,555 $1,901 ($654)
Roth IRA $10,090 $10,372 +$211
401K $9,467 $9,799 +$296
FSA $180 $0 ($180)
Pending $400 $400 +$0
Liabilities Sept-16 Oct-16 $ Change
Credit Cards $610 $361 +$249
Net Worth $22,082 $22,111 +$29
% Change +0.0%

I knew it was going to be a spendy month but October has been the worst month to date since I started the blog.  and I ended up having to spend even more than anticipated.

Notables for the month include:

  1. Draining my FSA
  2. Paying my Chase Sapphire Reserve Annual Fee
  3. Too many Amazon purchases
  4. Birthday gifts
  5.  Reaching $20,000 in my retirement accounts
  6.  Getting promoted!

Goals for Nov 2016- Dec 2017:

  1. Max out my retirement accounts
    • $5,500 Roth IRA
    • $18,000 in 401K
  2. Save $5,000 in liquid qssets
  3. Eventually generate $200/month in extra income

This was the first month that I saw a near loss in net worth, and ouch. I will have to get back on track next month. I am trialing YNAB for the month of November so that should be interesting, especially since I will be going on vacation at the same time. I doubt I will be buying the program, but I most likely will be making some type of excel spreadsheet to better track my budget. I honestly blame amazon prime for the ridiculous amount I went overboard.  I no longer think I can purchase amazon prime.