PhD in Saving

So it has been about a year since my last update and things are still crazy, but hopefully settling down soon. In the past year we have
- moved twice and plan to move again in the next few weeks
- each got a job and moved to a different job
- paid off my student loans
- learned that we may have to pay off my husband's student loans
- MOST IMPORTANTLY Entered into Escrow on a HOME!!!

So lots of changes in our household. You can see why I haven't updated. Living with my parents for 6 months was actually really great, but the last 6 months have been not so great. I love my new job though, and we can't wait to move into our new home at the end of April.

Financially, we now are using YNAB for our budgeting and after a couple months of CRAZY spending when we last moved, we seem to have things back under control. I'm hoping this move doesn't screw us up.

So I'm really excited and I hope to update more as we re-evaluate our financial priorities and move on with our life.

So I have been considering this for a while now, but as a graduate student who was already living very frugal, I felt I couldn't really pursue Financial Independence. With that part of my journey ending, I am strongly considering how our upcoming life choices will affect our financial situation. I talked with my husband and he has agreed to aim for a "savings" rate of 70%. I put this in quotes because I will include our childcare, debt, and mortgage in this amount. Here are the steps we are thinking of to obtain FI.

1) We have planned to move in with my parents for about 6 mons to save for a down payment.
2) DH may get a job less than 7 miles from my parents. He has agreed to bike to work most days to save gas/wear and further delay our getting a second car.
3) Depending on what job I get, I might use our car fund to pay off more student loan debt then conservatively invest it or put toward a bigger down payment.
4) If I get a job also in that area, or ven not, we might delay our dream hme to buy a smaller house that DH and maybe I can bike to work and then in 5-7 years move into our dream house in the nicer neighborhood and keep the first house as a rental.

These are all just ideas floating in my head. We have a lot of uncertainties right now as we both search for jobs. This is a scary time, but it is also a good time for us to recommit to fugality.

So in 11 days, March 15, I should have my PhD and be gainfully unemployed. Yuck! Honestly I'm really not feeling all that proud of my PhD. I already know that many business people think people with a PhD are elitist or know-it-all's or will demand a high paycheck. Really, most of us just really want to earn a real paycheck after years of working for our tuition and a paltry part-time stipend.

I can say that there is one thing from this process I am proud of. I am proud that I completed my degree a quarter early despite all that I faced: getting married, getting pregnant, having one adviser move across country, having another adviser pass away, and having my daughter 5 weeks early, and raising her while writing my dissertation.

After I lose my job, I'm going to start cleaning out our apartment, selling furniture, and generally preparing to move. Hopefully we can generate a little cash so we can pay movers to get us out of our 3rd & 4th story apartment.

Finished the first draft of my dissertation today.

I really wish I could add more to the calendar below. More little events and deadlines help me stay motivated. I wish I had some job deadlines or expectations, but I don't. Ugh I'm having goal withdrawal.

January 11 - First Dissertation Editing Meeting with my Adviser

February 15 - Finish Student Loan Savings
February 15-18 - Gaming Convention
February 16 - Neice's Birthday Party
February 22 - Deadline to Email Final Dissertation Manuscript

March 15 - Deadline to File Dissertation
March ? - File Taxes
March 30 - Passover
March 31 - Easter
March 31 - DH Finishes Admin Credential

April 1-5 - DH's Spring Break
April 15 - Finish $45K Down Payment

So as New Years approaches I am reviewing my goals for 2012 and 2013

2012
- I defended my proposal and advanced to candidacy
- We decided to put off buying a car even longer, though we have the money set aside. I am pretty sure I want a 2008 Honda CRV EX.
- DH received his second APLE payment. He should qualify for a third depending on how long he stays in his job in 2013.
- We did not fund my husbands Roth IRA, but we are adding to his 401k to get his company match.

2013
- We are on track to finish our down payment by April.
- I will probably finish my Dissertation in March. My first draft should be finished by January 7.
- I have been networking and applying in earnest the past month. I hope to continue between writing drafts. I really, really don't want to graduate without a job.
- We will continue to fund my husbands 401k as long as he works this job. Once that ends, we will have to reassess where we are putting out retirement contributions, but they should make it up to 15% once we both have a job.
- We will have enough money saved to pay off my high interest loans by April, though I'm not entirely sure when they will be coming due.

We have had a few financial setbacks in this last quarter with major medical bills and my funding running out for summer. I had to lower our savings rate from 35% to 30% due to increased expenses. We are also paying for child care now, and I really need to figure out how to budget for that. I was hoping we could pay for it out of my husband's bonus but that went to covering my lack of work. I will start to sell some of our things in preparation for moving after the New Year.

So we took advantage of the ING Independence Sale and started DD her own bank account. So at only 2 months, she has $23.76 to her name. We also started putting $1 for every month she is alive in her piggy bank so that there will be enough money in there when she is old enough to understand to really play with.

On a personal note, I should be getting my data on Tuesday! Then I can start my dissertation. A girlfriend wants me to apply to her company where they allow work-from-home.

Next year it looks like DH will be home 2 days a week. Hopefully we can limit our childcare needs to only 1 or 2 days a week. I need to start applying to childcare places soon.

So DD decided to make her appearance 5 weeks early, before I was able to have 3 of my 4 baby showers. Good thing we were able to return a lot of stuff so we could use our store credit because there were a lot of things we still needed. We've almost settled into a routine. I was also able to get my first 2 weeks after my leave as work at home time which will be very useful. Since DD was early, we aren't allowed to take her out or have many visitors so our spending this month has actually been way down.

Shortly before, DH started a third job giving speech lessons to a local woman. This has been earning him an additional $50 a week. The extra cash is nice.

I'm hoping by the time I return from leave I will have my data and be able to start working on my dissertation.

DH has started working on his APLE repayment paperwork. There might be a hitch, but hopefully everything will work out.

So this morning we turned in my car to finish off the lease. It will be nice to be a 1 car household for a while. I did sign up for ZipCar and even got a $25 bonus credit. I have a call into my insurance agent to drop our insurance down. That should lead us to a refund from our insurance. That money will go back into our Annual Fund. I'm also redirecting the lease payment every month into the Annual Fund. Since we already have $15,000 saved for replacing my car, all of this will help us buy the car after that in several years. Yay!!

So I just found out that the 2 pay raises I was counting on are not going to happen because they changed my funding. It's overly complicated, like all educational payroll seems to be, but I still ended up earning an additional $200 a month. So instead of earning a pay raise through hard work and progressing in my PhD, I earned it through dumb luck and some fancy accounting. Whatever, I'm not complaining.

DH and I have been going back and forth about childcare for our daughter. Since we don't know what his work situation will be like next year, specifically if he will be able to work from home part time, we don't know when we will need daycare. My University offers subsidized daycare to the children of students so I'm going to apply for that now that I know my pay situation, but I'm not sure if they offer occasional or only full time daycare. Otherwise it might be cheaper to just go with outside daycare even if it is unsubsidized.

Finally, DH has all but decided to start his administrative credential. His work offers $5000 per calendar year in education reimbursements. He is trying to decide between a traditional 15 month program which would end up costing us nothing and an 8 month online program that would cost us $2700. I'm partial to the online program since it will get him his credential by April 2013 in time for applications rather than November 2013 when it is too late to apply. Plus then he can work from home on his credential rather than going to a physical campus so he can possibly watch the baby or help me out.

So I passed my dissertation proposal last Thursday and today I turned in all my paperwork. This means I have Advanced to Candidacy and have earned another pay raise! My net increase should around $200 /month. This will all go into savings until the baby comes! Yay!

In other news we had our lease inspection for our upcoming termination date. We won't owe anything upon turning in the car. Leasing a car really was a decent move for us since we knew we would be having a baby in 3 years and would want to change cars. Still if ZipCar had existed back then I would much rather have that.

So in April we will:
1) Earn $200 extra income
2) Redirect $200 lease payment to annual savings (for future cars)
3) Lower our insurance rate & get a refund
4) Start ZipCar with the $25 annual fee

Life is pretty exciting right now.

So last night I received another medical bill, but I was perplexed by how little my insurance was covering. The bill was for the standard state prenatal screening, and I had called and been told that my insurance would cover it. I figured out that I was being billed for Out-of-Network instead of In-Network. I called the insurance, and quickly bypassed the phone tree (I've gotten too good at this) and got on the line with a representative. He said he would send it to the adjuster since the state is the only lab performing the screening. So I'm saving around $50 by a quick call to the insurance!

Lesson of the Day: Track medical expenses and know your insurance coverage. Don't be afraid to call.

So I spoke to our Personnel Manager about getting my maternity leave, and I also let her know I had earned my Masters. She said I will get paid retroactively for the pay raise I earned. In addition, I scheduled my Advancement which will lead me to my next pay raise! Woohoo! Plus this gets me a step closer to graduating and getting a real full time job.

So yesterday I had to take my car in because it was making a squealing noise and paid $300 for an oil change and new brake pads. We are turning this car in when the lease ends in April, and I am so ready to be without a car for a while. I really despise car ownership at the moment. Once the lease is done I'm going to join ZipCar which has around 15 cars on my campus.I'm so looking forward to this service. I won't have to pay for gas, maintenance, repairs, or insurance! It costs $25 per year and $8/hour or $66/day to take any of the cars. As rarely as I drive, I really just cannot wait to use ZipCar.

Now I must temper this by saying that DH will still own a car and will be home most of summer to drive with me places. Still, I really just don't want a car of my own. I'm afraid I might have to get one in August or September when DH starts work again, but I really would rather use ZipCar as long as possible. Hopefully I will feel differently come the end of summer.

Even on a small scale, it is possible to see your money working for you. I love getting my 1099-INT's from our banks and looking at how much we earn in interest. Even with interest rates so low, this is tangible proof that my money is working for me. This is way better than working for my money, or even worse paying money for money (debt). I've also realized as we are about to get our yearly credit card bonus that this is another example of getting my money to work for me. I don't believe in chump change or rounding errors. Sure there are opportunity costs to be weighed (like driving farther for pennies worth of savings), but that doesn't mean it's not worth weighing these costs. The only way for us to be financially independent is to get our money to work for us, one dollar at a time.

So yesterday we found out that DH is being reimbursed by his company for both the classes he took last semester! We were afraid one wouldn't be covered because he received a B-, but they still covered it. Man I love his job! That money will be coming in the next paycheck and going into the home down payment fund. With the extra money, we will be able to finish the home down payment and the student loan savings by May 2013. I make a point of never counting this sort of money until it is on the way to the bank so that I can revel in the progress it makes towards our goals!

So I began playing Saveup.com when it was mentioned on the forums last week, and I just won $50! You add your savings accounts to the website, and they give you credits for every dollar you save. Then you can play up to 3 times per day on their various prizes. I figured out the odds of winning cash by the amount of cash earned were best on the $50,000 prizes and today I won $50! I will update after I actually get the prize money, but for now, here is a link so others can sign up:

saveup.com/r/jp8

So I calculated my cost of working if I started over Summer versus if I started in January, and I came to the conclusion that tuition and day care are ridiculously expensive! DH and I agreed that if I don't get the Possible Job then I will wait to send any more applications until after the baby is born aiming for a January start date. That means though that I have until the baby comes to attend career panels, network, and figure out how much I am worth in the job market. I have made a deal with myself that I will be prepared to negotiate my salary. I'm also taking my time now to try to finish as much as I can before the baby gets here so I can enjoy as much time with her as possible.

Other upcoming things. I realized that our Roth IRA is reading the point where I'm going to have to move our investments around. We are currently in a Composite Index with a minimum of $2500, but I would rather be invested in the indexes that make it up to lower our expenses. The problem is that the index funds have a minimum of $10,000. I should have this money by May so my plan is to check the account then and if I have $13,000 I will move $10,000 into the S&P index and leave the rest in the Composite. Then I will continue to contribute to the Composite until it is back up to $13,000. I realize we could be putting our money into ETF's for now, but I am wary of trading fees more than expense ratios.

I made a pact with DH that after I finish my dissertation, we are both going to learn about investing in stocks and bonds. At that point, we will take a bit of money and open a Roth IRA for a little tax sheltered trading. That will probably also be around the right time for us to invest some of our car and other savings into bonds and other income generating assests.

I was hoping with the baby coming that we would be able to increase DH's allowances on his W4. I ran the calculator on the IRS website and it actually pushed us to decrease his allowances and increase mine, which would make very little difference. I was really hoping that with DH putting around $3K into his FSA we could make up the difference with an increase in his W4 allowances. Guess we will just sit on our hands until 2011 taxes give us a better estimate, I get a job, DH gets a raise, and the baby is born.

It seems like every year we struggle for the first 6 months of the year, panic over Summer, then sail smoothly through the last 3 months. Guess that is the life of educators. Hopefully the only panic this Summer is OMG raising a baby!

I submitted my resume to the possible job through a colleague who works there. Within a day, I heard back from the woman doing the hiring asking me about my availability for full time work. I'm pretty sure she was just trying to quickly categorize me. I told her that I can start before I finish my dissertation, but that since I am currently pregnant, I would not be available for full time until July. I thought that this might not come up until after I had interviewed, but I think my reply was professional. My husband has had some great advice for me, "If they don't respect your need for time after the baby is born, then you don't want to work there." I keep sticking with that.

So I just found out that the company I've been working with, the designers of the software I am writing my dissertation on, are hiring an Educational Assessment Specialist, a perfect position for me! I discussed this with my adviser and he supported me in applying. I emailed a couple of contacts in the company, and one replied back asking me to send her my resume and dissertation so that she can personally forward them to the person hiring for the position!! If I were to get this position, it would mean not having to move which means DH could keep his current job which he loves. Additionally I wouldn't have to travel to meet with my adviser and committee. Even better, I would be working on my dissertation as part of my job!! Oh man I really really hope this works out. The biggest snag is I wouldn't be able to start full time until July 1.

So I was reading a couple of different Personal Finance blogs out there on the web, and I noticed that many of them tout their "plans" which are basically how they will achieve a given goal. I was kinda unsatisfied with the plans since they didn't actually involve exact dollar amounts. My Plan of Attack is an spreadsheet that outlines every savings goal we have for the rest of our lives. It states in dollars how much we want to save for that goal, when we want to achieve that goal, and how much we have to put away every month (if we did not earn any interest) to achieve it. The goals are ranked in order of importance to us and I track the goals we are currently working on.

From this I know for a fact how much I need per month to achieve all of our goals on time ($3,702) and how much I need per month to achieve all of our goals before our current projected retirement age ($1870). I have calculated when I will achieve the goals we are currently working toward (August 2013, early) and when we will achieve some future goals (November 2015, late). I have a plan for what we will work on during certain years of our life which can get changed as we finish items early or late.

This may not be a plan that I would publish for all to see, but it is a plan that is useful to my family and achieving our goals.

So after a full year of saving, we met all of our 2011 financial goals and in fact finished several set out for 2012. Our liquid net worth increased from $37K to $65K so we saved over $28K this year. Our multiplier (assets/expenses) increased from 0.79 to 1.58 so we not only have more assets than expenses, but we have more than half again as much. Still much of this money will be disappearing over the next 2 years as we purchase a car (with cash) and a house (with close to a 20% down payment).

This year will represent huge changes for our family. I will propose my dissertation. We will be having a baby. I will get a new job. We might be moving for this job. We are already starting to dream about all the things we will do and purchase when we are in our own home. The home purchase will probably be put off until I have worked in my job for 6 months and possibly until after I finish my dissertation.

Right now our goals are focused on continuing our retirement savings, continuing to save for a down payment, and starting to save for my student loans coming due.

So we finished our car fund 4 months before I actually needed the money to replace my car!! Woot! We are now working to save to pay off my 6.8% student loans when they come due in about 2 years. According to my calculations we should be able to finish our Home Down Payment and my Student Loans while contributing to both my IRA and making monthly payments on DH's student loans (starting in August 2012) by July 2013. I'm pretty happy about that.

Now here's hoping for DH's bonus, a raise for each of us, and DH getting summer school. All of our medical bills should be covered by DH's FSA witholdings for 2012 so no worries about delivering the baby.

So DH's loan forgiveness payment came in back in November. I hadn't checked in a couple weeks and when I checked today it was in there. Sadly they applied it to his two low interest loans, which his parents are paying, instead of the one high interest loan, which we are paying. He is calling them on his way home to get the money transferred over to the correct loan. Still I'm happy that we finally got the money after only 4 months of poking and then 1 month of processing. Sigh. I'm so tired of bureaucracy.

Still this just leaves DH finishing his exit interview, and we are done with our 2011 goals!

So now after the overpayment department told us thy couldn't do anything to help us, the HR department is feeling really bad about screwing up DH's audit twice that they want to try to get our overpayment resolved without us paying them money. We will see how that turns out.

DH finished his Master's Thesis. Now he just has to complete the loan exit interview and he is officially finished. I double checked my paperwork, and it is officially in. I'm going to count my Master's as finished, but wait for DH to complete his exit interview before checking that goal off.

The offers of baby stuff have started to come in and at least one of my showers has been scheduled. It looks like I will have 3-4 total showers. After we get some hand-me-downs and find out the baby's sex, I will go register. I'm not really sure where I want to go, probably Target.

On Monday with DH on break, we will start cleaning out the house to make room for baby stuff. I'm hoping to get a few more things we can sell or put up on swap.com. I got an invite to the new Swap Market so I'm hoping to put some stuff up there. A decent amount will probably get thrown away or donated. I do have permission from my parents to store a bit at their place so that will take care of the stemware and extra set of dishes.

So DH resolved his overpayment with his old district. We still owe them money, but thankfully we can pay it back over the next 4 years with no interest. The money is already set aside in a savings account, but now I can reallocate the extra money I had set aside in case they decided we owed them even more.

Total in Account - $5922
Owe LAUSD - $3264
Leftover - $2658

DH also has one of the cars in to be fixed after his accident a couple months ago. That one is fully paid for my the insurance. The other car (because he was in an accident in both within a week) will go into the shop in January to take advantage of next year's deductible. About $500 of the extra money will go to this.

Car Repair - $500
Leftover - $2158

We also have some outstanding medical bills that I will need to take care of over the next couple weeks. I can't wait until the New Year and our new FSA elections. Until then I need to pay about $200 in bills still.

Medical Bills - $200
Leftover - $1958

With some of the extra money, we were hoping to take a small weekend trip to celebrate and pamper a bit before the baby comes. This shouldn't be too expensive.

Babymoon - $700
Leftover - $1258

DH and I have already resolved to just hoard money until next August so I'm not really worried about moving the money into our savings goals. I am thinking about dividing the rest of the money between our Down Payment and our Frivolous funds.

Down Payment - $1000
Frivolous - $258

First I want to get more exact estimates of the other items on this list.

So our savings plans are changing yet again. Over Thanksgiving, we found out my in-laws can't help with DH's student loans when they come due in January thanks to cash flow problems. This set off a flurry of activity which resulted in us finding out 1) that DH qualifies for the APLE loan forgiveness again this year and 2) DH can easily forbear his undergrad loans until August when his grad school loans are due. So now we are in no hurry to pay off his student loans. So here is the new plan:

- December 2011 - Finish car fund
- Jan - Aug 2012 - Use car fund to hold all additional savings. At some point, buy a car. Have our baby. I start applying to jobs. Financial flexibility will be key.
- August 2012 - Begin paying minimums on DH's grad school loans. In-laws pay their portion.
- Sept 2012 - June 2013 - I get a job then finish my PhD. Allocate any unused savings to either my $11k high interest student loans or a down payment on a house.
- After June 2013 - Pay off my high interest student loans. Raise retirement contributions to $10k/year. Pay minimums on my low interest student loans. All extra money goes toward expanding our down payment.

Our timeline will shift based on 1) when I get a job, 2) when I finish my PhD and then when my loans start, 3) whether we have to move for me to get a job, 4) everything being fine with our little one, 5) my need for a car, and 6) DH's job prospects wherever my job is. So I'm expecting that while we are hoarding money over the next 8 months, our plans will change a few times.

So I had a pleasant surprise yesterday when I finally got DH to show me his student loan account. The loans I was so worried about paying off are not due in January, they are due in August! This means I don't have to worry about choosing between paying off the loans immediately or paying cash for a car. By August, we should have both the APLE payment and the district overpayment resolved. We will also have DH's bonus, his summer school paychecks, and our little bundle of joy in hand. August is exactly when I will be ready to pay off his student loans.

In other news, we are getting our life insurance exams today. We switched to a new agent and the process is progressing much, much quicker than with the previous agent. I'm a little bit nervous, but I'm not really sure why. I guess because unlike all my OB exams, this one is like a test rather than for my health.

So I think I know what I want to do about paying off DH's student loans (vs buying a car with cash). I realized that much of the money is tied up in CD's which mature in February and March. So my current plan is to payoff one of DH's student loans in January to the tune of $8500. After this I have to get a couple questions answered.

1) Will APLE pay his undergraduate loans or only his graduate loans? If they will pay the undergrad loans then we can pay off without worry.
2) When will APLE send the check in?
3) When will our situation with the district overpayment be resolved?
4) How much will be owe the district?

I have about $6K set aside to deal with the district overpayment that I would love to have free. If I can resolve these two bureaucratic nightmares then I will free up $5K-8K which I can later use to buy a car. Plus if DH can get summer school then we can use that extra income to buy a car.

I realized one main reason to pay off the student loans is to keep from having a monthly payment right now when our budget is already tight. The debt payment would come out of our Savings budget anyway.

For those of you who don't read the forums, DH and I are are pregnant. We finished our Baby addition to our EF and immediately after got pregnant! The baby is due late May/Early June.

DH is on track to get his Masters finished in the next month. The whole thing is due December 9, and we will be thankful when it is over. The experience was amazing for him, but it was also trying. I'm currently working on my Dissertation proposal. The first draft should be complete soon at which point I will choose a committee and start getting it vetted. I'm hoping to defend in January.

We finally heard back from APLE. They have finished his paperwork, but now they have to wait for the state budget to release the money. That part might take a while. In the meantime, DH's loan payment start back up in January. We are debating paying them off with the car fund.

Speaking of the car fund, we are about 2 payments away from finishing that. As I have probably said before, the plan is to continue to add to that savings account and use the money to pay off the student loans when they come due. I just thought all along that we would have a 6 month grace period. Turns out you only get one of those and DH used it after undergrad. If I pay off all but the $2000 in loan debt that we expect with APLE and wait until August to buy a car, I will have over $8K in the car fund. I'm still debating this.

We are still working to resolve DH's overpayment issues with his old district. I'm hoping we can finish resolving his pay before the year ends. Otherwise we are likely going to have to file either an extension on our tax return or amend our tax return after the issues are settled. Either way I'm really peeved. Turns out the person he thought he was supposed to talk to had changed positions long ago and was ignoring his messages. Also before she left her old position, she marked his case as resolved so the new people didn't know to contact him. Bureaucratic inefficiency at it's best. If we can resolve this without him owing any money, I have $6K set aside to deal with this that will be freed up.

Finally, DH applied for an advancement at his job. He didn't get the position because he is too new, but the principal highly encouraged him to apply in May during their annual reviews (with a bit of a wink-wink, nudge-nudge). That will mean a much needed 5-10% pay raise next year. Additionally as soon as I defend my dissertation, I will get a $100-$200 pay raise. This will help out so much with leveling out our budget and with the baby.