2022 Income and Year-End Net Worth

In a previous post, I gave a run-down on all my 2022 expenses, in the form of a total for Sweetie and me. It's a more accurate way to do it, otherwise it might look like my food budget was shockingly high, or some other expense shockingly low because Sweetie paid for it.

As for income, I don't have all Sweetie's numbers handy, so you're going to have to settle for just mine!

I earned $82,660 in gross salary from my job. I also got $4,058 in 401k matching contributions.

I earned $575 from website stuff. (Amazon affiliate commissions and Google Ads)

I received cash gifts of $400. ($200 for my birthday and $200 for Christmas, from my mom.)

I earned $317 in interest on cash in bank accounts.

And I received $77,204 in assorted dividends and capital gains in my various investment accounts, including retirement and non-retirement accounts.

So that's a total of $165,217.

I'm always kind of amazed at how the investment income has become so large-- almost half the total this year. In 2021, it was even larger! About $150,560 vs. $80,116 for all the other income. But that was an extraordinary year.

Either way, it shows the power of all those early years of saving and investing. That snowball effect is really happening now, especially when the markets are doing well. Though it also looks more significant because my salary is less than half of what it was before I retired, down-shifted, took a sabbatical, or whatever you want to call it. With all the craziness of the past 3 years, I have to say I'm really glad I'm working again. I feel more secure knowing I have income covering my expenses, and decent healthcare coverage.

As for my net worth:

This was a bit annoying to figure out. I've just had some annoying Quicken problems where various securities were duplicated, and even though I've now fixed everything, the errors somehow are going backwards and throwing off my net worth for year-end 2022, and even back through earlier years as well. Luckily, I did post on this site that my 2021 year-end my net worth was $2,232,684. 

Unfortunately, 2022 was not kind to my investments. I ended the year at $1,779,292, which is the biggest net worth decline I've ever had in one year. In percentage terms, it's even worse than I did back in 2008 during the financial crisis. But I have a lot more money in the markets now, and I had some pretty big gains in 2021 and 2020. With my lower salary, I also can't save as much as I used to, which would have helped offset some investment losses. But luckily, I'm still ahead of where I was at the beginning of 2020.

It's a bit weird to realize that I'm basically saying "Yeah, I lost half a million dollars in a year, but no big whoop!" Part of me is really freaked out by that! But this is what investing is all about, risk and return, ups and downs. I will take a look at all my investments a bit more closely to make sure I still feel comfortable with how they're allocated and whether I should maybe be a little more conservative since I'm getting closer to traditional retirement age. I'll keep controlling what I can control, like spending, and try not to freak out about the rest. 

My net worth is at $1,857,838 as of this writing, so I'm riding some pretty big waves. I still feel good about where I am, especially given that I had a couple years when I had to spend down some savings while I had no income from a job. As shown in my last post, my expenses aren't exactly bare bones frugality, but I'm living within my means, and my shared means with Sweetie. But 2023 isn't looking all that promising, so I don't even know how to guess at a goal for the end of the year. Let's say $2 million. We'll see...

2021 Year-End Update

What a year... as I write this, I'm on the mend from my own mild case of COVID, having been finally been hit by Omicron despite being vaccinated and boosted. (I got it from extended indoor, unmasked contact with a family member who turned out to have been not as "careful" as they thought they had been.) I know a lot of people are in the same boat. It is disheartening to have such a huge spike in cases after feeling optimistic over the summer, but I am trying to focus on the lower hospitalization and death rates. If vaccinations mean COVID becomes something that has less serious long-term health risks, like the regular flu, that is good news.

I've been using this low-energy post-holiday time to start getting year-end accounting in order. A few facts and figures:

The investments I manage for my mother had returns of about 20% this year.

My year-end net worth was $2,232,684.

My income from investments was approximately $145,000, while my income from work was approximately $72,000.

My spending on "Arts," a new category I started breaking out last year for museums and concerts, was up from about $100 in 2020 to over $1,000 in 2021 because I was so excited to enjoy live music with the reopening of local venues. (Most of the concerts I went to were outdoors, but a couple were indoors, with masks required.)

Sweetie and I had let our gym membership expire during the height of the pandemic, but we re-joined this fall, at a cost of about $1,100 for a year. I also spent about $250 on some apps and equipment to try to get myself to exercise more at home.

My travel expenses were an all-time (or all recent memory, anyway) low of $356 in 2021. All we did was visit family using our own car. 2020 would have been almost as low but for an international trip for a wedding early in the year, before the pandemic blew up.

I spend about $1,800 on clothes in 2021, vs a little over $800 in 2020. I bought a couple of expensive fleeces from Patagonia and expensive Hoka One One sneakers since they are the only shoes I can really walk in anymore, but otherwise much of my spending was on very inexpensive jeans and shirts on eBay, some of which were for Sweetie. I love working from home and being able to prioritize comfort!

When I did my 2020 taxes with my accountant and she heard I was working again, she suggested that I not do pre-tax 401k contributions anymore. She did a quick calculation of how my savings might be likely to grow over the next 15 or so years and said "you're going to have a lot of money when you retire! Your tax bracket is likely to be higher then, so you should probably focus on Roth IRA contributions now." So I immediately switched to doing Roth 401k contributions in my employer's plan.

I'm still enjoying working again. During the summer, I did find myself missing the freedom I had the last couple of years, and Sweetie is itching to travel again when the pandemic subsides. I'm hoping there will be an opportunity to scale back my hours. Occasionally it has crossed my mind that I could get a better-paying job that would still allow me to work from home, now that my entire industry has become more flexible about remote work and is likely to stay that way. But I'm not feeling greedy about the money. My current salary has more than stabilized my cash flow. I could cut back my hours somewhat and still get benefits, so that is a plan that is in the back of my mind for whenever it makes sense.

Thank you to anyone who still checks back in and reads these posts. I wish you all a very happy and healthy New Year! Onwards and upwards in 2022 (as long as we're not talking about COVID hospitalization rates!)

A Millionaire Can Get Medicaid

So here’s an interesting development: I just found out I qualify for Medicaid, at least for the moment.

Now before you jump all over me saying I’m a greedy conniving cheat who shouldn’t be leeching services from the government, I will just say that it is very likely that I will never actually cost the government any money for using Medicaid. I’ll explain below. But I do think this is a great example of some of the perversity built into our current healthcare system.

I currently pay over $750 a month for COBRA coverage from my former job but in a few months, it will run out and I’ll have to buy my own insurance. I’ve been researching the plans offered through NY State’s marketplace under the ACA, otherwise known as Obamacare. I was going back and forth about what kind of plan to get and which insurance company to choose, but then realized that I shouldn’t be agonizing over it for just the last month of 2018— I could just pick the cheapest Bronze plan for that month since it was unlikely that I’d use medical care that month other than in an emergency, and then I could wait until the 2019 open enrollment period to decide on a plan for next year.

 I decided to see what the application process was like— I didn’t think I’d finalize and submit it right away, but I wanted to see what info was needed. The process is actually pretty straightforward, though if you aren’t sure what all the lines on your tax return mean, you might want to get some help. You basically have to give identifying information to be sure you qualify, and then income and deduction estimates for the year of coverage to see if you are eligible for any subsidies.

 The system is linked into NY State government data, so it knew I wasn’t earning any wages (via a paycheck with withholding) this year. For my estimated income for 2018, I just used the business income, interest, dividend and capital gains numbers from my 2017 tax return. (The business income is a little trickle from blogging, plus a consulting project I did last year, which is unlikely to be repeated this year.) They then ask about certain deductions that affect your adjusted gross income— again, I pulled this information from my 2017 tax return and extrapolated for what they would be in 2018. One of those deductions is what you pay for health insurance premiums if you are self- (or un-) employed.

 So here’s the thing— my taxable income this year is only likely to be around $20,000. When you subtract from that what I’ll pay in 2018 for my health insurance, which is over $8,000, boom, suddenly I’m at poverty level. Assets are not taken into consideration at all. It is also worth pointing out that the dividends and capital gains produced by my 401k and Roth IRA accounts are not taxable, so while I factor those in as “income” in my planning for the future, they don’t affect my eligibility for Medicaid. While I hadn’t originally planned to finalize my application, I sort of inadvertently did: a screen popped up saying I qualified for Medicaid, and that it would be effective as of July 1! I was very confused by this so I called the helpline and talked the whole thing through with someone to see what it would mean.

 Since I will still be paying for my COBRA coverage through November, any medical costs I have will still be covered by that primary insurance, but apparently Medicaid will become secondary coverage, if the provider I use accepts Medicaid. (That's a big if-- one of my doctors stopped being in-network for any insurance companies, so I’m sure she won’t accept Medicaid.) I’ll probably get a physical and maybe see another doctor or two before my COBRA runs out, but I’m guessing it may not be anything that Medicaid would cover.  There is also a slight possibility that I’ll get some work later this year— in that case I’ll have to go back into the application and update my projected income, and presumably that would put me back in the position of buying a bronze plan, with maybe a small subsidy towards the premium for 2018. And in 2019, without all those COBRA payments, I’ll probably no longer be eligible for Medicaid and will just get a subsidy for purchasing a plan. And depending on my actual income, I may end up paying all or some of the subsidy back when I do my 2019 taxes.

 I really wonder how many people fall into a situation like mine. I didn’t do anything to “game the system.” I just happen to benefit from a quirk in how the laws are currently designed (and yes, they should fix that quirk). If I had more investible assets, my dividends and capital gains would probably be high enough to disqualify me. And if I wasn’t paying for my platinum level COBRA, my adjusted gross income would be too high for me to qualify-- that, to me, is the most bizarre detail. But for the next couple of months at least, I am a millionaire who qualifies for Medicaid.

Catching up on 2016

A few notes as I do my year-end accounting for 2016. 

The first thing I dug into was the trusts I manage for my mom. Their return was about 9% last year and I was about to pay Mom about $8,000 in dividends. I feel pretty good about this, especially after a shaky start in the first few months I was managing her money when the market was down and I was afraid she wouldn’t understand that it wasn’t my fault! I am also a bit less nervous about my mom’s finances since my grandparents both died in 2016 and she does not have to contribute to their nursing home costs anymore, which was a big expense.

My own personal investment accounts are a bit more aggressive and using the way E*Trade calculates returns, I actually beat the S&P 500 in 2016— 11.4% returns in one account, 10.73% in the other, vs. 9.53% for S&P 500.

I earned more money this year as a result of my new job, and decent investment returns. My total income including salary, bonus, investment income and other odds and ends such as employer contributions to 401k was over $214,000, vs about $188,000 for 2015. I also spent more on various things— food, wine, clothes and a few other small pleasures, but also taxes, as those increased when my income went up. But my total spending only went up by about $6,500, so my net savings for the year ended up being almost $85,000, vs about $65k last year.

I am thinking more and more about how to retire early, or at least downshift to a less stressful job. I like making more money, but it has come with a TON of stress and I’m not sure it’s worth it. Maybe I’ll eventually feel more comfortable in this position, but for these first few months, I’ve been struggling and really not feeling confident that it will ever get better. I’d love to quit, but I’m not ready to admit failure, and I keep telling myself that the longer I stick it out, the earlier I can retire! 

My net worth was about $1.17 million at the end of 2016. I’m on the right track for my retirement goals, but not so much so that I can totally relax. I’ve played around with a lot of scenarios in a retirement calculator— the good news is that it does seem like I’d be able to retire at least a few years early, even if I go back to making somewhat less. If I was willing to move to a different part of the US with a lower cost of living and make some big changes to my lifestyle, I could probably retire tomorrow if I felt like it. But I’m not willing to do that just yet, and who knows what the next few years will bring, in terms of my own career, my family, and the political and economic uncertainty in our country.

2016 was a pretty shitty year. It was bad enough that David Bowie, Prince, and Sharon Jones died, not to mention various other iconic celebrities. I lost some dear friends and beloved family members, which of course was more important to me, and I lost a lot of faith in American democracy in seeing Donald Trump elected President. In most other ways, I am happy, pretty healthy, and generally feel incredibly lucky that I have the life I do. When I started this blog, I still thought of myself as “young”— now I’m middle-aged! It’s weird to feel like I’m shifting into a new attitude towards the future, at exactly the point when the future looks bleak in some ways. But I still keep thinking “onward and upward!” Wishing you all, dear loyal readers, the very very best and a happy New Year!

2015 Income and Expenses

I never recapped last year's income and expenses, so here's a very simplified version:

Salary and bonus and 401k match	$144,061
Investment income and interest	$42,515
Gift rec'd	$100
Blog income (net of expenses)	$1,018
Housing incl. utilities, phone, internet and other household expense	$26,465
Food and liquor	$14,881
Entertainment & subscriptions	$1,911
Charity	$707
Clothing	$2,802
Education	$1,347
Gifts given	$1,753
Gym	$2,389
Medical/dental	$5,679
Travel (incl vacation)	$5,244
Taxes (Payroll deductions and payment of 2014 taxes owed)	$55,482
Other misc	$4,441
Net Savings	$64,594

A few observations:
I continue to be amazed at how much income I get from my investments alone. It is more than Sweetie's salary at the moment! Every time I see that investment income, it is another reminder of how important it is to save money and invest it wisely.
Food and liquor is very high, but I cover all of that for both Sweetie and me. We eat dinner out from time to time, but not all that often. We've been using Blue Apron for a couple of years to encourage us to cook at home more. Blue Apron isn't super cheap, but it's cheaper than takeout or eat-in restaurant meals. Where I've been splurging a wee bit is on lunch, sometimes spending over $10 by going to a more upscale place and buying a drink instead of just having water from a cooler in the office.
Gym-- I pay in advance for 2 years at a time, so the true annual cost is only half this amount.
Medical/dental includes Sweetie's coverage, and an expensive crown.
Taxes-- I owed taxes in 2014 due to the extra income I had from selling my condo, so that was a hit this year.
Other miscellaneous includes things like haircuts, art supplies, postage, etc.

I saved 34% of my gross income, which is good, and I never particularly felt like I was having to make an effort to save-- if anything it's been the opposite, feeling like I could give myself permission to spend a little extra from time to time. But I try to keep that feeling in check! I am thinking a lot about early retirement and trying to balance that against enjoying life now. Always a tough question!

A Lot Can Happen in 6 Months!

Might be my longest ever lapse in blogging! Plenty to catch up on but I will check in with a couple of positive bits of news. 

My net worth is still over $1 million, and I don't think has dropped below that level since I last posted. It is an arbitrary number and doesn't mean I can stop worrying about money, but it is still a milestone to feel good about. 

And... It should become easier to maintain growth in my net worth because I got a new job that came with a big raise! I had been letting my career momentum stagnate a bit over the past few years-- perhaps because of hitting that other milestone of a 6-figure income and realizing I didn't desperately need to make a huge amount more money to reach my goals. But now I will be making 30-40% more depending on my bonus. And depending on whether I get fired for failing at my new job! I hope that won't happen, but it will definitely present new challenges, and more stress. I think more and more about retiring early, so I need to stay focused on saving my extra income to reach that goal. 

I will try to get back to posting more about other issues. If any loyal readers are still sticking around, thanks for bearing with me!

Time to Adjust... Withholding, and Attitude!

Tax time is usually a happy time of year for me. The last few years, I've tended to get refunds. I know it's all a psychological game, because a big refund really means you were overpaying all year, and gave the government a free loan. If you owe money, it's like the government gave you a free loan... though interest rates are so low these days, it's pretty much a wash anyway. What is ultimately important is the net amount of tax you pay... so I try to remember that the refund isn't really like winning the lottery. But this year, although I wasn't expecting to get a big refund, I got none at all. Instead, I owed several thousand dollars!
It's my own fault-- my accountant told me to adjust my withholding last year and I just never got around to doing it. And now that I'm not a homeowner anymore, I don't have the big mortgage interest deduction that I used to have, and some of my other itemized deductions were lower. I also had more income and the net result is that I owed more tax. A lot more than I thought I would. My total taxes paid will be a lot more than last year.
The good news is that I am not paying it a minute before it's due on April 15. And hopefully in the meantime I'll have gotten a decent bonus that will more than replace that outflow. And I already adjusted the allowances on my W-4 in hopes that I won't have this problem again next year!

Next on the to-do list is some serious thinking and planning about what makes sense for Sweetie and me and our tax situation as individuals and as a couple. Sweetie owns real estate but doesn't have a job right now. I have a job, but don't own any real estate, so one option is for me to buy a share of Sweetie's apartment. Another option is getting married! Neither of these is anything to take lightly... We shall see...

I Forgot How Much Money I Make

Seriously, I can't remember my salary! I was thinking about it just now and I know it is over $100k, but I don't remember how much. At one point it was $102k, but is it now more? $106k? $110k? I have been getting small raises each year, and just got one recently, so I should remember this more precisely, but I just don't. 

This just seems very unlike me. I pay so much attention to money in so many ways, but much less than I used to. I by no means advocate ignoring these things-- I have always said that paying close attention to your finances is the best way to keep them in control. But on the flip side, it can be a bad idea to micromanage them. Investments are often best left alone to sit and grow rather than fiddling around with too much trading. I check my Etrade account a lot less than I used to, which actually made it  quite gratifying recently to see that one of the stocks I bought a couple of years ago has doubled in share price. (At least it had before this past Friday's slump.) And sometimes it's good to avoid seeing a big downturn in investment performance, so you can avoid that temptation to panic-sell at a low. 

Anyway, I am really quite curious now to see what my current salary is, so I am going to stop writing for a moment and go check...

... OK, I'm back. $112,717 is my current salary. That is higher than I thought, so good news. But now I think I will try to forget again and try to behave as if I made less!

Happy New Year!

My, it's been a while, but I have been a busy girl and have lots to tell. I haven't wrapped up all my final numbers yet but I will give you a spoiler: my net worth is now over $900,000. I am wondering if I dare make my 2014 year-end goal the big One Million! Yikes. 

My income and spending haven't changed too drastically, or at least I don't think so. I was thinking about guessing which categories would be up or down, and predicted that my lunch spending would be up, just because I FEEL like I have been spending more on lunch... But a quick peek at Quicken told me I was wrong. So who knows what other surprises I will find. 

I need to spend more time analyzing those numbers, as there has been one major income/expense change that I have to account for-- I sold my apartment!

Yep, my tenants moved out and after doing a little research on the state of the real estate market, I decided to test the waters. The waters turned out to be steaming hot: I had multiple offers within days and ended up with a very quick sale  to an all-cash buyer for a little more than my asking price. Though of course there were a few more wrinkles to the story that made it somewhat more complicated! I will share the drama soon. 

The sale leaves me with some interesting decisions to make in the coming year-- how will I invest this cash? Sweetie may factor into this, in terms of some sort of joint property ownership. Oh, and Sweetie's unemployed now, just to toss in another financial bombshell. 

So stay tuned (those of you who are patient and loyal enough to still be tuned!) to see what 2014 will bring. 

Poverty Among Young Adults

Interesting article on the Atlantic's website. Has Being a Young Adult Always Been a Financial Nightmare? Scary charts! The one below kind of made me glad I'm getting old! I shudder to think what the addition of a 2000-2010 date range would look like.

"Young people have never had it easy, but they (probably) have had it better. By the turn of the century, 20- and 30-somethings were much far likely to experience a stint in poverty than they had been in the 1970s. Rank's newest research implies it's become even more common today. 

That said, I think we should be cautious about simple comparisons across time. The truth is, poverty in 2000 was not quite like poverty in 1973. Consumer goods that make life more bearable (think air conditions and decent televisions) have become cheaper and more commonplace over time. We have cell phones and Internet. And some changes in the safety net, though certainly not all of them, have made life near or right above the poverty line a bit less harsh. You don't necessarily have agree that the poor are far better off today than at the start of the Reagan era, as some conservatives will argue. But their standard of living has improved in ways that make it hard to say definitively whether Gen Xers or boomers really had a rougher time when they were young.... "

It is hard to compare. I was in my 20s in the 1990s, and in my first few years of work, my net worth was negative by several thousand dollars due to student loan debt, and my earnings went from $5.75 an hour, to $19,000 a year, to $30,000 a year, to somewhere around $50,000 by the end of the decade. I was lucky enough to be able to live with my parents for a couple of years, and of course their help left me with a much lower debt burden than I might otherwise have had if I'd had to pay for all of my education myself. When I look back at that time, I remember feeling the stress in those early years when I had my first apartment and struggled to pay all my bills while doing at least a little bit of the fun stuff a young adult wants to do.

My career advanced quickly enough to help me get past that stressful time fairly quickly, but the other thing that made the biggest difference was that I didn't procrastinate about saving. I was always aware that I needed to start saving money, and from my first job, I started contributing to a 401k. It might have only been 5% or 10% or 15% of my income at first, but pretty early on, I pushed that contribution as high as I could, knowing that it would be less painful if I learned to live without that money from the get-go. And somehow, as I saw that retirement account balance growing, it made me feel more inspired to save money. For some people, having savings might make them feel like it's ok to spend all the other money they've got coming in. But for me, I saw that having money makes more money, so I kept thinking about ways to cut expenses and debt. I paid off my student loans, and had become a homeowner rather than a renter by my late 20s. Seeing myself succeed in saving money made me feel great-- and when you know you're doing well at something, you want to do it more. It's a snowball effect.

For so many people, it's just the opposite. They start out with debt. They can't get ahead and fall deeper into debt. They live paycheck to paycheck, unable to invest in things that will pay off long term. Thinking about the situation is too depressing, so they put it off til another day. All that lost time is lost interest, lost investment gains, lost appreciation of a home's value. By the time they're 30 or 40, they may be making more money, but without the foundations laid in those early years, they're still in debt, maybe-- or even if they start to get ahead, they realize they'll never save enough money by the age at which they'd want to retire.
And of course none of this takes into account the curveballs life throws at you-- illness, injury, accidents, loss of a job, dependents to care for. I am so lucky to have had none of these to deal with yet, knock on wood. I am always so conscious that my life could easily have gone in a different direction...

Income Mobility by Region

Such an interesting NYT story about how different various US regions can be in terms of people being able to rise above the economic status they're born to:

In Climbing Income Ladder, Location Matters


Their sub-head makes it sound like New York and Boston have the highest chances for income mobility, but based on the map, it looks like the Dakotas and Nebraska area is actually the best of all? Odd... maybe some of these areas have had a boom in a particular industry that accounts for it. In any case, the stagnancy of incomes in the southeast is pretty dramatic...

From the article:

“Where you grow up matters,” said Nathaniel Hendren, a Harvard economist and one of the study’s authors. “There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty.”

That variation does not stem simply from the fact that some areas have higher average incomes: upward mobility rates, Mr. Hendren added, often differ sharply in areas where average income is similar, like Atlanta and Seattle.

The gaps can be stark. On average, fairly poor children in Seattle — those who grew up in the 25th percentile of the national income distribution — do as well financially when they grow up as middle-class children — those who grew up at the 50th percentile — from Atlanta.

Geography mattered much less for well-off children than for middle-class and poor children, according to the results. In an economic echo of Tolstoy’s line about happy families being alike, the chances that affluent children grow up to be affluent are broadly similar across metropolitan areas.

2012 Income and Expenses

2012 was a great year in terms of income-- I hit another new high:

Salary $106,244
Bonus $18,239
Employer contributions to my 401K $8,119
Dividends $15,977
Realized Gain (from a fund change made in 401k) $11,347
Blogging income $4,402
Gifts received $100
Interest $208
Tax refunds $2,516
Total Income $167,152

Almost all the dividends and realized gains were reinvested, and sometimes I don't really even consider these "real" income. But I love seeing my money work for me-- that is over $35,000 worth of income made not from labor but from my own savings and 401K participation.

The other income I had this year was $10,000 in rent from the tenants in my apartment, but for this year, I am kind of looking at it as a defrayal of my housing expenses. I'll start breaking this out differently next year, as I'll be reclassifying some of my expenses as business expenses for an investment property rather than personal household expenses.

Now for expenses:

Bank Charge	$77
Charity	$1,153
Clothing	$3,062
Dining / Groceries	$11,296
Education	$458
Entertainment	$1,364
Gifts Given	$2,266
Gym	$2,249
Household	$1,792
Housing (net)	$11,974
Income taxes	$34,639
Medical	$1,714
Miscellaneous	$3,434
Newspapers and Magazines	$404
Travel	$8,421
Utilities Internet Access	$360
Utilities Telephone	$953

A few notes:

• Charity refers to my personal contributions. I also plan to donate all the blogging income from this site.
• Dining-- about $8500 of this is for stuff shared with Sweetie. (I have to admit that we have been indulging in fancier wines than we used to! We buy it by the mixed case and usually 1 or 2 of the bottles is a special treat, i.e. something in the $16-35 range, compared to the $9-12 range for the rest. But at least in restaurants, we tend to stay with whatever's cheapest.) The rest is mostly for my own breakfasts and lunches.
• Entertainment was pretty high this year, due to buying more tickets for concerts and theater, including a rather expensive one to see Madonna at Yankee Stadium
• Gym-- this covers a membership renewal for 2 years
• Household is mainly laundry and dry-cleaning, plus a new armchair for the apartment Sweetie and I now share
• Housing-- as noted above, I pulled together my housing expenses such as condo charges, property tax, mortgage interest, rent I pay to Sweetie, and gas and electric charges for my condo, and then subtracted the rent I receive from tenants to arrive at a net housing cost for the year. This does not include about $10,000 in mortgage principal I've paid off, as I view that as a transfer from my cash net worth to home equity.
• Miscellaneous included a new iPhone and a lot of art supplies, plus haircuts and all the usual little personal items
• Travel includes daily commuting, some family visits, and a 2-week summer vacation in Europe.

Total expenses for the year came to $85,616. This is also an all-time high. I think the new iPhone, big vacation, 2-year gym expense and new chair account for a lot of that, plus trying to take better advantage of all the culture NYC has to offer.

Net savings were $81,536, of which $10,125 is the transfer to home equity for paying off mortgage principal. This is NOT an all-time high, but it's second only to the year when I received a $25,000 inheritance, so I'm not going to beat myself up about it. I saved about $5000 more than I did last year,
and about $9000 more than I did in 2010 if you back out the inheritance.

As always, I could easily have cut back on expenses and saved more, and I always have these thoughts about how much sooner I could retire if I did, and whether I'll wish I had saved more when there's another economic crisis... but at the end of the day, I am comfortable enough with my savings and net worth so far to allow myself some luxuries. I feel very, very lucky and thankful for the good fortune that has come my way.

Now I'm Really a Landlady

The latest news: I am officially a landlady now. I have rented out my apartment, furnished, and my lovely tenants have already set up an automatic payment so the rent goes straight into my bank account every month. It exceeds my monthly costs by a couple hundred dollars right now, not counting tax deductions, though that will fluctuate depending on the utility bills. For better or for worse, I decided it would be simpler to keep the gas, electric, and internet in my name and just build those costs into the rent. I did write it into the lease that the tenants would have to pay for usage over a certain level upon my providing them with a copy of the bill. Even when heat and AC are higher, I think I'll still end up with positive cash flow almost every month, and on average for the whole year.
So having given up my apartment, I have officially moved in with Sweetie. Sweetie never asked me for any contribution to the household expenses, though I've tended to buy all the groceries and about half the meals out, but on my insistence, we figured out a fair amount for me to contribute, and I've set that up as a monthly outgoing auto-payment. My net housing costs are now going to be about half what they were, maybe less.

All this is good news in terms of my being able to save more money. I'm not sure what I'll do about my apartment long term-- I'm hoping I can rent it for a year or two and then maybe sell it, as real estate prices seem to be turning around a wee bit. I've actually already had an offer from a potential buyer-- someone who owns one of the other units in my building said he'd be interested in buying it, though he didn't say at what price. But if he's serious, that could be an interesting possibility, as I wouldn't have to pay a real estate agent's commission. But for now, I'm just glad to have that rent money coming in, and it was convenient to be able to leave most of my furniture there too. Since it would be a nuisance to deal with selling or storing the furniture, I may also consider shorter term AirBnB type rentals-- I'd make more money, potentially, if I could keep the place booked. And it would also allow me to block out time for when my family and friends might want to stay there. Sweetie's apartment is bigger than mine was, but we're a bit tight for storage space for all our stuff, and if my sister and her husband and kids come to visit, there will be quite a line for the one tiny bathroom!

It will be interesting to talk all this property rental stuff through with my accountant in the spring. She had suggested that I might need to increase my witholding, as I'll have a lot more income when you include the rent, and my deductions will now include depreciation on an investment property instead of mortgage interest on a primary residence. I'll fill you in in a few months!

The Latest News

Yes, it's been too long since I've posted a net worth update or any other juicy details. And it's not just because I'm in love! I've been really, really busy at work, far more stressed out than I've been in years. One night I came home from work almost feeling like I was having an anxiety attack-- it's times like this that I start to wonder how else I could earn a paycheck...

So with all that going on, I haven't wanted to be on the computer all that much in my downtime. I haven't been blogging much, and hadn't even updated all my financial data in a while. But I did just catch up on some of that a few days ago-- I reconciled all my investment accounts through the end of March and the good news is that after some nice 1st quarter mutual fund results, plus a better than expected bonus, my net worth is currently somewhere around $620,000.

I will post more detail about my spending and account balances soon. I actually pulled together some comparisons of my spending by category from 2003 to the present. It was interesting to see that a lot of my expenses haven't increased that much (and those that have increased did not increase as much as my income has, so the net result is that I've been saving more). It gave me an idea for a future post about a financial tipping point-- in other words, if your current lifestyle, or what you consider a minimum acceptable lifestyle, costs X, at what point in your life did you start making enough to pay for X without going into debt? For me, at least so far, I'm pretty far past that tipping point, but for a lot of people it's not a one-way journey-- losing a job could mean you go back and forth across that line of being able to afford certain things you consider "normal."

Another tidbit of recent news-- this is the first time I've not been able to contribute the maximum to my Roth IRA because my income was too high. I guess that is a milestone to celebrate, in a way, but I couldn't help feeling disappointed!

And I will have to write more about it soon, but I highly recommend the book Thinking, Fast and Slow. There is a lot of interesting stuff in there about financial decision-making, as well as actionable tips that will help you check yourself from making errors of judgment.

So, lots of blogging ideas on my to-do list if I can get back into a rhythm of posting more frequently! Thanks for sticking with me and leaving comments that remind me to fill you in! I'd love to hear more from all of you about what's up in your financial lives lately-- what's on your to-do list? What's keeping you up at night? How are you personally weathering this economy?

Income and Poverty Statistics

I love looking at data about income and wealth and poverty levels. I feel like we're so inundated with misleading information when people start talking about "the middle class" in relation to politics and taxes.

A report was just released of Census Bureau Stats about real income before taxes-- it's good to note that this is different from the Adjusted Gross Income stats often reported when people are referring to IRS data. Since weathy people tend to take more deductions for mortgage interest, charitable giving, 401k contributions, etc., it's important to remember that their real income is much higher than their adjusted gross income-- so when politicians talk about taxes that might affect someone whose income is above $200,000, they mean someone whose real income could actually be much higher.



But here's a few stats I found most interesting:



Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445.

That is for all households. Breaking it down a bit more:


Married couple households $58,036
Non-family, aka individual male $35,627
Non-family female $25,456

Median income of full-time, year-round workers:
Men $47,715
Women $36,931

15.1% of people are below the poverty threshold. Kind of an arbitrary line in the sand, as someone making a dollar more than the threshold isn't in great shape either. It's also interesting to note that about 34% of people are below 2X the poverty level. The poverty thresholds by household size are below:

# of people in household	48 states &DC	Alaska	Hawaii
1	$10,890	$13,600	$12,540
2	$14,710	$18,380	$16,930
3	$18,530	$23,160	$21,320
4	$22,350	$27,940	$25,710
5	$26,170	$32,720	$30,100
6	$29,990	$37,500	$34,490
7	$33,810	$42,280	$38,880
8	$37,630	$47,060	$43,270

211,492,000 Americans over the age of 15 earned money in 2010, or 67% of total population.



Interesting that it corresponds very closely to the total number of people age 15-64, presumably the ages of people you'd expect to work. But a lot more people are working past the age of 65-- about 8% of people over 65 had income in 2010.

Total popluation of US: 312,222,000

0-14 years: 20.2% (male 31,639,127/female 30,305,704)
15–64 years: 67% (male 102,665,043/female 103,129,321)
65 years and over: 12.8% (male 16,901,232/female 22,571,696) (2010 est.)




What this says to me is that almost half of all working individuals in the US couldn't support a family of 4 at more than poverty level. Two-income families have become a necessity... as has debt. The graphic below, which accompanied an article by Robert Reich, highlights this nicely:




All stats are from this Census Bureau report and Wikipedia citations of Census data.

The Dilemma of Asking For and Accepting Help

I keep thinking about a friend I'll call Edna. Edna is a divorced mother of two. Because she's had to juggle child care, her job history over the past 15 or so years has been rather checkered-- nothing bad has happened, but she's had to stitch together various part time jobs that would allow her to be there for her kids. She'll do pretty much anything, from cleaning out someone's basement to cold-call selling on a commission-only basis to bartending, but many of her jobs have been temporary so she's never had a chance to really establish herself in a career. Her husband has paid child support, but she's just barely made ends meet-- one of the kids is now old enough to have her own part time job, and she made more money last year than Edna did. I learned this fact during a dinner when another friend of Edna's urged her to apply for food stamps, which Edna did not want to do.

The friend's argument was that these government assistance programs exist precisely for people like Edna-- she does her best to find sources of income but is trying to look after her kids without being a burden to anyone. Her income in some years is basically at or below poverty level though there are times when she manages to do better. Shouldn't she accept some help?
But Edna hates to ask for help, which leads us to another fascinating aspect of her situation: Edna's parents are quite wealthy.
They have several other children. Some of those children have been given quite a bit of financial assistance-- particulary the male children: there seems to be just enough of a generational gap that girls were seen as needing only to find a husband, while boys needed education... and cars and clothes and apartments and so on. But although they've occasionally paid Edna to do work for them, they are otherwise very stingy with her. They barely even give gifts to Edna's kids, and when they do, there's often a whiff of goodie-bag re-gifting about it. Edna hates to ask them for anything, and rarely does, but at one point she reluctantly reminded them of an offhand promise they'd once made to chip in when it came time to pay for sending Edna's kids to college-- this time they kind of winced and alluded to money being tight for them... but of course this is in the context of them having two luxurious homes where they do lots of entertaining, and other trappings of an upper-class life.

I'm way over-simplifying the situation here to avoid too many identifying details, not to mention writing a mile-long post, but it's an interesting dilemma, isn't it? Should someone who is not wealthy herself but has a wealthy family turn to government for assistance? Is it the family's obligation to help her first? Some will no doubt say "neither" but what is someone in such a situation supposed to do? Leave her kids unattended? Pay money she doesn't have for day care programs? Edna's ex-husband is a mess, so he's not much help. It's hard to imagine anyone being more responsible and less prima-donna-ish than Edna... but she just can't seem to make all this work on her own.
Within a few years, both of her kids will be in college, and whether or not they get financial aid, that will be another drain on her resources, even if it does free up her time for a full-time job. But she's already been looking, and it's tough-- with the resume of a stay-at-home-mom who's fit odd jobs in around child-rearing, she's not going to be the most attractive job candidate in a climate like today's, where employers can probably be more picky. But she did mention that she will be going on a second interview for a job that pays about $40,000 a year, an amount she referred to as "life-changing."

Interestingly enough, she told me about the potential job while we were both at the home of another friend who has become something of an art collector. As I was listening to Edna, I was looking up at a painting above the fireplace that supposedly cost $50,000. It was such a collision of worlds... and it leads me to one more facet of these kinds of situations among friends:

Whenever Sweetie and I have dinner with Edna, we'll often cook something at home in order to avoid the issue of whether Edna can afford to go out. Sometimes we do end up going out, and sometimes we'll just pick up the check ourselves and tell Edna it's our treat-- but again, Edna has a lot of pride and won't always let us do that. The art collector friend hadn't seen Edna in a long time and invited us all to visit for a weekend in the country. I had thought we'd just be barbequeing, but we went out to dinner one night, and when the check came, we all split it evenly. I guess on one level that's totally fair, and just because one person makes 10 (or 20 or 100) times more than another doesn't mean it's their obligation to pay. But I personally think that if you invite someone to spend the weekend with you, they are your guest for the whole weekend, which means the host should cover the dinner bill, while the guest will hold up their end of the bargain by bringing wine or some sort of gift and offering to chip in for dinner but not arguing too much when the hosts insist that they'll get it. That rule doesn't have to be set in stone-- maybe going out to dinner one night is the thank-you gift to the host/hostess, to show your appreciation and relieve them from having to cook so you can all just relax and talk. But in this situation it seemed a little insensitive...

Miscellaneous Tax Notes on a Lucky Day

Why is today lucky? I found a $20 bill on the street this morning while on my way to the gym.

A commenter on this recent post asked about my tax refund, noting that she made less money than I did yet did not get a refund. Of course, as another commenter pointed out, whether or not you get a refund depends not only on how much money you make and how much you can deduct, but how much you had withheld. If you don't have enough withheld from your paycheck, you'll owe money when tax time rolls around.

Another commenter took me to task for having too much withheld, noting that I'm giving the government a free loan. Yeah, that's kind of true but I really don't think it's a big deal. First of all, the interest I'm losing is not significant-- if my $2307 Federal refund had been sitting in a savings account all year, I'd be lucky to earn $35 in interest on it. Also, I think there's a psychological benefit to getting that money in a lump sum-- it's easier to just sock it away and not spend it, somehow. (Though some people might feel differently, seeing it as a windfall that can be spent on something fun.)
Also, I'd rather not take the risk of underwithholding-- if you owe a lot of Federal taxes at the end of the year, the IRS can assess a penalty which would work out to more than the interest you'd earn on that money while it sat in the bank.

As for my actual taxes paid, I always like to look back at what I paid in taxes via withholding minus my refund received, to see what my net taxes were for the previous year, as a percentage of my income by various measures:

I paid $16,308 in federal taxes via withholding in 2010. Minus $2,307 refunded, my net Federal taxes paid were $14,001.
My total salary plus bonus was $116,661, so my Federal taxes were 12.00% of that. But that's just my work salary, it doesn't include other things I pay tax on, like interest, dividends and income from blogging.
My adjusted gross income includes all those things, but it doesn't include things paid for out of pre-tax dollars, such as my 401k contributions of $16,500, FSA, medical and dental insurance costs and subway metrocard costs deducted from my pay. My AGI ended up being $101,095, so my Federal taxes were 13.85% of that.
But my Federal taxes aren't calculated as a percentage of my AGI-- all my various tax deductions are subtracted from that to get my taxable income. So after taking out my mortgage interest, charitable deductions and various other unreimbursed expenses that relate to my day job and the freelance income from blogging, my taxable income was only $71,532. My Federal taxes were 19.57% of that.
Interesting to note that Warren Buffett has said that in 2006, his taxes came to 17.7% of his taxable income (I'm not sure if he was counting just Federal taxes or also state taxes). Yes, of course his total taxes paid work out to about 58 times more than what I paid since his taxable income was over $46 million... the sad thing is that there are plenty of people who make less money than me who probably pay an even higher percentage of their gross income than I do.

It's also worth noting that my taxable income is less than 60% of my total gross income, and only about 71% of my adjusted gross income. When the media talks about whether or not taxes should be raised on "people who make over $250,000," that usually refers to a household adjusted gross income of $250,000-- their gross salary is probably more, and their taxable income is probably a lot less.

How about you? Have you ever done the math this way on your taxes? I'd be interested to hear from others about your gross income vs. taxable income and what you pay in taxes...

2010 Year End Recap

Well the year came to a close in an interesting and good way.

First of all, let's look at my net worth as of 12/31/10:
Cash and Bank Accounts: $66,039
Retirement (401k and Roth IRA): $320, 626
Other Investments (mutual funds @ E*Trade): $51,294
Bonds $5,197
Home Equity $82,592
Credit Card Balance -$2,615
TOTAL: $523,133

Now you may be thinking, as I did, whoa! Her net worth as of a month before was only $479,273! Did her net worth really increase 9.15% in one month? Well, I did receive $9,000 more of my inheritance from Great Aunt Minnie, and the stock market did ok... but what I also discovered is that I had the wrong symbol in Quicken for one of my mutual funds and therefore the wrong price, so my net worth has been understated by several thousand dollars for I don't know how long. So I not only blew away my original year end goal of $450,000, I sailed past the half-million dollar mark, which was totally unexpected. Pretty cool.

As for my income and expenses, here's a look at the totals for 2010 vs. 2009:

	2009	2010	Var.	% Var.
Income
Bonus	$11,765	$17,288	$5,523	47%
Gift Received	$1,309	$24,200	$22,891	1749%
Interest Inc	$776	$502	-$274	-35%
Other Inc	$6,503	$6,386	-$117	-2%
Salary	$96,206	$99,373	$3,167	3%
Tax Refund	$4,211	$2,873	-$1,338	-32%
Total Income	$120,770	$150,623	$29,853	25%
Expenses
Bank Charge	$160	$97	-$64	-40%
Business expense	$0	-$7	-$7	N/A
Charity	$468	$1,055	$586	125%
Clothing	$1,639	$2,648	$1,009	62%
Dining	$7,895	$8,552	$656	8%
Education	$406	$455	$49	12%
Entertainment	$663	$448	-$214	-32%
Gifts Given	$962	$1,924	$963	100%
Gym & Fitness	$1,317	$1,361	$44	3%
Household	$1,337	$760	-$577	-43%
Home Insurance	$335	$335	$0	0%
Housing	$14,384	$14,171	-$213	-1%
Medical	$1,938	$4,556	$2,619	135%
Misc	$2,215	$3,412	$1,197	54%
Taxes	$30,325	$34,053	$3,728	12%
Subscriptions	$956	$743	-$213	-22%
Travel	$1,712	$4,803	$3,091	180%
Utilities	$1,936	$2,454	$518	27%
Total Expenses	$68,648	$81,819	$13,171	19%
Net Savings	$52,122	$68,804	$16,683	32%
% of Gross Income Saved	43.16%	45.68%

A few notes:

• As noted elsewhere, I received a $24,000 inheritance from a family member.
• Other Income is matching 401k contributions from my employer.
• Interest is down because I shifted quite a bit of money from bank accounts into investment accounts.
• Charity and Gifts Given are up for reasons explained in this post.
• Medical is way up because I had a crown and root canal and exceeded the annual cap on my dental insurance.
• Miscellaneous is up mainly because I bought an iPhone and some apps.
• Travel is up because I didn't do much of a vacation last year, but this year I went to Turkey and splurged a little on hotels even though my air ticket was purchased with frequent flyer miles.
• Utilities is up because of the higher monthly costs of the iPhone.
• Subscriptions is down because I canceled my NY Times delivery at home, since I spend so much time at Sweetie's place. Household is lower for the same reason
• I'm pretty consistent but I let a few categories creep up a bit without any real reason, particularly Dining. I still like eating out and drink too much-- everyone has to have a vice, right?
• Clothing was also higher but I really needed some new work clothes and shoes, so I'm not too concerned about that.

But the bottom line is that I continue to save a lot of my income. If not for the inheritance, I would have saved less than I did last year, but at least some of that was due to more giving, and higher taxes because I earned more. It's not like I went crazy buying tons of stuff, even if I did allow myself a few treats like an iPhone, some clothes and a vacation.

Now I have to look ahead at 2011... what should my next net worth goal be? Should I make any changes to my budget? This could be the year when I rent out my apartment and move in with Sweetie, which could change things a lot. And I need to take a close look at my investment allocations, which I haven't done in a while. So much to think about! And write about here... I'm going to try to post more frequently this year. So happy 2011! As always, onward and upward!

November 2010 Recap

It's a bit late for this, but I'll get it out of the way before I have to move on to December!

First of all, it was a big month for income: $23,536 in total. In addition to my salary, I received $15,000 as part (not all) of my inheritance from Great Aunt Minnie. (I had thought that would be the full amount, but I got another $9,000 in December. I continue to be bewildered, amazed and grateful whenever I see these numbers.)

Gift Received	$15,000
Interest Inc	$36
Salary	$8,500

As for expenses, nothing too dramatic to report. I returned a few pairs of boots I'd bought from Zappo's last month, so the clothing line is negative. Travel is high because Sweetie and I settled up what we'd spent on our vacation back in September and I owed about $800. And I started doing a wee bit of Christmas shopping.

Taxes	$2,830
Housing	$1,716
Travel	$1,066
Dining	$769
Utilities	$176
Medical	$113
Misc	$100
Gifts Given	$80
Subscriptions	$58
Household	$43
Entertainment	$26
Business expense	$9
Clothing	-$759

The net is that I saved $17,309 in November, which is pretty good even without the $15,000 inheritance.

As for my net worth, it increased $20,493 from last month (+4.47%) to $479,273.

	10/31/10	11/30/10	Var.	Var. %
Cash	$45,665	$59,662	$13,997.00	30.65%
Stocks	$49,780	$49,704	-$76.00	-0.15%
Bonds	$5,091	$5,197	$106.00	2.08%
Retirement	$282,052	$284,341	$2,289.00	0.81%
Home	$81,856	$82,223	$367.00	0.45%
Credit Card	-$5,664	-$1,854	$3,810.00	-67.27%
	$458,780	$479,273	$20,493

So far, the inheritance has just gone into cash savings, but I'll probably add some more to mutual investments soon. The only other change of note here is that I finally updated my savings bond values, which I don't do every month.

December will probably not be a big savings month, considering charitable donations and holiday gift-giving, but I think 2010 overall will look pretty good, and I should exceed my year end net worth goal even backing out the inheritance. But what's next for 2011? We'll see...
Onward and upward!

October 2010 Recap

Better late than never! Here's what October looked like in terms of expenses and income:
My income from salary and interest was about $8,512.
Expenses were as follows:

Taxes	$2,740
Clothing	$1,959
Housing	$1,716
Gym & Fitness	$1,339
Total Dining	$701
Home Insurance	$335
Misc	$207
Utilities	$199
Medical	$153
Travel	$76
Gifts Given	$74
Charity	$52
Education	$44
Subscriptions	$37
Entertainment	$24
Household	$13
Business expense	-$709

Clothing looks outrageously high because I ordered a few pairs of boots from Zappos that I ended up returning, with the credit showing up in November. Gym & Fitness is high because I renewed my gym membership for a full year. With several free months tacked on, I now won't need to pay for this again until sometime in 2012. Home insurance is another yearly bill that happened to come due this month. Business expense is a reimbursement of things I paid for over the course of several months.
The net effect of these odd expenses, plus routine things being slightly higher than usual, was that I saved no money this month! I was in the red by about $448.

As for my net worth:
It's approximately $458,780, up $10,718 / 2.39% from last month. One major change is that I moved some money from a savings account into my E*Trade investment account. You can see the higher credit card balance here too, which should correct itself next month (and of course, as always, I pay it in full every month anyway). I haven't made any more adjustments to my home equity, but I feel pretty good about where it's at based on some recent sales data I've seen in my neighborhood. Of course, there aren't tons of sales to base things on lately, so I continue to think of that number as being a rough ballpark estimate.

	Sept.	Oct.
Cash and Bank Accounts	$ 69,355	$ 45,665
Retirement Accounts	$ 272,805	$ 282,052
Stocks & Mutual Funds	$ 22,236	$ 49,780
Bonds	$ 5,091	$ 5,091
Credit Cards	$ (2,915)	$ (5,664)
Home Equity	$ 81,490	$ 81,856
TOTAL	$ 448,062	$ 458,780

So the good news is that I've surpassed my net worth goal for the end of the year already. In November, I'll also add $15,000 I inherited from Great Aunt Minnie, so I'm hoping that even if the market is down somewhat, I can still beat my net worth goal. Onward and upward!