Updated Budgets

side312Several weeks ago, we moved to Boise.  (Read all about the move in this post) While we had an understanding that the cost of living between Portland and Boise was 10-30% cheaper, we didn’t know exactly how that was going to affect our budgets.  Was electricity going to be cheaper or more expensive, especially with a larger house?  Was natural gas cheaper in Idaho? How would fuel costs affect us since Idaho is much more spread out and requires more driving to school or work?  A budget experiment, analysis, and implementation was going to take place.  This is our findings

In order for the experiment to be effective, I collected four months worth of data.  This was easily tracked in our Mint.com budget.  I chose four months so I could spot trends and any anomalies that might come up, especially with the activation of new accounts such as garbage, electricity, and natural gas. This experiment also spanned the height of summer and the beginning of fall.  This was beneficial because it captured the heat of summer as well as the cooling temperatures in the autumn evenings.  The last reason we did four months was that I finally got around to doing it.  The plan was going to collect data for only three months, but time got away from me.

After four months of simply paying bills, I was ready to investigate my finding and adjust our budget to our new living conditions.  The picture above is my extremely high tech, state-of-the-art budget analysis tool.  As you can see, the largest jump in cost is our fuel consumption.  This makes complete sense because I travel about 25 minutes each way to get to work.  Often, I run into traffic which lowers my fuel economy.  Until I grow wings and fly to work, this is an inevitable expense.  Luckily gas prices in Idaho are cheaper than Oregon, but I’m still burning a lot more fuel.  This will also add more car repairs and maintenance to our vehicles with tires, oil changes, and service milestones.

Our electricity is also more expensive in Boise but there is a logical explanation for that difference.  In Oregon, we had solar panels on our roof that kept our electricity costs very low. We did have to lease the solar panels which cost $26 a month.  By adding both of those costs together, we get close to the cost of electricity in Idaho. I also think we forgot to pay our electricity bill the first month so I’m going to watch this bill and see if we can get a more consistent number.

Now that our budgets accurately reflect our real costs in our new house, we are ready to settle into a financial routine of paying our bills and adding to our savings goals.

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Moving to Boise, Idaho

boise signage
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Several months ago my family and I decided to make some pretty large life changes.

It all started shortly after I graduated from the University of Utah.  As part of the program, I had the opportunity to work with a career coach.  He informed me that recent college graduates are the most marketable at getting a new job.  If you remember, my last annual review, it didn’t go too well; I needed to find a new job.  I could find a new internal position and try to overcome the poor review or find a new company and start a new chapter in my career.  My coach and I thought it best to look outside of Intel first and see if there were new opportunities I could take advantage of.

To spare you the gory details of job hunting, phone screens, in-person interviews, initial job offers, negotiations, and final acceptance, I was offered a job at Micron Technology making $80,000 a year.  My new role would be a Supply Chain Planner.  At the time, I didn’t know exactly what that role would entail, but it would be a great opportunity with a growing company. I had several friends that worked at Micron and they spoke very highly of it.

I am extremely grateful for the last seven years I was able to work at Intel. My time there was a fantastic way to start and build my career. The people I worked with were very talented.  It was inspiring to work with them every single day and they motivated me to strive to do my absolute best.

The hardest part about moving to Boise was saying goodbye to all our friends in Oregon.  After living there for seven years, we had developed life-long friendships.  We had developed the relationship with one family that we didn’t need to knock on the front door when we went to their house, we just walked right in.  Our children got along great together. They were the hardest to say goodbye to.

Boise was going to have some distinct advantages that we were really excited to benefit from.  First of all, their school system was far more robust than Portland’s.  Test scores were higher, more grants were awarded, and the teacher ratings far surpassed those of Portland.  Now that our children were starting school, we wanted to make sure they had access to a great education.  Boise is also about 30% cheaper than Portland. With the new position and the salary increase, coupled with the lower cost of living, our income was going to stretch even farther in Boise.

We were very excited to start a new chapter in our lives by moving to Boise; saying goodbye to Portland was bitter-sweet. However, we felt that moving was best for our family and this was the best time to take advantage of the opportunity.  We can’t wait to see what new challenges and prospects await us.

Mutual Funds vs. Index Funds

airport bank board business
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Have you ever heard the expression, “not all animals are otters, but all otters are animals”? In my 9th-grade geometry class, my teacher, Mr. Power, would say, “not all rectangles are squares, but all squares are rectangles.” The same principle applies to mutual funds and index funds.  Not all mutual funds are index funds, but all index funds are mutual funds.

I used to be a big believer in mutual funds. I USED to be, but that has completely changed.

Continue reading Mutual Funds vs. Index Funds

6-Months Savings- New and Updated Goal

pink and white ceramic pig coin bank
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I have just accomplished another baby step in Dave Ramsey’s 7 step program.  I have $1,000 in cash; step 1-check.  I have paid off all my debts except the mortgage; step 2-check.  Now I’m working to build up my 3-6 month emergency fund.  I’ve calculated I will need $22,000 to survive for 6 months without an income.  So far, I have about $14,800 in my savings account so it’s about 67% complete.  My goal is to deposit $500 a month to build up that savings account.  Mint.com projects I will achieve my goal by March 2020 if I only deposit the $500 a month.  I bet I can easily beat that projection.  I’m expecting some stock dividends as well as some annual bonuses from work.  I’ll do my best to make quarterly updates on my progress to reach the full $22,000 to keep myself accountable and focused.

Continue reading 6-Months Savings- New and Updated Goal

Advice from Kevin O’Leary

https://www.cnbc.com/2018/05/22/kevin-oleary-age-at-which-you-should-have-your-debt-paid-off.html

I recently read this short article on CNBC.com about paying off debt.  The majority of the article contains quotes from Kevin O’Leary.  For those not familiar with Kevin, he’s become very popular on his role on Shark Tank.  He made most of his wealth from co-founding a software company that eventually became The Learning Company.  It is estimated that he is worth $400 million. I would say he knows a thing or two about being financially successful.

The article was basic and consistent with other financial advice.  Ideas like, save for the long term, plan for retirement, be thoughtful about a mortgage, and pay off debt quickly.  These are all fantastic ideas that I love.

The key message for me, that completely flies in the face of many financial advisors I’ve listened to is this: “There’s never an incentive to stay in debt. Life is unpredictable. What happens if you’re laid off or incur unexpected expenses elsewhere? Your once-manageable mortgage is suddenly going to seem not so manageable.”

Continue reading Advice from Kevin O’Leary

See Ya, Student Loans!

CaptureIn my last post, I discovered my student loans status changed to “In Grace” because I graduated from MBA school.  I didn’t know exactly what that meant or what effect that would have on my finances so I decided to call the company and find out.

“In Grace” is pretty self-explanatory. The loan is structured in a way that I have 6 months after graduation before I start making regular monthly payments.  What I didn’t know was the point I would be charged interest on those loans.  During “In Grace” was that when interest was being charged? Was it after that 6-month grace period? I had to find out.

Continue reading See Ya, Student Loans!

Quick Update as of September 2018

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I wanted to give a quick update to where I sit in trying to become financially free.  This helps to keep me accountable and also gives an idea of where I’ve come from and where I’m heading.  I’ve included some relative numbers so the rest of this post is understandable.  I hope it’s obvious this isn’t my total financial situation.  I have a 401K and Roth IRA, but those aren’t relevant for this discussion.

Savings Account: $46,000; Checking: $14,000; Chase: $3,000; Student Loans: $41,000; Intel Stocks: $19,000 Continue reading Quick Update as of September 2018