Author Topic: Floundering  (Read 4881 times)

c

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Floundering
« on: September 05, 2012, 07:06:01 PM »
Hi everyone,

I read this site frequently, but am not really active in the forums. I've reached a point where I feel I'm overwhelmed and slipping quickly back into old habits.

Last year I bought an apartment, I'm super thrilled with my decision. I ran the numbers (almost) a million ways and it made more sense for me to buy than continuing to rent.

I set up a spreadsheet of my amortization table showing how much I "save" by paying in $x at y month etc and came up with a fairly aggressive pay down schedule, which I briefly followed.

I was maxing out my 401k. My company matches up to 5% of my salary and we get an additional 5% "profit sharing" (though not over the last two years), so in a good year that was 10% extra, a bad year 5%.

What I didn't realize is that because my apartment is a co-op, it's hard to get any loans against it as you can't use it for collateral, so any money I put into it in terms of paying down the mortgage is really stuck there until I sell, which I don't plan on because, you know, I have to live somewhere (as my father says).

I'm not a US citizen and have no real intention of becoming one. I'm on a Green Card which I'll continue to renew. I have no intention of retiring here and am concerned about what that would mean in terms of the money I am putting into my 401k.

Recently I stopped pre-paying the mortgage and cut the 401k contributions down to 5% for the company match. I was doing so well, cutting out spending, building net worth, being sensible with my money etc, but now I find myself paralyzed in terms of what to do with my money going forward and am backsliding terribly - for the past two months I've saved NOTHING of my take home, down from 50%.

I only recently became serious about money, saving, paying down debt, cutting expenses etc, so my "nest egg" compared to my earnings is very small and I also feel overwhelmed by how much time and money I wasted.

It's clearly some kind of psychological block, as I know what I should do, but I seem to have commitment issues when tying up my money, so instead I just waste it on crap. I think the not becoming a citizen is a similar issue. Re-reading this, it's very whiney and self-pitying, I know. I know that getting access to my home equity shouldn't be a consideration, as I likely won't need to, but I worry "what if?".

I earn $125k at my day job (plus bonus which ranges from 12-20% depending but I never budget for it), I have $136k in my 401k, $47k in savings/investments, my only debt is my mortgage $260k. I don't really count the "equity" in the house as it's not actual money, but I have about $115k in "equity" in my apartment. I list these things, as other posts I've read the responders ask about it. Also, to shame myself at how little I'm doing to help my situation.

If you've made it this far, thanks and what the fuck is wrong with me?


gooki

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Re: Floundering
« Reply #1 on: September 05, 2012, 07:49:42 PM »
If you've made it this far, thanks and what the fuck is wrong with me?

You've let your doubts about the future take control.

The good news you're in a fucking good position finance/employment wise. You just need a kick in the ass to get investing again. At this stage I'd stop over analysing, and keep it simple.

  • Do you hate having a mortgage? Pay that fucker down.
  • Do you want good returns, with access to money. Vanguard index funds.
  • Do you want both of the above? Sweet as 50% to mortgage, 50% to index funds.

Basically you need to get back into the habit of automatically locking away your money either into investments or into your home.

arebelspy

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Re: Floundering
« Reply #2 on: September 05, 2012, 08:01:18 PM »
Sorry dude, hate to see someone get punches in the face on their first post, but I'm afraid that's what you're in for.

Hope you have a thick skin and stick around after all of the posts.  :)

I agree with Gooki.  Save it somewhere.  Doubts about illiquidity by having it in home equity are valid.  Don't know that the 401k doubts are - start some research into foreigners accessing 401ks under various circumstances and talk to the people who manage yours.

Either way though, save it somewhere.  In Vanguard, in gold, whatever.

But going from saving HALF your money to not saving any? 

Hell, bury it in the backyard if you want.  Losing a few percent to inflation and earning 0 interest on the amount saved is better than not saving ANY.  Spending it on stuff you don't need because you have some liquidity concerns is ridiculous.

You are just setting yourself further back from where you could be.

Think about it this way: do you regret that extra money in your condo or the extra money in your 401k?  Do you wish you could have it back so you could spend it all on more stuff?

Think about your goals and what motivates you.  Do you want FI or FIRE or what?  Cause whatever your goals are.. You aren't progressing toward them.  You're stalled.  So figure out what they are, so you can figure out next steps to get moving towards them again.
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c

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Re: Floundering
« Reply #3 on: September 05, 2012, 09:04:15 PM »
I came for the face punches, I'll stay for the kicks up the arse.

I worked so hard to get to this point and it's shocking to see how quickly I can undo all the good habits I worked so hard to build. I see myself setting myself back with every dollar I waste. I should know better, and I do.

My money goals are not to have to worry. I don't want to worry about being laid off, or quitting my job to pursue my side-hussle if I decide to, or paying for unexpected events. My husband has health issues which have severely limited his employment, he was also involved in a terrible accident where we thought he wouldn't walk again. I dealt with all that by spending on things to make us feel better, when all it did really was make me sick with worry.

He recently got a job for the first time in 4 years, which covers his medical expenses not covered by my insurance/FSA and gives us some extra. That takes a lot of the pressure off me and allows me to save more, as previously everything was coming out of my income (which I consider our income, but the reality is that I bring it in and it was all on me in terms of "DON'T GET LAID OFF, WE'LL BE FUCKED").

One month's savings went on a class I've wanted to take for years. It was out of state, so involved travel, class fees and accommodation. It really elevated my skills for my side-hussle, but in reality I took the class and haven't actually put any of the skills to use.

It's all excuses really. It's so easy to say "blah, blah, health, accident, class, blah blah", when at the end of the day what I really need to do is suck it up and work harder at managing my money and my life.

Thanks for listening, it really helps to see it all written down.


ShanghaiStashing

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Re: Floundering
« Reply #4 on: September 05, 2012, 10:04:41 PM »
Modified once I read the other post!

Sorry to hear about your husband. My dad was in a serious car accident when I was 10 and spent 11 months in the hospital, in traction with his jaw wired shut. That's some serious shit, but it shouldn't affect your lifestyle choices to gain security.

I live in bloody China, have to struggle to get money out of the country because of stupid currency laws, pay ridiculous income tax and rent instead of own in a country that I'll never be a citizen in and still bank well over 60% of my salary and my gf's salary per month and get it invested. I also don't even know where I'll be living in 18 months because of my job. China is a nice place to visit, but a shitty, shitty place to live (some perks aside). It would be easy to say 'waahhh waahhh waahhh my life sucks here spend more money'. But we don't.

Sure I could blow my money on hookers and blow every day (and get a discount, at least on the hookers because well, it's China) because I'm scared of committment, but I don't. I could stop cooking at home and eat street food everyday because it's almost the same price, but I don't (also because more than likely that shit will make your intenstines explode).

We have a plan to reach FI in 7 years and regardless of where we are in the world we intend to follow it, no excuses.

Long story short I have no idea what is wrong with you, with the exception of 'whineyitis' and 'whatifitis'. Stop worrying about your first world problems and start saving some shit.

You're suffering from three things: 1.) Buyer's remorse because you didn't really understand the total reality of owning your condo and 2.) Paralyzation by uncertainty about the future. 3.) Regret over past lifestyle choices.

None of these are related to your actual current reality and reflect the fact that you are currently dominated by your emotions, not the facts of your financial situation. This is easily addressed.

Let's look at #1 first. You only regret this purchase because apparently you can't get a loan against the condo. Why the hell do you want or need more debt? You still have a mortgage of 260K!!! Right now you only have 30% equity in your home so it will be a while before you need a loan for anything. Having additional debt in your condo does absolutely nothing for you and the money being 'stuck' there is somewhat irrelevant to your situation as you can effectively assume your home equity will be used to purchase another home wherever you go to live (or alternatively, invest it at a reasonable rate to make enough money in the market to pay rent, either one is fine). You are likely earning a half-decent rate of return by paying down your mortgage more quickly so suck it up and pay that bitch off. If you do nothing else, to force yourself to save simply have automated mortgage payments set-up to reach your 50% savings rate. not the most effective way but at least it's something.

#2. Deal with it. The future is uncertain and as cliche as it will be the only thing you can control is what you do today. Effectively you are adding risk to your future by fucking things up today and buying a bunch of shit you don't need. Building a nest egg and learning to live on less is the easiest form of security you can have. I live on ~24K (net of of exorbinant rent) per year right now with my girlfriend, in one of the most expensive cities in the world. At that price point there aren't many jobs I couldn't take that wouldn't cover my living expenses. The way you live now is simply adding additional uncertainty to your life because you can't ever be without a job. Everytime you don't buy something or save an additional dollar you can tell yourself 'I'm making my future more certain today'.

#3. Get over it. We were all pre-moustachian at some point in our lives. As my mom used to say, there's no point in crying over spilled milk. Right now all you're doing is further compounding your old errors by being a ridiculous sack of emotional consumerist purchasing. I'd suggest everytime you feel the urge to buy something you take the advice of MMM, look yourself in the mirror and punch yourself in your face as hard as you possibly can. If you still feel like buying something repeat. In fact, repeat until you no longer feel like buying something or your hand breaks. The beauty of this lifestyle is that regardless of how late you discovered it, most people are only 10-15 years away from early retirement. For instance, if you're 40 and you immediately implement every lifestyle change and stick with it most likely you can retire at 55, still 10 years ahead of everyone else. If your 30, 45 is a possibility. With your income it's possible even earlier.

Effectively, you've fallen off the 'moustachian wagon'. It's time to face-punch and hop back on.
« Last Edit: September 05, 2012, 10:07:45 PM by ShanghaiStashing »

MoonPilgrim

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Re: Floundering
« Reply #5 on: September 06, 2012, 06:21:00 AM »
I second Shanghai:  We all were pre-mustachian, at some point.  I, too, am overwhelmed and sickened, quite frankly, at the amount of time and dollars lost.  BUT, that is what motivates me every day.  Because I can change things now.  I can't go back ten years; but my future self is sure going to appreciate that dollar I tucked away today.  I feel good doing what I should have done.

And if the self-pity still glows faintly, don't forget gratitude.  Read some posts on the forum, look at the polls--there are many people who are still striving to get to zero, and your net worth is a quarter of a million dollars.  A quarter of a million!  You! By yourself!  That's actually pretty awesome.

And I'm reading between the lines, so I apologize if I'm way off base--but is it possible that the source of the psychological block could stem from resentment at having to carry the burden of your family's finances alone?  I don't mean just as far as paying for things, but the daily burden of being the one in the partnership who gives a shit?  I only ask because I would have assumed you were single, based on the "I, my" in the original post.  The only time you used "us" was in reference to spending, not saving or working towards a goal.  Like I said, maybe I'm off base, but I know from personal experience, it is hard going it alone when you have a partner.  Who spends to make himself feel better.

Get back on the wagon, you're going to have to at some point, and you'll be glad you did it today rather than waiting even one more day.


c

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Re: Floundering
« Reply #6 on: September 06, 2012, 05:11:26 PM »
Thank you all for your thoughtful and honest replies. It's surprisingly touching that strangers would take the time to help out.

Today I adjusted my 401K contributions, it will start on the pay cycle after next (it was too late for the next one) and I am going to use the difference from the next pay cycle to put towards the mortgage as well as re-starting my additional payments.  Instead of over thinking I'm going to take gooki's advice and put half my "savings" to my mortgage and half to my investments, that way the money is being used to further my goals rather than my regrets and I have a use for it, so I won't be tempted to fritter it away on crap. This will give me room to decide what to do (which may be sticking with the 50/50). Such an obvious solution, but it never occurred to me, so thanks.

Buying my apartment was a big part of my FI plan (and has also been my major life goal for as long as I can remember), so the last thing I want to do is borrow against it. I don't know why that is even a concern and I need to think about what exactly I'm worried about on that front.

This evening I'm going to clear out my workspace so that I can start on my side-hussle again. I really enjoy it and at one point I was doing quite well at it both skill and money wise.

I thought a lot about everything today and my immediate goals are to
  • Start cooking at home again and bringing my lunches. I already took inventory of my pantry and am soaking beans.
  • Make a list of all open projects around the apartment (there are tons) and finish them off before starting any more (half painted rooms, I patched dry wall in the bathroom and never sanded, yard work etc)
  • Start exercising again
  • Draw up a schedule for cleaning the apartment
  • Work on coping mechanisms for not getting overwhelmed, wallowing in past mistakes and giving up

MoonPilgrim you are right, I feel I do resent the last few years where I was carrying the burden of being 100% financially and emotionally responsible for another person who couldn't or wouldn't help themselves. It's hard enough getting up and doing things without having to make sure someone else does too. It's very draining and wears you down without you realizing it. I talk about finances in terms of "I" because I was the one getting up everyday and making sure there was enough to cover things. It's interesting that I read so many articles/threads on what people tell (or don't) their friends about their finances. For the past couple of years I would always say "we can't afford it" when it came to spending on certain things and he would always say "yes we can". I recently started saying "I'd rather put the money towards x", where x is visiting my family back home, paying down the mortgage or being able to take a class. It seems to be a lot more effective.

Thanks again. I'm feeling optimistic and that I'm on the right track again for the first time in a while.



« Last Edit: September 06, 2012, 05:26:40 PM by c »

gooki

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Re: Floundering
« Reply #7 on: September 06, 2012, 05:41:57 PM »
Thanks again. I'm feeling optimistic and that I'm on the right track again for the first time in a while.

And so you should, your plan (both financially and the personal goals) is looking very good.

KristinD

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Re: Floundering
« Reply #8 on: November 14, 2012, 09:23:05 AM »
I came for the face punches, I'll stay for the kicks up the arse.

I worked so hard to get to this point and it's shocking to see how quickly I can undo all the good habits I worked so hard to build. I see myself setting myself back with every dollar I waste. I should know better, and I do.

My money goals are not to have to worry. I don't want to worry about being laid off, or quitting my job to pursue my side-hussle if I decide to, or paying for unexpected events. My husband has health issues which have severely limited his employment, he was also involved in a terrible accident where we thought he wouldn't walk again. I dealt with all that by spending on things to make us feel better, when all it did really was make me sick with worry.

He recently got a job for the first time in 4 years, which covers his medical expenses not covered by my insurance/FSA and gives us some extra. That takes a lot of the pressure off me and allows me to save more, as previously everything was coming out of my income (which I consider our income, but the reality is that I bring it in and it was all on me in terms of "DON'T GET LAID OFF, WE'LL BE FUCKED").

One month's savings went on a class I've wanted to take for years. It was out of state, so involved travel, class fees and accommodation. It really elevated my skills for my side-hussle, but in reality I took the class and haven't actually put any of the skills to use.

It's all excuses really. It's so easy to say "blah, blah, health, accident, class, blah blah", when at the end of the day what I really need to do is suck it up and work harder at managing my money and my life.

Thanks for listening, it really helps to see it all written down.

I was wondering are you maxing out your FSA?  Are you paying for any medications or medical supplies out of pocket? I know many people are afraid to max out their FSA's because they don't want to lose any leftover funds. My family maxes out our FSA every year and any money leftover gets spent on http://fsastore.com/ on non-perishable supplies. If you aren't already taking full advantage of your FSA account that's money wasted.