It’s pretty damn presumptuous to think you care about what I’m doing with my money. But this weekend I read an article written by a sommelier, that gave me an idea. As you (maybe) know, a sommelier is a wine expert, and spends his/her life teaching people about the nuances of wine. When faced with the opportunity to learn what a sommelier does personally with their knowledge, I was in. Here is a person that knows just about everything about wine. I had to know how he applied that knowledge to his own personal consumption habits. In the same vein, I figured I’d share what I’m doing with you.
Here’s what you’re about to see. I have a few main goals (obsessions), I have some standard practices, and like you, I have my challenges.
Current personal financial obsession
I have two current financial obsessions. The first came-on about six months ago. It’s kinda weird. I’m obsessed with saving for my kids’ college education. This is weird because my kids are 5 and 2. Why wasn’t I obsessed with this one or two years ago? I have no idea. My only guess is that I see so many student loans decimate young Americans’ financial lives, that I’m simply trying to prevent this for my children. I’m currently maxing-out the state tax benefit, in the state in which I live (the great state of Indiana). Sadly, saving $5,000 per year for college, probably won’t get the job done. I plan on increasing this contribution level in 2015.
My second obsession is ridding myself of dependence on my monthly income. As our careers progress, I believe our biggest financial challenge is learning to not absorb our pay increases. I absorbed the hell out of my pay increases for the first five or six years of my career. In retrospect, it sucked. I kept making more money, and I kept spending more money. Nothing productive came from this time period. I’m not too sure I moved my net worth at all. I saved/invested a little bit of money, but the giant car loan I took-on ruined that. Not to mention, this was also the phase of my life that I described myself as a “watch guy.” I still cringe at the thought of that, for several reasons. So lame.
Anyhow, I’m now trying to pry discretionary income out of my ginger hands. Every month I try to commit a little more money of our take-home pay to a monthly investment plan. I think our chance at retirement will come because we aren’t dependent on large streams of income. I’ve been using Betterment.com to help with this monthly investing. It’s inexpensive, smart, easy, and slick.
Other stuff I’m working on
While I’m slightly obsessed with those other two things, I’m still focusing on a few other tasks. I max-out my company sponsored retirement plan, because if I didn’t, I would be a gigantic hypocrite. Oh, and I want to max it out too.
I have a rental property that is cash-flow positive, and I’m trying to focus on paying down that mortgage as fast as possible. I haven’t really focused on that too much in the past. I had a come to Jesus meeting with myself, and now I’m focusing on eliminating that debt.
Things I’m struggling with
I spend too much money on food and beverage. Not too much in relation to my budget, but too much in that I feel like I’m wasting money. While I do combine my food and entertainment budget to accomplish this, it still doesn’t feel right. Sometimes the numbers don’t tell the whole story.
I tend to fund my Health Savings Account (HSA) at the end of the year. It probably would make more sense to fund it every month. Ultimately it doesn’t really matter, but life is easier when you don’t rely on chunks of money to accomplish things at the end of the year.
My timing got off. My mortgage bill is due two days before I get paid. This isn’t good. This happened because I tried to deal with a financial emergency by simply using my checking account. That’s a bad idea. When you try to cash-flow a financial emergency, you’ll end up throwing off your timing. I don’t keep much of a buffer in my checking account, so things get a little stressful when my mortgage is due. It’s pretty stupid. I could solve the problem by investing/saving less, but I want my habits to fix this problem, not my income.
I probably need to buy more disability insurance. I’m not happy with my current amount of coverage. I’m even more frustrated with my unwillingness to do anything about it.
I’ve decided to hitch my investment wagon to Modern Portfolio Theory. I’ve wavered on this for a couple of years, but I’m done sowing my wild investment oats. It’s time to let a Nobel Prize winning strategy do the job.
Do you wanna know what I suck at the most? My behavior is definitely affected by the availability of resources. In other words, if I have extra money in my account, I tend to spend it on crap. My crap spending is not very discerning. This is primarily why I don’t keep extra money in my account. Basically, I’m a dumb animal.
What are you working on?
I’d love to hear what you are working on right now. Feel free to leave it in the comments. You can use this public forum to hold yourself accountable to your goals. That’s what I just did!
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.