Or on $45k..

Yesterday I found out that my position is going to be eliminated as of October 30th. I am not entirely shocked by this. I was expecting it in April, May, June, July.. Well, you get the picture. I am fortunate that it took this long. I will be participating in my 2nd reduction in force on Thursday. The 2nd of my career. The 2nd of 2009.

My supervisors were kind enough to reach out to the head of human resources with one of our sister companies to see if there might be an alternative opportunity for me, and there is. They actually had to get approval for more money to make it more appealing for me, capping it off at $45,000 per year.

I am going to take it. I know that this may be a terrible move for me in the long run career wise, but financially it is the best thing to do. I will keep all the same benefits and retain my tenure. More than I can say for the unfortunate folks this week who are losing their jobs without any options.

I'll have to cut my 401k contributions in half ensuring that I at least contribute enough for the match. Reduce the amount of money that goes towards savings considerably as well as cut extra payments to my credit cards.

The alternative: Receive unemployment and pay my rent from my emergency fund. Wish me luck.

Affording Manhattan On $55k

I've been very excited to see that the visits to my blog have increased exponentially since I started this pursuit about two weeks ago. I was even more excited to find out that had received my third comment and it was someone who wanted to know more! :)

Anonymous said...

How can you afford Manhattan on 55k?

When I first read the comment I didn't know what to think. I wasn't sure if the person thought I was ridiculous, or even lying when I say that I live a rather comfortable lifestyle in Manhattan on this kind of salary. Does this person really want to know how I do it? Well, that is the whole point of the blog, isn't it?

I am sure most of you, anonymous included, would like to hear me say that I receive a familial subsidy every month to make sure that I make ends meet. Or, that I have been lying, cheating and stealing my way through the streets of Manhattan. Neither of these things are the case. In fact, they are far from the truth. I have not accepted a penny of assistance from my family during the seven years I have resided in Manhattan. In fact, I've never even asked anyone for a single penny.

I am going to take this comment as an invitation to start a Financial Chronicle. Over the next 7 weeks I will write one blog that represents my financial standing for that year:

• How much I took home
• How I spent my money
• How I afforded my apartment
• What sacrifices I made

I hope that you all look forward to hearing about the adventures leading up to my being Financially Independent in Manhattan! There will, of course, be other blog-a-licious updates throughout the next few weeks to keep you up to date with what is going on in real time.

Check back soon!

Mr. Findep Man

The Social Security Quandry

I was reassured today by the Social Security Administration that Social Security would still be around when I retire. Reminding me that "Social Security taxes you now pay go into the Social Security Trust Funds and are used to pay benefits to current beneficiaries."

To me, that doesn't sound so promising. Given the number of baby boomers who have yet to retire and due to the economic climate coupled with bad investment choices or a lack of retirement planning in general, many will start to draw against Social Security much later in life. Lets say around 70. I don't believe, with that type of influx and draw on the system that there will necessarily be anything left for the 'rest' of us.

Many financial planners tell us that we should expect to have to replace about 70-80 percent of preretirement earnings to enjoy a comfortable life. I tend to disagree. As we get older our medical costs increase tremendously and if you are not fortunate enough to carry your employers health care through into retirement - just the premiums on those plans, at that age will be staggering. And, if we are living longer, there is a much higher chance that we will be living 'through' more illnesses, diseases and disorders to be quite frank. I would say it is in all of our best interest to plan on 100-110 percent of our preretirement earnings to be comfortable. Notice I left out the 'enjoy'.

Apparently, Social Security replaces about 40 percent as of today. They also say that by 2041 there will only be enough funds to pay about $780 for every $1,000 in benefits scheduled. That might actually be a pretty lofty estimate.

At this point in time I've earned enough credits to qualify for the following benefits:

Retire at age 62: $1,197 a month
Retire at age 67 (full retirement age): $1,700 a month
Retire at age 70: $2,109

Of course the actual amounts may differ because of an increase or decrease in my earnings in the future, an adjustment in cost-of-living when I start collecting and of course, the law. Should we be hopeful.

Some information that shocked me: The fact that I have been working for over 10 years now and that my first years earnings was $2,448. I remember how thrilling it was to be taking home that each summer. In total, I have earned roughly $240,000 in my lifetime. With that in mind my Net-Worth should look a little better.

A Balance In Quality

I had hoped that I would be able to produce posts every day for the first few weeks of the blog, however, I am finding that it is increasingly difficult to manage my work and school schedule while formulating ideas on what to write about. My desires are to ensure that the posts are relative to my own personal life while sparking an interest for my readers. I've come to realize that slow and steady wins the race. I am not going to sacrafice quantity for the quality of my posts.

I'm impressed so far at the number of readers who have visited my site in just the first week of posting. I had expected it to be much slower, considering the level of difficulty in promoting a site in which you cannot outwardly notify your friends about. I've had visitors from the New York City area, Boston, Florida and North Carolina. It will be fun to set goals for myself and see how long it takes to meet those goals.

Dear Mom..

I know that they always say it is best to write a letter to someone about how you feel, even if you never actually give it to them. Maybe somehow it is therapeutic to participate in this exercise without actually making the other person feel bad? Or actually make the other person think about what it is that they are doing – and whether they are hurting themselves or not, they might actually be hurting other people along the way. This is just one of those letters that I’ve decided to write to my Mother after speaking to one of my sisters this morning on the phone:

Dear Mom,

I know that times have been rough and there has been a lot of change in all of our lives ever since you and dad divorced. I try my best to be as supportive as I can, even though sometimes I don’t think that you are 100% supportive of me. But, then again – there is that unconditional love.

Between the email you sent the other day and our conversation on the phone I’ve had to take some time to think about the situation. What might I be able to do to help out in this situation? What have I tried to do to help out in this situation? What have you and Step-Dad done together to try and correct the situation? Has any of my advice been considered?

When you first told me that you were going to try and go for a short-sale with the bank, I told you that even if you do that, where would that leave you? I explained to you that a short-sale will affect your credit score, granted not as much as a full foreclosure, but enough where it will make it difficult for you to get another mortgage on a house. We also discussed the fact that you do not have any savings to be able to put down on a new house, so you essentially would need to be borrowing 100% of the cost of a home. Again. You didn’t put any money down on this current house, correct?

If I remember correctly, you explained to me that your realtor discussed all of these points with you and did not see there being any kind of issue in purchasing a new home, with 100% financing after closing on a short-sale with your current home. Are you sure this person has any idea what she is doing? Has she had a paper bag over her head and worn earmuffs? McDonald’s has gone to investment banks for funding three times in the last 10 months to borrow money. McDonald’s. They have been denied 3 times. Now, McDonald’s has far more capital to put against any type of loan than either you or I could imagine, but they were denied. Why would she think you could get a mortgage?

Did you stop to think that maybe she was looking for yet another realtor fee on the same house and not for your best interests? But, who are you going to listen to; your 25 year old son or your realtor. I can see how easy of a decision it was.

I can’t even begin to count the number of times that your daughters and I have mentioned the fact that you are living well beyond your means. We all think you could easily handle the mortgage, despite the increase due to your property taxes changing. When we talked the other day you mentioned that your mortgage was increasing by about $277 per month. When I asked you how much money you were currently paying on the fifth wheel camper (that you have not used once in the last 13 months) you said $400 per month. Not to mention, if you were to get rid of the camper there wouldn’t be any need for Step-Dad to have the gas guzzling truck that he currently has. How much is that setting you back a month? And gas? And insurance?

I understand that you think you are just another victim of the housing bubble. But the one thing that you are missing is that the majority of the people who are losing their homes to foreclosure have taken the necessary steps to purge waste and are still unable to afford their homes. They have gone down to one car for the household. Cut out premium cable channels. I don’t think you are a victim of the housing bubble, I think you are merely a victim of your own selfish wants or unable to tell Step-Dad, 'Enough is enough!" Now, don’t get me wrong there is nothing wrong with selfish wants – as long as you can afford to keep the roof over your head while indulging in the extras.

RN Saver and I talked this morning about the situation. Little did I know I was the absolute last person to find out about where everything has come to head? Not to mention, the $500-700 laptop you purchased at Wal-Mart a few months back. How many laptops do you currently have in that house? As well, I’d have to say that I am appalled that you would allow Step-Dad to turn your being ill and having to take time off from work a few months back as the reason for a missed mortgage payment. Wouldn’t you agree that if you had not been paying all of the money on ‘toys’ you might not be in this situation? Maybe you would have had enough saved to be able to cover that mortgage payment, or maybe two?

I commend you for deciding to live in a rental, since your aspirations to stick around after retirement (do you have retirement money?) are lacking. I am just surprised that you still think that hanging on to the fifth-wheel, when you are going to have to pay even MORE money to park it at a storage center, is a good idea.

I had thought about offering to give you that mortgage payment you missed with the agreement that you would get rid of the fifth-wheel camper and other unnecessary expenses. I don’t think that would happen. And frankly, I don’t think that helping out financially is the right thing to do for you.

I’ve spoken my mind and tried to offer you what I think would be the best solution to your problems, and I don’t know if it is the Mother:Son dynamic, but I don’t think you have taken anything I’ve said into consideration. With that in mind, I would prefer that going forward; we not talk about your financial situation. I don’t want to hear about it.

Unconditionally, I love you too. But I hate the decisions you are making.

Your son,

Mr. Findep Man

Employer Sponsored PTO = 401(k) Savings

This evening I happened across an interesting article on CNN.com about Obama's push for more personal savings among American's.  He speaks about retirement plan auto enrollment as well as issuing your tax refund as a savings bond. Interesting.

What caught my eye, however, was the idea of being able to turn your unused Paid Time Off into 401(k) contributions.  As someone who saves rather than splurges on vacations and long weekends, I would find this very advantageous to have as an option.

Employers, don't be too concerned, if you currently run a 'use it or lose it' type program, you will not be required to allow employees to convert their unused PTO into 401(k) contributions.

Foreclosures Among Us..

I received a very alarming, yet not so surprising email from my mother this afternoon. They are currently underwater in their home that they purchased about a year ago, and taxes have been evaluated at a higher amount making it next to impossible for my mother and step-father to afford the home.

The bank agreed to make a go at a short-sale, however, they have only had two showings since they put it up on the market. They are thinking now that the big 'F' word is looming. I have not been able to decipher whether or not they have been skipping their payments at this point.

They have found a rental apartment to move into on October 3rd. My biggest concern is that although they are reducing their housing costs (Home is $2,600/month | Apartment is $1,675/month) I am almost certain that they have not reduced other costs that include a loan on a gas-guzzling pick-up truck, motorcycle and fifth-wheel camper. The camper, mind you, has not been moved in the last 13 months except to relocate it to their current property.

They are underwater in their home.. Paying unnecessary expenses.. Where will it end?

I don't really remember my mother being terribly bad with money.  She always seemed to keep the family going when she was married to my father. It seems as though her financial accumen has gone slowly downhill since she remarried.

The worst part is that I think her current husband is trying to keep up with the Jones' (aka his brother, parents).  The problem: his Jones' live in trailers.. there is no need to own a $250,000 piece of property in order to 'keep up' with them.

I'll be calling her tonight and update you on the actual details of the situation.

Credit Card Reduction

If any of you have come to me via my NetworthIQ.com account, you may have read in my journal a while back that I had found that one (I currently have three roommates) of my roommates had a large sum of credit card debt and was considering working with CCCS (Consumer Credit Counseling Services) to find a better way of handling his current debt load. We will call him Mr. Debtor.

Here is the question I had:

"Last night I had a pretty heartfelt talk with my roommate about his finances. Little did I know, that he has managed to incur more than 25k in credit card debt. When I asked him how he accumulated most of it, he responded by telling me that it was from transferring balances from one card to another to another.

He was unable to explain to me exactly 'what' he had spent the money on. He makes a decent living, considering living in New York City - However, he is living paycheck to paycheck because with increased rates, he is paying almost $700 a month and doesn't see anyway out.

Has anyone used CCCS to help with credit card debt?

What was your experience like?"

Well, last night I had yet another conversation with my roommate about his current situation. He was asking me about what I thought of him purchasing a new digital-super-duper camera for $839.99.  I asked him how he was doing with his debt reduction plan and if he maybe had set a goal that he would be more comfortable with before he began making large purchases. He was very hesitant at first to go into detail about his debt, but after I showed him a debt reduction (snowball) calculater he decided to bring up his excel spreadsheet of the ten credit cards he currently had a balance on. 

I was shocked to find out that he had well over $33,000 in credit card debt.  We worked through a few different scenarios in which he could reduce that debt significantly over the next few years. He was shocked and amazed how quickly he could reduce his debt by throwing a bit more cash in the direction of his debt rather then spending found money on splurges and material wants. If he stays on course, paying well over $1,000 a month towards his debts he would be free and clear in 3 years, 1 month.

His other big concern was about whether or not he should be putting money towards an emergency fund or paying off the credit card debt.  I explained to him that there are a couple of different views on the subject:

1. Pay off your credit card debts first so as to have the security of use in your credit cards
2. Pay yourself first by creating a substantial emergency fund and pay the minimum on your credit cards
3. Create a compromised payment plan to both contribute to an emergency fund as well as pay above your minimum payments so as to pay down the debt and lessen the interest burden over the long term

I told him that the worst thing that could happen is that he is both in credit card debt and without an emergency card if he were to lose his job. Luckily, he is working for a rather well established retail chain that is doing very well during the current economic climate. His job is stable.

During this whole process, I realized that his major concern was being judged by me. I have known Mr. Debtor since I moved to Manhattan well over 7 years ago. He is 12 years my senior. I can understand why he would feel hesitant to speak to me about his financial shortcomings. I had to set him straight.

About four years ago I was behind on all of my credit cards, late on all of my student loans, lived paycheck to paycheck and hid it all from my then partner. I did not come clean until we were applying for our next apartment and he wanted to have me on the lease, so we gave our information to the realtor to conduct a credit check.  After we left the office of the realtor I told him that we needed to take my name out of the equation. I couldn't hide it any longer - He needed to know that I had a terrible credit history of collections, late payments and delinquencies.

Now, keep in mind that at 21 years old I was no where near the amount of debt that he is currently in.  But, I've been in the position of financial despair. I am in no position to judge despite my current financial situation. I feel much better about where I am and where I am going with my money, but I was once in that deep dark, secretive hole. I'm just glad I managed to get out of it.

Hello.. Is there anybody out there?

I've made the plunge. Taking that first substantial leap in the blogosphere. I have been reading a number of financial blogs over the past few years and finally decided that this was my time. I am in no way a professional writer, nor am I equipped to give anyone solid financial advice. I enjoy reading about personal finance, tracking my networth and creating goals to strive for.

I have been living in New York City for well over 7 years now and in the past 3 years I have finally felt that I've crossed the threshold into Full Financial Independence. Now, that is not to say that I was financially dependent on anyone else. No. That is far from the truth. I've supported myself for the past 8 years. No one has provided me with hand outs and I never once received a loan from a family member. I just finally feel as though I am in a good place with my money that makes me less dependent on credit and more alive with an emergency fund.

I am pursuing my Bachelors degree at the moment. And yes, I've managed to have a relatively successful career despite the lack of any degree. I work full-time in Human Resources making $55,000 a year.

At this point, I am sure you've guessed it. I won't actually ever be telling you who I am or who I associate with. Now that I've shared my salary - I will be known to you from now on as Findep Man.