Category Archives: goals

$2,000 loan payment .. and 134 months to go.

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I just made $1,000 for a side project and spent $2,000 on repaying a small part of my grad school loan. Since all of my debt is now essentially student loans, I’ve been quite aggressive to try and pay them off as soon as possible. My goal is to do $1,000 per month (notwithstanding the $155/mo I’m already paying on the undergrad loan). According to calculations using a conservative 6.8% interest rate as the bulk of my loans are that + some lower interest rate federal loans, I should have it paid off in: 130 months or 10.8 years..

Now I think I’m doing well in my plan, but it is certainly a daunting task. I plan on using any extra money I make to pay these loans back as soon as possible, but I have to also keep on saving for my other goals.

Is your emergency fund big enough?

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My emergency fund is by definition an account to be used in the interim should an “emergency” arise. What constitutes an emergency is really dependent on the user of the fund – I left it to medical expenses, being laid off, and unforeseen family issues. Currently the fund is at $16,000, and that should more than cover expenses for 6-8 months in NYC.

One question I’ve been toying with for the past couple of weeks is whether or not I should stop contributing to my emergency fund and switch to other investments or saving goals. In addition, I have my student loan payments to start worrying about.

I think i’ll give the funding other savings goals a shot (i.e. my home downpayment fund). That way, I can at least rely on it as well should the emergency be even bigger than what I currently have saved. Once I feel comfortable with the size of the home downpayment fund, then I’ll lower that contribution and switch to start either paying down the loan faster or making some Roth IRA investments.

My question to you is, is your emergency fund big enough?

What should you do?

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Seth Godin is one of my favorite reads, he often hits the nail on the head on topics I’m interested in. His latest post on what you can and should be doing really struck a chord with me.

We’ve become bombarded by so many choices nowadays that we often look at the whole platter and just choose from it. Instead, we need to ask ourselves what do I truly want to do - what makes me happy?

The obvious answer is to do what makes you happy :) Circumstances certainly shape decisions, but there’s no reason to not go through the exercise and find out what makes you happy. If you find that place, even if current circumstances don’t allow it, you will always be thinking about it and finding ways to subconsciously have it become part of your life.

For me it’s user interface design (how one interacts with a website for example). I’ve always loved how things work, and when they work well I am in awe. It’s definitely not the field that I studied in college, and not what I’m currently doing, but I’ve always had this in mind and it’s led me to work on side projects for friends that allowed me to do interaction design.

That’s just my example, but hey, if you don’t know what to look for – how do you get there?

A great exercise that I used to help me get at this point is finding what I have in common with what I do in my work, with friends, with family, and with strangers. I found that just writing down something under each column sparked a connection, amazing what paper and pen can do. My commonality was that I loved to help people to find solutions to problems. This is the overall subject that I love to do, and user interaction design is a way of doing it in the “real” world that really connected with my love of drawing.

I’m not giving up on this dream, it’s always there in my mind, and someday it might become a more real part of my life.

Do you know what you should do?

What the GMAT taught me.. Do it right

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I’ve never really enjoyed standardized tests, and when I finished undergrad with a masters degree to boot, I thought I would never have to take a test again. Little did I know how my desire to have an MBA would lead me into the GMATs..

The test itself is not hard, but it is something that you have to know cold in order to finish with enough time to spare. In addition, the very nature of answering more questions right from the start that have a greater impact on your score than the latter questions, made it imperative that you do it right from the beginning.

This brings me to my lesson. Doing things right from the start reduces rework and is more rewarding in the long run. I’m not talking about perfectionism, but just putting the effort in what you do so that it shows.

I often look at reports at work that others put together with gramattical and mathematical mistakes, and it makes me wonder just how much they care. These are reports being sent to superiors and even publications, not a simple blog post such as this :) By doing things right from the beginning, you can develop a reputation of being reliable and knowledgeable. These qualities come in hand when looking for recommendations, promotions, and even during layoffs! I know first hand. Plus, you become almost indispensable to the organization if you can show these skills. Whether or not you want to be indispensable is another question :)

Develop New Skills and Earn Money

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One of the biggest realizations that came to me early on after graduating from undergrad was that you are not constricted by the job you work in terms of earning money. Now this might seem like a no-brainer to many, but this was a foreign concept to me having come from a family that relied heavily on one source of income. Unfortunately, much like the saying “don’t put all your eggs in one basket”, this is not the best methodolgy to follow.
The restriction that comes from only doing one job is two-fold.
1 – Your current career might not go as planned and you could end up unemployed due to downsizing, finding someone that can do your job at a cheaper rate, a loss of work volume, etc..
2 – You lose an edge in being able to acquire new skills

I propose that to improve ones career, one should develop new skills – whether that is in management or in a technical manner that is different from what one is doing.
Take me for example. I took on extra projects and earned side income by utilizing those skills, albeit at a much lower work rate than I would’ve liked. That has actually led me to other projects (higher paying) and more opportunities to expand my career. It amazes me how much new skills offer outside of the actual knowledge you gain. It brings about a change in mindset and approach to problems that you would’ve never had, if you didn’t explore it.

If you are currently contemplating “so what do I need to learn?”. I don’t have an exact answer, but a guideline that you should follow an interest or passion and develop it to the fullest extent. From my experience, most people are not doing what they thought they’d be doing in their lives and have put things like their passions on hold. This mindset can lead to job unsatisfaction and a void in one’s life. So go ahead and set some specific actionable goals and small steps to get to those goals. I’m in the process of doing the same now (details removed for anonimity):

  • Start a website that connects _________ with __________ and earn a passive income of $10,000 per month.
    • Identify appropriate infrastructure requirements
    • Learn Ruby on Rails
    • Create data structure and sketch out user interaction with site
    • Identify revenue streams and income model

These are my beginning steps, and I’ll post more as I accomplish them. This being a side-project, it might proceed at a slower rate.  What are you passionate about? Are you willing to try something new and exciting in your life?

Networth Update – 4/25/11

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-Updated Networth-

Total Assets: $75,583
Total Liabilities: $109,657

Networth: -$31,074

Slowly but surely I am working my way into paying the student loans, my only outstanding “good debt” as they say, although I don’t know how much good it is with some of the loans at 6.8%. I also received a decent bonus from work, which was taxed 50% of course, but I entered it all toward paying the student loan. I am looking to make some additional payments for the student loan, but I need to come up with a game plan for 2011 in terms of how I’m allocating the money. It’s pretty cool, and I’ll share my insight to the way I’m approaching this. Essentially, I am taking the total amount I am expected to make over the rest of the year net, then I am subtracting all of my trips, gifts and large expenses. Then I am calculating my monthly needs (some of which I know such as rent and cell bill), and determining what my budget should be for everything else. This is a new way that I am allocating my money and I’m hoping it will help me in becoming more conscious of my spending as I will be automating all the goals on a bi-weekly basis.

How to succeed – often

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I’ve always been a fan of the ready, fire, aim approach. This gets me out of the planning stage and into the actual implementation of what I want to do. Often times it turns out that what I had originally thought about the situation was not the case and I had to change my tactic. For example, instead of sitting around and thinking of what to write about – day dreaming –  i often just start writing. The words flow, and they might not be the best written words, but who cares, it’s just a draft. The aim portion is where all the refining can take place.
I’m not saying that planning does not have its place, in fact, I think that planning is part of the fire step. Just don’t plan too in-depth or you might be turned off and not even complete the task at hand. This brings to mind an article I’ve read in The Economist called “Fail often, fail well”; very interesting to see some of the top firms out there like Bain & Company using the same approach to advise clients.
Learning from one’s mistakes is key, afraid of investing in stocks – why not buy just a few and give it a shot? If you fail, the downside is limited. By putting less at risk in the action portion, you can actually improve your situation the next time around. The big black box high frequency trading machines that many Wall Street firms use just the same sort of approach, at least the way I would do it, is to use a continuous algorithm that buys small share blocks, to figure out the direction of the stock and then buy/sell stock accordingly to where the algorithm is telling it to go; learning along the way.
I sometimes use this technique when playing poker (good thing this is an anonymous blog :) ; in order find out the strengths of my competition, I will play small amounts just to see how they play hands and to see how they disguise their bluffs. It’s much cheaper to learn in that manner, and win big when it really counts with all my chips in the pot.
So my advice is this, go for it - not all the chips in – but just enough to move forward in your approach, you can adjust along the way.

Automating Your Habits

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Building a new habit has always been hard for me. I always start off with great enthusiasm, followed by forgetting one day, then the next, and soon enough I’m back to square one.

I think I’ve found my solution. Google Calendar. Yep, I am going to automate my goals and habits in a clear way on the one device that I always look at, my phone. So far, it’s helped me recite my affirmations in the morning for the past two weeks (testing this affirmation thing out :) and I’ve been able to regularly take my vitamins in the afternoon (which I always forget to do).

I’ve even put in the regular updating of my Networth, so fingers crossed, I will provide regular updates from now on :)

Anyway, here’s to automating your habits.

Setting Goals up in Google Calendar


Setting Goals up in Google Calendar

Review of 2010 Goals

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Hmm.. I guess I haven’t been very good at updating this site for the past year, let’s see how how this year goes. It is helpful to have a record for the future though of my journey through finance. Here’s a review of how I did with my 2010 goals (2011 to follow).  3.5/6 goals achieved for 2010.. I guess it’s a big fat failure in terms of follow through; it makes me think of my automation post, perhaps this year it will be even more automated :)

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My goals for 2010 (starting on Feb 1st 2010)

1.) Achieved: Establish a $12,000 emergency fund by December 2010. Right now I’m at $4,300 and with bi-weekly $250 contributions I can reach this goal. (Automated)
Specific – Yes, an exact amount.
Measurable – Yes.
Attainable – Yes. I laid out the entire plan.
Realistic – Yes. I can save that much per paycheck.
Timebound – Yes. I set a deadline of Dec 2010.

2.) Achieved ~ somewhat, no current debt, but did carry a balance a few months in 2010: No Credit Card Debt

Specific – Yes. Currently I managed to payoff all of my CC debt with the exception of a self payment for previous.
Measurable – Yes. Pay off every month.
Attainable – Yes. Spend within my means and budget.
Realistic – Yes. I will always check for my balances and maintain to budget.
Timebound – Yes.. always by the end of the month “zero” out balances.

3.) Achieved and Raised to 7%: Contribute 6% of my income to 401k Retirement Accounts (Automated)
Specific – Yes.
Measurable – Yes.
Attainable – Yes.
Realistic – Yes.
Timebound – Yes.

4.) Not Achieved, only saved half of that 2,400 because I stopped contributing half way through the year to pay down my credit card balance, well worth it. Save $4,800 towards the eventual downpayment for an apartment/house (5 – 7 year goal) (Automated)
Specific – Yes. ($200/paycheck)
Measurable – Yes.
Attainable – Yes. Spend within my means and budget.
Realistic – Yes, at least according to my budget.
Timebound – Yes, 1 year then revisit. (this number might change according to how I can budget these numbers further.)

5.) Achieved, took a month long trip to South East Asia – spent quite a  bit more than $2,000, more like $5,000, need better planning for this year or next. Enjoy life and build some memories by taking some trips (total planned expenditure $2,000)
Specific – Yes.
Measurable – Yes.
Attainable – Yes. Budgeted, also “if” I do get a bonus this month then I will use a portion towards this goal. well no bonus.. guess I’ll have to find another way.
Realistic – Yes. I will always check for my balances and maintain to budget.
Timebound – Yes. By end of the year allocate $2,000 to a trip. *I already spent $1,000 of this money on a recent trip.*

6.) Not Achieved, life happened and my dislike for budgets took over. I’m much happier with the automated saving plan and spending allocation, not putting this goal on for 2011. Create a budget, trim where necessary, and follow it starting April.
Specific – Yes.
Measurable – Yes. I will track my expenses thoroughly for the months of February and March to figure out the best allocation of money and where to cut back.
Attainable – Yes. As long as I always write down my cash expenses. Otherwise the rest of the purchases will be categorized on Mint.com
Realistic – Yes.
Timebound – Yes. By the end of March I should have a clearer view of my budget.

Moving and Paying for it..

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I’m about to make a big move.. really big in the fact that I’ll be paying about $400 – $600 more in rent per month. Basically, I’m moving to New York City. I live pretty close by right now, but I feel the need and urge to move closer to the city. It’s an irrational need and thought I guess so I thought I’d share it here. Here are the pros and cons:

Cons:

  • 400 – 600 more in rent per month (about $6k more/year!).
  • Moving in with a roommate again..

Pros:

  • Convenience to the city and work (i.e. no more +1hr commute back after going out in the city).
  • Experience of having said that I actually lived in the city (I’m contemplating starting a consulting career in one year which might take me away on a regular basis).
  • Splitting utility and cable bills
  • Splitting some food costs
  • Slight savings in commuting costs (only 1 monthly pass for the MTA)

I’m not sure if these make sense and worthwhile the $6,000+ annual expense given my current status.. It does seem quite irrational. I’ve tried to tell myself that I’ll start taking lunch more often to work and eating dinner at home on a regular basis to make up for the lost amount of money. I guess anything to convince myself that this is a change that needs to happen. In a month, this move will happen and I’m quite nervous so I thought I’d follow Kotter’s 8 Steps to creating organizational change and apply it to making this move:

  1. Create a sense of Urgency
    • Done. I have to move out by the end of the month.
  2. Form a Powerful Coalition
    • Need to work on this.. So far only my roommate
  3. Create a Vision for Change
    • Trying to envision living in the new place and being a true New Yorker
  4. Communicate the Vision
    • This post.. I’ve also been talking with friends
  5. Remove Obstacles
    • Don’t talk to nay-sayers and come up with strategies to make the move have almost no impact (i.e. new ways to save/earn money)
  6. Create Short-Term Wins
    • Start by making changes this week, lunch and dinner in everyday
    • Think about the new apt and all the pros
  7. Build on the Change
    • Continue the short term wins and build on them every week to create new goals
  8. Anchor the Changes
    • Turn these changes into long term habits by continuing to practice them

Well, that’s about it, off I go to work and to start my change process… 1 step at a time.
If you want to read more about actual organizational change you can check out Kotter’s 8 steps by clicking here.