ripresa (ripresa) wrote,

tracking expenses

I do notice that I tend to blog in phases.. like a whole slew of Musical Theatre, ballet, dieting, improv, current hobby blog posts.

Apparently I'm in the finance phase, which to be honest, I needed to refocus on. I generally don't use LJ-cuts, but I figure since money is a taboo topic, there are certain things that should be in cuts so people don't accidentally read things they don't want to know.

Starting today, I'm going to track all my expanses for the month of Sept. Basically it's a step in the "Your Money or Your life" book, which is becoming conscious of all the little expenditures. Mint kinda does it, but the book wanted you to categorize everything in a way that's relevant to you. So like Food: for me can be divided into work lunch, eating out, groceries, and coffeeshop. Also, Mint doesn't know what you do with your cash. It's less about dieting and more about conscious spending.

Also, in terms of compound interest, I just found out that if I get an average annual return of 8% on my 401k for the next 30 years, even though I no longer contribute a dime, I'm set for retirement at 60. This has me a bit stunned. It wouldn't be a lavish retirement, but definitely enough. And that's not even counting social security payments.  The trick is not to withdraw money for 30 years, and figure out at least an 8% return rate. I can't wait to get my hands on my 401k when it turns into a rollover IRA so I can invest in what I want. Compound interest rocks.

I think next year onwards I will just try to max out on the roth IRAs of 5k. Between that and what I've already gotten from slaving away at a corporate job from when I'm 21, my retirement seems to be in a good shape.

Now the trick is to figure out how to be financial independent between the ages of now and 60. But now at least I don't have to worry about making enough income for my retirement. Except for the 5k a year.

The other thing that the book told me to do is to calculate all the money you've ever made in your life. I did it starting from 2001 when I started my corporate job. It also asked me to calculate my networth. Which I've been doing since 2005. I figured out that I've actually saved about 14% of my income before taxes. So I actually haven't been as spendthrifty as I though I have been, mostly because I always maxed my 401k to whatever my company was matching, which started at 3% and is now 5% matching. And in addition I have a savings acct that automatically takes money from my checking every month. Passive savings works. 

Tags: finance
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