Over the years I’ve tried to budget many, many times. It just doesn’t work for me. I guess in the grand scheme of things I don’t want to 1. write down that I spent $1.25 on a pack or gum or 2. Decide at the beginning of the month I will spend $250 on Groceries, $60 on eating out and $215 on clothes. I’ve even tried a few programs that help me with these two aspects even to the point of linking my credit and debit cards to them so the information could be pulled into the system directly. I’d plug along for a few weeks to a few months and then I just stop. I think I just can’t get excited about it because I’ve always managed to overall live below my means. A budget might make me able to squeeze out a few extra percent of savings but I’ve always managed to Max out my retirement savings and recently my overall savings rate has been above 25%.
So how can I save so much when I don’t budget, I fall into the scarcity camp of “budgeting.” When I was hired in 2000, the rules on 401k’s were a bit more cumbersome then they are now. The IRS set limited contributions to 10% of base pay for all contributors along with an overall dollar limit and most companies did not allow you to start contributing until you had been with the company for 6 months to a year. I fell into the almost a year stage. The government allowed you to start based on the date you were hired. I was hired Mid-July which meant I could not contribute until July 1, 2001. However, there were these forms all over the place that allowed one to sign up to purchase US EE savings bonds directly from your paycheck. So I did. An this began my process of automating my savings off the top and then allowing myself to spend the rest.
It began with the savings bonds and an automatic maybe $50 transfer from my checking to my savings account every paycheck. Next, when I was eligible I immediately contributed the max I could to my TSP (401k) account which was difficult as rules were different in 2001.. I was only able to contribute 10% of my pay up to $10,000 in 2001. I made about $50000 that year so only contributed $2,500 starting in July. Plus once the rules were changing each time I could raise my contributes I also happened to be getting my yearly pay raise with the pay raise being larger than my additional contribution. Sometime in the mid 2000s, someone told me about this thing called and IRA and I added one of those.
As I noticed my checking account growing I adjust that $50 paycheck transfer to my savings account upward. Soon someone else talked about how they kept their savings in a Money Market fund that earned them about 4% which was more than my savings account gave me. And hey my bank offered one. While I was signing up for my money market I saw that my bank offered these things called mutual funds. So I started adding those as well.
Now over the years I’ve had to adjust my automatic savings down as well. I’ve done it for one reason, my housing costs changed, going from renting, to renting and co-owning a vacation condo, to owning a co-op and that condo, and finally to owning that condo, the co-op and a house. In a similar manner I automatically adjusted my payments on those properties to a higher rate in order to pay off the loans sooner.
Sometime back before I had pets, 3 cats, I set up a bank account to save a bit each week for something. What that something was I can no longer remember. I’m sure it was something like a bicycle or a new computer or the like. Something that was more than $1,000 but less than $5,000.
I decided to save $14 a week at first, then $21 and ended up eventually with an automatic transfer of $35 to it every week, $5 a day. So several years later, I decide that I really didn’t want whatever it was but I had found myself a servant to a couple of 10 pound, 4 legged entities that go “meow.” I was looking into things like pet insurance and decided it wasn’t worth to me. But I also didn’t want to have to make a financial decision when it was emotional. I was thinking what to do, what to do when I opened up my bank account one day and saw my little savings account just sitting there. My little account which has become quite big got a new name. The Pet Savings Account. It even got big enough a few years ago that I re-directed the $35 a week back to my normal savings account for a couple of years.
Unfortunately at the end of 2015 I did have to dip into it. Well I chose to do so. One of my Fuzzies was diagnosed with Feline Diabetes. Like in humans, it is very treatable with a high quality of life. And the start up costs were pricey = I decided to use money from this account. It’s back to being replenished at $35 a week.
I’m incredibly lucky, the government has always offered good health insurance with multiple options. The whole ACA health care market place idea was based off of the system in place for Federal Workers. When I started I was advised to get the Blue Cross plan, which was the traditional Cadillac plan that came with a higher price of double my current plan. Since it was similar to what the plan I understood from my parents I was good with it. That is until the day I went to the doctor for routine tests in 2006. My in-plan doctor sent my labwork to Quest the week after Blue Cross decided they would only pay for labs sent to Labcorp. I ended up with a $400 bill. That day I decided the next open season I was gone.
When open season rolled along I had decided I wanted more flexibility than a traditional plan so I focused on HDHPs and their cousin the Consumer Driven Health Plan which was a hybrid of a High deductible and a traditional plan. In the end, I was scared and went with the less strange CDHP for six years. I think if I would have bitten the bullet I would have had to spend $1,000 out of my HSA over those 6 years. As I saved at least $4,000 in premiums over that time I would have still been ahead. In 2012 I bit the bullet and made the switch. With my new play I can also of course contribute to an HSA pre-tax. My HSA has about $7500 in it after 3 years and I just opened an investment account associated with it. I can only morn that if I had changed to it first I would have an additional $18,000 invested based on an average of $3,000 a year.
So I’m a Single Income No Kids Working for the Government. I’m also just plain single. I’ve been working for the “G” for 16 years and the golden handcuffs have me working for them for at least another 9 more. Why do I call them the golden handcuffs, because my pay and benefits make it extremely difficult to leave my current job. I mean where else am I likely to be able to retire at 47 with a pension and subsidized health care for the rest of my life. Some will see that last line and lump me in as a parasite, but in reality if those two things didn’t occur, I wouldn’t be working for the G or at least I won’t be doing my current job. In fact, I am exploring a job change, although not a full on career change. I don’t like many aspects of my current job but I don’t have any better idea of what I want to do with my life that outweighs what I currently receive. So what is my job exploration. Basically doing my same job (because I’m qualified for it) just a different department. Will a job change solve all my issues with work, nope, but I hope it will solve one of the biggest ones. My department is not known to have a good work/life balance. And the balance has been tilting toward the work side the last few years.
When it comes to my biweekly pay, I can’t complain about my compensation. In fact, I’m kind of amazed at how much money I make. I’m a GS 13 step 8 with a 25% bonus and some overtime. Which means what? I make over 6 figures and have been since 2005. Last year I broke a new milestone of $150,000 (barely). My career is in a pretty technical area, it is also one that is truly a “government function.” Some aspects of my career do have private sector touch points but the combination of what I do is not found outside of the Government. However, my income is pretty much at it’s max. Based on laws passed by Congress, my pay is limited to a maximum amount, this year it is $160,300. So with those numbers in mind, yes I plan to get rich working for the Government, in fact, yes I’m a Millionaire, again just barely including the equity in my home. My next goal is to become a Millionaire not counting my primary residence.
How’d I get here the biggest component is following the advise passed to me early on in my career, to contribute to my Thrift Savings Plan (the G’s 401k), as early as I could and as much as I could striving to reach the maximum. Once I did that, personal finance guru’s mentioned something called an IRA and I worked on maxing that out as well. The rest is a vacation home I own with my parents, savings, a small post tax investment account, a HSA and some savings bonds that I will be cashing out sometime soon.
I’ve had a lot of success with my finances but I’ve had my fare share of challenges and made more than one mistake. Luckily my mistakes have hurt but have never been devastating. Borrowing a phrase I learned from friends who run ultra-marathons, I’ve managed to practice constant forward momentum and even when things looked bleak I still made some progress even though it was tiny.