Tag: Personal Finance (Page 1 of 6)

Calculation Financial Scenarios: Roth IRA Edition

Calculation Financial Scenarios: Roth IRA Edition

On Monday, we we used our portfolio balance and our current savings rate to calculate the impact of different market conditions on our future portfolio. Today, we’re going to mix it up just a little bit. Same market scenarios. Different savings rate. Since Alaska is solidly in its own recession, we’re going to assume that Mr. T loses his job by the end of the year (Debbie Downer? I don’t actually think this will happen, but again, I love a good calculation scenario!), so instead of considering our current savings rate, we’re going to assume that we can only max out our Roth IRAs at a total of $11,000/year (or $916/month).

This scenario is more broadly applicable. You have $150,000 portfolio? You max out 2 Roth IRAs? This is the post for you! Again, to make these calculations, I use my very favorite compound interest calculator to plug in the numbers. We’re looking at 4 scenarios: from major recession to bonkers markets to see how long it would take to reach $1,000,000 and $2,000,000. Here we go:

The Recession Starts Tomorrow!

In this scenario, our entire portfolio takes a 25% hit before the end of the year and then grows at 3% forevermore. Let’s look at the numbers:

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Northern Expressions

Northern Expressions: How Close is Money to Your Heart?

Hello Friends! Today’s Northern Expression starts with a pretty famous Jonathan Swift quote, but we recently happened upon Lord Bolingbroke’s response and we loved the two together as a conversation so here you go:

A wise man should take care how he lets money get too much into his head, for it would most assuredly descend to the heart

“A wise man should have money in his head, but not in his heart.” – Jonathan Swift (in a letter to Lord Bolingbroke)

Lord Bolingbroke’s response: “A wise man should take care how he lets money get too much into his head, for it would most assuredly descend to the heart.”

I wonder why we don’t hear Lord Bolingbroke’s response as much as Swift’s quote because it’s basically the same sentiment with clarification. If you spend too much time thinking about money, it becomes the obsession and cannot be separated from your heart. It is a reminder that money is a tool. It is not the goal.

Happy Friday, friends.

Love, Maggie

Northern Expressions

Northern Expressions: Money without brains is always dangerous

Hello fellow money nerds. Today’s quote comes from the very famous book by Napoleon Hill, Think and Grow Rich.

Money without brains is always dangerous. Properly used, it is the most important essential of civilization. -Napoleon Hill, Think and Grow Rich

“Money without brains is always dangerous. Properly used, it is the most important essential of civilization.”

Money plus brains equals nearly endless opportunity! Use your brains. Use your resources. And get out there and make the world wonderful!

Happy weekend!

Love, Maggie

A Simple, Month-Ahead Elimination Budget

A Simple, Month-Ahead Elimination Budget

Mr. T and I were married in the midst of college. We were happiness-rich, but cash poor. We were both lucky to not be in debt because we were both given some assistance from our parents for college. After we were married, we combined our meager bank accounts and started an elimination budget.

We both worked hourly as custodians for our college football team cleaning the locker rooms and the coaches’ offices between 9:30PM and 1AM. Perks: football games were way more engaging because we knew the players intimately though we never met them (“the player that’s got that cute letter from a 6-year-old fan on his locker board has the ball!”). We also got random things out of the trash, like a barely-worn pair of shoes and a dozen tickets to the nearby waterpark. Also, we got to work together and we got a slight pay increase for working nights. Downsides: It was very late and we were tired. We got weekly wheatgrass shots at Jamba Juice to get us through.

The Simple Elimination Budget

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How to Choose a Fund Manager

How to Choose a Fund Manager

Over the past year, I’ve come across some pretty interesting studies about fund managers. Based on the research, let’s take a look at who the ideal fund manager is:

Top Performing Fund Managers:

  1. Drive “Practical but Unexciting” Cars – Fund managers who drive sports cars take on more risk… but the risk doesn’t translate into better returns. So, make sure you’re checking the parking lot before choosing your fund manager!
  2. Are from Poorer Backgrounds – It turns out privilege puts people in positions they don’t necessarily deserve to be in. Fund managers from poorer backgrounds may have to prove themselves more because of their lack of connections or status, so the ones that make it are smarter and have more grit than the ones that got a “leg up” to get there.
  3. Actually Do Very Little – This article is about Nevada’s 35 billion dollar fund manager. He describes his method as “bare-bones.” The article says: “The Nevada system’s stocks and bonds are all in low-cost funds that mimic indexes. Mr. Edmundson may make one change to the portfolio a year.”

Be Your Own Manager:

The key, as Mr. Edmundson from the Nevada fund would tell you, is low-fee index funds. Even if you don’t choose Vanguard funds, you can thank Vanguard for creating The Vanguard Effect – The combined savings of Vanguard’s low fees added to the driving down of prices in the industry leading to a savings of over $1 Trillion to the consumer!*

Maybe this is the end of investing as we know it if everyone jumps on the passive funds train. Or maybe you think index funds are communist (I don’t make this stuff up!). Then make up your own mind… but for now, I’m going to drive my sensible car and put my money in index funds and leave it alone!**


*This is similar to the “Costco Effect” in Anchorage. We’re told to be grateful we live in Anchorage after Costco came because before that, prices were much, much higher. 

**I can’t claim I don’t have the privilege card, because I do

Tracking Your Finances Won't Make You Rich

Tracking Your Finances Won’t Make You Rich

Tracking is the First Step

If you don’t know where your money is going, you don’t know how to make it go where you want. Simply having a budget or tracking your finances the right way isn’t going to change your behavior.

In Fall 2016, a study was published about activity trackers (ie: FitBits) and weight loss. It was a randomized controlled trial (the best kind of study there is!). 471 participants spent 6 months on a low calorie diet, group counseling, and physical fitness prescriptions. After 6 months, the group was randomized into 2 groups: “Self-monitoring” (ie: “you’re on your own, but here’s a website where you can enter your data”) or “Activity Tracker” (ie: “here’s a FitBit. It will capture your data.”) After 2 years (!), they all weighed in. Both groups had better levels of fitness, but the group without the FitBit lost significantly more weight!

You read that right… the ones that had the fancy trackers lost LESS weight than those that didn’t have them!

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Tracking Your Finances and Celebrating Wins!

Tracking Your Finances and Celebrating Wins!

If you’ve been around Northern Expenditure awhile, you’re probably aware that I like to celebrate. (If you follow me on Twitter, you’re aware I celebrate with dancing gifs!) If you don’t track, you can’t celebrate!

Tracking Your Finances:

It’s a new year (yay for new!) and it’s time to start tracking your finances FOR REAL this year. Here’s what you need:

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What does your remarkable life look like?

What Does Your Remarkable Life Look Like?

Several years ago, I caught a glimpse at my doctor’s notes in my chart. Mine didn’t say “difficult patient” like Elaine in that one Seinfeld Episode, but I was equally confused and offended by a statement in mine:

Bones and joints unremarkable.

Um, excuse me?! I think my bones and joints are VERY remarkable! I jest about my offense, of course. As Mr. T pointed out, in the medical world, that is probably a compliment (and since Lui’s birth, my joints are probably now medically remarkable). But “unremarkable” feels offensive.

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Santa Baby for Savers

Santa Baby for Savers

I can’t tell you how excited I am to share this with you today! As our Christmas present to you, Mr. T and I have written and recorded a brand new Christmas Carol for Personal Finance Geeks and Money-Savers alike! Enjoy!

NOTE: The Google ads in the video were not added by us, but by the owners of the copyright of the original song. 

Is it Time to Quit Your Job?

Is it Time to Quit Your Job?

In the book Born for This by Chris Guillebeau, he recommends setting a date to resign from your job each year. On that date, you commit to resigning if your job is not the best fit. This exercise forces you to re-evaluate every year with an ultimatum. Are you miserable? This is quitting day! Things going great? Reset the calendar reminder for next year and carry on.

What if?

Many advocate that if you prepare for the absolute worst case scenario, you’ll get over your fear. So, what if you lost your job tomorrow? What is the worst that could happen? Your family goes hungry. You lose your house. Jobs are scarce. Keep the thought experiment going. What would you actually do?

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