My 29th birthday is changing how I think about money

plus Magic School Bus + barkuterie
Money
Dollar Scholar
Hi y’all —

Today is my birthday! What did you get me? I’ve been checking the mail, but your present hasn’t arrived yet.

Birthdays are strange, because 99% of the time I feel like I haven’t changed at all in recent years. Like, I certainly earn more now than a decade ago, but I’m still spending the majority of my disposable income on Jonas Brothers concerts. I’ve relocated to New York City, but I still sleep with my childhood teddy bear every night. 

I use the same Gmail account I made in 2009. The other day I wore a pair of shoes I’ve had since high school. Whenever I write the letter Z, I put a line through the middle — a habit I picked up at 15 because the boy I liked did it that way and I wanted him to think I was cool (???).

But then 1% of the time, I consider my younger self and feel like she’s a completely different person. Where did I get the energy to stay up until 1 a.m. every night doing homework? Why on Earth did I own camouflage pants? And what was going through my head when I took this photo in the bathroom at Macaroni Grill?

Anyway, clearly I’ve been doing some self-reflection. Part of that is looking critically at how I save and spend, so I asked financial planners to review my money habits. Here’s what they said.

First, we have habit No. 1: I have Mint, but I disconnected my credit cards from it because I didn’t like receiving “You’re over budget for Alcohol & Bars” emails all the time.

Tiffany Kent, a certified financial planner and founding partner of Wealth Engagement in Atlanta, told me this actually isn’t that bad. She compared attempting to stay on budget to wanting to lose weight. If I’m trying to lose 10 pounds, I don’t necessarily need to step on the scale everyday — but I do have to generally eat healthy and work out.

If I want to save money, I don’t necessarily need to pore over incremental spending reports — but I do need to generally stay on top of my spending. It’s about understanding the long-term implications of my short-term decisions.

To that end, Kent suggested I do some mental math to fully understand how my spending may affect my goals. I should get as specific as possible: If I want to splurge at Uncle Barry’s tonight, I need to remember that I’m sacrificing a day of the Key West beach trip I’m working toward.

 
I've analyzed my spending and it turns out my most expensive habit is “having a place to live”
Onto habit No. 2: I lend money relatively freely to friends and family. I’m always putting my card down at group dinners with the idea that my pals will Venmo me later, but I rarely follow up. If someone asks for gas money or the like, I’ll just give it to them without a second thought.

Linking friendship and money can be difficult, but this behavior is “totally OK as long as you can afford it,” Kent says.

When paying for friends or family, Kent to make sure I’m to be upfront with my motivations and expectations. Am I paying for this round of beers simply to be generous? Or am I loaning my brother $100 in rent money because I’m assuming I’ll be repaid next month with interest?

To avoid any drama, I may want to adjust my thinking whenever giving a friend or relative money. Instead of viewing it as a loan, I should assume it’s a gift and that I won’t get it back.

I contacted Holly Mazzocca, a CFP and president with Bartlett Wealth Management, to help me tackle habit No. 3. Ever since I got my American Express, I pay off my credit card every day. I don’t like checking the app (which I do daily, as Scholars know from issue #78) and seeing I owe money. If the system will let me, I prefer to overpay — I breathe easiest when the numbers are negative.

Mazzocca said this doesn’t make much sense, especially if I’m not carrying a balance from month to month. “You’re probably stressing yourself out more than what is necessary,” she adds.

The major benefit to paying off my credit card balance early and not waiting until I receive a statement has to do with my credit utilization ratio. My utilization ratio, a proportion of available credit to credit used, should ideally be under 30% at all times. Over that, and it can start to hurt my credit score.

Mazzocca said that if I make a big purchase that brings me close to that 30% threshold, I may want to go into my account right after and pay down my balance. That way I can avoid dinging my credit by accident.

This brought me to habit No. 4, my last (for the purposes of this exercise, at least). I tend to agonize over big purchases. Like, I’ve been trying to talk myself into buying a Nintendo Switch for over a year now but freeze up whenever I actually attempt to order one.

Mazzocca told me this is normal, to a degree.

“There’s a healthy level of concern we should all have when we’re making big spending decisions,” she adds. “At the end of the day, it’s those big expenses that have an impact on annual savings goals.”

To get around this and feel more comfortable spending my disposable income, Mazzocca recommended I develop a routine where I pay myself first. I should aim to save about 20% of my after-tax income over time, but if I’m not there quite yet I should put aside what I can afford. If I know that my savings are under control, my splurges will likely feel easier to justify.

On top of that, I may want to break down how I’d finance such a purchase. A Nintendo Switch is $300, and I want to buy a couple games to go with it — so say $500 total. If I divide that by 12 months, I need to free up about $40 a month in order to afford it. That means I need to cut out one $10 Chipotle meal every week.

“Can you make that sacrifice to get the larger item?” Mazzocca says. “Then, when it comes time to pull the trigger, you know you can afford it."
THE BOTTOM LINE
(but please don't tell me you scrolled past all of my hard work)

The financial planners didn’t drag me as much as I thought they would! But I could probably work on refining my saving and spending strategy. I am a newly 29-year-old work in progress.


Growth
via GIPHY
RECEIPT OF THE WEEK
DMX
via Instagram
After rapper DMX died on Friday, this 2019 story resurfaced about him paying for a Maine family’s back-to-school shopping. A 12-year-old and her sister were buying new shoes at Journey’s when they met DMX at checkout. DMX, a father of 15, mentioned that he was familiar with back-to-school rituals and then offered to pay for the girls’ shoes. “He told me he’d been blessed in his life as a rapper and a performing artist, and he wanted to bless us, too,” the sister said at the time. DMX went all out up in there, up in there.
INTERNET GOLD
five things I'm loving online right now
1 Forget salami roses and baked brie: People are now making charcuterie boards for their dogs, stacking plates with artfully arranged peas, jerky, sweet potatoes, blueberries, goat’s milk popsicles and more. The best part? They’re calling them barkuterie boards. I’m obsessed.
2 Bear in a hot tub.
3 The mechanic who built the Magic School Bus is sick and tired of Ms. Frizzle getting all the credit for her wild field trips in this new McSweeney’s piece. “It doesn’t take a genius to spot the thing that sets Ms. Frizzle apart, and it’s not her lesson plans or her classroom management strategies,” he says. “It’s my bus, which defies the laws of physics to facilitate time- and space-bending educational experiences. So why aren’t I the beloved local celebrity with the sandwich named after her?”
4 That awkward moment when there’s a raccoon in your house and then your son feeds it half a turkey and a stick of butter.
5 I love the new AJR album, OK Orchestra, and the music videos the band has been releasing to promote it. “Way Less Sad” and “World’s Smallest Violin” are off the wall in the best way.
401(K)9 CONTRIBUTION
send me cute pictures of your pets, please
Maple
via Rachel McGovern
Meet Maple, a Chicago pup whose biggest financial goal is to depawsit treats into her mouth.
Time to blow out my candles.

See you next week.

Julia

P.S. Do you have any odd money habits? How would you react if you found a raccoon in your house? What would be on your ideal charcuterie board? Send cake to
 julia.glum@money.com or @SuperJulia on Twitter.
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