What’s your hobby?

I’m always curious to learn about someone’s hobbies. I mean, think about it. People might spend their free time knitting, playing Bunco, crossfitting, flying remote control planes, rapping, collecting stamps, or white water rafting. Some hobbies cost nothing, swimming in the local lake. Others have significant upfront costs, like cycling, but have minimal recurring expenses. While others are a never-ending money suck, skiing/technology/yoga.

I started thinking about what my hobbies are and how much money they cost me and decided I’d rank them from “most expensive” to least expensive.

1. Fixing up our house. There were very virtually no red flags on our home inspection report. But that hasn’t stopped us from dropping thousands of dollars in the first few months on making our house more personal to our tastes. We upgraded functioning appliances, painted all the walls, painted/added hardware to the kitchen cabinets, ripped out the basement carpet, and the list goes on and on. None of these things absolutely needed to be taken care of, so while some might argue it’s not a hobby, I’d argue it sure looks like one. I spend most of my free time on these house projects and enjoy (for the most part) doing them. We’re probably spending $2,000+ each month right now, but by the end of the month we’ll be spending virtually nothing since I’ll be out of the country for almost two months.

2. Young Life. You remember that crazy outfit I showed you in my last blog post? The one where I dressed up as Chatterbox Charlie for a youth group event. We are pretty involved in Young Life and as a result, spend a ton of time (and money) on it. From buying costumes and game supplies, to hosting 30 puberty stricken high school kids for game night, costs can add up quick. Probably spending around $100/month on YL related shenanigans.

3. Internet. I’m not ashamed to admit it, I spend a good chunk of time on the interwebs. Whether that’s writing this here blog (which costs about $100/year to maintain), catching up on Google News, or mindlessly surfing Facebook/Instagram more than I’d ever care to admit, I don’t think I can get by without access to the net. Fortunately, my internet service is covered by my employer so that means this hobby is virtually free…unless you count all the things I buy on Amazon… haha.

 

I could go on with things like Skiing or dining out,  but the three listed above are probably how I spend the large majority of my free time. What about you? What are some of your primary hobbies, and how much do they cost ya?

A lot can happen in 12 months.

Sorcery

Yesterday, I went all “Who wants to be a millionaire” on you guys and asked the audience a question. It was a simple question:

How has your financial situation changed over the last 12 months?

Of the 333 of you that responded, 240 said things have gotten better. Only 44 readers said things have gotten worse. I wasn’t surprised by the results, considering anyone who voluntarily reads personal finance blogs in their free time, probably tends to care about their finances more than the average joe.

I liked my question because it was intentionally vague. I left it up to the respondent to decide what an improvement in one’s financial situation meant. Maybe that meant getting a fat raise, maybe it meant your retirement funds have appreciated, maybe you moved out of your parent’s basement, or maybe you’ve finally started knocking out that consumer debt that’s been hanging over your head. It was awesome to see the additional insight some of you provided in the comments section, so thanks for that.

While not much has changed in the Ninja household over the last year (expenses and income are pretty much the same), we’ve seen a pretty incredible increase in our net worth.

In fact, I just ran the numbers and it looks like we’ve shot up $55,454 in the last 12 months. In-FREAKING-sane. I honestly had no idea we made that much progress. That works out to a $4,621 increase each month… for twelve straight months.

What’s more, we dropped $12,000 cash on a car upgrade and another $7,500 on MANteresting during this time.

How the heck did we swing this?

I really don’t know. I mean, obviously the markets are responsible for a big chunk, but it really just comes down to boring ol discipline. Investing in our future, saving aggressively for a down payment, not being consumer whores, blah, blah, blah.

Being intentional and proactive with our finances in our 20’s will hopefully set us up for continued success in our 30’s, 40’s, and beyond. I’m taking the words of Spock seriously and doing my best to…

Live long and prosper

There is nothing sexy about our story.

too sexy

As our savings account continues to grow, I’ve been doing a lot of reflecting. How are Girl Ninja and I quickly approaching a $200,000 net worth at 25 and 27 years old? What’s the magic trick? How can I package our story up in to a $10 e-book called “Punch Being Poor In The Face” and sell it to you all?

I mean, we didn’t receive an inheritance. We didn’t get bailed out by Uncle Sam. We’ve never negotiated a huge bonus or pay bump. Our retirement accounts aren’t performing as well as I would have expected thanks to a stagnant economy. We aren’t incredibly frugal. And while this blog netted me about $3,500 last year, MANteresting cost me $7,500 so I’m not bringing in tons of passive income. Basically, my friends, there is nothing sexy about our story. 

Unless of course you find boring sexy.

Fortunately, boring works! Not only does it work, but it works really, really, really well. If I had to summarize how we’ve managed to do alright for ourselves in one sentence I think it would be this: We want a lot, but need nothing. 

For over two years now I’ve been hoping my crappy six-year-old Macbook would die. Well, actually it did die once, but I was able to revive it. I want it to die, because I REALLY want to buy a new laptop, but for as long as this little hunk of junk continues to power on, I will continue to blog from it. I recognize that I want a new laptop, and that I will buy one when this one no longer does it’s job, but I do not NEED a new laptop and there is no sense pretending like I do.

The same could be said about our housing situation. We want a house. We want more than 700sqft of space. We want a second bedroom for guests to stay in. Girl Ninja wants a second bathroom so she doesn’t have to go near it after I’ve “occupied” it 😉 We want to stop paying rent. We want to diversify our investments by including real estate in our portfolio. That said, we could still add a little more to savings to give us a bigger financial cushion after putting 20% down. We could definitely use more time house hunting and familiarizing ourselves with the local market. We want a house, and might buy one soon, but we definitely don’t pretend like we “need” one.

Heck, eight months ago we bought ourselves a new-to-us Honda Pilot (which we officially named Pontius). We dropped $20,000 cash on the car ($8,000 of which came from the sale of Girl Ninja’s Corolla). But even then, we knew the whole time the Pilot was a want, not a need. We never felt like we deserved a bigger car. We didn’t try to pretend our family of two needs a car that seats eight. Sure it was frivolous, but because we only wanted, and not needed it, we were able to make sure the purchase didn’t impact our financial situation significantly. A want has no sense of urgency; the same can’t be said for a need.

Most financial experts will tell you to separate your wants from your needs, and only focus on your needs. That’s terrible advice if you ask me. Let’s be real, we are greedy Americans who use the word “need” to justify anything and everything under the sun. If we can convince ourselves we need a new computer, phone, vacuum,  or car; we suddenly don’t feel bad about buying one.

That’s not how I roll. Aside from basic necessities like food, water, shelter, and a kiss from Girl Ninja each morning I can’t really think of anything else I need. There are a ton of things I want. Some of these things we will end up buying, others we will just continue wanting. As long as I recognize that our basic needs have already been met, I’m confident our net worth will continue to rise.

Want a lot, need nothing.

Too conservative for my own good.

Screen shot 2013-01-16 at Jan 16, 2013, 11.56.18 PM
I was chatting with a close friend a few days ago about the housing market. Big surprise right? We know what the median household income is in Seattle ($66,000), and we also know the median sales price of a home in Seattle right now is $380,000. What we don’t know is how the crap people can afford a $380,000 house on a $66,000 annual income! There are only a few logical conclusions…

1. They inherited the property

2. They received a financial windfall

3. They are house poor. 

4. They are risk takers.

If they inherited the property, or received a financial windfall, good for them.

If they are house poor, I can’t say I’m jealous of them. Nothing about living paycheck to paycheck appeals to me. I would never want to be in a position where I have to sacrifice traveling, eating out, or skiing just so I can make a mortgage payment. No thank you.

But what about the people who are just willing to take a risk. Debt has a pretty bad rap. Heck, I even named my blog Punch Debt In The Face because I think it’s so dumb. But reality is, debt can be a powerful tool for building wealth; like when one takes out a line of credit to start a business, or when someone finances a rental property.

Sure it’s risky. If the business fails, or the real estate market crumbles, you could lose everything. But how bad is that really? It’s not like you have to worry about going to jail. Maybe you get sent to collections and settle your debt for less than you owe, maybe you walk away from your house and get foreclosed on. Maybe you have to consider filing bankruptcy. While none of these things are particularly enjoyable, they are solutions.

Maybe I’m too conservative for my own good?

I mean, if we bought a $500,000 house last year, we’d have about 15% equity in the thing based on recent market appreciation. That’s a $75,000 gain in 12 months!!!

What did I do? Oh that’s right. I decided to keep saving money so we could easily afford a 20% down payment on a house priced $150,000 under what we are qualified to borrow. At last check, my savings account earned a paltry 0.75%. 

Do you see what I’m saying friends? It seems to me that the risk/reward comparison of using debt to leverage one’s financial position often favors reward. Think about it.

We buy a $500,000 house and sell it a year later for a $50,000 profit (after commissions). Or we buy a $500,000 house, watch the markets tank, and walk away from the property and let the bank deal with it (Washington is a non-recourse state). The system is set up to protect one against their own stupid decisions, so much so, that these stupid decisions are no longer necessarily stupid.

Interest rates are low, and house prices are still lower than pre-bubble days. Why not use the depressed market, and government bailouts (quantitative easing), as an opportunity to make some extra dough?

Oh that’s right, because I’m a wuss.

Screen shot 2013-01-17 at Jan 17, 2013, 12.02.52 AM

Being conservative might not make me rich, but I guess it beats the possibility of being poor?

I can buy anything I want.

As I logged in to Mint to give the ‘ol bank accounts a quick check, I realized something. Girl Ninja and I can pay cash for virtually anything we could ever want (excluding a house). Too be honest, it’s kind of humbling. I don’t feel like we can buy a 2013 Porsche Cayenne, but the reality is we could buy two. When the crap did that happen?

I guess this isn’t too surprising because if you DON’T feel like you can buy a Porsche, you DON’T buy a Porsche. Not buying a Porsche leaves more money in my bank account. Simple stuff.

That my friends is called financial peace. It’s been a long journey. A journey that started with a negative net worth of $28,000 and an annual income that was only slightly more than that. There was no windfall or inheritance. My boss never doubled my salary overnight. It wasn’t always easy; I sold my motorcycle to buy GN’s engagement ring because I didn’t want to take money from my savings account.

Sometimes making good decisions hurts. Bad.  

We are impatient people. We selectively forget it took us four years to accumulate our student loans, yet we complain when they haven’t been paid off in six months.

Patience, grasshopper.

You didn’t get in to debt overnight, and you wont be getting out of it overnight. Stay the course. Make wise decisions. Live within your means. Then one day, you’ll be able to buy anything you want.

p.s. part of me wants to go buy a Porsche now. 

p.p.s. Come win $200 over at MANteresting.

feeling fRISKY

Am I the only person that doesn’t understand why some people choose to live a life of fear? Few good things come without risk. I think the world would be a better place if everyone learned to step out of their comfort zone and take some risks every now and again.

Here are a few instances from my life, in which I took a risk, and reaped the benefits…

Career.

Did you know I graduated with a degree in Psychology, but a concentration in pre-medicine? That’s right. I wanted to be a doctor. Specifically, a psychiatrist. I did well in all the pre-med courses and, come graduation time, was prepared to take the MCAT. But then, a funny thing happened. I got an email from one of my Psychology professors about a job opening in San Diego for a Special Agent.

My professor thought that I would be a great candidate for the position and recommended I apply. So apply I did (not thinking I’d actually get the job). That summer I worked as a Psychiatric Technician, gaining relevant experience to what I thought would be a long and prosperous career in medicine.

Fast forward three months. It was the morning of my MCAT and I was playing “Damn It Feels Good To Be A Gangsta” (I played that song before every single final I took in high school and college…not even joking) to pump myself up for the big test. Suddenly my phone rings. I answer it, and low and behold I received a job offer for the Special Agent position I applied for.

I accepted the job offer that morning and said goodbye to medical school. I took a huge risk accepting a job I knew little about, but 5 years later I am confident I made the right decision (couldn’t imagine still only being a first year resident MD). Although it was a dream to be called Dr. Ninja, I think Special Agent Ninja has a pretty nice ring to it… don’t you?

Girl

Girl Ninja and I have the most unique/weird/frustrating/awkward/awesome love story ever. I’ll save the story for another time, but I can tell you this; Taking a leap of faith and giving my heart to Girl Ninja was the best decision I’ve ever made. There were a few occasions in which we almost didn’t make it, but through a lot of hard work, and a continually evolving love for one another, I can say with confidence; Every frustrating moment was worth it. Married the crap out of her two years ago and couldn’t be happier.

Money

You had to know this one was coming right? What kind of PF blogger would I be if I didn’t tie in money somehow? By investing standards, I guess I am considered a risky investor. 100% of my retirement accounts sit in the stock market. And, as we all are aware, the market can be a nightmarish rollercoaster in which it seems the only direction is down. Although I hate seeing my account balances drop 50% in a relatively short time span, I am more than happy to weather the storm. I am confident the risks I take in the market will pay off ten fold come time to retire.

In fact, I would argue that I take on very little risk. The real risk takers are the people who put no money in to retirement out of fear… or just plain laziness. They squander their cash now, but will be in for a rude awakening when they go to retire and have little or no funds available to them.

Yes, life is about taking risks, but that doesn’t give you an excuse to go be a stupid-head. If you want to start a basket weaving business and leverage a $100,000 loan to start said business, you aren’t taking a risk… you’re just being dumb. Life is about taking a leap of faith, but only if you have done your research and are confident that leap is likely to have a positive outcome.

What areas in your life have you taken on some risk? Have you ever held back from “taking the leap” and now regret it? Would you consider yourself a ‘risky’ or ‘play-it-safe’ individual?

p.s. now that most of you know what we look like and know our real first names, I’ve included our AHmazing wedding video below. Ladies, bring out the tissues. Guys, you probably will think this is terribly boring 😉

 

The hidden fees of adulthood.

If there is one thing I’ve learned over the last decade, it’s this: Growing up is expensive. I’m talking real expensive. What do you mean I have to pay for toilet paper? When I was a wee-ninja the toilet paper roll always magically replaced itself after it was depleted. Just as an aging child discovers the tooth fairy doesn’t exist, I have learned the toilet paper fairy doesn’t either.

Maybe I was spoiled, but I had most of my expenses covered by parents (even through college). This lead to a rude awakening five years ago when I graduated and got my first big-boy job. What do you mean I have to pay to use the washer and dryer in our apartment complex? Turns out this was just one of many unwelcome expenses I encountered.

Here are a few others that really hurt my heart….

Taxes:

They don’t really tell you this in High School, but when you make $40,000 a year, that really means you make $30k-$35k a year after all taxes, social security, etc are taken in to consideration. Sweet, I just got an $8,000 pay-cut without even knowing it. AWESOME! Taxes, although necessary, can be incredibly frustrating/annoying.

Insurance:

I’ve paid for health insurance for five years now. Wanna know how many times I’ve used it for myself….ZERO. While that is ultimately a good thing, it hurts knowing how much not being sick has cost me. Do I really have to pay $300 a month for all the different insurances I need, but rarely use? Why can’t I spend that money on Xbox games, Hot Pockets, and Barbies? Kids don’t have to think about these things. Why should I?

Random Household Stuff:

Toilet paper, paper towels, soap, sponges, toothpaste, bandaids, chapstick, dustpans, etc. What the heck! These things add up quick. There are so many “hidden fees” that come with adulthood I’m starting to feel nauseous. Please hold while I throw up….

….I can’t handle the nickel and dime-ing going on. I know, I’m being a whiner, but really what kid realizes all these things actually cost a substantial amount of money each month? I sure as heck didn’t. I blame Mom Ninja for my naivety.

The list goes on and on. There is no denying that the transition from childhood to adulthood is an expensive one. And there is no denying that transition sucks. I want to hear some of the hidden fees of growing up that shocked you?