My 2012 Income Goal: failed, but had a good time anyway

With only one month left at 2012, I have a pretty good idea of where I’ll stand financially when all is said and done. Instead of waiting until the bitter end, I thought I’d reveal now my income goal and how very close I came to success.

In 2012, I set out to gross $70,000

To date, I’ve brought in just over $58K of that, or about 83% of my goal. I expect to earn another $5,000-$6,000 in December, bringing my final total to $64K, or about 91% of my goal. In short, I won’t make it. But I’m cool with that.

After all, it wasn’t a BIG failure. I did pretty good.

If I hadn’t gone without a paycheque in July to accommodate a pay schedule change at work, I would have reached 95% of my goal this year . Oh well! At least that won’t be happening in 2013. The bulk of my income came from my full-time salary, with some extra income from freelance writing and this blog. Very little came from passive income, which is the main source I want to increase over the coming years.

For 2013, my personal income goal is $90,000

Originally I would have liked to set it at $100,000 but I’m not totally sure I’m at the six-figure mark just yet. I thought about setting it at $70,000 again, but my average income for the past 3 months has been about $6,000. This means that for the last little while, I’ve been living and spending like someone making $72,000 (maybe you noticed when I was buying iPhones and TVs and hanging out in Vancouver?).

Setting my goal back at $70,000 for another year is too low, because I expect my income to increase in 2013 for a few reasons:

  • I will get another raise at work.
  • I have more money invested now than I did at the beginning of 2012, which will generate more passive income for 2013.
  • I’m pretty greedy.

As for upping it another $20K for 2013, I realize that’s pretty ambitious and no, I don’t have a plan — but if I fail, hopefully I fail with distinction like I did here.

I set goals by choosing whatever seems just out of reach. 

Because if you choose something that is already within your grasp, it’s not a goal, it’s just a to-do item.

I’ll be honest, grossing $6,000+ per month is weird. It feels both like more and like less than I thought it would. I feel the perks of my income all the time, and then at other times all I feel is its limits. I worry that there isn’t a sum that I’ll live happily with, and then at other times I’m sure it’s just around the corner ($90,000?).

I’ve started assembling some spending and earning plans for 2013, but I still don’t have the personality of an ardent budgeting machine, as befits a personal finance blogger. Actually, as time passes I sort of kind of care less and less about personal finance. Don’t get me wrong, I will always love money, but as the vice-grip of debt loosens, so does the motivation to worry about every dollar that passes through my fingers.

I won’t be meticulously tracking my income in 2013 on the blog the way I did this year — it’s just too much to update every time I get paid. Same goes for Net Worth, which is failure number 2 for this year (though that one is not entirely my fault, since stocks were tanking recently).

Happy Birthday to ME

I turn 27 today! I am officially “late twenties”. I continue to be unmarried and childless as befits my selfish and spendy nature. Honestly, I keep waiting to feel “old” at some point, but my personal success to-do list keeps growing and I really feel excited for the opportunity and experiences ahead of me. I also breathe a deep sigh of relief that I’ve completed school, found gainful employment, saved five-figures for retirement, know how to invest in the stock market, and otherwise exhibit signs of a successful adult. It’s probably all downhill from here.

Most of my partying happened on the weekend, and included a night of debauchery in which my iPhone 5 was lost/stolen on a dance floor and subsequently returned, a themed birthday party in which all my friends participated because they are the very best, and a dinner with my extended family that included roast beef and cake, as every celebration of my birth should. I feel very  loved <3

In order to maintain my personal tradition of over-spending on my birthday, I bought myself this:

Overall, I kept this year pretty tame (no, seriously) because next year is my champagne birthday where I turn 28 on the 28th of November. Plans and spending are already happening, I will keep you posted.

In the meantime, readers read on! Your acceptance of me and my crazy ways is the best gift you can give. Thank you for your support and encouragement, and your hilarious contributions to this website. I love you all to bits!

I have a credit card with a $699 annual fee

Hello PF blogosphere, I am committing a grave personal finance sin to be added to the list here and paying for credit card. There’s no-fee credit cards all over the place, so why would someone choose a card with a fee — and an astronomical one at that?

Earlier this year, I got the MBNA cash-back card and for the most part, it’s been great. However, recently they changed some of their rewards criteria which made the card less valuable to me, namely setting a cap on their 1% cash-back to spending of $1,250 per month.

I spend on average $2,500 per month on my credit card, with some months as high as $4,000 to $5,000.

This is a combination of both work and personal spending, and as a result I was getting a $50 cheque in the mail as a cash-back reward approximately every 2 months. However, MBNA’s new rules means this would get cut back to about every 4 months. While I appreciate that the MBNA is still a no-fee card, it’s now offering me considerably less for using it.

So I went out at got a American Express Platinum card.

Now, you’ve probably already guessed that I’ve been eyeing the Platinum card ever since I learned about the elusive black Amex/Centurion Card. While I still can’t stomach paying that annual fee for that titanium beast, I am wholly enchanted with the prospect of qualifying for that card — mostly so I can screech “I AM THE 1%” and post photos on Rich Kids of Instagram and do other such superficial things that are all part of being in a pissing contest with rich people. The Platinum Amex is my gateway drug to douchey affluence.

Just kidding… mostly.

The card was actually recommended by a coworker who uses it regularly on our business trips. Once she told me all the rewards she was receiving, I was sold.

Benefits:

  • $200 annual travel credit that can be applied to things like airfare and hotel stays.
  • 1.25 reward points which never expire (unlike stupid airmiles!) for every dollar spent that can be redeemed for travel and other things.
  • TRAVEL INSURANCE. Including travel health insurance and baggage insurance, as well as flight delay and cancellation insurance (which I need, because god knows I never pay for it and I nearly missed my connection to Amsterdam at the Heathrow airport this year)
  • PURCHASE PROTECTION. Up to $50,000 per calendar year for purchases on the card that end up broken, lost or stolen — or even items you can’t return to the store for a refund.
  • Complimentary room upgrades and complimentary nights at luxury hotels, plus little perks like late check-outs and gift-cards to in-house hotel restaurants and spas.
  • Complimentary access to airport lounges.
  • Complimentary or discount companion tickets for first or business class international flights — if you were around for my twitter rant in July, you already know I’m never sitting in coach/economy class on an international flight ever again.
  • Complimentary enrolment in various car rental and hotel member programs.
  • “Front of the Line” access to pre-sale concert tickets to ensure the Maroon 5 debacle never happens again.

Draw-backs:

  • Annual fee of $699.
  • Some places don’t take American Express (which is why I won’t be cancelling my MBNA card)
  • Strict income and credit requirements to qualify for the card.

 Why the American Express Platinum card makes sense for me

- I travel a ton, both for work and for pleasure. This results in a lot of hanging out in airports, lots of hotel stays and lots of car rentals. I’m no jet-setting executive, but it adds up.

- When I travel for work, I stay at hotels like the Four Seasons and it’s not unusual for me to extend my stay at these places with some vacation days. While I could pick out a hostel or even a budget hotel wherever I am, I usually splurge and stay at the luxury hotel I’m already at. YOLO!

- I’m way more about enjoying my money than hoarding it, so I’d rather opt for a perk like a hotel room upgrade in lieu of a cash-back program, even though I’d never actually pay out of pocket for a room upgrade (does that even make sense? whatevs.)

The math:

$699 annual fee - $200 travel credit = $499 of rewards required to be obtained every year to break even on the card.

If I spend $3,000 on the card in the first three months I’ll receive 60,000 points, which translates directly into 2 round-trip tickets within Canada or $500 in gift cards at stores like Coach or Banana Republic. I will not disclose how much I’ve spent at those places in 2012 but rest assured, it’s more than $500.

In short, the card will pay for itself the first year.

… but I’ll need to keep track of my usage and the rewards I get from it to see if this will be a long-term relationship. If the perks are not with the price, I’ll cancel the card so fast Amex won’t know what hit them, but for right now, I stand to reap some cool rewards.

Investing in an MBA

I occasionally mock graduate school in a good-natured way, so it might come as a surprise to you that I do actually think it can be a worthwhile investment for the right person. At this point, I’m feeling pretty happy with my BSc., though I’m not sure if it’s all I’ll ever need to get me to the career (and salary) I want. At this point, I’m not in the mood to pursue any more formal education, but that’s a decision that my mind can be changed on.

While a few of my friends are doing PhDs and medical school and law school, the greatest number are enrolled in MBA programs. There seems to be a pretty broad spectrum of MBA programs you can take, from finance to environmental consulting, and the compensation doesn’t seem to be a bad deal either. I didn’t know what an MBA grad made but I got curious once I met a dozen people pursuing the degree.

According to Forbes, the starting salary for an MBA graduate is $101,778 + a signing bonus of $18,139 for an average total compensation of $119,917

Good thing, because the cost of an MBA is in the neighborhood of $100,000 even though it’s usually only a 1-2 year program. Not to mention that’s also 1-2 years out of the workforce (unless you study part-time, which extends your degree) which translates directly into $50,000 to $100,000+ in lost income, depending on your current job.

While I think completing an MBA part-time is an attractive option, I’d much rather just go into it full-time, finish as quickly as possible, and enter the workforce as soon as I could at that $120,000 starting salary. Then I think about living as a student and going back into debt again and I start to feel a little sick. There are, of course, ways to keep your costs down such as getting your employer to pay for some or all of the costs (particularly if you’re studying part-time), but chances are, unless you’ve saved up six-figures of cash, you’re going to graduate in the hole. Nevertheless, an immediate six-figure paycheque does make that easier to swallow.

Like all things, it probably depends what school you attend. While I’m confident an MBA from Harvard Business School will secure you a >$100,000 in compensation, I’d encourage you to avoid online degrees from questionable, never-before-heard-from “universities”.

While I am very debt-averse, I do believe in borrowing (responsibly, of course) for your education since it means investing in an income-generating asset. Student loans aren’t that much fun, but earning more money over your entire working lifetime is, so I think if it’s your only option to pay for school, it’s a worthwhile investment to make.

Shopping Lover or Addict?

Being inspired by my newest reality show favourite ‘My Shopping Addiction’, I decided to think to past behaviours from when I was a student in debt and continually putting myself further into debt by purchasing non-essentials when I knew I shouldn’t. After school, when most graduates are trying to pay off debt they often spend more than they can afford on such a small income.

There are psychologists who believe that excessive shopping can be a sign of a literal addiction to shopping which is called oniomania. Not everyone who indulges themselves has a true shopping addiction. Here are a few different signs your love for shopping is becoming an unhealthy obsession :

Spending more than you have. If you spend your rent money on shoes, that is a problem. You do not want to become the old woman who lived in a shoe, no matter how cute the shoe.

It is a constant, chronic problem. People often overspend at Christmas or other special occasions, but have better periods of time that make up for it. If you are chronically spending too much it is a problem.

You are making compulsive purchases. If you go to the store to buy a pair of pants you really need and end up with 3 pairs of pants, a dress, and several other items that you feel like you cannot leave the store without, you are likely overspending a lot.

You are hiding purchases. If you feel the need to hide the things you bought, it goes beyond regular shopping habits. There are several spouses that have secret credit cards and accounts so that they can rack up their shopping debt secretly.

Your relationships are suffering. If your shopping habit is ruining relationships yet you still can’t stop yourself, there may be a problem. Borrowing money from friends and family that you cannot repay should never happen. It’s just not worth it.

You are shopping for the high. If you are shopping just to feel a high that comes along with it, it can be very problematic since once the shopping trip is over, there is often a depressed and guilty feeling that occurs once you realize what you bought didn’t make your problems disappear.

Do I think I had a shopping addiction? Yes and no. I was definitely shopping to fill a gap I felt in myself at the time and to de-stress from all of the work that came with working while being in school. I had already worked through my own internal issues by the time I decided I needed to rein in my finances. It wasn’t horribly difficult for me to stop shopping once I came to the decision to make a change. I’ve seen people on the show that when faced with cutting back on spending have complete mental breakdowns. They feel a NEED to shop, not just a strong want. I think for most people shopping is not an addiction, just something they do above their means.

Do you or have you ever shopped too much? How difficult was it to change your habits?