Grownup Escapades: Handling Finances

Alastair Paragas
6 min readOct 5, 2017

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Disclaimer: I am not a financial advisor, professional financial analyst nor even have an Economics/Finance major back in College — I just like computers, data and other CS-buzzwordy topics. Please take my advice as you wish.

Extra disclaimer: I haven’t finished writing this article yet. Give me comments and suggestions on how I should finish this!

How you view money can totally shape who you are as a person and thus, how you manage it. Therefore, this advice would come from my personality and point of view and as such — please take it with a grain of salt. Feel free to have your own plan of attack and idea!

Personally, I don’t care for money as I don’t even like to buy things and when I do, I do so under extreme caution, extraneous planning and sheer necessity. However, I do realize that money is a necessary evil to manipulating entities, events and circumstances around us to our favor. When nothing else gives, money is an important bargaining chip that can be used to leverage power. Therefore, my financial recommendations would be based on two personality assumptions:

  • You’re a low-maintenance person who typically only purchases the necessities — food, housing, gas, etc. You typically tend to have salary leftovers because you don’t spend much.
  • Having a ton of money is not your end goal in life. You realize that money is important but gaining/losing money itself does not affect your character and goal as a person. This may be easy or hard to determine and may require a bit of self-observation over a period of time.

Apportioning the Paycheck: Fighting the temptation

Whenever the paycheck comes around, I make sure to only use up to (and never over) 50% of my monthly net paycheck for any expense I may have for the month. This 50% covers absolutely all of my expense and so if cutbacks need to be made, they will be made — whether it be finding a new apartment, finding a new insurance plan, or etc.

I also make sure to take advantage of my workplace’s 401K program, which for me, is a dollar-for-dollar match for any contribution up to 6% of an employee’s pay. This in essence, is doubling the money I am already tucking away for retirement without me doing much work as it stands.

There are lots of other popular plans out there like the 50/20/30 plan, which recommends 50% of your monthly paycheck going to continous and exact fixed monthly payments you have to make, 30% going to monthly fluid expenses that may come and go (like travel, gas and food) and the remaining 20% to investments — as made popular by Elizabeth Warren.

Checking and Savings Accounts: The daily bread

Currently, fully digital banks like Ally and Summit provide good interest rates for savings and checking accounts (respectively) that cannot be beaten by brick-and-mortar banks. I recently transitioned to Ally for my savings account (with a 1.20% annual percentage yield) and currently in the process of transitioning my checking account from Chase to Summit (which offers a 1% annual percentage yield for balances of at least $2,500 or more).

Image courtesy of ValuePenguin: https://www.valuepenguin.com/average-savings-account-interest-rates

Why the transfer? Currently, Chase only provided me with a 0.01% APY for my savings account and none for my checkings account. Letting your money work for you in any small way is very important and considering such a small APY, your money in the bank will most likely devaluate faster than the USD’s devaluation rate.

For my checking account, I keep an amount equal to or above 1 month’s worth of expenses — which for me personally, included my apartment, apartment and car insurance, electricity, food, gas, internet and phone bills, with a small breathing room for unforeseen expenses like weekend goings-outs.

For my savings account, I keep an amount equal to or above 4 month’s worth of expenses (which would cover all of the above for a span of 4 months), just in case of an accident, job loss, etc.

Besides this, I make sure to invest any other monetary asset that I may have left. Even with such a generous APY on both my checkings and savings accounts, I am still not letting my money do my work for me.

Investments — Stocks, Bonds, ETFs: The Stock Market jargon

There are many routes and avenues to investing your money, but for me personally, the most convenient way was through the stock market. Working in the tech industry, I know certain trends that can come and go and thus, I tend to gravitate my investments toward this sector. However, I also make sure to diversify myself to avoid mistakes like a dip coming towards the next tech bubble.

Last year, I used OptionsHouse which got bought out by E-Trade (and causing the commission rate to go up) but currently, I am using Ally Invest. Ally Invest offers a nice low $4.95 commission rate per order, which was around $2 lower than E-Trade. Being the cheap-o that I am, I transferred to Ally Invest.

Ally Invest’s interface

70% of my total investment money is thrown towards ETFs (Exchange Traded Funds), which track indexes. Indexes are an automatically managed list of well-performing companies for any given sector. You probably have heard of indexes already — S&P500, Nasdaq Top 100 Tech Sector, Willshire 5000, S&P Oil and Gas Production Select Industry Index and so forth. However, you cannot actually buy “stocks” of such indexes but rather, buy “stocks” of Exchange-Traded funds which are based on and track such indexes (but vary in minute ways). For example, given S&P500, you can purchase shares of VOO, IVV or SPY. I personally have IVV, which is a more open-ended take on the S&P 500 as it lends out portfolio securities from profits made by tracking such an index (which can mean that IVV is widely more advantageous for “good” markets but widely disadvantageous for “bad” markets).

20% of my total investment money is thrown towards individual company stocks, which I make on a case-per-case basis. Again, since I work in the tech industry, this is where I use a bit of decision-making and research to see what individual companies it would be widely profitable to invest in. Last year, I made a risky bet in investing a ton of my assets on NVIDIA (yes, the graphics card/GPU company) and had a gracious amount of returns — almost 3x my original investment!

Seriously, things like this shouldn’t happen, but bought that stock at $62.84 per share and sold it at $178.21 per share. Charts courtesy of Yahoo! Finance

10% of my remaining investment money is thrown towards bonds. Bonds are a more stable, secure though much slower form of investment, but have proven themselves very well especially in poorly performing markets (where they are used for company bail-outs where guaranteed interest is promised by that entity, which in return, benefits you as the bond-holder).

It is always recommended to invest a percentage amount equal to 100 — your age towards stocks and a percentage equal to your current age in bonds. Thus, as you get older, you should slide towards making slower but more secure investments. However, I have broken this rule as I truly do not care much about fiscal stability and moreso going for risk of gain at my current stage in life, acknowledging full well that even if I lose my entire financial basket in investments to literally zero, I wouldn’t care or bat an eye.

Many have recommended me to invest in cryptocurrencies though but no matter how risky I am, my lack of knowledge and interest in the technology makes that space a black-out zone for me. It might be an exciting prospect for you, so do keep it in your financial deck of cards.

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Alastair Paragas
Alastair Paragas

Written by Alastair Paragas

Machine Learning Platform, Apple. Physics, UW. IA, Georgia Tech. I build apps/systems with Scala, Java, Javascript, Python, GoLang and many more. aparagas.com