FINANCIAL CHOICES ~ My Adventure to a Million Dollar Goal

Update for December

noreply@blogger.com (Financial Choices) — Wed, 16 Dec 2009 01:11:00 +0000

Long time since I last Posted..Man how time flies. Networth is sitting at $264K. Considering the year we have had I really can't complain. This is a 70K increase from December 2008. I am very pleased that my cash accounts are now over $50K (sleeping well at night) and my 401K and 403B balances equal over $100K now. That's a nice milestone to achieve. My wife and I are still planning on building up our cash accounts for a potential move of paying down a bit of the mortgage, resetting our rate (we have a 5 year arm) and increasing our monthly cash flow. Our mortgage has a nice feature of not needing to refinance but with a $700 fee we can have our mortgage reset with a new payment and new rate.
We continue to wrestle with our wants and needs and have purchased a second flat screen TV and a new rug for our dining room. At least we got a good deal on it since we purchased it around the holidays. We are now anxious to purchase some new dining room furniture to increase our storage capacity and lesson the burden on the Kitchen cabinets. Of course furniture is hugely overpriced which makes the process ever so painful. We continue to use a very useful system for determining future big purchases. We have a piece of paper on the refrigerator and simply write items on the list and cross them off when we get them. This at least helps control the impulsive buys and allows for some level of planning.

Update for August

noreply@blogger.com (Financial Choices) — Sat, 15 Aug 2009 13:53:00 +0000

Nice gain of $8,507 to get me to $225,955. It is nice to see the stock market bounce back a bit but the fast gain is a little concerning. As much as the market has come back I think it can give a false sense that things are better. The reality is that although some of the losses have been erased all of the profits from the last ten years are still lost.

For a comment on the local real estate market there are two homes for sale in my area. One is a forclosure..ugh..and in terrible condition. There have been a lot of people in and out of the house looking for a good deal but I'm guessing they are totally appalled by the house. I have not seen the inside but I can tell you that by looking through the fence in the backyard the home appears to be missing the AC unit. This speaks volumes for what the inside must look like. I think we need an investor or a young couple willing to fix it up. On a much more positive note there is another house on an opposite corner (an end unit) that was only on the market for 11 days before showing up as under contract. The pictures that I saw of this home were very good. The home is a good comp for me and shows me that people are still willing to pay for nice things. I will wait to see what the final closing price is. I'm feeling much better that the market in my area is already starting to recover. According to Zillow my house has increased by about $15k in the last 30 days. I am not a huge fan of Zillow but it is a good site to show trends.

Although I am happy with the gain this month I am a little frustrated over the lack of cash savings increase for the month. There was a decrease of cash by about $1,600 because of having to pay property taxes.

My wife and I continue to balance the "wants" and "needs" for our lives. We now have a list of items we want posted on the fridge. This is everything from a $300-$500 carpet for the dinning room, fix the flashing on two windows-$500, new TV for the living room-$900, dining room cabinetry-$unknown, and living trust $300-$1,000 , and a new mattress for our bedroom which is maybe a $1,500-$2,000 cost. We may pick off a few of the smaller items first. A lot of these items are hardly necessities but they are things we want.

Still plugging away with saving...wish it was going faster.

Debating and thinking about contributing to our 1 Roth IRA. I am still wanting my cash to grow by another $4k-$5K before I either start contributing to the Roth or start working on paying down my mortgage a bit. I still think it would be great to have a much reduced mortgage over the next 5-8 years. The increased cash flow by the refinancing would be really nice. Much to ponder.

End of June update

noreply@blogger.com (Financial Choices) — Sat, 11 Jul 2009 18:37:00 +0000

Small gain of $3,471 which puts me up to $217,447. Still trying to recover from spending some money on my landscaping. We have also come into several minor expenses that seem to add up. We've both got new car seats for the baby which are of course mandatory expenses. For one of the car seats we used several really good coupons which saved us about $50.00. For the month of July we have paid our property taxes ($1,600) and also have a $300 medical bill which was a co-pay for a minor procedure for the baby. All is well with the baby but $300 is now on the credit card that will be paid off by the end of the month. I have tried to offset some of these costs by cashing in some of our credit card reward points. That added up to $500 which was very nice. My wife and I have also both pushed some money from our personal accounts into the joint account to help catch up. Our cash accounts are sitting at about $43K. A few more months of building up the cash accounts and I will begin looking at paying down some mortgage debt prior to a rate reset in 3 years.

All for now.

Update for End of May

noreply@blogger.com (Financial Choices) — Sat, 30 May 2009 15:50:00 +0000

Since my last post things seem to be leveling off a bit. Large increase since my last post but since the end of April there has been a 5% increase up to $213,976. According to my spreadsheet I am still roughly $44K behind where I should be if I was averaging an 8% annual return and contributing $3K a month. The increase is nice even with some recent expenditures which include about $6K for some much needed landscaping work. We completely renovated the front of our home which in my opinion was well worth the price. The front was roughly half of the total cost. The rest of the money went towards tree removal, deck removal, new sod, and new flower beds. All of this work has gotten me motivated to tend to the yard and I am enjoying it a lot.
We are still plugging away at trying to save and are both somewhat relieved that now that some of the landscaping is done our major home improvement project are out of the way for some time. I believe our plan now is to bring the cash accounts back to $45-$50K. They are down to $42K now and then we will start putting more money towards retirement and or paying down the mortgage.

End of February Update

noreply@blogger.com (Financial Choices) — Sun, 01 Mar 2009 00:29:00 +0000

It’s official, the sky is falling and I think it hit the back of my head on the way down. We have moved way past the 8000 mark on the Dow and are fast approaching Dow 6000. I will admit that I pay way too much attention to the news and have almost become frozen into inaction. Well not completely.

I recently read an article about a few people that had seen the troubled markets brewing back in 2007/2008 and are now trying to figure out when to reenter the market. I have to admit that I was jealous of those people who sold at the top and are now trying to time the bottom. Now I’m thinking about putting a note under my pillow that says sell everything when the Dow Jones get’s back to 13000? Will that be in 2011 or 2020…tough to say at this point. The financial down turn is very disappointing to say the least. I am working towards a goal of a net worth of $1,000,000 by the time I’m 40 and It seems like a big deal to lose several years worth of gains along the way. I turned 32 in the month of February and was reminded that I only have 8 more years. Part of me also knows and thinks that as I buy shares at 1997 prices in 2009 I stand a chance of drastically increasing my net worth if the Dow Jones does get back to 13,000 within the next 5 years. Jim Cramer keeps saying 4.5 years.

Net worth update: $193,407.57, Which is a loss of $866.47

Recent moves include upping my 401K to 14%. With my company match of 6.5% this puts me close to $20,000 for the year. I have also changed where my future contributions will go into.

PIMCO PIMCO Total Return Instl Fund 40.00%
Fidelity Contra Fund 35.00%
Principal Global Investors MidCap Blend Separate Account15.00%
Principal Global Investors International Growth Separate Account 10.00%

I know it seems a little conservative by putting 40% into a PIMPCO bond fund but I feel like this is balancing the risk of 5% out of the 6.5% match from my company being in the form of company stock. Having said that, my company stock is only down about 13% for the year.

Other financial moves if you want to call it that is the purchase of a new car. My car was dying and needed about $4,500 worth of maintenance. I elected to purchase a used car, 2008 with 13K miles on it. I put $6,000 down and now have a payment of $218 a month for the next four years ($9,000 loan). This purchase won’t be reflected on this month’s balance sheet but next months. The reason for this is that I put the down payment on a credit card that does not need to get paid off until next month.

I must admit that this purchase has made me question my thoughts on counting personal property as part of my net worth. At a maximum I was thinking of giving myself a partial credit for personal property only up to the point of offsetting the loss of cash from my savings account. This to me seems to fall in the category of “funny accounting” but seems like the car and all our property is worth something. However, I really don’t want to play the game of how much is my car worth versus how much I owe on the loan. I am leaning towards not putting my car debt on my balance sheet and only reflecting it in terms of cash flow loss. This is totally cheating in some respects. However, my wife’s car is nearly paid for with only a few car payments left and I will not include the value of her car on our balance sheet. We also have furniture, TVs, and a painting worth thousands of dollars not included on our balance sheet. The painting is worth maybe $2-3K alone. I think this all get’s back to how I want to count personal property as part of my net worth. The bottom line is that I don’t think it fair to deduct $15,000 from my net worth just because I purchased a vehicle. I don’t think it tells the entire story of what is going on. At the same time I don’t want to play the game of “how much is my car worth” either. The car has a blue book value of 18K and I owe 9K on it.

I will continue to ponder my accounting over the next few weeks and months ahead.

Net worth update for Feb 2009

noreply@blogger.com (Financial Choices) — Sun, 01 Feb 2009 00:32:00 +0000

Just tallied up the net worth for the end of January. This is getting old. With the stock market declining 10% for the month I was not expecting any gain. Net worth is down to $194,274. That's a loss of $1,900 for the month...ahhh really a loss of much more if you include the $2K I put in. It was not a good saving month because of the excessive credit card bill. Mainly from the purchase of the new refrigerator. Next month I will start putting extra money into my cash account until I decide what to do with it.

Also, I started my taxes. I finally got all the forms and have done an initial upload of information into H&R Block. I have made the mistake of accidentally falling into the 28% tax bracket. Ugh...Turns out I will only get about $200 back on my Federal and maybe $1,200 back from my state. So much for the small windfall I was expecting. I believe that this occurred because my wife was not contributing to her 403b while she was on maternity leave. Also, she was getting paid by an insurance company (who covered her benefits while on maternity leave) who may not have been deducting all of the taxes they should have. This didn't impact the tax bracket rate we fell into but impacted the size of our refund. I have taken some quick action to ensure I will remain in the 25% tax bracket next year. I raised my 401K deduction from 8% to 14%. This is a big jump but I think I can do it. My first check with the new 14% deduction will occur in a few weeks. My only frustration with doing this is it limits the amount of money I will have access to in the short term for home improvements and building up my brokerage account/cash acccount. Having said that, putting more money into your retirement account is hardly a bad mistake to make. This bump will put us up to over $20K of contributions for the year into our 401K/B accounts. Not including the matches that we get at 6.5% and 9% each. I also plan on putting more money into one Roth IRA for us. All in all this is a lot of money going into retirment accounts for us.

Don't expect any reall good news in the next few months. I expect the Dow Jones to go up and down from 8000 to 8800 for the next 6 months. ugh.

Update

noreply@blogger.com (Financial Choices) — Sat, 17 Jan 2009 16:18:00 +0000

It's been a while since I've posted so here is a quick update. We had an end of the year problem with bad luck. Our refrigerator went out on us, our computer got a virus and my car's transmission started to do weird things. It really began to feel like the world was working against us. We have seemed to come through the rough patch and are about to start a more steady state of affairs. At least so I hope. The fridge had to be replaced ASAP. I went out and got a mini fridge from Walmart for temporary supply and then later got a loaner from my boss. What a nice boss. I then later returned the Walmart fridge getting back my $89.00. We have since replaced the broken fridge with a new one from Lowes. Pretty standard side by side stainless steel (more grey than stainless) with water in the door. We did not previously have this feature and we are loving it. Nice to throw that Britta away also. The entire Fridge ordeal cost me about $1100. I have my $89.00 rebate in the mail for the "free" delivery from Lowes. I hate rebates by the way.
My computer virus was fixed by myself. I did some research and discovered the name of the virus that was on my computer. I did this by doing a google search for the constant advertisements that were popping up on my computer when I had a web browser open. I then did a search under the virus name which lead me to a website called, "bleepingcomputer.com" I posted my issue and a few days later I had a tech person respond with what to do. After several posts back and forth my computer was fixed. Most of what they had me do was download executable files and run scans of my computer. It took about a week but my computer is now fixed and all for free.
My car is a different matter. My transmission is making rough transitions between 1st and 2nd gear and I am almost ready to throw in the towel. I don't plan on replacing the transmission but will bite the bullet and get a used "new" car. I'm looking at Toyotas.
Net Worth Update- Last month was a small gain of about $3K. Nothing to get excited about because I am not sure this trend will continue. However, it is nice not to take another $10K hit. I am still below the $200K mark and standing at $193K. Very disappointing.
A few recent financial moves my wife and I have taken were to up her 403B from 5% to 12%. She also gets a 9% match bringing her to a total of 21% of her pay being put into retirement. I have left mine at 8% for now and will begin transferring money over to our ING savings account next month. My baseline of saving outside retirement accounts is at $1,600 a month. I think I can do more. I also changed my W4 tax form from zero to One. This didn't make a huge difference but will let me bring home roughly $800 more dollars a year.
We are excited to do our taxes this year. Maybe by next week I will have my W2 forms which might complete all of the tax forms required to begin the process. This should be a nice cash inflow for us. Most of it will go to savings although we may splurge on a new table for our dining room with some of the money.
Savings estimate for 2009.
At our current rate we will collectively put in $27K into our 401K/403b accounts. At $1600 a month we will be putting an additional $19,200 into taxable accounts. That is a total of just over $46K in annual savings. Not too shabby. I think I can put more money into savings on occasion. It is the unexpected expenditures that are tough to plan for. Some upcoming expenses that could mess things up are: new car and landscaping project this spring. Let's hope nothing else brakes on me in the next couple of months.

Net worth update for October 2008

noreply@blogger.com (Financial Choices) — Sat, 08 Nov 2008 04:11:00 +0000

YIKES...knew it was going to be bad but it hurts when you actually put it on paper. Net worth dropped down to $191,777. That's a drop of nearly 5% or just under $10,000. What is still hard to really compute in my head is the fact that I have also been putting money in. So really the $10,000 drop doesn't account for the $3,000-$4,000 dollars that I managed to add to my accounts. I try not to think about that one too much.
It is hard to stick with the plan during these times of economic sickness but I have managed to do just that. Expect to max out my Roth IRA by the end of December and both the wife and I are planning on putting more money into our 401Ks once we get our annual raises. I still don't know what mine will be. I keep telling myself that I am buying low now so it will pay off later. That's the point right. Buy low and sell high. The mental image that I use is the stretching of a rubber band. The more shares that I purchase at the lower prices will eventually cause my wealth to spring into action when the stock market corrects itself. But when will that be? How low will the stock market go? What happens if the auto industry collapses? Another Terrorist attack? Could there be a DOW 5,000 in the next 12 months? The list of questions goes on. It sort of makes buying shares of a mutual fund like throwing money down a black hole. Is there light at the end of the tunnel or does it just go on forever.

When I look at the nice and neat charts of monthly progression towards my million dollar goal I am shocked by how far off I am. The chart I look at assumes I save $3K a month with a 8% rate of return per year. By that chart I should have around $226K for a net worth in the month of October in order to hit the $1Million dollar mark by age 40. However, life never seems to be that simple. There is a part of me though that really knows that in a few years (maybe 4 or 5) I will look back and understand that this period of time was when a lot of my wealth was created. Buying low. I only hope that I will have the wisdom to not get greedy when things are really high. Be smart and re balance as the market corrects itself. Having said all of that what really scares me is the chart of the NASDAQ. Remember NASDQ 5000 in year 2000? It closed at around 1,600 on Friday. If you look at this chart from back during the .COM bubble it is clear that it hasn't even remotely corrected itself. Could this happen for the Dow Jones? Could it take more than 3-5 years to get out of this mess? YIKES.

I wish life was as neat as my spreadsheet that assumes an 8% return a year. In many, many, many ways.

Recent activities

noreply@blogger.com (Financial Choices) — Mon, 13 Oct 2008 17:53:00 +0000

As a result of the recent economic news I have taken a few actions.

The first action was to do nothing. I sold no shares within my 401K or my wife's 403b. In my last post I describe how this drop in the market could really be the sole reason as to why we hit our goal. Buying low is really the key. My wife and I have also decided to put our yearly raises into our retirement accounts. This will give us a nice boost. My wife found out that she is going to receive a 7% raise. NICE!!!! I have not found out what I am going to get but I suspect it will be between 3-5%...

I changed our future contributions to our retirement accounts. Both my wife and I now contribute 25% to bonds or some sort of fixed income investment for our retirement accounts. I just feel more comfortable with this for the long term.

I also started watching the first 25 minutes of "Mad Money". I believe that Jim Cramer offers the best economic and market commentary around. I don't watch the entire show but just the first 25 minutes. The later part of the show gets into the quicker stock picking recommendations that are of no value to me.

Today I did something out of the norm. I purchased a few shares of JNJ (Johnson & Johnson) , KBR and KO (Coke) stock. These companies were to good of a deal to pass up. I have regretted not buying after the last crash after 9/11 and didn't want to sit on the side line for this one. Only a small amount of shares each. I am also watching Apple, inc. It is my opinion that many good companies have been dragged down by the market but for no other good reason. Some of these are down over 50%. That's a lot of upside potential over the next year or two. These are long term positions.

Monthly Update for Sept 2008

noreply@blogger.com (Financial Choices) — Sat, 04 Oct 2008 00:40:00 +0000

Not much to say for this month. Net worth loss of about 2%. Down to $201,516. A loss of about $4K from last month. The hysteria of the news and what is going on with our economy is scary to say the least. I have resisted the temptation to change my plans so far. All I wish for the Govt to do is to give an honest, hardworking saver like myself a chance at making it. Thus far I plan on keeping to my current plan. To recap, the plan is to max out my Roth IRA and contribute about $450 a month to my brokerage account from now until December. We are also going to keep our contributions to our 401Ks. I set that plan prior to all of the market "crisis" news of late. I have so far decided to stick with it and am telling myself that I am buying low. For our 401K and 403B plans I am more easily able to go along with the long term investment plan. For my taxable brokerage account I am having hesitations. For now I am going with the buy low mentality. I am considering at least looking for a bond position for my taxable brokerage account. Maybe even adding to my cash position. Seems easier to add to cash with a 3% guaranteed return versus buying a bond fund. I am amazed at how many people I work with have sold all their retirement holding and moved them to a cash position. They did this mostly after the market had lost over 10%. And worse is that these people are more than 10 years away from retirement.

I have also had a thought that all this economic mess could be the very reason why I end up hitting my goal of $1Million in the next 9 years. If I can buy shares at a much reduced price for the next 12-18 months maybe that will help me catch up. If in 2010 the Dow Jones reaches 14,000 my portfolio would have essentially exploded upward. Maybe that's just me trying to be positive.

I have also run some numbers at paying down my mortgage versus contributing to a taxable brokerage account. $1200 a month to a brokerage account or to my mortgage. What to do. In theory if I earned 8% on the brokerage account the choice is obvious. If I paid down my mortgage for a few years and then tried to refinance I could lower my monthly mortgage bill. Right now it's about $2,000 a month. There is also an emotional aspect to paying down the mortgage. A certain comfort. However, it also ties up your money. These are the things that race through my mind at times.

Hanging on one week at a time...Thinking long term...trying to do the right thing...

Monthly Update for August 2008~Net Woth inrease of $3,370

noreply@blogger.com (Financial Choices) — Mon, 01 Sep 2008 00:04:00 +0000

Long time no blog...sorry for that. The past few months have been a Blurr. The addition of a new baby has made life very challenging. My wife and I are enjoying the new addition to the family but still trying to get a handle on all of the changes that have accured. There will be some added expenses for us to consider with the number one expense right now being child care. A new child is certainly not a good investment to the balance sheet but we will go ahead and keep the baby anyways. (ha ha). The day care will start in a few weeks once my wife goes back to work. I am still hoping to be able to save close to $2,000 a month outside of our 401K accounts. The nice thing is that my company matches me 5% and my wife's company matches her 9% (nice). This should help keep me on track to hit the 1million mark in the next 9 years. I will need to get close to 8% return from the stock market in order to get to the million dollar mark. That seems far fetched these days, but long term I think there is a chance. The longer I study the charts I feel that the more money in the stock market is the only way to go. Accruing at a higher rate of return will help me achieve my goals and that the risk of the stock market is worth taking.

August was a decent month. I am still being dragged down by the stock market but our ability to save cash is helping. We are continuing our move into the $200K territory by hitting $205, 633. That's a gain of just over 1.5% for the month. I have also hit the $45,000 mark for our cash holdings that will help me sleep better at night. This is part of our recovering from the purchase of our first home and lots of home renovations. All of our home renovations were paid with cash and we also put down a nice down payment when we purchased.
As a result of our cash holdings hitting this $45K mark, I have decided to move our money savings into a Roth IRA and our brokerage account. Right now my wife and I only have one Roth IRA. By the end of December we will max out this Roth IRA and also put money into a regular brokerage account we have with Fidelity. After December, I am not sure where we will focus on. I will either open up a Roth IRA in my wife's name or simply focus on putting money into the brokerage account.
PS..I finally broke down and purchased a big LCD tv...It had been years since I wanted one and was tired of watching TV on a very small tv from College.

Monthly Update for May 2008

noreply@blogger.com (Financial Choices) — Fri, 30 May 2008 20:13:00 +0000

Great Month!! Very unexpected. This type of month is exactly why it is worth keeping track of all assets and liabilities on a spreadsheet and a blog. I had predicted last month that I would see a several thousand dollar dip in my net worth. However, I was very wrong. I have broken the $200K mark for the first time with a net worth of $202,527.83 which is a 3.3% increase over last month. Wow...

Some Key events of the past 30 days.

My company added to my retirement account by contributing their matching 5%. They sadly only match me twice a year instead of actually giving me this money every pay check. However, this was an unexpected $2,400 dollar bump to my 401K..Nice...
Good old fashioned savings...I have been able to save extra money by bringing lunch to work and contributed an extra $850 out of my account and add it to the ING account. This is on top of the automatically saved $2,400 a month to ING.
$1,200 bucks from Uncle Sam that my wife and I qualified for. Our gross income was over the $150K combined income threshold but luckily we had deducted enough money to qualify. This money went into the ING account.
Paid off the final home improvement costs of about $7,000. This was actually $1,000 less than anticipated. The contractor came in under budget because of some minor changes that were made along the way. I had actually assumed that these changes were going to increase the price not decrease it. Needless to say this contractor will be hired for follow on work.

Predictions for next month--I am unsure to be honest. I know that a few expenses are about to hit. With that, I will predict a small decline next month.

My wife and I have spent some money on home furnishings and electronics that were much needed. These expenses won't hit the the CC statement until June. Some of these items are gifts from our family. They are going to reimburse us on some of the purchases. I know this sounds weird but this is the easiest way to do it when you live several hundred miles away from home.

My main goal is to keep us above the $200K mark. With a little help from the Stock Market and hard savings I might just be able to do this. Who knows maybe I will be surprised again and have a gain.

Monthly Update for April 2008~Updated May30th

noreply@blogger.com (Financial Choices) — Sat, 03 May 2008 16:12:00 +0000

******Realized that I made a small mistake on this months reporting. I added a digit to one of my cash accounts. Ooops...My net worth was actually $195,993.31 which was a decrease of $941.71. I still say this was impressive considering all of the home improvements being done at the time and the amount of cash output..
A relatively flat month. Increase of $158 to $197,093. This is actually a really good sign. I have paid over a third of the home improvement costs and was still able to keep the net worth stable. I contribute this to the comeback of the stock market to the tune of about $4,200. This offset the loss of my cash balance. Another highlight is the paying off of the Zero Percent CC balance. I now have Zero cc debt. Next month the final payment for home improvements should hit. This is roughly $8K more dollars owed. Suspect the month of May will be a decline of about $6K.

Monthly Update for March 2008

noreply@blogger.com (Financial Choices) — Sat, 03 May 2008 16:05:00 +0000

Good Month! Up $7,419 for the month to a total of $196,935. Just shy of $200K . Unfortunately the next few months spending will take me a few steps backwards. Home renovations are underway. We are redoing 2 of our 3 bathrooms. This will be a major improvement to our home but will cost us about $14-15K. We will be paying cash for these improvements.
Competing goals are so difficult. Wanting to have a big cash cushion for security but also wanting a nice home to live in is tough. I plan to keep the value of our home listed at what it appraised for a year ago. The below link is a great explanation of keeping track of ones home worth. It is one that I agree with. http://www.2millionblog.com/2008/04/why_is_my_house_value_not_going_down_whos_shortsighted_now.html

Monthly Update for February 2008

noreply@blogger.com (Financial Choices) — Sun, 09 Mar 2008 01:27:00 +0000

Good month..Net worth up by $6,532 to $189,515. That's an increase of 3.6% over last month. During this economic period I think it is a small miracle to have any gains. I have almost $100K in the stock market so the declines in the market absolutely have an effect on my net worth. I am looking forward to when the market comes roaring back, which I believe it will. In fact I believe the stock market and real estate market will come back with a bang in the next 2-3 years.
Overall, I feel it is a tough time. So much in flux with the stock market and real estate. Still just plugging away and saving cash..Cash account is just over $40K. I am trying to avoid spending to much cash on the home renovations but we need the work to get done.
Highlights for the month

Paid down CC debt (at Zero %) by $2,500.
Received a quote for some bathroom work..Came in at about $25K..Yikes. no way.. getting more quotes.
New position at work has me driving a lot more so the gas bill is going up. Flip side is that I am bringing my lunch to work and not spending hardly any money during the week. I have noticed extra cash in my account that I am sending to the ING savings account.
Received our $2,100 dollar tax refund..

Monthly Update for January 2008

noreply@blogger.com (Financial Choices) — Sat, 02 Feb 2008 23:40:00 +0000

Networth increase of $974.00 to $182,982 Tough month for the networth. Details on NetWorth IQ. With a "normal" stock market climate it would have been a huge month for me. The stock market tank has really impacted my retirement and brokerage account balances. However, on a very positive note, my cash increase has gone up by $4,046 dollars for the month. This is huge!! I am still trying to get my cash account back to the $45K or higher range. Right now it is sitting at $35K. So you can see that if the stock market had gained even moderate numbers or stayed even for the month my increase could have been $5-6K...oh well. I fugure the market will come back and I will make up the networth numbers on the back end...i.e. whenever the stock market comes back.
Highlights for the month

We finished paying off the HVAC unit for the townhouse.
Extra income from travel reimbursement
I spent my last day at my current position at work. On Monday I will be moving to a new sector within my company.
Two chairs were purchased for the livingroom at Ikea..$100/chair.
Awaiting an estimate for updating all three of the bathrooms in our townhouse. We will have to prioritize some of this work depending upon what the quote comes in at. We have $1000 from the family to help chip in. Much appreciated...This money is not reflected in my net worth. Check is literally sitting on the dining room table (I think).
I spent $158 dollars on new clothes for my new position at work. I rarely buy clothes for myself, but the ones I have are very nice. I usually only buy clothes on sale. I got all items on 50% off...not too bad.

Overall, I feel like I am on track... I am really focused on the cash...If only I could get more comfortable with the amount of cash I have on hand for emergencies I would then feel more comfortable in tryng to max out retirement accounts...I am hoping that $45-$55K is the magic number for me. I have looked at many other people who post their networh and the size of cash on hand seems to very. I will keep plugging away and do the best I can.

Monthly Update for December 2007

noreply@blogger.com (Financial Choices) — Thu, 03 Jan 2008 22:57:00 +0000

Average gain for the month of 1.4% or $2,447 for a grand total of $182, 008 as a net worth. This was actually a surprise as my wife and I are still in the middle of paying off our HVAC. Last payment is this month of about $1,100. I am doing my best to transfer any extra cash over to our ING savings account so that we can add to our cash cushion. I am expecting January to be a tad bit better with a noticeable increase in February. This also depends upon any small home improvements we intend to make to our bathrooms. More to follow on this. I am going to try and get a quote this month from our contractor for work on all three bathrooms and then make the decision based on the price....

Monthly Update for November 2007

noreply@blogger.com (Financial Choices) — Fri, 07 Dec 2007 23:19:00 +0000

Net Worth is down by $249 Dollars to $179,561. I'm actually happy about this. There have been some unexpected events the past 30 days or so.

My heating and air conditioning unit in my home decided to go on me. ugh! The joys of home ownership...And this is supposed to be an investment. Yah, I'll keep telling myself that until I believe it. However, the new unit has added a great improvement to the house. We even have a fancy new programmable thermostat. The total cost of the equipment and labor was around $4,700. I got the installer to agree to breaking up the payments over the course of three months. I am learning that I don't like to drag out financial obligations this way. Kind of like my dislike of our CC balance at zero percent. The upside of this is not having to take out any cash from my ING account, but in turn, I have had to suspend any further payments into this account until mid January. I am hoping to pay off the repair bill and maybe add a little additional cushion to the joint checking account by doing this and not have to actually transfer any savings. This home improvement is really crushing my cash flow in a bad way. I am estimating that I can put the ING on automatic pilot for $500 a week beginning mid January.
A few other factors were:
1. My employee stock actually went down by about 7% instead of the rumor of a heavy increase.
2. Overall Stock Market decline

December may not be much better. We still owe about $1,200 to the installer and another $700 for some recent furniture purchases. On a positive note, my next paycheck should be a bit higher. I received a 5% raise and will be able to drop my W4 form down by about $200. I am also expecting about $500 dollars (Net) from a bonus from work. I am hoping to break into the $181K bench mark in December. This should be achievable with just our 401K contributions and company match. As I suspected the stock market has come roaring back in the past few days adding easy money back into our accounts. This will certainly help the cause.

My short term goals are still the same. I want between 40-50K total in our cash accounts. I will then start contributing to our brokerage accounts to include Roth IRA and maybe even a little extra into the mortgage. I must say I feel like I'm running up hill pretty hard right now. Sometimes it feels like I just won't make it over the hill. I look forward to the day when I can feel comfortable with the amount of cash I have on hand and start putting more money into the brokerage accounts.

Monthly Update for October 2007

noreply@blogger.com (Financial Choices) — Sun, 04 Nov 2007 19:27:00 +0000

Another good month! Net worth is up to $179, 810 an increase of just over $6,000 from last month or 3.5%. A more detailed listing of all my assets and liabilities can be found at http://www.networthiq.com/people/VAContractor

I am particularly proud of the large increase in my cash holdings with an increase of over $3,000 for the month. I am still focused on getting my cash savings up to $40-$50K. This will make me rest easier at night. Additional savings this month came from extra income generated from traveling at work.

Projections for next month are difficult to anticipate. I will need to pay my property taxes for $1,600 and also plan to pay down some of the CC balance of $5,000 that I am currently holding at 0%. I would rather pay this down a little at a time rather than just one large $5K payment. What can I say, I just don't like having CC debt. Even if it is at 0%. This could be a weakness of mine. The total amount needs to be paid by May 2008.

Next month could also see a spike in my employee stock (employee owned). I currently have about $8K worth of company stock. Rumor has it that there could be about a 20% jump in the next month. Not sure when I will see this realized in my balance if at all.

This month my wife and I also sat down for about an hour and did an estimate on what we may owe in taxes. The numbers look good. Since we bought our home in May we do not get the full year advantage of writing off the interest but it looks like we may be breaking about even. This is a weight off my shoulders. After December I will be able to adjust my W-4 and give myself about a $175 a paycheck raise (I get paid every two weeks). This is a nice little raise.

On another note, I find myself getting excited as each month comes to a close. I love to sit down and plug in my new numbers to see what progress I am making. This exercise has also forced me to look at each month as a seperate transaction period. I can try and strategise what actions I would like to take place within each month. I guess what I'm saying is that keeping a detailed spreadsheet and this blog makes me view my personal finances as a true business. Each month at work we do monthly roll ups to see if we are going to hit our annual goals/budget. I now do much of the same for my own finances.

Net Worth Projections

noreply@blogger.com (Financial Choices) — Fri, 26 Oct 2007 23:46:00 +0000

I have been doing some analysis of how to best estimate the potential growth of my net worth. This is to try an answer the question of "how much money will I have when I'm 33, 34, 35 etc. years old. It will be nice to try and celebrate the smaller successes along the way to achieving my goal. Celebrating every six figure amount is nice. I am heading close to the $200K range as I write. This exercise is also an attempt to try and determine if my current path will allow me to hit my goal of having $1M by the time I'm 40 (Feb. 2017). This exercise or analysis has been very interesting for me and reveals a lot about how the future will play out.

I have taken a look at several ways to come up with a good predictor. Right now I have decided to compare the growth of a set rate of return on a monthly basis (1.5%) versus an increase of a set amount of money (how much I save) each month as well as a specific rate of return (8% annually or .0066 a month). The past several months I have been able to save at least $3K dollars a month and hope to get about 8% return from all my investments.

An important note is that since tracking my progress I have beaten this growth rate on both accounts almost every month. I have somehow been able to save more and gain a better rate of return. However, I believe that there will be good times and bad on the road ahead so I should account for that somehow. I believe that both of these methods have a strong a potential for becoming my baseline from which to compare my progress. I have highlighted in the spreadsheet below my birthday which is in February as well as the $100K milestones.

As you can see the 1.5% column on the left does not beat out the $3K plus 8% return. However, as time goes by the advantage shifts to the 1.5% growth column. In June 2016 or in the $700K range the column on the left or 1.5% growth has the advantage and takes the lead for ever more.

As the my net worth increases the advantage becomes even greater. If I draw the numbers down until I'm age 50 the discrepancy is over 50% in favor of the 1.5% growth column.

In February of 2027 when I turn 50 the 1.5% column reads $5,365,340 while the $3k in savings plus 8% annual return column only reads $2,420,486.96. This is amazing if you ask me.

Some takeaways from this analysis so far are:

1. Saving the first 700K is influenced more by my ability to save money. From this point on it is the true growth or rate of return from my investments.

2. Based on these two predictions I will fall short of my $1M dollar goal by age 40. I turn 40 in February of 2017. At a 1.5% increase I will have $898,818.97. At $3K a month plus 8% return I will have $851, 058.98. Either of these numbers would be something to be proud of by the time I'm 40, but most definitely falling short of my goal.

3. More to follow as I ponder these numbers.

Any thoughts?

Life Get's in the Way

noreply@blogger.com (Financial Choices) — Fri, 19 Oct 2007 23:46:00 +0000

What a crazy few weeks I have had! My work situation is not good. The Division I work in is going through some major business issues right now. The good news is that I am still in the good graces with my supervisors (I have 3 or 4 or maybe 5 bosses). At least I feel that they would be upset if I were to leave. However, the current situation has caused me to consider other options for employment. I have only put in a minimal effort in looking for a job. I updated my resume and went to one job fair which has resulted in two potential opportunities. I also have a potential opportunity within the same company I am working. This entire situation has caused me to really question what I want to do with the next few years. I can try and stay with one company for a long time and move up in the management chain or bounce around every couple of years working on various different project that peak my interest. Having said that... All of this is stressful. In the middle of all of this I got a bad sinus infection that I am still getting over and I have also developed my first experience with TMJ (I am still not sure what this stands for) which is severe jaw pain brought on by stress.
Oh, did I mention, my wife and I just found out that she is pregnant. This does add to the stress but in some way brings everything back into perspective. Regardless, I am in a good job market in a thriving industry with some money in the bank.
The lesson learned over the past few weeks is really the importance of saving money. The corporate rat race is risky business. Not to mention it is bad for your health.

$200,000 a year and completely broke.

noreply@blogger.com (Financial Choices) — Sun, 14 Oct 2007 13:44:00 +0000

Someone who I have worked with for a few years has recently left the company. For reasons I won't go into, the move was sudden and unexpected. He is in his early 50's, extremely smart, very employable, but his financial choices are questionable at best. I was very close to this person, and he would often share some very personal details of his financial situation. I have recently reread "The Millionaire Next Door," and I would say he is the perfect example of a hyper consumer. His financial situation is completely out of control. Overspending on just about everything from cars for his kids, last minute trips, and even a stretch-Hummer for one son's senior prom party. An overall complete disregard for the value of a dollar.

This person made a combined income of about $200K a year including his salary, his wife's salary, and a pension from the government. He was living paycheck to paycheck. I know this because he told me, as he would say, "most people live check to check." I didn't say anything about my situation. Don't get me wrong...I am hardly perfect, but not living check to check. He had convinced himself of a couple of things. One being, "most people live check to check" and that "it is impossible to get ahead." $200K a year and completely broke.

I work for a medium-sized corporation with a benefit of a retirement plan made up of a 401K, stock sharing plan, and a healthy match made in the form of cash and company stock. This is about 95% retirement money subject to all the rules and regulations you would expect. This person's account was just over $100K at the time of his departure. Again, I know this because he told me. He was contributing only 3% of his salary. When he told me his account was $100K, he framed the conversation in the terms of "you'll have this much some day, too." I kept my mouth closed as I usually do. I rarely disclose any personal money info (except on this blog).

This person left our company about 6 weeks ago and has recently cashed out of all retirement accounts. I imagine that after all penalties and taxes he is walking away with maybe half ($50K). To make things worse he has cashed out at the end of a tax year. Interesting enough, his financial move has come up at work. His former boss and my big boss asked how he was doing and if he had found another job. In my area, he could realistically find another job within about 4-8 weeks. Someone in the room replied, "he hasn't found another job, but he is OK because he cashed out of his 401K and he now has several months to figure things out."

I feel totally amazed at these comments. Not only is this person not okay and probably headed for financial ruin, but I am amazed that other people view this move as no big deal. Not only did all those taxes and fees have to be paid but he is most likely going to blow through this money in a few months. Even with a government pension of about $40K a year, he is in real financial trouble unless he makes some real changes.

If my wife and I both lost our jobs or even just one of us lost our jobs we would be worried. We would quickly hit the pavement looking for new work and slow down on all non-essential spending. Cashing out of even taxable accounts would be a last resort. The money we have saved has come from hard work and sacrifice. I would do everything I could to avoid spending it down on monthly expenses. I think what I have observed really comes down to a person's values. How they value money and really how they value themselves. A hyper consumer who thinks he is providing for his family by giving cars and lavish gifts, is really potentially leading them over the financial waterfall. Loving your kids (again, I don't have any yet) means making some tough decisions on what you are going to provide and what you are going to hold back - having some control over the situation and not being a victim.

I am left wondering why people who have made poor financial choices seem to be more inclined to bring them up in conversation as if these moves are okay. Are they trying to get reassurance? Should I speak up more about my opinions? I'm not for hiding one's mistakes, but at least admitting that they were an unfortunate financial move. Why is there a social awkwardness in admitting that you are saving as much as you can for your future? And really saying that if you are not saving for your future you are in danger of some pretty bad things?

"Millionairs in the Making"

noreply@blogger.com (Financial Choices) — Sat, 13 Oct 2007 16:05:00 +0000

I am debating about taking the links to CNN's "Millionaires in the Making" pages off my blog. Why am I highlighting some of these people? Some of these families are doing great. However, there seems to be a lot of stories written about families who are only one or two steps away from financial ruin. Why are these families being highlighted as financial successes? I enjoyed the new postings on the Millionaires in the Making for a long time but now I find myself quickly reading through the story to get to the juicy comments left by other people evaluating the true situation. Is it just me?

My house is worth what?

noreply@blogger.com (Financial Choices) — Wed, 03 Oct 2007 01:13:00 +0000

Over the past few months I have really been in tune with by balance sheet. One key point learned is if I move money from my asset column towards one of my liabilities there is no change in my net worth. The move cancels itself out so to speak. The only time paying down a liability will increase my net worth is when the funds come in from "new" money i.e. my paycheck and never hits the asset column first. (not sure if this is explained well).

So here is my concern. If I move some of my assets from a cash account to do some home improvements, how do I reflect that change in my homes value? I have my homes appraised value listed as the dollar amount under my asset column. I am trying to be conservative with the value of my home. Some of the improvement we would like to make are pretty solid. Things like new vanities and tile floor in the bathrooms should be a good investment. However, what should my change in our House Value be? How do I determine the change in my home's value?

I have spent some time on Trulia and Zillow doing some research on house values in my neighborhood. I have a few known facts to work from because some close neighbors have recently sold. Their homes have sold relatively quickly I might add. My conclusion is that these two websites may be totally inaccurate. Several homes that were listed as sold, to include mine, were listed at the wrong price. My house was listed as being sold for close to the original asking price but not for what we actually bought it for. This is a big deal because my wife and I bought our home for almost $30K less the asking price. We have since put close to $25K in home improvements back into our home.

I am pained by the idea of making what should be a good home improvement but not getting credit for it on my net worth balance sheet. I am considering a few options; 1. Getting my house appraised in a few months. We bought in May and have made major improvements to include new kitchen, flooring throughout, general cleaning, and totally repainted. However, it may be tough for an appraiser to adjust the house value because it has been such a short amount of time. 2. Having my real estate agent come back over and give me her best guess on what equity room I have left in the home.
Thoughts???

Smart Money Article

noreply@blogger.com (Financial Choices) — Tue, 02 Oct 2007 23:24:00 +0000

In the October issue of Smart Money magazine there is a great article about people who have "cashed out" of ther 9-5 jobs. They have done this by saving a tidy nest egg and lowering there living expenses. This is a great article and I would recommend it to anyone reading this blog.

The article highlights a few different couples who for one reason or another got sick of the daily grind, focused on there savings habits and started on a life less traveled. The article mentions a few books, one of them being, Cashing in on the American Dream: How to Retire at 35. I have added this book to my amazon wish list and intend on checking it out when I get a chance.

This article is rare in my experience. Most traditional money magazines focus on traditional things. Like, working until you are 65, max out your 401K and then retire. This article really tapped into the large group of people who are interested in doing other things with there lives other than go to work in a job they don't love. Some of the people highlighted, if not all of them, took up some other type of occupation that gave them more flexibility and enjoyment but maybe not the same paycheck. However, when you are not in a desperate need for a paycheck why should it be the most important factor.

One of the themes of the article is definitely lowering your living expenses. The concept being that you don't need to save as much or earn as much if your living expenses are low. Many of the couples were traveling the wold spending lots of time in Thailand or parts of Europe where your dollar goes a little further. I'm not sure my wife and I are willing to move to Thailand any time soon but the lesson of being flexible is noted.

My wife and I currently live in one of the more expensive parts of the country. We have purchased a home hoping that this investment will pay off over the next 5-10 years. We have no illusions of trying to retire in this area. It is simply to expensive. The strategy of moving to a less expensive area is a good one and one that my wife and I plan on using. It would be nice to eventually cash out of our higher priced home by moving to a less expensive one in a different area of the country. Maybe even renting again...
Below is most of the article from http://www.smartmoney.com/cover/index.cfm?Story=october2007

NO, IT'S NOT your imagination: You're working too hard. Bucking the trend in most developed nations, the American workweek has been growing longer. We put in an average of 1,815 hours a year — longer hours than even the Japanese, who have a word, karoshi, for people who die from overwork. The extra labor often translates into bigger salaries and more-secure retirements, but it also pours fuel on a fire as old as work itself: the dream of cashing out early.
While there's no way to quantify how many of us are eyeing the exits, evidence suggests that more people are taking the idea seriously. Books about early retirement are steady sellers, and virtual communities of would-be escape artists thrive on the web. Fortunately, it doesn't take an enormous nest egg to fund a life-changing move. We interviewed financial experts and early retirees to find out how to get out while you're young.
SUPER SAVERSNext May, Jay Arnold of Nashville, Tenn., will retire from his position as project manager at an auto maker — at 43. His wife Corinne has already left her job. They've got two young children, but they're not fazed: they've been saving aggressively for two decades. "Debt-free before our first child? Did it," says the confident Jay. Their secret: Supplementing their management-level salaries with part-time, self-employed work. They saved 30% of their take-home pay; after they paid off their house in 1998, they bumped that rate to 50%. The fruit of their labor: a savings hoard that's approaching $2 million.
For more tips on how to save for and make the most of an early retirement, plus tips on taking a buyout, turn to the October issue of SmartMoney Magazine.