The Financial Oracle

January 2007 Net Worth Update

2007-02-09T09:19:00.000-05:00

Pretty good month overall. Cash savings was up more than expected due to ebay auctions that sold. Next month I expect the 401k to go up a bit more because two contributions will have cleared. Still waiting on my bonus to nail some of that debt because right now I'm using extra money to build the emergency savings account. T-minus 8 months until the cars are paid off...

Ebay Update

2007-02-01T10:00:00.000-05:00

Man I forgot what it was like using ebay cause it had been so long. I held two auctions over the past two weeks, selling my Xbox and Nintendo 64. The Nindendo was harder for me to let go of, but now it's gone and I don't miss it. I hadn't played either for a good 2-3 years, and in selling them I netted about $200, all of which I put into my emergency ING savings account. I plan on holding two more auctions. The first to sell all of my cd's (every song I own is now on my ipod) and eventually my dvd's. I want to burn them first, which requires buying a dvd burner, and then they'll be for sale. It felt really good getting paid for the things I no longer use, and the transactions couldn't have been more smooth. The money went from Paypal into ING with the click of a button, and this month I saw the emergency savings account grow a lot more than expected.

Ebay

2007-01-22T16:05:00.000-05:00

I held the first of hopefully several ebay auctions last week to get rid of some stuff I haven't used in forever. First up was my Xbox. I haven't played it in probably 2 years and I've been thinking about selling it for awhile now. It felt so good once my auction ended and I ended up making $112.50. The transaction went smooth and I just shipped it today. The best part is that the money from the auction was already transferred to my ING direct account and it's now earning interest. Next up is my Nintendo 64. It's scheduled to end this Saturday the 27th. I'd put a link up to it but I'm sure nobody really cares. It's currently at $40, and whatever it sells for will also be stashed away with ING. I'm trying to look for other stuff that might be worth selling, but besides my sports card collection I can't think of anything. I'd have a really hard time parting with the basis of my entire childhood, so I might just end up holding onto those.

R.I.T.A.

2007-01-16T11:12:00.000-05:00

This morning I had to drive to City Hall where I used to live to file my Regional Income Taxes. Turns out, I owe nothing because the city I used to live gives a 100% tax credit toward local taxes. It was a big waste of time, but also a relief because that could have put a damper on our goals for the year ahead.

Net Worth Forecast for '07

2007-01-11T09:54:00.000-05:00

One of my main goals for 2007 is to increase my net worth to $100,000. I thought I would write down a forecast of how I'm going to do this, which will also show me how close I'll get to my target and identify ways to make it more realistic.

As of today (January 11), my net worth has increased from the beginning of the month due to debt payments clearing, etc. I'm starting with a rough estimate of a net worth of $66,000, give or take a few hundred dollars (this is just an exercise!).

Debt reduction:
-$3495 auto loans
-$3456 mortgage principle reduction
-$4000 credit card balance reduction

Total liability reduction: -$10,951

Asset increase:
$1550 ING emergency fund
$400 life insurance cash value increase
$7308 401k + company match
$2720 conservative estimated rate of return on 401k. This estimate is an 8% increase of its current value.

Total asset increase: $11,978

Total forecasted net worth increase: $22,929

This wold set my net worth at nearly $89,000, so I'd fall $11,000 short of my goal. This amount assumes a number of things:

1.) I won't get any sort of raise/bonus (which I'm supposed to get and if I don't I'll be looking for a new job).
2.) I'll only contribute $125 into my emergency account each month.
3.) A very conservative credit card reduction. After our cars are paid off this will be very aggressive.
4.) I will not hold several ebay auctions throughout the year to get rid of stuff I haven't used for years.
5.) The stock market will not be as bullish as a lot of investors are predicting.

I set my goal high so it would be a challenge. This is going to be an exciting year. Stay with me to see how it turns out!

December 2006 Net Worth Update

2007-01-10T11:11:00.000-05:00

This is as the end of December. The credit card balance is much more accurate because I sat down and added up every dollar of credit card debt we have. I expect my net worth to take a nice turn for the good next for next month's update, and on through the 1st quarter of 2007 (depending on the market).

This year we will pay of our cars (by October) and I expect us to concentrate on building up our emergency fund along with pay down consumer debts.

On a sort of related note, I received a letter in the mail yesterday from RITA (regional income tax agency in Ohio) telling me that I need to go to City Hall to file my regional taxes for 2005. This made me mad because I have never had to do this before, and I didn't get any notice before yesterday. I'll supposedly owe money, which I'll have to put on credit, so that's not going to help my goal out from the start. More on that later.

I'm already looking forward to next month's update to see how the first month of the new year goes, and to really get an idea of what it's going to take to reach my goals.

Goal Outlook For the New Year

2007-01-04T13:16:00.000-05:00

To give myself a good chance to reach my financial goals for 2007, I thought I'd look into how I am actually going to try to accomplish them:

In order to reach a net worth of $100,000, I must depend a lot on the market return of my 401k. I'm sure most people with net worth goals depend on the market, so that wasn't supposed to come across as a naive comment! I'm contributing the David Bach recommended 10% of my gross income to my 401k already, and I hope to increase that to 11% by mid 2007, once some of our debts are paid off. That brings me to my next avenue of increasing net worth:

Pay our credit cards down by 50%. This will increase our net worth by a nice chunk, with the biggest chunk of debt to be knocked off in the final 2 months of the year, after our cars are paid off (which also increases our net worth because we won't any money on them anymore!). They're scheduled to be paid off in October, but there's a chance we might be able to pay them off a month or two ahead of time.

Contributing to my 401k and reducing our debts are the two biggest factors (the we are in control of) in increasing our net worth. Smaller factors include contributing to our emergency saving account and paying down the mortgage (with bi-weekly mortgage plan).

Setting up an additional account to use for "fun" stuff will be easy...I just have to do it! It's not the biggest priority right now because 1. we just bought a house and we've been buying a lot of stuff for furnishing and decorating, which falls into the "fun" basket (although I could think of things to do that way more fun than that), and 2. funding the emergency account and paying down debts are much more important.

All in all, I'm excited to start 2007 off with a bang, and I'm really looking forward to trying my best to reach my goals for the year!

Getting Real With Myself

2007-01-02T10:45:00.000-05:00

First off, Happy New Year to everyone. 2006 was a good year and I'm hoping to make 2007 even better!

I haven't been 100% accurate since starting to track my net worth in October, most notably my credit card debt. This isn't because I wanted to skew my net worth to make myself think I am worth more than I really am, nor to ignore my actual credit card debt in the hopes of making myself feel better about it. It was simply because I didn't know what it exactly was, until last night.

If you've been reading this PF blog, you'll probably know that my wife and I bought a house in October. Things were hectic and unorganized. Our home "office" is still a pile of chaos, mainly because we have not bought a desk and everything is spread across the floor. As I was watching Michigan getting routed by USC in the Rose Bowl, I thought I'd finally check it out and see what our overall credit card debt really is.

Drum roll please...

$12,605 and some change.

That's not all that far off from my $10,000 estimate. We put $1,500 on one card to buy our living room furniture, and we're still waiting for a refund check from my wife's parents because that was our "house warming" gift from them. So when (if, hoping...) we get that and put it toward our debt, I was a mere $1,105 off my guestimate.

As noted in a previous post, one of my goals for 2007 is to decrease my credit card debt by 50%. Let's put a number on that:

If we do not get our $1,500 "refund," the number we're shooting for is $6302.50 (half of $12,605). If we DO get the money for our furniture, the goal is to eliminate an additional $5,552.50 (half of $11,105).

More to follow soon on this topic soon...

Goals for 2007

2006-12-21T10:53:00.000-05:00

This may be the last post until 2007, so let me first wish everyone a very Merry Christmas and Happy New Year! Now for my goals for next year:

1. Save $2,500 into my emergency savings account by mid May (MyMoneyBlog goal).
2. Decrease credit card debt by 50%.
3. Increase net worth to $100,000. I don't know how possible this is based on our current income and mortgage payment, but I'm going to give it a shot.
4. Continue to fund emergency fund throughout the year.
5. Start a retirement account for my wife and have her contribute 10% of her income.
6. Open an account to save for "fun" stuff.

This will be updated throughout the year with my progress!

Trying Not to Stress Out

2006-12-13T14:26:00.000-05:00

Ok, so I'm pretty new to the blogging scene, but I've enjoyed reading a lot of interesting personal finance blogs. That is indeed why I started my own. There are many good things about keeping a personal finance blog: it keeps me honest about my saving and spending habits, I'm certainly more organized with my finances, and it's motivational. If you've read my blog before, you'll know I just bought a house with my wife a little more that a month ago. We love it, and it's probably the best financial decision we've ever made. A lot of new (and not regular) expenses come with it though, and earlier this week I found myself stressing about it a lot more than I should be. Every time we go to buy something for the house (blinds, a computer desk, Christmas decorations) I worry that I'm not going to have any money to save this month. I was stressing out so much about it that I started feeling depressed, and almost sick to my stomach.

I've been feeling like this for a couple weeks now, until yesterday when I seemed to snap out of it. I realized that, among all the saving and investing and preparing for the future, you have to give in a little bit, especially when just getting into a new house. The whole idea is to bend and not break, and bending a little bit here and there is healthy, in my opinion, as long as you still pursue your goals of being financially independent. Did we NEED the blinds, desk and Christmas stuff? Of course not. Not like you need food and water to survive, but I particularly didn't like being without blinds so anybody could see right into my living room from the street, and using the floor as a desk for the computer wasn't working out very well, and it's tough to stay organized when the floor is your filing system.

I guess my point is, in the midst of all of the personal finance blogs out there and all the information I've come across in the past couple months, don't forget to live life now, while still preparing for your future.

The Move is Complete

2006-12-05T08:23:00.000-05:00

Finally! We're in our new house and starting to get settled. We have a lot more work to do, but for the past couple of days we've just been enjoying our home and relaxing a bit. The downstairs bathroom needs to be completely redone, and right now it's still torn apart, and the living room and foyer still need to be painted. Things will be a little slow until after Christmas because there are a lot of uncommon expenses that come with the holidays, but after my wife's birthday (New Year's Eve), things will start to get back to normal.

November Net Worth Update

2006-12-01T08:41:00.000-05:00

November was a pretty good month overall, mainly due to the market being up. My 401k is at a 10.0% year-to-date return and I'll be extremely happy if I can hold onto that through December. There are no inputs for change vs. last month because I started with an estimate in certain categories (life insurance, credit card balance and car balances) so the change wouldn't be completely accurate. My life insurance is probably a little higher than what I have recorded, and the balance on the two cars is now within $10 (give or take) of what the actual payoff is. Things have been crazy this month with the acquisition of our new house and getting it ready to move into, and my wife handles the car payments, so I tried to get those numbers as close as possible. The credit card balance probably went up a tad, but $10,000 was only an estimate to begin with. Once we're moved (this weekend), things will be a little more in order.

Another thing that some people do when calculating their net worth is to add in the value of their personal "stuff," like electronics, furniture, collectibles, etc. Although technically this would contribute to one's net worth, I do not feel like it should be included. However, just for fun, here are some estimates on my (our) personal assets that are not included in my net worth:

TV: $2,500 (Brand new)

Furniture: $750 (Some if it is pretty old. This is a low estimate and includes living, dining and bedroom furniture.)

Kitchen appliances: $1500 (New refrigerator and stove)

Computer, DVD's: $500

Golf Clubs: $500

As you can see, I could skew my assets to include an additional $5,750. I think that's pretty significant, but, in my own opinion, should not be factored in when calculating net worth.

My Money Blog Goal

2006-11-30T10:02:00.000-05:00

My 6 month goal as part of Jonathan's experiment on My Money Blog isn't off to the best start. With the new mortgage and the holidays coming up, we had to downsize our $250 per month savings into the ING Direct account to $125 per month. Along with the holidays approaching, we started the equity accelerator program through our lender, so after we make our first payment tomorrow, the next (half) payment will be coming on December 20th. I still plan on reaching my goal of $2500 by mid-May, but it's gonna take a lot of determination. Our annual bonus is up in the air as to how much it'll be, so this should be interesting. Whatever it is, I plan on saving half and using the other half toward improving our home.

All My Money is Gone

2006-11-27T14:08:00.000-05:00

The big move is this weekend. I'm really excited about it. It's our first house, and most importantly, we can stop spending so much money on fixing it up. For the most part, it's finished. Let me rephrase, it's move-in ready. The new carpet is in, the new flooring is down, and the inside has been re-painted from top to bottom. Our house appraised for $207,000 when we bought it a month ago. I wonder what it would appraise for now since we put in so many upgrades?

Still to come:

New lighting for the kitchen, foyer, dining room, upstairs hallway and 3 bathrooms
Pedestal sink for the downstairs bathroom
Quarter round to complete the look of the flooring and the hide the imperfections
Stainless steel dishwasher
Window treatments for the entire house
Guest and master bathroom painted
New family room furniture

Is that all??? I need a second job.

Bi-Weekly Mortgage Program

2006-11-22T08:56:00.000-05:00

Last night I officially signed up for the bi-weekly mortgage program through my lender. Actually, it's semi-monthly with a little added to the principle at each draft, so it equates to the same thing as a bi-weekly draft. It will cut 7 years off the life of the mortgage and over $60,000 in interest savings, and that's if we decide to not put any additional payment toward the principle. After our cars are paid off, I'll be looking to tack on an extra $100 toward the principle per month. Most importantly, this program will build equity in our home 3 times faster than making a regular payment! I recommend everyone do this. Not only because of the reasons above, but because it will make it MUCH easier to budget our money and it lightens the one time monthly hit on your checking account. It cost us a one time setup fee of $195 to enroll, and it'll be worth every penny!

Making Your Holiday Donation: The Eddie Johnson Memorial Foundation

2006-11-20T15:09:00.000-05:00

It's that time of the year where generosity lurks in the air, either for the gratification of doing something good for someone else or for squeezing in one last tax write-off before the end of the year. Whatever your motivation is, charitable donations go a long way to help those less fortunate. For those who wish do donate, my recommendation is The Eddie Johnson Memorial Foundation. I have proudly been able to be apart of this organization since it's inception in 2001 when it was The Eddie Johnson Foundation.

Let me backtrack a bit. Eddie Johnson was a linebacker for the Cleveland Browns in the mid-1980's-early '90's. He died during a second stint of colon cancer in January of 2003. Eddie was known as "The Assassin" on the football field, but he wanted to be known more for what he did off the field. He loved kids, and was very active in helping kids in need. He was a great player, but more importantly a great person.

Today the EJMF holds two events per year to raise money for kids with cancer, but donations are accepted all year long, and 100% of all donations go directly to the cause. There are no "administration" fees that some charities charge to pay their board members, so you can feel good that what you give goes to what it should be going to. All donations are tax deductible because it is a 501(c)(3) organization. If a receipt is needed, email the EJMF's webmaster here.

Mortgage Protection

2006-11-17T15:45:00.001-05:00

This is something I never thought I'd consider: mortgage protection. The purpose of mortgage protection is to pay off the remainder of your mortgage if you die, become disabled and can't work, and in some cases, make your mortgage payment in case of unemployment. The reason I'm considering this is the latter. I've only been working in the private sector for about 10 months now, and it's much different than working for the government like I used to. You could probably kill somebody on the job and not get fired working in the public sector. Luckily I was able to land a job with a higher salary and much more potential, but there are plans in place to start outsourcing 90% of IT in my company starting in 2010. Now I know I still have 3 years, and it's not a guarantee that I'll be laid off or even be with the same company when that comes, but I'm a bit of a worrier when it comes to supporting myself and my family. I don't know if it's a great idea to pay a premium on mortgage protection when I could be putting that money toward the principle, but I sent the form in to get more info anyway.

Updates on this will follow...

6-Month Goal

2006-11-16T12:48:00.000-05:00

Jonathan over at My Money Blog has a little experiment he's doing. It's very simple, just write down a 6 month goal for yourself in the comments section, check in at the 3 and 6 month marks to update the status on your goal, and win a prize just for playing! Can't get much easier than that, and here's mine:

Accumulate $2,500 in my ING Direct account by May 16. As of this writing I currently have just under $800. Right now I'm putting away $250 a month into that account which would actually leave me just short of my goal, but I'm hoping for a little bonus at work and a positive tax return that will help me get there.

What a Bunch of Bull

2006-11-16T09:22:00.000-05:00

The market, that is. It's been a great week so far for retirement plans across the board. Four days in a row our friends on Wall Street have been making gains for the betterment of mankind. Well, not really, but it feels good if you're a 401k junkie like me who checks almost every day to see how things are doing. I know that may not be the healthiest thing to do from a financial standpoint, but I just can't help coming into work and checking the retirement update after logging into my Google homepage and seeing green under the stock market section!

401k News

2006-11-15T11:38:00.000-05:00

After a slow start, I think I finally have my 401k asset allocation in order. About 3 months ago I took a good look at how I had been contributing to my 401k and found to be investing too much in balanced funds. In mid August, before I started this blog, my year-to-date return was just over 3%. Not very good! I could have been making more money not contributing to my retirement plan and instead going with an ING or Emigrant Direct saving account. I couldn't beleive it, and I decided to be more aggressive...a lot more aggressive. I moved a big chunk of assets in my balanced funds to aggressive growth funds, namely American Funds EuroPacific Growth Class A (AEPGX) and T. Rowe Price Small Cap Stock (OTCFX). Don't get me wrong, I still have plenty of balanced funds in the mix, but in about 3 months my year-to-date return went from about 3% to 9% as of today. I'll be extremely satisfied if my portfolio stays at or above 9% in a year where Wall Street only expects single digit returns.

Traditional, Roth or ETF

2006-11-13T13:56:00.000-05:00

This January I'm going to set up a retirement plan that my wife will contribute to. Currently, she has no retirement plan in place as her employer doesn't offer one. I have a few things in mind: the traditional IRA, the Roth IRA or an ETF like Nasdaq's QQQ or the S&P's Spiders. I know the tax benefits of the Roth vs. the traditional IRA, but I've also been researching investing in ETF's as well as they seem to be growing in popularity. I'm all over the place with these and can't make up my mind as to which one to go with. It'll probably come down to personal preference. Check back and see in a month or two to see what we come up with.

Wall Art for Sale??

2006-11-13T12:52:00.000-05:00

When I calculated my net worth when I started this blog I purposely left out about $9,000 in savings because we were planning on using that money specifically for purchases on things for the house. We had (and still have) a lot of things we needed to buy:

New carpet for the upstairs: check.
Flooring for the downstairs: check.
Paint and supplies: check.
TV and stand: check.
Refrigerator: check.
Family room furniture: check.

Not a bad start. What I didn't count on were all of the re-visits to Home Depot and the paint store because we were constantly running out of supplies. All those little purchases really add up, which is yet another reason I can't wait to finally move in. Out of our approximately nine grand that we had, only about $500 remains. That's cool and all because we are very fortunate to be able to have all these things, but it'll be nice to get things back to normal once we're settled.

Still need: pedestal sink for downstairs bathroom, 220 volt connection for our electric stove, miscellaneous plumbing repairs (nothing serious or very expensive), probably more paint, miscellaneous home decor.

All that being said, I'm looking to buy some inexpensive, yet cool and contemporary wall art if anybody has any laying around. Keep in mind I'm not looking for expensive stuff here, but if a nice piece is collecting dust in a closet I'd be happy to work out a deal.

House Update and New "Toys"

2006-11-13T10:06:00.000-05:00

Unfortunately we were only able to work on our house one day this weekend because of a family wedding. Dont' get me wrong, I enjoyed the wedding (and by wedding I mean the reception) but my mind was on getting our house up to "move-in" standards. I got the wood flooring down in the dining and living rooms, and my wife started priming the family room. I'll get some pics posted a little later. If you want to make some money in the stock market this month, try buying stock in Home Depot because I seem to be spending all my money there making a half dozen trips every weekend.

The new toys for the house include a Craftsman lawn mower and wet-dry vac, and wow does that thing suck! I highly recommend investing in one of those, especially because you can get a good one for around $35. It was a pretty successful weekend, and I'm already looking forward to the upcoming weekend in continuing our quest to making our house a home.

Goal Setting Entry #1

2006-11-10T15:15:00.000-05:00

It's been a long day, but I think I can find some energy to identify some goals for myself. Long and short term personal, professional and financial goals are included. Keep in mind that these are all off the top of my head, so more could be added soon:

Personal Goals
#1: Lay new flooring in my new house to completion, without succumbing to pay someone to do it for me, and still make it look like it was professionally installed.

#2: Move into my new house by no later than November 25, 2006.

Professional Goals
#1: Obtain my Oracle Database 10g DBA OCP (Oracle Certified Professional) by March 3, 2007.

Financial Goals
Short term
#1: Pay off auto loans.
#2: Pay off credit cards 100%, cut those suckers up and never carry any more consumer debt.

Mid term
#1: Accumulate $15,000 in savings in our ING Direct money market account to use for emergency purposes.
#2: Start a "dream" money market fund to use for future vacations, both large and small.

NOTE: If you are reading this blog and are interested in opening an ING Direct savings account with a minimun deposit of $250, please email me at jkickel@gmail.com for a referral link. ING Direct will deposit $25 into your account with a referral, and I'll get $10 for referring you. We both win!

Long term
#1: Put our kids (who aren't born yet) through college.
#2: Retire by age 55 with $2 million in liquid assets (I'm 27 years old at the time of this writing).

Our New House

2006-11-09T16:26:00.000-05:00

Here are some pics of the new house. I'm so proud to be a homeowner. This house will contribute to my net worth significantly, and with appreciation I should get a good return on my investment. These pics came off the MLS listing. The new 1.7 mile commute to work is a pretty cool perk too! Inside pictures to follow...

Specs:
1906 square feet
818 square foot finished basement
210 square foot 3-season sun room
10,123 square foot lot size