Archive for the 'Goals' Category
Monday, March 3rd, 2008
“Good” Credit Card Debt
If you’re a new reader, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high-yield savings accounts that actually earn me 4% interest or more, and keeping the difference as profit! 
Along with other deals that I blog about, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Cash Savings, Home Purchase
If my posting has been a bit light lately, it has been because I’ve been bogged down by a combination of illness, travel, and the home-buying process. Also, I didn’t want to do it in real-time because there were some snags along the way… but we’ve finally closed!! I have lots of house-related posts coming about mortgages, inspections, and so on… but first here are a few details that will help explain this net worth update.
| Purchase price |
$600,000 |
| Down payment (20%) |
$120,000 |
| Discount points paid (1%) |
$6,000 |
| Buyer’s agent rebate (1.5%) |
$9,000 |
| Closing Costs |
~$3,000 (rest paid by lender) |
Our purchase price of $600,000 was more than the $500,000 we estimated we wanted to spend a couple years ago, but we are now in a 4-bedroom single-family home that we can see ourselves living in forever. In addition, we didn’t stretch too far as we can handle the mortgage payment on either one of our incomes.
We believe we got a good deal even though the short-term market looks bad, and the house has tons of potential. We’re even going to rent out a room to a relative. Our home appraisal actually came in at $640,000 - we’ve been told an appraisal coming in higher than purchase price doesn’t happen very much in this scared housing market. Using this value would actually leave our home equity at $160,000 instead of just the down payment of $120,000. However, I’m just going to be conservative and leave it at $120,000 for now.
As you can see, our 50% buyer’s agent rebate helped offset our closing costs and the points on the loan. Of course, mentally we are using the $9,000 rebate towards all the home improvement projects we have brewing. 
Finally, adding back in the $5,000 earnest deposit that I had marked as spent last month makes the numbers look a lot better than they really were.
Emergency Fund?
Our net cash balances have taken a big hit to less than $10,000, and that makes me nervous given that our monthly expenses just shot up drastically. Our foreseeable mid-term goal will definitely need to be to build up a proper emergency fund, which we’ve never officially had since we basically treated our downpayment funds as such. Visiting Brazil and Australia will have to be placed on the backburners for now…
Retirement and Brokerage accounts
February is the fourth month is a row that our IRAs and 401k/403bs have dropped by 3%. We may need to start setting up some regular monthly investments in order to help force ourselves to keep investing.
It’s been a wild month! You can see our previous net worth updates here.
Posted in Goals, Investing, Real Estate, Retirement | 60 Comments »
Monday, February 4th, 2008
Credit Card Debt
If you’ve recently starting reading, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high yield savings accounts that actually earn me 5% interest or more, and keeping the difference as profit!
Along with other deals that I write about, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Cash Savings, Home Purchase
We’re still in the process of buying a home. There will be big drops on the cash column soon as we finally spend our down payment funds as well as pay for things like closing costs and home improvements for our home.
$5,000 was put towards the earnest deposit, and I just marked it as spent. But I will have to decide on how to account for my home value in my net worth. I’m leaning towards just keeping it simple and taking option #2, but that may be considered a cop-out if my home value drops.
Retirement and Brokerage accounts
For the third month in a row, our investments overall have dropped in value by 2-3%. Good thing I only check in once a month. I gloomily predict that things will get significantly worse before they get better… but I don’t actually risk my money on guesses. I continue to “stay the course” and keep making regular investments into my asset allocation.
New Midterm Goals?
Although I still want to visit Brazil, Australia, and Southeast Asia, it looks like we’ll probably be spending the next 6 months instead installing hardwood floors, remodeling bathrooms, and jackhammering some concrete. I don’t know if we’ll have the time or money to visit any other place besides the wonderful world of Home Depot. We’ll have to see.
You can see our previous net worth updates here.
Posted in Goals | 19 Comments »
Tuesday, January 8th, 2008
Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high yield savings accounts that actually earn me 5% interest or more, and keeping the difference as profit!
Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Cash Savings, Unknown Goals
These numbers are as of January 1st, but I didn’t post them because I was hoping to announce new goals at the same time. But I haven’t pinned them down exactly yet. I know that do want to create a formal emergency fund, as opposed to just relying on the existing cash cushion we have right now from our future house down payment. So that’s where the cash increase will go towards. We also still need to re-examine our insurance needs.
(Added) Again for newer readers, this is the total net worth for both my wife and myself. We are (now) both working professionals in our late 20s making sizable incomes in the six-figure range. Until recently I was still in school (again). Our expenses are low right now right now, not having a huge mortgage to support… yet. But we do want a house and want to put 20% down if we can, so that is what the large amounts of cash savings are for.
Retirement and Brokerage accounts
Our investments overall have dropped another 2-3% since last month. As reported in our retirement portfolio update, we have both placed $15,500 into each of our 401k/403b plans this year. For 2008, I think we will try and make the contributions more spread out across the year in order to dollar-cost-average and make our cashflow more consistent.
You can see our previous net worth updates here.
Posted in Goals | 5 Comments »
Tuesday, December 11th, 2007
I’ve talked about this in bit and pieces under the Goals category, but I thought I should organize our life goals into one post. Hopefully, this will outline our priorities and shed some light on why we choose to do the things we do.
First, I’d like offer what I am afraid people think our life goals are:
Incorrect Goals
- Find the highest paying job possible. Work long hours, but tolerate it for the money.
- Live a very spartan lifestyle, with minimal luxuries and worrying about money constantly.
- At age 65, abruptly stop working so hard, finally relax and begin enjoying our life. Hopefully live long enough to enjoy this period.
In fact, that’s not what we want at all:
Actual Goal #1 - Finding A Job That Fits
If your going to spend almost 50% of every weekday doing something, shouldn’t you enjoy it? Sure, even great jobs have their challenges - bureaucracy, boring meetings, office politics, the occasional annoying co-worker. But finding a job where you don’t dread getting out of bed in the morning was a huge priority for me. It took a few different degree programs, a couple of resignations, some stressful interviews, and several rejections, but we are definitely making progress in finding work that is challenging, enjoyable, and reasonably well-compensated.
I would also add that having a simple lifestyle initially allowed us to take some risks in order to get where we are now.
Actual Goal #2 - Less Work, More Life
Read the rest of this entry…
Posted in Career, Family, Frugal Living, Goals, Retirement | 38 Comments »
Monday, December 3rd, 2007
About My Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it on junk, I am placing it in high yield savings accounts that earn me 5% interest or more, and keeping the difference as profit.
Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to. Also mixed in are our monthly credit card charges, which we do pay off each month.
Commentary
Cash Savings, Midterm Goal Done. We have successfully reached our mid-term goal of $100,000 to put towards a house downpayment. This goal was set initially on April 2, 2005 - right here on this blog, with a deadline of mid-2007. Since then, I quit my 9-5 job, went back to school, changed fields, and now work both on my own independent ventures and a salaried “W-2″ job. That transition set us back, but we finally got there, just 6 months late. 
Of course, now we have to set another mid-term goal. For now, I think a proper goal would be probably to keep accumulating more cash, as if we do have to buy a house there are tons of other costs like closing costs, mortgage points, moving costs, initial home repairs, and so on to worry about. Not to mention also keeping an emergency fund, which is pretty critical once you have a mortgage to worry about.
Retirement and Brokerage accounts. Our investments overall have dropped about 2-3% since last month. We have again juiced up our retirement contributions this month, because unlike IRAs, the 401k contributions for 2007 have be in by the end of the year to count under the 2007 annual contribution limits. Thanksgiving managed to sidetrack me from my asset allocation series. It must be done by 2008!
You can see our previous net worth updates here.
Posted in Goals | 39 Comments »
Monday, November 5th, 2007
About My Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually borrowing money for free at 0% interest, putting it in high yield savings accounts that earn me 5% interest or more, and keeping the difference as profit. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Also mixed in are our monthly credit card charges, which we do pay off each month.
Commentary
Cash Savings. We continue to have a big cash hoard to try and reach our mid-term goal of $100,000 to put towards a house downpayment in an expensive area of the country. We are now at $94,386 in non-retirement funds (cash + brokerage + 529 - credit cards). Getting close! We continue to browse for that perfect home that fits us, and we’re starting to learn more about the ins and outs of mortgages.
Retirement and Brokerage accounts. Performance-wise, there seems to have been little movement over the last month. The increase in value is primarily due to my wife starting to contribute to her new 403b, which is finally set up properly. We hiked up the percentages in order to try and build up some pre-tax contributions before the end of 2007. Still have to decide whether to contribute to a Non-deductible IRA this year. Finally, I’ll be finishing up my series on rebuilding our portfolio this week.
That’s it for this month. As always, we’re not racing against anyone else but ourselves. Take a peek back at our previous net worth updates here.
Posted in Goals | 31 Comments »
Monday, October 1st, 2007
About My Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually borrowing money for free at 0% interest, putting it in high yield savings accounts that earn me 5% interest or more, and keeping the difference as profit. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Commentary
Retirement and Brokerage accounts. Last month’s update was right before the drop in the Fed Funds rate, which resulted in another big jump in our account values this time around. In addition, I made a large $10,000 contribution to my Self-Employed 401k at Fidelity.
I’m glad to get our retirement contributions back on track since we haven’t done very much in that department this year. I still have to figure out how much more I want contribute this year, as I do have a some flexibility with the account due to the ability to add profit-sharing contributions. Another thing on my mind is whether to contribute to a Non-deductible IRA this year.
Cash Savings. This actually didn’t go up as much, due to the big contribution to our 401k.
Quick summary. Our non-retirement funds went up slightly to $85,605, which puts us at almost 86% of our mid-term goal of $100,000 towards a house downpayment. Total net cash is at $79,707 (+$1,475 from last month). Take a look back at our previous net worth updates here.
Posted in Goals | 40 Comments »
Sunday, September 9th, 2007
I just found my old copy of The Millionaire Next Door, a book which found that, contrary to popular belief, most millionaires actively live in modest neighborhoods and drive common cars like the Ford F-150 truck. Flipping through it, I remembered that it also provided a target as to what your net worth “should” be:
Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.
If you don’t have any significant inheritances, this boils down to:
If you are near this target, you are an average accumulator of wealth (AAW).
If you are less than half your target, you are an under-accumulator of wealth (UAW).
If you have more than double this target, you are an prodigious accumulator of wealth (PAW).
I’ve never liked this formula. The main problem I see with this rule of thumb is that it is linear with respect to age. This makes it pretty harsh on younger people, especially those who are just starting out.
Someone who is 25 and makes $40,000 a year is supposed to have a net worth of $100,000. If you got a job at 21, you’d need to have both graduated with zero student loan debt and saved up $25,000 each of the last 4 years. That’s barely even possible after taxes. But if you went to say, law school, and just graduated at 25 making $90,000 a year, you’re supposed to have $225,000 saved up right out of the gate?
Let’s do our target, roughly: 29 x 200,000 / 10 = $580,000. Whew, we are serious under-accumulators!
Posted in Goals | 37 Comments »
Tuesday, September 4th, 2007
About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. I’m actually borrowing money for free, putting it in safe investments that earn me 5-6% interest, and keeping the difference as profit. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Commentary
August was still a very transitional month with starting new jobs, meeting new people, and getting used to living in the in-law unit of a family member. Most of our things are still stuffed in the basement. The positives definitely overwhelm the negatives however:
Cash Savings. It’s showtime! With dual incomes, no kids, and no rent or mortgage, the next several months should allow us to save money faster than ever before. This is a great opportunity, so I really want to take full advantage of it.
We’ve tried to alleviate the no-rent guilt by buying food, power tools, and football season tickets for our family. But they all know the whole point of living here is to save up for a house, and have done the same thing themselves, so hopefully there won’t be much tension.
Retirement and Brokerage accounts. There seems to have been a bounce since last month, with our accounts going up about 3% and ~$2,500. I don’t think we’re out of the woods yet, though. I do need to catch up on my Solo 401k contributions, and make sure to finish setting up our new Roth 403b plan.
Quick summary. Our non-retirement funds now add up to $83,763, which puts us at 84% of our mid-term goal of $100,000 towards a house downpayment. Total net cash is at $78,232 (+$10,938 from last month). Take a look back at our previous net worth updates here.
Posted in Goals | 31 Comments »
Monday, August 6th, 2007
About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me 5-6% interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please do check it out if you are curious. This is why, although I have the ability to pay the balances off, I choose not to.
Commentary
What a crazy month July was. Saying goodbye, packing up, visiting family, celebrating a marriage, moving, saying hello! In the meantime, our net worth dropped, again! What happened?
» Stock Market Blues. With everything that’s been happening, I haven’t been keeping up with this wild stock market ride. Losing 5% in one month in our investments was a surprise. Sub-prime loans are either a real factor to worry about or mainly just a cover-up for the fact that people really don’t know what to think right now. I certainly don’t, but I never try to understand the short-term movements of the markets.
» Moving Chaos. Moving cross-country really throws off a budget. We ate out a lot. We paid for travel costs. We had to pay for movers, but are waiting to get reimbursed by our employers. We bought some new furniture. We only had to pay for rent for a part of July, but we’re still waiting for our security deposit back.
» New Jobs. We’re both in our new positions and faced with new co-workers and bosses, bigger (upcoming) paychecks, and a whole new set of challenges. I have to decide on investments and contribution levels for a new 403(b), as well as other benefits like health insurance, dental insurance, and disability insurance. Lots of stuff to talk about in August!
Quick summary time… We are still saving cash, with our non-retirement funds now add up to $72,699, and total cash is $67,294 (+$2,573 from last month). Read about our mid-term and long-term goals and take a look back at our previous net worth updates.
Posted in Goals | 25 Comments »
Monday, July 2nd, 2007
About My Credit Card Debt
Got credit card debt? I sure do. But let me explain - I’m borrowing money from credit cards at 0% interest and investing in a bank account that’s earning me 5-6% interest. Result: Free Money! Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I wrote up a series of step-by-step posts on how I do this. Please do check it out if you are curious. This is why, although I have the ability to pay the balances off, I choose not to.
Commentary
To answer a common question first, yes, this is net worth for two people. We use the “one pot” method of managing partner finances, we don’t separate things out by person.
Our net worth dropped! There were a bunch of factors in play, but mainly it’s just a superficial wound. One significant change was that as was discussed previously, we stopped listing one of our cars as an asset. It messes up the numbers a bit temporarily, but in the long run it gives us a clearer picture of our progress towards that mythic “financial freedom” we all want.
Lots of big bills this month. Paid our semi-annual auto insurance premiums of about $700. Bought a new luxurious bed, also bought some nice sheets and pillows (from Ross), for a total of about $750. We’ve also been dining out a lot and spending time with good friends here before we leave.
Our stock portfolio dipped a little over the last month, it feels like a time of uncertainty for the markets in general. Some portfolio changes are coming, but nothing so far. While compiling this net worth update, I noticed that my wife’s 401k just jumped by $1,200?! It turns out they did some sort of special mid-year employer contribution, which my wife apparently didn’t even know about. Hey, I’m not going to question it
After all that, we still saved a good chunk of money this month. Our non-retirement funds now add up to $70,419, with total cash at $64,721. See our mid-term and long-term goals explained.
You can see all my previous net worth updates here. Next month is going to be hectic, with a wedding, a trip to visit the parents, the big move, and new jobs!
Posted in Goals | 19 Comments »
Tuesday, June 19th, 2007
When tracking one’s net worth, whether publicly or privately, I don’t think there is any one “correct” way to do it. People should measure it however they like in order to achieve useful information out of it. Accordingly, as we get closer to reaching our mid-term goal, I am considering changing how I calculate our net worth. After the purchase of our house, our main goal will mainly be to accumulate enough assets to provide income for the future. Everything that doesn’t help us do this, shouldn’t I just ignore it?
Dropping the value of our cars
Many people ask why I include the value of one of ours car in our net worth, while ignoring the other. It’s mostly legacy reasons. When I first started tracking our balances, I already owned one car free and clear and ignored it from the beginning. When I purchased our second car after getting married, I was faced with the choice of either taking an $8,000 hit immediately, or simply including the Blue Book value of the car in the assets column. I chose the latter because I felt it would help me better track the month-to-month differences.
Since cars are really just a depreciating asset, I’m going to stop tracking the values of them completely.
Ignoring any home equity and mortgage debt
I’ve explored a bit whether owning your primary home should be considered an investment, and also explained how our house is going to be a long-term commitment. Along the lines of this, I’m starting to think that I should just ignore any equity accumulation in my net worth charts and just treat our future mortgage payment the same as our current rent payment - an expense for housing. Since we’ll be living in this home, it won’t generate any cashflow, so why include it?
Perhaps one day I’ll be able to cash out the equity or have the mortgage paid off and be able to live rent-free, but in the meantime it just seems to be a bit of a distraction. This way, I can ignore any short-term increases or decreases in the market value of the house.
What do you think? Personally, I don’t think this will make much difference either way, it’s just a slight change in measurement to help guide our focus.
Posted in Goals | 81 Comments »
Monday, June 4th, 2007
About My Credit Card Debt
As usual, let me prevent any scathing e-mails by first explaining my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me 5-6% interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I wrote up a series of step-by-step posts on how I do this. Please do check it out if you are curious. This is why, although I have the ability to pay the balances off, I choose not too.
Commentary
- IRAs/401ks: The Dow breaks some arbitrary number!! Wee. While the CNBC shows have more things to chatter about, I continue to make my monthly $500 401(k) contributions.
- Brokerage: This consists of $2,173 in Bridgeway funds (BRSIX) and $1,054 of currently idle cash in my Zecco account.
- 529: This pops up because I ended up not using a portion of my 529 for tuition as intended. I guess the rest of this 529 will be left to grow for another 20 years until our kids need it.
- Good clean living (not really) gets us to $71,929 of non-retirement funds, reaching 67% of our midterm goal of house downpayment. Total cash is now $60,725.
You can see all my previous net worth updates here. Looking ahead to future expenses, we may buy some new furniture.
Posted in Goals | 29 Comments »
Tuesday, May 15th, 2007
Exactly six months ago on November 16th, on a whim I started a Make-A-Goal Experiment. I wanted to encourage people to set a six-month goal for themselves, and follow through with tracking it for six months. I even promised a prize for those that checked in half-way through and at the end of 6-months.
People who made a goal by the 1st prize deadline: 100+
People who checked in at the half way mark: 30+
People who checked in at the end: ???
As I mentioned before, the prize will be a chance at a new, sealed 1 GB iPod Shuffle. Right now the odds are something like 1 in 2, so get your updates in by leaving a comment here with your goal progress! Remember, it’s okay if you didn’t reach the goal, just say how well you did and maybe add an explanation. The deadline is Friday, May 18th, and I’ll figure out the winner over the weekend.
Our Own Goal Update
We reached our goal of reaching $50,000 in cash (saving $12,000 more) in April. We’ll probably reward ourselves with some sort of sugary dessert. Time to set another goal!
Posted in Goals | 41 Comments »
Sunday, May 6th, 2007
About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me 5-6% interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I wrote up a series of step-by-step posts on how I do this. Please check it out if you are curious.
Commentary
- The stock market apparently went up this month, again confounding many experts and increased our IRA balances. I continued my monthly contributions towards buying FSTMX within my Self-Employed 401(k).
- I moved $1,050 into my Zecco brokerage account and made a few free experimental ETF trades. I’ll share the details in the 2nd part of my Zecco review.
- Another good month of controlled spending gets us to $66,520 of non-retirement funds, reaching 67% of our midterm goal of house downpayment. Total cash is now $56,025.
- Two things that helped boost our savings were the $350 from Vegas gambling winnings and $520 from optimizing credit card cashback on my Citi Driver?s Edge Mastercard.
You can see all my previous net worth updates here. Looking ahead to future expenses, we need to start looking into moving companies.
Posted in Goals | 24 Comments »
