May 2005 Financial Status / Net Worth Update



Before any of my newer readers get excited, let me say that all of my credit card debt is in the form of a 0% balance transfer. Please see all three of my posts (1,2,3) on this and the best 0% offers that I have found. No crazy interest payments here.

So another pretty solid month finance-wise. We did get a $1,000 tax refund, and promptly spent it with a week at DisneyWorld, which was fun. Actually these things shouldn’t be connected, as one shouldn’t necessarily feel obligated to spend their tax refund, but whatever.
Overall, our net worth increased $2,965 (almost the same as last month), and our non-retirement funds went up $2,555.

We are now $60,500 away from our mid-term goal of $100,000, with 26 months to go. That’s $2,327 per month, and we are on track (for now). I am continuing my work with our budget, which is pretty cool, it’s neat to get a better grasp of things on the finer level.

Comments

  1. Hi,

    I’m a bit confused, it looks as if the money you paid to your credit card in the amount of $279 in April is being added to your networth. Are you including available credit in your networth?

    Sorry, just learning all this new financial stuff.

    thanks

  2. Are you concerned that as interest rates continue to rise it will be harder to keep finding new 0% balance transfer offers to roll into? I guess it’s not too big a deal, if you got in a pinch you have plenty of cash to pay it off quickly. Just curious…

  3. Hi Sam,

    The confusion is probably my fault, my credit card debt decreased by $279, increasing my overall net worth. Some people show liabilities as negative numbers, but I show them as positive (just makes more sense to me). So,

    Assets – Liabilities = Net Worth

    DF, Yes, with rising interest rates, it will get harder and harder to find 0% APR deals, especially with no balance transfer fees. Even some of the ones I posted before are dead now, but some are still alive (for now). ALL of my cc debt is in a liquid investment, so I can just pay them off if need be.

    Another thing is as interest rates rise, it may still be advantageous to take 0% balance transfer with small fees, or even ones with low 0.9% or 1.9% rates.

  4. Thank you! Makes sense.

  5. I’m not sure how transfering your balance from card to card affects your credit score, but you might want to research that…

  6. Is the net worth of $74,115 combined? That is yours and your wife’s combined together.

  7. Muckdog, I believe havgin credit card balances and especially using up much of your available credit limit does lower your credit score, but transferring over and over by itself shouldn’t hurt your credit score. (as far as I’ve read)

    Lee, it’s both of us together. =)

  8. I found a score estimator at bankrate.com. Questions like:

    How many loans or credit cards have you applied for in the last year?

    How recently have you opened a new loan or credit card?

    Do affect your score. The scoring is so opaque it is frustrating.

  9. Actually it affects the FICO score quite a big deal, but this usually depends on your overall credit history. Without seeing a snapshot of that its tough to say.

    BUT, utilization accounts for about 30% of your FICO score. Take my example, I had about 50K in total credit limit.. and I used up about 15K of it.. one card was 6K out of 9K limit. When I paid off those 15K down to 2K, the score went up about 30 on each agency. Experian from 720 to 750, Equifax from 750 to 800, Transunion from 720 to 750 ish. Quite a big jump for my case.

    I think Jonathan isnt going to apply for any large loans anytime soon, so its probably not an issue for him, since once he pays it off, the scores will revert in 1-2 months.

    So if you’re expecting to get an auto loan, mortagage anytime soon, you might not want to do the balance transfer game to earn interest on free 0% loans.

    Transferring from cards to cards do not affect your FICO score, but it does show certain pattern in credit usage, and credit provider does take that into account. So even if it doesnt affect your scores, its still something that can sorta be deducted from your credit report. One thing though, opening more and more cards does affect your score.. as the amounts and types of account (revolving, non revolving) plays about 10% into ur FICO score too. (The funky thing is, it affects its positvely at times, and negatively most of the time)

    but yes, FICO scores are confusing and frustrating at times.

    Still, I envy those like Jonathan that has enough cash flow and credit available to do offers like this. I just can’t risk it right now.

    - Cap@StopBuyingCrap.com

  10. In my experience applying for a new credit card only lowers your FICO score about 5 points, but if you are transferring the balance to an existing card with 0%, then it hardly changes at all. Of course, if you keep applying for credit cards those 5 points add up. Personally, I want $100 worth of benefit to apply for another credit card.

    Thanks for the estimator link. It gives you a 50 point range for a score, not too helpful for me, but for a ballpark it’s nice.

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