Net Worth & Goals Update – April 2010

Net Worth Chart 2010

This month involved some cleaning up of financial affairs in order to complete our taxes as well as get back on track in general.

Credit Card Debt
I used to take money from credit cards at 0% APR and place it into online savings accounts, bank CDs, or savings bonds that earned 4-5% interest (much less recently), keeping the difference as profit while taking minimal risk. (Minimal in regards that the risk was under my control.) However, given the current lack of great no fee 0% APR balance transfer offers, I am currently not playing this “game”.

Most credit cards don’t require you to pay the charges built up during a monthly cycle until after a grace period of about 14 days. This theoretically provides enough time for you to receive your statement in the mail and send back a check. As this is simply a real-time snapshot of my finances, my credit card debt consists of just these charges.

Retirement and Brokerage accounts
After wading through way too many IRS charts, we both contributed $5,000 to a non-deductible Traditional IRA. This will be converted to a Roth IRA within the next few weeks.

In our 401k, we continue to make regular contributions. We also received recently our true-up contribution which corrected for us maxing out a bit early in 2009. Mrs. MMB also gets a bonus for maxing out, which is nice.

Our total retirement portfolio is now $289,909 or on an estimated after-tax basis, $235,263. At a theoretical 4% withdrawal rate, this would provide $784 per month in after-tax retirement income, which brings me to 31% of my long-term goal of generating $2,500 per month.

Cash Savings and Emergency Funds
We continue to keep a year’s worth of expenses (overestimated at $60,000) in our emergency fund. Most of it is kept in either a rewards checking account (with debit card usage requirements) or in a 5-year CD from Ally Bank, which despite the long term still provides a very competitive yield even if you withdraw early before the 5 years is up.

Home Value
I am no longer using any internet home valuation tools to track home value. After using them for a year and finding them unreliable, I am back to simply taking a conservative estimate and focusing on mortgage payoff. Unless rates start to skyrocket, it might soon be time for another mortgage prepayment.

Comments

  1. Totally agree with you on the home valuation tools being unreliable. Some show my house losing 40%, a second shows it has staid steady for 2 years, a third actually shows a 20% increase in those two years.

  2. rubin pham says:

    Brad Says:

    April 13th, 2010 at 9:06 am
    Totally agree with you on the home valuation tools being unreliable. Some show my house losing 40%, a second shows it has staid steady for 2 years, a third actually shows a 20% increase in those two years.

    I have the same problem. I guess the only way to be sure is to have a full apprasal.

  3. Have you considered moving some of your emergency funds into I-Bonds? This topic has come up recently in the Bogleheads forum, and I’ve decided to do it. Current I-Bonds are yielding 3.36% (tax deferred until redeemed, exempt from state tax).

    The only downside is that they’re not redeemable for the first year, but you could convert $5,000 every 6 months and never have more than $5,000 inaccessible at any time.

  4. Oops, no, if you did that, you’d have $10,000 inaccessible at a time. But your emergency fund is overestimated anyway, so that shouldn’t be a big deal.

  5. Net worth is usually inflated by home equity (most middle class is house rich, cash poor). Maybe primary residence shouldn’t count.

  6. @ Rubin. A full appraisal won’t necessarily resolve anything in this unstable market. I tried to re-fi when rates hit their lowest ever – first appraiser put my house at $337,000. The second (who was sent after a desk jockey got playing with an online tool that undervalued it) valued it at $215,000 – more than $120k difference! I think the truth is right in the middle, but the lender, Lending Tree dba Home Loan Center (or was it the other way around?) decided the second one was accurate, despite several errors I pointed out with it and confirmed with a third appraiser. I was denied the loan, and depending which appraiser you ask, I’m either under water or have $90k in equity.

  7. Hi – if I do a partial conversion from traditional to Roth, should I consider my 457 and 401k monies as the basis in addition to the unconverted traditional IRA.?.
    Jm

  8. Well, Zillow is certainly a joke.

    Their value on our house – already overpriced by 13 percent (we know because we just sold it mid-March) – just shot up another 26 percent in three days for some unexplained. This is in a nice southern Twin Cities (MN) suburb.

  9. bb – a tired discussion. He counts it. It adds a whooping 20K to his networth.

  10. corntrollio says:

    Did you guys get massive raises or something? I’m a relatively long-time reader, but I don’t remember you putting away this much money per month in the past. Did I miss a post?

  11. That would be stock market gains corntrollio. Just the opposite of when he was loosing 30K a month two years ago!

  12. try epropertywatch.com from First American – its free

  13. Well, Zillow is clearly a mess again.

    After our house sold in March at about 13 percent under the Zillow valuation, the Zillow valuation shot up another 26 percent in three days for some unexplained.

    Now, it has jumped yet another 11 percent this month.

    So now Zillow has our home valued at 60 percent above what it just sold for six weeks ago – a sale price in line with other houses in the neighborhood which sold in the recent past as well, including a nearly identical home/lot that sold the same week half-a-block away.

    Zillow’s got problems.

    This is in a nice southern Twin Cities (MN) suburb.

  14. Jonathan, re “$2500 Monthly Income Investment” are you referring to income generated from your investments or is this a separate business/income? Just wondering where this is coming from.

  15. I’m also wondering where the Monthly Investment Income is coming from and how it’s realized. I don’t trade often, and if I do it’s for the long term, so I’m trying to figure out how to do this for myself.

  16. Nice, I need to do something like this myself. You don’t put your income. I am assuming you still work since you show 401k figures. Is this blog highly profitable or just chump change

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