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.

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!

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.

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.

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!

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 down payment. 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 Drivers 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.

If you look at the progress bars on the top right of this site, you’ll see our current progress towards our mid-term and long-term goals. I just wanted to spend a minute and discuss these goals, as I haven’t revisited them in a long time.

First of all, these were initially set over two years ago. Since then, I’ve quit a well-paying steady job, went back to school, and started doing a combination of mismatched jobs. Only recently am I about to get back on a stable income. My wife is doing incredibly well in her career, exceeding even our expectations. In other words, there’s no way we could have predicted how the last two years have turned out.

$1,000,000 Long-Term Goal… Sooner Than You Think
Many people point out that we’re going to need much more than $1,000,000 in order to retire. I totally agree – that’s why the deadline for this goal is actually set at age 45, after which we plan to keep working for another 10 years (and allow that million to keep compounding away). My goal remains to become “financially free” by age 55, meaning I don’t have to work, even though I’m sure I’ll need something to keep me occupied.

This gives me a goal that’s within 20 years from now, and a nice round number that I can wrap my head around. At the same time, we don’t want to be mercenaries – we both want meaningful jobs that won’t make the next 27 years miserable.

$100,000 Mid-term Goal… Almost Time!
Again, this goal was made based on me keeping my old job and income. Quitting put us behind (check out the dip in our net worth history chart), and it is unlikely we’ll catch up in time. Saving up $100,000 in non-retirement assets (mainly cash) for a house down payment is a lot harder than I thought. You don’t get the benefit of big stock returns, nor the time to compound them. It’s just cold reality – every dollar you spend is one less towards your goal.

Still, we try to maintain a good balance between saving and enjoying our lives, and with the housing market looking the way it is, we aren’t in a hurry to buy. If anything, our income by the end of 2007 will be higher than what we would have expected before, so it’s all good.

In the end, I’m still glad we made these goals, as it has definitely helped focus our energies. Hopefully my next post on this topic will be about the completion of this mid-term goal and the need for a new one!

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.

About My Goals
I haven’t explained the goals in the progress bar on the top right of this page recently, either. First, I have a mid-term goal of $100,000 in net non-retirement funds (everything but IRAs/401ks). This is designed to help us save for a house downpayment. We’ll also need enough for any closing costs plus some for our emergency fund. Second, we have a long-term goal of one million dollars in total net worth by the age of 45. This is not our end goal, as we plan to keep working past 45, but it is something for us to work towards. 65 is just too far away, as are crazy numbers like $3,000,000 🙂

These goals were set more than two years ago, and while our situation has changed a lot since, I am still keeping them around. I may revise them later, especially if we buy a house near the end of this year.

Commentary

• Our investment portfolio blipped back up in March. Honestly, this is becoming the only time of the month I even catch a whiff of what’s going on in the markets.
• We had some pretty large pseudo-unexpected expenses this month. Coupled with our planned Vegas trip, we put a lot of stuff on the credit cards this month. (We never carry a balance though, it’s just for the rewards.)
• Still, we continue to save more than half of our take-home income while our housing costs are lower. We did track our expenses for February, which was a helpful exercise. I think our spending is in an acceptable range for now. But anything to help us grow that downpayment is good!
• Other stats: $51,600 in net cash and $60,900 in total non-retirement assets.

You can see all my previous net worth updates here. I’m getting excited about starting to look at houses, if only to keep an eye on the real estate prices.

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 check it out first if you have any questions.

Commentary

• The stock market stalled a bit this month, as should be expected given its healthy run for the last two years.
• The big drop in cash reserves and credit card debt is due to the ending of one of my 0% balance transfer cards in February (Discover Miles Card). Everything went smoothly and it was paid off without a hitch.
• Our combined incomes continue to far exceed our spending, which is great. I still need to finish tallying up last month’s budget results.
• We still haven’t done our taxes, as I am still waiting on some corrected 1099s and trying to organize my business records. I have a feeling we might have to file an extension this year.
• I know this is poor form, but I have mentioned previously that I keep forgetting to include a $2,000 taxable investment I made in a micro-cap mutual fund (BRSIX) several months ago. If it doesn’t show up in Yodlee, it’s almost like it isn’t there 😉 Anyhow, I’ve finally accounted for it and it’s helped the numbers a bit.
• We are now at $48,167 in net cash and $57,288 in total non-retirement assets. That’s 57% of our mid-term goal, and 96% of our (much easier) May goals regarding saving up for a house down payment. I remain completely confused about housing prices…

You can see all my previous net worth updates here.

Three months ago on November 16th, 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. I was happy to see that over 100 people shared their goals. I believe that simply writing down a specific goal will increase the chance of it happening.

I forgot to remind those 100 people about the half-way mark, so I am extending the halfway deadline to February 23rd. Leave a comment either here or in the original post with the same e-mail address (will not be public) to count. It doesn’t matter what your progress is, as long as you measure it. The prize is going to be a chance at a free iPod Shuffle, so I encourage you to leave a status check. Thanks to the six people who were really on the ball and already submitted updates! Right now you have a 17% chance at a free iPod 🙂

As for myself, the goal was to save reach $50,000 in cash. That meant an increase of approximately $11,610 above my November net worth update (11/8). As of my February net worth update (2/5), I have increased it by $4,602 so far. That’s 40% progress, which is actually better than it looks because we paid over $7,000 in taxes for our Traditional-to-Roth IRA conversion back in December. I am still hopeful that we can reach the $50k mark by May 16th.

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 interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a detailed series of posts on this 0% game. So please, don’t worry!

Summary
While we are still recovering from the hit when we converted our Traditional IRA to a Roth IRA, this month was one of our strongest yet. First, the stock market continued upwards and our portfolio followed passively. Second, my wife got a healthy bonus from her job in January. Third, I renewed some advertising contracts on this site. Fourth, we had less unexpected expenses stemming from personal events than in previous months.

We are now at $42,992 in net cash and $50,335 in total non-retirement assets. Our mid-term goal of $100,000 for a house-downpayment is still in reach, especially with recent developments… The job search is going well and it looks like one of us (hint: not me) will be getting a big raise soon. This has been in the works actually for a while, but we had a few worried moments here and there. Now all the pressure is on me!

You can see all my previous net worth updates here.

Where are my annual goals? Right now our lives are in a state of limbo, with several pieces that need to fall into place. First and foremost, we are both working towards getting jobs in a new city. After that, we’ll have a better idea of what our income will be (probably significantly higher). It is quite probable that one of us will take longer to find a position than the other. We have a lot of temporary living options with family, or we could rent again, or we could buy our first house.

Given all those variables, here’s the best I could come up with:

1st Quarter
– Find a job!
– Start Tracking Expenses
– File income taxes
– Set up estimated taxes for rest of year
– Put at least $500/month away in 401k

2nd Quarter
– Reach $50,000 in cash for a house down payment (currently at ~$37k)
– Sell most of our nonessential property, aka crap

3rd Quarter
– Move; Find a real estate agent
– Maybe buy a house if the stars align correctly

4th Quarter
– Most likely buy a “reasonable” house during this period
– Long shot goal: Buy a rental property in the Portland area

We are putting off the 2007 Roth IRA contributions until we know better what our income situation will be. It’s amazing that 2006 felt like it passed right by without much action, but 2007 looks like it will be much more hectic.