December 31, 2007

A Look Back At 2007: Digging Out From A Negative Net Worth

2007 has been a great financial turnaround year for us. We went from a negative net worth of -$3,168.85 to a positive net worth of $23,873.25. That’s a $27,042.10 increase in 11 months!

2007 financial highlights include:

  • Paid off all of our credit card debt ($5,064)
  • Fully funded both of our Roth IRA's ($8,000 total)
  • Restarted my 401(k) contribution in April at 2%, and increased it to 3% in July
  • Increased our savings account balance to almost half of our $10,000 emergency fund goal
  • Paid down 25% of my wife's student loans
  • Sold one of our vehicles and replaced it with a vehicle that has less mileage, lower monthly payments, and more affordable insurance costs

As I set our net worth goals for the next 20 years back in April 2007, I wasn't totally sure they were achievable. Sure, I crunched some numbers and kept my assumptions conservative, but I could have been way off. While we still have 19 years left in the plan, it's comforting to have the first year in the bag and to have surpassed our 2007 goal. We are truly blessed.

Some financial plans for 2008 include:

  • Increase my 401(k) contribution to 4% in January
  • Fully fund both of our Roth IRA's ($10,000 total)
  • Begin accelerated payments on our 2nd mortgage balance ($52,648.72)
  • Increase our savings account balance to $7,000

I’ve refined our net worth goals table (click on spreadsheet below) to include additional information that I would like to capture each year including household income (not including commissions), % of income invested, and retirement savings. God willing, 2007 is just the beginning to our 20 year journey towards early retirement.

December 30, 2007

December 2007 Income Statement

We spent more than we earned in December. I was wrong last month when I said that we should not have any large annual expenses hit in December. We prepaid 16 months of my gym membership for $828. With the holiday and birthdays, we also spent $148.09 on gifts. Thankfully we spread our Christmas gift spending over a couple of months so it didn’t all hit in one month. I also bought a couple of pairs of work pants, shoes, and a shirt on sales for $166.03. We purchased our first term insurance policies and had to prepay 2 months ($78.86 total).

January should be a better month since I receive an extra paycheck (3 total), I plan to cash out a few vacation days, and I should receive my annual pay raise. Hopefully we can keep our expenses next month below our income.

December 27, 2007

December 2007 Net Worth Update (-$3,301.44)

December was the first decrease to our net worth since we began tracking it in February. Our net worth decreased $3,301.44 from last month to $23,873.25 (click on spreadsheet below).

What worked this month?
While December was a roller coaster month in the stock market, thankfully, our investments ended on an up note.

What did not work this month?

December was a bad net worth month because of my poor accounting methods earlier in the year. As I mentioned in a previously post, I have not been depreciating our vehicle values each month, thus, I have been over stating our net worth. Before closing out 2007, I wanted to adjust the vehicle values to give us a more accurate net worth. To reflect the depreciation, you will notice a change of ($2,085) in the asset column for Car 1 and a change of ($2,760) in the asset column for Car 2. It’s no fun taking a $4,845 depreciation hit in one month. So, beginning in January, we will depreciate our vehicles monthly at 1%.

What's coming next month?
The end of 2007 was rough on our net worth, but thank God we were still able to finish the year 8.51% above our net worth goal of $22,000. I will be posting a review of 2007 within the next couple of weeks.

January should be a strong month and an awesome start to 2008. I receive an extra paycheck (3 total), I plan to cash out a few vacation days, and I should receive my annual pay raise. Most of this extra money will go towards our plan to pay down our 2nd mortgage, but we will also begin contributing to our Roth IRA’s for 2008.

December 25, 2007

Merry Christmas

Merry Christmas!

My wife and I just returned from spending Christmas with her Mom (yesterday) and her Dad (today). It was a lot of fun, as always. We were talking on the drive home about how lucky we are to have such great families.

On a financial note, we were able to keep our gift shopping within reason this year.

December 22, 2007

Carnival of Personal Finance #131: Naughty or Nice Edition

JD at Get Rich Slowly did a great job putting together the Christmas themed Carnival of Personal Finance #131: Naughty or Nice Edition. My Well Rewarded post was included in the "Five Gold Rings" section of the Carnival.

December 19, 2007

Vechicle Depreciation Plan

I've reconsidered our depreciation plan for our vehicles. Instead of depreciating them at $200/month, I’m going to use a 12% per year (1% per month) depreciation schedule. This will more accurately reflect our vehicles decline in value over time.

December 18, 2007

Spending Money To Save Money

Our savings account just took a big hit. The 16 months of prepaid gym membership that my awesome wife bought me expires this month. Thankfully, we were able to score the same great deal that she originally negotiated: 16 months for $828, plus a free set of boxing gloves ($50 value).

The membership is normally $65/month, but our special deal ends up only costing $51.75/month. That equates to ~20% discount! The gym is only a couple of blocks from our condo, allowing me to easily shoot of for a class or to lift weights after work.

At my heaviest, I weights 205lbs, but have been able to gradually whittle it down to 185lbs. So, not only do I really enjoy the training, but it is also slowly helping me shed some weight.

December 14, 2007

Insurance Shake-up

We have decided to get term life insurance to protect us financially in case one of us. . . well, you know.

My wife found $500,000 10 year term life insurance from Farmers for $20.68/month for me and $18.60/month for her. We made sure there is an option to increase coverage for when we buy a home as well as to renew the policy at the end of the 10 year term.

We are also switching our condo insurance and my truck insurance from AAA to Farmers. The condo insurance will increase $35/year ($451/year vs. $416), but my truck insurance will decrease $254/year ($626/year vs. $880/year). Both policies will have the same coverage and deductibles as before. The money we’re saving on the truck insurance will help offset some to the cost of the term insurance. Plus, it just makes sense to have all of the policies with one company.

December 9, 2007

Well Rewarded

I love cash back rewards credit cards! My wife and I both have cash back rewards cards that we use for business expenses (reimbursed by our companies) as well as a separate cash back rewards card we use for our household expenses. We are able to charge 30% of our total monthly household expenses to the cash back reward card each month.

If you don't currently have a rewards credit card, and you are able to properly manage your credit card debt, I recommend looking into it. My wife was the mastermind behind getting us signed up for the cash back rewards cards and it’s really paid off. We have averaged $59/month in rewards from our various cash back rewards credit cards over the past 10 months. Annually, that would be more than $700, and over 20 years it would exceed $14,000. That’s free money! In addition, charging expenses to a credit card helps with our monthly cash flow.

After having been in a great deal of credit card debt previously and paid untold amounts of interest to the credit card companies, it’s nice to get a little payback. . . literally.

A great resource for comparing various cash back credit cards can be found at It's important to note that the balance needs to be paid off each month so that you don't incur interest, otherwise cash back rewards don't mean jack.

December 7, 2007

401(k) Increase Time

I just submitted paperwork to increase my 401(k) contribution by 1% next year (effective 1/2/08). This will bring us to a 4% total contribution to my 401(k) plan. This percentage is low because our first priority is to contribute the max to our Roth IRA’s each year ($5,000 each in 2008).

Based on my current income, a 4% contribution represents $2,646 annually. However, my annual review is also in January, and I would guess that my raise will be ~5% this year. If that assumption is true, the total 2008 contribution will be $2,778. In addition to my 401(k) contribution, I also receive company profit sharing into my 401(k) in September, which last year was $3,005.63.

Our plan is to increase my 401(k) contribution 1% each year until we reach the maximum contribution. By timing this increase with my annual raise, we don’t even feel the effects of the extra contribution money missing from my paychecks.

December 4, 2007

Vehicle Depreciation

You may have noticed that our vehicle values in the assets section of our Net Worth Updates have remained the same since March. We take good care of our cars, but they still depreciate. Therefore, we must make an adjustment to our balance sheet to account for the current value of the vehicles.

I had planned to adjust our vehicle values annually using the Kelly Blue Book value. However, now that I am faced with taking a $4,800 adjustment in one month. . . I'm rethinking my plan. For the first time since beginning this blog, we will post a negative change to our net worth in December.

To avoid this big hit and the associated sorrow every year, we will begin depreciating our vehicles in January at $200/month.

November 30, 2007

November 2007 Income Statement

At first glace, I was disappointed with how much money we seemed to have spent in November (click on spreadsheet below). It was more than last month and more than we earned. In fact, we had to dip into our savings to cover all of the bills. However, $1,296 went to paying for 12 months of our truck and condo insurance, $1,000 went into savings for my wife’s taxes while she is 1099, and $475 went to paying down our 0% interest credit card balance. If you subtract out this $2,771, we weren’t to far over budget.

In addition to our standard income, this month my wife received an extra paycheck (three total) as well as a $491.22 commission check and $182.87 in mileage reimbursements. We also supplemented our income with a $25 HSBC credit card cash back reward and a $50 Chase credit card cash back reward.

Next month should be a standard income month, 2 paychecks for my wife and 2 paychecks for me. My wife may also be receiving a commission check for a few hundred dollars next month which we will deposit into savings.

November 29, 2007

November 2007 Net Worth Update (+$2.01)

November has been a crazy net worth month due to the stock market volatility. Many times throughout the month, our net worth dipped over $800 below what we ended October with. We also had a few large annual bills come due this month including a $1,842.84 condo tax bill, $880 auto insurance bill (1 years coverage), and a $416 condo insurance bill (1 years coverage). That being said, we are thankful to have ended the month with a net worth increase of $2.01 over last month, for a total net worth of $27,174.69 (click on spreadsheet below).

What worked this month?
First, we feel great about paying our condo insurance and truck insurance for the year, rather than financing both over many months. Secondly, we’re thrilled to have completely paid off our 0% interest Chase credit card ($999.49), eliminating the last of our credit card debt. Finally, we fully funding my Roth IRA for 2007 ($4,000) by contributing the final $500.

What did not work this month?
Our 401(k) took a pretty good hit this month; it was down $1,105.63 from last month. Our savings also shrunk by $845.04, but only because we pulled funds out to pay off our Chase credit card. With the stock market volatility and our large bills this month, the damage could have been much worse.

What's coming next month?
December should be a much quieter month. There are no large annual bills looming in the next 31 days and hopefully the market will settle down. We've been greatly blessed to have already reached our net worth goal for the 2007 ($22,000); any net worth increase in December will be going towards our 2008 net worth goal.

November 26, 2007

Paid Off Last Off Credit Card Debt

I hope everyone had a nice Thanksgiving. My wife and I just returned from spending the holiday with my family. It was a blast! Great food and good times.

In financial news, my wife and I decided today to pay off our 0% interest Chase credit card balance (the last of our credit card debt). This credit card had a clause that if we were late with a payment, they could back-charge us interest. We didn't want to have that hanging over our heads any longer. Better yet, we also wanted to start 2008 with a little less debt.

November 16, 2007

Frequent Flyer Miles From My Trip To Europe

I just returned from my business trip overseas. It was a good trip, but, as always, it's nice to be home. One nice thing about traveling is the frequent flyer miles that I earn. This trip, I earned 15,692 and now have 60,276 Delta SkyMiles saved up.

However, I learned that I was not automatically updated to Gold Medallion status when I hit the 50,000 mile mark. The update usually takes place the following Saturday. So, I only received a 25% bonus for my miles on this trip (Silver Medallion), not a 100% bonus (Gold Medallion). One bit of good news that I learned though is that my Medallion status will be good until December 30, 2008 - a year longer than I thought.

November 10, 2007

Headed To Europe

I am going to Europe for a 5 day business trip tomorrow. I will pass Delta's 50,000 mile mark (for the year) on my flight over to Europe. This will move me from the Silver Medallion level to the Gold Medallion level. At the Gold level, I'm entitled to a 100% mile bonus for every mile I fly with Delta the rest of the year. This means double the frequent flyer miles on my return flight from Europe!

November 8, 2007

Extra Money

My wife just received a $491.22 commission check from her new job as well as a $158.78 mileage reimbursement check. It’s amazing how she is able to pull in some extra money almost every month.

We plan to use $350 of the money to help pay down our 0% interest credit card. Our goal is to have this paid off by the end of the year. The remainder will be put into savings and a portion will be given to our church. Beginning in 2008, we will use her commission checks help us pay down our 2nd mortgage.

November 6, 2007

Finished Husband's Roth IRA

We just contributed the final $500 to my Roth IRA for 2007! It feels great to have maxed out our Roth IRA's this year ($4,000 each for my wife and I). Hopefully we can do the same next year. It will be a bit more of a challenge with the new $5,000 max contribution per person, but it will be fun trying.

November 5, 2007

Decline In Our Net Worth On The Way?

I'm a bit worried that November could be the 1st decline in our net worth since we began tracking it in February. We have a number of large bills due this month including a $880 truck insurance bill, $416 condo insurance bill, and $1,842.84 for our 1st 2007 condo tax payment.

We have been saving $302/month into our Emigrant Direct account for our condo taxes, so we expected to have to pull it out when the bill came due. Thankfully, my wife receives an extra paycheck this month (3 total) which will help cover the truck and condo insurance bills. However, if any other large bills come up this month and/or it's a bad month in the stock market, I'm afraid we may post a decrease to our net worth. It’s not the end of the world, but it would be disappointing. Oh well, 25 more days until we know.

November 4, 2007

Condo Taxes

This year, our condo tax bill increased from $3619.60 to $3,685.68. This is surprising considering the decline in Southern California property values. We purchased our condo two years ago for $333,250. Similar units are now selling for ~$260,000-$290,000.

Our tax bill indicates the county's assessed value pf our condo is currently $340,016. A couple of our neighbors have been successful this year at reducing their condo taxes $500-$1,000 simply by challenge the county's current value of their property. So, we have decided to do the same. We filled out an APPLICATION FOR CHANGED ASSESSMENT, in which we estimated our properties value at $275,000. The form was easy to complete but the approval process can take a couple of months. If we are successful, we will receive a refund on the taxes we paid this year.

November 1, 2007

October 2007 Income Statement

We definitely spent more money in October (click on spreadsheet below) than last month.

Our biggest expense was a $1,000 business expense that posted to my credit card, but that I was already reimbursed for in June. We also began purchasing Christmas gifts.Incomewise, my wife receive a $761.50 commission check from referring customer to her father's company and a $752 commission check from old job. In addition to this, we received 123.47 in credit card cash back rewards and a small rebate. Our interest income continues to grow as our savings increases. In October we earned $20.29 in interest income.

Next month my wife receives an extra paycheck (3 total). Off setting this is a $416 condo insurance bill and a $880 truck insurance bill.

October 31, 2007

October 2007 Net Worth Update (+$1,409.31)

October was a pretty average month all around. We increased our net worth $1,409.31 from last month, to $27,172.68. We've already passed our net worth goal for 2007, so any additional gains are gravy.

What worked this month?
My wife continues to bring in multiple streams of income. She brought in a $761.50 commission check for referring a customer to her father's company and a $752 commission check from old job. Another plus this month was that our retirement accounts (401K and Roth IRA’s) increased by a total of $778.90. We also reduced our liabilities by the standard amount (~$1,000).

What did not work this month?
A $1,000 business expense that we've been expecting finally posted to my credit card. I was already reimbursed for it in June and had the money sitting in our savings account gaining interest. We also saw a ~65% reduction in the value of our shares of Adventrx Pharmaceuticals.

What's coming next month?
My wife receives and extra paycheck next month and may also receive her first commission check from her new job. I will be traveling overseas for 5 days (all expenses paid by employers) so we might see small savings there. My wife and I will also be taking a road trip to visit my family for Thanksgiving. A couple of big insurance bill hit next month: We will be pay for a years worth of car insurance for my truck ($880) and a years worth of insurance for our condo ($416).

October 22, 2007

Southern California Wildfires

Many of our friends have been evacuated because of the Southern California Wildfires. We are far enough away that it is unlikely our neighborhood will be evacuated.

However, I'm flying to the east coast tomorrow for a business trip so we prepared my wife just in case the fire heads in our direction.

Here's what we packed in a suitcase in case there isn't time to fully load up the car:

Food / Dog Food
Extra clothing
Family Photos
Legal Documents
Insurance Documents
Emergency Cash
Hand Gun
Pen & Paper

It's unlikely she will be in a survival situation, even if our area is evacuated. There are many evacuation shelters available. However, worst case scenario, she and our puppy can get by safely staying a night by themselves in the car. In addition to the items above, she would also have her purse, cell phone, computer, and chargers with her.

October 17, 2007

Auto Insurance

For the 1st time ever, we plan to pay my auto insurance bill in a lump sum payment. We typically finance the 12 months of auto insurance thru AAA, costing us an extra $58.73 annually. Here’s the breakdown:

$1,041.73 12 months coverage
-$103.00 AAA credit for 12 years of membership
$880.00 balance due

$58.73 cost to finance payments for 9 months
$938.73 total amount paid if financed

An added benefit is that we will have one less bill to pay every month.

October 13, 2007

Back Home. . . For a Week

I just returned from a business trip to the East Coast, adding another 6,212 miles to my Delta SkyMiles. This has been a good year for my frequent fly miles. I'm now at 37,580 miles on Delta and qualify for Silver Medallion benefits. I didn't realize this until I was automatically upgraded to 1st class and also did not have to pay the $50 charge for an overweight bag.

I fly back to the East Coast in a week for an 8 day trip, adding another 6K miles to my Delta SkyMiles (and hopefully another complimentary upgrade to 1st class). Two weeks after that, I fly to Europe on Delta for another large chunk of frequent flyer miles.

I'm working towards a couple of free (frequent flyer miles) tickets to Hawaii for my wife and I.

October 6, 2007

2nd Mortgage Payment Plan

One of our big goals is to buy a house in 5 years and hopefully keep our condo as an investment property.

Currently, our monthly condo expenses (mortgages, taxes, HOA fees, and insurance) total $2,697, Unfortunately, that is way more that we can rent our condo for. Therefore, we have decided to focus on paying off our 2nd mortgage ($52,755.81 balance) to help bridge the gap.

Of that $2,697 in total monthly expenses, our 2nd mortgage payment represents $411.33. The interest rate is 8.55%, so only $36 is currently hitting principle each month.

Here’s the plan:

We will use what we consider “extra” money each year to knock down the principle:

$2,000/year from my wife’s two extra paychecks
$3,761.40/year from my two extra paychecks
$1,219.11/year from cashing in 6 days of my vacation
$5,000/year from my wife’s commissions

This would result in $11,980.51 in extra principle payments per year, or $47,922.04 in 4 years, allowing us to pay off the 2nd mortgage by 2011. We may be able to pay it off even sooner because $5,000 is a very conservative number for my wife’s annual commission and we will likely receive annual pay raises.

Once the 2nd is paid off, we will focus on increasing our savings for a house down payment and create a reserve fund for maintenace of both properties. In addition to the $411.33/month we will save after paying off the 2nd, my wife’s car will be paid off in April of 2012, allowing us to bank an extra $450/month. My car will be paid off in June of 2013, helping with our cash flow once we buy a house.

Our condo is next to a major UC school, providing large pool of renters. We hope to be able to rent the unit for $1,800/month. We’d be taking a loss each month initially, but a combination of paying off the 2nd mortgage and tax deductions should help us get within a couple hundred dollars of our rent target.

If we are sucessful in our plan to pay off the 2nd, but find the numbers don't work out for renting the unit, we will sell the condo and buy a house. In the very least, we will have increased our equity in the condo and saved ourselves a lot of interest.

October 3, 2007

Rewarding Ourselves

My wife and I have decided to give ourselves a "bonus" this month for reaching our 2007 net worth goal 3 months early.

This extra fun money will come from an unexpected ~ $799.09 commission check my wife will receive from her old, old job. We plan to give some of it to our church and then split the remainder. Don't get me wrong, we're not getting lazy now that we reached our 2007 net worth goal, we're just rewarding ourselves for being consistent with our plan earlier in the year.

We're excited to already be making progress on our 2008 net worth goal ($48,700) while still only in 2007. If my projections are accurate, we should be over 60% of the way there (~$30,000) when 2008 actually starts.

October 1, 2007

September 2007 Income Statement

As I hinted at last month, September was a great income month and a pretty decent month expensewise (click on spreadsheet below).

While my income was pretty boring this month, my wife raked in money from 3 different companies. First, she received a $1,057.94 commission check from her old job (with another $799 commission check from the same company on the way next month). Second, she received a final $1,778.75 check for last 3 weeks with company that just laid her off. And finally, she received a $1,211.54 check from her new company for her first 9 days of work. We were somewhat expecting a ~$700 commission check on a job that my wife referred to her dad’s company, but it will not be sent until next month.

October has the makings of a good month too. My wife is expecting a commission check on a job that she referred to her dad’s company (~$700) and another commission from her old job ($799.09). She may also be receiving a little commission check (<$50) from her new job for some small sales that she had her first month. In terms of expenses, I will be traveling for business for 2 weeks and my wife will be on the road a couple of days as well. With our employers covering all expenses for us when we travel, October could likely be one of our lowest expense months yet.

September 29, 2007

September 2007 Net Worth Update (+$8,496.14)

September has been a banner month. Our net worth increased $8,496.14 over last month to $25,763.37 (click on the spreadsheet below). We blew by our 2007 net worth goal of $22,000 this month! Now we can use the final 3 months in 2007 to start making progress on our 2008 net worth goal of $47,800. Our previous best net worth increase month was March 2007, with a $6,462.28 increase

What worked this month?
We have a lot to be thankful for. My wife was able to find a new job within a week of being laid off from her old job. Because of this quick transition, we experienced no lapse in paychecks and did not have to dip into our savings accounts. Our biggest gain in September came from an unexpectedly large $3,005.63 contribution to my 401(k) from my company's profit sharing. Our retirement investments also received a boost by a $500 contribution that we did to my wife's Roth IRA, completing her contributions for 2007, and a $500 contribution that we did to my Roth IRA. We also boosted our savings account balance considerably, by making a few extra deposits in September.

What did not work this month?
The Labor Day week heat wave sent everyone to the store to purchase air conditioners, including us. We spent $377.74 on a portable air conditioner.

What's coming next month?
My wife and I will both be traveling for business in October. Since both of our employers cover 100% of our expenses while traveling, we should be able to save a little extra money next month.

September 24, 2007

Steady progress III

As of today, our liquid assets total $30,433.46, an increase of $7,403.42 in just one month. A combination of company profit sharing, Roth IRA contributions (here, here, and here), and additional deposits into our saving accounts this month have made this possible.

To provide some consistency, I’ve decided to post Steady Progress updates to our liquid assets in $10,000 intervals. God willing, I’ll be able to post Steady Progress IV ($40K in liquid assets) sometime in mid to late 2008.

September 22, 2007

Wife's 1st Paycheck At New Job

My wife just received her 1st paycheck at her new company. The $1,211.54 check she received was for 9 days of work. For the 1st 3 months of her employement, she is 1099. Therefore, her paychecks will not have any taxes taken out. After 3 months, she will be a salaried employee with taxes taken out of her check automatically. That being said, we will deposit $300 per check to our savings account while she is 1099 to ensure that we have enough for taxes in April.

After recieving her paycheck, we deposited $500 into our savings account ($300 for taxes and $200 to boost our savings) and contributed another $500 to my Roth. We have only $500 more to go to reach my 2007 max contribution of $4000.

September 21, 2007


My siblings and I were blessed to have grown up in a nice home in one of the better communities of my hometown. As a young man, it didn't seem like such a big deal to me that our home was paid off. As I grew up, however, I realized that most of my friend's parents still had huge mortgages in addition to a lot of consumer debt. Now that my wife and I have our own mortgage, I have an even greater appreciation for what they were able to achieve.

My parents ended up selling that house years ago and purchased a new home in a retirement community on a beautiful golf course. During a recent conversation with them, I learned that they only have a ~$23K balance on their mortgage and will likely have it paid off soon. Wow! Most people are lucky if they pay off one house in their lifetime and my parents are going to have done it twice.

September 20, 2007

Final Commission Check?

Great news! My wife received a final commission check from her old company today for $1,057.94. The first thing we did was log onto Vanguard and contribute another $300 to her Roth IRA , which completes her contributions for 2007 ($4,000 total). We also paid off the $377.74 air conditioner that we purchased earlier this month on our cash rewards credit card. The remainder of the check will be deposited into our saving account at the end of the month.

The good news continues. This is not actually be her final commission check from her old company. Her records indicated that three commissions were not included in the check. She called her old company and determined that these jobs are scheduled to be completed this month, so she will be paid commissions on them next month. She estimates that next months commission check from them will be $799.09.

My wife is a money making machine.

September 19, 2007

Retirement Account Forecasting

To help keep myself motivated on our early retirement goal, I like to review our 20 year retirement account forecast from time-to-time.

I was happy to see today that our current retirement account balances (assuming no additional contributions) should be worth just over $100,000 in 20 years. I calculated this using an 8% average return rate, which I believe to be conservative given that the historical average return rate of the stock market is ~10%.

Obviously, we plan to continue contributing to our retirement accounts, and even hopefully increase our contributions; it’s just nice to envision what our sacrifices now will be worth later, God willing.

September 15, 2007

2007 Profit Sharing

I've been eagerly awaiting my company's annual profit sharing. In the past, it has represented a $550 increase to my 401(k) each year. It's typically paid around July, but my company was running a bit late this year because of administration issues.

Well, I woke up this morning and was shocked to see that my 401(k) balance jumped $3,000 since yesterday. I checked the transaction history and it turns out a $3,005.63 employer contribution was made!

I had heard that the profit sharing contribution was going to be big this year, but that's quite a jump compared to previous years. I hope it is not a mistake. I'm not sure how each person's share is calculated, but I've been told it has something to do with how long you have been with the company and that being in management helps too. I've been with the company over 6 years and have been a manager for ~1-1/2. I hope these are the reasons for the dramatic increase.

Assuming there was not a mistake, this would mean that we will likely hit our 2007 net worth goal of $22,000 this month, 3 months early. What a blessing!

September 13, 2007

Could Have Been Worse

Today is a busy meeting day for me at work (4 meetings total). I try to get my work done between meetings, making for a hectic day. In-between meetings, one of my co-workers popped in my office today asking "Do you know you have a flat tire?". I thought he was joking, but unfortunately, he wasn't. Since my day was packed, I figured I'd wait until after work to take care of it.

After work, I removed the flat tire and put on my spare tire - one of my co-workers was nice enough to lend a hand. I hesitated going to the tire store because I figured it would be packed with customers coming in after work. When I pulled up, there was not one customer in the office or a single car in the bay. They were able to patch my tire in 15 minutes, for no charge. Heck, they even saved me the trouble of putting my spare back under my truck.

What started off as a bad situation that didn't turn out so bad after all.

September 10, 2007

Balancing Act

My wife and I are trying to find the balance between long term investing (retirement) and short term savings (emergency fund, house, etc.).

I tend to focus too much on investing for retirement, and am eager to put all of our spare money into either our Roth IRA’s or 401(k). The power of compounding is amazing and time is the most important element. The more money we can invest now, the better off we should be later. This simple table demonstrates that a person who invests early and for just eight years will have more money at 65 years old than will someone who starts late and invests for nearly 40 years.

My wife, on the other hand, reminds me that we can't keep all of our money tied up in retirement accounts. We want to buy a house in a few years and need to save for a down payment. We also need to have cash on hand for unexpected emergencies. We had a real world example of why this is important when my wife was recently laid off. The value of an emergency fund, even the smallish amount we had in our savings at the time (~$3,000), provided a great deal of peace of mind. Thankfully, my wife found a new job within a week, and we did not have to dip into our savings.

Like most things in life, we have to find a balance. Currently, our retirement investments represent 78.30% of our total liquid assets. We’ve agreed to work on increasing our savings, but not at the expense of fully funding our Roth IRA’s. In fact, we have already added another $1,300 to our savings this month, while simultaneously investing another $200 in my wife’s Roth IRA.

September 6, 2007

Net Worth Milestone In September?

Although we’re only one week into it, September is already shaping up to be an excellent month. In addition to our average monthly decrease in liabilities of ~$1,000, we just contributed $200 to my Wife’s Roth IRA and deposited $1,300 into our savings account.

God willing, we should surpass the $20,000 net worth milestone this month. This would put us at just over 90% of our 2007 net worth goal of $22,000, and on schedule to hit our 2007 goal in October (2 months early!). After that point, anything extra we were able to add to our net worth in 2007 would help us begin making ground on our 2008 net worth goal of $47,800.

September 5, 2007

Another Contribution to Wife's Roth IRA

We deposited another $200 into my Wife's Roth IRA, and plan to deposit another $300 next month to bring her total contributions to $4,000, the maximum for 2007. We have another $1,000 to contribute to my Roth IRA to reach the maximum for 2007.

Next year, the maximum contribution goes up to $5,000 for each of us. That will be a fun challenge.

Carnival of Personal Finance #116

Thank you to Advanced Personal Finance for including my Delicious Savings post in the Carnival of Personal Finance #116.

Please check out the carnival - there are many great posts to read.

September 4, 2007

Beat The HEAT

The heat lately has been oppressive. Since our condo is so close to the ocean, it does not have central air conditioning. During this recent heat wave, my wife and I have found it difficult to sleep at night. To make matters worse, our condo is only open on one side, so there is no opportunity for cross ventilation. The best we can do it put a fan in front of an open window.

We've lived in our condo for ~2 years and have finally decided to throw in the towel and purchase a Soleus Air 9000 BTU Evaporative Portable Air Conditioner. A few of our neighbors have similar units and they do a great job cooling our little condos for ~$50/month. My wife found this unit online for $295.20, it regularly sells for $369.00. Since it’s portable, we can take it with us when we move to another place at a later date.

It would be great to be able to put this money into our investments, but it sure is going to be nice to be comfortable at the push of a button.

September 3, 2007

Have A Great Labor Day!

It's nice to have a break from work. Labor Day marks the end of summer and I've got to say that I'm ready for winter. It's been stiflingly hot lately. To beat the heat, we're joining some friends for a relaxing day by the pool. Have a safe Labor Day.

September 1, 2007

August 2007 Income Statement

As I mentioned in my July 2007 Income Statement post, I didn't expected that we would be able to match the relatively low expense levels of July in August. Well, August, with all of its ups and downs, ended up being a great month in terms of our expenses (click spreadsheet below). We only went over budget ~$300, $716.53 of which was for a new mattress. That puts our August expenses $264.69 lower than our July expenses!

In terms of income, August was a mixed bag. I received an extra paycheck this month, but my wife's 1st paycheck was only for one week. We were able to earn an extra $104.53 thru credit card cash back rewards and $100.00 thru selling our old mattress. And finally, with our increased savings account balance, we earned $12.14 in interest income, our largest amount yet.

September should be a great month incomewise. My wife is expecting a commission check on a job that she referred to her dad’s company (~$700), a final commission check from her old job ($600-$1,000), a final check from the job that laid her off (~$1920), and her first paycheck from her new job(~$1,075). Hopefully, we can continue keeping our expenses down.

August 31, 2007

August 2007 Net Worth Update (+$2,205.39)

August has been a volatile month in more ways than one. Nonetheless, our net worth increased $2,205.39 over last month, to $17,267.23 (click on spreadsheet below). We are currently at 78.49% of our 2007 net worth goal. Thank God, we’re still ahead of schedule to meet our goal.

What worked this month?
I received an extra (3rd) check this month that provided us with an additional $1,880.70. We were able to increase our savings by $831.02, which is amazing because we had a couple of large expenses come due in August, such as a $716.53 mattress bill and $300 seat sponsorship for our church. Surprisingly, we did not have a $1,000 business expense that we are expecting post to our credit card; this will likely post in September. In other good news, we were also able to contribute another $500 to my wife's Roth IRA and we continue to make progress on our liabilities, decreasing them by ~$1,000 each month.

What did not work this month?
Obviously, this was a roller coaster month for the stock market. After subtracting out our contributions, our retirement investments were either flat or lagged behind last month’s balances. Another shake-up this month was that the company my wife just started with 1 month ago laid off 75% of their employees, including her. The great news is that she already has a replacement job.

What's coming next month?
Now that August’s books are closed, we’re looking ahead toward September. All indications are that it should be a good month too. My wife is expecting a commission check on a job that she referred to her dad’s company (~$700), a final commission check from her old job ($600-$1,000), a final check from the job that laid her off (~$1920), and her first paycheck from her new job(~$1,075). I’m also hoping to receive my company profit sharing (~$550) in September.

August 30, 2007

It's Good To Know We Were Prepared

Great news! My wife has accepted the job offer that she was considering. We are very blessed in that she was offered the job within 2 days of being laid off from her last company. After meeting with them again this morning to learn more about the company and the job, she decided it was a good fit. She starts with them on Tuesday of next week.

Her first 2 months with the company are training, but there may still be an opportunity for her to earn some commission during this time because she inherits all existing accounts in her protected territory. Any accounts that are due to renew service, she receives a commission for.

I am very proud of her. You hear horror stories of people being out of work for months on end. Within a week, she interviewed with numerous companies and received quite a few call backs for second interviews.

Since she received a new job so quick, and her old company agreed to pay her until 9/5, we will not experience any paycheck lapse. Therefore, our emergency fund will remain untouched and we're moving forward. I've got to say, it's good to know we were prepared for the worst in case things worked out differently.

This concludes this test of the Emergency Broadcast System.

August 29, 2007

The Beat Goes On

Thus far, we have done a pretty good job of reducing our expenses while my wife is searching for a new job. To further help our cash flow, we have decided to postpone a $165 deep cleaning that my dentist wanted to schedule this month. Also, if my $1000 business expense posts before my wife has a new job, we will likely pay the minimum to preserve cash.

My wife has had many interviews with various companies and is seriously considering an offer from one. She has arranged a 2nd meeting to learn more about the company and the position before making her decision. The position is in a field that she is not experienced in, but the company has a training program to get her up to speed and she would receive existing accounts in a protected territory. They would like her to start Tuesday of next week, which is great timing for us.

The offer is a $35,000 base, 20% commission, milage reimbursement, laptop, cell phone, and 100% medical insurance paid for. Unfortunately, they do not offer a 401(k), but they are considering adding it down the road. I am only contributing $2,000/year to my 401(k) currently, so we have plenty of room to increase our contributions.

Stay tuned.

August 26, 2007

Delicious Savings

With my wife in-between jobs, we are working on stretching our dollars. One area we can have an immediate affect in is our grocery/dinning budget. We allocate $400/month to groceries and $130/month to dinning out.

Plain and simple, we waste too much food. My wife buys nice groceries so that we can enjoy delicious healthy meals together (she's an awesome cook), but sometimes these ingredients go bad before we get around to eating them. I'm especially guilty of letting my workouts and surfing get in the way of a nice meal together. When I’m in a hurry, I’ll pick something up on the road, compounding the problem (wasting food at home + spending unnecessary money).

So, we're consciously looking to see what food is about to expire, and eating it first.

Here’s and example: My wife bought ingredients to make Tex-Mex meatballs for a work potluck. Since her company laid everyone off, these ingredients have been sitting in our refrigerator. We also have a $50 Roy’s gift card that we’ve been wanting to use. Well, we spent Saturday at the beach and when we got home, Roy’s was sounding pretty good. However, we knew the Tex-Mex ingredients were close to expiration, so we did the right thing and stayed home for dinner. The meal was awesome and we have leftovers for today.

I know this sounds kind of a basic, but think about how much food you throw out each month. Stale bread, expired yogurt, moldy fruit, etc.

It all adds up.

August 24, 2007

Cash Flow

My wife’s 2nd to last paycheck arrived last night via direct deposit. We were expecting it to be somewhere between $1,000 and $1,100. It ended up being $1280.88! That extra cash is a God sent at a time when cash is critical.

One element of our finances that we have never included in our balance sheet is our checking account balance. This number fluctuates each month, depending on our expenses, and is not worth tracking in our balance sheet. With my wife currently searching for a new job, this number is important given that we’re much more focused on managing our cash flow.

We typically keep a few hundred dollars above and beyond our normal monthly expenses in our checking account. This “extra” money is usually somewhere between $300 and $600. Whenever this “extra” money gets higher than $600, it is moved into our online savings account.

Thankfully, it looks like we will have somewhere between $500 and $600 “extra” in our checking account at the end of August. This will help greatly as we manage our cash flow during my wife’s job search. In fact, our cash situation is looking so strong that, with reducing expenses and receiving unemployment benefits, we should be able to get well into October before having to resort to tap into our saving accounts.

That is a very good feeling.

August 23, 2007

Wife Laid Off

There have been rumblings at my wife’s company that trouble was on the way. Well, yesterday, trouble arrived.

My wife's company laid off 75% of their employees, agreeing to pay them until September 5. The remaining skeleton crew will likely finish the final business before the company closes their doors.

My wife receives her standard paycheck via direct deposit tonight at midnight. We’re not holding our breath on the final check they promised her on September 5. Unfortunately, it’s hard to get blood out of a turnip. Thankfully, this happened at a time when our savings is higher than it’s been in months ($3,326.97). In addition, my wife is expecting a final commission check from her old job (~$1,000) and a commission check on a job that she referred to her dad’s company (~$700).

It’s disappointing because my wife enjoyed her work, got along well with her co-workers and bosses, and had an opportunity to earn great money. She also quit her old job only a month ago and is forced back into the job search. Other employees that were hired by her company just a month or two ago moved here from out-of-state to start their careers. Now, after spending the money moving out here and signing apartment leases, they are left without a job. What shocked me the most was to hear is that they hired another group of employees just last week. These people probably left decent jobs, just like my wife, only to be unemployed a week later.

There’s no time to cry over spilled milk. My wife has hit the ground running. In less than 24 hours of receiving the news, she has already updated her resume, had one face-to-face interview, had a phone interview, and spoken with a recruiter. Tomorrow, she has a phone interview (set-up by a retired VP of the company that she knows), plans to do some marketing for her father’s company, will investigate her unemployment benefits, and will continue her online job search.

We have put together an action plan to limit our expenses and increase our cash flow while my wife is between jobs:

Thanks to my wife’s extra commission checks, and our plan to reduce expenses, we probably won’t have to dip until savings for at least one month. After which time, our savings should last a couple of months. Worst case scenario, if we blow thru our savings, we can consider placing charges onto our credit cards or pull contributions from our Roth IRAs. I don’t see it getting to that point as I’m confident that we will pull thru this hiccup without any long term damage.

August 15, 2007

Stock Market Roller Coaster

Wow, this market is a wild ride. Our 401(k) is balance is back to where it was 6 months ago. I like buying mutual funds cheap, but when is the coaster ride going to go back up?

August 14, 2007

I just received a subscription renewal notice from Surfer Magazine. Surfing is one of my passions. Living 3 miles from the beach allows me to indulge in my obsession multiple times per week (when there are decent waves).

I have subscribed to Surfer Magazine for years and have always enjoyed the content. That being said, I was preparing to send in my check for $37.97 (2 year subscription) when I decided to stop and think about my decision.

Lately, I’ve been doing most of my reading online (cheap, easy, and convenient). The Surfer Magazine website has tons of information, as well as an interesting forum. This realization, along with the fact that I seem to have less and less time for flipping thru a magazine has lead me to a decision to forego my subscription for now.

I realize that $37.97 is nothing in the grand scheme of things, but I am trying to get myself out of the habit of spending money on auto pilot. I want to do a better job analyzing my purchases to ensure that I am getting the most bang for my buck.

August 13, 2007

What A Difference A Couple Of Years Make

Over the weekend, I was looking at an old copy of our financial spreadsheet from 2 years ago. It brought me back to a time of financial struggle and uncertainty.

At the time, we were renting an apartment, in a lot of debt (my fault), and had little in the way of assets. Comparing the numbers from 2005 with 2007 reminds me how greatly we have been blessed. Here is a brief breakdown of where we were financially in August 2005 and were we are today:

August 2005

Liquid Assets
$5,157.00 401(k)
$1,547.00 Cash & Savings Accts
$759.00 Taxable accounts
$7,454.00 Total

Credit Card Debt
$10,630.56 (9.99%- 15.49% interest rate)

Net Pay Every 2 Weeks
$1,390.00 (Husband)
$1,180.00 (Wife)
$2,570.00 Total

August 2007

Liquid Assets
$12,805.68 401(k)
$3,326.97 Cash & Savings Accts
$6,278.41 Roth IRA’s
$838.79 Taxable accounts
$23,249.85 Total

Credit Card Debt
$1,249.49 (0% interest rate)

Net Pay Every 2 Weeks
$1,880.70 (Husband)
$1,200.00 plus bonuses and commissions (Wife)
$3,080.70 Total plus Wife’s bonuses and commissions

August 9, 2007

The Cost Of Not Flossing Enough

During my visit to the dentist six months ago, I was informed that I needed to floss more because my gums were in bad shape, and might require special deep cleaning. The dental hygienist told me it can cost ~$1,000 to have the deep cleaning performed. Needless to say, I was scared into submission. Since that visit, I have been flossing every other day or so.

I visited the dentist again last week and was told that my flossing had paid off in all but one area, the upper left-hand side of my mouth. In that area, my gums have accentually worsened. With my insurance, it's going to cost $165 to have the deep cleaning performed. I have a call in with a friend of mine who is a dentist to get his opinion, but, it looks like I'm going to have to have it done. Learn from my mistake about the cost of not flossing enough.

I am so paranoid, I now bring floss with me to work.

August 7, 2007

Steady Progress II

We just broke $23,000 in liquid assets (pre-tax retirement accounts, Roth IRAs, taxable accounts, cash & savings accounts). As of this morning, we're at $23,030.04, a nearly $3,000 increase over less than two months ago. Not too shabby with the stock market turbulence.

August 4, 2007

Additional Contribution to Wife's Roth IRA

With the market down, my wife suggested that now would be a good time to do another contribution to her Roth IRA, which is invested in the Vanguard 500 Index Fund.

She opened her Roth IRA back on May 8, 2007 by purchasing $3,000 of Vanguard 500 Index Fund at $139.02/share. It is now trading at $132.16/share. With $1,000 left to fully fund her Roth IRA for the year, we decided to invest another $500 this month. We will likely invest the final $500 in her Roth IRA next month to get her to the $4,000 fully funded level.

After her Roth is fully funded, we will have just $1,000 left for my Roth IRA to be fully funded for the year, which will likely be done just before year end.

That will bring us to a total of $8,000 invested for the year in our Roth IRA's. Next year, the maximums increase and we will be able to invest up to $10,000 in our Roth IRA's ($5,000 in each) . Good stuff.

August 1, 2007

Bought A New Mattress

We were able to sell our mattress today and got $100! Thanks to my husband we can save more of my commission check now.

Posted by: The Wife

July 2007 Income Statement

July was a strong income month with my wife earning an additional $1,674.68 above her normal pay/auto allowance. We were also able to keep our expenses within reason compared to previous months (click spreadsheet below).

We only went over budget $650, and if you subtract out the $630.44 we spent on business clothing for my wife’s new job, we would have hit our budget mark. It’s encouraging to know our budget is realistic and doable. Although, with a couple of large expenses forecasted for August, it’s doubtful that we will be this close to our budget next month.

July 31, 2007

July 2007 Net Worth Update (+$2,039.64)

July was our lightest net worth increase month yet. Our net worth increased $2,039.64 over last month, to a new total of $15,062.84 (click spreadsheet below).

Still, we had a better month than I expected, primarily because a $1,000 business expense has not posted yet . Here are the highlights from July:

  • In an effort to sock away a bit more money, we increased my 401(k) contribution from 2% to 3%.

  • My wife received an additional $1,674.68 in income in July that greatly helped boost our savings account balance.

  • Our retirement investments were doing very well most of the month, but plummeted last week, resulting in end of month balances that are lower than June.

  • We paid down our liabilities by their standard monthly rate with the exception of our credit card, which we paid a little extra on.

August should be an interesting month. I will receive an extra paycheck ($1883.49 + an additional $76.33 to my 401k) and will also possibly receive my annual company profit sharing (~$550). However, my wife's 1st paycheck at her new job will only be for one week’s pay. We also have some large bills due in August including $716.53 for a new mattress, $300 for a seat we are sponsoring at our church’s new location, and $1,000 for a business expense that I was already reimbursed for. Our August net worth increase may look very similar to July’s, but as long as we’re headed in the right direction, I’m not complaining.

July 30, 2007

Wife's Multiple Paychecks

My wife received a lot of extra income at the end of July as a result of leaving one company and starting with a new company. Here’s the breakdown:

  • Her old company gave her a paycheck for 3 weeks (instead of 2), since they needed to cash her out for her final week that would have normally fallen in the next pay period. This added $635.20 after taxes to her normal paycheck.
  • Her old company gave her an additional 27 days of fuel reimbursement, which totaled $479.47 after taxes (she would normally be reimbursed in August).
  • She was paid $560.01 after taxes for 4 days of training at her new job. She was able to do the training while concurrently working at her old job.

We used this extra income to buy new business clothes for my wife and increase our savings account balance. Her next paycheck on 8/10 (at her new company) will only be for 1 weeks worth of work, so we also keep some of the extra money in our checking account to cover August expenses.

The fun doesn’t stop there, my wife is also expecting a final commission check (~$1,000) from her old company the second week of September.

July 29, 2007

Bought A New Mattress

My wife and I have been sleeping poorly on our old lumpy mattress, and have been keeping an eye out for a good deal on a new mattress. My wife found a queen size Sealy Posturepedic mattress at Costco for only $699 + tax (delivered). A great price, but the mattress is only available in a pillow top version that my wife and I find sleeps too warm.

We visited our local Sleep Train Mattress Center and found the same mattress without the pillow top, but they were asking $1,599 + tax (delivered). While chatting with the salesman, my wife mentioned Costco's great price and the gentleman said they can beat it by 5%.

So, with that one comment, my wife got us the mattress we wanted (non-pillow top Sealy Posturepedic) at a great price $665 + tax (delivered) - a 58% savings. Plus, God willing, we should be able to sell our old mattress for ~$100.

July 27, 2007

Market Ups and Downs

I update our net worth in our spreadsheet almost daily, but only post updates to this blog on the 1st of every month.

That being said, it drives me a little crazy when the stock market does great all month, and then, just as I get ready to post our new net worth on the 1st, the market drops. I know it doesn’t matter long term, and in fact, it is better for us because we are buying mutual funds at a lower price. However, I wish it would just wait until after I post the update on the 1st. The numbers would have looked great.

Oh, well, the market can always rebound before then. . .Dang it, I just checked and it’s down again today.

July 23, 2007

Wife's New Job Benefits

My Wife's new job compensation and benefits are awesome. Here they are at-a-glance:

$40,000 base salary during 12 months of training + bonuses + commissions + travel + expense account + laptop

Insurance (starts in November)
Health insurance:$48.00/month vs $84.01/month previously
Detal insurance: $3.23/month vs $8.08/month previously
Vision insurance: $2.08/month vs none previously (paid 100% of contact costs)

401(k) (starts in January)
401(k) match of 50% up to 6% of her salary (4 year vesting schedule)

Misc (starts immediately)
Less driving will save us ~$100/month
Better training
Nicer/more qualified boss
Exciting new field

July 21, 2007

Considering Adding Another Dog To The Family

I just returned from my business trip and am happy to be back home. Our neighbor's dog is over our house and our dog and him are having a lot of fun playing. My wife and I have been discussing getting another dog so that our dog has a playmate and to help with home security while I am away on business.

My wife's old job allowed her much more time at home to entertain our dog. We're blessed that her new job will as well, but not for another 1+ years. The new job is going to keep her in the office 10+ hours a day for the next 7 months. Once she's back out in the field, it is likely that she will have to spend considerable time away from home initially to set up accounts.

We've always wanted to get another dog, especially one that would be suitable for home security. Our little dog (13lbs) is very protective of the home, but the most he can do is sound the alarm, he doesn't have much to back up the bark with.

We plan to spend a couple of hours online tonight researching breeds and discussing the pros and cons. A new dog will cost us a considerable amount of time and money to purchase, train, and care for. Our condo is pretty small, so we're debating whether or not to wait until we have a house.

July 19, 2007

The Big Idea

I really enjoy watching Donny Deutsch’s television show, The Big Idea. This show introduces you to men and women who have made millions with their Big Idea. It is truly inspirational to hear about entrepreneurs that had a great idea, saw it thru to an actual product, and did not take no for an answer.

My “Big Idea” is to create a show called The Big Idea That Failed. Just like it sounds, the show would highlight great ideas and hard working entrepreneurs that fell flat on their faces. With most businesses failing within the first year, there is an endless supply of material for the show.

I picture the show segments flowing something like this:

Explanation of the big idea
This segment will be very much like Donny Deutsch’s The Big Idea, with the entrepreneur discussing the hope and excitement of making their idea a reality (most viewers will think “dang, why didn’t I think of that?”).

Step-by-step business analysis
This segment will go over the business model, distribution network, cash flow, etc. The first hints that there are problems with the business will crop up in this segment.

Melt Down
This segment will give the why, when, where, and how of the business failure. Essentially, it will be 15 minutes of the entrepreneur crying uncontrollably and explaining what went wrong in nonsensical gibberish.

Where is he/she now?
This segment will show the hopeless state that the entrepreneur is in after dumping their life savings, time, blood, sweat, and tears into a failed business. The closing statement will be, “Well, at least they tried”.

Okay, I was just having a little fun. I am totally impressed with people that have the guts to follow thru with an idea. If everyone were afraid get an idea off the ground, where would we be today? If you get a chance, check out the The Big Idea website. You can click on entrepreneurs they have highlighted on the show and read the details of their success.

July 15, 2007

Target Retirement Date Update

It’s been a half a year since we first started down the path towards our goal of early retirement. While our goal of retiring in 2027 may still be a stretch, I’m more optimistic than ever. We have enjoyed great success thus far in growing our net worth, while having fun along the way.

There are still many years and major events between now and the possibility of early retirement. We would like to purchase a house and have kids in the next few years, both of which will impact our goal. We hope to offset these costs by increasing our earning potential and investing more each year. Oh, and it would be great if the housing market turns around and we can sell our condo in a few years for a profit.

Maybe I should say that we’re cautiously optimistic.

July 13, 2007

Busy Week Next Week

I will be out of town from next week for a business trip. It will be nice to get out of the office for a few days, same some money on food and gas, get some cash back rewards for charging business expenses to our rewards card, and rack up a few more frequent flyer miles.

My wife starts training at her new job next week, while finishing up the first of her last two weeks with her current employer. They are going to be long, but exciting days for her.

July 12, 2007

Airline Credit

My wife was planning to join me on a business trip next week, but is unable to now that she is starting a new career. We had purchased her plane ticket online and received special pricing, so I was sure we would have to just right it off. I was wrong. She called the airline yesterday and they told her that we can apply the value of the ticket to another flight as long as we did so within 12 months. I'm going to miss her on the trip, but it's good to know that the money spent on her ticket was not just thrown away.

July 10, 2007

Career Change

My wife has been eager to leave her current company because her new sales manager is difficult to work with and doesn’t know anything about their industry. She also has seen indications that the company’s profitability is way down and there may be major problems ahead.

My wife has been interviewing with a great company for the past 1-1/2, and completed her 3rd and last interview with them today. The final interview was with a panel composed company upper management. As part of the interview, she was required to give a detailed sales presentation to the group. She nailed it. The group told her that she was one of the strongest candidates they have ever had. Needless to say, they offered her the job and she gratefully accepted. She starts with the company in 2-1/2 weeks, just enough time to tie up loose ends with her current company and give them proper notice.

The new job offers a much greater commission/bonus potential and better benefits than her current company. She should know more about the benefits next Tuesday, when she completes new hire paperwork. However, she has already learned that the health insurance is great and they offer a company matched 401(k).

I’m so proud of her. Not only did she get the job, she is joining the company as one of their top candidates, having already caught the eye of upper management.

July 6, 2007

So Far, So Good

We're about 1/4 of the way thru July and my wife and I have done a good job thus far in keeping our expenses down. Our goal is for July to be our lightest expense month yet. That shouldn't be too hard since we've spent an average of $7,110/month in the last four months. I'm hoping we can keep our July expenses in the vicinity of $6,500.

My wife and I are treating ourselves to a dinner date tonight, but to keep true to our goal, we're taking advantage of a buy one, get one free coupon at an Italian restaurant in our neighborhood that we haven't been to. We ordinarily spilt a meal when we go out, since the servings sizes in restaurants are usually huge. So, with a buy one, get one free deal, we’ll have a nice meal tonight and leftovers for lunch tomorrow.

Got to love a deal.

July 3, 2007

Let Freedom Ring

Happy (early) Independence Day! My wife and I are spending tomorrow on the lake with her father and step-mother. We'll be enjoying lots of sunshine, boating, and BBQ.

As I get older, I realize more and more how blessed I am to live in America. This country offers priceless freedoms, amazing opportunities, and unending inspiration.

Have a safe 4th of July.

July 2, 2007

June 2007 Income Statement

We had a lot of money flowing out in June, going over our budget in almost all categories (click on spreadsheet below). I’m beginning to sound like a broken record when it comes to our budget.

My wife and I have committed to doing a better job of watching expenses in July. In fact, we have already declined a couple of social events to help us get July off to a solid start.

Working on it.

June 30, 2007

June 2007 Net Worth Update (+$3,979.67)

We had a lot of financial action in June. Our investments ended on a down note, but we still increased our net worth by $3,979.67, to $13,022.20 (click on the spreadsheet below).

  • My wife received an extra $1,161.67 paycheck this month.
  • I cashed in 6 days of vacation time for an extra $1,219.11.
  • We sold Car 1 and bought a new (used) Car 1. $1,000 was withdrawn from savings to transact the deal, and we spent another $321.94 getting the new vehicle outfitted with an alarm and a few other things.
  • Also related to cars, my wife got a flat tire, resulting in a $159.25 replacement tire.
  • We withdrew $2,000 from savings and used a $1,000 business reimbursement check to open a Roth for me, and fund it with $3,000. The $1,000 business expense will not hit my credit card until July or August, at which time we will pay it off from savings. In the meantime, we are earning stock market returns on the money.
  • My wife graduated (great job sugar!) this month, so we spent $219.08 on a nice party for her.
  • June was a heavier than usual month for gifts to family/friends ($216).

We’re tracking nicely to meet our 2007 net worth goal of $22,000. It’s just over half way thru the year and we’re currently at 59.19% of our annual goal.

June 29, 2007

Double-Edged Sword

I'm excited to close out June and post our numbers. Even with the market fluctuations, we have made some good headway.

Unfortunately, July looks like it will be a very weak month for our net worth. We went so far over budget in June that we will have to use money that would have been deposited into savings in July to cover our June expenses. We also used a $1,000 reimbursement check from my company to get my Roth funded a bit earlier. If the business charges post to the credit card next month, we'll have to use most of our savings to pay it back. I'm hoping the charges will hit after our July statement, as I receive 3 paychecks in August and will be in a much better position to pay.

June 28, 2007

Financial Education

My wife and I started attending a bible study on Wednesday nights a couple of months ago. It runs just under 2 hours, and attracts a large group of people. We've enjoyed attending immensely, but I have to say, last nights class was my favorite discussion yet.

FINANCES! I would have never expected that this would be one of the topics we would cover. I expected it to focus on tithing, but it was equally, or more, focused on getting out of debt.

Did you know in the bible:

Faith is mentioned under 500 times
Prayer is mentioned about 500 times
Money is mentioned more than 2000 times

So, I guess it’s an appropriate subject for bible study.

The pastor explained how he and his wife were in debt $250,000 at one point, living in a rental home, with creditors calling daily. Here’s how it happened:

He landed a great graphic design job right out of high school (he went to a vocational school) and a couple of years later, he and his new wife moved into their first home. He began to fill that home with expensive toys. He took pride in these material objects, enjoying being the guy on the block with all of the cool stuff. He got in the habit of spending more than he earned, ended up getting over his head, and losing everything. He lost the house, the cars, the boat, etc. He said it was the lowest point of his life, and that he could understand why people consider suicide. He began working two additional jobs so they could pay down their debt. During this time, he also began praying, going to church, and even tithing. In fact, the week he began tithing, he was called into his boss’ office and fired. He couldn’t believe it, he felt like he should be getting blessing that week, not fired.

The owner explained that they hadn’t made money in 3 years and he was sick of losing money because of the company. Not sure what to do, he pleaded for his job and explained to the owner numerous ways that he thought he the business could be improved and made profitable. After hearing him out, the owner said, “if you think you can do such a great job, why don’t you take over the company’? He told the owner that he didn’t have any money, and the owner’s response was, ‘I didn’t ask you for money’. He ended up making more that first month he was running the company than he made in all three of his jobs the previous month. That allowed him to quit his two other jobs, and spend more time fixing his relationship with his wife, and getting involved in the church.

They focused their income on paying off all of their debts, and succeeded in paying everything off, including their mortgage, in 7 years. They then bought a new house, and began renting their other house. The $1,200 of monthly rental income was added to their mortgage payment, and they paid the new house off in 8 years. They used that same technique with another house, and now have 3 homes paid for. Now financially independent, he became a full time pastor.

He didn’t give us his testimony to brag. He wanted to show that having even a basic understanding of finances can improve your life dramatically.

I could see that he was getting people in the room excited to pay off their debt. He even provided a debt reduction worksheet to help people get on a plan. This was a real world financial education being taught in bible study. He was careful to explain that where your treasure lies, your heart will follow. And that you don’t want to be in love with money, but to be a good steward with what God has provided you.

June 27, 2007

My Wife Graduated!

I should have posted this sooner. The commencement ceremony was last weekend, and we had a nice party afterwards to celebrate the special occasion.

My wife received a psychology degree from a UC school; graduating with a 3.5GPA. She currently has a good paying, flexible outside sales position, but wants to get into pharmaceutical sales. I have no doubt that with her education background, leadership skills, and personable disposition, that she will be successful in any endeavor she wishes to pursue. Plus, she’s gorgeous, so that helps too.

Great job sweetheart!

June 26, 2007

Fool Me Once, Shame On You. . .

I was reading about scams the other day and it got me thinking.

I don' t believe I have been duped many times, but a story that immediately came to mind was a time I was took for $20, and gave it to the guy with a smile. A few years back, when I was living in an apartment, my roommates and I were kicking back in front of our place when a guy walked up looking sweaty and tired. He explained to us that he was our new neighbor in a unit just across the pool, and had run into some bad luck. His moving van ran out of gas down the hill, and he was trying to get everything moved in to his new place before he had to work that evening. He asked if he could borrow $20, and repay it the next day. Wanting to be a helpful neighbor, I gave him $20 and wished him luck. After a couple of days of not hearing back from the guy, I began knocking on the doors of the apartments across the pool. No one had heard of a new neighbor moving in, or had seen the guy. I couldn't believe how gullible I was. It wasn’t so much the $20, but the fact that someone would take advantage of another person that was trying to help.

Another story that came to mind was the time my buddy bought a VCR (before DVD’s) from a guy selling them out of the back of his trunk in a parking lot. My friend gave the guys $50 for a new, unopened VCR. He raced home, excited to test his new purchase. Upon opening the shrink wrapped box, he realized that instead of buying a VCR, he bought a VCR box filled with bricks. Granted, he deserved what he got for buying what would likely have been stolen merchandise.

Do you have a good story of a time you have been coned?

June 25, 2007

The Carnival Of Personal Finance, #106

Special thanks to Silicon Valley Blogger at The Digerati Life for doing a superb job hosting the 91 Ways To Wealth: The Carnival of Personal Finance, Epic Journey Edition. Out of 91 posts, I'm proud that my post Credit Reports and Credit Scores was selected as one of the Editor’s Choice.

Thank you also to Clever Dude, Blunt Money, and Cheap as chips for picking my post as a one of their favorites in the carnival.

June 24, 2007

Investing Plan - Update

We have made good progress with our Investing Plan, and have tweaked it a bit along the way.

Our 401(k) is currently at $13,184.13. We have increase our contribution from 2% to 3%, effective July 4. To better diversify our 401(k), we have reduced the percentage allocation of each mutual fund, and added a couple of additional funds. Our current holdings are:

16% - JH Lifestyle Aggressive (1.47% expense ratio)
16% - Pacific Rim Fund (1.46% expense ratio)
16% - Real Est. Securities Fund (1.19% expense ratio)
20% - Natural Resources Fund (1.49% expense ratio)
16% - International Small Cap Fund (1.55% expense ratio)
16% - Small Cap Index Fund (0.95% expense ratio)

I really dislike the high expense ratios of my 401(k) choices, and I was surprised to find they increased on some of the funds since my last post, and went down on others.

My wife is eligible to enroll in her company's 401(k) plan in October. She will get a 100% match on the first 3% and a 50% match for the next 2%. Needless to say, we plan to invest 5% of her paycheck to get the company match (free money).

Roth IRA's
My wife and I have opened Roth IRA's thru Vanguard.

For my wife, we invested $3,000 in Vanguard 500 Index Fund Investor Shares (VFINX) (0.18% expense ratio).

And for me, we invested $3,000 in Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) (0.19% expense ratio).

We hope to have both Roths fully funded by the end of the year.

Taxable Accounts (Brokerage, Prosper, etc.)
Our 300 shares of ADVENTRX Pharmaceuticals (ANX) are now worth $798.00. My parents gave me this stock, and have a large amount of money invested in this stock. Since they first bought in, the stock has almost doubled. They expect it will go to $10/share. That would be sweet.

My wife and I invested $100 in two Proper loans. Both loans are current and our average interest rate is 12.23%, which is great, but for a variety of reasons, I'm glad we didn't invest more money.

Savings Accounts
With just a $1,286.79 balance, we haven't made as much progress on our saving as we would like. Most of our spare money has gone to funding our Roth IRA's. We should be able to build this up the 2nd half of the year. Our goal is to eventually have a $10,000 emergency fund.

We feel that things are clicking along nicely. We're working towards our goals, while not having to overly sacrifice. God willing, this success will continue.

June 22, 2007

Free Gas

Another benefit that we received as a result of purchasing the new (old) car is $35 worth of FREE gas. The credit union we funded the loan thru gave us a $10 gas card since a friend referred us to them, we also received another $25 gas card since we opened an auto loan within 30 days of our new credit union membership. They’re not big perks, but they’re free.

June 20, 2007

Opened Roth IRA

As you may recall, we opened a Roth IRA for my wife last month. I’m happy to report that we just opened a Roth IRA with Vanguard for myself as well. I invested in Vanguard’s Total Stock Market Index Fund (VTSMX).

We had planned to open my Roth IRA next month, but I received a $1,000 reimbursement check from my company a month or two before the business expense will post to my credit card. So, we used the $1,000 reimbursement check and $2,000 from our savings account to open my Roth IRA. The $1,000 business expense will be paid off (using savings) as soon as it posts to my credit card. In the meantime, it has allowed us to open my Roth IRA a little sooner than expected.

So, my wife and I each have $3,000 in our Roth IRA’s thus far for 2007. We plan to contribute another $1,000 each in the coming months to fully fund our Roth IRA’s for 2007.

June 19, 2007

The Benefits Of Acupunture

My wife has suffered with severe allergies her whole life, and none of the prescriptions her doctors have provided gave any lasting relief. She began going to an acupuncturist a little over a year ago on the recommendation of a friend. I’m a bit of a skeptic, so I didn’t expect results from such an unusual field of medicine. Acupuncture seemed so foreign to me and more of a novelty than anything. However, after a few visits, she was able to reduce her allergy medicine and, eventually, quit taking the medicine altogether. I was surprised at the results – there was no doubt that she was feeling much better.
Fast forward to March 2007 (when we combined our finances): My wife quit going to the acupuncturist because she was feeling better and wanted to help us save the money. As a result, her allergies have begun to worsen again. That being said, we have decided to add the $60 acupuncturist visit to our monthly budget beginning this month.
Although I wouldn’t believe it if I didn’t see it, this is money well spent.

June 15, 2007

Steady Progress

Although I only post our net worth in this blog once a month, I check our progress almost daily. Well this morning, we broke $20,000 ($20,235.09 to be precise) in liquid assets (Pre-tax Retirement Accounts, Roth IRAs, Taxable Accounts, Cash & Savings Accounts). Unfortunately, our net worth is well below this amount because we have liabilities that pull it down (0% interest credit card debt, student loan balance, and a mortgage that is slightly higher than what our condo is worth).

The details of this increase in our liquid assets will be noted in our new worth update post at the end of the month.

June 13, 2007

Cashing In Some Vacation Days

My company provides 4 paid days off (PDO) each year. The vacation days are structured as follows:

  • After your 1st year, you receive 1 week of vacation

  • After your 2nd year, you receive 2 weeks of vacation

  • After your 5th year, you receive 3 weeks of vacation

I have been with my company for just over 6 years, and currently have 92.29 hours of Vacation/PDO saved up. My goal was to always have 2 weeks of Vacation/PDO available in case of an emergency. Today, I decided to cash in 48 hours of vacation so that we can start earning interest on it.

My company’s HR Department and Accounting Department are quick - I received the check this afternoon. The gross amount was $1,526.54, but after taxes, social security, and a mandatory 401(k) contribution, the net amount is $1,219.11. What a blessing. I plan to deposit these funds into our Emigrant Direct Savings Account, and eventually use them to fund my Roth IRA.

I can cash in Vacation/PDO whenever I want, but will probably limit it to 6-8 days cashed in a year. Effectively, giving myself a 1.9 % - 2.7% raise.