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

Inspiration

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.