January 30, 2008

January 2008 Net Worth Update (+$806.53)

Our net worth increase this month may not be as much as usual, but we’re still making progress. Our net worth increased $806.53 over last month, to $24,679.78 (click on spreadsheet below).

What worked this month?
Much went well this month. We began our 2nd mortgage accelerated payment plan by paying an additional $691.00 in principle, increased our savings account balance by $1,390.61, began our 2008 Roth IRA contributions with $300, and increased my 401(k) contribution by 1% (4% total contribution).

What did not work this month?
Unfortunately, our 401(k) and Roth IRA retirement accounts went down a total of $1,786.17 this month, even with our $609.74 in total contributions. Seeing as we should not need to access these investments for a couple of decades, this is good for us. We're buying low! Hopefully in 20+ years, we will be able to sell high.

What's coming next month?
Next month is looking good. We hope to be able to continue our 2nd mortgage accelerated payment plan with money from my wife’s commission check and by cashing in some of my vacation time. It will also be the first full month of pay after receiving my raise, further helping our bottom line. The big unknown is income taxes. We plan to do our taxes next month, determine how much we owe, and if we want to wait until April to pay it.

January 29, 2008

Property Taxes - Were We Able To Get Them Reduced?

In a previous post, I mentioned that we filed an APPLICATION FOR CHANGED ASSESSMENT in an attempt to get our property taxes reduced.

We received a letter from the County's Assessor's Office today stating that they reviewed comparable properties and agree that property values have declined. In our application, we requested that they reduce our property value from $340,016 to $275,000. Instead, they reduced our property value to $270,000, $5,000 more that we requested!

We simply have to sign the form and send it in. From that point, it should take 30-45 days to receive a corrected tax bill. We have already paid $1,842.50, half of our original $3,685.00 tax bill. We're guesing that our 2nd half of the tax bill will be reduced by ~$700, to $1,142.

Looking back, I thought this whole process was going to be a hassle. Thankfully, my wife was not of the same opinion and took it upon herself to call the County's Assessor's Office to find out where to download the form. After downloading the form, we spent a few minutes checking comps in the area on http://www.zillow.com/, completed the form, and drop it in the mail. . .Easy money.

January 21, 2008

2008 Annual Review

I had my annual review today and received good marks, as well a 4.5% raise. This $2,880 raise brings my annual salary to $69,030.

The raise was a bit lower than I usual receive because I will be getting another review, and hopefully another raise, in April. They are doing this in an effort to get all employee's annual review dates back to their date of hire anniversary (April for me). I had received a promotion a couple of years ago (in January) that threw my annual review date off from of my date of hire.

January 18, 2008

Not Worth The Risk

As a follow-up to my last post regarding Prosper, we have decided to quit lending on Prosper and begin moving our money out of this investment. While our loans are current and we're earning an average interest rate of 12.21%, we don't like the fact that each time we receive a payment, the money sits in our Prosper account accruing no interest, thus, reducing our return. For the amount of risk involved in personal loans, it’s just not worth it to us.

The money deposited in our Prosper account with each payment can't be loaned again or even withdrawn until it reaches a $25 minimum balance. Since we have 2 loans and the payments are only ~$1.65/month each, it took many months for our Prosper account balance to reach the $25 mark. Now that our account has reached the minimum transaction amount, we are moving $25 out of Prosper and into our Emigrant Direct savings account. At this rate though, it will take a couple of years until we have all of our money out.

We had such high hopes when we first learned about Prosper, but I'm glad that we did not invest more money because I have read numerous reports of defaults, even with A grade borrowers such as we lent to. Once in collections, these lenders are lucky if they get pennies on their dollar.

January 16, 2008

Slight Change In Plan

As I posted before, we have begun our 2nd mortgage accelerated payment plan. However, we are deviating from our plan a bit this month by not paying 100% of my extra check ($1859.07) to the 2nd mortgage. Instead, it will be spent as such:

$500.00 to 2nd mortgage
$785.00 to savings account
$100.00 to my Roth IRA
$474.07 to checking

I can rationalize the deviation from our plan because I found out that I will be receiving 3 months with 3 paychecks in 2008, one more than our 2nd mortgage payment plan is based on.

The money is being put to good use. We wanted to increase our savings to ensure we had more than enough to pay for our income taxes. We also wanted to bolster our checking account balance because our February mortgage payment will be due before we receive our 1st paycheck in February. We need a large enough balance to get us by until February 8th.

January 12, 2008

Net Worth Comparison

Check out this interesting net worth comparison tool based on your age and income: http://cgi.money.cnn.com/tools/networth_ageincome/index.html.

This calculator is set-up for individual comparison; I don’t think it really applies for couples. Nonetheless, I ran a few scenarios just to see how our current $23,873.25 net worth compares. The details are below.

Using my age (32) and annual income ($66,150):

Using my wife’s age (23) and annual income ($40,000):

Using my age (32) and our combined annual income ($106,150):

Based on the results, it seems that we are doing great for our ages. However, we are not don't as great when comparing our net worth based on our income. We just barely came out ahead in Scenario #2 using my wife’s income and in the other two scenarios, we get badly beaten.

While this calculator was fun to play with, I do not put a lot of weight into its usefulness. One flaw is that it does not take into account how long you have been making your current income. Just a couple of years ago, my salary was considerably less. In real life, this has to play into the equation.

Okay, maybe I'm just a little bitter that we didn't get better results. Ultimately, I know that what matters is where we are at in achieving our goals, not how we compare to everyone else.

January 10, 2008

3 Months Of 3 Checks in 2008

I was updating my work calendar for 2008 (holidays, paydays, etc.) and noticed that I will receive 3 months of 3 checks in 2008. This discovery was a nice surprise.

I get paid every two weeks, which usually results in 2 months with 3 checks. But, in 2008 it works out where there will be 3 months with 3 checks (January, July, and December). This "extra" money will go towards paying down our 2nd mortgage.

I call this "extra" money since our budget is based on my wife and I each earning 2 paychecks a month. I thought by chance my wife might also be getting 3 months with 3 checks in 2008, but it turns out she will be getting her standard 2 months with 3 checks.

January 7, 2008

2nd Mortgage Payment Plan Underway

I am happy to announce that we have begun our 2nd mortgage payment plan. We used $191 from my wife's commission check this month to make an extra payment to the principle. I know, it might not seem like much, but we have only paid down $637.49 in 2nd mortgage principle since we refinanced a year ago. Taken in that context, this extra $191 payment is the equivalent of 4 months of regular monthly payments.

And it doesn't stop there. We plan to make another $1700 payment to principle this month using my extra paycheck. This will get our 2nd mortgage payment plan off to an awesome start for 2008.

January 3, 2008

2007 Net Worth Recap

Below is a table compiling our net worth data for 2007 (click on table to enlarge). Besides our monthly net worth growth, certain things jump out at me:

Reviewing our net worth this way reminds me how different things were for us less than 12 months ago. During that time, our assets grew from $387,420.00 to $398,339.46 and our liabilities decreased from $390,588.85 to $374,466.21.

God willing, 2008 will be as much of a success.