Real World Finance$

It’s that time again.  I got a chance to see how we are doing with just one month left to go this year.  Despite the stingy market, we have done pretty well.  We are under budget for spending this year and over budget on income (not a bad place to be huh?).  But let’s look at our current net worth, shall we?

• Assets - just a slight increase this month.  Still, the problem seems to be mainly with the market, so it’s not too concerning.  Despite putting another $600+ in my 401(k) the total value is up by only $5!  It’s a little depressing if I think about it too much, but not so bad when I take a the long term approach.  We’ll shake this dust off soon enough and I’ll be better off for it.
• Debts - Good progress here again.  It’s been a very consistent drop this year.  Our credit card debt started the year at like $54,000, so being close to breaking the $45,000 mark at the end of the year feels good.  Just regular payments are accelerating the rate at which that amount goes down.   I’ll also have to keep an eye out should the government actually do something about mortgage rates and they drop down to 4.5% as is being talked about now.  A streamline refinance would be a great solution for us if available.  We could either save $160 a month and put it towards other debt, or keep paying the same and pay the house off sooner.  We’ll cross that bridge when we come to it.
• Net Worth - Obviously, we aren’t going to be getting back to a $0 net worth still this year.  Of course if our retirement investments had simply held value and not dropped like they have, we’d have another 4-5k towards our net worth and be much closer.  Still, we’ve made good enough progress and will continue down this path.
• Look Ahead - December is looking to be a good month.  I should get paid 3 tims this month as I am currently scheduled to get paid on 1/1/09, so I’m assuming they will move that back to the previous business day and put it in the month (otherwise, January will get 3).  In addition, I will get that extra paycheck from teaching at the end of the month.  We aren’t spending a lot on Christmas this year as we are taking a vacation in early February.  In all honesty, I’m expecting to be within $10k of our $0 net worth mark before year end.  Next year is looking pretty good as well, thanks to about $40k of business loss of which 40% will come back to me.  That will give a nice extra tax refund I hadn’t really planned on and that will get applied to some extra debt payments.

This past week has been amazingly busy for me.  Work has been full of planning meetings as we are moving towards a conversion of our custom software to a new programming language and from a actual application to a web based function.  In addition, my own company is preparing to leave for our trade show a week from tomorrow, so we’ve got brochures to finish a booth that just got done and is being packed for shipping as well as our final draft of the patent application that just got filed today.

With all that going on, I just haven’t had much time to get in here and write any posts this week.  I have been working on our budget some and we have been doing really well at cutting back on our spending again.  We just filled the car up with gas last night.  It had been 13 days since our last fill-up  and we bought less than 9 gallons and paid less that $18 (it was $2.179 per gallon).  Of course, as we were on our way back home, we saw it for 2 cents cheaper a few blocks from our house!  It always seems to work that way.

I did a quick look at our net worth coming up on the end of the month and while our debts will be down again this month, our assets are down even more thanks almost entirely to the stock market.  Still no worries, we actually have some money back in the savings account now and I start teaching a new class next week and will have some extra paychecks the next 3 months.

Hope you all have a nice Halloween.  Hopefully next week won’t be quite so busy, but don’t count on it!

I reviewed and made some updates to our goals for the year recently. Part of the updates have to do with the way the stock market has performed this year and part has to do with the fact that I chose to not teach as much this summer as I had earlier in the year. Here are the updates and our status on them as of the end of September.

• Credit Cards - I had originally hoped to get that balance down to -$40,000. I’ve changed it some, but still hope to get $10,000 paid off on it this year. It’s still a bit of a stretch at the current pace, but we should hopefully come close to that.
• Net Worth - Much of this has to do with the market as well. If you look at the numbers on the retirement section below, you will understand why (not that you don’t already). But I actually calculated that if we had gotten a small 3-5% return on the market so far this year, our current net worth would be $3,000-$4,000 higher than it is currently. So, we won’t make our orignal goal of zero net worth until next year, but we will still make it none the less.
• Retirement - Yikes, this has been a disaster this year. I’m still hoping there will be a bit of a market recover here soon. October has been rough and the number looks even worse than the end of September (the current balance is shrinking down below $9,000 at present). I still have nearly $2,000 of contributions coming out my paycheck yet this year, so some small market corrections and I just might make that goal yet.
• Cash - Last month should have been the low point since we just got back from vacation (missing a full week of work unpaid) and I hadn’t been teaching for a while. I’ll have some better paychecks the rest of the year and I start teaching another class in about 3 weeks, so this should get back up, though not as high as my original goal of 10k by the end of the year.

Anyway, probably some more realistic goals in this economy. I suppose I’ll have to start thinking about goals for next year as well.

Well, it’s October, we made it through September.  As I mentioned yesterday, September was not a strong month asset wise, but we continued to pay down our debts.  So, here’s the dirty details via my NetworthIQ Profile.  I’ll go over the details of the whys below the picture.

•  Cash - One big word here, Vacation.  Such is life when you are a contract employee.  The vacation itself wasn’t quite as expensive as 6 days away from work.  Being away from work made up for almost three quarters of the decline in cash for the month.  The rest was a new bed for my son (he’d well outgrown the old and had been sleeping on a couch in his room) and the rest of the vacation expenses (gas, food, etc.)
• Retirement - I promise, I really did put money in my retirement account last month!  No, Really!  Of course, when the stock market does what it did last month, this is to be expected.  At least I’ll be buying a lot more shares with each paycheck contribution the next few months.
• Cars - Updated the value based upon the current Kelly Blue Book value listed online.
• Total Assets - Not a pretty picture here, all those circumstances above leads to a bad month on our asset balance.
• Total Debts - Regular old month here, not much to tell.  We continue to make progress on that number.  We haven’t been able to do much extra lately as I haven’t been teaching and we were saving for vacation.  There were 2 car payments that cleared the bank this month, so that did help to offset the asset slide a bit more than usual.  Otherwise, it’s slow and steady at this point.  I start teaching again next month, so hopefully we’ll be making more progress soon.

So, what’s up next?  Well, being a little worried, I checked out our budget for the year.  We are actually less than 1% over budget on spending so far this year.  Add to that being 5% over budget on income and we end up being pretty well off.  Of course, some of that extra income was my 401(k) matching that I didn’t account for as income in my budget and has since disappeared in the stock market.

Over this weekend I’m thinking about sitting down as a family and looking over our budget for next year and where we can find some more savings without giving up having fun too.  I’m sure there are still some more places to save, we just need to to coax them out of hiding.

I haven’t actually recorded all the numbers from September yet, but I can tell you that things don’t look good.  Between vacation (which means missing an entire week of pay), the stock market plunge at the end of the month and another write down of the value of our car (which I do quarterly) our net worth has dropped 2k-3k last month.

Despite that, I do know that our debt went down.  Most of the bad changes were in our assets category and not in our liabilities, so that’s one bright side.  I’ve looked briefly, but haven’t had the time to physically record the numbers as of yet.  Hopefully that will be coming this evening.

Also, as we’ve been tightening our belt again lately, I’ve noticed us going through a cycle of spending money right away when I get paid, and then not having anything left to spend in our “allowance” for the last week before the next pay day.  On one hand, it’s good that we are keeping to our allowance type budget, but on the other, I’d like to have more even spending rather than the binge and then nothing.  So, we’ll be sitting down soon as a family and talking about the upcoming holidays and what we can expect budget wise.

We’ll also need to start sitting down and pouring through our budget for the coming year to see where we can save more.  It might be a bit tricky as I will hopefully make the transition to self-employed next year as my business is beginning to take off.  So, lots of planning to take place in the weeks to come.  That means lots more posts from me about how we decide what to keep and what to get rid of for next year.

By the way… can you believe it’s October already!

This summer we have been rather lax with our spending.  We haven’t made quite the progress we were earlier in the year.  Although, only part of that was because of our spending.  The other part was that I haven’t been teaching and bringing in the extra income.  The summer off was nice, but it’s time to get back down to business again.

Having just got back from vacation a couple weeks ago, we have begun to tighten the belt again and hold ourselves back to our budget.  We’ve got some old furniture up for sale on Craigslist so that we can pay for a new bed for our son.  I’ve signed up to begin teaching another class starting in early November as well.  That should give me two more extra paychecks by the end of the year and one more the end of January (just in time for Christmas and an early February vacation).

In light of the stock market this year, I’m not anticipating actually reaching my goal on retirement savings.  Then again, I don’t know anyone who is!  So, this year is not shaping up to be quite as good as I’d hoped, it’s still going to be many times better than if we’d continued with our previous habits, so I’m still happy at this point.  If things continue to go well with my new business, we just might make some very big strides next year as I start to get income from there while I’m still working my regular job.

Keep your fingers crossed for me.  By the way, I do plan on writing up a little something on our venture here soon.  We are putting some final updates to our website this week, so after that I’d love to start getting some traffic over there!

Glad to see I still have a few people hanging around here.  I know I’ve done a terrible job of keeping up to date the last couple of months.  Between my regular job, taking over as treasurer of the neighborhood association, and things getting up and moving on my own business, there just doesn’t seem to be enough time in the day most days.  Anyway, so here’s an update of what’s happened these last several, dormant, weeks.

• I haven’t been teaching at all.  I decided to take the summer off and relax.  However, my schedule now is so full that I don’t see when I can fit 6-8 straight weeks in of teaching during the week.  Maybe I’ll start a class this winter heading into the new year.
• We were on vacation the first week of September.  All expenses were paid out of pocket, except for the pre-paid hotel bills that I put on a card.  I’ll be paying that card off as soon as the bill comes in later this month.
•  My business is starting to take off.  We’re working on getting our first customer up and running by the end of next week.  We were also invited to speak at a trade show in AZ come November, so that’s exciting.
• In order to help fund the business, my business partner and I were approved for a line of credit from a local business.  We had to secure it with second mortgages and personal guarantees.  We’ve set up spending limits on the line for ourselves and projects we know need to be done soon.  I haven’t put that amount on our net worth.  If worse comes to worse and we are forced to pay it personally I’ll so so at that time, but right now, it’s still a liability of the LLC.

Also, I did just update our NetWorth IQ last night as well.  Our net worth is still headed up towards $0, which is exciting.  It’s not looking like we will make it all the way by the end of the year, but we will be MUCH closer than the -$20k we had towards the beginning of the year.  So, unless my business takes a quick turn (which is possible) and we’re able to draw some income from it yet this year, we will likely end up short of most of our goals.   But being short of lofty goals is still better than being in the same boat we were in 12 months ago, wouldn’t you agree?

The year is half past now.  But, as most everyone has noticed, the market has not been a pleasant thing the past couple of months since I’ve done this.  June was not exactly a pretty month and July is a big question mark at this point.  Let’s look at the real numbers though and I’ll get into it from there.

• Credit Cards - Yep, the balance went up this past month.  We had been saving for our new TV for a while.  With getting our economic stimulus we decided to go ahead and do that now.  However, since the store was running a 3 year, 0% interest deal, we put it on the card (that we already had) and I’ve set up auto payments from our bank account for the next 30 months to pay off the balance.  So, yes, we used the card, but it was planned for and will be paid off with no effort or cost.  That allows me to keep money in our savings account longer and earn more interest.
• Net Worth - Down almost $3,000 this month.  Part of that comes from the credit card, part from the retirement plan going down in value, and part from the whole roof fiasco.  Not as bad as it should have been, since the larger of the 2 payments to fix our roof didn’t clear the bank until after the first of July.  On top of that, I also wrote down the value of the car another $1,500 the month as well.  Guess things could have been worse.
• Retirement - Down almost $100!  That’s really frustrating.  Between my 401(k) contributions and my company matching contribution, there was nearly $700 put in the plan this last month.  To see the value go down like that is rather disheartening.  Guess if I hadn’t put anything in it would have been much worse!
• Cash- In addition to paying for part of the roof, we also had our 6 month insurance renewal and our annual renewal of our VoIP.  Then there were the  summer expenses for the pool, camps, golf lessons, etc.  All that added up pretty good this last month.

Now for the details on the Net Worth Update:

Of course, the month didn’t quite go as expected.  We bought the new TV right after Memorial Day and, believe it or not, the next day I noticed a wet ceiling from our leaky roof.  The total roof cost was nearly $3,000 and still 2 of that will come off of next month’s report.  So, about a thousand of our cash was from the roof.  The retirement went down because of the crappy market this last month.  I wrote down the value of the car another $1,500 as well.  That all means our assets went down over three grand.  Not exactly the picture I was hoping for this month.

 On the liabilities side, our mortgage is down slightly along with the student loan, as always.  The credit card was up some, but only about half as much as the tv cost, so it will be back down next month for sure.  The car loan took another big hit this month as the timing of things had 2 payments come out in June.  So, net effect, our total debts still went down this month, but our assets were down substantially.

Next month will be a curious one.  On one hand we will have the extra 2 grand for the roof come out along with our booking of vacation in September (we’ll be going to an all-inclusive conference on homeschooling for about a thousand bucks).  However, to offset some of that this will be my second time this year to get 3 paychecks this month.  So, baring another disastrous stock market month, our net worth might dip back down towards the -$10,000 range next month (I hope). 

Our 6 month update of our electric bill came this past week.  Last year the bill had been $104 per month.  It was increased last fall after we got the new AC unit to $124 a month.  That was okay mainly because we had used it as supplemental heat that kept us from leaving the natural gas boiler for the radiators on as long.  That meant the gas bill had actually dropped from $165 to $126 at the same time.

Now that we’ve been through a winter with very little electric use the budget is set to adjust again.  We’ve now been in the house for just shy of 2 years and have a full year of the new AC unit on the bill.  Next month, our budget billing will be dropping to $102!  Yeah us.  I’m hoping that our efforts at turning off lights, converting to CFL’s and being more stingy with our temperature in the house that we can get that under $100 by the next adjustment. 

On other notes, we have our 6 month auto insurance to pay yet this month as well as our annual VoIP bill.  Yet, even with those large bills, we should blast past a -10k net worth this month.  I’m hoping to finish up my current class I’m teaching through next month and take a bit of a break.  I want to use that time to get a better handle on our situation and see what I can do to speed things up even more.  Things are going well so far and I want to make it better.

Time for the budget update for the month of April.  Here’s where the budget stands for the year and some comments below:

• Income - Always the top line of any budget.  We are over budget still yet this year.  The addition of our tax refunds in April helped keep this number above budget.  However, things will change the last half of the year as my wife will no longer be babysitting and I’ll take a break from my teaching so we can take a vacation.  All that will eat into the over budget and into our cash savings we’ve been building up as well.
• Committed- This is a target of 60% of our income and includes all of our monthly commitments such as taxes, mortgage, insurance, etc.  We are still 14% under the YTD budget so far, so that’s good.  Part of that is due to missing 2 mortgage payments early on, but even with that this past month we were several hundred dollars under budget.  I don’t see that trend changing, so I may move some more from that category to the debt category.
• Debt - The target here is 10% for all debt except for the mortgage, but we are budgeted at 14%.  We are way over budget here because of that large payment this month.  Future months will be back to normal so to speak and we’ll drop down some, but I hope to keep that number up as high as possible this year. 
• Retirement - The target for this category is 10%, but we are down at 6% to put more towards debt.  I’ m putting 6% of my income in my 401(k) and started getting a matching contribution from my employer in April.  So, that puts us over the 6% budget for the year and will keep us over I’m sure.  It’s also helping out as it’s classified as extra “income” that I hadn’t really planned on for the budget.
• Fun- This is another 10% of the budget for all of our fun expenses for things like dining out, baseball games, new clothes, Netflix & Gamefly, etc.  We are still under budget here, but part of that is because we’re a bit over budget in Irregular at the moment.  Some of the expenses we’ve had lately for getting a garden ready and doing some planting around the house have been going to irregular rather than fun.  Re-classified we’d be right on budget in both.
• Irregular - This is the last 10% of the budget and is for stuff like my orthodontic payments, vacation and home improvements.  See the note on our Fun category for much of this, though we did also have our gutters and sewer lines cleaned out this past month.  That’s keeping the water flowing away from the house and out of the basement.  A much needed repair.
• All expenses- I put this line on there just to see where we were in total for expenses.  We went from 11% under budget for the year last month to 3% over this month.  The big change, the now infamous 4 grand debt payment.  Our expenses will be much lower in future months and we’ll continue to try and stay under.  The more we can stay under each month, the more we can save for extra debt payments.