Credit Card Debt
If you’ve recently starting reading, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high yield savings accounts that actually earn me 5% interest or more, and keeping the difference as profit!

Along with other deals that I write about, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.

Cash Savings, Home Purchase
We’re still in the process of buying a home. There will be big drops on the cash column soon as we finally spend our down payment funds as well as pay for things like closing costs and home improvements for our home.

$5,000 was put towards the earnest deposit, and I just marked it as spent. But I will have to decide on how to account for my home value in my net worth. I’m leaning towards just keeping it simple and taking option #2, but that may be considered a cop-out if my home value drops.

Retirement and Brokerage accounts
For the third month in a row, our investments overall have dropped in value by 2-3%. Good thing I only check in once a month. I gloomily predict that things will get significantly worse before they get better… but I don’t actually risk my money on guesses. I continue to “stay the course” and keep making regular investments into my asset allocation.

New Midterm Goals?
Although I still want to visit Brazil, Australia, and Southeast Asia, it looks like we’ll probably be spending the next 6 months instead installing hardwood floors, remodeling bathrooms, and jackhammering some concrete. I don’t know if we’ll have the time or money to visit any other place besides the wonderful world of Home Depot. We’ll have to see.

You can see our previous net worth updates here.

Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high yield savings accounts that actually earn me 5% interest or more, and keeping the difference as profit!

Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.

Cash Savings, Unknown Goals
These numbers are as of January 1st, but I didn’t post them because I was hoping to announce new goals at the same time. But I haven’t pinned them down exactly yet. I know that do want to create a formal emergency fund, as opposed to just relying on the existing cash cushion we have right now from our future house down payment. So that’s where the cash increase will go towards. We also still need to re-examine our insurance needs.

(Added) Again for newer readers, this is the total net worth for both my wife and myself. We are (now) both working professionals in our late 20s making sizable incomes in the six-figure range. Until recently I was still in school (again). Our expenses are low right now right now, not having a huge mortgage to support… yet. But we do want a house and want to put 20% down if we can, so that is what the large amounts of cash savings are for.

Retirement and Brokerage accounts
Our investments overall have dropped another 2-3% since last month. As reported in our retirement portfolio update, we have both placed $15,500 into each of our 401k/403b plans this year. For 2008, I think we will try and make the contributions more spread out across the year in order to dollar-cost-average and make our cashflow more consistent.

You can see our previous net worth updates here.

About My Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it on junk, I am placing it in high yield savings accounts that earn me 5% interest or more, and keeping the difference as profit.

Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to. Also mixed in are our monthly credit card charges, which we do pay off each month.

Commentary

Cash Savings, Midterm Goal Done. We have successfully reached our mid-term goal of $100,000 to put towards a house downpayment. This goal was set initially on April 2, 2005 – right here on this blog, with a deadline of mid-2007. Since then, I quit my 9-5 job, went back to school, changed fields, and now work both on my own independent ventures and a salaried “W-2” job. That transition set us back, but we finally got there, just 6 months late. 🙂

Of course, now we have to set another mid-term goal. For now, I think a proper goal would be probably to keep accumulating more cash, as if we do have to buy a house there are tons of other costs like closing costs, mortgage points, moving costs, initial home repairs, and so on to worry about. Not to mention also keeping an emergency fund, which is pretty critical once you have a mortgage to worry about.

Retirement and Brokerage accounts. Our investments overall have dropped about 2-3% since last month. We have again juiced up our retirement contributions this month, because unlike IRAs, the 401k contributions for 2007 have be in by the end of the year to count under the 2007 annual contribution limits. Thanksgiving managed to sidetrack me from my asset allocation series. It must be done by 2008!

You can see our previous net worth updates here.

About My Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually borrowing money for free at 0% interest, putting it in high yield savings accounts that earn me 5% interest or more, and keeping the difference as profit. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.

Also mixed in are our monthly credit card charges, which we do pay off each month.

Commentary

Cash Savings. We continue to have a big cash hoard to try and reach our mid-term goal of $100,000 to put towards a house downpayment in an expensive area of the country. We are now at $94,386 in non-retirement funds (cash + brokerage + 529 – credit cards). Getting close! We continue to browse for that perfect home that fits us, and we’re starting to learn more about the ins and outs of mortgages.

Retirement and Brokerage accounts. Performance-wise, there seems to have been little movement over the last month. The increase in value is primarily due to my wife starting to contribute to her new 403b, which is finally set up properly. We hiked up the percentages in order to try and build up some pre-tax contributions before the end of 2007. Still have to decide whether to contribute to a Non-deductible IRA this year. Finally, I’ll be finishing up my series on rebuilding our portfolio this week.

That’s it for this month. As always, we’re not racing against anyone else but ourselves. Take a peek back at our previous net worth updates here.

About My Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually borrowing money for free at 0% interest, putting it in high yield savings accounts that earn me 5% interest or more, and keeping the difference as profit. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.

Commentary

Retirement and Brokerage accounts. Last month’s update was right before the drop in the Fed Funds rate, which resulted in another big jump in our account values this time around. In addition, I made a large $10,000 contribution to my Self-Employed 401k at Fidelity.

I’m glad to get our retirement contributions back on track since we haven’t done very much in that department this year. I still have to figure out how much more I want contribute this year, as I do have a some flexibility with the account due to the ability to add profit-sharing contributions. Another thing on my mind is whether to contribute to a Non-deductible IRA this year.

Cash Savings. This actually didn’t go up as much, due to the big contribution to our 401k.

Quick summary. Our non-retirement funds went up slightly to $85,605, which puts us at almost 86% of our mid-term goal of $100,000 towards a house downpayment. Total net cash is at $79,707 (+$1,475 from last month). Take a look back at our previous net worth updates here.

I just found my old copy of The Millionaire Next Door, a book which found that, contrary to popular belief, most millionaires actively live in modest neighborhoods and drive common cars like the Ford F-150 truck. Flipping through it, I remembered that it also provided a target as to what your net worth “should” be:

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

If you don’t have any significant inheritances, this boils down to:

If you are near this target, you are an average accumulator of wealth (AAW).

If you are less than half your target, you are an under-accumulator of wealth (UAW).

If you have more than double this target, you are an prodigious accumulator of wealth (PAW).

I’ve never liked this formula. The main problem I see with this rule of thumb is that it is linear with respect to age. This makes it pretty harsh on younger people, especially those who are just starting out.

Someone who is 25 and makes $40,000 a year is supposed to have a net worth of $100,000. If you got a job at 21, you’d need to have both graduated with zero student loan debt and saved up $25,000 each of the last 4 years. That’s barely even possible after taxes. But if you went to say, law school, and just graduated at 25 making $90,000 a year, you’re supposed to have $225,000 saved up right out of the gate?

Let’s do our target, roughly: 29 x 200,000 / 10 = $580,000. Whew, we are serious under-accumulators!

About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. I’m actually borrowing money for free, putting it in safe investments that earn me 5-6% interest, and keeping the difference as profit. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.

Commentary
August was still a very transitional month with starting new jobs, meeting new people, and getting used to living in the in-law unit of a family member. Most of our things are still stuffed in the basement. The positives definitely overwhelm the negatives however:

Cash Savings. It’s showtime! With dual incomes, no kids, and no rent or mortgage, the next several months should allow us to save money faster than ever before. This is a great opportunity, so I really want to take full advantage of it.

We’ve tried to alleviate the no-rent guilt by buying food, power tools, and football season tickets for our family. But they all know the whole point of living here is to save up for a house, and have done the same thing themselves, so hopefully there won’t be much tension.

Retirement and Brokerage accounts. There seems to have been a bounce since last month, with our accounts going up about 3% and ~$2,500. I don’t think we’re out of the woods yet, though. I do need to catch up on my Solo 401k contributions, and make sure to finish setting up our new Roth 403b plan.

Quick summary. Our non-retirement funds now add up to $83,763, which puts us at 84% of our mid-term goal of $100,000 towards a house downpayment. Total net cash is at $78,232 (+$10,938 from last month). Take a look back at our previous net worth updates here.

About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me 5-6% interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please do check it out if you are curious. This is why, although I have the ability to pay the balances off, I choose not to.

Commentary
What a crazy month July was. Saying goodbye, packing up, visiting family, celebrating a marriage, moving, saying hello! In the meantime, our net worth dropped, again! What happened?

» Stock Market Blues. With everything that’s been happening, I haven’t been keeping up with this wild stock market ride. Losing 5% in one month in our investments was a surprise. Sub-prime loans are either a real factor to worry about or mainly just a cover-up for the fact that people really don’t know what to think right now. I certainly don’t, but I never try to understand the short-term movements of the markets.

» Moving Chaos. Moving cross-country really throws off a budget. We ate out a lot. We paid for travel costs. We had to pay for movers, but are waiting to get reimbursed by our employers. We bought some new furniture. We only had to pay for rent for a part of July, but we’re still waiting for our security deposit back.

» New Jobs. We’re both in our new positions and faced with new co-workers and bosses, bigger (upcoming) paychecks, and a whole new set of challenges. I have to decide on investments and contribution levels for a new 403(b), as well as other benefits like health insurance, dental insurance, and disability insurance. Lots of stuff to talk about in August!

Quick summary time… We are still saving cash, with our non-retirement funds now add up to $72,699, and total cash is $67,294 (+$2,573 from last month). Read about our mid-term and long-term goals and take a look back at our previous net worth updates.

About My Credit Card Debt
Got credit card debt? I sure do. But let me explain – I’m borrowing money from credit cards at 0% interest and investing in a bank account that’s earning me 5-6% interest. Result: Free Money! Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I wrote up a series of step-by-step posts on how I do this. Please do check it out if you are curious. This is why, although I have the ability to pay the balances off, I choose not to.

Commentary
To answer a common question first, yes, this is net worth for two people. We use the “one pot” method of managing partner finances, we don’t separate things out by person.

Our net worth dropped! There were a bunch of factors in play, but mainly it’s just a superficial wound. One significant change was that as was discussed previously, we stopped listing one of our cars as an asset. It messes up the numbers a bit temporarily, but in the long run it gives us a clearer picture of our progress towards that mythic “financial freedom” we all want.

Lots of big bills this month. Paid our semi-annual auto insurance premiums of about $700. Bought a new luxurious bed, also bought some nice sheets and pillows (from Ross), for a total of about $750. We’ve also been dining out a lot and spending time with good friends here before we leave.

Our stock portfolio dipped a little over the last month, it feels like a time of uncertainty for the markets in general. Some portfolio changes are coming, but nothing so far. While compiling this net worth update, I noticed that my wife’s 401k just jumped by $1,200?! It turns out they did some sort of special mid-year employer contribution, which my wife apparently didn’t even know about. Hey, I’m not going to question it 🙂

After all that, we still saved a good chunk of money this month. Our non-retirement funds now add up to $70,419, with total cash at $64,721. See our mid-term and long-term goals explained.

You can see all my previous net worth updates here. Next month is going to be hectic, with a wedding, a trip to visit the parents, the big move, and new jobs!