Financial Year In Review
Monday, January 05, 2009
Back at the end of May, I started taking a snap shot of all of my account values so I could come up with an estimated net worth.
Since that time, I spent nearly six thousand dollars on a new heat pump, started paying for a home refinance, bought new tires and watched the stock market dive, taking a big chunk of value out of my 401(k). I also got my biggest Christmas bonus (technically profit share) of my career, zeroed out my credit card debt, and started saving up for a mattress purchase.
After seven months of tracking my accounts, I've increased my net worth by just over eight... thousand... dollars! That means I averaged a positive cash flow of over one thousand dollars every month, even with all those negative marks on my budget. That feels pretty good.
Coming into this year, I'm refinancing my mortgage at a much lower rate and a shorter term. This means that my month to month balances will improve that much faster. I'll be saving over $160 each month in interest, and that compounds over time, so it'll actually be more as time goes on. I plan to pay off my car loan by the end of the year, for additional interest savings, and to really increase the amount of money I can put into savings each month.
The trick is to keep spending (a lot) less than I earn. And well, there's really no trick to that. There are methods though. I limit "reckless" spending to a preset amount each month, placed in a separate account I call my allowance. That money is spent on lunches and eating out and socializing and buying toys. As long as I'm sticking to that preset amount, I feel no guilt, and I won't break my budget! I also try to optimize in other ways. The debts I have are low interest, and with the exception of the car loan, the interest payments are tax deductible! Money is kept in relatively high yield savings accounts. I am not maximizing my 401(k) yet, but I do put in the maximum amount that gets matched by my employer. That also saves me money on taxes. And I take opportunities to get bonuses, such as opening an ING Electric Orange for an extra $50, and earning about 2% overall cashback on my credit card (which I pay off each month and pay no interest on).
Sometimes I worry that maybe I'm not spending *enough* on myself, that I might squeeze too hard and snap. But I also remember that while I'm a little "deprived" now (and I use that word loosely), I'm making a big difference in my future. A positive cash flow now increases over time, and a really large cash flow in my future will allow me to not only be better prepared for retirement, but also allow me to increase the amount I put into my disposable income. Anyway, here's to another year of living life while also being fiscally responsible!
Happy New Year!
Seasons
Tuesday, December 30, 2008
Is history just repeating itself for me? My behavior and activities follow patterns. Some are short term. Maybe every week I go out for drinks with some co-workers. Hopefully, every week, I make it to the gym. Other things are long term. I work at a job for 2-3 years before moving on. I do the same with a car. Or where I live.
Are my patterns changing? I bought a brand new car. Surely I'll hold on to that longer than the usual 18-24 months. Right? I bought a house. I can't just pick up and go after a year, when my lease would be up. And I really like my job. Good perks. Good environment. Lots of friends. (Hopefully the economy won't sabotage this good thing!)
I'd like to think I'm stabilizing. You might even say I'm settling down. I don't know. I still find myself neurotic and paranoid at times. And some patterns seem to go back farther than I realize, when I read my old blogs. I am kind of a "nice guy" in how I approach women. And I seem to spend most of my time around girls that are already in relationships. I'm attracted to the unattainable and impossible.
And even when I find myself in a relationship, I find it so ridiculous that it could really be happening that I question reality. I deem myself unlovable. I assume that this, too, is destined to end in failure. I can't seem to take my own advice and see things at face value instead of analyzing and questioning.
Perhaps it is a self-fulfilling destiny. And a self-defeating attitude.
Positive Cashflow
Thursday, November 20, 2008
I tried to figure out my cash flow before, but I wasn't thinking in terms of the overall change in my net worth. But I create XLS spreadsheets for just about every idea I have. I created one where I record the balance of each account at the end of the day on the first of each month. I only have balances for the past six months so far. The first four are real rocky and the net change in that time span is $32.19 in the negative! The simple explanation is that I spent nearly $6000 on the heat pump for my house. But then it gets interesting. From month four to month six, my net worth jumped a whopping $3900. I thought this might be a mistake, but after poring over the numbers and formulas, I decided to copy one of my cash flow sheets and adjust it not to show payments towards things like the mortgage and cars, but simply things that change my net worth. So instead of a car payment, I show the amount of interest paid. Same with student loans and my mortgage. I include all income including paychecks, retirement contributions (and company match) and the rent paid to me by roommates. I include outgoing payments like utilities, groceries and any other expenditure that doesn't reduce my debts. Shockingly, my income exceeds my expenditures by $1900! I still can't believe that's real. I haven't been this healthy financially... ever! At least, I don't think so. Maybe when I first started working full time, I may have expenses small enough to make up the difference, but I doubt it. Now I have a new way to compare financial health to my friend and co-worker. We turn lots of things into competitions, like not eating sugar for 17 days (and counting)! I'm curious to see how her positive cash flow stacks up!
Money in the Mind
Wednesday, October 29, 2008
I don't want to jinx myself, but I've been doing a good job of controlling my spending. Well, mostly. I bought a new suit for a funeral, and I didn't really have to. It's just that I've been under dressed for a lot of events before, and didn't want to repeat that embarrassment. I mean, I'm sure family would overlook that, if they'd even notice, especially at an event of that nature, but then I thought I'd need a suit anyway for an upcoming holiday party. So I bought it, and it's been bouncing around in my head since. I even felt a little sick about it for the first day or two, and even now, weeks later, I debate the decision, and wonder if I could and should return it. But I've bought very little else. To aid in this, I no longer let myself visit http://slickdeals.net/ while I'm at work. I still visit http://www.woot.com/ but since there's only "one" deal each day, it's a lot less likely that I will succumb to temptation.
I set up allowance accounts back when I was dating Emilie (as recommended by my therapist!) and it's something I kept after we parted ways. I don't always stick to it (the suit, for example), but most "wants" come out of the allowance. Dining out, drinks with friends, grabbing lunch instead of packing, and buying new clothes all comes from the allowance fund. That money is spent however I like, guilt free. Of course, when I cheat, I feel some guilt! When I don't cheat, my budget actually turns out the way I thought it would, and it's actually a pretty healthy budget. Since I don't have any credit card debt, I am currently putting $200/month into my growing emergency fund, $130/month into an irregular expenses fund (to deal with quarterly, semi-annual and annual expenses like some utilities and basic car maintenance, as well as less frequent things like tires and appliances), and $250/month extra towards my mortgage.
I think about all of this a lot, and tweak things all the time. Only a month ago, the plan was to put that mortgage money into a high yield savings account so I could afford to refinance if interest rates dropped. But I realized that since I still owe more than 80% of my home value, I need the balance to decrease anyway, and if a good enough rate comes along, it'll be OK to roll the closing costs into the refinance... as long as the total is less than 80%. And though I do enjoy some liquidity, I also wanted to get a little more bang for my buck, so I started a CD ladder with the "excess" in my emergency fund. Every month (for a year), I'll put $200 in a new 12 month CD. Once they are all created, I'll let each one roll into a new CD, unless I need extra money that month... for an emergency. It's kind of funny knowing that after a year, that single $200 CD will only earn $8.50. But the whole ladder could be earning over $100, and the interest will compound over the years. The other day, a piece of my neighbors opened mail (or trash) blew over to my yard, and I saw that it was a notification of a CD maturing. What was once $500 was now over $800. I wonder how long the CD existed! At any rate (pun!), I could possibly create a larger ladder down the line, if I have enough in the emergency fund.
Please Make The Freelance Stop
Tuesday, October 28, 2008
I am very tired. I'm not sure if I had a pinch too much sugar last night, as I drank a few gulps of 100% fruit juice, but I laid in bed exhausted but unable to fall asleep. I did not have coffee late in the afternoon! The last thing I ate was raisin bran, though that was somewhat late at night.
Now I'm having coffee, and it's later in the afternoon than I'd like, but my head is hurting a little, and I haven't been productive at all today. My schedule is terrible, dooming me to a low percentage of hours I can bill this week.
I watched a movie last week, and wrote a review and analysis, but I was pretty tired when I wrote it. Still, I want to get back into that, but I haven't found time yet. I did kill some time playing Civilization: Revolutions over the weekend, but the biggest problem in my life for the past several months has been freelance. Now I really haven't put much of my time into it, because I'm really never in the mood for it. So one little project that wasn't supposed to go beyond May and perhaps June is still dragging on, with increasingly dire messages from my freelance client. But I just can't focus on freelance for long at home without getting rather annoyed with it all. And whenever I'm not doing it, I'm feeling guilty instead of really relaxing and resting and enjoying whatever I'm doing. I want the freelance to go away, but it just lingers, needing my devotion to the project for resolution. As a bonus, I stupidly accepted another project after that, which is dragging in the same way. I should have learned when to say "no". Now, I can't figure out how to make it go away. The easy answer is to complete the work, but it's the last thing I ever want to do when I'm home. I can almost trick myself sometimes into believing it's still a hobby of mine, and that I have some interest in it, but then I see the site I'm working on, and all the disorganized tasks and bugs and requests my client has thrown at me, and my frustration returns rapidly. I just wish he'd find someone else to finish the job by now!