- Up at 5 two days in a row. Sleepy. #
- May your…year be filled w/ magic and dreams and good madness. I hope you…kiss someone who thinks you’re wonderful. @neilhimself #
- Woo! First all-cash grocery trip ever. Felt neat. #
- I accidentally took a 3 hour nap yesterday, so I had a hard time sleeping. 5am is difficult. #
- Wee! Got included in the Carnival of Personal Finance, again. http://su.pr/2AKnDB #
- Son’s wrestling season starts in two days. My next 3 months just got hectic. #
- RT @Moneymonk: A real emergency is something that threatens your survival, not just your desire to be comfortable -David Bach # [Read more…] about Twitter Weekly Updates for 2010-01-09
My Net Worth
I last did a net worth update in August. I don’t worry much about tracking my net worth, but I’d like to know where I sit at the beginning of the year. If I’m going to track it, I’m going to share it.
This is where I was sitting in August:
Assets
- House: $252,900
- Cars: $19,740
- Checking accounts: $1,342
- Savings accounts: $5,481 I
- CDs: $1,101
- IRAs: $10,838
- Total: $291,402
Liabilities
- Mortgage: $31,118
- Car loan: $0. Woo!
- Credit card: $20,967
- Total: $52,085
Overall: $239,317
Here is my current status:
Assets
- House: $252,900 (-0) Estimated market value according to the county tax assessor. This will be going down in a few months when the estimates are finalized for the year. It hasn’t gone down, yet, so I’m not counting the change, yet.
- Cars: $20,789 (+1049) Kelly Blue Book suggested retail value for both of our vehicles and my motorcycle. Wee! Value went up on things I intend to drive into the ground!
- Checking accounts: $3,220 (+1,878) I have accounts spread across three banks. I don’t keep much operating cash here, so this fluctuates based on how far away my next paycheck is.
- Savings accounts: $6,254 (+773) I have savings accounts spread across a few banks. This does not include my kids’ accounts, even though they are in my name. This includes every savings goal I have at the moment.
- CDs: $1,105 (+4) I consider this a part of my emergency fund.
- IRAs: $12,001 (+1,163)
- Investment Accounts: $1,155 (+1155) Occasionally, I run across some stocks that can’t possibly go down. I’ve only been wrong once on this front, but I never risk an amount that would be painful to lose.
- Total: $297,424 (+6022)
Liabilities
- Mortgage: $29,982 (-1136)
- Car loan: $0.
- Credit card: $18,725 (-2242) This is the current target of my debt snowball. This has actually grown a bit over the last week. I did a balance transfer that cost $400, but it gives me 0% for a year, versus the 9% I was paying. That will pay for itself in 3 months, while simplifying my payments a bit and saving me almost a thousand dollars in payments this year.
- Total: $48,707 (-3378)
Overall: $249,717 (+9400)
2011 Totals
- Assets: $297,424 (-1441)
- Liabilities: $48,707 (-10021)
- Overall: $249,717 (+9580)
I had two goals in August: Get an IRA rolling and save an extra $2500.
The IRAs I have are just sitting. I haven’t done anything to boost them, in any way, so hurray for the free $1163!
My savings have only grown my $773, but the $1000 I put in the investment account 3 weeks ago came from my car fund, so it would have been a growth of $1773, which isn’t bad at all.
I would still like to kill that credit card debt by August, which I think is doable. My crazy goal is to get rid of it by the end of May.
On 4/15/2009, I had $90,395 in debt. Today, it’s $48,707, so I’ve paid down $41,688 in just under three years, for an average of $1263 per month. That average is down $92 over the last few months. I blame our insane Christmas.
Overall, we had a good year. Paying off my car loan while paying down $4800 in credit card debt feels good. Now, I need to make 2012 better.
Watching My Debt
- Image by Getty Images via @daylife
I’m so excited. Yesterday, I transferred the final payment for my personal line of credit. This LOC was originally my overdraft protection LOC that had worked it’s way up to $6000 at 21%. Today, it is non-existent.
We started to pay down debt on April 15th, 2009. Since that time, we have paid off $22, 370.70 of our debt. That isn’t $22,370.00 in payments, that is a $22k reduction in our total debt! By my calculations, we have made approximately $28,000 in payments to get that reduction. Next week, we cross the line for 25% of debt eliminated. This is a good day.
Over the last 14 months, we’ve settled into much more responsible spending and saving habits. It no longer feels like we’re sacrificing our lifestyle. We’ve built up a useful emergency fund and set aside money for some things that we know are coming, like braces for my son. In 6 weeks, we are taking our first debt-less vacation.
Now, we start on the long slog to the end. We have 3 debts left to pay: Our last car loan(ever!), one credit card which was an accumulation of pretending we were making progress on our debt by combining many debts onto one card, and finally, our mortgage. The car will be paid by the end of the year. When summer childcare expenses are over, we’ll be making triple payments until it is gone. After that, we have a long, slow couple of years paying off the credit card.
It hasn’t always been easy, but right now, it feels good to look at the progress we’ve made.
Update: This post has been included in the Carnival of Debt Reduction.
How devalued dollars can hit you in the pocket
The Bretton Woods Conference started the system now known as fixed rate exchange. After the 1944 conference, theUnited Statesattached dollars to gold with one ounce of
gold equal to $35.
The process changed in the 1970s, due to problems with inflation and currencies from other countries. The financial system of any country relates to the law of supply and demand.
As the demand for currency increases, the system undergoes appreciation. When the demand for currency drops, the system goes through depreciation. A country can devalue its currency based on lower demand.
For example, a country might equate 20 of its own currency for one American dollar. After the market fluctuates, the country devalues its money, making 40 of its currency equal to a single American dollar.
Devalued currency occurs in theUnited Statesduring periods of debt or recession. The government prints more money, which is worth less.
The country must have a way of covering its debts, such as with gold. If the country lacks adequate funds, the paper currency is essentially worthless.
A good example of this occurred during the American Civil War. The Confederates printed its own Confederate money. Once the war ended, the devalued money was worth nothing. Even today, the money only has a slight historical value.
American debt rises when the country goes through a recession or depression.Franceunderwent such a change when the country increased minimum wages and benefits for the working class.
The national debt continued rising and the country had no funds to pay back that debt. Fortunately, comparison sites like MoneySupermarket can help you find the best ways to save and make the most of your money when the value of American dollars drops.
Devalued dollars affect you because it reduces the amount of goods and services you can afford. Even simple things, such as buying car insurance or saving money takes more than it did before.
Devalued dollars increase inflation. As the country pumps out more money, stores and businesses increase prices.
You spend more money on the things you need every day, only to find yourself in debt once inflation ends. TheUnited Statesdevalued the dollar in the 1970s and again in 2001. During the 1970s, inflation hit gas stations particularly hard, leading to markups on gas prices and an overall gas shortage.
The 2001 inflation came with increased housing prices, car prices and food prices. Once the bottom fell out, millions of Americans found themselves further in debt. The devalued dollar affects you because it increases costs.
The value of gold, copper, silver and platinum rises, which in turns increases the prices of any items using those metals. Electronics, vehicles, construction and even jewelry prices increase.
Maximize your dollar amount now by saving money on travel expenses, home utilities and anything else you use on a daily basis. Reduce your overall costs before supply and demand causes a drop in the dollar value.
Anytime you use money, including paying student loan bills or insurance bills, you risk spending more than you should. As the dollar value drops, you will find yourself paying even more.
Brought to you by MoneySupermarket.
Answer: How Much Term Life Insurance Do I Need to Buy?
From a question posted here:
Thank you for all your help in my previous question. After meeting with the agent, I’ve decided on term life insurance over whole life. But I am still not sure how much term life I should buy. Should I buy as much as I could afford or some specific amount?
My answer(edited a bit):
That question is far too open-ended.
Are you married? If yes, are you the primary breadwinner? Do you have children? Investments? Savings?
Here’s my situation:
I am married, with three children. I have the primary income.
We have a mortgage, a car payment, and some consumer debt.
I added up all of the debt as my base level of term life insurance. My family will not be burdened with debt if anything happens to me.
To the base level, I added 5 years of my net income. Without changing a thing, my family will be supported exactly as is for 5 years if I die. They won’t, however, have the same level of expenses, due to the base level of insurance paying off all debt. All of my living expenses also evaporate. For example, there will be one car sold, one less mouth to feed and body to dress, etc.
I figure with the lower expenses and no debt, my insurance will support my family for 10 to 15 years if my wife manages the money right. If she continues to work, it should last almost forever.
How do you figure the “right” amount of life insurance?[ad name=”inlineright”]
3 Things Everyone Should Do Before the End of 2010
- Image via Wikipedia
New Year’s resolutions are great, but what are you doing the rest of the year? As we roll into summer and we see the year’s halfway point approaching, it’s important to look at our goals and our progress and see if we’re on track for where we want to be in our lives.
Financially, now is the time to start preparing for the new year. Don’t be like most people and wait until December to think about it.
Here’s a place to start:
- Max out your 401(k). If you are under 50 years old, your maximum annual contribution is $16,500. If you haven’t contributed to your 401(k), yet, this means you will have to deposit $2358 per month to max it out. If you would have started at the beginning of the year it would only be $1375 per month. If those numbers are out of reach, at least contribute enough to get your employer’s match. If your company matches 50% of your contribution up to 5%, you need to be contributing 5%. If your gross paycheck is $1000, you should contribute $50. If you do so, your company will be giving you $25. That’s free money and a 2.5% raise! With a pre-tax contribution, you are also lowering your taxable wage, so the 5% contribution is not lowering your take-home pay by 5%. In some cases, it may even raise your take-home pay!
- Know your money. Take some time to examine your income and your expenses. What are you having withheld? Will that leave you with a large tax bill next spring? Will it give you a huge tax refund, which is just an interest-free loan to the government? You withholding goal should be to pay nothing and receive nothing when you file your taxes in the spring. The less you withhold, the more you have for your daily expenses, but, if you withhold too much, you risk an unaffordable tax bill and possible penalties later. Look also at your expenses. Have you used your gym membership in the last few months? Cancel it. Do you know every cent you have to pay each month? Figure it out so you can plan the rest of your financial year. A budget is helpful here.
- Own your debt. “It’s not my fault.” “My ex stole my bank account.” “My dog ate the bill.” “My kidneys were stolen and I woke up in a bathtub full of ice and an invoice for services rendered.” “I lost my job.” “I have an X-Box addiction.” “I gave my credit card to a stripper, but we broke up. Go after the stripper.” Excuses. Here’s the thing: None of it matters. You owe the debt. Your choices are to pay the debt or file bankruptcy. Either way, you need to own the debt and take responsibility for whatever choices you made or debt you’ve accumulated. Denial is not a successful coping mechanism. Whatever you choose to do, know that it is your choice. You can’t hide from your bills or your $15/day “Venti Soy Hazelnut Vanilla Cinnamon White Mocha with extra White Mocha and caramel” habit.
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What are your financial plans for the rest of the year?
Update: This post has been included in the Festival of Frugality.
