June Finance and Goal Review

 

 

Well June is done, stick a fork in the first half of the year as well. The days are getting shorter already as we head into the Fourth of July holiday, but as the sun sets on one month it is a great time to take stock of where we are as well as look at the missing few months.

 

With out further ado..

 

Highlights:

• Stuck to most of plan - Used cash for cash bills, didn't use Cards and survived some Ninja Bills!
• Improved Net Worth by $3455! - Mostly debt reduction, but still!
• Back to blogging! - Missed you all. But keeping it in perspective! Moderation in all things, including moderation

Points to work on:

• Still need to rebuild MS Money file after last computer failure...again!
• Check mail more frequently - Avoidance doesn't work
• Began saving for something - Need a good medium term goal that we can save for as starvation spending is grating on all of our nerves. Just feels like more tunnel is in front of tunnel!

Goals: 

• Pay Off StateFarm CC - $2836 - Down to $2228 or $608 less! Need to pick up pace to do it...iffy
• Pay Off Car - $4594.87 - Down to $2706,  $1888 less than the beginning of the year! Less and Less interest per payment...looking probable
• Pay Off CC CitiBank Platinum - $8989 - Now $8749, $240 less than the beginning of the year. Not using it, still making progress, but given no bonus...no way.
• Pay off all CC Debt - Paid off $848 since beginning of the year, another bonus causualty!
• Save 100% 2008 Property Taxes - $4500 - $3024 Saved in E*Trade Account. Back to working this amount. Whatever not achieved will come out of Emergency fund, but would rather not tap it.
• Keep Snowball 100% Intact - $308.43 Is the Current. Once StateFarm is paid off, it will be $654.72! Back at it in July!
• No CC Use - For the Ninth month! Getting close to the 1-year mark!
• Increase Average FICO-Score to 720- Without CC payoff not gonna happen this year, but Sstill getting better. Now average 700.7 over the three agencies!
• Stick to Cash Budget System - Yep!
• Net Worth increased by $20,000 - $9,932 so far! Halfway there. Broke the Negative $20K mark (small things are happy things!)

So goal-wise with no bonus or opportunity this year it is really gonna be hard to hit these payoff goals. All I can do is at least work my snowball, but a good lesson for my self-image...won't count chickens...

Baby Step Progress:

• Baby Step 2 - We have paid off $20,057 worth of non-mortgage debt putting us at 29% complete. Don't know whether  to cry or cheer about that!

That's it, warts and all! Hope to do better, but god knows I have done much worse!

Thanks for all of the support!

February Financial Month in Review

End of a longer then usual February, and pretty good progress this month. Not too many Ninja Bills, out side of taxes but still OK there. We got our high yield E*Trade Savings Account (currently 4.1%) going and we have now funded half of our 2008 Property Taxes already!

Here are some highlights:

• Net Worth Increased $5019 - Huge Increase! $3000 was from Tax Return, rest from debt reduction. Take that out and still a good month!
• Debt Reduction of $1692! - Included over $500 off of Credit Card Debt!
• Tax Return - Direct to our E*Trade Complete Savings Account. Not one Dime spent. This is a big deal here as we always "talked" ourselves into a little here a little there.

Went to dinner and a movie to celebrate last night (used our allowance! Not Breaking any rules! Semi-Pro!) and we both commented how far we have come over the last few months. We are really trying to move forward on these goals and look forward to completing Baby Step #2 - The Elimination of Consumer debt.

Points to work on:

• Focusing on the Negative - Let the whole Tax Refund debacle get us under for awhile. Bounced back after refocus on progress
• Time Management - Not allocating enough time to certain areas. Work is very heavy right now with a launch of a major project. Lots of late nights...Need to remember to breathe sometimes!

Goals:

• Pay Off StateFarm CC - $2836.22 - Down to $2369 or $470 Less! Will be close to under $2K this month!
• Pay Off Car - $4594.87 - Down to $4033, $561 less than the beginning of the year!
• Pay Off CC CitiBank Platinum - $8989.16 - Now $8806, $183 less than the beginning of the year. Not the snowball debt, yet still making progress.
• Pay off all CC Debt - Getting closer everyday!
• Save 100% 2008 Property Taxes - $5000 - $3000 Saved in E*Trade Account. Saving $225 per month toward goal moving forward.
• Keep Snowball 100% Intact - Still growing! $308.43 Is the Current. Once StateFarm is paid off, it will be $654.72!
• No CC Use - For the Fifth month! Getting close to the 1/2 year mark!
• Increase Average FICO-Score to 720- No real change this month. Equifax moved from 716 to 715. Average over all three is 698.7.
• Stick to Cash Budget System - Gas is the only issue as the cheapest gas station makes it a pain to pay with cash. Paid with debit twice, but then removed cash from envelope.
• Net Worth increased by $20,000 - $5019 movement means $6156 movement for the first 1/6th of the year...Real Progress!

Baby Step Progress:

• Baby Step #2 - Paid $16,143 so far, or 23.43% done! Lot of progress!

Overall great month. Still no word on my review, but I do know that I will be retro-ed for any amount back to my due date. It is all going to the snowball, but it would be great to push the accelerator even more.

That's It! 2 down, 10 to go!

(Photo from Calendar available from Amazon)

The Five Levels of Wealth

In the "Complete Idiot's Guide to Getting Rich" the author Larry Waschka describes five separate levels of wealth.

This book grabbed my attention when I bought awhile ago, frankly because at the time I though, heck if an idiot can do it, I'll be a bajillionaire! Not so fast Wile E Coyote, there is the little issue of following that ACME plan!

Here are the paraphrased outlined levels:

1. Level 1 - You are able to maintain your standard of living while still saving your Target Saving Goal, which is the annual amount needed to fund your retirement.
2. Level 2 - Your Investment Portfolio (could be 401k too) is large enough on its own to deliver a return large enough to cover your TSG and keep up with inflation.
3. Level 3 - Your portfolio returns enough to cover your desired lifestyle and inflation.
4. Level 4 - You have enough assets to produce a return big enough to increase your lifestyle, now and in the future, while keeping up with inflation.
5. Level 5 - You have enough assets to produce a return well beyond what would could ever spend. You no longer have to work and can make large charitable gifts.

Quite a gap between Level One and Two, but this list makes sense from an investment focus. Once we are through Baby Step #2, paying off our consumer debt and Baby Step #3, saving 6-months worth of expenses we should be able to apply our snowball to reaching Level One.

Level Two is pretty tough. Given that we will try to deliver 8% returns we will need to have 12.5x our savings number to reach the goal. Say I wanted to save $20,000 per year, which means that I would need $250,000 saved. Not impossible, but like I said tough...

Level Three is gonna require some extra muscle. To replace $140K salary we would need the 12.5x again or $1.75 Million! To hit this I need to save $70K per year. Now compounding really helps here so it won't be actual salary savings used to do that, but it won't be easy at all.

Level Four is kind of based on your lifestyle choice, so if you have a high three reaching four is probably off. It is just you definition of what big is. For sake of comparison say I would like $200k. To pull that off I need a cool $2.5MM

Pipedream time. Level Five. Time to open the RacerX PF Memorial Library and Grille (the 'E' makes it Classy). I am saying...$100MM.

That is a fun exercise, but it really doesn't meet my personal goals. My goal is simple. Make sure that my family is taken care of and that we can spend our twilight years in comfort but not ostentatiously.

The only way we are gonna get there is to have that plan that is always a few steps ahead of us! It takes planning, budgeting, money management and most importantly...patience.

Very Wealthy People's Characteristics...

In preparing our final 2008 budget and goals, I came across an older book of mine from the late '90's dealing with Personal Finance and Managing Money called, "The Complete Idiot's Guide to Getting Rich."

Well I must be pretty smart, because after owning the book for 12 years I have a negative Net Worth!

Anyway inside the front cover of these book was a tear out page. I don't know if the publisher hoped these would become tradeable or collectible like baseball cards, but lucky for me they didn't cause mine was still there.

All kidding aside it had some great wealth level indicators and such, but the best part was this little list of the Top Characteristics of wealthy people...and they ring very true of everyone that I know who is, as we say...with money.

Here is the list:

Have a Passion for What You Do - This was a key to everyone that I know who have been very successful that I have had a chance to really talk with, including the CEO of a couple publicly traded companies that I have worked for. Both of them I believe would be doing this whether or not they were being paid for it. The seriously enjoyed the business and role they were in. Many would say, "Pay me that kind of money and I would be passionate as well!" Both of these people by all account have always been this way.

I have seen very successful people who didn't care make it as well. They made it on drive, determination and will...and most either seemed miserable, or were busy planning their second career as soon as they had enough money. So call me naive, but I believe successful people get the position because they are those passionate people., not because they have the position.


The Ability to Make Decisions - I once heard someone define genius as the ability to make order out of chaos. So many people that describe their best boss say that the person would weigh all of the input, analyse the facts and make the call. They would spend much more time to make sure that everyone understood their role.

This goes to one of my personal mottos, which is: A Good Plan executed is better than a Perfect Plan in a drawer. A good leader makes decisions, but isn't afraid to make course corrections or change plans in the face of enough evidence.


Discipline - When you look at successful leaders, whether in politics or in business this is a huge difference maker. This can be as small as taking care of your finances or health. It can be as important as not taking a big pay raise when you ask your team to do with less.

I see this everyday on different blogs: Doing the right thing everyday, even in small amounts is so much more important than grandiose gestures. The ones who really get their financial houses in order are the ones that make the lifestyle changes, and make them part of who they are.

Patience - I see this as a key for every investor. If you look at the mix of stocks at Waren Buffet's Berkshire Hathaway 3-5 years ago it is pretty much the same, with maybe more added on. Now show me a mutual fund that is the same way. You can find them, but they are rare. So many chase the fat buck running to the hot stock or sector. If it is OK for one of the world's richest men (that made most of their fortunes investing) it may be OK for you :)

This one is going to be a prime goal for 2008 for me. I will have the patience to manage my money, pay down my debt and increase my savings.

Or you will be free to mock me...