Happy Easter!

Happy Easter/Passover/whatever you may celebrate everyone.  I hope everyone is having a fantastic weekend.  I especially hope people got last Friday off.  For some reason, my company gives me that day off.  We don’t get New Year’s Eve off but we get Good Friday.  I won’t complain about a three day weekend but it sure doesn’t make sense.

I just wanted to give everyone an update that they may see some changes to my site over the next few weeks.  I’m most likely going to be changing the site design.  The wordpress theme I’m currently using isn’t supported or updated anymore and I keep running into little technical issues that I can’t change.  If anyone out there has any thoughts on a wordpress theme they particularly like or found useful, let me know!  I’m open to ideas.

I’m also going to finally start looking for some guest posting opportunities at other sites this month.  If you know of one or think you may want me to write something for you, let me know!

And with that, have a great day everyone!  We’ll be back into regular posting tomorrow!

The Importance of Communication

Communication
Communication

Communication courtesy of P shanks

Communication may not seem like something that is important to Financial Independence or Personal Finance but to be honest, you’d be surprised.  It’s obviously important in both relationships and business but how can it really affect the other aspects of our life?

Well, as with everything else we talk about, everything is connected.  If you’re able to communicate the things you truly want in life to the people who can help you, well, they will help!  For example, I had my review earlier this year and I expressed some unhappiness with my compensation.  Not my salary per se but the fact that I was not receiving a quantified bonus structure with goals and other items that I could hit.  A few conversations later and I now have a structured bonus plan for 2013 that can earn me as much money as I earned in my first year at the company.  Granted, I have a good relationship with my boss but still, he would never have known without me telling him.  And because of this, I’m getting that much closer to Financial Independence.

That’s the point of this post: we don’t communicate well as a society.  Many of us just assume that those around us have our best interests at heart.  The problem is that while people may have your best interests at heart, they don’t know what you truly want.  For this, you have to actually talk to them and communicate clearly what your goals are.  I’m not saying you have to go to your boss and express your desire to retire early or switch careers.  But if your goal is to maximize your personal earnings then you have to go for it.  You’ve got to express that goal, in a positive and not at all threatening way, to your boss and find a way to justify it.

It’s one thing in life to ask for a raise or a bonus because you just want it.  It’s an entirely other thing when you quantify it with hard data and facts about what you have truly done for the organization.  If you’ve saved the organization $200K last year, why shouldn’t you receive 5% as a bonus?  The heart of the matter in situations like this is the justification.  You’ll dealing with someone that has likely done your job.  What’s more than that, they are most likely tasked with keeping their bottom line growing.  If you’re able to positively contribute to that growth in a measurable way, it’s easy to get a bonus from even the most difficult of bosses.

At the end of the day, numbers are numbers and if they are in your favor, you can communicate them efficiently to give yourself an advantage.  The basic thing here is to communicate.  If you’re in constant communication with those around you, they’re more likely to help you achieve your goals.  As you achieve your goals and communicate them to your boss, you’re more likely to receive the raise and the bonus you desire.  And both of these get you one step closer to Financial Independence and to a state of personal finance that you can be happy with.  So the next time you’re in the office, talk to your boss.  Talk about their career or where they think your career is going.  Find out what you need to do to get somewhere else.  Tell them what you want to do!  It’s worth a shot and improving your ability to communicate will only take you further and further professionally.  Because when it comes down to it, everything is run by people and people need to talk.

We got a puppy!

Jackson the jack russell beagle mix
Jackson the jack russell beagle mix

My new dog, Jackson

Well, he’s not actually a puppy.  He’s a full grown dog at this point.  By now, we’ve had him for a full month and he’s doing extremely well in his new surroundings!  He’s pretty healthy and he’s forcing me to go on more walks than I used to.  He also, however, is costing us a little more money.

Like reasonably responsible people, we adopted Jackson, a Jack Russell-Beagle mix.  Neither myself nor the girlfriend would ever get a dog from a puppy mill.  We found him at an adoption event nearby for Life 4 Paws, a local rescue that does a pretty great job finding homes for their dogs.  We found this little guy and instantly had a connection.  Pretty much, he loved us from the get go.  So, we filed our papers for adoption and started to get ready to take this guy home once we were approved.

If you’re paying attention, you’ll notice we forgot something: money.  Adopting a dog isn’t free and that was and is the case with Jackson.  You might be wondering why I’d be willing to take on another mouth to feed and additional expenses when all I’m trying to do in life is minimize the money going out of my pocket.  Well…he’s adorable.  Also, this is one of those recurring expenses I’m willing to take on.  I’ve wanted a dog my whole life and I won’t lie, it’s a different experience having a dog just unconditionally love you.  It adds something to the day to day and helps relieve the stress and tension you build up from work.

So how much did Jackson cost exactly?  Let’s take a look (numbers are rounded):

Adoption Fee: $200

Pet Deposit:     $500

Crate:               $100

Food:                $75

Toys:                $20

Leash:               $25

Total Cost:      $920

That’s actually a bit of a doozy.  And this is without us taking him to the Vet (his first appointment is on Tuesday, settle down now).  The good thing is most of this is up front expenses and won’t be recurring.  The pet deposit is refundable and so far, he hasn’t shown any destructive tendencies in the apartment, as well as being an expert at bladder control.  Hopefully our apartment agrees when we eventually move out!  If in the long run he costs maybe $50 a month, I think that’s something I can live with.  The benefits of having a dog (lower blood pressure, decreased stress, increased physical activity and overall well being) well outweigh the costs in the long run.

I’m going to start keeping a tally on the cost of Jackson and will update it every month in my Net Worth Update.  I’m pretty sure that in the long run, the average monthly cost will be between $50 and $75 but we will find out for sure in time.

If you have a good dog adoption story, please feel free to share here!  I’d love to hear other takes on dog ownership from people trying to achieve Financial Independence!

Breaking Bad Habits

Running - Courtesy of Sean Venn

Running – Courtesy of Sean Venn

We’ve all got bad habits.  I love cookies.  I especially love freshly baked chocolate chip cookies (keep this in mind everyone, I can be bribed with these).  I’m also one of those people that has to keep moving.  No matter what, I’m always moving.  Whether I’m tapping my foot or clicking a pen, I’m always doing something.  It’s a habit and it tends to annoy the hell out of the people around me.  The point is, we all develop habits, good and bad, over the course of our lives.  When we get to the point where we are trying to get back into shape, eat better, or rehabilitate our finances, we struggle and fail.  It’s why gym’s always have their promotions in December and January; they want to take advantage of your bad habits and get a paying member that they don’t actually have to cater to.

We’ve all built these habits up over the years.  The question here is how do we break them down and get rid of them.  A few years ago, I had a track coach that taught me a few things about habits.  In track you are always trying to build new, good habits.  You want to be able to pass the baton as if it’s an extension of your body.  You want to be able to keep your foot in just the right position, move your arm a certain way, react just right out of the blocks.  It’s all about perfecting these tiny, unseen movements over thousands of hours of practice that get you to become an elite athlete (aka, not me).  So when you’re teaching a habit, there are a few steps along the way before you know it without knowing it, you know?

1.  Unconscious Incompetence: You don’t even realize you suck.  This is what happens when you’re living paycheck to paycheck, leasing that BMW 3 series and partying every night (the $30K Millionaire style) and wondering why you’re broke.  You’ve never had a moment of self reflection about your finances and you have no idea what a budget is.  You think it might be French and pronounced boo-shjay.

2.  Conscious Incompetence:  You’ve figured it out.  You know you’re bad with money.  You think it has something to do with spending more than you earn but you’re testing out some general theories on the matter.  In general, you don’t know what to do, so you start reading some good finance blogs and reading some books.  You’re still screwing up but at least you know it.

3.  Conscious Competence: With your budget in hand, a vanguard account and IRA rolling every month, you’re maxing out your 401k and doing everything right.  But, you’ve still gotta watch your budget.  You can still be impulsive and sometimes you just plain don’t think when you buy more expensive items. At this level, you’re doing most things right but they just aren’t second nature to you.

4.  Unconscious Competence:  It’s all second nature. You’ve been budgeting and saving and thrifting for so long, you don’t know what else to do.  Everything is just automatic.

Now, these four levels apply to all aspects of life.  Want to run a marathon?  We’ll, you’re going to need to get in the habit of running a lot.  How long will it take before you actually go running everyday without your mind saying no way?  According to this study, it should take you about 66 days.  That means repetition every day, or else you’ll lose it.

So how can we apply this to our daily lives?  If you’re here, then I’m going to guess you’re at least at number 2 above.  To start with, make a budget!  Stick to it.  Plan your groceries out before you go and buy them and keep an eye on your mint.com account.  Don’t have one?  Start one!  Check it every day.  Keep your spending in control.  If you want to buy something big, expensive, wait two weeks.  Wait a month.  If you really want it, figure out how to get it without using credit or busting your budget.

In reality, these are all little things.  But each one of them adds up.  Most people don’t realize how much they spend going out to eat or drink.  Looking back at my mint account when I was more of a paycheck to paycheck guy, there were some months where I spent $500 going out to eat and $500 at the bars.  And I didn’t have that much money to spend each month!  But I just looked at it and moved on.  I didn’t recognize what was actually happening.  Now that I watch my budget and spending each day, each week, I’m on a much better path.

Each of these habits will take you a while to form.  Just recognizing that you need to form them will be difficult in itself, let alone the actual habit.  But with time, you can get to a point where you have good financial habits and are fixing the mistakes of your past.  It’s easy!  Just do something small, everyday and eventually, you won’t even notice that you do it.

 

Destroy your debt

Destroy Debt - Courtesy of By all hands volunteer photobank

Destroy Debt – Courtesy of By all hands volunteer photobank

Screw debt.  Seriously, screw it!  Who needs it?  I mean, yes, most people need it to buy homes and cars, etc, but still, screw it!  You all know I hate debt.  I mean seriously, I loathe it.  You also know that I’m doing everything I can to pay mine off early.  Because seriously, who needs or wants debt?  But just hating debt doesn’t get me or you where we need to be.  We’ve gotta figure out the best way to actually fight it off for good.  Recently, I got turned on to the website unbury.me, which has a wholly unsafe sounding site link but I assure you is 100% real.  Seriously, I swear it.

Anyway, this site allows for you to input all of your loans, the interest rates and the payments, and then specify how much a month more than the minimum you’d like to pay.  It then tells you exactly how much to pay on each loan, each month, until they’re paid off using two different methods: the debt avalanche and the dent snowball.   Let me explain.

Debt Avalanche: This is the more mathematically sound of the two methods.  Under this method, unbury.me calculates what you need to do in order to pay off your highest interest rate loan first, followed by the next highest, and so on and so on.  This method will ultimately lead you to save the most on your interest payments, cutting down the principal of the highest interest loans before they can take too much money from you.  The problem here is that it’s not terribly satisfying.  Your biggest loan might also have the highest interest rate, which means you might not see any real momentum in your debt destruction question.  This makes this a bit more difficult but in the long run, much simpler.

Debt Snowball: Similar to above, this method pays the smallest loan off first, rather than the highest interest rate.  Basically, if you have four loans, each with a value of $1,000, $2,000, $3,000 and $4,000 respectively, you’d try to knock off the $1,000 loan first.  By doing this, you’ll start to see tangible results in your debt destruction process and feel like you’re actually accomplishing something.  You’ll go smallest to largest and by the time you get to your last loan, it shouldn’t take you too long to beat it into submission.

Both of these methods have their own merits.  The debt avalanche obviously saves you the most money in the long run.  The problem is, you can feel like you’re banging your head against a brick wall for most of it!  It just takes too damn long.  The debt snowball actually feels like you’re accomplishing something.  With every small loan you knock off, you know you’re getting closer to your goal.

Personally, I’m using the debt avalanche.  The numbers just don’t lie.  If you have time, check out the unbury.me site and see how soon you could pay off your debt.  It’s at least worth a look!

What’s a million dollars worth anymore?

A million dollars, courtesy of Jeffrey Putman

A million dollars, courtesy of Jeffrey Putman

Why is it that we have this fascination with getting a million dollars in our bank account?  Besides the fact that we love round numbers, why is it that a million dollars is so important?  The reason I’m asking this is because, while thinking of my goals for the future, for retirement, for getting the life that I want to live, this number keeps standing out.  One Million Dollars.  Over at Budgets are Sexy, J Money has started a little club, with just over 100 members who are trying to become millionaires.  Whenever you read about retirement, whether on Forbes or Bloomberg, you read about the million dollar nest egg.  So, what can I even do with a million dollars?  Would it be enough to retire on?  Let’s run down some numbers and figure out what makes sense.  Is one million dollars the goal?  Is it more?  Could it be less?  How the hell do I even get to a million dollars??

Well, let’s start with the easy one question first: How the hell do you even get to a million dollars? I’ve spoken about this briefly before but I didn’t delve into how long it could actually take.  Let’s look at some basic assumptions and then figure out the timeline with Dave Ramsey’s Investment Calculator.

  • Starting Value of $10,000
  • Annual rate of return of 8.00%
  • Contribution of $400
  • Contribution and Investment timeline of 35 years

If we look at a situation like this, you’ll have saved up just over one million dollars in those 35 years.  But I’m on a bit of a more restricted timeline than that.  I’m 26 and I want to be out of the rat race inside of 11 years!  So, let’s look at a slightly more aggressive timeline.

  • Starting value of $10,000
  • Annual rate of return 10.00%
  • Contribution of $900
  • Timeline of 11 years

$420K.  Damn.  Not even half way.  That’s pretty discouraging.  I adjusted the rate of return up a a little bit because I’m considering that in the future, I will use real estate to get some of my income going and that has a bit higher rate of return (12-14%), so combined with stocks and bonds, I think a 10% returns is possible for this.  But, still, this doesn’t get me to where I need to be!  But let’s think about the above situation.  I’m saving $900 a month.  That’s only 25% of my monthly take home salary.  If I’m able to save 50% of my salary, well, I might get a bit closer!  After 11 years, I’d have saved just under $900K.  Not quite one million but it would definitely be able to take care of my day to day life!  Especially if I’m able to save 50% of my monthly take home, $900K should be able to provide more than enough income from dividends, real estate returns, etc.

But still, what does one million really get me?  Well, the median home price in the US was $221K as of 2012.  So, if we think we’re living a little bit large, this little cash hoard could buy two homes outright: one for living in and one for renting out, providing a good little income stream.  Since I’m not one to want ultra luxury things, it would probably get me a cheap, diesel car as well.  With the rental income from the house, dividend and bond income, I’d have more than enough to survive on and, plus any consulting or freelance work, even save up and grow my nest egg even more.

There it is!  A million dollars isn’t worth what it used to be but it can definitely provide a frugal family with a decent buffer from the rest of the world and maybe even allow them to leave the corporate world behind for more fun things, like kayaking or coaching.

What are we working for?

What most people see every day

What most people see every day – Photo credit to Flickr user archie4oz

I feel like this may be a broad question but it’s been on my mind like crazy lately.  There are some obvious answers: we work for the weekend and so the bill collector doesn’t come knocking.  But, without getting to existential here, what are we really doing?  I mean, you’ve got weddings, kids, school tuition, electricity, funerals, vacations and a whole host of other things that you really want.  But, again, what is your or my goal?

I’ve been thinking a lot about this lately.  During my annual review, I posited a similar question towards my boss: “What am I working towards here?  What can I really grow in to?”  I’ve been with this company for three years and in general, I’m doing well.  But, my upward mobility is pretty limited.  I already report to the CFO, who is a pretty young guy in his own right.  I could work there for fifteen years and the entire time it would be “Well, Brian reports to the CFO.”  Sure, the title might change and I might gain responsibilities but overall, nothing would really change.  But even then, we get back to the other question: What am I working for?  What am I working towards?

If we go by what we see around us or by what our parents had, have, or will have, then it’s simple really.  Nice house in a decent neighborhood, enough money to go on vacation and put the kids through school.  All admirable things to want.  But the house, the vacations, the school tuition, all of this comes at a cost.  So many people have mortgages and credit card debts that they can’t afford.  If you try to force some of the finer things in life too soon, you end up like the $30k millionaires we spoke about a few days ago.  So is there a right way to get these things without killing ourselves working 50, 60, 100 hours a week?

In a way, there is a lack of structure and focus in the corporate world.  It leaves most people feeling empty after a day’s work.  Now, I don’t mean to say that companies themselves lack structure or focus.  They know exactly what they want: profits.  And they know how to get there.  What I mean is that companies rarely know how to give their employees focus for their own lives.  Their idea of focus is that if you work for 45 years, you’ll retire and live a few years doing nothing.  But that’s not focus, that’s not a goal.  There is a whole lot of in between that not many people are paying attention to.  We grow up in a school system that has set goals and benchmarks.  You always know where you stand.  In athletics, there are goals. You have championships and personal bests to conquer.  In the professional world?  Well, you’re trying to make rent next month.  You’d like to eat dinner tonight.  If you have room on your credit card you’d really like to take that trip to Alaska you always hear about, you know the one.

The point I’ve been getting at is that, after a lot of think and soul searching, working for a retirement years and years down the road doesn’t really suit me.  Neither does the thought of buying an overpriced monstrosity of a house with a mortgage that is 75% of the value.  I’ve already established earlier in the year that I hate my car loan and, well, debt in general.  I think it’s time to add a new goal to my 2013 and beyond: I’m working towards Financial Independence.  It’s a crazy goal, I know.  And I’m way, way far off.  But there is more to my thinking so hear me out.

In general, I’m not a huge fan of the corporate world.  While I like where I work, I can’t say that I enjoy it every day.  It’s not as satisfying as I’d ultimately want it to be.  That in mind, it makes sense that I should strive for Financial Independence.  If I could work for another ten to twelve years in Finance and save up enough to buy a home with no mortgage, plus some income producing assets (bonds, dividend stocks, a rental property), then maybe I could do something.  I could start consulting or do some freelance stuff without having to worry too much about the bills.  I could coach track, something I already know I love to do (and know doesn’t pay anything at all).  The point is, if this is my goal, if this is what I’m working towards then in my late 30’s, I could start doing something that makes me truly happy and isn’t a huge burden on my life or my health.  Instead of working behind a desk for fifty years, I get to be outside and influence young people for thirty or forty.

I think most people want to attain some measure of financial independence.  Saving up some serious Eff You money can make life decisions significantly easier.  You’re not going to stand there and take BS from someone when you know you can leave and not miss a beat.  So I guess this really will come down to if this is a rational idea or a crazy one.  If it’s attainable or a pipe dream.  Who else out there is trying to get to Financial independence?  What are you doing to get there?  Let’s see what people really think when it comes to this.

The Dow, Standard and Poor’s, and a Bubble walk into a bar

New York Stock Exchange

New York Stock Exchange

With the Dow and the S&P 500 reaching their all time highs with the rest of the economy still suffering from a bit of a hangover, one has to be wondering what the hell is really going on!  All we hear from Washington is that the economy is struggling, it contracted in the last quarter of 2012 and something about sequestration.  On the news, whether it is CNN or Fox, we hear about the same things.  So how exactly did the stock market end up exactly where it was before this mess happened?  Is it possible that we’ve got yet another bubble forming right under our noses?

First, let’s go over what a bubble actually is.  If we go check out Investopedia, we can see that a bubble is “an economic cycle characterized by a rapid expansion followed by a contraction.”  Basically, some part of the market, whether it is tech stocks or real estate, grows way faster than it should, getting bigger and more overvalued than it should.  Eventually, the market steps in and people begin to sell, fast, and the bubble bursts.  We’ve seen this throughout history, with examples occurring all over the place.  What’s happening is really simple: humans get super excited about something, everyone wants it and then, all of a sudden, it’s done.  Remember beanie babies?  Or ferbies?  People went nuts for those things.  They were toys but people were purchasing them with the intent to make an easy buck, turning them around and selling them to whomever would buy it.  In the lead up to the financial crisis, a lot of stuff like that happened only on a much, much bigger scale.

The market correction for the financial crisis (aka, telling the guy with the ferbies that you’re not buying) was swift and painful.  The stock market dropped 45% in about 6 months, costing trillions of dollars.  Some estimates say it was a $7 trillion loss, some go as high as $11 trillion.  Either way, it was a huge loss.  Since the market bottomed out on March 6, 2009, we’ve seen a pretty big jump in the equities market.  It’s jumped up 111% in the time since then, making back everything that was lost and then some.  But the economy was dragging throughout the entire period the market was going up.  Government bonds are super low, the Fed is pumping money into the economy to try to jump start it, mortgage rates are low, everything is low!  But the stock market grew by 111%.  How the hell did this happen?

Honestly, I think the answer is pretty simple.  Most people, institutions, businesses, retirement funds, etc, don’t want their money to languish away in the low interest prison of savings accounts or US bonds.  Yeah, people are still going to put their money there but why?  You’re barely getting a return!  You’re definitely going to lose money once you take inflation into account.  So people put their money into companies.  They saw that after 2009, most companies had cut down on debt and personnel and were running lean, profitable machines.  Sure the economy was only so so and barely growing but the truth is, a lot of companies were still profitable.  Money poured into equities because they were the only viable option for getting an actual return.

And now here we are.  Markets have hit an all time high and some people are saying that they can only go higher.  While that’s not entirely false (the markets will always go up in the long, long run), I think it may be time to hold back on that big investments.  This may not be a bubble right now but it is definitely starting to look like it could be one.

You’re probably wondering how you could ever spot a bubble and what you could do.  Well, that’s the bad news.  You’ve read everything I just wrote and realized that in general, if there’s a bubble, it’s going to burst and it’s going to suck.  So here’s what you can do: Don’t panic.  The worst thing you can do is to panic sell everything you’ve got.  A lot of people jumped out of the market in January and February 2009.  They stuck in it a while but ultimately, they just handle the stress of watching their portfolio drop every day.  When they eventually bought back in, they purchased the same stocks, the same mutual funds, as they had before at the same price they sold it at or a higher price.  Panic selling is one of the worst things you can do.

Let’s face it, the market is going to go down eventually.  It’s also going to go back up eventually.  The stock market drop in 2008 was one of the worst in history.  Every major recession of the past 50 years has had a huge drop like that and each time, the market fights and claws its way back.  So whether we are in a bubble or not, keep your cool and don’t panic!

*DISCLAIMER: Please remember, I’m not an investment professional, CPA, CFA, or JD.   Nothing I say should be construed as legal or financial advice.  Please, always consult with a licensed professional when it comes to legal or financial matters.

Everything you own will one day be junk

That’s right, everything you own will eventually be junk.  But then again, so will everything I own.  It’s the unfortunate cycle stuff that we life in these days.  Your car, your laptop, everything, will eventually break down.  So how can we protect ourselves from these events?  I mean, the girlfriend needs new brakes for instance.  What could / should we do to make sure we’ve got enough money in the bank for these things?

This thought has been rolling around in my head for a long time.  It goes hand in hand with my savings, cash flow, and investment goals.  Basically, we all want nice things.  But we hate spending money and we hate using our credit cards (or we’re at least supposed to….$30K Millionaire anyone?).  Even worse, we’re all pretty awful at planning.  Just because I’ve got a budget doesn’t mean I’m good at it!

So how the hell do we plan for these things?  A lot of the things that go wrong, laptop dying or your car breaking down, for example, tend to pop out of nowhere.  If we’re talking about the unexpected, then this is going to be a difficult thing to plan for.  If we’ve done things right then we’ve got our emergency savings ready to help us take care of any unforeseen event.  But at the same time, that’s for when we lose our job, not for buying a new laptop.

So, we need to figure out how much things cost.  Let’s use a laptop and a car as our two examples.  A low end macbook pro, non refurbished, can be purchased for $1,200.00.  A used diesel Jetta can be purchased for about $9,000.  Now let’s look into this a bit further: what are the useful life spans for each object.  While the macbook pro is great, we’d probably replace it after 3 years, because we’re kind of snobs.  For the used diesel Jetta, we’re looking at an additional 10 years.  They run forever and we’re talking about paying cash for them.  So three and ten years down the line, we need to make sure we’ve saved up the rough equivalent of today’s value, in order to just buy what we need and move on.  Assuming a 5% annual growth rate (we’re considering a Vanguard indexed fund or something like that for our savings), we really don’t need to save that much per month.  Only $40 per month for the laptop and about $100 a month for the car.  By identifying what we’ll need way down the line, we can save ourselves some heartbreak and set the money aside now and grow it over time.

Through some careful planning, we (mostly me) can figure out how to not bust our budgets and save for things we want, like cars, laptops, or suits.  If saving $40 a month for three years means I can get a sweet laptop (or three good suits) then I’d have to say that I prefer that to the alternative of just spending money I don’t have when I think I want something.

Net Worth Update – February 2013

Well, I knew the unbelievable gains of December and January would come to an end eventually!  Luckily I still managed to increase my Net Worth somehow, albeit barely.  Moving into a new place, plus the new (used) furniture and some other items really set me back.  Plus the girlfriend and I rescued a dog, which is changing our monthly expenses just a little bit.  His name is Jackson.  He’s awesome.

Anyway, let’s take a look at the chart, shall we?

February 2013 Net Worth Update

February 2013 Net Worth Update

After two consecutive huge months ($4600 gain in December, $5100 gain in January) this month really brought me back to earth a bit.  My Net Worth only increased by 188 dollars!  Yikes.  I guess the good news is I somehow managed to not have my net worth go down.  I’ll take that as a victory.  Now let’s take a closer look at each category:

Checking Account:  Wow.  This account dropped by $1900 this month.  Basically, I spent WAY too much money on furniture, deposits, and general moving expenses.  Luckily, this is an aberration.  We’re planning on staying in this awesome apartment for longer than four months, so I don’t see these expenses coming up again until 2014, at the earliest.  Even then, we’re definitely keeping this furniture.  It’s awesome!

Savings Accounts: I beefed up my B of A savings account for the time being, negating a fee that happens if it falls under $500.  I’d completely forgotten about it and it was beginning to drive me nuts.  As for the ING (Now Capital360), the $200 a month is making a difference.  The interest isn’t much but I’m definitely enjoying seeing the balance jump as I add more money each month.

401k: As my contributions to this account grow (and the match made by my company grows as well) this account is becoming a huge, huge portion of my net worth.  This and the Vanguard account are really driving my growth here.  I’m diversified well enough in my account that I shouldn’t be too screwed up by any changes in the market but still, i’m keeping an eye on things here.

Vanguard: February was not the best month for stock appreciation.  The market only grew by 1.1%, as opposed to 5% in January.  The best thing I can do here is to keep on putting money in it and letting dollar cost averaging work its magic over many years.

The Acura: This was surprising but VERY welcome.  The new residence is less than a mile from work and I’ve taken to walking some days.  Overall, my mileage per week has dropped so much that it’s already starting to keep the value of my car up.  I’ll take it!

Liabilities: Another drop with no increase in Credit Card debt.  I’ll just keep slowly chipping away at this.  Someday, it’ll be gone!

I’m hoping that I don’t have another month like February soon.  I’m getting really close to having a positive net worth and I think I’d like to avoid any more heartbreaking three digit changes (or negative!!) in my net worth.  With a bit of a renewed focus on my budget and cutting back further on going out to eat, I think I’ve got this!