Our Money

Milestone reached: net worth of over $250,000

2008-05-05T12:11:00.000-07:00

The last net worth milestone we published was back at $150,000 which was over a year ago. Since then things have been pretty much on auto pilot where we haven’t been diligently tracking our progress as we had in the past. So it feels very refreshing to get to talk about passing another milestone, this time being a quarter of a million dollars. Interestingly, it was about this day two years ago when we finally surpassed the $100,000 mark.

Husband’s 401k

2008-05-05T09:51:00.000-07:00

When I was first hired by my current employer they were not offering a 401k program. Though the position met all of our other requirements this was a big piece that was missing. However, I was told coming in that I could explore possible options for the company which they would take into consideration. And true to their word, after a rather lengthy evaluation of several providers the company went with my recommendation (Vanguard) with a plan that began this year.

The plan is what is known as a Safe Harbor 401k which allows all participants to make the maximum-allowable contributions each year regardless of income. All of the plan expenses are paid by the company and the employees are only responsible for the costs of the individual funds. There is a 4% match – dollar for dollar on the first 3% and $0.50 on the dollar for up to 5%.

Since I have been with my current employer for a year I now qualify to contribute to the plan. I have elected to defer the maximum amount for 2008 and will continue to do so in the coming years. The money will initially be invested into Vanguard Target Retirement 2050 Fund (VFIFX) for now, but this will change shortly as we begin to realign our portfolio after adding the taxable investment account last month.

Husband gets a raise

2008-05-01T09:05:00.000-07:00

It’s hard to believe that it’s been over a year since I quit my previous job and found another. My workload has increased, as you can see from the lack of blog output, since taking the new position. Today I learned that I received a 10% raise which bumps up our total salary income to $152,440. This will surely help in making our net worth goal of $350,000 by the end of the year. If we can manage to accomplish that feat we’ll still be on the aggressive path of our long-term plan even though we are currently fighting against negative investment returns.

On a side note, since I have been with my current employer for a year I now qualify to contribute to the company 401k program. I’ve already made the necessary adjustments so that I make the maximum-allowable contribution ($15,500) for this year. You may remember that earlier I made mention to the fact that my new employer did not offer any benefit programs. I’ll explain what has transpired since then in my next post.

Taxable investment account established

2008-04-29T14:51:00.000-07:00

Today I opened up a joint taxable investment account through Vanguard with an initial deposit of $10,000 to be invested in Total Stock Market Index Fund Investor Shares (VTSMX). Since we are already taking full advantage of our tax-advantaged savings (Roth IRAs, 401ks and HSA) and all of our “bad debt" is now fully paid down, this was the next logical step in our journey toward achieving financial independence.

In the next few weeks we’ll be restructuring our investment portfolio to a more "slice-n-dice" setup using an asset allocation that is more aligned with our goals and risk tolerances. Right now we’re essentially 100% invested in Target Retirement 2045 Fund (VTIVX) which has served us well up to this point. The plan is to adjust our allocation to the following:

40% TSM - Taxable, Husband's 401k ($44,000)
30% Foreign - Roths ($33,000)
20% Bonds - Husband's 401k ($22,000)
10% REIT - Roths ($11,000)

You’ll notice that the wife’s 401k isn’t included above. That’s because the options she has outside of the Target Retirement funds are quite expensive, so we’ll stick with the Target Retirement 2045 for this account for the time being.

Car purchased

2008-04-23T07:31:00.000-07:00

One of our goals for this year was to use the funds that were set aside in 2007 to purchase a reasonably used car to replace one of our existing ones. In late February we bought a used 05 Hyundai Elantra to replace the 95 Mazda Protégé LX.

Though the Mazda was still in reliable driving condition the wife felt she needed a newer car due to the fact that, with her new promotion, she would be required to drive with clients and coworkers more often and the Mazda was starting to show its age.

Going in we had just a handful of requirements (in order of priority):

Sedan or large compact

Overall cost of around $6,000

Fuel efficient

Reasonable reliability

75,000 miles or less

2001 model or later

Cloth interior

Sunroof

Power locks/windows

I was primarily concerned with getting the most car for the dollar regardless of brand. Initially, the sunroof was more of a preference and we had a lot more options to choose from. However, after doing a bit of looking around, the wife decided that the sunroof would be a requirement. This certainly helped to narrow down our search as you just don’t see many cars with cloth interior and a sunroof.

Of course, when you talk about reliability the Honda and Toyota brands are usually at the top of everyone’s list. Because of this they tend to hold on to their value much better than others. Since I wanted to get the most for our money I gravitated more toward Mazdas, Hyundais and proven domestic brands. For a while I thought we’d end up with a Chevy Malibu or another Mazda Protégé, but in the end we found ourselves deciding on a Hyundai Elantra after finding a good price with a small used-car dealer in a nearby town.

I knew little about the Hyundai Elantra beforehand, but during the course of my research I found out that since 2001, when the vehicle was redesigned, it has proven to be a very reliable car, but because of its prior poor reputation the resale values continue to be very low making it a good buy. Edmunds even ranks it as one of their Used Car Best Bets for 2007.

So, in the end we bought a 2005 Hyundai Elantra that satisfied all of our requirements for the asking price of $7,950, which was slightly lower than the Kelley Blue Book value. We were able to trade in the Mazda for $1,300 which brought the overall cost down to what we had wanted to spend. The car had just over 43,000 miles on it and the CARFAX Vehicle History indicates it sat in a State agency parking lot for much of its life.

Second mortgage paid off

2008-04-22T16:33:00.000-07:00

Today I wired the necessary funds to completely pay off our second mortgage debt, thus completing the goal we set for ourselves this year.

As you might recall, in later part of 2006 we began to make extra payments toward the principal balance which we got down to under $10,000. For 2007 we had planned to transfer this balance to a credit card offering a no fee, 0% interest rate where we'd slowly pay this debt down over the course of the offer period. For reasons explained earlier this did not happen and so this goal was reintroduced as part of our 2008 goal set.

The remaining $8,492.68 of our second mortgage is what I consider the last of our "bad debt" since the interest rate on this loan was so high (8.25%). Now that it is paid off and we have long since established an emergency reserve we can now fully concentrate on nurturing our investment growth.

Contribution made to HSA

2008-01-14T18:50:00.000-08:00

Last week I made the maximum allowable contribution of $2,900 to my health savings account. Now that we have maxed out contributions for both Roth IRAs and the HSA we only have our 401Ks remaining which we plan to max out by the end of the year as part of our 2008 goals.

We always want to contribute more aggressively at the beginning of the calendar year as to maximize our long-term returns and this has been the first year we’ve been able to max out both our Roths and HSA at the very beginning of the year.

Wife gets a promotion at work

2008-01-14T18:05:00.000-08:00

A couple of weeks ago we were excited to learn that the wife would be getting a rather big promotion at her work and a sizeable raise in pay to match.

She was initially approached to fill a recently vacated position and was offered a 10% raise which would have increased her annual salary from $53,000 to $58,300. She smartly asked for some time to consider the offer.

That night we discussed the proposal together and decided we should try to counter the offer since it appeared we had the leverage to do so and, as mentioned earlier, the wife had been toying with the idea of leaving her current employer anyway, so we had little to lose if they rejected her proposal. It was decided she’d try to negotiate a larger raise along with some additional incentives.

The next day she explained to her company that she was very appreciative of the offer, but a 10% increase in salary would not be enough for her to take the position. Again, she was very smart as to not give her hand on what the exact figure was ($60,000). Her company was very understanding and asked for some time to make a decision. Later that day the hiring manager proposed a salary of $64,000 and the fulfillment of all of her requested incentives. She gladly accepted.

With the increase our salary income now totals $144,400 which should put us back on the aggressive path of our long-term plan for 2008.

2008 financial goals

2008-01-07T09:03:00.000-08:00

In 2007 we continued our journey toward achieving financial independence by finding a more lucrative job position for the husband, maxing out our retirement accounts at an accelerated pace and setting aside enough cash to purchase a replacement for one of our existing vehicles.

For 2008 it is expected that we stay more in line with our outlined agressive savings plan while we take care of a few loose ends and begin to position ourselves so that we can start to fully concentrate on nurturing our investment gowth next year. With that said, this year we are hoping to:

Continue to make the maximum allowable contributions to our retirement accounts and the husband's health savings account as we've done in the past - both 401ks ($31,000), Roth IRAs ($10,000) and HSA ($2,900). Much like the previous years, we want to be more agressive with our contributions at the beginning of the year to maximize our long-term returns.
status: in progress

Use the funds that were set aside in the previous year to purchase a reasonably used car to replace one of our existing vehicles. It is expected that this will cost around $6,000.
status: completed

Though we failed to do so last year, we plan to completely pay off the second mortgage debt.
status: completed

After the above three goals are met, we will want to establish a taxable investment account in which we will utilize the most tax-efficient choices available to us to maximize our investment return. We will need to restructure our investment portfolio to a more "slice-n-dice" setup using an asset allocation that is more aligned with our goals and risk tolerances.
status: in progress

Reach $350,000 in net worth by year end.
status: in progress

Review of 2007 financial goals

2008-01-07T08:54:00.000-08:00

I would say we were less than satisfied with our progress made in 2007. Though we met the majority of our goals, we weren't as disciplined (especially with our spending) in the second half of the year and I know we can do a much better job. Because of this we are now slightly behind schedule according to our long-term plan - we were only able to reach around $234,000 in net worth toward the end of December which falls just short of our outlined ideal savings plan.

Below are our 2007 financial goals with comments following each:

Goal: Continue to make the maximum-allowable contributions to our retirement accounts as we've done in the past - wife’s 401k ($15,500), husband’s Simple IRA ($10,500), and both Roth IRAs ($8,000). Much like last year, we want to be more aggressive with our contributions at the beginning of the year to maximize our long-term returns.
status: completed

Comments: Each year our first order of business is to fully utilize whatever tax-advantaged savings we have access to. Just like in previous years, we were able to make the maximum-allowable contributions and were able to do so at an accelerated pace. In addition, we were able to make the maximum allowable contribution to the husband's HSA which was unplanned for going into the year.

Goal: Though we failed last year, we want to make it a top priority to find a new job for the husband who has achieved all that is possible with his current employer and is looking to make a move that will further his professional growth and better help in accomplishing our goals towards achieving financial independence. The primary requirements for the new position will be greater challenges and responsibilities, higher income and a full 401k package with an employer match which would allow us to contribute more in tax-deferred savings.
status: completed

Comments: This was a major goal I had set for myself going into the year and I'm glad we were able to make this happen. For far too long I had talked the talk about making a job change and in 2007 I finally made it a reality by making the difficult decision to quit my job so that I could focus all my energy on completing this goal.

Goal: Make the necessary contributions (around $300 per month) to our cash reserve to bring us back up to $13,000 after paying our property taxes at the end of 2006. In addition, we want to also begin saving for a car to replace one of our existing vehicles. We'll assume for now we will need roughly $6,000 by the end of the year (around $500 per month). So, total monthly contributions to our cash reserve should be around $800 per month this year.
status: completed

Comments: As I had mentioned in the Catching up post, we were not very proactive last year and pretty much did the bare minimum for much of 2007. As such, we accumulated quite a bit of cash in our savings account with EmigrantDirect (at one point we neared $40,000), so this goal was rather easily accomplished.

Goal: Transfer the second mortgage balance to a credit card offering a no-fee, 0% balance transfer and completely pay off the balance by the end of November. In order to do so we are looking at monthly payments of roughly $900.
status: failed

Comments: As I had mentioned in the Catching up post, we got so far as to request the balance transfer, but we never made the next step of actually paying off the account. Instead, the funds sat in our savings account with EmigrantDirect accruing interest while we made the necessary minimum payments on the credit card debt. Chalk this up to laziness on my part because I was never willing to dedicate the time to take the next step and send off the payoff amount to the lender. In December we paid the outstanding amount on the credit card since the 0% offer was to expire in January. We will reintroduce this as part of our goal set for 2008.

Goal: Reach $238,000 in net worth by year end.
status: failed

Comments: Below average investment returns, a full month without the husband producing income and undisciplined spending in the second half of the year were all factors that contributed to us not being able to reach our net worth goal for 2007. The first two factors were pretty much beyond our control, but the third is what disappoints me the most when looking back at the year.

Catching up

2008-01-06T17:29:00.000-08:00

Let’s see…where were we now? Well, it has been quite some time since I’ve last posted (May). At that time I had just made a job change, bought a high-deductible health plan and fully funded a Health Savings Account. Since then things have pretty much been on auto pilot while I have been busy with my new job and some other matters than needed my attention. During that time I’ve been pretty much doing the bare minimum - making sure to pay the bills on time, continue to watch our spending habits (though a bit less closely than in the past) and to funnel excess funds to our account at EmigrantDirect.

Now I feel that things are starting to settle back down I should have more time to dedicate to the blog, so to quickly get back up to speed before we move forward, here is a quick rundown of the more important events that have transpired since May:

As soon as it was possible, I rolled my Simple IRA account from my previous workplace to a Traditional IRA account held with Vanguard in which all money is still invested into Vanguard’s Target Retirement 2045 (VTIVX).

We were able to make the maximum allowable contributions to our Roth IRAs and the wife's 401k as expected. In addition, we were able to make the maximum allowable contribution to the husband's HSA.

We had plans to pay down the second mortgage debt with the help of a no-fee, 0% balance transfer offer, but never moved on paying the debt after receiving the balance transfer check (I’ll get into the reasons why later on). We got so far as to deposit the funds and transfer the amount to our account with EmigrantDirect where it sat accruing interest while we made the necessary minimum payments on the credit card debt. In December we paid the outstanding amount on the credit card since the 0% offer was to expire in January.

We paid down the balance on the American Express Blue which was the remaining balance of a personal loan we paid down back in March 2005. There was really no rush to pay this off since the interest rate was 2.99% for life, but I missed paying on time in April (by a day), so I had to quickly pay the remainder of the balance to avoid additional interest charges. That was a rather careless oversight on my part, but at least it’s one less thing to worry about going forward.

We paid property taxes last month which totaled $3,517.32 (last year we paid $3,869.48) and made an additional mortgage payment in December to get the additional tax deduction as we had done last year.

For the first time, we were able to immediately make the maximum contributions ($5,000 each) to our Roth IRAs on January 2 due to the large amount of cash that had accumulated in our EmigrantDirect account.

I believe that covers much of the bigger stuff. Next I’ll be updating our balance sheet and the about us sections. Afterward I’ll review our financial goals for 2007 and put together what we hope to accomplish in 2008.

Contribution made to Health Savings Account

2007-05-31T17:45:00.000-07:00

After much research comparing HSA custodians I decided to go with Health Savings Administrators due to their low fee structure and the opportunity to immediately invest in Vanguard Admiral Shares. I’ve elected to contribute the maximum amount this year ($2,850) that will be invested into Vanguard Wellington Fund Admiral Shares (VWENX). Yesterday I mailed the required enrollment form and my payment check.

As mentioned previously, my concern now is that the quarterly custodial fee will become rather expensive as the account grows and I will need to monitor for other options in the future to avoid excessive account expenses.

Health Savings Accounts

2007-05-16T07:03:00.000-07:00

What if I was to tell you that you could sock away as much as to $3,650 per individual this year and never have to pay a single penny of taxes on the amount? Often called the “Super IRA”, Health Savings Accounts (HSAs) allow you to do just that.

I’m probably like the majority of you, in that, I had never heard of HSAs. That is until recently when I happen to read about them while shopping around for health insurance.

HSA contributions are fully tax deductible and distributions are also tax free if used for medical expenses. That alone makes them particularly attractive, but that’s only half the story.

After you turn 65 years old withdrawals are only subject to income taxes for all other non-qualifying expenses. That’s right - the HSA essentially becomes a traditional IRA at this point with the added bonus of not having a mandatory distribution requirement. It should become immediately apparent how valuable HSAs become for those that are young and healthy with historically few medical expenses.

So what’s the catch? Only one - you need to be only covered by a qualified high deductible health plan (HDHP). As mentioned earlier, I just recently signed up for a qualifying individual health plan, so I should be able to contribute $2,850 for this year.

HSAs are relatively new, so account options are still rather limited. Most of what is currently being offered is in the form of interest-bearing accounts, but there are a few now that let you invest in mutual funds.

Here are some of the more popular choices right now:

Shawnee HSA looks particularly attractive with its low fees and investment options (DFA and American Funds). But, as many have discovered, the investment options are not yet available. I called Shawnee earlier this week and was told the deadline is now July.

Because of my uncertainty of Shawnee HSA meeting their deadline, I’m leaning towards going with Health Savings Administrators. They offer a good selection of Vanguard funds, including access to admiral shares. My only concern is that the quarterly custodial fee would become rather expensive as the account grew, but then again, I would have the option of switching providers whenever I’d like in the future.

What to learn more about HSAs?
http://www.ustreas.gov/offices/public-affairs/hsa/

Shopping for health insurance

2007-05-11T17:29:00.000-07:00

As mentioned earlier, my new employer currently does not provide any insurance benefits, so I was forced into having to look for an individual health policy to cover my own needs.

In the past I always had the luxury of being able to sign up with an employer-sponsored group policy and very rarely utilized the plan. Because of this I never really gave much thought about medical coverage options.

Initially I looked into continuing my existing coverage via COBRA or signing onto my wife’s plan at her work, but both options proved to be very expensive. I knew I could do better on my own.

Since I would be doing the necessary leg work to find the best deal I first needed to educate myself. The vast amount of information found on the Internet was more than adequate. I quickly got up to speed on all the lingo and educated myself on the different plan types.

Then I happen to stumble across a little-known hidden gem - Health Savings Accounts (HSAs). My oh my, why aren’t people talking about these? I guess they’re still relatively new, so many may not know about the incredible benefits these types of accounts provide. I’ll leave this topic to my next post.

A coworker at my new job referred me to ehealthinsurance.com which proved to be helpful for my case. Using their service I was able to narrow down my search to a low-cost, high-deductible plan which better suits my needs. I ultimately decided to go with BlueCross BlueShield’s BlueEdge Individual HSA Plan VII. The policy will cost me $74 a month and provide for the type of coverage I was seeking.

Job change complete

2007-05-06T22:30:00.000-07:00

It’s amazing how time can move so quickly. I can’t believe it’s been two whole months since I last wrote. As a matter of fact, looking back, I’ve neglected to write much about anything thus far this year which is quite disappointing.

Let it be known that nothing has changed - we’re still committed as ever toward achieving financial independence and much has happened these past few weeks. I’ll be quickly reviewing those events during the next few days and then make it a point to get two or three quality posts in a week moving forward.

Please take note that I’ve updated our balance sheet on the right and will explain the changes very soon.

The first order of business to address is that I did, in fact, find a new job. Oh, I know, I said I would keep this blog updated with my progress as I went through the job search process. Well, that obviously didn’t happen.

Truth be told, I greatly enjoyed my brief stint of retirement. I wanted to spend at least one month off before having to rejoin the workforce and I got just that - one month.

I would like to offer one bit of advice for you hungry job seekers out there - get your resume on monster.com or one of the other big job search sites. And by that I don’t mean uploading your resume and calling it a day. Take the time to build your resume using their online resume-builder tool and make sure you adequately list all of your professional skills. By doing this you will make it much easier for employers and recruiters to quickly find you.

After getting this advice from a friend I decided to give it a try and was inundated with so many phone calls and emails during the first day I had to temporarily disable the service because I wasn’t quite ready to start working again so soon. But now that I know how easy it would have been to find a job using this method, I’ll certainly utilize it again in the future. (On a side note, the wife is now thinking about making a job change and we’ve already discussed going down this avenue with her in the near future.)

But I didn’t land my new job using a job search service. It actually came by the way of a referral from an old coworker which turned out to be (almost) exactly what I was looking for.

As a brief refresher, our goal was to find something that would further my professional growth and better help in accomplishing our goals towards achieving financial independence. The primary requirements for the new position were greater challenges and responsibilities, higher income and a full 401k package with an employer match which would allow us to contribute more in tax-deferred savings.

My new position is a senior development role within a small software company and satisfies all of the above requirements, except for the 401k part (so far).

The good news is that I’ve increased my annual salary from $60,000 to $80,400 which will greatly help in accomplishing our financial goals for this year and the new position comes with much greater challenges and responsibilities than the previous.

The bad news is that the company provides no additional benefits such as a retirement savings plan and medical insurance. But there is a silver lining to this cloud – the company wants to provide these benefits and I’ve been allowed to look into retirement plan options for the company. I hope to get something in place by the middle of this year so that there will be enough time to get the maximum deferment of taxes this year.

In my next posts I’ll talk about my experiences shopping around for personal medical insurance, the wonderful world of health savings accounts and my search for the best retirement plan for the company.

Making a change

2007-02-09T10:17:00.000-08:00

These past few weeks we’ve both been incredibly busy and I haven’t found the time to write as often as I would like. I will always have the desire to keep this blog up to date, but I need to do a better job of allocating my time to do so.

I’ve been mulling over a decision to make for quite some time – whether or not to leave my current employer. One of our goals last year was for me to make a job change (for reasons explained here), but I failed to do so primarily because of two reasons:

I work for a small company where my position is relied heavily upon. I feel it would be unfair to give my current employer anything less than a 3-week notice because the transition period will be difficult for them. Practically every interview I participated in the employer was looking to fill a recently vacated or newly created position as soon as possible. I felt I disqualified myself when requesting the extended notice.

My work keeps me incredibly busy during the day and I found it increasingly difficult to get away for interviews while keeping my search in secret.

After several interviews I began to realize the only way I’d be able to move forward and make a job change in the near term (while extending my employer the courtesy of enough notice) would be for me to go ahead and cut my ties with my existing employer so that I could fully concentrate on finding a position that would best fit our primary requirements. Of course, this strategy could hurt our chances of completing a lot of our financial goals for this year – we realize it could take longer than expected to find a suitable fit, but we believe, in the long run, this would be the smart choice to make.

So my wife and I came to the conclusion that it was time to make a change and a few weeks ago I gave my letter of resignation that I would be leaving the company in March to explore other opportunities.

I’ve been with my current employer for over six years, so there is a feeling that another chapter of my life has ended – but I am excited for what is to come. Not many in this world have the luxury of being able to just decide one day to quit their job and do something else. The financial holes we dig ourselves into preclude us from doing so. Not too long ago we were in that situation, but because of the progress we have made we now have that sense of freedom.

In the coming days I’ll outline some adjustments we have made to decrease our financial risk while I am on the job hunt. I also plan to keep this blog updated with my progress as I go through the job search process.

December financial snapshot

2007-01-10T15:00:00.000-08:00

Below is a monthly snapshot of our investments, major debts and net worth for December as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

December was a very good month for us, but we were not able to pull out another record breaker though. Our net worth gains achieved in November 2006 now stands as the mark to beat going forward. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a return of 1.31% last month and had a 15.98% return for the year.

We saw a milestone reached - we passed the $150K mark in net worth for the first time. Shortly afterward we paid our property taxes (using funds from our cash reserve held with EmigrantDirect) and found ourselves back under that mark and still remain there for the time being.

We continued to pay down our second mortgage debt at an accelerated pace and even were able to make an extra mortgage payment before the year ended.

We paid off the last remnants of student loan #2 by making the final payment to the transferred balance on the Citi Simplicity card.

We increased our net worth by 2.96% in December by adding another $4,209.84 to the stack.

December expense review

2007-01-10T14:25:00.000-08:00

It seems like every year around this time there is just so much going on that we are unable to document everything on the blog. This is a bit late, but better late than never as was the case last year when we didn’t even do a December review.

Below are our itemized expense categories as they compare with the previous month and some quick thoughts.

Much like the previous few months, our expense total is largely inflated because we’ve been aggressively paying down the second mortgage debt. For the month of December we were able to pay an additional $5,500 on top of our normal mortgage payment. We also were able to make an extra mortgage payment last month.

Property taxes were also due last month and were paid using our cash reserve. One of our goals this year is to make the necessary contributions (around $300 per month) to our cash reserve to bring us back up to $13,000 by year end.

To conclude, just as with November, we are somewhat satisfied with our expenses again this month, but there is always room for improvement.

Attacking the second mortgage – requesting the balance transfer check

2007-01-10T13:11:00.000-08:00

One of our goals this year is to transfer the remnants of our second mortgage debt to a credit card offering a no-fee, 0% balance transfer and completely pay off the balance by the end of November.

Now, after being able to get the balance down under $10,000 last year, we are ready to transfer the remainder to one of the recently acquired credit cards.

Today we took advantage of the promotional balance transfer offer provided by the Citi Diamond Preferred Rewards American Express Card by requesting a check in the amount of $18,000.

Why $18,000 when we need only $10,000? Because we’d like to go ahead and use the other $8,000 to immediately make the maximum-allowable contributions to our Roth IRAs for 2007 which we’ll elaborate more on in the near future.

As you might recall, we only received an initial credit limit of $6,500 on the Diamond Preferred Rewards. However, we were able to reallocate some of our available credit with Citi by moving $20,000 from the now retired Citi Dividend to increase the credit line on the Diamond to $26,500.

The check should arrive in the mail sometime around this weekend. We’ll immediately deposit it into our personal checking account and contact our mortgage provider to get the final payoff amount.

Here are the steps we have taken thus far in paying down our second mortgage:

2007 financial goals

2006-12-31T07:58:00.000-08:00

In 2006 we continued our journey toward achieving financial independence by paying down a high-interest student loan, maxing out our retirement accounts at an accelerated pace, completing our cash reserve and beginning the process of aggressively paying down our second mortgage debt.

We want to continue with the same relentless pace and determination we have shown in previous years, so in 2007 we are hoping to:

Continue to make the maximum-allowable contributions to our retirement accounts as we've done in the past - wife’s 401k ($15,500), husband’s Simple IRA ($10,500), and both Roth IRAs ($8,000). Much like last year, we want to be more aggressive with our contributions at the beginning of the year to maximize our long-term returns.
status: completed

Though we failed last year, we want to make it a top priority to find a new job for the husband who has achieved all that is possible with his current employer and is looking to make a move that will further his professional growth and better help in accomplishing our goals towards achieving financial independence. The primary requirements for the new position will be greater challenges and responsibilities, higher income and a full 401k package with an employer match which would allow us to contribute more in tax-deferred savings.
status: completed

Make the necessary contributions (around $300 per month) to our cash reserve to bring us back up to $13,000 after paying our property taxes at the end of 2006. In addition, we want to also begin saving for a car to replace one of our existing vehicles. We'll assume for now we will need roughly $6,000 by the end of the year (around $500 per month). So, total monthly contributions to our cash reserve should be around $800 per month this year.
status: completed

Transfer the second mortgage balance to a credit card offering a no-fee, 0% balance transfer and completely pay off the balance by the end of November. In order to do so we are looking at monthly payments of roughly $900.
status: failed

Reach $238,000 in net worth by year end.
status: failed

Review of 2006 financial goals

2006-12-31T07:38:00.000-08:00

By and large we are quite happy with the progress we’ve made in 2006. As of right now we are slightly ahead of schedule according to our long-term plan.

However, this is the first year in which we were unable to complete all of our financial goals as set forth at the beginning of the year which was a minor disappointment. But that disappointment is quickly diminished when we look back and see our early progress in the paying off of the second mortgage debt, which was only expected to begin in 2007.

Below are our 2006 financial goals with comments following each:

Goal: Continue to make the maximum allowed contributions to our retirement accounts as we've done in the past - wife’s 401k ($15,000), husband’s Simple IRA ($10,000), and both Roth IRAs ($8,000). However, this time around we will be more aggressive in our contributions at the beginning of the year to maximize our long-term returns.
status: completed

Comments: Each year our first order of business is to take full advantage of our retirement account options. Just like in previous years, we were able to make the maximum-allowable contributions and were able to do so at an accelerated pace. In fact, we were able to max out the husband’s Simple and our Roth IRAs in record time.

Goal: Continue to contribute to our cash reserves each month until we reach a total of $13,000. The majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property tax on our home at the end of the year which will be $3,869.48 according to the bill we received in October. Last year saw us contributing $800 per month to quickly bring us up to speed; this year will be a more relaxed approach with monthly contributions closer to $450.
status: completed

Comments: It may have taken us a couple of years, but we were able to finally complete our cash reserve. Having the extra cash set aside has brought a certain level of financial comfortability we had never experienced before.

Goal: Transfer the student loan #2 balance to a 0% no-fee credit card and completely pay it off by the end of the year.
status: completed

Comments: Any time you are able to eliminate a debt it certainly brings a level of satisfaction. We could have paid this off sooner, but the balance transfer offer allowed us to max out our Roth IRAs and the husband’s SIMPLE IRA contributions earlier which turned out to be a major contributor in us reaching our net worth goal this year (bottom).

Goal: Build enough available credit to transfer the second mortgage balance to a 0% no-fee credit card(s) in 2007.
status: completed

Comments: This didn’t take as long as we had previously thought and we’re now in the position to transfer the remaining second mortgage balance to one of the recently acquired credit cards.

Goal: Find a new job for the husband who has achieved all that is possible with his current employer and is looking to make a move that will further his professional growth and better help in accomplishing our goals towards achieving financial independence. The primary requirements for the new position will be greater challenges and responsibilities, higher income and a full 401k package with an employer match.
status: failed

Comments: This is the first goal since starting this blog that we have been unsuccessful in completing. It will remain in our goal set going into next year and will be given the highest priority. Though the husband was able to garner a handful of interviews, the simple lack of commitment hindered our progress here. As we’ve mentioned just recently, we need to work extra hard in the coming years on growing our incoming revenue to reach our ultimate goal and this is an important step in doing so.

Goal: Reach $150,000 in net worth by year end.
status: completed

Comments: Back when putting together our financial goals for 2006 we honestly did not think we could reach this mark without the job change for the husband as described above. But, with the help of favorable market conditions, our investments were able to provide enough return to complete our net worth goal. This will probably mark the last time we will ever be able to double our net worth in a year’s time.

Early mortgage payment made

2006-12-30T07:56:00.000-08:00

As we mentioned before, we wanted to make one more extra payment of $2,500 to the principal balance of the second mortgage by the end of this month to get the loan under $10,000. According to the lender website we have to include this amount with a regular monthly mortgage payment, so since we had the available funds we went ahead and paid the amount due for next month early.

So, not only did we bring the balance under $10,000 as hoped for, but we will also get the additional deduction for the interest paid on our tax bill.

The outstanding loan balance now stands at $9,797.68 and we are about ready to transfer the amount to one of the recently acquired credit cards. One of our goals next year will be to completely pay off this balance by the end of November. In order to do so we are looking at monthly payments of roughly $900.

Here are the steps we have taken thus far in paying down our second mortgage:

Property taxes paid

2006-12-29T12:42:00.000-08:00

Today we put the check in the mail to pay our annual property tax bill. Instead of drawing the expected $4,000 from our cash reserve held with EmigrantDirect, we only had to transfer $3,750 to our checking account.

Next year we’ll need to make the necessary contributions (around $300 per month) to our cash reserve to bring us back up to $13,000.

Paying off a student loan – update #4

2006-12-29T12:27:00.000-08:00

Today we paid off the last remnants of student loan #2 by making the final payment to the transferred balance on the Citi Simplicity card thus completing one of our last remaining financial goals for 2006.

As you might recall, back in February, we utilized a promotional no-fee 0% balance transfer offer on the Simplicity card to facilitate the paying down of the balance throughout 2006. Each month we’ve been quietly making the necessary payments in order to remove the debt and now we are left with one less liability to worry about.

For those interested, here were the steps we took to pay off the loan in a year’s time. We are currently using a similar approach to eliminate the second mortgage next year.

Milestone reached: net worth of over $150,000

2006-12-29T11:50:00.000-08:00

It wasn’t easy, but today we finally surpassed $150K in net worth for the first time thus effectively doubling our net worth total from this time last year and completing one of our last remaining financial goals for 2006.

Back in September it looked very unlikely we’d meet this mark by the end of the year. At that time our investment returns were absolutely flat and I still needed to make a job change that would increase our incoming revenue. Even though I have yet to find a new job, a nice sustained bull run by the market during these past few months has helped us greatly in realizing our year-end goal.

We had predicted on reaching this milestone sooner, but the expected holiday bonuses were a bit of a disappointment this year.

Right now we are ahead of schedule according to our long-term plan, but we know we can’t expect the kind of investment performance we enjoyed in 2006 every year. We’ll need to work extra hard in the coming years on growing our incoming revenue to reach our ultimate goal.

Later today we’ll be publishing our financial goals for next year, one of which is to reach $238,000 in net worth by year end.

Our previous net worth milestones:

Could you survive on only $150K a year?

2006-12-22T11:25:00.000-08:00

I offer exhibit A on why a basic personal finance course should be required in every high school.

Attacking the second mortgage – part 4

2006-12-06T07:51:00.000-08:00

We are currently hacking away at our second mortgage debt to get it to a reasonable size to which we can transfer it to a credit card offering a 0% interest rate to facilitate the paying off of the remaining balance next year.

Thus far we’ve been able to direct whatever available cash we have on hand toward the principal balance in addition to our normal monthly payments. In October we paid an additional $650 and in November we paid another $3,000.

In keeping with our plan, last month we applied for a credit card offering a no-fee 0% rate and ended up getting accepted for two cards offering no-fee 0% promotions.

Since we are hoping to get the loan balance under $10,000 before we transfer it to one of the credit cards we will need to set aside at least $5,500 in extra payments this month. We started off the week by paying another $3,000 in addition to our normal payment to bring the outstanding loan balance down to $12,360.20.

Now the plan is to make one more payment of $2,500 to the principal at the end of this month before we transfer the remainder to one of the credit cards in January. One of our goals next year will be to completely pay off this balance by the end of November.

November financial snapshot

2006-12-05T08:56:00.000-08:00

Below is a monthly snapshot of our investments, major debts and net worth for November as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

Just like last month, with the added push from our investment portfolio we were able to have another record-breaking month. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a return of 2.35% last month and is now up 15.27% for the year.

We saw a milestone reached - we passed the $140K mark in net worth for the first time. We now anticipate accomplishing our year-end net worth goal of $150,000 shortly before Christmas day.

We continue to pay down our second mortgage debt at an accelerated pace. In November we were able to pay an additional $3,000.

We continue to make contributions to the wife’s 401k plan in which we should reach the maximum allowed by the end of the year as planned.

We increased our net worth by 6.70% in November by adding $8,922.50 to the stack. We now need a total of $7,893.23 in net worth gains in order to meet our goal of having $150,000 by the end of 2006 which is one of our goals.

Since the creation of this blog back in January of 2005 we have seen a 685.2% increase in our net worth.

November expense review

2006-12-05T08:27:00.000-08:00

Below are our itemized expense categories as they compare with the previous month and some thoughts.

Much like last month, our expense total is a bit inflated because we’ve been working extra hard to rid ourselves of the second mortgage debt. For the month of November we were able to pay an additional $3,000 towards the principal balance. This month we are planning to set aside at least $5,500 to get the balance under $10,000.

However, when you subtract the extra second mortgage payment we still find ourselves a bit over the $3,000 mark we are always hoping to be at. A bit of early holiday shopping and two electric bills in one month were mostly to blame. We also bought some trees for our home – this was categorized has as a household expense.

In closing, we are somewhat satisfied with our expenses this month, but there is always room for improvement.

New credit cards arrive

2006-11-29T12:16:00.000-08:00

We just recently received the two credit cards in the mail that we applied for earlier this month – the Citi Diamond Preferred Rewards American Express with a credit limit of $6,500 and the Citi Professional with a credit limit of $10,000.

We are only using these cards to take advantage of the sign-up promotions – both offer a no-fee 0% balance transfer and 10,000 bonus ThankYou Points.

Our first order of business is to make a small initial purchase with each of these cards to begin the redemption process of the bonus points. We’ll then convert the points to a $200 check payable to our student loan provider which we will use toward the principal balance of the remaining student loan debt.

The second step will be the paying down of the second mortgage using one of the no-fee 0% balance transfer offers at the end of the year when we plan to have the balance down under $10,000.

As I feared, it seems all but certain that we will not be able to reallocate the $23,200 we have in available credit on our old Citi Dividend to the Citi Professional because the Dividend is a personal credit card and the Professional is a business credit card.

However, it appears that we might be able to transfer the available credit to the Diamond Preferred Rewards card. If that is the case then we’d probably want to shift $18,500 over to the new card which would then give us a credit limit of $25,000. If we are able to do so then we’ll probably go ahead and request a check large enough to cover our second mortgage payoff plus the amount necessary to max out our Roth IRA contributions for next year. As some might remember, we toyed around with this idea last year, but ultimately decided against it.

Closed ING Direct savings account

2006-11-22T12:49:00.000-08:00

Back in December of 2004, shortly before starting this blog, we signed up for our first online savings account. At the time we were looking to begin building a cash reserve in which a majority would serve as our emergency fund. We were immediately attracted to ING Direct because they were offering the highest yield of any savings account available at that time - especially when compared to our options locally.

Later, in March of 2005, we decided to open an account with EmigrantDirect after it became apparent that ING Direct was no longer willing to remain competitive with the new online banks entering the marketplace. Though we stopped transferring money to our account with ING Direct, we decided to keep the account open in the hopes that they would one day become competitive with their interest rates, but that hasn’t happened. So today we decided to move on and drop our account at ING Direct.

Milestone reached: net worth over $140,000

2006-11-22T08:15:00.000-08:00

Today we passed the $140K mark in net worth for the first time which, much like in passing the $120K and $130K milestones, was a lot easier thanks to the added push from our investment portfolio.

We had stated previously that we would need the help of a sustained bull run by the market in order for us to complete our goal of having $150,000 in net worth by the end of the year and thus far things have worked nicely in our favor.

Now we have a little over one month to add the remaining $9,055.07 to our net worth. Historically, December has been a very good month for us and we anticipate accomplishing our net worth goal before Christmas day.

Looking back, the ability to max out our Roth IRAs and the husband’s SIMPLE IRA contributions early has helped us greatly this year because we were able to buy when prices were low.

Our previous net worth milestones:

A new tenant moves in

2006-11-21T15:12:00.000-08:00

Back in February of last year, in an effort to increase our cash inflow, we made the decision to rent out the unused space of our home to the wife’s sister. We have a 3 bedroom, 2 bath, one story home (approx. 1,800 sq. ft.), but we rarely use the front areas (bedroom, bath and formal dining area).

After a little less than two years the wife’s sister moved out last month and we had thought we would be without a source of rental income for a while since the wife is only comfortable living with someone she knows, but as luck would have it a long-time, mutual friend of ours has found a new job in the area and is in need of a place to stay while he is able to research into buying a house near his new place of work.

Since it would be a win-win situation for both parties - giving him the time to properly shop around for his first home while the additional income generated would help us accomplish our goals - we offered to rent out the same portion of our home that was previously occupied by the wife’s sister.

Though the wife’s sister was only paying us $250 a month for the space, we offered our friend a very reasonable rate of $300 per month which he gladly accepted.

His plan is to be out by the end of February of next year, but I’m hoping he will take this opportunity to save enough money to put down the full 20% at the time of purchase which is something we wish we had done instead of having the piggyback loan that we have been hacking away at recently.

More credit card gymnastics

2006-11-17T15:05:00.000-08:00

On Wednesday we made mention that the husband was approved for the Citi Diamond Preferred Rewards American Express Card to help with the paying down of our second mortgage debt.

Yesterday we received a follow-up phone call from Citi promoting an additional credit card - the Citi Professional, which is currently offering the exact same promotional offer that we received with the Citi Simplicity last year – 10,000 ThankYou Points after the initial purchase and a no-fee, 0% balance transfer offer for 12 months from the date of the first balance transfer.

We decided to jump on this deal after seeing that no-fee, 0% balance transfer offers seem to be going the way of the dinosaur. I also noticed that this promotion is currently being advertised on Citi’s website, so anyone can apply for this offer.

What’s particularly sweet about this deal is that we can hold onto the balance transfer offer for now and use it later next year when we might need it. In the meantime, we will make a small initial purchase with the card and redeem the bonus points for another $100 check payable to our student loan provider.

I’ll need to check to see if we can reallocate the $23,200 of available credit we have on our old Citi Dividend card, but we might not be able to do so since the Dividend is a personal credit card and the Professional is a business credit card.

In other news, after 9 months we received our first increase on our Fidelity Investments 529 College Rewards Card credit limit – bumping us up from $15,000 to $18,000. This was welcome news because since our account has been taken over by Bank of America, the option to request a credit limit increase online has been removed.

Attacking the second mortgage – part 3

2006-11-15T10:02:00.000-08:00

We are currently hacking away at our second mortgage debt to get it to a reasonable size to which we can transfer it to a credit card offering 0% interest to facilitate the paying off of the remaining balance next year.

Thus far we’ve been able to direct whatever available cash we have on hand toward the principal balance in addition to our normal mortgage payments. In October we paid an additional $650 and this month we paid an additional $3,000.

The outstanding loan balance now stands at $15,402.58. By the end of the year we plan to have it down under $10,000 and transfer the remaining balance to a credit card offering a no-fee 0% interest rate. We’ve been on the lookout for any such deals and have found the pickings rather slim nowadays, especially if you’re hoping to avoid any balance transfer fees. But we were able to find a deal from Citi that is very similar to what we took advantage of last year to facilitate the paying down of some student loan debt.

Citi is currently running a promotional signup offer on the Diamond Preferred Rewards American Express Card where you get 10,000 bonus ThankYou Points after making your first purchase within 3 months of receiving the card and offers a balance transfer APR of 0% until December 1, 2007 which is also free of any balance transfer fees. A discussion over at FatWallet explains the details for those interested.

Essentially, Citi is going to give us $100 to take out a free, 0%-interest loan for almost 12 months during which time we will be able to completely pay off the balance at a more leisurely pace.

We applied for the card and the husband was accepted with an initial credit limit of $6,500. Since the balance transfer amount will be around $10,000 we will need to beef that credit limit up a bit. We’ll discuss that little detail later on.

So, when we receive the card the plan is to:

Immediately make a small initial purchase;
Completely pay balance as soon as it appears online;
Get a suitable credit line increase;
Request a balance transfer check for the outstanding amount of the second mortgage;
Redeem the bonus points for a $100 check payable to our student loan provider;
Completely pay the balance off by the end of November 2007 (roughly $1,000 per month).

FRONTLINE: can you afford to retire?

2006-11-08T13:43:00.000-08:00

If you missed it, PBS Frontline had a very interesting show on last night about retirement plans which addresses some very real concerns with the current system. We weren’t able to catch it on television, but Barry was nice enough to let us know that the full show is available to watch online.

The first half is primarily dedicated to the downfall of corporate pension plans and the second half focuses more on the issues of today’s 401k programs.

A discussion over on Vanguard Diehards offers some additional commentary for those interested.

October financial snapshot

2006-11-05T10:36:00.000-08:00

Below is a monthly snapshot of our investments, major debts and net worth for October as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

With the stock market continuing to smash through new highs, October turned out to be the best month ever for us, dethroning November 2005 were we saw our net worth grow by $7,666.37. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a return of 3.38% last month and is now up 10.98% for the year.

We saw a milestone reached - we passed the $130K mark in net worth for the first time. Because we’ve been doing a better job of keeping our expenses in check we should be able to pass the $140K mark in net worth by the end of November – and we will need this to happen if we are to realize our goal of having $150,000 in net worth by the end of the year.

We’ve begun our run to quickly rid ourselves of the last of our “bad debt” - the second mortgage - by paying an additional $650 toward the principal balance last month. Already for November we’ve been able to pay an additional $3,000.

We continue to make contributions to the wife’s 401k plan in which we should reach the maximum allowed by the end of the year as planned.

We increased our net worth by 6.68% in October by adding $8,337.58 to the stack. We now need a total of $16,815.73 in net worth gains in order to meet our goal of having $150,000 by the end of 2006 which is one of our goals.

Since the creation of this blog back in January of 2005 we have seen a 635.9% increase in our net worth.

October expense review

2006-11-05T09:50:00.000-08:00

For the month of October we had $4,512.79 in expenses. In comparison, for October of the previous year we had $3,237.85 in expenses. Below are our itemized expense categories as they compare with the previous month and some thoughts.

The numbers can be deceiving - we’ve begun to attack the second mortgage and were able to pay an additional $650 toward the principal balance last month. For November our expense totals will be even greater because we were able to pay an additional $3,000 just recently.

Two other events were also responsible for the increase in expenses. The first was the marriage of the wife’s sister which we helped to finance - the vast majority of this is categorized as gifts given. The wife also did a small bit of clothes shopping and had her hair done (personal care). The second was the payment our home insurance policy which was due for renewal.

Our electrical provider appears to have adjusted their billing cycle as we did not receive a bill until earlier this month.

The wife was able to recoup the remaining shared expenses from her sister’s bachelorette trip in September.

We are exactly where we want to be in our other expense categories and we expect to have a good showing next month.

Attacking the second mortgage – part 2

2006-11-03T09:22:00.000-08:00

We are currently hacking away at our second mortgage debt to get it to a reasonable size to which we can transfer it to a credit card offering 0% interest to facilitate the paying off of the remaining balance next year.

Last month we were able to apply an additional $650 in payment toward the principal. We had hoped to pay more, but our excessive expenses in August kept us from doing so. At the time we had predicted we’d be able to pay another $2,000 toward the principal balance this month.

But since we’ve been doing a better job of keeping our expenses in check these past two months we were actually able to apply $3,000 toward the principal today. The loan balance now stands at $15,403.18.

The way things are going there is little doubt we could get the balance down under $8,000 by the end of the year, but we will stick with our initial plan to get it down to $10,000 and transfer the balance to a credit card at a no fee, 0% interest rate. We’d rather use the extra cash on hand for next year’s Roth IRA contributions and/or to top off our cash reserve after paying property taxes in late December.

Updated retirement savings limits for 2007

2006-10-27T10:42:00.000-07:00

I’m surprised to see little to no mention of the recent IRS announcement to increase retirement savings limitations for next year. The announced cost-of-living adjustments (COLA) affect 401k, SEP, SIMPLE, 457 and a host of other retirement plans.

From 2007 going forward contribution limits are automatically indexed using COLA which is supposed to reflect increases in the cost of living. Contribution limits are adjusted in $500 increments.

The great news is that we’ll be able to contribute an additional $1,000 in tax-deferred savings next year. The wife has access to a 401k plan at her work which the maximum salary deferral will increase to $15,500. My employer offers a SIMPLE IRA plan which the maximum salary deferral will increase to $10,500. As most of our regular readers know, every year we strive to contribute the maximum amount allowed and plan to do so again in 2007.

Home insurance policy renewal

2006-10-27T09:41:00.000-07:00

Last year we were able to take the time to extensively shop around for home insurance, but this year we didn’t get the same opportunity. However, since our premium was only slightly higher (due to a rise in home value) we felt we were unlikely to find significant savings elsewhere and opted to just renew with our current provider this time around.

Unlike in other parts of the country, home values in our area are on the rise, so our policy was adjusted accordingly. This year’s premium is $509 which is a 6.5% increase from last year’s premium of $478.

In addition, we have the option of paying our premium with a credit card, so we used the Fidelity Investments 529 College Rewards Card to get 2% back.

Here is what our home insurance policy will look like for the next 12 months:

Dwelling = $152,000
Personal Property = $91,200 (60% of dwelling)
Personal Liability = $300,000 per occurrence
Medical = $5,000 per person Deductible = $1,520 (1% of dwelling)

Annual property tax bill received

2006-10-26T10:03:00.000-07:00

This week we received our annual property tax bill for our home. This year we will be required to pay $3,869.48 in taxes which is not only lower than the estimate sent to us in April, but a 4.1% decrease from last year’s bill of $4,033.69.

This year’s appraised value of our home by the county is $146,015 which is a 3.2% increase from last year’s county appraisal of $141,501.

We do have the option of paying via credit card, but there is an additional 2.75% “convenience” fee we’d incur which is rather undesirable. Instead, we’ll mail a check at the end of the year with funds for the payment to be drawn from our cash reserve as planned.

No more rental income

2006-10-25T12:17:00.000-07:00

It was a sweet deal while it lasted, but ten days ago the wife’s sister officially moved out as planned thus ending our source of rental income.

Back in February of last year, in an effort to increase our cash inflow, we decided to rent out the unused space of our home. We have a 3 bedroom, 2 bath, one story home (approx. 1,800 sq. ft.), but we rarely use the front areas (bedroom, bath and formal dining area).

The wife’s sister agreed to move in and occupy this space for a very reasonable rate of $250 a month.

At the time it was a win-win situation for both parties – it gave her a chance to get her personal finances in order before she was to be married and the additional income generated helped us fund our cash reserve which we completed in August.

Now we’ve got the whole house to ourselves once more which is nice, but I’d much rather have someone occupy the available space. Unfortunately, the wife is only comfortable living with someone she knows, so we are more than likely to remain without a roommate for the time being.

Milestone reached: net worth over $130,000

2006-10-14T05:39:00.000-07:00

Today we passed the $130K mark in net worth for the first time which, much like in passing the $120K milestone, was a lot easier thanks to the added push from our investment portfolio.

We had stated previously that we would need the help of a sustained bull run by the market in order for us to complete our goal of having $150,000 in net worth by the end of the year and so far things have worked in our favor.

Looking back, the ability to max out our Roth IRAs and the husband’s SIMPLE IRA contributions early has helped us greatly this year because we were able to buy when prices were low.

Our previous net worth milestones:

Easy money

2006-10-09T15:36:00.000-07:00

Last week ended quite nicely for us. We were able to redeem the $50 instant cash-back bonus for the first purchase on the recently acquired Chase Cash Plus Rewards Card. For those interested, it looks like people are now able to get this card with a $100 instant cash-back bonus.

We also received a check in the amount of $40 from cardoffers.com for clicking through their site to get the Citi mtvU Card. Looking back at our records, we should have also received an additional $10 bonus cash reward for our first approval through their site which was not included. I have submitted my concerns to customer support to see what happened.

September financial snapshot

2006-10-05T09:34:00.000-07:00

Below is a monthly snapshot of our investments, major debts and net worth for September as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

With the stock market breaking new highs, September proved to be another good month to us as far as investment returns are concerned. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a return of 1.72% last month and is now up 9.23% for the year.

Because we did a better job of keeping our expenses down last month we should be able to pass the $130K mark in net worth around the middle of October.

We continue to make contributions to the wife’s 401k plan in which we should reach the maximum allowed by the end of the year as planned.

We increased our net worth by 5.88% in September by adding $6,931.87 to the stack. We now need a total of $25,153.31 in net worth gains in order to meet our goal of having $150,000 by the end of 2006 which is one of our goals.

Since the creation of this blog back in January of 2005 we have seen a 589.8% increase in our net worth.

September expense review

2006-10-05T09:09:00.000-07:00

For the month of September we had $3,647.14 in expenses. In comparison, for September of the previous year we had $2,973.05 in expenses. Below are our itemized expense categories as they compare with the previous month and some thoughts.

Well, last month was an improvement from the previous, but we’re still not where we want to be. Though every category was kept in check the vacation expenses hurt us in the end, accounting for 18% of our total expenses. The wife decided to host a bachelorette trip to Las Vegas for her sister and her closest friends where she footed most of the bill. I can’t say I was entirely happy with the arrangement, but part of marriage is being willing to make compromises.

The end of September means our electric and water expenses should now begin to decrease as we enter the cooler months of fall. We’ve been able to live without AC in the house for the past couple of weeks now and we’ve cut back on the amount of irrigation to the lawn.

Attacking the second mortgage

2006-10-04T12:47:00.000-07:00

As mentioned in the previous post, we’re now set to begin hacking away at our second mortgage debt to get it to a reasonable size where we can transfer it to a credit card offering 0% interest to finish it off in 2007.

We consider this the last of our “bad debt” and the remaining major hurdle before we can set up a taxable investment account.

Tomorrow we will be able to apply an additional $650 in payment toward the principal getting the balance down to $18,426.15. We were hoping to be able to pay more, but our excessive expenses in August have slowed our progress.

As of right now, we are tentatively scheduled to pay another $2,000 in November and $6,000 in December toward the principal balance. If we can manage to keep our expenses under control during these next three months there will be an excellent possibility of us getting the loan balance under $10,000 by year end.

Final update on credit limits

2006-10-04T11:31:00.000-07:00

For the past year we have been aggressively pursuing higher limits on each of our credit cards. At the beginning of each month we attempted to raise the limits on each of our credit cards by requesting a credit line increase without performing any hard inquiries on our credit reports (as explained in strategies on raising your credit limit).

The motivation for doing so is provided by one of our goals we have committed to for next year - we want to completely pay down the second mortgage by the end of 2007. The plan is to apply any extra funds available during the remaining months of this year to the principal in hopes of getting the balance down under $10,000. In January 2007 we will utilize a no-fee 0% balance transfer offer to facilitate the gradual paying down of this debt throughout 2007.

We had expected to see another round of increases this month, but it did not happen. Every issuer required an additional hard inquiry to request a credit line increase which we are unwilling to do. This marks the third month in a row where we have been unable to raise the limits on any of our credit accounts. This is mostly due to the fact that a couple of the cards we are currently using are not quite old enough and the older cards are no longer being utilized which precludes us from qualifying for inquiry-free limit increases on these accounts.

So, we proceeded as planned and moved the available credit from two credit cards we no longer intend to use and closed the accounts. We reallocated the $11,400 in available credit on the Citi Driver’s Edge card to the Citi Dividend to bring the limit up to $23,200. This now makes the Dividend card our largest credit line to date. We also reallocated the $3,800 in available credit on the old Chase Profit card to the recently acquired Chase Chas Plus Rewards to bring the limit up to $13,800.

I expect the accounts closed to have a minimal impact on our credit scores since these were both opened not too long ago. However, if we were concerned about our credit scores I would have elected not to close the accounts.

We’ll continue to work on building our lines of credit in the future, but won’t be as aggressive as we have been and won’t make any reoccurring notes on here about our progress.

In conclusion, we accomplished what we set out to do – getting our credit limits up to a reasonable level so that we may transfer the outstanding second mortgage balance using a 0% offer in 2007. We were able to double our highest credit limit and our average credit line within twelve months time.

A change of season

2006-09-28T08:42:00.000-07:00

It appears that the heat of summer has finally given way to the cool temperatures of autumn and we are now able to turn off the AC and open the windows in the house. We can also start to cut down on the amount of water used on the lawn.

In the coming months we’ll see our electric and water utility bills drop significantly which is always welcome. This year, though we used less energy, our bills were at an all-time high. Last month’s bill was a record-breaking $148.85 – the most we’ve ever spent on electricity for a given month. However, we only consumed 991 kWh, which is below average for us for that particular time of the year.

Looking over our previous bills our rate has gradually increased to $0.1352 per kWh which, by the chart below (which represents the last 4.5 years), you can see has had its effect on our recent monthly payments.

Since we live in a deregulated state we have the option of switching providers, so we’ve been looking at making a switch like we had done previously a little more than a year ago. However, after briefly scanning over our available options it appears the rate we have right now is competitive with the other offerings. We’ll continue to monitor and make a move when the opportunity presents itself.

Milestone reached: net worth over $120,000

2006-09-08T09:43:00.000-07:00

Today we passed the $120K mark in net worth for the first time which was a lot easier than getting to $110K thanks to the increased help from our investment portfolio.

As stated in our August financial snapshot, we need to average $8,021.95 in monthly gains to meet our goal of having $150,000 in net worth by the end of the year, which honestly looks very unlikely at this point. I do believe we will come close because we always do well in the later part of the year, but we’ll need a major bull run by the market in order to meet our goal.

Our previous net worth milestones:

Our current credit card rotation

2006-09-06T08:51:00.000-07:00

As explained in a previous post, we use multiple credit cards because we seek to maximize all possible savings on expenses we would normally incur otherwise. At this time we are utilizing the following five cards to accomplish this:

Chase Cash Plus Rewards is used for all purchases made at grocery stores, gas stations and drugstores (often termed as “everyday purchases”) in which we earn 5% cash back. Cash back is capped at $300 ($6,000 in total qualifying purchases) per calendar year.

Citi mtvU Platinum Select is used for all purchases made at restaurants, book stores, record stores, movie theaters, and video rental stores in which we earn 5% back by redeeming reward points for student loan rebates. Points are capped at 75,000 per calendar year which is well beyond our reach.

Advanta Platinum BusinessCard is used for all purchases of office supplies, computer equipment, utilities, cell phone and internet services in which we earn 5% cash back. Much like the Chase Cash Plus Rewards, cash back is capped at $300 ($6,000 in total qualifying purchases) per calendar year. In addition, cash back is also capped at $25 ($500 in total qualifying purchases) per month.

Fidelity Investments 529 College Rewards Card is used for all other purchases in which we earn 2% back that is automatically deposited into our 529 Plan account with Fidelity on a quarterly basis. Cash back is capped at $1,500 ($75,000 in total purchases) per calendar year which is well beyond our reach.

Discover Platinum is only used to take advantage of the rotating 5% “Get More Purchases” quarterly rebate promos. We can double the rewards by redeeming our cash back bonus with one of Discover’s partners thereby earning an effective 10% return.

There are many rewards credit cards out there, but these are the ones that are best suited for our needs. For those looking for more options, this discussion at FatWallet will be helpful.

Studies have shown that people typically spend more with a credit card offering rewards, so you must be extremely disciplined in your spending habits. If you can not responsibly use a credit card I would recommend you stick with paying everything in cash instead. There is a reason casinos make you use gambling chips instead of cash; don’t be another statistic.

Chase Cash Plus Rewards arrives

2006-09-06T08:30:00.000-07:00

After our search for a suitable replacement for the Citi Dividend Platinum Select in our credit card rotation, the Chase Cash Plus Rewards MasterCard finally arrived in the mail yesterday.

We will be using the Chase Cash Plus in the same manner as we did with the Citi Dividend because the Chase Cash Plus rewards program is pretty much a carbon copy of the old Citi Dividend Platinum Select program:

5% cash back for purchases made at grocery stores, gas stations and drug stores
1% cash back on all other purchases
Cash back is capped at $300 per calendar year
Cash back can be redeemed when at least $50 in rebates is accumulated

As previously mentioned, Chase no longer advertises this card on its website, but you can still apply for the card here. As of this moment Chase is offering a $50 instant cash-back bonus on the first purchase made with this card.

Discover fall “Get More” promo announced

2006-09-05T13:32:00.000-07:00

Those with a qualifying Discover card can sign up here to receive 5% cash back on all purchases made at restaurants, movie theaters/rentals and select retailers from October through December 2006. The bonus is up to $1000 in purchases, so that means you’ll be limited to only $50 in cash back returns.

Since our Discover card has been converted to the platinum variety, we are now able to participate in these rotating 5% “Get More Purchases” quarterly rebate promos. For the first time we are able to sign up using our old Discover Restaurant card to take advantage of the offer.

As others have already astutely noted, this promo is pretty much an exact copy of the Citi mtvU rewards program. As you might recall, we now have the mtvU card, so why bother with the Discover promo? Well, we can double the rewards by redeeming our cashback bonus with one of Discover’s partners thereby earning an effective 10% return which bests the return that we could realize using the mtvU card.

So, starting in October the plan will be to use the Discover whenever possible for these types of purchases until the promo period ends or we reach $1000 in qualifying purchases - whichever event occurs first.

August financial snapshot

2006-09-04T10:41:00.000-07:00

Below is a monthly snapshot of our investments, major debts and net worth for August as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

After several months of lackluster investment returns, August turned out to be an improvement. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a return of 2.30%. For the past couple of months our net worth gains have come solely from our ability to diligently save and pay down existing debt, so it’s good to finally get some help from our investments.

If we had done a better job of keeping our expenses down last month we would have already passed the $120K mark in net worth, but instead we must wait at least another week before we can accomplish this feat.

The biggest news during August was that we were able to complete our goal of having $13,000 in cash reserves. Now that we find ourselves a bit ahead of schedule we can begin to work on some things we have planned for next year. Since we’ve already made the maximum allowable contributions to our Roths and the husband’s SIMPLE IRA and no longer have the cash reserve to worry about, we will now turn our attention towards the second mortgage in the coming months.

We continue to make contributions to the wife’s 401k plan in which we should reach the maximum allowed by the end of the year as planned.

We increased our net worth by 6.24% in August by adding $6,930.13 to the stack. We now need a total of $32,085.18 in net worth gains in order to meet our goal of having $150,000 by the end of 2006 which is one of our goals.

Since the creation of this blog back in January of 2005 we have seen a 551.5% increase in our net worth.

August expense review

2006-09-04T10:05:00.000-07:00

For the month of August we had $4,696.82 in expenses. In comparison, for August of the previous year we had $ 3,735.66 in expenses. Below are our itemized expense categories as they compare with the previous month and some thoughts.

Needless to say, we are very disappointed with our performance last month - we spent 20.59% more in August as compared to the previous month. We should be closer to $3,000 in total expenses, something we’ve been unable to accomplish since March. For the remaining months of 06 we need to concentrate on doing a better job with our spending because we've obviously lost our way.

Let’s start with the obvious – clothing. Because of the sales tax holiday we do most of our clothes shopping during the month of August, but this year we spent almost four times as much as compared to last year. Though our wardrobes have been greatly expanded, the damage to our budget was quite excessive.

Next up - entertainment and dining. It seems we are always struggling to keep these two categories in check each month and we obviously failed in our latest attempt. A trip to the baseball park and a happy hour at a sushi bar helped greatly in breaking our budget here. Dining expenses need to be around $200 and entertainment expenses around $100.

Lastly - miscellaneous. A one time reimbursement check of $376 to a family member did us in here.

There was a small bit of good news – groceries. We were able to bring this category back within budget.

Update on credit limits

2006-09-04T07:54:00.000-07:00

Advanta BusinessCard - $6,500
American Express Blue - $18,200
Citi Dividend - $11,800
Citi Dividend (wife) - $1,500
Citi Driver’s Edge - $11,400
Citi mtvU - $2,000
Citi Simplicity Rewards - $10,250
Discover Restaurant - $6,500
Fidelity 529 College Rewards - $15,000

Searching for a replacement for Citi Dividend

2006-08-28T09:42:00.000-07:00

Last week we mentioned that the Citi Dividend rewards program will be undergoing changes in October which will render it virtually useless for our needs. Since we were lucky enough to get a rebate check at about the same time the announcement was made we immediately stopped using the card.

There are currently a few alternatives that we’ve been looking at to replace the Citi Dividend in our credit card rotation. Based upon our needs we narrowed our search down to the following three candidates:

HSBC Direct Rewards Platinum MasterCard

Chase Rewards Plus Visa

Chase Cash Plus Rewards MasterCard

At first we were hesitant toward applying for any of the cards offered by Chase because they will more than likely follow Citi’s move and reduce or phase out these programs as well (these cards are no longer being advertised on Chase’s website and were rumored to have been eliminated in the past).

However, we ultimately elected to apply for the Chase Cash Plus Rewards for the following two reasons:

According to the application, Chase is offering a $50 instant cash-back bonus on the first purchase made with this card. So, even if they do change/eliminate the program in the future we’re still $50 richer.

The HSBC Direct Rewards card only allows the redemption of the accumulated rewards once a year which is quite risky because they can always change or eliminate the rewards program before you have a chance to get any cash back.

This morning we were instantly approved for the Chase Cash Plus Rewards card and will be reallocating the available credit from another credit card we have with Chase but no longer use.

Cash reserve complete

2006-08-25T14:11:00.000-07:00

Today we transferred the remaining $1,559.79 needed from our personal checking account to EmigrantDirect to reach a total of $13,000 in cash reserves, thus completing our goal well ahead of schedule.

As stated in our 2006 financial goals, the majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property taxes on our home at the end of the year which is estimated to be $3,947.27.

Now that we find ourselves a bit ahead of schedule we can begin to work on some things we have planned for next year. Since we’ve already made the maximum allowable contributions to our Roths and the husband’s SIMPLE IRA and no longer have the cash reserve to worry about, we will now turn our attention towards the second mortgage.

These past few months we’ve been concentrating on building enough available credit in the hopes of being able to transfer the second mortgage balance to a 0% no-fee credit card(s) in 2007 to facilitate the paying down of the debt.

Since we will now have more money on our hands we will begin making extra payments toward the principal balance to get it down under $10,000 by the end of the year. At that point we will proceed with our original plan to get the remaining amount transferred to a credit card offering a no-fee 0% balance transfer in 2007 to finish paying it off next year.

The end of Citi Dividend

2006-08-22T20:46:00.000-07:00

Yesterday I was sad to hear rumors that arguably the most popular cash back credit card available today, and what we would consider the be the most valuable card in our current rotation, might be undergoing changes in October which would render it virtually useless for our needs.

This week there have been a few confirmations to that rumor as customers are beginning to receive letters from Citi making it official that the Citi Dividend Platinum Select cash back bonus is being devalued to such a point that the card is no longer worth using.

Jonathan, Jim and Flexo have all gone over the changes, so there is no need for me to explain the details. The fact remains that we will need to find a replacement in the near future which is frustrating because we just recently replaced the now defunct Discover Restaurant with the Citi mtvU.

To add insult to injury, Citi is claiming the changes have come about due to the enormous feedback from their customer base which is just completely ridiculous. One only has to read the news to see that this move is most likely in response to recent flat profits.

So what are our options at this point? Well, there are still quite a few actually. Though Citi still has a handful of cards that offer a similar return on “everyday purchases”, we are hesitant to apply because there is some uncertainty if these programs will also be cut in the future.

Other options include the HSBC Direct Rewards Platinum MasterCard, which we are currently leaning toward applying for, and the Chase equivalents (Chase Rewards Plus Visa, Chase Cash Plus Rewards MasterCard), but there is some concern that Chase will shortly follow Citi’s move and reduce or phase out these programs as well.

On a somewhat fortuitous note, yesterday we received our final rebate check for this calendar year, so we can immediately stop using the Dividend card without worry of any unclaimed rewards in the future.

In the meantime we will be using the Fidelity Investments 529 College Rewards Card for our purchases made at grocery stores and the Advanta Platinum BusinessCard for our purchases made at gas stations until we make our decision on a replacement.

Requesting a student loan rebate check – update

2006-08-22T13:12:00.000-07:00

Yesterday we received the student loan rebate check we had requested two weeks ago and promptly mailed it to the lender today. The funds will go toward the paying down of the principal balance on our last remaining student loan.

The check was in the amount of $75 which we were able to acquire by redeeming the points we had accumulated during the Citi Driver’s Edge special promotional offer.

Since we still have quite a bit of student loan debt on our hands, we will be making full use of the student loan rebates in the future (courtesy of the mtvU card) to help facilitate the paying down of the outstanding amount.

Funds transferred to cash reserve

2006-08-10T07:40:00.000-07:00

Today we transferred $2,000 from our personal checking account to EmigrantDirect which now brings our cash reserve balance to $11,440.21.

As stated in our 2006 financial goals, we hope to reach a total of $13,000 by the end of the year. The majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property taxes on our home at the end of the year which is estimated to be $3,947.27.

Only $1,559.79 now separates us from completing our goal and we are planning to transfer this remaining amount on August 25th, a full two months ahead of what we had originally scheduled.

Requesting a student loan rebate check

2006-08-08T12:14:00.000-07:00

Today I requested a student loan rebate check (via Citi’s ThankYou Network) in the amount of $75 by redeeming the points we had accumulated during the Citi Driver’s Edge special promotional offer we received earlier in the year.

As previously mentioned, we will be using the check to help pay down the principal balance on the remaining student loan. The check is expected to arrive in 4-6 weeks, though last time around it only took two weeks.

Since we still have quite a bit of student loan debt on our hands, we will be making full use of the student loan rebates in the future (courtesy of the mtvU card) to help facilitate the paying down of the outstanding amount.

Our current credit card rotation

2006-08-07T08:26:00.000-07:00

As I explained in a previous post, we use multiple credit cards because we seek to maximize all possible savings on expenses we would normally incur otherwise. At this stage we are utilizing the following four cards to accomplish this:

Citi Dividend Platinum Select is used for all purchases made at grocery stores, gas stations and drugstores (often termed as “everyday purchases”) in which we earn 5% cash back. Cash back is capped at $300 ($6,000 in total purchases) in any calendar year. The wife also has a card of her own that we can use if/when we reach the $300 cap in rewards before the year is up.

Citi mtvU Platinum Select is used for all purchases made at restaurants, book stores, record stores, movie theaters, and video rental stores in which we earn 5% back by redeeming reward points for student loan rebates. Points are capped at 75,000 a year which is well beyond our reach.

Advanta Platinum BusinessCard is used for all purchases of office supplies, computer equipment, utilities, cell phone and internet services in which we earn 5% cash back. Much like the Citi Dividend card, cash back is capped at $300 in any calendar year.

Fidelity Investments 529 College Rewards Card is used for all other purchases in which we earn 2% back that is automatically deposited into our 529 Plan account with Fidelity on a quarterly basis. Cash back is capped at $1,500 ($75,000 in total purchases) a year which is well beyond our reach.

Citi mtvU arrives

2006-08-07T08:06:00.000-07:00

After an exhaustive search for a credit card to replace the Discover Restaurant card in our credit card rotation, the Citi mtvU credit card finally arrived in the mail on Friday.

Dining expenses have always been one of our largest expense categories each month. This category not only includes purchases made at restaurants, but also clubs and bars which are frequently coded as restaurants by credit card companies.

The mtvU card is the sole remaining credit card available today that returns a full 5% back on these types of purchases.

The card is not technically a straight cash-back credit card, but rather it is a point reward system where you accumulate points by making qualified purchases and then redeeming the points for various merchandise through Citi’s ThankYou Network.

Though most of the items available to choose from when redeeming the points do not allow you to realize a full 5% return, you can achieve the full 5% return by redeeming points for student loan rebates – a check payable to the loan provider which you can use to pay down the principal balance of the loan. Since we still have quite a bit of outstanding student loan debt on our hands, we will be making full use of the student loan rebates to help us pay down this debt.

In addition to restaurants, the card also returns 5% back on purchases made at book stores, record stores, movie theaters and video rental stores. And it even rewards you for making on-time payments and staying within your credit limit.

For further details there is a nice discussion about this card at FatWallet for those wanting to know more. As discussed in the aforementioned link, we went through cardoffers.com to get the $50 signup bonus.

A special thanks goes out to Jim who was nice enough to hint on the fact that though we are not students, we still could probably get the card.

Texas sales tax holiday begins today

2006-08-04T14:06:00.000-07:00

Today begins the 3-day Texas sales tax holiday where most clothing and footwear priced at less than $100 are exempt from state and local sales taxes. This exemption period is especially beneficial to us because our sales tax is 8.25% here in the Austin area – the maximum allowed in the state of Texas.

This is pretty much the only time of year when the husband does any kind of clothes shopping and we’ll again be taking advantage of the savings. After work we’ll be making stops at Second Looks (a local upscale men’s clothing resale) for business attire, Ross (discount clothing) for socks/underwear and Goodwill (clothing resale) for knit tops.

July financial snapshot

2006-08-04T13:55:00.000-07:00

Below is a monthly snapshot of our investments, major debts and net worth for July as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

Another lackluster month of investment returns. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a paltry return of 0.23% in July. For the past couple of months our net worth gains have come solely from our ability to diligently save.

We continue to make contributions to the wife’s 401k plan in which we should reach the maximum allowed by the end of the year as planned.

Since we’ve already made the maximum allowable contributions to our Roths and the husband’s SIMPLE IRA for this year, we’ve begun concentrating on finishing our cash reserve as quickly as possible. In July we were able to add $2,500. Our current projections show us being able to complete our goal by the end of August in which time we should be able to transfer the additional $3,500 needed.

We saw a milestone reached - we passed the $110K mark in net worth for the first time.

We increased our net worth by 4.77% in June by adding $5,050.65 to the stack. We now need a total of $39,015.31 in net worth gains in order to meet our goal of having $150,000 by the end of 2006 which is one of our goals.

Since the creation of this blog back in January of 2005 we have seen a 513.2% increase in our net worth.

July expense review

2006-08-04T13:26:00.000-07:00

For the month of July we had $3,894.76 in expenses. In comparison, for June of the previous year we had $3,334.26 in expenses. Below are our itemized expense categories as they compare with the previous month and some thoughts.

Though we spent 2.13% less in July as compared to the previous month, we would much prefer our total expenses to be closer to $3,000.

Much like last month we had one large, irregular expense that inflated our total above our desired amount. This time, instead of an exotic vacation getaway, we had a car repair (AC overhaul) that hurt us. Normally, I prefer to do all of our own car maitenance and repairs which greatly saves on cost, but this particular job required a mechanic.

Entertainment expenses were a bit high due to a trip to the baseball park and the wife’s turn to host “bunko night”. Entertainment expenses should be closer to $100 and grocery expenses should be closer to $250, so we’ll need to improve on these areas in August.

As for water and electric expenses, we are entering the most expensive time of the year for us. Temperatures are at or near the triple-digit mark every day and the home A/C is working overtime to keep the house cool. At this point we’re just trying to keep the grass alive - without adequate shade the hot Texas sun cooks everything during the day.

Update on credit limits

2006-08-01T08:41:00.000-07:00

Advanta BusinessCard - $6,500
American Express Blue - $18,200
Citi Dividend - $11,800
Citi Dividend (wife) - $1,500 (-1,500)
Citi Driver’s Edge - $11,400
Citi Simplicity Rewards - $10,250
Discover Restaurant - $6,500 (+1,500)
Fidelity 529 College Rewards - $15,000

Searching for a replacement for Discover - part 2

2006-07-27T13:47:00.000-07:00

As mentioned earlier, we’ve begun to wing ourselves from using the Discover Restaurant card since we no longer qualify to receive 10% back on our dining expenses.

In our last post I had mentioned 4 possible candidates that would replace the Discover card in our current credit card rotation. They were:

We had thought we would be going with the Chase card, but Jim commented that even though we are not students, we can still get the mtvU card. After doing some additional research and reading other people’s experiences, it does appear that those without a mortgage and at least one student loan on their credit report are able to get the card even though they’ve been out of school for years.

Knowing that the wife would be most likely to be accepted (the mortgage is under my name and she is the owner of the consolidated student loan), we applied a few weeks ago using her information. She was later informed by Citi that she needed to reallocate some of her available credit from her other cards in order to get the card which she gladly elected to do. We are now expecting the card to arrive in the mail within the next 7-10 business days at which point I’ll update our current credit card rotation.

On a related note - last week we received a notice in the mail that our credit limit for the Discover card had increased from $5,000 to $6,500. I found it quite humorous because it was just a few days earlier when we tried for an increase by talking directly with a customer service representative, but were denied.

Oddly enough, we still have yet to receive an official letter from Discover stating that our card will be converted to the Platinum variety. I’m sure we’re not magically exempt and expect a replacement card in the mail in the near future. However, because the Discover Platinum has several, potentially valuable, promotions throughout the year, we’ll keep the account active for possible future use.

Milestone reached: net worth over $110,000

2006-07-26T06:55:00.000-07:00

Today we finally passed the $110K mark in net worth for the first time which seemed to take an eternity as compared to the pace we were on during the first part of this year when we were getting more help from our investment portfolio.

As stated in our June financial snapshot, we need to average $7,344.33 in monthly gains to meet our goal of having $150,000 in net worth by the end of the year, which looks unlikely (we’ve only done better once this year).

Our previous net worth milestones:

Got our free credit reports

2006-07-19T15:26:00.000-07:00

I had all but forgotten that we were past due in being able to pull our free annual credit reports from the three reporting agencies (TransUnion, Experian, Equifax) by going to AnnualCreditReport.com.

The first day of June of last year marked first time that residents of Texas and other states in the southeastern region were able to get their credit reports from all three reporting agencies for free. Everyone is allowed to pull their reports for free once a year.

After a brief scan of the reports everything appears to be looking as it should. Though I had mentioned last year that we would probably just pull one every four months from a different agency as a strategy to better track our credit activity throughout the year, we just elected to download them all this time around.

As always, you are able to get the reports for free, but you still have to pay to see your overall credit score. I’m certainly curious as to what our credit scores are, but am unwilling to pay for it at this time.

Funds transferred to cash reserve

2006-07-19T13:12:00.000-07:00

Today we transferred $1,000 from our personal checking account to EmigrantDirect which now brings our cash reserve balance to $9,405.94.

As stated in our 2006 financial goals, we hope to reach a total of $13,000 by the end of the year. The majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property taxes on our home at the end of the year which is estimated to be $3,947.27.

Only $3,594.06 left to go…

Funds transferred to cash reserve

2006-07-10T11:23:00.000-07:00

Today we transferred $1,500 from our personal checking account to EmigrantDirect which now brings our cash reserve balance to $8,405.94.

As stated in our 2006 financial goals, we hope to reach a total of $13,000 by the end of the year. The majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property taxes on our home at the end of the year which is estimated to be $3,947.27.

Though we still have another $4,594.06 left to go, the road to $13,000 shouldn’t be too difficult now that we have maxed out our 2006 contributions for our Roths and the husband’s SIMPLE plan. Looking ahead, it appears very likely that we will finish our cash reserve by the end of October. Afterward, we’ll turn our attention to the second mortgage which we will begin aggressively paying down as we approach 2007.

June financial snapshot

2006-07-05T14:47:00.000-07:00

Below is a monthly snapshot of our investments, major debts and net worth for June as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

Though not quite as dismal as May, June certainly wasn’t a stellar month for investment returns. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a return of 0.15% in June. Disappointing? Perhaps - only because it is making it harder for us to reach our short-term goals. But in the long run, it benefits us much more if the market tanks at this stage of the game. We took advantage of the low prices and decided to max out our Roth contributions ahead of schedule.

As expected, we maxed out the husband’s SIMPLE IRA contributions in half the time it took in previous years. We were hoping for a job change by now, but things are moving more slowly than we had intended.

We continue to make contributions to the wife’s 401k plan in which we should reach the maximum allowed by the end of the year as planned.

We tapped into our cash reserve and transferred out $3,600 in order to max out our Roth contributions early, but we still we still made our regular transfer of $450 to EmigrantDirect, the holder of our cash reserve. As explained in our 2006 financial goals, we hope to accumulate $13,000 in this account by the end of the year so we’ll need to pick up the pace during the second half. Since we don’t have the Roths or the husband’s SIMPLE plan to worry about at this point, the task shouldn’t be too difficult.

We increased our net worth by 3.84% in June by adding $3,922.15 to the stack. We now need a total of $44,065.96 in net worth gains throughout the remainder of the year in order to meet our goal of having $150,000 in net worth by the end of 2006 which is one of our goals. In order to do so we will need to average $7,344.33 in monthly gains, which looks unlikely (we’ve only done better once this year).

Since the creation of this blog back in January of 2005 we have seen a 485.3% increase in our net worth.

June expense review

2006-07-05T14:43:00.000-07:00

For the month of June we had $3,979.56 in expenses. In comparison, for June of the previous year we had $3,190.66 in expenses. Below are our itemized expense categories as they compare with the previous month and some thoughts.

Though the total says otherwise, June was a very good month for us as our recent vacation getway accounted for about 25% of those expenses. We also had the renewal of our auto insurance policy to take care of as well which helped inflate the total.

Pretty much every category expense was lower last month and we are exactly where we want to be. Glad to see grocery and dining expenses back down to within budgeted levels.

As noted last month, we thought we had seen the last of sub-$100 gas/electric and water expenses because of the summer heat, but we managed to squeak out one more month. Unfortunately, I can already tell we won’t be so lucky in July.

Update on credit limits

2006-07-05T09:20:00.000-07:00

At the beginning of each month we attempt to raise the limits on each of our credit cards by requesting a credit line increase without performing any hard inquiries on our credit reports. As mentioned in our post on strategies on raising your credit limit, most credit card companies offer an automated option online to request a credit line increase without having to pull your credit report which would otherwise have a negative impact on your credit score.

The reasoning for this strategy is fully explained in our post in October when we began to track our progress. Essentially, now at this point, after transferring the student loan #2 balance using a no-fee 0% offer, we want to quickly beef up our lines of credit in anticipation of transferring the second mortgage using a no-fee, 0% offer next year. By the time we are able to do this the transferred balance of student loan #2 should be fully paid off.

After two months (June, May) of being unable to raise the limits on any of our credit accounts (without an additional hard inquiry) we were granted several increases this month. We received an increase on each of our Citi cards (last round of increases were in April) with the exception of the wife’s Dividend card because it has not been used since paying off a balance transfer back in November 2005.

In addition, we were able to increase the credit limit on the American Express Blue card once again, this time to $18,200 which is, and has consistently been, our largest line of credit. Our last increase for this card came in February. Not bad, considering that the majority of these increases have occurred while carrying a transferred balance at a promotional rate (2.99%) which we are in no hurry to pay down.

Just like last month, I called Discover to request a credit line increase (Discover does not offer an automated option online to do so) and again the request (increase to $7,500) could not be completed without requiring an additional hard inquiry. Seeing as that we’ve begun to wing ourselves from this card, it appears it will remain at $5,000 for the time being. We’ll do one last try next month as we take it out of our current credit card rotation after we make our last payment.

We were also unable to get a credit line increase on the Advanta card. They seem to be much more stringent than other card companies because the last (and only) increase we ever received was back in February. Perhaps it is just due to the fact that it is a business and not a personal credit card.

We are still unable to request a credit line increase for the Fidelity 529 College Rewards because we haven’t had this card long enough (typically you are required to hold the card for at least 6 months before you can begin requesting credit line increases without having to pull your credit report). Since we received this card in February, I would not expect to see anything until around September.

To date our limits on credit card accounts that we are currently using are as follows:

Advanta BusinessCard - $6,500
American Express Blue - $18,200 (+$1,900)
Citi Dividend - $11,800 (+$2,000)
Citi Dividend (wife) - $3,000
Citi Driver’s Edge - $11,400 (+2,000)
Citi Simplicity Rewards - $10,250 (+$1,500)
Discover Restaurant - $5,000
Fidelity 529 College Rewards - $15,000

Searching for a replacement for Discover

2006-07-03T13:09:00.000-07:00

As described in our balance sheet, we’ve been using the Discover Restaurant card solely for purchases made at restaurants in which we effectively receive 10% back by redeeming the cash back bonus with one of Discover’s partners. Dining expenses have always been one of our largest expense categories each month, averaging around $250, so this program was especially sweet for us.

Sadly, shortly after being approved in November 2005, Discover closed access to these cards to new applicants and later existing cardholders began to receive letters from Discover stating that the cards would be converted to the regular platinum card on the July 2006 billing date, thus ending the Restaurant rebate program.

Though we have yet to receive the program termination letter, last month we reached the $1,500 spending limit on this card and are no longer eligible for the full cash back rebates. Essentially, at this point the card is useless to us and it makes little difference now if the program is terminated.

Now that we will no longer be using the Discover we must once again search out another rewards credit card for this expense category. Currently, the credit cards offering the highest returns are:

Since neither of us are students we don’t qualify for the Citi mtvU card. In addition, we don’t have/need a Costco membership, so that eliminates the AMEX/Costo TrueEarnings card. The Chase Business and Citi Professional are essentially the same, but we are more inclined to go with the Chase card because we have an older Chase card lying dormant that we can use to reallocate the credit.

Funds transferred to cash reserve

2006-07-03T12:36:00.000-07:00

Today we transferred $450 from our personal checking account to EmigrantDirect which now brings our cash reserve balance to $6,875.87.

We hope to reach a total of $13,000 by the end of the year. The majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property taxes on our home at the end of the year which is estimated to be $3,947.27.

After making the decision to quickly max out our Roths last month by using funds from our cash reserve we now have to pick up the pace in order to meet our goal by making contributions of roughly $1,224.83 in each of the remaining months. Since we don’t have the Roths or the husband’s SIMPLE plan to worry about at this point, the task shouldn’t be too difficult.

Some good and bad news

2006-07-03T12:28:00.000-07:00

First, the bad news:

As mentioned back in January, I had hoped to have made a job change by now, but as you can see I have failed in that attempt. The job search started off on a very positive note with a couple of interviews, but nothing panned out. Since then the workload at my current employer has increased significantly leaving me with little time to concentrate on my search. The ultimate goal is still to make a change by year end, so I’ll need to regain my focus and make a stronger commitment during the second half of 2006.

Now, the good news:

In anticipation of meeting my planned deadline I had adjusted my SIMPLE IRA contributions so that I would max out by the end of June (for reasons explained here). I was informed by my employer that I would be forced to forfeit my monthly employer match for the remaining months of when I would not be able to make further contributions to the employer-sponsored retirement plan. This strategy was intended to provide the motivation for me to make a move before my deadline date. Well, it turned out that I did get the full match for this year – instead of it being broken into twelve months, it was divided into six. So, not only did I max out my SIMPLE in half the time, but I also received the full company match just as quickly.

Savings and CD rates beginning to move again

2006-06-28T14:40:00.000-07:00

Seeing as it is pretty much an absolute certainty that the Federal Reserve will move forward with another quarter-point interest rate hike tomorrow, banks have already been positioning themselves by bumping up rates on their savings accounts and CDs in anticipation.

As what always happens every time we go on vacation, EmigrantDirect decided to raise their rate (this time to 4.80%, matching HSBC) while we were away. Glad to see the increase, but I have to agree with what Banking Guy has already said - this move does seem a little disappointing because, as other banks are now beginning to cross the 5.00% APY barrier, I was hoping for EmigrantDirect to be one of those that lead the way. Now it seems that this won’t be happening; at least not for another month or so.

Meanwhile, short-term CD rates continue to march forward at a seemingly much faster pace with many now approaching 6.00% APY. As we near our year-end goal of completing our cash reserve we will consider putting a portion of this into CDs to take advantage of the higher rates of return.

As described in our balance sheet, EmigrantDirect is the holder of our cash reserve which consists of our emergency savings and our annual property tax payment.

Back from vacation

2006-06-27T15:28:00.000-07:00

Though it may have seemed we had all but abandoned the blog these past two weeks, in actuality we decided to take a quick, last-minute trip to Puerto Vallarta a few days ago. After some much needed rest and relaxation we are now starting to get back into the swing of things.

Much like last year, I had wanted to do a little write-up leading up to the trip and how we go about looking for vacation deals, but just like last year I couldn’t find the time to do so.

Our wedding anniversary is in June and normally we enjoy taking a trip to a tropical destination, usually outside the US, for some sun and relaxation to celebrate. Typically, we start aggressively browsing travel discount sites as we get within 30 days or so of when we would like to take time off. We never have a particular date or destination in mind, just a general time frame.

Since we could only get away from work for a short period this time around we decided that a 3 or 4-day trip was in our best interests. I was able to find a decent deal through Apple Vacations for a 3-night all-inclusive in Puerto Vallarta (w/air) for $289.99 each. The total came out to $892.98 once all the taxes and fees where computed for the two of us. (Of course I paid using the Fidelity Investments 529 College Rewards Card to get 2% back - $17.86.)

The ability to be flexible while planning a vacation and booking directly with wholesalers have been the best ways we have found to keep our trips as inexpensive as possible.

The most expensive vacations are those in which you are bound to a specific date and/or location. If you find yourself in this situation I’d recommend using Priceline. Also, check out the discussion boards at BiddingForTravel.com for tips on getting the most out of Priceline.

Yes, wholesalers ship you to and from your destination like cattle, but you simply can’t beat the prices these guys are able to offer.

There seem to be an endless supply of so-called “travel deal” web sites, but in actuality the vast majority of them are all talk and nothing of real value. Cutting through the fluff, here are the following sites we have found to be the most helpful in finding real bargains:

Travelzoo – Without a doubt, this is my first spot to go to when looking for a vacation destination. These guys do a pretty good job of scouring the Internet for the best in travel deals. The weekly Top 20 (released every Wednesday) and Last Minute Travel sections are the most useful.

Apple Vacations – Seem to be the most inexpensive wholesaler out there. Take a look at the Last Minute Specials for the best deals.

Worry-Free Vacations – Also a very inexpensive wholesaler that is comparable to Apple. The Red Hot Deals (released every Tuesday) is where the best prices can be found.

Funjet Vacations – A bit more expensive then the above two wholesalers, but occasionally have pretty good deals. We found our honeymoon package through their website, but it seems their prices have increased since then.

Make Your Bet Vacation – this is just a travel agency website, but it has a useful search engine that allows one to quickly compare deals from different wholesalers. I’ve seen this search engine on other websites as well.

Here are a few other websites I’ll check out from time to time, but up to this point we haven’t found anything more appealing than what can be found on the sites listed above:

Site59.com

11thHour.com

Vacations by Adventure Tours

One final note, airfare is usually the most expensive portion of a trip, especially if you are traveling to another country. You will get more for your travel dollar if you are able to stay at your destination for a longer period of time. 7-day vacations usually make more sense financially than say 3-day trips.

We were so desperate for a break that we booked a 4-day vacation, but upon review we won’t do this again because we never felt we got a chance to really settle down. When two of your days are spent in airports, it only leaves two days for a real vacation which is not enough time to do much of anything, so in the future when we travel we’ll make sure our trips are a minimum of 5 days.

Final contributions made to Roth IRAs

2006-06-13T21:17:00.000-07:00

After yet another down day on Wall Street I decided it was time to take advantage of the current low prices and make contributions to our Roths by transferring $1,800 to each of our accounts held with Vanguard for a total of $3,600. This completes the maximum allowed for both ($4,000 each) for 2006.

Since we didn’t have the necessary funds in our checking account I had to pull from our cash reserves – a temporary sacrifice. We still have over $6,000 (which equates to about 2 months of living expenses) and we should be able to quickly build this back up now that we no longer have the Roth contributions to worry about.

Yes, this move certainly stinks of market timing, but I can’t resist a good bargain. The market could certainly continue to decline, but then again, we could see just the opposite. No one really knows, but one thing is for certain – shares of Vanguard’s Target Retirement 2045 (VTIVX) haven’t been this cheap since November of last year.

As stated in our 2006 financial goals, we hope to contribute more aggressively at the beginning of the calendar year to maximize our long-term returns and we certainly accomplished this as far as our Roths are concerned. We were well ahead of the pace of last year’s contribution schedule where we maxed out in late November.

Here were our contributions for 2006:

New Vanguard Target Retirement Funds available

2006-06-09T08:11:00.000-07:00

This past Wednesday Vanguard announced that the new Target Retirement Funds (2010, 2020, 2030, 2040 and 2050) are now available. As I mentioned before, I really don’t see any benefit to having them and think their addition will bring unneeded complication. Is there really a need for these funds to come in 5-year increments? In my opinion, a much more sensible strategy would have been just to introduce a new fund every ten years instead.

May financial snapshot

2006-06-05T14:29:00.000-07:00

Below is a monthly snapshot of our investments, major debts and net worth for May as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

Yep, you’ve read it elsewhere and it’s more of the same here - the declines in the stock market have had their nasty effects on our investment portfolio as well. Vanguard’s Target Retirement 2045 (VTIVX), our sole investment of choice, had a return of -3.12% in May. Disappointing? Perhaps - only because it is making it harder for us to reach our short-term goals. But in the long run, it benefits us much more if the market tanks at this stage of the game.

As mentioned in last month’s snapshot, we were able to make contributions of $600 to each of our Roth IRA accounts held with Vanguard for a total of $1,200. For June, we are scheduled to once again make contributions of $600 each. If we can continue at this pace we should be maxed out by the end of August.

We made our regular transfer of $450 to EmigrantDirect, the holder of our cash reserve. As explained in our 2006 financial goals, we hope to accumulate $13,000 in this account by the end of the year and as long as we keep up with our planned monthly transfers of $450 we should have no problem in doing so.

We continued to make contributions to our SIMPLE IRA and 401k plans in which we should reach the maximum allowed by the end of the year as planned. As noted previously, we plan to have the SIMPLE maxed out much earlier this year (July) in anticipation of a job change for the husband which, incidentally, does not look like it is going to happen as quickly as we had hoped for.

We saw a milestone reached - we passed the $100K mark in net worth for the first time.

We increased our net worth by 3.96% in May by adding $3,883.00 to the stack. We now need a total of $47,988.11 in net worth gains throughout the remainder of the year in order to meet our goal of having $150,000 in net worth by the end of 2006 which is one of our goals. In order to do so we will need to average $6,855.44 in monthly gains.

Since the creation of this blog back in January of 2005 we have seen a 463.6% increase in our net worth.

May expense review

2006-06-05T13:21:00.000-07:00

For the month of May we had $3,636.34 in expenses. In comparison, for May of the previous year we had $3,833.01 in expenses. Below are our itemized expense categories as they compare with the previous month and some thoughts.

Though we spent 17.6% less in May as compared to the previous month, we would much prefer our total expenses to be closer to $3,000.

Gas prices must have been unusually high for the month of May or we were consuming much more fuel because we recorded the second highest monthly total since we began this blog.

We spent a lot on gifts last month, but we’re scheduled to receive $353.20 in reimbursements that will be applied to this category in June.

We must be eating better because dining expenses are over budget (needs to be around $200) and we continued to struggle with grocery expenses (needs to be around $250). Personally, I put the blame squarely on the influence of Alton Brown and the Food Network.

We have probably seen the last of sub-$100 gas/electric and water expenses for a while. As mentioned earlier, the home air conditioning is now on and there is no more rain in the forecast. Summer is a bit early!

Home air conditioning now on

2006-06-05T12:26:00.000-07:00

Each year we try to resist the urge to turn on the central air conditioning in our home by keeping the windows open and utilizing the ceiling fans. Why? I don’t know…call it a test of willpower, a false hope for that elusive endless spring, being a cheapskate…however, yesterday afternoon we finally succumbed to the hot Texas sun and turned on the air conditioning for the first time this year - an improvement from last year when we made it to May 21st.

No doubt about it, summers are hot in Texas (though we are blessed with mild winters) and this week we are expecting temperatures to rise into the triple digits and will probably break a few records in the process. Of course, I’d love to think we’d switch the AC back off after this heat wave, but it seems that once high temperatures take hold here the heat never relents until mid-September.

We now have larger electric (and water) bills to look forward to in the coming months, though the programmable thermostat and switching of electrical providers should provide us with some relief.

Funds transferred to cash reserve

2006-06-01T08:16:00.000-07:00

Today we transferred $450 from our personal checking account to EmigrantDirect which now brings our cash reserve balance to $10,025.87.

We hope to reach a total of $13,000 by the end of the year. The majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property taxes on our home at the end of the year which is estimated to be $3,947.27.

In order to meet our goal we will need to make contributions of roughly $450 in each of the remaining months.

Update on credit limits

2006-06-01T07:57:00.000-07:00

Advanta BusinessCard - $6,500
American Express Blue - $16,300
Citi Dividend - $9,800
Citi Dividend (wife) - $3,000
Citi Driver’s Edge - $9,400
Citi Simplicity Rewards - $8,750
Discover Restaurant - $5,000
Fidelity 529 College Rewards - $15,000

EmigrantDirect increases APY to 4.65%

2006-05-26T06:41:00.000-07:00

This morning EmigrantDirect’s website began advertising the new interest rate of 4.65% APY on its American Dream Savings Account. Though the rate change does not put them back ahead of the pack, it still keeps ED’s offering competitive. As you might know, EmigrantDirect is the holder of our cash reserve which consists of our emergency savings and our annual property tax payment.

Contributions made to Roth IRAs

2006-05-19T13:08:00.000-07:00

Today we transferred $600 to each of our Roth IRA accounts held with Vanguard for a total of $1,200.

As stated in our 2006 financial goals, we hope to contribute more aggressively at the beginning of the calendar year to maximize our long-term returns.

To date we have put in $2,200 into each of our Roths and are well above the pace of last year’s contribution schedule where we maxed out in late November. If we can continue at this pace we should be maxed out by the end of August. Only $3,600 left to go!

Market takes a turn south…thank goodness!

2006-05-19T13:07:00.000-07:00

From time to time there is a moment when it’s nice to see a good market rally that helps in pushing us into new territory (the passing of the $100K in net worth milestone being the most recent example), but I always try to keep focused on the larger picture and know rallies are not exactly in our best interest right now.

I know, in the long run, it benefits us much more if the market tanks at this stage of the game. Why? Because prices will be cheaper and during the accumulation phase, when we are young and pumping as much capital as we can into our portfolio, it pays to buy low.

Time is on our side to weather the storm and the ideal situation would be to have that huge market rally toward the end of our accumulation phase just as we are beginning to adjust our asset allocation to more conservative holdings.

Now, before the anonymous boo birds start labeling us as market timers please let me point out the fact that we invest regardless of market conditions and are buy-and-hold investors who are following a plan we have already put in place.

Milestone reached: net worth over $100,000

2006-05-08T09:04:00.000-07:00

Wow, we didn’t expect to reach this milestone so soon, but it is certainly welcome! We had projected that we’d surpass $100,000 in net worth sometime in mid-May after receiving one or two more pay checks, but with the latest market rally on Friday our investment portfolio, which just recently surpassed $100,000 as well, pushed us over the mark.

For those curious of how we went from $18,000 to over $100,000 in net worth in less than 1.5 years, it’s all documented here starting with page 1.

Of course, this is but a small step toward our ultimate goal and so the journey continues. (Though I do think we’ll take a moment and briefly celebrate the accomplishment in some fashion this evening.)

As stated in our April financial snapshot, we need to average $6,483.89 in monthly to meet our goal of having $150,000 in net worth by the end of the year which is one of our goals for 2006.
Our previous net worth milestones:

5.51% 7-Month CD?

2006-05-05T14:18:00.000-07:00

Word is beginning to spread over at FatWallet that World Savings has begun offering another unadvertised, short-term CD special. This time it’s a 7-month CD with an APR of 5.51%. If the information is true, then that rate of return would best every CD currently advertised with a maturity date of less than 3 years (PenFed is currently offering a 6.0% 3-year CD).

The special is reportedly running until June 3rd. No further details have been released as of this moment, but it is probably similar to the previous unadvertised special where there was a minimum deposit requirement of $10,000.

World Savings has several branches throughout the continental US.

We’re hoping that the minimum requirement is lower this time so we can jump on this offer if it turns out to be legit. It certainly appears short-term CD rates are now beginning to outpace those of online savings accounts and we are planning to eventually shift a portion of our cash reserve over to take advantage of these higher rates of return.

UPDATE: This special starts today (5/8/06) and requires a minimum investment of $10,000. Banking Guy has these details and more for those interested.

The end of Chase 5% rewards?

2006-05-04T14:34:00.000-07:00

It appears that Chase is no longer offering its popular Cash Plus and Rewards Plus credit card programs to new applicants according to this thread at FatWallet.

If the news is true then this would be a very surprising move by Chase because they just recently released these cards last year to compete head-on with Citi’s comparable offering - the Dividend Platinum Select. The cards offer 5% back on all purchases made at grocery stores, gas stations and drug stores and 1% back on everything else.

The word is that existing users will be unaffected, but if history serves, those accounts will eventually be converted over to a lesser program in the future.

We are currently using the Citi Dividend Platinum Select as the core holding in our current credit card rotation which is designed to maximize savings on our biggest expense categories.

April financial snapshot

2006-05-04T12:47:00.000-07:00

Below is a monthly snapshot of our investments, major debts and net worth for April as they compare with the previous month and some thoughts.

[Please note: checking accounts, credit cards without balance transfers and house/car values are excluded from this table for simplicity. The net worth calculation shown is based on our full balance sheet provided on the right which includes these values.]

Even with the heavy drag of our above-average expenses in April we were still able to put together a respectable gain in net worth thanks to the returns on our investments as the Dow marches ever closer to its all-time high.

As mentioned in last month’s snapshot, we were able to make contributions of $600 to each of our Roth IRA accounts held with Vanguard for a total of $1,200. We had actually hoped to contribute a bit more, but the large tax bill wiped out any chance of that happening. For May, we are scheduled to once again make contributions of $600 each.

We made our regular transfer of $450 to EmigrantDirect, the holder of our cash reserve. As explained in our 2006 financial goals, we hope to accumulate $13,000 in this account by the end of the year and as long as we keep up with our planned monthly transfers of $450 we should have no problem in doing so.

We continued to make contributions to our SIMPLE IRA and 401k plans in which we should reach the maximum allowed by the end of the year as planned. As noted previously, we plan to have the SIMPLE maxed out much earlier this year (July) in anticipation of a job change for the husband.

We saw a milestone reached - we passed the $100K mark in total investments for the first time. Another major milestone should be reached in mid-May as we pass the $100K mark in net worth for the first time.

We increased our net worth by 6.61% in April by adding $6,088.41 to the stack. We now need a total of $51,871.11 in net worth gains throughout the remainder of the year in order to meet our goal of having $150,000 in net worth by the end of 2006 which is one of our goals. In order to do so we will need to average $6,483.89 in monthly gains.

Since the creation of this blog back in January of 2005 we have seen a 442.2% increase in our net worth.

April expense review

2006-05-04T12:05:00.000-07:00

For the month of April we had $4,413.07 in expenses. In comparison, for April of the previous year we had $3,501.84 in expenses. Below are our itemized expense categories as they compare with the previous month and some thoughts.

April was not a very good month for us in regard to expenses. Typically, we should expect to see around a total of $3,000, but we spent 57.06% more in April as compared to the previous month. A $1,137 tax bill was mostly to blame for this.

There was a small bit of good news - we were able to bring down our clothing and entertainment expenses as hoped for last month, but grocery expenses still remain above the budgeted $250.

Milestone reached: investment total over $100,000

2006-05-03T09:35:00.000-07:00

Yesterday, after another day of positive gains as the Dow marches ever closer to its all-time high, we passed the $100K mark in total investments for the first time. Though probably not worth celebrating (we are more interested in the hitting the $100K mark in net worth in the very near future) it is nice to see another 6-figure number in our balance sheet besides the value of our home and the outstanding balance of the house loan.

Funds transferred to cash reserve

2006-05-02T08:05:00.000-07:00

Today we transferred $450 from our personal checking account to EmigrantDirect which now brings our cash reserve balance to $9,540.02.

We hope to reach a total of $13,000 by the end of the year. The majority of this will be designated as our emergency fund (3 months of living expenses = $9,000). The remaining portion will be used to pay property taxes on our home at the end of the year which is estimated to be $3,947.27.

In order to meet our goal we will need to make contributions of roughly $450 in each of the remaining months.

Update on credit limits

2006-05-01T08:28:00.000-07:00

Advanta BusinessCard - $6,500
American Express Blue - $16,300
Citi Dividend - $9,800
Citi Dividend (wife) - $3,000
Citi Driver’s Edge - $9,400
Citi Simplicity Rewards - $8,750
Discover Restaurant - $5,000
Fidelity 529 College Rewards - $15,000