Finally got around to adding up the numbers for the last month:
Credit Card Debt
If you’re a new reader, let me start out as usual by explaining the credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high-yield savings accounts that actually earn 3-4% interest or more, and keeping the difference as profit. Along with other deals that I blog about, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the credit card balances off, I choose not to.
Retirement and Brokerage accounts
The bad news is that the market value of our investments went down over $3,500. And this is despite my wife being able to finally max out her 401k for 2008 (total of $15,500 as of this month). At least I don’t own much Fannie Mae stock…
The good news is that I am finally ready to make some big contributions to my Fidelity Self-Employed 401k, at the same time that the markets are near their 2008 lows. Buy low, sell high! Why now? I like to wait because my income fluctuates and this way I have a clearer idea of what my contribution limits will be, as they are based on gross income.
Cash Savings and Emergency Funds
Our mid-term goal was to have six months of expenses ($30,000) in net cash put aside for emergencies. This is now done. As mentioned, future cashflow will be put towards retirement accounts. Speaking of emergencies, with all these hurricanes, I have been checking out portable generators as well.
Home Mortgage
Another ~$500 of loan principal paid off. Housing prices are still dropping in my area. I will probably have to adjust my home value estimate in the future, a short-term goal might be to pick a simple benchmark to follow. After a few other financial priorities are taken care of, perhaps I’ll start a DIY biweekly mortgage plan.
We had some visitors and took a tiny bit of vacation this month, so it was a nice end to the summer. You can see our previous net worth updates here.
The Best Credit Card Bonus Offers – October 2024
Big List of Free Stocks from Brokerage Apps
Best Interest Rates on Cash - October 2024
Free Credit Scores x 3 + Free Credit Monitoring
Best No Fee 0% APR Balance Transfer Offers
Little-Known Cellular Data Plans That Can Save Big Money
How To Haggle Your Cable or Direct TV Bill
Big List of Free Consumer Data Reports (Credit, Rent, Work)
The difference in income between locations gets me every month. I couldn’t imagine putting away $7K in cash in a month… between my wife and I, we bring home just over half of that each month. I guess this is why its hard for me to max out my retirement contributions… its half of my take-home pay. Gotta love rural cost of living.
WaMu has entered a letter of understanding with the Office of Thrift Supervision. This usually means the company is in trouble. Does that change your thoughts on putting money there?
your link to previous nw updates doesnt have the most recent entries. it goes from april to sep..
Just wondering, with your wife’s 401K:
Are you leaving any company match on the table by hitting the max with 4 months left in year? I know many plans will only match while you are making contributions. So in order to get the full benefit, you need to make sure you don’t hit the limit too early.
Is it possible to set up and contribute to an individual 401-k (solo) and also contribute to a regular 401-k through the regular employer? I have a small consulting business (just a few hours a week) in addition to my regular full-time job.
Paul – Not really, as long as I am under FDIC limits. People at IndyMac Federal seem to be fine.
gt – Thanks, I’ll fix that now.
F2O – For some people that is true, so that’s a good question. However, she doesn’t get a match 🙁 so it didn’t matter.
Harish – Yes. However, there is a max of $15,500 of total salary deferrals for all your jobs total. What you can do is contribute additionally is another 20-25% (depends on legal structure) of your consulting income towards a Solo 401k or SEP-IRA.
Jonathan – Enjoy your blog! One question though, since you’ve fully funded your Emergency Fund, do you have another savings account for minor unexpected expenses or will you just handle those out of your emergency fund?
The credit card scheme you’re speaking of is known as arbitrage. The British have come up with a word for it…Stoozing. I would not recommend this to anyone unless you have excellent credit and are really on top of paying your bills. If you can handle an additional bill per month (the monthly min on the cash advance). This is a nice way to make a few hundred, work up to a thousand in a year).
also people, remember to look at the details on the credit card, you need a 0% balance transfer and 0% cash advance. I have not seen too many of those around.
what are everyone’s thoughts on CDs versus stocks right now? I know historically, stocks will win out but right now my stocks are pretty much stinking.
Congratulations on meeting your emergency fund goal! I’ve been reading for a few months and have often found your entries helpful and always found them interesting. I even managed to swing a few 0% credit card offers into free interest payments thanks to you.
Best of luck with your next endeavor.
Thanks for the update. We too are contemplating using some type of index to more accurately track the value of our investment property for our net worth statement. Zillow’s Zestimate is somewhat reliable where the property is located, so we might go that direction.
Auntie Green – depends on your investment horizon. If you have a long term horizon, I would definitely think stocks right now. The market is down roughly 20% from its peak. In the long run, the market will rebound, and equities will appreciate. This is a great opportunity to buy select high quality equities at a substantial discount. If your horizon is short, CDs would be the place to be, since the stock market is in for a bouncy ride in the short term.
Thanks for the info, Jonathan. Could you give me a hint about where to find information regarding that additional 20-25% contribution?
Well done. I have the same issue regarding my house value. I think it’s best to use an online valuation calculator – and sticking to the same one from month to month
Like Auntie Green, my 401(k) keeps losing big bucks as the stock market keeps dropping. I’ve asked before, with no answer – does anyone move (say) 50% of your retirement dollars into a CD/bond/money market account for (say) 3 months or so in order to gain ANY % interest? (vs. losing more $$?)
I know we shouldn’t time the market, but if it just keeps going down, and we are diligent enough to move it back into the market (e.g. mark the calendar!) why not?
Deb
Everyone should be very happy that the stock market has fallen. You are now buying on the cheap! (Hopefully this won’t be another 1929 or anything like that…).
Is without doubt a great rate, I had 17% with my way2save for the past three months and now is 5% but you can only deposit so much per month.
@ Deb and auntie_green:
You don’t realize losses until you sell and that will happen if you move money from stocks that are down into CDs. You invested in stocks knowing there were risks. Don’t go after risk premiums if you can’t accept the risk. Adjust your portfolio according to your risk tolerance (and be honest about how risk averse you really are), and consider it the cost of a lesson learned.
Wow, you guys save and earn a lot. Congrats! Just a question, do you lump your interest income with “Cash Savings”?
Would you mind breaking down the money into new money injected and growth of your money? It would be helpful I think for people to see how it breaks down. I don’t track that myself currently, but am going to start soon.
You look like you’re doing well. Considering that you’re on the West Coast, I can’t imagine that your house is now worth more than what you bought it for. You’re probably breaking even, if not losing right now.
Here is a rough look at mine. I’m 28, wife is 27 .
Assets
Cash – $150,000
401K – $ 80,000
House – $170,000
Total Assets = $400,000
Liabilities
Credit Card – $ 2,300
House – $100,000
Total Liabilities = $102,300
Net Worth = $297,700
I’m thinking about paying the house off now, but not sure. Oh well, any advice would be great. Take care.
TO ADD TO WHAT ZACH SAID…YOU ALSO HAVE TO MAKE SURE THERE IS NO FEE…I KNOW I GET BALANCE TRANSFERS FOR 0% INTEREST BUT THERE IS A 3% FEE SO IF I DO GET THE MONEY AND DEPOSIT IT INTO FUND AND ONLY GET 3-4% I’M NOT GOING TO MAKE ANY MONEY….IT DOESN’T SOUND LIKE A GOOD IDEA AND YOU STILL HAVE TO MAKE A MINIUM PAYMENT EVERY MONTH….IT’S NICE TO THINK AND ATTEMPT TO DO BY USING OTHER PEOPLES MONEY TO MAKE MONEY BUT YOU HAVE TO MAKE SURE OF ALL THE FEES THAT WILL BE INVOLVED……