About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me 5-6% interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a series of step-by-step posts on how I do this. Please check it out first if you have any questions.

Commentary

• The stock market stalled a bit this month, as should be expected given its healthy run for the last two years.
• The big drop in cash reserves and credit card debt is due to the ending of one of my 0% balance transfer cards in February (Discover Miles Card). Everything went smoothly and it was paid off without a hitch.
• Our combined incomes continue to far exceed our spending, which is great. I still need to finish tallying up last month’s budget results.
• We still haven’t done our taxes, as I am still waiting on some corrected 1099s and trying to organize my business records. I have a feeling we might have to file an extension this year.
• I know this is poor form, but I have mentioned previously that I keep forgetting to include a $2,000 taxable investment I made in a micro-cap mutual fund (BRSIX) several months ago. If it doesn’t show up in Yodlee, it’s almost like it isn’t there 😉 Anyhow, I’ve finally accounted for it and it’s helped the numbers a bit.
• We are now at $48,167 in net cash and $57,288 in total non-retirement assets. That’s 57% of our mid-term goal, and 96% of our (much easier) May goals regarding saving up for a house down payment. I remain completely confused about housing prices…

You can see all my previous net worth updates here.

Three months ago on November 16th, I started a Make-A-Goal Experiment. I wanted to encourage people to set a six-month goal for themselves, and follow through with tracking it for six months. I even promised a prize for those that checked in half-way through and at the end of 6-months. I was happy to see that over 100 people shared their goals. I believe that simply writing down a specific goal will increase the chance of it happening.

I forgot to remind those 100 people about the half-way mark, so I am extending the halfway deadline to February 23rd. Leave a comment either here or in the original post with the same e-mail address (will not be public) to count. It doesn’t matter what your progress is, as long as you measure it. The prize is going to be a chance at a free iPod Shuffle, so I encourage you to leave a status check. Thanks to the six people who were really on the ball and already submitted updates! Right now you have a 17% chance at a free iPod 🙂

As for myself, the goal was to save reach $50,000 in cash. That meant an increase of approximately $11,610 above my November net worth update (11/8). As of my February net worth update (2/5), I have increased it by $4,602 so far. That’s 40% progress, which is actually better than it looks because we paid over $7,000 in taxes for our Traditional-to-Roth IRA conversion back in December. I am still hopeful that we can reach the $50k mark by May 16th.

About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a detailed series of posts on this 0% game. So please, don’t worry!

Summary
While we are still recovering from the hit when we converted our Traditional IRA to a Roth IRA, this month was one of our strongest yet. First, the stock market continued upwards and our portfolio followed passively. Second, my wife got a healthy bonus from her job in January. Third, I renewed some advertising contracts on this site. Fourth, we had less unexpected expenses stemming from personal events than in previous months.

We are now at $42,992 in net cash and $50,335 in total non-retirement assets. Our mid-term goal of $100,000 for a house-downpayment is still in reach, especially with recent developments… The job search is going well and it looks like one of us (hint: not me) will be getting a big raise soon. This has been in the works actually for a while, but we had a few worried moments here and there. Now all the pressure is on me!

You can see all my previous net worth updates here.

Where are my annual goals? Right now our lives are in a state of limbo, with several pieces that need to fall into place. First and foremost, we are both working towards getting jobs in a new city. After that, we’ll have a better idea of what our income will be (probably significantly higher). It is quite probable that one of us will take longer to find a position than the other. We have a lot of temporary living options with family, or we could rent again, or we could buy our first house.

Given all those variables, here’s the best I could come up with:

1st Quarter
– Find a job!
– Start Tracking Expenses
– File income taxes
– Set up estimated taxes for rest of year
– Put at least $500/month away in 401k

2nd Quarter
– Reach $50,000 in cash for a house down payment (currently at ~$37k)
– Sell most of our nonessential property, aka crap

3rd Quarter
– Move; Find a real estate agent
– Maybe buy a house if the stars align correctly

4th Quarter
– Most likely buy a “reasonable” house during this period
– Long shot goal: Buy a rental property in the Portland area

We are putting off the 2007 Roth IRA contributions until we know better what our income situation will be. It’s amazing that 2006 felt like it passed right by without much action, but 2007 looks like it will be much more hectic.

About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a detailed series of posts on this 0% game. Please check it out first if you are curious!

I like to think of it as similar to what banks do. For example, Capital One 360 is paying people 0.75% interest to hold their cash, and then going out and lending that cash as mortgages to other people at 6-8%. My rate spread is even a bit better than Capital One 360, although they do have a slight edge in volume… a mere $50 Billion or so 😉

Thoughts
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A year ago I set myself some specific financial goals to reach in 2006. Let’s see what I managed to accomplish:

Separate business and personal financial worlds. Done, I have separate business checking accounts and credit cards, and I run all of my business expenses through those accounts. I have also set up a special home office area in our house.

Open a SEP IRA for 2005 business income at Vanguard. Done, opened a SEP-IRA with $2,500, which I then later rolled over to combine with my existing Traditional IRA.

Do my taxes and research to maximize tax return. Used the advanced form of TurboTax to do this for 2006, for 2007 I will either have to do a lot more reading on how to do S-Corp taxes or use an accountant. Probably the latter.

Roll over Traditional IRA to Roth IRA. After much deliberation and procrastination, we finally initiated the conversion internally with Vanguard last week.

Implement Business Idea A, and have it not take too long to maintain. Decided against pursuing this due to various reasons. I have started writing up all my reasons for failure, but haven’t finished yet.
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(image fixed, it was wrong initially)

About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. In short, I’m borrowing money for free and keeping it in safe investments while earning me interest. Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I put up a detailed series of posts on this 0% game. Please check it out first if you have any questions, it should contain answers to most of them.

More Thoughts [Read more…]

No, I didn’t forget! Over 100 people joined me in my Make A Goal Experiment and shared their goals. Since they are cached somewhere in a Google database by now, your goals are now a permanent piece of internet history.

Now to make it happen… I’m going to share a little tip my mom taught me. Whenever you are too lazy to study, exercise, or do a chore, tell yourself to just do it for five minutes. If you want to stop after that, fine. But you’ll be amazed. Once you do it for 5 minutes, most of the time you’ll keep doing it. I often do this with jogging. Sometimes I just come home after a circle around the block. But 90% of the time I go much longer.

Most of the goals involved a certain sum of money, be it for a house, debt repayment, or retirement. Applying my 5-minute trick, my suggestion is spend those 5 minutes and set up a small automatic transfer towards this goal today. Open an online savings account. Washington Mutual, Citibank, Capital One 360, whatever – They are all earning around 5% interest right now, are FDIC-insured, and you only need $1 to open. Or depending on your goal, start an automatic transfer into your 401k or an automatic billpay to a credit card.

With most of these services you can set up automatic transfers weekly, biweekly, monthly, quarterly, whenever. No matter what your goal is or what your budget is, you can make some sort of commitment. If you can only do $10 a week, that’s still a start. After a while, that $10 will feel like nothing and you can increase it.

As for me, I am going to set up an automatic transfer of $125 to my savings account every week. This won’t make me reach my goal 100%, but it will get me moving and build some momentum.

So here I am, 4am in the morning, and trying to think of something interesting/inspiring/useful to say about money. So here it is. If you haven’t already, you should set yourself a 6-month financial goal. Maybe it’s “I will pay off my credit card with the biggest balance.” Or “I will put $1,000 into an emergency fund.” It should be something challenging yet attainable. Making a goal increases the probability of it happening increase 15.8 times at least.

List your 6-month goal in the comments below. Leave a contact e-mail (will not be shared), make the name anonymous. If you check in with the same e-mail at the 3-month mark (February 16th, 2006) with a status update and also at the end of 6 months (May 16th, 2006) you will get some sort of prize, no matter if you reach it or not. Everyone! (Prize value will be non-zero, but don’t expect an iPod or anything.) I want to see what percentage of people actually reach their goals.

You have nothing to lose and everything to gain. Make your goal now!

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