About My Credit Card Debt
Got credit card debt? I sure do. But let me explain – I’m borrowing money from credit cards at 0% interest and investing in a bank account that’s earning me 5-6% interest. Result: Free Money! Along with other things, this helps me earn extra side income of thousands of dollars a year. Recently I wrote up a series of step-by-step posts on how I do this. Please do check it out if you are curious. This is why, although I have the ability to pay the balances off, I choose not to.
Commentary
To answer a common question first, yes, this is net worth for two people. We use the “one pot” method of managing partner finances, we don’t separate things out by person.
Our net worth dropped! There were a bunch of factors in play, but mainly it’s just a superficial wound. One significant change was that as was discussed previously, we stopped listing one of our cars as an asset. It messes up the numbers a bit temporarily, but in the long run it gives us a clearer picture of our progress towards that mythic “financial freedom” we all want.
Lots of big bills this month. Paid our semi-annual auto insurance premiums of about $700. Bought a new luxurious bed, also bought some nice sheets and pillows (from Ross), for a total of about $750. We’ve also been dining out a lot and spending time with good friends here before we leave.
Our stock portfolio dipped a little over the last month, it feels like a time of uncertainty for the markets in general. Some portfolio changes are coming, but nothing so far. While compiling this net worth update, I noticed that my wife’s 401k just jumped by $1,200?! It turns out they did some sort of special mid-year employer contribution, which my wife apparently didn’t even know about. Hey, I’m not going to question it 🙂
After all that, we still saved a good chunk of money this month. Our non-retirement funds now add up to $70,419, with total cash at $64,721. See our mid-term and long-term goals explained.
You can see all my previous net worth updates here. Next month is going to be hectic, with a wedding, a trip to visit the parents, the big move, and new jobs!
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I am confused, why so much cash on hand?
cash on hand = saving for a downpayment on a house (which I will argue should not be bought for a few years).
I know the pain of the net worth being wounded by moving/large events. Larger deposit on the place I am renting + buying a bunch of necessities (I also just bought a bed + sheets, etc). It will take a month or two to get back on track. I hate losing ground, even for a short time.
Jonathan, have you considered taking your car out of the assets for all the prior months so you can better track your net worth gains from prior months/years? It doesn’t seem that time consuming especially if you’re using excel or something similar.
you’re going to Florida?!
We use the ?one pot? method of managing partner finances, we don?t separate things out by person.
Bravo! Indeed, there should BE only one pot (and, my friend, once the children flow, it should be hers)!
I knew a (married) couple that split their grocery bills: I was only off by a couple of months in predicting how long their marriage was to last.
Marriage is about sacrifice (in a GOOD way), and wealth will flow from the considered decisions you will make (now that more than one is involved) as well as the measured risks you will take.
Removing any “backdoor escape hatch”–forcing oneself to commit fully to the other–only enhances wealth creation; you are each a steward of different aspects of the unit’s success.
Grrr… don’t know how many times I’ve lost a post!
Main gist referred to:
To answer a common question first, yes, this is net worth for two people. We use the ?one pot? method of managing partner finances, we don?t separate things out by person
Marriage as a unity–two into one–has real meaning in the financial world, leading to increased health, wealth, and happiness for all involved (especially if you plan on having children).
Once children begin to flow, there really IS only one pot–and it’s the wife’s! And more power to her.
Marriage puts bonds around all movements, especially with regard to the moves you make and risks you take. All to the good. Congrats on moving conscientiously!
Oi! Sorry; never mind; nothing to see folks, just a dotty poster…
Having credit debt is awful. I have never been in similar situation because I am a punctual payer and advise everyone to feel the same. It is a pleasure to be debt free.
CreditGuide – I think you missed the point on the credit card debt in the net worth. It was used to get a 5-6% return. You are right about being debt free, though. That is a wonderful feeling (I’m sure).
Tangential near-non sequitur: just received my Social Security “Statement.” About the only thing it’s good for is tracking my taxable wages year over year. Might be interesting to bring each year’s earnings to today’s dollars and see how you’re doing…
For example, my first year of taxable earnings–when I was 14 (and breaking a few child-labor laws) amounted to $562 in the early 80s. Ah, memories!
My net worth at that time was…zero. In fact, my net worth was zero (or negative) up until marriage in the mid 90s, after which I buckled down and got to work. Job, house, etc.
So, given that you like to track things, perhaps tracking taxable wages would provide a few moments of memory and amusement for you as well.
Clearly, CreditGuide didn’t read the notice he posts everytime about the credit card debt.
I understand how you feel about the move. I’m on the other side of the situation, just got my place in New York and start my new job on Monday. After months of getting ready for this, then doing it, it’s finally almost over and I can get back to substantially increasing the old net worth.
I understand how you feel about the move. I’m on the other side of the situation, just got my place in New York and start my new job on Monday. After months of getting ready for this, then doing it, it’s finally almost over and I can get back to substantially increasing the old net worth.
One of my goals during this process was to not have a negative net-worth month and so far I’ve achieved that… July will be cutting it close with the added surprise of what they call a “broker fee” out here. I guess craigslist hasn’t caught on as much on the east coast as in CA 😀
Question: After you buy a house will you count the net value of the house in your net worth? For example you owe $175,000 on the house, but the neighbor’s house sold for $300,000. Then conceivably your net worth in the house could be $125,000?
Sure Matt, a lot of people do that. I would use something like zillow.com for estimating your house value though, you don’t really know how it compares to your neighbor’s place.
Saving the 0% interest credit card money interests me. Is this zero-payment and 0% interest? It would annoy me if I had 0% interest for a year but had to pay a minimum payment each month.
Do you have a breakdown of where you are parking your cash? Between the accounts? Did you ever end up buying the T-bills?
I have noticed folks tend to do the combined or seperate
We examined the extremes of both and observed how others did it and what we felt and thought would work for us.
We use a compromise method and setup its initial inception during our traditional pre-cana engadgement. We both had been making our own way prior to marriage, and experienced financial freedom from others, to save or spend. Hybrid pot maybe…. it has two components. The household and the individuals.
The ‘household’ is the pot, and manages the joint cash flow/credit card, investments, asset/liabilities,insurance and taxes. Household descisions are both of our responsibility.
The other component, individual, consists of a monthly allowance from the ‘household’ and any individual cash flow/credit card (and possibly investment or asset/liability).
Our marriage financial agreement has remained after 6 years with a house, and now two children, 22 and 6 months. As life has happened we have been flexible with how to adjust the household to the needs of the family.
Now that the WSJ has done a piece on the credit card practice ( http://online.wsj.com/article/SB118255545661145353.html?mod=todays_us_nonsub_money_and_investing ) will it now be harder to do?