(Update: I just want to clarify that all my credit card debt is either at 0% interest or will be paid off this month. To learn more about why I do this, please see this entry.)
I was actually in a mild panic last night, while I was compiling this information. For some reason I couldn’t balance everything out, and a few thousand dollars was missing somehow. Did one of my online transfers not make it to the receiving bank? After wasting an extra hour or two checking all my statements, it ended up being a simple formula error in my Excel spreadsheet. Whew. Maybe I should switch to that MSN Money I bought soon…
First, the numbers. Our net worth increased by $8351 since last month’s snapshot. My non-retirement funds now total $34,204, an increase of $6897. As usual, a couple things skew the results. On the plus side, I have had a $5,000 savings bond sitting in a safe deposit box since 2003 that I forgot to include in the calculations, but am including now for completeness. My annual bonus also posted this month.
On the minus side, I misread our contract and our landlord wants both first and last month’s rent ahead of time, so we shelled out another month’s rent this month. Just have to remember not to pay it again when we leave. We also probably spent a couple hundred on home improvement and decoration items this month to spruce up our new place. We could’ve done better, but overall I am satisfied with the results.
Looking forward and considering my Mid-Term Goal, we have $65,772 left with 28 months to go. This equates to $2350/month, which I think is within reach, but it won’t be easy.
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It must be an intergenerational thing. I would be quaking in my boots with 24K in credit card debt, and my net worth is pretty well up there. Every time I read an article that says the average person has $8K (or whatever) of credit card debt I say to myself that it just can’t be true. Guess I’d better finally admit it’s a valid number.
At least you’re starting early enough. Good luck!
Not worry, all of my credit card debt is either going to be paid off this month or it is being borrowed for free at 0% APR interest (details about this here). I have paid a grand total of less than a dollar of credit card interest in my life!
I’m not sure I understand the graph on your web page. If your goal is $100K and you currently have$68K wouldn’t that be 68% not 34%?
Great Job! Keep up the good work..
Joe Watkins
Thanks! Sorry for the confusion, my Mid-Term Goal is $100,000 non-retirement funds for a house downpayment, of which I have $34,204.
Jonathan, take a look at:
http://online.wsj.com/public/article/0,,SB110974163972268078,00.html?mod=todays%5Ffree%5Ffeature
SOMEONE is mentioned 🙂
-Nev
I was just going to say..congrats on being quoted in the Journal. =)
Why in the world do you have 50K in cash sitting in the bank when you have 25K in credit card debt? Does it make you ‘feel’ richer? I’m sorry but that is one of the dumbest things I’ve ever seen. You can rationalize it anyway you want but you still are in debt 25K and when you run your Fico score or go to get approved for a home loan it will not help to have that 25K sitting around. Bite the bullet and pay that off.
The question of credit card debt aside… I’m curious as to your rationale for holding such a huge percentage of your net worth in cash. Is all of that at an ING type account? How soon are you planning to buy the house – not until 2007, it seems, plenty of time for some kind of fixed income instrument, right?
Neville & Arjo – Thanks! =)
Brian – Please see the 2nd comment above. It’s all at 0% interest. My FICO is fine at the high 600s, and when I need to raise it I’ll just pay off the credit cards. I’m not betting the money on black or anything 😉
cmcg – Good question! From what I’ve read with such a short time horizon ~2.5 years, if I’m sure I’ll need the money I should keep it in cash/money market. I am considering putting some of it in a short-term bond fund, or TIPS, but am not sure. Any suggestions?
Hi there:
Found you through Russell Beattie’s Blog.
I’m actually in a similar place as you. I’m 26 years old.
My current breakdown is approximately.
58K Cash Savings
24K Vanguard Index Funds (combination of 500 Index, Growth Index, REIT Index, MidCap index, Total Market Index)12K Scottrade Stock Holdings
12K Scottrade Stocks (7 trades, much happier than them than with E-Trade)
1K Roth IRA (just getting into this this year with VTTHX)
15k 401K
I’ve eased into the stock game in the past year, by subscribing to the Motley Fool Stock Advisor. They show their past results so you can judge their performance. It costs $150 a year now I believe, and they recommend 2 stocks each month. I usually invest 600-1000 in a stock for starters and usually have 8-10 stocks in my portfolio. I buy the stocks that I feel have the best short term potential, with what I consider to be a solid business. I often sell the stocks before they suggest doing so. My goal is to lock in decent returns and usually to flip a stock that’s locked in 15%-20% returns, however if I think the stock has significantly more upside I’ll hold it w/o flipping it, or use stop-limit orders to lock in the return while hoping for more upside. If my average holding for a stock is 6 months, and I can get 15-20% return on each trade, that means 30-40% a year increase pre-tax. As I’ve made more trades my average holding size has gone up as a result of my gains. While the results have been good in the past 8 months or so I don’t want to move all my savings there because of the risk. Another thing I’ll do is increase my holdings in a particular stock if it drops a significant amount but I still feel the business is sound. I’m mostly just using my gains now to increase my holdings, and free up money for new stocks.
In the near future I may buy a house which I’ll probably use 40-45K of my cash savings on for a down payment. That leaves me with 10-15k of cash for emergencies.
Hi Tim,
Thanks for the comments. Yes it does look like we’re in similar situations, your method with Motley Fool is interesting. I’ve read a lot of their articles, but I’ve never paid for any of their stuff. There’s so many stock newsletters out there I can’t distinguish between them, is there a reason you chose them?
I do like TIPS. I’ve also been thinking about buying CDs, although I have yet to do research on where the best rates are. Currently I hold a lot (too much) cash in an ING account – also waiting to buy a house but not ready yet.
I was getting ready to suggest that you pay off that debt with the cash your saving, but you’ve already addressed that. I will encourage you to follow through with your plan though…
CC companies only offer those 0% interest periods because most people will not pay it off, even if they intend to.
good luck, i’ll be checking back!
I used to follow the Motley Fool pretty closely, but after they got burned by the tech bubble like everybody else, I’m not so sure they really know what they’re talking about in terms of stock picking. I suspect they only talk about that because so many of their advertisers are discount brokerages. So I’m sticking with asset allocation via index funds.
As for the cash, don’t bother with bond funds, which don’t necessarily hold them to maturity. You have more than enough money that you should just buy individual bonds and treasuries yourself. And yes, I’d recommend having a portion of this in TIPS (how much depends on how much you fear inflation).
A $100,000 downpayment? Sheesh, how expensive of a house are you looking for?
just curious, is the 529 account the college savings plan subsidized by the government?
And if so, are you planning on going back to college, or is that for your children? (from what I understand, you are still in your 20s)
Hi-
Great site, Jonathan.
Just thought you should know that your IRA-CAM.com link is broken.