Intro
My large credit card debt is all at 0% APR interest, so don’t be alarmed. Please see my posts on taking advantage of no fee 0% APR balance transfers for more information. In short, I’m borrowing the money for “free” and keeping it in safe investments while earning me interest. I received another $9,000 this month, in addition to the $10,000 from last month.
Thoughts
I revalued my car at Kelley Blue Book and it dropped, but no big deal. I also cashed out some of my credit cards rewards, so that’s the cause of the 529 drop. Other than that, I think we continue to live comfortably but still within our means, and are saving at an acceptable rate. Definitely room to improve though.
Looking at our goals, our non-retirement funds now total $41,175, or at 41% of our mid-term goal of a house downpayment, and our net worth is at 9% of our $1,000,000 by age 45 goal. Onwards!
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Why did your 529 drop?
1.9% increase in a month is GREAT! Keep that up and you’ll be doing well in 20 years. 😉
Are you counting your car’s value as part of non-retirement funds to be used for the house downpayment?
Maybe you’ve been over this before, but I have to ask since I’m new to your blog. Isn’t this 0% interest credit card arbitrage going to wreck your FICO score?
I remember the time from 2001 to 2003 when we were socking away every penny to buy a house in CA, under the assumption that we need a 20% down payment and 25% payment to income ratio, driving 20 year old cars, eating out was $5 chinese takeout, no furniture in the house and the checking account hitting double digits at times since all the money was getting stashed in 6 month CDs…looking back it was fun and those few years of discipline all paid off handsomely. The house has appreciated by over $200K, our salaries have gone up and the mortgage has been paid down below the jumbo limit. I hope it works out the same for you too.
Ryan – Yes, and I know that is stupid. It’s more of a legacy thing from when I started keeping track of my net worth online, as I paid cash for the car. For example, I don’t keep track of our 2nd car at all. Another reason is that I plan on selling the car once we move, which is why I chose Private Party minus $500. At the rate my GM car is depreciating (it’s only a 2002!), it won’t even matter much soon =(
Dollar – No, my credit score remains above 700. I am not saying everyone’s credit score will, but mine is. Please see my post from a few days ago for more of other people’s experiences. Once I am ready to buy a house, I will simply pay off the money about 30 days before I need to lock in the mortgage rate in order to guarantee myself the best rate.
sid – I hope so too =)
Can you give me advice on retirement accounts?
Can I open Roth and Traditional IRA at same time? If not, how about combination of IRA and 401K is allowed? I am trying to take advantage of tax-deffered retirement accounts. Is there any other option I can take of? I am totally new to whole personal financial game.
Thanks in advance.
UBTB, Can you please search his blog? He has this stuff posted in previous entries.
You can open both a Roth (if you meet certain requirements) and Traditional IRA if you so chose, however there is a fixed amount you can contribute to IRAs each year.
I think the maximum you can contribute per year to an IRA (traditional or Roth or a combintation of both) is $4000. If you’re 50 or older, you can contribute $500 more.
Someone back me up on this, I’m not 100% sure.
Go Bears! I saw this site in a Business Week article. Nice to see a fellow bear doing well! Did you meet you wife at Cal?
Unit 3 all the way, baby 😉
Hey Johnathan,
I just read the Business week article and found your site. I’ve also created my own net worth tracker on NetWorthIQ as mentioned in the article. Gotta say that I love this kind of thing!
🙂
I really admire how you can borrow so much and maintain the discipline to not just spend it. I’m graduating in May and while I’m pretty lucky to have a good job offer, I seem to be a spender type since my parents have been paying for almost everything so far and I don’t usually give a thought to whipping out my credit card. That’s probably going to have to change when I’m responsible for myself.
Can you write a post about your days right after graduation and how you delt with money then? I know a lot of my cousins spent tons of money on trips, gadgets, furniture, etc. after graduation. As soon as I accepted the job offer I bought a computer on 18 month 0% APR planning to pay it off with my future income. I hope this isn’t a bad sign.
I am looking at your website for the first time and saw that you had most of your assets in tax deferred vehicles. Do you believe taxes will be lower in the future?
That’s a good question – I don’t know. But you can hedge that by splitting your money between Traditional and Roth-type of IRAs and 401ks now.
Jonathan,
Where do you get $41k for a house downpayment? Is part of this your Roth IRA contributions? I’m missing something.
Congratulations on surpassing the $90K milestone in net worth; hope to reach it shortly as well. $100K is just around the corner now.
Jonathan – Great blog. I have just launched my own and am trying to figure out how to do the Net Worth meter thing that you have going on. If you have any advice on how to do this that would be great. Keep up the good work and you will definitely meet your goal.
Dont you think considering the before tax worth of your IRA into your net worth might be a little misleading? I think of current net worth as the money I will have in hand if I decide to sell off all my assets and pay off any taxes resulting from the sale. If I liquidate my IRAs, I will pay a tax which I would subtract from my net worth.
Anon – You make a good point, which is why I mark it as pre-tax. It is too much trouble to really calculate your post-tax values. What about taxable brokerage accounts? Any short-term and long-term capital gains in such accounts will also be taxed sooner or later when you withdraw as well. Add in that my tax bracket may increase later, and it’s just too much to deal with. If I convert my IRA to a Roth, then I will report the post-tax value then.
Great blog. I also found you through the businessweek article. This is very educational and inspiring. I was wondering, how do you feel about investing in stock directly without going through funds or IRAs? Is that included in your brokerage?
How did you do on adjusting your W-2 so that you were not giving Uncle Sam a free loan every year? I have always only listed 1 on mine, but realized when I got married, bought a house, and had a kid, that getting a $4000-$5000 refund check in April that I am doing something wrong. I looked at a couple sites to help me with this, and granted, I am in a different situation now than I was last tax year: Going from two incomes to one, lowering my tax bracket, bought and sold a home, etc……but I am getting told to change my deductions to numbers between 5 and 8, but I am leary about this. Let us know how you did on that.
You make too much money to save.
Good job building this web site! I found out about it today when I read business week. I admire you for taking the time to do this and sharing this valuable info with everyone. I will be reading this web site on a regular basis from now on and monitoring your progress. I hope you hit the $1 million target by 40.
Just wanted to congratulate you on your progress. I’ve been trying to read the blog from start to finish, I’ve been going both ways, from the first post up and from the last post down. I hope to start joining you playing the 0% BT game soon, but right now we are trying to sell our house, and then are going to take our time about buying a new one (we want to get a stellar deal). So, for the moment, I need to keep my credit score way up, and I can’t predict exactly when I’ll need it to be high.
I have one question, however, you are saying that by 2007 you will be “geographically stable”. I was wondering why exactly you’ve planned on living in such an expensive area, is it that you two have really good jobs, or that you plan on the real estate in an area such as that giving you the best appreciation, or what exactly? I’m just curious. While I appreciate being in Texas and having no income tax, it would be nice sometimes to have had the real estate appreciation some people have had in California.
The reason is mainly family, and partially weather. Some things can’t be replaced by cheaper housing 🙂