About My Credit Card Debt
If you’re a newer reader, you may have some concerns about my high levels of credit card debt. I’m actually borrowing money for free at 0% interest, putting it in high yield savings accounts that earn me 5% interest or more, and keeping the difference as profit. 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. This is why, although I have the ability to pay the balances off, I choose not to.
Also mixed in are our monthly credit card charges, which we do pay off each month.
Commentary
Cash Savings. We continue to have a big cash hoard to try and reach our mid-term goal of $100,000 to put towards a house downpayment in an expensive area of the country. We are now at $94,386 in non-retirement funds (cash + brokerage + 529 – credit cards). Getting close! We continue to browse for that perfect home that fits us, and we’re starting to learn more about the ins and outs of mortgages.
Retirement and Brokerage accounts. Performance-wise, there seems to have been little movement over the last month. The increase in value is primarily due to my wife starting to contribute to her new 403b, which is finally set up properly. We hiked up the percentages in order to try and build up some pre-tax contributions before the end of 2007. Still have to decide whether to contribute to a Non-deductible IRA this year. Finally, I’ll be finishing up my series on rebuilding our portfolio this week.
That’s it for this month. As always, we’re not racing against anyone else but ourselves. Take a peek back at our previous net worth updates here.
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Woo… getting very close! I remember seeing that mid-term goal at like 50% ish when I first started reading. How time flies… I feel old.
Congrats on another big net worth increase!
Looks like you had an awesome month. Congratulations!
Holy schnike!?! You saved almost $8,000 in ONE MONTH? I can’t save that (after tax) in a year. Good for you.
Am I missing something? It looks like from your posted statement you have ~112K in cash and have thus already surpassed your goal?
is google paying you for the adverts? Ted, we have the same problem.
It’ll be great if you can show where those net income is from. I mean from employment or investment, show %.
this may be a dumb question…but how do you calculate the percentage change in your net worth updates? by the way, your savings is great!!! congrats!!
Hiking up 403b contributions to get money in in 2007 sounds like a great idea – is it like an IRA where you can do so until April if you want, or does it actually have to be before the new year?
How do you have $64k in your Roth IRA? Have you just had really high returns on that account, or are you much older than I thought you were? Just scratching my head a bit, figuring that’s 16 years’ worth of contributions, or more…
Madame X – Stephen is correct, 401k to Rollover IRA, converted to Roth IRA. I guess nowadays people can also do Roth 401k to Roth IRA.
k – Yes, 403b contributions are like 401k, you can only defer $15,500 in salary each year. We just got the 403b this year, so we hadn’t put anything at all in yet.
susan – percentage change is on a month-to-month basis. so (this month-last month)/last month.
mini – I try to do portfolio % returns every two months or so, but I’m probably too lazy to break it all down each month 🙂 I just don’t check my investments that often.
Market – yes, I make money from the Google ads.
ntguru – I remove the credit card debt at 0% APR, since that’s not really “mine”. non-retirement funds = cash + brokerage + 529 – credit cards.
Ted, SingleGuy, Million, Cap, all – Thanks! 🙂 It won’t be this pretty once we have a mortgage and an actual regular housing payment. We’re also Dual-Income-No-Kids now, whereas one day we want to be One-Total-Income-Multiple-Kids…
Or he paid the tax penalty at some point to roll an IRA or 401k into his Roth.
Don’t forget………..
Gotta send those kids to private school! ($1,500/mo)
And don’t forget about tithing to the church ($1k ??)
And be sure your wife develops expensive shopping habits to knock another $1K or so outta’ the bag every month!!
Soon you should be chippin’ away at those IRA’s to make the rest of us feel better about scrapin’ our nails bloody! 😉
Red: It’s interesting that you bring up tithing. It’s not something I’ve read much at all on PF blogs. My wife and I used to tithe 10% of our gross income each week, but for some reason, we stopped after we started trying to save for a down payment. It’s amazing how much faster you save once you stop tithing! I know, it’s not good though.
Jonathan,
Can u still do ROTH IRA if combined salaries are more than >150K?
tithing sucks and u shouldnt be doing it.
God loves u anyhow.
The only time i ever did tithing is when i was a baby and my teeth started coming out!….wait, thats teething!!!
@Jonathan – Thanks for the info on timing! It turns out your reminder came JUST in time for us to sneak in our contribution for the year, rather than realize mid-Feb that our plan to add it in then was flawed.
I think that may be the single most immediately useful piece of info I’ve ever gotten from a blog!
banana – Yes there are income limits to Roth IRA contributions. Our Roth conversion was done in 2006. Now we are probably over the income limits. We haven’t done any IRA contributions at all for 2007 yet.
To tithe or not is a personal and religious decision. I don’t tithe. I respect that others do; It takes a great deal of commitment and discipline.
k – Nope, there is no extension to April 15th for 403b/401ks. Glad you found it useful, I don’t really understand it all myself.
“Render therefore unto Bush those things which are Bush’s; and to God the things which are God’s.”
😉
I THINK the calculation is a little wrong.
Arent u suppose to minus the Asset with liability?
12652-787?
Then again my math sucks.
RothNovice – when your liabilities decrease, that is a good thing!
With your killer state and fed tax rates, why not use a tax-free money market? Seems like that would beat the rate-chasing.
Aye, there is a math error. You added your liabilities and assets together. They should be subtracted from your assets.
I guess I don’t think of my 529 as a cash account, even though it may be non-retirement, it seems like that should not be included in the mid-term goal…
DINK, means you should hit $100,000 pretty quickly…so, are you actively looking for a depressed value house now that you are so close to your mid-term goal? What is your timeline on that? Do you then go back to goaling $100,000 non retirement cash?
Wow, amazing on the percentage increase last month. Your mid-term goal is going to be accomplished so fast. I think you should raise your long term goal. 🙂
Please explain how $23000 at 5% interest earns “thousands of dollars a year”. The way I calculate it, you would only make about $1176.00 after a year of compounded interest.
Thanks.
Once again, this site depresses the hell out of me.
I will never even come close to any of this without a really lucky lottery ticket.
Simon – Thanks, perhaps. It is a mil by age 45 though 🙂 Not my final goal.
DJ – “Along with other things, this helps me earn extra side income of thousands of dollars a year.”
Max – Never say never…
DJ – also since he’s paying a rough 800 a month, in 10 months that is about 8,000. Add in the 5% on the 31,000 ten months ago etc. That also helps inflate the number that you’re basing it off of right now. (I don’t know all his specific numbers but that could be a part of it too)
I’m curious now though, it seems like the “interest free short term loans” aka credit card offers may be drying up – what kind of impact do you think that will ultimately have on your plan to use the free loan as interest income – or were you planning to get rid of it for your house loan anyways?
Awesome site! Thanks for the heads up on the deals. I sarted th 29 card because of you for my business expenses and I have been only using for a month and already accumulated over $80 for a kid I don’t have yet… gotta luv it! As far as tithing, if you are a human it is good practice. Can’t forget Who provides us with the money. Anyways, great site.
Woe to you, Pharisees! You tithe mint and rue and every edible herb but disregard justice and the love of God. These were rather the things one should practice, without neglecting the others.
(Luke & Matthew)