About My Credit Card Debt
Newer readers may be alarmed by my high levels of credit card debt. I’m actually borrowing money for free, putting it in safe investments that earn me 5-6% interest, 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.
Commentary
August was still a very transitional month with starting new jobs, meeting new people, and getting used to living in the in-law unit of a family member. Most of our things are still stuffed in the basement. The positives definitely overwhelm the negatives however:
Cash Savings. It’s showtime! With dual incomes, no kids, and no rent or mortgage, the next several months should allow us to save money faster than ever before. This is a great opportunity, so I really want to take full advantage of it.
We’ve tried to alleviate the no-rent guilt by buying food, power tools, and football season tickets for our family. But they all know the whole point of living here is to save up for a house, and have done the same thing themselves, so hopefully there won’t be much tension.
Retirement and Brokerage accounts. There seems to have been a bounce since last month, with our accounts going up about 3% and ~$2,500. I don’t think we’re out of the woods yet, though. I do need to catch up on my Solo 401k contributions, and make sure to finish setting up our new Roth 403b plan.
Quick summary. Our non-retirement funds now add up to $83,763, which puts us at 84% of our mid-term goal of $100,000 towards a house downpayment. Total net cash is at $78,232 (+$10,938 from last month). Take a look back at our previous net worth updates here.
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congrats on the dink status…the money is flowing
however, i could relate a little more to your story when you couldn’t save $13K a month…but good job anyways 🙂
Yes, I do feel a little bad about that… but whaddya gonna do. Everyone’s got to worry about their own goals 😉
That’s a pretty impressive increase considering the way the market has been going lately. Congrats!
Man – $8.5k cash saved! That is unbelievable. Your taking the challenge out of it :-). If you can maintain that for 5 yrs you are set.
You would be amazed at how much money you can save without renting or owning a home.
I am 23, still live at home, and soon about to finish college. I work a very modest job at a toy store, bringing in only $7.90 an hour currently. However, since I have no more school bills and dont pay rent or car payments etc., I have started to save up for my nest egg just this month.
I recently decided to go prepaid phone over a plan phone, and other things that will help me bring in money faster in the short term than I have been doing for the last 4 years.
$1,170 so far, $98,830 more till I reach my short term goal 😀
Nice numbers!
I know, no rent or mortgage also means no water bill, electric bill, sewer bill, garbage bill, gas bill, or even cable TV bill!
I did forgot to add that we did try to pay our share of the utilities as well, I just have to see if they cash our check.
It is like you are living in college again, but now make some real money! Thinking back to college days of living off of things like 1/4th of power/food bills, little rent (or none in your case!), and few expenses other than entertainment… just think about living off of two engineer salaries with those kinds of expenses. It makes you wonder why more people don’t live more efficiently (i.e. in large groups) to make saving money so much easier instead of following the crowd and going off on their own and foregoing the benefits of economies of scale.
I love your blog.
I don’t understand considering the fact you can save 10000+.
I think you should rent your own apartment, for the benefits of having you own space (privacy, not being dependant on someone else, etc?).
And doing so will not push off your goal by much.
Congratulations on both of your jobs,
May you be successful in all your endeavors, especially in the savings department. Hopefully the amounts you save, will keep on going up up up up.
We could do a lot of things with $10,000 a month 🙂 I’ll spare the details, but our situation is actually very nice. Having lived in 3 different apartments each of the last three years, and being kicked out of one of them, I hope to make our next move the last one we make for a verrry long time.
I can totally relate to the huge money drain experienced when you live on your own and are paying high rent, utilities and services. Sometimes it seems like it would be much easier living with the parents again and saving a fortune in rent, but the lack of privacy and independence wouldn’t be worth it. I know my single friends who moved back home may disagree.
BTW, you’re one of the few people I know aside from myself who doesn’t have a monstrous 401k.
-Raymond
Oh, we’re not living with our parents. Not that we wouldn’t, but the dynamic is different. 🙂
Renting + associated costs might be $2,000-$2,500 a month for our area. For us, saving upwards of $15,000 over the next several months is worth a little bit less privacy. It may not be the case for others, every family and culture is different.
Yeah, I really need to sit down and work out one of these goals.
wow that is quite impressive! i didnt know you were living with another family member, so i guess that helps for sure, but even still that would only have been ~2k for the month. but i dont understand how you saved this much…your ira did well with a not so great month in the market, you moved and maybe had moving costs?, you were between jobs, i would think for a little anyway? we had a lousy 4200 nw bump
nix that, i guess those costs were mostly last month
Great month – Congrats!
Do you maintain a graph showing not only your monthly net worth but also the M-O-M change in k’s? I know I could pull the history and compute, but this would be faster, visual and useful for purposes of future projections. I do so with time on the X-axis, total NW on Y1 and MOM change on Y-2. Very useful data.
Love the site. You’re a smart guy.
The growth for last month looks very good, but there would be more insight in this number for you if you also tracked your actual growth rate achieved from investment return separate from your contributions. This way you know how well your underlying investments are vs just how much you are contributing. Quicken certainly makes easy calculation of this. Adding a column that shows what you added as well as a column for gain from investment would be quite beneficial.
I cringed one time when I went through a friend’s documents from a planner she used where the planner was quoting her “investment growth rate” to be inclusive of what she was adding to the account! The 14% number looked impressive until one peeled back the data to see her underlying investments were LOSING money…..
I also like to keep noted in my net worth table the rate of return I am getting on my fixed income accounts so I can quickly know if I should be moving to a more productive product as rates change around. It also provides a baseline as to what your “risk-free rate of return” is (which your riskier investments should be beating….).
Props on the shared living arrangement. I’m a big fan of in-law apartments, and roommates as good ways to save money on housing.
OK, I must be missing something. (And I think I did this before, but that was when you used to include the cars so maybe I *am* missing something).
But………
I come up w/ $81,304 for your total cash. (Cash + Broker – C/C carry). I can’t get to $84K and I can’t get to $78K either.
??????
P.S. I was just about to congratulate you for getting “just cash” to $102K!!!!!!!
6 figures in cash………..makes ya’ wanna withdraw it, spread it out on a table, roll around in it, then go deposit it back, eh??? 😉
Jonathan,
Since you are only a month or two away from your savings goal for your house — why aren’t you contributing more to your retirement accounts? The numbers here make it appear that your contributions are still pretty minimal….
I’ve been sidetracked by the move, will be making some big lump sum contributions to Solo 401k soon.
Net cash is just Cash savings – CC balances.
Add in taxable brokerage accounts and 529 to achieve “non-retirement” funds.
$8,000 in one month is very impressive! Very nice numbers.
Tom, i think the 8,000/month is net. Net of all of mymoneyblog’s (and wife’s) monthly expenses (like car insurance, gas, oil changes/etc., meals, gym, clothing, gadgets, any magazines newspapers netflix or other online services, and any other personal expenses).. which i guess makes’ it more impressive. Based on 1 of my calculations and predictions, they grossly make (not including any side or personal jobs) is ~$13,000.
Ahhhhhhhhh…………thanks for clearing that up Jonathan.
Yes, I’m missing the 529.
I *think* the reason I’ve missed it twice now is because I consider a 529 a “deferred” investment (a la IRA) and because it’s specifically dedicated to tuition, I have a hard time digesting that as *cash* because of those reasons.
Nevertheless, you’re killin’ ’em!!!!! Kudos to you!
Hi! I’ve just came across your net worth updates…just curious, how did you calculate the percentages?? It may be a silly question, (I’m not the best in math), but your net worth calcuations have inspired me to do something similar of my own. I really enjoy reading your blog–and congrats for all you’ve done!!
This might be a separate topic but when you guys moved, did you do anything with your 401(k)s? Did you rollover into your employers 401(k) or do an IRA rollover? I left for a new job and kept hearing I should roll my 401(k) into an IRA instead of the new 401(k) (better control, more options & can convert to a roth). The IRA rollover is traditional but I want to convert to a Roth. Am I limited to converting $4k a year or is a traditional to roth conversion exempt from this annual limit? It would be nice if I could convert it all at once so I wouldn’t have to deal with buying/selling funds while in the process of converting. Any experience with this? I should just be wary of paying the taxes for the conversion with funds outside of the IRAs right?
your savings is 102,000 dollars. Can you be more specific? Is it in cds or stocks? I want to start my savings and don’t know if i should put it in a cds or stock market. Being a total newbie to stock market, i don’t know where to begin. I done some research and would like to be the money in index fund. Any advice? thx
key —
I’ve recently been looking into this:
If you don’t want to convert to a Roth, then you’re basically indifferent about the money being in a 401k or an IRA. I had a dozen fund options and was making 20% a year in my 401k, so I was happy. Until I tried to consolidate my financial tracking and realized that I couldn’t get centralized quotes for their funds.
If you’re looking at converting to a Roth, then you have to rollover first. You can rollover the full amount, but you have to be making
(Sorry for the repost, but my less-than-or-equal-to characters seem to have cut off my previous post.)
key —
I’ve recently been looking into this:
If you don’t want to convert to a Roth, then you’re basically indifferent about the money being in a 401k or an IRA. I had a dozen fund options and was making 20% a year in my 401k, so I was happy. Until I tried to consolidate my financial tracking and realized that I couldn’t get centralized quotes for their funds.
If you’re looking at converting to a Roth, then you have to rollover first. You can rollover the full amount, but you have to be making less than $100k (double-check that), at least until 2010. Also, you’ll have to pay taxes on it.
I ran the numbers for my situation recently, and being 25 it’s a great bargain! I took the amount in taxes I’d have to pay (~$4k) and looked at it’s value at retirement if I invested it at my, admittedly, agressive rate of return. Then I took taxes out from that (because I’d invest it in a taxable account). On the other hand, I took the value of my 401k and calculated it’s value in retirement with and without taxes. The difference is what I compared to my $4k invested. After seeing that, I made up my mind to call Vanguard this year.
Good job and good luck on your goals!