A lot of personal finance blogs reveal their author’s entire financial picture; so that you can follow them on their quest and help them achieve their goals. I’m not going to give that much information but I think that in order to help me improve my budgeting system, I have to reveal it to the world and have the world poke holes. We’ll track it back to the start of the year. I’ll also give you a look into my 401k as well, percentages of course. In future posts in this category, Financial Outlook, it won’t be quite as verbose as this one.
* These percentages are calculated against my post-tax income, which already has 20% contributed to my employer’s 401k plan.
** Budget Reserve is simply my safety blanket in the budget for overruns. 13% seems like quite a bit but any excess falls into Savings!
Automotive (Jan): Last December, I was in an unfortunate car accident that totaled my car (2000 Acura Integra) at no fault of my own. So I had to purchase a new (used) car, which was a 2003 Toyota Celica, from a private owner in Florida with the insurance company’s funds. But, that also meant I needed to purchase four new all-season tires (since Florida cars don’t know of seasons) which set me back in the Automotive category. Usually that category is very small, consisting of oil changes. I also had to get the tint removed to pass inspection, a $100 ding.
Other (Jan): Usually the Other category is also pretty small too, I try to put anything I spend in a category other than Other. I made a donation to the American Cancer Society and I couldn’t really justify putting it anywhere so it went into Other.
Meals (Feb): 10% is far too much to be spending on Meals. I usually try to keep this somewhere under 7% (achieved in January) and I’ll have to bring lunch to work more often.
Recreation (Feb): I took a nearly weeklong trip for Mardis Gras and a weekend trip to Seven Springs ski resort. I’m allowed to take vacations! 🙂
I don’t really restrict my spending to a dollar amount but I do try to keep things in range of percentages I feel comfortable with. I want to save at least 20% of my income, 30% if possible, and I trim where I find it easiest to trim. Sometimes aberrations (like Automotive in January) are unavoidable, that’s when the Budget Reserve comes into play. Hopefully overruns don’t exceed 13% and starts to dip into the real reserve, my emergency fund.
Onto the 401k…
|Emerging Market Equity||32.48%|
This is a very aggressive and risky portfolio, as you can see. Only 0.90% is in bonds, the rest are in stocks. The International Equity, International Bond, and Emerging Market Equity Funds are all international funds. Small Cap, Employer Stock, and Equity Index are all funds consisting of stocks. I figured since I’m only 24, I have a long long time to watch my fund appreciate and I wouldn’t have been satisfied with a couple percent in a bond fund, even if it was a small percentage. Thus far, the gamble has paid off. While the allocation hasn’t been this way since June 2003 when it started, it’s been relatively close to this. In the first six months ending in December 2003, the 401k appreciated around 8% (calculated as the total return divided by the ending balance, so it was probably much higher by other calculations). In the calendar year of 2004, it appreciated 10.7%. So far in the first three months of this year, it’s appreciated 1.9%.
I don’t know how long I’ll keep the allocation this way but with how the economy is doing (the dollar so weak), international appears the way to go. I wonder what JLP would say about such an aggressive portfolio. 🙂
Anyhow, that’s it! I’ll probably give an outlook update at the start of each month and next month, look for some goals I’ll be setting up and hopefully reaching. As usual, comments are greatly appreciated!