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October ‘06 Net Worth Monthly Review

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It’s been a long long time since I’ve written one of these reviews (back in May is my last one) so those of you who have been patiently waiting for one of these can finally rejoice, it’s here. Some personal finance bloggers give you brutally and painfully detailed account information, I just give the roll up information and then look back at what I did wrong, what I did right, and any other big changes.

All the gory details are after the jump.

Net Worth: $146,886.30
Retirement Assets: $67,501.11

Normally there are percentages next to those number, they’ll return next month.

Here are some things of note that have changed in my financial picture since I last wrote one of these:

  • I’m engaged. While the numbers above partially reflect some of my fiancée’s assets and liabilities, they don’t reflect all of them. In fact, the only financials on her side that are counted are those that we share in a joint bank account where we both direct deposit our paychecks but that hasn’t been significant since we’ve only had about a month of paychecks deposited in there so far.
  • I switched jobs. Hopefully my net worth growth curve will be elevated with the increase income but it also experienced a slight blip as a result of my former employer paying me for two and a half weeks of vacation. That temporary blip will be very temporary as I’ve already put that away for my new windows and doors.
  • I paid off one 0% balance transfer. It was the Citi mtvU card, a 6 month offer, that got paid off. After all these 0% balance transfer deals expire, I’ll probably stop doing them. While it’s taken only a small amount of time, there is a lot of hassle involved and I’ve gotten too busy as my new job to really have the energy to stay on top of these.
  • Opened Up A Vanguard Account For Extra Savings. My fiancée opened up a Vanguard mutual fund account (we put it in her name since she’ll be in a lower tax bracket and we aren’t yet married) and we’ve deposited $5,000 into it and put it with an index fund, this will be the first time any one of us has invested money in the market outside of a retirement account (401k or Roth).

Some thoughts on my mind:

  • Rolling over my 401(k). I was looking at the fees on my former employer’s 401(k) plan funds and most of them were under 0.7% with the exception of the Emerging Markets fund which had a whopping 1.5% fee. While Emerging Markets had performed quite well for me, I am debating whether or not I should just push my 401(k) to a Vanguard IRA and put it in a Target Retirement fund.
  • Business Income. This blog has been incredible, all of the folks who read it are incredible, and I’ve been lucky to make even a penny off just writing my thoughts on money. That being said, I have no idea what I should do with this extra income. Right now it just gets lumped into my bank accounts and pretty much disappears into the numbers (with the mental note that we’re probably saving it for the wedding) but I’d like to earmark it for something bigger after we’ve saved enough for the wedding. I’ve thought about using it as a down payment on a rental property but I think I need to research that a little bit more before I do anything drastic.
  • Budgeting Daily Expenses and Being More Frugal. I’ve been really really lax on this the last year or so. Part of that was because I was over-diligent before I bought the house and I may have been burned out because of it, keeping track of expenses pretty much sucks honestly, but you have to do things you don’t like to do in order to achieve the goals you want to achieve. Another part of the reason was that this blog started to earn money and I saw that money as “free.” I wasn’t really “working” for it and so any excess spending I had would be covered by this income… that’s a bad strategy, it’s a lazy and irresponsible strategy, so I’m going to change it.

Well, that’s that, tune in next month to see how things have progressed and if you have any advice, as always, I welcome it with open arms.

{ 11 comments, please add your thoughts now! }

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11 Responses to “October ‘06 Net Worth Monthly Review”

  1. Rich Slick says:

    Well now that you’re engaged you’ll soon find out your cash flow will drastically begin to change.

    1. You’ll probably need to buy life insurance and it’ll only go up as you begin to have kids.
    2. You’ll need to start some sort of college fund for your kids if you plan on having them.
    3. As a couple you may decide to buy a new house or move into a bigger one as you expand your family (if that is your plan).
    4. Stuff happens and you may be struck with illness or your wife might be – try to plan for some sort of catastrophe – everyone encounters one or another in their lifetime.
    5. Be careful with your income levels so that you don’t get phased out of Roth contributions
    6. If and when you do decide to have kids, you’ll be hit with heavy medical expenses, deductibles, extra non-covered charges, exclusions, etc. Plan for them.

    Other than that, you’re doing good ;)

  2. Him says:

    “Be careful with your income levels so that you don’t get phased out of Roth contributions”

    How does one do that? Refuse raises?

  3. Jim, I don’t know if it makes sense to you, but I’m holding off on my 401k until Zecco offers their IRA plans. Some may say it’s risky with putting money in a new brokerage like that, but there were millions of them in the dot-com boom and I don’t remember anyone losing their money. My idea with Zecco is that I can invest in ETFs that are diversified to my liking and can rebalance them as necessary without paying the commissions that would eat into my nest egg. Problem is that Zecco had IRA’s as coming soon when I last checked. I really can’t argue the Vanguard Target retirement, though. It seems very safe with very low fees.

    Rich Slick, it seems to me all those costs are costs of having children with the exception of the catastrophe which will should be prepared even before getting engaged. What if Jim and future Mrs. Jim decide to not have kids. If that’s the case, they may find that combined housing is cheaper than separate. One utility bill is often better than two ;-) .

  4. jim says:

    I’ve definitely researched 529 plans and the like, I do want to have kids but that’s down the road for me. As for the rest of it, my income has definitely improved with the new job and the increase in blogging income, I’ll need to investigate how I can reduce my AGI so I can still participate in a Roth IRA. This year I think I’m okay but next year it’ll be tricky…

  5. Rich Slick says:

    “Be careful with your income levels so that you don’t get phased out of Roth contributions”

    How does one do that? Refuse raises?

    LOL! I’ve been saving that one for a post on my blog but I’m going to have to do that next year at my job. You see I’m on the verge of being phased out of being able to make Roth IRA contributions and it creates so many problems – no more matching 401k money, no more Roth contributions, etc. I’m contemplating creating an S corp or LLC to handle all my investment activities so I can offset some income but that’s a long discussion for another day and another blog.

    Remember this number 160,000. Once you cross that threshold you run into many many tax problems.

  6. jim says:

    To be honest Rich Slick, you’ve said nothing except imply that you make $160k…

  7. One solution to bypass the Roth IRA phaseout is to GET MARRIED!!!

  8. twins15 says:

    Not knowing what to do with all your income…. not a bad problem to have! :D

  9. CK says:

    Jimbo-

    Start putting the blog money into a new account. It’s easy to tack on another account at the online banks.

  10. Rich Slick says:

    Well here’s something I will say….. kids don’t always come when planned which is why I made all the suggestions I did. You don’t plan on moving until you have kids? What if your wife gets pregnant next year? What school system do you want your kid to go to? Private school? Public school?

    I know it seems so far away right now but when it comes it’ll be like a tsunami.
    1. Your kid will be born.
    2. Your wife will likely stop working (at least for a while).
    3. You’ll be hit with medical expenses (some may be unexpected).

    I talk from experience friends. As for the 160k you can read about it here and some of the tax implications: http://www.fairmark.com/rothira/phaseout.htm

  11. Foobarista says:

    On the blog, it’ll be Schedule C self-employment income, so you’ll want to be sure to deduct everything. Also, you can set up a SEP-IRA to put aside up to 25% of the blog profit for retirement. (If you don’t have a 401K or other pension device at work, you could use a SE401K instead and put _all_ the blog income in it up to $15K, and 25% after.)


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