August 2014 net worth update (+21.1%)

31-Dec-2013 31-Jul-2014 31-Aug-2014 MoM YTD
cash $13,500 $5,400 $6,000 +$600 -$7,500
savings $27,400 $21,800 $25,000 +$3,200 -$2,400
investments $134,600 $156,500 $167,800 +$11,300
+7.2%
+$33,200
+24.7%
mortgage $187,600 $151,500 $149,900 +$1,600
+1.1%
+$37,700
+20.1%
net worth $345,900 $412,000 $498,900 +$86,900
+21.1%
+$153,000
+44.2%
liquid assets – debts $49,000 $12,000 $100 +$11,900
+99.2%
+$48,900
+99.8%
$ until FI $823,900 $901,300 $841,500 -$59,800
-6.6%
+$17,600
+2.1%

After some discussion in the comments on last month’s net worth update, I decided to set my condo value to what I realistically think it would sell for today, from a comparative market analysis done by a real estate agent familiar with my area and unit. This month also saw about $4,000 in after-tax savings from my paycheck, in addition to about $8,000 of 401(k) contributions from last month and some gains in the stock market. I’m now so close to $500,000 in net worth!

I saved 71% of my net income this month! I’m at 73% so far for the year. I’ve been looking at my budget with the plan to change jobs and trying to see what I can reduce, but it’s hard when I have ~$1,900/month of fixed expenses. Add in $200/month for groceries and I guess my bare bones budget is $2,100/month, which is a pretty decent chunk of money. I’m so glad I didn’t buy a more expensive place! If I was going to take more than a month off, I could recast my mortgage, which would drop the required payment down about $400/month.

It’s interesting seeing how different my finances have unfolded than I expected. My May 2011 projections showed me hitting $250,000 in 5 years (2016), $500,000 by age 35, and $1 million by age 51. I hit $250,000 two years later than that in May 2013 and will hit $500,000 this year at age 26. My projections now show that I will hit $1 million in net worth around age 30-31, which is twenty years earlier than my projection three years ago. Early compounding really is your friend!

Expenses: I spent $3,570 in August after the mortgage or $2,543 without it. So far, my total spending for 2014 is $31,272, which is $46,908 annualized.

To hit my $38,500 spending goal for the year, I need to spend no more than an average of $1,807/month over the remaining 4 months this year. That’s not really possible considering that the mortgage, property taxes, and HOA dues alone will add up to $6,653 over the remaining 4 months of the year or about $1,663 on average per month, leaving me with only $144 of room each month to hit $38,500. So that’s not going to happen. My current spending estimate is $42,360 for 2014, which would be a decrease of $2,450 from 2013 or about $200/month.

Some of my controllable expenses broke down as follows:

  • ($47) Clothing – adjustment on the cost of some dresses from July
  • $331 Entertainment/Social [average this year: $214, last year: $224]
  • $28 Eating out by myself [average this year: $18, last year: $25]
  • $36 Groceries – for two people [average this year: $201, last year: $152]
  • $116 Work lunches [average this year: $156, last year: $77]
  • $53 Presents – a gift for a friend’s bridal shower [$221 so far this year, $235 last year]
  • $53 Internet
  • $94 Electricity – June/July [$614 so far this year, $571 last year – rates went up about 7% year-over-year]
  • $3 Household goods [average this year: $23, last year: $29]
  • $20 Eyebrows
  • $38 Toiletries – buying a year’s supply of lip balm [average this year: $21, last year: $31]
  • $29 Fuel [$129 so far this year, $302 last year]
  • $1,420 Travel – a) bought flights for a September trip with my boyfriend, b) bought the second flight for a fall trip with some girlfriends, and c) paid a deposit on the hotel for the trip with some girlfriends (the other women owe me for their portion of the cost…) September will see another ~$650 in travel spending and then I will likely be done with non-work travel spending for the year!

Savings: $25,000 (up $3,200)

These funds are spread across a Chase savings account, a general online savings account, a checking account that gets free ATM fees anywhere in the world, and my health savings account.

I’ve decided to keep the Chase savings account open even though I could now close it with no penalty as it has come in handy a few times, for example to get a deposit rather than a statement credit for credit card rewards and then immediately send them to the mortgage. Plus, it is only the opportunity cost on $300, which at the Ally online savings account rates loses me $2.55/year.

This month, I was able to set aside just over $4,000 to my savings account! (It’s only up $3,200 because I tossed a bit at my mortgage to get it under $150,000…) Since I’m done contributing to my 401(k) for the year, I should be able to save quite a bit of funds post-tax over the rest of the year (close to $4,000 from each full paycheck).

Investments: $167,800 (up $11,300 or +7.2%)

This includes my Roth and Traditional 401(k), my 401(k) employer matching (fully vested!), my Roth IRA, my taxable investments including stock index funds and Series I Savings Bonds.

The change here comes from:

  1. July paycheck 401(k) contribution and employer matching (last contribution for the year to any of my investment accounts)
  2. Some stock market gains

My 401(k) is now worth over $100,000! That’s pretty exciting!

Mortgage: $149,900 (down $1,600 or -1.1%)

Some statistics here:

  • 2.5%: the interest rate on my 5/1 ARM
  • February 2018: when the interest rate on my mortgage is set to reset, possibly to 7.5%
  • 1: months of payments eliminated with this month’s pre-payments
  • ~$900: extra payments made on the mortgage this month
  • ~$2: interest this month’s extra payments will save me on the next regular payment
  • 30.7%: portion of my regular payment went to interest (originally was 59%; down 0.2 percentage points from July)
  • 58.1%: amount of equity in my condo, assuming purchase price (up 0.5 percentage points from July)
  • 47.6%: amount of the mortgage I’ve paid down (up 0.6 percentage points from July)

I cheated and threw enough extra at the mortgage this month to roll the balance under $150,000. It was worth it. I still increased my cash position by $3,200, so I call it not a bad month for savings.

TOTAL: $498,500 (up $86,500 or +21.0%)

I ended 2013 with a net worth of $345,900, so I’ve seen a change of +$152,600 or +44.1% so far this year. I’ve set the y-axis on this graph to $465,000 so we can see how my net worth grows towards that throughout the year. I have now surpassed my original y-axis of $465,000 (!), so I’ve increased it to $550,000, which is my new estimate for the year.

August 2014 Net Worth Graph

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Guest post at Frugal Portland

Hope you all are having a great long weekend!

Last week, Kathleen over at Frugal Portland kindly published a guest post of mine on how I’ve always saved at least 50% since I’ve had an income. If you’ve ever wanted a peek into how my teenage mind worked, this is the post for you! (Note that the numbers in the post represent my net worth at the time of writing in July.)

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How much cash to keep on hand?

This is a question that I’ve been really struggling with recently. As I’ve been strongly considering leaving my job in the last few months, I started being a little anxious about how much cash I had around and wanted to stockpile more cash, but then every month, I’ve also wanted to throw the extra money from my paycheck at the mortgage.

What do my liquid funds look like right now?

  1. $19,551.10 in savings ($300 at Chase and the rest at Ally)
  2. $10,172.00 in Series I Savings Bonds that are redeemable (if I redeem them in early September)
  3. just under $17,000 in taxable index funds at Vanguard
  4. total: ~$46,723.10

That is approximately one year’s expenses, maybe a little more or a little less depending on which twelve month period you look at. Yes, I can’t rely on the stock index funds being worth more than 50% of their current value, but that’s still a decent chunk of change. And I should stop forgetting about the Series I Savings Bonds because they were meant to be potentially long-term cash.

So then why, as I contemplate taking some time off between jobs, do I want to stockpile all of my extra money as cash over the next few months? I guess it would help, to a certain extent, to not have to replenish my savings after starting a new job, but especially if I get my second bonus for this year, I don’t need to stockpile all of the extra money as cash. Based on my current budget for the remainder of the year (October, November, and December since September’s spending is more than covered with my August paycheck), I should set aside an additional $9,381.65, or about three months’ spending. That seems much more reasonable to me than simply attempting to hoard all of my money, which was my going plan… And then, once I start a new job, if there is any extra money left in my savings account, I will throw the rest at the mortgage.

Readers, what strange financial habits do you have in times of stress?

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Q2 2014 Update

Eurgh, this update was super delayed! It’s now midway through Q3! I have several job interviews lined up and I am super excited about some of my prospects! That will definitely affect how my financial goals end up falling for the year, so I will definitely be reconsidering my goals for the year (such as the mortgage payoff plan!) once I have a more firm idea of what my income will look like. I’m especially not excited about paying for COBRA. I found out how much it was and, ahem, let me say that I am only paying 5% of the actual cost of my health insurance plan. Wow.

Income

I saw one bonus in the second quarter and my regular income chugged along. I didn’t see a raise on my regular salary. I also saw expected amounts of interest (~$100), credit card rewards (~$55), and dividends on my index fund investments (~$950!). Maybe another quarter soon, I will surpass $1,000 in dividends across my portfolio! That would be pretty cool. I think it might happen in Q4 this year.

Saving

In Q2, I saved 79% of my total net pay.

I’ve contributed about 55% of the yearly 401(k) contribution as of the end of Q2. It will be fully funded by mid Q3. I’m contemplating fully funding it early in the year in the future to help me be a bit less stressed out if I am unhappy in my job.

I made $22,749.03 in extra mortgage payments in Q2, which is about 8% of the original mortgage balance, double last quarter’s payments.

I also set aside $1,300.00 in cash.

Giving

I made a small number of donations in Q2 compared to Q1, but I’m close to having positive budget space in this category, which is nice. I’ve been really happy with my increase here this year and will consider increasing it higher next year.

Spending

I was only $300 over budget this quarter (or $100 per month), compared to $1,700 last quarter! Total spending came in at $10,061.91 and I’m on track to spend about $44,781.15 total this year, which would be a decrease of $27 from last year (2013).

  • $586.64 Clothing – this was clearly way over budget. I’ve spent $1,286.64 on clothing so far this year. Hopefully this goes down a bit in H2…
  • $525.18 Entertainment – slightly under budget. $1,261.70 total so far this year.
  • $965.53 Food – pretty much right on budget.
  • Charitable donations – I’ve overspent by about 2 months’ of budget. This should reconcile itself soon.
  • $6,141.33 Housing – this includes my mortgage payments, internet and electricity bills, HOA dues, household goods (e.g. toilet paper, paper towels, and cleaning supplies), mortgage loan fees, and property taxes. I was about $500 overbudget thanks to increasing my internet speed, budgeting for average monthly electricity bills rather than winter electricity bills, and property taxes going up.
  • Medical bills – nothing surprising here. Just paid my normal premiums for dental, medical, and vision insurance. I’m over budget a very small amount since I hadn’t budgeted for the premiums going up, but they didn’t go up very much $ wise.
  • $269.29 Personal care – this includes eyebrows, hair cuts, make-up, and toiletries. This was overbudget a very small amount.
  • $424.44 Recreation – after spending nothing in Q1, I spent a fair bit in Q2. Still under budget for the year though.
  • $311.95 Shopping – bought a new router with my boyfriend and then some other general furnishings.
  • $35 Transportation – just fuel. Q3 will see insurance and vehicle tab renewal, which will be much more expensive.
  • $365.08 Travel – I’m surprised I spent this little on travel in Q2! That puts the year at $2,258.65 so far.

Here’s what my travel expectations look like for the rest of the year:

  1. (July) Weekend getaway with my boyfriend – $430 total
  2. A friend’s wedding – $710 flight, $70 lodging, $100 transportation, $100 food -> $980 my portion
  3. A friend’s bachelorette party – $325 flights, $400 lodging (my portion), $300 food and incidentals -> $1,025

I spent $2,258.65 on travel in H1 and anticipate spending $2,435 in H2 for a total of $4,693.65, which is about $500 over my original budget. Next year’s travel budget is in the works and it is starting to look like it’ll be around $6,000: two weddings, Christmas, and a two-ish week trip to Europe. I’ve debated postponing the bigger trip, but that seems a little silly to do simply for financial reasons.

Readers, how was your Q2?

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I might keep my Barclaycard Arrival

I’ve been using my Barclaycard Arrival Plus World Elite MasterCard for everything except for 5% Chase Freedom categories and Amazon.com purchases. I have to admit that it is pretty awesome having essentially only one credit card. (I don’t notice having a separate card for Amazon.com purchases since the card is already linked and I don’t carry it around with me.) As much as I have a tendency to overcomplicate things, it is really nice to keep things simple from time to time.

In some ways, I’m still trying to build my credit history. The average age on my credit cards isn’t quite 24 months because I keep applying for new credit cards and canceling older ones. (I’m trying to cut down on that now, but I picked some early credit cards that didn’t turn out to be very useful…) So my goal for the rest of 2014 is not apply for any more credit cards.

I’m not convinced that the Barclaycard Arrival will keep its program at 2.22% cashback forever, but maybe it will since it has an annual fee of $89. I’ll keep my Fidelity American Express as a backup 2% credit card forever (plus it’s nice at Costco!), just like my 1% cashback credit union visa with no foreign transaction fees. I don’t know about the Chase Freedom, but I’ll probably keep it around for a while since it has no annual fee and it is with the same bank as the Chase Amazon.com visa which I doubt I will ever get rid of since a) it is no hassle and b) I’ve now had it for 3.5 years, which is by a slim margin my second oldest credit card. I’m going to ditch the Chase Sapphire Preferred Visa once I use the ~70k points ($875) to book something (even if it’s after the annual fee hits because using the points to book something will earn me $175 more than redeeming them for cashback directly). But the Barclaycard? I love it as much as you can possibly love a credit card.

I tracked my “everything else” spending (basically everything except for foreign purchases, restaurants, and Amazon.com purchases) for the period of July 2012 – June 2013. I spent $19,384.88 total, with an average cashback earning of 1.75% based on where took American Express and where did not. I would have earned an additional cashback of $91.11 in these categories by using the Barclaycard Arrival for everything, covering the $89 annual fee with $2.11 to spare. I also spent $954.99 on foreign transactions, for which I lost out on 1.22% of cashback or $28.48. Lastly, I spent $3,799.25 at restaurants and drugstores, for which I lost out on 0.22% of cashback or $8.36. So if I had only used the Barclaycard, I would have earned an additional $22 in cashback for the year over the annual fee, making it basically a wash, except that instead of needing to carry three cards (Fidelity Amex, Chase Amazon.com Visa, and credit union visa) to accomplish that, I only need to carry one (the Barclaycard).

What would my ideal single credit card look like? I explained this in a comment on Emily’s post a few weeks ago:

  1. Visa/MasterCard (accepted more widely than American Express)
  2. Chip and PIN (easier when traveling – remember, this is an ideal single credit card)
  3. No foreign transaction fees
  4. 2% cashback on everything (no categories)
  5. Easily redeemable
  6. No annual fee
  7. No maximum on the earnings
  8. Free FICO score
  9. Trip cancellation insurance, baggage delay insurance, and supplementary rental car insurance (I’m super worried about something going wrong while traveling)
  10. Flexible automatic payments (Chase and my credit union both reduce the automatic payment if you make an extra payment.

The Barclaycard Arrival World Elite Mastercard meets all of them except 6) and 10). Points are easily redeemable since I travel often enough. I love not having to worry about whether a merchant is foreign or not.

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July 2014 net worth update (+4.2%)

31-Dec-2013 30-Jun-2014 31-Jul-2014 MoM YTD
cash $13,500 $9,100 $5,400 -$3,700 -$8,100
savings $27,400 $23,700 $21,800 -$1,900 -$5,600
investments $134,600 $156,700 $156,500 -$200
-0.1%
+$21,900
+16.3%
mortgage $187,600 $152,200 $151,500 +$700
+0.5%
+$36,100
+19.2%
net worth $345,900 $395,300 $412,000 +$16,700
+4.2%
+$66,100
+19.1%
liquid assets – debts $49,000 $6,900 $12,000 -$5,100
-73.9%
+$37,000
+75.5%
$ until FI $823,900 $835,700 $901,300 +$65,600
+7.8%
+$77,400
+9.4%

You’re probably wondering where the big bump comes from when cash, savings, and investments are all down and the mortgage balance only went down a tiny bit. Well, after much debate, I decided to increase the value of my condo in my spreadsheets by 3% for each of the two years that I’ve owned it, compounded. It’s a pretty modest increase based on what prices are looking like around here (I think it’s actually up in value by about 25% from my purchase price), but it seemed closer to accurate than using my purchase price. That bumped me over $400,000 overall :)

Expenses: I spent $4,952 in July after the mortgage or $3,924 without it. So far, my total spending for 2014 is $27,702, which is $47,489 annualized. To hit my $38,500 spending goal for the year, I need to spend no more than an average of $2,160/month over the remaining 5 months this year. I’m not sure that’s going to be possible. We will see how things unfold though!

Some of my controllable expenses broke down as follows:

  • $175 Clothing – mostly stocking up on underwear, but also buying a hat and two dresses (mostly with gift cards)
  • $142 Entertainment/Social [average this year: $198, last year: $224]
  • $28 Eating out by myself [average this year: $16, last year: $25]
  • $355 Groceries – for two people [average this year: $225, last year: $152]
  • $183 Work lunches [average this year: $162, last year: $77]
  • $53 Internet
  • $150 Condo insurance, 12 month policy [-$123 from last year based on actual cost, +$10 from last year based on this billing plan]
  • $0 Household goods [average this year: $26, last year: $29]
  • $0 Toiletries [average this year: $19, last year: $31]
  • $90 Recreation – 5 pack of yoga classes
  • $115 Furnishings – home decor :)
  • ~$1,500 Car insurance, 12 month policy [-$500 from last year based on actual cost, +$300 from last year based on this billing plan]
  • $30 Fuel [$100 so far this year, $273 last year]
  • $13 Taxis [first laziness this year]
  • $158 Umbrella insurance, 12 month policy [-$223 from last year based on actual cost, no change in billing plan]
  • $584 Travel – had a nice weekend away! So relaxing. Also started paying for a trip in the fall with some girlfriends.

Note that in 2013, I paid monthly for my 2012-2013 insurance policy through July and then in full for my 2013-2014 policy in August, which is what I’m referencing with last year’s actual cost.

July was a pretty expensive month, though about average if you take out the insurance costs.

Savings: $21,800 (down $1,900)

These funds are spread across a Chase savings account, a general online savings account, a checking account that gets free ATM fees anywhere in the world, and my health savings account.

I’ve decided to keep the Chase savings account open even though I could now close it with no penalty as it has come in handy a few times, for example to get a deposit rather than a statement credit for credit card rewards and then immediately send them to the mortgage. Plus, it is only the opportunity cost on $300, which at the Ally online savings account rates loses me $2.55/year.

I took my August budget money out of here since I made the final 401(k) contribution with my July paycheck.

Investments: $156,500 (down $200 or -0.1%)

This includes my Roth and Traditional 401(k), my 401(k) employer matching (fully vested!), my Roth IRA, my taxable investments including stock index funds and Series I Savings Bonds.

The change here comes from:

  1. Some stock market losses
  2. June paycheck 401(k) contribution and employer matching

Mortgage: $151,500 (down $700 or -0.5%)

Some statistics here:

  • 2.5%: the interest rate on my 5/1 ARM
  • February 2018: when the interest rate on my mortgage is set to reset, possibly to 7.5%
  • 0: months of payments eliminated with this month’s pre-payments
  • $0: extra payments made on the mortgage this month
  • $0: interest this month’s extra payments will save me on the next regular payment
  • 30.9%: portion of my regular payment went to interest (originally was 59%; down 0.1 percentage points from June)
  • 57.6%: amount of equity in my condo, assuming purchase price
  • 47.0%: amount of the mortgage I’ve paid down

A pretty bland month for the mortgage.

TOTAL: $412,000 (up $16,700 or +4.2%)

I ended 2013 with a net worth of $345,900, so I’ve seen a change of +$66,100 or +19.1% so far this year. I’ve set the y-axis on this graph to $465,000 so we can see how my net worth grows towards that throughout the year.

July 2014 Net Worth Graph

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Reflections on Home Ownership: 2 Years In

Woo! I have lived in my condo for over two years now. In some ways, it feels like it has been far longer (my mom was convinced I’ve been here three years). And you know what that means? The next time I request one of my credit reports, I only have to list this address :)

If I sold my condo today for the exact same amount I bought it for 2 years ago, I would have spent about $9,019.23 more than I would have renting over the same time period. If the market has truly gone up by as much as it looks like it has by the sale prices around me, buying would be cheaper than renting today by $76,284.27. Buying should be cheaper than renting at my purchase price by the end of 2014.

The mortgage balance at the end of June sat at $152,167.66. It was at $187,552.40 at the end of December, so I have paid down $35,384.74 in the last six months, for a total of $133,832.34 in the 24 months that I have owned my condo, while still maxing out my 401(k), Roth IRA, maintaining my $20,000 emergency fund, and occasionally adding to my taxable investments. I now have 57.5% in equity (assuming purchase price) and have paid off 46.8% of the original mortgage balance. If I didn’t make any more pre-payments, I would have just under 15 years left on the mortgage, which is pretty good considering that it was a 30 year mortgage 1.5 years ago.

What interesting things have I bought for my condo in the last six months?

  • ~$2,500 on the closet organizer install and painting. These have been absolutely wonderful and my only regret is that I didn’t do it right away after moving in! Spending $2,500 on it then seemed a lot harder to fathom than it did this year.
  • ~$110 on replacing the two programmable thermostats in the condo. We will see in December whether this reduced the electricity from heating at all, but the new thermostats are definitely far nicer to use and they do seem to detect the room temperature better. I’ve also been considering installing another heating vent in the master bedroom as it gets chilly on the end of the room without one in the winter. That would probably cost $500.
  • ~$140 on a new container, a second perennial and then some annuals.
  • ~$100 on replacing all of the lights in the kitchen, hallway, second bedroom, and some of the lights in the master bathroom with LEDs. If all of my light bulb electricity is in the second tier and each of these lights is on for an average of 3 hours per day, it would take 382 day to break even or slightly over a year, shaving $7-26 off each bimonthly electricity bill.

I got a bit frustrated with how much my property taxes and HOA dues went up this year ($700 from last year), but then I realized that if I was still renting, my rent would be up probably $300/month from last year, so I’m quite happy with where things are sitting at the moment.

Things haven’t been super exciting on the mortgage front these last six months. The mortgage is almost half gone though, which is pretty exciting! Some days, the chart below astonishes me at just how much of the mortgage I’ve paid off in two years. $133,832.34 is $66,916.17 per 12 months or $5,576.35 per month on average, which is a lot of money!

June 2014 Mortgage Balance

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