December 2008 Financial Status / Net Worth Update
Credit Card Debt
I have no actual consumer debt. In the past, I have been taking money from credit cards at 0% APR and immediately placing it into high-yield savings accounts or similar safe investments that earn 3-5% interest or more, and keeping the difference as profit. I even put together a series of step-by-step posts on how I how I make money off of credit cards this way. However, given the current lack of good low fee 0% APR credit card offers, I don’t think I’ll be doing anymore in the near future.
Retirement and Brokerage accounts
Ignoring new contributions, my retirement accounts have lost about ~$8,500 over the last month. I will perform another portfolio update soon to find more accurate year-to-date return numbers.
I have sent in another $5,000 late last month and $5,000 this month in order to max out my pre-tax 401k contributions for this year. My asset allocation is way off target so I need to sit down and try to rebalance using these funds today. It might be tricky to due to the $10,000 minimums for index funds at Fidelity, and I might actually buy ETFs and pay the trade commission.
Cash Savings and Emergency Funds
Why am I not panicking (yet)? Well, I think a big part is my fat cash pile that serves as my emergency fund. In my mind, having a separate short-term reserve keeps me from worrying about my long-term “can’t touch” portfolio.
I have about $49,000 net in sitting in different forms of safe cash earning from 3 to 6% interest, while now my entire retirement portfolio is worth about $93,000. I will keep accumulating cash until I reach a full year’s worth of expenses, which is about $60,000. I think this is prudent given the high unemployment rate right now.
Home Equity
This is the second month of testing out my new way of estimating our house’s value. Again, I take the average estimates provided by Zillow, Cyberhomes, Coldwell Banker, and Bank of America. Then, I shave off 5% to be conservative and subtract 6% for expected real estate agent commissions (11% total). I use this final number as my estimate for home value. Looks like my home value has dropped by another 1% or so.
Overall, another tough month. However, I am very thankful we both still have jobs - knock on virtual wood!
You can see our previous net worth updates here.
Charles Schwab 2% Cashback Credit Card
Schwab brokerage is offering a new credit card that gives you 2% cash back on all purchases. The only catch is that the rewards can only be redeemed into a SchwabOne brokerage account. When linked to the Schwab card, the SchwabOne account has no minimum balance requirement or monthly service charges.
With no annual fee and no cashback limit, this is a very competitive card. I just hope it sticks around - many, many 2% cashback on everything cards have come and gone, from Farm Bureau to Countrywide, as that level of rewards make the issuer’s cut very slim. I’m sure they are counting on fees from the SchwabOne brokerage account to make up for the difference. Fidelity has a similar 1.5% cashback card.
10 Things I Hate About Money
Money is physically dirty 99.9% of all paper money is covered in germs and bacteria including E. coli and salmonella. Money isn’t just dirty because of the microorganisms; it’s also covered in bits of fecal matter and grains of cocaine. You would probably be just as well off licking the bottom of your shoe as you [...]Frivolous Massages and Contempt for Manicurists
I live in a suburb that has grown rapidly over the past decade. When we first moved here, there were two shopping areas within three miles of our home. Now there are at least eight. Where once there were trees, now there are stores and restaurants. A lot of the development I [...]ING Direct Referral Giveway - First 25 Only
Do you have an ING Direct savings account with unused referrals? I usually have plenty, but have been falling behind again. The first 25 people who comment below tonight and leave a working contact e-mail (real name not required, e-mail will not be shared publicly) will get one filled by me for free, which is $10 for you.
Due to comment moderation, your comment may not show up right away. One referral per person. You cannot have had a “freebie” before. Look for a message from me to your e-mail address with further instructions later on. Thanks!
Medical collections, unpaid medical bills, HIPAA laws
Dilbert’s One-Page Guide to Everything Financial
The story goes that Scott Adams wanted to publish this as a one-page book, but he couldn’t find a publisher to do it. In fact, he is quoted as saying that “if God materialized on earth and wrote the secret of the universe on one page, he wouldn’t be able to find a publisher” either [Marketwatch]. So, he weaved it into a Dilbert cartoon-based book called Dilbert and the Way of the Weasels (368 pages).
Everything else you may want to do with your money is a bad idea compared to what’s on my one-page summary. You want an annuity? It’s worse. You want a whole life insurance policy? It’s worse. You want to invest in individual stocks? It’s worse. You want a managed mutual fund instead of an index fund? It’s worse. I could go on, but you get the point.
Overall, the book is pretty funny if you like Dilbert and understand the corporate hell that he lives in. Otherwise, without further ado, here is Dilbert’s One-Page Guide to Everything Financial:
- Make a will.
- Pay off your credit cards.
- Get term life insurance if you have a family to support.
- Fund your 401k to the maximum.
- Fund your IRA to the maximum.
- Buy a house if you want to live in a house and can afford it.
- Put six months worth of expenses in a money-market account.
- Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.
- If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio.
From Vanguard article:
Does Adams live by his financial rules? For the most part he does. Adams said he’s allergic to debt and makes a habit of saving half of his income.
“I found that people who had massive credit card debt were asking me how they could invest in stocks, or how they could borrow money from their credit card to invest in stocks,” the cartoonist recalled.
However, Adams said he no longer follows his rule to invest 70% in a stock index fund and 30% in a bond fund. The best-selling author says he invests primarily in municipal bonds today, which are tax-exempt, and also owns land in his adopted home state of California.
If I had his amount of money, I’d probably be investing only in muni bonds as well!
Dave Ramsey Falters in a Crummy Economy
By Maggie Ellis, guest writer I know many people who are followers of Dave Ramsey’s financial advice. Since the economy has tanked, it seems like I’m seeing even more people joining the Dave bandwagon, looking for a way out of the financial messes that they have gotten themselves into. His “Total Money Makeover” and the associated [...]The Power of Perspective
This year marked the 5 year anniversary of my Grandfather’s passing. When he died, it was like losing my father. In fact, he was the only father figure in my life for my first 8 years until my mother remarried. So it’s no surprise his death affected me as deeply as it did. This past [...]Writ of garnishment explanation
-
-
About
We aim to bring great info on saving money, budgeting, and managing your personal finances.
-
Blogroll
- Bad Credit Advisor
- Consumerist
- Debt Advice
- Debt Diet
- My Money Blog - Personal Finance and Investing Blog
- PFBlog.com: The Unique Personal Finance Blog Since 2003 - Daily personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least a million dollars.
- Saving Without A Budget - Saving Lots of Money Is Easy. I’ll Show You How.
- SavingAdvice.com Blog - Bridging the gap between saving money and investing
- Your Money
Get an Equifax 3-in-1 Credit Report Now!
Get up to $1500 NOW!