Hi….again!

It’s been too long.  MUCH too long.

Please forgive me, I am really tackling my CPA studying with a vengeance.  I want to move on!  Trust me, blogging will be one of my number one priorities when I don’t have that beast on my back!

On to the net worth…

This is the first month I haven’t increased my net worth since I started tracking it in March of last year! Sad!

The (small) loss is attributable in full to my 401K account.  I saved over $1,500 last month.  I am actually getting ready to put $1,500 in my savings right now for February 2010 as well!  Woo hoo for savings!

Anyways, I have to be honest.  My next test is in about 2.5 weeks.  Posting will be hit and miss between then.  I’d like to get in one or two solid posts between now and then, but who knows.  It’s sad – I miss posting frequently!

Have a FAB February all!

Question:  What are you guys doing for Valentine’s Day?  Staying in?  Going Out?  Boycotting the day?  Lloyd is planning V-day for us this year, so I am not sure what is in store! I’m sure it’s good!

Click on the link below to get all the details.  If you feel this is right for you, I encourage you to sign up today.  Seating is limited to only 20 people …

http://bit.ly/cbzK8V

So I recently put 2 and 5 together to sort of kind of figure out where the $17.53 went missing.

Well, on that very Sunday that I calculated my net worth, I totally forgot that I did LAUNDRY! That was exactly $7.50. It was also an 1.5 hours of my life that I will never get back. So sad. As for the $10.03, I’m thinking that I may have forgotten to include one of my church donations ($10.00) and I may have dropped 3 pennies somewhere. My wallet, even though it is cute, has a gaping hole on the top so one sudden movement and there go my coins flying all over the place.

Although this is a giant conjecture, I am glad that I can finally get some sleep at night, because it was really bothering me. I was having nightmares where a gang consisting of a $10 bill, a $5 bill and two $1 bill would chase me. And they were using quarters and pennies as ammo. Ok, ok, it wasn’t that dramatic, but isn’t that just a scary thought?

Well, I may have solved that case, but now I have other questions lingering on my mind:

1) So I bought tickets to go see Avatar in December. Except I didn’t pay the bill until February. Now, since I didn’t have a budget in January and February, I can’t say that I stored that cost in anticipation for the bill. Does this mean that this will have to deduct this from my February entertainment budget? Cuz that would be sad. Very, very sad. Or, should I create a new category called Stuff That I Bought Before but Forgot to Pay for Until Now?

2) Although I created the Misc. purchases category out of sheer laziness, should I break those costs down into their respective categories? My thinking was that if I bought food from CVS, for example, then that would be food that I wouldn’t be consuming outside, hence maintaining the balance in the universe. But now I’m slowly seeing my Misc. category grow and I’m wondering if maybe I should ixnay the laziness.

3) Why is that tracking your expenses increases instances of buyers’ remorse? Gosh I felt bad about getting a deal at CVS (buy one get one free cereal. That’s two boxes for $4.49!!). I used to get annoyed when PF bloggers would write about how they bought something and how the shame of the world descended upon them for their purchase. Then they would proceed with self-flagellation as repentance for their sins. Except now, I’m all like, omg, did I really buy something again? Newbie, you’ve GOT TO DO BETTER.

But then I walk out of the store and gorge on the pint of ice cream I just purchased and the pain just goes away. But the question still stands: why does budgeting make life feel bad?!!

I may be a detective, but I am not a one-man show. Would love to hear your thoughts/solutions on my pending questions/investigations.

To most people, the home buying process can seem like a
complicated and confusing process Even though it seems like a
daunting task can be made much easier if you take things
step-by-step, you will soon be holding the keys to your own
home! But before going into the process of buying that home, you
really need to honestly ask yourself if you are honestly ready
to buy a home in the first place! Think about this.

Do you enjoy or even prefer moving into different places or
areas of the country? Do you prefer to use your money for things
like vacations, appliances, retirement or having your own
business? Do you dislike doing typical household maintenance,
repair and handyman work around the home?

If you answered yes to these questions, you may not be ready to
delve into the home buying experience. You may think you have a
lot of good reasons for buying a home. but it’s very important
that you should also consider your reasons for not wanting to
become a homeowner!

Remember that buying a home isn’t just the biggest financial
decision you’ll probably ever make but it can also be the most
nerve wracking emotional choice in your life! So be prepared to
make wise decisions and be willing to logically and
unemotionally think out the entire process before you buy.
Basically, look before you leap!

In today’s hot real estate market, buying a home always seems to
be a great idea, but it’s important to completely understand
that homeownership also comes with a great deal of
responsibility too! Of course, being a homeowner is something to
be proud of, but it also means having to invest heart earned
money, time, energy and financial resources. So you have to
really be sure this is right for you.

Typically the first thing that comes to mind when we dream of
homeownership, are the wonderful things that are connected to
it, which are great reasons for buying a home. Here are some of
the tremendous advantages for buying a home:

Yes, it’s really nice to think about the positive aspects of
owning a home, it is also a crucial part to consider the
downsides as well. Here are some of the disadvantages on home
buying.

Financial Stress

Probably the most common feeling in the home buying process.
Coming up with the down payment, meeting regular mortgage
payments and other ongoing costs will tie up a lot of your cash,
and can put considerable stress on your finances. So it’s very
important that you carefully manage your budget and finances to
make sure that you can meet all of your obligations. Many new
homeowners get a shock in their first year of owning a home.
Proper planning and preparation can help you avoid this.

Maintenance Costs

Unlike renting where a landlord may take care of the
maintenance, when you’re a homeowner you are solely responsible
for keeping your home in good working order. Keeping a home
operational and looking good requires time and money. Once
again, it’s important that new homeowners carefully monitor
their finances and also carefully keep an eye on small
maintenance issues and work on them before they become huge
repairs.

Higher Monthly Payments:

It’s entirely possible that you will pay more each month for
your home payment that you ever did as a renter. You not only
have to pay the mortgage, you pay taxes, you pay utilities, you
pay expenses, you pay for maintenance, everything. And when you
add that up it can be shocking at how much that can be. Yes, in
today’s tax code there are benefits that come from homeownership
that can defer some of that expense, but you still have to pay
it first!

Still think you want to buy a home? GOOD! If you feel that now
is the time and homeownership is right for you, you need to make
sure that you are truly financially ready to do so.

To avoid any future surprises, you can do some financial
planning to see where you stand, including: calculating your net
worth, determining your current monthly expenses and your
current monthly debt payments.

Gathering this detailed information and knowing things like your
net worth is important because you’ll need this information when
you discuss financing with your mortgage lender. Going through
this exercise will give you a snapshot of where you stand
financially and show you how much you can afford to invest as
your down payment on the home purchase. You do not want to rush
this process since finding the best type of financing for your
particular situation will determine how much you will be paying
every month.

Also be sure to work with a trustworthy and professional real
estate professional. In today’s market there are real estate
agents and Realtors that work specifically in representing
buyers. These professionals will help you in everything from
finding the right home for you, to helping you understand the
contracts and paperwork, to negotiating the deal for you, and
representing your interests in the buying process. They can even
help direct you to good financing sources and be a “one stop
shop” to help you in every step of the way to find your home and
get you in it with the least amount of stress.

After you’ve found your dream home, and contracts have been
accepted and your financing is in place you’re ready for closing
day when you finally settle the transaction and become the
proud, legal owner of a home that you can call your own.

Although this is a GREAT day, it’s also very confusing and full
of papers flying around and being signed. Your closing attorney
or title company will handle all of the details of the closing
including making sure the money is in place from your mortgage
company, make sure that tax bills are paid, any outstanding
debts resolved, takes care of the seller’s paperwork. Bottom
line, they make sure that all the T’s are crossed and I’s are
dotted so that when you leave you’ll have a deed which calls YOU
the owner of that property!

When all the dust settles, you’ll be handed the keys and you’ll
be able to walk into a home that you can call your own! Enjoy
the moment and congratulations on becoming a homeowner!

As part of securing an aircraft loan, an underwriter will need to review the following: 1.) Credit Application, 2.) Credit Report, 3.) Cash Flows, 4.) Net Worth, and 5.) the Aircraft information itself.

As a part of an educational series, we are addressing each of these components separately and reviewing some of the questions the lender tries to answer through analysis of a client’s credit package.  This should provide some insight into what a loan officer is trying to accomplish by requesting certain information.

In this article, we’ll discuss the evaluation an underwriter makes to determine the applicant’s net worth – an important piece in determining overall financial health:

1.  What is net worth? Net worth is a calculation of the applicant’s total assets less their total liabilities.  In order to calculate this, the customer is asked to fill out a personal financial statement indicating what they own versus what they owe.  Oftentimes customers will have a separate, more detailed, personal financial statement that they may attach in lieu of that section on the application.

2.  What assets/liabilities are typically included in the calculation? In true net worth calculation, anything you own can be recorded at market value in a personal financial statement.  For aircraft financing (and to keep it simple), the assets we are interested in usually include real estate, cash, marketable securities (ie, stocks), non-marketable securities (ie, retirement account), accounts receivable, and other items such as cars, boats, or other aircraft.  The liabilities we are interested in usually include real estate mortgage balances, secured notes payable (ie, car), unsecured notes payable (ie, credit card), unpaid taxes, and accounts payable.

3.  Why is net worth important to the lender? Net worth is a good overall indicator of financial health.  It gives the lender a snapshot of what is going on with the applicant – what they have to fall back on, their liquid position, and how leveraged they are with other obligations.

4.  What is a customer’s typical net worth? This range will vary depending on each buyer’s financial situation (such as cash position, etc.), but as a typical point of reference, aircraft lenders find the average net worth to be somewhere around 10X the amount of the aircraft note. (ie, a $4 million net worth for a $400,000 loan).

2010 started out with the lowest increase since June and included an actual dip in total assets but still an overall increase none the less.

Cash-The quarterly sale of stock in the employee stock purchase program was the main reason for the increase. The cash is made up of a $10,000 emergency fund while the rest is mostly in savings for a car/vacation.

Employee Stock Purchase Program- As previously noted, our ESPP account was depleted to buy stock on December 31st. That stock was sold on January 10^th and put into our cash reserves. The January amount equals one month’s pay that will be used to buy stock at the end of the fourth quarter.

House-I have recently tried some of the online home valuators and got a wide range of values. The average was around the $95,000 and I will be using the amount for a while.

Retirement-For the first time in a while the stock market hit a downturn. The actual loss was much greater considering we contributed about $1,100 into our 401(K) and ROTH IRA accounts. Starting this month my company will be began offering a ROTH 401(K) feature which I started to participate in.

Pension-A new year means a reset on the level on contributions put into my pension each month. The $172.76 will be constant for most of 2010.

Mortgage-Another triple mortgage payment reduces the principal by ~$1,800!  I have discussed our decision to pay down the mortgage as quickly as we can before. It is really cool to see the principle reduced by big chunks every month. At our current rate, we will pay the mortgage off on July, 2013. We have decided against refinancing for now due to the breakeven point being 24 months.

You can see past net worth updates at the net worth history page.

Paying off one’s mortgage can be a very viable financial planning goal. Just do it the smartest, fastest, safest way possible.  People often say, “Well, I’m conservative. I want to pay my mortgage off.” My response to that is, “Conservative to me means that I have the financial wherewithal to meet any financial challenge I may have and to take advantage of any financial opportunity that may come my way.”  That means having cold, hard cash available—not tying up so much of my net worth in real estate, which is not very liquid. 

Look For New Ideas

There are many innovators out there, creating products that are going to help the American consumer pay off their homes and save for retirement. There are mortgage products and strategies, that when used consistently will have you pay off your mortgage in half the time without increasing the amount of money you pay on your mortgage.  By simply by taking advantage of daily crediting strategies and the “free float” on credit lines, you can achieve home-ownership quickly.  Because you are not paying extra money on your mortgage to make this happen, you can then put that money toward an investment plan that will provide for you in retirement (or for college educations or any other expense that you might have).  I can teach you how to do this.  It’s not magic.  It’s just math.

Contrary to what I originally thought, my networth didn’t decrease. It went up by 3.04%!!

Excited? Kinda

In 2009, I posted 8 months of gains. It would suck major PACIFIER if I had a down month. But I’ll be tracking my net worth for about 40 years, so I’m pretty sure a down month is inevitable. But I’d rather deal with it at some distant future time. Right now, I want to continue my gains, however small. Here’s the low down:

Assets:

Cash- $8,980. A modest 2.49% over the last month. I didn’t make any effort to save this month and I won’t do so until I fund my brokerage account with about $5,000. Thus any growth you see here is a reflection of money in my pocket, money in my checking account and interest accrued in my savings account.

Stocks- $5,470. Ugh, nearly a 5% decrease. The market was not my friend this month. Hopefully it get its stuff together. I’m not a fan of the possibility of a double dip recession. But, hey, on the bright side, it would bring some of those prices down. And you guys know I love a sale.

Retirement – $3,086. A 2.66% increase. Like my Stocks section, I lost a lot of money here. However, I had an automatic contribution that offset those losses. I’m hoping to beef up this account even further with my tax return.

Liabilities

Credit Cards- $140. So, Networth IQ says this was a 77% decrease in my credit card bills. Little do they know that these aren’t the same bills from last month, but rather new bills. But whatever, seeing that I attacked my credit card bills with a 77% Karate Chop makes me feel good. And I am not above distorting reality for a good feeling.

And there you have it. Later this week (a.k.a tomorrow) I’ll be focusing on my expenses wondering why the heck I’ve spent all but $176 dollars out of my entire monthly paycheck. Yeah, it’s that bad. Hopefully that analysis will allow me to hone in where I’m leaking money and be able to save in February.

Well, it’s after 7:00 PM on January 31, and barring an informercial that I can’t resist in the next 5 hours, the numbers are in for January.  Since starting the blog earlier in the month, I find myself obsessed with our net worth and tracking it.  Hopefully, we can keep it a healthy obsession! 

It was a pretty good month for our budget, as we were under budget on all items I would call controllable, with the big exception of an unexpected trip to Vegas we booked for next weekend.  That was definitely a splurge, but the Mrs. is turning 30, so I can live with it.  In the end, our NW increased by $1,471 (2.14%), which is pretty good, considering that my 401k had an investment loss of $1,309 due to decreases in the markets.

February should hopefully be a good month for the NW.  Annual bonuses at work are paying this month and should allow us to pay off the remaining balances on the credit card and car loan.

For info on our net worth, click here

Have you ever watched a movie and you don’t like any of the characters involved in the plot?  I found myself having a similar feeling reading an article from the Dallas Observer (here) about Craig Cunningham.  Mr. Cunningham is roughly 100k in debt and seems to have taken up a full time occupation of suing debt collectors for violations of consumer protection laws.  This excerpt from the article pretty much sums up Mr. Cunningham’s view of the debt he has amassed:

Debtors, either because they feel morally obligated or because they don’t know their options, get backed into a corner by their creditors and believe they have to repay their debts, he says. Not so with Cunningham. "I don’t have to do anything but stay black and die," he says, a small, smug smile on his lips.

Here are the takeaways:

1. It’s hard to feel sorry for debt collectors – While I don’t have a lot of sympathy for Mr. Cunningham or what he is doing, the practices of debt collectors seem to be shady at best, outright deceptive at worst.  There is certainly some good that can come from people holding debt collectors accountable to consumer laws and making sure that they are conducting their business in a responsible manner.
2. You can’t get rich quick – It seems like at every turn Mr. Cunningham was looking for the next “scheme” to make a buck.  Borrowing money from credit cards to buy the stocks of sub-prime mortgage companies is about as risky a form of “investing” (I wouldn’t really call it investing… more like speculation) that you could find.  The thing about this article is that Mr. Cunningham seems very intelligent and probably could be successful in building wealth. 
3. Excessive leverage (i.e. debt) is a recipe for disaster – Over the past several years, countless people have learned this lesson then hard way, but excess debt will always make a bad situation worse.  When you’re looking at any asset that you own, the more money you have borrowed against that asset, the more significant the consequences of those assets dropping in value.  When we originally bought our current home, we used 100% (80/20) financing.  While we have been fairly luck in our area with home values, we still are at a point where we will have few options to either buy a new home or refinance our existing loans for some time without having a significant amount of money saved.  We love our home and are able to cover our payment very comfortably, but it’s still a bit of a helpless feeling knowing that our options are limited at this point.  If we had to do it again, we certainly would have kept renting for a few more years.  I am definitely now on the “20% down payment” bandwagon.
Technorati Tags: debt collectors,debt,leverage,net worth
4. You are obligated to pay your debts… if you’re able to – When you enter into a contract to borrow money, there should be a reasonable assurance that you will pay back those debts.  However, if circumstances in your life have made making those payments difficult, paying on those debts should not come first.  Having food, shelter, clothes and utilities for you and your family should be the priority.  Then, and only then, should any of your monthly income go to debt service.
5. I can’t wait to get out of debt – As I mentioned above, debt ALWAYS adds an element of risk to your life and it will be a great day when we are completely out of debt! 

 have been observing people and sometimes it makes me wonder in the process of growing if we calculate the net worth of life did we gain something or lose. The moment a task is given we start thinking of risk and advanatages of doing it/ not doing it. Then we start to put our false prestige at stake. Will our decision please(one who we think will do us a favor) other person. Slowly this thought process starts us to wear a new mask on our faces and life long we keep having this mask on. There will be times when people start cursing life, get frustated with artifical behavior and then pray deeply from heart to get rid of the role they landed themselves into. I see children and feel amazed. Have you ever wondered by the fact that everyone of us can walk? Yes I have because  its a challenging task for every child to learn walking but everybody does it. I think reason is because there is no false prestige in the moments when we fall off, nor is there a risk calculation or an outlook for calculating the advantages of walking, we start off, fall (several times..not to mention but even get hurt occasionally) but never let the goal off our sight. We keep striving for it and here we are where we are not only walking but running toooo. Today our measure of success is just scoring points more than some body else That’s it. Our scale of measurement is people’s praise and their view points we have lost the art of using self satisfaction for measuring the success….. Love to be a child again who does not fear to try something new, does not limit his capabilities, does not feel he is the only bearer of torch, Has trust so much that when he is flewn  in the sky by his mom/Dad he knows they will hold him firm. So that’s how life is under vikky scope…. Check out this space for my next psychic post…. hahahaha Have a great Day… Stay Hungry Stay foolish….

While implementing new ways to increase business and striving to be the leading mobile notary closing company available, APAT Real Estate Settlement Services truly has gone to the next level.  By leveraging new media platforms, reaching out to our clients and industry network for feedback and constantly providing better service has paid off in a different way this time:  a very significant way.  APAT Real Estate Services is now international!

To say we have grown our network even more would be an understatement. And in this case, social media marketing gets all the credit.  None of this would have happened without it.  Let me explain what I mean.

A while back, I joined a group on LinkedIn:  British American Connections.  The organizer, John McLoughlin, started the group as a local real estate networking group here in Orlando.  We also meet in person here locally.  But the online network on LinkedIn, British American Connections,  is a strategic bridge between British and American real estate agents.  Talk about social media transcending space and time!  From local to across the globe and from in person connections to virtual connections all without limits…it just doesn’t get any better than that.

Here’s how it started:  I received a call from a title company here in Florida asking if mobile notary services could be done in London, and if so, could APAT handle the closing.  They called me because both their US and London connections had been telling them it could not be done and they knew I had a London connection in my database.  McLoghlin, is not only from the UK, but still has many real estate connections there.  So although they were told it could not be done, I was able to firmly answer, “Yes it can – and yes, APAT can handle it.”

I also already knew how to handle to closings in London because I was ahead of the game.  Knowing this possibility may arise, I got up to speed through LinkedIn, Twitter and some other online research on how UK closings are handled.  So when the call came, APAT Real Estate Services was ready to go.

I have been truly amazed at the power of social media and what it has to offer.  This story just goes to show what you can learn and who you can meet when you target who you follow and engage your entire social media campaign around your niche industry and a targeted audience.

This is just one success story of how impactful social media marketing can be for any company looking to grow.  It not only connects you to your niche industry, it educates you in the process.  It helps you grow your business, your brand and…your net worth.  For anyone not using social media marketing to develop their business, they truly are missing the boat.

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For whatever reason, I’ve been working with several clients lately that have an inordinate percentage of their net worth tied up in real estate or other illiquid assets.  This is threatening their retirement income plans and their estate plans.  Don’t get me wrong. I love real estate and I love real estate investing and investments. Just make sure you’re planning along the way.  Your financial life is not about The Plan—it’s about planning. 

Remember, Cash is King

So far, it is still impossible to take your ATM card and stick into the side of your home or your investment properties and pull out cash.  If you are in the habit of accelerating your mortgage pay-off, stop. Review what you’re doing and why. Just because that seemed like a good idea years ago doesn’t mean it’s a good idea now.  It’s hard to get that money back once you’ve put it in your house, especially in this lending environment.  Often, you’re better off keeping the mortgage, getting the mortgage interest deduction, taking the money you would have used to pay off that mortgage, having that money make money for you, and in the future be at choice as to whether to pay off the mortgage or keep it going.  The potential upside is more retirement income and more liquid assets available to you. To me, that equals financial security.  Having to sell a piece of real estate in a potentially down market to generate cash for retirement or other needs is terrible. Often it results in lower sales prices and less proceeds in the seller’s hands. What I want for my clients is options.  Keep your options open.  Keep your assets balanced.

It is a terrible feeling to be victimized. And with the Internet, it gets even scarier.

Below is the top of a story in the Lewiston Sun Journal that also provides tips on how to avoid being victimized. There is a lot of info and, frankly, I didn’t get through the story on the first try. But I wanted to pass along the information as a reminder to take care at all times.

A laptop’s stolen in Seattle and 205 Starbucks employees in Maine get word that a thief has their Social Security numbers.

The World Bank slips up and posts payroll records online. For four Mainers that means the very public outing of their bank account numbers.

A Fox Entertainment employee in Los Angeles pokes around company files containing Social Security numbers and salaries, and, hello — sees three that belong to Mainers.

It happens more frequently than you’d guess.

Click the link to read the rest of “Have they got your number?” by the Lewiston Sun Journal’s Kathryn Skelton.

My net worth is most likely going to go down this month.

Get it? Money...down the drain. Sad face.

After a day of tears and eating giant tubs of chocolate ice cream, I think I’m sort of over it. However, I will need to assess what went horrifically wrong this month and hopefully get my act together in February. I don’t have my budget with me (I ran out of my office like I was on fire…and forgot that my budget was on my work computer…sigh), so I can’t really do a lot of analysis. Thankfully the source of all my expenditures, my checking account, is online and I was able to look over several transactions to see where I failed.

The first culprit was the credit card. Oh buddy! December was a terrible month. All of my cards [seven...yup seven] got a little swipe action it seems. And those payments didn’t come due until January. So I had over $1,000 in credit card payments to make. That is nearly one half of a month’s salary. YIKES. I’m putting those babies away for now and trying to stick to a cash system for now. This will serve a two-fold purpose: 1) I’ll be able to calm down on the credit card debt and 2) I will be able to [temporarily] eradicate all my debt so that I can start canceling those credit cards.

Another stealth criminal was food. Please believe, I will never, ever, cut food out of my life, but I really can cut down on some unnecessary food expenses. Mainly, how I often I buy the bagel and yogurt from ABP (total $3.47). I’m sure I can save at least $30 by not having it so often. No, I will never touch my Chipotle expense, so don’t even mention it.

Some of my largest expenses for the month are one time charges. For example, I had to pay my mom $120 this month for the phone bill. It is usually $60, but since I was so busy getting swipe-happy with the credit cards, I totes mcgotes forgot to pay for last month’s bill. It doesn’t pay to be forgetful, friends. Also, I pledged to pay $500 per semester towards my sisters tuition. So every January and September, I’m down $500. Well, at least its for some good.

I’m also gifting my parents $1,500. That is some serious, serious dough. Also, I use the term “gifting” extremely loosely. Maybe I owe them said money for something I may or may not have wrecked and maybe they told me that I didn’t have to pay for this but my conscience is an awful awful thing on overdrive and is telling me to get my affairs in order. Lastly, I may have signed up for that GMAT class, but I totally have not completely payed for it. I still owe Princeton Review a hot $750 dollars. Well, its due by February 21st, so I do have a little time to pay for this.

When everything is all tallied up, I’m down about $2,750. As my monthly income is a wee bit less than that, I’m actually going to dip into my savings to quickly fix this situation. THE HORROR!! My net worth going down is a sad, sad thing, but hopefully this will be the last time I’ll find myself in this perfect storm.

{Photo Props}

Doesn’t that sound like the perfect title for a personal finance reality show? And maybe Suze Orman could be a judge. And/or Dave Ramsay? And it would involve 12 contestants that need to save as much money/increase their net worth/be financially awesome in a months time And maybe some PF love connections would be formed and also drama would ensue in the household. Major networks, if you want more info, hit me up in the Contact Me section.

Whenever I mention to anyone that I have an FA, they give me a 1-2 lookdown. You know, from head-to-toe, or from toe-to-head, as if by scanning my body type they can understand how in goodness’ name someone like me (young and fabulous) could have an FA. Long gone are the days where an FA is for the old and crusty. Anyone could have an FA. But yes, I do have a financial advisor. His name is Joseph. He’s a very cool guy.

I was referred to him by a friend of mine who went to see him regarding her finances and was extremely satisfied. When I went to him, I had about $5,000 to my name. I had been working for about 8 months, but saving was a concept that was irrelevant to me. That 5K I had? That was just money I hadn’t used yet. He gave me an extremely detailed questionnaire which asked me about my monthly/annual budget. Seriously, it asked me about how much I spent on movie tickets (not just entertainment). Most of the boxes had a big, fat ZERO in them, because I didn’t spend on a lot of things. I just spent a lot on some things. Like clothes, shoes, more clothes, and FOOD. He also asked me about my goals. Where did I see myself financially tomorrow, in 10 years, in 50 years.

In our next meeting, he gave me a printout of my financial future. It pretty much assumed that I would have a post-retirement income of my current income and how much I would need to save to get there. I WAS WAY OFF. Like nearly $1,000 per month off. This when the suggestions began to pour in. I ultimately decided to make stock investing even more personal, but agreed to open a Roth IRA and contribute as much as I could until the match was reinstated at my job.

The terms of me seeing Joseph are pretty informal. In the beginning I would call and set up an appointment and we would meet face to face. Now, most of our correspondence is done via phone and e-mail. Thats also because I am using him mostly as an Advisor now, which doesn’t require paperwork. With my Roth, if I want to change my contribution amount or anything, really, I can give him a call and he’ll do it all for me.

And the cost? Well, he is free. That’s right, F-R-Double E. FREE. At least in theory he is. Every time I see him/talk to him, I don’t fork over a check. However, he does get a commission from the services that I, or any of his clients, end up signing up for, like a Roth IRA or life insurance (inspired). It makes sense that he has no direct cost because he doesn’t actually manage my finances directly. He is an advisor, providing me with information necessary for me to reach my financial goals.

There are three great things about Joseph: 1) he’s young, 2) he’s knowledgeable, and 3) he’s accessible. By being relatively close in age, I feel more comfortable revealing my personal finances and goals as well as listening to his suggestions for increasing my net worth and my nest egg. To say that someone is knowledgeable assumes that you yourself most have some knowledge of the spectrum of vast array of information there is. I may not know everything, but I know how a teeny bit of how much there is to know and Joseph knows quite a bit. If I have a question, he has three possible answers and we usually go through each one before arriving on the pros and cons of each.

Lastly, he is accessible. When my company reinstated the match, to say I was having a crisis of some sorts doesn’t really capture the entire picture. I was pulling out my hair, losing teeth, and developing an eerie twitch in my right eye. I had gotten so comfortable with how I was “dividing” my income that introducing a new expense (or investment…but that twitch made it seem more like an expense) was looking pretty difficult. He was able to talk some sense into me, helping me realize that with just $200/month I would be able to get the company match. Not too much budgeting would need to go into that. And I only e-mailed him on Tuesday. By Wednesday my decision was made.

A week later, I still haven’t filled out the paperwork, but this isn’t about me, this is about JOSEPH!

I don’t want to say that I could have totally done anything without him. Actually, I will never say that. But it is possible for others with the right tools and a large amount of time to do the necessary research to do without a Joseph. However, I don’t have that time and I’m not really in the mood to search for the right tools concerning my retirement. Having an FA ensures that I’m touching upon that facet of my finances while giving me time for the cool stuff like INVESTING.

I live my life by 1 rule.  That is to pay my self before paying any thing else.  I have followed this rule since I was 22 years old and have never stopped following it.  Investing in yourself is always the best investment.  I don’t care if you’re putting the money in a savings account, retirement fund, stock market or in a coffee can in your back yard.  Just make sure that your paying yourself first.  This in my opinion is the best way to building wealth.  Put 10% of your net pay away every pay period and you will be surprised on how fast your money will start piling up.  The experts say that you should have a least 6 months of your salary put away in case of an emergency.  If you were to lose your job, get sick and aren’t able to work etc…

Live by this rule and you will be well on your way to increasing your net worth.  Believe me, it makes you feel better when you have some money put a side.  It takes off some of the stress that money can bring upon you.  But just remember, don’t ever touch that money unless it’s an emergency!  Buying a new stereo for your car is not an emergency.

To Your Financial Wealth!

Welcome to my first attempt at blogging.  I thought I’d kick things off with a foundation of who we are and where we are starting.  My wife and I are rapidly approaching the end of our 20s, and all things considered we are in pretty good shape financially.  We both are well-established in our careers and enjoy what we do… or at least most of the time.  Our combined income is in the 100k-105k range and we live comfortably.  We have spent much of the past 3-5 years cleaning up some silly debts (from you name it:  too much fun in college, engagement rings, weddings, a stint of unemployment) and are finally are a point where we can start accumulating wealth, thus the motivation for the blog.

We by no means have an extravagant lifestyle, but we are sloppy with our money at times.  As a typical DINK household… we enjoy too many dinners out, the occasional vacation on a whim, drinks on a Saturday night, etc.  I have a weakness for tech gadgets (love the Crackberry) and my wife has her own indulgences (Coach purses).  While we have never lived well beyond our means, we have typically lived up to our means. Income increases… get a car.  Income increases again… buy a house.  You get the idea.

Going forward, we want to be more deliberate in how we handle our money.  While I have used Quicken for several years to track our finances, we are starting a budget in January, and plan to stick with it.  The wife is even on board.  With the beginning of a new year and a new decade, I figure there is no time like know to start on this wealth building journey.  I hope you find it entertaining and would encourage any feedback you may have.

Here’s to success and prosperity in 2010.

NET WORTH

Here is the report card to start the year.  It looks a little ugly after the holiday season!

Jay-Z is lucky he put a ring on it. He and Beyoncé led Forbes’ annual list of Hollywood’s top-earning couples for the second year running with a combined income of $122 million—$35 million from him and $87 million from her. Calista Flockhart and Harrison Ford came in a distant second with a combined $69 million, beating out Brangelina’s $55 million and Will and Jada Pinkett Smith’s $48 million. David and Victoria Beckham rounded out the top five with a combined $46 million in earnings from June 2008 to June 2009.

This week, a nontechnical but nevertheless effective way to build wealth, or at least increase cash flow by reducing outflow.

The Census Bureau claims that the median household income in the United States was $50,233 in 2005. Other sources claim that the average household spends 7.5% of its income of groceries. Yes, there’s a danger in mixing “average” with “median”, but it shouldn’t affect our calculations too much here: besides, there’s a larger point to be made. The average household makes more than the median, because there’s a lower bound to household income (which is of course $50,233 less than the median), but no such upper bound. Just as obviously, the less money a household earns, the greater the share of that income it’ll spend on groceries. Regardless, the average household spends somewhere around $4000 a year on groceries.

Would it be worth your while to cut that number by, say, $1600? As there’s no way to escape having to eat, you could almost think of it as a 40% return on a $4000 annuity.

Which brings us to Costco, one of the quietly great successes in American retailing. Control Your Cash got to the party late on this one, but that doesn’t make Costco any less amazing.

Stop buying your groceries at Safeway. Or Albertson’s. Or Ralph’s. Or Lucky. Or Vons. Despite its mellifluous slogan, Vons is not value. Nor is Publix nor Piggly Wiggly nor Wegman’s nor Pamida. Fine companies all, to be sure, but not committed to the principle of Controlling one’s Cash.

Pay $50 and buy a Costco membership instead. If you’re a human who enjoys eating things, it’ll pay for itself 40-fold. This is not an exaggeration.

Quick recap, if you’ve only driven by a Costco and have no idea what goes on inside: that membership entitles people to buy groceries and other stuff at prices around 30-40% lower than you’ll find elsewhere, with much of the merchandise stacked to the ceiling in aisles wide enough to hold chariot races in. This leads to the perception that Costco only sells in colossal lots, requiring you to buy, say, a year’s supply of cereal at a time. This is false.

Costco and its competitor, Sam’s Club, represent the zenith of human achievement, on a par with space travel and sanitation. With every dollar these retailer/wholesalers reduce prices by, customers have to expend ever less incremental effort to earn money to feed themselves with. Costco performs wonders by exploiting a fundamental economic truth: the more a seller can sell to a buyer, the more likely the seller is to discount what he’s selling. Therefore, the more you buy, even if it’s in concert with other members, the cheaper each unit becomes.

Costco and Sam’s Club have 90 million members between them, so it’s not as though either company is operating in the shadows.

Costco doesn’t just sell groceries. The displays are loaded with everything from vacuum cleaners to tires to flat-screen TVs to books. Even hearing aids and prescription glasses.  Another misconception is that Costco only deals in minor brands, which is also false. A look at digital SLR cameras at Costco.com, for instance, shows Canon, Nikon and Pentax offered, among others.

Downsides to buying at Costco:

-Parking is scarce on weekends.
-They keep standard retail hours, closing around 8:30 on weekdays and 6:00 on weekends.
-You have to bring your own bags, or boxes.
-There’s little variety among brands. Costco typically carries only one brand of a particular item (e.g. NutriSystem but not Alli.) But this isn’t necessarily a negative.

When you’re torn between the Prego and the Ragu, or the Coke and the Pepsi, what criteria do you typically weigh when you buy? Be honest with yourself and ask: is there really that much difference between one and the next? And if price isn’t a criterion for you, would it become one if the differences among brands were large enough?

“I would never dream of shopping there.”

Some people find the idea of deciding to save lots of money on groceries to be gauche, a step up from collecting soda cans or beachcombing. Often, these people will justify it by assuming that no retailer could set its prices so low without exploiting its employees. Fine. If you’re wealthy enough to have such a limiting grocery-buying philosophy, or if overpaying somehow makes you feel rich, have at it. Have your kippers and water biscuits shipped over from the Marks & Spencer flagship store at Marble Arch. The rest of us will save money, thank you very much. And hopefully use it to buy assets with.

December is traditionally the most expensive month for me. As you all know I was MIA for about two weeks on vacation so I only checked my online bank account a few times to make sure I wasn’t over budget. To be honest I didn’t really think about my money that much. So when I finally calculated my net worth, I was shocked! Somehow I managed to increase my net worth by over $1,600! That is the most that it has increased since I got my tax refund in March.

Here are the details:

Cash: +$235

• Checking: $110

• Car Repair Fund: $427 — Added $144 to this fund from extra money, etc.

• Christmas: $85 — No change.

• Wedding: $25 — I added $975 from my Wedding Fund to my Emergency Fund so they were combined. After I pay off my debt, I want to get my Emergency Fund to $10,000 and then save for a wedding. That’s the plan today, anyways.

• Emergency: $3,466 — Added $975 from Wedding Fund plus $105 saved from the month from extra money.

Retirement: +$350

• Roth: $866 — $100 added in December, plus interest.

• 401k: $2,863 — $200 was added (me+employer), plus interest.

Debt: -$1,000

• Debt to Parents: $2,500 — I paid $1,000 towards my debt in December. Cha-ching!

TOTAL NET WORTH: $5,383 as of 12/31/2009

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Summary: It is so encouraging to see that this stuff is really working. It’s really happening! I’m almost done with my debt and already my Emergency Fund sits at almost $3,500! I know January will be pretty expensive and there will be future months with a lot of expenses… but for now I’m just savoring the fact that I ended December worth $11,822 more than in 2008. Hell yeah!

Momma always said, “Better Late Than Never.” Or was it someone else?

Anyway, I know I’ve already spent 6 days without goals which pretty much buys me a one-way ticket to the lowest rung of hell. But before I go to confession to try to salvage my soul, here are my goals for 2010:

Financial:

– Increase my monthly contribution to my Roth to $300
– Start a 401K
– Double my Net Worth (so I’m shooting for $33,766)
– Budget? (The question mark is there for a reason. I’m hoping to start budgeting someway, somehow, so I’m going to leave this as a very open-ended goal)
– Cancel 2 credit cards
– Take another bill from parents (Essentially my paying the Electric Bill is the only form of Rent I’m paying. It’s a toss up between Cable and Phone and I’m leaning towards Cable…)
– Move my savings to another bank (I’ve complained enough…)

Blog

– Participate in 12 blog carnivals (that is 1 per month. Come on Newbie, you can do it!)
– Write at least 3 posts a week
– Change the theme (grey, blue and orange are so 2009…)
– Buy a domain name (right now mine is on backorder…still deciding whether it is worth buying at a higher price [18.99 vs 9.99] or waiting and crossing my fingers…)
– Do a monthly update of my net worth
– Get more readers (I love you guys, please come back?)

Personal

– Work out 3 times a week (maybe I’ll do this with blogging?)
– Make one meal a month
– Study my cheeks off for the GMAT
– Apply/Get into to B-School
– Get a raise (or promotion or both…if anyone is listening, HAHA)
– Team Lead 2 Community Service projects and Volunteer at least once a month
– Update my resume once a month
– Network (the dreaded cold call or mixer. I will challenge myself to at least one per month)
– Add $5 to each of my donations (I have a list of charities that I’ll go into in another post…)
– Read one book a month (after I’m done with the GMAT…lol, so 8 books!)
– Travel with BF ( we’re planning on Costa Rica. Actually this goal is half accomplised because we have the hotel, flight, and activities. But you never know with these things…)

So those are my goals. I really feel like I need more goals, but this is a start. If I can accomplish all of these this year, then I will challenge myself to harder and more goals next year. Also, for those with a keen eye, there are 24 goals in total since I’m turning 24 in April. OWW!

So, after all the kinks were figured out, I’m ready to expand upon my net worth. As you’ll see if you click on the image in the sidebar, there really isn’t much to talk about since I don’t have anything sexy like a Mortgage or a Car. I’m not saying Debt is Sexy, because it isn’t. As a matter of fact, it is really unsexy. But it would be nice if my Assets side wasn’t a Plain Jane. Well, I guess I’ll have to wait a couple of years for that, but here’s the breakdown:

Assets:

Cash- $8,762. This figure might be stagnant for a while as I re-start my contributions to my brokerage account. I really feel like I’m more of an investor, rather than a saver, so having a stockpile of cash isn’t really top priority for me. Also, I don’t have a separate E-fund. This account is my everything all rolled up into one. It is pretty low on my Scale of Liquidity so I will hopefully never have to tap into this money until I buy that condo.

Stocks- $5,726. Insert foot into mouth! Until the market starts to skyrocket, I will most likely have more in cash savings than in my brokerage account. I have committed myself to investing at least $5,000 per year in the market. So that $726 you see there is actually all gains. WOO-HOO!

Retirement – $3,006. I’ve done way better in my Roth IRA than I have done on my own. I’ve made over $1,000! I will write a post someday on my Roth and how amazing it is, but until then, please bask in the sweet ambiance that is my retirement account.

Liabilities

Credit Cards- $611. Nothing fancy shmancy here. This is spread over several cards so it isn’t as bad as it sounds. Also, I always pay the outstanding balance in full whenever the bill is due. So the only reason why I have credit card debt now is because I haven’t received the statements yet!

And that’s my net worth!

On a slightly related note, isn’t it amazing how writing about your net worth gives you ideas for future posts? Hopefully I can be a little more prolific than last year.

 Welcome to 2010!

I’m so looking forward to 2010!  Namely, because I’ll likely be done with the CPA this year!  Woot!

Net Worth notes:

• SAVINGS: I saved a decent amount even though it was Christmas this month.  However, I’d like to see that $1,000 per month start inching closer to $1,500 per month…
• RETIREMENT: I maxed out my 401K in 2009!  In 2010, I will not be maxing out (read about that here).  Instead I’m going to contribute about 10% to my 401K and max out a Roth IRA this year.  So excited to open my first Roth IRA!

As always, onward and upward!  Here’s to a fabulous 2010!

To see more about my Net Worth, go HERE.

To sign up for your own Net Worth tracker, go HERE!