Friday, December 28, 2007

A Look Back at 2007

2007! The first year I started keeping track of my finances. I graduated from college in May of 2006 and took what I consider my first real job (current job) in September of 2006. Now I have worked for an entire year and have made significant financial progress.

I started keeping track of my finances more in depth in August of 2007. Back then my net worth started at $2,952. I know have a net worth of $5,321 for an increase of 80.25%. That is quite an increase. My best month was December which accounted for almost half of those gains.

2007 wasn't just a good year for my net worth. This was my first year out in the real world after college and I want to take a look at some things I did right that I am proud of and some things I did that were probably bad ideas.

First lets take a look at what I did right this past year:
  1. I began the year by opening a traditional IRA. I contributed 5% of my salary a month into the IRA until I was able to start contributing to my 401k.
  2. Once eligible to contribute to my company's 401k in September, I took full advantage. I contribute the maximum amount needed to recieve the company's full match.
  3. I opened an online money market account and funded it with $1,000 for emergencies through automatic savings.
  4. I got engaged to a beautiful woman who I love with all my heart. I can't wait to get married next year and spend the rest of our lives together.
  5. I took a nice vacation with my girlfriend (now fiance) to Mexico. A great experience and well worth the money to enjoy a vacation with her.

Now lets take a look at the things that could've gone better:

  1. I racked up quite a bit of credit card debt through the year before I got serious about finances. I paid for last christmas with my credit cards. I overspent on christmas trying to impress my family with the money I now make. I also paid for the Mexico trip with a credit card. I now know I would have been better off saving for things before I spend money on them and not racking up the debt.
  2. I bought a new bike and took out a loan to pay for it. The loan is at 0% interest and will be paid off so I won't owe any interest on it. I still count this as part of my current debt. The bike was an impulse purchase and if I would have waited a few weeks I probably would not have bought the bike.
  3. I opened up a stock brokerage account and tried trading stocks without really knowing what I was doing. I felt like I've read alot about investing but I ended up losing over a thousand dollars. I funded the account with $1,700 and now have about $600. I now plan on leaving the money in the stocks I currently have them in and earning dividends and hopefully seeing some appreciation over the next year. However, I absolutely will NOT add any more money to the account this year. Once I have a better financial base, I will consider trying to invest in stocks on my own. If I had not tried jumping into the stock market prematurely, I would have a net worth of about $7,000 instead of $5,300. In the long run this will be an inmaterial amount but currently, it would have been nice to have that much less debt or that much more into my retirement account.

So, I generally feel like I had a good year. I made some good progress and since tracking my finances have increased my net worth and lowered my credit card debt. Hopefully I continue to make good progress in 2008.

Raise for 2008

Today we were informed of our raises effective the first pay period of 2008. I will be recieving a 5% raise or $1,800. I am fairly pleased with this raise. It would have been nice to get more but I could have gotten less. This puts my salary up to 38k plus a bonus if we recieve one next year. I calculated that I will be saving an extra $480 in my 401k plus company match and I will have about $1,200 more take home pay next year then this year with the raise. Right now this money will be earmarked for paying down my credit card debt until I can rid myself of the debt. Then the extra money will be saved each month.

I have been working at my new job for about a year and 3 months now and am currently making about 3k more then when I started. I have also recieved over 5k in holiday bonuses. This is nothing to be ashamed of and pretty soon in another year or so my base salary should be over the 40k mark. I am looking forward to it.

December 2007 Net Worth Update

Today was pay day at work and since I have no more bills going out this month I updated my net worth on NetworthIQ. I had a feeling this month was going to be a good month. I am proud to say that this was the best month I have had since starting to keep track of my net worth earlier this year. The increase in my net worth from last month is 28.22% increase. The dollar amount is a $1,171 increase. This puts my total net worth now up to $5,321. I am extremely pleased to have crossed over the 5k mark before the end of the year.

My cash went up slightly this month. My stocks took another hit losing $223. I have sold out of my big losing stock and bought into a preferred stock that will yeild over 10% in dividends for 2008. My retirement account jumped up nicely by $617 for an increase in retirement assets of 23.31%. On the debt side of the equation, my credit card debt went down $279 or almost 10%. Overall my assets increased 2.67% while liabilities decreased 3.26% giving me a huge boost to my bottom line. These numbers do not include my big bonus I recieved this month from work or the christmas money I recieved. I did not put these figures into my net worth because they are in a joint account set up for my fiance and I's upcoming wedding.

The next step for me is that the fiance and I are about to combine our finances. I will be updating my networth IQ chart again probably this weekend or on January 1st and will get a good picture of where my fiance and I will be starting out together.

Thursday, December 27, 2007

The 4 Financial Books I Recieved for Christmas

This Christmas I recieved 4 financial books that I have been wanting to read. Three of the books are more about investing and one is overall personal finance.

The personal finance book, with picture to the left, is Dave Ramsey's Financial Peace Revisited. I am a big fan of Dave Ramsey after reading his book "Total Money Makeover." I believe if you follow his steps you will find yourself in a better financial position. He can help you get out of debt and not have to worry about finances too much. I am excited to get started on this book. I doubt it has any new information in it for me but it will be very motivational to keep on track towards my own "financial peace!"

The investing books I recieved are Micheal Covel's "Trend Following" and "The Complete Turtle Trader." I also recieved Timothy Sykes "An American Hedge Fund." I like reading about stock investing and about peoples success so these books will be very interesting.

So far I have started reading my first book which is the Complete Turtle Trader. It has been interesting so far giving the background of Richard Dennis. He started out with a hundred dollar stake and became a millionaire by his early 20's. He traded on the commodities trading floor in Chicago but soon moved to an office so he could trade all the markets. This book will be about how Richard Dennis trained some random people that answered an ad he put out in papers on how to trade. He let them trade his money and they all turned out to be very successful. This experiment shows that you can be taught how to trade and how to make millions of dollars. I look forward to reading more of it.

Wednesday, December 26, 2007

2008 Goals

This past weekend I sat down with my fiance and we discussed our goals for the upcoming year. We came up with a list of goals that we wanted to work towards together and then we prioritized them into order from most important to us to least for the year.

Goal #1: Our first goal is our wedding coming up in the Fall of 2008. Our date is October 11, 2008 and so that gives us about 9 more months to continue saving and paying for the wedding. Currently we have just under $2,500 in our wedding fund. We are putting another $250 in there that we recieved for Christmas. We have set up automatic deposits of $225 a month into the fund to save. We are also planning on putting our tax refunds into the fund. Any leftover money in our budget each month will also be put into the wedding fund. Our goal is to be able to pay for our wedding off of savings through the year and not have to tap into our emergency fund and house savings.

Goal #2: Our second goal for the year and a longer term goal is to save for retirement. My fiance will continue to contribute 5% to her work 401k. I have increased my contribution so that I will contribute 6% of my salary to my 401k. It is very important for us both to remember to keep saving for our future even though there are alot of current pressures to save our money for weddings and a house that we want to purchase. We have made the decision, however, that we will not compromise saving for our retirement.

Goal #3: Purchasing a house. We have decided to go ahead and look for a house this spring. If we find one that we like and feel we can afford then we will go ahead and make an offer. If we do not find anything then we will discontinue looking and rent for another year. We would like to keep our emergency fund above $15,000 after the purchase of a house. This means we need to not draw out any money for the wedding. This will give us a comfortable level to not worry about anything happening where we would not be able to meet our future mortgage obligation.

Goal #4: We want to ultimately bring our emergency fund equal to and over $20,000. This will equal about 6 months of current expenses for us. Currently, all our savings will be going to the wedding fund until the wedding. After the wedding we will be working on growing our emergency fund. The main objective with this goal is not using any of the money currently saved up for the emergency fund on the wedding.

Goal #5: Our last goal is to continue paying down our debt and eventually be debt free. Currently our debt consists of $2,500 in credit card debt, 2 car loans, 1 student loan, a 0% financing deal on some furniture, a 0% financing deal on the engagement ring, and a 0% financing deal on a bike. Our top priority is the credit card debt. We will be working towards paying this off as soon as possible and hopefully have it all gone by the end of the year. We are currently paying the car loans off each month with no extra payments. We are currently paying the minimum on my fiances student loans. We are currently paying the amount owed divided by the number of months to repay for the furniture, ring, and bike. The ring will be paid off this year. The furniture and bike next year. We are aggresively working towards paying off the credit card debt and then will work to pay down the car loans quicker.

These are our main goals for 2008. These are the things we want to accomplish and will keep our sights on throughout the year to work towards these goals.

Consolidating our Finances

The fiance and I have decided it is time to combine our finances and work together towards common goals. Starting in January we are going to get a joint checking account where our paychecks will be deposited. We will use this one checking account to pay all of our bills from. We have decided to each keep our individual checking accounts where we will deposit a small allowance each month for each of us to do with what we please. We will continue to hold our online money market accounts for different goals. We currently have the wedding fund which is a joint account. Seperately I have two other money market funds for different goals and she has one for her emergency money. We will keep her money market fund as our emergency fund. My two funds will be for insurance bills and the second for saving for gifts, vacations, other big purchases. We will try to get all these accounts put into both of our names within the next few weeks.

We sat down this past weekend and worked out a combined budget for January. I believe the budget looks pretty good and we should be able to stick to it. We have budgeted for retirement and savings for the wedding fund. We will also be paying down our debts.

Our main goals that we decided to focus on for 2008 were saving for wedding fund, saving for retirement, paying off bad debts (and eventually all debts), saving up to $20,000 in the emergency fund, and purchasing a house. I will write more about these goals in a follow up post and how we are planning on achieving them.

Otherwise, I will be combining our net worth figures into networth IQ soon and we will look to keep increasing our net worth month after month.

A Wonderful Christmas

This was a great Christmas for me this year. This was the first Christmas I spent with my fiance where we stayed together. We started our Christmas festivities off by going up to my hometown and going to Christmas Eve mass with my grandmother. Then the whole family got together at grandma's house for some pizza, visiting, and gifts. My fiance and I then went over to my father and stepmothers house for more gifts and then spent the night at thier house on the sofa sleeper. An uncomfortable sleep and probably not the best nights rest but it was ok. Up early in the morning to head out to my mother and stepfathers house for more gifts. We then had christmas lunch and it was off back to KC to the fiances family for christmas dinner and more gifts.

It was a busy couple days and I am exhausted. I was so excited to get to spend the entire time with my fiance. I love that she got to come experience how christmas is with me with my family and I enjoyed getting to experience christmas with her family as well.

The best part was seeing people open our gifts and seeing them happy with them. I think most people were happy with what we got them this year. I was also very pleased with what we got this year as well. We got some christmas money which we have already decided will go into our Wedding Fund to help pay for the wedding. Along with the money we recieved jointly a new nice silverware set, a digital picture frame, and season tickets to the Kansas City Royals. That last one is the one that has me most excited. Individually I got a few books, a couple cd's, a video game, dress pants for work, a paper shredder, and a sweater.

Overall it was a great Christmas spent with family and the fiance and I got quite a few things to enjoy for the next few months.

Friday, December 21, 2007

Why am I Such a Terrible Stock Investor?

I think I must be one of the worst investors in the stock market ever! I love the stock market! I read books about investing, read stories of other people turning small sums of money into large sums of money, do research into stocks and love everything about the market. However, I cannot seem to make any money in stocks.

I opened up an online stock brokerage account back in June and have lost over half the money I've invested. Luckily for me I started out with a small amount of money to begin with. I'm not sure why but it seems like every time I pick a stock to buy it plummets shortly after I buy it. This is a sad story considering how much I love the stock market and how badly I want to be a successful investor. It seems however that I would be better off just putting my money into some mutual funds and leave the individual stock picking up to the professionals.

For now, I currently own two dividend paying stocks in my account. They have gone down considerably since I bought them but I am planning on holding onto the stocks for a few years to see what happens. I don't think I'll be putting in any more money to my account for awhile until I have lots of money saved up towards all my other financial goals. Only then will I feel comfortable risking some money to "play" with in the stock market.

Just Increased My 401k Contribution

Well, I just walked down to the HR department and put in my form to increase the amount I contribute to my 401k to 6%. Starting the first pay check of 2008 I should be contributing 6% of my salary with the company matching another 4% putting me up to a total of 10% of saved for retirement next year. It's a small increase but I am working my way up slowly until I am personally contributing at least 10% myself. I'm not sure when the next time I will increase it will be but I felt like this would be a good time for a small increase since I should be getting a raise for 2008. I should find out about the raise the first or second week of January. I think it is very important to maintain the same standard of living even though I will be making more money. This is an effective strategy to save more money by saving any increases I recieve in salary every year.

Thursday, December 20, 2007

December is a Good Month!

I admit it, I was nervous heading into the last month of 2007. Along with December comes the big spending time of Christmas. Having a list of family members who expecting something from you for Christmas can put a damper on your budget and goal of a higher net worth. I was worried that this may be my first month since starting to keep track of my net worth back in August where I would have a decrease in net worth.

Now, I'm not so sure and definately not as worried. This month has been going great for me! I have completely paid off credit card #1. My retirement account has risen to the over 3k mark. I recieved a nice bonus at work that will go towards my fiance and my wedding plans. I made a budget for Christmas and stuck to it and actually came in under budget. I didn't buy my gifts this year with credit but instead used the cash I had been saving since October for this specific purpose.

So far the only downside I can see to this month has been my loss in the stock market. I don't have a lot invested in my individual stock account so I am not too worried about the loss. However it is dissappointing that I can't seem to make money with stocks.

December has been a good month for me! I am not sure what I am more excited about. Am I more excited for Christmas in less then a week or am I more excited for a week later when I get to update my net worth chart and see my progress? Both should be good days for me!

Retirement Accounts over 3k!

Ok, $3,000 might not seem like much for retirement so some people might not understand why I am soo excited to be over $3,000 in my IRA and 401k. Well, I am 25 years old. I just started saving for retirement earlier this year and have gone from $0 for retirement to just under $3,200. I like to think that that is a pretty good amount starting out.

I have set up an excel spreadsheet to calculate some projected retirement amounts. I have started with my current salary and figured a 4% annual raise. I have set up three different scenarios where I will contribute 10% total per year to my retirement with the returns being 5%, 8%, and 10%. Based on my calculations, I can hope to have $863,063 if I earn only 5% on my money. I can hope to have $1,657,763 if I earn 8%, and I can hope to have $2,676,029 if I earn a 10% return. Hopefully I can average 10% returns over the next 40 years to have over $2.5 million by the time I turn 65.

The excel spreadsheet has given me some goal numbers I would like to shoot for in the future. One year from now I hope to have $7,265 total in my 401k and IRA combined. This will require me to put in 10% of my salary and to earn a 10% return. Another goal is when I hope to cross the million dollar mark in my retirement accounts. The retirement simulation I set up shows me crossing over into the millionairre category by the time I am 56 years old or 31 years from now. I am hoping to accomplish this goal 6 years before that when I am 50 years old or 25 years from now. In order to accomplish this I will aim to sock away even more of my hard earned money for retirement when I am able. Hopefully I can average some good returns which will also help along the way.

Tuesday, December 18, 2007

Cigarrete Smoking is a Waste of Money

This morning on my drive to work I was stopped at a stop light and looked to my right to see a lady with her window down. "What is she doing with her window down!" I thought to myself before I noticed the cigarette between her fingers hanging out the window. "Oh, she is smoking." Apparently smokers don't care that it is only 30 degrees outside. They need to have their smoke and don't mind freezing their arses off to get it. The same concept can be seen when exiting the south doors of my office building where the smokers gather to have their cigs. I can't imagine wanting something so bad that I would stand outside in below freezing temperatures to get it.

I think smokers are idiots. There are the health issues and then the financial issues. I'm not sure on the price of a pack of cigarettes but I imagine it is around $4/pack. If you are a pack a day smoker, then you are wasting $28 a week on cigarettes. That is a total of $121.33 per month or $1456 per year. That is ridiculous. I wish I had over a hundred dollars a month in my budget to waste. It's even stupider when you think that they are paying out almost $1500 a year for something that is slowly killing them. I think I'll continue to save my money and stay away from the cigarettes.

Monday, December 17, 2007

How I Dealt with the Costs of Christmas

Christmas can be an expensive time of year. For me, I want to buy those close to me nice gifts. I like to show my love by buying them something that is really great and this usually means spending quite a bit of money. Unfortunately, I am not rich. I have quite a few family members that I will buy presents for this year. This list includes my mother, stepfather, father, stepmother, brother, sister, grandma and fiance. On my fiance's side we also have to get gifts for her two parents, her sister and future brother in law. This can get pretty expensive but I feel this year we did a good job keeping our costs low and still getting gifts that everyone will enjoy.

The first thing I did in preparation for the Christmas money spending season is that I opened up a money market account to specifically save for the holiday. I opened this account back in October with $50 and set up an automatic deposit of $25 every two weeks. Sometime in November I put another hundred in the account so that now I ended up with $275 saved up to spend on Christmas. This is an idea I would like to carry forward in the future with my fiance. Since we have the account set up, we will continue to put in $25 or so every couple weeks automatically throughout the year. This will help us cover all gift giving through the year and the big spending time of Christmas at year end. If there is anything left over we can spend that on ourselves or use for a different goal.

The next thing I did was set a budget. There are 8 people that I personally needed to get gifts for this year. This includes my side of the family and my fiance. I let her take care of her own side of the family but we used the same budget. We decided to spend a maximum of $50 per person. For my grandma we decided to spend $20 and for each other we decided on around $75.

Next came the spending. This year I asked everyone for ideas of what they wanted or needed for Christmas. This way I knew I wasn't wasting money on a gift that will just go in the closet and be forgotten about. Once I had a list I was easily able to find gifts for each person that were in my budget. I am very pleased with what I got everyone this year and don't feel like it is breaking my budget. My total Christmas budget amounted to $395 and I actually spent about $320. Because I prepared for these expenditures, I was able to use cash and take on no new debt. This is a big difference from a year ago when I racked up over $500 on the credit cards and really didn't have gifts that were any better then this year. I just had a debt cloud hanging over my head that was a big hassle to pay off.

Credit Card #1 Paid Off

I have finally done it! Credit card #1 is finally paid off with a balance of $0. This weekend when going over my finances and figuring out exactly where my paycheck for the second half of the month was going I realized I had enough to bring that balance down to zero. This has been something I have been trying to accomplish for the past 3 months and finally have made it. The next target of debt reduction will be the credit card #2. This card will be a little more difficult because I am still using it for gas. I get a 5% discount for gas by using this card and don't want to lose that. Therefore I need to make sure I am paying more towards the card each month then I put on it for gas. Towards the end of the month I will post more on my goals for 2008 and this credit card #2 will definately be a part of those goals. I'll do some math but I hope to have most of it paid off in the next year.

Holiday Bonus Time!

It's always a nice surprise when you get a big holiday bonus at work. I wasn't expecting a bonus but am definately happy and the money is needed. This year I got $3,300 for my bonus which amounted to just under $2,000 once taxes were taken out. I also didn't know that they would take out 5% to put into my 401k but I am happy they did. This adds an extra $160 or so to my 401k and more if they match with the usual match. The bonus money that I recieved in my bank account is going to be used for the upcoming wedding (October 2008). I immediately transferred the money into our joint money market account where we have automatic savings going each month to try to save up some for the different wedding expenses. The fiance has paid all of our down payments so this has me pretty happy that I can finally contribute something to the wedding. She is the one of the two of us with the most cash saved up.

There are many different things to do with that nice holiday bonus you recieve. I find it interesting to hear how the different people I work with plan on using thier bonuses.

Thier is CZ who has plans to use her bonus for a vacation for her and her boyfriend. I think this is a good idea because vacations are good experiences and not a waste of money. However, since she just bought a house with zero down and sometimes complains about money, I think I would look to save the money for an emergency fund or put towards the house.

Next there is RP. She complains all the time about having no money. I find it amusing because she wastes money all the time. Recently she just bought 6 video games for example. Another example is the gym membership for a year that never gets used and the glider excersice machine recently purchased that does not get used. I haven't heard exactly what they plan on blowing her bonus on but I am certain it is not going towards savings.

Last thier is CW. She seems to be the more financially smart of the people I work with. She is a fan of Dave Ramsey and sometimes refers to her budget so I know her and her husband work on saving and sticking to a budget. Since her husband also works here I expect they got about double a bonus. She said they are using thier bonuses to pay for a new needed roof for thier house. I would hate to spend my whole bonus but if it is needed then it will be worth it.

My boss of course asked me what I was going to do with my bonus. She thinks it should be spent on something nice for myself. I believe in saving. Last years bonus went into an IRA. This year I will use it to pay for the wedding so we don't need to take on any new debt. I am a little disappointed that I don't get to put some towards savings or current debt, but I am pleased that I finally get to put some towards the wedding and feel like I have contributed.

What will you do with your bonus if you get one?

Sunday, December 16, 2007

Net Worth Update

Keeping track of the net worth is one of my main goals with this blog. I use NetworthIQ to track everything and you can see the results in a graph on the left sidebar. I started tracking my net worth back in August of this year (2007). I am pleased to say that I have had positive months every month since through November which was the last update. My net worth started out at $2,952 in August and as of the last update was $4,150. This is a total gain of $1,198 or 40.6% in 4 months. I'm pleased with the percentage gain so far but the total dollar amount doesn't have me too excited. Here in a couple weeks I will update my net worth for December and give a new post about the year in review. I don't expect it to change too much from where the numbers were in November. This is the christmas season and that means spending money on gifts. My fiance and I do expect/hope to get some cash for presents from our family but this will go straight into the wedding fund which I do not count as part of my net worth. Coming up in the new year the fiance and I will be combining our finances and I will start tracking our net worth together. I wonder if this will make my overall net worth increase or decrease? She has a lot of cash but she also carries a student loan and car loan. Either way the goal is to always make progress and increase our net worth.

A New Beginning to this Blog

Well, I'm back! I have been gone for awhile as I decided not to blog anymore but have recently had a change of heart and decided I wanted to write some more about my life. I will continue to do what I had been doing in the past keeping track of networth and goals. I am leaving this blog open though to anything and everything I feel the need to express my opinions on or talk about. Moving forward this blog will probably end up being a lot more personal and less personal finance. Most people won't be interested in alot of the things I'm going to write about because this is going to have stuff about my everyday life. Not just my financial every day life. Stay tuned if your interested to follow my journey through life.

Friday, November 2, 2007

Net Worth Update October

First things first. I am now engaged. I asked my fiance over the weekend on October 27th and of course she said yes. Now we have the daunting task of planning and paying for a wedding. For someone interested in personal finance and wanting to grow his net worth, this kind of sucks. Don't get my wrong. I am estatic to be getting married to the woman of my dreams. She is so wonderful and I have never loved anyone like I love her. But the idea of shelling out a ton of dough for a wedding is scary. But I know we are both financially responsible people and we will do what is right. The wedding will be great and we'll keep moving forward in our finances.

So, for the month of October, I was able to increase my net worth by 16.27% or $522. I'm pretty pleased with this jump. This is just about double my increase last month and every time there is an increase I will be happy. This month I have focused on paying off credit cards and other debt. I have made it a new dream in life to be debt free and want to pay off all my credit card debt as quick as possible. This could be troublesome however in the near future due to trying to pay for a wedding. The fiance and I have decided to open a joint account and save all available money for the wedding. Hopefully I will still be able to decrease debt a little just not as fast as I would like. My assets should also still grow nicely from my 401k. Cash should stay idle for awhile.

The upcoming month of November will involve me keeping track of every cent that enters and exits my life. I want to see the net of these numbers be positive. Of course, with Christmas coming up, growing the net worth could be a daunting task. I have saved up for Christmas though so I have that money available. The fiance and I have already talked about not spending too much on each other. Everything is going to work out and I have a goal of a net worth close to $5,000 by the end of the year. Lets see what happens!

Tuesday, October 9, 2007

Clinton's 401k for Every Family Plan

I recently read an article on Yahoo! titled Clinton Proposes 401(k)s, Matching Funds. I have to admit I am a fan of this idea. I believe that the majority of Americans are not going to be ready for retirement and thus have to continue to work well past normal retirement age. This plan calls for a 401k for every individual in which you can save up to $5,000 a year and the government will match your first $1,000. I like this idea and if I was eligible then I would definately participate, at least up to the match. The program would be paid for by taxing those with estates of over $7 million per couple. In order to get the $1,000 match you must earn less then $60,00 a year which is me. I'm not sure if she wants people who already participate in 401k's at work and recieve a match to be eligible.

The one thing that puzzles me with her proposal is the sentence in the article that states that for 1 estate over $7 million being taxed they can match at least 5,000 families. The math doesn't quite work out in my head and maybe I don't quite understand. If each family has only one 401k and get a $1,000 match, then that is $5 million for 5,000 families. Most families have more then 1 individual. I don't think you can tax someone with $7 million a total of $5 million. That's a hefty tax. So although I don't see how it would work as laid out in this article, I do believe this could be a good idea if figured out and proposed correctly. I know I certainly would like the extra $1,000 a year for retirement!

Sunday, October 7, 2007

Looking for New Income

Part of my goal of paying down all my debts involves finding new ways to bring in more money to put towards my credit card balances and my car and other debts. This is hard to do. I am currently taking H&R Block's Tax Course and hoping that I can get hired on by them for tax season to prepare taxes. This will bring in maybe $1,000 of income more then I am used to. Another way I am trying to bring in money to pay off debt is by selling some old books, movies, and video games on Amazon. I placed 5 books on Amazon this morning and have so far sold 2 of them. This will give me about $12 after I ship them to put towards my credit cards. I guess every little bit helps! Any other ideas on how to scrounge up some more money to put towards debts? I could sure use them.

My Total Money Makeover!

I just finished reading the book entitled "The Total Money Makeover" by Dave Ramsey. I was impressed. I have decided that I would like to try to follow the instructions given in Ramsey's book for the total money makeover. To me, it makes complete sense. Basically Ramsey is talking about paying off all your debts and living life debt free. If I have no debts then I will be able to save the $600 a month I am paying off in debts. And $600 a month will add up quick.

Ramsey's plan has 7 steps which he calls Baby Steps. The steps are as follows:
Step 1: Save $1,000 for emergency fund.
Step 2: Eliminate debt using a debt snowball.
Step 3: Finish the emergency fund with 3-6 months worth expenses.
Step 4: Maximize retirement investing with 15% of salary.
Step 5: Save for your children's college education.
Step 6: Pay off your home mortgage.
Step 7: Build wealth like crazy for fun, investing, and giving.

These are the steps I hope to follow to work towards my very own Total Money Makeover. I already have step 1 complete. I have more then $1,000 in my emergency fund. I have decided to take the excess money and pay down my credit cards. I will keep my brokerage account as extra emergency money. Therefore step 1 is complete with actually about $2,000 for emergencies. Another difference I am doing is that I am going to still contribute to my 401k. I have decided to take the money I am contributing to my IRA and put that towards paying down my debt and then saving for a wedding for the next year at least. So I am on Step 2. I am trying to eliminate all of my debt. Currently I have what I feel like is a pretty substantial amount of debt. I currently have about 19,000 in debt and I am going to do all that I can to pay this debt down as fast as possible. I should have my 2 credit cards paid off within 4 months and then continue to pay down the other debts and hopefully be debt free in 22 months. I will keep track each month of how much debt I still have and what month it is from now, this being month 1. Keep posted for my progress from month to month and wish me luck!

This means that my goals for the year have now changed. My current goals are now to pay down all of my debt as fast as possible. I will continue contributing 5% of my salary to my 401k and use all of my other available money to pay down debt. I hope to be down close to 15,000 by the new year.

Tuesday, October 2, 2007

Hannah Montana and Selling Tickets through EBay

Wow! There is such a frenzy going on currently about the Hannah Montana tour and tickets selling out at every venue. You can find tickets of course still for sale on ebay and from ticket brokers but be prepared to pay one hefty price. A headline on Yahoo! shows that tickets have sold for as high as $2,565! This concert recently went on sale in my city and there was a big fuss in the paper because a lot of parents were unable to get tickets and were told it was sold out immediately when tickets were supposed to be on sale! However, by searching on the internet you can find the same sellers who have multiple tickets on sale for a much higher price then they originally sold for. This has parents mad that these ticket brokers were able to get so many tickets while the parents could not get them for thier children.

I followed this story because it is something that interests me. I had a friend in college who would by tickets to hot concerts and sell them on ebay for a nice profit. My father recently tried this out and made double his money on one entertainer that was coming through town. However, he quickly blew the money he made and then some by trying to sell tickets to less popular artists. Unfortunately for him, he missed the Hannah Montana bandwagon.

What does this have to do with personal finance and why am I writing about it? The reason I am interested in this and writing about this is because I have wanted to try my hand at buying tickets and selling them for more money on ebay. This is a personal finance blog and I feel this could be a good way of bringing in some additional income. It is all about looking for the right opportunities and knowing what artists are going to sell out and bring a high demand for thier tickets. Tommorrow, I believe I have this opportunity to give this a shot. A huge artist is coming through my city and tickets go on sale tommorrow. I am going to try to go to ticketmaster on my lunch break and pick up a couple tickets. I will then post them on ebay and see if I can make a decent profit. What if they don't sell? Well then I will take my girlfriend to a wonderful show. But I'm hoping there is someone out there that will want to go more then me and will be willing to pay me more for the tickets then I bought them. I will post more on this adventure later!

Monday, October 1, 2007

Summary of Goals

I have recently written about my main goals of retirement, debt reduction, increasing emergency fund, and coming up with a solid budget. Here is a brief summary of my goals that I hope to achieve by the end of this year:

Stick to established budget for one month.

$3,260 in retirement accounts.

$17,500 in debt accounts.

$2,500 in emergency fund.

I haven't talked about my emergency fund other then stating that I will not be contributing to it while trying to reduce my debt. However, I decided to make a small goal of increasing the balance by $300 by the end of the year because this should easily be attainable. I will be earning interest on my current balance and should be able to put in a little bit of money over the next three months to reach this goal as well even though it is not budgeted for. We'll see!

Goal 3: Get out of Debt!

One of my main goals along with retirement is getting completely out of debt. Currently I have over $19,000 in debt when you add up my car, credit cards, bike, and engagement ring. I am also taking my girlfriend to a bed and breakfast at the end of this month where I plan on proposing to her. The cost of the B & B will be $400 on my credit card. I have worked up a debt snowball plan to pay off this debt hopefully as quick as possible. By my calculations, I hope to have this debt reduced to $17,592 by the end of the year. This will be a reduction of over $2,000. Therefore, I am setting my goal of having debt of less then $17,500 by the end of this year. In January I will recalculate some numbers, see if I have reached this goal, and set a new goal for 2008. I have a plan of action that I am putting into place and hopefully we will find that this plan works. I am going to be paying off the minimum on all of my debts except for one of my credit cards which I will had what I can afford to pay off to the minimum. My main focus must be to pay off this debt without incurring any new debt. This can be difficult with Christmas coming up and hopefully a wedding to start preparing for!

The Joneses have us Fooled!

I just finished reading an interesting article I found on Yahoo! Finance entitled "How to Avoid Money Envy." I found this article very interesting because it is talking about ways to avoid the want to keep up with those dang Joneses. Everyone believes that they are worse off then others and don't understand how so and so can afford such a nice house or such nice clothes or cars or vacations. This article talks about getting right down to it and realizing that so and so can't actually afford those nice things they are buying. I like the idea presented in this article where you find out your neighbor is going on a great trip to Paris. The author suggests saying to this neighbor how wonderful that sounds and you wish you could go on such a nice trip but just can't afford it right now. Then ask the neighbor how long they had to save in order to afford that trip. The neighbor might tell you they financed it or give you a look which lets you know they really can't afford it either! This makes you feel better and makes you realize there is no reason to keep up with the Joneses because chances are, they are in debt!

I find the money envy a problem with me. We have a couple that we are friends with who seem to be doing soo much better then us. When we go out to eat they try to pay for our check. It seems they are always buying such nice stuff and spending lots of money. Now I wonder how they are able to afford all this nice stuff. I know for a fact that they don't make any more money then us! I try telling myself that they are just digging themselves into a big debt hole but sometimes it is tough and I want to rush right out and prove to them that I can afford the same things they can. I must resist though and stick to my newly formed budget and continue to save. I have a feeling in 30 years or so I will be happy with my decision and notice that I am living much better then they are because of my larger retirement savings. Let me know what you think.

Goal 2: Budget!

One of my goals is to establish a firm budget and get it right over the next few months. I don't think I'll ever be able to have it perfect, but I want it to help out so I can see where my money is going and find areas to save and spend less. This budget will hopefully help me attain my other "real" goals of saving for retirement, building an emergency fund, and becoming debt free. I won't post the details of my budget but I have worked into it my retirement savings of $300 a month and paying down $845 a month on debt. I have decided to put my emergency fund savings on hold until I have most of my debt paid off. I have about $2,200 in my emergency fund which should hold me over until I can get alot of this debt paid off and start contributing again. I also set up a "Fun" account for whatever I want. I am contributing $50 a month towards this account. I am getting ready to set up a debt snowball and will post later with the details.

Saturday, September 29, 2007

Goal 1: Retirement!

One of my big goals is to grow my retirement as much and as quickly as possible. I don't have a magic number that I think I must reach by a certain date in order to retire. I do however have an amounts that I will be happy to reach as milestones on my path towards retirement. The first amount I want to reach is the $5,000 mark and then the $10,000 mark.

Currently I have just over $2,000 in my IRA. I am now eligible to participate in my 401k and have decided to put in 5% of my salary in order to get my full company match which will amount to 4% of my salary. Currently that means that starting this month (October) my accounts will increase by about $420 a month not including any capital gains/losses. A quick calculation and this gives me about $3,260 at the end of this year. At the end of 2008 I hope to have over $8,300. Using a quick savings calculator with a return of 8%, in 30 years at the age of 55 I can hope to have $611,717. This number should be higher as my salary grows. If I save another 10 years until the age of 65, I can hope to have $1,396,302. With an ultimate goal of over $1,000,000, I am getting a good start. Once I can afford it I would like to increase my contributions to my retirement accounts but for now, I am feeling pretty good that I am on my way to reaching a good retirement.

Friday, September 28, 2007

Updates and Updates!

I've updated my Networth IQ and it shows an increase in my net worth even though it feels like it was a bad month. My retirement account number isn't accurate because it is not including my 401k which I just started. I will update that hopefully later today or monday when I can get the correct numbers after the market closes today.

My last post I laid out some goals I want to accomplish. The goals I most want to focus on currently involve paying down my debt, increasing my emergency fund, and increasing my retirement accounts. In order to work towards these goals I am planning on working out a budget this weekend. I will continue tinkering with my budget over the next few months but hope to have it firmly established by the new year 2008. This will be just in time for a raise that I hope will be coming. I will post more later on my 3 big goals and the budget that will help me accomplish these goals.

Monday, September 24, 2007

101 Goals

Earlier I posted that I wanted to try the 101 goals in 1001 days. Now I have come up with a list. Unfortunately I have only come up with 60 goals. I think this is fine and I will be doing great if I accomplish these goals. I don't know when 1001 days from today is, so I am using August 6, 2010 as my goal end date. I would like to accomplish this list by then. I will post a little about each goal and keep the list updated as I go along over time. The list is as follows:

1.) Emergency Fund exceeds $5,000.
2.) Retirement Funds exceed $10,000.
3.) Pay off new bike.
4.) Pay off engagement ring.
5.) Pay off credit cards.
6.) Ask Bridget to marry me.
7.) Plan and have wedding.
8.) Go on honeymoon to Europe.
9.) Purchase a house.
10.) Run a marathon under 3 hours 20 minutes.
11.) Establish a solid training plan utilizing running and biking.
12.) Compete in corporate Challenge bike race, 5k run, triathlon and duathlon.
13.) Run more road races. (Westport St. Patty’s Day, Groundhog run, Trolley Run, Hospital Hill, KC Marathon).
14.) Join a bike club.
15.) Start 8 minute abs and stick to it.
16.) Do 50 push ups a day consistently.
17.) Get house completely organized.
18.) Get files completely organized in file cabinet.
19.) Establish and stick to a new budget.
20.) Earn over $40,000 taxable income in one year.
21.) Post consistently on my blog. (At least once a week).
22.) Increase net worth over $15,000.
23.) Stay on top of car maintenance. (check tire pressure, change oil, carwash).
24.) Stay in touch with old friends.
25.) Take lots more pictures of family and friends.
26.) Visit my family more often.
27.) Save money in my Emigrant account for whatever “fun” thing I want at the time.
28.) Brush my teeth twice a day every day.
29.) Read at least one book a month.
30.) Paint bedroom and add second coat of paint to the living room.
31.) Finish H & R Block tax course.
32.) Work 2-3 years seasonally doing taxes for H&R Block.
33.) Work towards starting your own tax preparation business on the side.
34.) Go to Boston.
35.) Eat at least one fruit or vegetable a day.
36.) Don’t drink alcohol.
37.) Manage my checkbook register instead of relying on online statement from bank.
38.) Don’t purchase what I don’t really need.
39.) Don’t eat out so much.
40.) Clean the house with Bridget for at least 1 hour every weekend.
41.) Do something productive every single day.
42.) Start working from lists every week of stuff that needs done.
43.) Take Bridget out on a nice surprise dress up date at least twice a year.
44.) Keep a fitness journal up to date.
45.) Drink at least one glass of water a day at work every day.
46.) Keep my car clean inside and outside.
47.) Roll my PERA account into my IRA.
48.) Switch my IRA out of New Concepts fund at beginning of next year.
49.) Complete a century bike ride (100 miles).
50.) Save all lose change in tennis ball container. Cash in when full and put money towards emergency fund, debt repayment, or wedding planning.
51.) Form a list of birthdays and important dates of family and friends.
52.) Send out cards on birthdays and important dates to family and friends.
53.) Get a magazine subscription to Bicycle magazine and one other magazine that interests me.
54.) Take a vitamin every single day.
55.) Get two dentist checkups/cleaning every year. (March, September).
56.) Go to doctor for physical in two years. (September 2009)
57.) Only buy things on sale.
58.) Take Edgar on at least two walks outside every week.
59.) Begin to sell tickets on eBay for profits.
60.) Think of more goals for this list!

New Inspiration!

Ok, I've failed to post on here for the past two and half weeks. I'm sorry. I need to work on staying on top of posting at least once a week for an update of what is going on. Today I was checking out the The Simple Dollar blog and found a great idea that I want to try for myself. The author wrote an article about an idea which he read about on some other blog. The idea involves completing 101 goals in 1001 days. I like this idea alot and am going to come up with a list of all of my goals that I would like to accomplish in 1001 days. I'm not going to count out the days, I'm just going to pick an end date a little over 2 and half years from now. I will be working on my list this week and come up with as many goals as I can. I'm not sure if I will end up with 101 goals or not but I will have a long complete list of what I want to accomplish in the next couple years and hopefully this will get me inspired to get out and accomplish these things.

Wednesday, September 5, 2007

Cell Phones are Expensive!

I finally did it. Every month I look at my cell phone bill and it makes me soo mad because I have 500 minutes and only use about 200. I have sprint and the only option they have that would be any cheaper is 450 minutes for 5 dollars cheaper. I have put this off because of fear that I might go over 450 minutes but I am never even close. I also have told myself that it is just $5 and worth the extra 50 minutes.

So here's the deal. Using a savings calculator, I figured out if I save $5 a month for the next 35 years until I retire earning 5% interest and paying 28% tax then I will save $4,147. Cha Ching! This isn't a million dollars but I believe it is well worth lowering my cell phone bill for. Especially since I'm not using the minutes anyways.

These little costs can add up and I believe it is in my best interest to try to cut expenses as much as I can. Even little things that I don't think make a difference ($5 a month) can add up to some serious cash over the long run. And I am a fan of serious cash!

Working through the Budget Numbers

Ok, I finally worked through the numbers and have come up with a loose budget to try for starting NEXT month. I will go into October with a good plan of how my money is going to be allocated. I read a good article about budgeting and the author gave some loose zones to try to aim for. The author talks about spending 60% on committed expenses, 10% each on retirement, long term savings, short term savings, and fun.

Keeping this in mind I went to work on my own budget and came up with close numbers that I hope to stick to. My budget will consist of 65% committed expenses, 13% retirement, 7.5% emergency savings, 12% debt reduction (credit cards), and 2% fun. I want to try to lower my committed expenses but we'll see how the month goes. I think these numbers will be fine for awhile. Eventually I'd like to grow towards the 60,10,10,10 budget but for now I have credit cards that need paid off, I want to get a good head start on retirement, and I have too many monthly bills.

I plan on setting up a Fun account with Emigrant Bank to save my fun money into. The emergency fund is being saved at capital one. I also have planned to take out each month in cash what I am hoping to spend on groceries and entertainment. I am allocating $150 a month on each and hopefully I will actually come in spending less and the left over money will then go to emergency, debt reduction, and fun. I will start keeping track of all monthly expenditures and we'll see how this budget works out!

Friday, August 31, 2007

Goals and Values

I read an article discussing ones values and how their goals should be aimed at ones values. After reading through the examples of values in the article, I decided on a few values that are important to me. These are the things in my life that are most important to me and nothing else should matter. If keeping up with the Jones' doesn't adhere to my values, then there is no reason for me to want to try to keep up with them. Here goes then. The values that I find are most important to me include:

1. Family, Love - For me these two are the same value. My goals should be aimed at taking care of those that I love and that are my family. Buying that brand new luxury car doesn't help out my family much and I know that my girlfriend isn't going to love me any more then she already does. Therefore, I should be and am fine driving my current used vehicle for hopefully the next 10 years.

2. Freedom, Peace of Mind, Security - I believe these are all one in the same and are very important for me. This involves having an emergency fund and a good amount of money for retirement so that I don't have to worry about money. There are plenty of other things in life to worry about such as family and health to where I don't need to worry about money. I don't want to have to worry about whether I'm going to be able to pay the bills this or next month if something bad happens.

3. Health - This is something that has become very important to me lately. I am in love with a girl with lots of health problems. These aren't things that can be controlled but it is important to me that we both take care of ourselves and don't do anything destructive to our health and cause any unnecessary problems.

4. Happiness - I value being happy. I have a family that loves me and that makes me happy. I have a girlfriend who loves me and I can love and that makes me happy. It is important to be happy in life.

5. Balance - This is my last value. I want to achieve a balance in my life between family, friends, myself, and work. If I am ever too involved in one where my other relationships start to suffer then I will not be looking after this value.

With these 5 values in mind I want to come up with some goals. I've written about goals once before and I want to write about them again and come up with more clear goals.

1. Increase net worth - This is still my top goal and this goal will come with the achievement of other goals. A net worth of a million dollars is a nice number to think about. However, this goal goes towards the value of security. In actuality, a net worth of $100,000 might actually provide me with the security I seek.

2. Build emergency fund to 6 months expenses - The number I'm going to put on this goal is $13,944. That is 6 months worth of net pay. This also goes towards security.

3. Reduce credit card debt. Have this paid off completely and never put more on my credit card again that I can pay off each month. Security value.

4. Purchase a home - This goes towards both security and love. I want to purchase a home that both myself and my girlfriend love and will start our lives together in. This will also bring me happiness to have a home of the both of ours together. I want to save up for a down payment on a house. I believe we can find a house we are happy with between $135k and $190k.

5. Marriage - This goes towards family, love, and happiness. I want to start saving up for an engagement, wedding, and honeymoon. I have no idea of a monetary value on this goal but any money saved towards this goal will help.

6. Happiness Account - I want to set up an account that I will call my happiness account. I want to put away a small amount automatically for things that I will want to buy such as a LCD tv or a future car in 10 years. Having the cash to pay for these things will mean I don't have to incur debt for such purchases that will bring me happiness.

These are currently the goals that are most important to me. Previously I had wanted to pay my car off early. However, I feel that with an upcoming wedding and the want of owning a home, this can be put off and the car will be paid off when it is paid off.

Need of a Plan

I've decided that I need a plan. I have several goals and I am going to need a plan of action to put in place to achieve these goals. Therefore, over the weekend I want to figure out exactly what my goals are and figure out and begin to implement a plan for achieving these goals. This weekend I would like to come up with a rough budget to try to stick to for the month of September. I would the like to open up a couple more online savings accounts to give me a place to save for separate goals. This will involve a little bit of math to figure out what I can afford and how much I can hope to save towards each goal. I will set targets for each goal and track my progress of each goal separately. This might take me until the end of the month before I have been able to implement my plan and be heading down the path towards achievement of my goals and dreams.

Net Worth

I have updated my net worth on NetWorthIQ for the complete month of August. I feel this gives a better snapshot of where I am at the end of the month. Hopefully the end of September will see a higher net worth number. I would like to see my credit card debt number go down and my cash and stock numbers go up. The retirement number should start to go up because I will also start contributing to my 401k the second pay period of the upcoming month! My big concern is the credit card debt. I think I am going to put my Capital One credit card away for awhile until I can get the balance down under $2,500. In order to do this I hope I will spend less if I am not using my Capital One card. This weekend will be a spending fest though because I will be going up to Truman to visit some friends and will be eating out and drinking some beer. I will try not to spend too much.

Sunday, August 26, 2007

What to do on Weekends!

For me, weekends are the toughest times to try and not spend money. Weekends are two whole days off work and they can get fairly long and boring if you don't do anything. Unfortunately for me, it seems like doing something over the weekend is going to cost me money.

For example, lets take a look at my spending this weekend. On Friday night I hit up the Kansas City Royals game with one of my friends. Here I spent $14 on my ticket and about another $10 on parking and food. Luckily it was buck night so it only cost me about $5 for some hot dogs and sodas. Next comes Saturday. Saturday I did pretty good as we didn't do much. In the afternoon we watched a movie recieved from Netflix. This subscription costs $10 a month but I feel it is well spent because it usually keeps us in on a Friday or Saturday night every week and gives us entertainment. Saturday night we went out to eat but my girlfriend paid because it was her turn. Today, I we are going to the grocery store which we do every weekend. This is unavoidable because we need food. I would also like to try to go to Target because I have a couple things I want to buy. This will cost me probably around a hundred dollars for the filing cabinet and paper shredder I want to get. I have a gift certificate to Nebraska Furniture Mart but we are going to take that to pay for our furniture we bought a couple months ago that was financed with 18 months no interest.

So you can see my problem. On weekends it is hard to find things to do that don't include shopping and spending money. Next weekend I am going back to my college town for an alumni event but the weekend after I think I will try to see if I can get by without spending too much money. I think some good tips for us to do on weekends to keep from spending money are to do chores on the weekends. I mowed the yard Thursday night, but it would be better to wait until the weekend to do this. Cleaning the house will also keep us distracted. Doing our grocery shopping on Friday night will keep us busy that night so that we aren't wanting to go spend money. We need to try to focus on saving money.

Saturday, August 25, 2007

The Importance of a 401K

In September I will have been working for my company for a year. This means that I am now eligible to take part in our company's 401k plan. I have friends that think it's ridiculous that I am so excited to finally be able to contribute to a 401k. What do I need to worry about retirement for? I'm only 25 years old! Well, for me it's not just retirement I'm thinking about. The 401k is a component of my wealth and as my 401k grows, so does my wealth. Since I receive a nice match from my company for my 401k, my wealth will grow at a much quicker rate then if I am just putting this money into a savings account or even an IRA.

At the beginning of the year I began contributing 5% of my salary to a IRA. I decided to do this so that when the time came to contribute to my 401k I would be used to the 5% less in my paycheck. At the same time, I would get a head start in retirement savings and now I have a little over $1,500 in retirement savings already. The plan was to contribute to the IRA until I was eligible to participate in the 401k and then switch the funds over. Now, I have decided that I can do some more adjusting and am going to continue contributing to my IRA while also contributing an additional 5% to the 401k. If I put in 5% in the 401k, my company will put in 4% of my salary as a match which is the full match. Here is the good part. With my contributions and the company match, my retirement savings will grow to just over $921,000 by the time I'm 60 years old. This is assuming an 8% rate of return. If I decide to start contributing more or my annual salary goes up from it's current level (which it better) then I will have even more money. If I decide to wait until I'm 30 years old before contributing, then this will change my end amount down to just over $599,000. That's a huge difference of $322,000!! Wow, I know I will be glad I am getting started right now. And for those that argue that a million dollars in 35 years won't be worth as much as it is right now, yes you are right. But, a million dollars in 35 years will be worth more then half a million dollars in 35 years. That is a promise.

The lesson of this post is if you have the opportunity to contribute to a 401k then get started right away. If you don't have the opportunity, then open up an IRA and start contributing what you can.

Friday, August 24, 2007

Good Article of the Week

I have decided while reading many other blogs that I would like to pick out one or two articles each week that catch my eye and talk about them.

This week, Advanced Personal Finance wrote an article titled "The Cost of Prepaying." In this article the author writes about how they prepay thier mortgage even though they are told it is not the financially "smart" thing to do. The author figures out some math and comes up with a number of $78,000 cost for prepaying his mortgage. However, this is based on certain assumptions like getting an 8% return from the market for your money that could or could not happen.

I agree with the author in this article. Anyone who has read a book by David Bach (The Automatic Millionaire), knows he is an advocate of paying off your mortgage early. By making one extra payment a year you can decrease the life of a 30 year mortgage by 8 or 9 years or something like that and save thousands of dollars. Bach doesn't figure out how much you would have if instead of making that extra payment, you put that money into the market and earned a higher return. I don't think he needs to. There are a couple reasons I like the idea of prepaying your mortgage. Keep in mind I don't have a mortgage so I can't actually do this yet and my mind may change when I do buy my first house. But for now, I like the idea of prepaying your mortgage because for one, I hate debt. I don't like knowing I owe someone else money. I am prepaying my car and I will prepay my mortgage. By prepaying I am going to save thousands of dollars in interest and will be able to stop paying 8 years earlier then if not prepaying. At that point, I will continue to make these payments, however they will go to myself instead of the bank.

Another reason I like the idea of prepaying is brought up in the article. If I have a mortgage with 7% interest, then I know I am saving 7% on my money by prepaying. Lets say I take that $1,500 extra payment and put it in the market instead. Well, I will need to be sure that I am going to earn over 7%. I can't be sure of this. If I could be sure then I would take my emergency fund which pays me 5% and put it into the market. No one is telling you to do this. Why not take the sure return instead of gamble for a couple extra points return in the market? Why not build my equity faster and owe less to the bank when and if I decide to sell? If I decide to stay, then I completely own the home sooner and feel better about myself. In the end isn't that all that is important? Money is a good thing and I am obsessed with it. But like they say, money can't buy you happiness. I need to do what makes me feel the most comfortable and secure. In the end, I think I will have the most security if I don't have debts hanging over my head. Let me know what you think!

Thursday, August 23, 2007

Confessions of a Street Addict - Book Review

Last night I finished Jim Cramer's book "Confessions of a Street Addict." I enjoyed this book for the entertainment factor. "Confessions of a Street Addict" is more of a biography of Jim Cramer starting with his younger days when he was more interested in reading the stock quotes in the paper while other kids his age were reading the comics or sports. The book goes up through Jim Cramer's retirement from his hedge fund. He is still involved with his startup dot com

I know alot of people don't like Jim Cramer. However, if you watch is show, alot of people do. I'm not really leaning one way or the other. I think he is an interesting and entertaining personality. His show, Mad Money on CNBC is entertaining, but I would never take stock advice from Cramer.

I didn't really know what the book would be about but I usually read books looking for some investing tips. I didn't find any from this book. Cramer's hedge fund made money in a way that the average investor would not be able to do. I don't have access to all the companies CEO's. I can't call up the analysts and talk to them on the phone to get a feel for where a company is going. I don't have a man down on the trading floor that can give me an idea of investor sentiment. However, even though I don't get much investing advice from this book, I was interested in reading about how Cramer got started. I found it interesting reading about his struggles for control at

If you are looking for a book to gain some advice on investing, I would suggest looking elsewhere. If you are looking for an entertaining book about Wall Street, gaining some insight into the hedge fund business, and a biography of one of the wackiest personalities on Wall Street, then I think this is a book you would enjoy. Let me know what you think.

BRLC Questions

Well, I thought BRLC was coming out with earnings today but instead when I checked on Marketwatch to see the news I see an article stating that BRLC will release Fiscal 2007 and 4th quarter earnings on September 11. I'm not sure if this is a change and they pushed back the release date or if I was wrong in the first place. I'm hoping for the first.

Another article about BRLC caught my eye as well. BRLC sells $20 million in shares to TECO Electrics for $6.4852 per share. This may be a good move for BRLC entering into a strategic alliance and raising some money to support thier elevated growth which according to the article includes expanding thier manufacturing base and supporting efforts to continue elevating awareness of the Olevia brand among consumers worldwide. All of this is great. However, I feel like they sold off part of the company for $6.4852 per share when the shares yesterday were valued at $6.96. Today shares have plummeted so far to $6.40 a share or down 8%. Apparently $6.48 is more along the lines of the correct value of this company.

Either way, I have sold covered calls on this position and will remain in this position at least until expiration which isn't until September 22 so I shouldn't worry to much about this peice of news. I will continue to look forward to the earnings release.

Disclosure: I am long BRLC.

Wednesday, August 22, 2007

The Markets and the Masses

The markets. How do they work? When investing, we are told to look for solid companies with good earnings history, solid management, and strong growth. Try to find the companies that are financially stable with strong growth in earnings if we are a growth investor or possibly a low P/E if we are a value investor. This is great and I believe over the long term if you stick to your guns and look for good solid companies with a nice history of earnings and dividends and growth and proof that they have withstood some challenges and are still going strong then you will make a good investment over the longer period. Money will come to your pockets. It's just going to take 10 or 20 years of slow growth of your money.

Not for me! I want money now! Sure my retirement account is for 35 to 40 years from now. That's fine. Let those fund managers worry about investing for the long haul. But in my stock account, I want to see results. I want them fast. I want to see a 20% plus return this year and every year following no matter what the market is doing. This morning I was reading the book "Confessions of a Street Addict" by Jim Cramer. I'm not really a fan of Cramer. I'm not going to go out and buy everything he says to buy and sell everything he says to sell. His show on CNBC is a circus and he's the clown. He's just there to entertain us and it is entertaining. I'll admit if I'm flipping the channels and his show is on, I might pause to check it out for a few minutes. It grabs your attention. His book is interesting. It goes through his biography basically which I find interesting. It's not really helpful on my journey towards wealth but as a form of entertainment, I enjoy reading it. This mroning I read a section where Cramer talks about the markets are all about psychology. The underlying fundamentals don't matter. When you are trying to make money in the short term, you need to be able to understand the psychology of the masses of the people. And I couldn't agree more! Every little piece of news that comes out affects the price of this stock or that stock. Good earnings and the stock jumps. Bad earnings and the stock falls. It doesn't matter what the company has consistently done. Coca Cola is still going strong and not too worried about the current sub-prime mortgage crisis. Yet COKE fell along with all the other stocks this past month because of sub-prime credit worries.

In the short term, if you pay attention to the news and market psychology, you can make money. I don't have enough capital in my stock account to take advantage of this. I can't put $1,000 into a stock and watch it rise 1% like I knew it would and sell it for a quick profit. With the commissions I pay, I'd lose $4 on this trade. But if I had $10,000 and did the same thing, I'd make $86. So I'll stick to my covered call strategy. Until I have more money. Then I will use some capital to trade on the news and begin to bring in some good returns quickly.

If you have an opinion on this let me know. If you have enough money to trade, the markets up today, why not take out a percent or two. Go get yourself some returns. I'll just continue to hope that my covered call position will make money over the next month. Until next time, I'm a dreamer.

Monday, August 20, 2007

Ouch!! Stop the Addiction!

Ok, I am addicted to eating out! I knew this already but today my credit card statement came in the mail today. I put everything on my credit card in order to get the air miles rewards. This month I spent way too much money on everything but when I look closely it appears that most of the transactions are to restaurants. I know I eat out almost every day for lunch and frequently for dinners as well especially on weekends. I decided this was an area where I need to try to cut back and spend less. This will help boost my net worth month to month.

In order to get an idea of how much I spend and what my goal should be, I went back the past 3 months statements. Here are the results:

June - $276.01 eating out or 26.99% of total expenditures.
July - $133.04 eating out or 19.95% of total expenditures.
August - $185.56 eat out or 20.06% of total expenditures.

My goal is to cut this spending in half and spend between $50 and $75 per month eating out. I also need to try to cut the whole bill down. My august statement showed transactions of $924.97. My goal is to cut this down to under $750 per month at first and then try to keep reducing it so that I am spending less then $500 per month. In order to do this I need to be aware of my goals each time I think of spending money and ask myself if I really need to make this purchase.

Bank of America!

In my last post I discussed some different securities I was thinking about putting the remainder of my money in my stock account in. I decided to put my money into Bank of America. I liked Bank of America's low P/E and the higher dividend yield offered. Bank of America was purchased for $51.20 a share. When looking at the chart for the past 2 years I noticed the stock traded typically between $55 to $80 range going up and down within that range frequently. I'm hoping the stock will turn around and head back up towards $80 soon. I look at this as a conservative play that hopefully won't be too volatile.

I also sold 2 call options for BRLC. I sold the September options with a strike of $7.50. I collected a premium of $0.25 for each of these options.

Disclosure: I own shares of BAC and BRLC. I am not a professional advisor so do your own research before purchasing any stocks.

BRLC and Choices!

I purchased 100 shares of BRLC at the open today for a price of $5.90 per share. I plan on waiting until mid day and then selling a call. Hopefully we see the share price rise and I can get a higher premium for the 2 calls I will be selling.

With my remaining money in the account, I am debating on what to do. I am considering a few different options. The first option is to hold the money in cash. There is over 200 dollars though and I don't want to hold that in cash unless it was in my money market account. The stocks I am considering are as follows:

COF - Capital One Financial. I believe this is a good company. I have my money market account and credit card through capital one. Capital One was trading this morning at $69.10. It has a PE of 10.5 and a Debt/Equity of 1.19. Capital one gives a ROA of 2% and a ROE of 11.7% The dividend yeild is 0.16%.

BAC - Bank of America. Bank of America is rated a buy by S&P and is the official bank of the NFL. Lots of publicity this fall and winter for NFL fans. BAC traded at $52.01 this morning with a PE of 10.8 and a D/E of 4.05. They have a ROA of 1.5% and a ROE of 16.6%. The dividend yeild is 4.95%.

AA - Alcoa is Dow Jones 30 company that I have been interested in for awhile. AA trades at $33.87 with a PE of 13.4 and DE of 0.47. The ROA is 6.9% and ROE is 14%. They return a dividend yeild of 2.04%.

I feel all three of these companies would add some stability to my portfolio. They are all companies that have been around for a long time and will pay a dividend. I will see where they trade through the day before making my decision. Stay tuned!!

Disclosure: I own shares of BRLC. I do not own shares of BAC, COF, AA yet. I am not a professional so do your own research before purchasing stocks.

Sunday, August 19, 2007

BRCD or BRLC? That is the Question!

As I mentioned in my last post, I am deciding between two covered call positions to take with the extra cash in my stock account. Here I will discuss the numbers and facts of both positions and state my decision.

BRCD - The first idea I am considering is Brocade Communications (BRCD). BRCD is in the computer storage devices industry in the technology sector. They design, develop, market, and sell data storage networking and management solutions. BRCD closed friday at $6.49/share. In the news is the SEC charging BRCD's ex-CEO and CFO with options backdating and fraud. This case has dragged the stock down considerably and will continue to be a drag on the stock until resolved even though these execs have been removed from thier powers. BRCD has quarter 3 earnings expected at .11 per share. Earnings are expected to be released this coming Wednesday. BRCD however, has announced that they have revised quarter 3 revenue guidance below analyst estimates. Usually a bad sign. BRCD has a PE of 23.1, a PB of 4.4, PS of 2.7. ROE is 8.4%, ROA 5%. They have a debt/equity of .14, current ratio of 2.07 and quick ratio of 2.02. Analyst rate BRCD at 2.39 which is slightly better then the 2.47 and 2.63 ratings from 4 and 12 weeks ago respectively.

BRLC - The next idea is Syntax Brillian (BRLC). BRLC is a designer, developer, and distributor of HDTV's in LCD format. They sell under the brand name Olevia. BRLC also sells Vivitar cameras. I currently own 100 shares of BRLC. In the news, BRLC recently added new sales channels in Chile, Columbia, and Mexico. Earlier in the year they expanded into Brazil and Venezuela. Quarter 4 earnings, to be released on Wednesday, are expected to be 0.08 per share. On July 16, management reaffirmed Q4 revenue guidance and raised 2007 calendar year guidance. BRLC has a PE of 24.9, PB of 5, PS of .9. The ROE is 14% with ROA at 6%. Debt/Equity is at .48, current ratio of 1.33, and quick ratio of 1.17. Analyst rate BRLC a buy at 1.17. Four weeks and 12 weeks ratings were 1.43 and 1.5 respectively. Analysts are getting more bullish on this stock.

After doing my research, I have chosen to put my money in BRLC. They have more positive news coming out. Thier numbers aren't quite as good as BRCD but close. They have a higher ROE and ROA which I like. Another reason I like this position is because I can sell two of the same calls for less commission. The main concern I have on this position is having most of my account in this one position. After entering this position, I will have about $300 to put into another position that is not a covered call. I'm not sure yet where this will be. Possibly sitting in cash for awhile.

Disclosure: I don't own BRCD and do own BRLC. As always, do your own research and don't just go by my opinions. From my past performance, I'm not a very reliable person to listen to for stock advice.

My Stock Account

Back in June I opened up my first real stock trading account with Scottrade Online Brokerage. At first I wasn't sure what trading strategy I wanted to use. I have always been a fan of Warren Buffet and value investing. I am also a fan of "The Little Book That Beats the Market" and it's magic formula investing. I have had a mock portfolio made up of securities using the magic formula and it is done incredibly well. When I opened my account I bought a couple securities trying my hand at both of these methods. I lost money. My first purchase was Aspreva Pharmaceuticals. I lost 16% of my investment. Next I owned IVAC and FLIR. I gained around 2% on FLIR and lost about 14% on IVAC.

After my experience in these securities, and reading a little more on the internet and in books such as Market Wizards, I have decided once again to change my strategy. My current strategy that I am using and used in a position for a month now is covered call writing. Covered call writing involves the purchase of 100 shares of a company and selling (writing) a call on the same security. I believe this is a great strategy to make slow but consistent gains throughout a year. A 2% gain every month will put you up 24% on the year. I am getting ready to read the book "Options as a Strategic Investment" to make sure I know everything I can about this strategy. There are also a couple blogs I like to read about other people using this same strategy. Unfortunately with my low capital in this account, I am limited on the positions I can take. Securities have to trade in the under $10 range in order for me to be able to purchase a hundred shares.

Currently my account looks like this. I currently own a hundred shares of Syntax Brillian (BRLC) and as of Saturday my option I had sold expired. Last week I sold out my positions in IVAC and FLIR and now have funds of just over $800 to invest. I am considering two covered call option positions to get into. My next post will discuss my research on these two positions and my decision. As for my account. I have put in a total of $1,730 into the account. The current balance is $1,419.48. This amounts to a $310.52 loss or 17.95% since the beginning. This is terrible and I hope to reel in these losses by the end of the year to hopefully even or positive. I will update each month to see how much I am up/down for the month and overall. Since I am trying out a covered call strategy, these updates will come after the expiration date for options each month.

Saturday, August 18, 2007

The Plan

In my last post I talked about my main personal financial goals. Here I want to discuss they way I hope to go about achieving these goals.

My first goal is growing my net worth. I would like to have $5,000 by the end of the year. In order to do this I plan on saving more and paying down credit card. I believe this attainable especially with my enrollment in my companies 401k in which I will recieve a match from my company. I plan on putting in 5% of my salary to get the full match which is 4% of my salary. I also plan on continuing to contribute to my IRA 5% of my salary which is what is currently going in there. My net worth will grow as I grow my retirement accounts, emergency fund, and stock account. I also must decrease my car loan and credit card loan. My strategy to increase my stock account is by writing covered calls. I will post more on this later. I also need to find other ways to accumulate money besides my normal salary.

My second goal is to build an emergency fund of $5,000. I would like to have $3,000 by the end of this year which is about another $1,000 from what is currently in there. With 4 months left in the year I will need to put in $250 a month. Not sure this will be attainable but will try my best. I probably won't be able to consistently put in $250 per month and will have to catch up at end of year. This will also help boost my net worth.

The third goal is paying down the credit card debt. The best way to do this is by not putting so much on the card in the first place. I have been spending too much money recently and plan on cutting back. One huge thing that I blow too much on is eating out. I want to cut this down dramatically and hopefully I will find that I can pay the card off quicker.

Fourth, paying my car off early. The best way I know to do this is by adding a little extra each payment. I have put this on hold recently (past month) because of extra money being spent for moving. By the end of this year I want to start paying more towards my loan again.

The last goal is purchasing a home. I won't feel comfortable purchasing a home until I have an emergency fund built up. Is $5,000 enough to make me comfortable? No! But more comfortable then $2,000. Ideally my stock account and emergency fund account combined will be close to $10,000 when I plan on looking for a house.


Well, I am a believer that in order to go forward and make progress in life we must have goals. I set goals in my running to try to run faster. I had a goal to complete the Kansas City Marathon and to run it faster then I ran my first marathon. This goal has been sidetracked due to injury and it is time for a new goal in the running department. Currently I am working on letting my ankle heal. Hopefully by September I will be able to begin running again. Once I am out the door running again, I will be able to figure out future goals. Until then, I want to make sure I give my ankle enough time to completely heal before trying anything.

Another area of my life where it is important for goals are my finances. Will I save money if I don't have a goal to accumulate a certain amount of wealth? Probably not. Therefore, I need to set out a group of goals and track my progress each month. Here they are:

1. My current net worth is $2,222. Long term I want a net worth of $1,000,000. Short term I have a goal to end the year with a net worth of $5,000. In five years (December 31, 2012), I would like to have grown my net worth up to $50,000.

2. I currently have an emergency fund of $2,000. I want this fund to grow to about $5,000. Not sure on a timeline for this goal but I have to believe the sooner the better. By the end of the year I would like to see closer to $3,000 in this fund.

3. I have credit card debt over $3,000. I want this paid off. By the end of this year I would like to have less then $1,500.

4. I want to pay my car off in 3 years. I've paid on the car for almost a full year so this really only gives me 2 more years to pay off the rest of the loan. We'll see how this following year goes.

5. I want to purchase a home. I am currently a renter and would like to be in my own home putting money towards the mortgage instead of in my landlords pockets next year. If this is unrealistic then I will shoot for the year after as a definite deadline.

I believe this pretty much covers all of my financial goals. In my next post I will discuss how I plan on working towards the attainment of these goals! Stay tuned!

Friday, August 17, 2007

Good Morning!

Well, today is officially the second day of the blog! I have added a couple new features which I am excited about. The first feature I added is counter that shows the number of visitors we've had here at Dreaming of Money. The company also sends me a weekly report showing me weekly numbers of how many visitors have stopped by. Right now, this will only be me. In the future however, I hope to see more people stopping by to read my blog. The second new feature I added was my NetworthIQ chart. This is a site where you can put in your numbers and track your net worth from month to month. The chart doesn't look right currently because I only have one month of data in. After a few months it should start taking shape hopefully in an upward slope showing the growth of my net worth. This will be a good site and good way to chart my progress towards greater net worth from month to month and see how I am doing in my quest for wealth!

Thursday, August 16, 2007

A Little About Me!

Well, if anyone decides they would like to actually read this blog then I thought they might want to have a little bit of an idea of who I am. I am a recent college grad who works for a mutual fund company as a fund accountant. I really enjoy my job. It is probably the perfect job for me considering I get to look at investments all day and account for the funds owned by my company. The company offers great benefits and has kept me very happy since I started. I started working for this company about a year ago. Before that I tried a brief (1 month) stint at being a Financial Advisor for Ameriprise. This didn't work out! They just wanted me to cold call and get clients and no sane person wants to hand over thier finances to some 25 year old kid just out of college with no experience. I am interested in personal finance but I can't advise people if they don't want it. I didn't like cold calling and the pressure and long hours so I quit and moved home until I found my current job (career) which has me very satisfied in the present.

I just recently moved into a rental house with my girlfriend. We have been dating for a little over a year and things are going wonderful. We have a little dog named Edgar to give us some joy.

I like to run. I ran cross country and track in high school and college. I have ran one marathon (San Diego Rock N' Roll Marathon) in 3 hours 25 minutes and would like to complete another. I was training for the Kansas City Marathon this upcoming fall but have been sidelined with a twisted ankle the past 3 weeks and am going to have to pass on the run.

I enjoy reading personal finance books and investing books. I am very interested in stock picking and investing.

Hopefully that's enough about me. For future plans, I will post my goals, my investing, book reviews, and other personal finance information I find worthy of this site. Keep checking back for updates.

Dreaming of Money

Wow! I have finally created my own blog. This is going to be a personal finance blog where I write about anything personal finance. I decided to write this blog after reading others and thinking it was a good idea. This will be a good way for me to keep track of my personal finance goals and net worth. Finally, here is a place I can express my dreams and goals, establish ways to achieve them, and be held accountable for my actions towards achieving these goals.

Things I want to do with this blog are keep track of my own personal net worth. I would like to keep track month to month how much I am spending or saving and how my net worth is changing. Ideally it will be going up and I will be heading towards my goals (which will be established in a later post). I'd also like to give my ideas and opinions on different topics. I would like to blog about different books I have read. I will blog about different investments. Hopefully, in the end, I will have created a blog that others enjoy reading and find helpful in thier own quests for wealth.