Roth IRA

Blood On The Streets

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Wow, I just checked our retirement accounts after having not looked at them for 1 week and they dropped a total of another $3,000. So, we did what any sensible young couple would do and contributed $500 into our Roth IRAs.

I like this quote from William Bernstein, author of “The Four Pillars of Investing”:

“A young person saving for retirement should get down on his knees and pray for a market crash, so that he can purchase his nest egg at fire sale prices.”

I don’t really want to see a market crash, but when there is blood on the streets, we’re buying!

Income Statement

September 2009 Income Statement

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While our net worth dropped $3,310.51 in September, we nevertheless did a good job of keeping our expenses down (click on spreadsheet).

Our total expenses were $6,894.11, surprisingly low considering we purchased a new table and chairs ($329), paid off the balance of Car 1 so we could sell it ($600), and had to have some plumbing work done ($75).

In addition to our regular paychecks, we were able to pull in other income of $265.01 this month from two credit card rewards, a small refund check, and my wife’s reimbursement. Our interest income for September was $29.06.

Next month should be a low expense month since I will be on business travel for two weeks.

Net Worth

September 2009 Net Worth Update (-$3,310.51)

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It will be interesting to see how many blogger’s actually saw an increase in their net worth in September. It was a very rough month, and our net worth took a huge $3,310.51 drop to $38,897.21. On the bright side, long term, the depressed stock market should help put our investments that much further ahead when it comes time to retire, since we’re buying everything “on sale” right now.

What worked:
We finally sold Car 1 (my truck). This will allow us to save an additional $293/month in car payments. It was a blessing to sell the truck before the economy gets any worse.

What did not work:
Our retirement accounts (401k’s and Roth IRAs) were hit hard, going down a combined $2,660.13 since last month, even though we contributed a total of $713 in September. We also pulled money out of savings to pay off Car 1, since we sold it at a loss. We’ve slipped off track for hitting our 2008 net worth goal of $47,800 in December. We’re going to work hard to achieve the goal, but if the market remains depressed, we may miss by a couple thousand dollars.

Next month:
October should be a low expense month. We don’t have any large bills due and I will be out of town for 2 weeks so our fuel and food expenses should be less. We’re going to work on stockpiling more cash in the coming months to give us more of a cushion during this economic uncertainty.

Credit Scores

Credit Scores Creeping Up

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I neglected to mention that I ordered an Equifax credit report for my wife and myself last month. I had meant to run our credit reports more often, but have totally neglected this. Thankfully, the reports came back without any issues.

I also ordered our credit scores. Mine was 780 and my wife’s was 764. We have been able to steadily increase our scores to the current level (click on the tables below to see our current and previous scores). The only reason my wife’s score is lower than mine is because she does not have enough credit history.

I hope to run our reports with the Experian and TransUnion in the next 6-8 months.

My credit score history:

My wife’s credit score history:

Investing

Stock Options Package

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The company I work for split into two companies a couple of years ago and both are still privately owned by the same person. Since the split, the Owner has hinted that some key people in management may receive stock options down the road.

My company has provided stock options in the past, but not while I have been with them. The recent splitting of the organization resulted in a new Board of Directors and a fresh look at offering a stock option plan. I found out last week that seven of us received a stock options package that will go into effect next September.

I was provided a large packet explaining how the program works and that I can exercise the option to buy up to 16 shares a year (beginning 9/1/09) for 5 years at $1/share. The current value of each share is $500. So, I can obtain up to $8,000 worth of stock each year for only $16.

Historically, when shareholders have left the organization, the company has bought out their shares at the current book value. There’s even been a couple of cases of existing employees selling shares back to the company at a slight discount to get access to the money. In fact, my old GM sold back almost $200K of his shares last year because he wanted to remold his home.

I’m really happy that my company included me on this opportunity, not only for the financial gain, but also because it’s nice to know my hard work is appreciated. This is another piece in the puzzle to reach our early retirement goal in ~19 years.

Debt

No More Truck

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We’ve finally sold my truck!

We negotiated with the buyer on a price of $12,600. Less than the $12,999 we wanted, but we were eager to quit wasting time. We’ve had four previous offers on the truck and all flaked out. It was starting to eat up more time that I had planned. In addition, the truck was smogged 2 months ago because we thought we had a guy that was serious about buying it. Since the smog certificate is only good for 3 months, we were working against the clock. Our 8 week ad on AutoTrader.com was also about to expire. It would have cost us ~$100 to get another smog certificate and place a 2nd ad on Auto Trader.

We had to pull $640 out of savings to pay off the balance we owed, but with the truck finally sold, we can begin saving an additional $293/month that was going to the truck loan.

Now, our only debt is our condo mortgages, 1 auto loan, and 1 student loan.

Deals and Bargains

Great Deal On A Dinning Table

Once again, my wife hooks us up. We’ve wanted a new dinning table for awhile, but have been waiting until we could buy one that was nice enough to take with us when we get a house down the road. She found a beautiful wood table that regularly costs $500, on sale for only $250. The table includes a couple of leaves, so we can scale the size up when we get a house. The 4 wood chairs she picked out were normally $120 each, but they were marked down over half price.

Unfortunately, there was a mix-up at the store and they neglected to load one of the boxes for the table. After getting home, my wife discovered the error and called the store to ask that they deliver the box at no charge since it was their mistake. The store offered to discount the table further, if she would be willing to come back to pick up the box. She agreed and picked up the final box.

What started off as a table and chair set that cost $1,000+ (with tax), was discounted down to $324 (tax included). What a bargin!

Income Statement

August 2008 Income Statement

August was our 2nd lowest month of expenses in this year (click on spreadsheet below). My wife was out of town 2-1/2 weeks for business and I was out of town 1 week for business; all of this business travel helped save us some money. While my wife was out of town, I was able to use her company car and gas card, saving us $125-$150 in gas.

We had another strong income month, which is especially nice when combined with a low expense month. My wife earned an “extra” third check this month as well as a $236.16 commission from her old company. We also received a $200 wedding gift that was totally unexpected, but appreciated, since we have been married a couple of years. With our savings account balance rising, we’re starting to see an increase in interest income; this month we earned $28.05 in interest income.

Next month my wife may receive her 1st quarterly bonus, although if she receives anything, it will be a much smaller bonus than what she can expect down the road. We should also earn cash rewards from our Citi credit card and HSBC credit card. The only major expense planned is a few hundred dollars for a new kitchen table and chairs.

Net Worth

August 2008 Net Worth Update (+$3,434.28)

August was another good month for our net worth. It increased $3,434.28 from last month to a new total of $42,207.72.

What worked:
I received my annual company profit sharing this month to the tune of $730.72, my wife received an “extra” third paycheck, my wife’s 6% 401(k) contribution (with a 25% match) began this month and we contributed a total of $400 to our Roth IRAs.

What did not work:
We still have not been able to sell my truck, but otherwise, no complaints.

Next month:
September should be a pretty straight forward month. We have not large expenses forecast or any extra money coming in. Actually, I take that back. There is a chance that my wife may receive her first quarterly bonus from her company, but it will likely be a fraction of what she can hope to receive after she has been in the field awhile.

Debt, Goals, Investing

What A Difference A Year Makes

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Last August, I posted about how our financial situation had significantly changed for the better from two years prior. What’s interesting about that post is that 10 days later, my wife was laid off from her job and we faced a potentially challenging time. Less than a week after being laid off, we were blessed with her receiving a new job, saving us from what could put our financial situation in dire straits.

Well, now I’d like to take a look at August 2007 compared to August 2008 (see below). Again, we’ve been greatly blessed and have seen our financial picture improve more than we could have even hoped. We’ve continued to increase our retirement investments and improve our savings. We’ve also eliminated our credit card debt and improved our salaries. Another major change from last year is that my wife now has another new job in a field that she is truly passionate about. Her new job has so many benefits, I can’t list them all here. The short list is company car and gas card, 401(k) with company match, and cell and internet reimbursements. What you can’t see in the breakdown below is that her annual bonus should be ~$20,000!

Our path to financial independence and retiring early.