Net Worth

October 2008 Net Worth Update (-$3,598.11)

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As with most people, October was another brutal month for our net worth. It decreased $3,598.11 from last month to $35,299.10, a 9.25% drop (click on spreadsheet below).

What worked:
We both still have our jobs. Seriously, with unemployment at 7.7% in California, we are blessed to be working. We deposited $661 into our savings account and subsequently pulled $1,000 out of saving to open a stock trading account. We purchased 15 shares of Toyota Motor Corporation (ticker TM) for $63.71/share It is currently trading at $76.09/share.

What did not work:
Our retirement accounts declined by $4,536.50, even though we contributed a total of $1,513 to our 401(k)s and Roth IRAs. No big deal, we’re not touching this money for 20+ years. I’m glad we were able to put some extra money toward retirement while the market is cheap.

Next month:
We have a couple of big annual bills due next month: $1,157 for auto insurance, $439 for condo insurance, and $1,169.14 for property taxes. We should be able to cover most of the insurance bills by cashing in 5 days of my vacation and the property tax bill will come out of savings. I will also be out of town ½ of November on business, so our food and gas should be below budget.

Money Musings

We Bought A Robot

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We decided to take advantage of technological advancements and purchased an iRobot Vacuum Cleaning Robot from Costco for $279.

This thing is as neat as it sounds. You input a cleaning schedule and it crawls around the house daily vacuuming the carpet and travertine. We were amazed how much more stuff the robot picks up because it can reach under places we can’t get to with the vacuum. It even has a side brush that reaches into corners to remove dirt, hair, etc. Another cool feature is that it comes with two small towers that serve as virtual walls. The vacuum will not pass the invisible beam emitted from the tower. We found out how important this can be when we left our front door open and the robot scaled the door jam and cruised down our sidewalk. Thankfully, my wife caught it before it ventured too far. This thing even finds its way back to its docking station to recharge once its done vacuuming. How cool is that?

My wife has bad allergies and our dog shed quite a bit, so it’s important to keep our place well vacuumed. The iRobot is a great time saver and actually does a better job vacuuming than we do.

We want to do a better job of taking advantage of technology, especially technology that saves us time. Another thing my wife and I have begun doing is watching some of our favorite TV shows online because there are no commercials. In a 30 minute program, that saves us 8 minutes or so in commercials.

Next up, a car that drives itself so I can blog on the way to work.



Investing

Bought Some Stock

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With the market beaten down pretty bad, we figure now is a perfect time for us to buy some individual stock with a little “play money”.

We took $1,000 out of savings and opened an E*TRADE stock trading account. My wife and I have had our eyes on a few stocks, but ended up choosing Toyota Motor Corporation (ticker TM) because we feel it is a strong company and will likely recover nicely when the economy turns around. We purchased 15 shares of Toyota on Thursday for $63.71/share. In the last month, it dropped from right around $90/share to its current price of $67.10/share. 12 months ago, it was at around $114/share.

We’ll see where it goes from here. With the volitliy of the market, I’m sure it will shoot above and below our purchase price. We hope to take some profits if it works its way back up to $90/share.

Investing

Update On My Friend Who Pulled $100K Out Of The Market

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My post regarding my friend who pulled $100,000 out of his investments when the Dow plummeted last week received a lot of comments. Therefore, I felt an update was warranted.

I spoke with my friend yesterday and it turns out that he reinvested the money almost immediately. He might have lost a few bucks, but the bulk of the money is back in the stock market. Obviously, I was really happy that he made that decision. We ended up having a pretty good talk about money. I appologized for butting my head into his business, but he understood that I’m just trying to help and he said he appricated it. I reminded him that having this much invested at his age puts him ahead of the curve and that it’s going to be worth a boatload when he needs it for retirement in 20-30 years.

Thanks to everyone that commented on the original post. As always, I appreciate the input and feedback.

Deals and Bargains

One Advantage Of The Depressed Housing Market

Last year, we were able to get our property tax reduced $767.20 by simply filling out a one page Property Tax Assessment Appeals Application.This year, we had planned to complete another application because our property value decreased again.

To our surprise, the County Tax Assessor’s office automatically reduced our property taxes this year by $578.52. We didn’t have to file any application. Our property taxes went from $2,916.80 (two payments of $1,458.40) to $2,338.28 (two payments of $1,169.14).

Man, I was impressed with the County Tax Assessor’s office when dealing with them last year, but now I am really impressed.

Investing

In A Panic, My Friend Pulled $100K Out Of The Market

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My best friend inherited $100,000 when we were in college over 10 years ago. He blew through the money quickly and ended up with nothing to show for it. A couple of years ago, he received a 2nd inheritance of ~$160,000 and swore not to make the same mistakes. He immediately worked with a financial planner, investing $100,000 and depositing the remainder into a savings account.

During our conversations over the past couple of years, I got the impression that he was slowly spending the money in his savings account. Since he is in between jobs and will not likely receive another inheritance, I was worried, but knew that he at least had the $100K invested in a diversified portfolio. Whenever we spoke about money, I reminded him that, if he leaves his investments alone, he will be set when he retires.

Last week, he called to let me know after the Dow plummeted, he freaked out and pulled all of the money out of his investments. I explained to him that it was only a paper loss until he pulled the money out and that with his timeframe to retirement (25-30 years) it doesn’t matter what the market does short term.

It’s tough to see a good friend make such a huge mistake. I’m half convinced that he is going to deposit the money into his savings account and slowly bleed it dry. Because he’s like family, I’ve got to talk some sense into him. I’m going to call him back this week to encourage him to reinvest the money and leave it alone (no matter what the market does short term).

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:

Our path to financial independence and retiring early.