Money Musings

Enjoying the Wife’s New Company Car

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My wife is currently out of town training for her new job on the East Coast. She’ll be gone a total of 2-1/2 weeks. I miss her a lot, but driving her new company car is helping me pass the time.

My wife has an extra $10/month taken out of her pay to allow me to drive her company car (what a deal, huh?). So while she is out of town, I’m getting to use it a lot. It’s a great looking new car with only 70 miles on it. In fact, I’ve already received a couple of complements on it (too bad it’s not mine).

Not only does driving her company car while she is out of town save us the cost of fuel and wear and tear on my car, the XM satellite radio it came with makes driving much more fun.

Income Statement

July 2008 Income Statement

We earned a total of $13,763.08 in July, by far our largest income month yet (click on spreadsheet below). Over 30% of this came from a huge $4,427.74 commission my wife received from her old company. The balance was a combination of my wife began receiving paychecks from her new better paying job, my third “extra” paycheck, $292.17 from my wife’s company in reimbursements, and $19.81 in interest income.

In addition to this great income month, we were able to keep our expenses pretty well inline. I cost us a $250 because I hurt my ear and have to have surgery. Our phone bill also jumped up because we added a phone for my wife with many minutes because she needs it for work. Thankfully, her company reimburses her $60/month for a cell phone, so most of the added costs are covered. Our gas & electric bill jumped over 40% because we have been using our air conditioning quite a bit (my fault). I’m going to be more careful with running it only when needed.

In August, my wife will receive a third “extra” check and possibly even another small commission check from her old company. My wife will also be out of town for a 2-1/2 week training program. While she is gone, I get to drive her company car and save gas money.

Net Worth

July 2008 Net Worth Update (+$5,309.10)

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As I had hoped, July was a great turnaround month for our net worth. It increased $5,309.10, to $38,773.44. That’s a 15.86% increase from last month (click on spreadsheet below).

What worked:
The biggest impact in July came from my wife’s huge $4,427.74 commission check from her old job. In addition, my wife began her new better paying job and I received a third “extra” paycheck. All of these funds allowed us to increase our cash and savings balance to $10,299.08, even after withdrawing $1,079.86 from savings to pay down Car 1 in anticipation of selling it (the deal feel thru).

What did not work:
Once again, our retirement accounts were down from the previous month. We contributed a total of $606.50 to our retirement accounts this month, but still saw our retirement account totals reduced by $684.62 over the previous month.

Next month:
Next month, my wife’s 6% 401(k) contribution (and 25% company match) should kick in. She also will receive a third “extra” check, allowing us to boost our savings even more. God willing, we hope to sell my truck next month since it is not being used.

Money Musings

Want To Buy A Car, Or Maybe A Truck?

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Since my wife’s new company provides her a company car, we had planned to sell her car. Unfortunately, because we bought her car new and it is only 2 years old, we would be upsidedown ~$3,500 if we tried to sell it. So, we decided to put my truck up for sale instead.

It makes sense for us to keep her car – it gets much better gas mileage than the truck, has 25K fewer miles, and is 5 years newer. We also just put new brakes on it. The car payments are $157/month more than the truck and insurance is $29/month more, but we should make most of this up in the gas savings alone.

The first day I put the truck up for sale, I had a gentleman come by and make an offer. I accepted, had the truck smogged, paid down the loan to the amount we agreed upon and contacted him to complete the DMV paperwork. When I got a hold of him, he told me his wallet was stole and needed more time. Since we know some of the same people, I gave him the benefit of the doubt, but he flaked and has not called me back since. Lesson learned: Get a deposit before jumping thru hoops.

It’s a tough time to sell a truck. Thankfully, it’s a V6, which isn’t great with the current gas prices, but at least it’s not a V8.

Income

Wife’s Final Commission Check

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My wife received her final commission check from her old company and it was her largest by far, even larger than we thought it would be: $4427.74! This will have a huge impact on our goals and is such a blessing. We are going to tithe 20% of the check ($885.55), save 25% for taxes ($1,106.94), deposit $2,000.00 into our savings account, and leave the $435.25 balance in our checking account. As usual, the 25% for taxes will be deposited in our savings account until April.

In addition to this awesome commission check, I received an “extra” paycheck this month so we are depositing another $1800 into our savings account from that. By the end of the month, our savings account should be just shy of $10,000.

Since the economy seems to continue to worsen, we have shifted our 2nd mortgage payment plan to a house deposit savings plan. Rather than put our extra cash towards the 2nd mortgage principle, where it cannot be accessed in an emergency, we have decided to just save for a house deposit, providing us with an every increasing emergency fund until we buy.

I hate the idea of paying 8.55% on our 2nd mortgage, but in tough times, cash is king.

Income

First Paycheck

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My wife’s received her first paycheck from her new company. It was for $1,629.53, quite a bit more than the $1,109.48/paycheck she used to earn at her old company.

This first paycheck did not have any of her benefits deducted, so it was larger than what she will typically receive. Health insurance deductions should hit next paycheck (7/18) and will cost $66.83/paycheck and cover both of us. Her heath insurance plan is better and costs less than the plan my company offers so we’re going to move me to her insurance. Come August, our 6% contribution to her 401(k) plan will reduce the paychecks ~$90 each. Her company also matches 25% of her contribution (up to 6%). She will have ~$48/paycheck deducted for her company car starting in August or September; almost nothing considering that includes all costs associated with the car (car payment, insurance, maintenance, all of her fuel, etc.).

Once all of these benefits kick in, her paycheck should still be over $1,400.

Income Statement

June 2008 Income Statement

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Not only was June the 2nd month yet in which our net worth decreased, it was also our 2nd largest month of expenses (click on spreadsheet below). The only month our expenses were greater was in November 2007, when they totaled $9176.12.

We spent a total of $8,610.66 in June, but our income was only $6,324.00. Obviously, we do not want to make a habit of this, even if we did make enough money to support it. Large expenses included $1,071.09 for our vacation at the end of May (bill was due in June), $407.76 on gifts, $301.42 on household items, $187.69 eating out, and $104 on my eye exam and contacts.

My wife’s income in June was a bit less because of the transition to her new job – her first check in July will be for three weeks of work. She earned a nice $519.12 commission check during her last month with her old company. We also earned $109.79 in mileage reimbursements, $74.83 in Citi credit card rewards, and $13.26 in interest income.

God willing, we will substantially reduce our expenses in July. Incomewise, we should have a great month. My wife will receive her first paycheck from her better paying new job, I receive an “extra” third check, and my wife may receive a large ~$3,800 commission from her old company.

Money Musings

The Upside To Declining Home Values

We received a letter from the Assessor’s Office today stating that our condo value assessment is being reduced again from $270,000 to $220,000. Good stuff! This should result in a ~$500 reduction in our property taxes this year.

We did not have to complete any paperwork to have our property reassessed this year. Last year, having our property value reassessed and reduced saved us $767.20 in property taxes.

If we end up keeping our condo as a rental property when we buy a house, these reductions in our property value should save us a lot of money in property taxes over the years since the property value assessment can only be increased by 2% annually.

Net Worth

June 2008 Net Worth Update (-$2,221.12)

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June ended up being a worse net worth month for us than I expected. We were down $2,221.12 from last month, to a total net worth of $33,464.34 (click on spreadsheet below).

As I mentioned in my previous post, the down month was due to a combination of planned annual expenses (such as our vacation), some overspending (such as the increase in eating out), and depressed market conditions (such as the reduction in our retirement accounts).

I’m not going to dwell on all of the details that made June a bad month for our net worth. We are simply going to move on and focus on turning things around in July.

Money Musings

Bummer

Since we began tracking our net worth in February 2007, it has consistently increased each month by an average of $2,428. December 2007 was the only month thus far that our net worth has decreased (it was down $3,301.44 from November 2007) because we reduced the value of our two cars by a total of $4,845 in December to account for depreciation.

Well, at this point, it looks like our net worth will be down ~$1,500 at the end of June. I reviewed the numbers and determined that it is due to a combination of planned annual expenses (such as our vacation), some overspending (such as the increase in eating out), and depressed market conditions (such as the reduction in our retirement accounts).

Below are some of the details:

1) We paid for the $1,071.09 vacation we took at the end of May (bill was due in June)
2) We have spent ~$410 thus far on gifts
3) We have spent $233.90 thus far on household items (our budget is $150)
4) We have spent $173.62 thus far eating out (our budget is $130)
5) We spent $104 on my eye exam and contacts
6) Our retirement accounts are down ~$1,100 thus far
7) We were not able to contribute any money to our Roth IRAs

We should be able to turn this around in July. My wife will receive her first paycheck from her better paying new job, I receive an “extra” third check next month, and my wife may receive a ~$3,800 commission from her old company. However, we may need to pull ~$3,500 from savings to pay off my wife’s car that we are selling, the bill for our new LCD TV will come due, and the bill for my wife’s new brakes will come due.

God willing, we can change direction and get back on track towards our goal.

Our path to financial independence and retiring early.