401(k)

401(k) Increase Time

I just submitted paperwork to increase my 401(k) contribution by 1% next year (effective 1/2/08). This will bring us to a 4% total contribution to my 401(k) plan. This percentage is low because our first priority is to contribute the max to our Roth IRA’s each year ($5,000 each in 2008).

Based on my current income, a 4% contribution represents $2,646 annually. However, my annual review is also in January, and I would guess that my raise will be ~5% this year. If that assumption is true, the total 2008 contribution will be $2,778. In addition to my 401(k) contribution, I also receive company profit sharing into my 401(k) in September, which last year was $3,005.63.

Our plan is to increase my 401(k) contribution 1% each year until we reach the maximum contribution. By timing this increase with my annual raise, we don’t even feel the effects of the extra contribution money missing from my paychecks.

Debt

Vehicle Depreciation

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You may have noticed that our vehicle values in the assets section of our Net Worth Updates have remained the same since March. We take good care of our cars, but they still depreciate. Therefore, we must make an adjustment to our balance sheet to account for the current value of the vehicles.

I had planned to adjust our vehicle values annually using the Kelly Blue Book value. However, now that I am faced with taking a $4,800 adjustment in one month. . . I’m rethinking my plan. For the first time since beginning this blog, we will post a negative change to our net worth in December.

To avoid this big hit and the associated sorrow every year, we will begin depreciating our vehicles in January at $200/month.

Income Statement

November 2007 Income Statement

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At first glace, I was disappointed with how much money we seemed to have spent in November (click on spreadsheet below). It was more than last month and more than we earned. In fact, we had to dip into our savings to cover all of the bills. However, $1,296 went to paying for 12 months of our truck and condo insurance, $1,000 went into savings for my wife’s taxes while she is 1099, and $475 went to paying down our 0% interest credit card balance. If you subtract out this $2,771, we weren’t to far over budget.

In addition to our standard income, this month my wife received an extra paycheck (three total) as well as a $491.22 commission check and $182.87 in mileage reimbursements. We also supplemented our income with a $25 HSBC credit card cash back reward and a $50 Chase credit card cash back reward.

Next month should be a standard income month, 2 paychecks for my wife and 2 paychecks for me. My wife may also be receiving a commission check for a few hundred dollars next month which we will deposit into savings.

Net Worth

November 2007 Net Worth Update (+$2.01)

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November has been a crazy net worth month due to the stock market volatility. Many times throughout the month, our net worth dipped over $800 below what we ended October with. We also had a few large annual bills come due this month including a $1,842.84 condo tax bill, $880 auto insurance bill (1 years coverage), and a $416 condo insurance bill (1 years coverage). That being said, we are thankful to have ended the month with a net worth increase of $2.01 over last month, for a total net worth of $27,174.69 (click on spreadsheet below).

What worked this month?
First, we feel great about paying our condo insurance and truck insurance for the year, rather than financing both over many months. Secondly, we’re thrilled to have completely paid off our 0% interest Chase credit card ($999.49), eliminating the last of our credit card debt. Finally, we fully funding my Roth IRA for 2007 ($4,000) by contributing the final $500.

What did not work this month?
Our 401(k) took a pretty good hit this month; it was down $1,105.63 from last month. Our savings also shrunk by $845.04, but only because we pulled funds out to pay off our Chase credit card. With the stock market volatility and our large bills this month, the damage could have been much worse.

What’s coming next month?
December should be a much quieter month. There are no large annual bills looming in the next 31 days and hopefully the market will settle down. We’ve been greatly blessed to have already reached our net worth goal for the 2007 ($22,000); any net worth increase in December will be going towards our 2008 net worth goal.

Credit Cards

Paid Off Last Off Credit Card Debt

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I hope everyone had a nice Thanksgiving. My wife and I just returned from spending the holiday with my family. It was a blast! Great food and good times.

In financial news, my wife and I decided today to pay off our 0% interest Chase credit card balance (the last of our credit card debt). This credit card had a clause that if we were late with a payment, they could back-charge us interest. We didn’t want to have that hanging over our heads any longer. Better yet, we also wanted to start 2008 with a little less debt.

Business Travel

Frequent Flyer Miles From My Trip To Europe

I just returned from my business trip overseas. It was a good trip, but, as always, it’s nice to be home. One nice thing about traveling is the frequent flyer miles that I earn. This trip, I earned 15,692 and now have 60,276 Delta SkyMiles saved up.

However, I learned that I was not automatically updated to Gold Medallion status when I hit the 50,000 mile mark. The update usually takes place the following Saturday. So, I only received a 25% bonus for my miles on this trip (Silver Medallion), not a 100% bonus (Gold Medallion). One bit of good news that I learned though is that my Medallion status will be good until December 30, 2008 – a year longer than I thought.

Business Travel

Headed To Europe

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I am going to Europe for a 5 day business trip tomorrow. I will pass Delta’s 50,000 mile mark (for the year) on my flight over to Europe. This will move me from the Silver Medallion level to the Gold Medallion level. At the Gold level, I’m entitled to a 100% mile bonus for every mile I fly with Delta the rest of the year. This means double the frequent flyer miles on my return flight from Europe!

Income

Extra Money

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My wife just received a $491.22 commission check from her new job as well as a $158.78 mileage reimbursement check. It’s amazing how she is able to pull in some extra money almost every month.

We plan to use $350 of the money to help pay down our 0% interest credit card. Our goal is to have this paid off by the end of the year. The remainder will be put into savings and a portion will be given to our church. Beginning in 2008, we will use her commission checks help us pay down our 2nd mortgage.

Roth IRA

Finished Husband’s Roth IRA

We just contributed the final $500 to my Roth IRA for 2007! It feels great to have maxed out our Roth IRA’s this year ($4,000 each for my wife and I). Hopefully we can do the same next year. It will be a bit more of a challenge with the new $5,000 max contribution per person, but it will be fun trying.

Budget

Decline In Our Net Worth On The Way?

I’m a bit worried that November could be the 1st decline in our net worth since we began tracking it in February. We have a number of large bills due this month including a $880 truck insurance bill, $416 condo insurance bill, and $1,842.84 for our 1st 2007 condo tax payment.

We have been saving $302/month into our Emigrant Direct account for our condo taxes, so we expected to have to pull it out when the bill came due. Thankfully, my wife receives an extra paycheck this month (3 total) which will help cover the truck and condo insurance bills. However, if any other large bills come up this month and/or it’s a bad month in the stock market, I’m afraid we may post a decrease to our net worth. It’s not the end of the world, but it would be disappointing. Oh well, 25 more days until we know.

Our path to financial independence and retiring early.