My wife just did some back of the napkin calculations for her commission check this month. If all of her orders go thru as expected, she should receive a $1,033 commission check (less taxes) on 4/20. This would be a sizeable boost to our net worth for April. Go wife and thank God! We’ll use the money to immediately pay off our American Express credit card, leaving us with just one credit card balance of roughly $1,800.
I love counting our eggs before they hatch. Happy Easter!
Live below your means
I believe this is one of the most important steps to a strong financial foundation and, for me, one of the hardest. If you try to keep up with your rich looking friends and associates, you may end up like most of them: lots of nice stuff, but a low net worth. Every dollar that you save is worth more than an extra dollar earned because the extra dollar earned is taxed.
Start an emergency fund
Job loss, health issues, and expenisve repairs are financial blows that can affect us all. Open a high yeild savings account (Emigrant Direct, ING, etc.) and start saving for the unexpected.
Aviod credit card debt
Credit card debt is the path to financial ruin. Been there, done that. Believe me when I tell you that digging the hole is very, very easy and climbing out is often a long, hard fought battle. The only thing we use credit cards for now are monthly bills because we get cash back from our Citi credit card. Don’t do this if can’t pay off the balance in full each month.
Track spending / create a budget
It’s easy to overspend if you don’t know what you’re spending. Track spending for a few months and use this information to create a budget. The budget will help keep you on track and hopefully help you find areas where you can reduce spending.
Learn all you can about investing
Most financial planners are more interested in their commission, rather than what is in your best interest. If you educate yourself, you can save A LOT of money and probably do just as good a job, if not better.
Invest at least 10% of your gross income
The future is coming whether you want it to our not. The magic of compound interest can make your consistent contributions grow into a large nest egg. Take advantage of tax sheltered retirement account such as a 401(k) and/or Roth IRA. If your employer offers a 401(k) with a company match, take advantage of the free money.
If we believe that we can live on $60,000/year when we retire, then using a 4% Safe Withdrawal Rate (SWR), our nest egg goal is $1.5M. However, with inflation averaging 3.43% annually, our nest egg may need to be substantially larger.
We will refine and better define our plans/goal as time goes on. Some other challenges in reaching our goal include being able to purchase (and pay off) a home and finding affordable long term health care. Our desire to have children will also affect our saving/investing rate, but won’t stop us from having them.
I guess if I have to work until 53, I could live with that.
In the last 12 months, I have accumulated 31,368 miles on Delta SkyMiles and 11,316 on American Airlines Aadvantage. .. . for doing nothing more than enrolling and entering my account number when purchasing tickets. That is enough points for a free flight in the continental U.S., Alaska, Canada, Caribbean, and Mexico on Delta (see chart) and a free upgrade (see chart) on American Airlines. Best of all, since I signed up with Delta and American Airlines, I have not had to bend my schedule to fly on these airlines.
I’m kicking myself for all of those years that I flew and did not accumulate frequent flyer miles.
a Pay off 401K loan
a Pay off credit card debt with rate interest over 0%
a Save up 2 weeks worth of vacation (in case of job loss / unable to work)
Pay off 0% interest rate credit card debt
Open and fully fund Roth IRA for wife
Open and fully fund Roth IRA for husband
Sell Car 1
Pay off Car 2
10% (of gross income) contribution to 401(k)
Build emergency fund to $12,000
We’ll be selling Car 1 and funding Roth IRA’s for my wife and I in the coming months, so more checkmarks will be added soon.
We had a great net worth increase in March, but did a poor job staying within our budget. We were sadly over budget $775.68 in March (click on spreadsheet below).
A lot of non-monthly bills hit in March, such as both cars needing servicing, buying a baby shower gift, enrolling wife in new insurance program, and a mini vacation. That’s not a good excuse though because we also went over budget for some of our standard monthly bills.
Time to take back some ground by coming in under budget next month!
Stay tuned. . .
A lot of progress was made since our February 2007 Net Worth update. We have a positive net worth! Thank God! It’s a great feeling to finally have a positive net worth, even if it is only $3,293.43.
I can’t believe we were able to post a $6,462.28 change (click on spreadsheet below) to our net worth in one month. Over half of this increase was due to our Federal and State tax refunds ($2,044) and my wife receiving a $1,463 tuition reimbursement.
Here are the highlights from March:
I don’t expect us to be able to keep up this kind of a pacing in the coming months, but we’ll sure try. 
I travel 6-7 times per year, usually for 1-3 weeks per trip. While it’s hard work being on the road, there are perks. My company reimburses me for my travel costs (i.e. hotel, rental car, meals, etc.). I also use a 1-2% cash back credit card for all trip costs that helps put a few extra dollars directly into my pocket. In addition, my American Airlines Aadvantage and Delta SkyMiles frequent flyer accounts earn me free trips or upgrades.
When I first began traveling for work, I did a poor job of keeping receipts (for reimbursement), didn’t use cash back credit cards, and didn’t have frequent flyer accounts. I often spent more personal money while traveling trying to entertain myself. Now, I make sure my hotel is near nice restaurants and has high speed internet.
While on my business trips, I save money on food, gas, and entertainment. It’s also nice getting away from the office for a few days.
My wife cancelled our old Time Warner cable/internet plan and restarted our service to take advantage of a 2-year promotion they are running for digital cable. She was even able to coordinate it so that there was no interruption in service.
We just received our first bill, only $72 compared to the $94/month we were paying previously. This represents an annual savings of $264 for us. With digital cable we get many additional channels including music channels and On Demand. Plus, Time Warner provided us an HD box so that we can access High Definition channels. Let me tell you, the HD box alone was worth the effort. We purchased a 42” Panasonic plasma a year ago and the theater-like picture of HD is absolutely awesome. Tonight, we were getting a kick out of switching between watching American Idol on Fox and American Idol on Fox HD. What a difference.
There is nothing like relaxing on the couch with your girl, a cocktail, and a great movie to watch. At $4.95/movie for new releases, movie rental costs add up. We’ve thought about signing up for Netflix, but never liked the idea of having to wait for the next movie to arrive in the mail. Blockbuster Total Access solved that problem by offering low cost online movie rentals, and the ability to pick-up rentals at your local Blockbuster.
We chose to go with the $14.99/month plan that allows us to have two online movies out at any time.
Here’s how it works:
1) Select movies online and add them to your queue
2) The movie is mailed within 1 business day
3) After watching the movie, mail it back in the supplied envelope or return it to your local Blockbuster
-Each movie returned to the Blockbuster store in the supplied envelope is good for one free in-store movie rental
4) Once the movie is scanned into the system, either at the store or when they receive the mailed return, the next movie in your queue is mailed
We plan to always return the online movies to our local Blockbuster so that we maximize the number of movies we get per month. You’re also given one free in-store movie rental each month. So, if you run out of online DVD’s to return for in-store rentals, no problem.
You could conceivable get 25 movies a month for the price of what it would regularly cost to rent 3 new release rentals. I doubt we would ever have that much free time or even the desire to watch that many movies. Nonetheless, I’m sure we’ll watch our fair share.