A Look Back on 2008

So it's not quite over yet but the thoughts have been swirling inside my head. Happy holidays y'all! (If anyone is reading..)

It was a great year, both financially speaking and in my life overall.

My net worth increased (out of the red, yay!!) just shy of $10,000. That is unreal to me. I sort of forgot that just a year ago it was in the red. Especially since it is so stagnant lately.

I paid off 8% of my car loan and 3.5% of my student loan. Hm, not so impressive.

I fleshed out my 6 months expenses emergency fund and started on my house down payment fund. Very happy about this. I expected things to move much more slowly.

My credit history/scores are healthy despite two new accounts.

Cars and Houses

Wow, I realized I hadn't checked my car's value since last month so I went to Kelley Blue Book. It dropped $1800+ since the beginning of November. And that's for Excellent condition, which it isn't, because someone rear-ended me lightly and I had the bumper repainted on her dollar. I know, if I could do that over, I wouldn't. While my premium didn't directly go up, I realize this ultimate increases the costs for everyone. So anyway, I'm really glad I put 33% down when I bought it because if not, I'd probably be upside down now. And this is a loan at 3.95%. On a car that holds its value slightly better than most.

In great news, I got pre-approved for a mortgage through my local credit union. If I actually find a house I plan to try a broker to make sure I'm getting the best rates but I wanted to make sure I could at least get a loan to begin with. Yay! Now the hard part. There's this very cute little house about 4 miles from work. I like it, and I can picture myself living there. But I really wanted to be in the neighboring city. And it's really small. Probably good sized for me but probably hard to sell years down the road. But possibly a good rental unit at that point. Part of me hopes someone buys it quickly so I don't have to think about this house anymore. The other part of me hopes it stays on the market for a few more months so the sellers will be motivated to drop the price and I can swoop in for a deal.

It is stressful to be so excited. It shows on my face, too. The acne products deal with this and I don't do make-up.. :/

Monthly Update

Build emergency fund to 6 mo expenses - 100.4% (Up 1.6%) Yay! :)

I added some cash and the market didn't do so bad. We'll see what next month holds. I'm thinking I should just get into the habit of sticking even $50/month in there just because of the way the economy is and such. Folks have me paranoid.

Pay off car loan - 16.5% (Up 1.6%)
Pay off student loan - 8.6% (No progress)
House down payment - 31.2% (I made a booboo on how I was calculating this one so can't really compare to last month..)

Woohoo!

My student loan servicer added a new section to their website called Borrower Benefits. I recently remembered that I had an option when I consolidated. I could choose a lower interest rate after a number of on-time payments or I could have a principal reduction. I chose the reduced rate. I thought it kicked in after 2 years but I couldn't find anything in my file to suggest this was anything more than a figment of my imagination :) Ta-da! The new section has details. I'm about 8 months away from my reduced rate. I assume my payment stays the same so I just make faster progress. Way cool.. 3.75% :D

Rich Dad, Poor Dad

This was my latest read. It was a good one. The author has an entertaining writing style. Here's the two-minute summary. Buy assets, not liabilities. I know Quicken suggests your car and house are an asset but the author suggests that in this context, these things don't count. For this purpose, an asset is something that generates income. Since you dump money in a car and it only depreciates, it is definitely out. Your home will at least appreciate over the long term, but you still must dump money into it and it usually doesn't generate income, unless you rent parts of it out. Which brings me to my next point. He doesn't really give many examples. This takes away from his credibility in my mind. He suggested he didn't want to stifle creativity or narrow your visions when you look for opportunities. This makes sense but still..

So yeah, buy your house and your car but keep them small and reasonably priced, at least until you have enough assets to comfortably afford a Porsche and a mansion.

One example he did give was with real estate, which hits home at this point in time. He would buy houses at auctions for much reduced prices, fix them up, rent them out for a few years, and sell them at nearly double the purchase price. All the while the renters pay the mortgage. Not too many other examples. Some of the book sounds a little too much like get-rich-quick scheming. But he says more than once that you'll probably lose money and make mistakes. If you don't want the risk, you can buy mutual funds. But then you can only expect average results..

Monthly Update

Build emergency fund to 6 mo expenses - 98.8% (Down .8%)

Oops, bad month in the stock market world. Must..add..more..cash. I do have extra funds this month after paying myself first and paying bills so at least some of the extra can go here.

Pay off car loan - 14.9% (Up 1.5%)
Pay off student loan - 8.6% (Up .7%)
House down payment - 32.7% (Up 11.1%) Oh my gosh, getting excited.

It's getting hard though. I find myself thinking thinks like, "At this time next year, I'll have trick-or-treaters." Or, "At this time next year, I'll be raking my own leaves." You know? Blahhh. There are two open houses this weekend in my target locale and price range so I might check them out. I'm aiming to form healthy ideas about what sort of housing you get for the price. I tell myself it will be less painful to reform my goals now than say, in 5 months when I might be house-shopping. Ooh, and I found out you can amend your 2008 taxes to to get the first time homebuyer's interest-free loan if you buy the house before 7/1/09. I was thinking I'd have to wait months.

Yes, and for the first time since I started paying attention, my net worth has gone done. Yayyy, stock market. Hopefully we're almost at the bottom.. Any day now..

Randomness

87 words

Typingtest

That was fun. It's been awhile since I tried one of those. I spent entirely too much of my teen life chatting at the computer screen. At one point I was even contracted to moderate and host in some youth chat rooms at a chat server. But alas, all good things must end and shortly thereafter I started my stint in retail hell. These days I'm back to spending a whole ton of time at the computer but it's not a whole lot of intense typing. I spend of a lot of time waiting for programs to run or thinking..haha.

My Emergency Fund

I did some rearranging of my emergency fund. It had been in savings, checking, and a money market fund with the exception of 2% which was in an index fund. For the past few weeks I've been thinking it would be really unfortunate to miss the opportunities we have in these times. I mean, I have been continuing to contribute to my 401k but that's it.

So I decided to put another 10% of my e-fund into the index fund. Then I caught my father's excitement and put in an order for AIG. The 10% promptly fell to 9% and the AIG would only be around 2% of my e-fund so totaled up, I have 12.5-13% of my e-fund in pretty unstable places. This doesn't really bother me, though. I figured eventually I would move in that direction anyway. I mean, if I amass 25k or 50k in stocks and mutual funds, who needs a whole pile sitting in stable funds? I would still want a few months worth of expenses in "cash" but 6 might be overkill.

Besides, I currently have what would be an additional 10% of my emergency fund in a stock and a mutual fund but I'm not counting that as e-fund. I dunno, I can see myself having trouble drawing the line.. 'cause at the end of the day, if I had a true emergency, I wouldn't stop at my cash funds, you know?

In any event, now is a good time to make this move. If what amounts to 20% of my emergency fund suddenly drops like a rock and turns into 5% of my emergency fund, I can easily steal from my house down payment fund in an emergency. I think I will re-evaluate things at the point when I want to empty my house DP fund, but I don't think I will change my mind. Also, I added a bit more "cash" to the e-fund to make up for a bit of the drop that already happened. It'll be interesting to see where things sit at the end of the month.

Overall my net worth dropped so far this month despite me spending less than what I bring home, therefore saving money and paying off little bits of my debts. Don't you hate it when that happens? So yeah, I'm one of those obsessive money watchers. I don't think it's a problem, though. I have no desire to pull my money out of the stock market or the bank and put it under the mattress. Especially where I currently live :)

Scores

So I have all three at once, although one is outdated..

TU - 757 (10/10/08) dropped.. hm.. I think the new account hurt me since avg age is down almost 2 years.
Exp - 788 (9/12/08)
Eq - 752 (10/10/08) this did not drop with the new account/inquiry.. yay!

My short time in the 760+ midscore club was well enjoyed :)

Monthly Update

Build emergency fund to 6 mo expenses - 99.6% (Up .3%)

Clearly I haven't taken care of that last little bit. Maybe this month..

Pay off car loan - 13.4% (Up 2.5%)
Pay off student loan - 7.9% (Up .2%)
House down payment - 21.6% (Up 7.1%)

Yay, check out the DP progress. I didn't even hit my goal for the month. Hope to catch up this month. But darn, I really should fill out the e-fund. B-oring.. :)

Credit scores are still 752 and 788. Not sure on the last one.

The World Is Not Going to End

Okay kids. Stop pulling your money out of the market! The world is not going to end and the market will bounce back. If you're pulling out now, it's probably time to do some reading and research. The market does this, it's kind of a natural cycle. A mass exodus hurts you and many others. If you can't handle the news, go stick your head in the sand until things look a little more cheery. But leave your money alone?! Unless you have more than 100k in one bank...

I guess there is an upside for me. I get to buy things at a deep discount.

My 3 Points Are Back

Yeah, you guessed it. Equifax gave me my 3 points back again.. We'll see how it reacts when my new credit card posts..haha. That score has moved 10 points since 11/2007. I wonder what it needs to go up a few more points.. Maybe just a longer credit history will do it.

Experian

Woohoo!! Experian is at 788 today. That's only 12 points away from the elusive 800. OMG. Ugh. I think I need help. As if paying for credit monitoring weren't enough I now seem to have added a score every month. Sheesh. At least now I know how to google for coupon codes..

AND. Hi, grammer police? Ignore me.. haha. I got a very nice raise and today was the first day it showed up. So exciting. Of course taxes are always a kick in gut. Oh well, happy I have the income to pay them..

Ding! Another 3 Points..

I asked for a credit limit increase on my credit card (to improve my utilization) and it seems to have spurred a mid-cycle balance update. At first I viewed this as a bad thing since my score dropped as the balance increased. But then I realized my statement balance was even higher than the reported balance so perhaps that was a good thing. I guess that's not to say they won't still report the statement balance in a delayed fashion. The odd part was it said the balance increased from $0 to $148 or something. I don't think my balance has been at zero for longer than a couple of days ever? I always pay in full and shortly thereafter another charge posts.. Whatever, I don't care. I'll care when I'm loan shopping, hopefully next year.

And in other surprising news, ING posted my interest today. Happy holiday? I didn't think banks ever showed activity on holidays..

Monthly Update

Early update since the month ends with a weekend then a holiday..

Build emergency fund to 6 mo expenses - 99.3% (Up .7%)

Woohoo! As a refresher, I adjusted the goal upwards. Golly, I gotta get on that last little bit. But it's so much more fun to put my extra money in the DP fund!

Pay off car loan - 10.9% (Up 1.6%)

Wow, did I mention how I love how fast progress goes on this puppy?

Pay off student loan - 7.7% (Up .4%)
House down payment -14.5% (Up 4.5%)

Yay for another good month.

Just Kidding..?

Surprise, my score went up 3 points. That would put it back to its 752of 4 days ago..haha. No credit alerts..

Score Down

Oops, lost 3 points 'cause Chase statement posted a $15 balance, which was a $15 increase over last month's $0 balance. HAHA. What am I learning? Pay off both cards right before the statement posts when I'm applying for credit. Sheesh. Down to 749, no biggie..

Too Much Debt?

So I'm planning on having enough money for a small down payment and closing costs for a house next year. What's bothering me is that I'll still have a car loan and a student loan. It didn't bother me at first since both are at very reasonable interest rates and I plan to have a mortgage close to my current rent. My dad recently found out about my timeline and he seems worried that I won't be able to adequately maintain the house with both loans. However, if the mortgage is at my current rent level, that leaves 80% of the current rent/future mortgage for taxes and maintenance and such. I think that's a pretty good cushion.

The car loan would take a year to pay off but then I would have to start from scratch to save for the house. Of course, with no car loan it would only take about 6 months I guess to save. The student loan would consume all of my extra cash to wipe it out in like 5 or 7 years.

So for now I decided I need to get to the point where I have a dp & closing costs. If at that point I'm still bothered by the prospect of 3 loans, I can wipe out the car loan and work on a new dp. Or, with the new tax credit for first time homebuyers, if I magically find a house before the deadline, I could use the tax credit to pay off the car. Yes, I realize this is an interest-free 15 year loan.

My thoughts are, if I can find a house I can afford with a car payment and a student loan, that should leave room enough to start saving for a new car when this one's paid off. Did I mention my goal of buying the next car with cash? 10 or 12 years down the road, that is.. :) And if I buy a house without the car loan, I don't think I can restrain myself to the old price range. I think I'd be too tempted to extend the price range a bit. Then I'd be spending the same amount on debt service to cover a mortgage and SL versus a mortgage, SL, and car loan. Maybe I'm the only one that sees things this way and it's not a great way of thinking?

The Millionaire Next Door

I finished the Millionaire Next Door this week. It's an interesting read. Basically, just because someone has a high income doesn't mean s/he has a high net worth. Many high income folks just get used to spending it all. There are case studies that lay this out and a whole bunch of statistics they formulated based on their studies. I personally liked the stories best.. But the great news is that you don't need a stellar income to become a millionaire. For the best odds, live frugally and invest the remainder wisely. To make the investing part easy, just find yourself a low-expense index fund or two and you're covered. And it's important to note that if you start ASAP, your odds are better.

They basically divide the population into 3 categories - underachievers, average, and prodigious accumulators of wealth. This is based on your age, income, and net worth. You can use the calculator below to find out what you are.

http://homefinance.nytimes.com/nyt/personalFinanceCalcs/calculator/wealth/

My results:
Your net worth is 0.049 of the Desired Net Worth

To me this seems a little unfair since I'm fresh 2 and a half years out of college and burdened with school loans. I do have a financial project and if all goes as planned, by my next birthday I will be at

Your net worth is 0.136 of the Desired Net Worth

Yay! Progress! And it does look like catching up is possible! The scary part is I thought the number they gave was in percent format. But it's not. 5% is a lot better sounding than .05%, y'know?

Wow! WOW!

So I've been resisting the urge to buy another credit score until today.. I hate when I spend money on such an instant gratification sort of thing.
So here they are, I'm so excited.. I just can't hide it.. err.. :)

TU - 769 (8/6/08)
Eq - 752 (8/2/08, supposed to update like daily but they changed their product and I never quite know for sure..)
Exp - 782 (7/16/08)

I've heard they use middle score for mortgages which puts me above 760! TU jumped like 20 points in two months. I know an inquiry fell off but other than that I don't think anything happened.. My car loan updated and it's now 6 months..? Another account aged a year but it's closed, the car loan I had before refinancing..

One thing I did notice is they have a new address reporting in the previous address section. It's an odd combination of my old address and new address. WTF? I hope someone's not um, stealing my identity or something. I printed off a dispute letter so I guess I'll mail that in.

Monthly Update

Build emergency fund to 6 mo expenses - 98.6% (Up .3%)
Pay off car loan - 9.3% (Up 1.5%)
Pay off student loan - 7.3% (Up .2%)
House down payment -10% (Up 5.6%)

Yay, good month. Look, progress on the SL..hehe.

I'm having a really hard time fleshing out the emergency fund.
1- It's so much more fun to put money in the house DP fund, y'know?
2- About half of the remainder should be coming in interest over the next 8 months (when I plan to start looking at houses seriously).
3- I've been trying to hitch my bank account to my Schwab account so transfers are easier. I just got word that it is set up but the letter says I have to call to take advantage of the option. And when I meant easier, I mean I could push a few buttons on the computer at 10pm on a Sunday night... not get out of my recliner, pick up the phone, dial the number, speak with a representative..blah blah blah..

Anyway, maybe I need to make that the goal for August - fill up the e-fund.

Credit Scores

Woohoo! I was pleasantly surprised to find the credit score I get through Scorewatch is the middle score. I bought Transunion in June - 743 and bought the other e-one in July at 782. 782! That makes my goal of 760+ by Feb/Apr of 2009 more attainable! My Scorewatch score is 747. I've heard they use the middle one so that's only 13 points.

Now I just have to resist the temptation to keep buying these things. The only thing I know should help bump them up is a couple of inquiries falling off. A couple fell off in June. One should be rolling off in December. The next two to go would be in Feb and May of 2009.

Other than that I don't think there's much I can do except keep on keeping on. No lates, no high utilization.

I wish there was a product like Scorewatch which included all three reports.. Shucks.

Monthly Update

Build emergency fund to 6 mo expenses - 98.3% (Down 2.5%)
Pay off car loan - 7.8 (Up 1.6%)
Pay off student loan - 7.1% (No Change)
House down payment - 4.4% (Up 3.3%)

Okay, with the end of June I decided it was a good time to re-evaluate the emergency fund. I've been shooting for 6 months of expenses so I had to up it a bit. Even though I added money (a little), my progress percent went down.

Yay, the car loan seems to be moving quickly with the bi-weekly payments and the low interest rate.

Also, the down payment is going well. I'm thinking about adjusting the total goal down since I will probably start shopping when I have 3% down + expected closing costs. I was originally shooting for more like 5-6% down and closing costs but, too anxious and on the surface I would qualify for a WHEDA loan with reduced PMI and low down payment and slightly advantaged interest rate with only 3%. That does give me a narrow range I expect to be able to afford so if I adjust the goal down and can't find anything when I hit it, I'll just have to keep saving..

I'm looking forward to July as August is a 3 pay check month. The way I work my checks, the extra from August will mostly "hit" in July. I've been using the current month's check for next month's expenses. I don't know if that makes sense but it works for me..

Credit Scores

Two things..

I've been watching one score over time so I decided to splurge on a one-time look at another score. It was only two points off the one I'm watching so that was comforting.

The score I've been watching went up 4 points last month and 7 points this month. There weren't any explanations attached but I have a couple theories. This month I paid off both cards right before the statements so the balances were low and zero. Also, I think inquiries for my car loans should start falling off any time now. I think they stay for a year and I bought my car last June.

Normally I wouldn't care about such trivial things, but my score's at 748 now (one of them, one close behind, third unknown) and I'm ultimately aiming for 760+. 7 points could mean a difference in rates at mortgage time. So I've learned to pay off my cards right before the statement, and not request anymore credit. It's almost silly.. in the past number of months my card has had no more than $300 balance when the statement goes out, which coordinates with when the score changes come through. $300 is like, not even 4% of my combined credit limits.. Sheesh.

Monthly Update

Build emergency fund to 6 mo expenses - 100.8% (Up 10.5%)
Pay off car loan - 6.2% (Up 1.5%)
Pay off student loan - 7.1% (Up .3%)
House down payment - 1.1% (Up 1.1%)

Woohoo! See that? Thanks to the economic stimulus package and the usual savings my emergency fund goal is met!

I had paid ahead on my student loan about 5 or 6 months and I'm letting that catch up a bit, just covering interest in May. At this point I'd rather put it in the down payment fund. I'd really like to pay extra on the car loan but that would seriously hinder the down payment savings and I'm getting very anxious. Also, at the great rate it is at, I really think I should pay no extra until I'm ready to pay the whole thing off - preserve my liquidity as much as possible and all that.

I also had a good month lawn-mowing and teaching knitting classes.

May Update

Build emergency fund to 6 mo expenses - 90.3% (Up 4.6%)
Pay off car loan - 4.7% (Up 1.6%)
Pay off student loan - 6.8% (Up .1%)

The emergency fund had a good month and my credit score is holding steady.

In big news, my net worth is now positive!! How exciting..

April Monthly Update

Build emergency fund to 6 mo expenses - 85.7 (Up 7.5%)
Pay off car - 3.1 (Up 2.3%)
Pay off student loan - 6.7% (Up .6%)

The economic stimulus package is slated to go toward the e-fund. By my calculations the e-fund should be complete by the end of July. Woohoo! Provided no emergencies come up..

FICO score's been pretty steady..

In other good news, my employer did the yearly dump into our retirement accounts. I wasn't sure if I would be eligible but it turns out I was for part of the year. Yay!

Monthly Update

Build emergency fund to 6 mo expenses - 78.2% (Up 21%)
Pay off car - .8% (Down 12.7% due to refinance, started the counter over)
Pay off student loan - 6.1% (Up .2%)

Woohoo, good month! I think my credit score dropped a bit but I'm not sure how much offhand..

Good Week

It was a good week. I got my refunds back, one Wednesday and one Friday so I'm a good bit closer to my goal of building the emergency fund.

Also, the car refinance went through. There was a fee of $20-something to transfer the title but that was it. The extra money is hanging in a savings account while I decide what to do with it. I did get their rate of 3.95%. I was surprised. I usually see the teaser rates and assume that's exactly what they are.. I was impressed with the service also. I made an appointment to sign papers and went to the wrong branch. By the time I got to sit down with someone it was 18 minutes before they closed. But they worked it out anyway and I didn't have to make another trip. I love good service..

Monthly Update

My credit score just went up 11 points (737). No alerts so I would guess dropping balances, etc.

Build emergency fund to 6 mo expenses - 57.2% (Up 2.2%)
Pay off car - 13.5% (Up 3.3%)
Pay off student loan - 5.9% (Up .3%)

I did apply to refinance my car loan. A local credit union is having a "loan sale" this weekend with rates as low as 3.95%. I haven't heard anything yet so we'll see. The minimum amount is 10,000 and my balance is a little over 9,000. That might disqualify me, guess I don't know what "new money" means. My rate is pretty reasonable but I'm early into my loan and if I can drop it 3 points and no fees, I will.. If I've done my calculations correctly that's nearly $1,000 in savings over the term.

Ooh, and I also filed my returns and expect a gift to myself Friday from fed. Don't know when the state will be returning my money.

Credit Score Dropped

14 points due to the new credit card, not as much of a hit as I had expected. In better news, I'm turning 25 this year and my car insurance dropped a good bit.

Score's Up

Yay, up 7 points, no reason in particular according to ScoreWatch. I have been paying the balance on my credit card twice a month instead of once a month in hopes that a lower balance would help.

Monthly Progress

I thought it would be helpful for my own sake to post my progress toward goals so here we go.

Build emergency fund to 6 mo expenses - 55%
Pay off car - 10.2%
Pay off student loan - 5.6%

I haven't determined a dollar amount for retirement and if I had, I wouldn't track the progress, I don't think. It would be depressing, such a big, daunting number..

Once the emergency fund is sufficiently built, I'll send those dollars to the house down payment fund.

Score's Up

I never got the email from ScoreWatch, seems it disappeared into the black hole. So this change is a couple weeks old. There were no credit alerts so it was probably due to decreased balances on my credit card/store card. It's up to 733.

I opened a second credit card right around then also. I expected the score to drop initially because of the new line and a credit check. So far it hasn't..

Happy New Year!

Accomplishments for 2007 -
1. Financial Health Assessment

If you want to call it that.. The point is that now I have a more complete picture of my financial health. I got Quicken and set up all of my assets and liabilities. I was kind of in the dark as to how net worth works and now I have an accurate estimate. I have my credit score. I feel comfortable with my insurance (health, car, renters, disability, life..)

2. Bumped up 401k contribution.

I started at 3% when I got my job and point by point moved to 6%. Yay! My employer will now be contributing 3.5%.

Goals for 2008 -
1. Flesh out my emergency fund.

I currently have about 3 and a half months worth of expenses and some of my reading suggests closer to 6, especially for a singleton. I expect to be here by the end of the new year.

2. Bring net worth out of the red.

I'll be happy if it's at zero by the end of the year..

3. Open Roth IRA.

I met with a financial adviser to open an American Funds account this past year and refused his advice but I've finally come to the conclusion that he was right. So this year I will do that. (Sometimes I just have to come around in my own time, you know?) I have no delusions of fully funding it but something is better than nothing in the eyes of compounding over time and such.