Triumph

I felt a weird sense of triumph today as I reviewed my 401k performance for the year. Annualized rate of return for 2008 = -42%. Haha. Why am I happy? Because the market took a huge dump and it hasn't rattled me yet. In fact I bumped up my contribution rate today. The one wussy change I made was to mark 1% of my future contributions for the stable fund. I'm not moving any of my current investments but some of my reading has suggested that even young people should have a tiny bit of stability. Hm.. okay.

Monthly Update

Build emergency fund to 6 mo expenses - 100.8% (Up .4%) Yay! :)

No effort on my part as the gains came from the market activity and interest.

Pay off car loan - 18.1% (Up 1.6%)
Pay off student loan - 8.8% (Up .2%)
House down payment - 39.5% (Up 8.3%)

Another good month for me. I'm mulling over goals for the next year so I'll throw something up soon. Well, technically the goals are now for this year. Happy new year to anyone reading! I hope it brings good things to all!

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..