Friday, December 7, 2007

Monthly Update for November 2007

Net Worth is down by $249 Dollars to $179,561. I'm actually happy about this. There have been some unexpected events the past 30 days or so.

My heating and air conditioning unit in my home decided to go on me. ugh! The joys of home ownership...And this is supposed to be an investment. Yah, I'll keep telling myself that until I believe it. However, the new unit has added a great improvement to the house. We even have a fancy new programmable thermostat. The total cost of the equipment and labor was around $4,700. I got the installer to agree to breaking up the payments over the course of three months. I am learning that I don't like to drag out financial obligations this way. Kind of like my dislike of our CC balance at zero percent. The upside of this is not having to take out any cash from my ING account, but in turn, I have had to suspend any further payments into this account until mid January. I am hoping to pay off the repair bill and maybe add a little additional cushion to the joint checking account by doing this and not have to actually transfer any savings. This home improvement is really crushing my cash flow in a bad way. I am estimating that I can put the ING on automatic pilot for $500 a week beginning mid January.
A few other factors were:
1. My employee stock actually went down by about 7% instead of the rumor of a heavy increase.
2. Overall Stock Market decline

December may not be much better. We still owe about $1,200 to the installer and another $700 for some recent furniture purchases. On a positive note, my next paycheck should be a bit higher. I received a 5% raise and will be able to drop my W4 form down by about $200. I am also expecting about $500 dollars (Net) from a bonus from work. I am hoping to break into the $181K bench mark in December. This should be achievable with just our 401K contributions and company match. As I suspected the stock market has come roaring back in the past few days adding easy money back into our accounts. This will certainly help the cause.

My short term goals are still the same. I want between 40-50K total in our cash accounts. I will then start contributing to our brokerage accounts to include Roth IRA and maybe even a little extra into the mortgage. I must say I feel like I'm running up hill pretty hard right now. Sometimes it feels like I just won't make it over the hill. I look forward to the day when I can feel comfortable with the amount of cash I have on hand and start putting more money into the brokerage accounts.

Sunday, November 4, 2007

Monthly Update for October 2007

Another good month! Net worth is up to $179, 810 an increase of just over $6,000 from last month or 3.5%. A more detailed listing of all my assets and liabilities can be found at

I am particularly proud of the large increase in my cash holdings with an increase of over $3,000 for the month. I am still focused on getting my cash savings up to $40-$50K. This will make me rest easier at night. Additional savings this month came from extra income generated from traveling at work.

Projections for next month are difficult to anticipate. I will need to pay my property taxes for $1,600 and also plan to pay down some of the CC balance of $5,000 that I am currently holding at 0%. I would rather pay this down a little at a time rather than just one large $5K payment. What can I say, I just don't like having CC debt. Even if it is at 0%. This could be a weakness of mine. The total amount needs to be paid by May 2008.

Next month could also see a spike in my employee stock (employee owned). I currently have about $8K worth of company stock. Rumor has it that there could be about a 20% jump in the next month. Not sure when I will see this realized in my balance if at all.

This month my wife and I also sat down for about an hour and did an estimate on what we may owe in taxes. The numbers look good. Since we bought our home in May we do not get the full year advantage of writing off the interest but it looks like we may be breaking about even. This is a weight off my shoulders. After December I will be able to adjust my W-4 and give myself about a $175 a paycheck raise (I get paid every two weeks). This is a nice little raise.

On another note, I find myself getting excited as each month comes to a close. I love to sit down and plug in my new numbers to see what progress I am making. This exercise has also forced me to look at each month as a seperate transaction period. I can try and strategise what actions I would like to take place within each month. I guess what I'm saying is that keeping a detailed spreadsheet and this blog makes me view my personal finances as a true business. Each month at work we do monthly roll ups to see if we are going to hit our annual goals/budget. I now do much of the same for my own finances.

Friday, October 26, 2007

Net Worth Projections

I have been doing some analysis of how to best estimate the potential growth of my net worth. This is to try an answer the question of "how much money will I have when I'm 33, 34, 35 etc. years old. It will be nice to try and celebrate the smaller successes along the way to achieving my goal. Celebrating every six figure amount is nice. I am heading close to the $200K range as I write. This exercise is also an attempt to try and determine if my current path will allow me to hit my goal of having $1M by the time I'm 40 (Feb. 2017). This exercise or analysis has been very interesting for me and reveals a lot about how the future will play out.

I have taken a look at several ways to come up with a good predictor. Right now I have decided to compare the growth of a set rate of return on a monthly basis (1.5%) versus an increase of a set amount of money (how much I save) each month as well as a specific rate of return (8% annually or .0066 a month). The past several months I have been able to save at least $3K dollars a month and hope to get about 8% return from all my investments.
An important note is that since tracking my progress I have beaten this growth rate on both accounts almost every month. I have somehow been able to save more and gain a better rate of return. However, I believe that there will be good times and bad on the road ahead so I should account for that somehow. I believe that both of these methods have a strong a potential for becoming my baseline from which to compare my progress. I have highlighted in the spreadsheet below my birthday which is in February as well as the $100K milestones.
As you can see the 1.5% column on the left does not beat out the $3K plus 8% return. However, as time goes by the advantage shifts to the 1.5% growth column. In June 2016 or in the $700K range the column on the left or 1.5% growth has the advantage and takes the lead for ever more.

As the my net worth increases the advantage becomes even greater. If I draw the numbers down until I'm age 50 the discrepancy is over 50% in favor of the 1.5% growth column.

In February of 2027 when I turn 50 the 1.5% column reads $5,365,340 while the $3k in savings plus 8% annual return column only reads $2,420,486.96. This is amazing if you ask me.

Some takeaways from this analysis so far are:
1. Saving the first 700K is influenced more by my ability to save money. From this point on it is the true growth or rate of return from my investments.

2. Based on these two predictions I will fall short of my $1M dollar goal by age 40. I turn 40 in February of 2017. At a 1.5% increase I will have $898,818.97. At $3K a month plus 8% return I will have $851, 058.98. Either of these numbers would be something to be proud of by the time I'm 40, but most definitely falling short of my goal.
3. More to follow as I ponder these numbers.
Any thoughts?

Friday, October 19, 2007

Life Get's in the Way

What a crazy few weeks I have had! My work situation is not good. The Division I work in is going through some major business issues right now. The good news is that I am still in the good graces with my supervisors (I have 3 or 4 or maybe 5 bosses). At least I feel that they would be upset if I were to leave. However, the current situation has caused me to consider other options for employment. I have only put in a minimal effort in looking for a job. I updated my resume and went to one job fair which has resulted in two potential opportunities. I also have a potential opportunity within the same company I am working. This entire situation has caused me to really question what I want to do with the next few years. I can try and stay with one company for a long time and move up in the management chain or bounce around every couple of years working on various different project that peak my interest. Having said that... All of this is stressful. In the middle of all of this I got a bad sinus infection that I am still getting over and I have also developed my first experience with TMJ (I am still not sure what this stands for) which is severe jaw pain brought on by stress.
Oh, did I mention, my wife and I just found out that she is pregnant. This does add to the stress but in some way brings everything back into perspective. Regardless, I am in a good job market in a thriving industry with some money in the bank.
The lesson learned over the past few weeks is really the importance of saving money. The corporate rat race is risky business. Not to mention it is bad for your health.

Sunday, October 14, 2007

$200,000 a year and completely broke.

Someone who I have worked with for a few years has recently left the company. For reasons I won't go into, the move was sudden and unexpected. He is in his early 50's, extremely smart, very employable, but his financial choices are questionable at best. I was very close to this person, and he would often share some very personal details of his financial situation. I have recently reread "The Millionaire Next Door," and I would say he is the perfect example of a hyper consumer. His financial situation is completely out of control. Overspending on just about everything from cars for his kids, last minute trips, and even a stretch-Hummer for one son's senior prom party. An overall complete disregard for the value of a dollar.

This person made a combined income of about $200K a year including his salary, his wife's salary, and a pension from the government. He was living paycheck to paycheck. I know this because he told me, as he would say, "most people live check to check." I didn't say anything about my situation. Don't get me wrong...I am hardly perfect, but not living check to check. He had convinced himself of a couple of things. One being, "most people live check to check" and that "it is impossible to get ahead." $200K a year and completely broke.

I work for a medium-sized corporation with a benefit of a retirement plan made up of a 401K, stock sharing plan, and a healthy match made in the form of cash and company stock. This is about 95% retirement money subject to all the rules and regulations you would expect. This person's account was just over $100K at the time of his departure. Again, I know this because he told me. He was contributing only 3% of his salary. When he told me his account was $100K, he framed the conversation in the terms of "you'll have this much some day, too." I kept my mouth closed as I usually do. I rarely disclose any personal money info (except on this blog).

This person left our company about 6 weeks ago and has recently cashed out of all retirement accounts. I imagine that after all penalties and taxes he is walking away with maybe half ($50K). To make things worse he has cashed out at the end of a tax year. Interesting enough, his financial move has come up at work. His former boss and my big boss asked how he was doing and if he had found another job. In my area, he could realistically find another job within about 4-8 weeks. Someone in the room replied, "he hasn't found another job, but he is OK because he cashed out of his 401K and he now has several months to figure things out."

I feel totally amazed at these comments. Not only is this person not okay and probably headed for financial ruin, but I am amazed that other people view this move as no big deal. Not only did all those taxes and fees have to be paid but he is most likely going to blow through this money in a few months. Even with a government pension of about $40K a year, he is in real financial trouble unless he makes some real changes.

If my wife and I both lost our jobs or even just one of us lost our jobs we would be worried. We would quickly hit the pavement looking for new work and slow down on all non-essential spending. Cashing out of even taxable accounts would be a last resort. The money we have saved has come from hard work and sacrifice. I would do everything I could to avoid spending it down on monthly expenses. I think what I have observed really comes down to a person's values. How they value money and really how they value themselves. A hyper consumer who thinks he is providing for his family by giving cars and lavish gifts, is really potentially leading them over the financial waterfall. Loving your kids (again, I don't have any yet) means making some tough decisions on what you are going to provide and what you are going to hold back - having some control over the situation and not being a victim.

I am left wondering why people who have made poor financial choices seem to be more inclined to bring them up in conversation as if these moves are okay. Are they trying to get reassurance? Should I speak up more about my opinions? I'm not for hiding one's mistakes, but at least admitting that they were an unfortunate financial move. Why is there a social awkwardness in admitting that you are saving as much as you can for your future? And really saying that if you are not saving for your future you are in danger of some pretty bad things?

Saturday, October 13, 2007

"Millionairs in the Making"

I am debating about taking the links to CNN's "Millionaires in the Making" pages off my blog. Why am I highlighting some of these people? Some of these families are doing great. However, there seems to be a lot of stories written about families who are only one or two steps away from financial ruin. Why are these families being highlighted as financial successes? I enjoyed the new postings on the Millionaires in the Making for a long time but now I find myself quickly reading through the story to get to the juicy comments left by other people evaluating the true situation. Is it just me?

Tuesday, October 2, 2007

My house is worth what?

Over the past few months I have really been in tune with by balance sheet. One key point learned is if I move money from my asset column towards one of my liabilities there is no change in my net worth. The move cancels itself out so to speak. The only time paying down a liability will increase my net worth is when the funds come in from "new" money i.e. my paycheck and never hits the asset column first. (not sure if this is explained well).

So here is my concern. If I move some of my assets from a cash account to do some home improvements, how do I reflect that change in my homes value? I have my homes appraised value listed as the dollar amount under my asset column. I am trying to be conservative with the value of my home. Some of the improvement we would like to make are pretty solid. Things like new vanities and tile floor in the bathrooms should be a good investment. However, what should my change in our House Value be? How do I determine the change in my home's value?

I have spent some time on Trulia and Zillow doing some research on house values in my neighborhood. I have a few known facts to work from because some close neighbors have recently sold. Their homes have sold relatively quickly I might add. My conclusion is that these two websites may be totally inaccurate. Several homes that were listed as sold, to include mine, were listed at the wrong price. My house was listed as being sold for close to the original asking price but not for what we actually bought it for. This is a big deal because my wife and I bought our home for almost $30K less the asking price. We have since put close to $25K in home improvements back into our home.

I am pained by the idea of making what should be a good home improvement but not getting credit for it on my net worth balance sheet. I am considering a few options; 1. Getting my house appraised in a few months. We bought in May and have made major improvements to include new kitchen, flooring throughout, general cleaning, and totally repainted. However, it may be tough for an appraiser to adjust the house value because it has been such a short amount of time. 2. Having my real estate agent come back over and give me her best guess on what equity room I have left in the home.

Smart Money Article

In the October issue of Smart Money magazine there is a great article about people who have "cashed out" of ther 9-5 jobs. They have done this by saving a tidy nest egg and lowering there living expenses. This is a great article and I would recommend it to anyone reading this blog.

The article highlights a few different couples who for one reason or another got sick of the daily grind, focused on there savings habits and started on a life less traveled. The article mentions a few books, one of them being, Cashing in on the American Dream: How to Retire at 35. I have added this book to my amazon wish list and intend on checking it out when I get a chance.

This article is rare in my experience. Most traditional money magazines focus on traditional things. Like, working until you are 65, max out your 401K and then retire. This article really tapped into the large group of people who are interested in doing other things with there lives other than go to work in a job they don't love. Some of the people highlighted, if not all of them, took up some other type of occupation that gave them more flexibility and enjoyment but maybe not the same paycheck. However, when you are not in a desperate need for a paycheck why should it be the most important factor.

One of the themes of the article is definitely lowering your living expenses. The concept being that you don't need to save as much or earn as much if your living expenses are low. Many of the couples were traveling the wold spending lots of time in Thailand or parts of Europe where your dollar goes a little further. I'm not sure my wife and I are willing to move to Thailand any time soon but the lesson of being flexible is noted.

My wife and I currently live in one of the more expensive parts of the country. We have purchased a home hoping that this investment will pay off over the next 5-10 years. We have no illusions of trying to retire in this area. It is simply to expensive. The strategy of moving to a less expensive area is a good one and one that my wife and I plan on using. It would be nice to eventually cash out of our higher priced home by moving to a less expensive one in a different area of the country. Maybe even renting again...
Below is most of the article from

NO, IT'S NOT your imagination: You're working too hard. Bucking the trend in most developed nations, the American workweek has been growing longer. We put in an average of 1,815 hours a year — longer hours than even the Japanese, who have a word, karoshi, for people who die from overwork. The extra labor often translates into bigger salaries and more-secure retirements, but it also pours fuel on a fire as old as work itself: the dream of cashing out early.
While there's no way to quantify how many of us are eyeing the exits, evidence suggests that more people are taking the idea seriously. Books about early retirement are steady sellers, and virtual communities of would-be escape artists thrive on the web. Fortunately, it doesn't take an enormous nest egg to fund a life-changing move. We interviewed financial experts and early retirees to find out how to get out while you're young.
SUPER SAVERSNext May, Jay Arnold of Nashville, Tenn., will retire from his position as project manager at an auto maker — at 43. His wife Corinne has already left her job. They've got two young children, but they're not fazed: they've been saving aggressively for two decades. "Debt-free before our first child? Did it," says the confident Jay. Their secret: Supplementing their management-level salaries with part-time, self-employed work. They saved 30% of their take-home pay; after they paid off their house in 1998, they bumped that rate to 50%. The fruit of their labor: a savings hoard that's approaching $2 million.
For more tips on how to save for and make the most of an early retirement, plus tips on taking a buyout, turn to the October issue of
SmartMoney Magazine.

Monthly Update for September 2007

Wow! Net worth up to $173,791.84. That's a change of $7,498 dollars or about a 4.5% increase from last month! Details listed on

I have been saving money for some time now but never really tracked my month to month progress in detail. This has been such a great learning experience for me.

A few notes on the month

  • Over $2,500 dollars deposited into my ING account!

  • Recovery of the overall U.S. Stock Market had a major impact to my mutual fund portfolio (retirement and taxable accounts)

  • Limited draw down of liabilities other than the $339 from a mortgage payment

A few thoughts on the future

  • Expect next month to be another good ING savings month.

  • Expecting some additional income from travel reimbursements from work.

  • Cash savings goal of $45,000. Within 6-8 months.

  • Continue researching new investments for after cash savings goal is attained.

Friday, September 28, 2007

New home purchases

As my wife and I have purchased our first home we are being presented by many tempting choices to buy "stuff". Luckily my wife and I are mostly on the same page when it comes to purchasing household items. However, our new home is three times larger than the apartment we have moved out of. Our living room, dinning room, and two of the three bedrooms are empty. We have placed an order for a new couch and rug for the living room (about $1,000) but have decided to hold off on any furniture for the bedrooms. The dining room set is probably an inevitable purchase within the next 6 months. This is not something I am looking forward to but I know we should just bite the bullet and get it done. Purchasing these items for me is a very difficult process. I want nice things but don't want to pay for them. Is this a problem?

Throughout the entire home buying process I have learned and seen how easy it is to fall into the many middle class traps along the way. First was the real estate agent who kept sending me links to homes outside of our agreed upon price range. Then there is the loan officer telling me I qualify for a $600,000 dollar mortgage. Yikes...I feel sorry for anyone who just goes along for the ride and decides not to take control over the situation. Now we are faced with the traps of wanting to have nice things for our new home. Luckily I have a wonderful wife who does an outstanding job at finding good deals and sales on items for the house. I thinke we struggle equally with these decisions.

The question is how do you balance enjoying today while wanting to save for tomorrow. If we lived in a small one bedroom apartment we would be able to save a lot more money but our quality of life would be very low. I am hoping we have made a good decision with the purchase of our townhouse. The longer we live in our new house the more I think we will stay for many years to come i.e. we will avoid the temptation to upgrade.

Tuesday, September 25, 2007

The Tax Man

One of the main benefits of our home purchase (besides making $20K the day we closed...on paper at least) is the tax breaks to come in 2008. The last two years we have gotten killed on taxes. Two incomes and no kids = your paying a lot in taxes. Our 2006 tax strategy was maxing out my 401K and just about maxing out my wifes. In addition to this I was also paying an extra $300 a paycheck to taxes. I did this by adjusting my W-4 form and checking the box "additional amount". I was trying to spread out the pain throughout the year. We still ended up owing a few thousand dollars. In 2007, we have cut down on our 401K contributions in order to increase our take home pay and ability to save additional cash in our ING account. I have also changed my W4 form to only take an additional $250 per paycheck. I am expecting to still owe some money for 2007. We may be able to save some money on taxes from the deduction of loan interest and any additional tax breaks from purchasing our home, however since we bought in May we will not receive the full tax benefits this year.

January 1, 2008 is a brand new day. I will immediately adjust my W4 form and give myself a $250 a paycheck raise. This will be nice. My plan is to put this money automatically into savings buy bumping up our ING savings rate. This should put us up to $750 a week in savings! I am expecting 2008 tax year to be completely different for us. We should be able to deduct over twice as much from our 2006 and 2007 filings.

Sunday, September 23, 2007

Home Improvements

My wife and I have recently purchased a new townhouse. Our home is an end unit so our living space and yard is much larger than our surrounding neighbors. We bought in May and spent the next several months renovating. In an uncertain real estate market we felt more comfortable with hedging our bets by purchasing a fixer upper. We purchased the home for $370,000 which was $20,000 under the appraised value. We have recently updated the kitchen, flooring and several other minor projects around the house. A home two doors down from ours (not an end unit) has recently sold for $395,000. In theory an end unit should sell for about $15,000 more. However, I only list my house value as $390,000 when calculating my net worth. I'm trying to be conservative about my homes estimated value.

Here is my challenge. How much money should my wife and I spend on fixing the house up. We still have new siding to replace ($2,500), new tile and vanities in the 2.5 bathrooms (Hoping for under $5,000) and landscaping ($1,000).

My current numbers are below for the amount of money I have put into my home. As a new home owner I am finding it harder than anticipated to get my mind around home equity. Right now, my wife and I are automatically putting $500.00 a week into our ING Orange savings account. This feels a lot better to me than putting $500.00 a week into fixing up my home. This is my struggle. I also feel that I need to build up my cash cushion. Prior to buying our home my ING account was just over $50,000. I want that back.

I am leaning more towards holding off on any major fixes for at least 4 months.

Monday, September 17, 2007

Work is Hard

I am currently on business travel. Two weeks away from my wife and daily routine. I am very lucky this time that I am actually on the West Coast staying in one of the most beautiful places in the world. Huntington Beach. I love the pier and Maine Street activities. My day is full of contrast. What I mean is that during the day I am usually totally stressed out and stuck in a not so good working condition. After work I am running on the beach or along the Pacific Coast Highway without a care in the world. This should be good motivation for achieving my financial goals. I wonder how many people on that beach are financially free? How many of them are only working part time? How many of them have sacrificed early in there lives so that they could enjoy such beautiful scenery later on in life?

I'm not sure I would ever want to live full time on the West Coast but it would sure be nice to rent a house a few weeks out of the year. It's on the list for reasons to sacrifice now for a better tomorrow...

One major plus for travelling for work is the extra money I make. Every day out in CA I receive an extra $64 a day for my expenses (tax free). I typically spend about half. For a two week trip I should walk away with an extra couple hundred bucks that will go right into savings. Over the past few years I have managed to save an extra $4,000-$5,000 dollars tax free.

Saturday, September 8, 2007

2 Years Ago

A friend of mine who I had served with was driving through the area and asked if he could stay with my wife and I. Two of his close classmates had been killed in Iraq during the same incident and he was driving back from the funeral at West Point. We spent some time catching up and exchanged stories about the civilian world. He had done much better than me. He had found this great company who truly valued his military experience. I was totally jealous. I wanted to give him my resume. The only catch was that he worked 400 miles away. I still gave him my resume knowing it probably wouldn’t work out anyways. After a few phone calls and emails I was on a plane for an interview. I was offered a job with a salary of $40K more than I was currently making. My wife and I both agreed that we had to take the opportunity. There were plenty of jobs within my wife’s industry in the area and we anticipated the transition to be a relatively easy one. Within a few months she had a job making almost $20K more than her previous position. Our situations had completely changed. I was back in the game. When we moved we had a net worth of about $60K. We were both 28 years old.

4 Years Ago

I was headed home from active duty with no solid plans for my next job. I had a close family member who was very sick with cancer and a fiancée ready to settle down. Coming off of active duty was a huge transition. I was fortunate to have money in the bank, a brokerage account and very little debt except for a car payment. I spent the next 2 years trying to figure out what I was supposed to be doing as a civilian. I literally changed jobs every 6 months. I hated just about every boss I had. I also felt completely under used. I had been an officer in the military in charge of at one time almost 2oo people and millions of dollars worth of equipment. I felt my dream of saving money for a better life slipping away. Luckily my wife had a great career and literally carried us through this time. I made enough money to pay some of our bills but very little money went into our savings. However, even with a tight budget we still manage to save a few thousand every year. I was still very frustrated. We had a net worth of about $45K

8 Years Ago

Eight years ago I had just graduated from college. I felt lucky because I actually had a full time job waiting for me when I graduated. I had always wanted to be in the army and ROTC (Reserve Officer Training Corps) was my route in. I was awarded a two year scholarship which not only paid for my tuition and gave me a monthly pay check as a college student. The scholarship also guaranteed me active duty. Believe it or not but back in 1995 when I was freshman, active duty assignments in the army were extremely competitive to get. By 1999, when I graduated, active duty was not as competitive. How times have changed.

Three days after graduation my car was packed and I was headed to my Officer Basic Course for training. For the first 5 ½ months of active duty I was being paid my salary as a 2nd LT and also a monthly stipend equal to about an additional pay check to compensate for my in transit for training status. I felt rich..Honestly…I had gone from a college student to collecting what felt like a huge pay check three times a month. My living expenses were also extremely low. The army covered just about all of my living expenses including housing. For me this was a small two bedroom apartment just outside post. They also offered cheap alternatives for eating etc. At the time I had about $8K to my name made up of a checking account and a fidelity brokerage account. I started to quickly pay down my car loan which was in my parent’s name. My parents agreed to pay my student loan for the first two years of my in state tuition. My parents were nervous about me being in the army but were thrilled that the army had paid for the last two years.

With the army paying for my housing, giving me a salary of about $900 dollars take home pay twice a month and an additional stipend of $900 more dollars I felt in great shape. $2,700 dollars a month in take home pay and next to no living expenses. Within two months of being on active duty I had signed up for a Roth IRA and set up automatic payments to max it out. I also set up automatic payments of $150 dollars to contribute to my brokerage account. Within the next few weeks I remember realizing that I had a lot more room within my budget (remember I was totally new to the real world…well the army). I gradually increased my automatic savings or would manually transfer money over to my mutual funds. My brokerage account began to grow. While other young officers were buying new clothes or fancy cars I was watching my savings grow. I was hooked.

If I had it all to do over again, I think I would have focused more on building up a large cash savings for an emergency fund. However, during 1999 it was hard to ignore the gains of the stock market.
Overall, I would say looking back 8 years ago; I had a huge advantage of having an immediate job after college and one that paid relatively well. I also had supporting parents who helped cover college costs and an Army scholarship that chipped in a huge amount. What I remember most was the excitement I had over seeing my brokerage account increase on a monthly basis. It was during this time that I wrote down that I wanted a 6 figure net worth by the time I was 30 years old. At the time I was quickly crossing from $8K to $10K. The hardships of the army helped me save more money. I was deployed or in the field training for over 50% of the time I was on active duty. While deployed I had the advantage of not paying federal taxes and receiving hazardess duty pay. During one 7 month deployment I only spent $2,000 the entire time I was away…and that included my plane ticket home to see my family. The rest went into my saving account or mutual funds.

Friday, September 7, 2007

My Real Goal

I know I’ve said that my goal is to have a million dollars. This is basically my 10 year goal. There is more to the story. My real goal is to accumulate enough money to live off the interest, dividend and appreciation of my money without touching the principle. I would like to be able to work part time/consult or take a less stressful full time job. Besides wanting more choices (see previous post) I would also like to be remembered. What do I mean by this? I was attending a family party on my wife’s side and my father in law was showing us a family genealogy book he had just put together. There were lots of old pictures of family members from a few generations back. My father in law had struggled to find the names of these people. The pictures were old, but not ancient. It struck me on how quick people are forgotten once they are gone. I might be crazy, but I guarantee it would have been easier to remember those people in the picture if they had passed down a substantial amount of wealth when they passed on. My real goal is to pass down wealth to the next generation. I want to educate my children (I currently don’t have any) to treat money in the same way I do and continue the tradition of saving and accumulating wealth. I would also like them to have more choices (or choices faster) than I did. I’m sure that most people don’t think about this but I guess I’m the exception.

Why I'm Saving

Why I’m Saving
A few years back when I was in the military one of my Sergeants compared being in the army to being in prison…He had a very good point. First of all we were standing on a hill top in a third world country under very difficult conditions. He quickly ran down the list of, we don’t eat what we want, sleep when we want, wear the clothes we want, or basically do anything we want…He wasn’t complaining, in fact he was one of the most pro Army soldiers I ever worked with. It was just how he looked at it. It was hard to argue. I think I said something like, “yah, but we have guns.” We had a good laugh.
Bottom line was that he felt like he was in prison because he had no choices. This really stuck with me. During my time in the military I learned so much from the people who were on my team.
Although I would never truly compare my life to someone serving hard time in prison I still think about what he said to me that day. By all accounts I have a great job. I have a boss who loves me, pushes for promotions and gives me large raises when he can. But I still don’t have the freedom of choice on any given day. I have to go to work to get a paycheck. I don’t get to wear what I want or keep the schedule that I want. I often have to jump on a plane at a moments notice to attend meetings putting my entire life on hold until I get back. Again, I have a great job but I don’t have the choices that I want. That is why I am saving. I don’t want money... I just would like to have more choices in my future. Maybe take a job that truly inspires me instead of a job that pays me the most amount of money...The list of choices seems endless. It would be nice to have a few more in my life one day...

My Financial Strategy

A few things about me…In my daily life, I typically don’t enjoy details. I tend to gloss over pretty quick. I like broader strokes and concepts. This is where I excel. I run my financial life much in the same way. Also, from the time I was very small I was a saver. I always asked my parents for singles because some how I thought it looked like more money. I’ve had a fidelity account since I was about 16 years old (thanks dad). I must admit I did have a Legg Mason account for 2 years but have since moved back to Fidelity. I enjoy listening and reading about single stocks but rarely act on any of this info. I dream of one day being a day trader of such but have enough of an understanding to know this takes a lot more time than some late night infomercials admit to. A key moment in my life was first reading about compounding interest. If I remember correctly I was in middle school. From a very young age I understood this concept of compounding interest and it has made all the difference.

So here is my strategy (1) starting early is one of my strategies. I’m saving as much as I can now so it will have the biggest impact on my life (and brokerage account) later. Also, (2) making up for my lack of Warren Buffet stock picking skills by sheer volume of money saved. I want to make up for my projected smaller rate of return by saving more money. I can control how much I save way more than I can control if a small cap stock will triple in the next 6 months. (3)Being disciplined. I am the king of delayed gratification. Discipline is on my side I must admit.

For most of the past 8 years I have decided how much I wanted to save first and then lived the rest of my life with what was left over. Most people do it the other way. I am merely going to try and use my strengths to my advantage in order to meet my goal.

Over the last two years, my wife and I have seen a huge increase in our net worth by using these three basic strategies. I hope you enjoy my posts and following me on my journey.

Welcome!!!! First Entry

Welcome to my personal finance blog
I have decided to start a personal finance blog. I read a few different financial blogs and have been inspired. In a world where talking about finance is so taboo it is such a relief to see blogs where real people share their financial challenges and goals. I love talking to people about money and frankly don’t get enough opportunities to discuss personal finance. So here is my chance. I also noticed that the financial bloggers seem so focused on their goals. The saying, “be careful what you write down because it might come true,” should be changed to “be careful what you blog...”

Creating this blog is my way of keeping on track for my short term and long term financial goals. About 8 years ago I wrote down on a piece of paper that I wanted to have a net worth of $100K by the time I was 30. At the time I had about $8K to my name…I beat that goal by 6 months. I often wonder what would have happened if I wrote down a bigger number.

My long term goal is to have a net worth (including my primary residence) of one million dollars by the time I turn 40. I’m hoping to beat this goal.