I finally hit over 100k saved in my retirement accounts! Derek and I combined have over 150k. I hope the stock market doesn’t dip anytime soon. It’d totally rain on my victory parade.
I’ve started to contain and extinguish the raging dumpster fire that is my monthly cash flow. It’s still going to be a struggle to find the right balance of saving, spending, and feeling in control.
Net Worth: $21,285
I’m trying to “pay myself first.” But, when your math ends up off, your monthly costs end up much more than anticipated, you can end up “paying yourself first” and then “stealing from yourself” to reconcile.
One factor that will help: I got a sweet sweet raise in January! I can also now take advantage the company 401(k) match. More money flowing in. Just gotta keep it from flowing through to expenses. I stopped myself from spending $16 at Old Navy online yesterday. I was tempted because I had $10 off $25. Although I could probably use more leggings, and Lu will eventually need new cloths, I was attempting to talk myself into spending money under the ruse of “saving.” I shut that down. There’s no need to rationalize a need now when it just isn’t there.
If you look month over month at the numbers: Stocks are at record highs. All our balances are up.
I closed my small brokerage account. Years ago, as a curiosity, I added maybe $100 to a brokerage account. Sharebuilder at the time offered perhaps a $50 bonus after 90 days of account opening if you started an account with $100. So, I’ve about tripled my money in a few years. But, I don’t want to invest more post-tax since I’m not yet maxing out my pre-tax contributions. It’s such a small silly balance, I decided to liquidate it to simplify how many accounts I’m tracking.
There’s actually a balance in my checking account because I haven’t paid all my bills yet. I tend to keep it close to $0.
When I began tracking my net worth monthly, I wasn’t sure if it would in fact be motivating or if I’d see much change. It’s been pretty awesome to see. It definitely helps to see I can move the needle, even if just a little bit, month after month.
My big dreams won’t make themselves my reality just because I dreamt them up. Focusing. Striving. Tracking. Recalibrating. That’s my plan to get there.
Starting the year out strong!
Net Worth: $14,107
When I made the FML reckoning in May 2016, and promised to begin tracking our net worth monthly, I discovered we were in the hole over four grand. We’re now positive $14017. That’s a gain of eighteen thousand dollars. That’s a lot of dollars. It’s humbling and rewarding to see forward progress.
It took a lot of effort to throw money at retirement savings to make this happen. I found an old list of our investment accounts from October 2013. We had $61292 between the both of us. Student loan debt was around the same amounts if not more. So we were about sixty thousand in the hole then. Now that’s progress!
Throwing Piles of Money Around Playing the Credit Card Game
For anyone who looks closely at the transactions, you can see that while we’re hoarding cash in retirement investment accounts, we’re also playing a dangerous game with my credit cards. At the end of 2015 into 2016, we racked up debt on one interest free credit card after another. We took a huge hit to income and so put all our basic life costs on credit cards. Now they’re coming due, so we’re racking up a NEW card so we can stockpile cash to pay those about to charge interest.
Why You Need a Budget and Need to Stick to the Budget
I sat down last week and looked at all my spending in 2016. It was way out of whack with my budget. I set my budget expectations for 2016 in early 2016, but somehow, I consistently fell into a trap of thinking I had more money to spend on groceries, on fun, on travel, on everything really, than I had available. If you’ve got access to credit, it can be easy to put aside “savings” to “pay yourself first,” only to discover spending creeps and creeps until it starts lingering on credit cards. So, those savings end up getting drained to pay credit card debt. I mean I stared at it happening for six months and yet still couldn’t stop myself from doing it.
Unless I do dramatic changes in 2017, I’m going to slowly sink into a credit card debt hole I can only get myself out of by trashing my long term savings goals. That option sucks. Here’s to holding my ass to the fire to spend less in 2017!
In future posts, I’ll share my big goals and bold plans to get there.
Net Worth: $10380.25
Winning and losing at the same time
Our net worth is still climbing. But if you look at what we’re doing, you can see we’re still sustaining some bad habits. Student loan debt is holding pretty steady. Credit card debt is steady or growing.
The Story the Numbers Don’t Tell
I raided my daughter’s piggy bank for $1.50 today. I didn’t have any cash on hand and needed to add money to my transit fare card to ride into work.
Here’s some of the problems. We moved in March and I switched jobs. Without any lifestyle inflation of us enjoying more or different things, we had a huge bottom line inflation of our basic costs. They went up. A lot.
- Rent – up $405/month
- Health Insurance – up $100+/month (I know before it was around $300 and now it’s about $400 in premiums)
- Transit – up $50/month
So, total increase of $6600 in costs while my base salary went down $10,000 a year. If/when I get my bonus, I’ll have more cash, but that doesn’t help pay my health insurance or rent costs today.
I’ve started to slack in my timely reporting, but I did at least crunch the numbers early November.
Net Worth: $5091
It Ain’t a Smooth Onward and Upward Ride
We’ve lost more than $1000 since last month. This is a primo example of why it can be dangerous to check net worth monthly. Investments are a long term game and do have small fluctuations.
If you look at the 6 months since I started tracking my net worth – HOLY COW – We’re up about $9000, taking it from the red to black. A $1300 gain from September doesn’t seem as impressive. Seeing it as a more than $1000 loss since the month prior sucks.
An Epic Battle Against Spending
While it wasn’t all roses and growth, that’s not the reason I’m super down about net worth. We’ve been fighting an epic battle against our spending. We’ve been losing. We’re losing so bad all our money is spoken for until March 2017. We’ve got to figure out how to earn more as we can only do so much to spend less.
Money is not just about math. It’s about emotions too. And irrational decisions. Right now I’m frustrated and need to figure out a way to get ahead. What tracking my net worth has shown me is that so long as my husband and I continue on this path, we’re not going to get very far very fast.
My investments continue to save me from drowning in my credit card and student loan debt.
Net Worth: $6425
If you look closely at the changes in my savings balances compared to the changes in my credit card balances, you’ll notice a bunch of money shifted accounts.
The Good, the Bad, and the Ugly
I’m shoving a ton of money into my 401(k).
Our investments are pretty much holding steady/steadily gaining. You can see small fluctuations up and down. That’s the problem with looking month by month. The stock market is a long play. If quarter after quarter, year over year, things were looking bad I’d be worried and shoving money into my mattress. These dips and rises, however, don’t concern me. I know I chose decent stocks (Vanguard funds for the win) and so pay little attention beyond recording the numbers.
I’m draining my savings account.
I’ve got balances on several credit cards. None are accruing interest, however, so it’s not ugly yet.
My high interest rate graduate student loan is growing, even though I’m now making payments! At 6.8% interest, my income based repayment amount isn’t enough to hold it down. I need to find extra money to throw at this debt and soon.
If you add up my “available” savings – my regular checking and savings accounts that have no penalties attached when I use that money – and subtract all my credit card balances you’ll come up with a negative number. I’m spending more each month than I’ve given myself to pay the bills.
Why “Paying yourself first” is not enough
I’m paying myself first. Isn’t that obvious? I’ve done the math and skimmed $2125 off the top each month to go towards my 401(k). Great! Right?
The problem – I’ve given myself about $2000 after rent’s paid to pay all my other expenses. That should be enough. In fact, in an ideal world, I want my above rent expenses to be $1000/month. Trouble is, for the past few months I’ve been spending more than $2000 a month on stuff.
The stuff all seems mostly justified at the time, but stuff is blowing my budget to the moon. I’ve got until March 2017 to fix this problem before the credit card interest monsters come out of the closet to get me.
What did the budget-blowing stuff look like in September?
Well, Derek’s parents visited. That meant we got to go on two kid free dates! That’s more than we’ve done in a year. But that also cost us about $80 in extra costs. Movies aren’t cheap. Neither are a couple of beers out and an uber home. Their visit also meant that instead of eating every meal at home, we went out a few times with them and picked up the tab a few times. Another $200+ beyond our expectations.
Boston in August was unseasonably warm to the tune of having three ACs kicking full bore most of the days most of the time. The luxury of not dying of heat stroke in our apartment cost us a jaw dropping $220 for our September bill. That’s about $150 more that we typically spend on electric. Since we’ve moved to this apartment, our electric bills have been more $100+ than $50-$70 like we’ve been accustomed in our old place. Our spending hasn’t shifted to reflect that cost.
Many other budget categories are likewise being broken by $20 here or there, which adds up over time.
The killer for the past few months has been the “well, we must do this” costs. Extra travel, clothing and household purchases, socializing. We’ve got to find ways to bring it back down. We’re going to Poland for two weeks this month, so unfortunately, October probably won’t fix our spending problem.
It’s not all onward and upward.
Net Worth: $3972
Our net worth has shrunk by the cost of a bar tab. We’re worth $46 less than last month. How September compares to August is a great reflection of why it can be problematic to check your net worth monthly. The end tally doesn’t tell much about the picture. The details of what’s good and what’s bad need to be scrutinized. I don’t feel bad about this downturn. It shows that my stock portfolios were slightly inflated in price month over month and recent gains have come back down a little bit. They’ll soon grow again, so I don’t care.
What’s Gone Smashingly Well Since August
I became eligible to contribute to my employers 401(k) plan. The first month of eligibility, I started putting money aside. My monthly contribution amount is $2125. I’ve already seen that money grow by $22! Since I only became eligible August 1, I’m doing a push to put as close to the $18,500 max that I can. There’s no employer match at this time. I’m currently testing the limits of my budget by contributing 30 percent of my salary. For those whipping out the calculators, yes, $2125 x 12 = waaay more than you’re allowed to contribute. But, I’m not contributing $2125 for 12 months. I’ve only got a handful of months to sock money away for 2016. I’m only going to end up with about $12,000 put away for this year.
Why on earth am I carrying so much credit card debt?
You may have noticed most of my credit card balances grew over the past month. Before you slap me upside the head, I’m not paying interest on any of my credit cards. I’m using free loans from the credit card company. They give me points and perks for buying my groceries and flights and meals on their cards. I give them nothing in return except my usage of their card. I do sometimes pay interest (I’m not perfect), but it’s always less than the perks I get from the card for the year. At this time we’ve got a few 0% interest credit cards in circulation. Credit Card #2 is due November, so I’m actually paying that off before the end of this month.
I am currently failing at the credit card game, however, if you look at my available savings versus current credit card balances. If I was killing it at this game, my available savings account balance would be more than what I owe on all my cards. Right now I’m a little in the hole. The hole started because I was laid off and I’m still in the hole now because I’m pushing more money than comfortable to long term “do not touch” retirement savings. I’m betting on my near term future self to bail me out and make sure I don’t start paying interest on my cards. I’m being stupid gambling on my future self. But, it’s a small gamble that I’m willing to do right now. As I track my progress, you’ll be able to judge yourself how stupid or stupidly sensible this decision was.
Why is one student loan balance growing rather than shrinking?
My student loans were in a deferment for a while. So, they’ve slowly grown over the past few months by a few hundred dollars. I’m starting to pay them back again so these balances should start to shrink. The first payment for Student Loan (Grad) is due October 7th.
Wow, you’ve basically got $4000, so lets party!
Not so fast. I don’t have $4000 accessible to me to wantonly spend. See my above explanation about my credit cards. If you look at money I can access without penalties, I’m actually negative money. I’ve wantonly spent more money on credit cards than I can actually pay off at this moment.
If ever there was an argument for saving early and often, our changes in net worth over the past three months alone represent the sheer power of compounding interest.
June 2016: We were at minus $4,328!
July 2016: We came out of the red to the tune of $619
August 2016: We’re now $4018 positive!
The Details of How Our Net Worth Changed Month Over Month
Net Worth: $4018
I’ve done no significant and fancy hoopla to power up our savings or pay down our debt since I started monthly tracking net worth. In fact, looking at the month change, there’s some bad stuff happening. My student loan balances are growing. A couple of my investments took a small hit and shrank. But that negative is countered by a bigger, stronger positive flow of strong investment returns and paying down my credit cards.
My first net worth reveal showed that we were in the hole some -$4432.30. How did the passage of one more month treat us financially?
Net Worth: $619
We’re no longer in the red. We’re +$619. Woo hoo.
This is the magic of compounding interest in action. If you look closely at the numbers, you’ll notice that I added $1218.23 to our debt balances. Due to sheer luck our investments increased $6163.67, which dragged us out of our hole.
A small shift in the stock market could easily move us back to red.
Other questions you may have:
Why are your student loans growing?
Well, we’re on IBR and not currently paying enough each month to cover the growing interest. These are very bad, no good debts that need to be squashed. “Student Loan – D” and “Student Loan (Undergrad) – K” at least are at under 4% interest rates. “Student Loan (Grad) – K,” however, haunts my nightmares. It’s at 6.8% interest. I wanted it 100% dead last year, but life got in the way of me aggressively paying it down.
My, my, that’s a lot of credit cards. Do you need so many?
This actually isn’t even all our credit cards. I added number 8 to this list this month as it had a balance. Between Derek and myself, there’s four or five more credit cards in our possession. Credit isn’t always evil, but it needs to be done right. Our growing credit card balances, or the ones that are remaining flat are actually at 0% interest right now. So, we’re rocking our free loans. I consider myself in bad shape if my savings and checking account balance can’t obliterate all the credit card balances.
Right now, we’re worth $619, but most of that is tied up in retirement accounts with harsh penalties if we raid them early.
There’s $12,692.48 on our credit cards. There’s $11,756.16 available cash in our accounts. Therefore, all is not right in Katrina’s money-land. I’m -$936.32.
What on earth could you be charging on those cards to have such high balances?
All will be revealed in good time.
Thanks for some figures, but really, what are you making a month?
I know this net worth table is only a partial picture to judge my progress and how it may relate to your own situation. In later posts, I’ll share more about our income and expenses to shed more perspective on the details.
You say “our” sometimes and “my” others. Is this your joint net worth?
Good catch! This is kinda my husband and my joint net worth. I track our major debts together and our major savings. But Derek has some credit cards and a savings and checking account that I only vaguely know of. I don’t track what he spends on it or how much he saves. I know whatever other debts he has he could easily pay by selling a few items he owns, so I don’t factor these items in.
Am I creating more questions than I’m answering? Let me know what you wish you knew and I’ll work more info into future posts.