2008 was an incredible year for the United States, the world - and of course me personally. I achieved a lot in terms of improving my personal finances. I learned a great deal since I started this journey last January, and it's amazing to think how far I've come and how far I have yet to go. It's an exciting, difficult, but positive journey and I can't wait to see what the future brings.
And now, 2008 in numbers:
$0 - The amount I paid in bank fees this year. A key reason for this was switching most of my banking to ING, but I also didn't overspend my checking account as I had regularly in the past (to the tune of $2,633 in overdraft charges, late fees, and service fees, which also happens to be close to my current IRA balance).
3.598 - This is the amount of shares I automatically purchased through dividend reinvestment in my FFNOX fund. Even though this is a tiny amount - purchased around $19 per share - this represents the first real example to me of true passive income beyond piddling savings account interest. Simply by owning these equities, I earned dividend cash that gave me something of additional value (in this case more shares). This was a big moment for me conceptually as a beginning investor.
12 - In the last year - just 12 short months - I have increased my knowledge of investing, the economy, frugality, retirement planning, and everything having to do with personal finance infinitely from where I was back in December in 2007.
57 - The number of personal finance blogs and websites listed on my sidebar. You were all extremely helpful, positive, and informative, and I know that my journey would have been much, much more difficult without your daily advice filling my Google Reader. And this is not to ignore the innumerable members of the Snowflake Revolution, whose dedication to strategic debt reduction and saving is truly inspirational.
$1,000 - It's a nice round number to use as a first goal for everyone's emergency fund, which is a personal finance must. I built my EF up to $1,000 earlier in '08, emptied it for what I feel was a great reason, and am glad I currently have it sitting at $907.
$2,501.72 - This is the amount that I used to buy into my first-ever investment in the stock market, the FFNOX index fund in my Fidelity Roth IRA. A banner day.
$3,342.25 - This is the amount that I paid in debt reduction for the year.
$4,684 - This is my current total assets. Considering I had literally $0 for years this is an infinitely fantastic improvement!
$28,076 - This is the total debt that I finished the year with, which is actually $873.25 more than a year ago. Though some of this can be attributed to the interest on my student loan, the majority of it represents additional debt incurred by me. This is one significant disappointment for the year and something I have to concentrate on further in '09 and beyond.
Showing posts with label Reports. Show all posts
Showing posts with label Reports. Show all posts
Wednesday, January 7, 2009
Tuesday, January 6, 2009
December 2008 Net Worth: Finishing Strong (Kind Of)
Well. It's been some time since I blogged about my financial progress on here. I'm not entirely sure why; I think I got burned out a bit from taking in too much financial media, then the historic election, I was busy with various other things...at any rate I'm back to being focused on my personal finance and the economy in general.
I finished up the year with a great month on the face of it: a 2.22% increase in my net worth. This was due to a big increase in assets by way of a healthy dose of Xmas cash, other savings, and small FFNOX dividends. This is bloated a bit, as I have close to $400 earmarked for specific debt reduction this month. Still, a solid month for asset accumulation.
And then we come to my debts. Loans down as usual, cards down even more (representing reduced rotating monthly payments - I don't carry a balance aside from about $2600 in collections from years ago that I'm paying off at 0% interest), but that persnickety Other category is way, way up! +$771! Ugh. Part of this is that I haven't paid off NSTAR just yet (I'd rather hang onto the cash until the last possible moment. Psychological I suppose.) Part of it represents a few small family and friend debts that I seem to keep adding despite my commitment to not do so. And a big part of it - $430.53 to be exact - is from a Commonwealth of Massachusetts Tax Assessment from 2005! Perfect. Just what I need right now. Unfortuately I can't help but think this is accurate as back then I had no idea what I was doing with my taxes. I have some recourse to appeal; I will have to take a look at my records if I even have them lying around. Need to concentrate more on debt reduction in 2009.
Because I like graphs that tell a great deal of information, I added a net worth line to my asset & debt graph. Here I can visually track my increasing net worth until it hits the point where the assets and debt lines cross (in the far, far future) - positive net worth. Not sure yet if this is cool, helpful, or silly. As you can see even though I increased my debts this month my big asset increase still resulted in a net worth increase.
Because I like to pack as much info as possible into one graph, check out this new one! It's my FIP, or Financial Independence Progress, graph. A laughable concept right now to be sure, but I love tracking this stuff. I added a line that tracks my assets on here. The thing is even in those bad September and October months - and they certainly affected my equity positions - I was nevertheless able to build up my total cash assets. And the other excellent thing, and big reason for my asset jump this month, is that I was able to take that big income spike and turn it all into savings. I even decreased my overall expenses a bit. So the trend shown here is actually quite good.
I finished up the year with a great month on the face of it: a 2.22% increase in my net worth. This was due to a big increase in assets by way of a healthy dose of Xmas cash, other savings, and small FFNOX dividends. This is bloated a bit, as I have close to $400 earmarked for specific debt reduction this month. Still, a solid month for asset accumulation.
And then we come to my debts. Loans down as usual, cards down even more (representing reduced rotating monthly payments - I don't carry a balance aside from about $2600 in collections from years ago that I'm paying off at 0% interest), but that persnickety Other category is way, way up! +$771! Ugh. Part of this is that I haven't paid off NSTAR just yet (I'd rather hang onto the cash until the last possible moment. Psychological I suppose.) Part of it represents a few small family and friend debts that I seem to keep adding despite my commitment to not do so. And a big part of it - $430.53 to be exact - is from a Commonwealth of Massachusetts Tax Assessment from 2005! Perfect. Just what I need right now. Unfortuately I can't help but think this is accurate as back then I had no idea what I was doing with my taxes. I have some recourse to appeal; I will have to take a look at my records if I even have them lying around. Need to concentrate more on debt reduction in 2009.
Because I like graphs that tell a great deal of information, I added a net worth line to my asset & debt graph. Here I can visually track my increasing net worth until it hits the point where the assets and debt lines cross (in the far, far future) - positive net worth. Not sure yet if this is cool, helpful, or silly. As you can see even though I increased my debts this month my big asset increase still resulted in a net worth increase.
Because I like to pack as much info as possible into one graph, check out this new one! It's my FIP, or Financial Independence Progress, graph. A laughable concept right now to be sure, but I love tracking this stuff. I added a line that tracks my assets on here. The thing is even in those bad September and October months - and they certainly affected my equity positions - I was nevertheless able to build up my total cash assets. And the other excellent thing, and big reason for my asset jump this month, is that I was able to take that big income spike and turn it all into savings. I even decreased my overall expenses a bit. So the trend shown here is actually quite good.
Friday, August 1, 2008
Financial Independence Progress (FIP) Graph
Here's the second installment of my new favorite way to evaluate my financial situation - the Financial Independence Progress Graph. This is a simple but elegant graph that actually provides quite a bit of information, but directly and indirectly. The blue line tracks my income month-to-month, the red line tracks my monthly living expenses (all spending minus savings and investments), and the green line tracks my investment income. The key is to try to maximize blue, minimize red, and increase green until it crosses or surpasses red - this is the point at which financial independence (FI) is achieved.
As you can see things are at least trending in the right direction after a horrid June, expense-wise. I picked up a little bit of extra income in referral bonuses and brought spending back down, although not nearly as low as I'd like. Although it's barely noticeable here, that green line is beginning to rise as well coming off a tiny gain in my IRA.
The real key to increasing the green is to maximize my monthly savings and investments. The key to doing that is to maximize the area between the blue and red lines. It's a simple formula: income - expenses = cash flow. That cash has to be used as investment capital in order to have any hope of accelerating my journey toward FI. As you can see from the graph I had a couple great months in this regard, which helped me get my assets to where they are now, and a few so-so and bad months that have brought my efforts to a crawl. I need to work much harder than I have been on this.
It's a long road to be sure, and a tough one, but by starting early and focusing now it will make it easier as the power of compounding works for me.
As you can see things are at least trending in the right direction after a horrid June, expense-wise. I picked up a little bit of extra income in referral bonuses and brought spending back down, although not nearly as low as I'd like. Although it's barely noticeable here, that green line is beginning to rise as well coming off a tiny gain in my IRA.
The real key to increasing the green is to maximize my monthly savings and investments. The key to doing that is to maximize the area between the blue and red lines. It's a simple formula: income - expenses = cash flow. That cash has to be used as investment capital in order to have any hope of accelerating my journey toward FI. As you can see from the graph I had a couple great months in this regard, which helped me get my assets to where they are now, and a few so-so and bad months that have brought my efforts to a crawl. I need to work much harder than I have been on this.
It's a long road to be sure, and a tough one, but by starting early and focusing now it will make it easier as the power of compounding works for me.
July 2008 Financial Report: Back on Track
July was an important month for me. I actually became an investor for the first time and saw a very modest increase in my IRA over the closing week of July. My raise at work kicked in, although due to accounting errors this won't have an effect until this month (starting with paycheck #1 for August). Overall the month was far better than June, as I got back to increasing my net worth.
Assets increased but by far too little. I need to focus more on saving. I started rebuilding my emergency fund this month with some snowflakes as well as the monthly $100 deposit from my checking, but I borrowed that $100 to pay for other stuff. I really cannot do this if I hope to rebuild my emergency fund specifically and my assets in general. I'm hoping to pay this back to myself this month.
Debt reduction is continuing apace. I can't say I'm necessarily pleased with the progress, but it's ok as I'm trying to maximize my savings at the same time.
I'm heading in the right direction, although I'm getting somewhat frustrated by a lack of discipline, and also pressure by way of various social obligations that inevitably cost money. Tack onto that my obligation and desire to eliminate a lot of personal debt and things aren't going as well as I'd like. I need to ramp this program up significantly. This end-of-month accounting is great though, as it exposes everything - the holes, the guilt, but also a few bright spots. Due to my taking on more debt last month, I still haven't hit my highest net worth. It'll be a good day when I surpass that.
Assets increased but by far too little. I need to focus more on saving. I started rebuilding my emergency fund this month with some snowflakes as well as the monthly $100 deposit from my checking, but I borrowed that $100 to pay for other stuff. I really cannot do this if I hope to rebuild my emergency fund specifically and my assets in general. I'm hoping to pay this back to myself this month.
Debt reduction is continuing apace. I can't say I'm necessarily pleased with the progress, but it's ok as I'm trying to maximize my savings at the same time.
I'm heading in the right direction, although I'm getting somewhat frustrated by a lack of discipline, and also pressure by way of various social obligations that inevitably cost money. Tack onto that my obligation and desire to eliminate a lot of personal debt and things aren't going as well as I'd like. I need to ramp this program up significantly. This end-of-month accounting is great though, as it exposes everything - the holes, the guilt, but also a few bright spots. Due to my taking on more debt last month, I still haven't hit my highest net worth. It'll be a good day when I surpass that.
Thursday, July 10, 2008
Tracking Progress Toward Financial Independence
The ultimate goal for me and almost every personal finance blogger out there is to become financially independent. But what does that mean exactly? In the simplest sense this means when one no longer has to actively work to earn income to support one's lifestyle, i.e. regular expenses. It's the point when all one's passive income from investments such as interest, rental income, stock dividends, et al. reach or surpass one's regular expenses.
So far I've done well with tracking my monthly budget and net worth, but I haven't really taken a look at the (albeit long, long, long term) view of reaching this goal of financial freedom. Jonathan over at My Money Blog had a nice post recently about this very topic. He presents a graph that shows a simple but informative picture of one's financial progress:
The graph shows a monthly picture of one's income, expenses, and investment income. This is a great graph because you can visually track changes in your regular income, see your spending habits in your expense line, and watch as your investment income grows. What you are shooting for is the crossover point when that green line hits the red - that's when your passive income equals your expenses!
The key here is that you are tracking investment income, not total investment assets. This of course can fluctuate quite a bit depending on the risks associated with one's portfolio.
I decided to do this for my own finances over the last six months (since I started this blog and revamped my financial life). The result is, well, interesting:
Kind of crazy, isn't it? The income line is screwy for a couple reasons: January included my (substantial) Christmas gifts which really kick-started my saving and investing. March included a big check from my aunt which was subsequently used for my tickets to Europe, hence the spike in income and spending there. As you can see, June was bad with my taking on debt to help cover my trip to Europe. Right now the investment income line is laughably flat, as I'm only making something like $5-6 per month.
In the short term this graph will be useful as I try to increase my active income and concurrently decrease my spending. I'd like to get that red line to a lower, more even amount. February here represents my "ideal" month, at least according to my old income level. I kept my consumption down and stayed within my budget. This is the model I'd like to keep moving forward. For the foreseeable future this should be doable because there aren't any major events coming up (that I know about at least - life throws stuff at you all the time!).
So the short term key is to maximize that active income and minimize expenses, all the while building up my investment portfolio and watching that yellow line grow, ever so slowly, into something resembling a slope which is increasing at an increasing rate!
That's the plan at least. We'll see what happens.
So far I've done well with tracking my monthly budget and net worth, but I haven't really taken a look at the (albeit long, long, long term) view of reaching this goal of financial freedom. Jonathan over at My Money Blog had a nice post recently about this very topic. He presents a graph that shows a simple but informative picture of one's financial progress:
The graph shows a monthly picture of one's income, expenses, and investment income. This is a great graph because you can visually track changes in your regular income, see your spending habits in your expense line, and watch as your investment income grows. What you are shooting for is the crossover point when that green line hits the red - that's when your passive income equals your expenses!
The key here is that you are tracking investment income, not total investment assets. This of course can fluctuate quite a bit depending on the risks associated with one's portfolio.
I decided to do this for my own finances over the last six months (since I started this blog and revamped my financial life). The result is, well, interesting:
Kind of crazy, isn't it? The income line is screwy for a couple reasons: January included my (substantial) Christmas gifts which really kick-started my saving and investing. March included a big check from my aunt which was subsequently used for my tickets to Europe, hence the spike in income and spending there. As you can see, June was bad with my taking on debt to help cover my trip to Europe. Right now the investment income line is laughably flat, as I'm only making something like $5-6 per month.
In the short term this graph will be useful as I try to increase my active income and concurrently decrease my spending. I'd like to get that red line to a lower, more even amount. February here represents my "ideal" month, at least according to my old income level. I kept my consumption down and stayed within my budget. This is the model I'd like to keep moving forward. For the foreseeable future this should be doable because there aren't any major events coming up (that I know about at least - life throws stuff at you all the time!).
So the short term key is to maximize that active income and minimize expenses, all the while building up my investment portfolio and watching that yellow line grow, ever so slowly, into something resembling a slope which is increasing at an increasing rate!
That's the plan at least. We'll see what happens.
Tuesday, July 1, 2008
June 2008 Financial Report: Rough Month
Hi there. It's been a while! June was a crazy month for me - I was traveling in Europe for two weeks and had hardly any time to spend worrying about my finances and especially blogging. I've fallen completely out of my personal finance reading. I realize now that I even missed doing my monthly report for May (nothing major, just a small increase in net worth). It was an amazing trip - trip of a lifetime - but now it's time to get back into the swing of things and buckle down financially.
June was a rough month for me financially. Despite having planned and saved for the trip somewhat, I still ended up putting myself in debt a bit. All in all it was a very inexpensive trip, and I should be able to wipe out this additional debt by the end of this month. I just hate to see that negative slope on my net worth graph for the first time.
So I ended up diving into my cash assets, which was fine, because I had some money saved up. A bright spot is that I was able to contribute $200 more to my Roth IRA, even though this happened by accident. I had an auto-deposit set up initially, but suspended it for a few months because it was easier for me to work around that and deposit what I needed in odd amounts (turns out that Fidelity doesn't require the $200/mo. auto deposit once your account is actually open). It was set to resume in June, but I had forgotten. So I saw that it took money out of my Citizens checking account and caused an overdraft! Luckily I was able to get the fee refunded (6 months since my last one!) and I decided to just let the deposit stay in my IRA.
So overall assets are down but only by $217. We are at the halfway point in the year and I am at $2,720.19 in assets - just under $280 shy of my target of $3,000 to be on pace to hit $6,000 by year's end. I consider this pretty good shape considering last month's spending. I will definitely need to focus and be disciplined moving forward with my saving. Asset accumulation is a priority.
On a related note, it's nice to see my funds in the Fidelity Cash Reserves actually generating a few bucks. Small, to be sure, but at least it's something positive. I'm close to the $2,500 needed to buy into a mutual fund. Hopefully this month will be the month when I can start investing that money in a long-term vehicle.
Debts - not quite as bad as it seems. A decent credit bard balance but I will be able to pay that off as well as the money I owe to others from the trip. Should work out fine.
A big plus from last month is that I got a big raise at my job! Still not making much but it's actually quite significant and will help a lot moving forward. I plan on putting all that additional money toward accelerating my savings to make up for a little lost ground. I need to rebuild my emergency fund and get my IRA funding back on track. I should be in pretty good shape in another six months if I stay the course.
June was a rough month for me financially. Despite having planned and saved for the trip somewhat, I still ended up putting myself in debt a bit. All in all it was a very inexpensive trip, and I should be able to wipe out this additional debt by the end of this month. I just hate to see that negative slope on my net worth graph for the first time.
So I ended up diving into my cash assets, which was fine, because I had some money saved up. A bright spot is that I was able to contribute $200 more to my Roth IRA, even though this happened by accident. I had an auto-deposit set up initially, but suspended it for a few months because it was easier for me to work around that and deposit what I needed in odd amounts (turns out that Fidelity doesn't require the $200/mo. auto deposit once your account is actually open). It was set to resume in June, but I had forgotten. So I saw that it took money out of my Citizens checking account and caused an overdraft! Luckily I was able to get the fee refunded (6 months since my last one!) and I decided to just let the deposit stay in my IRA.
So overall assets are down but only by $217. We are at the halfway point in the year and I am at $2,720.19 in assets - just under $280 shy of my target of $3,000 to be on pace to hit $6,000 by year's end. I consider this pretty good shape considering last month's spending. I will definitely need to focus and be disciplined moving forward with my saving. Asset accumulation is a priority.
On a related note, it's nice to see my funds in the Fidelity Cash Reserves actually generating a few bucks. Small, to be sure, but at least it's something positive. I'm close to the $2,500 needed to buy into a mutual fund. Hopefully this month will be the month when I can start investing that money in a long-term vehicle.
Debts - not quite as bad as it seems. A decent credit bard balance but I will be able to pay that off as well as the money I owe to others from the trip. Should work out fine.
A big plus from last month is that I got a big raise at my job! Still not making much but it's actually quite significant and will help a lot moving forward. I plan on putting all that additional money toward accelerating my savings to make up for a little lost ground. I need to rebuild my emergency fund and get my IRA funding back on track. I should be in pretty good shape in another six months if I stay the course.
Friday, May 9, 2008
April 2008 Financial Report: Slipping a Bit
April was another increase in my net worth, but this is somewhat misleading. The reality is my spending got a bit out of control, and while I was able to add to my assets, a significant portion of that was money that is to be used for my trip in June. It's good that I have this money to help with my Travel Fund, but on the whole I'm kind of annoyed with myself. I would have liked to put more $ into my savings and retirement.
Debts increased slightly, but this is also somewhat misleading. I included the balance on my new credit card (using it for utilities for now to build my credit rating back up) that gets paid off in full every month, but the cycle ends on the 23rd of the month so there will be some carryover. So still on track, and I actually reduced some of a small personal debt.
Not a great month, but still a net increase. I need to focus this month to log another strong month of saving.
Sunday, April 6, 2008
March 2008 Financial Report: Minor Hurdles But Keeping Pace
Third good month in a row for me! I was able to increase my assets by 45.95%. You can see that my cash reserves took a big hit because I transferred $1,000 from my Emergency Fund into my Roth IRA to help boost my contribution for 2007. I'm very pleased with this, and I should be able to stick even more in before the 4/15 deadline.
Standard debt reduction rate for my loan and credit card. However, I added more debt in the Other category by way of a tax payment hit. An unfortuate but necessary liability. An increase in my total debt but I was still able to manage a small increase (0.44%) in my net worth for the month.
Saturday, March 1, 2008
February 2008 Financial Report: A Good Start Gets Better
February was a fantastic month for me. I was able to establish a monthly budget and I kept track of literally every cent that came into my possession. Through this I was able to cut spending and increase saving. I employed snowflaking to help build up my savings and I was able to earn a few extra dollars through some excellent referral and rewards programs. I was attentive, disciplined, and now I feel rewarded with the numbers I see. I'm going to discuss in detail over a few posts how I accomplished all of this, starting with an overall look at my net worth. If you take a look at the sidebar you'll see my NetworthIQ graph. Click on that to go to my member profile. NetworthIQ is a great way to keep track of your net worth. Here's my assets after my second month of keeping track:
As you can see, some significant increases. Obviously this is because I'm working with small amounts, but it's still very heartening to see an accumulation of assets - I've never been in this position before! I was able to contribute an extra $100 to my Roth IRA on top of my automatic $200 contribution and an extra $160 in cash savings on top of my automatic $100 savings. I'm already more than 27% of the way toward hitting my asset goal for 2008 of $6,000.
Debt reduction is, and will be for the foreseeable future, small but consistent. My student loan % diff will gradually increase as more of my monthly payment goes toward the principal rather than interest, but the credit card payment will remain the same until I can reach a point where paying it off at once is feasible.
So a small reduction in debt and a big increase in assets lead to a 2.61% increase in my net worth over January and 6.88% for the year thus far. This is great news. I'm psyched about my progress so far and seeing the numbers gives me even more motivation to save.
As you can see, some significant increases. Obviously this is because I'm working with small amounts, but it's still very heartening to see an accumulation of assets - I've never been in this position before! I was able to contribute an extra $100 to my Roth IRA on top of my automatic $200 contribution and an extra $160 in cash savings on top of my automatic $100 savings. I'm already more than 27% of the way toward hitting my asset goal for 2008 of $6,000.
Debt reduction is, and will be for the foreseeable future, small but consistent. My student loan % diff will gradually increase as more of my monthly payment goes toward the principal rather than interest, but the credit card payment will remain the same until I can reach a point where paying it off at once is feasible.
So a small reduction in debt and a big increase in assets lead to a 2.61% increase in my net worth over January and 6.88% for the year thus far. This is great news. I'm psyched about my progress so far and seeing the numbers gives me even more motivation to save.
Friday, February 1, 2008
January 2008 Financial Report: How I Became Rich in One Month!
Ok, so I lied - I didn't really become rich in a month. But I did make the changes necessary in my financial life to eventually become rich. Here I'm defining rich as having achieved financial independence - when my passive income meets or exceeds my expenses. This would allow for a level of comfort and freedom that I would consider "rich" as I get into my golden years. (Of course I would love to become rich according to the traditional connotation of the word. Here's hoping!) Starting with the initial deposit into my ING Orange Savings Account on 12/31/07, my outlook and philosophy on money has changed entirely. Here's what I've done to establish a foundation for future financial independence in January:
The impact of these actions after only one month has been amazing, from both a practical and psychological standpoint. For one - I have assets now! I went from literally zero assets to just over $1,000 in a month. Granted, in such a short time this was mainly due to some very generous Xmas gifts, but also I was able to not carry a negative balance on my Citizens Bank checking account for the first time in a while, and with a little self-evaluation and discipline I was able to sock away a nice little portion of cash to get me started along the road to financial independence.
But, as important and absolutely necessary as these actions were, it was almost as important to change the way in which I thought about money on a daily basis. I no longer see money as a burden. Ever since I graduated college, money has been a constant negative in my life. In large part this has been due to my being severely underemployed and underpaid for the most part, but it was more my behavior that was responsible for the position I put myself in. Late payments, owing money to friends, overdraft fees - all these contributed to not only a negative financial bottom line but a debilitating psychological mindset. Simply being conscious of how much money flows in and out of my possession has entirely changed my financial situation.
I now realize that money is a tool, and I view it as such. My money is no longer in control of me; I am the one calling the shots. My money can be frittered away but it can also go toward paying down my debt, contributing to my savings, investing, and planning for retirement. As I continue to educate myself on personal finance and get used to managing my money on a daily basis, as opposed to just spending it, I become increasingly aware of opportunity and effective strategies to maximize the earning potential of my money. I'm off to a great start this month, and I look forward to continuing and hopefully improving my money management over the coming months. This is actually turning into an enjoyable, as well as profitable, pastime!
"Ok," you say, "All this feel-good fluff is great, but show us the numbers!" Fair enough. So how did I do in this first month on my journey to financial independence?
Well my current net worth stands at a robust -$25,926! Unimpressed? Check the breakdown:
Assets: $1,089.54
Savings: $730.88
Checking: $155.50
Roth IRA: $200.16
Debts: $27,015.71
Student Loan: $14,734.30
Credit Card: $3226.28
Misc: $9,055.13
Total Net Worth: -$25,926
Again, what impresses me is the asset acquisition. I've gone from literally nothing to just over a grand. If I can pair regular savings with debt payments, my net worth will hit $0 before you know it! If you're interested you can also click on my Net Worth progress graph to the right, courtesy of NetWorthIQ. It's a cool site that allows you to keep track of your net worth on a monthly basis - and it's free! I'm excited to watch my progress as that line starts on the slow climb to positive numbers.
I'm in a great place right now mentally regarding my finances. I feel in control for the first time, and I am eager to maintain the necessary discipline. The sense of security that I feel with money in the bank, earning interest, while I finish the month with a positive checking account balance, is thrilling!
- Opened a high-yield online savings account
- Opened a high-yield online checking account
- Opened a Roth IRA
- Set up automatic monthly contributions to both my savings and IRA
- Recorded my income and expenditures for January in order to establish a monthly budget
- Outlined financial goals for 2008
The impact of these actions after only one month has been amazing, from both a practical and psychological standpoint. For one - I have assets now! I went from literally zero assets to just over $1,000 in a month. Granted, in such a short time this was mainly due to some very generous Xmas gifts, but also I was able to not carry a negative balance on my Citizens Bank checking account for the first time in a while, and with a little self-evaluation and discipline I was able to sock away a nice little portion of cash to get me started along the road to financial independence.
But, as important and absolutely necessary as these actions were, it was almost as important to change the way in which I thought about money on a daily basis. I no longer see money as a burden. Ever since I graduated college, money has been a constant negative in my life. In large part this has been due to my being severely underemployed and underpaid for the most part, but it was more my behavior that was responsible for the position I put myself in. Late payments, owing money to friends, overdraft fees - all these contributed to not only a negative financial bottom line but a debilitating psychological mindset. Simply being conscious of how much money flows in and out of my possession has entirely changed my financial situation.
I now realize that money is a tool, and I view it as such. My money is no longer in control of me; I am the one calling the shots. My money can be frittered away but it can also go toward paying down my debt, contributing to my savings, investing, and planning for retirement. As I continue to educate myself on personal finance and get used to managing my money on a daily basis, as opposed to just spending it, I become increasingly aware of opportunity and effective strategies to maximize the earning potential of my money. I'm off to a great start this month, and I look forward to continuing and hopefully improving my money management over the coming months. This is actually turning into an enjoyable, as well as profitable, pastime!
"Ok," you say, "All this feel-good fluff is great, but show us the numbers!" Fair enough. So how did I do in this first month on my journey to financial independence?
Well my current net worth stands at a robust -$25,926! Unimpressed? Check the breakdown:
Assets: $1,089.54
Savings: $730.88
Checking: $155.50
Roth IRA: $200.16
Debts: $27,015.71
Student Loan: $14,734.30
Credit Card: $3226.28
Misc: $9,055.13
Total Net Worth: -$25,926
Again, what impresses me is the asset acquisition. I've gone from literally nothing to just over a grand. If I can pair regular savings with debt payments, my net worth will hit $0 before you know it! If you're interested you can also click on my Net Worth progress graph to the right, courtesy of NetWorthIQ. It's a cool site that allows you to keep track of your net worth on a monthly basis - and it's free! I'm excited to watch my progress as that line starts on the slow climb to positive numbers.
I'm in a great place right now mentally regarding my finances. I feel in control for the first time, and I am eager to maintain the necessary discipline. The sense of security that I feel with money in the bank, earning interest, while I finish the month with a positive checking account balance, is thrilling!
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