Unequivocal Notes

I wrote this post on 8th of May and it took me so long to post it. Sorry about the delay.

Our assets decreased by $2155 and our debts decreased by $9389. We were anxious to pay back our parents and so we paid them back earlier than we planned with money from our savings. We still have about $2000 in our emergency savings. Our networth since the start of this blog has tripled. It sounds dramatic but this huge number is because we started pretty low. When I started this blog our networth was about $11,000 and now it stands at $48,000. In certain aspects we could have done better than this, still this blog has brought a change in me that is far more worthy than this networth increase is.

Our current asset allocation is

Domestic Stocks : 51%

Foreign Stocks : 14%

Cash : 21%

Bonds : 14%

It looks as though we could lower our cash and bond allocation and increase our foreign stocks allocation. Since both me and BB are in tech jobs, we want to keep our emergency fund large. And for the rest, we have changed our monthly investments in such a way that we would be contributing more towards international stocks and less towards bonds.

The loan to our parents has been paid off in full. We paid about $2000 extra considering the currency conversion rates and the timely help they provided us when we needed a downpayment. This gives us a full 10% ownership on our house. Starting this month we will start paying extra towards our second mortgage which has the highest rate of interest.

In the past 6 months we have paid back $30,000 in debt and increased our assets by $10,000. I don’t think it would have been possible without this blog. This blog has made me accountable to myself and all my readers.

On my job front, my current contract has a good chance of becoming a full time employee position in a couple of months. I received good reviews from my manager for my latest project. I am waiting for that day when I can start contributing to a 401k plan.

On the blog front, I seem to be writing less and less as each day goes by. All I really do is provide updates about our current situation. I don’t write much about personal finance in general. Sometimes It feels like I didn’t have much to contribute to start with. Work schedule is getting busier by the day and I even considered closing the blog. But the fighter in me tells me that my writing skill is going to improve soon and I would be able to contribute quality articles in this space.

We filed our federal and state taxes yesterday night and they got accepted already. Whew!! What a relief!! I was always afraid that we would forget it and on the morning of 16 April, we would wake up with a shock. It’s not happening this year atleast. Between the federal tax where we would get a refund and the state tax we owe, the net refund would be less than $100. We owed money to the state because of my 2007 withholdings being incorrect. We fixed that this January. So we should be good for 2008 taxes. Since we bought the house only around the end of year 2007, our mortgage interest deductions were not as much as the standard deduction.

2008 would be the first year when both of us are working full-time. A couple of things that we need to remember for 2008 taxes are

1) 401k - 2008 would be the first year when we max out our 401k

2) Mortgage interest deductions

3) Traditional IRA contribution

4) Track our medical expenses more closely since we will mostly be itemizing our deductions

Bye Bye Year 2007.

It is 1/4th of the way into the year. I wanted to share with you how we have done so far.

1) Increase networth by $50,000. Our networth at the start of April 2008 compared to that of January 2008 has gone up by $14,400. I guess we are on track to achieving this goal. Our assets have increased by $6200 and our debts have decreased by $8200 in the last 3 months.
2) Learn about investing. We bought some mutual funds and are planning to invest small amounts on a regular basis. So this has become an on the job training. I’m afraid that there is no means to measure this goal.
3) Roth IRA. We did not open a Roth IRA but we did open a traditional IRA for 2007 and invested the maximum allowed. We are planning to fully fund it for year 2008 also. Let’s just say I am on track to achieving this goal also.
4) Finding a new job. I did a couple of interviews like a month back. This month has been busy at work and I have absolutely no time to do job hunting. I am looking forward to my vacation next week. I am planning to vigorously look for other jobs during my vacation time.
5) Get a promotion. BB wanted to get a promotion. I can’t measure this one too. It’s a binary value. So let’s just wait and see.
6) Exercise. I’m going just say this aspect is so far a terrible failure. We haven’t done ANYTHING. Mabbe I’ll start doing something today.

I wanted to set one additional goal for each month. But the first month itself was a flop. Also last week we did put most of our stuff on craigslist to sell it, but no buyers yet. I think we just have to give them away.

I’m starting to feel skeptical about publishing so many numbers about our accounts on the internet. I am trying to figure out a better way to update my networth and budgets monthly. I’ve still not come up with something that is meaningful. And I’m looking at other PF bloggers to see how they do it. I might pick up one of their existing formats soon.

But for this month, this is all I am going to publish.

Dollar change from last month = $7940. This is about $3772 less than what we expected it to be. One of the reasons being the TV purchase. There is some cash that we haven’t deposited yet and it has not been accounted for here. And we lost some money due to currency rates during BB’s trip to Japan.

Our goals need to be modified because we are planning to fully fund the traditional IRA for year 2008.

Our budget last month was overspent. When I look back at the expenses, all of them seem to be things that we need to account for when we make a budget, but I don’t know how. I am wondering how long it is going to take before we have a decent budget to follow. We started having a budget in January. January looked pretty good. But due to BB’s trip abroad and the reimbursable expenses, the budget was off in february. I was expecting everything to reset to normal in March once we get the reimbursements. But again March is off track because of the currency rates. I’m keeping my budget the way it is and hoping that April would put things into perspective again.

Also for May, my paycheck would be less than normal because of my vacations. But since we use my paycheck only for additional debt payments and savings, it shouldn’t affect our monthly expenses in any way. Something tells me that I need to get BB more involved in this.

Well….I am scared. Scared that I might have let down all the hopes that a few of my good readers might have had on us eliminating our debt. Last weekend we bought the TV - Samsung 46 inch 1080p LCD HDTV. Cost us a huge $1600+ including taxes. The cost is sitting in my credit card with 0% interest rate until Sep 2008 with the full intention of paying it off without paying any interest on it. The good news is that BB adores it. At the same time, I don’t seem to be too excited. I guess between the huge TV screen and it’s cost, I’m pretty much occupied by it’s cost rather than the TV screen that dominates our living room. If this means lesser trips to the bar to watch sports and hence no obligation to buy expensive beer and sides from the restaurant, so be it.

I don’t have any excuses. I want you readers to hang on. April will be a fresh new start. And trust me when I say the future looks good.

Bought FFNOX! Thanks to Joe for encouraging me to look away from Precious Metals Mutual Funds. I am pretty sure it is not right for me right now.

After yesterday’s post and joe’s comment, we thought we were probably missing something. So we went and looked at the annual return on the three mutual funds we were considering to buy - FSAGX (Fidelity Select Gold), FRESX(Fidelity Real Estate Investment) and FSMAX(Fidelity Spartan 500 Index Advantage).

Are we missing something here if we still want to pick FSAGX for our investment? Are we overlooking a basic flaw in our judgement?