Networth Update - August

Debt paid off since 01 Nov 2007            : 33,276.76
Increase in assets since 01 Nov 2007     : 21,531.74
Change in networth since 01 Nov 2007  : 54,808.50 ( +8.73% since last networth post )

The car payment has been deducted from my checking account, but it has not been applied yet to the loan account. If the payment isn’t applied by tomorrow, I need to call my lender to check the status. That would be another -400 to the debt paid off.

We are currently concentrating on increasing our emergency fund. Also we have come up with a weekly allowance that each of us would take for our lunch and other individual expenses. This is the first week we are following this. This is a drastic reduction in our monthly miscellaneous spending amount. Let’s see how this goes.

What has been happening?

I have nothing interesting happening in my personal life. All is well and we are focusing on paying the money we borrowed from our parents for our house down-payment. We have paid back about $10,000 in the past 4 months. And looking to pay off the rest in the next couple of months.

Once that is done, we need to reevaluate whether our next priority would be to increase our emergency fund or pay down the car loan or the second mortgage.

We are in the process of funding the 2007 IRA this week and file our taxes after that. This was the first year I did the taxes. We used turbotax and it made my life easier. We were initially not planning on opening an IRA this year but after looking at how much we owed the IRS, we decided that it would be a good idea to open a traditional IRA to bring our tax down.

I would be talking with BB about how we would be investing the money in our traditional IRA. We opened an account with Fidelity and we are interested in buying mutual funds that invest in REIT or Gold. We were initally thinking about buying index funds, but since most of BB’s 401k is invested in index funds, we wanted to diversify a little and be adventurous. I will update you on what we did after we invest the money.

Today, BB called up and asked me if we could buy that LCD flat panel tv that he has been longing to buy. I told him that we did not have money to buy it and since then I have been thinking about that sentence. 4 months back I wouldn’t have thought like that. What a difference it makes to be so close to your accounts? It really opens up a lot of things we took for granted. We have never been in too much credit card debt, too much being in 10s of thousands of dollars. BB completed graduate school without incurring any debt. BB supported me throughout my graduate school and when I completed we still did not have any student loans. Thanks to our parents who supported us during our undergraduate degree. The debt we have now is about 1k in credit card(0% interest rate until September 2008), 8k to parents, 17k in car loan(@6.55%) and a mortgage. We live(including mortgage) off of BB’s income and use my income towards other debt repayment. I feel bad to tell BB that we can’t buy the tv now. But we should seriously considering buying it once we pay off our parents money.

Is it okay to indulge in something that you have wanted for long. This tv thing has been going on for the past 6 months atleast. When is it okay to indulge? 

Networth and Budget Updates

It’s been a late update. But here it goes.

The crux of the update is that it looks bad. It is actually not bad. There were some unexpected work related expenses for which the reimbursements would probably come in March. So hopefully I will be able to account for this drastic looking failure in March and get back to normal course. In the mean time, hang on!!!

Gas consumption was less. It was because my husband is out of town and didn’t use his car for about 15 days during february. Gifts was overspent. We bought a music system for our house. I can’t believe we had none so far. So no complaints there. We paid the rest of the car insurance in whole. So we don’t have to pay in March. So that is a normal expense. Misc 1 is discretionary spending for me. I have to stop going to craft stores. Utilities is overspent too. It’s because of the overseas calls that I have been making to talk to BB (Let’s call my husband that from now on).

As for as the networth update, the numbers don’t look good because of the unexpected work related expense. But I have not modified the goals for march. It is based on the assumption that we would get the refunds this month.

Weekend Budget Busters

Saturday was a budget busting day for me. My husband being away and me left with nothing to do, I went on a shopping trip to buy some supplies for my new hobby - sewing. My husband bought me a sewing machine for my birthday and I wanted to make doll clothes for my niece’s barbie doll. I didn’t have any supplies. So I had to buy stuff. Saying “STUFF” freaks me out. I also had to buy some sewing pattern books. Anyways, the total damage was a little less than $150.

I was feeling pretty bad about this until I finished the first doll dress. After I finished it, I was convinced that it was worth it. Anything that would bring a smile on my niece’s face is worth everything in the whole wide world. And I’m going to spend each saturday making new doll clothes. I already have enough supplies to make 9 more doll clothes. And I have supplies to make a new dress for my niece.

There were several questions that popped in my head.

• How and when do you identify an activity as your hobby?
• How much money would you spend to try it initially?
• Once you identify something as your hobby, how much money do you put aside each month for it?
• When does your hobby make you think that you can make a living out of it?

I would love to hear from you all about what your thoughts are on this.

On another note, I bought the books at a used book store. They also have an online shop at http://www.bookbuyers.com. Check it out. I love the store.

Not About Valentine’s Day

Who am I kidding? It is obviously valentine’s day. And it cost us $250. I am okay with this. Because we did not buy perishables and we did not buy things that only one of us can enjoy. And the thing that I am really happy about is that we did not use our credit cards.

On the credit card note, I have been thinking about using my rewards card for all the purchases and pay it in full each statement period. This way I can handle all the household spending from one account. But it’s not going to happen this month. I have only been thinking.

Tracking our budget this month is going to be a challenge. My husband is going to be away for a month and he is going to use all cash. Anything he spends will be reimbursed. But how do I account for the withdrawn money. It would affect my networth updates too. But I think I am just going to report what it is according to my bank statements. When the reimbursements come they would adjust automatically. And honestly, I think I need to give ourselves more cushion in our budget. But I am going to stick with it for now and see how it goes.

Things that don’t look good on my budget and networth are

• The cash withdrawn for my husband’s trip
• Valentine’s day gift costs
• Misc 1 and Misc 2 categories already spent. We did not pack lunch as much as we wanted to.
• Grocery money left for the rest of the month is $50. (But I think I have enough to last me 2 weeks)
• Our electricity bill might be more for this month.
• We need to open an IRA for 2007 tax year and this is going to delay paying back our parents
• We are going to pay car insurance in full since we don’t want to pay the extra $5 each installment period.

Things that I liked about February

• I used coupons during my last visit to the grocery store and saved $6.05. This is on top of the savings($23) due to club member prices.
• I got a nice gift from my husband for Valentine’s day. It would keep me cheerful when he is away.
• I am hoping to put a tick mark next to one my 2008 goals. Will let you know what it is once I know the result for sure. 

I guess this month is the real test for my budget. January was pretty smooth compared to February. I’m hoping March would be better.

Jan Budget Updates and Feb Budget

I feel that having monthly budgets works better for us than having a yearly budget. This allows us to allocate money for things that we cannot know well ahead of time.

This is how we did with our Jan budget.

The areas where the actuals were greater than the budget were credit card debt and miscellaneous. I wanted to get our credit card debt to $2000 and hence overpaid our credit cards. It’s a good thing. In fact I think often about paying it off completely. Having a 0% interest on the card is letting me prioritize other things. The miscellaneous category is overspent by $48. I can over look this one since the total of underspent categories is greater than $48. I am extremely proud that we spent only around $100 eating out. It is about 20% of what we normally(??) spend eating out. Overall I am excited about repeating this month after month.

The most important aspect of doing this for us was that it gave us an opportunity to know where our money was going. Not that we were shopping every weekend at the mall nor were we charging our credit cards left, right and center. It’s improved our awareness of how we spend. I think this is the most important step in getting our finances in order. If you look at any personal finance books or blogs, the first recommendation that everybody makes is to ‘Make a Budget’.

We have made a few changes to the February budget. 2 new categories, Gifts and HOA have been added. Food and Miscellaneous has been split into Grocery, Misc 1(for me) and Misc 2(my husband). I plan to bring down the credit card debt by another $500. The Misc 1 and Misc 2 includes any restaurant trips that we make during the month.

Networth update is due on the 10th of Feb. Check back to see how our networth has improved.

Budget 2008

Here is the split of our monthly budget. Along with networth updates, we will be doing a budget analysis at the end of each month. 

 

Being Financially Organized

We are fairly organized when it comes to bills. But I don’t clearly understand what it means to be financially organized.
There are various things we do to stay on track

1) Monthly bill payments - We use a simple excel sheet. It contains a list of bills that we would need to pay on a monthly basis. We look at the sheet twice a month and pay the bills that are due. Most of our bills are online. We update the sheet with the payment date, the amount, confirmation numbers for online payments or check numbers. We calculate the total bill amount paid and make sure our bank balance has money for this plus an allotted monthly spending amount. We have been doing it for almost 3 years now and it has helped us to avoid late payments.

2) Analyze monthly spending - Until recently, we used a tool provided by my online bank account to categorize my spending and compare with an allotted budget. Last week, I went and bought Quicken and we have just started using it. Will update you later on my experience with Quicken.

3) Taxes - For most part, I let my husband do the taxes. But this year, I am going to be involved. This year is crucial because we need to itemize our deductions. We are expecting that we would owe some money to IRS. We need to be more careful about this for the year 2008.

4) Documents - We are very careful about our documents. They are pretty well organized. But we do not file our account statements or receipts. I don’t know the pros and cons of doing it. Any information with regards to this would be helpful. How long to store statements and receipts? Why do we need to store these? Is it okay if we scan and store soft copies? etc.

What are the ways in which you keep your finances organized?

The Food Budget

Our monthly food expenses for the month of October and November total to about $800 on an average. About $500 of this goes to eating out and the rest towards grocery.

Though we knew for a long time now that we were eating out a lot, we didn’t realize how much until recently. We analyzed our monthly spending from the past two months around the first of December. When we looked at it in terms of numbers, it really hit us. So this was the first thing that we wanted to be tackled in our budget.

Out of this $500, 35% was being spent for lunch on weekdays. The past couple of weeks, we have been bringing lunch to work. The intention of bring lunch to work makes us to cook in the evenings, resulting in less eat outs for dinner during the weekdays.

To check our progress so far into this month, I summed up the spending for 10 days in the past couple of months. The first 10 days of each month, we had spent about $170 eating out. For this month, it is so far $30. Though we cook more at home, the grocery bill has gone up only by $15 compared to last month. I think this is a great progress and we need this to go on.

To keep us motivated to do this, we are planning to use the cut down savings from food towards buying the new LCD HDTV. At this rate, we need to continue doing this for another 4 months. We will keep you updated about our progress.

How much do you spend on food every month? How has budgeting helped you reduce your food related spending?