Making Me a Millionaire

January 2010 Net Worth

Here’s an update on my net worth for this month.  I’m feeling good with every month that passes!  But then again, when the economy has hit almost rock bottom, going up is not a big surpirse.

This month, we’re in the green by $26548.60!  The only thing that depreciated was my car.  We actually sold it (haven’t gotten the check yet though) for $24,000 so I know we lost $1k there but that’s OK.  I just canceled the auto insurance for that car so we should be saving a little bit more money.

Here’s a graph that shows how much the net worth has gone up in the last few months.

This has been the best month so far!

Next up:  Once we get the check from the car we sold, I’d like to use that money (and pull out some money from our cash savings) to pay off that home loan of $36,978.55.  With that paid off, we’ll have an extra $600 a month to play with and we’ll save ourselves a couple thousand dollars in interest.

Goals for 2010

I’m very happy with the way we managed our finances towards the second half of 2009.  We curbed our spending and made sure we weren’t being reckless with our money and as a result, we managed to accumulate a good chunk in our emergency fund.

In 2010, we will be selling our house and moving to a new city.  We booked our tickets to Seattle for January 14 so hopefully that will help us in making our decision on where to move to.  With all these big changes, its a bit more difficult to have aggressive goals but I will still list some that I plan on aiming for this year.

1) Max out the Roth IRA for 2009. Since we still have until April 2010 to put money into our Roth IRA, I plan on maxing both our accounts out.  The Roth IRA is one of the best retirement vehicles and I plan on taking full advantage of it while we still can.

2) Put away $50K into our down payment fund. 50K sounds like a lot to be able to put away, but we’re lucky that my husband still has 5 months of his severance left!  We plan on putting away his entire severance and continue living our lives like we normally do (ok maybe with a little more spluring than usual).  We want to buy a home soon and we all know how insanely expensive west coast home prices are.  We probably don’t want to carry more than a 300K mortgage so that means we’d have to put down at least 200K.

3) Invest more in stocks. In 2009, we focused mostly on mutual funds and not enough on stocks.  This year, I plan on evening it out and investing in both stocks and mutual funds and try to do dollar cost averaging.  I also want to learn a little more about ETFs.

4) Spend less on food. This past year, we spent over $16K on dining out alone!  It’s carelessness and gluttony at its best.  I’m not proud of it.  I hope to cut this in half for this year by cooking more at home and being more mindful and aware of what we’re ordering and what kind of restaurants we are going to.  I’ve also wasted groceries on many occasions when we had food at home but we chose to dine out and ended up throwing out the food later on.  My new goal is to eliminate excess and waste!

5) Give more. My husband and I have a foundation set up with Vanguard.  The purpose of this foundation is to one day either set up a school for underprivileged kids or to offer scholarships to students who cannot afford college.  I would like to contribute $10,000 to the foundation this year.

6) eBay. With the big move happening this year, this is a great opportunity for us to sell some of our furniture or clutter on eBay.

7) Prepare for a baby! Ideally, we’d like to start having kids soon and with each pregnancy/delivery costing around $20K we need to start preparing.  I don’t want to actually set aside the money for a baby but I want to be aware of the costs and prepare accordingly by putting some money away and being smart with our spending habits.

It will be fun to look back on this entry and see how many of these goals were met.  I hope we succeed in achieving our goals and I have great hopes for 2010!

Where Do You Stand?

So today I was curious to find out where exactly my husband and I stand compared with people our age and compared with people who make around the same amount of money.  I did a little bit of Googling and discovered some handy tools on CNN. At age 30 and an annual income of $145,000 this is where we stand:

With our current net worth hovering around $300k, I’d say we’re doing pretty well compared to others who are our age.

However, compared with others who have a similar income, I guess we’re not doing as well….

A grade of “B” is not bad but there are definitely areas that we can improve on.

Based on the Financial Health calculations, I need to:

• Allocate more money into stocks
• Decrease the percentage of money we have in company stock
• Increase our life insurance benefits

So I’ve learned that we are doing well for our age but for the amount of money that is coming in we should be doing better.  My guess is that since most people who are making $145K are probably older than us, they’ve had more time to accumulate their assets and therefore have much higher net worths.

After we move, I’d like to straighten out our investments and invest in more stock.  My husband will be participating as much as he can (we’ll have to figure out what the best contribution amount will be)  in the employee stock purchase program but I’d also like to diversify our investment portfolio.

NetWorth Update

November was a good month!  Everything was in the green for me and my net worth increased by quite a bit thanks the stock market doing a little better.

My goals for the month of December:

1) Keep our dining expenses below $400.

2) Keep our grocery expenses below $400.

3) Put another $2,000 into savings.

Why You Should Take Up Running

On Thanksgiving Day, I ran my first half marathon.  My time was not anything especial but I was proud of myself for just finishing.  I don’t consider myself an athletic person and I think if I’m able to run a half marathon, anyone can do it.

I think running is a great sport.  It’s good for the body, good for the mind and when you accomplish a feat, the rewards are everlasting.  I will forever be proud of myself for this race and hope to set an example for my kids one day (no, I don’t want them to be runners, I just want them to know that if they put their minds to it, they can accomplish anything).

So how is this related to personal finance?

• Running is cheap. All you need is a pair of $40 running shoes.  No gym memberships, no personal trainers, no pricey equipment.  Just put on a pair of shoes and run out the door. Sure, if you want you can always splurge on special fabric clothing or fancy stopwatches
• Exercise is necessary. If you want to avoid the astronomical medical costs associated with poor health, you need to be exercising now and exercising consistently.  What better and cheaper way to improve your cardiovascular health than to go for a jog?
• Running a race is a lot like saving and gaining rewards later on. Preparing for a race requires discipline, patience and commitment.  The same goes for living your life frugally and striving to become a millionaire.  With each race that I prepare for, I am ingraining the mentality that is necessary for accomplishing a financial goal.  When you can train yourself to be patient for your reward while being disciplined enough to practice everyday, learning to be disciplined enough to save/invest/be frugal and being patient enough to hold out on instant gratification comes to you a lot more easily.
• Finishing a race is exhilarating. There are very few things in my life that can compare to that of crossing a finish line while the crowds are cheering you on.  The hard work, the pain, the strength required, are all worth it once you cross the finish line.  That feeling is one of pride and joy and it is a reminder of what it will feel like one day when you own your home free and clear, or when you’re ready to retire and you’ve got a nice big nest egg and no worries.  Imagine what you will feel the day you retire knowing that all those years of working and saving and investing were all worth it.  It truly is exhilarating.  Go ahead and finish a race and you’ll get a glimpse of what the future can be like.

With the half marathon done, my next goal is to run a full marathon.  How do I plan on preparing for this?  With patience, discipline and commitment!

Running is my way of testing my limits and training my mind to be disciplined.  Are there any sports or activities you do to train your mind?

What Are You Thankful For?

As Thanksgiving Day approaches, I keep thinking about what I am thankful for this year.  We have been so lucky to have so much and to live very peaceful lives.  I say this even after my husband is laid off because we still have access to clean water, good health care and nutritious food and we don’t ever really worry about being in a country filled with political turmoil.

If you ever have doubts about how lucky you are, feel free to check out this site.  Kinda puts things in perspective don’t ya think?

I am in no way rich.  But after looking at my results and learning that I am in the top 0.43% of the richest people in the world, I feel lucky and grateful.

Things I am thankful for this year:

• my family and friends
• that my husband is getting severance
• my health and the relatively good health of all my friends and family
• getting my finances in order and saving money
• starting this blog
• the many nephews/nieces/cousins that came into the world recently

In the world of fiscally-conscious folks, it’s easy to think that being smart with your money is the norm.  But the average savings rate of Americans is still pretty low at 3% although definitely much better than it was a few years back.  With that said, I’d like to say that I am very thankful for having joined all you financial bloggers and readers in the world of smart money management.  We are a small group and hopefully through our blogs, we can spread the word and encourage others to take control of their finances and build more wealth.

Should I Marry Into Debt?

Getting married is one of the biggest life altering decisions you can make.  If you marry the right person, you can enjoy a lifetime of happiness and do great things together.  If you marry the wrong person, you can ruin your life.

Not to scare everyone away from marriage, but it’s important to think about what you’re doing before you step into something that is so permanent and binding.  My husband and I had been dating through college so after we got settled in our lives, it was no surprise we decided to get married.  For us, we were lucky neither of us had debt and were able to start our lives with a stable income.  I can’t say the same for some of our other college friends who got engaged around the same time.  One of my closest friends asked me if she should be worried that her fiance had tens of thousands of dollars to pay back in school loans.  We also were friends with another couple who did not ask for advice, but everyone knew that at least one half of that couple had an obsession with shoes and bags and was proud of the fact that she had maxed out all her credit cards.

So is it a good idea to marry someone who has debt?  Well in my opinion, it depends.

Personally, I think school debt is fine.  Not everyone can afford to pay a college tuition and those who are willing to take a loan just to go to college are the ones who have their priorities straight.  Education is very important and college is a great investment.  Being in debt for education is not a bad thing and if that’s all there is to it, I say go for it!

As for the girl with the shoe/handbag obsession and the maxed out credit card pride…..well…if I was her bf I would find a way to end that relationship fast.  Finances is the number one reason why people get divorced.  You don’t want to be married to someone who is going to bring you deeper and deeper into debt and not care about changing that.  It can ruin your life, your marriage and your future.

What if they’re willing to change?  I do know people who have managed to get themselves out of debt after years of reckless spending.  If you truly believe that your partner is willing and determined to change their spending habits then I would wait a little longer before you get married and give them a chance to prove themselves.  See if their spending habits have changed, if they are paying off their debts and thinking about the future.  If you see a change that you think could be permanent, then I think it would OK to tie the knot.

Do keep in mind that although the debt incurred by your spouse before your wedding day is not yours, any debt incurred after you are married belongs to both of you.

Would you marry someone you loved who had debt?

Save For Retirement NOW

I was sitting at Barnes & Noble today (and did not order a white chocolate mocha this time!) and an older woman came and sat at the table next to me.  She waited about 10 minutes before a young couple with a very young baby showed up and asked if she was “Nancy”.  After overhearing their conversations, I learned that Nancy was there for an interview to be the nanny of this baby.  Both parents worked very long hours and now that the mom’s maternity leave is up, she’s due to go back to work and they need someone to care for the baby.  As I was listening to the interview, the couple asked the potential nanny why she decided to change careers from accounting to childcare.  The woman (who was somewhere in her 60s) explained she had been an accountant all her life and was recently laid off after having just bought a condo.  She was old enough to just retire but all she had was social security and it just wasn’t enough for her to live on so she had to think about getting a job.  They discussed a whole bunch of things this afternoon but I’ll end the story there because I just could not get over the fact that this poor woman who had been working all her life was not able to retire and that all she had were those measly social security payments.

All I know is I do not want to end up like Nancy.  I don’t want to get to that age and run out of options.  I don’t want to have to take on a job because I absolutely have to.  I would want to do it because I want to.  I don’t want my kids or grandkids to ever have to worry about me because I can’t take care of myself in retirement.

Please please please please please!  Don’t do this to yourself and don’t do this to your loved ones.  You need to save for retirement NOW.  I know, I haven’t been doing the best I could…for the most part we have done our part with the 401k but our Roth IRAs are looking pretty sad.  We put in $500 so far this year and nothing the last 4 years.  I vow to max out my Roth IRA this year.  The maximum contribution we can make as a couple is $10,000 so I hope to do that by April 15 of next year.

Here’s a list of some blogs with good articles on retirement accounts.  I don’t want to restate what they have explained so well so I’ve decided to let you look through their posts.  Happy reading!

• MoneyNing – 401k, Traditional IRA and Roth IRA Savings Not the Same
• CashMoneyLife – 2009 Year End Tax Moves and 2010 Traditional and Roth IRA Contribution Limits
• Own the Dollar – Roth IRA vs. 401k Retirement Plan – Which is Better?
• Budgets are Sexy – 401k vs. IRA – Which is Better For Your Extra Money?
• PTMoney – Max Out Your 2009 Retirement Contributions

My Millionaire List

So I was looking around the web at personal finance blogs today to see what good advice is out there.  I came across a posting that was made well over a year ago but is such a good idea I decided to participate.  J. Money at Budgets Are Sexy proposed that we create a millionaire to do list that lists the steps that we need to reach our goal of becoming a millionaire.  Well, since my blog is centered around my efforts to become a millionaire, this was a no brainer.

And even if you have no intention of becoming a millionaire (and what sane person would not want to be one?), this is a great idea for any goal whether it be getting out of debt, saving up for a house, running a marathon, learning another language.  You get the idea.

So here’s my list….

1. Max out our retirement accounts. That means my husband’s 401k, and both of our Roth IRAs.
2. Save $400 a month. And put it into either our emergency fund or stocks.
3. Take advantage of what his company offers us. This means participating in the Employee Stock Purchase Plan and buying discounted stock.  It also means contributing to a Flexible Spending Account for our health care costs.
4. Carpool to work. My husband carpools with a nearby coworker everyday.  Not only are they saving money on gas but saving time by being able to ride in the HOV lane!
5. Never take out a loan for a luxury car. I made this mistake last year.  I am paying for it and I will never ever ever do this again.  I will never buy myself a luxury car unless I can afford to plop down cash for it after having done my part in saving and investing.
6. Limit the amount of debt. I vow to decrease the amount of debt I have.  If I have a car loan, I will do the best I can to pay it off faster than I have to.  I will also try not to make purchases that require me to borrow money (except for a house).
7. Ask myself “Do I really need this?”. This actually works!  I have saved myself hundreds of dollars this year by simply asking myself this question every time I pick up a cute shirt at the mall.  I even ask my husband this whenever he decides to come with me to Costco and randomly picks up every other item there and about 99% of the time he puts it back on the shelf.
8. Exercise & eat well. OK this may seem irrelevant but it’s not!  Healthcare costs are so high right now.  I truly believe that by taking are of my health, I am saving myself thousands of dollars in the long run.  I pledge to exercise for at least 30 minutes at least 5 days a week and to eat nutritious home cooked meals as often as possible.

OK, so I’m going to leave it at that for now and add to this list as life goes on.  I think it’s a good start and as long as I follow these steps I should be well on my way to becoming a millionaire.