A Sloppy Start

January is my third consecutive atypical month, and financially things are looking messy. I’m writing this post to come up with a way to better meet my savings goals and get myself back on track. Just a quick month-by-month overview of how I got in this situation:

  • November – purchased a condo which resulted in expenses associated with buying a place, moving and settling in.
  • December – still had expenses associated with settling in and purchased holiday gifts.
  • January – went on vacation and I’m still getting settled.

I’ve basically spent too much and my credit card balances are higher than I’d like. My anticipated income for the remainder of the month is $500 (this is a crude estimate). I’ll be roughly $500 short of paying off all my credit cards…oops.

Updates/Check-in Frequency

I need to start doing weekly updates/check-ins to make sure I am on track. I may not do this formally on my blog, but I do need to assess my financial standing more frequently than once a month.

Saving and Checking Accounts

I have the following savings/checking accounts to meet my various savings goals. My next net worth update will reflect these accounts:

  1. Regular Checking Account – $500/month towards monthly expenses
  2. Amazon Gift Card Balance – $100/month for Amazon purchases
  3. Emergency Fund – $50-$100/month for emergency
  4. Irregular Bills (sink fund) – $55/month towards non-monthly bills
  5. Short-Term Savings – $75/month
    • Fund #1: local transportation sink fund (ex. ubers, taxis)
    • Fund #2: Eating out sink fund
    • Fund #3:  Home Maintenance sink fund (bulbs, batteries, minor improvements)
    • Fund #4: Travel fund ($500 est.)
  6. Long-Term Savings – $50/month
    • Goal #1: laptop ($1,000 est.)
    • Goal #2: Hardwood Floors ($2,000 est)
  7. Mortgage Holding- $X,XXX/month towards mortgage payment

One new accounting strategy is to keep track of my Amazon Gift Card Balance. I need to start treating this as another asset due to the frequency in which I use Amazon and my desire to earn credit card reward points. If I treat my Amazon Gift Card Balance like all other accounts, I should be less inclined to blow through the balance as I usually do.

Note that I still am not disclosing how much my mortgage payments are. But I do set aside my mortgage payments in a separate account. It helps me mentally avoid considering the use of a sizable sum of money designated for my mortgage when making financial decisions.

Credit Card Repayment Plan

My current credit card balances and my repayment plan is detailed below:

  • Credit Cards #1-4: $400
    • Will pay off with next paycheck
  • Credit Card 5: $600
    • Lowest priority: 0% APR with incoming $200 reward
    • January Payment: $150 ($100 from income, $50 from “Irregular Bills” Sink Fund )
    • February – November Payments $40/month (tentative)
      • February Additional Payment: $40 (for prepaid internet)
      • March Additional Payment: $40 (for prepaid internet)

Credit Card Rewards

  1. My 0% APR credit card (Credit Card #5) has a $200 reward incoming for spending $1,000 in the first 3 months. I opened this card to insure my new phone at no (explicit) cost.
  2. I am starting off the year with 30,703 Chase Sapphire Reward Points.
    • I need to earn ~8,333 points (or $125 travel credit equivalent) to break even. Though in actuality, additional card perks, such as airport lounge access, lower the break even point.
  3. Chase Freedom – 5% categories include phone/internet, gas stations, & Android pay. I should purchase and possibly prepay for:
    • Groceries
    • Gift cards (Amazon, Grocery stores etc)
    • Internet (prepay in March)
  4. I need to do better when using my Chase Cards in order to increase the points I earn. For example, I should:
    • Use Chase Freedom only on 5% categories
    • Use Chase Sapphire on dining and travel expenses
    • Use Chase Freedom Unlimited on all other purchases

 

A Year in Review | 2017 (& 2018 Goals)

Yes, this post is finally up and happening. Here’s my end-of-year review for 2017! It was a whirlwind of a year for sure. In the financial sense everything went smoothly. My net worth increased by over 75% in 12 months. I bought a condo. And I met all my financial goals.

Here’s an overview of my holdings at the beginning and end of the year:

Liquid Assets Jan-17 Dec-17 $ Change
Cash & Savings $1,200 $450 ($750)
Emergency Fund  $2501 $3,405  +$904
Short Term Savings $75 $525  +$450
Long Term Savings $43 $0  ($43)
Illiquid Assets Jan-17 Feb-17 $ Change
Brokerage  – $697  +$697
Savings Bonds $500 $2,135  +$1,635
Home Equity $11,850  +$11,850
Retirement Accounts $25,950 $46,459  +$20,509
Liabilities Jan-17 Feb-17 $ Change
Medical ($100) ($0) +$100
Furniture Loan ($1,792) ($1,792)
401K Loan ($10,748) ($10,748)
Net Worth $30,169 $52,981 +$22,812
% Change +75.6%

Buying a condo had a huge impact on my finances. I now have a mortgage and two loans. I have decided not to disclose my mortgage amount. Instead I’ll be sharing my home equity each month as I track my net worth. My liquid assets were somewhat depleted due to the condo acquisition, but the financial impacts would have been worse had I bought the condo before the end of the year.

And as previously mentioned, despite buying a condo, I was able to meet all of the following financial goals:

Fund/Goal Goal Progress Initial Goal Percent
401K $18,000 $18,000 100%
Roth IRA $5,550 $5,500 100%
Emergency Fund $5,500 $5,500 100%
Vacation $1,125 $1,000 112.5%

My spending wasn’t terrible either but I did tend to go over budget most months. If I exclude the costs towards homeownership, my 2017 spending breaks down to be:

  • 56% – Rent
  • 23% – Everything Else
  • 10% – Food
  • 7% – Medical
  • 4% – Fixed Expenses

If I Include home ownership expenditures:

  • 39% – Homeownership
  • 34% – Rent
  • 14% – Everything Else
  • 6% – Food
  • 4% – Medical
  • 3% – Fixed Expenses

Most likely in 2018, I should start tracking the “Everything Else” category in greater detail so I can attempt to trim the fat off of unnecessary expenses.

I know I don’t talk much about the non-financial aspects of my life, but one of the main reasons why I seek financial independence/stability is because I live with a chronic illness. The year 2017 wasn’t a great year for my health, and so far 2018 has not been much better. I do hope 2018 changes for the better and is the year I can find a viable treatment option. I’ll take a cure too. Without proper control of my illness, my life will eventually get very complicated and even more expensive.

Outside of my personal health, everyone in my immediate family had very serious health problems too. Thankfully, everyone seems to be fully recovered and I hope they stay in good health throughout 2018 and beyond!

Financial Goals for 2018:

  • Contribute 15% of income towards retirement (20% stretch goal)
  • Pay $2,500 towards 401K Loan ($3,000 stretch goal)
  • Pay $1,250 towards furniture loan ($1,900 stretch goal)
  • Contribute $1,000 to emergency fund ($1,500 stretch goal).
  • Increase net worth by $20k, barring a market downturn ($25k stretch).
  • Start saving towards home improvement projects (hard wood floors, new furniture etc).

******EDITED TO ADD******

I would like to note that I am starting off the year with 30,703 Chase Sapphire Reward Points. I need to earn ~10,000 points (or $150 travel credit equivalent) to break even on my travel credit card.  Though, I also do use perks such as airport lounge access which more than make up for the cost of the card.

Nov/Dec 2017 Spending

Okay so I’m trying to get caught up on some details that I left out in the November and December net worth updates. Neither month went as well as I would have liked due to the condo purchase and the expenses that come with a new place.

November Spend

Category Budgeted Actual Remaining
Rent $1,050 $1,045 $5 under
Fixed Expenses $125 $122 $3 under
Food $200 $337 $137 over
Moving Exp. $600 $600 $0 over
Everything Else $250 $924 $674 over
Total  $2,225  $3,228 $803 over

In November I was $803 over budget.  I ate out a little more than usual and I made quite a few purchases for my new place. I also used Uber frequently to run errands and purchased Christmas gifts.

December Spend

Category Budgeted Actual Remaining
Mortgage $- $- $0 over
Fixed Expenses $125 $315 $190 over
Food $200 $183 $17 under
Medical $- $52 $-
Everything Else $250 $702 $352 over
Total  $575 $1,134 $559 over

In December I was $559 over budget for many of the same reasons. Thankfully my first mortgage payment wasn’t due until January 1.

I spent a week with my parents which helped cut down on food costs.

I did purchase a new phone and also applied for a new credit card to insure said phone (some credit cards come with this free benefit). In order to get the $200 bonus reward from the new credit card, I need to spend $1,000 in 3 months, so I went ahead and prepaid my internet bill and Netflix. This resulted in high spending in the “Fixed Expense” category.

Under the medical category, I bought new glasses for $52.

I’m satisfied with the amount of additional expenses that came with moving and settling into a new place. I only made one major purchase which was a leather sofa.  I did take out a 0% loan for the purchase because of the interest rate. I’m hoping leather will allow me to sit on this sofa without breaking out in hives. The sofa will arrive in February.

For 2018 I’ll need to tweak my budget to account for additional fixed expenses (an electricity bill and the furniture loan). I also need to come up with financial goals.

I’m still on vacation but hopefully I can churn out a couple more posts when I return home next week.

Net Worth Update – December 2017

I know I should have posted this earlier, but I’ve been busy with the holidays and now I’m on vacation. December was another irregular month for me mostly due to moving into my new place. The good thing is my first mortgage payment wasn’t due until January 1.  So I was able to save quite a bit anyway. I’m hoping next month goes by a little smoother.

Here is a breakdown of my assets and liabilities. I aggregated my retirement accounts as well as my brokerage accounts for simplicity.

Liquid Assets Start End Change
Cash & Checking $1,000 $450  ($550)
Brokerage Accts $660 $697  +$37
Emergency Fund $3,400 $3,405  +$5
Short Term Savings $50 $525  $475
Illiquid Assets Start End Change
Savings Bonds $2,130 $2,135  +$5
IRA & 401K $42,920 $46,459  +$3,668
Liabilities Start End Change
Furniture Loan  ($1,898) ($1,792) +$106
401K Loan ($10,799)  ($10,748)  +$51
Equity Start End Change
Home Equity 11,850 $11,850 +$0
Net Worth $49,313 $52,981 +$3,668
% Change +7.4%

I’ll have to post my December spending later. I know I’ve been slacking since November! Hopefully I can also do a year in review before February!