I haven’t done a net worth update in a very, very long time. To be honest, I haven’t done a net worth update in such a long time because my net worth updates are kind of boring. Nothing really exciting happens month after month as my wife and I consistently spend less than we earn (or earn more than we spend, depending on how you like to look at it). I promise to try and think of a way to make these more interesting – both for you and for me – but until that day I think we are going to have to live with me talking about how my net worth grew by such and such percent and then show a neato graph that shows how we have been making headway along the trail to financial freedom.
Since our last update (for the month of July, 2008), our networth has grown by $2388 (8.67%). This averages out to over a $700 growth in the months of August, September, and October – which is what I was projecting we would have given my predictions with the loss of my wife’s employment and our move in with a family member. And all that growth despite the dismal state of our very small stock portfolio. I hope November is an even better month!
Here are some ideas that I have to make these less boring:
Come up with an early retirement “number” and begin tracking our progress along this goal
Develop a graph that charts the changes in our asset and liability classes. Right now the only liabilities that we have is the balance on a credit card that we pay off in full whenever it is due. This would not be interesting at all to make a graph about. Something that would be potentially interesting would be to track how the different components that make up the asset side of our net worth change over time. (An example of an “asset class” would be cash, stocks, bonds, retirement accounts, etc.) Since the vast majority of our value is in cash, it might be interesting to see how this changes over time.
I could also start including updates on my progress in making residual income online. This could be really boring or really interesting. I have actually set up some hard goals/benchmarks for me to accomplish with this over the next year and perhaps to keep myself accountable and reminded of these goals adding them to my net worth updates could make them more interesting.
If you have any suggestions please feel free to chime in. The comments section is always open.
One of the things that I noticed catching up with our budgeting is that our budget is totally out of whack now that we don’t pay rent, don’t pay for phone and internet, don’t pay for energy, and don’t have to pay that much for my commuting. Just take a look at how our new spending matches up with our old budget:
Our categories need some major adjustments. Our monthly bills have dropped from over $1000 per month to under $100 since we moved out of our apartment. If we drop our gym membership for my wife, which I think we will soon, our monthly obligations will drop below $50. With these changes this portion of our budget will have been reduced by over 95%.
Another area where we seem to be spending a lot less these days is on gas/transportation. I have recently talked about how my bike commuting is turning out to be very frugal, but I didn’t really realize how this savings was translating into our monthly budget. The $71.01 we spent in gas this month represents the cost of two tanks of gas and a single one way bus fare. This category has been effectively reduced by 50% given previous spending habits and could see additional reductions now that gas prices have fallen sharply. I might leave some padding in this category in order to accommodate for the seasonal changes in fuel prices.
With all the dramatic drops in our spending habits, it might be a better gauge of how effectively my wife and I are managing our money by looking at our cash inputs and outputs for the month. I call this tab on our monthly budget spreadsheet “the ledger”:
Oh the glories of a positive cash flow. Our effective savings rate in October was 52.66%. I would love to keep that up, but I have a feeling that this will be increasingly difficulty once we move east to go to school. I probably won’t earn very much of anything then, so saving around 50% of it seems like a pipe dream. I’m just happy with what we did this month.
It seems like I have a few points of action over the next month in terms of budgeting:
Come up with a more realistic budget given our current needs and priorities
With the coming of our baby at any moment this month (due date is the 10th of November) I should really try and think through how the baby will affect our budget as well as observe how our baby is affecting our budget. This may take a few months to determine, but I hope to have some idea of what I need to do by the the beginning of 2009.
Which reminds me – my son is due to be born soon! I am so excited, I can taste it. Whatever ends up happening over the next month or so is going to be awesome – even if we spend twice as much as we did last month – because I can’t wait to hold my baby in my arms.
Welcome to the November 3, 2008 edition of the carnival of twenty something finances. For this edition, because I am in control (muhaha), I have decided to use my Phenomenal Cosmic Power that carnival hosting brings to intersperse what I want into this collection of personal finance articles: oddly colored, magical bears.
You see, these bears are dashing, they are daring, they are even courageous and caring, faithful and friendly with stories to tell. That’s right, they are the Gummi Bears:
I remember that this show taught me a lot about living life with a magical potion that you need to keep out of the hands of Duke Igthorn and his band of Ogres. I don’t think I could have gotten through third grade without learning that one. But that wasn’t all that the Gummi Bears were about. I think that we can also learn something about the world of personal finances, and especially personal finance for those in their twenty somethings.
So without further ado, the carnival.
Savings, Banks, and Credit Cards
Zummi Gummi is the wise yet unreliable keeper of the Gummi wisdom. Very useful to the Gummies in principal, when it comes down to times of dire need Zummi can be frustratingly forgetful. I think he is much like banks, credit card companies, and other aspects of our consumer side financial insitutions: useful in principal, but hard to work with when times get tough.
Grammi Gummi is the voice of reason and the glue to keeps the Gummies together. Her maternal strength and knowledge of the secret gummiberry juice lets the Gummies go about their business of protecting the forest from evil and maintaining internal cohesion, even with teenage Gummies getting the group into a mess or two with Ogres. This is the same role that I think a budget performs in a person’s or family’s life. It keeps the financial wheels from falling off and the person or family moving in the right direction.
Danny Gamache presents Simplify Your Budget posted at The Success Professor, saying, “This article shares a simple process that can help twenty somethings to develop a simple budget system that works! It provides lifestyle freedom with the benefits of a basic structure.”
Frugality, Life Lessons, and Other Financial Survival Skills
Gruffi Gummi was a jack of all trades, making due with whatever was around him to get the job done. He was wise, but not like Zummi – Gruffi’s knowledge came from the school of hard knocks and experience. If you ask me, this is what being frugal is all about. A person can save a lot of money over the long term by applying themselves and learning to do something rather than paying the “easy tax” and getting and “expert” to do it for them. And besides, it pays to learn.
Gusto Gummi is an artist, and like all artists he feel like he has something to say about pretty much anything. Sometimes he says it straight up, other times he uses his art to express his thoughts. Maybe we all have a little Gusto in each of us, spurning us on to make our voices and opinions heard. And what else is there to make our voices and opinions heard on if it is not the state of our economy?
Tummi Gummi is a fat, gluttonous bear with a penchant for sweats. He seems to be a little slow to think and to act, but on the whole he is just as helpful and courageous as the other Gummi bears. Investors are kind of like Tummi. They want to gorge themselves on phenominal returns or sweet, sweet dividens. Knowledge in the game of investing is key, but sometimes as a group investors can appear slow to think and to act – but then burst into a frenzy of activity. In the end though, everybody wants their account to be a full of cash as Tummi wants his stomach to be full of pies.
Cubbi Gummi is the youngest of the Gummies, but he is by no means someone who should be ignored. His youth is a great asset to himself and to everyone around him. But he needs guidance and help in his path to mature Gummi Bearness, guidance and help he finds in those who have gone before him. In the same way, we as 20 somethings need to be taught by those that know more than us and have walked down the path of financial success before us. For some that means going to college and finding a smokin’ deal, for other it means finding somebody that you trust and listening to what they have to say.
Ogres are really stupid but insanely powerful creatures. Servants to the evil Duke Igthorn, they are better left alone. Some financial products and services are definitely better left alone. In the long run, they will not help and will in the end only hurt your financial situation. Stay away from them just like you would a terrible ogre, unless you want to hit the ogre over the head with a nice fat cut of mutton. Then it is okay to get close.
That concludes this edition of the Gummi Bear Carnival of Twenty Something Finance. Feel free to submit your blog article to the next edition of twenty something finances using the carnival submission form. Past posts and future hosts can be found on our blog carnival index page. Thanks for stopping by and have a wonderful day!
I haven’t been keeping up on budget numbers since my wife and I moved out of our one bedroom apartment that ran us $890 a month in early August. This has been gnawing away the life-blood of my financial soul (not really, but it sounds so dramatic) as month after month marched by and still no budgeting or expense tracking went on. Early this month I bit the bullet and fuddled through my credit card and checking account history for August, September, and early October in order to catch up. This was not fun, but did teach me a few things about my accounting system.
Some portions of my budget spreadsheets are so complex I didn’t want to take the time to relearn what I was doing in them after 2 months of inactivity. Being away from looking at my budget daily gave me fresh eyes, and my eyes were stunned with how hard I make my spreadsheets to understand. My use of colors can at times be kind of ugly and bewildering. I can throw too much information onto a single screen without organizing it into a helpful system. One sheet in particular made me cringe with the thought of figuring out what I was trying to accomplish let alone how I was trying to accomplish it. It was just total yuk.
Yet despite all that, I actually do some things really right in my budget spreadsheet. I might even use the word “elegant” to describe with what spreadsheet grace I effortlessly calculate sums and display my monthly summary. I really like how I make use of tabs to break up different information and provide me with different glances at my spending, earning, and savings. The one area that I could probably improve further is how I manage my savings information – but I think it is still pretty cool what I do there.
Another key thing I learned is that budgeting is best done regularly. Being lazy does not pay off here and just makes for a lot more work and a lot more headache down the road. It is really much easier and much simpler to keep up with the day to day expenses of my family on a day to day or weekly basis. Having to wade through a mountain of receipts was tedious and no fun. Don’t pull a Steward and make sure you are up to date on your budget.
I have already started to implement some of what I learned into a new budgeting spreadsheet set to go live for 2009. Well, implement might not be the right word – steal is probably better. I have stolen the ideas that I think work best from my current budgeting spreadsheet system and simply placed them in my new spreadsheet system. I haven’t done any of the hard work of rethinking how I do certain things, but I plan on doing that before January 2009. Who knows, I might even pick up the budgeting basics series I tried to start a few months ago with that one post Budgeting Basics: An Expense Tracker That Works.
No matter what happens, I’m just glad that budgeting is back.
Life is all about maximizing happiness. My Family's Money is about exploring how money fits in to making the world a happier place through humor, financial transparency, wartime living, and looking at life's major events through the money lens. There is so much more to life than money, so it’s high time we made money work for us so we can really get down to living instead of working.