Friday, December 16, 2011

Visual Budget for 2012

Here's the updated visual budget for next year. I find it very helpful to remember what each day of work is for...

Friday, December 9, 2011

Updated Budget for 2012

Judging from my expense report and updated salary figures, here is the breakdown for next year's budget.

Home = 20%
Giving = 20%
Food = 10%
Auto = 7.5%
Utils = 6.7%
Travel = 5%
Shopping = 2.5%
Education = 5%
Retirement = 5% +(5% matching)
Savings = 20%

My goal is to have a fully funded emergency fund of 6 months expenses. My education budget went up, just hoping I can finish up some of my classes before the baby comes. The food budget has increased slightly, but everything is down relative to higher income except for savings and giving.

I always have this tension when it comes to giving and saving. On one hand it is good to be generous, on the other hand we need to save for the future. I think that is one of the reasons why I love Dickens' A Christmas Carol so much. I relate very much like Ebenezer Scrooge. One side of me always wants to save and accumulate as much as possible, but I also know that in the end it isn't how much you've saved, but how well you used the resources and talent you that God has given you.

To those who were given much, much is required. I know that and I keep that in mind every time I spend on things. Maybe that's why I struggle so much to buy things... and struggle so much to be generous and struggle so much to enjoy the fruits of my labor.

I need to be a faithful steward of the things God gave me. Not to spend it on self, but to use this stuff to point people to our future where we will live in mansions with many rooms, where we will eat the finest of foods, the best of meats and the finest wines... I await the wedding feast, the New Heaven and the New Earth, the City of God, the New Jerusalem... where we will have new bodies, resurrected bodies, living and eating and enjoying and worshiping God... everything we long for here on earth, just in a more perfect way.

For now we see only a reflection as in a mirror; then we shall see face to face. Now I know in part; then I shall know fully, even as I am fully known.

Merry Christmas, Happy New Year, Happy Saving, and Happy Giving!

Saturday, December 3, 2011

Expense Report: FY2011

Here's the breakdown for FY2011.  From October 2010 to September 2011.


So for this past year, judging from after tax income the breakdown is this:

Home = 24%
Giving = 20%
Food = 11%
Auto = 9%
Utils = 8%
Travel = 6%
Shopping = 3%
Education = 2%
Retirement = 5% +(5% matching)
Savings = 14%

Wednesday, November 30, 2011

Net Worth November 2011


Here it is. I'm still doing my Mint stuff, but finding it hard to maintain my money in this volatile market. Markets were down for the Thanksgiving holiday and just coming back up.

On a brighter note, I finally asked my boss for a raise. After the end of FY2011 I performed fairly well, making 110% production and a bonus, so I asked for the promotion. He agreed. That means more work, but a good chunk of change... increase in salary.

That's that for 2011. I'm looking forward to some major changes next year... i.e. an addition in the family.

We are in the middle of furniture shopping as well. We bought a Scandinavian Teak (mid-century) dining table for $795 this month as well as two Ikea Malm dressers for $75. My wife has been active on the Craigslist.  We are on the lookout for a bunk bed for the kids... something not too high and with a slide.

I need to sell more things though and teach my kids not to be hoarders. That is going to be a seriously tough thing to do.

 Until next time, happy saving!

Monday, October 31, 2011

Net Worth Oct 2011

Happy Halloween! or for you reformed people, happy reformation day!


This month was a huge increase due to several factors. We went on a nice vacation, so some of our expenses went down while others went up. We had extra family come stay with us... which meant some sharing of the burden. But after looking at our spending, we didn't save much because of that. It was largely due to bounce back in stock market. Investments increased significantly over last month because of some perceived notion that Europe might have a plan for their debt. As well as some nice earnings from some companies.

I currently have large percentage of investments in retirement.

We have about 3 months worth of emergency fund, but I hope to have it to 6 months by the end of next year.

My savings for college is a little bit behind (according to Mint) but overall, savings are mostly ahead of schedule.

On a side note, we are expecting our 3rd baby, so we need to save up on that.

Wednesday, October 19, 2011

Average Savings Rate

Here's an interesting chart demonstrating how much Americans save compared to other nations.

Saturday, October 1, 2011

Net Worth (Sept 2011)

Well, the market is going down, economy is shot... what are we to do?
This is updated net worth for September. We should be going up... here's for hoping.

Saturday, September 10, 2011

Net Worth August 2011

A little late, but here's the update for August's net worth. Seems like the market is still going down. Spending seems to be ok. We entertained a bit this month and gave some money to college students as gifts. We'll see what happens. Oh well.

Tuesday, August 16, 2011

Taking a dip in shark infested waters

After last week's falling knife and uncertainty in the market I know people are closing their eyes and plugging their ears.  I fortunately have been immune mostly to the noise as most of my investments are in retirement accounts and I've decided to play a hands off approach for the time being.

I've fooled around too much in my personal portfolio that I've seen the damage I've done due to irrational, emotional, impatience, and risky behavior. 

I owned NFLX and played around with it around $20-30 range.  It jumped to $60.  What do you do?  Not a bad return.  But it is near $300 today.  Who would have thunk it?

I was playing with LULU options around $60.  I sold it around $80.  It jumped to 100.  Then did a 2:1 split.  It's near back to $60 (or $120 pre-split). 

I owned APPL and fooled around with it $120-200 range.  It's now almost $400.  Did I keep any of these stocks? No.  because I liked to trade in and out, getting it while it's NOT and selling while it's HOT.  But I am realizing now that if it gets HOT, it gets REALLY HOT.

I guess it's kinda like dating.  I've been a stock slut for a long time.  Maybe not willing to make that commitment for the long term.

In any case, recent weeks have made stocks relatively cheap.  If you haven't been in the market in a while, I suggest you put a little bit of money in now.  Buy low, sell high.  That's the key.  I was fortunate to have balanced my portfolio before the crash.  And I just adjusted it again to take advantage of the drops.

But nothing is certain.  The sharks may still be in the water, taking a dip may mean you get eaten.  So don't put all your eggs in one basket.  But this is a good opportunity to test the waters if you haven't done so in a while.

With that, happy investing.

Wednesday, August 3, 2011

Net Worth July 2011

Was a little bit busy this end of July, so here's the latest chart. I think investments are down due to Debt/uncertainty/and just about everything else. i'm not surprise.

I hope to be saving a bit more... still on the prowl for that nice house upgrade. We'll see.


Friday, July 1, 2011

Midyear Review: Overall Expenditures


So here are our latest numbers:

Home = $1361/month
Giving = $893/month
Food = $595/month
Auto = $407/month
Travel = $357/month
Utils = $340/month
Misc = $250/month

How does it compare with original budget?

23% Mortgage
17% Giving
11% Food (groceries, eating out)
7% utils (phone, gas, electric, internet, water)
7% auto (gas, insurance, etc)
5% travel
3% Education
3% misc
24% savings/investment




We are currently OVERSPENDING: FOOD ($50/month), AUTO ($50/month), TRAVEL ($100/month)

We are ON BUDGET: HOME, UTILS and MISC/EDUCATION

We are UNDERBUDGET: GIVING

Our travel budget was used up earlier this year with winter vacation and trip to Cali. It'll even out if we don't do any major traveling for the rest of the year...

As for food and auto, I think these are ok. I might have been too conservative with the numbers. I'm going to check again with auto insurance to see if maybe we can reduce that expense. Considering that we have nearly 30 people in our house every Thursday for bible study... AND we've been feeding them, I think we are doing VERY well keeping costs down.

As for giving, we have not been tithing regularly... so that's something we need to be more consistent in doing. We have been however, generous to other causes, but I think we still need to be consistent in supporting our local church.

Okay, until then, WHAT CAN A BUDGET DO FOR YOU?

Net Worth: June 2011

Ok, so half way through the year. We in a bit of a slump, but seems like stocks are recovering. We just spent $350 moving a piano, $200 on a new tv, and another $200 on food... this was all this week. I'm a bit overwhelmed, but it's ok. I think we are ahead this month. We're kinda behind for the year, but small victories, right?

Here is our latest:

Saturday, June 18, 2011

Promotion or No Promotion

I still remember Star Trek IV when Admiral Kirk was demoted to Captain Kirk. Kirk was adventurous and throughout his career he was saved the Federation many times over. But as he got older, he was placed in a "desk" job. Becoming admiral meant he was overseeing other captains. His adventure days were over. Kirk's heart however was in the adventure. His promotion only brought him sadness and regret.

As the movie came to an end, Kirk was before Starfleet council and he was under trial. Because he disobeyed a direct order or something from Starfleet, they had no choice but to reprimand him. THey took away his desk job and demoted him to Captain and gave him command of the Enterprise. This was actually a way to reward him, but outwardly it was a "demotion." But inwardly, Kirk was ecstatic, this was his dream, to command a starship once again.

So... what's your dream? What's the "Enterprise" of your life? Does the next promotion bring you closer or further away from the Enterprise of your life? Or are you content at where you are?

I'm actually at that place right now. After the end of this quarter, I have the opportunity for a promotion. This however means more cases each week and probably more responsibility in terms of the cases I do. I currently spend over 15 hours each week doing church stuff, a little bit over 30 hours of flexible/family time, 6 hours physical activity and 12 hours for personal reading/television time. My work time is spread throughout the week and would probably use more just to do the extra work.

In any case, evaluating my spending habits, my time with family, our giving, and other financial/time constraints, an extra 2 cases a bi-week should be doable. I just have to be vigilant in maintaining the right schedule and discipline.

Tuesday, June 14, 2011

God's generosity

GENEROSITY
Just reminded today how rich we really are.  When it comes to money, we always look for more.  We compare net worth with others or compare salaries with other people.  The funny thing is we look at those who are above us. We want to be at the top of the pyramid.  But God continually reminds us in the scriptures that "blessed are the poor in spirit"; that His people are poor made rich... that Jesus, though he was rich became poor for our sake. We have been given every spiritual blessing...

How generous have you been with the money and wealth and resources God has given you?

It's easy to say, I've done well for myself... I got this college degree, I made this money, I'm working a good job. I did this all by myself. I've supported myself and no one has helped me...

THE LIFE YOU HAVE
But it's VERY hard to see that all of this depended on where we were born, who we were born to, the time period in which we were born... we might think we did this all by ourselves, but we forget that the opportunities we have came not out of our choice, but rather chance, or if you believe in a higher being, by the sovereign hand of God. We could have been born in a different time period, or instead of America, I could have been born in China... or some other country... or even to different parents.

But what if I was born in China... what if instead of competing with the 300 million people in the U.S. for jobs... I'm competing with 1.3 Billion people in China... what if instead of a country that desires life, liberty and pursuit of happiness, I was born to a country that desires pursuit of national pride and community rather than individual freedoms? Or born in South America... my friends from South America are more laid back, they know how to enjoy life and party, Asians are WAY too driven... but that's the only way we think to get ahead in life.

WHAT THE WORLD TELLS YOU
I was told to get 10x my salary for life insurance. I was told I needed $3 million for retirement. I was told I needed to own a house. I was told I needed a garage, I need at least 4 bedrooms. I was told I need 6 figure income. I was told I need more and more money so I can buy more and more stuff.

STATS
Do I? Is this what life is about? Half the world live on less than $2.50 a day.

80% of humanity lives on less than $10 a day. (2005 stats)

WHY DO WE COMPLAIN?
Do you ever complain about AC, heating, toilet, shower... half the world poops in a hole in the ground.

We complain about our cars, our houses, our jobs, our food, our cell phone plans, we complain about internet speeds, we complain about the movies and television we watch, instant streaming too slow, not enough video games... 90%+ would give up what they have for our place in life. They deal with diseases that can be cured (if they had healthcare), wars, crime, corrupt government... poverty is not the exception... it is the norm for the world, we, living in an industrialized nation, are the exception.

BIG QUESTION
So the big question is: What will you do with the wealth and resources and riches God has generously given you? Will you spend it on yourself or will you be GENEROUS... as God has been generous to you?

My desire is to be generous. But I'm not. I'm stingy. I'm a complainer. I worry that I don't have enough. I worry my retirement isn't enough. I worry my children may not have enough.

God change my heart.

I'm the 46,279,569 richest person on earth!


Discover how rich you are! >>

Friday, June 10, 2011

Net Worth 05-31-2011

Forgot to update my net worth back in the end of May.  Been too busy.

SO here it is, June 10th.


Investments are down a bit, credit card bills are up and cash is down.  We continue to pay down, but seems like always buying more stuff. 

We really need to up the cash savings. 

Friday, May 27, 2011

Life Insurance

I haven't really talked about life insurance.  But with the death of family friend and many recent deaths this year and last, I have to face reality and look at what I am leaving my family in the case I die. When we first got married, I think we got 200k for me and 100k for my wife.  After two kids, we upped it to 300k for me and 150k for my wife.  My policy allows me to get up to 1/2 of my current coverage.

I'm told I should get 10x my current salary.  I'm thinking I need to up it some more.  Maybe to 400k or 500k, but not 10x my salary... I definitely can't afford that.

I'm currently paying $28.25 for 300k/150k.

If I up it to 400k/200k the premiums would be: $37.61
If I up it to 500k/250k the premiums would be: $47.08

So yearly payments:
300k/150k = $339
400k/200k = $451
500k/250k = $565

That means for each extra 100k I want to insure, it would cost an extra $110 each year.  In the case of my death, I know 500k would help my wife and kids tremendously.  For the past few years, my insurance has refunded up to 25% of premiums.  So in actuality that $565 is actually $423... which means it's not as bad as I first calculated.

How much are you covered for in case of death?

Tuesday, May 24, 2011

Productivity: Maximizing Time

Time is another commodity that we have that is limited.  Like money, unless we budget it and know where it is going, our time will slip right through us.

The past couple of weeks I have encountered this verse in scripture. Psalm 90:12 Teach us to number our days, that we may gain wisdom.

Our life is finite.  We will die someday.  We need to balance the possibility that we may die tomorrow with the fact that we may live to 80-90 years old.  It requires wisdom to say "yes" to important things and "no" to not so important things.  It requires wisdom to put down toys and other time wasters to spend time with loved ones and building relationships.  It requires wisdom to say no to good things, and say yes to best things.

Here are some tips I've been reading about:

- Wake up an hour earlier
- Streamline email
- Do similar tasks in blocks
- Use a TIMER
- Learn how to delegate
- Hire Great People

Another great technique is mapping out your week.



Setting a weekly schedule like this and seeing where you are wasting time and what times you are most productive helps.  I set my workout in the mornings, and so every morning after waking up I go straight to the basement to get it done.

Gray: Personal disciplines exercise and reading
White: Flexible time with family
Blue: Work
Blue striped: work, but flexible
Red: meal times with family
Yellow: Church time

Overall, I've noticed that as I get more systematic with my budget, other areas of my life becomes more disciplined as well.  This includes diet, exercise, spiritual activities, family time, etc.

How do you number your days?  Are you using it to further your goals or are you wasting it away?

Your life is limited.  You may die tomorrow or in 80-90 years.  What will you do with it?

Monday, May 2, 2011

Net Worth 4-30-2011


Net worth. Mint's been acting up. Our credit card is actually $2.6k not the $4.7k. Some retirement stuff down due to bad investment.

Overall spending has been down thanks in part to living close to family and lots of church activities.

For some reason being part of a community helps in sharing the cost of things... especially food. Go figure.

401k Loan Repaid

Back in late 2008 we purchased a house with 10% down. We decided to renovate the house so that required taking out a loan. We took it out of our TSP, the government version of 401k.

THis was a little hasty and poor decision mainly because the stock market was at its bottom at that time. Late 2008 and early 2009, had we left the money in the stocks would have doubled by 2011. In any case, what's done is done.

At that time we had about $28k and they allowed for the residential loan to take up to 50% of value of the account. So we took out $14k.

Currently our account value is nearly $63k, thanks in part to a rising stock market and early repayment of the loan. But it would probably be well over $100k had we left the account alone. Lesson learned: delay gratification is usually wiser.

So the loan began in Feb 2009 and we finished paying it off in May 2011. 27 months. Two years and three months. Even though the loan interest was only 2.75% and we had 15 years to pay back at $47 a bi-week, it was a waste not to accelerate the repayments especially with the rise in the S&P and small cap stocks.

So over that 27 months, we averaged $518.52 a month or about $240 per bi-week. It could have been much faster, but emotionally, at times I wanted to have more paycheck/emergency fund. At times the low payments of $47 didn't seem that bad (had we waited for 15 years to pay back). The past half year we had been paying about $800 a bi-week or over $1600 a month. This was a large chunk of change each month, but a necessary sacrifice... however we did not even feel it. The only thing that felt it was the relatively small balance in our checking account each month. But again, well worth it. And thank God we did not have any major emergencies.

LESSONS LEARNED
Looking back:
- We should not have borrowed from the retirement.
- We should not have waited so long to pay off.

FUTURE
So what about that other big debt we have? the HOUSE? We will accelerate payments as well. And make sure we are saving 15% for retirement.

That's that. Let's celebrate!

Tuesday, April 19, 2011

The Fifth Discipline

Peter senge (MIT) wrote a book back in the 90s about management called The Fifth Discipline: The Art & Practice of The Learning Organization.

The Five disciplines (taken off of Wikipedia) for better/learning organization:

1) "Personal mastery is a discipline of continually clarifying and deepening our personal vision, of focusing our energies, of developing patience, and of seeing reality objectively." (p. 7)
2) "Mental models are deeply ingrained assumptions, generalizations, or even pictures of images that influence how we understand the world and how we take action." (p. 8)
3) "Building shared vision a practice of unearthing shared pictures of the future that foster genuine commitment and enrollment rather than compliance." (p. 9)
4) "Team learning starts with dialogue, the capacity of members of a team to suspend assumptions and enter into genuine thinking together." (p. 10)
5) Systems thinking - The Fifth Discipline that integrates the other 4.

Seven learning disabilities responsible for organizational failure (taken from greathumancapital.wordpress.com

[1]-I am my own position: is when people focus only on their position within the organization and have little sense of responsibility for the results produced -when all positions interact.

[2]-The enemy is out there syndrome: is when we focus only on our position; we do not see how our own actions extend beyond the boundary of that position.

[3]-The illusion of taking charge: is that we should face up to difficult issues, stop waiting for someone else to do something, and solve problems before they grow into crises but proactiveness is really reactive ness in disguise.

[4]-The fixation on events: leads to “event” explanations that are true for now but distract us from seeing the longer-tenri patterns of change behind the events and understanding the causes of the patterns to events.

[5]-The parable of the boiled frog: is in relation to the maladaptation of organizations to recognize gradually building threats to survival; just as the frog placed in a pot of water brought to boiling temperature will not attempt to jump out of the pot but adjusts to the temperature and slowly dies.

[6]-The delusion of learning from experience: is when our actions have consequences in the distant future or part of the larger operating system, which makes it impossible to learn from direct experience.

[7]-The myth of the management team: because teams in business tend to spend their time fighting for turf, avoiding anything that will make them look bad personally, and pretending that everyone is behind the team’s collective strategy.

--
more links:
Manager's learning disabilities
Learning traps
Friday reflections

Tuesday, April 5, 2011

2011 1st Quarter Expense Report

Here it is.  Jan-Mar expense report.  I'm not sure if this is entirely accurate because Mint.com has been acting up lately.  I'll check again in a few days, but I was fairly pleased with our expenses.  Like I said in the earlier post, travel expenses have been high, but overall we've been doing a great job.


I'll break it down each category versus my take home pay.

Home: 28%
Gifts: 15%
Travel: 13.5%
Auto: 8.33%
Food: 7.67%
Utils: 6.5%
Misc: 2%
Others: 2%

Compare to our budget and you'll see we're doing ok.

Thursday, March 31, 2011

Finance Update: March 2011

As the end of quarter approached this past Monday, I was able to put in nearly 50 hours of overtime at work.  In the process, we have paid down our $14k loan from my retirement plan to less than $2k.  Putting in $800 each paycheck to pay down this debt.  I wouldn't recommend borrowing from retirement for future reference.  I think had we left our money in the TSP, it probably would have grown to about $80k+, but because of borrowing, it is about $10k shy at nearly $60k.

Our college fund has continued to grow from less than $2k a year ago to nearly $5k, thanks in part to continued funding and the rise in the stock market.

I hope to continue to rack up more overtime as well as pursue other interests.  Our trip to California was pretty hefty.

Expenses:
Plane Tickets = 4x$300 = $1200
Rental Car = 7*40+tax = $330
1 night hotel = $70
Gas = $75

Total = $1675

Thanks to family and friends we were able to keep most of our costs to a minimum especially food and lodging.

In any case our travel expense for 2011 is pretty high considering our road trip earlier in the year.

So for now, I'm hoping to put a pause on our traveling and settle down to save some money.

What can a budget do for you???

Net Worth (Mar 2011)


Net worth down about 10% due to poor investments.  Did not listen to my own advice.   I had a high of about $97k last month in investments, but fast gains led to BLOCK HEADED moves which meant equally quick losses.

In any case.  I still stick with my original plan of diversify, index funds, decline of U.S. dollar, decline of U.S. dollar, China, and commodities (silver, coal, copper, oil, fertilizer). 

I hope to recover soon.

Monday, February 28, 2011

Wednesday, February 16, 2011

Investing 101

Today marked a special day in that the S&P 500 doubled since the 2009 market crashed.


As those scared by the great crash in late 2008 and losing money like the waterfall that it was, investors would have been out over 50% of their investments. From a high of 1400 in 2008 to a low of 680 in 2009. I was certainly one of them. Who knows what's going to happen... the market could have dropped to 400 or lower.

Today, the beginning of 2011, the headlines on Google Finance says:


So who do you believe? Do you believe that when the market drops 50% in less than a year you should GET OUT AS SOON AS POSSIBLE or do you say to yourself FIRESALE, BLUE LIGHT SPECIALS, 50% OFF SALES?

I think the mentality of investors having a short term mindset, i.e. daytraders, week (weak) traders will definitely jumpship. But with your retirement plan, you are going at it for the long haul. Companies rise and fall not because of the stock market, but because they have a good product they are selling, people are buying it or using their services.

That's why when the market goes crazy and yells SELL! SELL! SELL! As an investor, you need to ask yourself, where are the opportunities that people are missing.

I've posted in the past some books I've read and some investors that have made some good money because they found good companies to invest in... Intelligent Investors.

Here are two quick principles I've learned over the past ten years of investing. I started in 1999 when the market was going crazy and seen the ups and downs in the 2000s. My father is an investor and he's been at it for 30+ years and I also chat with my sister and brother about investing, but here goes.

Two BIG principles you HAVE to keep in mind when investing. These are basic principles I have to always remind myself while investing.

1. INVEST FOR THE LONG HAUL

Having a long time horizon means that you can't expect 100% returns every year. You also can't expect it to be positive every year, but historically, the market has been positive more years than it has been negative. Those with long term perspective can ride out the short term turbulence especially when Macroeconomics and Foreign Trade and Commodities and China and foreign debt all can affect a day or a quarter or even longer how the stock is being traded.

By having a long time horizon, you can better let your investments ride. So when you have a 10% or 20% or even 30% drop, you won't pull the trigger, but instead see what opportunities you have for long term growth in such situations.

Which means when you are investing regularly, you dollar cost average and buy when stocks are going down as well as when they are going up.

2. DIVERSIFY YOUR PORTFOLIO

This principle has been debated vigorously. I'm sure you've seen the charts. Some years small caps do well, other years gold does well, other years Real Estate does well. You can predict some of the things happening through Macroeconomics big picture stuff like:

1. America has huge debt, which means we borrow money or print more money, in any case the value of the dollar goes down, which means prices of commodities goes up, especially precious metals or

2. there's greater growth in China, so there will be greater demand in commodities like copper, oil, steel, agriculture and other stuffs, or

3. interest rates are rising making it harder for smaller companies to borrow which means large caps with large cash holdings will do better, housing market will slow, housing prices will stabilize or go down due to lesser demand, etc. etc. etc.

But what we don't know is when these things are going to take place. We are not psychic and most investors try to forecast when things will happen, but like weather people, forecasts are only as good opening your door and looking outside.


This chart is a little bit outdated, but you can see that no two years had the same returns. Some did better than others. One year it's real estate, another it's large caps, other years it's commodities. You get the picture. Diversify is your best bet for a winning portfolio.

Why are people against diversifying? Well, it actually hinders you from maximizing your gains. If for example I placed all my money in Small-Caps Growth in 1999, I would have returned 43%. But if you diversified, you would have made about 15%. Not bad but not as good as 43%. So you sacrifice some return for risk. You're hedging some risk. My example is roulettes. You can choose black 29 every time and once in a while it'll pop up, but if instead you place your bet on Black you'll have a greater chance of winning but you'll get a far smaller return.

So I say diversify, it's a safer bet and it's a smarter bet.

I say a good index fund like the S&P 500 or Russell 2000 and for international exposure something like the EAFE index.

I'll post more insights on investment once I read some of these books I borrowed from the library, so stay tuned.

Wednesday, January 19, 2011

2010 4th Quarter Expense Report


Here's the 4th quarter expense report for 2010.

4th Quarter Income: $17.5k
4th Quarter Expense: $11.4k
4th Quarter Net Income: $6.1k

Thanks in part to my bonus coming in and some overtime worked in the last quarter we were able to do fairly well. I hope to match this this coming quarter (now that I know overtime can be done with a little bit of effort).

So here's the breakdown:

30% Gifts and Donations
20% Home
12% Food and Dining
10% Auto and Transport
10% Bills and Utils
8% Travel
5% Shopping
5% Misc

As you can see, housing was actually down this quarter due to the refinance. We did not have a mortgage payment in December. Auto and Travel expense was on the high side due to the front end of our Christmas vacation.

We have been very blessed this year and was able to give away almost $4k at the end of the year, including one organization that reaches out to North Koreans, our church tithe, support of missionaries and other year end gifts.

In looking at this new year, I hope you can say with me how much a budget has helped you.

Wednesday, January 12, 2011

Goals for 2011

It has been a beautiful start to 2011. We went on a wild vacation and came back more or less intact. So what do we have planned for 2011?

Here are my goals:

Finances:
- Save $30k for downpayment on new house.
- Buy or be in the process of purchasing a new house with at least 4 bedrooms, 2 baths, garage, an office for me and nice kitchen for my wife.
- Match or surpass last year's stock market rally of 50%+ gains

Family
- Take at least 4-1 week vacations this year.
- Start teaching my daughter to read and count numbers
- Continue learning chinese
- Start playing soccer with the kids (teaching them all my skills)

Career
- Work from home 100% (this will actually happen in Mid-February)
- Get my next Pay Grade promotion (hopefully in July).
- Maintain 110% production (6.8 cases)and 20 Hours of OT (1.2 cases)

Spiritual
- Finish at least 3-4 classes towards my degree in Seminary
- Read through Bible in a year using the M'Cheyne reading plan.
- Memorize the Book of Philippians
- Continue hosting bible study and be active in a 3-4 more people's lives.

Well there you have it. Some of my goals for this year.

Sunday, January 9, 2011

Future Value of Money

Part of my Engineering degree required taking a class called Engineering Economy. Most of the class was filled with calculating annuities and savings and calculating whether a present value of money was worth spending or would it be better to save.

FUTURE VALUE FORMULA
On this website there's the Free calculator for you. This calculator requires the amount you save a over a period of time at a specific interest rate. How much would you have at the end of 30 years if you saved $100 a month at a return of 10%? According to the calculator you would have $197,393. That's only saving $100 a month.

What if you put a lump sum in an index fund that returns 10% interest each year for 30 years?

The Compounding Formula for Future Value would be this:

FV = PV (1 + i)^t

Where:
FV = Future Value
PV = Present Value
i = interest rate/time
t = time

EXAMPLE 1
Let's say we spent $25,000 renovating our house. What is the actual cost of the renovations in terms of future value. According to this formula it would be:

FV = $25000 (1 + .10)^30 = $25000 * 17.45 = $436,235

By spending $25000 today you forgo a future savings of $436k in 30 years.

You can use this formula for pretty much anything.

EXAMPLE 2
A friend is getting married soon, if you do a quick google search, the average wedding for most couples is $20k.

In 30 years, that $20k is actually worth $350k.

By choosing a slightly cheaper venue and spending half of that $20k, you actually save $175k in 30 years.

And if you were like us, and go even cheaper, spending a quarter of that $20k would be saving you $262k. Well, that is if you actually invested the rest of your money. We ended up paying off school loans, and later spending $25k on home renovations.

Oh well. You win some you lose some.

What can a budget do for you?

Thursday, January 6, 2011

Buying that new car

A bunch of kids (twenty somethings) at church just recently purchased brand new cars. Of course they were 0% down and 0% APR financing for 60 months. Boy, that shining car looks really nice. Was this a smart decision?

NEW CAR SCENARIO
Here's the breakdown. In this scenario, a $15k new car would be $250/month or $3k/year and probably under warranty for the first 60k miles. So in any case, owning a car is expensive.

Dave Ramsey says that we shouldn't even consider buying a new car unless we have $1Million net worth. Why is that? Because of compounding interest. If we invest $250/month for 60 months and earn 10% interest that $15k would actually be something like $18k. If we continued this habit for not 60 months, but for 30 years, that $250 would be $493k. By forgoing a little in the present time we can save up a bunch through investing.

USED CAR SCENARIO
If they paid $3k-4k for a used car, they probably would have to pay maintenance and car repair, probably $1k-2k/year. What about a $3k car today? Using our same assumptions of 10% return and 30 years, $3k today would be $52k in 30 years.

But I need a car now. Okay using our above values... a new car paid in full after 60 months would cost about 18k. Hold on to your horses. 18k at 10% return for the remaining 25 years would come out to: $195k.

So what would you rather have? $52k less in 30 years if you bought a used car or $195k less if you bought a new car?

INCLUDE MAINTENANCE COSTS
OK, what about maintenance costs? Okay, let's say we spend about $1k each year for maintenance on the used car. LAST SCENARIO: After 5 years, we would have spent $3000+5000=$8000. Including maintenance, our used car would come out to about $82k over that 30 year period.

My advice for the young kids out there. $250-300/month may seem like a doable payment, but you are missing out on a larger nest egg of over $100k if that money was invested.

Don't be fooled by these new car ads. That's why we had a 1991 Honda Civic, currently driving a 1999 Ford Ranger and 1999 Nissan Quest. All with retail values of less than $5k. They may not look nice, but they drive fine. And in the long run they are saving us $100k+.

What can a budget do for you? (Hope I don't sound like a used car salesman).



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Resources:
Financial Strategy: convincing 20 year-olds to make ROTH IRA Contributions
Dave Ramsey:saying no to new cars
Great Video: Drive Free

Tuesday, January 4, 2011

Why Budgets Fail

NY Times has an interesting article about a guy who is devising a wallet that makes it harder to open when the bank account goes low. People have no self-control and as an analogy to dieting, plans fail. So we need other types of safe guards. This is one. I'm not sure how effective this is or how secure it is for a wallet to always be connected to a bank account but I guess we can always try...

I think budgeting and dieting are very similar since both require discipline in maintaining and sustaining a reasonable lifestyle. Are people now less disciplined? I doubt it, I think it is the ease of use that is making things harder to control. In the past, money came in a physical form, now it's all virtual and credit. In the past, we actually had to spend hours cooking our food and then finally eat it.. now, there is fast food, restaurants, and other high calorie, FAST service foods. Too easy to access and too easy to forget your plans.

What's next? I see all these gadgets and electronics are going to make us dumber... it used to be we have to do calculations in our heads or memorization of facts, etc... now, it's all on the tip of our fingers... Making things easier is not going to make us better. It is when you undergo physical, mental, and spiritual training, that's when you will produce a more financially stable budget, a healthier and leaner body, a more gracious and thankful person. I hope your desires for this new year is not to continue in laziness, but a renewed sense of who you are and where you belong on this world. Strive to do that which is hard or in some cases impossible.

What can a budget (or a PLAN) do for you?

Monday, January 3, 2011

Budget for 2011

Looking at our budget for last year and how much we actually spent. This is my proposed budget for this 2011

23% Mortgage (HOA, insurance, tax, mortgage)
17% Giving (tithes, charities, missionary support, gifts)
11% Food (groceries, eating out)
7% Utils (phone, gas, electric, internet, water)
7% Auto (gas, insurance, etc)
5% Travel (hotel, rental, airline tickets)
3% Education (tuition, books, etc)
3% Misc
24% Savings/Investment (Roth IRA, TSP, 429)

Here is a breakdown of our Net Income month by month for 2010.


Here is a breakdown of our spending by Category for 2010.


Hopefully we can carry this on to 2011.

Happy New Year!

Just came back from our vacation... here's the break down:

16 states, 15 days, 3 hotels, 3839 miles, 140 gallons of gas, lots of food, lots of burgers, lots of fries...

Hotels: $466.26
Gas: $406.48
Rental Car: $336.89
Eating out: $217.27
Misc Shopping: $140.42
===========================

Total Vacation: $1567.32

We were treated to a lot of food and received a lot of gifts along the way. It was a blessing to us and we hope a blessing to others to see the kids. In any case, this trip averaged about $391.83/person.

Which means I needed to budget about $130/month for this trip. This year we spent about $2,188 (traveling from Jan to Nov) and $803.15 (Rental and Hotel for Dec) totalling $2,991 this year.

This means we need to budget about $250/month for an annual travel budget. Some years we might travel less, but with the two girls getting bigger and the possibility of more children, we're going to have to find ways to cut back on hotel costs, rental costs, and meal related costs.

$250/month is about 5% of after tax income. That's a big chunk. But that's a part of our life that we decided would be good for our family. Both educational and maintaining relationships.

Saturday, January 1, 2011

Net Worth (Dec 2010)

Final Net Worth for 2010: