miercuri, 2 februarie 2011

Why Blog?

I've been reading other blogs for quite some time now. Many have been very interesting and englightening, even educational, weird, or just plain funny. I like the idea of being able to share your thoughts with the world and get feedback on things that interest you. So I started this blog as a way to record my thoughts on spending, saving, investing, and my financial goals. The primary difference between my blog and what I have not been able to find in other "money related" blogs is that I am a single mom, so my money trials seem a little more challenging and my triumphs are fewer and far between but still very rewarding.

As I embark on this new journey, I hope to get more organized, learn new things, become financially savvy, and [hopefully] inspire and help others along the way.

A quick peek at my finances

For a starting point, here are my finances as they stand today.


Checking: Our checking account is for bill paying only. After everything is paid, I'm lucky if I have $20 left. So as of today (I guess you can say I'm lucky), I have approximately $153 in my checking account. Of course, the auto payments for my car insurance and student loans haven't posted yet. When it's all said and done, I might have $11 left.

Savings: The savings account is for our emergency fund. As of now, I'm working on rebuilding the emergency fund because it was partially depleted to pay the earnest deposit on the townhouse we're having built. The current balance is slightly more than $8,000.

Retirement: The only retirement account I have right now is through my employer pretax plan. I contribute just enough to get the employer matching and the balance is ~$16,600.


Car Loan: I bought a new Honda about 2 years ago. While I know buying a brand new depreciating lump of metal (I have a little trouble calling it an asset) is frowned upon in the financial world, I went against the grain just this one time. I won't try to justify why I did it (although you'd be amazed at what excuses I can come up with), but I know better now. So it was my first and last time buying a brand new car. On the bright side, my loan balance is $5,000 less than the private selling value according to Kelley Blue Book. I still owe $12,600 financed at 5.5%

Student Loans: What can I say about student loans? Most of us have them and we all hate them. In hindsight, getting them was worth it but feels a grey cloud that will follow me around for the next 20 years. With a Business degree from a private college and an MBA from a public university, I managed to finish with only $14,500 of student loan debt (and NO credit card debt - yay me!!). A recent consolidation helped me to lock in a 4.25% rate.

In summary: Not including the value of my car or personal possessions, my total assets are ~$24,600 while my liabilities are ~$27,100, resulting in a net worth of ($2,500). Yep, that's a big ole' negative sign!

*sigh* I have a lot of work to do.

My Goals for 2006

In B school, they teach you that goals should be SMART:
  • S - simple
  • M - measurable
  • A - achievable
  • R - realistic
  • T - time sensitive
With that in mind, my goals for 2006 are:
  • Build e-fund to $10,000 by June
  • Continue 401k contribution up to employer match
  • Open a Roth and fully fund by year end
  • Close on new townhouse in February
  • Create a budget for new home expenses by April
  • Increase income from lower $60s to upper $70s by July
  • Research long term investment options
If all goes well, I should be out of the red and into the black by year end. I didn't set the bar out of reach but my goals are high enough to keep me grounded. I'll reflect on them daily and record the details of my accomplishments when each one is achieved.
Note: Major 2006 expenses are moving, increased housing (mortgage vs. rent), increased utilities (1800 sq ft house vs. 900 sq ft apartment), furniture, and daughter's braces

Getting Out of the Red

I have an idea for getting us out of the red but I don't know if this is the best approach. I'm thinking of doing things in this order:

  • Roll in closing cost with mortgage
  • Get refund of my $6,000 earnest deposit
  • Use $2,000 to complete e-fund
  • Use $4,000 to fully fund Roth
  • Pay off car faster using previous e-fund and Roth contributions
  • After car is paid off, max out 401k and invest
So that means increase 1 asset (e-fund), add 2 appreciating assets (house and Roth), add 1 liability (mortgage) that is offset by an appreciating asset and eliminate 1 liability (car loan). Hmmm...not bad. This allows me to potentially satisfy four of my goals for the year while eliminating debt associated with a depreciating *cough* asset.

These are just my ideas for now. I haven't evaluated the possible cons, which I know there are some. I have a few weeks to think about it and come up with a plan.

+ + + + + Net Worth here I come!!

Grades and Money: I'm so proud

My daughter brought home her interim report today. She made 3 As and 4 Bs. I am very proud of her because she was having a little trouble in math class during the last grading period. She worked really hard to apply herself and it paid off with a whole letter grade increase. In our home, ALL hard work is rewarded (yep, just like money matters). But instead of rewarding her with a purchased gift like I used to do, I tried to think of ways to give her something special without breaking the bank.

I settled on fixing her favorite meal for dinner...Baked Spaghetti. I have no idea why she likes baked spaghetti so much, as opposed to regular spaghetti, but I hadn't fixed it in a while so it was the perfect solution.

1lb of Ground Round - $0 (already in freezer)
1 box of spaghetti noodles - $0.75
1 jar of 7 Herbes Ragu Sauce - $1.89
1 bag of generic brand Sharp shredded cheese - $1.33

Cost of baked Spaghetti Dinner: $3.97 + tax
Cost of daughter's happiness when she smelled it cooking: PRICELESS!!

It was good too! Of course there was a money lesson discussed over dinner. :-)