The Balanced Spreadsheet-Financial News, Budget Advice, Debt help, Financial Tips, and other advice

June 1, 2010

May ’10 Net Worth Update (-2.44%)

Filed under: Net Worth, Personal Finance, Real Example, Uncategorized — Tags: , — thebalancedspreadsheet @ 1:58 pm

Well my wife and I celebrated our first year of marriage together and also our first month of seeing our net worth actually decrease.  It was really no fault of our own however as most of the decrease is primarily due to the drop in the stock market.  Our net worth is still up 68% since we first got married which is really amazing when you think about it.  I do not expect it to grow at that fast of a pace simply due to the fact we are now down to primarily one income.

Cash– Cash dropped mostly due to our vacation in San Diego in the middle of the month.  It was good to report that we actually came up under budget on our trip and still had a blast! We still have $10,000 as an emergency fund and the rest is set aside to cover the possible replacement of our cars and my wife’s college tuition in June.

Employee Stock Purchase Program– Nothing new to report here, as another $1,667 was taken out of my paycheck and will be used to buy company stock at the end of the quarter which is June 30th.

House-I have recently tried some of the online home evaluators and got a wide range of values. The average was around the $95,000 and I will be using the amount for a while.

Retirement-Got hit by the stock market drop in May.  We are still holding steady by contributing 15% of our pay each month into our 401(K) and IRA.  The stock market swings are enough to give anyone an ulcer.  Good thing we are in it for the long haul.

Pension-Same contribution as last month. This amount should stay steady until October or November of this year.

Mortgage-This amount represent about an extra $150 that we are applying to our principal each month.  Right now on our pace it is going to take us approximately 9 years and 3 months.  Our goal is pay it off sooner than that however.

You can see past net worth updates at the net worth history page.

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May 1, 2010

April ’10 Net Worth Update (+2.17%)

Filed under: Excel fun, Net Worth, Real Example — Tags: , — thebalancedspreadsheet @ 12:12 pm

April saw another nice increase in our net worth. It might be a little slow going this summer though as my wife is leaving her job and going back to school. That will definitely slow down the cash flow for the time being but we have the cushion to get through it.

Cash– The quarterly sale of stock in the employee stock purchase program was the main reason for the increase. Cash will be taking a little hit the next few months as we have our anniversary trip to San Diego in May, my wife’s college tuition in June, and the funding on my financial coaching business. We still have $10,000 as an emergency fund and the rest is set aside the expenses mentioned above.

Employee Stock Purchase Program– As previously noted our ESPP account was depleted to buy stock on March 31st. That stock was sold in the beginning of April and put into our cash reserves. The April amount equals one month’s pay that will be used to buy stock at the end of the fourth quarter.

House-I have recently tried some of the online home evaluators and got a wide range of values. The average was around the $95,000 and I will be using the amount for a while.

Retirement-Big increase in retirement accounts for the month of April. We are currently making contributions into our 401(K) and ROTH IRA accounts. As noted before, the stock market had a great first quarter and those gains extended into April.

Pension-Same contribution as last month. This amount should stay steady until October or November of this year.

Mortgage-As mentioned above, with my wife quitting her job and going to college we are down to one income so no more triple mortgage payments. After seeing the principal reduce by $1,800 each month for the past few weeks, it looks different to only pay down ~$475. For now we are just paying $200 extra a month but are looking into ways to pay down more.

You can see past net worth updates at the net worth history page.

April 30, 2010

PMI Removal

Filed under: Personal Finance, Real Example, Uncategorized — Tags: , , — thebalancedspreadsheet @ 4:10 pm

After significantly paying down our mortgage balance and monitoring recent condo sales in our area, my wife and I finally decide to try to get rid of our Private Mortgage Insurance or PMI. PMI is simply is insurance paid by the borrower that protects the lender from potential loss in case of foreclosure.

Currently PMI is costing us $58.26 a month. To remove PMI you must have a Loan to Value (LTV) ration of 80% which means you must owe less than 80% then what the home is currently valued. Our LTV is currently 65.29% after our April payment; however the value of the house is significantly less than the $118,500 we bought it for in 2006. Our current loan balance is $77,365 so we need an appraisal of $96,700 to be at 80%. It is going to be really close; the good thing is that the appraisal is good for 90 days so we would have a few more months to pay it down if we are short.

The Appraisal costs $150 but it is worth it as we can knock off $58.26 on our mortgage payment each month and apply that to the principal owed. In addition it would be nice to get a good estimate on how much our house is really worth instead of estimating each month. My goal is to have PMI eliminated starting with June’s payment. Hopefully it will all work out.

April 22, 2010

Employee Stock Purchase Program 1st quarter ’10

Filed under: Excel fun, Personal Finance, Real Example — Tags: , — thebalancedspreadsheet @ 8:00 am

The 1st quarter for my employer ended on March 31st. That means another stock purchase through my employer stock purchase program (ESPP). You can read a review of the entire process in my 2nd Quarter 2009  report.

It was nice to finally have a capital gain again after two straight quarters of capital losses. The 13.92% total gain is one of my highest one quarter gains since I have been participating in the Employee Stock Purchase Program. All of the gain will go into the Car/Vacation fund.  Overall a pretty easy way to make  $700.

April 20, 2010

Stock Market Recovery

Filed under: News Review, Real Example, Uncategorized — Tags: , , , , — thebalancedspreadsheet @ 7:30 am

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Have you checked the US stock market lately?  Most of us stopped looking when the financial crisis hit in late 2008 and early 2009, but if you have not done so already take a peak and you will notice that it has quietly risen in the past year or so Goldman Sachs withstanding.  I wrote back in November how the stock market had gone up over 50% since its low point on March 9, 2009 and these gains have now carried on into the 1st quarter of 2010.  Tom Petruno from the Los Angeles Times wrote an article on the stock market’s 1st quarter performance in an article titled “Tenacity of stock investors pays off”.  Some of the interesting tidbits:

 Most stock mutual-fund categories scored gains in the first three months of the year; it was the fourth straight quarterly advance since the meltdown of 2008 and early 2009.

The average U.S. equity fund posted a total return of 5.1 percent in the quarter, lifting the 12-month return to 49.4 percent, said the data firm Morningstar Inc.

 “[Stock Market] beat the 2 percent average return of bond mutual funds and the near-zero average yield on money-market funds.”

“U.S. stock funds overall still are experiencing net redemptions, meaning more cash is going out as investors sell than is coming in via purchases. Instead, Americans continue to pump record sums into bond mutual funds.”

 

I went ahead and compiled a chart of how well the three major US Markets (Dow Jones, NASDAQ, S&P 500 have done in the 1st quarter of 2010.

For those of us who have continued to stay in the stock market it is nice to see a good return especially on the stocks that we bought low back last winter and spring.  Still, how is the stock market today compared to when the economic crisis really hit back in the fall of 2008?  I went ahead and pulled up some 2 year graphs showing the change from April ’08 to April ’10 for all three major indices:

Dow Jones

Chart forDow Jones Industrial Average (^DJI)

S&P 500

Chart forS&P 500 INDEX,RTH (^GSPC)

NASDAQ

Chart forNASDAQ Composite (^IXIC)

As you can see all three have rebounded nicely since the fall of 2008, while the Dow and S&P are down 15% from April 2008 and about 25% off their high in October 2007. Meanwhile the NASDAQ is about even over the last two years.  While the 15% decrease is nothing to sneeze about it pales in comparison to the 70% drop during the Great Depression.

As mentioned before it is encouraging to see stock increase in the beginning of 2010.  However, one needs to look at the big picture when investing in stocks and not just a three-month time horizon.  According to Petruno’s article many people are still weary of the stock market.

 “U.S. stock funds overall still are experiencing net redemptions, meaning more cash is going out as investors sell than is coming in via purchases. Instead, Americans continue to pump record sums into bond mutual funds.

David Kelly, strategist at JPMorgan Funds in New York, believes that investors will come to regret their caution. Given that bond yields are low while corporate earnings are rising, “The bond market still looks too expensive and the stock market still looks cheap,” he said.”

I have to agree with the bond market.  Bonds typically do well with low-interest rates and currently we are in one of the lowest interest rate environments ever.  So interest rates have only one place to go and that is up so therefore bonds will become less valuable.  Overall though it is nice to see most of our retirement accounts in 401(K) and IRA’s recover since the economic downfall.

April 13, 2010

Cash Breakdown March ’10

Filed under: Excel fun, Real Example — Tags: , , , — thebalancedspreadsheet @ 12:00 pm

With things changing around our household, I thought it would be good time to update our breakdown of our cash and see where we stand before we go down to one income.

Emergency FundStaying pat at $10,000.  This number still represents about 5 months worth of expenses and is an amount that we feel comfortable with.  It is great to know that we have ten grand in the bank in case of medical emergency or job loss. 

Insurance Accrual-This currently includes 10 months our life insurance accrual as well as 4 months worth of Car Insurance.  Since we pay our car insurance semi-annually (June and December) and the our life insurance annually (June), I need to “accrue” monthly the cash needed to pay the bill when it is due instead of having to come up with the full amount on the month it is due.  I simply just take premium due and divide by 12 for the accrual.

IRA Funding-About $400 is marked for my wife’s IRA funding.   

Car/Vacation-Nice to see almost $12,000 in our car/vacation fund.  We will be going on vacation in May and we already have our flight and hotel booked and paid for so the only other expenses on the trip will be car rental and eating out.  The Financial Counselor training that I will be doing later on in April is paid for as well as the flight down to Nashville.  We will be dipping out of this account however for my wife’s college that she will be finishing up in the summer as well as her home business.  My goal when all the vacations, college, and all start up business expenses are paid is to have about $8,000 left for the car fund.

April 10, 2010

Changes In The Balanced Spreadsheet’s Family

Filed under: Personal Finance, Real Example — Tags: , , , — thebalancedspreadsheet @ 12:30 pm

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Sorry for the lack of quality posts lately.  I have been really busy at work recently, but things should be calming down shortly and a regular schedule of quality posts will resume soon.  Today I would like to share some big changes to Mrs. Balanced Spreadsheet and myself.  These changes will not impact the blog any; however they are things will impact our personal finance situation over the short and long-term.

If you have read our 7 financial goals before you know that one of my dreams has been to always have my own business.  Well after reading many career books from different sources including Dan Miller’s 48 days to the Work You Love and No More Mondays, I have decided to put my knowledge of finances to use and become a financial coach!  I am both nervous and very excited about starting my own financial coaching business but it is something I have a passion for.  Part of my training will include attending Dave Ramsey’s Financial Counselor training starting April 20th  in Nashville, TN.  This is pretty exciting because I have always been a big fan of Dave’s financial principles and the way he presents them.  My plan is start the business slowly and build a solid customer base before I pursue it full-time.

The change is not limited to me however.  My wife will be leaving her current position in May to pursue finishing up some courses to get her undergrad degree.  In addition she will also starting up a home business on the side to help replace her lost income.  This is really exciting as she is only two classes short from her undergrad degree and the timing of the classes lined up perfectly to do this over the summer.  We are also excited about the business as it will help replace some of the lost wages initially and is something she can continue to work on even when we have children someday.

The next few months should be busy for us and we will definitely be going through some changes in the next few months.  Some initial changes will be that our income is going to drop initially as we will go down to one fixed income.  Our budget is based on my income anyway so we will be fine there, but we are going to be slowing down our accelerated mortgage payoff plan for now.  We will pick that up as soon as our businesses become profitable.  So while in the short-term it will be a little chaotic, things will be better going forward.  We know it will be a challenge but we have prayed about this and carefully plotted out a plan to make this all work.

April 3, 2010

Refinance Breakeven Spreadsheet

Filed under: Excel fun, Mortgage — Tags: , , , — thebalancedspreadsheet @ 8:55 am

To be Updated with Spreadsheets like this one and other Financial news and advice, please link to The Balanced Spreadsheet!

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On the heels of releasing the mortgage amortization schedule, I thought it would be nice to follow that up with a refinance breakeven calculator.  With mortgage interest rates at 40 year lows most people are rushing to refinance before rates rise again.  There are several things to consider before you refinance and this spreadsheet will help determine two of them. 1.) How much interest you will save if you refinance and 2.) How long it will take you to recoup your closing costs.   All you need to do is input 6 numbers:

Refinance Breakeven calculator

1.)    Current Loan balance-In cell B1 input your current loan balance.  Note that this is your current balance not the original amount you paid for the house but rather how much is owed currently.

2.)    Current Interest rate-In cell B2 enter your current interest rate.  Enter as a percentage (IE 5.5% interest rate would be 5.5 not .055)

3.)    Current Payment-In cell B3 enter your current principal and interest payment per month only, not taxes or insurance.

4.)    Refinance Rate-In cell E1 enter your refinanced rate the same way you entered in your current interest rate in cell B2.

5.)    Length of New Loan-In cell E2 enter the length in years of your new loan.  If doing partial years divide the partial year’s months by 12 and enter that number in as a decimal. For example, a 17 years and 3 month amortization you would enter 17.25 (17 years and (3 months/12)).

6.)    Refinance Costs-In cell E4 enter the total refinance cost.

Notes: After entering all six figures cells B16 and E6 will give you your results.  B16 is the total interest savings over the entire length of the refinance and E16 is the number of months it will take until your interest saved is greater than your closing costs.  Also note that all these savings are pre-tax.  Like the mortgage amortization schedule you can plug-in extra principle payments in the ‘Current’ and “Refi’ tabs if you choose to determine how much faster they will help pay off your mortgage.

The most important number is the months to breakeven figure.  As mentioned before when we were considering a refinance, if you do not think you will be in the house after the breakeven point, refinancing will actually cost you more in the long run.

You can find this and other helpful spreadsheets that I have created and shared on the spreadsheet page.  So please come back soon as that page will be continually updated.

April 1, 2010

March ’10 Net Worth Update (+6.23%)

Filed under: Net Worth, Personal Finance, Real Example — Tags: , , , — thebalancedspreadsheet @ 10:25 am

March included hitting a milestone as we crossed the $100,000 mark!  We might actually dip below that in April due to some cash expenses described below but it is exciting to see our net worth grow.  After hitting the six figure mark our next goal is the seven-figure mark although that is a few years away. 🙂

Cash-The usual decrease for the month, the balance will decrease a little in April and May due to some big financial changes for us which will be discussed about in the coming weeks.  Also in May is our one year anniversary trip to San Diego!  Our flight and hotel are already paid for but there will be money spent on food, entertainment, and a car while we are out there. 

Employee Stock Purchase Program– End of a quarter so the amount is maxed out at $5,000.  Stock was bought at the close of business on March 31st and after quickly selling it will be posted to my checking account in about a week.

House-I have recently tried some of the online home evaluators and got a wide range of values. The average was around the $95,000 and I will be using the amount for a while.

Retirement-Big increase in retirement in the month of March as only a third of the increase is due to contributions into our 401(K) and ROTH IRA accounts.  Starting in 2010 my company began offering a ROTH 401(K)feature which I started to participate in.

Pension-Back to the normal contribution this month.  This amount should stay steady until October or November of this year. 

Mortgage-Another triple mortgage payment reduces the principal by ~$1,800!  We are trying to pay down the mortgage as quickly as we can and it is really cool to see the principle reduced by big chunks every month.  I have added a sidebar on the right side of the blog that has a graph that charts our progress as well as a goal sheet that shows how much time we have left.  At our current pace we will pay the mortgage off in 3 years and 2 months.

You can see past net worth updates at the net worth history page.

March 28, 2010

Gauge on your middle class status

Filed under: News Review, Real Example — Tags: , , — thebalancedspreadsheet @ 9:57 am

Yahoo Finance with the help of US World News had an article titled “How to gauge your Middle Class Status” It compiled a whole bunch of data and determined what the average American household earns and what they spent it on. A few things that jumped out to me:

Median Income-The Median middle class income in America is $81,000 as of 2008 with the income range between $51,000 and $123,000.

Home-The average home value is $231,000 with $17,600 a year in mortgage payments and other costs. The average mortgage payments are not that high considering an $81,000 income. After taking out taxes, that is about 25% of your take home pay.

Cars-$12,400 a year is dropped on cars with the average new car price around $45,000. YIKES! I have discussed how much a new car really costs you before and having a depreciating asset that is over half of your salary is not a way to be building wealth.

Vacation vs. Retirement-The average spent on vacations is $3,000 versus $2,600 saving for retirement assuming the 3.2 percent average savings rate. So we spend more on vacations then we do our future! Something does not seem right there.

Household Net Worth-The Average net worth is $84,000 which is down about 30% since 2007. That just tells me that most of the net worth we have as Americans was mostly tied into our home value. Yes, the stock market has fallen but it has recovered quite nicely in the past 12 months.

I recommend reading the whole article as it is interesting to see how you compare to the average American household. It was nice to see that my family has a higher savings rate and less car expense then most people though. This is a big reason why our net worth is higher than average as well and it continues to rise. Another interesting figure was that we are working more than ever before but when surveyed it was found the one thing we wanted 5.5 more times then wealth? Free time (68% vs. 12%)! Could it be that our consumption driven society based on working a lot to get more money to buy “stuff” (cars and vacations) to impress our friends is not the way to go?

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