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 15, 2010

Helpful Links: www.AnnualCreditReport.com

Filed under: News Review, Personal Finance, Uncategorized — Tags: , , , — thebalancedspreadsheet @ 6:54 am

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AnnualCreditReport.com is a website that everyone should visit once a year.  The reason is because every year you get a free credit report.  The difference between this site and the other “free” credit report sites is that you do not have to enroll in any offers to get your “free” credit report.  You are allowed to get a free credit report from each of the 3 credit reporting companies (Equifax, TransUnion, and Experian) every 12 months.  So if you time it out you can get a free credit report every 4 months.

It is important to remember though that this is just a credit report, not a credit score.  It is good to check your credit report every year because most are filled with errors and it is a good thing to keep on top of things instead of getting a surprise or two when you apply for a mortgage.

May 3, 2010

Media Monday: Maxed Out

Filed under: Personal Finance, Uncategorized, Videos — Tags: , — thebalancedspreadsheet @ 4:31 pm

Welcome to the debut of a new series that I call Media Mondays.  Every Monday I will try to come up with a video clip that has to do something with personal finances.  Today’s clip is the opening 10 minutes from the 2007 documentary Maxed Out.  Maxed Out goes in-depth into the world of credit cards and those that are impacted from college students, to those who are late on their payments, to the credit card collection agencies themselves. 

If you liked the first ten minutes then I definitely recommend you watch the whole thing as it is really an eye opener on how certain segments of the credit card industry work.  Interesting to note that this was filed before the recession of 2008-2009, I can only imagine it has gotten a lot worse since then.

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 27, 2010

Financial issues facing Generation Yers

Filed under: Goals, News Review, Personal Finance — Tags: , , , — thebalancedspreadsheet @ 7:05 pm

While in Tennessee last week I came across a good front page article in USA Today titled “Generation Y’s Steep financial hurdles: Huge Debt, no savings”.  Being a member of the so called “Generation Y” myself the title caught my eye.  The article mainly profiles Frank and Erin Lennon who just got married in October and Kristen Ammerman a senior from Michigan State who is graduating with a degree in journalism.  The article is full of interesting (and also scary) statistics and facts on young people today from the public policy research group Demos.

“Their generation is the first in a century that is unlikely to end up better off financially than their parents, the Demos report said.•Only 58% pay monthly bills on time, a National Foundation for Credit Counseling (NFCC) 2010 survey said.

•Nearly 70% of Gen Y members are not building up a cash cushion, and 43% are amassing too much credit card debt, says a November MetLife poll.

•On average, Gen Yers each have more than three credit cards, and 20% carry a balance of more than $10,000, according to Fidelity Investments.

•Millennials are graduating from college with an average of $23,200 in student debt, according to the most recent data from the Project on Student Debt. That is a 24% increase from 2004.  Even before the recession, nearly half of college students dropped out before earning a degree, the Demos report said.

Add all of that up and the data is kind of depressing.  This really does not come as much of a shock to me.  Talking with friends, family, and coworkers you always wonder how people my age could afford going on nice vacations and buying nice cars.  Well the data suggest they are faking it by going into credit card debt.  Although these quotes below kind of made me chuckle:

  “It was only when [the Lennon’s] were married in October that they became aware of their total credit card and college loan debts.

“The real shock was on our wedding day, when we realized that we were $104,000 in debt,” Frank says.

Surprise!  The thing that shocked me most was not that fact they were $104K in debt, but the fact they just found out about it on their wedding night!  You would think it might have come up some time in the dating or engagement process right?  Ultimately though this quote sums up what most twenty-something’s are feeling today:

  “When you get a little bit of money, what do you do with it?” asks Mikala Shremshock, 27, who works for Veeco Instruments near Philadelphia. 

“Do you pay off your credit cards, put it toward student loans, make an extra payment on your house or car, or put it in your IRA? I don’t have enough to really make a big dent in anything. If you get a bonus, why not just spend it?”

This shows the hopelessness and short-term thinking that so many people have right now which is the “Thank God it is Friday and oh no, it is Monday” mentality of buying stuff whenever you feel like it and paying for it later.  Twenty-something’s have dug themselves a hole, but it is not a hole they can not get out of, nor do I believe that it is absolutely certain they will be worse off than their parents.  What most of us are lacking is clearly defined financial goals and a plan to carry them 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 17, 2010

Entitlement Spending Projection

Filed under: Personal Finance, Videos — Tags: , , , , , — thebalancedspreadsheet @ 9:30 am

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Have you ever looked at your paycheck and wondered what the FICA taxes withheld from your pay are for?  Well FICA stands for Federal Insurance Contributions Act and it is a payroll tax that funds programs such as Social Security and Medicare.  It is often referred to as Entitlements.  Since everybody who earns money pays into this system the question should be asked, how is my money being spent?

The two video’s below are from John Stossel’s Fox Business show on March 26th titled Stealing from our children.  Both are about 9 minutes long, but if you are short on time I recommend starting at the 3:20 mark and going through the end in the first video and going from the start to the 2:11 mark in the second video.

You might know Stossel from his work on ABC’s 20/20 show or from this famous incident with pro wrestling back in the mid 1980’s.  Even though I do not agree with him or his guests on everything I find the show to be really interesting each week.  What really stuck out to me towards the end of the video were the projected tax rates coming up in the near future.  I always knew that social security was in trouble and if I were under the age of 40 I would not count on social security in its current form.  It is just disheartening to see 6.2% (12.4% if self-employed) coming out of your paycheck each month going into a program that is heading towards insolvency.  Good thing I am not planning on Social Security for retirement income.

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 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 20, 2010

Most Important Money Advice a Young Person Can Receive?

Filed under: Personal Finance, Uncategorized — Tags: , , — thebalancedspreadsheet @ 7:45 am

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An interesting question was asked recently on Cash Commons by AskaboutGadgets.com.  The question was “what is the most important money advice that a young person can get?”  I posted a brief answer but after thinking about it some more I think the real answer depends on age of the young person we are talking about. 

Up to 12 years old-I think the most important thing I would stress is the relationship between work and money.  Money is not just “created” it is earned through hard work and discipline.

Teenage years before college-Try and set goals on what you want to do career wise with your life.  If college is your goal figure out how you will pay for it and realize that the most expensive school is not always the best option.

College age-For those who go the college route the best advice I would give is to have a game plan to figure out your career and get the degree that will enable you to do that career.  Do not go to school just to “get a degree” or get the “college experience”.  Rather decide what career you want and what it will take to get you there.

Post-College-As noted in Cash Commons, my advice would be to get out of and stay out of debt.  Your greatest wealth building tool is your income and you can not become wealthy by making payments to a bank or to a credit card company.  As noted in The Millionaire Next Door and Stop Acting Rich and Start Acting Like a Real Millionaire, wealth is created by not spending luxuriously but rather living below ones means.

With that being said anybody else have good financial advice that I missed or forgot?

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