Feb 2010 Net Worth
As expected, I had a huge and positive change to my net worth this month! I made a huge payment towards debt, paying off my personal line of credit in full ($1,000!), fully funding my emergency fund ($300), and paid an extra $500 towards my SBA loan. This was due primarily towards some very large paychecks this past month and receiving my tax refund.
WordPress blogs won’t allow javascripting to be displayed, so I can’t show you the chart. Instead, you can view it here.
| Assets: | |||
| Feb ’10 | Jan ’10 | Difference | |
| Cash | $950 | $580 | $370 |
| Savings | $1,000 | $700 | $300 |
| 401K (current): | $5,399 | $5222 | $177 |
| 401K (rolled over): | $40,930 | $40,147 | $783 |
| Total Assets: | $48,279 | $46,649 | $1,630 |
| Liabilities | |||
| SBA: | $29,196 | $29,699 | ($503) |
| Line of Credit: | $0 | $1,017 | ($1,017) |
| Citibank: | $0 | $0 | $0 |
| Discover: | $0 | $0 | $0 |
| US Bank: | $5,700 | $5763 | ($63) |
| Total Liabilities: | $34,896 | $36,479 | ($1,583) |
| Total Net Worth: | $13,383 | $10,170 | $3,213 |
Next month will probably be pretty lean. My next paycheck is only 9 days, and of those days, I lost about 4 hours of overtime due to attending a 3-day seminar (8 hour days instead of 10). I also expect some major changes at work, with a probable reduction in my salary in response to several months of losses at work (the economy has finally come calling). I’ll be posting more when I find out more this week.
More details about CreditKarma & recent changes to my credit score
I got my updated credit score from creditkarma today and have started to notice some specific issues with the speed of changes that get reported. Now I am not sure if the problem lies with creditkarma (CK) itself, or if it’s based on how slowly things are reported to TransUnion, the site that it gets them from. Here are a few observations:
- I joined a credit union in mid-January. It wasn’t until after February 1st that it was reported as opened (the last time I checked my credit).
- My credit card/debt balance is comprised of only 2 debts and is missing 1 big one. The US Bank balance and the Wells Fargo personal line of credit are both reported. My SBA loan is completely missing. I wonder if it is because this is a business loan?
- My debt balance is out of date. The US Bank balance is listing as over $6K – it hasn’t been that high since before December, 2008. I wonder if US Bank isn’t reporting it since I am not using it for any transactions whatsoever? Wells Fargo is reporting much more quickly. It shows at $999 balance, which indicates that they reported the total debt within the last 2 weeks. I will need to keep checking back to see how long before that debt shows up as $0 – that will indicate how quickly WF updates and/or how quickly TransUnion shows changes.
- I get an “F” for having so little accounts open (7 open, 1 closed). Apparently, to have the best score, I should have more like 40+ (that’s what they indicate as having the best result on your credit score). Sorry, not going to open 30 or more credit cards!!!!!!
- Having a new account opened had 2 effects that I can determine: it reduced the average age of my available credit, since this new one is a newborn (bad) and increased the available credit available (good). Overall, the new account caused my credit score to go from 794 to 790, a drop of 4 points.
I will post more on this subject as I find it out – I am fascinated to be able to tell changes in my score from specific and measurable occurrences (it must be the scientist leanings in me).
Tax refund + large debt payments
This has been a nose-to-the-grindstone week, so not much to talk about. However, a few big things occurred this week:
I got my $792 refund from the IRS on Friday. Whoo hoo! I immediately fully-funded my emergency fund back to $1,000 (as I said I would) and paid the remaining amount towards my main remaining debt, the SBA loan (the US Bank is at 0% currently, so it gets no extra attention). Last week I fully paid off my personal line of credit, so between both of these payments, I’ve dropped a huge chunk of change into debt and savings this month.
I’ll be posting my net worth tomorrow, and I can tell you, it’s looking pretty stellar! This is the largest debt payment month I’ve ever had.
Please note the updated debt stats on the right ———>
Revisiting the ideal emergency fund
Up until this past week, I thought having a $1K emergency fund would be more than sufficient. My job is ultra-stable, not in danger of disappearing or being cut down even if other people have reduced hours. So I never worried too much about it – if something really BIG happened, more than I had saved up for, then I could always temporarily dip into my (now paid in full!) personal line of credit.
I get the concept of having 3-6 month’s of living expenses saved up, “just in case.” I’d love to do that! But I really want to pay my debt off first. Saving and increasing my 401K percentage and contributing to an IRA will just have to wait until my debt is GONE. It should be about 3 more years.
There is one major flaw with my accepted theory. An injury or health problem that causes me to be unable to work. A co-worker broke her wrist a week ago, outside of work. So worker’s comp won’t apply. She’s unable to do most of her job (it is physical and requires movement and range of motion). In effect she will be losing quite a bit of work until the whole healing process is complete.
If I had a similar situation, say I get into a bad car accident, or fall on a hike and break my leg or something, how would I handle that? Right now my EF is at $700 (but as I’ve mentioned recently, when I get my tax refund in the next 2 weeks, I will drop in another $300 to fully fund it). I think I’ll continue to gamble on nothing catastrophic happening. In the long run, having no debt and needing to use some to pay for it vs. having a big savings fund to deplete but not being able to make any headway on paying down debt come out equal in my book. So I guess I’ll continue with my status quo.
Great progress this month – line of credit paid in full!
Today I paid off my personal line of credit with a $1,000 payment!!! It was my highest interest rate debt at 10%. Now, I’m left with $29,582 in my SBA loan, which is at 5% and about $5800 on my US Bank card, currently at 0%. I’ve been very careful this month with spending, and I was lucky enough to have 2 very nice paychecks with a lot of overtime. Going forward, I will dedicate myself with sniper focus on my SBA. In a way it’s a nice feeling to know that you only have to concentrate on one debt. I don’t know how people with a gazillion cards do it. But then, in the past I’ve only had 2 credit cards at most at any one time (now I have 3 but that was just to get the 0% interest rates; I did it intentionally, never used them except as a way to reduce interest, and have been paying them back steadily).
I should be receiving my $792 back from the IRS by early March. I think I will put $300 into my emergency fund to top it off back to $1,000. The rest I’m debating throwing at the SBA debt, or possibly saving it for next month’s expenses. I will have a fairly large expense in the next 3 weeks; we are building raised garden beds and will have 6 cubic yards of compost/soil delivered, which should be about $240. Add in the purchase of fertilizer and soil ammendments (we will have a lot of growing space to deal with), I’ll say it will be $350-$400 that J and I will have to split. To add insult to injury, my next paycheck will be extremely tiny. Not only will it only be a measly 9 days, but due to a 3-day management seminar work is sending me to, I’m losing 2 days of OT – both days that I stay late to close the building – to the tune of about 4 hours. So this paycheck will be a full day and a half smaller than usual.
I also updated my mini-funds a few days ago. Overall, this has been a good month for progress, great for making up for the past 2 months of much more modest gains.
Actually
Jan 2010 net worth: slow progress
January saw a modest decline in my net worth because of 2 things. Most of my assets are tied up in 401K mutual funds, which decreased, slightly in the past month. The other reason was due to my final large installment on rental move-in costs (the second half of last month’s rent, plus security, pet, and cleaning deposits).
WordPress blogs won’t allow javascripting to be displayed, so I can’t show you the chart. Instead, you can view it here. Further explanations are below.
| Assets: | |||
| Jan. ’10 | Dec. ’09 | Difference | |
| Cash | $580 | $300 | $280 |
| Savings | $700 | $700 | $0 |
| 401K (current): | $5222 | $5013 | $209 |
| 401K (rolled over): | $40,147 | $41,727 | ($1580) |
| Total Assets: | $46,649 | $47,740 | ($1,091) |
| Liabilities | |||
| SBA: | $29,699 | $29,637 | $62 |
| Line of Credit: | $1,017 | $1,469 | ($452) |
| Citibank: | $0 | $0 | $0 |
| Discover: | $0 | $0 | $0 |
| US Bank: | $5,763 | $5888 | ($125) |
| Total Liabilities: | $36,479 | $36,994 | ($515) |
| Total Net Worth: | $10,170 | $10,746 | ($576) |
Cash:
I started contributing small amounts again to my mini-funds. Most of this money I expect to pay out at some point, so it won’t have a large impact on my networth from year to year. February will see a much larger and regular gain, once my budget gets back to “normal.” The most this category should increase in any one month would be $370.
Savings:
This category is primarily my $1,000 emergency fund. It’s been depleted with moving, rental fees, a recent car expense that I didn’t quite have enough saved up for, and finally, moving my primary checking/savings from Wells Fargo to Boeing Employees Credit Union. Now that the rent will be back to a sane $895/month instead of over $1500, and now that I don’t have to shuffle between paying out of 4 different accounts, I can start building this up again in February.
401K funds:
The only reason my current 401K (the one I am contributing to in my current employment) went up at all is due to my contributions and extremely minor (1%) employee match. As you can tell from my past (and partially rolled-over) 401K, I lost in the one that I don’t contribute to. Just a small jog in the road, and I’m not really concerned.
Credit Cards:
I overpaid my US Bank account as I started online banking (and was worried payment wouldn’t make it in time). This is a low-priority debt, as it is currently 0% interest; it should only go down by $60/month until the rate expires. Citibank is always paid in full (like frugallawyer, I hate them). Discover is now paid in full, now that their 0% rate expired.
Personal Line of Credit:
This is at $1017 and should be paid in full by end of February. All my extra payments go here; it’s my highest interst rate at 10%.
SBA:
Until the line of credit is paid off, this gets the minimum payment. It is at a lowly 5% interest rate. I overpaid a little in January for the same reason I overpaid the US Bank card – I was worried about my first online bank payment getting there in time. Come March, this will be receiving my complete and undivided debt-payoff attention.
Next Month
Unless the stock market completely tanks, I should have a somewhat (at least to me and my moderate salary) significant change in net worth in February – I expect to get my $792 tax refund in 2 weeks and this will go towards my EF and completing my line of credit payoff. This will be on top of my regular debt extra payments, which I guestimate will be about $800, making it one of the best debt payments I’ll have made outside of any month that I receive a tax return. Fingers crossed that nothing untoward happens.
Unexpected Valentine’s event!
We’re not doing much in the maven household. J is recovering from oral surgery on Friday and the aftereffects of a drug reaction (percoset, too much caffeine, and an empty stomach can be really really scarey!). He’s miserable, and not going anywhere or doing anything. He did promise to make me his famous creme brulees, and we have an excess of half and half cream to use up since our weekly home dairy delivery has been more than we can use and he refuses to call and reduce what they bring us. So I’ll win on that count!
But I did do one amazing and unexpected thing this Valentine’s Day! I just watched 2 racoons shag in the cedar tree out in our backyard. Love is in the air! I see racoon kits in our future.
What’s the most unexpected thing you’ve done on this holiday?
Tax season, how does it work?
During the months of January through April do you all of a sudden find lots of tax-assistance stores in the strip malls and small business areas where you live? I had my oil changed yesterday, in this really sketchy lower-income neighborhood area that’s near where I live. I took a walk around to see it while I waited the 40 minutes for the mechanic to finish.
There was the person in the liberty mutual costume on the street corner waving at people. H&R Block had an office, as did like 3 other tax businesses. I tried to remember if there are that many in the “off” tax season, you know the rest of the year after April 15? I can’t remember if these were from vacant businesses and only temporary office shells, or if they were around the rest of the year.
I wonder what these business do the rest of the year? Is it all seasonal, temp tax-prep work? I’m sure there are business folks that need tax help to file quarterly taxes, but I’m sure they don’t use the predatory tax assistance businesses, or if they do, that there would be enough work to employ people and pay for business storefront rent. I would hope they go to accredited CPAs.
And what about the IRS? I got my electronic filing approved today. On a Sunday! I don’t know if it is automated or if it is done by a live human. Either way, I’m sure there are IRS government employees working weekends. I’ve always been impressed how quickly they process my return and refund. I can’t imagine how many people they must employ, to have every adult tax payer go through their system in an orderly and timely fashion in a 2.5 month period (I’m estimating that taxes start Feb, after W-2s come out through April 15). What do *they* do the rest of the year? Audits? If they have other work to do, do they put it on hiatus until tax season is over? Do they employ hordes of temporary workers?
If anyone works in this field, I would love to know the logistics! It seems like the higher-education version of hiring temp workers for the Christmas shopping rush.
First time e-filing! Over and done.
Wow. I just finished doing my taxes. It was relatively painless, almost (dare I say it) fun. I have to admit that I’ve always done paper taxes, and always gotten it wrong. I’d send off my return, and then a check would show up for several hundred dollars more than I had expected. And I never really understood why.
This year, for the first time, I decided to use a tax software program – TurboTax’s free online e-filing. This was partially due to seeing lots of other pf bloggers talk about it. So I checked it out and decided to trust them with my personal information. I still wasn’t convinced – I went through the motions of filling out all the forms, data entry, and answering questions. It determined which form I needed to use (1040A rather than the 1040 I tried filling out myself). It gave me a tax refund number. Then it asked me to confirm my identity with the IRS since this would be my first e-filing attempt. My last year’s return is bundled up in my file drawers which are still wrapped up in the basement since our fall move. It wasn’t super easy to access, and I wasn’t completely sure about the electronic portion – did I still have to send forms in? Maybe I wanted to keep 100% control and do it myself, still, and use TurboTax’s results as a guide to make sure I got the numbers right.
Well, I filled out the form manually and found out how unclear some of it all is. I doubted my entries over and over. I read page 26, 32 and 47 of the instruction booklet (I made those numbers up for this post, by the way). I finished and my return was much less than TurboTax’s. I must have done something wrong. Turns out that I didn’t know about the Making Work Pay refund ($400!) or anything about Schedule M.
So I decided to just go for it and e-file. I found last year’s tax return, submitted one number, entered my bank info, and I was good to go. Easy, done, and whew! No wondering if it will get lost in the mail, ID theft, or long delays. Plus, I feel confident that I entered everything correctly, and didn’t miss out.
I fit into the category for free e-filing. My income is less than $57K, I don’t own a home, didn’t buy a car this year, and was not a student. Pretty basic. Even if I didn’t, I still feel like it might be worth paying for. However, I’ve been seeing that there are plenty of other free services you can use: Tax Act, as well as the IRS’s website itself.
Hopefully on Monday I’ll get a confirmation that my e-filing was accepted. If so, I can look forward to a $792 credit that I will be applying to my debt principal.
DebtMaven 