Saturday, February 23, 2013

January 2013 Progress Report

February has been a lousy month with my being sick and all.  Although it's almost the end of February, I thought I ought to provide my January 2013 progress report.  My current debts are 331.66% my AGI, which is
 MY DEBT


Starting Debt
Last MonthThis MonthDIFFERENCE
Fed'l SL (06/08)$55,852.68$48,542.02$48,318.04-$223.98
Mortgage (1/6/12)$274,000.00$269,463.90$268,607.81-$856.09
Bank of Mom (1/6/12)$68,500.00$60,421.00$60,196.00-$225.00
CC (3/31/12)$34,188.50$26,047.00$26,582.84+$535.84
TOTAL$476,414.00$404,473.92$403,704.69-$769.23

The 0% promotional rates on of my credit cards expired and I couldn't pay off the $18,396 balance.  I transferred the balance to another 0% offer with a 4% balance transfer fee which cost me $735.84.  Hence, the negative development in my credit card balance this month.  The 0% promotional rate on my other credit card will expire on October 31, 2013.  I hope to pay that balance off without incurring yet another balance transfer fee.

Other than my credit card balances, I'm on track with my other debts.

SAVINGS

LAST MONTH
THIS MONTH
DIFFERENCE
$15,527.30$15,945.04+$417.74

I borrowed $282 (net) from my EF to pay for my property tax in December.  My EF is now fully reimbursed and I added an additional $135.74 in January.

The savings I report here is with respect to my emergency fund only and does not include my future spending earmarks. Currently, the total amount in my liquid savings account is $21,284.23.

MY ROP (LIFE INS) FUND

LAST MONTH
THIS MONTH
DIFFERENCE
$2,584.63$2,646.83+$62.20


Long story short, I'm pretending to pay myself $55/month for a "hypothetical" return of premium (ROP) term life insurance policy. (A ROP policy pays back your premium at the end of the term if you outlive the policy term.)  Investopedia looked into whether ROP premiums are worth it and it concluded that "for policy owners that can invest in tax-deferred or tax-free accounts and are comfortable investing in the markets, a basic term policy without the rider probably makes more sense."

That is exactly what I am doing:  I bought a plain-vanilla term life insurance policy and am putting the $55/month savings in my Roth.  I've calculated that I need an annual return of approximately 3.7% to make this experiment worthwhile.

I've paid $4,628 in premiums to date and my ROP balance is $2,646.83.  I've recouped 58.98% of my premiums and the annual return on my investments is currently 3.79%, which is slightly above my target. 

MY NET WORTH

LAST MONTHTHIS MONTHDIFFERENCE
$241,536.92$256,353.60$14,816.68

The majority of the increase in my net worth came from increases in my 401k and investment accounts.    

The history of my net worth can be found here.

Friday, January 11, 2013

Things I'll Start Buying With My FSA Money

I knew that starting 1/1/2011, a lot of stuff I previously bought using FSA money (OTC drugs) were no longer allowed without prescriptions.  So for the past couple of years, I just used my FSA money to pay for co-pays, co-insurance, contact lens stuff and other health equipment.

I looked carefully at a similar list of eligible and ineligible items yesterday and I was surprised at some of the stuff that are covered without a doctor's note:
  • Hand sanitizer
  • Hot creams (hot pads and hot patches included as well)
  • Toilet seat covers
  • Sunscreen with SPF 30+
  • Vent cleaning (Expenses paid for the cleaning of your home's vent system.  The customer's explanation of necessity is required.)
  • Parking fee or bus fare incurred for medical care.
I was also issued a FSA debit card for the first time this year.  When I spoke with a CIGNA representative yesterday, she advised that if I buy any of those items at general stores like Walmart or Target, to buy those items items:  (1) separately from non-eligible items and (2) at the pharmacy counter.
I'm going to try to push the envelope by submitting my SPF 30+ BB Cream purchase under the "Suncreen with SPF 30+" category.  I won't buy it with my debit card, but I'll submit it manually.  Who said health and beauty are mutually exclusive?

Sunday, January 6, 2013

Budget Fail

Looks like I'm going to blow my monthly budget already.  2013 hasn't been good so far.  A shelf in my guest bathroom started tilting because the drywall anchor broke.  As a result, one of my apothecary jars fell and shattered (-$16.95+tax).  I also forgot to close my vegetable crisper in my fridge.  When I closed the door, it hit the still-open crisper and it cracked (-$38.95+tax+S&H).  But those accidents aren't what caused me to go over-budget.  (I'm just whining.  I'll replace those items in due time.)  I'd forgotten to account for 2 recurring items in my budget:  $21 orchid care service (quarterly) and $59 massage (monthly) dues.  *Sigh*

I'm still $3.17 below my budget, but I anticipate that with gas and other groceries, I'll likely go over in the next week or so.  Nevertheless, I'm going to try to see if I can live off of a $50 food budget I set for myself.  At this point, I've only spent $8.86, so I'm doing good so far. 

Friday, January 4, 2013

$50 Food Budget Until the 26th

Like a scared ostrich, I buried my head in the sand last year with respect to my finances.  I'm surprised that even though I was over-budget every month, I didn't run a major deficit.  (Not sure how I managed that feat.)  Nevertheless, I vowed to keep better tabs on my spending this year since my total dollars in the bank was less in Dec. 2012 than 2011.   So....


It's only the 4th and I'm suffering from a financial hangover from the holidays.  I can't believe I've already spent $400 of my $500 food/gas/incidentals budget for January.  This means I need to live off of $100 until the 26th, when my credit card turns over.  Since I expect to spend $50 in gas, that means I only have $50 for food and incidentals.  I've inventoried my fridge and I think I can manage with only buying certain staples like eggs, milk, veggies and fruit.  I'll be eating a lot of starch this month.  I guess my weight loss resolution will have to wait until February.

Sunday, December 30, 2012

Year-End Progress Review

I guess this should be titled, "My One and Only 2012 Progress Review."   Rather than a month-to-month comparison, this will be a year-to-year comparison.

I know it isn't year-end yet, but with family around on New Year's Eve and Day, I doubt I'll capture all of the relevant data as of 12/31/12.  This will be as close as it gets.



MY DEBT



Starting Debt
Last Year This Month*This MonthDIFFERENCE
Fed'l SL (06/08)$55,852.68$50,115.88$48,542.02$1,573.86
Mortgage (1/6/12)$274,000.00$274,000.00$269,463.90$4,536.10
Bank of Mom (1/6/12)$68,500.00$68,050.00$60,421.00$7,629.00
CC (3/31/12)$34,188.50*$34,188.50*$26,047.00*$8,141.50*
TOTAL$476,414.00$426,354.38$404,473.92$21,880.46
* This credit card debt was incurred for the renovation work on my condo.  The renovation work wasn't completed until Feb. 2012 and the total was unknown until March 2012.  Thus, the balance of $34,188.50 is not from Dec. 2011 but rather from March 2012.

I eliminated approximately 5.13% of my debt.  Thankfully, I have not incurred any more debt since 3/31/12.  I would like to snowball my student loans to pay it off sooner, but I feel compelled to pay back my mom ASAP since this money will be used for her care if my sister and I ever have to put her in an assisted living facility.  So right now, my payoff priority is equally split between my student loans and my "mom loan."  Hopefully, at this rate, I will be debt-free (except mortgage) in 8 years.  I hope to be completely debt-free in 18 years.

SAVINGS

LAST YEAR THIS MONTH
THIS MONTH
DIFFERENCE
$14,437.72$15,527.40+$1,089.68

I'm actually short $277 from where I should be.  I had to borrow $632 from my EF to cover a Supplemental Property Tax bill that I'd overlooked when budgeting last year.  Due to Prop 13 in California, the prior owner of my condo paid artificially low property taxes because she bought the property 15 years ago when property values were much lower.  When I closed on my condo, I paid 50% of the property tax in 2011 based upon the prior owner's tax rate.  I budgeted and saved enough to cover my 2012 property tax at the newly assessed value, but I'd forgotten to budget for the retroactively reassessed property value for 2011.  Hence, the $632 shortfall.  *Dagnabbit*  I've already reimbursed $350 back into my EF.  My EF should be fully reimbursed by the end of January.

The savings I report here is with respect to my emergency fund only and does not include my future spending earmarks. Currently, the total amount in my liquid savings account is $22,054.62, which is actually $1,375.92 less than last year.  Not a good trend. 

MY ROP (LIFE INS) FUND

LAST YEAR THIS MONTH
THIS MONTH
DIFFERENCE
$1,823.93$2,854.63+$1,030.70


Long story short, I'm pretending to pay myself $55/month for a "hypothetical" return of premium (ROP) term life insurance policy. (A ROP policy pays back your premium at the end of the term if you outlive the policy term.)  Investopedia looked into whether ROP premiums are worth it and it concluded that "for policy owners that can invest in tax-deferred or tax-free accounts and are comfortable investing in the markets, a basic term policy without the rider probably makes more sense." 

That is exactly what I am doing:  I bought a plain-vanilla term life insurance policy and putting the $55/month savings in my Roth.  I've calculated that I need an annual return of approximately 3.7% to make this experiment worthwhile.

I've paid $4,422 in premiums to date and my ROP balance is $2,584.63.  I've recouped 58.45% of my premiums and the annual return on my investments is currently 3.34%, which is a bit below my target.  I'm not concerned because I haven't invested any of my contributions from this past year.  I feel stocks are a bit too expensive right now so rather than dollar cost averaging while the market's up, I'm just parking the money in my Roth and waiting on the sidelines.  I hope down the line, this strategy will pay dividends.

MY NET WORTH


LAST YEAR THIS MONTHTHIS MONTHDIFFERENCE
$187,878.14$241,536.92$53,658.78

I think I can take maybe 20% of the credit for the increase in my net worth through debt reduction and savings.  But I suspect that 80% of the increase is from the market rise.  In light of the fact that I'd ignored my finances this past year, I'm pleased with the results. 

The history of my net worth can be found here.