Monday, March 2, 2009

February '09 Progress Report and Net Worth - Ugly Edition

So what can I say other than it was an ugly month? Thank heavens this was a short month. I don't think I could've taken another 3 days.

Work has been hellishly busy so I haven't been able to update or respond to comments as often as I'd like. Worse yet, I haven't kept up with everyone else's blog. And for that, please accept my heartfelt apologies.

And I figure I might as well 'fess up early - I totally failed with respect to my veggie/exercise swear jar experiment. Although I did well on eating more fruits and vegetables, I got ZERO, zippo, nada exercise this past month. (Another confession: I've been eating broccoli almost every night sauteed with 1/4 strip of bacon. That still counts, right?)

Anyhow, as they say, "On with the show!"

Starting Debt (6/31/08)Last MonthThis MonthDifference
Private SL$49,528.99$47,268.94$46,902.46$(366.48)
Fed'l SL$55,852.68$54,982.25$54,876.76$(105.49)
Car Loan$9,779.33$4,696.24$0.00$(4,696.24)

The one bright spot of the February 2009 catastrophe was that I paid off my car (yee-hawwww), which has freed up $788/month from my monthly obligations.

Before I go on, an anon commenter suggested that I should be owning a $50,000 car if I was paying $788/month. Actually, if I took out a $50,000 loan with 4.75% APR for a 38 month term, my monthly payment would've been $1,418/month (!!!). (The only way a $50k loan would have had a $788/month payment is if the term was for 72 months. And that would just be insane.) Secondly, I've only recently (i.e., within the past 7-8 months) started paying $788/month. Prior to that, I'd been paying $570/month. So, that's how I ended up with a $788/month payment on a $25,000 car that I paid off in 38 months.

Anyhoo, I digress.

I previously whined about how I wanted to spend some of the $788/month payment for fun, but I've since controlled my tantrum, and am committed to using the car payment to pay down my credit card. Since my credit card interest is currently at 0%, my tentative plan is to reverse arbitrage the additional $788/month payment into my "high-yield" (*snort*) savings account.

I may change my mind about arbitraging though, since my debt-to-limit ratio has gone up (and probably reducing my FICO score) as a result of closing my Chase credit card. I figure that the earlier I pay down my debt, the faster I can repair any damage that I've done by closing my $18,500 limit credit card. (Curse you Chase!)

Additionally, the "high-yield" interest rates on my online saving accounts are dropping like flies. By my calculations, the reverse arbitrage would net me around $43 (pre-tax). Is $43 worth sacrificing the immediate gratification of seeing my credit card balance go down? Hmmmm... not sure. I'll play this one by ear.




OY GEVALT!! I'm hemmorhaging! Just joking.

The reason why my savings went down $2k+ is because I used $2,219 of my savings and $1,908 of my earmarks (which don't count towards my savings) to speed up my car pay off date. So, if you disregard the money I took out to pay off my car, I actually saved an additional $153.80 this month.

But yuck. The above chart looks pretty ugly, doesn't it?


Wow. The graph and the chart get uglier and uglier. Ha ha.

The swan dive looks worse than it actually is because I took an immediate write down of $12,600 in my assets with respect to the value of my car. The only reason why I previously included the value of my car in my asset calculation was because I wanted to reassure myself that my loan amount didn't exceed the value of my car. Now that I own the car outright, I don't have to worry about that. And as Frugal CPA commented, putting the value of my car in my net worth is misleading since I'm never going to see the value it supposedly represents while I keep the car.

But... this doesn't fully explain the carnage. I'm sure you've all suffered from the market breaking the November 08 lows so I'm not going to bother discussing it here.

The breakdown of my net worth can be seen here.


DogAteMyFinances said...

It's GREAT you paid off your car. That's really a big deal. It just felt different to me after that.

Miss M said...

My eyes, my eyes. Was that Sam or another hideously ugly chinese crested? Congrats on paying off the car, that's huge. I got similar comments when I said I was paying $700/mo on my car, everyone thought it must be a BMW. It was the $480 monthly payment and $220 extra to help pay it off early. I hear you on the savings rates, all of them are dropping. But cash in savings also means flexibility, it could help you weather a layoff for example. The little bit of interest is a bonus.

444 said...

I also don't include either of our cars in NW calculations, for different reasons. For one, we owe more than it is worth, which does not mean it is worth negative equity to us, and the other is paid-for but supposedly worth next to nothing - again, it provides a lot of value to me as I drive around problem-free year after year (knock on wood) and payment-free with it. Valuing cars is absurd, in my opinion.

I have similarly-depressing sinking charts, so don't feel like you're the only one. Stop by and see the new ones I installed at the bottom of my sidebar. I guess one swan-dive chart wasn't enough for me and I wanted detailed separate ones to see the trend repeated over and over.

Sharon Rose said...

Hi there-You have had a productively good month, sorry to see about the charts, but nevertheless, you've done brilliantly!

paranoidasteroid said...

My net worth charts are taking a similar dive.

I include my car in my net worth calculations because if I needed to, I could sell the car to come up with cash. I adjust the value every year to coincide with the KBB value.

Sunflowers said...

U..ugh... that poor dog. *cringe*

Anyway... it's really awesome that you've paid off your car! Congrats! :) I still have a few years of payments ahead of me... sigh.

RTC said...

Way to go on the car payoff!
February wasn't that bad!

Sallie's Niece said...

Congrats on buying off the car!

Shtinkykat said...

@Dog: Thanks!

@Miss M: Ha ha. The picture is the past winner of the ugliest dog contest. Ever since he passed away, his successors have not matched him in ugliness.

@444: Ha ha. This market makes us all a bit masochistic, I guess.

@$haronRo$e: Thank you so much for your continued support.

@ParanoidAsteroid: Since my car is my only mode of transportation, I'm not likely to sell it. As my friend said, if I ever get evicted, at least I have a car to sleep in!

@ Sunflowers: Hee. Hope the ugly dog didn't scare ya.

@RTC: I guess good mixed in with some bad ain't all to bad.

@ Sallie: Gracias!

DebtConsultant said...

you can seek proffesional help to eliminate your debt . That is the best way to deal with this difficult situation

Jason said...

Let me first tell you that I have NEVER ever written a comment in a blog...ever. Having said that I want to congratulate you on your blog--the stats you have listed on the right side of the page are great.
I'd also like to make a comment about getting out of debt. I'm not sure how much of Dave Ramsey you have read or listened to but I want to encourage you on your journey to changing your life by eliminating debt. I am currently reading through all of your posts which I anticipate might take a while and one of the comments I have read so far was about the "urges" to go out and spend instead of paying down your debts.
Ramsey mentions that not only should you pay your debts but also attack those debts with a "gazelle" intensity. I believe the most difficult part of paying off debt is that in order to "get sold" on focusing only on paying it off you must come to a must hit rock bottom.
The best example I can think of is when an alcoholic or someone with a drug addiction gets to the point where they suddenly realize it cannot get worse...where they come to the realization that they have lost things in their lives that are extremely valuable to them. At this rock bottom point it is easier to start to focus on a goal because the motivation is never ever to return to the low point.
So my question to you is:
Have you hit rock bottom?

I have some other questions as Im trying to get a sense of your situation reagrading your debt challenge..if the questions are too personal I apologize:
What debt payment systems have you looked into?
How much have you studied about Dave Ramsey and the Total Money makeover?
You list your total debt which is the "hole" but might I inquire as to how big your "shovel" is (a general range of your total income that you can use to attack your debt)?

Jason said...

So as I predicted earlier i have now come to realize that I simply didnt read enuf of your blog to be completely up to date. I can answer many of the questions I sent in the last post from what I read so far. i do have another question though.
What are your thoughts of stoping your 401k until you at least clear the cc bills and only have the house and college loans left?
I can see your deep into something that resembles the Ramsey plan so Im guessing you have already thought of this but i would like to read your thoughts on this subject.

Shtinkykat said...

Jason: Welcome to my blog. Thanks for your comments and questions. I do like the concept of Dave Ramsey's snowball debt reduction but I haven't done everything he recommends. For example, I'm contributing to my 401k and I'm saving some cash(around $200/month), above and beyond the $1k that Dave Ramsey recommends.
I admit I don't have the "gazelle intensity" that he discusses. But I think I am very determined and focused to reduce my debt, though.
The reason why I save while I pay down my debt is because I'm not confident about my job security. When you're not confident about your job prospects, I think it's crazy to only have $1k in the bank.