Wednesday, July 16, 2014

Long Hiatus

It's been over a year and a half since my last post?  I guess an update is warranted.  When I started this blog six years ago, I was $126,000 in debt ($104k+ in student loans and $22k in cc and auto loan) and only had $125,000 in assets (of which the majority was my 401k and very little else).  My finances have improved drastically since I started this blog and I'm currently on auto-pilot mode.  I now have the luxury of not needing to monitor my every spending down to the penny anymore.

I should be happy, right?  But I'm miserable at my work.  My employer has been firing one employee every couple of months for the past couple of years.  I live Everybody at work lives in constant fear that I he or she will be next.  I've now resolved that I want to retire by age 56.  (That's 14 years away, BTW.)  I'm sick and tired of living in a constant state of fear. 

I don't have any creative plans to achieve my goal other than to accelerate debt repayment and increase savings.  My future posts will likely be sparse and limited to ideas towards achieving my retirement goal.  This will be my last post re: my net worth update. 


Starting Debt
January 2013 June 2014 DIFFERENCE
Fed'l SL (06/08)$55,852.68$48,318.04$37,324.65-$10,993.39
Mortgage (1/6/12)$274,000.00$268,607.81$261,060.15-$7,547.66
Bank of Mom (1/6/12)$68,500.00$60,196.00$48,271.00-$11,925.00
CC (3/31/12)$34,188.50$26,582.84$4,400.00-$22,182.84

I sold $15k in company stocks to pay down my credit card debt but still had to transfer my credit card balance yet another time in February 2014.  Fortunately, I did not incur any balance transfer fee and it is currently at 0% due to the Chase Slate balance transfer promotion.  My 15 month promotional period will end some time in April 2015 but I plan to pay this balance off my this December.

After my cc balance is paid off, my next line of attack is my student loan.  I plan to pay this off by by March 2018.

My "Bank of Mom" loan (i.e., my Dad's life insurance proceeds used towards the down payment of my condo) is not actually a loan but rather my setting aside money for the benefit of my mom, in the event she needs the money.   I plan to repay the "loan" balance of $68,500 by March 2020.

Finally, the mortgage (the last debt I hope to ever have to pay back) is expected to be paid off by August 2028 (i.e., 14 years from now).


JUNE 2014

This category is a bit embarrassing since I haven't made much progress over the past year and a half. 

The savings I report here is with respect to my emergency fund only and does not include my future spending earmarks.


JUNE 2014

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 $6,346 in premiums to date and my ROP balance is $3,830.17.  I've recouped 60.35% of my premium.  This experiment has a long-tail of 25 years remaining.  It will be interesting if this pans out.



Not bad! I'm too lazy to update the details of my net worth but in case you're wondering, I've broken down the various sources of the increase:
  • Almost $99,000 of the increase is due to my 401k performance, for which I can't take credit.  (Thanks, irrational and crazy stock market!)   
  • Approximately $52.6k of the increase is due to my debt reduction (see, above), for which I will  take credit.  
  • I gave myself an $18,000 bump in the increase of the value of my condo.  According to Zillow, the increase in the value of my condo is actually closer to $50k+, but it's just paper value and is what I call "fluffy money."  (Thanks, irrational and crazy California housing market!)  I instead give myself an annual 5% increase in property value as a conservative estimate.
  •  Approximately $4,000 of my net worth increase was due to the increase in my ESOP account.   This may not seem too impressive at first blush but actually is, considering:  I've contributed $15.3k towards my ESOP plan since January 2013 but sold $15k worth of company stock to help pay down some of my debt.  
  • The remaining $5,000 increase is due to increase in my EF (see, above) and other miscellaneous increase in my IRA and savings bonds.