Sunday, January 23, 2011

Give More Than You Get

I've made a personal commitment to live by this motto.

In the past, I lived by the motto, "Do unto others as they have done for me." For example, if some one didn't do "X" for me, I won't do "X" for them either. I guess in many ways this is a pragmatic way to live. But it also made me miserable because I was keeping score. And I've come to the conclusion that keeping score is exhausting, limiting and ultimately, self-defeating.

Don't get me wrong - - I have no intention of trying to make friends with those who have intentionally wronged or back-stabbed me in the past. I'm just talking about those people who haven't necessarily reciprocated my kind gestures in the past.

I bring this up because my BFF told me, "If 'giving more than you get' is your motto, you're going to discover that you got taken advantage of your entire life." My BFF said this with respect to my friend, "Tara," who I take out to lunch every year for her birthday. Tara has never remembered my birthday. This irked me for a while, but I came to the conclusion that I'm just being petty.

Tara is a single mother who is sandwiched between taking care of her college-bound daughter and a sick, invalid father. She has a lot on her plate and I doubt remembering my birthday is high on her priority list. Besides, I haven't really cared about my birthday since I turned 30 either.

My BFF said, "Tara is just using you and she'll see you nothing other than a free meal-ticket. She will do nothing for you. You watch." Of course, my BFF has never met Tara and is casting a broad judgment based upon this one issue. Fact of the matter is, Tara wouldn't care if I never paid for her lunch. I just take Tara out to lunch on her birthday because it's an excuse to get together and catch up. She never expects or have asked to be taken out.

I took Tara out to lunch for her birthday last week. She offered and even insisted on paying for her own meal, but I paid anyways. She finally sheepishly said, "You always do this for me and I don't even know your birthday. When is it?" I told her my birthday was in June but didn't say the specific day . After all, I don't take her out with the expectation that she'll take me out for mine.

On a side note, my BFF complains that she has no "girl-friends" that she can hang out with. What she really means is that she has no friends that she deems worthy to hang out with. I guess when you expect your friends to reciprocate every kind thing you do for them, you're pretty much going to limit your circle of friends.

Saturday, January 15, 2011

2010 Year-End Progress Report

This is my (belated) 2010 year-end financial review.

Due to family obligations last year, I hadn't been updating my blog regularly other than to blow steam about my parents' financial irresponsibility.

With my father now deceased (RIP), I am hoping that my life will return to "normal" and that I will be able to resume a semi-regular update of my financial progress.


Starting Debt (6/08)

Last MonthThis MonthDIFFERENCE
Private SL$49,528.99$33,936.80$33,486.00$(450.80)
Fed'l SL$55,852.68$52,101.45$51,953.37$(148.08)
Car Loan

I totally fell off of the snowball plan last year. It's partly because my monthly budget took a whack every time I traveled out-of-state to attend to my parents' bankruptcy and health care issues. I also blew beaucoup cash to deal with my emotional upheavals in dealing with my parents. Hey, retail therapy is a proud American tradition, no? Even if it isn't, our economic recovery depends upon it, sadly.

Anyhow, here's a recap:

Total debt in 12/31/09: $96,750.67
Total debt in 12/31/10: $85,439.37
Reduction in $: $11,311.30
Reduction in %: 11.69%





The savings I report here is with respect to my emergency fund savings only and does not include my future spending earmarks. My ultimate goal is to save $36,000.

Total EF in 12/31/09: $8,472.64
Total EF in 12/31/10: $9,696.45
Increase in $: $1,223.81
Increase in %: 14.44%





My "X"-Fund represents a part of a recent windfall that I'd set aside for some unplanned expense. I was thinking it could serve as a supplement to my emergency fund or a down-payment for my first home, but I'm very, very tempted to use this money to pay off my private student loans some time down the road. After all, this money is currently accruing interest at an anemic 1.3% APY. My private student loans are costing me ~3.6% APR. On paper it's a no-brainer, but the emotional security this money gives me is incalculable.





Long story short, I bought term life insurance but created a hypothetical whole life insurance policy (or, return of premium (ROP) term life insurance policy). I'm basically trying to see whether I can earn back my life insurance premiums through various investments.

So far, my investments have yielded a 9.06% return. With the stock market surging though, I don't think I'll be buying any stocks or ETFs in the near future. I'll wait for the inevitable (yet somehow unexpected) market correction.



Looks great doesn't it? But if I omit my 401k and IRAs, my net worth is... -$35,413.41. I'll do the happy dance when my net worth (excl-retirement accounts) is no longer in the red.

Net worth on 12/31/09: $53,922.34
Net worth on 12/31/10: $143,084.85
Increase in $: $89,162.51
Increase in %: 165.35%

The increase in my net worth is mostly attributed to: (a) 401k value increased by ~$45,000, (b) net windfall of ~$28,000, (c) debt reduction of ~$11,000.

The breakdown and the history of my net worth can be seen here.

What Are You Doing with the Social Security Payroll Tax Cut?

I got my first paycheck of 2011 and it was more than I expected. (This is partly due to the fact that I reduced my 401k contributions by 1% back in August because I would have otherwise maxed out my 401k contributions before my last paycheck and missed out on some of the company match.) But it looks like my Social Security payroll tax cut accounts for an additional $80 per paycheck or so.

I'm not too thrilled about this tax-cut, though, because I've always been worried about the solvency of the Social Security program when I retire. As a sign that we probably can't afford this tax cut, the government is borrowing $112 billion to make Social Security whole.

I guess the thought behind the SS payroll cut is to stimulate the economy. Unfortunately, I'm probably not going to put the money back into the stream of commerce. I intend to use the money to pay down my private student loans and/or to increase my Roth IRA contributions. I guess I'm no better than the companies that are hoarding cash rather than hiring, despite tax cuts and other government cheap money.

If I'm worried that I won't be able to collect on Social Security, I might as well reduce my debt and sock this money into my Roth, right? But does this make me a bad citizen? Maybe to alleviate my guilt, I'll continue to buy I-Bonds despite the less-than-thrilling rates they've been giving lately.