Yes, I Am Still Upbeat For The Future: Things Will Get Better In Time

Wow, what a roller coaster ride of a month in terms of the stock market. One minute the Dow is breaking past the psychological 10,000 mark and soaring to new bullish heights – the next, the entire stock market is sinking like a rock. In terms of economic volatility as a function of gains and losses, the last few weeks have definitely not been ideal for the emotionally squeamish short term traders out there. But for those that truly call themselves long term investors, I really don’t think there is anything to fear in this market but fear itself. Back in Fall 2008 and Spring 2009, there were serious questions about the ability of the American financial system to survive the ongoing subprime mortgage meltdown. The economy, on the verge of total collapse and teetering on the brink of a major economic depression, was clamoring for immediate stimulus and decisive federal government intervention.

But what a difference a year makes. There are still lingering concerns about the economic health and ability of consumers to start spending money again to stimulate the economy, and there are still trepidations about the plight of the current housing market – but I think the absolute worst case scenario has passed. We are now in a gradual economic recovery phase. To repair the American economy and restore all of the lost jobs that vanished subsequent to the credit crisis fallout will take time, but the healing will come to fruition in due time. Meanwhile for stock market investors, there are bound to be periods of extreme volatility and shocking price swings. But as I’ve championed many times before in past personal finance blog posts, if you can take a certain amount of risk now and hold on for the long haul, you are bound to come out hugely ahead when we finally emerge from this recessionary nightmare – whether that be 12 months, 2 years, or even 5 years from now. Recessions are terrible things to behold, but the great thing about them – is that they don’t last forever. The federal government, and the American people with its never ending entrepreneurial spirit will find a way. Don’t invest recklessly and take un-calculated, un-thought out risks, but I do encourage readers to be bold if they can. Place your stock market and real estate bets today in this down economy and reap what you sow today in the not too distant future.

This month, despite the fact that the market viciously tanked and dealt out a pretty severe lashing of my stock investment portfolio, I intend to stay the course and fight against my instinctive nature urge to pull out. For now at least, any short term losses due to market price volatility remains mere paper losses – so long as I don’t sell. My small legal practice remains healthy and my persistent efforts to make money by blogging online continues to yield positive dividends. As my monthly income remains stable and I have sufficient cash savings and credit card options for emergency fund purposes, I thankfully have ample financial resources to ride out the market doldrums. I don’t see it as overly-risking or gambling my life savings away – but rather, I see it as a pure exercise of my faith and belief that in the long run, things will be okay.

My Current Net Worth and Financial Status Update Compared To Last Month

Being Greedy When Others Are Fearful: Investing For The Long Term

If you want to save money and invest wisely for the future, it’s important to learn from the best – one of them being renown Billionaire investor, Warren Buffett. The gist of my own current trading strategy and approach towards investing can be summed up in this famous 2001 Warren Buffett quote:

• “Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

My attempt to be sunny and optimistic at the present time despite the uncertainty and fear that still permeates the economy is not because I’m foolhardy or desire to get rich quickly – but rather I believe it’s during such periods of pervasive fear and pessimism that great wealth can be made. After sitting on the sidelines and hoarding my cash in high yield savings accounts and certificate of deposits for many months while the economy suffered its worse collapse in decades, I finally pulled the trigger recently and started investing again. If your gut sentiments are like mine and you also believe that the worse has passed but that the positive feelings have not yet been properly reflected in stock market prices, then now may be a good time to start investing again.

New investors and those who have been cautiously staying away from the action for some time may now want to open up an investment account with a reliable and affordable discount broker, and start evaluating potential investment opportunities. In case you’re not sure which brokerage firm to go with, here are a few recommendations. I’ve complied a list of online brokers that have consistently received accolades and praise from the financial experts and have enjoyed favorable reviews among new investors and advanced traders alike. In the list, I particularly like TradeKing, Etrade, and Scottrade.

Progress and Status Report Of My New Single Family Home Construction

As I’ve been reporting for months now, my new home is currently under construction. I visit the construction site every few days or so to walk around the lot and take photos to document the construction progress for my own personal photographic archives. After all, it’s not everyday that we get to see the construction of our own home and witness the transformation of a simple pile of dirt into a free standing structure that will one day be called home.

Currently, the concrete and rebar mixtures for the home foundation are in the process of being laid. Once the foundation has been properly poured and allowed to harden, the wooden housing structure usually goes up pretty quickly. Barring any unforeseen hindrances to construction activity by inclement weather, the house is expected to be built and delivered sometime in February 2010. For now, I’m in the active process of applying for a home mortgage loan. Because I’ve been tracking my free credit reports and my free credit score updates on a consistent basis for some time – not to mention I’ve also been taking concerted actions to keep my FICO score persistently high, I anticipate being able to ultimately qualify for a top mortgage interest rate of 4.75% APR or lower on a 30 year, 20% down home loan, give or take depending on interest rate conditions at the time of home delivery.

Continuing To Make Money Online As A Part Time Blogger

As should be pretty evident from the advertisement banners and occasional affiliate links that pepper this website, I blog to make money online and engage in Internet affiliate marketing as part of my home office business. I also earn some nice change on the side with online paid surveys and a couple of other online money making methods. While I do operate a small attorney practice as well and earn additional income through a small collection of other income sources, my blogging income is steadily becoming a larger and larger part of my total income stream. One of these days, perhaps I will transition into a full time problogger and run my collection of income producing websites as a full time job. But for now, I prefer to see it as merely an integral cog in my total overall income diversification plan. After all, in this sluggish economy and in this period of unpredictable layoffs and economic implosions, you never know when your primary breadwinner source of income will suddenly dry up. It’s best to diversify one’s financial life with a varied mixture of both active and passive income streams if possible.

Source URL: October 2009: Net Worth, Stock Loss, and New Home Update

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

Despite the fact that historically, the month of September has traditionally been a down month for stock market investors – after months of sitting on the sidelines and hoarding online savings account cash, I’ve finally pulled the trigger and re-entered the market en masse. Rather than take the often advised path of investing in small bite size chunks through dollar cost averaging, I decided to plow all of my investment cash into long term equity positions simultaneously. I don’t plan to pull out of my newly invested positions anytime soon and am very determined to stay the course for the very long haul – in excess of 5 years or longer. Despite the recent run up in the market, stock market prices are still at historical once-in-a-lifetime lows – and I have every intention to double or triple my investments in the next 5 years. The irrational fear and gloom of pending economic depression that gripped the whole world back in spring 2009 has mercifully passed and it now appears the beaten down economy is finally back on the track towards recovery.

Of course, this is not to say that we are anywhere close to experiencing a traditional bull market anytime soon that’s punctuated by rising employment numbers and increased consumer spending, but at the very least, the specter of a crippled financial system kamikaz-ing into an irreversible death spiral has disappeared – and replaced by faint glimmers of hope. Who knows if President Barack Obama’s second economic stimulus package truly worked or whether any of the resuscitative measures implemented by Congress such as the increased FDIC insurance limits, the Cash For Clunkers Bill, the $8,000 Federal Housing Tax Credit for first time home buyers, or even the appointment of new Treasury Secretary Timothy Geithner really did much to jolt the economy back to life in a sustained way. But at the very least, these measures have at least reassured formerly scared to death and shell shocked investors like myself that the federal government is finally ready, willing, and able to do whatever it takes to get this economic ship steaming full speed once again. That seemingly firm commitment, as evidenced by the number of quick and decisive emergency measures the federal government has thus taken – is enough to assuage my once irrational fears, and encourage me to think about a more optimistic future once again.

While I do not know where we will all be economically 12 months from now, I’m starting to have more faith that things will be okay in the coming years. With the possibility of a disastrous economic Armageddon finally out of the way, I’m willing to finally start placing long term economic bets for the future, and allow the normal economic tensions of fear and greed to put the market back to normal equilibrium once again. True economic recovery may be months or even years away, but as savvy investors like Warren Buffett will agree – it’s during the worst of times that enormous amounts of wealth are created by those willing to take on a measure of calculated risk. For the next few weeks and months, I intend to take advantage of every dip in the market to invest more. As I continue to make money blogging and generate income through my small legal practice, I intend to plow all upcoming profits into this market while prices are still attractive. Price dips from here on are all potential buying opportunities in my investment opinion.

Do you agree or disagree that the economic recession is nearing the end? Remember, the stock market is a forward looking entity, and has historically attempted to project what economic reality is to come an average of 6 months in advance. Optimism in terms of increased consumer spending and job growth numbers won’t likely be experienced by ordinary American consumers until the second half of 2010. Personally, I think the very sign that mergers and acquisitions are finally creeping back into the marketplace again is an extremely and exceedingly bullish sign that overwhelmingly overrides any of the current negative lagging indicators like low employment rates or even struggling consumer sentiment statistics.

My Current Net Worth and Financial Status Update Compared To Last Month

Picking Out Final Options To My New Construction Single Family House

As I mentioned in previous networth updates, I’m in the process of finalizing the purchase of my very first home – a 2,300 square feet, 4 bedroom, 4.5 bath, single family new construction house. After weeks of persistent meetings with my real estate agent and the home builder, I’ve finally completed the process of choosing and pricing all of my optional upgrades. After much thought, I decided to ditch the cheaper carpet route and go with all hardwood floors – even in the bedrooms. Despite the fact that hardwood costs substantially more in the way of optional upgrades, I think the cleanliness and maintenance conveniences of hardwood floors greatly outweigh the dirt and dust accumulation headaches of carpet floors.

With all optional upgrades including finished basement costs, upgraded hardwood flooring, a hardwired security system, and stainless steel appliances tossed in, the total price of the home will be around $620,000. I’m sure some of you who live in the Midwest or the South will be shocked at how much a mere 2,300 sq ft (excluding finished basement) home costs, but remember, I live in the state of Maryland – deemed by CNN Money to be the current wealthiest state in the United States, with high state wide income rates and high home prices to match. Pricey real estate in the general Washington DC, Virgina, and Maryland region is just a way of life for us. The ever present availability of federal government jobs here and the presence of highly ranked schools in my state make this area pretty desirable for singles and families alike.

In terms of good news in the real estate networth department, I’m pleased to note that my future home has already gained in home equity value, even though the home foundation has yet to be laid. Most recently, due to surging demand for up scale single family homes in my future neighborhood, the home builder who will be constructing my future house has decided to increase the base selling price for my home model by $9,000. At least in my future neighborhood (a pretty upscale D.C. suburb area of Maryland), the home resellers and new home builders are feeling extremely bullish about future housing demand.

With fingers crossed, I hope this is a portent of greater things to come in terms of future home appreciation. As I noted many times in past blog posts, I’m forever thankful that I was not unwittingly snagged by the housing craze of the last few years. By purchasing a home in 2009 after national home prices have collapsed by more than a third or even a half in certain regions, I’m in a much better position than many to experience the upside of home value appreciation. My prediction is that home prices will steadily rise from here on – certainly not at the crazy and outrageous pace that we all flabbergastically witnessed following the 2000 dot com crash, but I think home prices overall will very slowly but steadily trend upwards from here on as trepidatious home buyers return. The demand for housing never really abated, but the drastic plunge in home prices in recent years did scare away many prospective buyers, and force wannabe home buyers like myself to hold off until now. Remember, when prices are falling, consumers frequently ask themselves, “why buy now when I can buy later for less” as I myself did until very recently. But when buyers finally realize that there is indeed light at the end of the tunnel and that overall home pricing declines have significantly decelerated and are on the verge of  stabilizing, they will invariably return.

Paying Estimated Taxes For Self Employment, and Factoring In My New Home Deposit Into Real Estate Net Worth

This month, as I do every 3 months, I paid out a large chunk of my business profits in the way of quarterly assessed tax payments that likely deflated this month’s improvement in financial networth. Because my monthly revenue from my blogging business, legal practice, and other small business ventures are fairly significant, I pay out a tremendous amount of money every three months in the way of mandatory federal and state income taxes. Obviously, I’m hoping President Obama will be keen on keeping universal federal tax brackets low as he ought to, but with his apparent crusade to crack down on high income earners and push through his health care social agenda, I’m bracing for the worst in terms of future tax rate increases.

In terms of real estate networth, because I also paid out a $25,000 new home construction lot deposit this month that will be payable towards my future mortgage down payment, I intend to treat this $25,000 figure as home equity for now (as reflected in the table above). Eventually when my mortgage loan application goes through and I get a more finalized home valuation number, I’ll include the home value and mortgage numbers into my net worth calculations.

Back In the Stock Market Again As A Bull Market Investor After A Year Long Hiatus

After being away from the market due to excessive fear of the unknown, I’m finally back. This month, I plunged the vast bulk of my cash savings into aggressive stock market positions, primarily investing my money into popular exchange traded funds (ETF) with great future upside like the Financial Select Sector SPDR (XLF) and the iShares MSCI Emerging Markets Index (EEM) among others. Both are admittedly rather risky and considered to be more volatile positions, but like I mentioned earlier, I’m now in it for the long haul. Even if the market drops or dips 5-10% lower, I intend to hold on for the ride down and hold my breath for the swing back up again. I never feared normal stock market price fluctuations. It’s always been the catastrophic 30-75% price drops that scared the bejesus out of me -  the type of market plunges we witnessed from September 2008 of last year to March 2009. But with financial markets back on the mend and with irrational panic and economic hyperventilation among the masses finally in check, the risk of future major bank failures or collapses of major financial institutions to trigger another massive and prolonged sell off seem less likely now. Of course, anything can always happen from hereon, but the probability of such a return to the brink of disaster has drastically diminished.

Those on the sidelines may want to now consider opening up an online broker account for cheap stock trades and start investing again, or for the first time. If you haven’t opened a Roth IRA brokerage account, now may be the best time to do so. I know it seems like a cliche thing to say, but prices really are quite low at the present time, particularly for long term investors willing to buy and hold for 12 months or longer.

Source URL: September 2009: Net Worth Update and Stock Market Investing

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

The last few years have been quite the whirlwind for me. I know on this personal finance blog I may frequently portray a sense of stability and perhaps frequently offer up an air of someone who appears to know exactly where he wants to be in life and knows exactly how to get there – but the reality is quite far from it. I’ve been blessed with an incredible amount of luck, remarkable timing, and good fortune – with much of my financial success starting only a few years ago when I first started blogging online to make some extra cash on the side. My early attempts at trying to make money money blogging started rather surreptitiously without much fanfare and without the knowledge of most of my friends and family. Through the struggles and early process of starting my very first blog, I developed and honed a variety of entrepreneurial skills that I ultimately leveraged into the start of my own fledgling legal practice as a part time attorney. While I had saved a sum of money through my past jobs of working for other people shortly after graduating from law school, it wasn’t until after I had started working for myself and began to pursue my dream of starting my own small firm and online business that I began generating the type of income that I enjoy today. I guess it goes to show that even in a down economy, with some practical skills and a very healthy dose of chance, it is still possible to find a silver lining if one is willing to consider alternative possibilities and take a leap of faith on a dream.

My Current Net Worth and Financial Status Update Compared To Last Month

Closing In On The Purchase Of My Very First Home – A Long Time Coming

I started my home search in early May 2009, but didn’t start devoting serious time towards scouting out locations and visiting open houses until late June 2009. Because I work from my home office and much of my various self automated businesses are able to run themselves without active supervision for reasonably lengthy periods of time, I was able to pull myself away from work and spend a great deal of time in recent months searching for my future dream home in the Washington D.C./ Baltimore area.

As a single guy, who’s dating, with no family as of yet and not anticipating one anytime soon for at least the next 5 years – instead of focusing on school districts, I concentrated on finding an upscale semi-rural community located in very close proximity to stores and restaurants, that not only offered the sleepy feel of a farming town but also offered the transportation conveniences of a major suburban center. Because I work from home, work location was not an important consideration for me. However, proximity to major highways and multiple access points to both D.C. and Baltimore City were important factors to me as both areas are places I frequently visit for social and familial reasons. In terms of price, I made the decision early on that I would not be restricted to a certain price cap – as what I was looking for was fair value, with the potential for future upside. I decided at the start that I would be willing to pay a hefty premium for a high end location in an extremely safe neighborhood and that I would not be willing to pigeon hole my preferences into a less than desirable neighborhood for the sake of price savings alone.

After months of searching, I finally found my dream home in my dream location – a brand new, pre construction, perfectly sized (2500 square feet above grade) single family home with 4 bedrooms, 4 baths, located in an excellent upscale community close to all of the transportation conveniences I desired. While the house is close to powerlines (depending on whether you think 350 yards away is considered close), the home offers everything else I could ever want in a first time starter home situated in a strategically located D.C. / Baltimore area location. While I had considered the prospect of pursuing a lower priced new construction townhouse, ultimately, I felt a single family home offered better recoupment possibilities in terms of future resale upside.

With the assistance of my real estate agent, we are now imminently close to an official signing date. Unfortunately, negotiations don’t seem to be proceeding as well in my favor. While I had hoped to be able to negotiate the listing price down or secure better builder incentives towards option upgrades, the listing agent has thus far refused to budge. However, this refusal on the part of the builder to negotiate the price down can probably be attributed to the fact that the demand for upscale housing in my desired location is currently outstripping the available supply (rather opposite as to what’s happening in most other parts of the country). Despite this, I will probably still go through with the purchase in the next few days, barring any unforeseen hiccups.

Time For Me To Start Investing In The Stock Market Again Via ETF’s and Mutual Funds

For several months now, I’ve been holding the vast bulk of my discount brokerage account funds in cash form. As I liquidated the bulk of my stock market holdings early on (it really wasn’t a whole lot) to avoid the stock market crash of early 2009, I consequently missed out on the frantic rally of March 2009 that has since seemingly continued to soar. However, I don’t plan to miss the next major leg up – whenever that may happen.

With economic indicators now indicating faint glimmers of distant hope with better than expected statistical improvements in employment numbers, corporate profitability, and new housing constructions, I think this may finally be the time to get back in. While the stock market can certainly go down further from here (a W shape recovery as many CNBC pundits are calling it), I personally am no longer gripped in utter fear of the same cataclysmic multi-decade economic depression and financial Armageddon scenario that many had been so fearful of back in the early part of 2009.

In the coming months, I will probably start watching out for investment opportunities as they arise – focusing my efforts on broadly traded exchange traded funds (ETF’s) like the financial ETF (XLF), the S&P500 ETF Index (SPY), and possibly even the China 25 Index (FXI). Yes, I am quite well aware that the funds I’m looking at are regarded as aggressive investments, but with at least 30+ more years until my planned retirement, at this point I am seeking earnings upside rather than safety or stability (particularly now that the worst case scenario has seemingly passed). Serious issues like inflationary pressures due to the ever ballooning governmental deficit, market correction risks, and future interest rate increases by the Fed will probably result in a great deal of stock market volatility down the road, but I see the possibility of spikes and dips as prospective speed humps rather than serious causes for concern. Thoughts?

Source URL: August 2009: Net Worth Update and House Buying Plans

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

It’s About Time – I’m Finally Looking To Buy A Home For The Very First Time

This month has been a bit more hectic than usual. For one thing, I’m in the early stages of becoming a first time home buyer. Right now, my anticipated home purchase date is still likely months away, but I can already envision the prospect of finally moving out of my longtime apartment rental after all these years and into my very own single family home or town house for the very first time. If you’ve been following my previous networth reports, you probably already know that I’ve been mulling the advantages and drawbacks of buying a single family home or townhouse, versus a condominium. After much thought and back and forth debating, I’ve finally decided to focus exclusively on town homes and single family houses at this point. My goal is to find a nice home where I can reside for many years – at least 5-10 years or more. I think a condominium is well suited for single young professionals or busy working types who live in an urban setting and desire maintenance-free living with a kick-ass commute – but I don’t think it’s as appropriate in terms of investment upside or as a long term dwelling for individuals like myself who work from home and anticipate future family plans. I’m not presently married, but that stage in life is something I can see see and taste in the not too distant future. I think a house and particularly a single family residence, will better suit the future plans I have projected for myself.

In terms of housing location, I’ve yet to come to a definitive decision. As a long time resident of the Washington D.C. suburbs, I would very much like to stay in the same relative metropolitan area. However, due to the fact that I run my network of businesses from home, proximity to work and commuting time are not factors I have to really take into account. Thus, I am amicable to the prospect of moving out to the less crowded and less traffic jammed boonies of Maryland – areas like Ellicott City, Gaithersburg, and Germantown. For now at least, I’m passing on the resales, and focusing exclusively on new housing developments. There’s something sparkling refreshing about owning a brand new home that greatly appeals to me. Particularly in a down housing market as it is now, due to all of the amazing closing incentives and free options that new home builders are shelling out for prospective buyers, it makes a lot of sense to purchase a new home instead of buying an existing one. As I don’t have any immediate plans to move out of my current rental as of yet, I’m willing to be extraordinarily patient in my housing search – intending to move on to the next housing prospect if I can’t sufficiently price gouge the prospective home builder to my utter capitalist satisfaction. Sure, I’m being a rather greedy profiteer about this whole thing, but I’m just doing my part to ultimately and forcibly put the pricing equilibrium back into this housing market. I still think housing prices remain grossly overpriced in most areas.

Hopefully I can work the plunging home value and foreclosure supply pain felt by the major home builders to my advantage as I negotiate prices, option upgrades, and improved floor plan bump outs. As a prospective first time home buyer in the aftermath of the worst real estate market collapse in decades, I’m so thankful to have dodged the housing bubble bullet just a few years. I almost purchased a starter condominium home a few years ago at the height of the boom. I missed out big time on the housing surge, but thankfully also wasn’t locked in for the pricing collapse that ensued. My hope now is to snap up a great deal at the present time as housing prices are in the doldrums – and ride the price elevator up when the market recovers years from now. Those of you who are also prospective home buyers, don’t forget to take advantage of President Obama’s $8,000 tax credit incentive for new first time home buyers (assuming you qualify and aren’t phased out due to your income).

My Current Net Worth and Financial Status Update Compared To Last Month

Planning Ahead and Saving Up For A Home Mortgage Loan Down Payment

In anticipation of my upcoming home purchase (hopefully sometime in the next few months), I’ve been saving up cash for the 20% down payment I’ll inevitably need for a 30 year – 20% down – home mortgage loan within my approximate price range. If my dream of purchasing a brand new home at pre-construction comes to fruition, chances are I will probably only need to put down around 5% as a contractual security deposit for now. The rest of the money and even the mortgage application won’t be needed and processed until the home is actually entirely built 6 months from the date that I authorize the home construction to begin.

Usually, the vast bulk of my savings are duly invested in stocks, exchange traded indexes, and mutual funds. However, to ensure that I set aside the necessary amount of funds for a potential mortgage down payment sometime in the near future and to protect myself from unwittingly investing the funds away, I’ve transferred a sizable amount of funds from my discount broker accounts into various high yield savings accounts at a number of online banks for more liquid access should I need to call upon them at the desired time.

Boosting My FICO Credit Score To Qualify For The Best Home Loans and Mortgage Rates

In my earlier days, I used to take advantage of the availability of free credit report and free credit score trial offers to check my FICO score and credit report history (promptly canceling each individual trial offer after I had obtained the desired information for no money down). But now that I’m more financially established and can actually afford to purchase more advanced credit management applications, I’ve been using the MyFICO Score Watch tool to track my FICO credit score updates and changes on a regular basis. The MyFICO tool automatically monitors my triple credit reports and FICO credit score – emailing me instant alerts whenever my FICO score changes due to sudden updates to information on my credit reports (doubling as a useful identity theft prevention tool as well). The best part is that whenever the online credit score tool informs me of an increase or decrease to my credit score, it also informs me of the reason why my FICO score changed the way it did. For example, about a months ago, my FICO score suddenly and rather inexplicably dropped 15 points. The culprit (as was automatically reported to me by the online tool) was a sudden increase in my overall credit limit usage due to several large credit card purchases I had recently made.

Because I am now on the verge of purchasing a new home and anticipate the need to take out a home mortgage loan in the coming months, I’ve been taking appropriate actions to improve my credit report history and boost my FICO score to the highest it can reasonably be. Because one’s overall credit utilization ratio is such a major component piece of the FICO credit score pie, by making frequent extra payments towards my existing credit card balances and reducing balance transfer loads, I’ve been able to essentially reduce my credit usage ratio to nearly zero. As a result, my FICO credit score has recently enjoyed a very positive and significant spike. Due to aggressive and corrective actions I’ve been taking, my FICO score now stands at 813 – on a scale of 300-850. Generally 750-775 is sufficient to qualify for the lowest prime interest rates. My goal is to keep that number high – at least until I have completed the home mortgage loan process (whenever that may be). As home lenders rely heavily on an applicant’s credit scores and credit reports to gauge risk level and to assess interest rates, it’s in my own self interest to keep my credit rating as pristine as possible for the next few months.

Source URL: July 2009: Net Worth Update and First Time Home Buyer Plans

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

Unfortunately, the story of Michael Jackson is also one of great tragedy. Aside from the eccentricities of his life and the untimeliness of his death, the man was a text book case on how absolutely not to live one’s life. Despite building a massive music empire with an iconic brand unto himself, and despite raking in more than hundreds of millions of dollars as one of the most successful pop music artists of all time, Michael Jackson was more than $500 million in debt at the time of his death, according to The Wall Street Journal. Despite his celebrity fame as a money making machine, a great deal of multi-million dollar financial and legal troubles followed him his entire life. Well known for his insatiable and outrageously lavish shopping sprees for toys and priceless antiques, he leaves behind a mega mountain of debt and an unfinished comeback tour he had hoped would cure his financial troubles once and for all.

Unfortunately, even if Michael Jackson had lived on for many more years and had successfully raked in millions more from his concerts and performances, I still believe he still would have eventually left this Earth utterly in debt and plagued with financial issues. The man was an absolute music god, but a complete failure in the personal finance department. Living to great excess and spending grossly beyond one’s means with no accountability, and perhaps blindly assuming the financial windfalls will never end – are recipes for financial disaster. It’s not just the celebrities either. Even those who suddenly win the lottery and find themselves instant millionaires have the potential to lose it all if they aren’t careful and diligent with their investment strategies, savings, and even income tax responsibilities. Hopefully we can all learn something valuable about the need for proper personal financial management from the tragic life and unfortunate passing of Michael Jackson.

My Current Net Worth and Financial Status Update Compared To Last Month

Tracking My Income and Expenses With Free Budgeting Tools

Working that full time job, and finding ways to generate a steady income stream and make money are important endeavors, but so is finding an efficient and cost effective way to track those expenditures as well. There’s no way any reasonable person can expect to save money for the long haul if he or she is spending more than what he or she makes. You can’t expect to save or plug up those cash leaks if you don’t know where your daily funds are going. While I utilize a wide variety of account aggregator programs like Yodlee-powered Fidelity Full View and free Quicken Online to chart my bank account and credit card balances, I utilize various free budgeting software tools to help me track my spending habits.

Seeking Growth Opportunities In The Stock Market Via ETF’s

Investing in exchange traded funds (ETF’s) is the easiest way to put your money to work in the stock market without the expenses of mutual funds or the volatility risks of individual stock picking. Frankly, I’ve given up trying to buy and invest in individual companies, acknowledging that there is just too much unpredictability and uncertainty with any one particular company’s operations and disclosures. I’ve been burned too often and am finally starting to learn my lesson after all of these years. For now on and indefinitely into the future, I intend to stick solely with broader index funds that track major market indexes and industry sectors.

This month, I’ve finally transferred the vast bulk of my cash and savings account balances into my online brokers in anticipation of imminent index fund trading opportunities. However, I’ve yet to invest the funds and they continue to sit as brokerage cash reserves, waiting for me to pull the buying trigger. Call it market timing if you wish, but I’m just waiting for a good opportunity, or at least until the market settles down a bit more. I think the massive and irrationally exuberant run up in March is due for a significant series of pull backs between now and September.

Checking My Free Credit Reports and Free FICO Credit Score

For many years now I’ve lived in apartment rentals, hopping from one place to another as my various jobs necessitated. However, while I am currently still a renter, I’m gradually contemplating the prospect of becoming a first time home buyer within the next 6-12 months. It’s actually somewhat ironic since only 1-2 years ago, I was griping vehemently that home prices had soared to such ridiculous levels that the American dream of owning a home was starting to fly beyond the reach of most average citizens. It’s interesting how much the housing market has deteriorated (finally approaching rational equilibrium) and how significantly my personal financial balance sheet has improved since then.

With a thriving buyer’s market and home prices at historical lows that continue to drop, I’m in absolutely no rush to buy. While I’m still in the very early stages of interviewing real estate agents and scouting locations, I’m eager to get the ball rolling in anticipation. First thing’s first – I’ll need to know where I stand credit report and credit score-wise. Fortunately, there are a variety of ways to get my three free credit reports from Equifax, Experian, and TransUnion, and obtain my free FICO credit score from myFICO.com via a variety of cancellable trial offers.

Currently, I also utilize myFICO ScoreWatch to track my credit score changes and avoid identity theft. Recently my FICO score dropped down to 791 (scale of 300-850), due to an increased credit utilization on one of my reward credit cards. Hopefully after paying it back in full my FICO will return back into the 800’s. As a prospective home mortgage rate seeker now, I want to boost my credit score as much as possible for the next few months.

Buying A New Home – Detached Single Family Home Or Town House?

As a newbie first time home buyer, I’m still scratching my head and going back and forth between the pros and cons of buying a detached single family home versus buying a town house. I’ve already ruled out condominiums as I feel they make comparably worse investments for the long run with all things being equal – so right now my focus is on free standing houses and townhomes. As a single guy who probably won’t be getting married anytime soon for the next few years, I don’t really need all of the extra space that a detached home could conceivably provide, however I do like the extra privacy and parking conveniences that one affords. This is definitely one decision I’ll be pondering for quite some time as I spend my next few months talking to real estate agents and pouring over listings on real estate sites like Trulia.com and RedFin.com. Advice anyone?

Source URL: June 2009: My Net Worth Update and Personal Finance Report

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

Thus, as far as I can tell based on current projections and observations, the only significantly damaging element that has the foreseeable potential to hurt me financially in a big way – is higher federal and state income taxes. Hopefully President Obama will play nice and leave existing federal tax rates alone and not implement any drastic increases. Yes it’s easy to get all orgasmically gun-ho about fleecing the higher bracket taxpayers to generate tax revenue to pay for aggressive governmental social projects, but let’s not forget that it’s small business owners such as myself who directly stimulate this economy via trickle down effects by generating new jobs, expanding our entrepreneurial expenditures, and purchasing/leasing real estate properties. Taxing small business owners beyond current levels is ultimately counter-productive to achieving economic recovery in my humble opinion. Do we not agree?

My Current Net Worth and Financial Status Update Compared To Last Month

Seeking Out High Interest Alternatives To Savings Accounts and CD Deposits

If you’ve got money in the bank, then you’re likely well aware that both online and brick & mortar savings account rates and CD rates have been plummeting for a while now. Unfortunately for those of us who are aggressive cash savers, things aren’t likely to improve anytime soon. So what’s one to do in our current predicament where high yield savings accounts no longer offer the same high interest rates we’ve come to depend on? While certainly one can opt to spend the extra cash savings towards paying down high interest debt such as outstanding credit card balances, home mortgages, or student loans – persistent rate chasers can always choose to seek out comparably risk free short term savings account and high yielding CD alternatives instead.

A few of the popularly rated short term savings alternatives I’ve been looking to are high yielding peer-to-peer loan investments from online companies like Lending Club, high interest reward checking account offers, and special rate deals from local banks and community based credit unions. All of these underused and under tapped alternatives currently offer APY interest rates that greatly exceed overall market rates and are definitely worth looking into. With average interest rate yields in excess of 9.00% APY (even after accounting for risk factors), P2P social loan investments on sites like Lending Club definitely deserve some extra mainstream attention.

Transferring Funds From Cash Savings To Investment Brokerage Accounts

While I remain unconvinced at the short term sustainability and authenticity of the momentary run up in the Dow Jones, Nasdaq, and S&P 500 Indexes in the last few months, I must admit – the surge has been rather impressive. However, as as investor and trader who believes it’s important to remain vigilantly fearful when others are greedy, I hope to hold out for more positive economic news to back up this bullish stock market run before I make any decisions to start investing again.

For more than a year now, I’ve held back from investing into further positions – hoping to ride out the worst of this economic recession with my cash savings intact. Well so far so good as my savings account funds have been shielded from loss, but I think it may be time to start looking for opportunities again. At the start of this month, I transferred a large chunk of funds from my high yield savings accounts and expired CD deposits into my brokerage accounts. But for now at least, the newly added broker funds will be held in my money market sweep accounts rather than invested into any new stock, index, or mutual fund positions. I want to tread very carefully for the next few months and not make any hasty investment splurges that I’ll regret later.

Making Contributions To My Retirement Accounts (IRA, Roth IRA)

Despite whatever bearish or bullish sentiments I may personally harbor towards market investing at the present time, I still feel that it’s very important to continue contributing to one’s tax deferred retirement accounts (whether they be 401K’s, IRA’s, or Roth IRA accounts). As most investment retirement accounts like the Roth, are use it or lose it arrangements, failing to make the maximum IRA contribution limit for the year (it’s $5,000 for 2009) will only deprive you of future investment funds that could be growing tax-free. At the very least one ought to avail him or herself of the maximum contribution amount as there is no requirement the contributed funds must be invested right away – they can sit as idle cash in the broker account as long as the account holder desires.

My Monthly Credit Card Balances Are High, But I Always Pay Them Off In Full

You may have noticed that my total current credit card balance suddenly surged 4,204 % during the month of May. That’s because I’ve only recently returned home to the states from overseas. While I was away, I stuck with cash purchases exclusively, a practice that differs significantly from my U.S. consumer habits, which primarily revolve around credit card based transactions. However, the moment I returned home, my credit card expenditures reverted back to their pre-existing levels. But despite whatever balances I may carry on my credit cards, I always pay my card balances off in full every month, and have never paid out a single cent in hefty credit card overcharges or late fees, thanks to my pervasive usage of automatic account debit payments and crafty utilization of 0% balance transfer offers.

Speaking of credit cards, one particular cash back program that’s caught my eye recently is the new Charles Schwab Bank Invest First Visa Credit Card (link). Cardholders get 2% cash back on all purchases, with no cash back limits, no minimums, and no annual fees. Plus, for frequent international airline travelers like myself, the Schwab Visa Card impressively waives all foreign exchange transaction fees. The only catch with the Schwab credit card is that you must open or already own a Schwab One brokerage account where the cash back rewards can be deposited into every month. Charles Schwab offers great research tools for hardcore investors, but their trading fees are higher than I’d like.

Source URL: May 2009 – Current Net Worth and Personal Finance Report

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

Looking ahead at the upcoming official federal tax brackets for 2009, it doesn’t look like my taxation plight’s going to get any easier, particularly with tax happy President Obama at the helm. Although his positive approval rating’s through the roof and the man is absolutely oozing with optimism and confidence, I doubt many of his supporters are really comprised of scrutinizing individuals or small business owners like myself who actually pay attention to the potential tax implications of his slight of hand wealth redistribution policies. For the sake of competitive small business owners everywhere, I hope Obama doesn’t go through with his increasingly aggressive crusade to seize the financial proceeds of those who have worked hard to get to where they are today, with his continuous Presidential blurbs of patriotic taxation and “spreading the wealth around”.

My Current Net Worth and Financial Status Update Compared To Last Month

Thinking About Switching Gears From Cash Savings And Back Into Stock Market Investing

While the economy continues to be battered by volatility and investment unpredictability, I am content to cautiously remain on the sidelines, clutching onto my secure and reliable cash savings, currently still saved in online bank accounts reaping what decent interest rate yields are left in this poor interest rate climate. However, I will be honest – looking at how seemingly cheap and reasonably attractive current stock prices are, it’s hard to resist the siren calls of greed and profit. My crazy, irrational side really wants me to go nuts and dump everything into financial stocks like Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), – and bet big for the future. But then my more rationale and logical self thankfully reminds my more greedy half that stock market investing is all about making wise, long term, and diversified investment decisions for the long haul. It’s not about short time bets or gambling one’s life savings away via a single high risk, high stakes all-in-one basket dice roll. Thankfully, despite my torn emotional conflict between greed and rationality, I have been able to stay the course and not engage in any type of hasty stock purchases or aggressive index fund pickings – thus far at least.

Currently, my cash savings remain stored in several high yield savings accounts and bank CD rate deposits. But I anticipate moving a sizable portion into my brokerage account very soon to better position myself to take advantage of coming opportunities in the near future. I am still very pessimistic and hold a very bearish economic outlook, but things don’t look quite as grim or imminently dire as they once did. Obama is doing a great job of building consumer confidence and keeping the American public sentiment cautiously optimistic for the future. I just hope that this pervasive warm and fuzzy sentiment we are all witnessing at the moment isn’t temporary, and that the feel-good Obama train has enough substance to get the American and global economies back on track.

I Will No Longer Be Tracking Car and Vehicle Value For Net Worth Purposes

One of the big changes you may notice in this month’s net worth report is that I am eliminating the asset value for my car and primary vehicle. After including my vehicle asset value into my net worth for several months, I have finally decided that it no longer warrants such an inclusion. It was a mistake to even have included its value into my net worth calculations to begin with. A single primary vehicle is almost a basic necessity to everyday life and is rarely sold without replacement. Even in the event the vehicle is discarded, traded away, or sold, it is almost always promptly substituted with another one. Thus, its value really shouldn’t be lumped into the same category as that of a long term asset or investment. However, if I were to own multiple vehicles like an extra sports car for personal enjoyment purposes in the future, the secondary vehicle may very well warrant inclusion as a networth asset.

This Month’s Extremely Low Credit Card Usage Was Very Atypical Of Me

I put a whopping $104 on my credit cards the entire month of April. People who know me well may be shocked. It really isn’t like me to suddenly ditch my credit card spending habit in favor of using all cash for purchases. While a pro-cash financial guru like Dave Ramsey may be applauding my historical milestone, the real reason for the sudden and precipitous drop in credit card usage is because since March, I’ve been traveling and living overseas. As I’ve been visiting my overseas-living parents for the past few months to help them out with health related issues they’ve been struggling with, I’ve had to adjust my consumer habits to accommodate the realities of a non-credit card based society for some time now.

While it’s possible to avoid the near ubiquitous foreign currency fees on overseas credit card charges imposed on American credit cards by using a fee-less card option like Capital One or Discover Card, I’ve found that it’s usually better to stick to local paper currency while abroad. Credit card heavy countries like the United States have well developed anti-fraud and identity theft prevent mechanisms in place to instill credit card usage confidence in its consumer infrastructure. Foreign locales on the other hand frequently aren’t as well developed in this department – hence my decision to abandon risky credit card use the last few months and stick to cash exclusively.

Of course, when I return home to the United States in a few weeks, all of that will likely revert back to “normal”. I’m a big reward credit card and balance transfer user and will be resuming my old cash back credit card reward earning ways when I return. People like myself who are able to handle the responsibilities and obligations of credit card usage really lose out when we use cash since we miss out on the potential to rack up credit card spending rewards and lucrative airline credit card miles for our everyday purchases.

Source URL: April 2009 – Net Worth Statement and Personal Finance Report

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

While I’ve had to put my part time ambulance chasing legal practice on hold while traveling overseas for family health reasons, my portfolio of online and real world small businesses have continued to churn out a fairly steady income stream while I’ve been away, much of it passively generated without substantial attention on my part. Much of the hard work, mind numbing stress, and financial sacrifices that I made in the past few years in creating semi-self run businesses have finally paid off, allowing me to generate income and make money even when I’m not actively sitting at my home office desk in Maryland working on the computer or making phone calls.

In terms of my profession, I’m very thankful that I’ve been able to successfully make the transition from traditional 9-5 day job worker into a self employed entrepreneur and sole proprietor. The journey to get to this point wasn’t easy and there were many times when I felt demoralized and extremely lonely during my late night extended hour work sessions to the point of wanting to give up, but fortunately, I persisted. Today, I can confidently say that it was all worth it. Without my humble network of work from home based businesses and semi-self-run real life operations, I would not have been able to take 2-3 months off work to visit an overseas ailing parent – a luxury I’m enjoying today. After all, it’s not always the money – but the flexibility to set your own schedule and working pace that is frequently most sought after by many, myself included. Besides, it’s great being my own boss and not having to work for a psychotic, over-worked and under-loved attorney hag anymore (long story – I’ll save it for another day).

Those who have always desired to become their own bosses one day should make a concerted effort to make it happen and not allow idle hands to delay their dreams. There is an element of natural risk and sacrifice when trying to balance the duties of a full time job and a fledgling home office based business – but then nothing in life that is worth pursuing is inherently easy, at least initially. It’s true what they say – no pain, no gain. Anyhow, I’m sure you didn’t come here to just listen to me ramble about dreams and goals. Here’s my net worth update for March 2009.

My Current Net Worth and Financial Status Update Compared To Last Month

Continue Saving Money In Online Savings Accounts Or Start Investing?

For almost a year now, I have refrained from taking on any new stock, index, or mutual fund positions – instead opting to store the vast bulk of my money in the best bank accounts and in certificate of deposits offering the best CD rates. Thus far, in light of current volatile economic conditions, I’ve been cautiously pleased at the modest but predictably stable  rates of return that I’ve been getting from my conservative savings approach.

However, something strange happened during the month of March. The financial and stock markets actually saw a bit of an extended rally. Could we possibly be seeing the early stages of a substantive once-in-a-lifetime bull market – the likes we’ve never experienced before in our short existences? Very unlikely. Sorry to burst everyone’s bullish bubble, but I sense a massive bear market rally at work here. Sure, the market seems to be staging a bit of a rebound, perhaps soaring 20-30% in a matter of weeks, but there is nothing really tangible or economically positive as of yet to support this sudden stock buying resurgence. At this point in time, our investment emotions and sensibilities are still being artificially propped high by nothing more than mere cotton candy pufferey and wishful thinking from the Obama White House. The economy is still in the tank, unemployment rates across all 50 states are still climbing, housing market prices are STILL grossly overvalued (home owners must start selling at these depressed prices or we’ll never get back to market equilibrium), and the major banks are still struggling to deal with toxic mortgage based assets and trying to stave off a widespread federal government take over.

But with all this said, why do I strangely find myself starting to ponder whether this is a good time to start investing in the stock market and buying up real estate properties again? The answer is – because I’m a greedy capitalistic with a lusty dog nose for opportunity and profit.

As a greedy (but not evil) capitalist bent on maximizing my money and growing my financial portfolio, I subscribe to the age old Warren Buffett mantra regarding investment fear and greed – which calls for one to become fearful when others are greedy, and greedy when others are fearful. Because there is so much greed rampant in the economy and financial markets right now, the potential for massive windfalls and financial gains have never been better. Of course, the biggest problem now is timing. The worst thing I can probably do at this point in time is blindly jumping in and getting myself suckered into one of these bear market rallies, or dead cat bounces, as they are often called – only to see my portfolio get beaten into a whimpering pulp a few weeks later.

However, the winds of opportunity are in the air, and in the next few months, I may start shifting my money into online broker accounts again in anticipation of what lies ahead. While my better judgment will likely prevent me from jumping in and making a premature mistake at this very moment, I must admit, my investing trigger finger has grown a bit itchy of late.

Continuing To Invest In My IRA and Roth Retirement Accounts

While my small retirement portfolio has taken quite a beating from this recession, losing almost half of its value thus far, I intend to continue making annual contributions pursuant to my long term (25+ years horizon) investment strategy. Currently, I have a small amount of funds invested in Roth IRA’s and in traditional IRA accounts. I have yet to hit my IRA or Roth IRA contribution limit for 2009, so I will likely add additional funds in the next few weeks. Those who have not yet opened a ROTH or IRA account should really look into doing so. Stock market prices are at ridiculous lifetime lows and if you are a first time investor, now is the time to open an account with a Roth IRA broker and take advantage of cheap prices.

Filing My 2009 Federal and State Taxes Online With TurboTax

Well, after much procrastination, I’ve finally prepared and filed my 2009 taxes. Even though I’m currently overseas, I was able to bring all of my tax statements, 1099’s, and W-2 forms with me and file my taxes online. This year, I decided to file my taxes via the web again with good old TurboTax 2009. The company has always offered me a fairly efficient tax preparation and filing experience and this year was no different. The only change this year was my decision to go with the TurboTax Small Business edition instead of my usual TurboTax Premier version – mostly because of my growing need for extra assistance with business tax deductions.

This year, my taxes were incredibly high, and combing my federal and state income taxes, I paid out more than $140,000 worth of taxes for 2008. Obviously, it’s time I started looking into converting my current sole proprietorship business into a more tax advantaged business entity. So far, it looks like forming an S-Corporation, or a limited liability company (LLC) with election to be taxed as an S-Corporation are my best bets tax-wise.

Source URL: March 2009 – Net Worth Update and Personal Finance Status

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

Times Are Tough – Let’s Hope President Obama Knows What He’s Doing

In light of the ongoing financial crisis and economic recession, I wake up everyday thanking God for my continuous self employment and my ongoing ability to generate a fairly steady income. Times are certainly very difficult right now and thus far I’ve been able to dodge the painful recession bullets. Only a few years ago I was unemployed and found myself having to file for unemployment insurance benefits to make ends meet. Now, I’m on better financial footing – yet I still feel a great sense of lingering unease and perpetual pessimism as I look around the current economic landscape. A large number of my friends and acquaintances remain unemployed, victims of the never ending waves of corporate layoffs that have eliminated millions of jobs. Until times get better, I can only rise above the despair, sympathize, try not to feel the pangs of survivor guilt, and hope for better days ahead. Unfortunately, with Obama’s 2009 economic stimulus package having recently been passed, I grow more pessimistic than ever. Obama’s initiatives and economic vision for the country are indeed ambitious and commendable, but they are turning into a extremely costly and nightmarish budgetary morass.

As a small business owner of multiple small growing enterprises, I’m remain pretty frustrated and unhappy with President Barack Obama’s proposed plans to punish small business owners such as myself with substantially higher taxes. By raising devastating taxes on those best suited to create new jobs for Americans, his tax slaps will severely stifle economic growth for the future. In my opinion, Obama’s economic stimulus package, filled with porkish and utterly wasteful green jobs and useless expenditures, falls completely flat and misses the mark. I had hoped for a combination of across the board tax cuts for all taxpayers (rich and poor, consumers and businesses alike) along with a second round of much higher dollar value Obama stimulus checks for emergency support to struggling Americans. But it looks like President Obama has a different approach in mind. For those of us who voted Obama into office, let’s hope he is still listening to the voices of his constituency and hasn’t been blinded by his personal new world vision of potentially costly health care reform and the rise of a dubious American green energy industry. Those are perhaps worthy projects for a more prosperous era, but the American people need workable economic stimulus plans and infusions of real financial support now – not pipe dreams.

My Current Net Worth and Financial Status Update Compared To Last Month

High Interest Reward Checking, High Interest Savings, And High Yield CD Rate Deposits

Despite the ongoing failures and collapse of the financial industry, oddly enough, banks still remain the most solid of places to safely store money and earn a reasonable interest rate of return at the same time. Unlike investments in corporate bonds and stocks, bank deposits enjoy extraordinary security and safety guarantees via FDIC insurance, which backs all bank deposits with the full faith and credit of the United States government. Very few other types of financial deposits enjoy similar assurances and protections against unexpected financial loss. Despite the current dire shape of the U.S. economy, we are still very, very far from the type of utter financial devastation needed to render FDIC insured bank savings and certificate of deposit accounts vulnerable to loss.

Currently, the vast majority of my long term cash savings and investments remain deposited with the best online banks in the form of high yield savings accounts and high yield CD’s. My short term cash savings and immediate use funds currently reside in a few high yield checking accounts, some even interestingly saved in checking accounts that offer free reward points for usage (Citibank checking account Thank You Points).

While I still have a sizable sum of money invested in the stock market in the form of index and mutual funds, I have not added to or even touched any of my positions since January of 2008 (more than a year ago). Time after time I have been tempted by the siren of cheap stock prices, but fortunately, my savvier Jiminy Cricket guardian angel has continuously saved me from taking the plunge and buying shares. In my opinion (as well as those shared by fellow ultra bears), this economy is poised to get substantially worse before it will get any better. For the time being, it’s best for all of us to hold on to what we have and not make any hasty moves, lest we lose it all on a whim. Those who have been patiently hoarding their money on the sidelines are better off seeking maximum asset preservation by opening new FDIC insured bank accounts or investing in certificate of deposits offering the best cd rates.

Save Money With Credit Card Rewards That Offer Cash Back

Things days, amidst the ongoing recession and financial crunch, the age old practice of clipping coupons is making a comeback of sorts. Despite the pervasiveness of online shopping deals and discount coupon codes, there are still many basic consumer staples, like groceries, gas, and food where it’s still better to stop by a retail brick and mortar store than to attempt the online route.

For the frugal types out there such as myself who seek to save money whenever possible, one of the easiest and most consistent ways to save money every time you buy, is to purchase using a cash back credit card. While debt-laden or credit irresponsible consumers ought to stay away from credit cards altogether, lest they fall deeper into debt, those that can handle the responsibility of debt usage and are able to pay off their balances in full every month, should take advantage of all that cash back credit card rebates and purchase rewards have to offer. Even though I’m still single and don’t have a full family compliment to shop for, I still regularly earn more than a $1,000 worth of cash back credit card rewards and frequent flyer miles every year, just by using my reward credit cards whenever possible.

Preparing and Filing Taxes Online With TurboTax and H&R Block TaxCut

April 15, tax day – it’s just a month and a half away but interestingly, I still have not filed my federal or state income taxes yet. For some reason, I always seem to put it off into the last few weeks like many other people out there seem to do. As I no longer qualify for the free tax filing options offered by the IRS, I’ll probably take advantage of the myriad of paid, but affordable tax preparation offers available. I’ve been using TurboTax for many years now with a lot of satisfaction and will very likely return again to the same online tax preparation program for my annual ritual.

Frankly, the practice of filing taxes is really not all that convoluted or excruciating with user-friendly online tax preparation programs like TurboTax or TaxCut, but yet I always find an excuse to procrastinate. Maybe it’s my disdain of the IRS or my rebellious preference to make things as inconvenient and cumbersome for the federal government entity that takes so much of my money away, but I never like to file my taxes early. This year, I’m even considering printing my tax forms out manually in paper form to make the IRS’ job even more difficult. My tax preparation work will be completed using TurboTax’s intuitive online tax preparation program, but the filing will be made manually in paper form, requiring the hapless unknown IRS agent reviewing my tax forms to manually transcribe the numbers from my paper tax forms into their computerized system. Why E-file and make their job any easier? Too bad I can’t pay my taxes in pennies and random coinage. If that were such an option, I’d gleefully partake.

Source URL: February 2009 – Net Worth Update and Personal Finance Status

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

Billionaire investor Warren Buffett (who despite all of his historical wealth building wisdom, seems to be suffering a bit of a credibility and legacy problem recently with the plunge of his Berkshire Hathaway investments) used to preach that the world of money and finances revolves around the inextricable interplay between two core human emotions – fear and greed. These two primal capitalist emotions dictate our personal financial paths at any given moment and determine how we each respond to potential monetary opportunities as they present themselves. The age old Warren Buffett truism is that we ought to be greedy when others are fearful, since valuations and expectations are lowest, and opportunities and potential upside are highest at the peak of overwhelming market fear – but unfortunately, I think I have succumbed to this crippling fear of the unknown. Disillusioned by the never ending false verbal diarrhea spewed out by so-called financial experts and relentless bull market fanatics in the media, I am now starting to favor the viewpoints and sentiments of bearish prognosticators like infamous NYU economics professor Nouriel Roubini, nicknamed “Dr. Doom” for his pessimistic yet accurate economic forecasts in recent years.

As a self proclaimed perma-bear now, I currently remain hiding in my proverbial financial cave, hibernating and holding onto my stash of winter cash reserves in preparation for more difficult times ahead. I remain extremely cautious and stubbornly skeptical of the self interested optimistic pundits out there, who although have been proven wrong time and time again with their never ending predictions of the bottom, continue to cheer lead the market into plunging headfirst into reckless and financially suicidal decisions. “Extreme bearishness” is probably the phrase to best describe my overall investment sentiment for this month, and possibly for the entire first half of 2009. While the cash flow income generated from my active trading hours for dollars part time small law practice and entrepreneurial pursuits (one of which includes this personal finance blog) remain very healthy, I have completely halted my passive investment pursuits in the stock market, at least for now. Despite my earlier plans to purchase a single family home sometime this year, it is very possible that I may well put off the purchase until 2010 or later – at least until housing prices stabilize. I have the cash and down payment money necessary for a new first time home purchase right  now (with or without a sizable home mortgage loan), however, I want to see more visibility assurances in home prices before I invest. At least for the foreseeable future, my net worth growth and my marathon journey to become a millionaire will have to depend solely on the continuous cash flow increases provided by my regular day jobs, rather than from any improvements in passive income appreciation (via stocks, dividends, or housing).

My Current Net Worth and Financial Status Update Compared To Last Month

During Turbulent Times, It’s Best To Keep Your Money Safe and Secure In FDIC Insured High Interest Bank Accounts and High Yield CDs

In my opinion, you must be certified crazy or an extreme thrill seeking risk taker to even consider adding aggressive new investment positions into your stock market portfolio at this moment in time. At a moment’s notice, any one of the many market sectors could easily plunge 5-20% and destroy your life savings, as evidenced by the extremely volatile swings we’ve been experiencing lately. No matter the fact the market has already plummeted more than 50-75% since its peak in 2007 – the market has the potential to purge even more as current grim economic conditions have not slowed down its deterioration. This is truly not the time to get greedy and lose your money in one fell swoop. I fully understand the need to seek out long term opportunities and come out on top 5-10 years from now, but such immediate uncertainty and irrational volatility in the stock and real estate markets require a more asset protectionist mindset for the time being. I don’t anticipate the economy to experience much of a noticeable recovery until at least mid 2010. Perhaps sometime during the mid summer months of 2009 will be a more suitable time to start considering more long term objectives. But for now, I recommend greater caution and taking things a bit more short term, with a healthy dose of more fearful wisdom than exuberant greed.

During such scary times, I prefer to keep the vast bulk of my liquid cash savings stored in FDIC insured bank accounts, preferably invested into a mixture of high yield savings accounts and high interest certificate of deposits (CDs). I use laddered CDs with the best CD rates to maximize interest rate yields, but use multiple maxed out high interest savings accounts to keep money readily available for emergency fund purposes. As the cash savings generated by my day jobs and entrepreneurial pursuits have flourished, I have had to open multiple high interest online bank accounts to keep my aggregate savings fully protected under the current FDIC insurance coverage limit of $250,000.

Despite the current grim landscape of failed banks and struggling financial institutions, banks that offer full FDIC insurance coverage still afford consumers the best protection for their money that the market has to offer. FDIC insured deposit accounts at the nation’s best savings banks are fully backed by the full faith and credit of the United States government, and thus enjoy near iron-clad protection against bank failure or catastrophic financial loss. Unless the federal government of the world’s most powerful nation deteriorates and collapses into complete disarray, so much so that it can no longer honor its financial obligations to creditors, your money is otherwise 100% safe. Despite my extreme bearish sentiment, I have no real fear that the United States government won’t be able to survive the current credit crisis or economic recession. Times are certainly extremely gloomy, but the federal government and the U.S. economy will ultimately prevail – although it may take many years for recovery to happen.

Making Sure I Use My Reward Credit Cards To Keep The Accounts Active, and Keeping Tabs On My Credit Score

The current news on the street is that due to troubled credit markets, major credit card issuers are canceling and closing out inactive and unused consumer credit card accounts. For many struggling with credit card usage temptation or are currently mired in credit card debt, this may come as a forced financial blessing. However, it’s important to note that when a credit card issuers closes out one of your unused credit card accounts, this seemingly simple act may have the unintended consequence of hurting your FICO credit score. The FICO credit score is comprised of a multitude of credit and debt payment factors, but a very large component is the proportional usage of your utilized credit in relation to the total aggregate amount of credit that is available to you. Thus, by closing out unused but available credit lines, this decreases your credit utilization ratio – thereby causing the FICO credit score algorithm to churn out a lower credit rating in your name. This is also the same reason why unused credit card accounts with reward or 0% APR balance transfer terms that are no longer desirable should never be canceled, but rather should be stored in a safe place and kept open. Thus for example, if you’ve tapped out your Citi Platinum balance transfer offer, instead of closing out the card immediately, it benefits your ultimate FICO credit score more to keep the card open and use it at least a few times a year on small purchases.

As a heavy credit card user who has a large portfolio of reward and balance transfer credit cards, I have been making a concerned effort to make sure I use each of my credit cards at least once every few months to keep them active in the eyes of the issuing credit card companies. In particular, I pay special attention to keeping active those lesser used cards opened many years ago as the FICO scoring algorithm heavily favors older credit accounts over newer, recently opened accounts. Yes, the whole process of  juggling cards and ensuring continued usage of each individual credit card at least a few times a year is somewhat of a hassle. However, my extra steps have kept my FICO score nice and high at 802, in anticipation of my future plans to apply for a home mortgage loan when this whole economic recession finally blows over.

Charting Out My Financial Plan and Tracking Expenditures With Quicken 2009 Software and Free Quicken Online

While I’ve always had a history of using Intuit and Quicken related products like the paid desktop software versions of Quicken Premier and Quicken Deluxe, it was not until the recent emergence of free Quicken Online, that I’ve begun to consider the online version to be a real viable way of tracking my expenditures and financial account balances. As a long time user of Intuit’s popular online tax preparation program Turbo Tax, I eager anticipate the day that TurboTax is fully integrated into the free Quicken Online program for a more complete online budgeting platform with tax planning analysis. Tax planning is a critical component of any family’s or small business’ financial management so it stands to reason that full integration will arrive sometime in the future as web technology finally catches up to the demands of financial consumers such as myself.

In the meantime, I recommend getting into the habit of using account aggregation programs like Yodlee, Mint, or Quicken Online to help you calculate your networth and better budget your expenditures. I know it sounds like a sales pitch, but I recommend Quicken Online primarily because it’s a completely free service and a popular choice for many people. With future potential integration with programs like TurboTax from the same software maker, Quicken Online has pretty good future upside for those that prefer sticking with a single company for their financial planning needs.

Source URL: January 2009 – Net Worth Update and Personal Finance Status

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

Just a few days ago my brother asked me to contribute to his law school tuition fund. He’s currently working full time and juggling evening law school classes. His federal government office pays for the majority of his law school tuition expenses, but there is still a little bit leftover that he needs to cover out of pocket. I’m sure his awareness of my current financial state via my personal finance blog at Money Blue Book makes it easier for him to feel comfortable approaching me for money knowing that I probably have the means to provide some measure of financial support. I doubt he would have felt as comfortable asking me for a handout or a loan if he were not acutely aware of the specifics of my monthly cash flow or personal balance sheet.

Offering Loans To Family and Friends Is A Bad Idea – Don’t Give Money To Others That You Wouldn’t Feel Comfortable Giving Outright For Free

I have an unwritten rule for myself that I will never loan money to family or friends, even if it’s to bail them out of a difficult financial situation such as bankruptcy. I would prefer to provide them the money outright as I deem fit to avoid all the unnecessary and potentially negative relationship issues that may arise from the need to call in contractually obligated loan payments. I am not averse to giving money outright on a charitable basis to help a loved one, but I will never permit someone to borrow money from me due to the potentially foreseeable wedges that the loan and the issue of money may drive in our relationship. In the past I have loaned money to friends before and have experienced the dread and hassle of needing to constantly remind them to pay back the loan, and dealt with the reciprocal resentment of me even asking. Lending money to people who are good for it and guaranteed to pay the amount back on time without question or prompting is a joy and a breeze, but the vast majority of borrowers, particularly those who are friends or family, are less than model borrowers. Besides, oftentimes you are potentially setting a bad example when you bail the friend or family member out financially rather than compel the person to learn and utilize responsible self reliance techniques. As CNBC financial host Suze Orman always recommends – sometimes “you have to say no out of love, than yes out of fear or weakness”. It’s corny but true.

Thus, in regards to my brother’s request for a monetary contribution to his law school fund, I turned him down. The reason he seemed to be cash strapped was not really because of his tuition expenses alone, but attributable to a monetary shortfall caused by increased rental expenditures and higher relationship spending. I recommended to him that he seek out Sallie Mae for a small federally subsidized low interest student loan for education funding, or go apply for a 0% balance transfer credit card if he only needs a little bit of money as a one or two month stop gap measure. That’s how I personally stayed financially afloat when I was in law school – through a combination of parental financial support, low interest credit cards, and student loans. By depending on student loans and my own revolving credit, I learned a valuable lesson – the ability to rely on oneself when it comes to money and personal finance. I also told my brother to stop calling me rich whenever the issue of money came up – I got to where I was because I worked hard, made frugal decisions, refrained from lavish expenditures, and seized business and investment opportunities quickly and timely before the perfect moment was lost. I was not born with a self entitled silver spoon in my mouth, but studied hard, worked hard, and made key financial sacrifices along the way.

With that tangent aside and back to the topic of this post, I have provided my financial net worth calculations below for all to examine. I chart my financial journey every month so I can evaluate my progression towards my financial dream of becoming a millionaire and financially independent someday. It’s a marathon journey and I’m still a long ways off, but so long as I continue to make money, save money, and invest in income producing assets, someday the dream can and will become a reality.

My Current Net Worth and Financial Status Update Compared To Last Month

Focusing On Defensive Asset Preservation By Saving Money In FDIC Protected High Yield Savings Accounts and CD’s

It’s difficult not to watch CNBC or Fox Business News and not feel a sense of unease and pessimism emanating from the stock market investment community. While there remains a few bullish pundits who continuously make repeated calls of a market bottom, many of those overly optimistic commentators  have already been completely discredited with their wholly inaccurate and off the mark predictions. Much like the nutty National Association of Realtors’ perpetually optimistic sales pitch of “it’s always a great time to buy a house”, bullish financial commentators have lost their credibility in my opinion. In my assessment, the deteriorating credit markets and economic indicators are suggesting a severe and prolonged period of recession, signaling that more corporate layoffs and bankruptcies are yet to come. President elect Barack Obama and his proposed suggestion of an insanely high $1 trillion economic stimulus package may inject some much needed liquidity and money into the economic system, but even that will not be sufficient to jump start the economy for several years. The only way the market will recover is through the passage of time to work itself out, eliminating inefficient banks, striking out failed unionized labor strangleholds, and doing away with unprofitable and redundant corporate entities like at least one of the big 3 American automakers of Ford, GM, or Chrysler. Obviously, I’m staunchly opposed to any form of auto bailout at taxpayers expense. The market must be allowed to recover organically because that is the only way the economy will recover back to efficient equilibrium.

In light of this extremely bearish environment, I’ve decided to go on a saving spree – scrimping and hoarding away as much savings as I can. In the face of more difficult times ahead for the United States economy, I have essentially gone into a defensive asset preservation turtle shell in terms of my current investment and savings strategy. While I continue to earn a very healthy and steady income stream of $50,000-60,000 a month (through my legal business, various ventures, and online websites), after paying off expenses and setting aside certain amounts for various liabilities, I continue to store the vast bulk of my money away in multiple FDIC insured safe investments like high yield savings accounts and certificate of deposits (CD’s), ever mindful of the FDIC insurance limit of $250,000 for each insured account at any one banking entity. I have completely halted my previously active stock investment activity (much to the chagrin of my discount brokers) and will stay on the sidelines until the financial storm and economic recessionary pressures have eased. However, one thing that I am very aware of is that historically, the stock market has always rebounded approximately 6 months before the actual economy. I plan to take this historical statistic into consideration as I chart out my long term investment strategy in the months ahead. While I am adopting a defensive investment strategy right now, I am still mindful of the existence of potential future opportunities out there.

Taking Into Consideration My Future Tax Liability By Keeping Track Of My Estimated Tax Payments

As I am primarily self employed, running my legal, financial, and even online businesses from my home office, I have to contend with quarterly estimated tax payments to the Internal Revenue Service (IRS). Estimated tax is the way self employed people pay tax on income that is not subject to withholding. Since I myself am my own employer, I do not have income tax withholding. Pursuant to IRS regulations, estimated tax payments must be made four times a year on four specific payment due dates for the 3 immediate months prior – on April 15, June 15, September 15, and January 15. Since I have no tax withholding, in my net worth calculation, I need to set aside a portion of my monthly cash flow that will go towards my quarterly tax payments to get a more accurate picture of where I stand in terms of net worth. Thus as you can see on my net worth chart above, I have included a sum of money that will count as a tax liability account payable to be applied against my cash and other assets. Of course, when I actually make my quarterly tax payments, the tax liability account payable will be removed, along with the same denominational amount from the cash category.

Planning To Buy A Home – But Still Debating Between A Condo And A Detached Single Family Home

Despite depressed housing prices and a stagnant real estate market, I’m still set on my goal of buying a home and getting a piece of the long sought after American dream of home ownership. With 30 year and 15 year fixed home mortgage interest rates approaching historical lows of 5 to 6%, now is a great time to buy a home – but only if you can snag a home at an exceedingly great discount. We are currently in a tremendous buyer’s market right now and for prospective buyers such as myself, we have a strong tail wind on our side. On a human level, I feel a measure of sympathy for existing home sellers who have witnessed the complete wipe out of their multiple years of built up home equity, but at the same time as a potential buyer, I feel vindicated in my belief and cautious stance back during 2004-2007 when I decided home prices were severely over inflated. Because I was able to refrain from joining the housing lemming pack’s run up in the last few years, I saved myself from plunging over the housing market cliff when prices ultimately went splat.

With years of savings in hand, I’m now in a better position to negotiate favorable mortgage rates and take advantage of a favorable buyer’s market to secure the ideal home for myself. Currently I’m still debating between buying a 2-3 bedroom condominium or a 3-4 bedroom single detached house. As I am still currently single, I have little actual need for the size or spacial benefits of a large home, but at the same time, I am a bit leery about buying a condo, primarily because I would have to contend with non-tax deductible condo fees in the process. However, detached homes require much more expensive upkeep and care in the form of yard work and expenditures when it comes to household appliances – things I’m not sure I want to deal with at this moment in time. Then again, single detached homes offer a tremendous amount of freedom to customize and personalize, much more so than condominium apartments – luxuries that are the very beneficial essence of purchasing a home to begin with. These issues will likely stay on my mind as I begin the slow process of visiting open houses and browsing online real estate listings. Feel free to share any personal words of home buying advice.

Source URL: December 2008 – Net Worth Update and Personal Finance Status

Copyright Protected © 2008 Money Blue Book: Personal Finance Blog. All Rights Reserved.

My Current Net Worth and Financial Status Update Compared To Last Month

Saving My Small Home Business Income To Weather The Economic Recession

While October and November have been extremely difficult months in terms of the significant paper losses I’ve been seeing in my current stock and mutual fund investments, I continue to see a positive growth trend in my overall income cash flow (currently around $55,000-$60,000 a month). Despite the current economic situation, I continue to enjoy a steady stream of income from my legal practice day job and significant contributions from my side projects. While my small legal practice business has gyrated a bit in terms of leads and overall receivables, most pullbacks have been noticeably buttressed by steady increases in my alternative income streams, which includes profits generated by my online business blogs and my other real world developing ventures. However, as times get tougher, I anticipate monthly variable income drops in the coming months.

In this deteriorating economic climate amidst the ongoing credit crisis backdrop, it’s important to take prompt actions to preserve capital. That is why I have made a concerted effort to save as much money as I can to ensure I have enough emergency fund savings to weather any prolonged financial storm. While I currently remain gainfully self employed and have other immediate employment prospects in the way of legal temp jobs should my own legal practice or blogging business suddenly fall flat, I am very mindful of the fact that we are entering precariously unpredictable times. Even the once abundant spigot of 0% APR balance transfer credit card offers that used to be so popular among credit card arbitragers, that I used to rely so heavily upon as a secondary means of emergency fund support during periods of unemployment have slowed to a trickle. While my current savings rate is thankfully quite substantial, I remain perpetually dissatisfied, and remain determined to strive for ever increased levels of reasonable frugality and belt tightening to ensure I can endure the worst financial recession or depression scenario possible. I can’t predict what will happen months or years from now, but I can control my actions today and structure them so that I minimize my financial risks down the road.

My Stock Investments and Retirement Accounts Have Been Wiped Out

When I used to have a regular day job outside of the home, I had the luxury (if you can call it that) of not being able to track the market closely until I got home. Unfortunately (depending on how you look at it), I work primary from my home office now and have CNBC and Fox Business News on all day long as back ground noise. As a result, I am extremely in tune to the snowballing financial calamity and constant dire news coming out of Wall Street minute by minute. Every time I think the market surely must have hit a bottom, the bottom of some sector falls out and the entire stock market plummets yet another 5-10% as a whole. If we are not on the brink of a major financial market collapse at this point, we are surely close to it. With complete irrational fear gripping Wall Street and Main Street alike, as much as I hate to say it – I don’t think we’ve truly yet seen the worst – the worst is still yet to come. First it was the banking and insurance sector that felt the stabbing pain and now it’s the American auto industry that is on the verge of Chapter 11 bankruptcy. The huge recent plunges of the S&P 500 Index has by and large wiped out the bull market of 2002-2007 after the previous stock market wipe outs of 9-11 in 2001. Like a horrible nightmare of self fulfilling prophecies, it just keeps getting worse and worse, and the stock market bottom keeps getting spanked.

At this point, I’ve lost such a large percentage of my existing investment and retirement portfolio that I don’t even bother checking my account balances anymore. Due to my overly aggressive previous positions in foreign emerging market index funds, my stock portfolio is down more than 60% since their peaks in mid-2007. What was once a thriving stock portfolio worth more than $50,000 has been chopped to less than half. I debated whether to pull out of all my positions, but ultimately decided that I had ridden the stock price roller coaster too far down to bail out at this point. Thus, for the foreseeable future, I intend to ride this stock market coaster of doom as far down as need be. Having already lost more than half of my paper value, the prospect of losing the other half just don’t seem to hurt as much anymore. Besides, the sun will rise tomorrow, and tomorrow will arrive yet another day and another chance.

Cash Saving Accounts (Banks and CD’s)

Better days are ahead for the SS Money Blue Book Stock Portfolio, but this ship’s going to be pounded mercilessly until then. Thankfully (and I thank God for this everyday), my stock portfolio currently only comprises a comparatively small portion of my total combined assets, as I was able to wisely refrain from attempting to catch the falling knife of plummeting stock prices. Until there is more guidance on where this psycho market is headed, I intend to safely sit on the sidelines and continue stashing my cash savings in high interest savings accounts and certificate of deposits (CD) with the best online savings banks I can find. Sorry Warren Buffett, but for the moment, I guess I’m not fiscally strong enough to be greedy when others are fearful. Call it missing out on a juicy investment opportunity when prices are low or simply call it wise capital preservation if you will – in this unpredictable market, I intend to save my money in FDIC insured assets like money market savings accounts. While I might miss out on the potential of future gains by not taking a calculated risk today, at least I’ll sleep better at night knowing my money won’t suddenly evaporate overnight due to some irrational panic selling in the stock market. I will return to the market soon, but just not right now until there is more guidance.

Vehicle Asset Valuation and Dreams Of A New Car Purchase

Readers may notice that my 2004 Honda Accord EX-L’s vehicle asset value suddenly dropped more than 21% from last month. No, I didn’t get into a car accident nor did the vehicle end up in a lake. For the last few months I’ve been rather lazy in updating my car’s projected Kelly Blue Book dealer trade in value. While not an exact science, after running Kelly Blue Book’s online tool for used vehicle trade-in pricing and being extra conservative in valuation by plugging in my current mileage of 65,000 miles and condition of “good”, I came up with a reduced price that I felt accurately reflected its fair market value if I were to sell it today within a very short period of time.

As I currently have the financial means to purchase a new vehicle, I also briefly flirted with the wild idea of buying a new high performance luxury vehicle – contemplating a 2009 BMW M3 Sedan or a Mercedes Benz C63 AMG, both priced at around $55,000 to $60,000. But then I came out of my stupor and realized the irrationality of such a luxury purchase at this point in time. The enjoyment of owning such a high powered vehicle just didn’t seem to outweigh the tremendous financial loss of $60,000 worth of lost savings and investment potential. At least for now in my current stage in life, it would seem to be a very foolish financial splurge. Perhaps I ought to wait until I was married first and settled down with a family with a more sizable savings before indulging myself recklessly.

No Rush To Pay Off My Low Fixed Interest Rate Student Loans

Despite the relatively large amount of cash I’ve been able to save up in the last few years, I’m in no rush to pay off my student loans in full. That’s because currently my former subsidized federal student loans from law school remain nicely consolidated at a very low fixed annual interest rate of 2.25%. I consolidated several years ago back when interest rates were extremely low, and was able to further lower my rate over the years by satisfying all Sallie Mae good borrower perks for debtors who consistently made timely repayments. Because this fixed rate’s actually lower than what I could get if I stored the loan amount in a high interest savings account, I’ve decided to take my time paying off the loan principle. By keeping the loan balance in my interest earning bank account, the interest income generated (variable 3.50%-3.75% APY) is actually paying for the interest carrying cost of the loan (fixed 2.25%). Essentially, what I’m doing is engaging in a form of student loan arbitrage much the same way I used to make money from balance transfers.

Taking The First Few Baby Steps Towards Buying A New Home

While my luxury vehicle fantasy is just that – a fantasy, my desire to purchase a home for myself is very real. Currently, I’m renting a brand new one bedroom condominium in a suburb of Washington D.C. for $1,475 a month, but I feel it’s time I invested in a home to call my own. Of course, as home prices have plummeted and continue to drop, any major home purchase decisions I might make probably won’t happen until the second half of 2009 at the very earliest. I’m in no hurry to purchase a home and would be willing to wait an extra year until 2010 if the housing market conditions continue to stagnate. While potential home buyers such as myself certainly have the clout and means to price gouge home sellers mercilessly and demand unreasonable concessions to our heart’s content at this point, I think home prices still have many more months or years of continuous depreciation to go before they reach true fair market value. As evil or heartless as it may sound, when home values finally stop dropping in about 12 months or so, I’ll be there waiting, amidst the excess housing inventory, to eagerly select my home of choice and take it off the hands of some former owner who has no choice but to sell it at a desperate discount. Like it or not, it’s just efficient capitalism at work.

While I’m heavily leaning towards the purchase of a detached single family home, I’m not adverse to going with a high rise condominium with a view. As a relative newcomer to the realm of home buying, my preliminary research currently consists of watching home buying TV shows and occasionally browsing online real estate listing websites like Yahoo Real Estate, Zillow, and Trulia. I don’t even have a real estate agent yet as I’m still in the early preliminary research and scouting phase of home buying, primarily still working on maintaining my FICO credit score to improve my chances of getting an excellent home mortgage loan when the time arrives. I will talk about my search for a house in future posts.

Source URL: November 2008 – Net Worth Update and Personal Finance Status

Copyright Protected © 2008 Money Blue Book: Personal Finance Blog. All Rights Reserved.

As a side note, the reason I am posting this halfway through the month rather than the customary beginning of the month is because of how my income accounting is set up. My income streams tend to get realized and reported at around this time.

My Current Net Worth and Financial Status Update Compared To Last Month

Income From My Small Business Enterprise, and My Current Cash Flow

Ever since I made the significant switch from traditional job to self employment, my financial life has vastly improved. In my former life (which was only actually a year ago), I was an attorney and one who was stuck working the usual 9 to 5 job with frequent overtime and weekend hours. While I received a fairly steady paycheck, I constantly felt the slow drain of my youthful creative spirit being sapped away as I slaved away in a working situation where everyday felt the same as the day before. Eventually I made the decision to start working for myself and become a full time entrepreneur. Today, I run my own part time legal practice and spend much of my active daytime working hours keeping tabs on my alternative “real life” businesses. In between, I also spend a portion of my time managing my network of income producing online businesses which include the personal finance blog you are reading and another blog about health and fitness. Altogether, my combined monthly income stream from all income sources, averages around $53,000 a month, pre-tax. Needless to say, this healthy monthly cash flow, which has remained steady for more than 9 months now, has allowed me to pursue more aggressive investment opportunities and possibilities. Looking back, if I had decided to play it safe and not leave my job as an employed attorney a year ago, I would never have had the opportunity to realize my full financial potential.

Cash Saving Accounts (Banks and CD’s)

With the recent stock market crash brought on by the imminent economic recession and continuing credit crisis, I have decided to adopt a more conservative investment strategy regarding taking on new positions in the stock market. For the time being, I’ve chosen to keep the vast bulk of my monthly income and cash flow stored away in safe investments – namely FDIC insurance protected banks accounts. Currently, the largest chunk of my cash savings are spread among accounts with the top online banks in the market. These bank accounts are made up of a small mixture of high savings accounts and CD ladders.

While I fully understand the wisdom of Billionaire Warren Buffett’s investment mantra regarding fear and greed when it comes to seizing long term opportunities, I also soberly understand the need to preserve capital during difficult times. For the short term, I want to shield my cash assets from loss so I have sufficient assets to pursue lucrative opportunities once the recession and credit crisis have finished doing their financial demolition derby. For the next few months at least, I’m putting a higher priority on maintaining more than enough cash to enable me to ride out any financial emergency should the worst case scenario arise.

Credit Card Rewards and Debt

Although my income cash flow has significantly spiked within the last year due to the financial successes of my self run small businesses, I still maintain a manageable frugal lifestyle. However, some expenses simply can’t be avoided, sadly. Because I’m a single guy, I’m a terrible cook – which means I spend a lot of money per month dining out and buying expensive ready made meals and groceries at the supermarket. To reduce costs and save money, I use credit card rewards to earn up to 5% cashback bonuses on everything I buy. In an effort to maximize savings, I use multiple credit cards to get the highest spending rebates for all the different types of purchases I engage in. Currently, all additions to my credit card balances are due solely to regular spending habits and not attributed to any balance transfer arbitrage activity. My current credit card balance may seem rather high to some, but bear in mind, I use credit cards for everything and avoid using cash when I can. I actually abhor using cash.

Stock Investments and Retirement Accounts

Unless you’ve been living in a cave on Mars with your fingers stuck in your ears, you are no doubt well aware of the devastation happening in the world financial markets. Due to the housing bubble pop and the giant ongoing debacle involving risky subprime loans, several prominent banks and major financial institutions have recently been wiped out. As we slowly make our way through this economic recession, the stock market will undoubtedly remain extremely volatile and irrationally influenced by emotions and despair. This is the reason why the majority of my assets are now in cash savings and not fully invested in the stock market. Clearly in the long, long run, stock market investing is the way to go for the growth minded investor, but in this irrational economy, where corporate balance sheet fundamentals no longer matter and are overpowered by continuous fear, I prefer to play it safe until at least after the U.S. Presidential election and perhaps until the start of 2009.

Because most of my Roth IRA, and Traditional IRA retirement investments were previously made in more volatile and risky emerging market index and mutual funds, my stock portfolio has taken quite a beating since the highs a year ago – down 40%. However, I have not sold a position since the blood letting began and in fact, actually feel quite pleased (as giddy as a schoolgirl) at the significant drop in stock market prices. Despite the rampant fear in the market, I smell a wonderful opportunity in the making, and am waiting for the right opportunity at the right low price. Remember, it’s during economic recessions and stock market crashes that opportunistic future millionaires get made. I hope to be one of them someday.

Housing and Real Estate

Currently, I’m renting a brand new condominium apartment for $1,475 a month. My monthly rent may seem high to some, but it’s quite average for my area, a very convenient Maryland suburb of metropolitan Washington D.C.

My short term plan is to purchase a primary home for myself within the next year or so. Despite the recent precipitous plunge in national housing prices, I believe home prices must continue to drop some more – at least another 20-25% before we reach true real estate equilibrium. So long as house sellers refuse to sell their overinflated homes at bargain basement prices, buyers like myself will continue to sit on the sidelines and patiently continue renting.

As my income situation continues to prosper and improve, I have upcoming plans in the works to take advantage of my cash savings and healthy cash flow. As an aspiring vulture real estate investor, I hope to purchase several real estate investment properties in the next year or two at heavily discounted prices. I anticipate saving up enough money in the coming year to afford the 20% down payments to be used towards the properties I pursue. Meanwhile, I plan to continue monitoring my FICO credit score (currently at a healthy 802) and take necessary steps to maintain the score to increase my future chances of being able to secure multiple home mortgage loans when the opportunity arises in 2009 and 2010.

Source URL: October 2008 – Net Worth Update and Personal Finance Status

Copyright Protected © 2008 Money Blue Book: Personal Finance Blog. All Rights Reserved.