June 2009: My Net Worth Update and Personal Finance Report
Published 6/29/09 (Modified 3/8/11)
A few days ago, the legendary and super talented pop icon, Michael Jackson, suddenly and inexplicably passed away at the age of 50 due to cardiac arrest. After a long and glorious (but controversial) entertainment career that spanned 40 years and included the world's best selling music album of all time - "Thriller", the self anointed King of Pop was finally laid to rest in peace. Perhaps it was his enormous talent or his seemingly gentle nature, but I have always managed to overlook his eccentricities, the oddness of his perpetually changing skin color, and the lurid details of the tabloid controversies that followed him - particularly the allegations of child molestations and quirky behaviors and activities at his infamous Neverland Ranch. For me, I grew up as an adoring fan - enjoying amazing hits like "Black and White", "Billie Jean", "PYT", "Thriller", and "Jam". I will always remember Michael Jackson for his music, his stunning liquid pop locking dance moves, the ground breaking music videos, the moon walking, and his one of a kind "hee hee" falsetto squeals. Inevitably, artists in the future will continue to pay homage to Jackson by attempting to emulate his moves and his songs, but there will never be another one quite like him ever again.
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?