To our readers.
Below you will find an honest and very revealing statement of my wife and I’s accounts. We know this is a very taboo subject, to share one’s personal finances, and my wife and I have been struggling with exactly how much information to share. We kept coming back to what we look for when we read financial topics, real world examples with concrete numbers. Without the actual numbers financial writers are essentially spouting theory and principles without bridging how those theories and principles may look like to a individuals finances. We are hopeful that the data below will be helpful in creating understanding of our personal financial situation, and in turn provide inspiration to start your own personal financial journeys.
If you feel in any way uncomfortable knowing these personal details please redirect yourself from this post now.
W & B
April in Review
Revenue vs Expenses:
As you can see we successfully saved more than we spent. You may notice these small black lines falling down from the peaks on the “Revenue” line. These represent 10% demarcation. Our goal is to shoot for a 10% savings each month. Sometimes we make it, and sometimes we don’t. Often times when we don’t it is because we have done some super payments to our student loans.
Another interesting line we have placed into our Revenue vs Expenses graph is what were our expenses without the payments to student loans. As we were doing our expenses last year we just had the red expense line present in our graphs, over time we felt it was not a good indicator to see if our “living” expenses were trending up, down, or remaining stable. As you can see in April our line was relatively stable and continues to remain below what we spent in 2009 which is good as our income will be cut in half in a few months when B will be staying home with the baby.
We continued to see a great expense management month in April as our total expenses without student loans came out at $3,288.91. This is still a bit high for what our budget will be after B quits her job at the end of June, but we believe this will be manageable as we had over $300 in expenses related to our Cruise Vacation recently which trickled down to our bottom line. We were also proud of the fact that we were able to meet our tithe amount for this month ($617.10 of the $3,288.91) giving back to various community organizations to improve the lives of others.
In April we saw a chance to take on a significant portion of our student loans. We were able to pay $3,750.00 towards our loans this month representing roughly an 11% reduction in the principle. This extra large payment was largely possible due to the extra paycheck I received this month (one of the two extra paychecks a year on a bi-weekly compensation schedule).
We are currently working on an accelerated schedule trying to get as much of the student loan paid off before B quits her job to raise our new baby. Our goal is to have the unsubsidized portion completely paid off before the two subsidized portions of the student loan kick in. That will equate to roughly paying off $26,332.05 (51% of total student loans) in approximately 14 months. An aggressive goal, but one we both felt was obtainable without sacrificing our standard of living to an extreme.
Interest paid year-to-date 2010: $288.24
(Tax limit is $2,500 for tax benefit for student loan interest)
Cash Flow Statement:
During this month we made several large movements in our cash positions across accounts. We made a large payment towards our student loans leveling off our liquid cash statement at around $18,500 mark while making a very positive move in our net worth position. During the last week of April the stock market took a big dip (mostly on April 30). Due to this fact we moved approximately $2,250.00 ($1,500 from checking, and $750 from savings) into our investment money market account to take advantage of some lower stock prices in early May.
Our current stock position is made up primarily of a pharmaceutical holding company, PDL BioPharma, Inc. (NASDAQ: PDLI), which we invested in during March to take advantage of two special dividends that would be present in 2010. We currently hold 1925 shares at a weighted average of $6.85 each. If the price remains under or close to the $6.00 mark we will most likely buy another group of shares in anticipation of gaining equity and dividends as investors buy back in during October for the $0.50 special dividends. Our plan is to hold the stock until the dividend pay out at a minimum and then reassess the situation on whether to liquidate the equity or hold the shares.
We are by no means stock market experts and are not recommending any stocks. Please invest at your own risk.
Net Worth Calculations:
Net worth is a snapshot of ones ability to pay off their liabilities given the assets they have at their disposal at that very moment. I will not say that the way we are tabulating our net worth is 100% representative of all assets that could be sold, but below you will find the break down of accounts that goes into the calculations:
Liquid Net Worth
Fixed Net Worth
As you can see I include some “fixed” or “long-term” assets into our fixed net worth. I like to include these into the fixed net worth because they could technically be tapped in some sort of dire emergency if needed. I keep them out of the liquid net worth as such an emergency better be life or death meaning they really are just untouchable accounts. The great thing about monitoring this net worth over time is that I get a series of snap shots that when graphed like above can show a significant movement in the right direction.
There is a good chance B and I may cross over into the positive (+) net worth section this year which would be very exciting. This, however, is not a goal that we set out upon this year. If it happens we will be very excited, but with the other major life changes taking place (going to a one income household and adding a new member to our family) if it does not happen we would not consider it a failure.
We would be very interested if anyone can help direct us towards some reference material on what the average “20 something” family has in net worth. Are we ahead of the curve, behind, right on track, etc. ? We always like to compare against peers.
Extra Pay Check (Revenue Category: Warren): $1,470.02
Closed Old Savings Account (Revenue Category: Misc Checks): $98.01
I found out that I had a couple of accounts still open from High School in my hometown. I contacted the bank and had them closed. Since we have started tracking our finances in detail I cannot tell you how many times you “stumble” upon money that help you reach your short and long term financial goals.
Cruise (Expense Category: Other): $ 396.94
Loan Payments (Expense Category: Student Loans): $3,750.00
Energy (Expense Category: Fixed Expenses): $46.36 down from $61 prior month
In conclusion, April was a great month for our household. We were able to take a vacation, made significant improvements in reducing our student loan debt while also taking advantage of stock market opportunities (we hope), and have done well in managing down our expenses to a level that will be appropriate in the future as our income will shrink.
All the analysis was performed by us with the help of excel sheets that we created from the ground up. As we learn new financial tools we implement them into our excel sheets and see if they are useful or just another stat. If there are things we are not looking at or if you are interested in mimicking what you see above with your own numbers please leave a comment or e-mail us at firstname.lastname@example.org. Both of us have a deep passion for teaching and would be very interested in helping you get on the road of financial freedom as we have.