If I were to describe my finances in three words, those words would be “slow, steady progress.” I’m not getting rich by any stretch of the imagination, but if I am able to manage consistent growth at the same rate while making sound financial decisions, I should be able to live without worries. However, anything can happen, and good luck can always turn sour. I’m doing what I can now to ensure I’ll have a comfortable future while enjoying my life now.
Every month I review my personal finances by publishing my balance sheet and income report online. The balance sheet is included in this post. It shows a 5.3% increase in “modified net worth” since last month. That increase consists of a 13.7% decrease in cash equivalents and a 24.2% increase in investments. I’ll explain that after the report. Click on the thumbnail to zoom in.
Answers to Frequently Asked Questions
- The report is made with Intuit Quicken and Microsoft Excel. Here’s a balance sheet Excel template. If you don’t want to go through all the trouble I do every month, but you still want to post your financial reports online, I suggest checking out NetworthIQ.
- The credit card balance is paid off every month and earns cash back.
- My student loan interest rate is 4.25% and my savings account interest rates are mostly above 3.0%.
- I determine the value of my car using the private party value from edmunds.com, but only several times a year.
Explanations and Details
Considering the large tax payments I made in April, I’m happy to come out ahead. While filing my taxes, I was able to determine the maximum amount I could invest in my 2007 SEP IRA. This month, I transfered about $13,000 from savings into two funds at Vanguard. I purchased $4,350 in the Total Stock Market Index (VTSMX) and $8,480 in the Prime Money Market Fund (VMMXX). I plan on using the money market fund to invest periodically in VTSMX, but I have not set up the automatic transfer yet. This should give the the best of both worlds — lump sum investing and dollar-cost averaging. I have to admit, though, that $4,350 is not much of a lump sum, and a lump sum once a year is basically the same as dollar-cost averaging over a longer time frame.
I invested $1,115 in my 401(k) in April, including contributions for my employer. The remaining $1,975 increase in that account was due to investment returns. My Roth IRA’s increase was due to performance only. This is the first year I won’t be investing in a Roth IRA throughout the year. There’s a possibility I may not qualify due to a higher income. If I determine that I won’t reach that income level, I’ll invest in one lump sum when I file my taxes next April.
As a result of the higher investment into retirement accounts this month, my retirement accounts now represent 50% of my total assets.
My student loan debt is still hanging around. I’ve been paying the loan off slowly because the interest rate is not bad for a loan and for a while my savings accounts were earning more interest than I was paying. I’ve mentioned before that I intend to increase my payments towards this debt as savings interest rates are decreasing and there’s little advantage to keeping the debt around. I was nervous this month and didn’t want to jeopardize my cash position considering my tax bill, so I increased my payment to only $500 from $125. If May shapes up to be a good month, I’ll look to double my payment towards debt to $1,000.
Look for my April income and expense report shortly.
Updated February 6, 2012 and originally published May 2, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.