In 2003, I started Consumerism Commentary to teach myself more about personal finance and to track my progress as I strove to be financially secure. This was already a few years after my personal “rock bottom.” At the turn of the century, after a few years of letting my net worth as well as other aspects of my life decline, I realized I needed to turn everything around. From a financial standpoint, I attacked the problem from two sides: cutting back my expenses and figuring out how to earn more income, while at the same time, evaluating the other main decisions I’ve made with my life.
Almost eight years later, I’m still publicly reporting my financial progress on a monthly basis.
In April, I traveled with my girlfriend to visit family in California. From a business perspective, I was able to relax and not do as much as work as normal while allowing a number of guest authors to contribute the bulk of content on Consumerism Commentary for the week. In reality, I was still hard at work, spending several hours a day working on issues behind the scenes. Towards the end of the month, I also moved Consumerism Commentary to a new web hosting service. The improvements won’t be noticeable to everyone, but the improvements will be very significant behind the scenes. For those interested in the technical details, I switched from dedicated virtual hosting at MediaTemple to dedicated virtual cloud hosting at Amazon.
From an expense perspective, my vacation-related expenses were higher this month, as well as expenses related to birthdays. My girlfriend’s birthday was last week, and I treated her to entertainment and dining in Manhattan, as well as some other gifts.
On the income side of the equation, I have nothing to say but good things. I don’t share the gory details of the income I earn from my projects here, but there is no doubt that leaving my day job to focus full-time on my own business was the right choice and that I should have made the jump sooner. It might be slightly coincidental; there are market forces at play as well, in addition to some aspects of the internet that are beyond my control. Keeping this in mind, I am remaining cautious about the future.
Here are the numbers, subject to change as more information becomes available, followed by some comments.
I often receive questions about how I track my finances and post them online. Although no longer a heavy user like I was in the past, my main tool is Quicken 2011. This allows me to download most of my financial transactions and manually input the remainder. The software will also generate reports. For example, I export my net worth report to a file compatible with Excel and I copy that information into an Excel template. The template summarizes the information, and I copy the chart into a graphics editing program that saves images for use online.
Here is some discussion surrounding my balances.
Cash in banks
If I had found my way to the bank by the end of the month, this number would have been higher. I have a few checks sitting in my car since I’ve been away from my home without convenient access to Wells Fargo, the brick-and-mortar bank where I have my business accounts. I’ve finally started the process that will allow me to switch to direct deposit for my largest remaining check-sending client.
Having managed cash for a major corporation in the past, I know that it’s quite common for businesses to leave more than the FDIC limit in a savings account, but I prefer to stay within the maximum. For this reason, I will transfer excess money from my online business savings account at ING Direct to Wells Fargo. I’m keeping as much cash in the business as possible, but at some point, I will tap this resource for personal expenses.
Investment and retirement
A chunk of my increase from March to April was due to rolling over my pension. Prior to the rollover, I did not include my pension in my net worth. I received a statement from my employer with my pension balance every three months, but I never considered including the value in my reports. Now, those funds have been transferred to Vanguard, and they are now included in a rollover IRA where the balance is available to me at any time.
My next step is to rollover my 401(k), but I’ll only do this after I’ve had a chance to carefully consider my strategy.
Another change is my treatment of precious metals. A few weeks ago I explained how to track gold and silver bullion in Quicken. I was spurred onto this because I recently purchased some silver bullion, a special edition released by the U.S. Mint. It’s a hybrid, somewhere between a collectible item and an investment item, but I decided to track its value in my net worth.
The value fluctuates frequently. When I record business income, I almost always date it for the last day of the month although the income is earned throughout the month. For example, April 29 would have shown a much smaller balance than April 30 because almost all my income is dated April 30. Readers have frequently assumed that the income I earn is equal to this end-of-month balance in accounts receivable, but that isn’t the case.
The value of my 2004 Civic has actually increased according to Kelley Blue Book and Edmunds thanks to high demand and possibly the earthquake and tsunami that devastated parts of Japan. Regardless, I have not increased my book value for the car. I’m still taking a conservative approach in my valuation. The only value that matters is what I can convince someone to pay for the car. With only 130,000 miles and the car running perfectly, I don’t see a sale in the near future.
The accounts payable line includes credit card balances and any new business bills that haven’t been paid by the end of the month. This was the first month in a while without a major purchase on my credit cards, whether for personal purposes or business, so I’m glad to see this number lower again. I do use a credit card for almost all of my typical, day-to-day spending, due to convenience and rewards.
Assuming no surprises, May should be another positive month. The weather is getting to the point of comfortable, and my itch to move elsewhere won’t be as strong. This is a good time to check on my progress towards my goals for the year, to see if any changes are necessary to find my personal success. I’ll do this in a later post.
What are your plans for May?