I’ve been tracking my net worth and keeping my finances updated in personal finance management software since July 2003. I’ve done this mainly for myself. Posting my finances online helps make the numbers real. I use these monthly reports to hold myself accountable. If I write publicly about spending more in a budget category than I should, I have no one to blame myself if, at the end of the following month, I still have the same problem. I would have to face the judgment of readers who see my lack of progress. By keeping my finances public, I try to hold my money-related decisions to a high standard.
Over the past eight and a half years, this technique has helped me gain financial independence, combined with a thriving business. But this will be the final month I share my balances with this much detail. I’m moving into the next phase of my financial journey, and this requires taking back some of my willingness to bare all for an audience. I will still share quite a bit, more than most readers would expect, but the familiar balance sheet will be replaced with a different accountability measure.
Another reason to move away from posting a monthly balance sheet for accountability is the fact that the swings from month to month have more to do with stock market performance than day-to-day money management decisions. When I had very little money invested and my expenses were close to my income, every decision I made could have a strong effect on my finances. That is not the case today. Just like my need for tracking every cent has been relinquished as my budget began to allow more freedom, my daily spending has a smaller effect than decisions pertaining to the larger picture, like my investment portfolio allocation and diversification. I’ll be writing more about my investment choices in the future.
In October, my investments recovered. This contributed to an increase in my net worth. Continue reading to see the numbers.
Note that I took my business accounts out of this report a few months ago. Business income was healthy again in October, but that’s not reflected in these numbers.
If you’ve been following Consumerism Commentary, you should recognize the different lines included in my balance sheet. “Cash in banks” includes all the checking and savings accounts I own, mostly high-yield savings accounts. I added a new savings account in October, and it wasn’t exactly what I wanted to do. I needed a signature guarantee in person, a service banks and brokerages often provide. I walked into my local Wells Fargo branch, but the representative had no idea what I was asking for. The next closest bank location was a Chase branch, so I walked in to ask whether they could provide a signature guarantee.
At Chase, the representative knew what I was asking for and was able to provide the signature guarantee for free — but only for Chase customers. Despite the proximity to Bank Transfer Day, I opened a new account at Chase with a $100 cash deposit. In order for this checking account to remain free, I needed to initiate a $500 per month direct deposit or maintain a $1,500 balance. I covered both bases.
I’m not happy with the idea of adding yet another bank account, but I’ve also spent some time during the past few months canceling many of the savings accounts I’ve opened over the past few years as tests for writing reviews on Consumerism Commentary. I closed or zeroed out my HSBC Advance account, Ally Bank accounts, Everbank accounts, Sallie Mae account, Discover Bank account, and Zions Bank account. I’ll be canceling more accounts as I continue to simplify my finances.
My investments line includes a few accounts for stock trading, mostly unused, as well as an individual brokerage account at Vanguard. My plan for this month is to look into moving my investments around so this account includes the most tax-efficient investments. I’d rather have tax-free investments in this account to reduce my tax liability, while leaving the less tax-efficient investments in retirement accounts like 401(k)s and IRAs.
Those 401(k) plans and IRAs are included in the retirement line in the above balance sheet. For the Honda Civic line, I’ve just been reducing the value of my car by $100 every month. This may be something I shouldn’t include in the report, but for a while, this was my most valuable asset, and since I could sell my car in an emergency, I thought it might be worthwhile to track. I occasionally check the car’s value in Edmunds or Kelley Blue Book. I don’t see selling this car until it costs more to maintain than it is worth. I’ve put very little money into the Honda Civic besides regular maintenance.
THe amount in my credit cards category is paid off every month. I’ve been using primarily a Chase Continental Airlines OnePass Plus Card, and I’ve used the miles earned for upgrades. With all the traveling I’ve done this year, I”m very close to earning “Silver” Elite OnePass status in Continental’s (and United’s) frequent flyer program, but I might end the year without crossing the threshold of 25,000 Elite Qualification Miles. (With the OnePass Plus card, the miles you earn for every purchase do not help you qualify for a higher frequent flyer tier.)
As I mentioned above, my plan for November is to simplify my finances by reducing the number of open accounts. Next month, I’ll report November’s progress and review my finances as of the end of the month, but I’ll be changing the format. The monthly financial update is an integral part of this website, so I will find a way to continue this tradition despite the change of relevance.