I’ve spent the last decade of my life focused on my finances. I started because I had no money and a job that was taking more from me than it was providing in income. I knew I had to make some changes if I wanted to build any kind of future for myself. Soon into this journey, I founded this website, where I’ve written about my own financial situation and tracked my balances on a monthly basis.
Over the years, my financial situation has improved. Rather than focusing on and tracking every cent as I was doing in 2003, a necessary step to train myself to save money and value everything I was earning, I now am significantly more relaxed. I still track my bank account balances. Eventually, I stopped tracking every cent I spent with cash. Cash spending became such a small percentage of each month’s income that it became unnecessary for me to enter every receipt (or every remembered transaction for those where no receipt was provided) into Quicken. I have been using credit cards for most expenses. (I was using credit cards to take advantage of rewards, which I didn’t start doing until I was out of debt, spending less than I was earning, and making conscious spending decisions.) The credit cards helped me carefully track my expenses.
My ability to improve my financial condition has been partly due to my public tracking. When my numbers are published online, I have to admit to my mistakes and accept criticism from readers when it’s due. Knowing that I will be reporting the details of my bank accounts helps me to continue making good decisions with my money.
At the end of the year, I take the chance to look at my life from a broader perspective. I now have ten years of history in my Quicken file. I’ll be thirty-six years old in a couple of months, so my finances have been a focus for almost all of my adult life. And for those of you, readers, who know me only through this site, only as “Flexo” or Luke Landes, you may think that an obsession with personal finance rules my life. The good news is that this isn’t true; outside of Consumerism Commentary, when I see my friends and family, personal finance is not usually a topic of discussion.
With ten years of history in Quicken, I can easily see my own financial progress over time. At the end of 2001, the world was still shaking from terrorist attacks in New York and Washington, D.C., and my life was uncertain. With no money, no job, no girlfriend, and no place to live, I knew I needed to make changes in my life. That’s what I did.
Continue reading to see the numbers.
If you click on the above image, you can view a larger version of the chart, but you’ll need a wide monitor to see the entire ten-year history.
I recently changed the way I historically report my balances so I no longer include business-related accounts. While this does grant me some flexibility in reporting; theoretically, I could take as much or as little money from the business as necessary as until recently I was the sole owner. As a result of the flexibility to withdraw money from the business, I believe it has become less necessary for me on a personal level to report my finances on a monthly basis. There is nothing related to the business included in my net worth reports other than what I’ve taken as a salary.
Moving forward in 2012, I plan to keep an eye on my spending and income, as I will no longer have the flexibility of defining my own salary based on business performance.
The Cash in banks category represents any money I have in personal savings accounts, checking accounts, and money market accounts. Over the years, I’ve opened many accounts primarily to review for Consumerism Commentary. Over the last few months, I’ve spent some time consolidating the scattered banks and accounts that I’ve collected. I’ve closed my accounts at Ally Bank, Discover Bank, EverBank, HSBC Advance, FNBO Direct, Sallie Mae, SFGI Direct, and Zions Bank.
Additionally, I merged many of my subaccounts at ING Direct. The bulk of my Cash in banks funds are held there, the same online bank I started with many years ago. My primary brick-and-mortar bank is the descendant of the same bank I started with even earlier. I do plan to move money out of Wells Fargo within the next few weeks, however, due to their new policy of eliminating customers’ rights.
My Investments are held mostly at Vanguard, though I also have active accounts at ShareBuilder and Scottrade. At Scottrade, I’ve been holding an investment in AIVSX that was originally a UGMA. Aside from a small period of time about nine years ago when I thought it would be a good idea to automatically invest more money into this fund — and due to the front-end load fee of 5.25% it was a poor, uninformed decision on my part — this account has been stagnant other than moving from Wachovia to Scottrade when executives the large brokerage decided to begin charging inactivity fees. In ShareBuilder I’ve been holding small investments funded by sign-up bonuses.
I also have accounts at Zecco, Betterment, and Lending Club, but I haven’t done anything with these accounts. I have some company stock with my former company held at E*TRADE, and I’ve been waiting for the share prices to improve before selling.
I keep most of my Retirement accounts at Vanguard. I rolled my old 401(k) and pension over into Vanguard, and this past year, I opened an Individual 401(k) there.
When I first started investing for retirement almost ten years ago, rather than save up the money to reach one of Vanguard’s minimum investment amount, I started smaller with TIAA-Cref. This was perhaps a mistake. It’s possible that what I have is an annuity, although that was certainly not explained to me in language I understood at the time, and it’s still difficult to determine whether what I own are in fact pure mutual funds. I do know that transferring money from this brokerage to Vanguard is not as simple as filling out a form. Additionally, I encountered problems investing with TIAA-Cref, and hundreds of other customers have had complaints to share with other Consumerism Commentary readers over the past few years.
As I mentioned above, since the beginning of my trek to improve my finances, I’ve only used credit cards for everyday spending. I haven’t paid any interest or late fees over the last decade. I’ve spent only what I could pay off when the bill arrived. I have, however, decided it was worthwhile to pay an annual fee for a credit card that provides rewards that make that fee worthwhile; although the Continental Airlines OnePass Plus Card carries an annual fee, it has paid for itself in free checked luggage. I travel to visit family on the west coast and usually need to check bags. Paying the annual credit card fee (and the fee was waived the first year) has been a smaller expense than checked bag fees would have been.
I bought my 2004 Honda Civic new (though it was already an old model, as the 2005 editions had just arrived). That may have gone against most typical financial advice, as gurus often suggest you should buy used. In my case, I knew I liked the long-term reliability of the Civic, and a new car was only slightly more expensive than a slightly used car in great condition. As I was teaching at the time, I needed something that would be reliable as long as possible. I borrowed money from my father rather than seeking expensive financing from a bank, and paid off the loan as quickly as possible.
My student loans hung over my head for a long time. This wasn’t helped by the fact that I decided to pursue a Master of Business Administration degree at the University of Phoenix Online. My job paid for 90% of the tuition, so I figured it might have been worthwhile, particularly considering my earlier exposure to online learning as it was being developed at my undergraduate university. Unfortunately, I let the University of Phoenix financial adviser talk me into using loans to pay the tuition and using my company’s reimbursement checks to pay off the loan rather than to pay the tuition directly. While the loans ensured I didn’t need to use any of my own money up front while waiting for the reimbursement checks, I didn’t consistently use the reimbursement checks as I should have.
Nevertheless, I paid off the last of my student loans, including the graduate degree and remnants of the bachelor’s degree, about a year after I received my MBA and about ten years after I received my undergraduate degree.
This year, I’ll once again need to change the approach to my finances. I’m in a different financial environment now, and it will be important to ensure I continue to make decisions that take the reality of my situation into account. My monthly reporting will take on a new form this year, as I publicly report my expenses rather than my net worth. So once again, I will be more carefully tracking my cash, but not to the point where it is something I am obsessed about.
How as 2011 for your finances? Did you progress as expected? What are you looking forward to in 2012?