Four times a year, I go through my finances and take a look at what I have and what I owe and figure out a net worth calculation. I’ve discussed how I put together my net worth before, but basically it’s an accounting of the money I have, my investments, the Zillow value of my house, the Kelley Blue Book value of my car, and the debt I owe on my house and my car. I don’t include any of my personal property mainly because that would be hard to calculate. I include the house and the car, because otherwise, my net worth would be incredibly low, thanks mainly to my mortgage.
I’m doing this calculation following the Brexit vote, so I fully anticipated that my numbers would drop. While we don’t know yet how the United Kingdom leaving the European Union is going to affect us in the long run, in the short term, investors are scared and the markets have dropped a bit. Part of me wishes I had done these calculations a day or so prior to the vote and then a day or so after the vote, just to see the nitty gritty of how my net worth was affected. Part of me doesn’t want to know. But I may do a calculation before and after the US election to see if that has any effect.
Over the past three months, my net worth has risen 0.77%. That’s not a huge bump, but it’s continued growth. Last quarter, I saw a very tiny bump in my net worth, so it’s a good feeling to see those numbers growing.
This quarter, the big winner was my investment accounts. That’s right, even with Brexit, my investments are up from three months ago. Some of this is, of course, due to continued contributions to my retirement accounts, but the numbers are slowly growing, which is exactly what I want them to do. I’m not a short term investor. I’m in it for the long haul. (Well, sort of. More about that later.)
My debt continues to drop. I’m making extra payments on my car so that I can get that paid off sooner rather than later. I’m not currently making extra payments on my house, choosing instead to hold that extra cash for physical improvements to the house.
My cash accounts took a hit this quarter. I’ve discussed that my spending has been a bit more extravagant than before, and I had to tap into my emergency account to get my air conditioning fixed.
Since last July, my net worth has risen 2.65%. I’m pleased with that number. Again, it’s mostly in investments and also in the value of my house. I’m actually wondering how much my Zillow estimate will rise over the next quarter. Two houses very similar to mine just sold in my neighborhood for a pretty penny. Of course, it’s not something to get too excited about. I’m not planning to sell anytime soon, plus if I were, I would likely be buying another house, and if home prices are rising, I’m going to have to spend more anyway. But it’s nice to see the numbers grow. It’s a good sign that the neighborhood was a good choice.
I do have a few expensive projects that I need to do around my house. My basement is finished, but the flooring put in 5 years ago was just very cheap carpet. It’s looking pretty awful. I’d like to tear it out and put in some sort of hard surface. I’d also like to put in new windows in the house, as mine are getting old and at least one is pretty darn drafty. But I don’t have the cash right now for these expenses. I’m toying with the idea of selling off some investments in order to make the investment in my home, but I’m just not ready to pull the trigger quite yet. Maybe sometime over the next year. That’s the problem with long term investing. Even though I may have set aside the money years ago, it’s hard for me to sell off the investments without thinking about the profits I could be missing out on.
All in all, a good quarter. But I need to continue to tighten the purse strings and make those cash accounts grow again. Check back in three months to see how I did!
Vacation season is here! Kids are out of school, the weather is absolutely gorgeous (well, for the most part), and people are starting to take summer vacations. While it’s easy to want to keep up with the Jones’s and take your family on a whirlwind European vacation, you don’t need to spend a lot of money to have a great time.
When a lot of us think of vacations, we think about getting on an airplane and going somewhere great. And you can save a lot of money on air travel if you play your cards right. Check out credit cards that offer airline miles as rewards. But make sure you do your research and choose the right card (and if you carry a balance on your credit cards, under no circumstance should you get a rewards card – they have significantly higher interest rates that do not offset the benefits you get from the miles). You don’t want to choose a card that significantly limits how you can use your miles. You also don’t want to choose a card that has great benefits, but only works with an airline you rarely fly.
A number of my friends have Southwest credit cards, as that is their preferred airline. In my experience, their program is pretty great, and you can even earn extra rewards miles by shopping through their portal. What I love about Southwest is that you can change your flight for free – and that means if you book a ticket and then see that the price drops, you can re-book for credit on your account. The credit has to be used within a year, but it’s better than just throwing the money away. One of my friends just took her family of four on a trip across the country by paying for the flights with Southwest miles. Pretty great deal.
Some of my best childhood memories are of epic roadtrips we took as kids. My parents made sure that we saw what our country has to offer, so we drove all over the place. We couldn’t afford to fly as a family of five, so we drove. Mom had a special box of road trip games that she would pull out, and she had all sorts of activities for us to do in the car. We got to see a lot of the country and we also got to spend a lot of time together.
I think our longest trip was around ten days, and a coworker recently took her kids on a three week trip across the country, visiting baseball stadiums along the way. But not everyone has that kind of leave from their jobs, so consider a weekend trip a few hours away. Take a look at a map, draw a circle centered on your house, and see what you can see.
Staycation is a weird word, but I think it can be awesome. Travel can be expensive, and if a vacation just isn’t in the cards for you this year, consider a staycation. Now, this isn’t the time to take a week off of work and do projects around your house. While that’s a productive use of your time, it’s not very restful and vacation-like.
No, consider a family staycation, where every member of the family takes time off and spends time together. You don’t have to spend the time at home – go to your town pool, go out for ice cream, visit a local park, maybe even see what sort of day trips you can do in your area.
If you go this route, I highly recommend that everyone try to go as technology free as possible. Nowadays we can’t just leave our phones behind, but that doesn’t mean we have to be looking at them all the time. Spend your time together. Reconnect as a family.
And if you’re staycationing solo, just enjoy yourself. Read a book, watch a movie, go for a walk, check out the restaurant that just opened around the corner. Take time to relax and decompress. Life brings enough stress. Sometimes you just need to reconnect with you.
In trying to clean up my budget, one thing I’ve really worked to eliminate is eating out. I’m lucky in that my office is in a great neighborhood with tons of great places to eat, but that means it’s often very tempting to run out and grab lunch. While I can get something for cheap, I also have been trying to clean up my diet, and of course, the healthier options are also the more expensive ones. It wasn’t too bad when I was limiting myself to once every other week, but it started to become 2-3 times a week, and at $12-$15 a pop, that’s not cheap.
I’m working to be better about bringing my lunch every day. As part of cleaning up my diet, I’ve started to make lunch my big meal of the day. With my schedule, it’s just easier, and then I’m not ravenous when I get home from work.
I thought I was doing a decent job of saving money by bringing my lunch, but looking at my budget numbers, I’m not so sure the savings is as great as I thought. I’ve started sporadically using services like Blue Apron and Hello Fresh for meals, and they’re not cheap. I don’t use them every week, maybe twice a month. I love the variety, that’s for sure. It makes bringing my lunch a lot more fun and makes eating out a lot less tempting. But when I crunch the numbers, I’m still paying $10-$12 per meal. That’s… not awesome savings. And last month, I used those services three times! No wonder my budget looks rough.
I’ve also found a great service here that delivers a farm box to your house. It’s more expensive than going to a Farmer’s Market, but there, I have crunched the numbers and decided that the convenience fee is worth it to me. So I’m eating a lot more fresh produce, which is awesome for my health… but still rough on the budget.
My goal is to really lower the food spending numbers this month. I haven’t eaten out at all this month, so thumbs up for me on that category. But I did buy a few bottles of wine (I don’t drink much, but I like to keep nice wine around to take to friends’ houses or just to be able to open when guests are here, and I was down to my last bottle) and did my quarterly coffee bulk purchase, so those are two huge dents in the food budget.
It’s definitely a tough balance trying to eat as healthfully as possible while still keeping the budget reasonable. I’m also currently training for a half-ironman triathlon, so I need more calories than normal. It’s so tempting to fill up with inexpensive carbs, but I know that quality foods are so much better for me and I’m lucky I have the room in my budget for them.
But man, that grocery budget feels like it’s just blinking big red numbers at me right now. Time to work on cutting back on those food costs and be a better sale shopper.
A few weeks ago, I talked about the importance of an emergency fund.
This past week, I got to use mine.
On Monday, Memorial Day, I was at home, getting some projects done in the house, and I noticed that it was getting pretty warm in the house. I figured that it had something to do with the fact that I have the air conditioning set at a higher temperature during the day on weekdays since I’m not home. I don’t want things too warm – after all, I do have pets in the house. But when I checked the thermostat, I discovered that while it was set at 76, it was about 80 degrees in the house. That wasn’t good. So I walked outside, checked the AC. It was running. I checked the blower in the basement. That was running too. So I went back to the thermostat, dropped the temp 2 degrees and gave it 20 minutes.
The temperature actually went up. So that’s not good.
I have a service contract with a local HVAC company, so I called, hoping they had techs available in the next 24 hours. They didn’t, of course, but someone could come Wednesday afternoon.
A few days of a very warm house later, the tech showed up and I was so relieved to find out that I didn’t need a new air conditioner. But I did need service that was going to cost me about $600.
Now, my budgeting hasn’t been great over the past month, so there wasn’t any extra money in my normal home maintenance budget to cover this, which meant hitting the emergency fund. Which is, of course, exactly what it is for. It was nice to have the money available and not have to worry about how I’m going to pay for the bill or having to risk paying credit card interest.
(Of course I put the payment on my credit card. It’s all about the rewards! If I have to pay $600 in unexpected repairs, I might as well get something out of it. You know, other than just a fixed air conditioner.)
I transferred the funds out of my dedicated emergency fund account and into my normal spending account. I like to keep my emergency fund totally separate so I’m not tempted to dive into it unless I really need to. Now I just have to start paying the money back.
That’s right, just because I had the money doesn’t mean that everything is done. No, now I need to replenish the funds in my emergency fund. I’m not sure how long it will take, but it’s yet another reason to work on tightening up my budget.
So the point of this story is to remind you all of how important it is to have an emergency fund. This was a small emergency, thankfully and didn’t put a huge dent in the fund. And in the worst case scenario, I can live without air conditioning, though the coming months would have been a bit uncomfortable.
So if you don’t have an emergency fund, now’s the time to get cracking. Put aside what you have. Maybe it’s $100 a month, maybe it’s $20. But every little bit helps.
If you’re like me, you own your home and have insurance on it. It makes sense. What if a tree falls on the house during a storm? What if there’s a fire? Insurance is something you never want to need but something you always want to have.
But what if you rent your place? Is renters insurance really worth it? After all, the stuff you own isn’t worth all that much.
I had this very conversation with a friend of mine recently. She was moving into a new place and decided to not get renters insurance because nothing she had was of any great value. Her tv and furniture is all on the older side. Sure, she’s got a closet full of clothes (and then some), but she doesn’t have fancy tastes, so none of it is very expensive. She’s not really into jewelry or fancy electronics or anything like that. So why bother to get renters insurance?
It’s easy to understand where she’s coming from, and you will hear a lot of people say the same thing.
But just think – if your apartment building catches fire and burns to the ground along with everything in it, where will you be? You will only have the clothes on your back and maybe the junk that you forgot to take out of your car. All those clothes you had might not have been expensive when you bought them, but replacing them’s going to cost a pretty penny. The value of your stuff adds up really quickly, no matter how expensive your tastes. And even if you can replace your entire wardrobe for $500, do you have $500 to spend on a new wardrobe right now? Not to mention everything else that you lost.
But you think “Okay, what are the odds of that happening? Apartment buildings don’t burn down. And I’m smart, so I won’t catch my place on fire.” Okay, even if that rings true, you’re still not looking at the whole picture.
Total loss isn’t the only reason to get insurance. Another friend had a fire in her building. Her unit was fine, but was significantly smoke damaged. The whole place had to be gutted, repainted, re-carpeted, and all of her stuff had to be professionally cleaned. You know what paid for that? Insurance.
Renters insurance also covers liability issues. This is an example I gave to my friend. Let’s say I come over and while I’m there, I slip and fall and get injured. I have to go to the hospital and end up with a big bill. Of course, this is all charged to my insurance. But my insurance company says “Hey, wait, you were at a friend’s house? Well, we’re going to go after her to cover this because we don’t want to pay it all.” Doesn’t matter what I say to the insurance company, that’s how they roll. If she has insurance, her insurance company takes care of the whole issue, deals with the other insurance company, and she doesn’t have to worry. If she doesn’t… that could be a big headache.
Finally, renters insurance can also cover your stuff when you’re not in your home. Taking two big suitcases to the airport, only to never see them again? Renters insurance may be able to help you recoup some costs, depending on your policy.
I’ve had renters insurance or homeowners insurance for well over ten years. I’ve never had to file a claim. But that doesn’t mean that I don’t still recommend it to everyone. Play it safe.