Our next personal finance goal is to pay off my remaining student loan, which has an outstanding balance of $14,800 or so. This was the goal we had penciled in as our primary goal for 2009, intending to pay it off by the end of that year. Paying off that debt will leave us with only our mortgage as debt.

Rolling back the clock just twenty seven months really puts this financial turnaround in perspective. My wife had roughly $24K in student loans, all told (now paid off). I had $10K in one student loan (already paid off) and about $25K in another loan (now below $15K). We also both had significant amounts remaining on our separate car loans – I owed at least $5K on my truck at that point (now paid off), and she owed at least $2K on her car (also paid off). We also had a combined $17K (approximately) in credit card debt.

Adding that up means we’ve paid off a stunning $68K in debt in a little over two years. For comparison’s sake, our debt repayment is roughly equal to our 2006 income and not too much lower than our 2007 income, which should give a good idea of how hard we’ve pushed the pedal to the floor since our meltdown.

Now, we just have the remainders of my single remaining student loan and a mortgage to pay off. That’s all.

How did we do it? I’ve written about this a number of times, but it’s just as true now as it was then. We took a hard look at our financial situation, realized we were simply spending far more than we earned, and pushed ourselves – and each other individually – to turn that ship around. We sold off mountains of video games and DVDs and trading cards. We adopted much less expensive hobbies. I began to look seriously at alternative avenues for raising money in my spare time – at first, it was repairing computers, and then I began to have some success as a writer as well. We started preparing food at home instead of eating out most of the time. We made a debt repayment plan and started snowballing our payments, meaning as soon as one debt was paid off, we transferred that whole payment as an extra payment on the next debt.

The most important thing of all, though, was realizing that we needed to turn things around for each other and for our children. Spending far more than we earned was creating a dangerous path for our future, one that simply couldn’t continue.

We use each other as inspiration to push ourselves harder to save money. If my spouse has the financial strength to do it, so do I. If our children have a life of rich and full experiences and they’re emotionally centered, then we’re doing our jobs as parents, even if they don’t have the latest and greatest of everything.

But, for now, it’s time for us to celebrate a little in the way we’ve become accustomed to. A pair of steaks from the freezer are thawing and soon I’m going to go harvest some lettuce from the garden and maybe a fresh tomato or two, plus there’s a bottle of homemade blackberry wine that will be opened up and poured as a dessert drink. An amazing dinner, not much different than what we would have spent a lot of cash on a few years ago, but instead prepared and eaten at home, together, as a family.

The post Another Major Milestone on the Road to Financial Stability appeared first on The Simple Dollar.

My goals for February were interesting and varied. I had four goals for the month:

No eating out unless there’s a special opportunity with my wife. I didn’t quite achieve this goal, as I ate out a few times during the month mostly out of a pure convenience need, sadly enough. Sometimes, there aren’t enough hours in the day to do what I want.

Start saving for my wife’s birthday gift. Check, though I somewhat modified what I had in mind originally.

Reduce my debt by 1%. Check, and this one was a big milestone. It felt awesome to realize that my entire debt load was reduced by 1% this month. If I were able to make this same amount of debt reduction every month, I would be completely debt free in less than six years. No mortgage, no nothing. Wow.

Spend $0 on entertainment purchases this month. Check. The only new entertainment item I acquired the entire month was a long-preordered game for the Nintendo DS that I had purchased using a Christmas gift card.

Three out of four? Pretty good. My only real disappointment was in my assets, where it went down substantially due to a second straight weak month for my retirement accounts and higher-than-expected energy bills.

In March, my biggest focus is building up some extra buffer for when I leave my job at the end of the month, so Here are my goals for the next thirty one days.

An asset growth of 0.8%. I’m going to pull back the throttle on my rapid debt repayment schedule for a while and instead build up more cash in my savings and checking accounts for the moment. Thus, I’m shooting for a decent asset growth this month.

Completion of my 2007 income taxes. I have to pay in a little bit based on my thumbnail estimate. During the month, I hope to get this all finished up and sent in.

A very detailed plan for the first six months of my layoff. I already have a rough sketch of the first year, but I work best with specific plans and deadlines, so I’m going to literally lay down a daily schedule (four days a week) for the first six months after I leave my current job. The fifth day would give me room to breathe and also some space to work on other projects.

That’s my personal financial plan for the coming month. What’s yours?

The post February 2008 Review – Assets -0.5%, Debts -1.0% appeared first on The Simple Dollar.

Like many people, my retirement accounts took a serious pounding this month. My retirement investments dropped a full 6% – very painful, indeed. Even though my checking account and savings actually grew, the retirement loss, coupled with a very late expected payment from my business, dragging my overall assets down slightly.

Of course, this looks like a buying situation to me. I have been saving cash for a couple of significant purchases (primarily, a minivan), and I’m now considering putting that money in the stock market instead.

My goals for this month were for an asset growth of 1% and a debt reduction of 1% – I would have reached the former without the stock market volatility (even a zero market or just a slight down market would have been okay), and I basically reached the second goal this month, ending with no credit card debt at all, in fact. So, I don’t feel as though the wheels have fallen off, but I was fairly lazy this month when it came to being frugal.

What are my goals for next month? There are some interesting ones on this list this time, not just straight number ones.

First, I’m not going to eat out at all unless there’s a special opportunity with my wife. We may go out to dinner for Valentine’s Day and leave the kids with a babysitter, but other than that, everything I eat will be prepared at home. I am considering making this a permanent goal.

Second, I’m going to start saving for a special birthday surprise for my wife, saving 15% of the value by the end of the month. This is something she’s wanted for a long time and I think it’s a reasonable thing to spend money on – not something stupid and extravagant like a fur coat. Thus, I started a sub-account at ING Direct to save up the cash for this special item. Since I don’t want to spoil the surprise, I’m not going to mention it any further on here – but I will mention it after it’s done.

Third, my target for debt reduction next month is 1%. This means that, even though my credit cards have a zero balance, I hope to still knock 1% off my total debt next month. That will probably come in the form of a large overpayment on my student loans.

Fourth, I’m going to spend $0 on entertainment purchases this month. This is again excepting a possible Valentine’s Day date with my wife, when we might go to a movie. This means no music downloads, no DVDs, no video games, no books, no anything. I intend to hit the library a few times instead.

So, in a nutshell, I’m trying to do a massive trim on my soft spending next month to see how it goes. It should be fun. Check back next month, and I’ll talk about how it went.

The post January 2008 Review – Assets -0.2%, Debts -0.9% appeared first on The Simple Dollar.

December went very well, mostly thanks to the fact that I didn’t spend nearly as much on Christmas as I was originally anticipating. I actually already had many of the gifts on hand and others were handmade gifts that I invested time in rather than money. The end result? The Christmas bill wasn’t nearly as big as I thought.

Thus, I far exceeded my goals. I wanted to achieve a debt reduction of 1% (check), an asset growth of 0.2% (check plus plus), and Christmas gift-giving without worry (check plus plus).

When I have months like this, where I’m able to do the things I personally want with no worries at all, it makes the frugality and cost-saving choices that I make seem really worthwhile. At that pace, carried over several years, all of my debt vanishes in about eight years and my assets double in value in about twenty eight months – and that’s in a down stock market. Now, admittedly, I can’t keep up the pace – in some months, I have tax bills and other unexpected expenses. But that doesn’t change one simple fact: I’m making good progress each and every month, and that good progress really adds up.

My goals for next month are fairly modest, mostly based on the fact that I have to do some traveling.

Asset growth of 1% This requires my normal plan plus either a non-disastrous month on the stock market or some strongly frugal living from me.

Debt reduction of 1% Again, I’m hacking away at debt at the same pace as before, so this is pretty expected provided there are no unforeseen events.

These should both be achievable if I stick to my basic principles of frugality, reasonable spending, and automated saving and investing. I’m not planning on any big “stretch” goals until the spring, because the next few months are filled with some travel and a few unpredictable expenses.

The post December 2007 Review – Assets +2.3%, Debts -1.1% appeared first on The Simple Dollar.

This month, I really tightened things down and focused heavily on debt repayment, which is why you see that my total debt went down 1.2% this month. I knocked off a big chunk of student loan debt this month and didn’t spend very much at all. It was a good feeling, one that I intend to repeat in coming months.

How are we doing this? Early in November, we sat down and assembled a debt snowball for all of our remaining debts – our student loans and our mortgage. We’re throwing our money at this snowball as hard as we can, watching the debt disappear. Our anticipated date for the first payoff is next July, and then the remaining loan will be done in October, after which we’ll start hammering away on our mortgage.

What about next month? The month of December looks to be one that will see a lot of extra expenses due to the Christmas season. Thus, my goals for the coming month are relatively easy:

Asset growth of 0.2% This should largely result from normal deposits into my retirement fund and having slightly more in checking and savings at the end of the month than at the start.

Debt reduction of 1% I’ve set up a lot of large automatic payments on my student loan debts, so this is roughly what should occur with those payments, and perhaps one extra one (a Christmas gift to myself, in the form of peace of mind).

Christmas gift-giving without worry This is the first year in my entire life where I’ll be able to give nice Christmas gifts without financial worry. I really look forward to it.

The post November 2007 Review – Assets +0.4%, Debts -1.2% appeared first on The Simple Dollar.

After some careful deliberation, my wife and I made a decision in the middle of the month to focus heavily on debt repayment over building our assets, and as a result my debt took a major step downward this month because I paid off one of my outstanding student loans in its entirety. That’s right, we now have only my wife’s student loan, my one remaining student loan, and our home mortgage as debt.

Thus, last month’s goals didn’t really apply too much. My goals were centered around asset growth, which was mostly money to be put into savings while we made some challenging decisions about what to do next. Now that we’ve made those decisions, my asset growth was tiny, but my debts took a very large swoon.

Our next goal is to get rid of my wife’s student loan, and I’m going to be contributing some significant cash to that. I don’t include her student loan in my net worth calculation (we agreed that we’d individually be responsible for debts brought into the marriage), so I expect that over the next several months, my asset growth and debt reduction will remain relatively flaccid, but once that debt is gone, things will shoot off like a rocket.

Here are my goals for the coming month.

Asset growth of +0.25%. This goal will be accomplished by continued contributions to retirement and to various savings goals.

Debt reduction of 0.25%. I can largely accomplish this by making a mortgage payment, not charging up the credit cards, and making a student loan payment.

Paying off 10% of my wife’s student loan. Her loan is well north of $10,000, so this is actually the real tough goal for the month. Since I’ve made a pretty serious commitment to frugality this month, this is actually an achievable goal. In the following months, I’ll keep this as a goal and keep raising the percentage on it.

The post October 2007 Review – Assets +0.26%, Debts -2.28% appeared first on The Simple Dollar.

Assets My assets went up very nicely this month thanks to better than expected income from my side businesses and a timely investment in the Vanguard 500 (I got in about two days before the Fed dropped interest rates). It was also helped by a strong lack of frivolous spending.

Debts My debt went down, too, this month. The percentage actually would have dropped much more than that except for the fact that the credit card payments I made at the end of the month hadn’t gone through yet when I did the figures – I had subtracted the bill payment from the assets, but it hadn’t hit the card yet. This included most of my expenses for food and for The Simple Dollar throughout the month.

Last Month’s Goals (see last month’s review)

An asset gain of 1.25% I exceeded this goal thanks to a pretty solid month on the stock market and some strong income. I think this goal was pretty appropriate for getting me to not spend money this month.

A debt reduction of 0.25% I managed to beat this goal even with my credit card payment for the month not going through yet. This was in large part due to a pretty nice payment that ate up about a third of my smaller student loan bill – I had been saving money in a savings account for that purpose.

This Month’s Goals

An asset gain of 1.5% Since I made the goal from last month, I decided to light a fire under myself and set that goal a bit higher.

A debt reduction of 0.5% Similarly, let’s light a fire here, though that credit card payment will help with this number.

The post September 2007 Review – Assets +1.72%, Debts -0.29% appeared first on The Simple Dollar.

Assets After spending a lot in June and July, August was a very frugal month, with almost no spending at all other than the basic bills. We ate almost exclusively at home (I actually don’t think we ate out at all this month), didn’t buy anything frivolous, and basically just spent the month settling into the house and getting ready for the arrival of the baby in September.

Debts With the mortgage added into the debt column, debts are going to go down slowly for a while, I fear. Since I am using a “savings account debt snowball” (meaning I’m saving up money in a savings account for the strict purpose of paying off larger debts all at once), there will be months where a big minus will appear here (when I get rid of our student loan debts, first of all). After that, I will build up a very healthy emergency fund, then start making larger payments on my home loan.

So, let’s set some goals for September! Short term goals like these make it easier to stay motivated throughout the month.

An asset gain of 1.25% In September, the baby will arrive, so that means that I’ll probably have some extra expenses related to her arrival. Still, I shouldn’t have to spend too much and with some frugal living and not much spending, I can meet this goal.

A debt reduction of 0.25% I decided to bump up my overpayment on my highest interest student loan for the coming future. I am really living way below my means and my emergency funds are making me feel comfortable enough to start being more aggressive with my debts. According to my math, this should bump up my debt reduction to this level.

Can I do it? Tune in next month. Even better, set your own goals and see if you can make it!

The post August 2007 Review – Assets +1.46%, Debts -0.16% appeared first on The Simple Dollar.

First, I elected to stop the updates for two months. This gave me time to readjust my finances with the purchase of the house. I knew that there were going to be a lot of expenses during the months of June and July that were far outside the ordinary – and there certainly were. Only now are things getting back to “normal.”

The reason for this pause is that my finances before and after the home purchase are basically incomparable. So many numbers used in the total changed so significantly that it’s almost worthless to compare the pre-house numbers to the post-house numbers. If a similar major financial shift occurs for you, it’s okay to pause things for a bit until things get straight again – a net worth calculator is primarily useful as a motivational tool.

After some debate, I decided to include the assessed value of the home in my net worth calculation. Why the assessed value? In this area, the assessors are quite active in making sure that the value of the house and land are pretty close to the market value – my purchase price was over, but less than 20% over the assessed value – and it included all appliances. If I removed all appliances and left, I believe I would be able to sell the home for somewhere close to (likely slightly more than) the assessed value. Being conservative, I decided to stick with the assessed value.

I considered not including the value of the home at all, but I felt that would be terribly inaccurate. I generally feel that an estimate of the value of the home with all removable items stripped out of it is an appropriate number to use, and in this area, the assessed value is pretty close to that.

I basically started over with the calculator on August 5. As I mentioned before, I calculate my net worth weekly, so I started over on the first Sunday in August. Calculating my new net worth was painful – comparing that raw number to the last time I ran the numbers (the final Sunday in May), I almost gasped at the incredible drop. However, I look at it as though I bought a pile of appliances, furniture, and many, many other expenses (closing costs, etc.) in the interim, so it isn’t as bad as my gut was telling me. I still have a higher net worth than I had at the start of the year, which does make me feel quite good, but if I draw a graph of it, the cliff-like drop in the middle is startling.

I do take solace in a few things. First, many household tasks will now be cheaper. We have our own washer and dryer now, so no more pumping coins into the machine. It used to cost $1.75 just to run the load – now the electrical cost for a full load is way under a dollar. We also have a very nice, large garden that my wife and I are very excited about – we already have a compost bin being filled with yard waste and vegetable kitchen scraps. Plus, actually having a large and usable kitchen means cooking at home just became easier and more worthwhile, and we now have a deep freeze to store our food. Even though our monthly housing bill went way up, some areas are actually cheaper now than before.

What’s the real lesson here? A net worth calculator, if kept up and used, is a great tool for keeping yourself on task for positive financial growth. Each Sunday when I fill in the numbers, I can see right off whether or not we’re making good financial choices and whether there are any areas that need to be focused on. Keeping a weekly or monthly net worth calculator is a wonderful psychological and financial tool.

The post Rebooting My Net Worth Calculator: Food For Thought On Starting – Or Restarting – Your Own appeared first on The Simple Dollar.

Early Retirement Planning: Taking Early Withdrawals Without Penalty From Your 401(k) or IRA You can withdraw money from 401(k)s and IRAs without penalty earlier than the prescribed date – here’s how. (Hint: you have to retire early.) (@ my money blog)

5 Good Reasons To Avoid Debit Cards The crux here seems to mostly be that they limit consumer protection, their rewards aren’t all that good, and they encourage bad habits. Good points, but like anything else, it mostly comes down to good money management and sensible consumer choices. (@ consumerism commentary)

A Dollar Amount Cannot Be An End Goal While I do believe that a dollar amount can be an end goal, I have found it to be an awful motivator. More tangible goals work far, far better. (@ money, matter, and more musings)

The Simple Dollar Retro: Stay At Home Parenting: Is It Worth It? My wife and I are still vaguely toying with this idea.

The post The Simple Dollar Morning Roundup: June And July Personal Financial Review Edition appeared first on The Simple Dollar.

Assets My focus this month was in building liquid assets to make moving easier, and it certainly worked out well, with a 6.2% increase in assets. My wife was thrilled with this, as it was incredibly clear evidence that the ongoing success of The Simple Dollar and our frugal May are really paying off.

Debts A very slight increase in debts, mostly due to carrying a small credit card balance (gas and groceries, actually).

Net Worth The big jump in assets without much change in debt saw a very nice jump in net worth this month. Because of this, we feel very ready for the big move into a home in early July.

Last Month’s Goals (see last month’s review)
An asset increase of 5% We did this and more! Our happiness with the 6.2% increase in assets in a month cannot possibly be overstated.
A debt reduction of 0.5% We didn’t get this one done, but we’re fine with that, because the “overage” on the asset increase would have taken care of it and more and we were on time with all of our payments.

June is going to have a similar focus as May: maximizing liquid assets so that when we move, we don’t have to put necessary purchases on credit – we can pay cash for everything.

This Month’s Goal
An asset increase of 6% This is our only goal for June. We would like for that asset increase to be mostly liquid so that our move is easier.

How am I going to handle the big changes July will bring? July is going to look like a devastating month in my net worth roundup because (a) we’re going to spend at least some of that liquid buildup on a point on the mortgage, closing costs, our first mortgage payment, and lots of stuff for the home, and (b) the house will become a part of the equation, with the assessed value being a positive and the mortgage debt being a negative. The end result is that our net worth will see a precipitous drop as our debt skyrockets. I will probably not set a numerical goal for July because of this major change.

The post May 2007 Review – Net Worth +12.1%, Assets +6.2%, Debts +0.8% appeared first on The Simple Dollar.

Include the debt, but don’t include the house at all. The argument here is that if it’s your primary residence, then you’re not going to be liquidating it ever, thus it’s not an asset. For many people, this would push their net worth far, far into the hole and if you’re making interest-only payments, it’s a hole you’ll not be climbing out of.

Include the debt, but only include the equity in the house. In other words, only include the portion of the house that you could draw equity from through something like a home equity line of credit. This means that any payment directly to the principal actually counts double towards your net worth, as it decreases the debt and increases the equity in the house.

Include the debt and also include the purchase price of the house. This means that the house itself has no direct effect on your net worth upon purchase and it slowly goes up as you reduce the principal of the debt. Many people seem to follow this path because it somewhat disguises the debt.

So what are we going to do? We’re going to actually follow a fourth path, which is an interesting one.

Include the debt, but only include the assessed value of the house. This means that right after purchase, our net worth takes a small hit, but as time goes on it climbs back as we make debt payments. Plus, each time the house is reassessed, the value of that asset changes – and given the location and the quality of the house, it will likely go up. In essence, this route means we are not counting the appliances as assets in any way, nor are we considering some of the more aesthetic appeal of the house that isn’t directly affected by the tax assessment.

What this means is that in the short term, my monthly net worth calculations will look disastrous, with some big losses, particularly in the month where we sign all the papers and take possession of the house. After that, however, our net worth will begin to climb again, albeit at a slower rate than before because our housing payments are going up. Then, whenever our home is reassessed, our net worth will likely see a bump (even though that also means that we’ll be paying more in taxes, which is a downer).

I would recommend that others follow the same path as well for including the primary residence in calculations. It is an asset and can be liquidated, but the aesthetics of the house and the appliances within and so forth will often make some difference in the actual purchase price that may only be of value to you.

The post Calculating Net Worth: What Should One Do With Their Primary Residence? appeared first on The Simple Dollar.

Assets My assets went up 2.2%, which exceeded my goal by a significant amount. This was mostly due to a very nice month on the stock market.

Debts My debts went down 2.3%, which wasn’t as much as I wanted. I did not waste money this month, however; I had almost $1,000 in income tax that needed to be paid. If it had not been for this payment, I would have come extremely close to reaching my target of 5% debt reduction.

Net Worth With my assets going up and debts going down, it was another good month for my net worth. A 7.6% increase in my net worth was quite nice, growth that I mostly attribute to a steady hand with paying off debt and a solid month on the stock market.

Last Month’s Goals (see last month’s review)
1. An asset increase of 1.5% I beat this goal with an asset increase of 2.2%, which felt really good considering I had a large income tax payment to make.
2. A debt reduction of 5% I didn’t make this goal this month, unfortunately, mostly because of the tax payment.

I didn’t meet both goals this past month, but I believe I could have met the debt goal without that income tax bill. Now, I want to focus on building up liquid capital for the upcoming house purchase.

This Month’s Goals
1. An asset increase of 5% My wife and I are focusing on making this month frugal and instead of focusing on student loan payments, we’re going to pay the minimum and hold on to our cash until we buy the house.
2. A debt reduction of 0.5% Minimum payments made on time and no credit card debt should make this goal reachable.

The post April 2007 Review – Net Worth +7.6%, Debts -2.3%, Assets +2.2% appeared first on The Simple Dollar.

Assets My assets increased in value 2.5% this month. I bought into the Vanguard 500 on the downside of the big drop in the stock market at the start of the month and this rebounded a little, resulting in a lot of the growth here.

Debts My debts dropped 3.4% this month. I set a goal of 5% debt reduction this month which I didn’t quite reach, mostly because I took some money and bought stocks with it instead, as mentioned above. Aside from that, this was a pretty good month for paying down debt.

Net Worth With my assets going up and my debts going down, it was a good month for my net worth (assets minus debts). A 10.6% increase is very, very nice for the month, my highest growth month in quite a while. Where did this growth come from? The biggest thing, in my opinion, is learning how to continually live more frugally.

Last Month’s Goals (see last month’s review)
1. An asset increase of 1.5% I beat this goal with an asset increase of 2.5%. However, I intended this month to be one to focus on debt reduction, so…
2. A debt reduction of 5% The month was actually a disappointment, with only a 3.4% reduction in my debt. Next month, I can do better.

I didn’t meet both goals this past month, but I believe I could have met the debt goal with better focus. So I’m going to repeat the goals again for the coming month.

This Month’s Goals
1. An asset increase of 1.5% I simply want to maintain my rate of asset growth because I’m setting a big target for the debt…
2. A debt reduction of 5% As my debt gets closer and closer to zero, it becomes easier to hit monthly rates. But 5% is still a pretty big chunk for a single month, as I learned this month. However, the raw dollar amount to hit this goal is lower than last time, so let’s see if I can do it.

The post March 2007 Review – Net Worth +10.6%, Debts -3.4%, Assets +2.5% appeared first on The Simple Dollar.

We conceived a second child. This child is coming in late September. This is a great personal move, but a terrible financial move: another mouth to feed, clothe, house, and insure. That being said, it’s definitely a move I’m happy with considering the overall picture.

I bought my wife a laptop and a copy of Office 2007. She had an old desktop machine that was still (mostly) functional but it was giving her some headaches, especially since it had started spontaneously powering off and rebooting on occasion. So, on Valentine’s Day, she had a gift on the table: a new Sony Vaio laptop (that she had eyed in the past) plus a copy of the latest version of Office (she uses Word, Excel, and PowerPoint in the classroom). It was expensive and probably not wholly necessary, but my wife was so thrilled I’m actually wondering if she loves her laptop more than me.

Cat food and cat littler. I made a huge error buying these in bulk. Less than two days after buying a huge amount of both (that seemed like a good deal), the brands of both we used cut their prices everywhere a bit, plus the place we buy our supplies also had a huge sale on the items in bulk. I overpaid by about 35% on the bulk purchase. I realize it’s hard to know that such things are going to happen, but looking at prices and realizing I could have saved $50 or more by just waiting two days was painful. Even worse, I could have foreseen this price change had I done a bit of research before buying.

I ate out for breakfast and lunch way too much. I’ve been entertaining a lot of guests recently and thus have eaten meals out with them on a very regular basis, depleting my cash more than I would like. I should just invite some of them in for a home-cooked meal, but that also detracts from the conversation potential.

I bought into an index fund too early. I intended to buy into a broad index fund on the way down, but I got excited and it dropped a little more after I bought it. I still got about a 6% deal off of where the market peaked, however.

The post The Checkbook Confessional: My Five Worst Financial Moves So Far In 2007 appeared first on The Simple Dollar.

Step 1: Get a spreadsheet
If you already have a spreadsheet program, you can skip this step. If not, I highly recommend downloading OpenOffice, an open source version of Office that contains a very nice spreadsheet, Calc. I’ll be using that program for this description, but everything I show in this tutorial works exactly the same with Microsoft Excel.

Step 2: Make a list of your assets and debts
Make a list of your assets (meaning your open accounts, retirement savings, and your major assets, like your home and automobiles) and also a list of all of your debts. We’re not worried about account balances yet, we just want something to start building the calculator with.

Step 3: Fire up the spreadsheet and add these lists to it
Open up your spreadsheet and in cell A1, write Net Worth Calculator in bold, then in A3 write Assets in bold. Below that, make a list of your assets starting in A4. After your assets, put in an entry that says Total Assets in bold, then in the cell below that, put in Percent Change in bold. Skip a line and repeat the entire thing, except with debts. Below all of the debts, skip a line, then enter two more things in bold: Net Worth and below that Percent Change. When you’re done, it should look like this:

Step 4: In the B column, enter each of the amounts
Next to the word Assets, in the B column, put in today’s date, then next to asset and debt, enter the dollar (or whatever currency you use) amount. When you’re done, your worksheet should have progressed to this point:

Step 5: Total up your assets
Next to the word Asset Subtotal, you’ll need to enter a formula to automatically calculate the sum of all of your assets. You’ll need the cell identifier of the first asset (B5) and the last one (B??, depending on how many assets you have). In the example here, my first asset is in B5 and my last one is in B7, so I enter =SUM(B5:B7)

If your last asset value was in, say, B14, then you should enter =SUM(B5:B14) in there instead.

Step 6: Total up your debts
Here, we do the same thing totaling the debts, next to the Debt Subtotal. See here:

Step 7: Wait a month
If you want, you can calculate your net worth now (asset subtotal minus debt subtotal or, in the example above, =B9-B16 ), but I generally found it didn’t really mean anything until I had a second month worth of data.

Step 8: Enter another month of data
If you add a new asset, all you have to do is click on the row above where you want the new asset or debt to go, go to the Insert menu, and choose to add a row. The automatic calculations will update for you. Even niftier, you can click on the previous month’s total, click on that black square in the lower right, and drag that little black square over, as shown below, to automatically do the totaling for you:

Step 9: Calculate the percent change
Below the current month’s Asset Subtotal, across from the Percentage Change label, you’re now ready to calculate the percentage change. Let’s say the previous month’s subtotal is in cell B11 and the new subtotal is in C11; then in C12 you would enter =(C11-B11)/B11

Step 10: Finish it out
Now it’s just repetition. You can calculate the percentage change in debt and net worth in almost exactly the same way as the change in assets.

And there you have it! Each month, just add in the new numbers, then drag over the six calculations from the previous month (total debts, total assets, net worth, and the three percentage changes). You can use this to set goals for yourself for the coming month. I usually find that setting percentage goals works better for me than raw number goals. A good “starter” goal is to have a negative change in debt along with a positive change in assets (meaning you paid off a debt and had more money in your checking at the end of the month than last month).

Good luck!

The post Building Your Own Monthly Net Worth Calculator Using A Spreadsheet appeared first on The Simple Dollar.

Assets My assets increased in value only 1.7% this month. That untimely dip in the stock market on February 27 turned a nice month into a so-so month, but I can’t complain too much, as The Simple Dollar is starting to show some real financial rewards for the time invested in it.

Debts My debts dropped 3% this month. I was able to pay off an outstanding balance from a business trip that was sitting on my credit card at the end of last month. I probably won’t be able to match this reduction in future months, though, as the reduction was aided by a check that reimbursed the trip, applied directly to that credit card.

Net Worth With my assets going up and my debts going down, it was a good month for my net worth (assets minus debts). A 9% increase is very, very nice for the month, but now that my net worth is starting to actually build fairly nicely, the percentage increases aren’t jumping as much as they used to even though the dollar bump is healthy each month.

Last Month’s Goals (see last month’s review)
1. An asset increase of 1.5% I beat this goal with an asset increase of 1.7%. I would have done much better without the stock market volatility, though.
2. A debt reduction of 3% On the other hand, I was incredibly proud to meet this metric, as it made me realize that I am making real progress towards debt elimination.

Since I met both goals this month, I’m going to set higher goals for the next month. By doing this, I keep myself vigilant.

This Month’s Goals
1. An asset increase of 1.5% I simply want to maintain my rate of asset growth because I’m setting a big target for the debt…
2. A debt reduction of 5% As my debt gets closer and closer to zero, it becomes easier to hit monthly rates. So let’s set a big nice one and see if I can meet it. This will give me something to think about this month.

The post February 2007 Review – Net Worth +9.0%, Debts -3.0%, Assets +1.7% appeared first on The Simple Dollar.

Assets My assets increased in value by 3.9% this month. This was an excellent month for income for me, as a consulting project payment came in and I began to enjoy a bit of reward for the work I put into The Simple Dollar. This month was much stronger than expected in terms of asset accumulation.

Debts My debts overall went down by only 0.1% this month. Why? I traveled to San Diego for a week on a trip that I financed myself but that I was expecting reimbursement for, a reimbursement that I am still waiting on. Even with dumping a rather large amount onto my credit card, I still managed to reduce my overall debt, and next month will see a pretty solid drop in this number when my reimbursement comes in.

Net Worth With my assets going up quite a bit and my debts going down, my net worth took a nice 10.8% bump this month (net worth being my assets minus my debts, of course). I would love to be able to keep up such a number, but I simply don’t anticipate such growth continuing on a regular basis. What’s nice, though, is that every month that my assets go up and my debts go down, the ol’ net worth jumps very nicely.

Last Month’s Goals (see last month’s review)
1. An asset increase of 1.5% I blew this away with an increase of 3.9% in assets, thanks to a few unexpected things and a good month for my retirement accounts.
2. A debt reduction of 3% I didn’t meet this goal, however; I believe I would have met it had I been reimbursed for my travel. Let’s hope that happens soon.

Since I can theoretically expect a healthy drop in debt next month, let’s set some interesting goals for the coming month.

This Month’s Goals
1. An asset increase of 1.5% I don’t expect another asset bump like last month, but I also don’t expect to earn nothing, either.
2. A debt reduction of 3% I’ll get a travel reimbursement which will help this number greatly.

The post January 2007 Review – Net Worth +10.8%, Debts -0.1%, Assets +3.9% appeared first on The Simple Dollar.

Assets My assets increased in value by only 0.4% this month. The biggest reason for this was that I expended a large amount paying off my truck loan, knocking off almost a year’s worth of payments at once. I also purchased a new laptop. I was almost surprised to find that my asset values had actually increased for the month, as I expected a slight drop for the month. I attribute the gain to a good month for my retirement plans.

Debts My debts overall went down by 1.5% this month. Why not more, with my truck loan being paid off? Christmas spending was the culprit, as I put my Christmas gift purchases on a credit card to earn bonus points and I’m taking advantage of my ongoing interest-free period on the card to not pay it off all at once. Next month, I’m going to whack away a large piece of that balance, so my debt reduction should be nice next month.

Net Worth With my assets going up and my debts going down, my net worth took a nice 3.7% bump again this month. That felt really, really good, considering I purchased a new laptop (which I’m not counting as an asset, so the cost is a loss) during the month and also purchased lots of Christmas gifts.

Last Month’s Goals (see last month’s review)
1. An asset increase of 0.5% I just barely missed this goal. The reason? Core 2 Duo and 2 GB of RAM in my laptop. I look at it as an investment to extend the life of the machine.
2. A debt reduction of 1.5% I made this goal!

Now that Christmas, a laptop purchase, and the paying off of my truck loan are out of the way, January should be a good month. Let’s put the bar up high, shall we?

This Month’s Goals
1. An asset increase of 1.5% I managed 0.4% while dumping out several months of truck payments at once. How can I do without dumping out those payments?
2. A debt reduction of 3% That credit card balance is going away, or at least getting tiny, next month

The post December 2006 Review – Net Worth +3.7%, Debts -1.5%, Assets +0.4% appeared first on The Simple Dollar.

About three months ago, I hit my first milestone: I sent in the final payment on my credit card debt, and I have kept it paid off ever since. It was an enormous relief to not have that cloud of debt over my head any longer, but I still had some mountains to climb.

This morning, another cloud went away, and the sun is shining in, a bit brighter this time.

I walked into the financial institution that held the loan on my truck and wrote them a check for the entire outstanding balance on the truck. I now own the vehicle free and clear – it’s mine. Even better, I no longer have that $300 a month truck payment weighing over my head.

Right now, the only debt I have is my outstanding student loan debt. Right now, I still owe about $28,500 in student loans; one is about $5,500 and the other accounts for the remaining $23,000. My next goal, unsurprisingly, is to watch that $5,500 loan go away as fast as I can.

How did I do it, you ask? For the credit cards, their interest rate was so enormous that I simply dumped every spare dime I could find in them and started really living a thrifty lifestyle. I stopped buying books (my passion) and visited the library instead, I started preparing a lot more meals at home, and I sold a bunch of stuff around the house that I didn’t really want on eBay. These three things allowed me to knock out 10K in credit card debt in about four months. Once I committed myself to not spending money in frivolous ways, suddenly I had tons of money to throw towards killing the debt.

I then started saving that money towards an emergency fund, and it built up faster than I could have imagined. The emergency fund reached a level where I felt very comfortable with it, so today I spent a portion of it to eliminate my truck loan. Now I can dump even more a month into savings – and I plan to do a similar trick with the student loans, too.

For the first time in a long time, I owe nothing besides my student loans – and it feels great!

The post The Financial Turnaround Continues appeared first on The Simple Dollar.