January 2008 Review – Assets -0.2%, Debts -0.9%

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Once again, it’s time for a monthly review of my finances. I generally break things down by evaluating my assets and my debts (which together make up my net worth), and then using these numbers, I attempt to set goals for the coming month. This is a useful exercise for everyone to do, simply so they can keep tabs on their overall assets and debts and make sure that they are consistently heading in the right direction. Let’s break it down.

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.

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26 thoughts on “January 2008 Review – Assets -0.2%, Debts -0.9%

  1. Trent,

    I can tell you that the stock market is not expensive right now, especially if you are referring to buying a chunk of the broad market. There are little pockets of the markets that are a little expensive. I like Sears Holdings(SHLD). It is selling at a huge discount to its real value. They have 10 billion in real estate on the books. They have 1.5 billion in cash, very little debt. They have a 4 billion line of credit(untapped), They own several brands that are worth about a billion a piece…Lands End, Craftsman, Kenmore, Die Hard. The have a majority ownership in Sears Canada. Their balance sheet is pristine! They are also buying back a lot of stock and shrinking the float(shares outstanding not closely held)…which tends to increase per share value. Their retail business is not doing great, but it has been profitable. The company is selling for less than liquidation value, so you are getting the business operations for free. If the economy rebounds and the retail operations improve, this stock is going to explode upwards. And since it’s so cheap right now, you have very little downside.

  2. In our counseling appointments we see people do the no entertainment thing and recommend that for only short periods of time (one to three months). Eventually we all need to get out. One solution is renting dvd. Both Netflix and Blockbuster allow you to relax at home for a pretty low cost.

  3. I don’t understand why you refer to them as “ING subaccounts.” It seems to me that you are creating entirely new savings accounts when you follow those instructions. Am I missing something?

  4. Don’t forget, though, that you can get movies from the library for free. Through interlibrary loan, you’d be able to get movies that are in any library in your county.

  5. Good luck keeping your expenses low! I’m also trying to be very frugal in February, but to knock out a car repair bill without totally wiping out my emergency fund.

  6. I like the sub-account idea at ING. I basically do that with Excel worksheets, but it gets a little messy if I get a balance off here or there. I think I’ll investigate ING’s service.

  7. Doesn’t it take an emotional toll ? I am on my way to paying off a huge loan. I know i have been doing well with absolutely no extra spending. but today, i literally was frustrated and wanted to run out and buy myself something. luckily, i survived it and held my good.

  8. Trent,
    Nice idea about not eating out but please reconsider making it a permanent goal. It sounds like you like to eat out occasionally and going cold turkey (I know you are making a possible exception for Valentine’s Day) is a recipe for disaster. At some point you could start feeling “deprived” and then end up eating out more than you would otherwise. Maybe cut back but don’t outright eliminate.

  9. My husband and I never go out on Valentine’s day. We go out the night before or the night after. Why? The streets are crowded – you can’t find parking, the restaurants are packed, you get bad service cause the place is packed, we usually have to pay for a parking garage or valet service, etc… So we just go out on another night. We don’t have kids to worry about, but I would guess it is harder to get a babysitter on Valentine’s Day then it would be on another night.

  10. I would really not be putting anymore money into the stock market at this point as I believe it is going to collapse drastically in the short-term. I fear the U.S. is looking for a reason to attack Iran, as we saw early in January in a “Gulf of Tonkin”-like incident that we saw leading up to the Vietnam War.

    Iran actually made plans to start up it’s oil bourse around the date of February 1st during the celebration of the Islamic Revolution anniversary.
    Now, one day before (Jan 31), 4 under-sea cables have been cut causing large communication outages in the Middle East, Asia, and North Africa.

    I strongly encourage everyone to take a look at this article:
    http://www.energybulletin.net/12125.html

  11. I’ve been trying to use ING, but can’t (I live in France). I know there’s one here, but it doesn’t have the same services. I just did an autoevaluation, but unfortunately my results aren’t as good as yours!

  12. Find free things to do. Even an expensive place like NYC has loads of free things. There’s 2 places where you can get an entire free pizza every time you buy 1 beer, about $5 total. Not the greatest pizza in the world, but tasty enough!

    There’s also free concerts, free theater, free ‘readings’ in coffee shops, free gallery openings, free days at the museums. A woman here even wrote a book about not ‘shopping’ for an entire year which included spending money on going out in any capacity. I’m sure Iowa has a handful of free things you and your wife, or whole family, can enjoy without dipping into your budget.

    http://www.theinnovativetraveler.com

  13. Wow, good post. I don’t know how I’d do with a $0.00 entertainment budget, even being a voracious reader. I like the goal about not eating out as well, although…I’ve found it nearly impossible for me to think far enough ahead to pack my lunch. Or to actually find items that do well in a packed lunch…yarg!

  14. Trent, does your wife ever read your blog? It won’t be a surprise after she does…

    Actually, how many people that you personally know read your blog? I’m curious…

  15. I wish I could spend zero on entertainment. I could double my non-retirement savings rate by doing so…but I also think it’s okay to spend some money in this category.

  16. Spending $0 on entertainment is hard. I love music and usually go to a gig every couple of weeks. Costs can range from $10 to $40, depending on the venue and who’s performing. This does not include parking, food, and drinks. Lucky for me this is the only type of entertainment I spend money on.

  17. The $0 entertainment goal sounds tough–but hardly impossible. I’m in the middle of a no-pizza-for-a-month goal right now. (I’m going Jan 15 to Feb 15 because of when my credit card comes due). It was tough for the first week, but this second week it was almost an afterthought. I’ve been browsing through some of my cookbooks and looking at meals I’m interested in cooking. I expect the last two weeks to be a breeze. Based on this, I expect if you can get through the first week, you’ll find the rest will come along nicely.

  18. $0 is easy when you’re committed to using the heck out of your library. For me this is especially true in a month like this in which few great movies or DVDs are coming out.

  19. Ngthagg I hardly ever eat out anymore, once you discover the joys of cooking restaurant food becomes stale. I do eat out the odd time and I find I enjoy it more when I do. It helps the Wife travels alot and the last thing she wants is more restaurant food. We do treat ourselves to the odd (once every month or two) Starbucks, one has to enjoy life as well.

  20. No kidding about the retirement accounts. I took a 10% hit just as I rolled mine over to a 401k due to a new job. Ouch!

  21. I don’t think the $0 entertainment is that drastic. My husband and I did that in January – without even making it a goal. We occasionally rent a DVD from RedBox ($1) and watch only network TV – we get 8 channels with our rabbit ears. We have a decent collection of board games (most have been gifts) – much more fun and interactive than video games in our opinion. Most of our friends are pretty frugal, too – and love coming over for $1-2 homemade pizza and board games!

  22. Trent, to act on a “buying situation” in a stock market is market timing. You’ve said you don’t think much of it, so why would you do it now?

  23. We started eating in most of the time (out once a week) this year due to the dietary needs of one of our children. As a result our oldest now hates the taste of the food at McDonald’s. Quite the silver lining if you ask me. :-) Oh, and I’ve lost an entire dress size without so much as lifting a finger to exercise. :-D Good luck with your goals.

  24. About the RedBox renting, you can sign up for their weekly coupon online. You get a coupon code for a free rental on Monday nights. Even though we have a busy Monday night (boyscouts), we watch it Tuesday night, return it before 9pm, and the movie was still free.

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