November 2007 Review – Assets +0.4%, Debts -1.2%

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.

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.

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  1. Do you have a chart or table somewhere where all of this data is aggregated? I don’t mean that you should disclose real dollars. Rather, it would be informative if you could show a cumulative graph of the number of dollars you currently have relative for each dollar you had when you (got married, started TSD, whatever).

    So you’d essentially divide your net worth at every point on the chart by the starting value. That obfuscates how much you really have, but still helps to illustrate your compound growth

  2. Ugh. I meant to include this link to give you an example of what I’m talking about:

    link

    Regardless, it looks like you guys are doing very well.

  3. Great work Trent. Good luck with your December goals.

  4. Trent Hamm Trent says:

    Nickel, when I started The Simple Dollar, my net worth was close to negative. I plan on starting such a chart on January 1, 2008 and updating it each month throughout the year.

  5. Sounds like a plan. :)

  6. Eric says:

    I also really enjoy Christmas giving. Nothing better than reaping the benefits of 12 months of planning.

  7. rhbee says:

    Presents and people cloud my mind. Thoughts of this last year combine. Frugal this and fritter that. Plans that worked and what’s left undone. Life in the present or future fun.

    So here we are on the door of December and choices have to be made. Each year it gets harder to decide what to do about the gift giving thing. My personal past is replete with spending beyond my means and then covering the dismay I feel at being further in debt by remembering the effect that each gift had on the receiver. I really do like to see other people happy. Unfortunately, this personality trait has been and continues to be a major cause in keeping me from really being debt free.

    However, I have to say that this last year my awareness of frugality has been a major help in getting ready for this season of gift giving. For one thing, I don’t have any credit card debt and for another, I actually have set aside an emergency fund of sorts that (I know I shouldn’t think of Christmas as an emergency) I can now tap into to ease my way through. T. and I also have talked over the situation too and come to the conclusion that waiting for the after sales is a good idea. What I hope is that waiting will work like the count to ten rule and keep us from actually buying things we don’t need.

    What is a complimenting factor is that she and I are spending more and more time working on and discussing all of the things that go into our life together. So as stressful as this time can be, it is also a great time to recognize how life at least on a personal level is good.

    Now if we could just end this war and bring our troops home.

  8. janewilk says:

    On the Christmas gift-giving without worry – since we found your site at the end of January 2007, this will be our first Christmas that we don’t go into debt. We are debt-free now and have been planning our Christmas spending since the summer. One thing that helps us is revisiting our Christmas spending plan (it’s written down!) over and over and OVER. I’m one of those people who loves to give gifts, even when the “perfect” gift is much more expensive than we can afford. This will be the first Christmas I’m not falling into that habit!

  9. Brian says:

    Trent; great work on the site.

    I’ve found that your simple net worth calculator is an incredibly valuable tool for both inventory and inspiration.

    I do have a question–how do you treat the value of a vehicle on the “asset” portion of the calculator? I use the KBB “Trade-in” Value as found on their website, and have been wondering if this is the “best” value to use, since I’m most likely to trade in when I make my next purchase.

    Also, do you update the value over time as the car depreciates? As I have a long commute to and from my job, I’ve put quite a few miles on the car since I started the calculator–and thus, KBB tells me that my trade in value has dropped considerably. While I’d like to have my NW calculator as accurate as possible, the thought of dropping the car value from one week to the next (and losing approximately 15% of my “asset” value) is disheartening.

    Thanks for the help!

  10. Marta says:

    Trent, I’d love to see a list of frugal gift ideas or homemade food gifts, like your homemade bread recipe! I’ve been scouring the internets but haven’t found just the right gift for a few people. Thanks and congrats on the net worth growth and debt reduction!!

  11. turbogeek says:

    Trent: Superb post. I particularly like you drawing everyone’s attention to ‘the Christmas challenge’.

    Brian: I think there are only two really responsible thing to do when including a car in your positive asset list. One is to 1) assume when you would eliminate the asset, 2) estimate a residual value at that point, and 3) include that very diminished value in your worth. Two is to understand that a car is a more unstable asset than anything else you own, and call it a liability only. I take the most conservative route, and write a car off my net worth the day I aquire it. (I assume a car will eat more than its worth in other assets over its lifetime).

    Marta: Not cooking, but for those modestly handy with wood; I have done turned wood pens, cutting boards, picture frames, and chopping blocks in the past. This year I am giving serving trays / cheese service sets. At $16 worth of silver maple per serving set, estimated $5 wear-and-tear on my tools plus incidentals each, and about 4 hours labor per tray I’ve estimated I am giving $85 service tray sets for a cost of $21 ea, and ‘paying myself’ $16/hr to do it. :)

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