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

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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