Updated on 11.03.07

October 2007 Review – Assets +0.26%, Debts -2.28%

Trent Hamm

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.

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.

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  1. Jim says:

    good luck. progress is a beautiful thing!

  2. What’s the interest rate on your wife’s student loans? Have they been consolidated at a low interest rate? If so, keep in mind that not all debt is bad.

    Student loan consolidated at a fixed interest rate lower than then the interest rate you could earn by depositing the same amount in a interest bearing account shouldn’t be paid of quickly.


  3. !wanda says:

    “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. … (we agreed that we’d individually be responsible for debts brought into the marriage)”
    Why did you change your mind?

  4. sunny says:

    Like Dave Ramsey says kick Sally Mae to the curb, good for you!

    I have to disagree w/Money Blue Book nice theory but it doesn’t take in to consideration the variables in day-to-day life. Better to be free of debt than make a little bit on interest. The borrower is enslaved to the lender. I’d rather live free :-)

  5. hank says:

    It’s funny – I actually like SallieMae – I’ve got my loan at 3.25% – I DON’T like the Direct loans from the gov’t – my wifes loan is at 8.020% from there… ugh…

  6. JReed says:

    Trent; You, your wife and your children are ONE family…my advice is to see all debts and all net worth as belonging to all of you. When it relates to the important things, there should be no “this is mine and this is hers”. With two kids you are so far past that point. One solid unit will prove much stronger against the inevitable chips life hammers out of us.

  7. momoffive says:

    I have to agree with JReed. I was startled to read that comment about how your wife’s loans are her repsonsibilty. You are married and “one body” now. I can’t imagine my husband saying that it was my problem and I should keep tabs on my debt. Hope you can work on that.

  8. I really like the idea of setting individual goals for assets and liabilities versus an overall goal. I will have to use that method in the future.

  9. I agree with what was said about the debt being ONE and not seperate. However I did notice your going to be putting money towards it.

    To me it sounds like your net worth will look better if you don’t include “her” debt, but your willing to pay on “her” debt.

  10. Rob in Madrid says:

    I was just doing the samething, going over the budget (trying to focus on good things not negatives like how much debt we have) when I realized one of our loans next month will be withing shooting distance of being paid off. Move some numbers around and I think we can pay it off. Man that would feel good!

  11. Andre Kibbe says:

    Mutual support without mutual autonomy to balance is unhealthy. A joint purchase like a house makes sense to think of as a single family asset. But taking on someone else’s debt implies taking responsibility for his or her spending habits — micromanagement that inevitably breeds contempt in the long run, even within an older breadwinner/homemaker nuclear family model.

    Trent did say that he would “be contributing some significant cash” to his wife’s student loan, making the posts implying that support and autonomy are mututally exclusive demonstrably false.

  12. M3isMe says:

    I was startled to read how your wife’s debts are not calculated in your net worth. As someone who has been one half of a marriage for 18 years, that makes me sad. I disagree with all of the posters who say it breeds contempt for you to take on this debt as part of your own. You are married and have combined your lives…it is your debt, too, even if not in your name. You might have agreed to “keep it separate”, but that is a mind game, not a reality. At various times, my husband and I have alternated in the breadwinner/homemaker model (yes, that means he was the stay-at-home at times) and, if we had continued in a “that is “your” debt” mode, we would never have gotten the bigger picture of marriage. For now, I am the stay-at-home because it works better for us, but I can assure you, I am not micromanaged, nor do I micromanage him. We both now our bills, our goals, and our income…the decisions are joint, even if I often make the day-to-day decisions. Marriage is supposed to be creating something bigger than the two individuals separately.

    (Okay, I’m done…each couple needs to do what works best for them, but I still contest your net worth figures…)

    Other than that, love getting the emails daily, I forward them to my husband and my teenaged son and encourage lively discussions regarding spending, life, values, etc. Thanks!

  13. Trent Hamm Trent says:

    This discussion is somewhat amusing. My wife and I keep separate accounts mostly for accounting purposes, so that there isn’t a danger of overdrafting when we both simultaneously pay a bill or something to that effect. Because of that, when we calculate our combined net worth, we include all debts and assets, but when we calculate our individual net worth, we just use the items that we’re primarily responsible for under that arrangement. It’s largely just accounting.

  14. Jim Lippard says:

    It’s interesting how several commenters seem to think there must only be one right way to manage finances in a marriage (apparently with everything as community property or as joint tenants in common). Just because doing it one way seems right to you doesn’t mean other couples aren’t happier with different arrangements. And if you are making these statements without even being aware of what the legal differences are between different kinds of arrangements, then you’re not making a reasoned statement, but an emotional one.

    People often make similar complaints about the very idea of a premarital agreement–it’s unromantic, it shows a lack of trust. But all a premarital agreement does is explicitly lay out legal arrangements for a marriage in a way that is done implicitly (and often in complete ignorance) by couples who get married without one. A premarital agreement can make changes to the defaults in a state’s laws about marriage, and can do so in ways that make commitments stricter and stronger rather than weaker. For example, a premarital agreement can include commitment to care for the other should one become disabled, or to have joint custody of any children in the event of divorce.

  15. Dan says:

    “will remain relatively flaccid, but once that debt is gone, things will shoot off like a rocket.”

    Interesting choice of words…Does this give some insight into why you are paying “her” school debts? ;-)

  16. k says:

    Dan, I also caught the suggestive choice of words, especially in light of the “swoon” earlier in the post. Maybe Trent is pursuing a different sort of writing career… for Harlequin? ;)

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