February 2014 net worth update — we’re up $6,800 for the month!

Source: Mark Dumont via Flickr under a Creative Commons license

Source: Mark Dumont via Flickr under a Creative Commons license

Good afternoon and welcome to my net worth update for February 2014!

For those new to these updates, the way they work is pretty simple: Once a month, I add up the progress I made in increasing my net worth compared to the previous month.

Initially I considered just tracking the state of my debt, but didn’t want to implicitly penalize myself for taking advantage of the benefits associate with retirement accounts (e.g. taking a 10% early withdrawal penalty on an IRA on top of losing tax benefits to pay off a student loan might look good from a debt standpoint but is overall a move that may end up costing more than what I directly save by paying down the equivalent amount of debt) so I track a simplified, long-term-only net worth found by subtracting my unsecured debt from the money in my retirement accounts.

Easy enough, right?

Wait, but why do I track this?

Looking at my net worth numbers acts as a reality check.

Sure, during the rest of the month, I might talk a big game about how I’m spending less money and doing smart things with my savings.

But if all I’m doing is talking about it, then that lack of progress would show up in these net worth updates.

The numbers don’t lie!

(NB Numbers can be presented in a way that makes them mislead; let’s move on)

This month’s numbers

Click to enlarge

Click to enlarge

[Late edit: Obviously those numbers along the bottom row for net worth should be negative… :( ]

The top line number this month was a big one. I increased my net worth by $6,800.

The debt portion of that came from sending big payments to my student loan debt, which dropped its total by $2,800. Importantly, I had more money to send toward student loan debt this month because I no longer had to send payments toward my credit card debt, after paying the last of it off in December 2013.

That’s another great reason to pay off credit card debt!

On the retirement savings side, two big factors contributed: Because 2014 is a new tax year, I’ve started making aggressive contributions to my IRA to max it out as soon as possible.

The other factor was that my company contributed over $2,000 to my 401(K) as a performance bonus. I actually see it as a positive that they put it into a retirement account instead of just handing us cash.

I like your style, company I work for!

Goal results for January 2014

Jan. 2014 Goal #0: Set goals. FAIL! How on earth did I forget to set goals for January? That’s basically the thing that I do. Ugh…Will there be a Plutus Award this year for worst blogger alive? Because I’d totally be a finalist for that.

Let’s instead look at the progress that I’m making on my New Years resolutions 2014 personal finance goals.

2014 Personal Finance Goal #1: Pay off $27,000 in student loan debt. MONTHLY PASS!I paid $2,800 which is well over one month’s worth of $27,000.

2014 Personal Finance Goal #2: Contribute $17,000 to my retirement savings. MONTHLY PASS! I added $4,000 to my retirement savings which is well over one month’s worth of $17,000. It’s important to note that my employer will not help me reach this goal next month, so I’ll still have to work a bit harder on this going forward.

2014 Personal Finance Goal #3: Do the 52-week savings challenge to add $1,378 to my emergency fund. IN PROGRESS. I’m calling this one “in progress” because this one is meant to get harder as the weeks go along. The first four weeks of 2014 meant I had to add $1, $2, $3, and $4 to my emergency fund. I did that. My emergency fund is now hanging tough at $5,010… because I AM A WARRIOR.

2014 Personal Finance Goal #4: Drop food spending to $300 per month and switch to a prepaid cell phone service. IN PROGRESS. Alright, this too is in progress because I spent $440 on food in January. $430 was my average in 2013 so this isn’t far from the norm for me and I’ve still got a year to figure out more savings. In regard to switching cell phone plans, I made the jump from Verizon to T-mobile and will save about $600 because of it. That said, I’m still going to call the status of this one “in progress” as well because the real savings with T-mobile comes from bringing family over… and they’re stubbornly staying away. This too is why I gave myself a year for this.

2014 Personal Finance Goal #5: Volunteer on my terms. MONTHLY FAIL!  Approximately zero of you read my post discussing how I’d like to get back into volunteer work that lets me best use my skills without costing me a lot of money. Beyond a little bit of surface research (i.e. Googling), I didn’t do anything toward getting this goal accomplished, but am meeting with an organization on February 7 that could be a strong lead. More to follow.

And that’s that y’all. As usual, I welcome your comments. I’ll come back with February 2014 goals shortly. In the meantime, how did you do on your January goals?

Comments

  1. Rob says

    As someone who has taken money out of an IRA to pay down bills (and subsequently got hit with a 10% penalty and lost the student loan deduction because it pushed my MAGI over the limit) it is an incredibly dumb financial move…but I feel a lot less stress with those debts cleared.

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