Category: Budgeting

Achieving Positive Net Worth

Achieving Positive Net Worth

I Finally Have Positive Net Worth!

It’s been a long-time coming! In the beginning of 2013, I stopped defining myself by my debt and began tracking my net worth instead. I began contributing to my 401-K again. Implemented a plan for paying off my credit card balance. I logged the growth in my Personal Finance Spreadsheet. Soon after, I realized that positive net worth wasn’t that far out of reach. By September, I paid off the balance on my credit card. This left my student loan as my only debt. On the loan, I’ve been making more-than-minimum monthly payments. For the 401-K, I’m putting in the minimum matched-amount.

And now the time has come where the two have finally evened out! My 401-K is now safely more than the amount of debt I have!

Stop Defining Yourself By Your Debt

Using the terms “good debt” vs “bad debt” are rather meaningless. But I am very grateful for my student loans. And have no ill feelings toward them. Student loans often get a bad rep when it comes to finance talk. These are an investment. I definitely can’t wait to pay them off. But no regrets.

So, my 401-K is larger than the amount I owe on my student loans. Yes, I still have debt. But thinking of it that way is completely out of context. Looking at net worth means looking at your entire financial picture. This broad view can help you take your brain from the negative of debt woes, to thinking more about taking advantage of what you can build.

Instead of the goal being “get out of debt.” My goal became, “have a positive networth.” The problem with “get out of debt” as a goal, is there isn’t anywhere to go from there once completed. You are focusing on losing something, not growing something. Once you’ve lost something, it’s over. But paying off your debts is only the beginning.

Focusing on growing something means there is always a next step; keep growing, grow faster, grow in a different way. Now that I have achieved a positive networth, I can just keep doing what I’m doing. I want to continue growing my finances. Not take on more debts. And continue to increase my investments and savings.

Stating the obvious, having a goal for “positive net worth” is literally focused on the positive. When your focus is on losing/crushing/destroying debt, these are pretty negative words. Sort of the semantic equivalent of Go Team! versus Beat the other Team!

Bonus Announcement: Work Promotion

I want to take this happy announcement time to officially announce that I also earned a promotion and a raise at my current job! This is my third year with the company. This is the longest I’ve stayed with a company. The others just weren’t good fits. So this was the first time I had to engage the raise/title change/etc conversation. It wasn’t as scary as I thought. And surprisingly, I was already being considered for it so the process was rather quick. The promotion is valid since my responsibilities have significantly increased from when I was hired. My title has been expanded to Web Analyst & SEO Specialist. Neato.

The raise was rather significant. My rent is now only 42% of my monthly income. All of my utilities & commuting costs come to 9%.

Now that I have hit a financial milestone of positive networth and am earning more money, will my lifestyle change? YES.

My long-term good habits, personal finance knowledge, and frugal sensibilities are not going to be lost overnight. I won’t all of a sudden decide buying a new car is a great idea. Or start eating out every single day for every single meal. However, I might start buying two bagels a week instead of one. Or not panic if I forget to pack a lunch. Or not berate myself for buying a drink after happy hour. That sounds pretty nice to me.

Since I am fairly sensible with my finances, I am planning on putting more into savings each month. And increasing my student loan payment. I don’t think buying an extra bagel will hinder those plans.

These two positive events occurring at the same time really shows how my student loan debt has been a great investment. I’m certain that without my college experience, I wouldn’t be in the position I am now. Statistically, those without college degrees earn less on average. There is no need for me to hate my student loan debt. I accept that I needed to take that risk to move myself further. It has paid off, pun intended, and I will continue to look at it as a positive building block for my financial growth.

April 2015 Spending in NYC

April 2015 Spending in NYC

Spring Wardrobe Update

Every spring I usually purchase some new outfits. This is my attempt to slowly build a high-quality wardrobe. The past two years I’ve purchased good jeans and nice dresses. I expected to spend about $400 on clothing this month so the amount I spent wasn’t completely unplanned. However, instead of going for outfits, I went back to basics.

While organizing some things, I decided to finally throw out all my old stretched out socks, underwear with holes in them, bras that I can no longer remember where they were purchased, and some really gross work out clothing. After all that pruning, I was left with barely a week’s worth of socks and underwear, and no sports bras.

So, I resupplied myself with all of the basics: new socks, undergarments, work out clothing, plus some basic cami’s and t-shirts. I also threw out ill-fitting sweaters but those won’t have to be replaced until next November.

April is also my annual purchase of summer shoes. I’m not sure if canvas shoes should last more than a year but mine don’t. So I purchased a new pair of those, plus black flats. I have a pair of slip-on sneakers from last year that I will try to get an extra year out of. Then I also bought a new pair of running shoes in preparation for the Brooklyn Half later this month.

It sounds like a lot but really is all things I needed. And I threw out all of my old clothes and shoes, so I’m not accumulating more stuff. These are all basic clothing items that I know I will wear regularly. For the “spend your money where you spend your time” rule, these purchases fit seem to fit in well. Since I don’t own a car, most of my transportation is on my feet so good shoes are really important. And the basic clothing items, obviously, will get use.

PS3 & Games Hand-Me-Down

A friend sold me his PS3 and collection of games for $100. I know the system is old but I don’t need the newest thing. The video games themselves are still great. Before this, I was playing a Nintendo Gamecube so the graphics are an upgrade to me. I don’t play a lot of multi-player, so losing some of those servers doesn’t matter much either.

I like the idea of having something else to do on my down time than reading. Story-driven video games really are like an interactive book. They are not serial stories, which I am not a fan of. So watching television isn’t interesting to me, but playing through a story in a game is. I keep my consoles for years. I bought my Gamecube a decade ago and still have it. So, I do plan on playing this for a long time and I do have the leisure time for it. Also, I like having something else to do with friends who either live far away or when near ones come over.

I’ve also played it a lot; so far it has passed the “spend your money where you spend your time” rule. I love stories; video games are stories. I love puzzles; video games are also puzzles. Besides, I would rather play a beautiful game on my large-screen tv than something on my teeny-screen smart phone anyway.

Much Needed Beach Vacation

Right at the end of the month, after a very stressful few days where Depression began getting the best of me, I decided to book a beach vacation for June. I don’t typically take vacations, and have never taken one by myself. But the idea of sitting on a beach for three-days, not even leaving the hotel grounds, just sounds wonderful.

The cheapest I could find was a Florida beach for 3 days in June for $700 hotel + airfare. I was looking for a beach that was specifically within the US and for under $1K. I am taking another, more active, vacation later in the year so this will be more of a relaxing budgeted venture.

I love beaches. Even the ones here in the city without palm trees. But a vacation on a beach where someone brings you drinks with umbrellas and you have zero responsibilities – that just sounds perfect. I love the sound of the ocean. And walking along the shore. Hopefully being alone means there won’t be any pressure to “do something.” As far as the “spend your money where…” rule, getting out of the city to a tropical beach is a vacation I know I will enjoy. Last summer I went to the non-tropical beaches here all but two weekends. It certainly is a place where I spend my time.

Everything Else

The rest of the month was normal, considering. I bought a hamper for my apartment because I had been using mesh bags but that wasn’t nearly efficient enough. My total expenses for groceries + eating out + booze totaled $412. This is exactly my average for the combination. I spent $85 on books at MoCCA Fest this year and have no regrets about supporting indie artists. I’m still thinking of canceling Netflix. I may swap it out with a book service like Oyster or Scribd. Anyone familiar with these?

March Spending 2015

March Spending 2015

Income has been fairly consistent so far this year. Currently I am having a friend stay with me and am receiving a small amount of extra rent from them. All of this extra income is going directly into my savings, which I’m still trying to rebuild after last summer.

The largest expense this month was my cat Scarface’s bladder stone removal surgery. This was a planned expense. I charged the $950 total to my credit card for the rewards. Then will use my tax refund to pay it off in full for my next statement. An unexpected expense was clothing. I almost made it a full month without buying any clothes. Unfortunately, the zipper broke on a pair of jeans one day at work. So I had to make an emergency run to Century 21, near my work building, and purchased two pairs of jeans ($60 each) on my lunch break. This was my first time at the store and it really lived up to all the hype.

In March, I was very conscious of grocery, booze and eating out spending. All of those combined were $374 this month. Last month they were $377. Consistency! I am not limiting myself from eating out or going out to bars, but I am just staying a lot more conscious of it. I find that as long as I have groceries in the house, I tend not to eat out. And as long as I made dinner the night before, I can eat leftovers for lunch. So that solves two problems. And it’s been a long time since I ordered delivery. I’m fine with spending $400/month on this bulk category. Remember, this is just feeding myself.

I don’t often spend a lot of money on House items. Usually cleaning supplies fall under this category. But this month I bought a replacement cupcake carrier and a new towel rack. (It’s fancy and I love it). I also spent some money on gifts this month. I’m still on the fence about gifts for friends because, who needs more stuff? But I put thought into it and it was appreciated. Nothing overboard. And I am still sending birthday cards out to people I like. This was something I started last year and it has been well received. It’s also enjoyable for me because while putting the card together, I spend a few moments thinking about that person. And it feels nice to take that step back. I especially like the cards because it’s nice to reach out to someone without really feeling intrusive.