Fabulous Financials

Today, my blog turns 4 years old. Yay!  But this is a bitter sweet moment for me.  Years one, two, and three were about career growth, debt reduction, saving, learning to invest, and laying the foundation for our financial future.  And this year, I’ve exceeded my career and personal finance goals.  Then pretty soon, I’ll have an empty nest.  Now I can’t help but wonder…what’s next?

As I reflect on my reason for starting this blog, I think I have achieved my ultimate objectives: learn new things, share my personal journey and inspire others to establish their own fabulous financials.  With that said, I’ve decided that it’s time to retire this blog.  Other than repeating the same basic personal finance principles (e.g. earn more, spend less, avoid debt, save, and invest), I have nothing unique to offer you.  Besides, I lost my spark for personal finance blogging a long time ago and I won’t try to force it any longer.  So I’m going to bow out gracefully.  Sometimes you have to let old things go in order to grow.

It’s been a fabulous 4 years and I thank you all for reading.

Happy Holidays!

In January, I created seven personal finance goals for myself.  Sometimes I succeed, sometimes I fail miss the target.  Let’s see what I accomplished in 2009.  I said I would:

1. MAXIMIZE INVESTMENT CONTRIBUTIONS – contribute the maximum ($23,500) to all of my investment accounts by December 2009: 401k: $16,500 – ‘09 max, IRA: $5,000 – ‘09 max, and BabyGirl’s 529: $2,000 – tax deductible max.

Success!  This is only the second year I’ve maxed out my retirement accounts. Thanks to automatic payroll allotments, I’ve learned to live without the money because I never see it.  I set it and forget it. Barring any major life changing events, I plan to max out my annual retirement contributions until the golden age arrives.

2. MEET ALL PERSONAL SAVINGS GUIDELINES – in order to save at least 25% of my “net” income, I need to save an additional $11,750 by December 2009.

Success! As of December 5th, I have saved/invested over $29,500.  This was made possible by avoiding lifestyle creep after my salary increase.

3. SAVE $2,000 IN “BABYGIRL’S SENIOR YEAR EXPENSE” ACCOUNT – class of 2010 baby!  So you know what that means?  Lots of fun expenses!  By the end of December 2009, I will save (and probably spend part of) $2k for planned senior year expenses.

Success!  See above explanation.  To date, we’ve spent $875 of the planned/saved $2,000.  And the spring break/prom/graduation season hasn’t even begun. Oh my!

4. EARN $500/MONTH FROM ONLINE OPPORTUNITIES – I think it’s a stretch goal because I’m slowly losing my spark for blogging.  Not only do I post less frequently, but I’ll admit, the quality of my writing is slowly diminishing.  Am I losing my passion for personal finance or simply getting bored?  Whatever it is, I hope to get my mojo back soon.

At the beginning of the year, I knew something was off and I haven’t been able to get my groove back since then.  I still update the blog sporadically and I don’t participate in the PF blogging community the way I used to.  No more excuses and no more empty promises – I will NOT return to daily blogging.  *shrug*  At any rate, according to my records, I’ve earned on average ~$350/month from online activities.  Not quite a success, but not bad considering minimal effort.

5. ENJOY ONE “MAJOR” VACATION – I’ve been wanting to see Paris and London for almost 2 years now.  However, a cruise or any Caribbean island will suit me just fine.

Partial success.  I’ve decided to postpone Europe until 2010 so I can take BabyGirl as a graduation gift.  I did, however, go on a fabulous Caribbean cruise.

6. REMAIN NON-MORTGAGE DEBT FREE – I’ve been non-mortgage debt free since November 2007, but this goal is worth repeating every single year.  No debt.  No debt.  No debt.

Success!  No explanation needed.

7. NET WORTH – although I failed miserably last year, I will go on a limb and try to hit that $200,000 target again by the end of 2009. That’s an increase of over $37,000.  Don’t laugh, it’s worth trying! LOL

I met the goal in October, but due to current market fluctuations, I wanted to wait a few months to make sure it was real. As of December 5th, my net worth is ~$215,000. Now I can say with confidence, this goal is a success!

Overall, I’d consider 2009 to be a year of FABULOUS FINANCIALS and give myself an A minus for achieving my personal finance goals.

How did you perform in 2009?

In yesterday’s post, Where Did My Money Go in 2008, I shared a summary breakdown of how I spent a net income of $90,303.  The % for each category was reasonable: household (29%), savings (24%), rental/biz (22%), needs/wants (12% each), misc (0.5%), and debt repayment (0%).  After further investigation, I’ve gathered the dirty details behind the numbers:

1. Debt Repayment ($0 – 0%): I have no consumer debt, but prior to November 2007, I was giving away almost 50% of my income to creditors.  I don’t know about you, but there’s nothing worst than working 40+ hours and having nothing to show for it at the end of the week.  That ish is for the crows.  Now that I’m debt free, I have the flexibility to decide where I want my money to go.  It’s a lovely feeling.

2.  Rental Property/Business Expenses ($20,188 – 22%):  A small amount is associated with Fabulous Financials, but the majority is rental property expenses.  My townhouse was a blessing when I bought it as my primary residence in 2005.  But when I decided to relocate for a new job ($20k+ more), better schools (A+ better), and convenience – it became my greatest financial strain.  Monthly cash flow isn’t a major issue, but after depreciation, carrying costs during vacancies, and repairs (only minor so far, thank gawd!) – I’m in the hole every year.  Thanks to the market, I no longer have 20% equity, so it will be damn near impossible to refinance for a lower fixed rate – despite having excellent credit and decent income.  To make matters worse, the comps in the area are saturated with foreclosures and rock bottom new construction, which means I can’t sell – unless I sell at a loss.  *sigh*  Although I love(d) my house, I don’t think I will ever live in it again.  So for the time being, I will continue to rent it until my tenant’s lease expires, then I’ll need to make a decision about the money pit.

3.  Savings ($21,640 – 24%): This includes all savings and investments, excluding 401k.  Some of it was saved the standard way that most people save – at end of the month after all bills are paid – but most was saved automatically through payroll allotment.  I’m a firm believer in the “pay yourself FIRST” mantra.  If I don’t, who else will?  Besides, automation helps me avoid temptation because I have to think about every dollar that touches my hands.  And when I’m tempted by shiny things, the end result can be disastrous.  So I set it and forget it, then I’m able to achieve my goals and spend what’s left with little remorse.

4. Household ($26,029 – 29%): This includes my uber high rent and standard utilities (electric, gas, and water).  Trash and internet is included in the rent, but I don’t have cable or a landline.  When all you have are the basics, there isn’t much left to trim.  I guess I could have moved to a cheaper place, but I love my little neighborhood.  I really do.  It has every convenience and luxury a girl could possibly need.  But the rent is REE-DIK-U-LUS!  And buying is out of the question.  Can you say 700 sq ft, 1br condo for $450k?  Puh-leeze!  Believe it or not, it’s pretty standard for the location and I don’t see the prices changing anytime soon.  *sigh* Oh well.  My lease is scheduled to expire in May and I plan to renew for one more year.  I hope the rent increase is less than 5% – it was only 3% last year.  When BabyGirl graduates HS next summer, I’m out of here.

5.  Needs ($11,200 – 12%): I define “needs” as things that are essential to my daily life.  I can function without a few of them, if necessary, but none of them would be first on the chopping board if I were in a financial bind.  Overall, I think my spending was pretty normal.  I expect some areas to decrease this year while some may increase.  In the end, the total will probably remain the same.  Here’s the breakdown:

• Groceries & Essentials – $2,453: Hmm…this averages about $200 per month.  I expected more.  This will definitely increase in 2009.
• Medical – $2,026: Most of this was final payments on BabyGirl’s braces and retainers.  The rest was annual exams and routine care.  I expect a 50% reduction this year.
• Car Related – $3,815: My car has been paid off for almost 2 years and she’s in excellent condition, but I still incur regular expenses to keep her running smoothly.
  • Auto Maintenance – $1,213: I bought a new set of tires last year, Good Year Triple Tread.  Expensive but worth it.  Needed a new oxygen sensor.  Renewed my state registration.  And the rest was spent on quarterly oil changes and annual maintenance.  This year, I expect an overall 50% reduction.
  • Auto Gas – $1,615: I damn near choked when I saw that number.  Only two road trips and local travel. *smh*  I hope $4 gas will remain a distant memory.  I plan to take more road trips this year, so the net effect will probably be the same.
  • Auto Insurance – $987: I try to shop around every 6 months to make sure I’m getting a competitive rate, but I was lazy last year.  I don’t think my premium is bad but I need to make sure before I renew the policy again.
• BabyGirl – $898: School related activities and fees.  She worked last year so she purchased most of her personal wants/needs.  We’ve decided that she will only work during the summer months.  So as we prep for senior year and college, I expect this amount to increase significantly in 2009.
• My Pooch – $943: Wow, I spent more on my dog than I did on my child! Ha!  This number is unusually high because my poor baby was infected with e-coli and it caused a UTI.  The vet/lab bills caught me by surprise.  Other standard expenses include annual vet visit, vaccines, meds, and grooming.  I expect a 20% reduction this year.
• Cell – $1,064: Whoa!  That’s a lot of talk time!  Sadly, I don’t expect this to change much.

6.  Wants ($10,941 – 12%): I define “wants” as things I would eliminate without a second thought if I were in a financial bind.  Due to the economy, I cut back on many things.  By the look of these numbers, you can’t tell. LOL  I can’t promise that I’ll cut back anymore, so I don’t expect the total spending to change that much in 2009.  Here’s the breakdown:

• Entertainment & Dining Out – $2,160: Once again, I spent just as much in restaurants as I did at home.  And you know what?  That’s cool.  Cooking is not my favorite activity and I don’t expect that to change anytime soon.
• Shopping – $1,246: Actually, I’m a little surprised by this because I had two shopping strikes last year – 2.5 months and 4 months, respectively.  So that means I spent all of this in 5.5 months?  Hmm…what did I buy?  Must be more selective and focus on quality.  This will definitely increase in 2009.
• Donations – $3,087: This is about 3.5% of my calculated net income but I could have given more.  At least $4,500 or 5%.  I need to plan my donations better throughout the year.  Maybe create a separate savings account that’s earmarked specifically for donations.  Hmm…whatever I decide, I expect this to increase in 2009.
• Personal – $1,008: I’ve cut back in this area considerably.  Didn’t think I had it in me.  Nothing a quality blow dryer, ceramic flat iron, and good hair products can’t cure.  I still visit the salon but not nearly as often.  I keep my nails natural and clear, but I still need regular pedicures and occasional spa days.  I will try to stay within this total during 2009. *side eye*
• Travel – $3,440:  Most of this was spent during the summer – one vacation and two extended weekend excursions.  See what happens when a single mom gets 8 weeks to herself? LOL   I expect this to increase in 2009.  Work Hard, Play HardER!

7.  Miscellaneous ($345 – <0.5%): This is a catch-all category for rare items that don’t fit any other category.  Think bank fees, USPS shipping, membership dues, etc.  This also includes about $70 of unknown, which is why I hate cash.

Compared to my 2007 income and expense review, I increased spending in areas that are important (savings) and decreased spending in areas that are not important (non-necessities and debt).  Overall, I’m quite pleased.

According to my handy dandy excel spreadsheet, I earned $90,303 in 2008.  This amount includes my “net” income and bonuses from the 9-to-5, rental income, online income, child support, cash gifts, and rewards.  This amount does not include any taxes paid (federal, state, local, medicare, social security), fringe benefit premiums (FSA, heath, dental, vision, long/short TD, and life insurance), tax deferred income (401k and pension), or employer contributions.  This is ONLY the amount that touched my grimy little hands.  And here’s how I spent it all:

When looking at my expenses as a % of income, I am not surprised that household (29%), savings (24%), and rental/biz (22%) were my largest expenses.  These three things alone account for 75% of my spending.  On the flip side, needs/wants (12% each), misc (0.5%), and debt repayment (0%) were my smallest expenses.  According to conventional wisdom, this distribution of income is near perfect.  But as you know, the devil is in the details.  I will expound later.

Do you track your expenses and review them at the end of the year?

If so, how’d you do in 2008?

I already knew the credit card companies considered me a deadbeat, but I didn’t think I was that bad.  Sheesh.  In the past month or two, at least three CCCs have told me to “get ta steppin’!” LOL!  All because I wasn’t showing them any love. And only one had the courtesy of sending me a ‘dear john’ letter. *smh*  Here’s the aftermath (and my annual review) of our dreaded love affair:

1.  Bank of America Platinum Priority Visa

• Limit: $50,000
• Thoughts: Since this incident, BofA has been on my shyt list. The only reason I keep the card is because it’s one of my oldest AND has the highest limit. I use it for online shopping because it’s my only card with the virtual account number feature.

2. American Express Blue Cash

• Limit: $42,500
• Thoughts: This is one of my oldest cards. For a long time, it was also one of my highest limits, but BofA surpassed it in 2007. I really like it because it’s cute, you can see right through it!  The cash back structure (5/1) is pretty sweet too.  The only downside – everyone does not accept Amex.

3. USAA Platinum Visa Cash Rewards

• Limit: $35,000
• Thoughts: I love this card!! Their customer service is the absolute best.  THE BEST I TELL YA!  This speaks volumes because I expect superior customer service wherever I choose to spend my money. This is also my card of choice for EVERYDAY use. The reward structure is 1.5% cash back on anything, anytime, anywhere with no annual limit. This card also had one of the lowest rates (prime plus 1%), but due to uber low historical rates, they’ve established a “minimum” APR regardless of what prime may be at the moment.  I think that’s bull ish.  But I don’t carry a balance, so I can’t really get mad.

4. Navy Federal Credit Union Platinum Visa

• Limit: $20,000
• Thoughts: Always nice to have a credit union in the family. Never know when you’ll need a loan with a great rate. The monogram is kinda cute and I love the platinum concierge service.

5. Chase Rewards Mastercard

• Limit: $20,000
• Thoughts: Can you say poor customer service? I haven’t used this card regularly in ages. It’s one of my oldest cards and will continue to benefit my credit score, but I refuse to help them earn a dime.
• Last month, I received a letter from Chase.  They said they were closing my account due to 24 months of inactivity.  *shrug* Ok.

6. Citi Professional Mastercard

• Limit: $19,900
• Thoughts: I originally opened this card (with the Diamond Reward MC) for 10,000 reward points each and redeemed them for $100 each. There was also a nice little BT offer with no fees, but I never took advantage of it. Because of the 5% cash back on Diamond Rewards, Citi quickly become one of my favorite cards. But…as soon as they stopped offering 5%, I stopped using the card. It’s lovely when you have options. Soon after, I combined the limits and closed the DR. I decided to keep the Professional for business purposes, but I haven’t used it in months.
• After I received the Chase notice, I logged into to my Citi account and guess what I saw.  They reduced my credit limit to $100!  Da hell I’m posta do with $100???  ONE HUNNID FRIGGIN DOLLARS!  LOL!  I called ‘em up and closed the account.  Their retention department offered to increase the credit limit back to $2,000. LOL!  I was like, dude, fug outta here with that toy limit.  I quit you!

7. Macy’s Store and Visa

• Limit (Store/Visa): $1,500/$8,000
• Thoughts: This is the newest member of the family, born in May 2007. Macy’s is one of my favorite department stores, next to Nordy’s.  I love shopping during the semi-annual sale and getting an additional 15-20% off the “clearance” prices with my card.  I’ve never used the Visa option outside the store and probably never will.

8. Wa.lm.art Store Card

• Limit: $1,000
• Thoughts: Hate. This. Store. Never. Shop. There. The only reason I still have the card is because it’s my oldest revolving account. Otherwise, it would have been history a long time ago.
• After the Citi debacle and a credit alert from the monitoring service, I logged into all of my credit card accounts and Wa.lm.art was the only other culprit.  Back in June, they raised my limit to $1,000.  Can you imagine the damage a person can do with $1,000 in Wa.lm.art???  I haven’t shopped there in ages, but I kept the card because it was my oldest revolving account.  But then, these fools closed my account too.  Damn!

Now I’m down to 5 cards with a total available credit of $155,500, a reduction of $40,000+ from last year.  I don’t care about Chase and Citi, but I’m a little irked because Wa.lm.art was my oldest revolving account.  When an account is closed in good standing, it remains on the credit report for only 10 years.  After that, poof, it’s gone – as if it never existed. :-(

Has anyone else been affected by the credit crunch?