June 2008 Monthly Report

    Ok, so even spending willy nilly didn't put me in the red.

    On the contrary, I am well in the black.

    But, I went over budget in the same old categories, so I'm not going to go in detail there because you've read it dozens of times before (groceries and clothes, specifically), but, honestly, in many categories I either came in right at budget, or just a few dollars over.

    More importantly, I've spent a lot of time in the last few days figuring out my game plane for July and the rest of 2008.

    First, an announcement -- I have a POSITIVE net worth! If you include my car, savings, checking, and 401k, my net worth is $16,100. Imagine that! That's $26,000 swing up from where I was a year ago!

    Now for the start of my rest-of-the-year plan:

    1. Pay myself first. I'm actually going to do this now. I have budgeted for saving 10% of my income. Some of it will go into my 401k at work, while the rest will be cash savings dedicated to building my emergency fund, which, right now, is $3,200! I plan to have this money taken directly from my paycheck, rather than transferring it myself from checking to hi-yield savings (or set up an automatic transfer). I'm hoping "out of sight, out of mind" will apply here!

    2. Adjust taxes and savings. The IRS isn't totally useless. I used IRS.gov to figure out just how much I should owe the gub'ment for this year. The form was easy to use (have your tax return and a recent pay stub available) and it told me just how much I should owe and how to adjust my withholdings to stop me from overpaying.
    According to the site, I was going to overpay my taxes this year by $1,000. Instead, I could adjust my withholdings so that I would overpay just about $200 (anything more and I would wind up owing the Feds).
    So, I changed my withholdings to the suggested figure. The money that I will keep in my check is going straight into my 401k, PRE-TAX. So, I'll be saving more in my 401k AND lowering my tax liability at the same time.

    3. Create a $0 balance budget. In other words, rather than only budgeting for some things, I budgeted for just about everything. I kept it simple for now -- I took a 6-month average of my spending on everything I recorded in my spreadsheet (right down to postage stamps and library late fees). I used that to budget for all the categories in my spreadsheet. Even "miscellaneous" has a limit. Right now, that balance isn't exactly zero, it's more like $30.
    Honestly, I have long been afraid to account for every last penny like this. I thought it wiser (and it made me feel safer) to have a considerable amount of cash left over after accounting for bills and essentials. But, that makes little sense, because I was often fooled into thinking I had more cash available than I actually did, thus spending it, when it was really covering something else.

    Those are the three big things. The next few thing I want to investigate is a higher-yield saving method for my emergency account. I was thinking about I Bonds, which I read about at the Motley Fool. But, I need to do some more research.

    DH

   

Comments

[Lisa Clark]

You have done so well DH to get where you are today. I have a way to go yet but G-D willing this time next year I will also have a positive networth.

[Fabulously Broke]

WOO HOO!

Positive net worth rocks :D It feels great being positive for me... now it's just a matter of skyrocketing

As for $0 budget == I do that (I guess without thinking) and I LOVE IT!

[Jess]

I look forward to seeing how it works with a $0 balance budget. Dave Ramsey speaks to this and I've listened to him over and over. I have always been like you though. Accounting for all my bills and necessary stuff and leaving the leftover for cushion, I guess. It causes anxiety to account for every penny for me. lol

[mapgirl]

Wow. That is really fantastic news! Hooray for positivity!

[mapgirl]

BTW, Jonathan at My Money Blog has a way of laddering short term bonds that might interest you. I'm not sure if you can do it with I-bonds though. (Search his blog for 'treasury direct' and it should pop up.)

[alison]

Hey, DH...I just stumbled upon your blog and went back to the beginning to start reading what you've done...I'm completely hooked...I'm totally impressed with what you've done and can't wait to read more. My honey and I are just getting started on this whole journey, but luckily, we've already squelched the el credito cardos. Thanks for your inspiration!

[Megan]

DH, congrats on all of your accomplishments! I've been following your blog since the beginning and am very proud of you -- you're an inspiration. I just wanted to chime in and say to use caution with that IRS calculator, because I did the same thing last year using a recent pay stub, etc. I ended up paying a $3K tax bill this year b/c I withheld too much. The calculator wasn't correct. Ouch. Lesson learned!