Category: finances

The problem with off shore accounts

I like what this article says about large corporations not paying their fair share.

To put it bluntly: the reason why Uber has so much cash is because, well, governments no longer do. Instead, this money is parked in the offshore accounts of Silicon Valley and Wall Street firms. Look at Apple, which has recently announced that it sits on $200bn of potentially taxable overseas cash, or Facebook, which has just posted record profits of $3.69bn for 2015.

Some of these firms do choose to share their largesse with governments – both Apple and Google have agreed to pay tax bills far smaller than what they owe, in Italy and the UK respectively – but such moves aim at legitimising the questionable tax arrangements they have been using rather than paying their fair share.

Compare this with the dire state of affairs in which most governments and city administrations find themselves today. Starved of tax revenue, they often make things worse by committing themselves to the worst of austerity politics, shrinking the budgets dedicated to infrastructure, innovation, or creating alternatives to the rapacious “platform capitalism” of Silicon Valley.

Net Worth: November 2012

2012-08-07_1701Becoming debt free on everything except for the mortgage is goal #6 on my 40 before 40 list. These monthly net worth posts are my attempt to shine a bright light on what is otherwise a dirty little secret: finances.

I realized last month that I haven’t been focusing on an important piece of my financial picture. I’ve been focusing on net worth without highlighting my debt levels (which is my actual goal!). I’ve fixed that this month and I’m also trying out a different format.

Total Debt ($13,277.20) (-1.66%)

As I think about the rest of the year, I realize that we’re not going to be making any extra payments towards our debt other than the “normal” payments. With the holidays coming up, our disposable income is going towards Christmas. There probably won’t be any significant movement here until after the new year.

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Our current, non-mortgage debt is $13,277.20 which is just $225 lower than last month for a -1.66%.

Net Worth (-$594) (-75%)

Our net worth took a hit this month as we’ve spent some of our Christmas club savings on Christmas gifts.

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Unpacking Christmas

Santa and Mark -- Vintage 1959 Santa
Photo by Mark Kortum

Christmas is a stressful time of year for me. The problem is that my own expectations of what I want to buy people doesn’t always match up to what our Christmas savings account can afford. That sets up an internal struggle and I can’t admit to myself that I’ve internally over promised the gift giving. So I spend about 6 weeks wrestling with it and it just stresses me out. I wish I had all the money to get everybody all the perfect gifts.

So, how do I fix this so that Christmas doesn’t stress me out? Here are my actions items and I’ll be applying these to next year.

Emergency Savings 

The lynch pin to the whole thing is having some money in a savings account for when things come up. Maybe I can call this saving account emergency savings. Ingenious right? That I should be doing the thing that I’ve been blogging about for months now? Believe me… it’s as frustrating to keep typing that as it is for you guys to keep reading about it. So here I am again, resolving (again) to try harder. I’m swearing a blood oath, swearing on my ancestors graves and binding myself to the gods of personal finance but the emergency savings account will fully funded before the end of January… I swear, cross my heart and hope to die if it’s not. 😉

Christmas Club

The frustrating thing is that we have a savings account for our Christmas money. If I just let the auto-debits transfer over there and leave it alone, we’d have about $1,000 to spend on Christmas gifts. Something always comes up though so we have to dip into the Christmas club and I leave an IOU with every intention of paying it back but then something else comes up and then something else… /sigh. With the emergency savings in place though, we won’t have to dip into this pot of money.

So that’s my  master plan. If we have a fully funded emergency savings in place, then the Christmas club money can build up and it’ll be there when Christmas rolls around again.

How do you save for Christmas? What kind of Christmas budget do you guys have?

Net Worth: October 2012 +75.15%

2012-08-07_1701

Becoming debt free on everything except for the mortgage is goal #6 on my 40 before 40 list. These monthly net worth posts are my attempt to shine a bright light on what is otherwise a dirty little secret: finances.

We continued to cruise along at a decent clip in October, despite spending entirely too much money on a trip to the Smokies. Jen’s Dad and step-mom rented a cabin in the Smokies in October and invited us along. It was a fall break/birthday celebration for Tyler/fun hiking vacation that we thoroughly enjoyed. We weren’t obligated to spend any money but we did have to get ourselves there obviously and we also pitched in with some of the expenses by purchasing the wine etc. Grand total, we spent $394.30 on the trip. We really enjoyed the trip and having the opportunity to spend some quality time with Jen’s family but it’s a nice little lesson on how easy it is to spend money.

Dining out for October was a wash from last month; $344.58 compared to $359.25. Still, I want to do better in this area but I’m kind of resigned to the idea that I just need to budget enough. Having a realistic budget is more useful than lying to myself about a budget that we can’t stick to.

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Looking forward, November is looking like a good month for us. We’ll continue to grow the savings and pay down debt. We should definitely break into the positive side of the ledger on net worth.

How do you manage your personal finances?

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I asked today on Twitter how people manage their personal finances. I got a couple responses of “Mint”. I use Microsoft Money but since so many people seem to use Mint, I often think that perhaps I’m doing something wrong or I’m thinking about finances wrong. Here is my process… feel free to chime in at the end.

I don’t use a monthly budget. I find that the idea of a monthly budget is just too vague and isn’t useful from a cash flow perspective. So if I have $200 budgeted for donuts in October, what happens if I blow my $200 budget in the first week of October and now my rent check bounces? I like to look at personal finances at a more detailed level. If I make $1000 this payday, I want to know how much I owe in bills before next payday  to make sure I can buy donuts. I also want to know how much is coming out next payday so I can know how much, if any, of this paycheck to save. As far as I can tell, you can’t look ahead like that with Mint. Mint doesn’t have any sort of automatic reminders that are auto entered into your check register nor do they have any sort of cash flow projections based on said reminders.

I’ve actually level set my bills by using a “bill” account at ING Direct. This is just a normal electronic orange checking account but I’ve calculated my monthly expenses, calculated at a bi-weekly level (my pay period) and then I transfer that amount into the bill account (automatic electronic transfer of course). For example, lets consider the following monthly bills:

Cell phone: $200/month
ISP Bill: $45/month
Electric: $80/month
Water: $40 /month

In order to get the bi-weekly amounts on those, you just add everything up then divide by two. So that turns into this:

Cell phone: $100/bi-weekly
ISP Bill: $22.50/bi-weekly
Electric: $40/bi-weekly
Water: $20 /bi-weekly
Total: $182.50

Every payday, $182.50 gets transferred from our “main” checking account over to the bill account automatically and all of those bills are paid automatically with bill pay on their due dates. This helps me to easily keep up with it. If every payday I get paid $1000, I pay $100 on the gas/grocery CC and $182.50 goes to the “bill” account then that avoids having a lean pay period and a rich pay period as the expenses on the main account are almost always the same from paycheck to paycheck.

I think maybe everybody has a lot more money than I so they don’t have to think in terms of short term cash flow.

So how do you manage your personal finances?

Net Worth: September 2012 +51.31%

2012-08-07_1701

Becoming debt free on everything except for the mortgage is goal #6 on my 40 before 40 list. These monthly net worth posts are my attempt to shine a bright light on what is otherwise a dirty little secret; finances.

September was a much better month for us than August. We continued to pay down debt, settled an account in the “bad debt” category and even saved up tiny bit of money. Wooo!

We still spent entirely too much on dining out. In fact, we spent more on dining out ($359.25) than we did on groceries ($338.60). This is just something we have to be more disciplined with. I’ve been trying that method and it doesn’t seem to be working but I’m going to try harder. I feel that if I just keep taking swings at it that eventually, we’ll get it. I’d be curious to know how we compare to other families in the dinning out vs groceries categories.

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Looking forward to next month, it seems we’re on track to have another good month. We’ll grow our small savings and continue to pay down our normal debts. I think we might even break into the positive side of the ledger for net worth.

Looking even further down the road, the plan is to get our $1,000 baby, emergency savings in place, save up a bit before Christmas and then start hacking away at the bad debt category. We have $13,774 to pay off before next August 30th (my birthday) but I think we can do it. We improved our net worth by $1,440 this month and there is still lots of slack in our budget. I’m very optimistic about how things are going.

Net Worth: August 2012 +9.3%

2012-08-07_1701

Becoming debt free on everything except for the mortgage is goal #6 on my 40 before 40 list. These monthly net worth posts are my attempt to shine a bright light on what is otherwise a dirty little secret; finances.

August wasn’t a great month for us from a spending perspective. We still weren’t as disciplined as we need. I was sloppy on managing the day to day cash flow so we had some over draft charges and those things will eat you up in a hurry. We also spent way too much on dining out again this month ($498.26!). Compared to last month, we did manage to cut our dining out spending by 1/3rd though.

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Looking at the forecast for this month, we should have a pretty great month from a net worth perspective if we’re able to be gazelle intense. We need to stay within our “fun money” budget and get larger buffers in the accounts for when we overspend so my two goals for September are: $150 for the month on dining out and $0 for the month on over draft fees.

So yes, we did manage to gain 9.3% in net worth but it felt like we were just treading water. There is a lot of low hanging fruit in our budget and we have to be more disciplined.

Our Personal Finances, Monthly Net Worth & Goals Update – July 2012

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I’ve wanted to blog about our finances for a while (mentioned it here). Becoming debt free except for the mortgage is actually one of my 40 before 40 goals (#6!). Plus, I feel like if I’m out there, talking about it (even on the web) and thinking about it, it stops being this dirty little secret. Hopefully my journey will help others too.

I was updating this net worth tracking spreadsheet last year and Oct 2011 was the last entry. I’ve updated the spreadsheet as of end of Jul 2012 and I’ve included Oct 2011 just as a reference to how far we’ve come in the past 9 months. Our assets have gone down in value but we’ve also paid off over $11k worth of liabilities for an overall improvement to our net worth of $7k since last Oct.

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Jen and I have been married for three years. Each of us going through a divorce was catastrophic for our finances. I was actually working on the same program when Jen & I met… I had my baby emergency fund, I was working a second job and I was making progress on paying off debt. I explain that in order to put some context around the category of “Bad Debt” in the liabilities section above. Bad Debt is all of the debt from our previous marriages that had to be put on hold so we could restart our new life together. It’s hard to be too concerned about some credit cards when I have to pay alimony, for instance. Anyhoo, it’s all old credit cards and credit accounts that have gone to collections. We’ve made pretty good progress but we haven’t been gazelle intense. We eat out way more than we should. I’ve spent too much money on my tattoo and we make excuses for ourselves to spend money.

Going forward, we’re going to be doing the Dave Ramsey baby steps. I’m embarrassed to admit that we don’t have any cash savings. If an emergency comes up, we have to let a bill go in order to deal with the emergency so obviously the very first step is to get our starter emergency fund together.

I still have one more session to finish my tattoo and I really want an iPad for my birthday in August but I’m prepared to postpone both things. My short term goal is to have our $1k baby emergency fund and have a positive net worth by the end of the year.

I’d be interested in comparing notes with other people in the same predicament or with people who have already made the journey.

Blogging about finances

I want to blog about our personal finances. I want to share our journey, struggles, strategies, successes and failures but there is this stigma about talking about finances that stays my hand. In my mind, all of my friends and family are financial geniuses who live on half their income are debt free and have $50k saved. I’m none of those things but I want to be. The wife isn’t terribly excited about the idea but I think I can do it in such a way that still masks the bits that need to be masked.

So anyway, what do you think? Is talking about finances taboo?