Happy New Year 2007!

To my Bulgarian friends, Чеctиta Нoba Гoдина!

A new year is a great time to measure my progress. As of January 1, 2007, my net worth is $58,200, based on the figured below. So, my average monthly surplus is more than $4000.

Assets:
Credit Union: $7,800
Money Markets: $25,600
CDs: $36,900
Investment Accounts: $1,700
Retirement Accounts: $14,800
HSA Account: $1,300
Car: $6,900 (Trade-in value according to kbb.com)
Cash & Equivalent: $400
Total: $95,400

Liabilities:
Credit Cards: $27,200 (0% APR or pay off every month)
Tax liabilities: ~$10,000 (Due in April)
Total: $37,200

Early Rise Habit

“It is well to be up before daybreak, for such habits contribute to health, wealth, and wisdom” - Aristotle

I got up at noon today. When I wake up at noon, half the day is gone. By the time I shower and do other morning rituals, I’m looking at 2 PM. My problem is that I’m a night person and I tend to procrastinate.

I already know I am on the right path to succeed financially. However, that's not enough. To be a well-rounded successful person, I need to become an early riser!

After reading Steve Pavlina’s guide to Becoming an Early Riser (part 1 and part 2), I am determined to take the 30 day challenge to build the early riser habit.

30 Day Early Riser Challenge:
For the next 30 days, December 3nd to January 1st, I will wake up at 6:55 AM, sharp. No snoozing. I will do this every single day, regardless of what time I went to sleep the night before.

I will use this blog to keep me accountable. Every single morning I will leave a comment on the most recent entry, something like, “Good morning! It feels so good to be an early riser!“. You will see the date-stamp of my comment and will know that I am on track and ready to achieve success everyday.

From now on, this blog is going to be less about money, and more about becoming a successful individual.

Okay, I lied...

That wasn't my last blog entry. I enjoy blogging and sharing my financial experiences. Hopefully, you will learn something from this blog.

So, the blog is back!

Today is October 4th, exactly 6 months since my first blog entry. I'll recalculate my networth.

Assets:
Credit Union: $300
Money Markets: $10,500
CDs: $ 37,900
Retirement Accounts: $13,600
Investment Accounts: $1,500
Car: $ 7,000 (Trade-in value according to kbb.com)
Cash & Equivalent: $ 500
Total: $71,300

Liabilities:
Student Loans: $0 (Paid off)
Credit Cards: $20,300 (0% APR or pay off every month)
Tax liabilities: ~$5000
Total: $25,300

Networth on October 4th: 71,300 - 25,300 = $46,000.
Networth on April 4th: $24,087
Increase in 6 months: 46,000 - 24,087 = $21,913
So, in the past 6 months, I have been able to save an average of $3,652 per month!
I started my new job on June 1st. One of the benefits of my new job is a bigger paycheck. My networth on June 1st was $27,226, my average surplus for the past 4 months is $4,693 per month! I'll write more about my new job later.

Last Post

My EAITDA for the month of May is $1,896. My networth on June 1st is $27,226.

This is my last blog post.

First monthly earning report

Before I state my April earnings. I am going to explain my accounting method, which is derived from EBITDA.

EBITDA is a common accounting method used by corporations. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is an indicator of a company's financial performance which is calculated as follows:

= Revenue - Expenses (excluding tax, interest, depreciation and amortization)

EBITDA can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. However, this is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next.

EBITDA first came into common use with leveraged buyouts in the '80s, where it was used to indicate the ability of a company to service debt. As time passed, it became popular in industries with expensive assets that had to be written down over long periods of time. EBITDA is now commonly quoted by many companies, especially in the tech sector, even when it isn't warranted.

A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability, but not cash flow. EBITDA also leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's earnings.

My method of accounting will be called EAITDA (Earnings After Interest, Taxes, Depreciation, and Amortization). It eliminates all the problems discribed above.

My EAITDA for the month of April is $1240*. Therefore, My networth (excluding my primary residence) on May 1st is $25,330.

Note 1: This figure excludes any accumulation of equity in my primary residence.
Note 2: This figure is subject to revisions after I file for my income taxes.

No such thing as free money...

So I borrowed $20,000+ on two credit cards at 0% for one year. That's $4,000+ borrowed about 8 months ago and $16,000+ borrowed 2 months ago. I am leaving that money at HSBC Direct (4.75% APY until April 30th). I expect to make at least $800 dollars of interest on that money before paying it back.

Here comes the not so free part -- your credit score takes a hit. As a result of the $16k CC debt, my FICO score dropped from 741 to 718. Of course I knew that my credit score would suffer because 35% of credit scoring is dependent on debt load. The good news is that the 23 point drop is less than what I expected. I will be fine as long as my FICO score is more than 700.

In conclusion, free money - good, lower credit score - bad, one more bill to pay every month - bad. Like everything else in life, it's a choice you have to make.

Millions of Millionares!

CNN reports that the number of households with a net worth of one million dollars or more, not including their primary home, rose 11% last year to a record 8.3 million. It's the second year in a role that millionaire count hit a all time high.

American Millionaire Household net Worth:
$5 million+ 11% increase
$1 million+ 26% increase
$500k to $1m 7% increase

Source: the Spectrem Group

I am 27 and I got plenty of time to get there!
Too bad they cancelled that show!

My Taxes Are Done!

Mailed out my Federal tax return and e-filed my Virginia tax return this morning. I am getting about $2,000 in refunds this year. That would be a very nice net-worth increase when the refunds hit my checking account.

There is one thing I don't understand about e-filing. If the IRS is trying to get everyone to e-file, why does it cost $20? I know e-file is free for people with AGI of less than $50k. But what about those of us who more slightly more? I am not paying $20 to e-file when I can use 63 cents of postage instead.

In other news, April 15th marks the end of ING Direct's 4.75% Winter Saver's promotion. Their APR is back down to 4.00%. I promptly initiated a bank transfer to move almost all of my ING Direct money to a higher yield account.

Bankrate.com provides an up-to-date table of the high yield money market accounts here.

Gotta do my taxes!

I have been volunteering as a tax preparer through IRS's Volunteer Income Tax Assistance (VITA) program. It has been a great experience helping the working poor. The program took me to various homeless shelters that I would otherwise never see or hear about.

This is the ironic part. It's April 13th and I haven't done my taxes yet. I have prepared dozens of tax returns for others, and I am too lazy to do mine.

Anyways, if you haven't done your taxes yet and your 2005 income is less than $38,000. Take it to your local VITA sites and get it done. You don't want to end up like Richard Hatch!


Richard Hatch won $1 million on the first "Survivor." Now he's in jail for tax evasion.

Get a free I-Pod!

I like the line from The Simpsons where Bill Gates comments "I didn't get rich by writing a lot of checks."

A big part of becoming financially independent is to spend less! With that said, I love free stuff! Especially a free free I-Pod Nano from Citibank.

Be sure to read the small prints. You have to own your primary residence and have at least $10,000 of home equity. You also need to keep that house for at least three years, or incur a loan fee ranging from approximately $500 to $11,220.

It advantage of it before the offer expires on April 30th!

The Beginning...

I got the idea for this blog after reading lpkitten's blog about digging herself out of debt. She was able to pay her credit card debt down from $19,794.23 to $4,899.00 in less than 11 months. That was very inspiring. You go girl!

It's very important to have a financial goal in my life. My goal is to have a net worth of $1 million excluding my primary residence. Why one million dollars? The simplest answer is because that makes one a millionaire! One million dollars will provide me a comfortable retirement in or about 2038 (when I turn 60).

I have always been a saver. So, it was shocking to read about our nation's negative savings rate in 2005. 2005 was the first negative savings year since the great depression! I want to do my part to make it again.

As of today, April 4th, 2006, my net worth is $24,087, based on the figured below.
Assets:
Credit Union: $ 3,200
Money Markets: $30,200
CDs: $ 1,000
Retirement Accounts: $10,400
Car: $ 7,400 (Trade-in value according to kbb.com)
Cash & Equivalent: $ 1,000
Total: $53,200

Liabilities:
Outstanding Checks $ 1,569
Student Loans: $ 6,656
Credit Cards: $20,888 (0% APR or pay off every month)
Total: $29,113

I will re-evaluate my net worth once a month.