Llama Money

That’s how things look in the Llamafolio world.  BAC - Way down ( 18% since my purchase ).  COP down 12%.  Coke and Pfizer down 12% each.  The only bright spot left is VDSI, which is hanging on to a 14% gain.

I did receive two dividend payments, though.  $3.29 from COP, and a healthy $6.40 from PFE.  Finally, something good from PFE!  That stock has been a skunk since I purchased it.  A little over nine bucks in dividends doesn’t make up for those big losses across the board, but they help a bit at least.  Plus, losses are only paper, until I sell.  Looking over my portfolio, there’s nothing that I’m willing to sell at a loss.  A few more months and I’ll be able to unload a couple stocks, and streamline my holdings.  But, as Warren Buffet so eloquently put it, the first rule of investing is don’t lose money.  I don’t intend to.

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Welcome to the September 3, 2008 edition of the carnival of net worth.  I know it’s been awhile since the last edition.  I’ll try to keep things on a regular once per week schedule again.  Here are this editions best submissions:

John Crickett presents Sell To Rent posted at Find Financial Freedom, saying, “A critique of the sell the rent strategy.”

Raymond presents Do Credit Cards and Stocks Make Up Your Emergency Fund Savings? posted at Money Blue Book.

Aussie Investor presents Investing In The Stock Market To Grow Your Wealth posted at Money Management Personal Finance Blog, saying, “One of the best ways to build your personal wealth is by investing in the stock market (just look at Warren Buffett). This post contains some tips on how to get started with your stock investing endeavors.”

Ken Clark, CFP presents The Basics of Student Loan Forgiveness and Repayment Programs posted at Saving for College - About.com, saying, “A guide to finding an employer who’ll pay off your student loans.”

KCLau presents Do you have the assets to pay for your liabilities? posted at KCLau’s Money Tips, saying, “Article on whether one has the assets to pay off liabilities and how to obtain assets”

Investing Angel presents The 2008 Election And The Stock Market » Free Stock Market Investing Tips posted at Stock Tips, saying, “Your investment decisions right now may largely depend on who you think will win the 2008 election.”

Jose DeJesus MD presents Drawing on Your Retirement Funds posted at Physician Entrepreneur.

Tammy Powell presents Real Estate Investment in Times of Crises posted at Enlightened Wealth Institute student Tammy Powell.

Livingalmostlarge presents Book Review: Net Worth Workout posted at LivingAlmostLarge, saying, “While you can’t win the book, if you want to improve your net worth read this book.”

That concludes this edition. Submit your blog article to the next edition of the carnival of net worth using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the carnival of net worth, blog carnival.

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Another month passes, and it’s time to update my net worth progress.  August was a tough month to be sure, but had some great positives.  For one, my wife and I have decided that she will stop working full-time in the near future, and eventually return to school.  Financially ( short term ) that’s an awful thing, but it will bring about a much simpler life.  I have no doubt we’ll adapt, and grow to find new ways to save.  For another thing, I paid off my Best Buy card ( 0% interest purchase ).  My only credit card debt left is my PenFed Visa.  That’s the card I use for things like cell phone bill, water bill, etc.  It gets paid off monthly in full.

After tallying up the numbers, I came away a bit surprised.  My net worth increased a stunning 12% over last month - wow!  That’s a full $3665 improvement in a single month.  Let’s dig to see what happened.

Liquid Assets

A six percent jump in my liquid assets is strong.  What’s the breakdown?  I paid off the Best Buy card.  My Zecco account did fairly well for the month.  The dollar value of my precious metals investment dropped ( though I still have the same number of ounces as before ), and my accounts receivable balance dropped by $500.  And no, for the record, I didn’t actually receive that money.  It was a $500 loan to a family member - made over 2 years ago.  I’ll never see that money again, so there’s not much sense hoping.  I think it’s safe to say that said family member won’t be seeing any more money from this Llama.

My Cars

My wife’s car took a nosedive in book value this month, but it was countered by a stellar rise in my own car’s value.  $3k increase, to be exact.  That little “hybrid” badge goes a long way in the days of $3.50-$4 gasoline.  I’m not officially “right side up” on my Civic.  Neato.

My House

1% equity increase. Slow but steady.

Retirement

A 5% jump puts my retirement accounts back over the $11k mark.  At $11,445 that’s the highest it’s even been.  There’s a long road ahead to be sure, but who can complain that they have more money than they’ve ever had before?

Overall

Twelve percent in a month?  Please sir, may I have another?  This month I officially surpassed the $45k net worth goal I set at the beginning of the year.  I have three more months to pummel that goal, and I have every intention of doing just that.

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Since my wife and I are planning to try living on one income, we’re trying to do it intelligently.  There are a few things we’ve been wanting to buy for awhile, but haven’t gotten around to just yet.  Things like a pair of nightstands for a our bedroom, curtains for the living room, and a decent vacuum cleaner.  With a drastically reduced income, these purchases would have to come directly out of our savings - something I’m not comfortable with.

The solution is simple

Since we’re already on our new, frugal budget, our answer is easy.  My wife will continue working through the end of September.  Rather than spend her income on the usual things, we’ll use a portion of it for these purchases.  Curtains in the living room will sure help keep the glare off the TV.  Since we have a nice TV ( 65″ DLP ), it keeps us away from the movie theater.  Reducing that glare will make it more enjoyable during the day. 

The new vacuum cleaner has been a long time coming.  We have a Hoover that’s been limping along for awhile.  We’re still up in the air between a nice Kenmore, another Hoover, a Dyson, or even a Kirby.  Huge price ranges, and we haven’t made a decision.  We will, however, be purchasing one within a month - and it won’t have to come out of our savings account.

Planning is the only way to survive

With a reduced income and a super tight budget, planning carefully is the only way this will work out.  Raiding our savings account month after month simply won’t do, and will leave us in a terrible place financially.  To avoid that, we’re delaying our goals - and doing so gladly.

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The entire time I’ve been married, both my wife and I have worked.  At times I have made more money than she, and at other times she was the primary breadwinner.  It didn’t bother me either way - after all, who could be mad that their wife was making good money?  Every man should be so lucky.

Our lifestyle choices have always followed the fact that we both work.  Two car payments comes to mind - we’ve pretty much always had at least two car payments ( 3 for a time ) - we haven’t known any other way.  I’m not saying that we “need” two new shiny new cars complete with payments.  We also don’t need to eat out as often as we do - though it’s convenient with both of us working.  That’s just how we’ve done things.  Until now, that is.

Times may be a changin’

The past couple months have been filled with discussions between my wife and I.  The topic?  Her quitting her job, and being a housewife for a few months.  After that, college.  From every standpoint except finances, I’m 100% in.  After all, how nice would it be to come home to a delicious home-cooked meal every day?  And my wife is Hispanic… boy can she cook.  How great would it be not to have to worry about washing dishes… or doing my laundry… ironing my clothes…. etc etc.  All those household chores that need to be done every day after a long day at work.  With my wife staying home, they would all be handled.  And of course college is a great idea - she can study to figure out her desired career, and then pursue her degree.  I’m in.

What about the money?

Ahhh.. the money.  Fortunately I’m making more than Mrs. Llama these days.  Plus I have my side business doing fairly well.  And she also gets a monthly payment from the VA for an injury she suffered while deployed on active duty.  With her quitting, we would lose roughly 28% of our take-home pay.  A big chunk, to be sure.  We would also lose health insurance for our 9 year old.  I can add him to my policy at work for big bucks, but we may go with a separate policy.  Either way, that’s an extra expense.  Also, no more 401(k) at her job - so less retirement savings, and less tax sheltered money.

Can we do it?

That’s a big maybe.  If we cut back to the bone.. no more eating out.. no more frivilous shopping… no more credit cards ( envelope system )… yes.  We haven’t been able to stick religiously to a budget in the entire time we’ve been married, I’m sad to say.  But I have locked up our credit cards, and gone to cash… midway through this month.  I want this to work, and am willing to sacrifice.  We may end up *gasp* selling my car.  If we can break even on a private sale, I’ll consider it.  The replacement will likely be something new-ish, with low miles and a factory warranty.  I’m not willing to risk driving a $2000 beater, and the troubles it can bring.  But lowering my car payment significantly will help offset the increased fuel usage it will bring.  Remember, I drive a Civic Hybrid that gets 50 MPG.  Of course, my wife not working for a few months will cut back on her driving too.  So it may roughly even out until she goes back to school.

Quit beating around the bush - are you going to go for it?

Simple answer - I don’t know.  It’s looking pretty sure.  The timeframe I don’t know about yet….. perhaps as soon as September… maybe closer to December.  It will be tough, and will require some pretty big sacrifices.  But all in all I think it will help us become more responsible with our money…. even if it means cutting back on investing for awhile.  For a more peaceful life, and a wife in college - I can live with that.

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Just like my 9th electric bill since buying my home was a record-setter, so is the tenth.  Record high, that is.  Total cost for gas and electricity for August 2008?  How about a whopping $244.40?  Yowza.  That tops the previous $221.36 record from last month.  Where did the extra cost come from?  Let’s see.

Natural Gas - Not unexpected

My natural gas usage increased by 140% - though my cost jumped by “just” 63%.  Normally I might be racking my brain trying to figure out the cause. However, we had my two sisters-in-law staying with us for almost a month.  Two teenage girls means lots and lots of hot water usage.  No surprise at all here.

Electricity - Unstoppable.

Another month passes, and I use more electricity than ever before.  My usage climbed another 13%.  Fortunately my cost climbed only 5% in the same time - due to some vagaries of electricity billing.  1,757 kWh sure seems like a lot of electricity for a family to use in one month.  But then again, big house + texas heat means lots and lots of A/C usage.

Overall

I had forecast $300 for my August bill, so in that light, I’m ahead of the game.  I figure we’ve peaked on energy usage for this year.  The next 2-3 months bills will be large, but shouldn’t top this one.  No more house guests, and eventually it will start to cool down.  Frankly, I can’t wait.

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Just seconds ago, I made two separate but related Llamafolio purchases.  In case you haven’t been watching, all the precious metals have been taking a beating over the last few days.  This is mainly due to the strength of the US dollar, at least on somebody’s fancy charts.  I believe this to a false flag, and a situation that will reverse itself in short order.  So, what did I purchase?

• 15 shares of DGP @ 19.12 per share
• 14 shares of SLV @ 15.30 per share

A little background is in order, no doubt.  SLV is the Silver ETF - electronically traded fund.  Barclays supposedly holds an ounce of silver for every share of SLV on the market.  So, the share price of SLV is usually very close to the spot price for an ounce of silver.  Since I believe Silver to be undervalued, I am comfortable paying $15.30 per share for this ETF.  I don’t intend to hold a long position here, but rather a short-medium term position for a short capital gain.  With any proceeds, I’ll likely buy some Silver Eagles or US Junk silver.  I won’t make a fortune here by any means, but it looks to be a solid investment.

DGP works a little differently

DGP is another beast entirely.  There is a gold ETF -GLD, that acts in much the same way as the silver ETF.  The only difference is that each GLD share is 1/10 ounce of gold.  DGP doesn’t work quite the same way.  Rather, it’s a derivative investment.  That’s something I’ve never dabbled in before, and wouldn’t commit any large sum of money to.  Here’s why:

For every percentage move that Gold makes, DGP doubles that move.  I.E. if gold rises by 3% one day, DGP goes up 6%.  By the same token, if Gold drops by 5%, DGP falls by 10%.  This ETF magnifies gold’s moves by a factor of 2.  That means twice the risk, with the potential for twice the reward.  Since I feel gold will make a march toward $1000 again very soon, I feel this is also a smart choice.  Riskier than GLD for sure, but I don’t have any reservations about making that bet.  Like my SLV purchase, I don’t intend to hold DGP long-term.  A few months at most is my timeframe here. 

Trading is new to me

I haven’t before ventured into the world of trading stocks / ETF’s / ETN’s.  This is a first for me, and an experiment.  I did commit $500 to this experiment, which isn’t a pittance, but it also won’t take me to the poorhouse if it fails.  Keep your eyes peeled for my results.

Popularity: 13% [?]

July of 2008 is behind us, and had it’s share of ups and downs, to be sure.  I ended the month with a 2% net worth increase, so it’s another step forward.  The problem is that only adds up to about $842.  I can’t help but think I could have done some things differently to make a bigger impact on my net worth.  In any case, let’s see how it all breaks down.

Liquid Assets

I saw a slight 1% decrease in my liquid assets in July.  What happened?  Well, you’ll notice increases in my brokerage account and precious metals.   They helped balance out my growing tax liabilities ( property and business taxes ).  The thing that put me from the plus to the minus was my increased credit card debt.  My wife and I purchased a 37″ LCD TV as a joint anniversary present.  The total bill came to just about $1300, including taxes, a stand, and a new wireless router ( my old one was extra flaky ).  On one hand, I should know better.  On the other hand, it’s nice to splurge now and again.  We usually get a join gift on our anniversay too - it’s a nice way to celebrate together.  And no worries, it’s on a 0% best buy card, which will be paid off before the end of the year. 

My Cars

Yet another month passes while I watch my cars appreciate in value.  That’s right, the book value on both my cars has increased again.  Slightly , but it’s a much better position than SUV and truck owners are in these days.  My total negative equity improved to just over $8,000.  That’s still a whole lot, but a far cry from the $11k+ that I started the year with.

My House

1% equity increase.  If you’re a regular reader, you won’t be surprised by that.  My total home equity is about $18,458 these days. 

Retirement

Though my picture shows 0%, I actually gained a few bucks in my retirement accounts overall.  Considering how choppy the market has been, I won’t lose any sleep over this.  Nor will I freak out and cash my accounts in, as I’ve heard some people doing.

Overall

I’ll take a 2% increase.  I’m not thrilled with it, though.  August will bring better things, better numbers, and more cash in my accounts.  Stay tuned.

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The stock market is a funny thing, to be sure.  Bad news sometimes makes stocks go up, and good news sometimes makes them go down.  It’s almost as if the stock market is a completely random system sometimes.

That being said, I made my Llamafolio updates today, and was rewarded with a surprise.  After being in the red for a while recently, I’m back in the black!  My total investment to date is $3000, and the current market value is $3076.67.  While that won’t make me rich, it’s nice to see a positive return for a change.

BAC is making a comeback from it’s recent lows.  It may very well head south again before it climbs again for good.  Bad news elsewhere in the financial sector seems to hit BAC pretty hard.  And of course PRFT has performed stellarly for me - up 50% since my purchase.  Part of me still thinks I should sell PRFT to lock in my profits, but I’d rather stick it out long term. 

No Changes Planned

For now, I won’t be buying or selling any stock.  I’ll stick with what I have and see how it plays out.  Despite the volatility, I’m reasonably happy with the overall performance compared to the market as a whole.

Side Note

In case you didn’t notice, I updated the Llama Money logo.  Instead of a llama flying on a $100 Federal Reserve Note, that same llama is now using a 1 ounce American Gold Eagle.  While it’s officially a $50 coin, it’s true value is well north of $900.  Considering my interest in the yellow metal, I thought an update was fitting.

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One of the biggest stumbling blocks that I keep coming across in my pursuit of greater frugality is a lack of time.  The internet is full of money-saving tips.  Grow your own garden, make your own laundry detergent, cook every meal from scratch using the chickens in your back yard, etc etc.  If you have all the time in the world, there are many ways to cut your expenses.

The problem

Real life is the problem, of course.  My typical day goes something like this: Wake up at 6:00, get my son ready for school, drop him off, get myself ready for work, head in, get back home around 6:30-7:00 PM.  Eat dinner & clean up, done around ~7:30 PM.  Head up to my home office to put in a couple hours, and in bed by 11:30-12:00.  Notice the lack of time to do stuff like make dinner from the chickens, grow my own rice, and build my own car out of popsicle sticks and Elmer’s glue.

What’s the solution?

I’m not a fan of making excuses.  I’m not saying that I have an excuse for being lazy about certain things.  Should I eat more home-cooked meals?  Yes.  Should I brew my own bio-diesel fuel in my bathtub?  Maybe.  The point is, being busy isn’t an excuse.  It’s an obstacle to overcome.  It’s not that I can’t be more frugal - it’s just that I haven’t figured out how to do it realistically just yet.  And that’s part of the reason this site exists - to get some feedback from my readers.  If you have any great time-sensitive frugal tips, I’d love to hear them.

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