Credit Score Update

I just checked my Equifax credit report and everything appears to be in order. My credit score is a healthy 790. The only thing hurting my score was that I opened my newest account in January 2007 only 1 year and 2 months ago. According to the folks at Equifax, those with high scores opened their most recent accounts more than 27 months ago.

I would still like to get my score over 800 if I could. One thing hampering me is the amounts still owed on my mortgage. My current mortgage balance is 98% of the starting balance.

I am pleased with my current score.

Recession?

Besides the mortgage crisis the big focus of the new lately is the state of our economy. Many people say we are already in a recession and for a lot of folks who have lost their jobs in the past few months, I am certain that they feel we are in one. Hopefully, the economy will cycle through this in the next few months and we can get these people back to work.

I feel safe right now in my financial situation but that could change. I have written about this before but my emergency fund is not what it needs to be. I am hoping by the end of the year that I can get it to at least $10,000 and maybe even meet my stretch goal of $15,000.

Starting with my next paycheck I am going to start saving $200 per paycheck instead of $175. Once I know the full impact of the change I made to my withholding I may even be able to increase it a little more. One thing I do need to do is to stop dipping in to it.

Savings account vs. Money Market

Where to stash your cash now

This article would be scary if I had my meager savings sitting in a money market fund. A money market fund is not the same as a savings account and could lose money. That has not happened yet but it could. I think that a lot of people are going to reassess where they put their emergency fund after reading this reprint of a Fortune magazine article on the Money/CNN website.

Fortunately, mine is in savings and a CD. Right now I have just over $4,000 in my emergency fund which is lower than my 2007 year end goal. I need to get with the program and start stashing away some cash. In the first several months of this year I have paid off almost all of my credit card debt and made a few large purchases, a bike and a laptop. Now it is time to buckle down.

Verizon Unlimited Cellphone Plan

For several years I have used Verizon Wireless as my cell phone provider and I have always been happy with the service. Until last September I had a 2,000 minute per month plan that cost me about $87 per month including taxes with my 20% employee discount. I changed my plan to a 900 minute per month plan last year when I realized that I was only using about 700 minutes per month so now I pay about $55 per month including taxes.

Verizon wireless and several other cell providers have started an unlimited usage plan for $99 per month. I am not eligible for my 20% discount and I do not know how much the taxes would add to the monthly base charges.

I have recently began dating someone who is on a different plan so I may need to upgrade my cell plan to get more minutes. This is something that I am thinking about.

Does anyone know the "after-tax" cost of the $99 unlimited plan?

Back on Track

I have now been able to restore my 401k deduction to 15% of my gross. Since mid-January I lowed my deduction percentage to only 1% to free up some cash to pay down debt and pay bills. I am hoping to keep my deduction at 15% for the rest of the year. If I am able to do that then my annual 401k savings would be around $13,700. I am going to keep my fingers crossed.

My 401k balance is over $7,000 lower now then it was last October due to the crappy stock market lately. Again, I have to keep focused on the long term and not the short term.

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There is no such thing as a "Free" kitten

Yesterday I went to my vet to pick up some more insulin for my 14 year old diabetic cat...For some reason they are now charging tax on the insulin so it cost me $119 instead of the usual $110. Jeez, I do love my two cats but they are hard on the budget.

As I have written in my blog before, pets can be very expensive. They do add a lot to your life but you need to be prepared to handle the expenses. The older they get, the more expensive they get...sort of like human children.

My pet budget also took a hit this month when I spent $68 buying two new beds, bowls, a new litter box and another carrier so that I could keep them with me at my girlfriend's house on the weekends. She lives about 30 minutes away but that is a real pain when you have to give a cat shots twice a day.

Fortunately, I was under my pet budget for the months of January and February so I am probably okay so far for the year.

W-4 Withholding Changes

I am changing my federal tax withholding so that I can keep more of my paycheck when I earn it. I am hoping to increase my net pay by about $100 per paycheck and put the money in to my savings. I do have to admit that the "forced savings" of a large tax return is nice and it came in especially handy this year to pay down my Discover card balance to zero. I will still get a federal refund of around $3,000 next year if I have calculated correctly. My state refund should again be in the $1,200 range. All in all, I should be able to have $200 more per month to save and still get total federal and state refunds of $4,200. That would be more than enough to pay off my car or my 401k loan next year.

Now that my credit card debt is almost gone I would like to focus more on my emergency cushion. My stretch goal is to have $15,000 of cash reserves by the end of 2008. I am not sure how achievable that goal is as I am on track to only have about $11,000 saved by the end of the year. If I get a bonus (which is a very big if) I would put 15% of it in my 401k and the rest in my savings. Supposing my bonus is $4,000, then an additional $600 would go into my 401k and about $2,000 after taxes would be available for savings. Last year my bonus was $7,000 but my firm had a very good year. I am not counting on a repeat 12% raise or a $7,000 bonus. My expectations are more in line with a 7% raise and if I am lucky, a $4,000 bonus.

February Spending

Well as you can see I greatly exceeded by budget for the month. Primarily due to the purchase of my new Apple MacBook computer. I also paid down more on the Citibank 0% debt. After my March payment I only owe $618 on revolving credit card debt. In February I also splurged on a new comforter and feather bed for myself the cost around $625 (the feather bed was on sale). I was going through some personal turmoil during the month so I am not going to beat myself up too much.

I exceeded my grocery budget by $17 and the household budget was exceeded due to the above mentioned bedding. My disability and life insurance expense for the month was offset by the annual rebates totaling $91 for both life and disability insurance.

Stock Market Turmoil and Interest Rates on Savings

It has been another really rough patch for the stock market lately. To makes things even worse interest rates on savings accounts are down. My 6 month CD at ING Direct matures on the 18th of this month. I am not going to roll it into another CD at ING because as of right now I can get a better rate if I were to keep it in my WAMU savings account. I will probably put it in another 6 month CD only this time it will be at WAMU at 3.93%. It figures that just when I start trying to build an emergency account that the interest rates fall.

February 2008 Net Worth Update

It was a rough month for my net worth...the slide in the stock market took a toll. My investments decreased $1,600 due to the downturn. I also used some of my savings to help pay down debt. My only credit card debt that I am carrying is $768 on my Citicard at 0% interest. I don't have to pay it off until August of 2008 but I plan to pay it off much sooner. I am continuing to make progress in paying off my car. I am toying with the idea of using my tax refund for next year to pay off my car 6 months early. By next February/March I will only owe between $3,000 and $3,500 on it. On the other hand, I could reduce my tax withholdings so that I can keep more today and save it. I am not sure what I want to do yet with my withholding.

March is another month and I hope to see an uptick in the net worth again.