Finance Travels

This is just to let everyone know that I’m not holding out on the much dreaded October update.  I’ve had some minor technical difficulties that have prevented me from posting the update.

If all goes as planned, the update will be tomorrow.

It won’t be pretty.

For the first time in my adult life, I can say that my net worth has decreased to below what it was 12 months ago.

This month has been killer, as I’m sure that it has been for pretty much every investor.  It is by far the worst month since I’ve stared the site.  Obviously, the most damaged parts of my portfolio are my retirement accounts.  They accounted for over $10,000 in losses.

As far as positives go, we did manage to save close to 20% of our take home pay, making September the least expensive month so far of 2008.  This is especially significant in that we had a few major household purchases this month.

What to do now?  I’m just going to have to ride it out.  After some portfolio rebalancing, I’m comfortable with the amount of risk I’m taking on in the market.  Retirement is a far off thought, so the market hits really haven’t hit us in our daily lives.

I’m not a fan of the bailout, I believe that the financial markets took on way too much risk and they knew what they were doing.  The taxpayer should not be held to pay for their mistakes.

September 2008 Net Worth

I just received the following email from Prosper:

We are writing to inform you that we have made the decision to discontinue accepting new lender registrations, and new bids from existing lenders, from residents from the Commonwealth of Pennsylvania. Our decision to make this change was based on our ongoing discussions with regulators in Pennsylvania, which led us to believe the change was necessary to comply with their current interpretation of their state regulations.

You will continue with your existing lender agreements, have your existing loans serviced, and be able to transfer funds out of your Prosper account. However, you will not be able to place new bids on listings or transfer money into your Prosper account.

This change does not affect borrowers residing in Pennsylvania, who remain free to create loan listings on Prosper.

We apologize for any inconvenience this change may have caused.

We thank you for being a member of the Prosper community. We hope to make Prosper available to lenders in Pennsylvania again soon.

Regards,
Prosper

Well, my decision whether or not to continue investing in Prosper just got a whole lot easier.  The vaugeness of the letter tells me that it was illegal for Prosper to operate in PA from the start and are just now getting called on it.

I had actually been doing fairly well on my Prosper portfolio, but I haven’t put any new money into it for at least a year.

We ended August 2008 up $650.  Considering that we took a vacation, paid for another vacation, and had our other normal summertime expenses, I’m pretty happy to be up this amount.  Our liabilities decreased by almost $1,000 (although about $200 seems to be accounted for by some mishandling of the mortgage amount from previous months, I’m just going to start grabbing that amount directly from the website from this point out).

We are still trying to break the $200,000 mark before the end of the year.  We’ve vowed not to make any of the planned large purchases until we hit $203K so that we can have a little breathing room once the milestone is reached.

Childcare costs should decrease a good bit starting in September.  I’ll be continuing the 4-day work weeks and our oldest has started kindergarten which will lower daycare costs by one-third.

Just realized I got hit with a $39 late charge on one of my Chase credit cards.  Not a bill that I couldn’t pay, just one that slipped through the cracks somehow.  Too many credit cards, not enough time to keep track of them.

It’s definately time to consolidate.  I want to be down to 3 cards by this time next week (1 primary, 2 backup).

Well, I guess the good news is that I’m holding steady.  When I first looked at this month’s numbers, I was optimistic that I was going to have an  increase in net worth, but that just wasn’t the case.  Thanks to a higher than expected loss in my 401K, we were not able to post a positive number.

The number is admittedly flawed this month because the mortgage amounts that I’ve been posting have been one month off due to the timing of the report.  I figured this was as good of a month as any to get caught up.

The market continues to bear down on us, and while I’m sure we have it better than most, it is somewhat frustrating to realize that July was our least expensive month this year in terms of cash flow, but still have to report a decrease in net worth.

August will probably be a bit more expensive than the past 2 months due to a long awaited vacation at the beach.

I received an email last week notifying me that my Amazon.com Prime Account would expire at the end of August.  For those of you who don’t know, Amazon Prime is a yearly subscription service that costs about $80 and entitles you to free 2-Day shipping on many (I hesitate to say most) of their items.

Before renewing for 2008-09, I did a little research on my own Amazon spending over the past 11 months.

• Past 11 month spending at Amazon: $2,489
• Previous 11 month spending at Amazon (before signing up with Amazon Prime): $959

These numbers had me a bit worried at first, because I had more than doubled the amount that I had spent at Amazon.  Was Amazon Prime making me a frivolous shopper?

I went back to look at the numbers and realized that close to 50% of my Amazon spending was due to a much needed computer upgrade.  Costs reflected in that one purchase amounted to over $1,000, which made the total Amazon spending over the past 11 months a bit more palatable.

I looked at how much I saved using Amazon.  Since Amazon isn’t charging state sales tax, I saved 6% off of the purchases right off the top ($149).  Purchasing the items online without paying for shipping also saved me a bit of gas money, but this number is a bit more difficult to quantify.  Also, being able to purchase items online without worrying about shipping time saves a ton of personal time for me.  If I realize I need to get something, I’ll check Amazon first.  If I can get free shipping and the price is comparable to what I would pay locally, I’ll generally go with the purchase from Amazon as long as it’s not an immediate-need item.  This was a big plus during the holiday season, and I suspect we purchased close to 50% of our holiday gifts from Amazon this year.

So am I going to renew?  Yes.  Am I going to spend as much at Amazon this year as I did last?  I hope not.

This summer, my employer has given us the option to work four ten hour work days (as opposed to five eight hour days).  I was one of the surprising few who took them up on the offer and being that it’s my third week doing this, I figured I’d write up some of my thoughts on the change.

Pros:

• By far, the biggest pro for me is the fact that I can save over $70 a week in childcare.  Just over the course of the summer, this should add up to close to $1,000 saved.
• Having a three day weekend is nice, it means we can visit with friends/relatives longer and not have to take multiple trips to do so.
• More family time: I’m able to spend more time with the kids, and while this can be stressing at times, I know the kids enjoy it.
• Having 1.5 to 2 hours at work when a lot of coworkers aren’t here allows me to get some work done in peace.  A lot of my writing, catching up on stuff occurs during this time.  Overall, I’d say that I’m more productive working this schedule.

Cons:

• Those ten-hour days can seem looooong at times.
• Getting up one hour earlier (especially for someone who values his sleep as much as I do).
• Not having as much time in the evening four days a week.  For me, this has been a big con, as I’ve lost a significant amount of time that I used to use for running on the treadmill, small projects around the house, etc…  I obviously try to make up for it on my extra day at home, but you can only run on the treadmill so many times a day.
• It’s a tough adjustment.  The first week that I did this, I was getting bad headaches every morning starting at 10:00.  I’m pretty sure it was due to the adjustment in my sleep schedule.  I’m still adjusting, but now I’m finding it easier.

Ironically, the company started this policy as an attempt to lower fuel costs to employees.  For me, it’s probably going to have the opposite affect.  When I started this schedule, I gave up my chance to carpool, so I’m not driving any more or less times to work (When carpooling, I drove 8 times every 2 weeks, now I’m doing the same, just working longer hours).  So unless the car stays in the garage on my extra day off, I’m driving more miles overall.

Net worth wise, June 2008 was a big disappointment.   The market continued its decline, accounting for over $6,000 in losses for us.  We also took a $945 depreciation hit on our vehicles.  Six months into 2008, and our net worth is officially lower than what it was when the year started.

The one positive (and it’s a big one) is that our cash flow is positive for the first time in three months.  We’ve done a good job of containing our costs this month by taking steps to eat out less, carpool, decrease child care costs when possible, and just overall being more thrifty.  The next several months should continue having positive cash flows, but we are at the mercy of the market it seems.