Well that’s embarassing

Six months since my last post and nearly seven months since my last net worth update. I think it’s time to do one and see where I currently stand.

Here is where I currently am:

Checking: $286

Savings: $3,653

Roth IRA: $14,898

401(k): $20,548

Health Savings Account: $8,477

Total Assets: $47,862

Capital One: $340 (19.8%, have been paying off monthly)

AMEX: $20 (pay off monthly)

Discover: $4 (pay off monthly)

Chase: $9,319 (2 months left of 0% interest)

Ford Auto Loan: $15,233 (5.99%)

School Loans: $29,045 (generally 6.8%)

Total Liabilities: $53,961

Current Net Worth: ($6,099)

That is an increase in net worth by a whopping $26,340 from seven months ago. Despite leaving this blog dormant, my net worth has certainly improved a bit. Most of the improvement was from my investments/savings though. If I were to knock out my debt, I’d REALLY be able to do some damage then.

Thanks for reading.

Progressive Snapshot Discount

Car insurance has never been all that cheap for me. Now add in the fact that I’ve had fairly recent car troubles and subsequently bought a new car, my car insurance is pretty expensive. Add in that I live in a metropolitan area and you’ll come to my recent 6 month insurance premium of $814 ($135/month).

Now being someone who lives just minutes away from work and doesn’t drive much on weekends, that seems like an awful lot to spend on insurance a year. First, I was able to reduce it by approximately $50 when I added renter’s insurance (the renter’s premium and auto discount practically cancelled each other out, which is great). Then, the only other way I had to reduce my premium was to apply for the Snapshot Program.

I did some research online about the snapshot device that plugs into your car. Here’s a quick summary of my findings:

  • It grades you based on miles driven, what times you drive, and how many “hard brakes” you have, which occur when you decelerate too quickly
  • The info it gathers could possibly be used against you if it came to it in court
  • The “hard breaks” can be arbitrary and even flawed when driving a manual transmission car, like mine
  • The maximum discount you can get it 30% and the minimum is 0%, aka you can’t get an increased premium from using the device

Since I’ve recently moved closer to work, I thought I’d be perfect for a usage-based measurement of my driving. I’m not concerned with the info it gathers and I’d rather have the chance of a discount than no chance at all.

After the first 30 days, I’ve received my initial discount and I must say I am quite surprised. I didn’t think it’d be so easy. I received the full 30% discount.

Like I said, I don’t drive a whole lot and when I do, I drive like a grandmother. I generally try to top out my MPG so I don’t accelerate quickly and likewise don’t stomp on the brakes either. My manual transmission seems to have had zero issue with accidentally generating “hard brakes.” I only had one hard brake in the first month and it was from a stupid mistake from me not paying attention for a moment.

For those looking for my weekly averages thus far, here they are:

  1. High Risk Driving time: 00:00:00 (so I didn’t drive between the hours of 12:00am and 4:00am)
  2. Miles driven: 60.76
  3. Hard Brakes: 0.17

I have to keep up my habits for another 5 months to have the rate locked in, but I’m very happy with the program so far. The 30% discount amounted to $177 being refunded to me and would amount to a $229 discount at my renewal next year.


My Action Plan

Now, one thing about me is that I am a stubborn man. The easiest way to remedy my situation would be to scale back my savings and pay the resulting additional funds to the debts, right? Well, I’m not going to do that. I just can’t give up contributing to my emergency fund, HSA, or 401(k) to the match.

I need to replenish my emergency fund, which is currently at $2060 while I’m adding $200 from each paycheck bi-weekly. I will lower my additions to $75/check once I get up to $4000 though (3 months of essential expenses). I can’t give up free money from the 401(k) match and don’t want to miss out on maxing the ultimate retirement account, the HSA. I also still want to max out my Roth IRA, as well, by April 15th of next year.

What is my plan then? It’s nothing fancy, mind-blowing, or revolutionary. I am just going to work enough overtime to plow through as much debt as possible while also lowering my expenses. Working overtime isn’t the healthiest/easiest way, but it is a way for me to meet my investing and debt repayment goals simultaneously. I plan on working an additional 10-15 hours of work per week. I will also help things along by reigning in my spending by using my newly acquired YNAB software.

Here are the approximate resulting cash flows:

  • $900-1350/month in additional income after taxes and other deductions
  • $200/month in reduced expenses

So my new additional debt payments should be between $1100 and $1550 a month. This should allow me to quickly erase the debt on my Discover card which the introductory 0% rate ran out on. Once that is done, I need to start paying down my Chase card. At these current estimates, I won’t be able to wipe out the Chase card before it’s own intro rate expires as well. I may need to make bigger changes, but this is where I’ll start.

Now, I just need to follow through.

Past Mistakes

So my net worth is ($32,439). The scarier number is the ($61,104) that I owe between the credit cards and school/car loans. How has that number gotten so large? As I alluded to in the previous post, I have seemingly deferred expenses by using credits cards while continuing to save in various investment accounts.

I have always had a “Pay Yourself First” attitude when it comes to saving money. The plan was to set up automatic investments in my emergency fund, Roth IRA, HSA, 401(k), then divvy up the rest of the money for expenses. Where I got into trouble was “paying myself first” too much mixed in with some stupid financial decisions and sprinkled with bad luck (while not yet having an appropriate sized emergency fund). Here are a few specific examples, in the order they occurred:

  • Getting a cheap oil change led to my engine seizing up while on the highway (May 2013)
  • Replacing the engine caused me to have to pay for a rental car for several weeks in addition to deductible
  • The car never worked well again
  • Purchase of new car after 2 months of research and the $18k loan to follow, a large % of that being the finance charge (August 2013)
  • Icy winter car troubles (yeah cars don’t like me)
  • Maxing out both my HSA and Roth IRA late in 2013, deferring debt on 0% credit cards

So last year wasn’t my best year for car troubles, that’s a fact. My poor decisions after that debacle have been a large part of why I am where I’m at right now. Unfortunately, I can’t change what has happened or what I’ve done. I can, however, move on by working to reverse the debt I’ve incurred while also learning from these past mistakes.

The Beginning

Here is an up-to-date net worth statement to begin the long road ahead:

Checking: $220

Savings: $2,060

Roth IRA: $11,166

401(k): $8,916

Health Savings Account: $6,303

Total Assets: $28,665

Capital One: $145 (19.8%, have been paying off monthly)

AMEX: $389 (pay off monthly)

Discover: $3,767 (22.99%, recently ran out of 0% interest promo)

Chase: $10,187 (8 months left of 0% interest)

Ford Auto Loan: $16,640 (5.99%)

School Loans: $29,976 (generally 6.8%)

Total Liabilities: $61,104

Current Net Worth: ($32,439)

That is a depressing figure to look at, but I’ll be able to manage. As you can see, I’ve been able to “save” by basically deferring other costs. I will have a follow-up post with details/background about how I managed to get into this situation.

If you have any comments, questions, or suggestions, please leave a comment. Thanks!