If you are reading this on the morning after I publish this post, you are most likely easing yourself back into the real world. I feel for you. But I’m not there quite yet. I am writing this from your past. Your past of last night to be precise. It is currently my January 1, 2019; a significant precipice of a day and the day I finally got up the energy to write a long-overdue post. Why today you ask?
New Year’s Day, in my opinion, far outshines it’s big dramatic sister, “Eve.” Eve is all kisses, champagne, disco balls, and tooting your own horn. Her just slightly younger sister, Day, is all laziness, stark reality, and last-ditch efforts for self-reflection. And since The Lady is the Black is far more “Day” than “Eve” in personality type, today seemed like the day to write. (Plus, I have to work tomorrow. Ugh. Poor you.)
So grab another cup of coffee and settle in. I hope not to bore you with too much backstory but if you are dying to know, you could read last year’s similar post that outlines where I was one year ago.
I knew it had been some months since I ran my net worth. (Shout out to my friend Chief Mom Officer for the inspiration.) Honestly, I was kind dreading it for a few important and relevant reasons. One, I’ve been slacking HARD on my personal finances (including this blog so apologies.) Next, the stock market took a serious crap. (I say that like it really has any influence in my life. It really doesn’t because I’m a long-term investor but I didn’t really want to see the numbers.) But I ran it today and it was bad…and good.
Net Worth 2017 (December): -$10,354 Net Worth 2018 (December): -$32,827
Yup, all that red looks bad.
However, I know why it dropped and actually expected it. For those who know my personal finance nemesis, you aren’t surprised to hear the drop came in the form of another year of tax bills. I can’t even stand to hear the sound of my own voice about this one any more but I’ll just say (once again), pay your estimated taxes if you have them. Just do it.
As the classy lady that I am, I don’t focus on the negative. It’s my assets you should take a ganda’ at. (For extra comic relief moment, read that last sentence again with a Mae West accent in your head. You’re welcome.)
The Lady in the Black has many assets.
Hey! Year end assets are about $35,000. Not bad. And my assets, although, not increasing, are NOT tanking the way I pictured.
NOTE: A few disclosures. First, my assets didn’t fluctuate too much with the market because I simply don’t have that much invested yet. My total investments don’t total $6,000. My biggest asset is Itsy (my 2012 Prius). The other largest assets are the cash values of 2 life insurance policies, 2 retirement accounts and a cash management account. Only the 401K has market exposure. Lastly, I’m one of those investors that automates their monthly investments. (I can’t explain it myself but research dollar-cost averaging.)
So, blah, blah, blah. The Lady in the Black is NOT yet in the black.
However, I strongly feel that it really is better to focus on net worth instead of your debt totals. Personally, I don’t feel I really began to change the tide on my personal finances until I started adding assets acquisition into my debt reduction strategy. I know it doesn’t make too much sense to those of us programmed to struggle with your money and battle your debt.
For me, there is a huge psychological benefit in balancing out what I have with what I’ve lost. Which brings me to celebrate a few financial victories this year.
For those of you who aren’t familiar with my current retirement funding status, let’s just say it started with a capital F and ends in a small d. I have only about $5,000 in an old 401K….and I’m 48. So, ya. Not great.
For 2018, I wanted to make some type of move to improving that situation. I opened a ROTH IRA and started contributing $200/month. It was good. I was proud. In September, I increased my contribution t to $458/month (which is the monthly payment I’d make if I was “maxing” out.)
The cooler thing is that I hope to be able to sustain that “max” contribution all through 2019.
Again, I’m pretty bored of myself talking about how I need to prioritize my emergency fund. I’m sick of my own inability to practice what I preach but it’s an important topic, and financial metric.
As a single-mom, freelance writer, an emergency fund is imperative. As such, 2018 witnessed The Lady in the Black trying 3 different strategies to build her fund. All are predicated on the concepts of automatic deposits. The difference is in the monthly amounts and into which accounts they were deposited.
As a side note, my financial advisor and I agreed that access to this fund was a barrier to me truly being successful saving. In short, if it was there, I spent it. With her help, I opened a cash management account. I can’t access the money directly. I have to ask a very nice lady to transfer funds.
For 2018, my success with my emergency fund is tepid. I got “hot” there for a while and I was contributing over $1,600 a month to my emergency fund. However, it ran a bit cold. All that digging deep plus the increase in my IRA contributions, plus my variable income had me recently backing that my contributions by about half.
However, I will say that my emergency fund has quite literally saved my ass multiple times this past year. It’s a super, duper smart move and I’m really happy I have a plan of attack While I don’t have much in way of a balance ($2,200), I am working on it. I consider it a matter of vigilance and fine tuning at this point.
I don’t have too many passive income streams but the one I’m finding fun to track are my dividends.
My year-end dividends totaled $86. I know. That’s not a lot but that $86 I didn’t have to earn or save. $86 of my money making money. It’s also the first full year of me investing so I get to actually see the quarterly patterns. And that’s some geeky graph fun right there!
I have only a handful of consumer debt buckets. My car loan which is at a usurious interest rate, one converted secured credit card, one store card, and one gas card. The last three were solely for the purpose of increasing my credit.
My auto loan has a stupid high interest rate so I tried to refinance. Nope. Credit score was too crappy. So I did what I could, I increased my monthly payments. Instead of the requisite $272, most months I paid $400. I offering this level of detail because I think it’s important to remember that if you can’t beat a dead horse, you certainly can poke at it with a sharp stick.
Interestingly enough, I currently owe less than my car’s private party sell value. That’s a cool feeling. I’m not planning on doing that because I’m only about $5,000 away from owning her outright. And THAT will be a good day… in 2020 I hope.
There’s a segment of consumer debt called “the devil”? Yes. Because I believe credit cards are the devil on Earth. I lived without a single credit card for over a decade. Then, in an effort to improve my credit score, I opened a secured credit card for a whopping $200. After about a year (as promised), they converted it to an unsecured card and raised my credit limit. I used the card sparingly and paid off the balance in full every month.
But the devil loves good girls (good girls who used to be much, much worse.) Over 2018, my credit limit kept increasing, complete with a nice “Congratulations” email that felt more like an unwelcome dick pick than an announcement of increased credit limit. And yet, I continued to spend.
The good news? My credit limit is now just over $5,000. The bad news? My balance owed is $2,800 at 27.15%. (You see the devil now, right?)
So, I’m doing what any self-respecting good girl does when a bad boy starts up with his bullshit. I cut him out of my life. Literally. I play to cut that bastard up just as soon as I have my next paycheck in hand. While I was SUPER fortunate to only have paid $183 in credit card interest charges in 2018, the devil is breathing down my neck. So, it’s cutsville for you Beelzebub.
With all this talk of improving credit limits, you’d think my credit score would be golden by now. Well, not quite.
I started working on my credit score in earnest in 2016. It was bleak. By January 2017, I’d raised it considerably to 612. By year end 2018, I’m at 679. But worth’s celebrating is this green bar.
For a brief moment in 2018, my credit score crossed into “Good” category. While I couldn’t sustain it, I did it. And it shows me I can do it in the future.
I admit it. I make a good wage. I’m a seasoned marketing writer who freelances with a name-brand pharmaceutical account. That’s pretty cool but the choice to be freelance is not without it’s consequences. In short, cash flow (and automated bill payment, savings, and investments) is a bitch when your weekly income chart looks like this.
I did negotiate my rate for a 5% increase mid-year.
The weirdest thing about my income is how similar my year-end total is from 2017. It’s almost the exact same! And that is a blessing for me. Essentially, I have the benefits of freelance lifestyle and flexibility with the overall security of a full-time job. Of course, the flip side to having 1 main gig is the chance you become expendable. That’s why the emergency fund is imperative.
Adulting and Other Boring Crap
Again, let’s give credit where credit is due. Adulting is hard. There’s nothing real sexy about paying your own health and dental insurance. There’s nothing intriguing about putting gas in your car or grocery shopping. But I did it this past year and you did, too.
I am an adult. With that comes certain social, financial, and physical obligations. I am a mother. With that comes an additional layer of responsibility and activity. I am single. With dating comes an additional layer of involvement. It’s a lot, people. A damn lot, in fact.
So, my adult reader, if you are anything like me (or even have a few less or more layers) I give you the proverbial slow clap. Because regardless of your net worth, or your tax situation, or the value of your investments, or your credit score, you are an adult. And that in itself is an achievement.null
Slow clap to all you adults out there.
Go Get Another Coffee
Ok, that’s far more than enough about The Lady in the Black and her finances! Go get another cup of coffee and pat yourself on the back for surviving today and all of 2018.
Happy New Year to all of my Lady and Gentlemen friends!
If I can help even one other person besides myself with this post then I’m already kicking 2019 personal finance ass!