Recession Map from Moody's Analyitcs

Here is a handy map from Moody's Analytics that you can use to figure out if your city is still in recession, at risk, in recovery or expanding.

For me, the map tells me that my closest city, the one in which I work is in recovery.

Mid-June Update

(1) Max out 401k(s) - $18,079 (53%)(goal is $34,000)
(2) Max out IRA(s) - $4102 (41%)(goal is $10,000)
(3) Add to e/r fund - $4800 (48%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(5) House projects - $600 (12%)(goal is $5,000)
(6)  Trading account fund - $50 (1%)(goal is $5,000)

Total - $30,121 (44%)

Closing in on the half way mark for the year, we have caught up a bit more on our 2012 savings goals.  At present, we are $1725 behind on our goals.  The extra pay period in May helped us make up some of the deficiency that has taken root earlier this year.  But otherwise, we have just been trying to keep adding to our accounts by Snowflaking on a regular basis and with any extra founds hanging around at the end of a pay period.

June is Wedding Month

Interesting to learn that money causes the most arguments between couples.  And since June is the most popular month for Weddings, it seems appropriate to revisit this issue.

• Only 43 percent of couples talked about money before marriage, according to a May 2010 survey conducted for American Express.

Have the money talk.  Mr. Sam and I had, what we call a financial summit, before we bought a house together (this was before we got married).  We sat down, with no distractions, and we each brought information regarding our current assets, current debts and a copy of our credit report, and a pay stub and talked through each of those categories.  No it wasn't romantic and there was some embarrassment on both sides of the table, but it was a very helpful step in our financial realtionship.  

• Be up front about your financial situation, have the "money talk" long before the big day, and tackle any challenges as a couple.

Yes, we had the money talk before our wedding.  But we continued to keep our finances separate until we married.  We did set up a joint house account, and we calculated, by income, what percentage each of us would put into the house account to cover the mortgage, insurance, utilities and joint expenses of living together.  I took over the task of paying joint expenses since Mr. Sam wasn't great about paying his bills on time.  

• It's helpful to have basic guidelines in place that will keep you on the same page. For instance, purchases under a certain dollar amount can be left to each spouse's discretion, while larger ones should to be cleared with your partner.

We work from an allowance system, each of us gets the same amount of money, X2 a month, for discretionary spending.  We also have a rules system.  Any purchase over $300, even if spend from allowance money, requires a discussion and agreement between the two of us.  We also use the $100 rule, any purchase over a $100 requires a day's cooling off period for each $100.  So, a $600 purchase, requires a discussion, agreement between the two of us and a six day waiting period.

• Some couples might be comfortable pooling all of their money, and others may not; neither is the "right" choice, but that should be decided explicitly.

We use a his, hers, ours system.  We each maintain our own account for our allowance money and then we have an ours account for our joint spending, saving and bill paying.  

If you are in a co-habitation or marital relationship, what systems do you use, what works and what doesn't work for you and your significant other?

2007 - 2010 Survey of Consumer Finances

Following up on my earlier Balance of Power post there was a timely article regarding states that had the biggest drops in net worth.  Guess which state made the list  . . . Florida.

The very interesting underlying report* from the Federal Reserve can be found here.  The data and charts are fascinating.

• The decline in median income was most pronounced among more highly educated families, families headed by persons aged less than 55, and families living in the South and West regions.

Well that would be us, highly educated, less than 55 and in the South.  And, no my income has not recovered to 2008 levels.

• The decreases in family income over the 2007−10 period were substantially smaller than the declines in both median and mean net worth; overall, median net worth fell 38.8 percent, and the mean fell 14.7 percent.

So, that is the good news I guess.  Incomes didn't fall as hard as net worth.  Average net worth is now down to the level found in the early 1990s.  So almost two decades of progress was wiped out for average families.  

• Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices.  The decline in median net worth was especially large for families in groups where housing was a larger share of assets, such as families headed by someone 35 to 44 years old (median net worth fell 54.4 percent) and families in the West region (median net worth fell 55.3 percent).

Well, that would be us, for sure, we have lost almost $200,000 in our real estate investments (that doesn't include our primary home, which also lost value).  As mentioned in prior post, we were heavily weighted in real estate before the bubble popped so we have taken a major hit in our net worth due to the real estate collapse.

*I find the title of this survey to be ironic.  We are only consumers in the eye of the Federal Reserve.  

I'll Be Rich When . . .

According to this article from msnbc.com Gallup found that the median amount of savings, real estate holdings and other investments Americans would want to have in the bank in order to feel rich was $1 million.

I thought this was an interesting tidbit, since Sam, Inc. has been over the $1 million mark for six months running.    And guess what, I don't feel rich and Mr. Sam's favorite saying is "we must be the poorest rich people ever."

Mr. Sam's saying comes from the fact that we restrict how much we can spend via our allowance system and our rules.  So its hard to feel rich when you have to pay attention to how much you are spending otherwise you'll run out of funds.  I think I probably feel the same way, you are "rich" when you can spend without thinking or without care.  We, on the other hand, have gotten to this point only because we think about our day to day spending every day (just about).

I also think that your target income or target net worth is driven by your peers, and by what you see in your circle of reference.  I blogged about this back in December when I was at a "ladies who lunch"  charity event on Palm Beach.  A person's normal changes over time.  So while I am very happy that we have reached the $1 million mark, and recognize the hard work and discipline it took to get to this point, I don't feel rich at all.

What say you?  What is your target number for income and net worth in order to feel rich?

Balance of Power

For a very long time, our investments, and our net worth, were heavily weighted towards real estate.

But due to the real estate bust here in Florida, many of our properties lost considerable value over the last few years.  It appears that the market, maybe, has found its bottom because prices have started to inch up and housing stocks are way down.  But, our properties are filled and paying for themselves.  And by paying for themselves, that means that our tenants pay the mortgage and other costs.  That is the joy of rental property, someone else pays the mortgage.

In June of 2008, our real estate investments were valued at $460,018 (valuation less outstanding debt).  As for our retirement/investment accounts, in June 2008 they were valued at $290,145 (this is just before the market tanked in the fall of 2008).

Now, 4 years later, our real estate investments are valued at $287,810 and our retirement/investment accounts are valued at $521,634.

We have made good progress in the last few years in our retirement savings by (1) maxing out all our accounts, (2) buying some great stocks and funds at bargain prices in 2009 and 2010, (3) by taking advantage of Mr. Sam's company match.

Is it painful to lose $172,208, in 4 years, in the real estate market?  You betcha!  But really, we haven't lost that money, yet, because we have not sold any of our real estate holdings.  In the mean time the properties are filled and paying for themselves (although looks like one of our tenants will be leaving in September).  I am hopeful that the Florida real estate market has found its bottom and over the next 10 years the properties will appreciate to the point that we can make a profit.

Principal Progress

In updating our networthiq.com numbers for this month, I noticed that our primary mortgage is now diminishing at the rate of more than a $1000 a month.

Whoo-hoo!!  That is cause for celebration in my mind (no it doesn't take much at all to get me excited).

When we pay our regular mortgage payment, we are putting $617 towards principal.  Then when you throw in the extra payment of $415 a month, that adds up to $1032 in principal.

I actually didn't notice that we've been making this $1000+ principal payment progress since, about, October 2011.  I know we are paying extra each month, but it didn't all add up until just now.

2012 Goals - June Update

(1) Max out 401k(s) - $16,879 (50%)(goal is $34,000)
(2) Max out IRA(s) - $3502 (35%)(goal is $10,000)
(3) Add to e/r fund - $4800 (48%)(goal is $10,000)
(4) Pay down mortgage - $2075 (42%)(goal is $5,000)
(5) House projects - $600 (12%)(goal is $5,000)
(6)  Trading account fund - $50 (1%)(goal is $5,000)

Total - $27,906 (40%)

At present, we are about $2600 behind on our 2012 goals.  We have made some progress in catching up during May, as I though we could, because I was paid three times last month.  We need to keep pressure on the 2012 IRA goal this month.  I've also started saving towards the trading account fund, which may end up being extra savings and not utilized for trading.