Boston Gal's Open Wallet

I know this is probably a silly question, considering how disciplined you seem to be, but... you have absolutely NO credit card debt? When you travel, how do you pay fo that?

Thanks...

 

Hi e.e,

I do carry two credit cards in my wallet and yes, I do charge things on them. But I pay off the balance each and every month in full. I know some PFBloggers do list their credit card balances in the monthly liabilities column even when they also pay them off each month. For some it is because they used to have credit card debt and are used to tracking it. For others they list it because they are playing the credit card arbitrage game.

I had long paid off my cards before starting my blog and I have never done the arbitrage thing, so I choose to leave them off. My thinking is it is hard enough for me to track the line items I do, why add in two more accounts to track when I zero them out monthly anyway?

In my mind they really don't fit into my long term assets or liabilities lists.

Hope that answers the question.

 

Thanks Boston Gal. I started tracking my net worth 4 months ago and wasn't sure how to reflect the monthly credit card balance - which I pay off each month. I think I'll go back and delete it.

The stock market instability impacted my net worth number this month but already I see the trend going back up. I track my various 403 B, mutual funds, etc, in a separate spreadsheet and when there are 'bad days ', i.e. the Dow drops 350, I graph the YTD activity and look for the patterns of gains and losses. Just as long as the trend is up I'm happy.

 

Ahh, I see.... thanks for the response, BG. I, unfortunately, am carrying credit card debt... I am trying to pay it off but it's killing me. I am playing the no-interest-for-a-year-transfer-balance game, but it only gets me so far. Plus, my student loan.... UGH.

 

I, too, pay off my CCs every month, but I include them in my net worth, because *I haven't yet paid them off.* IE, if I have charged $1000 last month and need to pay it this month, I need use $1000 from my checking account to pay that bill. So the CC needs to be listed, or else I have to subtract $1000 from the checking account balance. And of course, it's not just what's due this month, because I've continued to charge on it (payment is for what was charged the prior month). So I often have $3-4000 on the cards except the few days right after a payment posts.

Of course, it's never $1000 even, so it would be difficult to do the subtractions properly so including it makes sense.

 

nice to see you survived november pretty well. it goes to show you that saving and investing go hand in hand.

 

Hi Ann Marie,

I know others have a different take on the credit card thing than I do. Really, it is whatever makes sense for you.

But following your logic, shouldn't you also include all other not-yet-paid bills for the month? How about your electric bill or cable tv bill? I assume you don't carry balances on those - do you subtract those from your checking account if they are still do when you compute your monthly report? Not every bill falls neatly on the last day of the month to allow for a perfectly clean 1st of the month Net Worth snap shot.

But if the bills all get paid during the month - what does it all really matter? If you spend down your checking account and end up taping a savings account to cover a bill - that will generally be reflected in the next months report.

 

Oops - that was me above responding to Ann Marie. I am still getting used to this new "Nickname" thing that has appeared on blogger comments!

 

I know you call this your December net worth report, but it reflects events that happened in November. So I say you still have 31 days to make the big half-million mark in 2007.

 

If you're like me and charge everything to your credit card (and then pay it off every month), the amount on the credit card is much more significant than any other bill (for one thing, pretty much all of my other bills are on it). I keep track of the credit card balance purely as a book-keeping measure though and it doesn't really matter much what you do if you're zeroing it every month. Your net worth will be consistently slightly overstated, but it's consistent so the month-to-month gains and losses are still useful.

 

I realize it won't be the major number in your spreadsheet, but I'm surprised you only value your 'stuff' at $5k. I am not a lavish dresser or decorator, but as a 30-something single guy who owns a small condo, I can quickly figure:

$600: 2 suits @ $300 each (less after depreciation, but I also have lots of dress shirts that I'm not counting.
$500 various shoes including fancy dress shoes, hiking boots, running shoes
$300: 10 Pair jeans/slacks @ average $30
$200: Miscellaneous socks, underwear, gloves, etc. Probably more value, but too hard to add up.
$500: Laptop (3 years old)
$300: Printer and misc software.
$400: Approx 100 CDs. I figure replacement is $1000, but I took of depreciation.
$500: Kayak and gear
$500: Power tools and hand tools
$300: Very conservative value on skates, tennis racket
$100: Various bottles of wine and booze on the shelf
$100: Miscellaneous food in the fridge, Freezer, etc.
$3000: Couch, Bed, dressers, tv, etc. (and my furniture, in a small condo, is pretty cheap)
$500 Books including dictionaries, text books
$300 Class ring and watches

That's over $7k, and I really didn't account for all of my clothes (ski parka anyone?), pots and pans, or other miscellany. If you have a few pairs of $70 jeans, they add up fast!

Besides BG's wallet, this is also important for those of you who rent. Renter's insurance is offered with replacement value. How much would it cost you to replace your laptop, sofware, and your entire wardrobe of clothes?

 

Hi Anonymous,

Thank you for breaking down the value of your possessions. I agree that I likely have under estimated the value of all my "stuff". But I did it rather deliberately. I consider it a good estimate of what I could get at "fire sale" prices.

This does not reflect my insured value, just what I could reasonably expect to get selling all my worldly goods on craigslist, Ebay, or at a yard sale...

 

i know what it's like to make progress and still wish you had done better in this or that area. (i felt like that this month!)

i think that's a good sign, though, of someone who is good at visualizing their goals and getting attached to them. and as long as we don't allow ourselves to get too disappointed, that's probably a good thing.

congrats on the upward net worth balance!

 

Congrats on your positive upward trend. I feel good about my own upticks (though my upticks are a little lower tick-y than yours), and I am ambitiously listing some stuff on ebay this month to try to finish the year with my own milestone goal. It would help if we had a little Santa Rally, too!

I am also in the camp that says that if you prepare your Jan 08 net worth statement on 1 January to the tune of $500k, you could surely claim that you finished the year with a half-mil net worth. No business is conducted on New Year's Day, anyway! :-)

 

To Anonymous who posted the value of his "stuff":

I think it is crazy to list the value of your "stuff" as part of your net worth, except for perhaps some large ticket items like expensive jewelry. But I wouldn't even list big items like TVs, computers, etc. The net worth that you should focus on is your realistic net worth if you wanted to convert your holdings to cash. You wouldn't sell your clothes because first of all what would you wear and second of all no one would buy them. A $300 suit wouldn't go for more than $20 second hand, who the heck wants a second hand suit particularly if it was a fairly cheap suit to begin with? Same goes for your shoes, socks, underwear, etc. I can't believe you would include those things in net worth. Those are simple consumer goods that don't have resale value. Otherwise I could have $2 million net worth all in cash, go out and buy $2 million worth of clothes, shoes, and various household goods. And then say I have a $1 million net worth after depreciating everything by 50%, even though realistically my net worth would be zero. Those things aren't real assets. In fact of all the PF blogs I read this is the only one where the author lists her "stuff". But considering it's only around 1% of her net worth it doesn't really change anything. I'd be more concerned aboutt the value she's carrying on her two properties which haven't changed one cent throughout this real estate slowdown. Even just the transaction costs for selling would amount to around $30k, that's before even reducing the prices.

 

To the anonymous concerned about the value of Boston Gal's properties - if I recall correctly, she uses their purchase price only, not their market value, and doesn't recognise any gains or losses in their value. (BG, am I correct?)

Even in the current market, that would still make them conservatively valued. YMMV, but when you know you're in a boom, it's wise not to count on the appreciation from it.

-Pam

 

I also don't value personal property. I think it shouldn't be valued at all. I also barely value our two cars. We own them but they are crap. Whose going to pay $300 for a used suit? Go to goodwill for $20.

The reality is most people's personal possessions are worth very little.

And I also value my house as purchase price. Likelyhood of getting that, I'm not sure. But when we move again out of the area, we'll have a relocation package and it'll be at least purchase price if not more.

 

To PipneyJane:

No, BostonGal is not using her purchase prices for her home values. She is using estimated values based on similar properties in her neighborhood that have sold. I think it is fine that she hasn't lowered the worth of these assets if she is valuing them very conservatively like she has said. However I do agree that she should reduce them by transaction costs which are significant compared to her net worth. Between the two properties her transaction costs would amount to around $30,000- $40,000.

By the way, I also agree that including the value of things like clothes, TV, computer, and the rest of your household goods is pointless. It will just pad your net worth but not reflect reality. You would never get much cash if any for most of those kinds of things. And the fact is you would never want to sell all of it because you obviously need some of those things.

 

Hi BG,
Thanks for blogging! I am just getting started keeping track of everything and saving/investing more. Do you have any tips for getting started? Especially around what things to track and how to allocated money? Do you work off a budget for each month?

Thank you!