Monday, January 30, 2012

My Retirement Planning

Perhaps one of the toughest perceived minefields to navigate is the topic of retirement planning. There’s a wide range of questions ranging from how much will I need to will I have to work until they have to carry my dead body out of the building? Then there’s the vehicles, 401ks, company matches, Iras and everything else that’s under the sun. There’s an endless and dizzying array of options, formulas, theories and suggestions that financial goobers and all our broke advisors recommend and advise.

Here’s my two cents, which is not theory or ideas. These are the practices that I have and am implementing in my life.

Before you Fund

When I began my ascent over my mountain of debt I was faced with two daunting and scary challenges. (1) Use up all of my pathetic and anorexic savings, leaving $1,000 to pay off debt to get my snowball rolling, and (2) suspend all retirement contributions while I worked my debt snowball. This meant, *GULP* missing out on my 401(k) match, which at the time was 100% up to 6% of contributions. Now while the match was sweet and gave me immediate return on my money, there were bigger and stronger forces at work here. By giving sold out and focused gazelle intensity for a short period of time, I attacked my debt snowball with unbridled fury and within the same year I was debt free and able to go right back to steady and strong contributions for retirement without feeling a pinch.

A disclaimer here though, if you are working your debt snowball and your forecast takes you beyond a few years to climb out; I DO NOT ADVISE STOPPING RETIREMENT CONTRIBUTIONS. If  you’ve got a big ticket debt item that’s not a mortgage, like student loan debt or something you can’t sell and be rid of, then I would advise to give sold out and focused intensity on everything up to that item. Go gazelle intense and when you reach that big ticket item on the debt snowball list, raise up your emergency fund to fully funded (3-6 months of expenses) and pick up retirement contributions (8-12% of your income). Gear up for that long haul but in the mean time, sell everything that’s not bolted down, trim your budget and get creative. There’s tons of really creative and cool things you can do to pump up income and/or keep your costs down, heck, I became a flexatarian!

The 15% Rule

Once you’re debt free from everything (but the house) and have a fully funded emergency fund, it’s time to build some wealth J! The tactic I use is contributing 15% of my gross income to retirement vehicles every year and all the time. Up to this point we busted up American Excess, kicked Sallie Mae to the curb and have one or none monthly payments due to debt. Why get rid of monthly loan payments? Because our single greatest wealth building tool is our income, period. When you free up your monthly income and no longer have debt payments, contributing 15% of your gross income to retirement will be second nature.

I start with my company retirement plan. In some cases, a company will match your contributions up to a certain percentage. This is free money, take it. Go all the way up to the match and the remaining amount needed for 15%, go ahead and funnel into a Roth IRA, do not include the company match in your 15% formula, you’ll thank me later when you have extra money to give away J!

In a recent change of events, my employer is no longer offering a company match. But since I can still contribute pre-tax income to the company retirement plan, I am putting 4% of my pre-tax income into my 401(k) and invest that money into a bond fund (my equity options stink) so that way in the long-term, my hard earned dollars can at least keep pace with inflation and I can access a little tax savings from current year to current year. So that leaves me with 11% left to allocate. I funnel this amount into a Roth IRA and invest in four types of mutual funds with long-term and proven historical track records (at least 10 years old with average annualized returns of over 12% since inception): Growth, Growth & Income, International and Aggressive Growth.

I do not use target dated funds. These guys run a ratio of holdings between equities and bonds, and shift towards bonds as the target date gets closer. So while the target dated fund does a little better with inflation for the person who plays it safe, over time the four type of funds I recommend will average 12% average annualized returns and kick inflation and taxes to the moon and back, all the while target-dated people wanted safety? The fact is that bonds are not the safe investment vehicle that advisors have touted them to be. You know how I feel about debt in general, (yes, bonds are debt instruments), but left in a long-term investment, especially over 30 years, you will cheat yourself valued growth by “playing it safe” against investing for value in time tested and historically proven mutual funds.

So let’s take a look at a real life example, mine.

Taken straight from the wonderful investing calculator tool at, I’ve inputted a starting amount of our current household balance within retirement accounts, as of the end of 2011. If all things hold true, we maintain our current salaries and continue to put away 15% of gross income for retirement and our mutual funds maintain average annualized returns of 12%, over 30 years, with the power of compound interest, we will have over $5 million dollars JUST IN RETIREMENT ACCOUNTS. What if I’m half wrong, still not half bad wouldn’t you say?!

Traditional vs. Roth

Tax savings is the ultimate catalyst for the Roth/Traditional debate. But breakdown of which you should use should be simple. Let’s look at my case study (of myself). Say, for 30 years I contribute 15% of pre-tax income to a Traditional IRA. Per the chart I would have total contributions north of $400,000. All 30 years I would have been able to deduct that money from my annual tax bill. Now when “MANDATORY WITHDRAWALS” occur due to rules and regulations from our fine friends in D.C, I will be taxed on my growth at ordinary income rates. So, say I am forced to withdraw 4% of my nest egg in my first year of mandatory withdrawals, this would be an annual withdrawal of $207,612 that would be taxed (as of today) north of 35%, translated, the KGB US Government will steal $72,000 of my nest egg every year because I was responsible and saved for retirement through a Traditional IRA.

Now say you invest all of that money into a Roth IRA. Yes, the 30 year contributions of $400,000 would have been taxed along the way. But the growth of over $4 million dollars can be withdrawn (say it with me class) TAX-FREEEEEE! The argument essentially boils down to this: If your mandatory retirement withdrawals put you in a higher tax bracket than now – use a Roth IRA. If you do not have as much time to build and accumulate wealth and mandatory annual withdrawals put you at the same or lower annual income – use a Traditional IRA.

Look, I acknowledge that I exist in a world where pensions are a thing of the past and Social (In)security is in a pathetic state. I don’t need the KGB US Government to take of me. I need to take care of myself. By getting costs under control and investing in the long-term, I will retire with dignity. It is up to me to save, not my company or our inept government to do it for me, it’s strictly up to you and me to take care of ourselves

Wednesday, January 25, 2012

My Thoughts on...Finance Education

The state of finance education in this country is pitiful, and that’s the G rated way to say it. I am absolultely disgusted that I went through 15 years of schooling, and was introduced to and learned on my own about retirement investment vehicles, types of insurance, the dangers of loans, mortgage options offered in the market place, etc. This is not to say that I expect, nor desire any education system, public or private, to tell and spoon feed pupils and indoctrinate them with how to think. In my ideal world, a basic finance class that introduced these basic concepts, and showed everyone that passed through it a chart displaying the magic of compound interest, would be shown and introduced to everyone by the time they reached the age of 18. With just a baseline knowledge, I would have looked into and researched these concepts further, and came to the realizations that I have made in the last few years when I was in high school or in grade school. Imagine the effects of having herds of people, aware of sound financial practices, entering higher education and eventually the work force, armed with this knowledge. I have the distinct feeling that payday lenders, our friends at Sallie Mae, high fee investment advisors, credit card companies and financial institutions that generate substantial income from their lending business, would all be forced to see a substantial decrease in their quality of life. *But honestly, do any of you feel bad for them??*
I’ll proceed from here with a bit of caution to not come across like a paranoid android, but leaving a financial institution to educate and/or make investment and lending decisions for you, is the equivalent of jumping into shark infested waters with a wetsuit made out of chum. It is NOT A GOOD IDEA to let this happen. And if you leave it to the KGB US Government to educate you on this, then you will be forever doomed to financial stagnation. Self education through independent sources, and making the decision for yourself is without question the best place to start. Now while I don’t believe that every person/entity that makes commission off me is out to get me, I understand and recognize that banks and lenders are not non-profit entities. It is in their interest and bottom line to have me pay fees and interest to them. They do not offer ARMs, HEL(L)s, payday loans, or any form of a line of credit, because they genuinely care about my ability or desire to go on vacation or start a business, they offer these products because these are their best resources of generating revenue.
Let’s look at the credit card, my favorite enemy. It’s my favorite enemy because I loathe everything about it and what it stands for, and because it makes more money for the lender than it does for me. With a balance, it would not be outrageous to see the lender charge a rate on a revolving line of credit in the ballpark of 18%. But I was the smart one making 3% back on my purchases, right? Look at the facts from the other side of it. Say for instance I am American Excess. I lend $100 out to my customer with the credit card. The customer, charges $100 and pays the bill in full one day after due date. I, the entire time, expected to be paid back the principal I lent out ($100) and now, with this “investment” made 18% in returns, in one month! Which leads me to my underlying thoughiwouldneveradmitinperson reason on why I detest credit cards: They return greater average annualized returns for the lender than my best mutual funds return for me.
Lenders do not offer their products because they want to help me, they do it because they want a chunk of my income every single month. And I firmly believe that I would have saved myself a ton of stupid tax, if, at 8 years old, I could have explained why earning 12% on mutual funds invested is greater than 3% in reward point “earned” by spending.

Tuesday, January 24, 2012

My Cash Based Life

Switching over to a cash based lifestyle was one of the most distinct and critical components to my total money makeover. Living on cash and saving up to pay for things revolutionized my perceived “standard of living” and encouraged me to never carry a credit card for the rest of my life. But continuing in the back to basics fashion, here’s a few tips to help you get started.

Get a liquid emergency fund

First and foremost put some cushion between you and life. If you swear off credit and don’t have some padding, your only option will be to utilize the evil and deceptive snake known as credit. A fully funded emergency fund should lie anywhere north of 3 – 6 months of expenses.

Go on auto-pilot with as much as possible

Automatic deductions and payments can make saving and paying bills a no brainer. We pay rent, utilities, utilize donations, save for insurance premiums and pay for gym memberships all through automatic payments and deductions. The less involvement I have from the second my paycheck hits my account, the less tempted I am to skew the money elsewhere. In setting a budget before the start of every month I tell my money where to go. And in doing so I prioritize saving, spending and giving.

Know your weak spots

I have long since abandoned the ideology of “what you don’t know can’t hurt you,” and have adopted “what you don’t know will kill you.” I found a little gem the other day when my wife and I were cleaning out our apartment for pre-spring cleaning. It was my old checkbook, and the dates on it were when I was pre-Ramsey. My monthly credit card bill used to tally around $1,600 every month. I blew money and overspent on entertainment and groceries. This happens no more. While I do not recommend keeping 20 envelopes with cash in your secret hiding place, I would recommend breaking it down to no more than half a dozen. I have envelopes for monthly entertainment, groceries, clothing and giving (on hand if there’s an immediate need). The best safeguards I put in place were where I could protect me from myself. When I paid with a credit card I overspent and with cash I am more conscientious of how much I spend.

The overall message here is to live below your means. It took courage to take a real look at my financial mirror. I saw a fat person on the road to diabetes and amputation. Now, three years into flexing my financial muscles, I’m in marathon shape and never going back to my old lifestyle. It was hard getting those first steps together. But little by little, with focused intensity over a period of time, you too can earn financial peace.

Wednesday, January 18, 2012

My Gazelle Intensity

A conversation my wife and I had the other night has left me in a state of self reflection. We were out for an evening stroll during an unusually warm (40ish - Fahrenheit) January night, and were spit-balling ideas, goals and dreams for our lives after we buy our first home together. On the material side, there’s not a lot that I personally want or am craving. I’d like a couple of nice, used vehicles to get us from point A & B and enough furniture in our home so our voices don’t echo off the walls. Generally, I used to think that when we hit our pinnacle point that I would add on my “want to buy” list things like: a fishing boat, a convertible, a Delorean with a flux capacitor, you know, the usual. Instead what I’m finding as we are getting closer to our goal is that I have less of a desire to hold material possessions that impress other people. I would rather payoff layaway Christmas items for families than drive the latest convertible model.

But when pressed for one thing in my house that I would want, I know exactly what it is. A statue, in the back yard, of a gazelle. For those who are not members of the Ramsey nation, I’ll bring you up to speed. When starting your Total Money Makeover, when you make the transition to focusing on you and your family’s financial well-being, you devote every ounce of energy, blood, sweat and tears to working each baby step as quickly as humanly possible. To bust through each of the first baby steps, (I. 1K emergency fund in the bank, II. Debt snowball, III. 3-6 months emergency fund in the bank) you sell things on ebay, you work as much overtime as they will give you, you take on an extra part-time job, you do everything within possibility to climb out of the debt trench and start the ascension to financial peace.

My gazelle intensity (and certification that I am a true nerd) was a well built game plan that improved the offense, but just as importantly stressed defense. I worked as much overtime as my employer would give me and my wife tutored in addition to her full-time job. On the defense side we cut our monthly expenses, and then cut some more, and then cut some more. We stripped our grocery and entertainment budgets to the bone, and let’s just say I know every park within a 10 mile radius of our apartment that shows free movies during the summer, and the same for lounges that host live music without a cover charge (and we stayed hydrated at those events with an old friend called water, not bottled, tap, and yes I am still alive to talk about it!). We held back on vacations, we dumpster dove for grocery carts, we dragged into our apartment 100+ pound entertainment centers from the dumpster, we picked up bags of clothes off freecycle and shop at our local Salvation Army for the “latest apparel,” we became flexatarians, we’ve continued to use public transportation instead of owning cars, we do our own taxes and combined we gross close to 100K and live on close to 20K. And you know what? It changed me.

As we get further along in our baby steps and the goals we have on paper become reality, the things I crave and desire and put as new goals aren’t lavish luxuries, they’ve become genuine experiences that represent where we’ve been, where we are and where we are going. So my “gazelle statue,” will be a physical reminder of how hard we worked and sacrificed to make the most of the resources available to us and achieved financial peace. It will represent the anti-consumerism lifestyle we live. And that no matter what life throws our way, we will be fine. As long as I can breathe I will carry with me the heart, drive, desire and humility to provide for my family financially, spiritually and emotionally. Whether I am faced with delivering pizzas, sorting boxes at UPS, or staying at the office job, we will always be on a plan to tell our money where to go rather than wonder where it went.

Tuesday, January 17, 2012

My Thoughts on...Single Stocks

Oddly coincidental is the fact that in the last few private conversations I have had with friends and family, the topic of single stocks has been on the menu. So I found it fitting to address my stance on this with all of you. There’s a barrage of presuppositions about single stocks when it comes to our investing portfolios, but the biggest that stands out to me and which I will address is: single stocks provide better returns.

This in fact is a myth.

The truth is that single stocks bring on a considerable amount of risk. Enough risk that returns are diminished over a lifetime of investing. Yes, you can make a lifetime fortune getting in on an IPO of the next Google or Microsoft. But you will burn through hundreds of thousands of companies and dollars (millions for companies gambling on single stocks), and even then a monkey could tell you that there are no guarantees “the next great thing” will pan out.

Even if you aren’t swinging for the fences and are fishing for a return that beats inflation and taxes, single stocks are still too risky and faulty. In principal, say you invest in a stable, strong and huge mega-company that represents a backbone of America, like say McDonald’s. A few decades worth of stable and (I’ll give you the benefit of the doubt) great returns of say over 12% during the life of the investment, can all be undone by a corporate scandal, E.coli outbreak, worker strike or bankruptcy filing (these things can NEVER happen, right??!!). And these events can and will leave a single company reeling for years, diminishing your previously earned returns. As quick as that stock price can rise, the quicker it can fall.

But let’s look at a real world example. Let’s pit a traditional, American company, Bank of America (BAC) up against one of the finer mutual funds I know of, Aston/Fairpointe Mid Cap (CHTTX). We’ll use the crash and boom of 2008 and 2011 as our backdrop. Say you invest $1,000 on January 7th, 2008 in each of these investment options. For BAC, this would have bought you 25.97 shares of BofA at a price of $38.50 per share. For CHTTX, you would have 37.75 shares at a price of $26.49 per share. At its absolute worst, the mid-cap mutual fund’s price fell to $13.29 per share during the week of February 23rd, 2009, halving your initial $1,000 investment to around $500, pretty rough huh? Well you ain’t seen nothing yet! During that same week, BofA shares fell to $3.95 price per share, plotting your initial investment of 1K down to roughly $102. As of today, BofA stock is bouncing around 6.66 (interesting huh?!) and after about 4 years, your 1K is now worth $172. As for the example where we held CHTTX, at the previous trading day’s close the price was $30.96 per share, meaning your 1K investment is now worth $1,168.

Now I’ll be nice, over a human lifetime the BofA stock will come back. Once the geniuses that run that company figure out that giving loans to people who can’t pay them is a recipe for disaster, the company stock will recover. While we wait for that to happen, for long term investing I’m going to park my money with a proven, time tested mutual fund that has been around for at least 10 years and has average annualized returns of over 10% since inception. You see, GOOD mutual fund teams live, breathe and eat company evaluations. They look for long-term growth potential and low debt to income ratios. I do not have this much time, schooling, nor team members around me to even come close to this expertise. Neither do you. You and your golfing buddy do not have this figured out. In short, single stocks leave you vulnerable to down-markets/company scandal/stupid decisions, and investing in a GOOD mutual fund for the long term is one of the pillars to financial peace.

Friday, January 13, 2012

My Wedding

My wedding was the happiest day in my life. It was a living testimony to the love shared between myself, my wife and God. Almost two years removed from the date, I continue to look back on it with the fondest of memories, a smile on my face, and with pride that the planning and follow-thru of the event was an exemplary example (hugely thanks to my wife) of frugality in action.

For starters we took a debt-free and unconventional approach to our nuptials. We opted to pay for our wedding, in cash, on our own without aid from family members. My take on it goes something like this: We have been blessed not only in our careers but also to have based our personal financial decisions and behaviors on God and grandma’s ways of handling money at a younger age. That, along with the fact that my in-laws lived in a house equivalent to an estrogen-filled ocean, led me to lobby my wife that we take the event on our own, so that our families could enjoy and celebrate with us, without worrying about the event “following them home.” Plus, as far as my in-laws go, the people have paid for enough weddings already and may have another on the horizon, so I just thought I’d give them a breather for once J

So, armed with our set budget THAT WE STUCK TO, the cash saved for, we sought out to plan a festive and frugal affair that our family and friends would enjoy celebrating along with us. Here are a few key lessons I learned and that helped us keep costs down.


Perhaps the greatest achievement in my pursuit of being “The Ultimate Cheapskate” is this bad boy. We got my wife’s dress for FREE!!!! Using one of the best resources known to the internet, we have to thank for this. Now we’ve been freecycling for years now, but when we saw, “Wedding Dress” in one of our daily emails, we just had to check it out. Thankfully, my wife loved the dress and her awesome 4-H (whatever that is) skills allowed the few alterations that had to be done on it go through without a hitch.

The Venue and Date

We chose a place that could accommodate the ceremony and reception at the same location. Our event contract also included a ton of what I call “gimmies” that saved us the hassle of going alone for finding things like: Our wedding cake (included in the ticket price), a decorator who worked the venue before, a favorably priced open bar, and flexibility on the menu. As my wife and I consider ourselves to have diverse palates, the traditional steak/chicken options just sounded (and tasted) bland and boring to us. So our main course were traditional Hispanic options and was LESS THAN the traditional boring packages. Date wise we went with early spring, so we took a chance that there would have been rain (there wasn’tJ, in fact, the weather was PERFECT!), and we were wed on a Sunday. A less trafficked day and at a better rate than Fridays and Saturdays.

Bridesmaids Dresses

Perhaps the coolest thing beyond being frugal, is forcing your bridal party to do it too. My wife had no formal requests, but instead gave her ladies the following (loosely translated) decree, “I want you to look great and be comfortable. So grab your best black dress, only new if you want it to be, and come to celebrate along with us. Don’t worry about style, length or shade, be you and we are going to love having you be apart of our wedding.” Ain’t she great J! And you know what, our bridal party looked great and the “different tones of black” made the wedding pictures look amazing and I would make this decision and recommendation every time. Which leads me to:

Hair, Make-Up and Photography

Free, free and free. Considered wedding gifts, these were tasked to family of my wife whom she knows and trusts, and have had experience making her look fabulous. Her comfort was my best investment.


You know what makes for bad pictures? Unpredictable and inconsistent flower arrangements that cost an arm and a leg because they are associated with a wedding. Some petals shine, others falter. NOT OURS! Our flower arrangements were of the replica nature and all looked flawless. Plus, it’s really cool to be 2 years removed from our wedding, have my wife’s bouquet in our living room, and have them look as sharp and beautiful as they were on that day.  


Home-made, professional looking and the best I’ve ever seen!

To sum it all up, my wedding was the best money, time and effort spent in my life. And to the woman I married, I’d make the same decision to live our lives together 10 times out of 10.

Wednesday, January 11, 2012

My Back to Basics

I’m always amazed at how when finance writers write about those that are diligent and consistent in their savings efforts, they are painted as overnight success stories. One article I read today particularly tickled me the wrong way. The article went into successful 401(k) investors who have accumulated a balance of over $1 million dollars during their working lifetimes. What are their secrets? What do they do and know that nobody else does? The answer is simple, common sense.

One success story followed a woman, at 56, who has over $6 million in her 401(k) balance (kudos to you by the way, CONGRATULATIONS!!). In two sentences talking about her “secrets” the article conveyed that she socked away 30% of her income, has never carried debt, and has consistently prioritized saving for a really really really long time. DUH!

To me, the attitude and behavior adjustments at the beginning are the most crucial “secrets” to wealth building. Saving money has to take priority, making your budget (plus sticking to it) and devising a plan to live below your income as the foundation for financial peace. Yet these literary financial goobers overlook the tough steps and decisions that these success stories made at the beginning, and only focus on what has been achieved.

So for a “back to basics” piece, I want to focus on the baby steps that took me from nothing, to being intentional with my dollars and cents.

I.                   Getting a liquid emergency fund

Putting some padding in between me and life was one of the best decisions of my life. Ultimately I recommend having 6 months worth of expenses saved for emergencies. Now it won’t earn much in return sitting in a savings account or a money market account, but the peace of mind that comes with it (emphasized when you go through your first two or three emergencies) is priceless.

II.                Make a budget and stick to it

Before every month begins, on paper, spend every dollar you expect to earn. Think of everything imaginable and completely re-examine the costs incurred during life. Beyond groceries and entertainment, examine how much you spend annually on expected costs like: insurance premiums, clothing, home maintenance, etc. Once tallied up, use a sinking fund and work these items into your monthly budget. Suddenly, tire replacement will become a lot less stressful J

III.             Destroy credit

Focusing on destroying and dismembering all forms of credit freed up my income and allowed me to save and give like never before. I first knocked out and closed my credit card, and then punched Sallie Mae through the wall. Today I write completely debt free, 0 credit cars, 0 car notes, 0 student loans and 0 mortgage. But it’s the decision I made early on to rid the use of credit from my life that enables me to save and give in the ways that I want to.

Monday, January 9, 2012

My Annihilated Grocery Cart

Outside of items related to my marriage, there are very few physical material possessions that I cherish and hold a sentimental value to. One of which are my popular Etnie shoes that I bought over seven years ago at an outlet mall with my nephew. Another, which met a glorious and trailblazing end yesterday, was my grocery cart.

My wife dumpster dove for this bad boy close to three years ago, and over time it’s kind of come to symbolize our frugal lifestyle. For starters we dumpster dove for it. But in our day to day in being without a vehicle going to fetch groceries, particularly when our cupboards are low, can at first glance appear to be a time consuming drag.

But for me the weekly grocery run has been crucial in forcing me to slow down and let my soul catch up with my body. Sure, I occasionally feel guilty when I occupy a seat up front on the bus and a geriatric slowly waddles on board. And yes, I’ve taken more than my fair shots when intentionally rolling over able bodied people’s feet when they refuse to move their hipster shoes from the path of my rolling cart. But I have heartily enjoyed the bus and train rides to and from Aldi. Some of my fondest memories over the past few years have been the peaceful transit rides back and forth from the grocer with my wife.

The rides are always peaceful, and even when have conversations about nothing, using the “grocery trip” to re-connect with my wife has been a blessing I look forward to every week. I can’t imagine the last four years in Chicago without these weekly trips J

But this cart has been through a good number of wars over the years. From snowstorms to heavy rainfall, to carrying heavy protein shakes and boxes upon boxes of groceries. On its final run our little cart that could valiantly carried its final set of groceries. As we made it off the bus four blocks from our apartment, its loosened screws really began to show their wear and tear, and I knew deep down inside this would be the last ride. We entered the hallway, the home stretch before reaching our apartment, and a loud *SNAP*  drew my attention to our little red cart and I instantly lunged down to hold it together, so that all of the contents would not fall out. Then, reminiscent of Forest Gump carrying Bubba, I reached down and with one arm continued to roll the cart, and with my shoulder held the groceries in tact within the busted cart so that they did not tumble all over the hallway of the building I live in. I made it to my apartment, and almost out of a sitcom, when I pulled the final bag of groceries from the cart, it literally imploded on itself. A legendary and fitting end for my wheeling hero, and left are big shoes to fill for a cart that will help me symbolically leave the cave, kill something and drag it home J

Wednesday, January 4, 2012

My Year End 2011

Call me an eternal optimist, but I am thoroughly thrilled and geeked to start 2012. Sure, quarter over quarter my net worth fell by $279.61 to land at $223,229.88 to close out 2011, but as is usually the case, the devil is always in the details J

Lately I’ve been feeling that my net worth spreadsheet has been eerily looking more and more like the economy overall. The most notable drop has been in my real estate appraisals over the last year and the most notable rise has been in equities during the same time period. If the trend continues through 2012, which I am predicting, then by year end for the first time in my life, my cash and equity investments will exceed the appraised value of real estate. BUT WAIT!!! There’s more…

2012 is indeed a presidential election year. Now regardless of whether we re-elect the “Great Socialist” or vote into office another moocher who appears to lean towards the right; presidential election years have proven throughout our country’s history to be positive periods for the market. Now during these “lost years,” in between 2009 and the end of 2011, through contributions/growth/decline, one of my major investment accounts has grown at an average annualized return of 69%. So if the last three, hell, ten years have been our generation’s version of the Great Depression, then I say bring on 2012 and the next ten years, this is going to be an awesome decade.

Personally 2011 ended on a very upward note. Throughout the course of a regular year my wife and I make regular gift contributions to our home church, sponsor three children overseas to go to school and set money aside for various giving opportunities (weddings, friends & family in need, graduations, etc.) and at the close of 2011 we had a considerable amount left over to allocate. As my wife and I had the ensuing discussion of where and who to allocate and give away the money to, I was struck with an overwhelming feeling of happiness and delight. It brought me back to the start of 2009 when we started all of this Dave Ramsey business. We fought each other and ourselves regarding what was important to have in the budget, how much would be needed for groceries and whether we should give while climbing out of our self-made financial hole. What a difference three years makes.

With focused intensity over a period of time we’ve strengthened our financial footing, regularly give more and more each year, are working towards a secure retirement WITHOUT help from our inept government, and am (conservatively) two years away from paying cash for our first home. But what about goals within the 2012 calendar year? Yes we have discussed having children around 30, moving and relocating, teaching ESL overseas, but what about this year?

For me I am planning to do more outreach and have stronger relationships with my home church. I’m hoping to facilitate Dave’s FPU at my home church, am on a team to help my home church improve its fiscal management and generally find ways to step up into leadership roles. I’m particularly not the type of person who makes New Year’s Resolutions, in my post-Ramsey life I’ve taken more of a put-up or shut-up stance, so I’ll spare you the long laundry list. But overall I’m planning for giving (effort and finances) to increase and to grow deeper in love and faith with my wife. So Happy New Year to everyone out there and happy hunting, this bull is looking forward to 2012!