Talk With The Financial Advisor

Tonight I had an appointment with a financial advisor. I am pleased to say that it was two hours well spent. He was able to analyze my situation and accounts and recommend a plan of action. If you've been keeping up with my blog, I have been saving $100 a week and it has been automatically transferring from my bank account to a money market account. Right now that account has about $1966 and is only earning 2.96% Based off my previous blog post, I was having a dilemma on whether or not I should pay off my credit card or keep the money in my account. He was able to show me the big picture and I have decided that it is not worth my effort to try to save money while paying off debt. My 11% on my credit cards should be a priority instead of saving it at 3%. I have also decided to stop contributing to my 401k and only contribute to my Roth 401k since I was putting in 10% of my paycheck in each. Now I have freed up 10% of my paycheck and can put it towards debt. The faster I pay off my credit card debt, the sooner I can begin to save towards my next purchase which is my house. I will also be maxing out my Roth IRA by contributing $416 a month to equal $5,000 (max) by the end of the year. I have also setup a fund for my child. I was currently saving $200 a month and putting towards SPY. Now I will be investing it towards mutual funds. My financial advisor was able to explain everything in full detail and I'm glad I made the time to schedule the appointment which I had been procrastinating for the past month.

What's new in my financial plan:
I have consolidated all my accounts (Sharebuilder and T.Rowe Price) into one account.
I will be maxing out my Roth IRA.
I will no longer contribute 10% to my 401k and put it towards paying debt.
I will be contributing $200 a month for my child in mutual funds.
I will focus on paying off debt instead of saving money, so when my debt is at $0, I will then start to save and earn a positive return.
Once I have paid off all my credit card debt, I can begin to start my house down payment fund.
I just paid off my entire Best Buy debt which was $2042 at 23%.


I also have made a goal not to listen to the radio while I am in my car and I will only be listening to audio cds. I am currently listening to Donald Trump's "Think Like a Billionaire." Lots of great ideas and a good mindset to have.

Credit Score 636

I get a free credit score each month with one of my credit cards and I'm glad to see my credit score is going up slowly. I took a screen shot so you can see the great upward trend. When I was 18, I didn't make my credit score a priority and now I'm paying for my past. My goal is to teach and educate my kid so that he will not have to spend time trying to rebuild. I hope he listens...

Helping & Giving advice

I've just realized that sometimes, trying to help other people or giving advice is not worth it. I have good intentions when I give my 2 cents, but lately, I've gotten the same response from people. So going forward, I'll keep my advice to myself and only offer it to those who ask. Why are people stubborn? Why do people want to go through heart aches and the trial and error when somebody else has already gone through it and trying to save them time and money?

I write this blog for myself. So I can look back and see how my decisions have led to the life I live now. I am not a financial adviser nor a planner. I'm not rich, nor do I pretend to be. I'm a regular guy with a goal to achieve a positive net worth.

On a positive note, I have an appointment to meet with a financial advisor. He's a friend of mine and he's going to help me optimize all my current investments and help create a plan for me and my son. Hopefully all goes well and I'll be able to get a better rate of return on the money I have saved. Another step in the right direction.

Emotions vs. Interest

I've heard different ways of paying off debt. Start with the highest interest rate first and work your way down versus pay off your small debt first and work you're way to your bigger debts. What's the benefit to each way and which is better?

Obviously, paying off your high interest rate debt is going to save you money in the long run. That's a no-brainer, but why would somebody else recommend paying off your small debt first? Psychologically, paying off your small debt gives you a sense of accomplishment and helps you tackle your next debt with a feel good attitude. Based off my experience, every time I pay off an entire credit card, I get a boost of confidence and I feel like I'm actually doing something. For some strange reason, when I pay off bigger debts, it just feels like forever and I feel like my payments aren't really doing any good (even though I know it's not true.)

The reason this has been on my mind is because one of my debts is a little over $2,000. Now I have multiple accounts and I have around $2,000 in the accounts combined that are part of my short term and midterm savings. I can either pay off the entire $2,000 debt and save on the interest I won't be charged or just make my regular "accelerated" payments and keep the $2,000 as my short/mid savings.

Logically this seems simple, but emotionally, it's hard for me to look at my short and midterm accounts and see a $0. I know I'll be saving money if I just pay off the credit card so I won't get charged interest, but for some reason I can't pull the trigger. I thought that if I blogged about it, I should be able to realize the easy answer. It's my emotions vs. the actual interest being charged. Why are decisions so hard to make when the answer looks obvious. If finances were easy, then everybody would be rich, but they're not.

After writing this out, it seems like the best thing for me to do is pay off half the card, and keep the other half in my accounts so I don't have to see a $0 (Which I hate and makes me depressed.)

Join this Bank (FDIC insured) with NO deposit and get $25!

www.100kjourney.com

www.100kjourney.com is now working!

I will be focusing on creating wealth for the remainder of the year. My debt is under control and I am slowly paying it all off. I have 3 credit cards remaining, about $8,000 left on my car, and I have not used my credit cards to add on new debt.

Creating wealth will be a slow but steady journey. I have created a deadline of May 20, 2008 to create a rough draft of my business plan. A friend of mine has gotten me motivated to start creating wealth again and the only way is through passive income. I have all these ideas in my head, but until I have them on paper in a structured manner, it will always be an "idea."

I will be working on my business plan and my goal is to have my business up and running by August of 2008.

May Net Worth Update

Here is my monthly Net Worth update.

Total Assets: $12,736
Total Debts: -$21,469
---------------------
Net Worth: -$8,733

Difference from last month: +$27
Percentage Difference: +.31%

Updates coming soon...

This blog will be updated soon on a daily basis. There will be more structure to my debt process and my methods. Please feel free to subscribe to my RSS Feed and stay tuned. I will be doing my May net worth update tomorrow after work.