Net Worth Update: May 2016

Happy May!  I hope April treated you well and tax day didn’t crush you like it crushed me!  Even though taxes came due, our net worth still went up $6,379.32!! I’ll take a $6K jump every month…

April Financial Breakdown

House: $383,728 – $321,484 $62,244.  I’m just using as the baseline here.  They give their estimate for how much they think you’re home is worth.  I’m not saying it’s accurate but it’s a decent way to keep track without bringing an appraiser in every month to help you track your net worth. This month it said the value of my home went up $4,197.00.

My 401k: $18,689.37.  Right now 5% of my salary is going into my 401k via my employer. Nothing crazy here.  According to my account at personal capital, my portfolio only increased 1.79% over the course of April.

Pension Fund: $8,215.40.  I’m one of the few remaining workers in America that contribute to an employee pension fund and if I decide to stay with my employer and retire 24 years from now I will receive a pension.  I DO NOT PLAN ON DOING THIS!  I’m all about early retirement!!!

My Old 401k: $8,497.11.  This 401k is from an old employer.  I need to roll this over into a Roth IRA.  Hopefully I get to this very soon…

Wifey 401k: $4,682.47. Same situation as my 401k.  5% match from her employer.

Wifey Old 401k: $3,300. Also in the same situation as my old 401k.  We also need to roll this over to a Roth IRA very soon.

Car: $13,174.00.  Well, I don’t know what to say on this one.  According to, the value of my car actually increased by $174 over the past month.  I won’t expect an increase on a vehicle ever again but it’s a nice surprise.

Jeep: $10,763.00.

Emergency Fund: $8,016.98.  The emergency fund took a hit this past month due to taxes.  I owed over $3k and was able to cash flow over $2k of it, but I had to dip into the emergency fund for just over $1,000 of it.

TOTAL NET WORTH: $137,582.33 (+$6,379.32)

So 2nd post of my net worth in the books.  I’m not expecting to see gains of over $6,000 for a while, especially since over $4,000 of it was due to gains on the value of my home.

Keep in mind, the first few years of beginning to build your net worth are slow but once you get some momentum it’ll shoot up faster than you can imagine!

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Do You “Act As If?”

Have you heard the saying “Act As If” before? If you’ve seen the movie “Boiler Room” I know you have.  In “Boiler Room,” Ben Affleck is training a group of wannabe stock brokers to be fantastic but illegal stock salesmen on Long Island.  I won’t ruin the story for you but I want to talk about a specific part of the movie where he’s addressing the group of trainees…

At this point in the movie all trainees have just been hired and are preparing to start selling stock after passing their series 7 exam (the SEC requires any individual who wants to sell securities pass this exam). While conducting a morning sales meeting Ben brings up the fact that many of the trainees, who are all wearing suits, aren’t wearing suits that meet their companies standards.  He told them they dress like $hit and need to go out and buy at least one decent suit because the company they work for has a “minimum level of aesthetic professionalism they need to maintain.”  He also promises the group that it’s ok to buy an expensive suit even though they’re broke because they’ll be millionaires in a short period of time.

This then led to the “Act As If” speech, which I’ve always loved. Check it out… ***Disclaimer: Ben drops the F bomb in this clip.***

This is how the typical American thinks about money.  Most of us spend our money before we’ve made it and it gets us into trouble.  Luckily, no job will require anyone to act like millionaires if they aren’t millionaires.  I understand that the point of this talk is to build confidence and present an image of success.  But, you can’t just go out and buy an expensive suit because you think it’ll make you successful faster by influencing how others think of you.  Maybe you’ll boost your confidence for a brief period of time but you’ll become financially successful by being good at your job and telling your money where you want it to go.

I’ve never gone to a doctor because he drives a $100,000 car or a lawyer because he wears a $1,500 suit.  I pick a doctor by talking to patients of his and finding out his reputation. Is he smart? Does he have a good bed side manner? Will he be able to keep me from dying if I’m not supposed to die at that particular time? My point is that if you’re good at your job, no one will care what kind of suit you’re wearing or what model car you’re driving.

Like I said, I’ve always liked the “Act As If” mantra.  It can be applied to almost any situation, not just money.  It pumps me up, it’s motivating and it makes me want to go out, kill something, and drag it back home (metaphorically).  However, now that I’ve gotten a little older and gotten control of my finances and career, I don’t agree with this message as it relates to personal finance.  “Act As If” sounds an awful lot like keeping up with the Jones’ and no one can build wealth by trying to keep up with all of the other fools who either don’t care or are ignorant about personal finance.

When I was younger, I would blow all of my money right after pay day because, like the characters in this movie believed, I thought that I would earn money so fast that I wouldn’t miss the money I already blew.  I think most young professionals feel that way in their early 20’s.  It’s hard to think about retirement when you’re just starting a working career.  But, there isn’t one person on this earth that won’t run across a difficult time in there lives. It is said that everyone will have at least 1 financial emergency every 10 years. We just can’t keep spending money and expect to make it back, or make more, right away. We have to be prepared!

Fortunately, some of us finally wake up and realize that we work too damn hard for our money and we don’t want to look up after 30 years and have nothing in the bank to show for our hard work.

Success with money and more importantly, the speed with how fast you are successful with money comes from your level of dedication and what you are willing to sacrifice. “Act As If” DOES apply to you and your money but you have to reverse how you think about this phrase. “Act As If” you’re poor. “Act As If” you only make 50, 60, 70% of what you really make. “Act As If” you’ll be working for the rest of your lives if you buy that new car or bigger house…because you actually might if you make a poor decision.

Get rich by “Acting As If…”. How will you “Act As If?”

Frugal Activities To Enjoy In The Spring!

Spring is an excellent time of year to be outside taking advantage of the sun, warmer temps, and FREE activities that nature provides.

The state park offers cabins like this to rent.
The state park offers cabins like this to rent. And, they’re right on the water.

I spent this past weekend at the lake with my family but we didn’t spend $1,000 or more on one of the fancy rental houses in the area.  I took advantage of the state park at the lake and rented a cabin with another family and split the cost.  Total cost for a trip to the lake after splitting the costs?  $160!  Not bad for a 3 day weekend.  Each family brought it’s own food so we could cook out by the fire and avoid eating at the high priced restaurants around the lake and nature provided all of the entertainment for the adults AND children.

Look at this Monster!
Look at this Monster!

The state park had miles and miles of hiking trails by the water and through the woods.  We skipped some rocks, caught a few fish, saw a ton of wildlife, and were able to get away from all of the technology that is normally part of our lives.  No T.V., no cell phone, no internet, social media or blogging.  Just fresh air and good times with family and friends.

The fun we had this past weekend got me thinking about other ways I’d like to get away on the cheap this spring and, luckily for you and I, nature provides just about all of them.  There’s no better way to enjoy a weekend after the cold, dark winter than to be out in nature getting fresh air and (for me) some much needed exercise.

  • Camping- Tent camping is the cheapest way to camp but RVs and Cabins are also decent options.
  • Kayaking– it’s great exercise and MUCH cheaper than boating.  You could pick up a decent kayak on craigslist for as little as $100.
  • Hiking- It’s free and you can easily google hiking trails wherever you live or wherever you’re vacationing.
  • Running
  • Trail riding- This could be with horses or bikes.  If you don’t already own a horse, obviously, a bike would be the more cost effective way to go.
  • Geocaching- If you prefer having a goal or a mission while you’re hiking, you could also take up geocaching.  Essentially, it’s the worlds largest treasure hunt and there are millions of “caches” all over the world.  You can check it out here.
  • Playing outdoor games with your kids-  You can teach them some outdoor games or, more likely, you can let them teach you some outdoor games.
  • Swimming in a river or lake
  • Fishing
  • Star Gazing- If you want to have your phone with you, you can always download one of the astronomy apps that points out the stars and planets as you pan your phone along the sky.
  • Hang around a camp fire with friends
  • Take up photography– You never know what types of things you’ll run across if you get out in the wild.

These frugal activities can take up most of your weekends in the spring and you’ll be healthier and more relaxed if you spend time outside and get your mind off of work and the stresses of normal life.  I only listed some of the ones that I really enjoy but there are unlimited options for cheap outdoor activities.  Use your imagination and come up with some that people may not have heard of yet.

What kind of frugal activities are you planning this spring?

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Is The Millionaire Next Door Dead?

If you watch the news these days, you may notice that a whole lot of people seem to believe that the American dream is dead. No one can get ahead and the notion of “the millionaire next door” is no longer attainable. Well, fortunately for everyone, you can still become a millionaire. The American dream is still alive and you can achieve anything you set out to achieve.  But you have to WORK hard!  No one said it was easy to be successful.  No one said you can become financially free without sacrifice.  And you sure as hell can’t rely on the government to help you out.  It’s all on you to achieve what it is you want and I wouldn’t have it any other way.

So How Do Rich People Handle Money?

millionaire lifestyle
The majority of millionaires do not live like this.

There has been study after study done on how millionaires handle money and one of the most extensive studies I’ve seen, was done by Dr. Thomas Stanley.

As Dr. Thomas Stanley, author of “The Millionaire Next Door” points out, one of the most popular chapters in his book (among millionaires) is Chapter 2, Frugal, Frugal, Frugal. This chapter details the frugal lifestyle of millionaires in terms of the modest prices paid for clothing, shoes, watches, motor vehicles, etc.  Check out the book, it’s one of my personal favorites.

Chapter 2, is essentially the most important takeaway of the entire book and it says that millionaires budget, avoid debt at all costs, and invest a lot of money.  But, they are frugal because they are content with what they have.

So How Can You Do It?

Obviously, becoming a millionaire or being financially free is not an easy feat. It takes a lot of work! It takes a lot of discipline! But it is still a possibility…look at all of my fellow personal finance bloggers, they know it can be done and they’re documenting exactly how they’re doing it! So, why not find a person you may look up to, who is successful with money and find out how they handle their money? If you handle money the same way they do, I can probably come to a conclusion that you will also be successful with money.

You can also find a financial plan that works for you and stick to it.  It doesn’t have to be difficult.  I actually prefer that it’s simple to understand because that means that it’ll be simple to follow.  My recommendations are:

  1. Create a Budget
  2. Pay off all Debt (except for your mortgage)
  3. Build up an emergency fund worth 6 months of expenses
  4. Invest in Retirement
  5. Pay Off Your House
  6. Build wealth and achieve Financial FREEDOM!!!

Why Aren’t More People Free?

Are you happy with what you have?  The answer to this question is important in knowing if you will become rich or not.  Most millionaires are content with their $20-$30 pair of jeans, used car, and modest homes.  They dont feel the need to try to impress anyone and they don’t care about what a stranger at a stoplight thinks about their car.

So, maybe the reason that people feel like getting ahead financially is a pipe dream is because they spend their days finding ways to buy convenience and focus on how they can keep up with the Jones’ instead of focusing on building wealth and increasing their net worth.  The size of your income doesn’t matter if you’re making more money AND spending more money.

90% of millionaires are first generation rich, meaning that they are self-made millionaires.  They didn’t receive inheritances.  They worked their butts off, had a plan, were disciplined with their money, avoided debt, and invested month after month, year after year.

They did it, and you can too!

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How much house can you truly afford?

If you’re like me and you’re on a mission to retire early, you need to know that the choices you make always affect your timeframe for when you’ll reach early retirement.  It can shorten how long it is until you reach your goal or it can push it back further and further into the future.  How much of a house you buy will be one of the most crucial financial decisions you’ll make.

extravagant home
Why have a home like this if you have to worry about paying the mortgage for the next 30 years?

Like everything in the world, there are many different opinions when it comes to how much you should spend on housing.  There are many people who think that their house is an investment and it’s ok if they have a ridiculous mortgage payment on an extravagant home.  On the opposite end of the spectrum, there’s a large movement of individuals who lean towards keeping there expenses down to nothing which has in turn created a housing market for “tiny” houses.  Personally, I pretty much stand right in the middle.  I like to keep my expenses low but with a wife, 2 kids, and 2 dogs I can’t really force them to spend the rest of their lives in 300 square foot house.

I’ve never really liked to think of my house as an investment but I can acknowledge the fact that houses do appreciate over time.  At 3% appreciation over 30 years, a $235,000 house becomes worth $485,000.  Not too shabby, but it isn’t guaranteed and shouldn’t be relied on.

How Much Should I Spend On A House?

When figuring out how much you want to spend on a house, you want to avoid any advice from the banks.  Banks will allow you buy a house where the mortgage will be around 50% of your take home pay (and they wonder why there was a housing crisis).  If you’re spending 50% of your monthly take home pay on a house, you’re house poor ladies and gentlemen.  Personally, I’d like to see everyone keep their house payment around 25% of their take home pay when financed with a fixed rate 15 year mortgage.  At 25%, you have the ability to buy a decent house, pay off that house earlyinvest a lot of money, and have a little bit of a life.

House-PoorWouldn’t it be great if you owned a home that you could afford AND pay off early?  Doing it this way will allow you to not only invest more money in retirement but you’ll also have a possible appreciating asset ready to sell if you desire.  If it doesn’t appreciate?  You won’t have to worry about it because you don’t owe a dime on it.  I’ve never seen a bank foreclose on a house that doesn’t have a mortgage!

Most of house poor America is barely able to pay their mortgage because they received terrible advice from somewhere and significantly overpaid.  They invest less than 5% of their income, drive cars with car payments, eat out constantly, and spend every dime they receive.  Please don’t be like everyone else!  Don’t mess up the biggest financial decision you’ll make by over paying for a house.  It’s easy to get house fever while you’re walking around with a real estate agent.  Be patient, be disciplined, and remember to sleep on any decision you’re thinking about.  Your financial freedom is depending on it!

Remember, 25% of your take home pay on a fixed rate, 15 year mortgage!

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Find Money In Your Budget

Making a budget is critical to staying on track with your finances over the course of the month but it’s also a fantastic way to find extra money by cutting expenses in areas where you noticed you are spending much more than you thought.  For example, when I first started budgeting and keeping track of my expenses, I had no idea how much money I was spending going out to eat.  Can you believe that one month I had spent over $600 in restaurants?  Insane!  The budget allowed me to consciously cut back where I thought I was out of control.  Check out these easy areas you too can save some money…

Cut Back on Eating Out

Don’t do what I did.  Spending $600 a month to eat out is not only ridiculous because it’s $600 but it’s also not nearly as healthy as eating at home.  If you have any debt whatsoever you’ll want to cut this number down to $0 until the debt is paid off, but if you are debt free and have your 6 month emergency fund saved up you can give yourself a little room to live it up.  How much should you spend eating out?  That’s up to you and what kind of goals you have.  Personally, I never spend more than $200 eating out over the course of a month now that I’ve finally come to my senses (but this is still higher than I’d like).

Cancel Your TV Service

No-TV-This one is difficult for many of us because TV has become such a huge habit, but it really does hurt you in many ways.  First, it hits you in your wallet.  I had very popular satellite service that was charging me almost $200 per month because I had every channel you could imagine.  That’s $24,000 every 10 years.  If you invested that $200 per month into a good mutual fund averaging 8% interest, you’d have just over $37,000.

But the monthly payment isn’t the only problem with TV.  Getting bombarded by advertising for hours on end gets you thinking about spending money on items that you would probably never think to buy.

If you need something, you can get use Netflix, Hulu, Amazon Prime or any other streaming service for around $8 per month.

Lose The Overpriced Cell Phone

Republic-Wireless-new-logoThere are many options outside of the “big 3” phone companies (AT&T, Verizon, and Sprint).  Why pay at least $150 per month for 2 cell phone lines?  Personally, I use republic wireless and I couldn’t be happier.  I get unlimited phone, text, and 2 Gigs worth of data and the phone is configured to have everything run through your WiFi when you’re around it.  Last month, I paid $40 for both of the phones I have.

Work Out At Home

garage gymCut the gym costs by working out at home and it’ll save you the money that you hand over to them every month.  There’s plenty for you to do around the house.  Body weight exercises, running, walking, etc… Or you could set up a garage gym!  It doesn’t have to be anything expensive, you could buy everything you need off of craigslist and you may even be able to find it for free.

Cut Transportation Costs

This is actually for personal use...
This is actually for personal use…

It costs a lot of money to get around these days.  Cut expenses by selling your gas guzzling truck/SUV and buy a practical car that gets around 40 miles per gallon.  You could also try car pooling, using public transportation, or riding a bike to work.

Get Creative

Look for ways to cut hidden costs all over your budget.  For example, you could:

  1. Shop around for better deals on car and home insurance
  2. Compare health insurance plans and see if you can save money by switching to a plan with lower premiums that will still give you the coverage you need.
  3. Save money on your electric bill by following the advice of your provider on becoming more energy efficient.  This could lower your costs significantly.  They probably have a list of things to help you on their website.
  4. Replace all of the light bulbs in your house with energy efficient LED light bulbs.  They last for 20 years and reduce the use of energy dramatically.

Now get to work on that budget!  If you are able to run through this list and save money in all of these areas, you’ll be saving lots of money every month.

How much were you able to save?  Let me know in the comment section below!

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Your Debt is Killing Your Future Self!

Your Debt is an EMERGENCY! It is killing your future self. You can’t build wealth with a pile of credit card debt and car loans hanging from your neck and you need to treat it like the emergency it is.  You have to get angry that you’re in debt so that you can attack it as if it were holding you captive and making you a slave, because when you’re in debt, you are a slave.  You’re a slave to the financial institutions, car companies, credit card companies and anyone else you borrowed money from.  Don’t be a slave anymore!  Get ANGRY!!!

Getting out of debt is not easy, but it is worth the effort.  For most people, wealth is built from your income, and you can’t use your income to build wealth if you’re like I was and paying $1,000 per month towards car payments, and $500 per month in credit card payments.  Don’t forget that I also had a $2,000 per month mortgage.  How can you save money with all of those payments?  You either have to significantly increase your income, payoff the debt, or preferably, do both!  Here we are going to talk about getting out of debt.

debt free sign

Step 2: Get Out of Debt

The first thing you need to do is write a list of everyone you owe money.  Do not include your house in this step.  We will focus on that in Step 5.  Figure out how much money you are in debt to each person/company in that list and sort them out from smallest to largest.  Here’s an example:

Debt Snowball

ItemTotal PayoffMinimum PaymentNew Payment
Credit Card 1$1,000$10
Credit Card 2$5,000$50
Vehicle 1$15,000$300
Vehicle 2$21,000$410
Student Loan 1$24,000$230
Student Loan 2$36,000$360
Net Worth Explosion

You can see that all debts are listed by smallest total payoff to largest total payoff amount.  You don’t need to be concerned about the interest rates of the loans unless 2 debts have a similar balance.  If you have 2 debts like this, list the one with the highest interest rate first.  However, you’ll be paying the debts off fast enough that the interests rates will not affect the math too much.

Since you’ve created your budget in Step 1 you know how much money you have left over after you’ve accounted for all expenses.    **Don’t forget that YOU WILL continue paying the minimum payments on all of your debts.**  The “New Payment” column is a combination of the minimum payment of that particular loan and the money you have left over, according to your budget.  You will take all of your “extra” money and throw it at the smallest debt until it’s paid off.  After each debt is paid off you’ll take all of the “extra” money that was in your budget, add the minimum payment from the debt you just paid off, and apply it to the next debt.  This is called a DEBT SNOWBALL.  As you pay off each debt you’ll start building a lot of momentum and you’ll be out of debt in no time!

Getting out of debt can take a little or a lot of time depending on the circumstances.  It took me 3 years to get out of debt but others have done it in less than a year.  It all depends on the amount of debt you have and the size of the snowball you can throw at your debt.

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Get Control of Your Finances!

I know, everyone thinks that budgeting is an evil word, but it’s not.  It is an itemized list of all of your income sources and your expenses for a given period of time.  In reality, a budget is simply a guideline for how you want to live and it will keep you on track to accomplish anything you want financially.  My goal here at Net Worth Explosion is to become financially free.

Step 1: Using Budgets as a Tool

Budgets help you prioritize your spending and manage your money.  They show you where you’re wasting money, where you could afford to spend a little more money, and where you may want to tweak a few numbers to better acclimate to your lifestyle and goals.  They create peace of mind and keep you from worrying when something bad happens.  Did your car break down?  Does your kid have to go to the doctor unexpectedly?  Did you want to do something spontaneously with your significant other just because it would be fun?  If you’re doing it right, you’ll know that there’s money in the bank/budget to cover these items.  Stress levels will be lower because you’ll finally have control of your finances.  Nothing bad can happen by creating a budget!

Dave Ramsey Debt Quote

How to Create a Budget

Creating a budget only takes a short amount of time.  The first time you do it may take longer than the rest but it is well worth taking the time to get started.  You want to create a simple zero-based budget.  This budget will consist of every dollar you are expecting to bring in this month.  It will also include every outgoing expense.  Here’s a list of steps to getting started:

  1. Write down your total household income– This is all money that comes into your house (after tax).  Income from however many jobs you may have, social security, disability, rental income, and side gigs.
  2. List all of your expenses- This includes all of your bills (mortgage, gas, electric, car payments, etc…).  You’ll also want to think about everything else you buy over the course of the month (groceries, going out to eat, gas for your car, entertainment, etc…).
  3. Subtract your expenses from your income- There will either be money left over or you won’t.
  4. Track your expenses for the month- You can write these down in an excel spreadsheet like the one below, check out these budgeting forms, or use automated websites that will do it for you.

Monthly Budget Form

Automated Websites You Can Use

There are many websites out there for you to use to track your budget and monitor your finances.  Here are a few that I recommend and have used personally.  Check them out and use whichever ones work best for you!

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