2million - My Journey to Financial Freedom

A Personal Finance Blog      ANNOUNCEMENT:2million has moved to www.2millionblog.com.     

Saturday, October 07, 2006

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Tuesday, September 19, 2006

Asset Allocation

Back in early 2006 when I reviewed the returns from my net worth in 2005 I realized I needed to spend some time looking at my asset allocation.

Here is what my asset allocation looked like in March:

I took a look at my total asset allocation in March, but dropped the ball and didn't dig any further. Unfortuntely, my asset allocation has already changed enough that I should start over.

Here is how my Total Asset Allocation looks now:

3 big changes since March:
1) I bought a second property.
2) I vested in my cash balance pension plan, thereby adding bonds (or really bond equivalent investment to the mix). My pension plan earns a yield equivalent to 1 yr treasuries + 1%.
3) I have burned through a sizable amount cash this year.

I actually think my asset allocation is better off today compared to March. I thought I wasn't exposed enough to real estate and given this is total assets (in the case of real estate ignoring the offsetting liabilities) then I think it make sense to have at least 1/2 your total assets in real estate assuming you have corresponding liabilities.

Friday, September 15, 2006

1st Discussions on our Wedding

Well, I knew it couldn't last forever. My fiancée has finally turned full speed on wedding planning. She had been distracted by other projects for at least a few weeks; however, she has suddenly decided we need to book a location NOW.

What is interesting to me is how this is beginning to evolve. I can't even conceive how you can decide where you are getting married until you have a budget for the wedding. In my opinion, 1st things 1st - you don't want to book an expensive location, find out you have no money, and then can't afford the rest of the pieces of a wedding. I understand the urgency - we have tentatively targeted Fall, 2007 to get married and hence a need to secure a location before they book up.

However I am treading on thin ice when I bring up costs. My fiancée’s parents have made some vague indications of providing my fiancée with a wedding that she wants. However, no budgets have been discussed, it seems to be stressing family members and its clear that we will be paying for at least a few parts of this wedding - how much is anyone's guess.

It seems to me that it would make sense to just get everyone in a room and everyone say 'I am willing to contribute $X to the wedding' and we can begin planning from there. However, I have been advised by many people to just stay out of the way and let things play out. I'm just worried it could lead to a budgeting disaster..... anyone been down this road?

Thursday, September 14, 2006

I am Cash Poor

No surprise here - as I suggested when I was setting my 2006 goals, I knew I was going to be spending a lot of cash this year. A quick glance at my August net worth readily reveals I now have negative net cash (Cash - CC Balances).

I stretched and put 20% down on the new property I purchased; last month I bought an engagement ring; and for the 2nd half of 2006 I am on a temporary assignment in New York (basically doubling my living expenses). All of these things have sucked the cash out of my balance sheet and I am now very cash poor.

Yes, this cash situation is a bit manufactured by me. I stretched to put 20% down on the property I purchased using all the cash (and then some with short term financing on an equity line) I had available at the time.

The good news in all this is I don't think I am going to have any liquidity problems. I have 2 outstanding 0% balance transfers totally nearly $40k, and a HELOC on my 1st property to cover any short term situations. If I plan correctly, I should be able to adjust my spending for long enough to recover my cash position.

However, the bad news is I am currently short $7,500 when you look at my available cash and the amounts owed on my outstanding balance transfers (ignoring offsetting assets such as stocks in taxable brokerage accounts). In addition, things will probably get worse before they start to get better.

Now that I am engaged, a wedding (and all the expenses that come with it) is looming in the background. I have some outstanding repairs that need to be done in the short term on my new property (est $2.5k) and a remodel project I am planning for the 1st half of 2007 (est $4k). All of these major expenses are going to have me in a tight situation for a long period of time.

Current Net Cash (Available cash - 0%BTs) -$7,500k
Repairs to New Property (Sept 2006) -$2,500k
Remodel Project (Mar 2007) -$4,000k
Wedding (Fall 2007?) -$??,???k
Net Total [A very tight cash situation]

It would be easy enough to just slow down my retirement contributions or stock investments to raise additional cash to help me get though this. However, I see this as an opportunity to challenge myself to control expenses, maintain my current savings routines, and recover my cash position. My goal has got to be to have as little or no impact on my current savings routines as possible. If I can get through this without significant impact to my savings/retirement contributions I believe this will be a huge win and could result in significant progress in my financial goals.

Wednesday, September 13, 2006

2million is moving....

2million is moving to www.2millionblog.com

I finally bit the bullet and have setup some permanent space for 2millionblog. Unlike many of my peers, I loved using blogger and had planned on continuing to use it for the foreseeable future. Unfortunately, I recently have just hit too many walls and felt like blogger was holding back this blog's development.

I have migrated all the archives (posts and comments) over to 2millionblog.com. I will continue to dual post at both sites while I finish up the last of the migration work. Hopefully in the next few weeks it will all be complete and I can solely focus my energy on the new 2millionblog.com.

I would like to invite you to update your bookmark and RSS feed to make sure you don't miss anything as I finish the move.

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