My Credit Score Has Been Repaired!

Last year, I discovered my credit score was taking a small beating from taking advantage of several 0% balance transfer credit cards offers. I used these interest free loans to earn interest in higher yield online savings accounts like this one from HSBC Bank.

At the time I had several credit card accounts with outstanding 0% balance transfers on them and as a result my score was approximately 687.

Over the weekend I was considering making an offer on a house and decided I wanted to make sure my credit score was is a position where I could obtain the best financing rates if I needed to find a mortgage. I knew I my score needed to be at least in the lower 700s to qualify for the best rates.

I decided to go to Experian and ordered my credit score for $5.95. I quickly found out that my fico credit score had gone from roughly 687 to now 766! I have to say I do feel relieved that my credit score has rebounded to where it used to be.

After implementing my action plan to improve my credit score, I still have 2 credit cards with 0% balance transfers that have high a high percentage of the limit borrowed (87.1% & 94.2%), but apparently they don't have as serious an impact on my score as I expected.

Current 0% Balance Transfer Offers

Company	Current 0% BT	Limit	% Limit	Expires
BofA	$ 12,345.00	$13,100.00	94.2%	Jun-06
Citi	$ 16,106.00	$18,500.00	87.1%	Aug-06

I guess the good news is I should be able to continue to take advantage of 0% balance transfer offers (in moderation) to continue to boost my interest income.

2005 Net Worth Review

I have been looking forward to this time of the year, because I can finally put together the full numbers for 2005 and look for good or bad trends and areas I might be able to improve.

Let me start with a chart of my monthly net worth for 2005. I started the year with a net worth of $157,340 and ended the year with a net worth of $206,990.

On the surface this chart looks pretty healthy, net worth is trending in the right direction - mainly UP. Hard to complain about that. However, if you look at the trend, my net worth seems to be moving up very linearly. As I have mentioned before, I am always striving to find exponential ways to improve my net worth. It may not possible, but obviously the faster my net worth increase, the quicker I will achieve my goals.

Here is another chart that tracks the total change per month in my net worth for 2005:

As you can see I actually decreased my net worth in Jan 2005, mainly the result of very sharp declines in stock investments. Other than one month were I had to pay closing costs on my home, I have never had a down month since I began tracking my net worth. January was a rough way to start the year.

The rest of the months seem to revert towards an average somewhere between a $4,000-$5,000 increase in net worth per month. This average is good because this is about the same rate I need to maintain to hit my 2006 net worth goal.

Now lets look at how much an impact my investments had on my net worth change each month. Keep in mind these numbers only include my taxable stocks held in various brokerage accounts and DRIPS. It does not include my Roth IRA nor my 401k.


As you can see there are a couple key months where I suffered significant losses in stock investments. In January, my investment suffered from a general market downturn and in April, my investments suffered from sizable losses from my heavy exposure to IBM stock, which plummeted in April after a disappointing 1Q earnings report. However this didn't result in a negative monthly net worth gain because I received my annual performance bonus during the same month.

Nothing really earth shattering in this review. I was able to pretty consistently increase my net worth month-to-month in 2005 despite lackluster performance in the stock market. Lets hope I can do the same in 2006.

A Starting Point for New Visitors

With all the new visitors that have stopped by this blog recently I thought it would be a good idea to revisit some of the basics of this blog.

1) Reads this blog's disclaimer.

2) This blog is a record of my journey to financial freedom. I have defined this goal as a net worth of $2 million plus the value of my primary residence. I figure with $2 million in investable assets I should be financially comfortable and able to pursue my passions whenever I want to.

3) This blog is a discussion. I love dialog so please feel free to comment on anything related to personal finance. I try to update the blog several times a week as my schedule permits.

4) Also be sure to check out other personal finance bloggers in the pf blogging community - I have a list of links to some of my favorites on the right hand side of the page.

5) Take a look at this guide to 2millionblog to dive in.

Starting off the Year on the Wrong Foot

According to a British psychologist, today (January 24th) is the most depressing day of the year. This is due to many factors converging this time of the year - among them is the realization of the debt accumulated from overspending during the holidays.

I tend to overspend like everyone on the holidays, but I do set a budget for holiday shopping and try not to exceed it by very much. Overall I think I do pretty well and my credit card bills this month are just about inline with any other given month of the year. I think it helps that while my gift giving and travel expenses go up for the holidays, I try to reduce my entertainment, dining, and other discretionary expenses for a while to offset some of these additional costs.

For me the worst part about overspending during the holidays would be kicking the year off on the wrong foot with my savings goals. There is nothing worse that setting a new goal for the year and in the 1st month discovering you are further behind on your goal at the end of the month instead of closer to it.
How depressing.

Tallying My 2005 Passive Income

So where am I at with my passive income? After all this is just as important as measuring my net worth, if I can't generate enough income to pay for my living expenses, that I won't be financially free no matter what my net worth is.

2005 was a great year for me to increase my annual passive income. I continued to make some strong long term investments in pharmaceuticals with high dividend yields (mainly Pfizer and Merck), I converted my primary residence into a cash flow positive rental property, and I also took advantage of several 0% APR credit cards to generate free loans that earned interest in higher yield online savings account like EmigrantDirect. I also benefited from dividend hikes with several of my stock investments.

Dividend Income
Here is a list of the stock investment I have with dividend income in 2004 and 2005:

	Annual Dividends
Investment	2004	2005
IBM	$ 156.40	$ 251.37
ExxonMobil	$ 49.81	$ 54.68
Pfizer	$ 132.44	$ 300.02
Bellsouth	$ 154.19	$ 166.38
Edison Int.	$ 8.82	$ 11.88
Medtronic	$ 19.02	$ 22.80
Pepco Energy	$ 17.97	$ 18.85
Duke Energy	$ 77.08	$ 88.66
Merck	$ 52.22	$ 108.56
General Electric	$ 65.57	$ 73.91
Lowes	$ 1.89	$ 2.70
Proctor & Gamble	$ 27.39	$ 31.09
Chevron	$ 18.34	$ 21.62
Anheuser Busch	NA	$ 54.00
Total	$ 781.14	$ 1,206.52

Note: This is dividend income from individual securities I own in taxable accounts. This does not include assets in 401k, Roth IRA, or securities in mutual funds.

My dividend payments in these taxable accounts are up over 54% from last year. I expect these to continue to increase each year as I make new investments in these and other companies.

Interest Income

	2004	2005
Interest	$39.76	$783.99

The amount of interest I earned in 2005 increased dramatically as a result of several 0% Balance Transfers offers and increasing interest rates. I currently have most of my savings in EmigrantDirect which is paying 4.0%APY.

Rental Property Income
Since I converted my primary residence to a rental property in 2005, all of my costs involved in improving, cleaning, and renting the property negate any positive cash flow for the year. However if the tenants renew their lease in 2006 then I have the potential to make up to ~$2,000 in cash profit from the rental property activities(depending on the maintenance expenses occurred) for 2006.


Overall not a bad year. I received $1990.51 in interest in dividends for 2005. I expect 2006 to be an even bigger year with additional income being kicked in from my rental property and additional investments.

Business Week Article on 2millionblog

If you haven't seen it, this week's issue of Business Week (January 30th, The Future of Outsourcing) has a small blurb on 2millionblog.com.

It refers to a recent post on how I saved money on a car repair by buying the car parts myself and having the mechanic install them.

Welcome BusinessWeek readers! Be sure to check out this post to find a great index of topics for 2millionblog. Thanks for stopping by.

Better Deals on Tax Software

Since I purchased Taxcut Deluxe for a net $8.96, several better deals have surfaced:

1) Free Taxcut Standard - my coworkers tell me its just as good as Taxcut Deluxe - just doesn't have as many of the videos I don't use anyway. Sounds like it is still ok to use for investment and rental property. Its a free download for federal only, but once you have your federal done, state is usually easy for me to finish up. Note: Select the download option and remove the Extended Download Protection from your shopping cart to get it for free

2) Jane Dough took advantage of the same Taxcut Deluxe deal I did but got it for $5.43 with a $15 Staples gift check.

3) Apparently if you are a Voyager client at Vanguard ($250k or more in investments) you get free use of turbotax online. Another reason the rich get richer ;-). Thanks to krispytoast for the info on this.

4) Of course if your AGI is lower you have access to many versions of discounted/free tax prep software.

Accounting Software for Self Employment Income

This year I expect to begin receiving an insignificant amount of self-employment income from this blog and other activities. I only expect it to be somewhere in the neighborhood of $100-$500 depending on how much time I put into everything. However, I still want to make sure I keep track of all income and expenses so I can report it accurately when tax time comes around.

So far I have uncovered a couple options on how I could track these transactions.

A) I could buy a version of Quickbooks. Quickbooks has a edition called SimpleStart that is for small businesses. It is offered at $99. However, that is about $80 more than I feel like I should spend on this software since I am currently expecting only an insignificant amount of income. The other benefit of quickbooks would be that if my needs grow I could upsize into more powerful versions of Quickbooks pretty easily. Cost $99
Note: I have also found that Quickbooks offers a Quickbooks Simple Start Special Edition 2006 for free with free shipping. It is a full version that you can use for up to 20 customers. Cost: Free

B) I could try Peachtree Accounting. Peachtree is often on sale so it could be basically free after rebate (see this post for more details). However, I have read mixed reviews about it and I get the indication that it is more complicated than I need. Cost: Free after rebates

C) I use MS Money Deluxe 2005 for my personal finance software. I could create separate accounts in it to track income/expense transactions. The downside is I don't know of a way to create invoices with this software if I need them. Cost: Free

D) I could upgrade to MS Money Small Business 2005. I have found new copies of this old software on ebay for about $20. This way I could just import my personal finances (without having to go through an upgrade) and also use it to track self-employment income and expenses. Cost: ~$20

E) I could just use a spreadsheet program such as MS Excel. This wouldn't cost me anything but it would take a lot more time to set up and if my needs expand I might need to go through the painful task of switching accounting software. Cost: Free

The good news is there are plenty of free choices when it comes to software to keep track of my self-employment income and expenses. After finding the free offer for Quickbooks Simple Start Special Edition 2006 I have decided to give this software a try. It looks like it will meet all of my needs for now and in the future if I need more powerful accounting software I should be able to easily upgrade to the fuller versions of Quickbooks.

Taxcut Deluxe + State, plus $10 Staples giftcard for $18.96

Just got back from Staples and am happy to report I was able to get Taxcut Deluxe + State, plus a $10 Staples giftcard (after Easy Rebate) for $18.96 (plus tax).

Here is how I did it:

1) Print out Walmart page for Taxcut Deluxe + State for $19.96.

2) Went to Staples with printed page, found Taxcut Deluxe + State, went to cashier and asked for the Staples 110% price match guarantee.

3) Cashier took my printed page, entered some codes in the register and reduced the price to $18.96 + tax.

4) Got my receipt plus a Staples Easy Rebate receipt to get a $10 Staples giftcard. Just had to go to StaplesEasyRebates.com and fill out the rebate form, no mailing required.

Note: rebate valid on purchases through 1/14/2006.

I haven't seen any deal better than essentially $8.96 for Taxcut Deluxe + State.

Hunting for the Best Deal on Tax Software

Its about that time of year again and I am in the hunt for a good deal on tax software. I don't care if I use turbotax or taxcut, but I really don't want to pay very much for it. I plan to go for the Taxcut Deluxe or Turbo Tax Deluxe editions.

The best price I have seen so far is Walmart has Taxcut Deluxe + State for $19.96. Most places seem to sell this for $29.99. Also I don't think I am interested in upgrading my financial software (I use MS Money) so I won't bother picking these up unless it will help me save more money off the price I pay for the tax software.

However some places are selling it around $29.99 with rebates. Staples has Taxcut Deluxe + State for $29.99, but it looks like they are offering it with a $10 giftcard easy rebate. If I can get them to pricematch Walmart then that means I could possibly get a $10 Staples giftcard and Taxcut Deluxe + State for $19.96.

This sounds like a good price to me if I can get it. Anyone seen any other good deals? If not, I'll try this plan and let you know how it works out.

Gambler's Scorecard for the 2005 Football Season

Some background on my bad habit.

Another college football season has come to a close and I can revel in the spoils. I ended up netting $91 in profit from the entire season. I deposited a total of $250 into my account all of which earned a 20% bonus (a total of $50 in bonus money) and oddly enough, accounts for the majority of my profit.

Here is a breakdown of my wagers this season:

Date	Risk	To Win	Result	Description
8/30/05	$100	$80	Win	VT(-3) over NCSU
9/4/05	$50	$46	Push	VT(-4) over NCSU
9/5/05	$5.00	$2.94	Lost	UM over FSU
9/7/05	$25.00	$21.74	Won	VT(-20.5) over Duke
9/9/05	$10.00	$3.57	Lost	UM over ND
9/9/05	$5.00	$4.55	Won	LSU over ASU
9/16/05	$10.00	$9.10	Won	VT(-34) over Ohio
9/17/05	$10.00	$6.90	Won	Pitt (+10) over Neb
9/17/05	$25.00	$10.04	Won	UF over Tenn
9/22/05	$10.00	$7.69	Won	VT(-10) over GT
9/24/05	$5.00	$4.35	Won	UT(+7) over LSU
9/26/05	$5.00	$5.00	Lost	Tol(+14) over FSU
9/28/05	$10.00	$8.33	Won	VT(-10) over GT
9/29/05	$20.00	$19.76	Lost	Clem(-7) over WFU
10/1/05	$5.00	$4.76	Won	Navy(-7) over Duke
10/1/05	$10.05	$8.38	Lost	UM(-20.5) over SF
10/5/05	$40.00	$34.78	Lost	OSU(-3) over PSU
10/14/05	$39.06	$33.98	Lost	FSU(-7) over UVA
10/22/05	$5.00	$4.35	Win	UNC
10/27/05	$5.00	$4.35	Win	VT(-13.5)
10/29/05	$5.14	$4.90	Win	UNC(+21)
11/5/05	$15.02	$14.37	Lost	VT(-6.5) over UM
11/12/05	$5.00	$3.33	Won	LSU over Alabama
11/12/05	$5.00	$5.75	Lost	UNC(-3)
11/19/05	$5.00	$1.67	Won	VT
11/26/05	$5.00	$4.76	Won	NCSU(-3)
12/3/05	$5.00	$4.37	Won	FSU(+14.5)
12/31/05	$5.00	$3.03	Won	NCSU over USF
1/2/06	$5.00	$4.55	Won	UF over Iowa
1/2/06	$10.05	$8.38	Won	VT(-7) vs Louisville
1/2/06	$5.00	$5.00	Lost	UGA vs WVU

Not necessarily pretty, but I won more times than I lost and had a lot of fun going through the highs and lows of the season.

Here is a weekly breakdown of my results:

Week	Won/Loss
Week 1	$ 80.00
Week 2	$ 19.78
Week 3	$ 11.29
Week 4	$ 12.04
Week 5	$ 3.33
Week 6	$ (25.29)
Week 7	$ (40.00)
Week 8	$ (39.06)
Week 9	$ 4.35
Week 10	$ 9.25
Week 11	$ (15.02)
Week 12	$ (1.67)
Week 13	$ 1.67
Week 14	$ 4.76
Week 15	$ 4.37
Bowls	$ 10.96

This weekly trend will be useful for next season. My typical season usually goes something like this - start off the season well, get too confident and start losing, I then try to recover and lose more, I then stop for a while to let the dust settle and then improve towards the end of the season but never make it up to the level I was at in the beginning of the season.

Well it turns out this season is no different. I started off well in weeks 1-4. In Week 5 I start losing, then make large wagers to try and recover and continue to loose in weeks 6, 7, and 8. I finally realized I need to settle down and start making better picks and slowing begin to improve to finish out the season.

Now that I have tracked all my picks this season, I have an idea next season when I should try and time a break in my picks. I think my strategy for next season should be to take a break from Weeks 5-8 and just pick on paper. I want to see if this helps avoid my typical mid-season slump and net better results for the season.


End Result: $250 Investment, Netted $341.00 = $91 profit, 36% ROI

I will consider this profit "free money" and add it to account that tracks the "free money" have received.

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