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.
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.
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.
26 Comments:
hey, good for you in trying to adapt instead of dialing down on retirement. the wedding, the home projects, are temporary and the cash will come back, eventually.
By
Anonymous, at 4:40 PM
I have to agree that the situation you're in makes the cashflow a bit on the tighter side but if you look at the benefits of being able to control expenses over the short term I think they're more than worth the effort. I've just started this becoming financially literate and getting a hold of my expenses to take down my debt is one thing that I've been trying to do (with some moderate success). Overall any situation that takes you out of your comfort zone and makes you scramble to maintain while keeping the level of savings (retirement or not) is a good situation to be in (remember you've always got some of these investments to fall back in if you absolutely need them). Just my 2 cents worth
By
Anonymous, at 5:18 PM
It will all work out! Sounds like you have enough savvy to get your cash situation back to where it should be. Sometimes it just takes time...
By
Anonymous, at 11:10 PM
You can also mess up with credit cards for newly weds... To complete the situation))
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lastAutumn, at 5:23 AM
Great idea for a blog. Keep it up!! :-)
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Unknown, at 12:12 PM
Nice thoughts. Very brave too. What i like to add for your readers is.. Set your target: It is important to know what amount of money, in today's terms, you would need at your retirement. For example, if you are 35 years of age and think that Rs 25,000 per month (in today's terms) is a good sum for retirement, plan to retire at 65 and hope to live till 80, then you can expect to require close to Rs 1,10,000 every month in the 66th year. This is simply because inflation continues to lower the purchasing power of your money. To get to this number, you should plan to have savings of approximately Rs 2 crores (Rs 20 million) by the time you retire. If you want to maintain your lifestyle, this pool needs to be closer to Rs 4 crores (Rs 40 million) in your 80th year !
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Anonymous, at 2:09 AM
At the moment I am really going through bad economic position....my financial position is really very bad.....
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SANJAY, at 8:50 PM
Well at the moment I am really passing through very bad situation.....
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Unknown, at 1:59 AM
@Finance girl,I agree, that was very commendable.
great article :)
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Tips for Paying Off Debt, at 6:13 PM
Here are some tips for you...
1. If you own your home and have enough equity in it, take out a home equity loan or line of credit.
2. Refinance your home and take cash out at closing.
3. Take out a personal or signature loan.
4. Do you own a car, boat, motorcycle, etc. with a free and clear title? If so, take out a title loan.
5. Renegotiate with your creditors.
6. Consult a debt consolidation service.
Hope it will help.... :)
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Credit Repair Advice, at 3:10 PM
This seems really nice and effective. Thanks for the posting. Keep posting like this.
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barclays credit card, at 12:24 AM
I've just started this becoming financially literate and getting a hold of my expenses to take down my debt is one thing that I've been trying to do with some moderate success.
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Jay Singh, at 3:45 AM
If you still have a job that finance your daily living, better to apply for different type of loans in order to help you in preparing your life for your retirement.
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What is a Short Sale?s, at 5:30 AM
You have a good strategy on that. Though exert effort on making things positive but still it wasn't work out. But still it ended up good, because you were to have lots of benefits and the effort has been saved. And that was a very well done.
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wholesale Wireless Accessories, at 9:51 PM
Nice blog and good thoughts. I personally like this blog. Keep it up.
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cottasofia, at 7:31 AM
i think you must try the credit card option but before doing soo...u must first check that is that really providing you a 0% balance transfer facility.
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Joseph, at 7:31 AM
Many people have no idea where they stand financially, they have no clue how to look at their debt, assets, and cash. Being cash poor is fine if you are debt free and have lots of assets. On the other hand a person can have a ton of cash but if they have a load of debt it does not really matter.
Many people are living in a fog, unaware of their finances, getting by day to day, more worried about having more stuff, and not so worried about getting their debt managed or controlled.
I am no where near 2 million, but nor have I tried hard to get there, good for you.
Great blog enjoyed.
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Unknown, at 8:24 AM
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Search Strings, at 6:21 AM
Great post! I must have missed this one. I have you on my blog reader to read your updates
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