2015 1st Quarter Goals Review

I have seen some up and downs this year and I continue tread lightly. I am going to review each goal in order to see where I am at.  

1. Have a net worth of $50,000 (includes Savings, Checking, 401k, and broker accounts) 

This one will be tough because on January 1st, my net worth stood at $19,102. The goal is to bring this amount all the way up to a solid $50,000 by the end of the year.

Where do I stand?

I am excited to announce that my net worth is currently $29,331 which gives me an increase of 34.87% in just 3 months. This is some pretty solid results so far. However I still have a long way to go.

Conclusion

I still need to increase my net worth by $20,669 in order to accomplish this goal. This means I am going to have to increase my net worth by $2296 for each month left of the year. This won’t be an easy task but I think it is achievable.

2. Receive $1000 in dividends from stocks during the year of 2015

This will be the hardest goal among all three because I set the bar real high. In 2014 I earned only $205 in dividends and now I am hoping to achieve 5 times that amount.

Where do I stand?

So far I have earned a total of $134.83 in dividends for the first quarter.  It looks like I have a lot of catching up to do. My main concern is that I have been adding to companies that have a low dividend but high growth rate. I am talking about companies like DIS, AAPL, and SBUX. These companies will surely help increase my net worth, but will not do much for my dividend goal.

Conclusion

I still need to increase my dividends earned this year by $865.17 in order to achieve this goal. This means I will have to earn an average of $96.13 for each month left in 2015. I am not counting myself out here because we have plenty time left in the year, but surely this one will require putting some serious capital to work in higher dividend paying companies. 

3. Save 37% of my net income from all sources. (Annual Average)

I have been reducing my expenses this year in order to increase my average annual savings rate. So far I have decreased my grocery bill to $180/month, decreased my cable bill by 50%, and cancelled my Brazilian Jiu-Jitsu membership.

Where do I stand?

My main concern is all of the car expenses that have been piling up this year. This has been a huge drag on my progress to achieve the 37% savings rate. What’s worse is that my car was overheating on the highway to work this morning due to the ac compressor belt snapping off. So yet again my car is in the garage this morning and the total cost for a water pump, belt, and pulley will be an astonishing $859. My full two week pay check is going right into the car. It really sucks when I don't have much of a choice here. I am avoiding the temptation of buying another used car because I have already put a ton of money into this one. At this point it would probably be cheaper to finance a newer car on a monthly basis compared to the monthly repair I am having to eat up on my current vehicle. This will certainly be the lat time I own a Cadillac.

Conclusion
Currently my average savings rate is sitting at 32.18%. I am not too far off from my goal of saving 37% of my monthly income, but I really need to figure out how to cut the cost of car repairs. I don't want to finance anything at this time because I don't want any liabilities, but having a $100/month car loan might make sense in my situation. 

Recent Home Buying Experience

Finding a nice home where you can cash flow positive is a tough business. The main reason being we will be occupying one of the units so that we can finally get out of the ghetto. I am going to share with everyone my last experience with trying to buy a home. Let's take a look at what the home looks like and then we can talk numbers:

 Now let's take a look at comparables in the same area. 

The home is at a list price for $159,900 and is currently only a 1 bedroom on each floor. This was the first problem because the listing states that it is a 3 bedroom which is very misleading.The first floor unit was in mint condition and did not need any work. The tenets are already paying $800/month with heat included which is below market average for this neighborhood.  The cheapest rent I found for this town for a 1 bedroom was $900/month and this did not include any utilities. The second floor is paying $650 in rent without any utilities. The apartment is very messy and would need some renovations to get market rent of $850/month. The second floor unit needs a substantial amount of work that includes:

1. Egress Ladder
2. Toilet
3. Tub
4. Bathroom Tile floor
5. Bathroom sink and vanity
6. Bedroom carpet
7. Paint whole apartment
8. Refinish stairs
9. Dome light fixtures
10. Door knobs
11. Refinish cabinets and knobs 

 At this point we are looking at about $6,500 in renovations just to get this apartment ready for some quality tenets. Keep in mind that this is just an estimate and could be more. Now we have to figure in all the costs of purchasing the home and moving costs.

Description	Cost
5% Down Payment (Offer Price $152,000)	$7,600
Renovations	$6,500
Moving Costs	$925
Total	$15,025.00

My first offer to the seller was $150,000 + Closing Costs with a deposit of $1,000. The seller would net $146,000. He refused the first offer as I expected and said that he was looking for a price closer to list price and a deposit of $4,000. I was very taken back my the seller demanding such a high deposit. After further investigation I took a closer look at the numbers. I decided that I should offer him $156,000 + Closing costs and would give him the $4,000 deposit. This means the seller would net $152,000 after closing costs. My mortgage would be estimated at $1,065/month and this includes taxes, insurance, and PMI. Even if we were to get the second floor at $850/month in rent we would still be cash flow negative because we would be occupying the first floor unit. So the negative cash flow would be -$215/month at best. 

      However I took at look at the value of the home if we were not occupying the home. Let's assume I was to get $900/month for first floor unit and $850 for second floor unit. Now were are looking at $21,000/year in income. The expenses would be about $16,080 and this also assumes the following:

Annual Expenses	Cost
Mortgage	$12,780
Water	$350
Sewer	$250
Gas	$2,700
Total	$16,080.00

Net Operating	Cost
Income	$21,000
Expense	$16,080
Net	$4,920

First Year ROI	Cost
Net Profit	$4,920
Investment Cost	$15,025
ROI	32.74%

Based on all this information I offered the seller $156,000 + Closing costs + $4,000 deposit. He would net $152,000. This is $7,000 lower than the listing price. He again counter offered and wanted an extra $4,000 on top of my offer. I finally gave up and said the hell with it. It's unfortunate we were only $4,000 off but at this point he was getting greedy. The house has been on the market for almost a year and I feel like it's not going anywhere at this point. I felt like my offer was very fair considering the amount of work I would need to put in it. And the deposit of $4,000 was already a huge risk for me in the first place. Oh well better luck next time.

What do you think of my recent home buying experience? Do you have any similar experiences? 

March 2015 Passive Income and Expenses

March Passive Income and Expenses

Expenses	Cost
Car Repairs	$473.54
Entertainment	$384.97
*Rent	$250
Groceries	$162.68
General Merchandise	$144.13
Car fuel	$127.53
Auto Insurance	$108
Car Registration Fees	$85.00
Restaurants	$62.22
*Utility Gas	$52.63
Student Loan	$50
Phone Service	$42.50
*Cable Internet	$39
Post Office	$36.70
*Electric	$35.04
*Dish	$22.45
Liquor	$10.99
Total	$2087.38

*These are expenses that are split between my significant other and I.

Expenses were a little higher this month for a few reasons. This month the highest expense was car repairs. Unfortunately the car needed rear end brake pads, rotors, and calipers. This is one of the expenses that I don’t mind paying for because I need my vehicle to get to work. The Cadillac is still going to need a power steering pump and an emergency brake line put in. I am trying to keep up with all the repairs but they just keep piling on. The other high expense for the month was Entertainment. We have plans to stay in a wonderful hotel in Vermont for 3 nights. I can’t wait to get away from the everyday grind back home. The other expenses were in line with what I usually spend on a monthly basis.

Now let’s take a look at the passive income:

Passive Income	Earnings
ConAgra (CAG)	$4.57
Target (TGT)	$5.80
Johnson & Johnson (JNJ)	$4.96
Mattel (MAT)	$10.60
Unilever (UL)	$10.21
Microsoft (MSFT)	$5.86
Hershey’s (HSY)	$2.54
Time Warner (TWX)	$2.01
McDonalds (MCD)	$10.98
Kellogg’s (K)	$4.99
Dunkin (DNKN)	$3.33
Emerson Electric (EMT)	$2.06
VF Corp. (VFC)	$2.69
BHP (BBL)	$7.25
CD Interest	$0.49
Savings Interest	$5.07
Credit Card Cash Back	$15.00
Total Passive Income	$98.41

This month my passive income nearly hit the $100 mark. Not a bad month at all in terms of passive income. I am hoping I can keep the passive income around this mark each month.

Now let’s take a look at all of the income sources:

Income Sources	Amount
Analyst Job (Net)	$1879.23
Ebay	$323.15
Dividends	$77.85
Interest	$5.56
CC Cash Back	$15.00
Job Lot Return	$105.19
401K	$190.00
Total	$2595.98
Savings Amount	$508.60
Savings Rate	19.59%

My goal is to save at least 37% of my total income annualized for the year. I was starting out way ahead with a 51.05% saving rate in January. A big part of this was because of all the cutting of my expenses I have been doing lately, but car repairs have been a drag on my progress.  

Month	Saving Rate
January	51.05%
February	25.89%
March	19.59%
New Average	32.18%

I am a little behind on my goal to achieve a 37% savings rate overall for the year.

Now let’s see how much of my expenses were covered by the passive income.

This is the most exciting part of this post because I can see how much of my expenses were covered by my passive income. This month 4.71% of my expenses were covered by the passive income from dividends, interest, and credit card rewards.

How was your month in terms of passive income?