Not So Mighty Merch

That's great, it starts with an earthquake, birds and snakes, an aeroplane -
Lenny Bruce is not afraid. Eye of a hurricane, listen to yourself churn -
world serves its own needs, regardless of your own needs. Feed it up a knock,
speed, grunt no, strength no. Ladder structure clatter with fear of height,
down height. Wire in a fire, represent the seven games in a government for
hire and a combat site. Left her, wasn't coming in a hurry with the furies
breathing down your neck. Team by team reporters baffled, trump, tethered
crop. Look at that low plane! Fine then. Uh oh, overflow, population,
common group, but it'll do. Save yourself, serve yourself. World serves its
own needs, listen to your heart bleed. Tell me with the rapture and the
reverent in the right - right. You vitriolic, patriotic, slam, fight, bright
light, feeling pretty psyched.

It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.

That’s right. I feel fine.

Yep. My wake up to date started with an earthquake of 25k in medical debt last August. Then, I was listening to my inner voice just churn with self-doubt. Then, the fear of the height of my debt crept in. Then, I saved myself and served myself and it was the end of my old world as I knew it, but I feel fine.

During the first quarter of this year, mid month was always the apex of the stress for the month. Then last month, something happened. There wasn’t any stress. This month, no stress.

Why? I had a plan at the being of the year. It’s basically the same plan I have this month. It’s because I have full faith in the plan. As they say “Plan the work and work the plan.”

So now, I don’t have to devote my mental energy to worry about the whether the plan will work or not. I can now start mapping out my next steps. My plan, which encompasses my goals, is pretty much mapped out for the rest of the year. I work the plan and I should get there.

This leaves me to start looking at what I want to do in 2009. What direction do I really want to go? And what are the main variables?

So what’s on the table for 2009?

Definite:
1) $15,500 to 401(k)
2) Contribute to 529s – total of $4,000
3) Max. 2008 IRA contributions

Now comes the harder goals. I need to explore if it is better for me to be a 1099 consultant or a W-2 consultant.

But the real big question is whether to stock up cash for real estate investment purchases or to pay down the mortgage. My thought process is that I am probably 2-3 years from purchasing my first investment property. I have a child that is 9 months and one that is 3.5 years old. At this juncture in my life, I really don’t want to take time away from them. Also, I want to do tremendous research into the market and formulate a business plan. I also want to enter the market from a position of strength (good down payment, strong cash reserve, and time to devote to it).

I also would love to get my 30 year mortgage down to a 15 year.

So those are the three things rolling through my head right now. But I have time to think before 2009 gets here. Time at the moment is on my side.

I keep on hearing about gas prices. How they are hurting the average American. Typical media frenzy? Have you wondered how much gas prices increased from last year? A dollar? 2? 1.50?

How about 40 cents. That’s right the average price of gas went from 3.22 to 3.62 a gallon. Yes I do have sources below from CNN.

So what does that translate to? If you fill up your car every week, it’s probably an increase of $32 a month. 20 gallons X 40 cents X 4 weeks.

Is the average American so over extended that $32 a month per vehicle is the straw that broke the camels back? What’s the median income in the US? About $48,000.

Well, I guess if you have a $600 car payment, mortgage, HELOC, boat payment, plasma TV and credit card debt, it might be hard to come up with that $32 a month.

I really haven’t felt the gas or the food increases. Maybe because I live on a budget and follow it. True, I might have to substitute lower priced options like pasta for rice. But, it’s not like I have to go from Lobster to Ramen noodles.

Anyway aside form truck drivers, I really don’t see how all this really affecting the average American. Maybe, I’m too rich. After all, I am only 23k in debt.


Source: http://money.cnn.com/2007/05/21/news/economy/record_gas_monday/index.htm

Source: http://money.cnn.com/2008/05/05/news/economy/gas_prices/index.htm

So I had a conversation with myself this morning.

Mirror image: You make me sick!!!
Me: What did I do now?
Mirror: Your goals. Are you going to up them or what?
Me: Well, I am still working on some scenarios ….
Mirror: LIAR!!!!!
Me: Well, they’re very aggressive ….
Mirror: So we shouldn’t do it because it’s hard?
Me: Well I might fail and it will be in my blog …
Mirror: This isn’t about them. This is about you and where you want to be.
Me: But…..
Mirror: You got keep on adjusting those goals every time they become achievable.
Me: But….
Mirror: But nothing!!! How do you think a baby learns to crawl? You put the toy just out of reach. Then the baby twists and turns until he gets the toy. Now, you move it further away. And the baby learns to crawl
Me: These last goals are just in my grasp.
Mirror: Exactly!!! Time to move the line!!!
Staring into the mirror and in my best Rambo voice: GOALS!!! I’m coming to get you!!!
As I was leaving, the mirror: That’s my boy. Keep the focus.

And with that, I am upping my savings goal from 10k to 15k. Yes, a 50% increase.

I am also adding a new goal of saving 4k in college funds for my kids.

This should keep that guy in the mirror happy and off my case, at least for a little while.

June is next month. At the end of the month, we will be half way through the year. Are you on track? Do you need to make your goals more aggressive? What’s holding you back?

You might need to talk to that guy or gal in the mirror. Be careful, they know when your lying and they don’t take excuses.

I am a deadbeat and a freeloader and am not alone.

I found out today that some of the largest companies in the US thinking of me as a deadbeat. How could that be? I have excellent credit, I pay my bills on time, I pay off my credit cards every month … How could I have such a soiled reputation?

I am also considered a terrible customer. And my wife or I use these companies probably every other day. Now, they have never said anything to my face but I know what they say behind my back. “He’s not generating enough profits for us. He’s costing us money.”

Yes. I am taking about credit card companies. I read somewhere that it costs credit card companies about $25 per account per year. Now, if the charge 1.25% per transaction, I would need to charge $2000 just for them to break even. And after $2000, they make 1.25% off my transactions. They could make more money opening a savings account.

So who are their best customers? People who carry outstanding balances month after month paying 16%, 20%, or 29% interest on those balances. But these aren’t even their best customers.

The best customers are late on payment that way they can charge fees plus increase the interest rates. These are the best customers. This is where all their profit comes from.

So yea, I’m a lousy, deadbeat, freeloader customer, and I wouldn’t want it any other way.

A third of the year is almost gone already and I am doing great on my goals so far. Paid off another debt this month and made a substantial debt in another.

So, let’s jump into things, shall we?
My goals for 2008 are:

1) Pay off debt (except mortgage) by October 1st
. a) Pay off CC by April 1st
. b) Pay off Car 1 by June 1st
. c) Pay off Car 2 by Aug 1st
. d) Pay off wife’s braces by June 1st
. e) Pay off son’s medical by October 1st
2) Invest $10,000 by year end
3) Invest $15,500 in 401(k)
4) Review and reallocate retirement funds by end of Q1
5) Will by end of Q2
6) Life Insurance by end of Q2

1) Pay off all debt but the mortgage by October 1st

Total Debt
04/30/2008 - $23,057 ($15,059 paid)

Car 1 (4% interest rate)
04/01/2008 - $0 ($4,264 paid)

Car 2 (3.9% interest rate)
04/30/2008 - $5,029 ($10,139 paid)

Wife's braces (0% interest rate)
04/30/2008 - $2,028 ($156 paid)

Son's medical (0% interest rate)
04/30/2008 - $16,000 ($500 paid)

True, I did have a huge tax refund of $13 k and I put about $11.3 k towards the debt but I also but in an additional $3.7 k. That means I put more then $15 k towards my debt.
We received the title for the first car, which just got my wife a little jazzed up. I only owe $5 k on my second car and I am hoping to have most of that paid of in May. May has 5 pay weeks for me, so I am hoping on putting a majority of that last paycheck towards the debt.
I am still on track on having car 2 and the wife’s braces paid off in June. That will leave me with only my son’s medical, which is looking at earlier September, if I can keep the pace up.

2) Invest $10,000 by yearend

Looks like we will start hitting this in September. If my calculations are correct, I can surpass this goal and throw $4 k total into my sons 529 plans. That would be sweet. And, I’ll have very close to a fully funded emergency fund (about 6 months).
So I am currently looking at making upping this goal to $15,000 and adding another goal of a 529 savings of $4 k. I have to run a few numbers and scenarios and should have it done for my mid month update.

3) Invest $15,500 in 401(k)

Invest $15,500 in 401(k)
04/25/2008 - $6,547 invested

I am 42% through this goal so I am still planning on this being hit by end of October. Then I plan to use this money towards Christmas, New Years, and Thanksgiving. A lot of wine and presents need to be bought and I also host a little family get together. Hoping not to have debt after the season and it looks like it shouldn’t be a problem.
That’s right. I’m already planning for Christmas.

4) Review and reallocate retirement funds by end of Q1

DONE

5) Will by end of Q2
6) Life Insurance by end of Q2

Yep, I still got to get on this and still plan on getting it done this quarter.

Summary

I am pretty happy as debt still continues to drop off. Now is the point in the race where I have to remain focused and it is getting harder. I feel myself starting to want to stray a little bit, which I think is odd. In other words, I feel myself saying look at how far you have come, loosen up the reins and enjoy life.

I have to stop and look at myself in the mirror and say, that’s great but we have a lot of work to do this year and debt is only the first goal of 6.

This post is mainly for Ceejay. Of course, if you feel inclined, please read on.

We all probably have a spreadsheet showing our debts and the like. Well, I’m no different. I have one sheet showing all my debts, the current amount I owe, and how much I have paid on a monthly basis.

I don’t just use this sheet to record my payments to the debt, but I also use the sheet kind of as a scenario analysis tool. For instance, in March, I was coming up with different ways of using my tax refund and how that would change pay off dates. I also look at it to see if I am keeping around the same pace.

I usually play with this sheet every couple of days so I am very aware of how slight changes effect my overall goals. A little nerdy? A little anal? Maybe.



The next ones are the executive reports for the boss. As we all know, bosses don’t have time for the details. They just want to now the bottomline and how we are progressing month to month. These big picture thinkers don’t want to know how I swept the residual from an envelope on the 8th to add $28 to a car payment.

So the first report shows where we are now (it ties into my other sheet). And the following two show the monthly progression.

I have organized the reports to show Dave Ramsey’s baby steps. It just gives a nice way to categorize the different goals.







So those are my sheets. (Notice how the executive ones are pretty, bosses like that.)

I was thinking about my journey on my way to work. Basically, where I was last year and where I am this year and where I am going. About every 6 months, I look back over the past year and I look forward for the next year.

About 7 years ago, I had a job where I would be vested in 5 years. The company would put away 15% of my salary allocated the same as my 401k every year and it would be vested after 5 years.

Jokingly, I told my boss at the time “looks like you got me for the next 5 years.” His reply was “If you look at it that way, this job will kill you.” And he went on to give me probably the best corporate advice I ever got. He said that after every six months look at where you are, where you came from and where you are going. The philosophy is that during that six months, it is a short enough time that you can stay in a job or situation you hate with enough time to rectify the situation.

After 5.5 years at that company. I left that job. It baffled more then a few people. I was leaving at the top of my game, but I could see my opportunities a year out not being there. I need to retool. So I took a job as a consultant. I told by wife that I’ll do this for a year and then we could reevaluate. Will we did and ten months ago, I took a different consulting job that had no travel (I had 80% travel before).

Yes, I do talk to my wife about career moves. A new job directly affects her whether a move or hours I’ll be home to money we have to spend. I know men who just concentrate on their careers and could care less about their wife’s input. Sad.

Well in August my second son was born and started having medical issues (seizures). He’s ok now but my health insurance was less then spectacular and I owed about $25k.

Well that was the cause that forced me to reevaluate where we were with my wife. We decided that for the next six months we would put together a budget and really stick to it. We would go in fully committed and see where it took us.

It’s been about six months since we made that decision, so time to reevaluate.

First, if you can have an honest conversation about money you can have an honest conversation about anything. The communication between my wife and me continues to improve. Six months ago, we had money fights (she spent to much, I spent to much, grocery cost too much). Now the conversation centers around our goals and budget. If we buy that then we have to reduce our debt snowball this month.

My wife also asked advice about parenting our 3 year old. I would have never envision this 3 weeks ago never mind 6 months ago. I feel that we are getting on the same page and acting more like a team instead of individuals.

I also feel less financial stress, especially this month. I see the snowball really taking hold and see my cash flow freeing up a little bit. My wife is about a month behind me in where we are on our path, but we are on the same path.

I also feel a lot of hope lately. Probably because I am moving in the right direction faster then I thought I could.

I have already planned my last half of 2008 and it looks like all my goals will be met, plus I might add a few in Q4. I have started roughing out my goals for 2009, which are really sub goals that bring me closer to my real goals.

My real goals are to work because I want not because I have to and spend more time with my family. In other words, I am looking at passive income (whether real estate or investments) to support my monthly expenses.

So when I look at setting up my goals, I ask myself do they support or get me a step closer to my big goals. I review everything every 6 months just to make any course corrections or evaluate new paths.

By the way, my two big goals also align with my wife’s.

I was reading Petunia’s blog and it got me thinking why some people fail and some succeed.

My first thought was having a “what” or a vision. You start by dreaming what would by life be if I was debt free. But that isn’t the answer. We all have dreams but not all of us will achieve them.

Maybe it’s the “how”. After all, it wasn’t the “what”. Well, it’s really not hard to get out of debt. You budget less then you make or pick up another job and throw the excess at the debt. Not rocket science and I could even give you a formula. Income – expenses = what’s left for debt reduction.

The leaves us with the “why”. But not any old “why” will do. You see if I said to you your life would be better off if you could save $30,000 this year. Could you? Maybe and then again maybe not. What happens if you need to save $30,000 because your spouse or child needs an operation. Well now, that’s one big “why” and I can tell you I would have $30,000 saved will before operation whether 6 months or a year away.

But with the first scenario, it would be a hit or miss. Yea, it would be nice, but then life happens (nice vacation, eating out, etc.).

My point? A big enough “why” keeps us focused and on point and our dreams can be achieved. For spouses, the “whys” maybe different but should be big enough.

My “why”? For me and my wife to feel more secure and spend more time together as a family. And the first goal is getting out of debt with the second goal to reduce my hours away from the family.

I know the “how” for the first but not the second, because my “whys” got me focused.

And Happy Marathon Monday from Boston!!!!

I have hit the 50% mark on my consumer debts. Yes, I have paid off over 50% of my debts. It’s more of a physiological thing then anything else. I am at the halfway point. Like a marathoner, it’s like getting my second wind.

But, I know up ahead is Heartbreak Hill. In the Boston marathon, there are four hills in succession right after mile 16 and going to mile 21. The last one is called Heartbreak Hill. Many a marathoner has “hit the wall” on Heartbreak Hill and dropped out of the race. At this point, everything is telling you to quit (your body, your mind),, but those crowds are egging you one. “Come on!!!! Only 5 more miles!!!” “One foot in front of the other!!!”

I know this is coming up. Somewhere between now and being debt free, there will be these hills that will test my resolve to the core. After Heartbreak Hill, until the finish, are just nasty little hills. You have used everything you got just to make it pace Heartbreak Hill and now you have these small nasty little hills where every step is an effort. At this point, it is the mind dragging the broken down body to the finish line.

And what do you get when it’s done? A medal. A little bronze medal for finishing. Was it worth it? You bet.

And that’s how I see my journey. I’m at the halfway point running through Wellesley College. Everyone is screaming and the real work is just about to begin.

The first half was mostly pacing my self as people pass me and get out of debt faster. But now I have my pace and feeling pretty good at the half way mark, knowing that soon it will be a battle of pure will.

And when I cross the finish line, what will I get? A little piece of paper generated from a computer in a billing department saying “PAID IN FULL”. And will it be worth it? You bet.

But until then, keep the pace, work the plan, and keep the focus.

OK, this has been simmering in the back of my mind for about a month now. My wife’s best friend came over with his family. Him and his family are nice people. I really like them.

Well, there in the same place I was about 5 months ago. The cash flow is getting squeezed. Under my old thinking, there were only a couple ways out: find a new job making more, get a second job, or hold on ride this because in the future we will always make more. Right?

He has decided it best to hold on tight and hope for the best. He has a pretty good job and could have a decent jump in income over the next 5 – 10 years.

I started to talk to him about budgeting and how we have been able to find money and start cutting down the debt. While I could tell, he felt I wasn’t under the same financial pressures as him. In other words, my cash flow was better. Well, needless to say, I ended the conversation by saying that he should look into Dave Ramsey. No sense in getting things all heated for no good reason.

I was also going to say that if I could do it, you can do. But I knew that wasn’t true. And this is the issue of my rant. It’s not that what I am doing requires a master degree in finance. It requires something that a lot of people today do not have: discipline, focus and the ability to sacrifice.

Yes, it’s hard work to stay focused, to have the discipline, and be able to sacrifice. But it’s far better then the stress of picking which bills to pay and just scraping by.

To each there own, but don’t suggest to me that luck played a part in this. There’s a lot of hard work behind these numbers. YTD through debt reduction and adding to my 401(k), I have added $29,843 to my net worth (not taking into account market conditions during that time).

My 2008 goals are very aggressive for me, and I am right on track. Why? Because my yearly goals are broken into quarterly goals, which are broken into monthly goals. which are broken into weekly goals, and daily decisions are made on how they effect weekly goals. The weekly goals may need to be adjusted to keep the monthly goals on track or the monthly goals must be adjusted to keep the quarterly goals on track but the yearly goals are not being adjusted.

What have you done to increase your net worth YTD? Are you where you thought you would be? Why not? What decisions are you making today to keep you from your goals?

You still have 8 ½ months left in the year. Time to get back on track and start accomplishing your goals. There’s still a ton of days left in the year, time to get cracking.

It’s the halfway point of the month and I’m chillin’ like a villain. I can’t believe tomorrow is April 15th.

As I said before, the 15th is usually my stress time when all my big bills are due. This month was no different. I looked at my watch last night and it was the 13th and I just logged onto my bank account and paid them. No muss, no fuss.

Great feeling.

As you can see from my sidebar, I have paid of $12,803 just this month. Most of it was due to a large tax return but I plan on adding another $2,200 to payments this month (see if I can crack $15,000). So, now car 1 is paid off and am working on car 2. I have $7,129 left to pay off on it. The current schedule is to have it paid off in June with the wife’s braces.

Since I paid off the CC and car 1, I can start feeling the snowball gaining strength. I also feel some breathing room. Rather then treading water keeping my head up, I am starting to swim to the shore.

In fact, I have started dreaming, dare I say, of a debt free existence. Yes, I have calculated the time needed to pay of my mortgage, fully fund my emergency fund, fully fund my retirement accounts, and fund my kids college funds. It may be 5-8 years away, but I can almost taste it. I can almost see it. Dare I dream?

Yes, but now is the time to keep the head down and focus. No time to pat ourselves on our back. We got a lot of work to do before we get to these sweet dreams. A lot of work…

Bottom line: I have paid off $24,129 or 48.8% of debt to date.

In a previous blog, I linked to an article about some quick on the back of a napkin ratio that you could quickly see if you are on target or not. These ratio are just meant as a quick sanity check,

Well, one of the ratios is savings to income. The debate then rages as to whether to include or exclude your house. The only way you could realize that equity in the house is to downsize or move to a less expensive area of the country. Neither one of these are in my near future.

The only way then to tap the equity is through a loan on the equity, which really isn’t taking the equity out but securitizing the load with the equity in the house. Therefore, I don’t include my home equity in the calculation.

However, if you plan on moving in the next few years and will be getting cash between the sale of the old and purchase of the new, I would include that in savings. Also, if you have investment properties, I would include that in savings.

For debt, I do include the mortgage. First, it is a debt. Second you have to live somewhere.

In my net worth calculations, I do include home equity but not cars.

I look at these as quick numbers to get a sense of where I am. If your income jumped recently, then the ratio are very different then they were last year. Maybe, you removed a huge debt and your income is far less now then you needed in previous years.

The idea is to be honest with yourself to see if you are on track. Where are you? Where are you going? And to a less extent, where did you come from?

Right now, I am in the forest and concentrating on my debt to income ratio. You may be further along on the journey concentrating on the savings numbers. Or you might be doing both.

So, I came into work this morning and it was a little slow at 7:00. So I decided to cruise the web a little and found an interesting article on retirement ratios from the Financial Planning Association.

The article talks about looking at three financial ratios. They are all based on income and are savings to income, debt to income, and savings rate. There are 2 tables in the article: one for a 5% real rate of return (think 8% return on portfolio) and 4% real rate of return.

The author doesn’t include home equity into the savings ratio, which I agree with. You have to live somewhere and most of that equity is going to be tied up in that home, so better not to include it.





Anyway the article is at: http://www.fpanet.org/journal/articles/2006_Issues/jfp0106-art6.cfm

So are you on target?

Personally my savings is a half what it should be, I am carrying 50% more debt, but I am looking at saving 12% - 15% this year. I got a lot of work but I got 1 year before I hit the age milestone.

Time to get cracking!!!

I was hoping to post this over the weekend or Monday to close out the quarter on a great note but whatever.

So, I got my refund from the fed on Saturday for $12,922. Most of it was due to my taxes being screwed up when I switched jobs. Bottom line, this is one time refund that I will not see again. The check cleared today and so I have already allocated the money.

So, what did I spend all this new found wealth on? A new boat? A first class vacation? Invest it in BA’s pyramid scheme?

They all sound so tempting, but alas I just decided to reduce my debt (and pay for TrueGreen or ChemLawn to take care of the lawn). The breakdown was Car1 paid off and $7,195 towards Car2.

I was hemming and hawing about whether to pay off the braces or Car2. Truthfully, in the end, it won’t matter. One way, I pay the braces off now and Car2 at the end of June. This way I pay the car off in mid June and the braces at the end of June. Since the braces are a 0% loan, it really doesn’t matter. So, I decided let’s due it this way and have both of these paid off in June.

So there you go. I started the year with $49,422 in debt and now I am down to $26,657, paying off 22,785 in just over a quarter.

Yes half of it was my tax refund, but Murrphy and his family are getting pretty nervous as an eviction is coming in Q3.

Well every good plan hits some speed bumps. I am not saying that I went backwards or stopped, just slightly less process then I would have liked.

So, let’s jump into things, shall we?
My goals for 2008 are:

1) Pay off debt (except mortgage) by October 1st
. a) Pay off CC by April 1st
. b) Pay off Car 1 by June 1st
. c) Pay off Car 2 by Aug 1st
. d) Pay off wife’s braces by June 1st
. e) Pay off son’s medical by October 1st
2) Invest $10,000 by year end
3) Invest $15,500 in 401(k)
4) Review and reallocate retirement funds by end of Q1
5) Will by end of Q2
6) Life Insurance by end of Q2

1) Pay off all debt but the mortgage by October 1st

$6,000 CC (0% until May 2008)
12/31/2007 - $6,000
01/31/2008 - $3,543 ($2,457 paid)
02/29/2008 - $1,388 ($2,155 paid)
03/31/2008 - $0 ($1,388 paid)

Car 1 (4% interest rate)
12/31/2007 - $5,726
01/31/2008 - $5,317 ($409 paid)
02/29/2008 - $4,761 ($556 paid)
03/31/2008 - $4,264 ($497 paid)


Car 2 (3.9% interest rate)
12/31/2007 - $17,064
01/31/2008 - $16,432 ($632 paid)
02/29/2008 - $15,800 ($632 paid)
03/31/2008 - $15,168 ($632 paid)

Wife's braces (0% interest rate)
12/31/2007 - $2,652
01/31/2008 - $2,496 ($156 paid)
02/29/2008 - $2,340 ($156 paid)
03/31/2008 - $2,184 ($156 paid)

Son's medical (0% interest rate)
12/31/2007 - $18,000
01/31/2008 - $17,500 ($500 paid)
02/29/2008 - $17,000 ($500 paid)
03/31/2008 - $16,500 ($500 paid)

This month I had some extra expenses: summer camp for my son was $350, CPA $400, baptism for other son with brunch $250, and hockey and swimming classes for my son $200.

Given these expenses, I am still pretty happy with my progress and am still on goal for all my consumer debt. I am also getting a $13k refund that I’ll use for car 1, wife’s braces, and start attacking car 2. I checked the IRS website and my refund was mailed on the 26th so should be here pretty soon.
Bottomline: I paid off the credit cards before the rate adjusted from 0% to who knows what.

2) Invest $10,000 by yearend

After the debt is paid, we will start tackling this. I am hoping to start this in September. When I first put this goal down, I was thinking there would be no way I would get to this. To me, it’s all about having a roadmap with your goals prioritized and then focusing on the first one, accomplishing it, and moving on to the next.

3) Invest $15,500 in 401(k)

Invest $15,500 in 401(k)
01/31/2008 - $1,451 invested
02/29/2008 - $3,291 invested
03/31/2008 - $4,881 invested

I am very happy with this. I am still on schedule for the end of October and then I’ll roll the extra money into my holiday budget.

4) Review and reallocate retirement funds by end of Q1

I am putting in my trades today. I believe the market has bottomed and the volatility has decreased to a level I feel comfortable with.

5) Will by end of Q2
6) Life Insurance by end of Q2

These two steps are going a little slower then I thought they would. I’ll have to just clamp down and get through this. My cash flow is improving so l should be able to float the lawyer fees and insurance premiums. I just need to get on them.

Summary

All and all, I’m pretty happy. We had some extra expenses this month and yes some of it was discretionary. But, the good news was we were able to absorb it. The big accomplishments this month are I get to cross of 1a and 4 from the list.

So, my wife has started her new job and she will be working 5-10 hours a week. Truth be told, this will probably last until June when the weather gets nice and then she’ll start working again in October.

Well, after her first day on the job, she was feeling all empowered and made the statement “Now that am working, you can stay home with the kids.”

I said “OK, to bring home what I bring home you would need to work over 100 hours a week.” She quickly calculated in her head that would be about 20 hours a day. I said or 14 hours if you work 7 days a week.

She then said “Never mind, you can continue to work.” I just kind of laughed to myself.

So my dream of staying home with the kids and watching ESPN will drinking beer and eating chips is still but a dream.

Shifting gears, I have been watching Dave Ramsey’s TV show at night lately, mainly because nothing else in on and I like to see him slam some of the people that call him. My wife usually sits on the couch next to me reading a book or magazine.

Well last night, I was watching some coverage about a little tourney coming up.

My wife goes “No Dave Ramsey tonight?” I was really stunned. I didn’t even know she listened to the show never mind enjoyed it.

Especially since she was complaining the other about needing more clothes the other week. Now for some perspective. We have a closet that’s 9x10 filled with some of her clothes and all of mine. Yes I do have about 5 feet of one wall. And she has a closet in the guest bedroom (not walk in but still big) and she has the entire coat closet. I think she may have boxes of clothes in the attic or basement but I’m not sure.

Since, watching Dave Ramsey, she hasn’t asked for money for new clothes or in general money for anything discretionary. She also is asking more questions about the budget and participating in it.

In fact, I never bring my lunch to work and always buy lunch, she said Dave Ramsey wouldn’t approve. Probably not, probably not.

I so disgusted today with stories I see in the news about people not taking responsibility for their actions.

At lunch, I watched a video on CCN.com about a couple in Las Vegas that were foreclosed on and moved from a house with huge kitchen and granite countertops on a mobile home. The basic story is that the moved into a house for $276k. For the first couple of years, the house went up into the $420k or $450k range. Then wife lost her job, they took equity out, and the ARM re adjusted.

So who do they blame? The lender and everyone else but them. These evil lenders took advantage of them.

Are you kidding me? Do you actually think a bank makes money on a foreclosure? You think banks want to be in real estate?

Then I was hearing some advise on credit cards. Basically to not pay for 120 days and then you can settle with the credit cards for half. Is this sound advise? This is the way we want to bring up the next generation?

I’m sorry but that’s not how I roll. If I borrow money or use credit cards or have medical bills, I pay what I owe. If I did something stupid that costs money, I take responsibility and pay what I owe. I don’t try to screw someone out of something I owe.

You might be saying that you owe $90k in CC and only make $30k. I say pay it all off and don’t weasel out of the bill. You owe the amount, you signed a contract, now pay it off up. Sure it may take 10 years but “man up”.

Sorry about the rant but I am so pissed off about people not taking responsibility in this country.

Your word is the only thing you have in this life so man up and accept your fate.

In an emergency meeting today, the Fed cut the discount rate by a quarter to 3.25% and approved Chase's purchase of Bear Sterns.

The street is also looking at the Fed dropping the fed funds rate to 2% on March 18th (a full percent).

I personally believe this is the other shoe dropping and this deals directly with confidence in the market.

We moved from credit quality issues (sub prime, CDOs, SIVs, municipal bond insurers, and CDS where the counter party was Bear Sterns, to solvency issues (Countrywide, muni insurers which led to issues in ARS, Bear Sterns), to the fed now flooding the market with liquidity.

I still haven't rebalanced my portfolio as I have been waiting for the market to settle. I believe this is the last shoe to drop and will wait for the dust to settle.

Most of my rebalancing was selling international to invest in my US stock portfolio and my small REITs. I believe this week we will see downward pressure on stocks (especially financials) and downward pressure on the dollar.

Good luck all!!! And cash is king (just not US ).

Source: www.bloomberg.com/apps/news?pid=20601087&sid=asg0H5x.VQ4g&refer=home

It’s a few days early, but I decided to go ahead with my mid month update. My February one, I was feeling like I might not be able to pay down the debt as quickly as I thought. At the end of the month everything worked out and I has a few hundred ahead of target.

Well, last week was one of those stressed week where Murphy puts you to the test. We had my son’s baptism and family had to stay over. This included a donation to the church ($100) and additional food and wine for dinner (people stayed over or house - $150) and party (small brunch party - $75). So, I had to borrow from some envelopes to scrap the cash together. And a very stressed wife. No new debt – I’ll take my wins where I can.

So we are closing in on the second week of March and I am actually feeling pretty good. With the paycheck I am getting tomorrow, I well have my envelopes funded where they need to be, a $1,000 in the CC envelope, and $416 in my 401(k).

This should put be on target to pay my minimums plus another $2,000 towards debt, eliminating my credit cards before they start charging interest and starting on paying down the first car.

I also sent in my taxes this week. Bad news – cost $400 for the CPA to do it, good news – we’re getting $13,400 back between state and local. This is mainly because when I switched jobs they screwed up my medicad withholdings and I paid double.

So, I hope that I’ll get my tax refund in April and most of that will go for debt. I’ll probably skim off about $1,200 for TruGreen to take care of my lawn this summer. The one that services my neighborhood really does a good job and it makes a huge difference. That still leaves $12,200 to go towards debt reduction then in May we get the tax credit. I’ll get $1,800, which will go towards debt.

I am basically hoping that by end of June I’ll have the CC, car 1, car 2, and the wife’s braces paid off. So, I’ll be able to snowball everything into my son’s medical.

So far, March is looking good. Looks like by end of June, Murphy’s family will be gone. Murphy will still be at my house, but I told him that he’ll have to find a new place by end of the year. But you never know with Murphy, he’s a tricky guy and once he’s in your house he’s tough to get rid of.

There was an interesting article I came across that offered a different way to look at retirement planning.

The article discusses a years worked to years in retirement ratio. So, if I work from 25 – 65 and plan on living till 85, my ratio is 40:20 or 2:1. To live comfortably in retirement, I would have to save 15% a year. The article continues that a 15% savings rate over 40 years is extremely aggressive

I just thought it was an interesting and different view of retirement savings.

W:R RATIO AND REQUIRED SAVINGS RATE FOR RETIREMENT

Working Retirement W:R Required
Savings Rate (%)
40 20 2:1 14
43 17 2.5:1 11
45 15 3:1 9.5
48 12 4:1 7
50 10 5:1 6


Source: http://www.aei.org/publications/filter.all,pubID.24940/pub_detail.asp

Well, I think the wife’s back on board.

I also think that she believes I was right. I think it was a couple of things just coming to a head. Our son is getting baptized this weekend. So I need extra money for the church and we're having family over for brunch. Also, both my sons seem to be eating a lot lately and it has really put a strain on the $100 per week grocery budget.

I think the furniture (one step up from parents basement) was the last straw and the wife went a little crazy. So, looking back, I think it was more a comment about the stress.

As I said before, since I didn’t have to sleep in the guest room, I wasn’t in the wrong. And that’s all am going to say on that

So next week things should get back to normal for her … and that means me too.

So what does this all mean? Well, right now I have some extra expenses that are coming up putting a little strain on the cashflow at the moment. My monthly budget is fine, just a short-term blip. So, I am going to steal from Paul to pay Mary. I’ll take some money out of my water bill envelope to pay some of these bills do this week and replace the money later in the month.

Hey, not perfect but I don’t have to take on new debt.

As an aside, Dave Ramsey actually said yesterday that in a certain case he would use a credit card. The only case he could see using a credit card was if the alternative was to borrow against your 401(k).

http://biz.yahoo.com/ts/080114/10398317.html?.v=2&.pf=retirement

This article talks about a 401(k) debit card. Basically, you transfer the amount that you can get as a loan to a line of credit. You pay a set up fee plus 2.9% above prime. What a bargain.

Great idea … just great. So my stock portfolio is gone, my home equity is gone … Hey wait I got some money left in my 401(k). I need my “buy more expense stuff to jam in my house with an arm that will be foreclosed in 2 months” fix.

Well, it’s that time of the month for me. The big bills come in – health insurance $1258, mortgage plus escrow for insurance and taxes $2800, ½ a car payment $316, and sons medical $500.

Am I worried?

Well, each month I worry about this time of the month less and less. Between the 10th and 15th is when all these bills seem to be due, and it is a lot of money shooting out. This month, I’ll actually have to have all the envelopes funded with my 3/7 paycheck, as the 3/14 will come too late. It’s a good feeling to know the amount you have due, when, and a plan to have that money there for the bills.

On a side note, the wife is having a hard time. Most of her luxuries have been cut out. I had started cutting the monthly clothing budget, entertainment budget, eating out budget, and vacation budget. She started complaining that she can’t live like this. So a little fight broke out (ok maybe not little).

I think this is the time when the rubber meets the road. Either we move forward or fall back, and I ain’t going back. The good news is she is going to get a part time job. She’ll make about $500 a month and we’ll just use this money for the discretionary items.

Anyway, it’s stressful now in the household, but I think if I can make the transition a little easier on her, she’ll get on board. Deep down, she knows that we have to do this. I also think that once we start baby step three and she sees mad cash going into her money market account, she’ll be all right.

Right now it’s just tough to keep the focus, if you don’t see that light, very faint in the distance. It doesn’t look like it’s getting any brighter on a month to month basis. You need scientific tools to measure these small changes, but the changes are there and that light is getting brighter.

When I first created my goals for the year, they seemed difficult. Since I’ll be starting my 5th monthly budget this weekend, these financial goals now seem easily attainable.

My goals for 2008 were:

1) Pay off $6,000 CC by May 1st
2) Pay down car 1 by Aug 1st
3) Invest $10,000 by year end
4) Invest $15,500 in 401(k)
5) Review and reallocate retirement funds by end of Q1
6) Will by end of Q1
7) Life Insurance by end of Q1

My new goals are:

1) Pay off debt (except mortgage) by October 1st
. a) Pay off CC by April 1st
. b) Pay off Car 1 by June 1st
. c) Pay off Car 2 by Aug 1st
. d) Pay off wife’s braces by June 1st
. e) Pay off son’s medical by October 1st
2) Invest $10,000 by year end
3) Invest $15,500 in 401(k)
4) Review and reallocate retirement funds by end of Q1
5) Will by end of Q2
6) Life Insurance by end of Q2

So, how are we doing with these new goals?

1) Pay off all debt but the mortgage by October 1st

$6,000 CC (0% until May 2008)
12/31/2007 - $6,000
01/31/2008 - $3,543 ($2,457 paid)
02/29/2008 - $1,388 ($2,155 paid)

Car 1 (4% interest rate)
12/31/2007 - $5,726
01/31/2008 - $5,317 ($409 paid)
02/29/2008 - $4,761 ($556 paid)

Car 2 (3.9% interest rate)
12/31/2007 - $17,064
01/31/2008 - $16,432 ($632 paid)
02/29/2008 - $15,800 ($632 paid)

Wife's braces (0% interest rate)
12/31/2007 - $2,652
01/31/2008 - $2,496 ($156 paid)
02/29/2008 - $2,340 ($156 paid)

Son's medical (0% interest rate)
12/31/2007 - $18,000
01/31/2008 - $17,500 ($500 paid)
02/29/2008 - $17,000 ($500 paid)

I am actually a few hundred dollars ahead of my targets.
One of the things I have not talked about was that I switched jobs and the firms took out double the FICA, so I will be getting $12k back from the government. I expect the check to either come in April or May. My CPA is currently finishing the forms.
So once this check hits, I plan on eliminating debt for car 1, my wife’s braces, and make a huge dent in car 2. So end of May, I plan on owing less then $1,000 on car 2 and my son’s medical will be the only outstanding debt (minus mortgage).


2) Invest $10,000 by yearend

After the debt is paid, we will start tackling this. On hold for a few more quarters.

3) Invest $15,500 in 401(k)

Invest $15,500 in 401(k)
01/31/2008 - $1,451 invested
02/29/2008 - $3,291 invested.

This is kind of where Dave Ramsey and I disagree. I can not bring myself to stop contributing to my 401(k) while I pay off debt.
So, I am about 21% done with this. This should be complete by November 1st. Then, I’ll use the extra money for holiday stuff. Wine for thanksgiving and Christmas, presents, tree, etc.

4) Review and reallocate retirement funds by end of Q1

I have everything set to go. I was just waiting for the market to become a little less volatile. I will probably due this towards the end of next week. I have a spreadsheet set up to show me the trades. I just need to update quantity and price, then execute the trades.

5) Will by end of Q1
6) Life Insurance by end of Q1

I wanted to talk to my CPA first and I did. I have interviewed a few lawyers and found an estate one I like. The next step is for me and my wife to really talk about what we want, then we will probably talk to the guardians for our children if we were to die, and then we will talk to the lawyer to draw up everything.

I am pretty happy so far. It hasn’t been easy these last 3 months. We have really focused on where our money is being spent. I feel I am just starting to get some traction. I can see things starting to come together, but I am still a little apprehensive.
Time to keep the focus and give the troops a pep talk.

I made it through my crunch time and I still have some money in the bank. Woo hoo!!! The first half of my month is paying the BIG bills. The second half of the month is to pay smaller bills (gas, electric, cell, cable, etc.), start saving for the BIG bills, and allocate the rest for debt reduction.

At this point of the month, I start doubting my debt payment plan. “It will never work, I’ll never be able to save up that money by the end of the month.” Those are my thoughts, but my plan says otherwise. My plan says to keep the focus and the numbers will work themselves out.

Tax rebate checks will begin going out in May, Treasury Secretary Henry Paulson said after the House's passage of a Senate-approved $167 billion economic stimulus package Thursday.

Senate Majority Leader Harry Reid: "This legislation is not everything that I wanted. But I am very happy."

The House of Representatives voted 380-34 to send the measure to the president a few hours after Democratic and Republican senators reached accord and ended a dayslong stalemate over the legislation.

Earlier, two White House officials said President Bush would support the package. The bill will be delivered Friday to the White House, with Bush's signing likely sometime next week, Democratic aides said.

The package, which passed the Senate 81-16, will send rebate checks to 130 million Americans in amounts of $300 to $600 for people who have an income between $3,000 and $75,000, plus $300 per child. Couples earning up to $150,000 would get $1,200.

The checks are an advance on next year's refunds, and most, if not all of the money, will be deducted from taxpayers' refunds in 12 months' time.

"My team will be sitting down with the IRS tomorrow, and the IRS, right in the middle of tax filing season ... will be working to get checks out," said Paulson, who helped broker the deal.

Paulson said the process of sending the checks would be completed by the end of summer.

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The leadership of both parties hailed the efforts that moved the package through Congress.

"You don't see anybody up here gloating about being a winner," Senate Minority Leader Mitch McConnell, R-Kentucky, said after the House vote.

"There were no winners or losers in this except the American people, who saw us rise above any differences we might have had and work to agreement on what is the No. 1 issue, and that is our slowing economy."

House Minority Leader John Boehner, R-Ohio, said, "The House gave a little, the Senate gave a little. I think that's what the American people expect of us -- to find some way to come together and deal with the problems the American people are facing."

Senate Majority Leader Harry Reid, D-Nevada, called the approval an "example of how government is supposed to work." Reid said, "Legislation is the art of compromise, and that compromise comes very hard sometimes. It came very hard this time."

After the House passed a stimulus package last week, Senate Democrats made a number of changes that Republicans would not accept, saying that they were too big and loaded with special-interest provisions.

After Democrats were unable to break a Republican filibuster threat, the leadership headed back to the negotiating table, finally agreeing to leave rebate check amounts at the House level. (Senate Democrats had lowered them and raised the income caps.) The Senate measure also added checks to more than 20 million Social Security beneficiaries and 250,000 handicapped veterans and their widows who were left out of the original House bill.

The Democrats dropped demands for an extension of unemployment benefits, energy assistance for low-income households and tax breaks for energy providers.

"This legislation is not everything that I wanted," Reid said. "But I am very happy."

While the members of Congress and Paulson applauded the bill's quick passage, a survey found that about one in four Americans (26 percent) said they would spend their tax rebates.

Nearly half (46 percent) said they plan to use the rebate to pay off debt and a quarter (28 percent) would save the money, according to the International Council of Shopping Centers and UBS Securities, which jointly commissioned the study of 1,005 households between January 31 and Sunday.

"The money will go into the hands of lenders rather than retailers," said Mike Niemira, chief economist of the International Council of Shopping Centers.

The crushing weight of Americans' debt load was underscored Thursday when the Federal Reserve reported Americans owed a record $943.5 billion in credit card debt at the end of December.

Including loans other than mortgages and home equity lines of credit, Americans are shouldering a record $2.5 trillion in debt.

That amount increased during the month by a relatively modest 2.1 percent, an indication that Americans have been restraining their spending


source: http://www.cnn.com/2008/POLITICS/02/08/economic.stimulus/

Justthe shear amount of debt boggles my mind. $2.5 trillion in debt not including mortgages and home equity loan? Wow!!!

46% said they would use it to pay off debt. I wonder what the actually numbers will be. I say most of the 46% will spend atleast some of the money.

We all have that one week in the month that is like the hump. Once we get over it, it’s all down hill. This is that week for me. The second week of the month.

My outflows:

Insurance: 1,250
Mortgage: 2,800
½ car: 316
Medical: 500
Groceries: 100
Utility:140

Needless to say, I don’t take home that type of cabbage on a weekly basis. This is where a budget fails. A typical budget looks at these items occurring within a month without regard to the cashflow. This is why it’s important to have a funding plan. Your inflow and outflows don’t match up. Some weeks are feast and some weeks are famine.

This is my third month of having a budget and funding plan, and I always had doubts on the second week. Is this going to work?

Well, this is the first month that I truly don’t feel stress paying these bills. I do have doubts about how much I will pay my debt down this month but not how I will pay for the essentials.

I guess what I am really trying to say is that I am starting to fully trust the plans (budget and funding plans). And as the saying goes, “Plan the work and work the plan.”

PS: No my employer doesn’t have health insurance. And this was the best plan for piece of mind. Sometimes the expense is worth the peace of mind (especially if it keeps the wife off my back). I’ll probably look for a cheaper plan next year.

So, I have a spreadsheet that tracks all my debt except the mortgage. I have everything bucketed by month and what I plan to pay off and when. I have a regular and aggressive payment sheet. The theory on the regular is that the are realistic numbers and if I stay on track I should hit them. The aggressive numbers are a motivational tool. Just out of my grasp but attainable in a perfect world (barely).

Well, after much debating internally, I have decided to redo my goals. I am dropping regular plan and adding a super aggressive plan. I don’t know how I’ll even come close on the super aggressive plan, but the goals on the regular plan were being easily accomplished.

1) Credit Card Debt (0% until May 08) – Balance 1/1 – 6,000

Regular: April 2008
Aggressive: March 2008
Super Aggressive: February 2008

2) Car 1 (4% interest rate) – Balance 1/1 – 5,726

Regular: July 2008
Aggressive: May 2008
Super Aggressive: March 2008

3) Car 2 (3.9% interest rate) – Balance 1/1 – 17,046

Regular: February 2009
Aggressive: September 2008
Super Aggressive: July 2008

4) Wife’s Braces (0% interest rate) – Balance 1/1 – 2,652

Regular: March 2009
Aggressive: September 2008
Super Aggressive: April 2008

5) Son’s Medical (0% interest rate) – Balance 1/1 – 18,000 (estimated)

Regular: August 2009
Aggressive: January 2009
Super Aggressive: September 2008

Let’s see how this works. Strive for the super aggressive plan and settle for the aggressive. Keep the focus!!! I don’t know how I’m going to do it, but that’s the challenge.

My goals for 2008 are:

1) Pay off $6,000 CC by May 1st
2) Pay down car 1 by Aug 1st
3) Invest $10,000 by year end
4) Invest $15,500 in 401(k)
5) Review and reallocate retirement funds by end of Q1
6) Will by end of Q1
7) Life Insurance by end of Q1

So, how are we doing? Good in some and procrastinating in others. Probably par for the course.

1) Pay off $6,000 CC by May 1st

12/31/2007 - $6,000
01/31/2008 - $3,543 ($2,457 paid)

Nice. I might be able to pay this off by end of March. 2 months early. Keep the focus.

2) Pay down car 1 by Aug 1st

12/31/2007 - $5,726
01/31/2008 - $5,317 ($409 paid)

Well, if I can keep up the pressure and the focus, I might be able to pay this off by end of May. Nice.

3) Invest $10,000 by year end

Yea, well, you know… I’ve been real busy lately. Seriously, once car 1 is paid is will get attacked. On hold now but itching to start.

4) Invest $15,500 in 401(k)

01/31/2008 - $1,451

Right on target. Looks to complete in middle of November. (A little boost in income around Christmas by not having the old 401(k) deducted from the paycheck.)

5) Review and reallocate retirement funds by end of Q1

I have reviewed the allocations and mine are all out of wack. I have set up a spreadsheet to figure out the buys and sells automatically. I am just waiting for some of the volatility to leave the market. No sense rebalancing if I need to rebalance next quarter. I like to do it once or twice a year. So ready to go, just waiting.

6) Will by end of Q1
7) Life Insurance by end of Q1

These last two items I believe go hand in hand. I might push these off to Q2 because I want to get some advice from my CPA, and I definitely don’t want to rush it. I figure work out the general plan with the CPA (how the trust and wills work together for tax purposes) and then have a lawyer fill in the blanks. Now, I’m not a millionaire; but once I throw in life insurance for me and my wife, my estate’s value goes up considerably.

All and all, I think I am pretty much on target to get all my goals accomplished this year. In fact, I have two other goals I might add: pay off a second car ($16,432) and my wife’s braces ($2,496).

The funny thing was that when I started putting together my goals for 2008 in December I thought that they were tough and it was going to be a stretch to achieve. After the first month of January, I’m ready to add more goals to the list.

I was watching Myth Busters over the weekend and they had a show where they were talking about how lead balloons can not fly. When you’re looking at material make a balloon, 2 characteristics come to mind: strong and light. Lead is neither. Lead foil rips easy and is 6 times heavier than aluminum foil.

In the end, the built a 10x10x10 cube and inflated it. All the time repairing rips. Make sure the various sides weren’t rubbing against each other. After it was inflated, it rose to the top of the ceiling and yes the lead balloon floated.

Sometime when I think of my finances, it seems that I am trying to get a lead balloon of the ground with debt and financial obligations being the weight of my balloon. The rips occurring so easily are my old spending habits.

So how do I get a lead balloon airborne? Well, I’ll follow what the Myth busters did.

1) Have a plan – So my plan is to start shedding debt. The order will be credit cards, my car, wife’s car, wife’s braces, and son’s medical. Basically it is from highest interest rate to lowest.

2) Implement the plan, working each step of the plan – In other words, concentrate on the first step. Let’s get the credit cards paid off before worrying about sending more to the cars.

3) Plan for the catastrophic risks – I may not know what the risks are, but I can plan for what happen when they occur. I have a budget that should take care of most things (car maintenance, house maintenance, etc.). I also have an emergency fund to go above and beyond this. I haven’t tapped into since I started a budget.

4) Review progress of the plan –
Now, you can review your progress to your plan. Is too aggressive, not aggressive enough?

5) Make adjustments as necessary – Little bumps are to be expected. Just rework the plan and make the small adjustments you need to.

And this is how I plan to fly my lead balloon. Tears rips and all, my toxic shining balloon will rise

I have been thinking of writing this for some time now. I figured today is as good as any day. A lot of you are feeling the pain of the stock market. It’s been down for 6 days and looking to go down again. The Fed lowered rates from, I feel, a position of weakness and not strength. The financials are leading the markets lower (even though yesterday was pretty good for some).

So what do I do now? Bury my head in the sand? Move everything to cash and put it in a mayonnaise jar?

Did you do that when you were creating a budget? No, you took a deep breath assessed things and came up with a plan. When times started getting tough with the budget, did you abandon it? No, you worked through the pain.

So what should we do?

1) Continue to put money in your retirement accounts. Remember, this to shall pass. Dollar cost averaging is a powerful concept.

2) Review your funds. Are some of these dogs that have been under performing for years?

3) Review your allocation.

The best way to illustrate this is the internet bubble. Internet stocks are growth stocks and in the late 90’s just took off. Chances are your portfolio was overweight technology and mostly likely you were taking on more risk then you wanted or intended.

It might make sense to review your portfolio and make sure your allocations are in line to your target allocations. I know for my portfolio, I am currently overweight international and emerging market, while underweight domestic stock and REITs. I reallocate every 6 months and am scheduled to do so in the next 3 weeks.

There are 2 ways to rebalance your portfolio:

1) Buy and sell shares in your accounts.

2) Tweak your buying so you buy more of your underweight and less of your overweight.

Lastly, don’t panic. Come up with a game plan that works in good and bad times and stick with it.