Aaaahhhhh…. It’s not going the way I want! To be honest, I thought April was going to be a good month in terms of net worth. I thought I wasn’t spending much and had figured that my overall debt would decrease… well it didn’t! Call it spring rush for the kids (clothing and stuff), call it dining out, call it stupid expenses… it all goes down to the same thing; I’m spending more than I am earning.
BUT THERE IS A REASON WHY…
No, it’s not an excuse; there is a real reason why I am spending more than I am earning right now; because a good part of my income consists of bonuses. The problem is that when I work my monthly budget, it doesn’t add up evenly. Each year, I receive about $15,000 net of taxes in bonus. The problem is that I receive a very small part of it in June and the biggest part in January (this is when I made a 5K RRSP contribution along with another 5K on my debt).
The other point is that I also include a partial sale of my employer stocks each year. I actually buy the maximum amount allowed per pay in this stock as my employer contributes an additional 25% of my purchase. Each year, I cash out a part of these stocks in order to pay off my municipal and school taxes. Right now, I am paying my taxes from my monthly income and leaving the stocks ride (as I am making a very good return on the stock).
The key point is that I am making a higher yield on my stock than I am paying in interest. In fact, my highest interest rate right now is 1.99% (which is my MBNA low rate balance transfer card).
THE MBNA IS COMING DUE…
Almost a year ago, I applied for a MBNA low rate balance transfer card in order to help manage my debts temporarily. Starting with a balance of $13,000, I am now at $9,500 but the 1.99% offer expires in 2 months. What is going to happen next? I have a few options:
#1 Use my HELOC and cash my employer stock to pay it off completely in May.
#2 Pay a part of it from my HELOC right now and write myself a check (from the card) for the same amount. I find it very weird, but they extend my “promotion” if I withdraw more money from the card. So, technically, if I take 5K from my HELOC to pay down the credit card and write myself a check for 5K a few days later, I can “reset” a debt of 5K at 1.99% for an additional 12 months.
Since my employer stock is paying a great dividend (more than 3%), I think I am going with option #2 to see if it works. If it does, it will give me more time to receive:
– About 2K in income tax refunds (May-June)
– About 5K in bonus (end of June)
– A salary increase (mid June)
I’ll use my 2K tax return to pay off a part of my debt along with my salary increase. I reserve the 5K bonus for my central A/C (yeah I know, I shouldn’t spend more… but I’m doing it anyways!).
So here’s the detail of my net worth for this month:
CHECKING ACCOUNT $1,000 $1,000 0.0%
$2,922 $5,332 82.5%
RRSP ACCOUNT $23,769 $23,685 -0.4%
PENSION PLAN $12,000 $12,000 0.0%
HOME $338,640 $338,640 0.0%
COMPANY SHARES $75,000 $75,000 0.0%
MAZDA TRIBUTE $22,134 $21,700 -2.0%
MAZDA RX-8 $9,600 $9,200 -4.2%
TOTAL $485,065 $486,557 0.3%
CREDIT CARD $8,979 $11,779 31.2%
LINE OF CREDIT $19,456 $19,348 -0.6%
HELOC $262,712 $261,214 -0.6%
CAR LOAN $22,134 $21,700 -2.0%
MBNA 1.99% TRSF $9,800 $9,500 -3.1%
TOTAL $323,081 $323,541 0.1%
Total Net Worth: $162,711 (-0.5%)
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