Debt to Dreams

Sorry for the Delay, I have been working in the ICU this month so my time and attention have been directed elsewhere…….. as it should be.

Only a couple of weeks ago I wrote “Minimal Risk, Maximal Satisfaction”, That was before the stock market regained some volatility. Couple that with an average savings month and we had our first negative net worth month on record.

We were not able to save enough of our income to offset the decline in our equity accounts. I was hoping to climb above the -$60,000 by the end of July, but it will have to wait for a better month. Despite the negative numbers the fundamentals in our household remain stable and barring any catastrophic economic collapse we should be back on track next month.

Here is the Damage:

Here is some Guidance to those numbers:
Looking at our balance sheet our Cash/Savings looks out of proportion to the rest of our assets. Part of that is due to a new 0% balance transfer offer that I took advantage of in July. It was the first time that I did this for the sole purpose of arbitrage. It was pretty easy and I hope to take advantage of a couple of other offers floating around over the next couple of months.

The main reason I keep so much cash on hand is maintain the ability to pay for short-term expenses, otherwise known as emergencies. Without this cash I would have to generate more credit card debt or having to liquidate a stock or bond investment at an unfavorable time and incur unwanted taxes.

Being newly married, halfway through residency without any established long term plans, maintaining our financial flexibility to take advantage of opportunities remains goal #1.

After watching our investments gyrate, my wife and I reaffirmed our main goals for the next 5 years which are basically:

1. pay off all of our non-student loan debt
2. build a 4-6 month emergency fund
3. save 20% for a down payment for a house
4. max out our Roth IRAs each year

On the liabilities side, the majority of my student loans remain in forbearance. This is a sort of purgatory where you watch your student loans accumulate interest but you don’t have to make you make monthly payments. I will renew this arrangement at the end of this month for yet another year.

This entry was posted on Monday, August 13th, 2007 at 3:41 PM and is filed under Goals and Monthly Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.