December 2005 Goal

First thing: for this week, the Carnival of Personal Finance is at Free Money Finance, and I suggest you check it out. I check FMF's site on a daily basis, and I'm always learning something new.

WSJ article: In my inbox today (my profile has a new email address by the way, just for the blog) I was emailed a link of a Wall Street Journal article about the rise of individual currency traders.
Some of the quotes remind me quotes I read during the internet bubble. I think I've mentioned that I do want to learn more about currency trading, but I definitely don't want to open an account with a few thousand dollars and see what happens, which these guys seem to be doing.

I took some time today to calculate a end of year 2005 goal. I made some estimates based on my take-home pay after taxes.
Assumptions

• Rent for my one room, a max of: $550/month
• Bills and groceries (not restaurants): $200/month
• The bills are on the low side because if I live in a 3 bedroom apartment, the bills will be split three ways.
• Working and transportation: $140/month

I then will set an amount to be in my bank account and I think I can put away $1000/month into my ING account. When I have investments available I will either transfer money over from ING to my brokerage account, or if I need to make a quick transaction I will buy on margin and then transfer the money over. I'm doing this so I can keep the maximum amount of free cash in a 3.15% account rather than a 0.50% account. The margin charges will be nominal.

I will make an assumption of my net worth for August 1st and this will be $25,000. The amount should be higher, but I need to buy more work clothes and the car repairment was expensive!

One note about the working and transportation. I found out that this amount can be reimbursed to me at the end of every month. This is a great thing because I will get the money back and it will have some tax benefits. Under the plan $140 will be taken out before taxes and thus reduce my taxable income. So I will be able to reduce my taxable income and get reimbursed the money, which comes out to $1,680/year.

Okay, finally on to the goal. It sometimes takes me awhile to get to the point.

December 2005 Goal
$32,000

This goal is based on the above assumptions, savings from work, and then I added a 6% growth to the money from August 1 till the end of the year. The 6% figure reflects increases in capital gains, dividends, as well as any extra savings that I may accumulate.