Tuesday, July 26, 2005

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.
  • 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

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.