Yikes! The month of August was a major punch to my financial gut, as I[m sure it was for pretty much anyone with any investments in the market whatsoever. People finally started to realize China’s economy is cooling off, and it freaked people out enough here that we had a correction in U.S. markets. And we’re now back to the oddball up-and-down rollercoaster markets from day to day – where good U.S. economic news might just make the market go up 2%… or down 2%because it’s making everyone uncertain what the Fed will do.
For background on the methodology and definitions, see Net Worth: September 2013 Progress. I’m including the past two months for comparisons now, but the “difference” values are computed for the past month’s changes.
|Category||June 2015||July 2015||August 2015||Difference|
Well, first off I need to address the elephant in the room: I haven’t been updating since January. Life happened, and we got busy and I just never caught up for a while and then the blog updates totally slipped from my mind. But hey, a financial correction and some shoddy budgeting the last couple months will bring it right back into focus.
This month was dominated by the major correction in the US stock markets that resulted in that stunning $22k+ drop in investments. Keep in mind that the market has also dropped more in September, and that I actually contributed about $2,500 to my accounts in August, so the real loss is bigger (~$25k in August plus more in September).
Now, plenty of bloggers will tell you not to FREAK OUT, and hey now we’re buying the same stuff just cheaper; or that they had “no loss” because it’s all in paper and doesn’t materialize until they sell. Whatever guys. A paper loss is demoralizing and depressing when it’s this large, even if you have some validity in what you’re saying. But hey, the big thing to remember is to not sell off or stop contributing – and that you can’t control the markets. Stuff like this happens.
So, on to something we can control – our month to month cashflow and expenses. I have to make a confession: since our daughter was born last October, our expenses have been getting out of hand. We expect an increase in costs due to diapers, wipes and formula – but not only could we not breastfeed her, but she required more expensive special formula for reflux. It adds up over time, and our little guy still isn’t potty trained (or even close to wanting to), so we’re still on the diapers and wipes front with him too. So that inflates our grocery/shopping expenses a little every month.
The reality is that we got lazy with groceries, household supplies, general shopping, clothing and restaurants. Those credit car balances I report every month do get paid off month to month, but they expose that we’ve been sloppy in keeping expenses low. So, we decided to implement a mostly cash budget for those variable categories lumped together. So the number isn’t totally getting rolled up into the credit card balance, but is taken out in cash in the beginning of the month. We always eschewed cash because I could automatically track expense through mint using the cards and we got 2% cash back. The problem is we’d become too comfortable just swiping our card without any regard to what it all added up to, and it was getting downright messy.
So I’m proud to show that our card balance is down quite a bit, and we’re going to try and continue to use a cash budget to keep that in line. We’ll still use cards for automatic/recurring bills (i.e. utilities, gym, Hulu, etc), but this had a huge impact this month and I’d love to keep it rolling.