The Broke Professional - Grow your money and yourself

Financial Lessons Learned During a Blizzard

My Sunday/Monday/Tuesday workout

My Sunday/Monday/Tuesday workout

The East Coast is now recovering and digging out from one of the worst blizzards it has seen in years.  In the MD/DC/VA area we got the brunt of it, so digging out has been a process for sure.

While being at home with my family for days was fun, cabin fever started to set in after a while, especially with my 3 year old son.  He begged us to take him to the nearby park which was covered in snow and he absolutely loved it!

It was an interesting and sometimes character building experience trying to dig ourselves out.  I saw the spectrum of humanity out there.  From neighbors helping each other shovel out of their driveways to guys taking selfies of themselves in their clean driveways and not lifting a finger to help others in need right next door.

Shoveling snow is kind of a cathartic experience because things are very quiet and still all around.  And all you’re left with is your thoughts while repetitively shoveling and pushing snow around.

In between thinking about my mortality and wondering if we had enough eggs to last the next few days, I did draw some financial analogies related to the blizzard:

1.  Debt keeps you from moving forward

Seeing the magnitude of the storm when it was finished and how helpless everything looked, I realized that this is what debt can do to your financial life.  If you have debt lying around all around you, it becomes very difficult to just take a step towards financial freedom.

Once you can stop the debt from piling on, the next action step should be to get rid of that crushing debt so you can actually move on and advance with your life.  Which brings me to my next realization:

2.  Large goals are best completed in stages

Once I got my gear on and opened the door to take a look outside, it was incredible to see how much snow there was.  My Corolla was almost completely covered and the mounds of snow in the driveway and on the sidewalk were enormous.  I thought to myself that we’re never going to be able to get out of this.

But once I started working, I just made a goal to clear off certain sections and take breaks every so often.  Before I knew it, I had most of the driveway clean that day and two days later the car is able to get out and the sidewalk is passable.

This concept can be applied to pretty much anything in life, be it paying off debt or starting a new business.  The final goal can seem daunting and even unattainable at first, but if you break it up into smaller goals and work on them consistently, the end goal will become much clearer.

3.  Focus on your own situation and don’t keep up with the Joneses

It’s interesting to see how differently people approach shoveling.  Some perfectly healthy people can’t be bothered and will hire somebody to clean.  Some people are out during the storm itself and to get a head start.  And some people just wait until the plows come by to get started.

People also have different levels of preparation.  Some are using their rickety old shovels that have lasted them for years.  Others are eager to start up their brand new snowblowers.  Everyone has different situations but my philosophy is to do what you can with your situation and help those who need it.

If you were unprepared for this storm, just do what you can and prepare better for the next storm.  Financially, constantly having your eyes towards those who have more will just make you feel worse and affect how you deal with your current situation.

4.  Having a partner helps.  A LOT.

Shoveling snow by yourself is repetitive, boring and time consuming.  I noticed when I had one or two more people helping, all with the same goal, things were just more fun and work got done more effectively.  Even if one of the other people was my 3 year old son with a sand shovel, it was still fun having him out there.

In the same way, I think it’s important to have a partner when it comes to your finances.  This could be an accountability partner, a spouse who is on the same page or just a friend who enjoys talking about finances (I’m taking applications if you’re looking for one.)

There’s a nice synergy that is created when you’re working with someone towards the same goal.  You feed off of each other and new ideas can be found during the journey.

Luckily the forecast is calling for temperatures to be in the mid 40’s this week, so hopefully we will have a lot less snow to contend with this time next week.

Now only if there was an act of God that could evaporate everyone’s student loan debt…


How I Increased My Net Worth by $70K with One Click!

Where have you been all my life??!!

Where have you been all my life??!!

It has been a long time since I wrote about net worth (2 years!!).

Looking back at that awkwardly written article, my views on net worth have changed a little since then and I started doing something big when it comes to my own net worth: actually tracking it!

Automatic or Manual?

Tracking your net worth is important because it gives you a look at how you’re doing with your finances over the long term.  Just like any business wants to see that profits chart trending upward over time, you want to see your net worth trending up too.

I’ve checked in on my net worth from time to time, but never as a regular exercise where I could actually gain some useful information from.  I started tracking it regularly a year or so ago.

Many bloggers recommend using websites like Mint and Personal Capital to track their expenses and net worth.  With these sites you link your accounts (checking, savings, loans etc) and they will give you one handy place to look at your income, expenses net worth.

While both of these websites are good in their own ways, they ultimately didn’t do it for me when it came to tracking net worth.

I gave up Mint a few years ago because it was becoming a chore to properly categorize all my transactions and it wouldn’t automatically update some of my student loan accounts.

I then switched to Personal Capital and have actually been using it for a couple of years to track my net worth and it worked great.  But again there was an issue with some accounts not updating and it wasn’t able to link to one of my student loan accounts.

So then I took the (relatively) drastic step of figuring out my net worth by hand.  Or by keyboard.  And it has made all the difference in the world.  While logging into my various accounts and noting down the net worth is more time consuming than just having a robot do it, I do find some advantages from manually calculating my net worth:

  • It gives me a better overall impression of my financial situation.
  • I can pick up any mistakes.  Since doing manual entry 3 months ago, I have found a checking to savings transfer I forgot to make and a transfer issue with my 401(k).
  • I don’t feel compelled to check my net worth often.  Because it takes some time to do this, I simply dedicate one day per month to figuring out my net worth, which I feel gives me a good picture of my finances.  When I was doing my net worth with Personal Capital, I would find myself wanting to check it every week or so, which is an exercise in futility.
  • It just feels satisfying typing numbers in a spreadsheet and seeing where you stand.  You should try it sometimes.

Another Change

So now that I have extolled the virtues of manually calculating my net worth, what’s all this about increasing my net worth by $70K with one click?  It’s pretty simple.

My definition of net worth changed.

For the longest time, I never really considered home equity as part of a net worth calculation.  I strictly thought of net worth as the difference between money you have in any type of account and any outstanding debts.

I’m not really sure why I never factored in home equity.  I guess I thought because a home can be difficult to sell and equity is so illiquid, it doesn’t need to be part of my calculation.

But you could say my time as a homeowner has “matured” me.  I’ve been a homeowner for 3 years now, but only recently did I start including my home value and mortgage as part of my net worth.  To be honest, a home is more liquid than my 401(k), since I can’t really touch my retirement money until about age 60.

And once I included my home value as an asset and my outstanding mortgage as a debt, my net worth shot up by about $70,000 and finally brought it into the positive range.  Take that student loans!


-Tracking my net worth manually once a month has been a very enlightening and fulfilling task compared to having a computer calculate it.  I will keep up this practice for as long as I can to get a better idea of where my finances are going (hopefully up!!)

-Net worth is your assets minus liabilities.  I’ve decided to include my home value and outstanding mortgage in that equation, but you might not want to.

I’ve seen people include their cars and furniture in their net worth, but I don’t think I’d ever do that.  Technically, you can sell your body (and your soul) for a lot of money, so should you include that as well?  I’m satisfied with just including my house and mortgage at the moment.

-There are tons of great net worth programs and spreadsheets out there.  I got mine from a finance blog which I can’t remember for the life of me, but just search around and find a method that works for you.

-Net worth is an important number, but it’s not as important as making sure it’s trending up over time instead of down.


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