Wednesday, August 25, 2010

9/01/10-12/01/10

So here is a brief rundown of my current finances.

On August 2nd, 2010 I liquated $20,000 in equities. With the S&P sitting at 1,125 it was on the verge of a decent pullback.  The last month’s events have confirmed my suspicions.  Normally, I would simply ride out the storm, but I was sitting on a large amount of Credit Card debt from a recent trip to Italy and college costs. I figured this was a good time as any to sell high and clean up my high interest loans. I am down to one credit card with a 0% interest rate and $3,000 balance- I am comfortable with this.

Career wise, I am Operations Manager at a publically traded company. My base salary is roughly $60,000 a year, with 5000-7000 in bonuses. I maximize my 401k contributions at 6%, I utilize our ESPP at 5% and cover my families health insurance. After all this I take home on average of $1,500 a week. My portion of our monthly mortgage payment is roughly $1,050. Phone, cable, car, insurance, food, etc add up to about another $700. That puts my monthly expenses at $1,750. My monthly income is roughly $3,000. This leaves me with a free cash flow of $1,250. If I am putting $1000 into equities a month, this leaves me with little wiggle room for error. The bonuses help me have a cushion- but they are bonuses and I cannot count on them. (look for an excel spreadsheet going into my budget further).
As for my equity portfolio, I am currently 100% in cash, roughly $2,500. My goal is to raise $10,000 by the end of September and begin building a diversified 5 stock dividend paying portfolio. I believe this will be a solid base to trade from.

So my Goals T20YM 9/01/10-12/01/10

  1. 1.       Reduce expenditures and increase free cash flow.
  2. 2.       Save $1000 a month, while raising extra money through overtime and extracurricular activities.
  3. 3.       Build a diversified dividend portfolio based on Dividend Aristocrats with foreign exposure.
  4. 4.       Use options to play any upswing momentum in the market.


Base Goal: $10,000
Stretch Goal $15,000

I will post stocks I am watching later this week. I might put some money to work sooner than later if we get a bounce at these levels. I believe the market is heading towards a huge correction. The recovery is built on a house of cards. Patience, patience, patience is needed.

All the best,

CM

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