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Financial Snapshot and Review

June 18th, 2014 at 09:00 pm

Here's an overview and analysis of all my financial accounts as of Wednesday, 18 June 2014 in excruciating detail.

CASH - $64,345

Yes, I know. I cringe when I look at this, because I know this is an absurd amount to hold in cash, but right now, I have $14,581 in my personal checking account, $7,873 in a joint checking account (the SO contributes his share of the mortgage here), $1,268 in a joint savings account, and $40,622 in my personal savings.

This is a somewhat hilarious "problem" to have, but I cannot get my cash levels down because I am hardwired to keep inflows greater than outflows, and it just keeps accumulating. I've been trying to move some of this cash into investments, but I wanted to dollar cost average rather than throw in a large lump sum (although I tried the latter too when I dumped $11K into an international stock fund last November). So I'm drawing down my checking account with weekly $400 automatic investments, but even with all of my other regular expenses (mortgage, Roth IRA, student loan and credit card payments) coming out of the same account, the balance isn't coming down. Actually, it's still going up. Sigh.

INVESTMENTS - $430,442

Here lie the bulk of my assets. My investments are primarily in retirement vehicles, but now that retirement is maxed, I'm redirecting excess cash to non-retirement brokerage accounts.

- 401(k)/403(b). My currently active 401(k) is at $82,419, and the 403(b) from my first job is at $13,847. The 403(b) is invested in the Vanguard Target Retirement 2050 Fund. The 401(k) is split 86.3% in Vanguard Institutional Index Fund Institutional Shares and 13.7% in company stock. I still need one more year to fully vest in the company stock match.

- Rollover IRA. The 401(k) from my second job is in a rollover IRA worth $42,250. I also have $8121 in stock match that's in a rollover IRA brokerage account. The non-stock portion is invested in Vanguard Target Retirement 2050.

- Roth IRA. The balance on my Roth IRA is $104,410. This includes a bit of rolled over Roth 401(k) from job #2. This is also invested in Vanguard Target Retirement 2050 (I'm apparently not very creative, okay??).

- Brokerage. I've got $47,766 in Vanguard 500 Index Fund Admiral Shares, $14,802 in Vanguard Total International Stock Index Fund Admiral Shares, and $14,265 in Vanguard Prime Money Market Fund, for a grand total of $76,834 in non-retirement investments. And yes, I know that Money Market is basically more cash. Ooops.

- Stock options. I have $102,296 in vested and exercisable stock options with my current company. I really don't know what to do with these. And here's the doozy -- I have an additional $142,396 in UNVESTED shares which is not included in this total. I feel like this portion of my net worth is actually cheating.


I still owe a little over $7K on my 3.5% Stafford loan. It started out at $17,125 in 2006, and I've got about seven years left on it. I've been known to chuck an extra hundred dollars at it every so often, but I'm not really in a hurry to pay it off.


This one is a bit painful and not a success story. I paid $205K for my house in 2008, but it's current value on Zillow is only $136,621. I still owe $138,137 on the mortgage, which means that not only has it lost one-third of its value, I'm actually slightly underwater on the loan -- hence the negative sign. The one piece of good news was that I was able to refinance it through HARP last September to from a 30-year fixed rate of 5.875% down to a 15-year fixed rate of 3.875%.

My only other property is my car. It's a 2012 Civic that I bought last year to replace my dead 1999 Toyota Camry that I inherited from my dad. It was a bit more than I'd wanted, but I was on a short timeline because I needed a car to commute, and I was tired of having Roadside Assistance on speed dial. It's not financed so I own it outright, but I don't like counting it among the assets column because it depreciates, but Mint includes it under assets, so I guess it counts.

So that's everything. Here's what's on the to-do list for the moment.

Action item #1 - Fix the excess cash situation. Holy moly, this is clearly one area where I fail, and when I fail, I fail hard.

Action item #2 - Should I move the stock portion of the rollover IRA out? It's irritating to me for some reason. I guess I just don't like holding a single stock.

Action item #3 - Oy, how does one deal with all those stock options? They make the "you must diversify!" part of my brain hurt, but they're worth SO MUCH and WHAT IF IT KEEPS GOING UP. Should I buy them out and hold them for capital gains? I know nothing about stock options.

Action item #4 - The one constructive comment that I received from a consultation with two financial advisors two years ago was that my diversification is awful. Well, I had (and still have) no idea what I'm doing, so they're probably right. I really ought to figure out proper diversification and asset allocation.

Action item #5 - Should we accelerate mortgage payoff? I'm vaguely embarrassed that I'm underwater, but we do like the house and have no plans to sell. A paid-off house is still a paid-off house, right?

4 Responses to “Financial Snapshot and Review”

  1. Another Reader Says:

    Your interest rate is low enough that in your shoes I would just make the mortgage payments. Over the remaining term of the mortgage, you will likely do better in the paper asset markets.

    My opinion (and that's all it is, an opinion) is that the market is richly priced right now and in your shoes I would continue to dollar cost average in. I would hold cash to buy in when there is a correction, for which we are long overdue.

    At your age, I would not put much in bonds. Interest rates will go up and bond funds will drop in value anyway, so I would be cautious. While you are waiting for a buying opportunity, read the bogleheads material and some of the recommended books. An overall asset allocation and an investment policy will help you make decisions. The asset allocation and IPS are stressed in the bogleheads material.

    Most folks sell some or all of their company stock when it vests. There is risk with having your job and your investments with the same company. Enron was a good example of why you should diversify away from your company. The rule of thumb is no more than 5 percent of your portfolio should be in company stock. There is a lot of information out there on the plusses and minuses of selling vested stock and on how to minimize the taxes. Also on how to handle options. In your shoes, I would sell the stock of your former company unless you would buy the stock today as an investment.

    You have done a fabulous job with just the basics of investing. Do some homework, and you will become a knowledgeable, confident investor.

  2. creditcardfree Says:

    You are doing well, I think I'd just pay off the student loan. Sure it isn't costing you much interest, but you have the cash and it is earning virtually zero. One less thing to think about.

    No suggestion on the options since I'm not familiar.

  3. CB in the City Says:

    I don't really have advice, I just want to say that your are doing very well, and I wouldn't worry about the underwater mortgage. It is the one piece of bad luck in your whole portfolio, but it will correct itself over time. If you like the house and want to remain living there, so much the better!

  4. Carol Says:

    For stock options etc. I found a book explaining strategy for selling etc. that was very helpful. I can't give title now; I'm away. I agree with reading Bogelheads, but they were not helpful enough with company stock. You may want to spread out sales to not adversely affect your taxes too much. Good luck-- a nice problem but you still need to get informed.

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