Back when I was in college a department head gave me a copy of The Millionaire Next Door as a thank-you gift for a project I helped with. This book had a profound effect on me at the time and I eagerly digested the follow-on book The Millionaire Mind when it came out. When I heard the author was publishing another book "Stop Acting Rich" I was ready to dig in.

I felt that Stop Acting Rich was very much inline with The Millionaire Mind in reciting numerous survey results on profiling millionaires. The book appears intend to address why people often live what they believe is an affluent lifestyle that is above their means and how drastically different that is from those that are actually affluent

Some nuggets I took from the book:
-The most productive accumulators of wealth live in homes that represent a fraction on their net worth - the data reported in the book suggests averages of 4.6%-27% of their net worth in home value for those with $1mill+. This appears to be on par with my goal of buying a house that would represent ~10% of my target net worth. The reality is our home' value is currenlty roughly equal to 50% of our net worth. Yikes!
-Interesting statistic the median price of the typical bootle of wine purchased by roughly half of the millionaires surveyed was $13.09 for a bottle of wine.
-Millionaires median restaurant bill is $19.59 with 1 in 4 reporting paying $14.60 or less. I think my fie and I are pretty on par with this. While once every couple months we may go to a chain restaurent like Olive Garden with higher prices, most of our restaurent bills for the 2 of us are <$15 for the 2 of us after we take advantage of coupons, specials, and/or avoid alocohol.
-The most popular make of car among millionaires is Toyota.

Is it worth reading?
I felt most of the meat of the book was the results of the survey data. The authors personal anecdotes were of little benefit to me. I felt other than the survey data - that most of the book was more just more examples of why people live above or below their means.

Found via slickdeals.

Earnings Per Share $29.02, Book value (liquidation value) per share $135.83 and the company's shares were trading around $23.50-$25 per share. I'm drooling....

Also Berkshire Hathaway Inc released Warren Buffet's 2009 Annual Letter to Shareholders recently. As always, a very valuable read from a very wise investor.

Check out this map of unemployment rate by county from Jan2007-Dec 2009. Scary!

Highlights for February

• All credit card debt (except current month's purchases) is in the form of 0% APR balance transfers earning interest in my savings accounts. We paid off the last of our 0% balance transfers in January 2009. The well has dried up for now, but we are ready to take advantages if any offers come our way.


• We track our real estate properties according to our cost basis.


• We received a $1,950 distribution from the taxes/insurance escrow account on our House#4 mortgage. The payment was a result of a tax prepayment when we bought the house back in 2008, it just took a while to catch up to us. Hence we had an extra bump this month in our cash flow.
• The stock market was up strongly for the month, although our actively managed holdings performed poorly against our benchmark. The full details of our investments will be posted shortly.
• Otherwise we continued to focus on paying down our IELOC (House #2 mortgage) which has been an ongoing focus for us. Our goal is to pay off this credit line by the end of this year as one of the steps to reduce our total debt load.
• For the first time since I graduated college I filed our taxes prior to April. I quickly realized we were going to get a large refund and it motivated me to aggressively pursue our income tax preparation. Our tax returns have been sent and now we are just waiting for our refunds. I have also already changed my withholding rate with my employer so that we should not get such a large refund next year. This year with a new baby, some sizable losses with our rental properties and stock investments meant we owed a lot less than I expected.

Back in mid-2008 we had $3,000+ free cash above our committed and typically living expenses for the month. In other words, after paying our typical bills, retirement savings, and mortgage payments we had about $3,000 left to save, invest, pay down debt or used to pay for large and or unexpected emergencies. Needless to say with the loss of 1 income and increased expenses our monthly cash flow has changed quite significantly.

If I ignore our Rental #2 refinancing we did in 2009 for a moment, we end up with <$500 free cash from our single income after our mortgages, retirement savings, and typical monthly expenses that we could save, invest, pay down debt or use for emergencies.

Things like small repairs, furnishing or other large purchases just wreck havoc on our ability to accumulate cash these days. Its frustrating and demoralizing at times. I recognize we were a bit spoiled by those months in 2008 when we had tremendous free cash to handle bumps in the road.

Obviously things have changed, but that doesn't mean that we can't take steps to adjust our monthly cash flow picture to improve this so we aren't living so quite on the edge.

We have already taken a couple steps:

• We refinanced our rental property reducing the monthly interest costs and reducing the minimum payment. Now we have ~$300 additional "free cash" from the rental income that we are using to pay down the loans further every month to eventually improve our cash flow further. In the meantime we consider that $300 "free cash" that we could reallocate to emergencies or other bumps in the road
• We have really focused on minimizing our family's committed monthly expenses in every way that we can.

So at this point that leaves us with about $800 in monthly "free cash". Once we payoff the Rental #2 mortgage with this monthly "free cash" that will improve to about $1,300 in monthly "free cash" in hopefully the next 3 years. $1,300/month is still a far cry from $3,000/month but significantly better than were we have been.

Once Rental #2 is paid off I'm thinking we could turn our attention to Rental #1 mortgages which with a $1,300 additional principal payment could be paid off in ~5-8 years. I imagine there will be hiccups and other investment opportunities along the way that could extend this by a couple of years. Once Rental #1 is paid off that would get us to $2,000 in monthly "free cash". Things would be looking pretty comfortable then compared to now.

I signed up for one back in 2006 since its free and only requires a few minutes to link your loyalty cards to. I figure with no change to my buying habits it should rack up a little cash over the years and might as well take advantage. I logged into my account and found out that I had received a whopping $9.10. That not exactly significant for 3 years of buying activity, but its a little something.

It turns out the Upromise web site has a link to a form you just need to print off, fill out with you information including your upromise account number and they will mail you a check. Its almost not worth the trouble for me, but if someone regularly shops at a participating store I could see how they could earn $100+ for a few minutes of time.

Link to Upromise account withdraw form .

Last year we identified our Rental #2 property with a 30yr fixed mortgage @ 6.5% as the first target of our debt reduction. We refinanced that into variable rate equity lines significantly reducing our current carrying costs and have been focused on paying it down with all free cash (while making no changes to our retirement savings, investments routines).

We currently have about $14,000 left @ 4.25% on our IELOC and $25,000 @ 3.25% on an HELOC. I hope to have the the $14,000 paid off this year and want to continue paying down the $25,000 once that's complete. Once we pay down the $25,000 HELOC to about $15,000 or so we'll begin to look into our next steps. At the rate we are progressing that's likely 24 months or more out.

Of Course if the stock market suddenly becomes much more attractive or we identify a more compelling investment we may shift gears to utilize our monthly free cash for other purposes. For now its focused on debt reduction.

The only equity investments not covered are:
1) my 401k which is invested in institutional index funds through my employer that I haven't found a tracking symbol for.
2) investments roughly worth less than $500, simply because I don't have the time and energy to keep up with them. I am thinking I will sell these off at some point and add the proceeds to my current investment portfolio because they are too much work to track.

January Highlights:

• Our investment performance performed very well compared to our benchmark. However both our portfolio and our benchmark took a beating as our holdings lost-2.34% while our benchmark (VTI) lost -3.57%.
• Otherwise our portfolio was very quiet. We only added our monthly contributions to our Roth IRAs, received and reinvested some dividends.
• Our recent monthly returns were: Jan 09 -4.98%, Feb -9.94%, Mar +8.45%, Apr +10.88%, May +4.65%, Jun +0.89%, Jul +9.94%, Aug +4.36%, Sept 3.15%, Oct -2.34%, Nov +5.83%, Dec +1.85%, Jan '10 -2.34%.....

January 2010 Investment Report:

Highlights for January

• All credit card debt (except current month's purchases) is in the form of 0% APR balance transfers earning interest in my savings accounts. We paid off the last of our 0% balance transfers in January 2009. The well has dried up for now, but we are ready to take advantages if any offers come our way.


• We track our real estate properties according to our cost basis.


• We clamp down our spending in January to help recover from our higher than average spending during the holidays in December.
• We received January rent for one of our rental properties in Dec so our income this month was below normal.
• The stock market was down for the month dragging our net worth down as well. We also saw a significant drop in the value of my employer's stock options this month
• Otherwise we continued to focus on paying down our IELOC (House #2 mortgage) which has been an ongoing focus for us. Our goal is to pay off this credit line by the end of this year as one of the steps to reduce our total debt load.
• My wife received here $121 bonus for opening an Electric Orange account back in November.

Overall we achieved a 34% return in 2009 for our investments besting our benchmark of the Vanguard Total Stock Market Index ETF. One could argue that our returns may have been higher in large part due to the timing of our net contributions which were heaviest towards the bottom of the market. Regardless we are pleased with the results and have no complaints with our investment strategy at least for 2009.

Here are our monthly investment reports for 2009 where you can see all our holdings and investment transactions for the year.

The only equity investments not covered are:
1) my 401k which is invested in institutional index funds through my employer that I haven't found a tracking symbol for.
2) investments roughly worth less than $500, simply because I don't have the time and energy to keep up with them. I am thinking I will sell these off at some point and add the proceeds to my current investment portfolio because they are too much work to track.

December Highlights:

• Our investment performance was very poor compared to our benchmark. Our benchamark was up 2.85% for the month, but our investments only gained 1.85%.
• During the last few days of the years we decided to sell of our remaining Well Fargo position to realize additional losses
• We also sold off our Radian holdings which was nothing more than a bet that mortgage insurers were undervalued. With a 20% return after just a few months I had no desire to hold on
• Our monthly returns for 2009: Jan -4.98%, Feb -9.94%, Mar +8.45%, Apr +10.88%, May +4.65%, Jun +0.89%, Jul +9.94%, Aug +4.36%, Sept 3.15%, Oct -2.34%, Nov +5.83%, Dec +1.85%.....

December 2009 Investment Report:

After a quick review I thought my best potential options were Mint.com or Quicken Home & Business.

Mint.com
Pros: Free! Web based so no software required and could access on any computer. Web design seems very slick for categorizing expenses, etc.

Cons: Transactions limited to web access financial accounts. No real ability to keep up transactions in other accounts or "buckets" in your personal finances. Reporting features seem more limited to what I am use to with MS Money. No ability to import the years of data I have with MS Money.

Quicken Home & Business
Pros: More similar to MS Money. Can import MS money data (not sure how well). More reporting features. Seems more designed for those looking for spending control.

Cons: Its not free - looks like it costs around $60. Not web based so technically I can't install it on my work pc making it more inconvenient to use.

Ive decided to start by giving Mint.com a try. Given it's free to use I figured I could try to use Mint.com and if all else fails I could consider purchasing Quicken Home & Business.

Setup
Pretty simple to get up and running. Took about an hour to enter in all my web based account info. Its was a bit weird entering all my authentication information into Mint.com (usernames, passwords, secret questions), but that was quickly forgotten once I saw how much of a better job Mint.com was doing pulling my transaction data from my accounts. Very nice.

I did have a couple accounts (Emigrant Direct, ESPP) that had a lot of trouble remembering all the authentication data (especially the secret questions) and still need to resolve.

First Impressions With Mint.com
My most immediate problem is I haven't found a way to create an offline account other than create a "asset" account and assign it a value. For instance my HELOC with First Citizens doesn't have a web access account. I can create a "asset" for my HELOC account and assign it the HELOC balance, but there is now way to enter transactions associated with my HELOC, I can only update its value.

While the reporting/trend information is limited to mostly income vs spending analysis my initial impression is the reporting feature is nicer to what Im use to in MS Money. Its much easier for me to review reports/trends on our spending patterns than is was in MS Money.

Reporting Monthly Net Worth
Since I have almost all our existing accounts loaded in Mint.com I think I can just update our net worth spreadsheet to utilize the data I can export from Mint.com to report our net worth.

I pay close attention to our annual dividend income because its one piece of the passive income we are going to need once we hit our financial goals. As part of our passive income strategy we will need an annual cash flow to sustain ourselves once we reduce our earned income and before we can raid our retirement accounts.

Heres a look at our dividend income for 2009:

For 2009 we saw a drop of about 18% in our net dividend income over 2008. While its a set back, we continued making investments with higher dividend yields in 2009 which should pay off in the long run.

You can also see our 2005 passive income, 2006 passive income, 2007 passive income, and 2008 passive income.