Why I Am Proud of My Negative Net Worth

I'm back in the red. I almost blew a gasket calculating this month's net worth. No more credit card debt (yay!). But the start-up business costs and the new car put me in the red for the first time since October 2007. I could feel my heart racing as I wrote out the three big debts:

Car 1: 9K (13K last month)
Car 2: 30K
Business: 10K

That's a lot of money, 49K in debt. Negative net worth again. But it's not that bad. The negative net worth is mostly an artifact of the very conservative way I calculate net worth. I don't include non-cash assets. So, that means the 50K in cars (conservative) is not valued, and the 25K in business assets and inventory (also conservative) are not included.

Not so long ago, I was staring at 80K in student loans out of grad school. That was truly terrifying. This time I have the stuff to back it up!

Today, every debt I have correlates to a thing that could be sold for far more than I owe. I feel like I've come a long way.

I choose to focus on the positive, and the positives in my negative net worth are really quite staggering:
* all debt is now secured in stuff with substantial equity
* at 25 and 26, we have 45K in retirement, which is quite a lot, even in PF blogs
* business debt is the (small) price we paid for fiance's freedom in self-employment
* we donated a 5K car and lots of smaller amounts, more this month than all of last year

So, I'm proud of my negative net worth!

Bridesmaid Bills Are In!

I am now the owner of a "rich chocolate" taffeta disaster of a dress, for $275. It was the "perfect" brown with the "perfect" sheen to match the linens. Guess it wasn't perfect enough to make it in the wedding budget.

There was also a bridal shower. In theory, bridesmaids split the cost of the bridal shower. Every other one I have thrown had a few decorations, some simple food, an inexpensive prize of some sort. For this shower, I was put in charge of drinks (adult and non) and decor. I did my part and picked up the bulk of the costs of the shower. I spent $150 on drinks and about $50 on decor and paper plates and such. I didn't get anything fancy.

When it came time to talk about the money, the others balked. One is a stay-at-home mom, and she "didn't know" you had to pay. I guess she thought drinks magically appeared. The other two refused to pay because they had "taken care of the food." I don't exactly have high standards for wedding shower food, but this was embarrassing. I mean a cheese ball, plate of ham, and loaf of bread embarrassing. If the bride were not such a conflict-avoider and general mess, I probably would have caused a fuss.

Instead, I got the $200 bill for the shower. BOO.

Thing is, if it weren't so tame it would have been cheaper! Bachelorette parties are the cheapest of all parties. They're almost free! If you pay for more than a feather boa or something, you're doing it wrong.

So far this wedding has cost me $475 and probably a friend. And I still have over a month to go.

HSAs Still Looking Bad

I've been looking into HSAs because my fiance now has a high-deductible health insurance plan.

He could put up to $2,900 into a HSA to use for health expenses, now or in retirement. This would be tax free now (but still self-employment taxes) and tax free at withdrawl! Sounds like a great deal, but I can't find a single one I like.

Instead, I've just seen red flags.

Red Flag #1: Every HSA I can find that allows you to invest only allows you to invest the amount over $3,000. Since this account would only be a one-time investment of $2,900, this would just be a really low-yield savings account, even if it did grow a lot.

Red Flag #2: Neither Fidelity nor Vanguard have HSAs. A search for them reveals news stories from a few years ago that both would. But here we are in 2008 and neither does. Since I simplified my finances, I rely on those two companies.

Red Flag #3: Nobody seems to know what will happen in the future. Nobody knows if you have to take payouts when you hit a certain age, if you can put it in an IRA, nobody knows.

An HSA just doesn't seem like a good fit for us.

A Foreclosure

A college friend called me today to talk about a work trip to Texas. I was glad to hear from her. Then came the bad news. Her house had been foreclosed. I thought I didn't know anyone who had been foreclosed; I guess I do.

This friend got a good government job in DC out of college (about $60K). She got house fever about 2.5 years ago, making statements like she would "never be able to afford a house" and she was "throwing away money." She decided to buy a $350K condo in North Virginia with $20K in "upgrades."

The loan was 100% financing, and she only got approved because her boyfriend promised to pay $750 rent. (This kind of loan no longer exists, for obvious reasons.) I thought this loan was a horrible idea because of the rent. She actually hung up on me because I said that out loud to her. But that turned out to be the least of her problems.

This house was not on public transportation, so her free subway pass turned into a $100/month garage plus gas plus an hour each way (YUCK). Her boyfriend dumped her and moved out nine months later. I knew that back then, but I hadn't really talked to her since.

In a normal housing market, if her boyfriend left she could have sold and just walked away from this mess with a $15K ding. But not this time. She had gotten ripped off on the house. She used a realtor from the selling company. She fell for all the upsell. She paid more than anyone else in the condos. AND, the part that I didn't expect:

the condos were down in value, way down.

She was underwater $40K on the house, it turns out. The bank sold it last month, she moved in with her parents, 1.5 hours north of DC in Maryland, and she still owes the bank $40K plus a pile of fees. The upside is that she hates living with her parents so much that she volunteered for a lot of business travel, which pays a bit more.

She sounded so defeated that I wish I had been wrong about gambling on your boyfriend's rent on a 100% financing loan. But how could you say that out loud and think it is a good idea?

My Engagement Ring

Following up on some other posts about engagement rings, I want to talk about mine.

Women care a lot about diamonds. They know whatever the "C"s are which correlate quality in the diamond, and thus the worth of the woman. I've seen, constantly, women sizing each other's rings up, just like handbags and other such status symbols.

I hate everything about diamonds. Even if they were produced ethically (which very, very few are), I would still hate the ads and the judginess and the expectations and the colossal waste of money. I hate the "guides" in the bridal magazines. I hate the ads in the New York Times. I hate it all. I thought about diamond substitutes. They're actually not bad. But that wasn't good enough---I needed out of this whole mess.

My ring is a gemstone. It's even one of the cheaper gemstones. The whole thing cost a little over 2K, and that's because we tracked down the nicest and biggest (lab) stone we could find and had our grandparents' rings melted down to make it and bands in the future. Today, you can get all kinds of FANTASTIC gemstones for very little, and I think they're gorgeous and have much more character.

Reactions have been, well, interesting. I got everything from "Couldn't you afford a diamond?" (a dirt poor family friend) to "I always loved that color!" to "That is so creative!" (my boss's boss's wife). The best reactions have actually been from women wearing 50K rings. They, I think, are the most impressed that I just bucked the whole system and did what I wanted. I wonder why women who wear around 50K in diamonds do it.

A New Car! (With Matching Loan)

I was planning to come back from vacation and explain that the small dip in net worth last month was just the start-up business costs and that surely net worth was not going to drop until the wedding. The business was doing so well, all of our big expenses were done, and life was looking good!

And then fiance stumbled on a heck of a deal.

A friend of a friend offered him a 20K discount on his used incredible luxury car for about 2 weeks of work. That made the car about 30K. Now, this is his dream car. This is probably anyone's dream car really. So, we did it.

He needed a new car in a year or two anyway. His old Toyota was worth about 5K. He just gave it to a family member in dire need. So, there's our charity for a while. That car will be the difference to that family member of being able to support her kids with a job. So, the Toyota went to good use.

This means we own (well, the banks own for us) about 75K in cars. Yipes. But I don't think this is unreasonable. I wouldn't be shocked if we pull in 300 this year together, and we might do even better. The business is really thriving.

And if not, then I guess we can sell the ridiculous car and get the 20K out of it. Right about now I wish we tracked the cars in our net worth, because this deal kind of increased our net worth. Now it just looks like an ugly 30K loan, along with 10K on the old car staring right at me.