2006 Year-End Review I: Financial Moves
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As 2006 is winding down, it's time to look back and examine what we did, how we did this year and where we will be when 2007 begins.
In the first part of this year-end review, I summarize the moves we made in 2006 that affected us financially.
Mutual fund investments
In 2006, we continued our regular investments in 12 mutual funds we currently hold. In total, we added $15,000 new money into our accounts. In the first quarter of 2006, I sold three funds (HABDX, NISVX, and WAAEX) that I didn't make regular purchase and bought a new one (ADVDX), mainly for its high dividend yield (currently at 12.17%). I hope one day it will provide us with more passive income.
Stock investments
We totally invested $17,704 in our stock portfolio. Major part of the money went to new purchases (PSI, PHO, PFM, GRRF, QQQ, BAC, PG, and PGN), through either brokerage firms (Scottrade, ShareBuiler, QQQDidrect, and Firstrade) or DRIP program (ComputerShares). A small portion went to recurring purchases of QQQQ, BAC, PG, and PGN at $50 a month and PEY and PFM at $100 per month. Unlike mutual funds, I don't want to make regular purchase of stocks due to cost concerns. For those I do make monthly investments, they are all dividend-paying equities (except QQQQ).
Bond investments
After selling HABDX, I no longer hold any bond fund in my taxable accounts. However, I continued monthly purchase of $100 I-Bond which is exempted from federal and local taxes. In addition, I started to buy 4-week T-Bill every week (except October) back in May and now the T-Bill counts half of our bond investments. In 2006, we added $13,200 new money into the bond investments.
401(k) contributions
The total contributions to our 401(k) plans in 2006 are $30,104, including $6,417 employer matches, though both my wife and I didn't max out the $15,000 allowed maximum. In 2007, we probably will increase the percentages a little to get close to the maximum $15,500 contribution limit. After all, today's $3,000 will make a difference 20 or 30 years later.
IRA contributions
I am very happy with this part as we contributed $8,000 into our Roth IRA accounts in 2006, though we have until April 14th, 2007 to do so. Actually, we have been contributing the maximum amount since we opened our accounts in 2002. Next year, the limit will go up to $5,000 and we will continue our quarterly investment into our accounts.
529 contributions
In addition to adding $100 every month into each of the three 529 plans (Vanguard, Fidelity, and T. R. Price), the cash backs we earned from Citi Upromise credit card and Fidelity 529 Rewards card were also automatically invested in to the plans. In 2006, our own contributions are $3,600.
Term life insurance
In February, both my wife and I bought a 30-year $500K term life insurance policy from Matlife. We have life insurances with our employers and the new policies are for our daughters' future should anything happens to us. The total annual premium is $754.
Additional mortgage payments
In 2006, we made $4,800 additional mortgage payment ($400 each month). Our 5-year 4.75% ARM is almost three years old and we want to get the most out of this low rate. Next year, we probably will buy a bigger house if the conditions are right.
New auto & home insurance
We are currently using Liberty Mutual with annual premium for both cars and home at $1,751. After some comparisons, I decided to switch to Ameriprise which gave us a better rate ($1,539 annual premium).
New IRA custodian
Back in October, we started the process of moving parts of IRAs from Scottrade to Vanguard since Scottrade charges $2 transaction fees for each purchase. This was supposed to be a routine, at least for Vanguard, but it turned to be a process that full of troubles. Now nearly three months after the initiations, we still don't know when Vanguard will finish the transfer of my wife account.
New online savings account
I opened a Virtual Bank savings account back in March when they offered a better rate. But that was then. Now almost all our savings are with EmigrantDirect and HSBC. I am considering open another account which gives me a higher rate, however, haven't decided which one yet.
New credit cards
We opened two new credit cards in 2006: Fidelity 529 Rewards MasterCard and Discover Miles card, with combined credit line of $14,500. We now use the Fidelity card every day for their 2% cash backs. The Discover card was for 0% balance transfer only (of course, I got the 10,000 mile bonus).
0% balance transfers
I just love them. In 2006, I took a total of six 0% balance transfer offers, five of them from Chase (five months, $75 transfer fees) and one from Discover (ten months, $0 fee). The combined balance from all these offers were about $75,000. Currently, only the Discover offer is still valid. I probably will take some more next year, either through new cards or existing ones (from Chase).
Others
In summer 2006, I started selling stuff on Amazon.com and have sold $1,164 of stuff so far, not too bad considering the effort I put into it. Most of the stuff I sold were bought from places like Buy.com and TigerDirect.com. In addition, I also took some time (quite some) taking online surveys and made $432 in total. I love to get a few bucks here and there :D.
Finally, I started this Diary in September and it has become my biggest hobby. Though the Diary is taking me a lot of time every day, I really enjoy it. And, of course, thanks everybody who stop by, read my story and comment on it.
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I think this was the most detailed year in review post I have seen. And by the way, GREAT JOB this year!
Very good year for you Sun! 2007 should be very promising, just stay on course. You are doing very well!
Happy New Year!
Sun,
Great post and congrats on a great 2006.
I look forward to reading your blog and following your progress into 2007 and beyond.
Happy New Year,
TMT
Golbguru to Sun –> This caught my eye first “The combined balance from all these offers were about $75,000″ …you rock dude !
Keep it up Sun.Will closely follow your blog in 2007.
Sun,
>> I am very happy with this part as we contributed
>> $8,000 into our Roth IRA accounts in 2006, though
>> we have until April 14th, 2007 to do so.
A simple question as I’m new to Roth IRA.. I didn’t make any contribution to Roth IRA last year. Now that it’s Feb. 2007 (but well before Apr 14), can I still contribute to last year’s (2006) Roth IRA? From your post it seems so. If this is true then it means I can contribute a total of $8000 at this time - $4000 for 2006 and $4000 for 2007? How do they know which is for which years? Thanks.
John: You are right, the deadline to open an IRA account is not the end of the calendar year, but rather the date to fill tax returns, which is April 15th. So you still have time to make 2006 contributions. Whether you send a check of $4000 or $8000 won’t make a difference on how they are invested. You can always write down the Memo that $4000 is for 2006 and $4000 is for 2007 if you are sending a check. To make sure the brokerage firm keeps the record right, which is the only thing that matters in this case, give them a call when they receive your check and tell them its for both 2006 and 2007 so they won’t you over-contribute in one calendar year.
Sun, thanks for the explanation. I plan to contribute a total of $5,500 to Roth IRA at Vanguard (I’ve already contributed $2,5000 at Fidelity). Among VTSMX, VGTSX and VWELX, which one would you recommend? It seems I can only invest on one fund becase according to Vanguard web page, the first two funds require a minimum of $3,000 and the Wellington fund require a minimum of $10,000. Thanks again for the help.
John: Depends on what you have with Fidelity. If it’s a domestic fund (either blend or equity), then investing in VGTSX makes sense as it gives you the international exposure. Otherwise (which means you already have a foreign fund), VTSMX may be the to go. With this fund, you won’t have extraordinary returns, but whatever the market offers at a very low cost.