for a couple of months, he tried to cook more often, but that experiment was short-lived. He laments that itâ€™s not unusual for him to eat out for breakfast, lunch, and dinner.
At the time of our profile, Butler was poised to buy a duplex that would provide both a home and rental income. It was a step in the right direction for building his personal wealth, and itâ€™s the foundation for the be Declaration of Financial Empowerment, Principle No. 1: I will use homeownership as a foundation for building wealth.
Unfortunately, the deal never came to pass. In the end, the owner didnâ€™t want to budge on the $207,000 asking price. But Butler is still optimistic about his chances for homeownership because of the downturn in real estate prices, which he says have fallen about 8% in his area. And heâ€™s patient enough to wait for a further dip.
But even bigger changes may put off his plans. Butler is waiting to hear about a job opportunity that could require him to temporarily relocate to England. So, for Butler, itâ€™s wait and see. In the meantime he wonders when his spending issues will be history. “Iâ€™m proud of my promotion, but Iâ€™m disappointed that I havenâ€™t been able to get my spending under control.”
New Yearâ€™s Resolution: “To continue to enjoy life, move to England, and to increase my salary a minimum of $10,000 to $20,000 by the end of 2008.” be
- Eliminate credit card debt. Use at least $300 of monthly savings to pay down debt. Never charge anything he canâ€™t pay off in 30 days and never borrow for pleasure.
- Take advantage of tax credits for his student loan.
- Butler didnâ€™t follow the advice. Worse, his credit card balance ballooned from $2,500 to $8,000. His credit limit was raised from $6,000 to $10,000. Then he asked that it be raised to $15,000, and it was. He says he asked for an increase in case he moves to England, as he will need money to get set up there.
- He made the adjustment and saved approximately $500.
- Assess asset allocation. Diversify beyond one asset class into four or five. Increase monthly contribution in 403(b) and invest in mutual funds.
- He increased his contributions to a total of $300 a month in his 403(b) and IRA. He ignored the advice to diversify but has no regrets because his heavy allocation in international stocks paid off. His IRA balance went from $2,200 to $7,000. He says he will diversify into U.S. stocks once the domestic market is a bit more settled.
PREPARE FOR THE FUTURE
- Use $2,000 contest winnings to increase emergency fund to nine months of expenses.
- Pursue real estate, especially a duplex that would provide supplementary income.
- Instead of the emergency fund, he put the $2,000 in his IRA. His emergency fund still stands at $3,000.
- Butler is waiting for prices to continue their decline and also waiting to see if heâ€™ll be moving overseas.