Squeezing the Last of the Assignment Benefits

Not really getting any bottom line benefit, but trying to negate the impact of taxable benefits from our overseas work assignment that ended in 2008.

Since our China assignment ended in 2008 it would make sense I wouldn't get any tax assistance from my employer in 2009, but after preparing my 2009 income taxes and examining my 2009 year-end statement I felt like there were some lingering assignment expenses that I might be able to get some employer tax benefit for.

There were a couple things that caught my eye:

Tax preparation fees and moving expenses recorded in 2009 as taxable benefits and added to my w2
My 2008 state tax refund was assigned to my employer as part of the assignment, but listed as a taxable refund on a 1099-G in my name
My state tax refund that was assigned to my employer earned interest that was also paid to my employer, but listed as taxable interest on a 1099-INT in my name.

As a result I started make some inquiries about the potential to get some employer tax assistance for 2009 despite it not being offered to me as part of the assignment. It turns out the effort paid off as I was eventually given a hypothetical tax analysis and am now expecting an additional ~$700 from my employer. Turns out it was well worth the effort on my part and these days ~$700 is a significant chunk of free cash for us.

Investment Performance June 2010 (-5.64%)

This is an ongoing monthly update on how our equity investments are performing. Please see this background on the investment tool I developed and how I am using it to track our performance against a benchmark to measure our progress or lack thereof.

June Highlights:

June was a quiet month for us despite the valuation drops in the market. On the last day in June we picked up some additional shares of our Total Stock market Index since it had dropped about 10% since our last purchase.
Our monthly performance was right inline with our benchmark (-5.64% vs -5.65%) with a stronger showing from our IRA mutual fund holdings.
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%, Feb +2.25%, Mar +5.88%, Apr +2.54%, May -8.13%, June -5.64%.....

June 2010 Investment Report:

Options to Increase Exposure in an Attractive Stock Market

A couple weeks ago fear and pessimism seemed to have returned to the stock market. That said I think things are starting to look interesting in the stock market. Stock prices have come down (roughly 15% by my estimation) since the highs in April 2010.

However my wife and I have our investments on autopilot. Every month we make automatic contributions to my 401(k) and our Roth IRAs and will hit the contribution limits by the end of the year. Beyond these monthly contributions we don't have a sizable cash position sitting around that we can utilize - so how do we "double-down" if I think the market has some compelling investment opportunities?

Here are the options I think we have to further capitalize on attractive stock investment opportunities:

Change Investment Allocations - Most portfolios have a certain allocation of stocks and bonds. I could increase exposure to the stock market by reducing the allocation of bonds in my portfolio.
Reallocate traditional 401(k) contributions to Roth 401(k) contributions - Today 100% of my 401(k) contributions are traditional or tax deferred. Changing my contributions to a Roth 401(k) would allow me to effectively put more money in the market since these will be after-tax dollars rather than pre-tax dollars. Ofcourse this does mean my current year's tax bill will be higher.
Convert Traditional IRA to Roth IRA - Same principal applies here as well - I could take our existing traditional IRA holdings and convert them to a Roth IRA. As a result I would be taking pre-tax investment dollars and turning them into post-tax dollars. This would require me to pay higher taxes now, but all returns earned on those dollars would be tax free if withdrawn properly.
Slow down additional mortgage principal payments and reallocate that money to stock purchases - I could reallocate some of our monthly cash flow (that money that today we put towards paying down our mortgage) and invest it. This is kind of a monthly decision for me anyway - we generally have some $$ left each month and I have to allocate them to mortgage paydown, stock investments, cash savings, etc although lately I have been just making mortgage principal payments.
Delay/defer spending to boost monthly cash flow that can be invested -The family could clamp down on discretionary expenses and free up month cash that would could put into the stock market. As I have mentioned we have a Wish List of Major Purchases that we have been spreading out over the year and we could just put this on hold to free up ~$400-$500/mo of our cash flow. Between this and the mortgage principal payments we could probably squeeze $500-$1,000/mo out of our cash flow that could invested in the stock market.
Pull money from our HELOC (ie out of our real estate holdings) and use that for stock investments - I have never felt confident enough to do this, but this would mean reallocating money in our real estate holdings to our sotck investments by using a equity line.

As our portfolio continues to grow and our monthly cash flow remains more or less the same I think we are going to be utilizing potentially all of these tactics until we have a large cash stockpile on our balance sheet. Any other ideas out there on how to increase exposure to the stock market if you don't have a large cash position to utilize?

June 2010 Net Worth Update (-$15,172)

Assets
Cash & Savings	$
Taxable Brokerage Accts	$
Roth IRAs	$
Pre-tax Retirement Accts	$
Stock Options	$
ESPP	$
House #1 - Rental	$
House #2 - Rental	$
House #4 - Primary	$
Receivable (Payable)	$
Other Assets	$
Total Assets	$
Liabilities
Credit Card Balances	$
House #1 Mortgages	$
House #2 Mortgages	$
House #4 Mortgages	$
Rental Deposits	$
Additional Tax Liability	$
Other Liabilities				Total Liabilities	$
$QDDI Goal Progress*		Net Worth	$

Highlights for June

All credit card debt (except current month's purchases) is in the form of May-10 Jun-10 Change % 29,015.07 $ 28,864.92 $ (150.15) -0.52% 118,991.39 $ 111,904.54 $ (7,086.85) -5.96% 54,287.06 $ 52,203.53 $ (2,083.53) -3.84% 208,572.64 $ 201,972.24 $ (6,600.40) -3.16% 25,544.00 $ 22,824.00 $ (2,720.00) -10.65% 20,964.40 $ 20,802.23 $ (162.17) -0.77% 160,000.00 $ 160,000.00 $ - 0.00% 128,225.00 $ 128,225.00 $ - 0.00% 300,000.00 $ 300,000.00 $ - 0.00% - $ - $ - - $ - $ - 1,045,599.56 $ 1,026,796.46 $ (18,803.10) -1.80% (2,778.04) $ (2,338.60) $ 439.44 -15.82% (133,072.53) $ (131,348.08) $ 1,724.45 -1.30% (9,651.10) $ (9,651.10) $ - 0.00% (236,477.16) $ (236,044.28) $ 432.88 -0.18% (5,597.72) $ (5,597.72) $ - 0.00% (9,706.72) $ (8,673.12) $ 1,033.60 -10.65% size="1" face="Arial"> $ - (397,283.27) $ (393,652.90) $ 3,630.37 -0.91% bgcolor="#C0C0C0"> $ 584,793.45 $ 569,187.84 $ (15,605.61) -2.67% 648,316.29 $ 633,143.56 $ (15,172.73) -2.34% di.com/2006/02/guide_to_taking_advantage_of_0.html">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 are taking advantage of a Discover card promotion to earn a $500 bonus by spending $2k a month on our card for 5 months. While our normal month-to-month spending is about ~$1,500 on credit cards we are accelerating some planned purchases to hit the monthly clip level.
We track our real estate properties according to our cost basis.
Overall our holdings again did not fare as well as our benchmark. Our benchmark (VTI) lost 5.65% of its value in June. The full details of our investments will be posted shortly.
Major purchases in June included some patio furniture at 75% for ~$160, a media extender ~$80, and upgrades to our internet tv box ~$100. The upgrades and media extender were one time expenses to improve the tv options in our house since we dropped cable over a year ago. I feel the upgrades have been earned as we have already saved at least (17mos * $40/mo cable service =) $680 so far.
Otherwise things have been quiet. July will be more hectic as Rental #1 will turn over and the market is starting to get very interesting.

June 2010 Monthly Cash Flow

Last month I posted our May cash flow analysis and given how tight things are these days with our downshifting to a single income and starting a family, feel that we probably need to pay closer attention to our cash flow at least in the near term.

So here an update with our June 2010 cash flow:

Here is our monthly update:

Income - Fairly steady with my wife's take home dropping to a more typical amount for the month. May's income was about twice what my wife normally brings home.
Food - It definitely looks like we need to pay closer attention to our food bills. My wife and I have made significant changes after she stopped working - mainly we limited eating out to 4 or less times a month along with focusing on utilizing coupons or specials to keep our average restaurant bill down to $15-$20 for the two of us. However, that being said clearly we need to pay closer attention to our grocery budget as that is where the bulk of our spending is. Maybe we can set a budget of $400/month for groceries and see if that helps us reel this in. I believe we can get this down to <$600/mo on a regular basis.
Utilities were up slightly as we went on an equal payment plan for gas heat this past year and had to pay off the remaining balance.
Gifts - were up for the month as I had to rent a tuxedo for a friend's wedding and decide to categorize that as a gift.
Misc - We continue our management of major purchases via monthly cash flow. Last month our major purchase was a cruise/vacation for my wife and I. Our major purchases for June included some patio furniture at Target my wife grabbed at 75% off (~$160); an Xbox360 media extender (~$136); and upgrades to our media center (~$100).

Last 15 Personal Finance Entries

07/02/2010 | Earn A $76 Bonus Today at Sharebuilder
06/29/2010 | Expanding Our Media Center
06/23/2010 | A Snapshot of our Monthly Cash Flow
06/17/2010 | Xbox 360 - A Low Cost Media Extender?
06/16/2010 | The Cost of Painting Yourself
06/14/2010 | Investment Performance May 2010 (-8.13%)
06/10/2010 | How To Save Money
06/07/2010 | New Look @ QDDI's Personal Finance Blog
06/04/2010 | Mattress Shopping Tip
06/02/2010 | May 2010 Net Worth Update (-$23, 287)
05/31/2010 | Recent Credit Card Promotions
05/27/2010 | Success is a Journey, Not a Destination
05/21/2010 | My Wife and I Booked Our First Cruise
05/11/2010 | Baby QDDI Turns One - My How Time Flies
05/09/2010 | Investment Performance April 2010 (+2.54%)

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $633,143

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