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When you are busy working away on your career or your business, or something that consumes much of your time, it is easy to overlook the nitty gritty details that bedevil your personal finances. I mean did you ever take the time to really read and understand your credit card agreement, your life insurance papers, your mortgage?

That was us! But we were caught out by falling interest rates, until it became such an obvious difference that we were forced to do something. Initially, we were successful in negotiating a re-mortgage and getting a full point of our interest rate, but we realised that it was just a ridiculously small amount when we saw rates still another point or more below what we were paying. So, we then went back to our lender and remortgaged the whole amount. While we didn’t play the “we’ll take our business elsewhere” card, the property market here was already in the doldrums, so it wasn’t difficult. In the end, instead of paying $675 per month in payments our remortgage ended up with us paying about $475. Not bad for a bit of inconvenience to our otherwise hectic lives.

However, we have to move with the times, and interest rates have now risen quite a lot from their low point, we are now considering switching to a fixed rate mortgage as a kind of insurance to protect us with interest rates that are still quite low historically speaking.

I recently came across this post that suggested we should pay off our mortgages within 15 years, not the typical 25- or 30-year deal! Now that would be aggressive. And locking in interest rates that are historically low may not be a bad idea! That would be much better than a 50-year mortgage! What do you think?

Calculating a Networth is an activity that preoccupies a lot of the personal finance bloggers. Bargaineering Blog revisits this, and has some sensible advice to those who are interested in doing this activity. Naturally, I’ve done this for more than ten years myself. As I’ve done this exercise, initially every month, but now just quarterly, I found it’s quite interesting to work things out yourself and see how your net worth changes over the longer periods.

Observations that I have found useful:

1. Conservative estimates are best. Always underestimate your assets, especially valuable items or depreciating items. Cars are a good example as they devalue fast, and it’s usually difficult to get their second hand value at 100% of full value. In fact, I don’t even count my car, golf clubs, or other such items UNLESS they are also a liability, ie I borrowed money to purchase them. Check all your cash, bank accounts, retirement accounts, house value (always tricky!), stock accounts, any large insured items. I usually don’t count household contents simply because they lack value. It’s pretty difficult to sell most of our household items at anything like a realistic price. So I just don’t. Deposits paid on utility services or on rent might be a good candidate for this category.

2. With liabilities, it’s best to overestimate your liabilities if in doubt. Liabilities typically include mortgages and money borrowed for purchasing large ticket items, credit card debt and so on. It’s rare though that liabilities are not expressed in dollar terms as you usually get a statement with the unpaid amount regularly. Liabilities would also include any personal loans you have had from friends, any money or bills that may be unpaid, or any owed amount.

3. I added a couple of tweaks over the years that helped to benchmark longer term performance, though. a. The first was a formula for recording a percentage of wealth correlated with age and salary. I can’t at this moment remember where I found the formula, but it’s quite simple:

Current Networth / ( Annual Salary x ( Age / 10 ) ) = Current Rate of Achievement.

So, if I earned $100,000 and I’m 40. My current networth is $250,000 Total. My performance would be benchmarked as $250,000 / ( $100,000 x ( 40 / 10 ) ) = 62.5%. In other words, I would need to get hustling. Anything over 100% would suggest a good effort on your part!

b. The second benchmark that helped was keeping recordings and comparing them with the 12 months’ previously. That I found really helpful, as it highlighted how different parts of my assets performed. For example, looking back, there are times when my house languished but my bank accounts did well, other times, my bank accounts took a hit, my house rose a little and the stock market jumped. Very useful as it helped me not to worry too much about individual baskets, but to keep my mind on the overall picture.

We all have our little luxuries, that cup of coffee, the more expensive newspaper, … So I thought I would share my own little list:

1. Coffee: I love coffee in many different forms – from Starbucks, from Costco, wherever there is the smell and flavor of good coffee. I don’t like those sweet or ice coffees much. I usually spend about $10-25 per week on coffee, but I tried to control it by making my own.
2. Cheesecake: I have been a fan of cheesecake for more than 10 years. In Taipei it used to be impossible to find, but now Cheesecake is easy to find, inexpensive, and increasingly good. I never make it, but when the cheesecake looks good, I’ll buy it in a restaurant at about $2-3 a piece.
3. I’ve collected quite a few board games over the years, including Monopoly, Scrabble, a small collection of other games, Chinese games, and, most recently, Settlers of Catan (pictured below).

It was the most expensive this year at about $50, but I also bought Cashflow 101, too. That was very expensive, but I managed to use it to earn some money, so I guess it paid for itself.

4. I do buy books, too from time to time, but I never really read them all. I tend to skim most of the pages, reread sections, and sometimes chapters. Rarely, do I finish a book from page 1 to the end.

5. Our car has been a real luxury item for us, as we don’t use it for work or transport. It’s freaky how much we had to spend on it, but it makes our lives a lot more pleasant. We only use it twice a week, so regular fuel costs aren’t excessive. About $50 per month at the most.

I’m sure I have other expenses that I ‘enjoy’ but those seem the most recent and the most indulgent!