Monthly Archives: March 2012

Money and The Single Mom – Wealth Building

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I always believed that Wealth Building was something “rich” people did.  As I have schooled myself in the area of personal finance, I have learned that Wealth Building is not just for the wealthy.  It’s for everyone, even a Single Mom, like me.   Who knew, right?!?!

There comes a time to stop living like there is no tomorrow and start  making financial decisions that will support your longer term goals.  These could be to save for a down payment on a home, provide some money for the kids college, save for retirement, a newer car and/or simply to provide a comfortable cushion should life throw a few lemons your way.

None of these items are out of reach as long as you establish your priorities.

Wealth Building begins with a positive Net Worth.  What is Net Worth?  It is the mathmatical outcome of the value of your Assets minus the cost of your Liabilities.

Assets .v. Liabilities

Anything that is owned that has value, such as a home, auto, cash, art, and investments is an Asset.   Assets always have a positive impact to your Net Worth.

A Liability is anything in which money is owed and has negative impact to your Net Worth.  The more debt you carry, the more it offsets the positive influence of your Assets.

For Example

A spreadsheet adding all assets and making adjustments for liability will provide a clear picture of your Net Worth.  In the example below, Assets are listed on the left side based with their present value.

On the right is where all liabilities are listed and valued.  Home loans, car loans, student loans and credit card debt are all liabilities.  This would also include any outstanding money owed to the IRS or legal fees or liens against your property.

A house is an asset, except for the part of it that is financed.  Since this is a debt that will need to be paid (a liability) the asset is offset by the liability.  If the house is worth $200,000, but $150,000 is owed, the asset is only worth $50,000  (200,000 – 150,000 = $50,000).  Since the money owed is less than the value of the house, the house remains an asset but for only the amount of the equity (value – debt = equity) of the home, $50,000.

On the spreadsheet above, the house value is listed in the Assets column and the Mortgage is listed in the Liability column.   The Liability will offset the Value.

If the value of the house (the amount at which it could be sold) is less than the amount owed, then the house becomes a liability.  “Upside down” is a favorite term for this scenario.

Net Worth

When the two sides of the spreadsheet are added together Assets – Liabilities = Net Worth, the Liabilities will always devalue Assets dollar for dollar.   In this example, the Net Worth is listed at the top right-hand side at $165,500.  This person has a positive Net Worth and that is the beginning of building wealth.

Now imagine if that person only had a house debt.  Without liquidating any of their assets, that person worked really hard (took a second job, maybe) to pay off their debt and today only had a house payment each month, then their Net Worth would have increased to $210,000 (reducing the liabilities column to only the $150,000 owed.)

Building Wealth

A positive number in the Net Worth box is the start of Wealth Building.  Why?  Well, all things being equal and should someone call in all your debts, you would not be completely broke (assuming you sell all your assets).    I recommend that this exercise be done every quarter and if this number is climbing, then you are increasing your assets or decreasing your liabilities and, therefore, are Building Wealth.  If this number is declining, then chances are you have increased your debt load.

So, it is to be said that the first steps to a positive Net Worth is to create a budget, remove the liabilities, i.e. debt, and start saving.  Your goal each month should be to pay off debt and/or add money to your savings or your investments.  Both will have a dollar for dollar positive effect on your Net Worth.

There is no “Get Rich Quick” scheme for building wealth.  It takes planning, budgeting, saving and investing.  By the way, putting $5 a week toward the lottery is not an investment, nor is it a plan.

At this point in your financial development, investments should be limited to 401(k), IRA, or Mutual Funds.  I do not recommend investments in jewelry or art or even property until your Net Worth is in excess of $1M or you are comfortable paying cash for these items.

I will cover more of how to make your wealth work hard to make more wealth in my next blog in this series….. Money and The Single Mom – Investing.

On a Personal Note

I have been working on my financial plan since 2009.  At the time, I calculated my Net Worth and have tracked it quarterly for these past 3 years.  During that time, I paid off all my debt (except the house) and I am careful not to incur any additional debt by planning purchases and living within my means.  I have begun to give to my 401(k) and building my Emergency Fund.   As a result, I have consistently increased my Net Worth by at least 5-10% each year.  I am building wealth, as a Single Mom, and you can too.

Now You're Thriving!!!


Free Net Worth Spreadsheet – Excel

References: 

3 Simple Steps to Building Wealth, Investopedia.com

5 Ways to Build Wealth Automatically, Forbes.com

I recommend the following books for more insight into budgeting and other money matters:

The Total Money Makeover – Dave Ramsey

Debt-Proof Living – Mary Hunt

Next Wednesday – Investing

~Dona~

Book Review: My Single Mom Life

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Several years ago, as my marriage was crumbling, I came across this book at Walmart and I snatched it up immediately.  When the Good Lord hands you a guide to the next phase of your life, you grab it, of course.

It was this book that helped me to understand that my new life was not a tragedy, but an opportunity to make a better life for me and my kids.  An amazing life.

The author, Angela Thomas, found herself in a life she didn’t choose as the single mom of 4 children.  Her first response was to fall apart and grieve for 3 long months.   With the encouragement of her parents and a bossy friend, she turned to her faith and began to piece together her life and bring a wholeness to her family.  In an ironic turn, she sold her wedding ring to buy furniture for their first home and with that, began to feel like they were going to make it.

As she walked this journey, she shares her experiences in solo-parenting, finances, dating, setting boundaries and changing her perspective.  While it is an uplifting story with practical advice on how to put one foot in front of the other and decide to have an amazing life, she shares her lonely-mom side, too.  She skewers the idea that since we have children, that we are never lonely.  We are.  God made us for companionship.

She has a wonderfully wholesome outlook, using her faith in God to establish a framework for her Single Mom Life.  There is no bitterness here.  There is no blame.  Her story is about taking survival to the next level.  It’s about living with integrity and passion.  It’s about thriving in your circumstance.

Her storytelling style is an easy read and with a graduate degree in Theology, she carries her spirituality through out the entire book.

I bought this book 5 years ago.   It gave me hope and conviction that the kids and I will have a great life together and that my faith and my attitude was going to make all the difference for me and for them.  I have read it again each year and I find something different each time that I can apply to my life at the given moment.

I recommend this book to anyone who is a Single Mom or preparing for life as a Single Mom.  Whether you are surviving or thriving, you will find this book to be inspirational.

~Dona~

Adventures in Table Making – Wrap Up

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As promised in Monday’s post here, I wanted to wrap up all the choices, costs, timeline and references in making this table into a single post.

References

Table Plans:  www.ana-white.com   Narrow Farmhouse Table

Table Top Idea:  www.deuxmaison.com (I love the rustic finish on the base here, as well)

Tapered Leg Jig

Materials & Costs:

I purchased Select Pine boards for this project.

Table Top:

8 – 1x3x6  –  $5.35 ea =  $43

Base:

2 –  1x3x6 – $5.35 ea =  $11

1 – 1x4x10 – $11

2 – 1x4x6 – $6.43 = $13

Scrap 2×2 (13¾”)

2 Cans White Primer =  $8

2 Cans Satin Ivory Silk = $8

2 Cans Matte Clear = $8

2 cans Wood Stain = $8

Total: $110

Dimension:

Table Top:

66″ Long  20″ Deep

(Remember to not cut 1x3s to length until after the boards have been glued and sanded)

Base:

Legs:  29¼”

Side Aprons: 58″

End Aprons: 13¾”

Maybe someday I will know enough about SketchUp to draw some awesome plans.

Colors:

Table Top:

Golden Pecan Stain

Cherry Stain

Base:

Ivory Silk Satin

Tips:

1.  I like to sand all the pieces before I assemble the final product.  That way there are no awkward angles or corners to sand into and the only sanding after assembly will be to smooth out any added wood putty.

2. Clamp together similar pieces and sand together to keep pieces uniform.

3. Test out stain and paint colors on test boards, including a poly coat.

4. Use a hair dryer on a cool setting to eliminate bubbles in your brushed-on poly coat.

Timeline

I completed the table top and the base as two separate projects over two weekends.

The table top took about 2.0 hours to assemble and sand allowing for a day to let the glue set and sanding a short time each evening.

The base took about 2.0 hours to assemble and sand.

Each coat of Poly was allowed to dry for 24 hours with a very light sanding between each coat.

I hope you enjoyed following this project and learned something new, like I did.  Good luck on your next project

~Dona~

Adventures in Table Making – Part II

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Here it is!  The table that I have been working on these past few weeks.   The table top, which I discussed in Part I, is now married to the base.  (Que Wedding March)

The Base

The base comes from these plans on http://www.ana-white com, the Narrow Farmhouse Table.

Except, her plans are for a table 96″ long and 30″ deep.  I loved the tapered legs in this plan, so I modified her plans down to 66″ long and 20″ deep in keeping with my intent and location.

Tapered Legs

The challenging part of this plan (click illustration above for Ana’s plan) was the tapered leg.  The goal, of course, was to have 8 uniformly tapered legs.

After a few failed attempts to make perfect cuts with a circular saw and a jig saw, I ran screaming to the internet looking for a better solution.  And I found this…..

Tablesaw Tapering Jig

Click the illustration above to get the directions for making this Jig for the tablesaw.  It was quick and easy to make with scraps I had on hand.

After making the jig, then I set up my saw for the 1×3 sized legs.  The fence was set to ensure that the saw blade entered the wood at the appropriate place and then I loosened the screw to get the angle that I wanted.

I was able to make 4 identical legs from the 1×3 boards.

Then I set up the jig for the 1×4 board by making the same adjustments to the fence and the screw to ensure I was getting the exact angle cut that I needed.

Once I got the hang of  it, and I did have to make adjustments to the screw a few times to get exactly the angle that I wanted, it was quick work to make the 4 identical legs from the 1×4 boards.

After all the cuts were made, I clamped the boards together to sand them to ensure they remained identical.

Then I glued and nailed the 1×4/1×3 combo’s together to get 4 distinct leg sections.

Be sure to follow Ana’s Leg diagram in Step 3 to ensure you are creating the correct combinations.

Framing the Base

I made some changes to the base from the original plans.  First, I removed the leg braces.  Since the table is not as deep as the original, it didn’t require the additional bracing.  Also,  I did not want to detract from the beautiful legs.

I did add the bracing and instantly regretted it.  I removed both of them with a swift whack of the hammer (while bracing the legs).

Second, I replaced the 1×6 apron with a 1×4 apron.  Again, the smaller table did not need that type of super structure and the 1×4 allowed more leg clearance when using a chair with a standard seat base height of 18″.

Using clamps, glue and a nail gun, I attached the apron to the legs.

Prepping the Base for the Table Top

The original plan for adding a table top to the base was to attach individual 1×8 boards screwed through the top.  Instead, I had created a single piece table top that I wanted to attach through the bottom.

So, rather than adding the 2×2 table supports as shown in Step 6:

I added corner brackets and a single 2×2 support in the middle which I glued and nailed into place.  The corner brackets are there to screw down the table top from the underside.

Painting

I used a color board to decide on a paint color for the base.  I matched this color board up with the stained top to get an understanding of how the colors would work together.  Plus, I can take the color board into the target room to see how the colors work in the lighting it will live in.

I did attempt to use just a clear lacquer finish to bring out the beauty of the select pine, but I’m afraid my cheap nail gun made too many blemishes that needed corrections and the lacquer would only accentuate the wood putty.  So, I decide a painted base was in order.

I applied three thin coats of white primer.

Followed by three thin coats of Satin Ivory Silk

Followed by two thin coats of Clear Matte.  After allowing the base to dry for 24 hours, I was ready to attach the table top.

Attaching the Table Top

I carefully laid the table top upside down onto some towels and then placed the inverted base on top.  I carefully measure and remeasure the overhang and made some reference marks.  In the case that the base is not perfectly square, the reference marks will allow it to be squared up as it is screwed down.

The Scary Part

I cannot count how many times I have ruined a beautiful finish by accidentally choosing the wrong screw size.   Since I was attaching the top to the base from the underside, there was the risk that I would end up piercing the finished topside if I was not careful.  Nightmarish stuff.

First, I made absolutely positive that I had the correct screw size (1 ¼”) for all 4 screws by stacking two 1×3 scrapes and ensuring the screw would not protrude, even if slightly countersunk.

Second, I knew I needed to make pilot holes to ensure that the wood would not split and I was concerned that I would drill through the finished topside.  To prevent this, there are two methods.

1) Use a piece of tape to mark on the drill bit the depth to which you want to drill.

2) Countersink your drill bit into the chuck to the desired depth.  Measure your depth with the 1 ¼ screw.

Next, I made pilot holes and then sunk the screws working in opposite corners to allow for squaring up as I went.

I made sure the Base was flush with the table top and did not overtighten.

So, I have gone from this:

Desk Mock Up

To this:

Narrow Farmhouse Table

Lots more to share with you regarding the final wood/color choices, costs, project time and some building tips.  I will save this for tomorrow while I savor my finished table.  Sometimes I walk into my bedroom several times a day just to look at it.

I will also be linking this on www.ana-white.com as a brag post.