Yearly Net Worth for 2016

I have been tracking my net worth since September 2014. I calculate it after the 15th of each month when CD and Savings interest deposit gets credited.

Here is the overall net worth graph -

Our net worth from September 2014 to December 2016

The sharp drop in net worth happened when we put a down payment on our house, and added the mortgage loan to the net worth calculation.

Here is the 2016 net worth graph -

Our net worth through 2016

Here are the raw numbers for the year 2016 -

Saturday, January 16, 2016 - $19,227.71
Tuesday, February 16, 2016 - $23,754.88
Wednesday, March 16, 2016 - $35,170.08
Sunday, April 17, 2016 - $39,981.02
Wednesday, May 18, 2016 - $45,126.21
Thursday, June 16, 2016 - $50,424.84
Saturday, July 16, 2016 - $56,655.58
Tuesday, August 16, 2016 - $61,539.37
Friday, September 16, 2016 - $65,852.22
Thursday, November 17, 2016 - $75,676.98
Friday, December 16, 2016 - $80,704.86

We managed to increase our net worth from $19,227.71 to $80,704.86. This was done through diligent saving, tracking our expenses very closely, and .

So my goal for 2017 is to automate savings, and allocate a percentage of our income towards experiences, be it overseas travel or a road trip. I feel like we should now focus on building a life, and let the net worth take care of itself through automated savings.

Our Budget

We live in a college town in the midwest. I work in IT and my wife works in a grocery store. 

Take home pay - $3563.57 (This is after contributing 20% of my income to the company’s 401k plan)

My wife makes about $1200 per month, but we don’t factor it into our budget. I am not sure if that is a good thing or not. I am open to suggestions. 

Here is our monthly budget based on my income only - 

Our current budget

The Latte Factor is Underrated

I recently finished the Automatic Millionaire audio book by David Bach. I was introduced to the latte factor through this book, and I thought it made a lot of sense. For those unfamiliar with the latte factor, I would summarize it as the unintentional spending on frivolous items consistently over a long period of time

In the book, the author gives a real world example (according to him) about a lady who got frustrated with his advice about boosting savings, and complained about how she did not have enough money to do so because she was always broke by the end of the month. Upon taking a closer look at her spending, they realize that she is spending close to $11 each day on just her morning coffee, breakfast and a snack. If she were to be more conscious about her spending and made a few lifestyle changes, she would have enough money to save without really breaking a sweat.

He goes on to wow the audience about how investing the money smartly would be worth over a million dollars by the time she reaches retirement age.

Of course with a theory like this, there will be plenty of people criticizing it. You hear some people in the personal finance community complain about how they will be miserable without their morning coffee, and it's just not worth their time to focus on something so small. I feel they missed the whole point. In fact, in the book David Bach talks about how the latte factor is not about lattes but more about realizing spending patterns, and getting the most out of your paycheck, and maximizing savings. I am not sure why someone would disagree with the principle.

While it is very true that one cannot shrink their way to greatness, I firmly believe in tracking spending to analyze bad habits, and working towards making necessary changes to reach personal financial goals.

As with most personal finance concepts, they are not inherently wrong. You have to figure out if they actually apply to you. For example, Dave Ramsey isn’t wrong about not using credit cards because statistically they will lead to more spending. I choose not to follow this and I would rather take my chance with the possibility of overspending in order to get some perks - credit score tracking, cash back etc. Similarly, you might choose not believe in the merits of the latte factor, but there is no doubt that the idea behind it is solid, and if it were to help someone get their finances on track, then more power to them.

From my own experience, I have made some fairly significant improvement in savings when I started tracking my expenses. There is something about writing down every transaction that makes you hyper aware of spending. I understand that for some people this is extremely difficult to accomplish, but once I figured out a system to easily track transactions, I was able to analyze spending patterns and make changes in my behavior that allowed me to save by not spending money on frivolous things, but rather focus on things that matter the most to me.

I started tracking expenses in 2010, and analyzing them
made me save a lot of money without sacrificing quality of life

One of the arguments I hear about this is that it takes the joy out of life. If my choices come down to having mindless fun versus being intentional about my spending thereby maximizing my happiness, I choose the latter.

I think the bottomline is, if you are focused on building wealth, getting rid of debt, then the numbers have to add up somehow. Spending less than you make, being frugal, cutting down waste are essential, regardless of whether you believe in the latte factor or not.

Building an 800+ FICO Score

As of August 2008, I did not have a credit score. I began the process of building it up slowly. In May 2016, I broke past 800 FICO score, so I wanted to talk about how I went about building my credit score over the past 8 years.

The first thing I did was to apply for a secure credit card at my local credit union. They gave me one with a limit of $300 and put a hold for the amount on my account. This was by far the easiest way for me to build credit.

I used this card for all purchases and paid it off in full each month. To this day, I never paid any interest changes on my any of my credit cards, but I did make the mistake of paying an annual fee for one year - more on that later.

March 2009 was when I first applied for a regular credit card, and it got denied because I used my home phone number (didn’t have a cell phone at the time), and my home phone number was international.

Rejected credit application

In April 2009, I got a credit card offer from CapitalOne in mail, and I was pre approved. I went ahead and applied for the credit card, and got approved. This is the credit card I still use. I got a starting limit of $500, but I got that increased over the years.

Making regular payments over the next year or so raised my credit score and got me closer to 700 towards the end of 2010. The only mistake I made was applying for AMEX Zync. This was a charge card that was aimed at students. This account did not have a credit limit from what I can tell, and it carried an annual fee of $25. Charge cards do not carry any interest, and failure to pay off the balance in full would result in steep fees, and account suspension. The "advantage" is that charge cards prevent the account holder from going further into debt because they do not charge interest.

Looking back, this was the only thing I would change in the way I went about building credit score. I was disciplined enough to not need a credit card company to look out me - I was very much capable of controlling my spending and not getting into debt.

Credit score in November 2010

Having too many accounts was negatively impacting my credit score. 

Between 2009 and 2014, I applied for every credit card offer I got pre-approved for. If my memory serves me correctly, I had about 14 credit cards. Looking back at the credit reports, one of the factors that was affecting my rating was the average age of accounts.

Credit score in January 2013

In 2015, I started canceling credit cards I was no longer using. I did keep my oldest credit card. Towards the end of 2015, I went down to 7 accounts, and I noticed that my credit score jumped around 30 points. I still haven’t broken the 800 barrier by 2016, however, I realized it was only a matter of time before I did.

In May 2016, I went past 800 credit score, and as of August 2016 I had a credit score of 809.

Breaking the 800 barrier in May 2016

Here are some strategies I used to build a good credit score -

1. Never go into debt to build credit. 
Even though the account holder is technically in debt whenever they use a credit card to make a purchase, typically no interest is charged if the balance is paid off in full by the due date. So, do not believe that a balance needs to be carried over to build a credit score.

2. Always pay bills on time. 
Never miss a payment. It is easy enough to be current with all the bills using a calendar app, like Google Calendar. Program weekly/monthly reminders and stick to them.

3. Keep the average age of the accounts high
This would mean keeping the old credit card account open, and closing the newest.

4. Periodically request for a credit limit increase
Every 6 months or so, I request for a credit limit increase on the cards that I intend to keep. Therefore when I closed accounts, the overall balance isn’t negatively affected. As far as I can tell, these request do not seem to generate an inquiry if the requested limit is reasonable. I typically ask for a $1000 increase. The most I have ever requested was $5000 from American Express, and they approved it, and they did a soft credit check, at least that’s what they told me.

5. Never be compelled to pay annual membership fees to build a good credit score
I have gotten credit card offers with an annual fee, and at one point of time, I fell for it. I think this was a mistake. Had I stuck to using my existing cards, I would have naturally increased my credit score. Credit card companies are being very aggressive about getting new customers, so there is absolutely no reason to pay for a membership, unless its a business oriented credit card.

Goal - Save 6 Months of Income

I have decided to embark on the journey to save 6 months of income in cash. My monthly take home pay is $3,692.45. So that's a total of $22,152.70 saved by the end of the goal.

To make this process a little easier, I worked in a reward system into the process. I divided the goal into 12 phases. Each phase will involve saving $1,846.23. After completing each phase, we are going to celebrate in some manner, be it a night out in the city or pizza and movie at home. Nothing too fancy.

I haven't quite decided how we are going to celebrate once we finish the final phase. I want to do something special...I will make up my mind along the way.

There are a couple of questions still left unanswered. When do I intend to finish phase 12? How can I stay on track? Obviously if I were to lose my job, or if there is a medical emergency, I will end up using this money, but at this point, I can only hope for the best.

I understand that setting goals without a target date is not good practice, but I don't know what the future has in store for me. I do have other systems in place that will ensure that I am not over spending. I will be able to set target dates by September 1, 2016, because I had already allocated the August paycheck on other goals.

CerberRansomware - A Dangerous Malware That Can Cause Massive Damage

The purpose of this post is to inform you about what went wrong when I downloaded a torrent, and how being careless nearly made me lose 7 years worth of work. The moral of the story here is, when engaging software piracy, never let your guard down, never believe that anything you download from the internet is safe, and most of all, do not install pirated software on a computer that you care about, and that especially includes your work or school computer. You don’t want to be in a situation where you have to explain to your company’s IT department how you managed to get your laptop infected with a virus commonly distributed through torrents.

I typically don’t pirate software these days. I have done so in the past, but now I do research on the software that I want, and if I can find it at a reasonable price, I would buy it, and if not, I just don’t bother with it, because I own most of the software I need, and there are tons of freeware available, that I can’t really justify the trouble to pirate something. 

On a fateful Friday morning, while I was having my coffee, and working on my spreadsheet, I felt like trying the latest version of MS Office. I realized there is a web version of MS office available. So I uploaded a copy of one of my most important spreadsheets online to my Microsoft OneDrive account, and opened it within the browser. While this version of Excel isn’t terrible, it isn't enough advanced enough for what I am trying to do. I concluded that it won't serve my purpose and decided to download Microsoft Office 2016, and give it a run. This one decision could have been very expensive.

The PirateBay Computer

I never install any pirated software on my main computer. I only ever use it for games and video editing. All the other work is done on a dedicated work VM. I use a throwaway Windows XP VM and an old Lenovo laptop to download and try software. If the laptop were to get infected with a virus, it wouldn’t really matter - or so I thought.

I decided to look up the pirated version of Microsoft Office 2016 and I found a link to a torrent on PirateBay (or some proxy) and downloaded the most popular torrent.

The torrent that contained the ransomware

I found it odd that there were no comments for that particular torrent, but I didn’t care, I went ahead and downloaded the torrent anyway. It took me about 30 minutes to download the 2.26GB torrent. The torrent included the ISO for Microsoft Office 2016, and an activator. 

I installed Microsoft office and after the installation was done, I ran the activator. I didn’t really keep an eye on what it was doing, I just hit next, and went to get ready for work. When I got back to the computer, The activator created some files on the desktop. I didn’t stop to look at what those files were. I launched MS Excel, and there was a activation prompt, and I canceled it, and Excel seemed to work, and it looked like that was all there it to it.

At this point, I had to leave to work. I decided I will check back on this at some point during the day, and off I went. 

Scammed!

After the usual status meetings and what not, I went back to my desk, and I decided to remote into the laptop using Team Viewer. 

I noticed that MS Office created a bunch of shortcuts on the taskbar, and I clicked on the Excel shortcut. It started up fine, but I need to see if it will fit my needs. So I opened my Dropbox folder on the laptop to access the most important spreadsheet. It was at this point I noticed that all the files in my Dropbox folder were missing, and in their place were a bunch of files whose extensions I did not recognize. I was puzzled, so I opened Dropbox on my work machine, and looked at the folder and it also has a bunch of files in it that I did not recognize, and my important spreadsheet was missing. 

It then dawned on me that something went wrong, and perhaps the torrent had something to do with it. I noticed that there is a text file named # DECRYPT MY FILES #.txt. I opened this and this was when I realized the mistake I made. 

Read the contents here - http://pastebin.com/V5AzXFfJ

My laptop got infected with ransomware and it encrypted a lot of files on my machine, that included files in Dropbox, and because my work computer also has Dropbox installed and it was linked to the same account, it got those changes as well. 

All Dropbox files are now encrypted

Contents of the torrent folder are also encrypted

It felt like I got punched in the stomach. The spreadsheet I was working on for 7 years was encrypted, and I had no clue on how to get it back. I certainly wasn’t going to pay the money they wanted. I had no idea what choices I had. I searched online and I found nothing helpful. Dropbox did not keep previous versions of the files, as some of the articles suggested, so I was out of luck. 

To say that I was sad wouldn’t even begin to describe my situation. Purchasing a copy of  Microsoft Office for $149 seemed worth it compared to the situation I was in. I couldn’t believe I let this happen.  

This had ruined my morning so far. I couldn’t focus on work because my 7 years worth of data I collected is now gone. I had backups of it, but stupidly enough, the backups were also in Dropbox. The careless mistakes I made over the years finally caught up to me. 

I knew I had a backup of the file on my external hard drive, but it was months old. I make changes to the file every couple of days or so with the latest real world data, and I did not keep an offline backup. I realized what a horrible mistake that was. 

Hibernate Mode Saved The Day

It was at this point I realized that my gaming computer also has Dropbox installed, but it was in Hibernate mode when the ransomware was running amok on my laptop. Therefore if I could boot up the machine without it connecting to the internet, I would still have all my files intact! 

When I went home, I unplugged the Ethernet, and booted the computer. I was relieved to know that all my files are intact, especially the spreadsheet. I took a backup of all the files in Dropbox. I then shut down the Dropbox process, and went online. 

I logged into my Dropbox account, and deleted all the files - they were all garbage now anyway. I then started Dropbox again. It did a sync with the server and deleted all my files from the computer. After it got done deleting the files, I put them back in the Dropbox folder from the backup, and I was done! 

The scammer managed to almost ruin my day and 7 years worth of work. I just got plain lucky. There is no other way to look at this. I was careless in the way I went about pirating, and I did not put thought into how I managed backups.  A lesson learned. 

Operating Rules for PirateBay Machine

I decided to come up with some rules on how to operate a PirateBay machine

• It should in no way be connected to the main computer. No sharing of home groups or folders. 
• Never access any work related websites or have work email setup on this machine
• Do not install dropbox, SVN, team viewer or any sync service that connects this computer to any other computer that you care about. 
• Do not use any form of browser sync feature
• Do not log into any important accounts (email, bank account (!), credit card account, youtube account…)
• When transferring files (be it pirated software, music etc.), run them through an antivirus scan and then transfer them to a flash drive, and run it through another  virus scan on the destination machine. 
• Always keep the antivirus on piratebay machine upto date. Disable it when needed and reenable it. 
• Do not remotely access this machine. Always access it physically. 
• When transferring files to the pirate machine, after the transfer is done, format the flash drive. 

Rules for data backup

This take a little bit of money to maintain but if you value your data, it's worth it. 

• Drive 1 will be connected to the computer that stores all the data
• Drive 2 will be used to backup all the data from drive 1 and after the backup is done, it will be disconnected. It is strictly for backup only. 

One Free Decrypt 

After I cleaned up the mess created by the ransomware, I decided to do some research about this. Turns out, this particular ransomware is particularly bad, and there are articles explaining the ransomware's behavior in detail. One of the article claims that the encryption can bypassed, but I am not so sure that that will work. I haven't tried this. 

BleepingComputer

MalwareBytes

PCrisk

I did try the decrypt option they have on their website, and surprisingly it worked. 

The ransomware website allows the victim to decrypt one file

The one free decrypt actually works

Conclusion

This ransomware could have done a lot of damage. I got lucky, and it taught me a valuable lesson. There will be those that won't be so fortunate. I feel for them. 

Just imagine a school student who got careless and now all their homework files are encrypted and they don't have a backup, and a deadline is approaching, or a employee whose work computer got infected. They could potentially lose their employment. This is a heavy price to pay for being careless. 

I hope this article prevents a potential disaster. If you found this page because your computer is infected, I can only wish you good luck.