Tomorrow, when I post the monthly net worth update, it will be the second consecutive month with a considerable drop.

Obviously, when your net worth drops, there’s usually a cash flow problem at the root of it. And this month, that’s exactly what the problem is.

I brought in $5883 this month. That includes my regular paycheck, my side business income, interest income, and 401k gains (and this month, more accurately, losses). Sounds pretty good, right? Not my best month, but certainly not my worst one either. There’s no denying that that’s a lot of money.

Problem is, I spent a whopping $11771. Ouch.

Almost to the dollar, I spent double what I brought in. That’s never good.

Even if the markets hadn’t bombed last week, that still wouldn’t cover the $5888 I overspent, not even close, so I can’t use that excuse.

But looking closer at the $11771 dollars, and where it all went, I don’t really feel like I’m hemorrhaging money. In fact, I almost feel like I did a good job last month keeping my expenses down.

Eight thousand dollars went towards the home improvement last month. Removing that cuts the outgoing dollar amount to $3771 and, in turn, makes my cash flow positive again. That’s really good news for August! It basically means that (when I’m not doing major renovations) I’m bringing in nearly one and a half times as much as I’m spending — always a good recipe for debt repayment.

Then, taking into account the mortgage, the car payment, and the rest of the regular monthly bills and we’re under $2000/month spent.

But wait… That’s a problem. That’s a lot of money to be spending on, well, stuff!? Where is *that* $2k going?

Sadly, I’m not 100% sure. A couple of weeks ago in my “Credit Card Debt: Plan of Attack“, I mentioned that there was a rogue outgoing $811/month that was unaccounted for. I never did get to the bottom of that one either — and I have a feeling that it’s just a subset of this $2k.

Right now I’m thinking it must just be a bunch of small expenses adding up, but still, $2k is far too much. I *will* figure that out in August.

In the end, it’s always good to know that there is still room for improvement. I see so many PF bloggers mentioning ways to cut costs and nine times out of ten, I’m already doing what they suggest so it doesn’t help my bottom line at all.

So, if I figure out what I’m (still) blowing so much money on, and I’m not too ashamed to admit it, I’ll share it with you!

I don’t have the solid numbers for July just yet, but as we close in on the end of the month, it’s looking like my net worth will take a second consecutive 12% monthly drop.

Sounds bad, but I’m not really looking at it that way.

The biggest expense, again, this month was the siding project. It’s still not done yet, but I’ve written the final check just to pretend the money is gone and to keep it off of August’s tally sheet.

The next biggest hit came in the form of losses in my 401k account. You couldn’t really realistically expect the market to keep going up at the rate it has been for, well, the entire year so far. Just last week, the balance dropped over $3k and as of this morning, it’s about where it was 3 months ago.

Big expenses and market downturns never help the asset side of things.

But on the bright side, I’ve still managed to chip away at all of my debts at an accelerated pace. The weekly $25 to the mortgage is making a sizeable difference, my auto loan is so far ahead that a payment isn’t due until 2008, and the credit card balances continue to fall — with the highest rate card falling the fastest.

As long as the debts continue to fall, the assets will take care of themselves in time.

Back in 1997, I’d just left University and stepped into what people over 25 call the “real” world. As I’ve mentioned in the past, I landed a job, which I still hold to this day, that paid $6/hour.

At the time, I didn’t have a car. For the first couple of weeks, I was carpooling with my mother, where I’d drive her to work, drop her off, speed back to my job, work the day, then drive back to her work to pick her up, and then we’d head home.

Put a lot of miles on the minivan, not that that mattered much…it was just a lot of wasted time, for both of us.

I think it was my mom’s doing that sent me and my father out to buy a car one weekend. I knew I wanted a VW Jetta and went to the local dealership. We also checked out Honda Civics and even stopped by a Ford dealership, but I never test drove either.

The Jetta it was. The base model, the Jetta GL, in green with a moon roof. No one in my family had ever had a car with a window on the roof before. It was like I was breaking new ground or something.

Then we sat down with the obnoxious car salesman, who was probably the same age as I was (not that it’s important, I’m just sayin’), and went through the numbers.

On $6/hour, and no savings, it became apparent that there was no way I could afford to buy a brand new vehicle. I’m not sure if my Dad knew that going in, or if he wanted me to learn it for myself, but I’m not sure it worked.

You see, the dealership had HUGE posters all over the place advertising “red carpet leases” on Jettas for $179/month. Now that… I could afford.

The inexperienced salesman went through the numbers again, this time with it set-up as a 4-year lease. (Crazy, I know, to lease a car for 4 years?!). In the end, he got the payment down to $223/month. Hardly $179, but still do-able.

Apparently the discrepancy was due to the fact that I wasn’t putting down the money required to get the $179/month payment. Makes sense, as those numbers they advertise in car commercials are always sketchy. I learned that this day.

Anyway, everything was looking great, they stuck us in the little office of the “Accounting Person” and I filled out the super long piece of paper filled with legalese.

Turns out, I needed a co-signer to qualify.

Thinking back, I’m not really sure why. I’d had a credit card for some time, so I must have had some credit history. The few bills I’d had in university were always paid on time. I’m not really sure why I needed a co-signer… Maybe it’s because I’d been in Canada for the past three years?

Either way, to get this car, and likely ANY car, I needed a co-signer.

I could tell by the look on my dad’s face that he was hesitant — like I wasn’t going to pay my bills or something. I was offended slightly at the thought, but now I can understand his delay. He did end up signing it, and away I drove in my brand new Jetta.

My dad never mentioned the co-sign thing to me, or that he was uncomfortable about the whole thing, or putting pressure on me to pay, or whatever, and I appreciated that. Evidently he didn’t see me as a lazy low wage non-bill-paying idiot.

Later in the year, when I realized the 10k miles per year I was allowed on the car wasn’t going to cut it, I looked into buying it outright rather than continuing to leasing it. Now that my job, through overtime, was bringing in more money, I re-financed it through GE Capital.

Fast forward two years later… my dad suddenly starts taking advantage of every “FREE” offer he comes across and one of them was for a free credit report.

The report comes in and he’s going over it and he asks my mom what this “GECAL” debt of $4k is? They can’t figure it out. I’m sitting idly by, thinking nothing of it — and then it hits me, “Hey, that’s about what I have left to pay on my Jetta!”

It blew my mind, and his, that even when I’d refinanced it in my own name, through the Volkswagen website mind you, that my dad’s name was still attached to it.

Now I’m not sure if that was a mistake on their part, or if that’s how it always happens, but now I know that I’d be unlikely to co-sign for anyone other than my wife.

I appreciate that my Dad co-signed for me back then to get me into a new car, but to think, what would have happened if I’d traded that VW in for my BMW — would my dad’s name have been attached to that?

That would have been a big debt to have ninja’d on to your credit report…and that car took me nearly 7 years to pay for. I’d have felt awful to be responsible for something that would linger on my dad’s credit report for that long.

So, from my VW experience, I’ve learned not to co-sign a loan with anyone other than my wife OR to ever lease another car.

Thankfully, no one got burned financially.