Friday, November 7, 2008

Net worth update for October 2008

YIKES...knew it was going to be bad but it hurts when you actually put it on paper. Net worth dropped down to $191,777. That's a drop of nearly 5% or just under $10,000. What is still hard to really compute in my head is the fact that I have also been putting money in. So really the $10,000 drop doesn't account for the $3,000-$4,000 dollars that I managed to add to my accounts. I try not to think about that one too much.
It is hard to stick with the plan during these times of economic sickness but I have managed to do just that. Expect to max out my Roth IRA by the end of December and both the wife and I are planning on putting more money into our 401Ks once we get our annual raises. I still don't know what mine will be. I keep telling myself that I am buying low now so it will pay off later. That's the point right. Buy low and sell high. The mental image that I use is the stretching of a rubber band. The more shares that I purchase at the lower prices will eventually cause my wealth to spring into action when the stock market corrects itself. But when will that be? How low will the stock market go? What happens if the auto industry collapses? Another Terrorist attack? Could there be a DOW 5,000 in the next 12 months? The list of questions goes on. It sort of makes buying shares of a mutual fund like throwing money down a black hole. Is there light at the end of the tunnel or does it just go on forever.

When I look at the nice and neat charts of monthly progression towards my million dollar goal I am shocked by how far off I am. The chart I look at assumes I save $3K a month with a 8% rate of return per year. By that chart I should have around $226K for a net worth in the month of October in order to hit the $1Million dollar mark by age 40. However, life never seems to be that simple. There is a part of me though that really knows that in a few years (maybe 4 or 5) I will look back and understand that this period of time was when a lot of my wealth was created. Buying low. I only hope that I will have the wisdom to not get greedy when things are really high. Be smart and re balance as the market corrects itself. Having said all of that what really scares me is the chart of the NASDAQ. Remember NASDQ 5000 in year 2000? It closed at around 1,600 on Friday. If you look at this chart from back during the .COM bubble it is clear that it hasn't even remotely corrected itself. Could this happen for the Dow Jones? Could it take more than 3-5 years to get out of this mess? YIKES.

I wish life was as neat as my spreadsheet that assumes an 8% return a year. In many, many, many ways.

Monday, October 13, 2008

Recent activities

As a result of the recent economic news I have taken a few actions.

  • The first action was to do nothing. I sold no shares within my 401K or my wife's 403b. In my last post I describe how this drop in the market could really be the sole reason as to why we hit our goal. Buying low is really the key. My wife and I have also decided to put our yearly raises into our retirement accounts. This will give us a nice boost. My wife found out that she is going to receive a 7% raise. NICE!!!! I have not found out what I am going to get but I suspect it will be between 3-5%...

  • I changed our future contributions to our retirement accounts. Both my wife and I now contribute 25% to bonds or some sort of fixed income investment for our retirement accounts. I just feel more comfortable with this for the long term.

  • I also started watching the first 25 minutes of "Mad Money". I believe that Jim Cramer offers the best economic and market commentary around. I don't watch the entire show but just the first 25 minutes. The later part of the show gets into the quicker stock picking recommendations that are of no value to me.

  • Today I did something out of the norm. I purchased a few shares of JNJ (Johnson & Johnson) , KBR and KO (Coke) stock. These companies were to good of a deal to pass up. I have regretted not buying after the last crash after 9/11 and didn't want to sit on the side line for this one. Only a small amount of shares each. I am also watching Apple, inc. It is my opinion that many good companies have been dragged down by the market but for no other good reason. Some of these are down over 50%. That's a lot of upside potential over the next year or two. These are long term positions.

Friday, October 3, 2008

Monthly Update for Sept 2008

Not much to say for this month. Net worth loss of about 2%. Down to $201,516. A loss of about $4K from last month. The hysteria of the news and what is going on with our economy is scary to say the least. I have resisted the temptation to change my plans so far. All I wish for the Govt to do is to give an honest, hardworking saver like myself a chance at making it. Thus far I plan on keeping to my current plan. To recap, the plan is to max out my Roth IRA and contribute about $450 a month to my brokerage account from now until December. We are also going to keep our contributions to our 401Ks. I set that plan prior to all of the market "crisis" news of late. I have so far decided to stick with it and am telling myself that I am buying low. For our 401K and 403B plans I am more easily able to go along with the long term investment plan. For my taxable brokerage account I am having hesitations. For now I am going with the buy low mentality. I am considering at least looking for a bond position for my taxable brokerage account. Maybe even adding to my cash position. Seems easier to add to cash with a 3% guaranteed return versus buying a bond fund. I am amazed at how many people I work with have sold all their retirement holding and moved them to a cash position. They did this mostly after the market had lost over 10%. And worse is that these people are more than 10 years away from retirement.

I have also had a thought that all this economic mess could be the very reason why I end up hitting my goal of $1Million in the next 9 years. If I can buy shares at a much reduced price for the next 12-18 months maybe that will help me catch up. If in 2010 the Dow Jones reaches 14,000 my portfolio would have essentially exploded upward. Maybe that's just me trying to be positive.

I have also run some numbers at paying down my mortgage versus contributing to a taxable brokerage account. $1200 a month to a brokerage account or to my mortgage. What to do. In theory if I earned 8% on the brokerage account the choice is obvious. If I paid down my mortgage for a few years and then tried to refinance I could lower my monthly mortgage bill. Right now it's about $2,000 a month. There is also an emotional aspect to paying down the mortgage. A certain comfort. However, it also ties up your money. These are the things that race through my mind at times.

Hanging on one week at a time...Thinking long term...trying to do the right thing...

Sunday, August 31, 2008

Monthly Update for August 2008~Net Woth inrease of $3,370

Long time no blog...sorry for that. The past few months have been a Blurr. The addition of a new baby has made life very challenging. My wife and I are enjoying the new addition to the family but still trying to get a handle on all of the changes that have accured. There will be some added expenses for us to consider with the number one expense right now being child care. A new child is certainly not a good investment to the balance sheet but we will go ahead and keep the baby anyways. (ha ha). The day care will start in a few weeks once my wife goes back to work. I am still hoping to be able to save close to $2,000 a month outside of our 401K accounts. The nice thing is that my company matches me 5% and my wife's company matches her 9% (nice). This should help keep me on track to hit the 1million mark in the next 9 years. I will need to get close to 8% return from the stock market in order to get to the million dollar mark. That seems far fetched these days, but long term I think there is a chance. The longer I study the charts I feel that the more money in the stock market is the only way to go. Accruing at a higher rate of return will help me achieve my goals and that the risk of the stock market is worth taking.

August was a decent month. I am still being dragged down by the stock market but our ability to save cash is helping. We are continuing our move into the $200K territory by hitting $205, 633. That's a gain of just over 1.5% for the month. I have also hit the $45,000 mark for our cash holdings that will help me sleep better at night. This is part of our recovering from the purchase of our first home and lots of home renovations. All of our home renovations were paid with cash and we also put down a nice down payment when we purchased.
As a result of our cash holdings hitting this $45K mark, I have decided to move our money savings into a Roth IRA and our brokerage account. Right now my wife and I only have one Roth IRA. By the end of December we will max out this Roth IRA and also put money into a regular brokerage account we have with Fidelity. After December, I am not sure where we will focus on. I will either open up a Roth IRA in my wife's name or simply focus on putting money into the brokerage account.
PS..I finally broke down and purchased a big LCD tv...It had been years since I wanted one and was tired of watching TV on a very small tv from College.

Friday, May 30, 2008

Monthly Update for May 2008

Great Month!! Very unexpected. This type of month is exactly why it is worth keeping track of all assets and liabilities on a spreadsheet and a blog. I had predicted last month that I would see a several thousand dollar dip in my net worth. However, I was very wrong. I have broken the $200K mark for the first time with a net worth of $202,527.83 which is a 3.3% increase over last month. Wow...

Some Key events of the past 30 days.

  • My company added to my retirement account by contributing their matching 5%. They sadly only match me twice a year instead of actually giving me this money every pay check. However, this was an unexpected $2,400 dollar bump to my 401K..Nice...
  • Good old fashioned savings...I have been able to save extra money by bringing lunch to work and contributed an extra $850 out of my account and add it to the ING account. This is on top of the automatically saved $2,400 a month to ING.
  • $1,200 bucks from Uncle Sam that my wife and I qualified for. Our gross income was over the $150K combined income threshold but luckily we had deducted enough money to qualify. This money went into the ING account.
  • Paid off the final home improvement costs of about $7,000. This was actually $1,000 less than anticipated. The contractor came in under budget because of some minor changes that were made along the way. I had actually assumed that these changes were going to increase the price not decrease it. Needless to say this contractor will be hired for follow on work.

Predictions for next month--I am unsure to be honest. I know that a few expenses are about to hit. With that, I will predict a small decline next month.

  • My wife and I have spent some money on home furnishings and electronics that were much needed. These expenses won't hit the the CC statement until June. Some of these items are gifts from our family. They are going to reimburse us on some of the purchases. I know this sounds weird but this is the easiest way to do it when you live several hundred miles away from home.

My main goal is to keep us above the $200K mark. With a little help from the Stock Market and hard savings I might just be able to do this. Who knows maybe I will be surprised again and have a gain.

Saturday, May 3, 2008

Monthly Update for April 2008~Updated May30th

******Realized that I made a small mistake on this months reporting. I added a digit to one of my cash accounts. Ooops...My net worth was actually $195,993.31 which was a decrease of $941.71. I still say this was impressive considering all of the home improvements being done at the time and the amount of cash output..
A relatively flat month. Increase of $158 to $197,093. This is actually a really good sign. I have paid over a third of the home improvement costs and was still able to keep the net worth stable. I contribute this to the comeback of the stock market to the tune of about $4,200. This offset the loss of my cash balance. Another highlight is the paying off of the Zero Percent CC balance. I now have Zero cc debt. Next month the final payment for home improvements should hit. This is roughly $8K more dollars owed. Suspect the month of May will be a decline of about $6K.

Monthly Update for March 2008

Good Month! Up $7,419 for the month to a total of $196,935. Just shy of $200K . Unfortunately the next few months spending will take me a few steps backwards. Home renovations are underway. We are redoing 2 of our 3 bathrooms. This will be a major improvement to our home but will cost us about $14-15K. We will be paying cash for these improvements.
Competing goals are so difficult. Wanting to have a big cash cushion for security but also wanting a nice home to live in is tough. I plan to keep the value of our home listed at what it appraised for a year ago. The below link is a great explanation of keeping track of ones home worth. It is one that I agree with.

Saturday, March 8, 2008

Monthly Update for February 2008

Good month..Net worth up by $6,532 to $189,515. That's an increase of 3.6% over last month. During this economic period I think it is a small miracle to have any gains. I have almost $100K in the stock market so the declines in the market absolutely have an effect on my net worth. I am looking forward to when the market comes roaring back, which I believe it will. In fact I believe the stock market and real estate market will come back with a bang in the next 2-3 years.
Overall, I feel it is a tough time. So much in flux with the stock market and real estate. Still just plugging away and saving cash..Cash account is just over $40K. I am trying to avoid spending to much cash on the home renovations but we need the work to get done.
Highlights for the month

  • Paid down CC debt (at Zero %) by $2,500.
  • Received a quote for some bathroom work..Came in at about $25K..Yikes. no way.. getting more quotes.
  • New position at work has me driving a lot more so the gas bill is going up. Flip side is that I am bringing my lunch to work and not spending hardly any money during the week. I have noticed extra cash in my account that I am sending to the ING savings account.
  • Received our $2,100 dollar tax refund..

Saturday, February 2, 2008

Monthly Update for January 2008

Networth increase of $974.00 to $182,982 Tough month for the networth. Details on NetWorth IQ. With a "normal" stock market climate it would have been a huge month for me. The stock market tank has really impacted my retirement and brokerage account balances. However, on a very positive note, my cash increase has gone up by $4,046 dollars for the month. This is huge!! I am still trying to get my cash account back to the $45K or higher range. Right now it is sitting at $35K. So you can see that if the stock market had gained even moderate numbers or stayed even for the month my increase could have been $5-6K...oh well. I fugure the market will come back and I will make up the networth numbers on the back end...i.e. whenever the stock market comes back.
Highlights for the month

  • We finished paying off the HVAC unit for the townhouse.
  • Extra income from travel reimbursement
  • I spent my last day at my current position at work. On Monday I will be moving to a new sector within my company.
  • Two chairs were purchased for the livingroom at Ikea..$100/chair.
  • Awaiting an estimate for updating all three of the bathrooms in our townhouse. We will have to prioritize some of this work depending upon what the quote comes in at. We have $1000 from the family to help chip in. Much appreciated...This money is not reflected in my net worth. Check is literally sitting on the dining room table (I think).
  • I spent $158 dollars on new clothes for my new position at work. I rarely buy clothes for myself, but the ones I have are very nice. I usually only buy clothes on sale. I got all items on 50% off...not too bad.

Overall, I feel like I am on track... I am really focused on the cash...If only I could get more comfortable with the amount of cash I have on hand for emergencies I would then feel more comfortable in tryng to max out retirement accounts...I am hoping that $45-$55K is the magic number for me. I have looked at many other people who post their networh and the size of cash on hand seems to very. I will keep plugging away and do the best I can.

Thursday, January 3, 2008

Monthly Update for December 2007

Average gain for the month of 1.4% or $2,447 for a grand total of $182, 008 as a net worth. This was actually a surprise as my wife and I are still in the middle of paying off our HVAC. Last payment is this month of about $1,100. I am doing my best to transfer any extra cash over to our ING savings account so that we can add to our cash cushion. I am expecting January to be a tad bit better with a noticeable increase in February. This also depends upon any small home improvements we intend to make to our bathrooms. More to follow on this. I am going to try and get a quote this month from our contractor for work on all three bathrooms and then make the decision based on the price....