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.