SUMMARY

Our family enjoyed a wonderful time during the New Year in a different city and both my wife and I had a great relax. Financially, it set us back by a grand or so, but it is more than worthwhile -- we see it is as a great celebration to what we achieved both financially and professionally in 2004.

At the end of 2004, our net worth checked in at $195,222, $7,150 higher than last month and a whole $62,937 more compared to the end of 2003. If you recall, this number put us way ahead of our 2004 net worth stretch goal of $180,000. Even assuming lower growth momentum, my Retirometer says we will be able to boast our first million in November 2015.

BALANCE SHEET RESULTS

(Starting from 2005, I am comparing monthly results to balance sheet one year and one month ago for better visibility of progress. Please refer to definition of balance sheet line items.)

IMPORTANT BALANCE SHEET MOVEMENT DISCUSSION

1) Cash/Saving: Cash and savings continue to swell as I couldn't find much opportunity to invest them other than parking extra money in my saving accounts.

2) Brokeage and Roth IRA: My actively managed portfolio extended its recovery as PPD, OCA, FDP and MO all contributed some more gains.

3) ESPP: Apart from regular contribution, this month's result captured the 15% discount I received for the Q4 ESPP cycle. As I disclosed at PFBlog, these shares were sold on January 4.

4) 401(k): 401(k) account growth followed November trend as both my wife and I are actively contributing. 401(k) balance also benefitted from investment gains, especially in international equity funds.

5) Loans: The current balance of $7,301 includes $4,500 "free money" from the 0% APR Discover Card balance-transfer deal I took in August. Christmas shopping and our family's short trip added to the balance but all non-0% APR balance will be repaid in the next month.

6) Tax Liability: Tax liability continued to grow thanks to 1) the recovery of my after-tax account and 2) the fact that my wife's tax i insufficiently withheld by employer. The balance of $4,625 includes an "incurred" portion of $819 and a "floating" portion of $3,806. "Incurred" represents my true tax liability in 2004 tax return, which I must pay to IRS by April 15, 2005. "Floating" represents my future tax liability (tax year uncertain) when I choose to cash out some of my after-tax account or stock option positions.

BRIEF DISCUSSION OF EXPENSES

We spent $6,764 in December with the New Year trip as the biggest contributor. In recent months, our expense rose a tad but we were also bringing in additional income.

IMPORTANT PERSONAL FINANCE ISSUES IN MONTHS AHEAD

- My 2005 budget is taking shape in my Excel workbook. In January I will disclose the steps I took to construct my 2005 budget (it is more a financial plan, which includes income, expenses, tax exposure and investment plan).

- I will also spell out my 2005 financial goals. I plan a few changes to my 2004 version because some of them might not be meaningful any more.

- 2005 Roth IRA contributions will be made in the next several months.