My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.


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Monthly Review - December 2004 ($195,522, +$7,150)

Contributed by mm | January 7, 2005 7:22 AM PST

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.)

  1 Yr Ago 2-Mo Ago Last Month This Month monthly Monthly
  Dec-03 Oct-04 Nov-04 Dec-04 Change Change %
Cash & Equivalent  $            918  $         2,517  $         4,611  $         4,916  $            305 6.6%
Saving  $       10,671  $       31,977  $       33,653  $       35,675  $         2,022 6.0%
Brokerage  $       21,329  $       14,079  $       16,650  $       17,964  $         1,314 7.9%
Roth IRA  $         7,604  $       13,722  $       13,449  $       13,819  $            370 2.7%
401(k)  $       11,308  $       26,022  $       28,562  $       31,234  $         2,672 9.4%
Stock Option  $         1,211  $         9,919  $       13,252  $       12,892  $           (360) -2.7%
ESPP  $         9,805  $         1,139  $         2,278  $         3,798  $         1,520 66.7%
Home Equity  $       66,392  $       74,068  $       74,917  $       75,767  $            850 1.1%
Other Assets  $         9,700  $       15,522  $       15,247  $       14,972  $           (275) -1.8%
Receivable (Payable)  $         3,491  $         1,834  $         1,273  $         1,159  $           (114) -8.9%
Reserve Funds  $        (1,455)  $        (4,615)  $        (4,451)  $        (4,750)  $           (298) 6.7%
Loans  $        (4,979)  $        (7,143)  $        (7,206)  $        (7,301)  $            (95) 1.3%
Tax Liability  $        (3,411)  $        (2,618)  $        (3,864)  $        (4,625)  $           (761) 19.7%
Net Worth  $     132,584  $     176,425  $     188,372  $     195,522  $         7,150 3.8%
Liquidation Value  $     106,875  $     146,061  $     156,847  $     163,548  $         6,701 4.3%

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.

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