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.