My Personal Finance Journey

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Monthly Review - December 2005 ($400,548, +$6,250)

Contributed by mm | January 1, 2006 6:16 PM PST

As expected, we wrapped up 2005 with over $400,000 in our book. This month's $6,250 net worth improvement is driven by the following factors (in approximate amounts):

• $10,000 from regular savings (earned income - expenses)
• $3,800 from investment gains
• ($9,600) loss from employee stock option value
• $2,100 tax benefit from stock option value decline, offsetting by investment gains

After two months' of neck-breaking growth ($90k in October and $40k in November) due to a series of one-time events, December is comparatively a normal month. For one thing, the $10,000 from regular savings is a result of largely normal income stream and spending pattern, which I expect to extend in the next 12 months. In addition, since I am moving more and more of my cashpile to more serious investments, I do anticipate investment gains (or losses) becoming a meaningful part of my monthly scorecard.

2005-12-net-worth.gif

IMPORTANT BALANCE SHEET MOVEMENT DISCUSSION

Cash and Savings: I made several mutual fund and stock purchases this month as an ongoing effort to make better use of our cash from recent home sale.

Brokerage: Deprived of more tax-efficient investment accounts (both 401(k) and Roth IRA), most of my net investment increase sits in after-tax brokerage accounts. (More details on my portfolio will be revealed in a separate post.)

401(k): Our 401(k) accounts benefitted from heavy exposure in international equity funds.

Stock Option: MSFT declined more than $1.50/share in the month of December, wiping out almost a third of my option value -- it is a reverse of fortune compared to hefty gains in November.

Receivable: Receivable increase represents accumulation of certain reimbursable medical expenses.

Tax Liability: $2,100 decrease reflects less tax liability with decline in future income from employee stock options, slightly offset by my investment gains in after-tax accounts. As of 2005 close, the liability includes $500 "incurred" part, which I expect to pay to IRS with the 2005 tax filing, and $7,300 "floating" part, which will only materialize should I decide to cash out options or some of my winning investment positions.


IMPORTANT PERSONAL FINANCE ISSUES IN MONTHS AHEAD

2006 Plan: My 2006 financial plan is almost 80% done. I am looking at mid-six-figure net worth increase for the coming 12 months, thanks to sizable regular savings, as well as (expected) improvements in investment income.

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This Post Has Received 7 Comments. Share Your Opinions Too.


Neo Commented on January 1, 2006

Congrats on ending the year on a great note and good luck with 2006. I will update the graph I have hosted on my blog with your net worth data. Once I have a few more responses, I will get it posted.

Neo


pfadvice Commented on January 2, 2006

Personal finance bloggers net worth rankings are up.


Rob Commented on January 2, 2006

What is your new date of retirement?
Are you still on path to retire at 40?


CPA1298 Commented on January 2, 2006

MM - $10,000 of savings from regular wages is amazing. If I remember, isn't your salary as an ex-pat about $180k per yr? I don't know much about your income tax situation, but at a 25% average tax rate, saving $120k per year is at a rate of ~ 89% of after tax income. If that is the situation, that is amazing. In any case, would you mind posting more detailed income statement information?


MM Commented on January 3, 2006

Rob, the tagline is to have financial independence by 36 now :-)


Neo Commented on January 3, 2006

Since I am more of a visual person, I entered the net worth percent changes for the past four months (when available) of personal finance bloggers and created the following graph:

http://neos-nest-egg.blogspot.com/2006/01/personal-finance-bloggers-net-worth_03.html

Neo


Neo Commented on January 7, 2006

If you haven't heard, I am organizing a "net worth challenge". If you are interested in participating, please drop by the following web site to get more details. For the time being, if you can post (at the below URL) your 2006 end of year goal, we might be using that information as part of the challenge.

http://neos-nest-egg.blogspot.com/2006/01/net-worth-challenge.html

Stay tuned for more details!

Neo



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