Thank you for the those who participated in the "Producing My 2008 Financial Plan" contest at PFBlog, which I believe is the first-ever contest of one personal finance blogger inviting the community to work on one's annual plan. As planned, today will be the day we announce the winner of Participation Award (prize is $50 Amazon gift certificate). Winner of "Closest to the Pin" Award will be announced before the new year starts and after I publish all posts about my own 2008 Financial Plan thoughts.
Let me start by saying the contest is inspired by an internal company activity. In the most recent summit of hundreds of financial professionals in the company, our CFO asks us to predict the earnings-per-share (EPS) of the company in three years, by supplying us with an Excel model with only seven variables (on revenue and margin growth of each of the three key business lines, and the effect of other corporate finance activities on EPS). The message he conveyed (successfully) is: if one can make a good forecast of a 50-billion-dollar company without a big spreadsheet, it means true business insight can and should be delivered in a simple fashion.
So the fact that 18 people who only received high level information of my finance can each submit a reasonably good prediction of our household finance in the next year really demonstrated how one can make a good annual financial plan by going top-down and focusing on some key variables.
I took some time to tabulate the results and show lowest, highest and average submission by each variable and the model output. Of course, as expected the submissions vary by a lot. (For example, prediction for net worth increase ranges from $237k to $374k, a 58% difference, which is wider than I thought.)
In order to produce the winner of Participation Award, I asked my son (who at the age of 6 obviously has no idea what this contest is all about) to pick a number between 1 and 18. He picked 16, so the 16th entry, submitted by Ken, is now the official Participation Award winner of PFBlog's "Producing My 2008 Financial Plan" contest. (I have sent an email to Ken email address on record the email on record.)
Starting from yesterday I am running a series to discuss my thoughts on our financial life in 2008. Stay tuned as we will be revealing the winner of the "Closest to the Pin" Award soon!