My Personal Finance Journey

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


By Topics

Overall:
0. About (10)
1. My Progress (139)
2. Car & Home (107)
3. Credit (138)
4. Banking (33)
5. Saving (49)
6. Investing (308)
7. Taxes (89)
8. Spending (74)
9. Misc (97)
A. Archive (49)



MONTHLY ARCHIVE

Feb 2014 (3)
Jan 2014 (6)
Jan 2012 (1)
Apr 2011 (1)
Mar 2011 (1)
Feb 2011 (1)
Jan 2011 (1)
Dec 2010 (1)
Oct 2010 (1)
Sep 2010 (1)
Aug 2010 (1)
Jul 2010 (1)
Jun 2010 (1)
May 2010 (1)
Apr 2010 (1)
Mar 2010 (6)
Feb 2010 (2)
Jan 2010 (7)
Dec 2009 (3)
Feb 2009 (4)
Jan 2009 (8)
Dec 2008 (1)
Jun 2008 (2)
May 2008 (2)
Apr 2008 (5)
Feb 2008 (3)
Jan 2008 (15)
Dec 2007 (32)
Nov 2007 (6)
Oct 2007 (8)
Sep 2007 (9)
Aug 2007 (24)
Jul 2007 (2)
Jun 2007 (1)
May 2007 (3)
Apr 2007 (4)
Mar 2007 (4)
Feb 2007 (13)
Jan 2007 (6)
Dec 2006 (3)
Nov 2006 (7)
Oct 2006 (7)
Sep 2006 (6)
Aug 2006 (4)
Jul 2006 (10)
Jun 2006 (1)
May 2006 (3)
Apr 2006 (2)
Mar 2006 (6)
Feb 2006 (6)
Jan 2006 (3)
Dec 2005 (1)
Nov 2005 (9)
Oct 2005 (8)
Sep 2005 (13)
Aug 2005 (25)
Jul 2005 (16)
Jun 2005 (17)
May 2005 (19)
Apr 2005 (20)
Mar 2005 (24)
Feb 2005 (23)
Jan 2005 (36)
Dec 2004 (40)
Nov 2004 (34)
Oct 2004 (17)
Sep 2004 (21)
Aug 2004 (59)
Jul 2004 (37)
Jun 2004 (31)
May 2004 (29)
Apr 2004 (52)
Mar 2004 (49)
Feb 2004 (49)
Jan 2004 (31)
Dec 2003 (48)
Nov 2003 (52)
Oct 2003 (29)
Sep 2003 (8)
Aug 2003 (5)
Jul 2003 (2)
Jun 2003 (2)
May 2003 (5)
Apr 2003 (2)
Mar 2003 (2)
Feb 2003 (3)
Jan 2003 (29)



 

Financial Plan 2005: Summary

Contributed by mm | February 8, 2005 11:34 AM PST

Now that we have gone through the respective analysis of income, expense and tax, it is time to connect the dots. In a nutshell, how much I can keep -- in other words, net worth growth, equals my income after expenses and Uncle Sam's share. If you piece together what I put down in the last three posts, here is what you will get:

  2004 Actual 2005 Plan YoY Growth
Total Income  $     154,498  $     196,385 27%
Adjusted Gross Income  $     120,705  $     148,028 23%
Tax      
  Income Tax  $       16,240  $       24,613 52%
  FICA Tax  $         8,224  $       10,652 30%
  Additional Tax Liability  $         2,368  $         3,045 29%
Total Tax  $       26,832  $       38,311 43%
Expenses      
  Auto  $         7,504  $         7,900 5%
  Bills  $       10,054  $       15,431 53%
  Clothing  $         1,722  $         2,400 39%
  Education  $           715  $           620 -13%
  Food and Groceries  $       15,077  $       16,440 9%
  Healthcare  $           428  $         1,560 265%
  Household  $       19,127  $       18,180 -5%
  Insurance  $         1,975  $         2,592 31%
  Leisure  $         2,785  $         5,760 107%
  Discretionary/Other  $         6,317  $         3,960 -37%
Total Expenses  $       65,703  $       74,843 14%
Total Net Worth Increase  $       61,963  $       83,230 34%
Tax as % of Income 17% 20%  
Total Saving % 40% 42%  


(Note: What I didn't fully explain in prior posts are: first, FICA tax is the social security tax (6.2% for the first $90,000 of earned income) and medicare tax (1.45% of earned income).

Second, the Year 2004 total net worth increase of $61,963 from the model does not fully tie to my actual net worth growth of $62,937. The difference is due to certain small accounting treatments.)

What the plan says is basically the following:

- Our family income will grow 27% due to more wife's additional job income and other income streams;
- The Big Brother will charge me 43% more;
- However, I manage to keep expense growth to 14%;
- As a result, I stand to keep 34% more, and am looking at a net worth growth of $83,230.

You might ask one question: why I set my 2005 net worth growth goal to be $79,500 instead of $83,230?

The answer is there are more than one risks that can easily knock me off by a few grands without me doing anything differently (or irrationally) -- MSFT stock price is a good example and it is a risk I cannot effectively hedge 100%. My intention is not to set the bar low -- I am also putting a stretch goal of growing net worth by $87,500; I just don't think I should be flunked if I execute the year flawlessly from a personal finance perspective, but failed to grow net worth enoguh because the market tanks.

So, this is my Financial Plan 2005, and in the next 12 months, you can watch me executing this plan step by step. Thank you for being a loyal reader and now you have one more reason to stay with PFBlog :-)

(This post is part of the five-post Financial Plan 2005 series. If you miss some parts of the series, you might find links to all posts at Financial Plan 2005: The Overview.)

Be the First to Comment on this Post


Add Your Comments










Remember personal information?




(It will take a few moments for your comment to be published. Please do not close the window until then.)


Read More ... 139 Posts In The Same Category










This page was last rebuilt at February 09, 2014 08:23 AM PST. (557 Words)
 

RSS FEED





PERSONAL FINANCE BLOGS I READ

Consumerism Commentary
Get Rich Slowly
My Money Blog
All Financial Matters
The Simple Dollar






.



Copyright 2003-2014, PFBlog.com. All Rights Reserved. (Privacy Policy)