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 - July 2005 ($238,781, +$7,662)

Contributed by mm | August 3, 2005 5:05 PM PST

After two less inspiring months, my personal finance journey is returning to its normal trajectory. The $7,662 monthly net worth gain marked the second best month of the year. Behind this satisfactory growth is a truly eventful month though. The headlines for this month's finances:

• Two big seasonal bills show up in July's P&L. First, our NYC/DC trip set us back by more than $3,000 (after my inlaws covered part of the expenses). Plus, my endodontist sent me the final bill of $2,300 for the final two root canals. I am pretty sure the dental bills are over for the year :-)

• In the stock option account, a slice of my 2002 stock option grant was vested on July 31. In addition, in a reversal of fortune, MSFT gained about 80 cents in the month, pushing my little stockpile of stock options back to the valuation level two months ago. (MSFT displayed more impressive gain in the last several trading days :-))

• My 401(k) has been faring well in the recent bull market too with almost $2,000 monthly gain.

BALANCE SHEET RESULTS

(Please refer to definition of balance sheet line items.)

  1 Yr Ago 2-Mo Ago Last Month This Month Monthly Monthly
  Jul-04 May-05 Jun-05 Jul-05 Change Change %
Cash & Equivalent  $         2,406  $            443  $         5,712  $         2,341  $        (3,371) -59.0%
Saving  $       17,369  $       31,647  $       34,097  $       43,493  $         9,396 27.6%
Brokerage  $       16,742  $       15,475  $       13,418  $       13,604  $            185 1.4%
Roth IRA  $       15,493  $       17,387  $       17,019  $       16,891  $           (128) -0.8%
401(k)  $       18,259  $       54,650  $       57,103  $       61,273  $         4,171 7.3%
Stock Option  $         7,910  $       14,939  $       11,686  $       15,188  $         3,502 30.0%
ESPP  $         1,191  $         3,471  $         5,842  $         1,766  $        (4,076) -69.8%
Home Equity  $       71,529  $       80,034  $       80,891  $       81,724  $            833 1.0%
Other Assets  $       16,347  $       30,525  $       30,100  $       29,675  $           (425) -1.4%
Receivable (Payable)  $         4,427  $         4,614  $         3,423  $         4,809  $         1,386 40.5%
Reserve Funds  $        (3,621)  $        (6,179)  $        (6,642)  $        (7,018)  $           (376) 5.7%
Loans  $        (8,109)  $      (13,828)  $      (15,429)  $      (18,341)  $        (2,912) 18.9%
Tax Liability  $        (3,147)  $        (6,436)  $        (6,101)  $        (6,624)  $           (523) 8.6%
Net Worth  $     156,795  $     226,743  $     231,119  $     238,781  $         7,662 3.3%
Liquidation Value  $     128,046  $     188,899  $     193,456  $     199,605  $         6,149 3.2%
IMPORTANT BALANCE SHEET MOVEMENT DISCUSSION


Cash and Savings: The disposition of my vested Q2 ESPP shares moved more than $5,800 to my accessible cash. Compared to one year ago, my cashpile has increased by $26,000, and I'm satisfied with the current cash level.
401(k): As discussed earlier, the $4,200 monthly increase includes about $2,200 in contributions and $2,000 in capital gains. This is really a sweet month for 401(k).
Stock Option: The balance of this account rebounded with a small rally of Microsoft stock. The newly vested options added another $1,000 or so.
ESPP: As usual, I liquidated my quarterly purchased ESPP shares almost immediately. My wife and I are still fully participating the program but we will continue our immediate-sale practice.
Receivable: Both my wife and I attended a Microsoft conference in Atlanta, GA in mid-July, so we have a bunch of expenses to claim right now.
Loans: The east coast trip added to our credit card balance, but all non 0% APR balance will be paid off at next cycle. By end of July, I have about $12,800 in two 0% APR balance transfer deals.
Tax Liability: The stock option advance increased my tax exposure, which is partially offset by some extra withholding I requested in my payroll.

BRIEF DISCUSSION OF EXPENSES

This month set a spending record with $10,935 (even higher than $10,716 in August 2003 when I moved into my current house). This is actually not too bad: excluding the trip and dental expenses, my normal expense is going back to $6,000, which I considered as a reasonable range.

IMPORTANT PERSONAL FINANCE ISSUES IN MONTHS AHEAD

• August will see several batches of my stock option grants and stock awards getting vested. I look forward to five-figure monthly net worth increase for July.

• My 2004 tax return is almost done. Some final check-up and it will be fined before the August 15 extended deadline.

• I will probably get the final compensation package for my offshore assignment, which will trigger another round of financial planning.

• I will find some time in the next several months to set up the Coverdell Education Savings Account for my kid. Based on readers' feedback, I will choose Scottrade as the broker.

This Post Has Received 5 Comments. Share Your Opinions Too.


Jamie Commented on August 3, 2005

Did you ever consider reporting the monthly change in net worth that is in your heading to a percentage instead of a keeping it in nominal form? I only suggest this because later on, your $ changes will be great (because your portfolio will be larger) but your % changes will be more constant... I would imagine that % changes are really going to be a better indicator of your best months than $ changes over the long-haul. What do you think?


Greg P Commented on August 5, 2005

Actually if you calculated his percent change now, it would be exaggerated by his large savings contributions relative to his total savings (e.g. $5,000 / $250,000 now vs $1,000,000 as he approaches his savings goal). In the future his savings contributions will be overshadowed by his net worth change due to appreciation.

My point is that his progress should be measured over time using (at least) three metrics: contributions, appreciation and percent change.

Greg


Greg P Commented on August 6, 2005

Actually if you calculated his percent change now, it would be exaggerated by his large savings contributions relative to his total savings (e.g. $5,000 / $250,000 now vs $1,000,000 as he approaches his savings goal). In the future his savings contributions will be overshadowed by his net worth change due to appreciation.

My point is that his progress should be measured over time using (at least) three metrics: contributions, appreciation and percent change.

Greg


Mike B Commented on September 8, 2005

But, geez, man! What is your salary??? I'd like to do the same, but how can a normal person afford $2,200 into their 401K AND 11K in monthly expenses???


right soldier will give round without any questions Commented on May 30, 2006

It's been a long time since I so enjoyed reading posts in the net. Two thumbs up! to expect grass you should be very profound


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