Summer time, review time. Now that we are six months into 2006, it is high time to review our financial progress against the ambitious plan we set forth earlier in the year.

To refresh the memory, our stated financial goals for 2006 are:

Goal 1: Annual Net Worth Growth of $150,000 ($12,500/month)

Goal 2: Annual Investment Gains of $40,000 ($3,333/month) -- excluding gains or losses from employee stock option plan.

By end of June, our family net worth checked in at $461,213, or exactly $60,575 higher than where we started 2006. In other words, we only achieved 40% of the aspired growth.

In pursuing Goal 2, we really encounted some strong headwind particularly in May with the global stock market decline. We did manage to get $10,571 investment gains, or 30% of the annual goal.

An imperfect reconciliation of the P&L vs plan explains the story better:

In short, we almost achieved our earned income goal (49% of annual target), but the sinking value of employee stock option dealt an unaccounted-for $15,000 blow. We did live within our means by only spending 44% of the annual spending budget, and our tax cut is lower than planned (partially "thanks to" the declining balance of stock option account). For the full P&L, we still managed to save 51% of what we earned -- not too shabby when the earning is in six figures :-)

Does this mean after beating annual financial goals by miles in 2004 and 2005, we will likely come under target in 2006? Time will tell. Here are the risks and opportunities in the 2nd half of the year:

Risks:

• The global stock market is still moving without direction. If the bull market is proven to be over, we might be have a huge hole in our financial plan.

• The full impact of tax law changes for expatriates are not certain. Our tax advisor KPMG is crunching number before they can estimate the impact. For now we haven't taken any reserve, and there is a chance we might have to record a substantial tax liability.

Opportunities:

• Our H1 income stream is actually stronger than plan. First, I received an unexpected raise in H1; second, our family business is performing very strong (already recording a year-to-date profit that is higher than the 2005 full-year profit) even without much care. With the annual bonus coming in September and several batches of stock option/awards to be vested in the next two months, we have a clear opportunity to beat our earned income goal by 5% or more.

• Our spending pattern is getting rationalized now that we fully re-settled in the city. We should be able to achieve some savings in spending budget in H2 too.

All in all, while H1 result is not too encouraging, I still expect we have a fairly good chance to achieve at least the net worth growth goal in 2006. Stay tuned for my step-by-step report of our progress.