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 2004 ($156,795, +$4,577)

Contributed by mm | August 1, 2004 7:09 AM PST

SUMMARY

July 2004 is a month of solid growth and significant balance sheet reshuffle. With the addition of my wife's job income (partially offset by daycare and related expense), we closed the month with net worth reading of $156,795, or $4,577 increase over last month. This bring us one month closer to the retirement goal. Month-to-Retire reading is now 142 months (May 2016).

On the balance sheet front, two events brought sea change to some accounts. First, as usual, I sold out my ESPP shares literally moments after they became available, sporting a net proceeds north of $8,000. Second, I took advantage of a no-fee, 0% APR balance-transfer offer from Discover, moving another $5,000 into my saving accounts.

Also worth mentioning here is the recent opening of my $30,000 Home Equity Line of Credit. No immediate impact to my balance sheet, but it adds a level of liquidity to my personal financial system.

MONTH-END BALANCE SHEET

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

  May-04 Jun-04 Jul-04 Change Change %
Cash & Equivalent  $         1,025  $         1,276  $         2,406  $         1,130 88.5%
Saving  $       10,613  $         2,524  $       17,369  $       14,845 588.3%
Brokerage  $       19,507  $       17,672  $       16,742  $           (930) -5.3%
Roth IRA  $       15,640  $       14,507  $       15,493  $            986 6.8%
401(k)  $       15,518  $       16,994  $       18,259  $         1,265 7.4%
Stock Option  $         2,801  $         7,158  $         7,910  $            752 10.5%
ESPP  $         6,455  $         8,084  $         1,191  $        (6,893) -85.3%
Home Equity  $       69,842  $       70,685  $       71,529  $            844 1.2%
Other Assets  $         8,950  $       16,622  $       16,347  $           (275) -1.7%
Receivable (Payable)  $         5,920  $         5,215  $         4,427  $           (788) -15.1%
Reserve Funds  $        (3,034)  $        (3,221)  $        (3,621)  $           (400) 12.4%
Loans  $        (2,214)  $        (2,369)  $        (8,109)  $        (5,739) 242.2%
Tax Liability  $        (2,014)  $        (2,927)  $        (3,147)  $           (220) 7.5%
Net Worth  $     149,010  $     152,219  $     156,795  $         4,577 3.0%
Liquidation Value  $     122,170  $     124,056  $     128,046  $         3,990 3.2%

INCOME STATEMENT

My total monthly operating expenses added up to $5,687, in par with last month's $5,641 (the last month's number was skewed by a car purchase for about $1,200). It should be noted, however, that this is the first month of full daycare payment of $940. Other living expenses categories are stable, except for a $500 entry of cash donation. Moving forward, I expect to keep the monthly living expenses in the range of $5,000 to $5,500, barring any unusual items.

BALANCE SHEET

The above-mentioned changes of ESPP sale and balance-transfer offer brought some significant changes in my balance sheet and here are the details:

1) Savings: My saving account was swiftly replenished as both ESPP sale and balance transfer allowed me to swept a huge sum to savings. Without interesting investment opportunities, I expect savings will be kept above $10,000 for the foreseeable future.

2) ESPP: As noted above, I sold out my ESPP shares accumulated from the last six-month cycle. Moving forward, as Microsoft changed the ESPP rules, I expect to conduct a sell every three months.

3) Receivable (Payable): The receivable decline is mostly because I gained access to a $1,700 check from First American Title, who closed my refinancing and withhold the amount for duplicate property tax payments. I had been able to convince them that property tax was paid in full by showing multiple evidences. (See "One Surprising Item" in this entry about the refinancing for the story around the $1,700.)

4) Loans: The $5,000 balance-transfer deal triggered this 242% single-month growth in this line. However, all balances continue to be paid off every month, and I expect to pay back the $5,000 the month before the 0% APR ends.

5) Investment Accounts: Even with 8% monthly decline in NASDAQ and 3% in S&P 500, my portfolio actually held up pretty well due to multiple bearish option plays. All loses in after-tax accounts are compensated by Roth IRA gains. My stock options account suffered a small bit from MSFT price decline, but a small batch of newly vested option helped to bring it up by the end of the month.

IMPORTANT PERSONAL FINANCE ISSUES IN MONTHS AHEAD

- I look forward to a windfall in the next two months: A new batch of my employee stock options will be vested in August, along with the first-year vesting of stock awards, which, combined, should add $6,000 (before tax) into my coffin given stable MSFT price (which is a high order to fill). September will also see the annual bonus. Although I made monthly accrual of the annual bonus, I expect the actual bonus will come with favorable surprises.

- Once the stock award shares are vested, I intended to sell it immediately. It should happen in early September.

- I intend to think about my strategy in Microsoft stock options in the next two months, now that the options will push my exposure to well over $10,000 in the next two months.

This Post Has Received 2 Comments. Share Your Opinions Too.


Paul Commented on August 4, 2004

I know that you want to sell your espp as soon as possible, however now that msft says they're giving a big whopping dividend, would that change you to holding on for a little bit to collect the dividend?

Just curious.


mm Commented on August 4, 2004

I don't think the special dividend poses a stellar opportunity for holding the stock because the stock price is expected to drop after the payout. There is little potential tax benefit but it may not be worth the effort:

http://www.pfblog.com/archives/000695.html


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