April 2009 - Net Worth Statement and Personal Finance Report
Published 4/30/09 (Modified 3/11/11)
Well, tax judgment day has come and gone, and after finally paying the federal government its annual tribute, I feel more depleted than ever. Due to my higher income rate during 2008, I winded up in the highest income tax bracket possible, necessitating that I pay out more than 40% of my total annual income to the Man via federal and state income taxes. So sad.....
Looking ahead at the upcoming official federal tax brackets for 2009, it doesn't look like my taxation plight's going to get any easier, particularly with tax happy President Obama at the helm. Although his positive approval rating's through the roof and the man is absolutely oozing with optimism and confidence, I doubt many of his supporters are really comprised of scrutinizing individuals or small business owners like myself who actually pay attention to the potential tax implications of his slight of hand wealth redistribution policies. For the sake of competitive small business owners everywhere, I hope Obama doesn't go through with his increasingly aggressive crusade to seize the financial proceeds of those who have worked hard to get to where they are today, with his continuous Presidential blurbs of patriotic taxation and "spreading the wealth around".
My Current Net Worth and Financial Status Update Compared To Last Month
Thinking About Switching Gears From Cash Savings And Back Into Stock Market Investing
While the economy continues to be battered by volatility and investment unpredictability, I am content to cautiously remain on the sidelines, clutching onto my secure and reliable cash savings, currently still saved in online bank accounts reaping what decent interest rate yields are left in this poor interest rate climate. However, I will be honest - looking at how seemingly cheap and reasonably attractive current stock prices are, it's hard to resist the siren calls of greed and profit. My crazy, irrational side really wants me to go nuts and dump everything into financial stocks like Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), - and bet big for the future. But then my more rationale and logical self thankfully reminds my more greedy half that stock market investing is all about making wise, long term, and diversified investment decisions for the long haul. It's not about short time bets or gambling one's life savings away via a single high risk, high stakes all-in-one basket dice roll. Thankfully, despite my torn emotional conflict between greed and rationality, I have been able to stay the course and not engage in any type of hasty stock purchases or aggressive index fund pickings - thus far at least.
Currently, my cash savings remain stored in several high yield savings accounts and bank CD rate deposits. But I anticipate moving a sizable portion into my brokerage account very soon to better position myself to take advantage of coming opportunities in the near future. I am still very pessimistic and hold a very bearish economic outlook, but things don't look quite as grim or imminently dire as they once did. Obama is doing a great job of building consumer confidence and keeping the American public sentiment cautiously optimistic for the future. I just hope that this pervasive warm and fuzzy sentiment we are all witnessing at the moment isn't temporary, and that the feel-good Obama train has enough substance to get the American and global economies back on track.
I Will No Longer Be Tracking Car and Vehicle Value For Net Worth Purposes
One of the big changes you may notice in this month's net worth report is that I am eliminating the asset value for my car and primary vehicle. After including my vehicle asset value into my net worth for several months, I have finally decided that it no longer warrants such an inclusion. It was a mistake to even have included its value into my net worth calculations to begin with. A single primary vehicle is almost a basic necessity to everyday life and is rarely sold without replacement. Even in the event the vehicle is discarded, traded away, or sold, it is almost always promptly substituted with another one. Thus, its value really shouldn't be lumped into the same category as that of a long term asset or investment. However, if I were to own multiple vehicles like an extra sports car for personal enjoyment purposes in the future, the secondary vehicle may very well warrant inclusion as a networth asset.
This Month's Extremely Low Credit Card Usage Was Very Atypical Of Me
I put a whopping $104 on my credit cards the entire month of April. People who know me well may be shocked. It really isn't like me to suddenly ditch my credit card spending habit in favor of using all cash for purchases. While a pro-cash financial guru like Dave Ramsey may be applauding my historical milestone, the real reason for the sudden and precipitous drop in credit card usage is because since March, I've been traveling and living overseas. As I've been visiting my overseas-living parents for the past few months to help them out with health related issues they've been struggling with, I've had to adjust my consumer habits to accommodate the realities of a non-credit card based society for some time now.
While it's possible to avoid the near ubiquitous foreign currency fees on overseas credit card charges imposed on American credit cards by using a fee-less card option like Capital One or Discover Card, I've found that it's usually better to stick to local paper currency while abroad. Credit card heavy countries like the United States have well developed anti-fraud and identity theft prevent mechanisms in place to instill credit card usage confidence in its consumer infrastructure. Foreign locales on the other hand frequently aren't as well developed in this department - hence my decision to abandon risky credit card use the last few months and stick to cash exclusively.
Of course, when I return home to the United States in a few weeks, all of that will likely revert back to "normal". I'm a big reward credit card and balance transfer user and will be resuming my old cash back credit card reward earning ways when I return. People like myself who are able to handle the responsibilities and obligations of credit card usage really lose out when we use cash since we miss out on the potential to rack up credit card spending rewards and lucrative airline credit card miles for our everyday purchases.