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April 2009 - Net Worth Statement and Personal Finance Report

Published 4/30/09 (Modified 3/11/11)
By MoneyBlueBook

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

Assets Balance $ Change % Change
Cash $323,374 $11,732 3.76 %
Stocks $21,184 $2,932 16.06 %
Bonds $0 $0 -
Retirement (401K, Roth, IRA) $8,685 $305 3.64 %
Car and Vehicle Value $0 -$9,420 -100 %
Real Estate and Home Value $0 $0 -
Other Real Estate $0 $0 -
Total Assets: $353,243 $5,549 1.60 %
Debt and Liabilities Balance $ Change % Change
Credit Cards $104 -$2,780 -96.39 %
Car Loans $0 $0 -
Home Mortgage $0 $0 -
Student Loans $27,179 -$101 -0.37 %
Total Debt $27,283 -$2,881 -9.55 %
Total Net Worth
$325,960 $8,430 2.65 %

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.

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8 Responses to “April 2009 - Net Worth Statement and Personal Finance Report” 

  1. Raymond says:

    As an addendum for clarification, I just had a friend contact me and inquire whether the figures listed in the table above for credit card spending are typos or not. The table indicates a credit card balance of $104 with a $$ change of -$2,780 and % change of -96.39% .

    The figures are indeed correct. Remember, these figures represent my current financial net worth compared to last month. Thus, my present total credit card balances are indeed at $104, but due to spending habit changes for the month of April compared to March, my credit card balances dropped -$2,780, a decrease of -96.39%.

  2. Tess says:

    Are you sure it was wise to no longer include your vehicle's market value into networth calculation? You say that the reason you are no longer adding the amount into net worth is because it's one of those assets that are rarely sold and not immediately replaced. But couldn't the same be said for say......your primary house or home? After all, we all need a place to live and it's rare that your primary real estate will be sold and not promptly replaced with a similar or better home for example. Curious about your thoughts on the matter.

  3. Raymond says:

    Tess,

    I wrestled with the decision but I ultimately decided that removing the vehicle asset figure provided a more accurate picture of overall networth, for many reasons.

    In regards to the market value of ones home and its inclusion into net worth, there is indeed quite a hearty debate between some financial writers regarding the wisdom of including real estate into the calculation of personal networth for the same reasons I indicated in not including vehicle asset value into my calculations.

    Frankly, I actually do see some merit in the argument that real estate SHOULD NOT be included into net worth as it frequently gives a false impression of true net worth. A home's fair market value is incredibly difficult to spot price and it's hard to know exactly how much a given property will ultimately sell on the open market. Inclusion of one's home into net worth has even led to the coinage of the term "house rich" to denote those who's primary net worth is derived from the value of their home alone. It's frequently a misleading figure as true home value is frequently substantially lower than one may believe or hope. Just because a home is fairly priced at $400,000 doesn't necessarily mean it will actually sell at that price, and may only fetch $350,000 when put on the market and scrutinized by prospective buyers.

    However, with all that said, it's hard not to deny that one's primary home value still ought to be included into networth figures somehow. Its value is simply too large and substantial to ignore. Besides, after subtracting the mortgage from the home's projected sale value, the home equity portion does have some liquid networth calculative value. Available home equity can be quickly converted into cash if need be.

  4. E.Newton says:

    Since you're thinking about getting back into the stock market, I'd recommend the PGF etf, it invests in the banks' preferred shares, and is currently paying a 14% dividend. Nice! As the preferreds go down in value, that dividend will go up, and barring one of the funds' banks going bankrupt or 'wiped out' by the govt, (Citigroup prime candidate), you're locking in some fat rewards for a long time to come... law of 72 predicts that the money put in would double every 5 years...

  5. E.Newton says:

    Also, the etf 'TNA' is working well, smallcap companies always rebound before largecaps. I've already locked in 10% profit in the last 2 weeks

  6. Raymond says:

    Thanks E.Newton,

    At this very moment, I'm still holding onto the remaining individual stocks, and index & mutual funds that I owned from a year ago. My losses are pretty tremendous (more than 50% down) so I'm just waiting out the market for now. In time I think the market will recover, but it's hard to set a real timetable at this point.

    Most of the funds I still own are foreign emerging market ones - Brazil, South Korea, Taiwan, China, and a few local SNP 500 tracking indexes etc. Mulling my investment options right now. It's hard not to go with the most beaten down sectors - the financials and even oil stocks... choices, choices.

  7. Rajeev says:

    I think you can also add back your vehicles residual value in your networth.. after all its an asset.. it might be difficult to sell. but everything gets sold at the right price.

  8. Raymond says:

    Rajeev,

    Why do you feel that I ought to include my vehicle's fair market value into my networth asset calculation? Curious as to your thoughts.

    If I owned a luxury watch (a Rolex or Omega) with value in excess of $3,000, should I include the resale value of the watch into my net worth as well? What about the fair market value of my entire wardrobe and clothing apparels....what about my TV etc?

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