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March 2009 - Net Worth Update and Personal Finance Status

Published 3/31/09 (Modified 3/8/11)
By MoneyBlueBook

March 2009 has turned out to be a pretty routine month for me. As I'm currently traveling overseas for an extended period of time and won't be returning home to the U.S. for several months, I haven't had much time to really closely follow the progression of my financial portfolio. However, even while away, I still find time to occasionally glance at my net worth balances periodically to make sure everything is okay. So far, all basic metrics, bank balances, and credit reports indicate that I'm maintaining a pretty stable and healthy financial position - well positioned to keeping growing for the foreseeable future and weather any significant or further downturn in the economy.

While I've had to put my part time ambulance chasing legal practice on hold while traveling overseas for family health reasons, my portfolio of online and real world small businesses have continued to churn out a fairly steady income stream while I've been away, much of it passively generated without substantial attention on my part. Much of the hard work, mind numbing stress, and financial sacrifices that I made in the past few years in creating semi-self run businesses have finally paid off, allowing me to generate income and make money even when I'm not actively sitting at my home office desk in Maryland working on the computer or making phone calls.

In terms of my profession, I'm very thankful that I've been able to successfully make the transition from traditional 9-5 day job worker into a self employed entrepreneur and sole proprietor. The journey to get to this point wasn't easy and there were many times when I felt demoralized and extremely lonely during my late night extended hour work sessions to the point of wanting to give up, but fortunately, I persisted. Today, I can confidently say that it was all worth it. Without my humble network of work from home based businesses and semi-self-run real life operations, I would not have been able to take 2-3 months off work to visit an overseas ailing parent - a luxury I'm enjoying today. After all, it's not always the money - but the flexibility to set your own schedule and working pace that is frequently most sought after by many, myself included. Besides, it's great being my own boss and not having to work for a psychotic, over-worked and under-loved attorney hag anymore (long story - I'll save it for another day).

Those who have always desired to become their own bosses one day should make a concerted effort to make it happen and not allow idle hands to delay their dreams. There is an element of natural risk and sacrifice when trying to balance the duties of a full time job and a fledgling home office based business - but then nothing in life that is worth pursuing is inherently easy, at least initially. It's true what they say - no pain, no gain. Anyhow, I'm sure you didn't come here to just listen to me ramble about dreams and goals. Here's my net worth update for March 2009.

My Current Net Worth and Financial Status Update Compared To Last Month

Assets Balance $ Change % Change
Cash $311,642 $9,921 3.29 %
Stocks $18,252 $1,882 11.50 %
Bonds $0 $0 -
Retirement (401K, Roth, IRA) $8,380 $802 10.58 %
Car and Vehicle Value $9,420 $0 -
Real Estate and Home Value $0 $0 -
Other Real Estate $0 $0 -
Total Assets: $347,694 $12,605
3.76 %
Debt and Liabilities Balance $ Change % Change
Credit Cards $2,884 -$398 -12.13 %
Car Loans $0 $0 -
Home Mortgage $0 $0 -
Student Loans $27,280 -$151 -0.55 %
Total Debt $30,164 -$10,549 -25.91 %
Total Net Worth
$317,530 $23,154 7.87 %

Continue Saving Money In Online Savings Accounts Or Start Investing?

For almost a year now, I have refrained from taking on any new stock, index, or mutual fund positions - instead opting to store the vast bulk of my money in the best bank accounts and in certificate of deposits offering the best CD rates. Thus far, in light of current volatile economic conditions, I've been cautiously pleased at the modest but predictably stable���� rates of return that I've been getting from my conservative savings approach.

However, something strange happened during the month of March. The financial and stock markets actually saw a bit of an extended rally. Could we possibly be seeing the early stages of a substantive once-in-a-lifetime bull market - the likes we've never experienced before in our short existences? Very unlikely. Sorry to burst everyone's bullish bubble, but I sense a massive bear market rally at work here. Sure, the market seems to be staging a bit of a rebound, perhaps soaring 20-30% in a matter of weeks, but there is nothing really tangible or economically positive as of yet to support this sudden stock buying resurgence. At this point in time, our investment emotions and sensibilities are still being artificially propped high by nothing more than mere cotton candy pufferey and wishful thinking from the Obama White House. The economy is still in the tank, unemployment rates across all 50 states are still climbing, housing market prices are STILL grossly overvalued (home owners must start selling at these depressed prices or we'll never get back to market equilibrium), and the major banks are still struggling to deal with toxic mortgage based assets and trying to stave off a widespread federal government take over.

But with all this said, why do I strangely find myself starting to ponder whether this is a good time to start investing in the stock market and buying up real estate properties again? The answer is - because I'm a greedy capitalistic with a lusty dog nose for opportunity and profit.

As a greedy (but not evil) capitalist bent on maximizing my money and growing my financial portfolio, I subscribe to the age old Warren Buffett mantra regarding investment fear and greed - which calls for one to become fearful when others are greedy, and greedy when others are fearful. Because there is so much greed rampant in the economy and financial markets right now, the potential for massive windfalls and financial gains have never been better. Of course, the biggest problem now is timing. The worst thing I can probably do at this point in time is blindly jumping in and getting myself suckered into one of these bear market rallies, or dead cat bounces, as they are often called - only to see my portfolio get beaten into a whimpering pulp a few weeks later.

However, the winds of opportunity are in the air, and in the next few months, I may start shifting my money into online broker accounts again in anticipation of what lies ahead. While my better judgment will likely prevent me from jumping in and making a premature mistake at this very moment, I must admit, my investing trigger finger has grown a bit itchy of late.

Continuing To Invest In My IRA and Roth Retirement Accounts

While my small retirement portfolio has taken quite a beating from this recession, losing almost half of its value thus far, I intend to continue making annual contributions pursuant to my long term (25+ years horizon) investment strategy. Currently, I have a small amount of funds invested in Roth IRA's and in traditional IRA accounts. I have yet to hit my IRA or Roth IRA contribution limit for 2009, so I will likely add additional funds in the next few weeks. Those who have not yet opened a ROTH or IRA account should really look into doing so. Stock market prices are at ridiculous lifetime lows and if you are a first time investor, now is the time to open an account with a Roth IRA broker and take advantage of cheap prices.

Filing My 2009 Federal and State Taxes Online With TurboTax

Well, after much procrastination, I've finally prepared and filed my 2009 taxes. Even though I'm currently overseas, I was able to bring all of my tax statements, 1099's, and W-2 forms with me and file my taxes online. This year, I decided to file my taxes via the web again with good old TurboTax 2009. The company has always offered me a fairly efficient tax preparation and filing experience and this year was no different. The only change this year was my decision to go with the TurboTax Small Business edition instead of my usual TurboTax Premier version - mostly because of my growing need for extra assistance with business tax deductions.

This year, my taxes were incredibly high, and combing my federal and state income taxes, I paid out more than $140,000 worth of taxes for 2008. Obviously, it's time I started looking into converting my current sole proprietorship business into a more tax advantaged business entity. So far, it looks like forming an S-Corporation, or a limited liability company (LLC) with election to be taxed as an S-Corporation are my best bets tax-wise.

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16 Responses to “March 2009 - Net Worth Update and Personal Finance Status” 

  1. Kate says:

    I love your section on becoming self-employed. I've been a freelancer for several years and it was the greatest career move I ever made-- I've never felt happier or more fulfilled. It's a cliche, but it's true, "Do what you love and you will never work a day in your life." And your slow and steady wins the race approach to becoming self employed is right on target. When you're still working for someone else, there can be a lot of temptation to make the big leap to self-employment all at once. But, the key to longterm success in building your own business (even if it's a one-man shop like mine), is to emulate ultra successful business mavens and start small. It's something I have heard the founders of the Kaplan Thaler Group refer to as "The Power of Small" (I think this might also be a book.) when they talk about how they started their agency: working little by little with small goals in mind instead of trying to grow too big, too fast. I might not have a billion dollar ad agency, but I am definitely reaping the rewards of working for myself!

  2. Raymond says:

    Fist bump to a fellow entrepreneur! In this stagnant economy, I think we are fortunate to be thriving and enjoying our working lives. Hopefully we can maintain our current freelance self employment projects long enough to ride out this terrible world wide economic situation we are in right now.

    But yes, step by step and forced self motivation wins the race and the long term benefits of self run businesses are tremendous. Just keep your eyes on the prize and work towards the future.

  3. Online Business says:

    Self employment requires a measure of luck, persistence, and sacrifice....from the words of Fort Minor

    "It's just ten percent luck
    Twenty percent skill
    Fifteen percent concentrated power of will
    Five percent pleasure
    Fifty percent pain
    And a hundred percent reason to remember the name"

  4. DebtGoal says:

    Your transition into self-employed entrepreneur status is inspiring. Any advice for the multitudes of self-employed entrepreneurs that need to manage debt loads at the same time?

  5. Raymond says:

    DebtGoal,

    Running a baby business at the early stages and balancing debt is tough. Been there, done that - and it certainly wasn't easy. But at some point in one's life, you have to take a leap of faith...and trust that your business gut instincts will ultimately pay off.

    In my case, there was a time in my life when I had mounting debts to pay, but instead of continuing to wallow in the same, depressing job that I had been holding for some time, I decided to leave for greener pastures and strike it out on my own. I applied for some 0% balance transfer credit cards (I don't necessarily recommend this strategy for everyone however), paid off all of my immediate bills, and gambled that my self implemented business plan would ultimately take off....eventually it did in a matter of weeks...and in the nick of time too.

    I guess in life there is always a measure of calculated risk that has to be taken to take your business life to the next level. But if you are absolutely drowning in pressing massive debt, even dreams may have to succumb to a little bit of immediate reality that may demand some postponing until ones situation can accommodate.

  6. Bill McCollam says:

    Thanks for the post... I'm quite interested in your methods and will look further into your site. I liked the balance sheet - (but would have really loved to see the income statement).

  7. Raymond says:

    Bill,

    One of these days, I may include a more detailed breakdown of my complete income and cash flow statements along with my current balance sheet. Currently my income is somewhat diverse and includes a variety of projects I've been involved in for some time - along with my regular legal practice part time day job. But I'll give some thought to such a future public disclosure..

    I'm still slowly getting used to sharing so much info online. Sharing personal finance ideas is one thing, but revealing actual personal numbers is always something altogether.

  8. RateNerd says:

    As an entrepreneur, I hate having to be so focused on the tax code to make sure that I am making money - when I set aside money for taxes I really wonder what I am getting for my 35%, especially when I have to dodge potholes and listen to the crooked Detroit politicians fight over turf (sorry to vent, but you hit a hot button for me!)

  9. Raymond says:

    Rate Nerd,

    I hate taxes with a passion as well. I have actually even contemplated moving some of my business operations to another state to minimize my overall tax burden - legally of course. Tax avoidance is always perfectly legal....it's tax evasion that's illegal.

    I am very, very wary about President Obama's plans for a tax hike. I know he thinks this will ultimately help the economy weather this recession, but I think it's punishing small businesses like mine. I really don't think there is a patriotic duty to pay more taxes....

  10. MoneyEnergy says:

    Congrats on all your achievements.... you are definitely living the life many dream of.... yes, it would be interesting to see your online income statement. But your networth looks great, keep it up and post more posts like this one. I say it's worth it to invest in any market if you know what you're investing in and why. If you have a compelling reason to invest in a certain company, regardless of market conditions, then do it.

  11. Mike Rowan says:

    If I were you, I would start investing. I think that the sky will be the limit once we have this downturn behind us.

  12. Raymond says:

    Money Energy & Mike Rowan:

    Yes I am constantly eying the stock market and licking my chops. Prices are certainly quite attractive, but I've been badly burned before. I have grown extremely paranoid and super suspicious of anything that even whiffs of a bear market rally - and I think this current situation is a classic bear market rally....so I'll be staying on the sidelines and resisting the temptation to jump in for a while longer. It's not easy though...my cash savings yearns for risky bets.....

    Of course, I'm no stock market prognosticator and truly have no idea what the market will do from here on. I urge caution for all those looking at current market conditions....don't be swayed by short term swings in prices and pure speculation by so-called financial experts, such as the pundits from CNBC

  13. Omar says:

    A gentleman told me to use Charles Schwab for investing. Is that a sound decision?

    Thanks

  14. Raymond says:

    Omar,

    This gentleman fellow gave you very generic financial advice. Using Charles Schwab for investing is neither good nor bad. They are a very popular choice for large portfolio holders as they offer very extensive services, however they are probably more of a higher end brokerage firm in my opinion...with much higher fees than the more stripped down discount brokers. I'd recommend something like a TradeKing, Sharebuilder, or TD Ameritrade for starters.

  15. E.Newton says:

    Raymond,

    Congrats on your success. I enjoy reading about how your evaluating your own financial goals and enjoy seeing somebody else not complaining about a 'bad economy'. Politically I believe the doom and gloom is being used as a scapegoat to push liberal agendas, hence 'Never let a crisis go to waste', but all those who are pessimistic about the big picture, I point them to your blog and tell them to let it sink in... look at this guy, and emulate how he manages money... so in up times and down times, you can be confident that you arent alone.

    Cheers,
    E.Newton

  16. Raymond says:

    Thank you E.Newton,

    How is your own portfolio and income flow doing in today's climate?

    And yes, I do share in your skepticism regarding Obama's current so-called liberal agendas. I think he means well, but I am afraid of how far he will go in pushing his wealth redistribution style policies. But politics aside, he is probably the best man for the job and the only one who can really inspire sufficient confidence and optimism to captain this American ship through rough waters.

    But even during tough economic times, opportunities abound and there are long term bets to be made. I am eyeing the markets extremely closely. I am sooo tempted to jump in but I fear greatly that this is the ultimate sucker's rally in the making. Your thoughts?

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