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Monthly Net Worth Check Point: August (up 3.7%)
To track how we are doing financially, I monitor our net worth and update it on a monthly basis. I think it is a great way to keep track of how all your planning and hard work is paying off.
I usually calculate our net worth around the 5th of each month, after our mortgage payment is deducted from our checking account. I feel that doing it the same time each month gives me an accurate picture of what happened the previous month. So, after I see that the mortgage payment is debited, I sit down in front of the computer and go through all of our accounts and update my little spreadsheet.
The overall number is important but I also like to create a number of groupings of various accounts and liabilities to provide a finer-grained view of exactly what is happening with all the components of our net worth. If anyone is interested, I can create a post detailing exactly how I set up the spreadsheet to collect this useful information and how I update it each month. You can even have it create a simple little graph for all you visual people out there.
Our assets increased approximately 0.88% last month
I say "approximately" because I don’t know the current value of my wife’s 401k (since I forgot the password to her online account). Our assets have been dropping for the past two months – so even though we had a gain this month we are still not back to our May level. I’m still quite pleased with this as we did experience some large expenses this month – we went on vacation, our yearly life insurance bills were due for both of us, and we had some other large purchases.
The lions share of our gain was due to the performance of the stock market and specifically my employer’s stock. I have some stock and stock options and when the company stock yo-yos up and down, so does our overall asset value. I periodically check to make sure that the value of our company stock holdings do not get out of whack – right now they comprise 6.2% of our non-retirement savings. The value of my stock options go up and down like crazy also. For instance, it decreased 15.4% last month only to rebound by 19.8% this month. (this is why I have all of this stuff separated out – so I can tell exactly what is doing what) If you take out the volatility of the stock options, the rest of our non-retirement assets increased 0.25% this month. (I guess it’s like the CPI and core CPI)
Our liabilities decreased by 0.60%.
The change in our liabilities is a much more predictable value. Each month we shave off about $300 from our mortgage balance, the student loan debt drops about $800, and my wife’s bonus payback drops about $1300. So, this month, like the last few months, saw our overall liabilities drop.
Our net worth increased approximately 3.7% in July.
If you put that all together, we experienced an overall net worth increase of 3.7% for the month. This seems like a big number to me, but in reality we are still a bit shy of our May net worth level. Our cash savings have been decreasing slightly due to some large bills recently but our liabilities continue to decrease also. This does show me that I might need to investigate further the reasons our cash is not increasing
This tells me that our net worth has a fairly high stock market exposure
Between June and July, our net worth decreased by 4.4% and then increased by 3.7% between July and August. To be more specific about the stock market exposure, I would say the net worth is very dependent on my employer’s stock. Over the same time periods my company’s stock dropped about 3.5% and then rose 4%. These numbers track very closely with our overall net worth changes. This is interesting information, but I’m not sure it will prompt me to do anything in the short term. I must certainly continue to monitor the overall percentage of our net worth tied up in company stock.
Since a huge factor is the stock options which we are going to wait to exercise, it is hard for me to decide exactly how to integrate them into the net worth. If I sold them all today, I would have X more dollars, so I do think that I should take that into account in my planning. Then again, they are not technically worth any money at this point in time. I’ve gone back and forth with including them; for now, they stay in so I have the complete picture of our finances.
Since I have been following my net worth, it has provided some useful information and, more importantly, has given me a sense that we are moving in the right direction . Even though we haven’t moved much (net) over the past few months, I am comfortable with the progress when I view it from a long term perspective. If you don’t already, I would suggest you periodically track your net worth. Even if you don’t like where you are, at least you’ll be able to see where you are going and change that direction to get to where you want to be.
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5 Responses to “Monthly Net Worth Check Point: August (up 3.7%)”
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Wow!
I’m very impressed that you keep track of this level of information on a monthly basis.
I’ve just started to track my expenses and I think that is work.
Good for you and good luck in keeping your net worth figure moving in the right direction.
DD-
Thanks for the comment. After getting the initial spreadsheet setup, it’s not that bad each month. It’s a little copying and pasting and then zipping around the web checking balances – I think it takes me less than 30 min once a month.
It’s nothing like keeping track of expenses like you mentioned – now that is work! I’m going to do an entire blog post (probably 2) on all the different things I’ve tried to find a workable plan to monitor my expenses. (and I’m still not there!)
You seem to keep really good track of things (other than the password to your wife’s account)
It’s important to keep good records if you really want to see what’s happening.
Here’s to an even better August! Cheers!
L@spillingbuckets’s latest blog post…How to Save a Bunch of Money Buying College Textbooks
John,
just read through your previous posts, very good stuff.
It is encouraging to see how well you track things.. I’d be interested to read about your spreadsheet setup.
I really need to get some expense tracking going too, so I’m looking forward to seeing what you’ve tried for that and how things have turned out.
Another nice method to generate profits rapidly (with less risk if you know what you’re doing) is with stock options. You may get free online training at InvestOnlineInfo.com.