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Monthly Net Worth Check Point: November (still dropping)
Scares! Shrieks! Is it Halloween, you ask? No, it’s time to check all our account balances and update our net worth for the month. Check out this page if you want to see the spreadsheet I use to track it and a video tutorial on how to create and update it . If you don’t like spreadsheets (who doesn’t like spreadsheets?!), I also have a post on some online tools for tracking your net worth .
Over at One Caveman’s Financial Journey, recently there was a post on why your net worth isn’t the best gauge of financial health . It’s an interesting post with some valid points. I agree that the usefulness of your net worth as an indicator of financial health is clouded by external forces such as the stock market. That is actually the main reason I created my net worth spreadsheet in such a way as to provide a information on different account categories. For instance, it might not be very illuminating to simply see that our net worth decreased 4.5% this month (OUCH!) but being able to see how our liquid savings did separately from our accounts with stock market exposure is still useful, I believe.
Our assets dropped 2%
Just like last month, I expected our assets to drop more than they did. Every account with stock market exposure dropped significantly. For instance, our taxable investments dropped 12%, our retirement accounts dropped 7.5%, our 529 plan dropped 5.7%, and my stock options dropped a whopping 49.5% in value! My options have been hammered lately, dropping 48%, 33%, and 49% over the last three months. That means compared to their value in August, my stock options are down more than 82%! (Luckily, I guess, they weren’t worth that much money to begin with)
All of this was buffeted by the fact that our liquid assets increased 9.9% this month. So, for the past two months while all of our accounts exposed to the market have been tanking, our liquid assets have balanced this out somewhat as they have grown 25%. So, I feel that looking at our increase or decrease in liquid savings is probably the best measure to see how we’re doing financially in this current environment.
Our liabilities decreased by 0.49%
Another very important financial metric to me is our level of liabilities (seeing that level go down to be specific). Our mortgage drops a similar amount each month and our lone remaining debt (my wife’s contractual obligation if she stops working) drops a set amount. As long as this keeps decreasing, I’m happy. I do not have any plans to accelerate our mortgage repayment in the near future, but it is an idea with which I am toying.
Our net worth decreased approximately 4.5%.
All of this adds up (subtracts up?) to a 4.5% loss in net worth this month. At least the downward decline is decelerating compared to our 8% drop last month. Again, the most important measures to me are the direction of our liquid savings and our liabilities. As long as our liquid savings are going up and our debts are going down, then I feel like we’ve been successful for another month.
I am still not overly concerned about the stock market
I am not super excited about the drop in our stock market accounts…well, in a strange way, I am actually somewhat happy about it (in a very selfish way, I admit). I am in a position that I do not need to draw on my retirement savings for decades and hopefully our emergency fund will prevent us from having to cash out any mutual funds or stock options in the near future. In that respect, the lower prices for stocks are actually helpful as we continue to purchase more every month. In fact, I recently increased my 401k contribution 4%.
I know it’s not pretty looking at the current numbers; instead I try to focus on how many more shares I am purchasing each month compared to the number I was buying last year at this time. If I stay focused and calm and continue to dollar cost average each month, it has the potential to pay off in the long term when the market recovers. (that assumes, of course, that the new president-elect and democrat controlled congress will attempt to stabilize the economy instead of causing it crash and burn so they can switch us over to socialism)
Related Posts:- Monthly Net Worth Check Point: September (down 6.1%)...
- Monthly Net Worth Check Point: August (up 3.7%)...
- Monthly Net Worth Check Point: October (down a lot!)...
- Monthly Net Worth Checkpoint: December (yep - lower still)...
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Valid points all - Fear has no hold on a man with a goal !!
I will be curious to see if in upcoming reports the national savings rate moves upward. I think you and many others are placing more into cash savings, and that is a good thing. ( Maybe this was all one big conspiracy to get our nation to start saving again !!!
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