May 2008 Net Worth Update (+$26,147)

Wow -- this is a record breaking month for us. Excluding the month were we merged our finances, this month smashed through my/our highest monthly net worth change that was previously $18,689 in August 2006. A single reason can summarize this explosive growth -- IBM stock. IBM's stock price has shot up over 7% in the month of May providing huge gains in the value of our stock options and ESPP.

Assets

Apr-08

May-08

Change

%

Cash & Savings

$ 86,625.21

$ 91,767.13

$ 5,141.92

5.94%

Taxable Brokerage Accts

$ 76,735.92

$ 77,669.02

$ 933.10

1.22%

Roth IRAs

$ 42,958.36

$ 44,244.80

$ 1,286.44

2.99%

Pre-tax Retirement Accts

$ 162,055.81

$ 173,517.84

$ 11,462.03

7.07%

Stock Options

$ 18,120.00

$ 28,863.99

$ 10,743.99

59.29%

ESPP

$ 39,885.58

$ 45,472.49

$ 5,586.91

14.01%

House #1 - Rental

$ 160,000.00

$ 160,000.00

$ -

 

House #2 - Rental

$ 128,225.00

$ 128,225.00

$ -

 

House #3 - Primary

$ 116,500.00

$ 116,500.00

$ -

 

Receivable (Payable)

$ -

$ -

$ -

 

Other Assets

$ -

$ -

$ -

 

Total Assets

$ 831,105.88

$ 866,260.27

$ 35,154.39

4.23%

Liabilities

 

 

 

 

Credit Card Balances

$ (18,524.27)

$ (20,054.38)

$ (1,530.11)

8.26%

House #1 Mortgages

$ (114,028.61)

$ (113,831.55)

$ 197.06

-0.17%

House #2 Mortgages

$ (101,697.03)

$ (101,578.55)

$ 118.48

-0.12%

House #3 Mortgages

$ (93,415.56)

$ (93,415.56)

$ -

0.00%

Rental Deposits

$ (6,447.00)

$ (10,190.57)

$ (3,743.57)

58.07%

Additional Tax Liability

$ (6,342.00)

$ (10,391.04)

$ (4,049.04)

63.84%

Other Liabilities

 

 

$ -

 

Total Liabilities

$ (340,454.47)

$ (349,461.65)

$ (9,007.18)

2.65%

$2million Goal Progress*

$ 467,566.97

$ 493,714.18

$ 26,147.21

5.59%

Net Worth

$ 490,651.41

$ 516,798.62

$ 26,147.21

5.33%

Highlights for May

  • All credit card debt (except current month's purchases) is in the form of 0% APR balance transfers earning interest in my savings accounts.
  • We were asked to extend our assignment till the end of this year.
  • My wife and I are spending a lot of time with life planning. We are coming up to some major crossroads in our lifes and we are working through some life decisions.
  • We crossed the half-millionaire mark this month. Its a significant milestone for us - we have reached 25% of our financial freedom goal.
  • Overall our investments performed well this month especially with the strong performance of IBM. See our May 2008 Investment Report.

You can see my previous monthly net worth updates here.

Related in Net Worth Archive:

May 2012 Net Worth Update (-$28,098) (Jun 10, 2012) Highlights for MayWe like to take advantage of 0% APR balance transfers and other credit card offers for free money. We are actively looking at taking advantage of new credit card arbitrage opportunities. Our properties are listed on our...

April 2012 Net Worth Update (+$2,763) (May 09, 2012) Highlights for AprilWe like to take advantage of 0% APR balance transfers and other credit card offers for free money. We are actively looking at taking advantage of new credit card arbitrage opportunities. We received $1,000+ in rewards cash...

March 2012 Net Worth Update (+$22,032) (Apr 11, 2012) Highlights for MarchWe like to take advantage of 0% APR balance transfers and other credit card offers for free money. We are actively looking at taking advantage of new credit card arbitrage opportunities. We are close to earning ~$1,000...

Comments (8)


Hi there,

I'm curious: why do you count your stock options as part of your net worth, when it could become worthless at any moment?

Isn't that taking a huge risk in figuring how much you actually "have"?

Jason.

Hi,
Considering that real estate values in the US have fallen on average by about 15% over the past year and even more rapidly in the last few months, shouldn't you take that into account and reduce your asset values for the 3 houses by at least 1% over the month?
Alex

Jason,
Thanks for the question. Agree -- reporting stock option value adds a lot of volatility to our net worth. When I compile our net worth report I am trying to get an accurate measure of our progress so I trying to come up with reasonable valuations for all our investments. Stock options are a very liquid asset so they are easy to measure (unlike our properties). Given they are now worth $30k they are a very big part of our assets so to ignore them would reduce our assets (what we "have") by over 5%. Plus we are going to cash them in eventually - I would rather have them built into our regular assessment then adjust once we sell them. I think it makes sense to report them.

Also to dampen their volatility I have allocated a "tax liability" of 35% in our net worth chart which helps reduce the impact of big valuation swings.

I think you should do a discounted cash flow analysis on this blog and list it as an asset.

Hi, just found the blog (again) and am enjoying it. However I think you are "guilty" of the same net worth blunders of a lot of PF bloggers (though many do not make this mistake). If you want to include your primary home in your net worth, that is your choice, however don't you think you should discount it in this market? Even the most "stable" markets have fallen. Also, since the purpose of including these hard assets in your net worth is to indicate the amount you would realize if you had to sell them, you should also include transaction costs. On stocks we don't bother since transaction costs are low, but for a house it is considerable. At least 6% just in commissions and then there are other costs as well. Personally, I only focus on my liquid net worth so I don't include my home but when I do I discount it by at least 10% to factor in transaction costs, I also discount it to market given liquidity issues.

Personally I'm losing interest in the net worth updates because I just can't figure out where the cash you report is coming in from, which makes it very hard to relate to, and hard to take advice from. Your investment performace shows up as 1.3% which doesn't add up anywhere near 25K$. Even "bad" invesmnent months shows up with a +10K increase.

I can only guess that your family must have a very high salary income that must account for the majority of the monthly progress. That's great, though it would seem to the key to your success has been that high income more than the nickel & dime savings that the blog's advice tends to focus on.

Muzie,
Thanks for the feedback - if you have suggestions on how to improve the clarity let me know.

Maybe this will help organized where the gains are coming from in May:
-$11k - 401k contributions and gains. Not included in investment report.
-$10k - IBM Stock Option gains. Not included in the investment report.
-$6k - Roth IRA, ESPP, Taxable Brokerage contributions and gains - this is whats recorded in the investment snapshot.
-As you can also see cash increased $5k, but my liabilities also increased by about $9k so a net balance change of -$4k.

In summary by far most of my gains/growth this month came from the stock options and 401k.

Ah I see. I can see why you would be off splitting of some of the investments from the main group, but it does tend to blur the overall picture. Perhaps it would help to provide the total investment ROI in that investment report regardless of source and break it down per account and/or asset class.

I can see why would you want hide your income from your colleages - though I have a hunch somebody at IBM who would be willing to go through the numbers could probably guess it anyway based on your stock option awards and gains.

Getting to a two million ne tworth is a very commendable goal that I'm sure many americans aspire to. But as I said, it makes an enormous difference whether you are in the bottom 20% or the top 5% (around 150K$+ in household income). Just hinting at which household bracket your family is in would make it easier to take some of the advice seriously knowing if your family is just an "average" family or part of that top 5%. Personally if your family is in that 5% I would tend to attribute a great portion of your success to that fact and think that most of the other elements of your strategy (credit card balances, savings, etc.) are minor points in comparison.

Have a great day!

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,574,185

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