October 2008 Net Worth Update (-$56,294)

If their is anything to be optimistic about for me is that October could possibly be the worst month of financial losses for our entire lives and we survived it (I can hope) . It is more than double the worse monthly loss I/we have ever had.

Assets	Sep-08	Oct-08	Change	%
Cash & Savings	$ 117,881.65	$ 114,246.57	$ (3,635.08)	-3.08%
Taxable Brokerage Accts	$ 73,584.42	$ 68,121.80	$ (5,462.62)	-7.42%
Roth IRAs	$ 42,526.21	$ 34,504.40	$ (8,021.81)	-18.86%
Pre-tax Retirement Accts	$ 156,383.40	$ 137,337.59	$ (19,045.81)	-12.18%
Stock Options	$ 18,288.00	$ 1,840.00	$ (16,448.00)	-89.94%
ESPP	$ 29,260.90	$ 24,177.52	$ (5,083.38)	-17.37%
House #1 - Rental	$ 160,000.00	$ 160,000.00	$ -
House #2 - Rental	$ 128,225.00	$ 128,225.00	$ -
House #3 - Primary	$ 116,500.00	$ 109,510.00	$ (6,990.00)
Receivable (Payable)	$ 5,920.76	$ 6,318.61	$ 397.85
Other Assets	$ -	$ -	$ -
Total Assets	$ 848,570.34	$ 784,281.49	$ (64,288.85)	-7.58%
Liabilities
Credit Card Balances	$ (20,739.18)	$ (20,515.94)	$ 223.24	-1.08%
House #1 Mortgages	$ (113,036.52)	$ (112,835.30)	$ 201.22	-0.18%
House #2 Mortgages	$ (101,216.90)	$ (101,091.93)	$ 124.97	-0.12%
House #3 Mortgages	$ (91,547.79)	$ (90,024.11)	$ 1,523.68	-1.66%
Rental Deposits	$ (9,980.57)	$ (9,980.57)	$ -	0.00%
Additional Tax Liability	$ (6,583.68)	$ (662.40)	$ 5,921.28	-89.94%
Other Liabilities			$ -
Total Liabilities	$ (343,104.64)	$ (335,110.25)	$ 7,994.39	-2.33%
$2million Goal Progress*	$ 480,513.49	$ 429,685.35	$ (50,828.14)	-10.58%
Net Worth	$ 505,465.70	$ 449,171.24	$ (56,294.46)	-11.14%

Highlights for October

All credit card debt (except current month's purchases) is in the form of 0% APR balance transfers earning interest in my savings accounts.
October was a brutal month for our stock investments with my stock options alone wiping out nearly $20k on our balance sheet.
My wife and I took a 1 1/2 week trip to Australia while we moved back to the US. An expensive trip all around, but probably the only time we will ever have the chance to go. We loved it enough though it took a chunk of our income this month.
My wife and I agreed conceptually to selling her townhouse when we find a new home. Up to now she was convinced we should rent it. As a result I have reduced the value of the property by a 6% real estate commission (previously computed by cost basis of the property). I am not sure what we would be able to liquidate it for, but given the negative sentiment of the market, and the lack of appreciation in the particular area that the townhouse is located in I think our upside if any is very limited in this particular property.
I also made an additional payment to the House #3 mortgage to officially get the mortgage below the 78% LTV threshold so we could submit another request to cancel PMI.
October was another bad month with our investments, but we did beat our benchmark - October 2008 Investment Report.

You can see my previous monthly net worth updates here.

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Comments (6)

What happened to the stock options?

Posted by Aaron | November 11, 2008 10:29 AM

One thing I don't get is how you could have lost $56K in October yet your total net worth seems to have barely budged. Shouldn't the net worth now read below 500K?

Posted by Anonymous | November 11, 2008 5:33 PM

Aaron - Stock Options value was erased through sharp declines in IBM stock price.

Anon - Yep, just a little behind on my updates - its been updated to below 500k.

Posted by 2million | November 12, 2008 8:47 AM

October was painful for most everyone. I'm just thankful I'm years from needing that money. How do you feel about your investments now, are there any you are reconsidering?

Posted by Miss M | November 12, 2008 3:51 PM

With all do respect, you are vastly inflating your true net worth:

1) You list the same home values in October 2008 as you had in October 2006. We've had a bit of a downturn since then...

2) All of the homes, not just the one you are currently selling, should have a 6% commission + 1-3% closing cost discount. You can't unlock any of the equity without these discounts so you might as well account for them now.

3) Your pre-tax retirement accounts cannot be counted at full value as, again, they have a cost to realize their value. You will have to pay taxes to take those out after you are 59 1/2.

Posted by Jim | November 16, 2008 10:48 PM

Jim,
Appreciate all the comments - let me add a few things.

1 &2 ) Yup - I have consistently listed the property values based on cost basis. People thought I was crazy to not show gains in house values when the market was going up, and now apparently people think I am crazy for not marking them down. In the end I think the house values listed in aggregate are conservatively accurate. We don't plan to sell House #1 or House #2 ever - by the time we do end up selling I think the commision (if we even used a RE agent) will be offset by rising home values. As for House #3 we are have just hit a milestone "mentally" that we will sell it soon so definitely need to think more about how to measure its true value. Expect more posts about this soon.

3) Agree - have discussed this at length long time ago. Since I don't know the marginal tax rate they will be taxed at its hard to account for this. Also if I accounted for this then all assets that have gained in value (with exception of Roth IRA) should have this adjustment including rental property appreciation, etc. Someday I might start tracking this, but not yet.

Posted by 2million | November 17, 2008 8:53 AM