Monday, January 12, 2009

Net Worth December 2008

Finally, I'm wrapping up my 2008 numbers! Today I'll tackle net worth, and I'll post expense and income numbers tomorrow.

Here's how my net worth fared this year:

2008 2007 % change
Cash/ Bank Accounts/ CDs $38,688 $30,670 26%
E*Trade Stocks/Mutual Funds $12,556 $17,255 -27%
Bonds $4,860 $4,583 6%
Home Equity $90,401 $84,620 7%
Retirement $154,143 $224,742 -31%
Credit Cards -$1,948 -$1,857 5%

Total Net Worth $298,700 $360,013 -17%

Given that my net worth goal for the end of the year had been $410,000, I don't feel all that cheerful about this, but there are some silver linings within the cloud.
As you can see from the above, my declines were entirely due to the lousy stock market. My cash accounts were up because I spent less than I earned. For the most part, I didn't transfer much savings from cash into investments this year other than my 401k contributions, but I did put $3,000 into a mutual fund-- the cash performance would have looked even better if not for that! (That also means my E*Trade losses would have looked even worse without the added cash.) I continue to have no debt other than my mortgage-- I had a little more outstanding on my credit card at the end of this year, but I still pay the bill in full every month. And it's nice to see my home equity growing as I pay down the mortgage-- this assumes that the market value of my home has stayed the same. (From what research I've been able to do about sales in my area, I think this is still a reasonable assumption, but we'll see how things go with the NYC real estate market!)

The bottom line is that I did a pretty good job on things I could control... and got royally screwed by the things I couldn't control! Oh well... onwards and upwards nevertheless!


Rachella said...

Nike looks like spam!

Anonymous said...

Until you come to the realization your home equity did not go up...good luck.

Gord said...

You are doing great, it's just the market at the moment. It's really easy for people to sit on the sidelines and say, stay out of the market, or sell it all. It takes the courage of your convictions to stay the course and keep investing. Warren Buffet is good company indeed.

frugal zeitgeist said...

Yup, I got it in the shorts too as far as investments go. It's good that you socked away some more cash. How safe does your job look right now?

Madame X said...

Anon 3:42-- I don't take my home equity calculations lightly, especially with what's been going on. I determined my market value in late 2006 when I bought, and haven't raised or lowered it since. I was fairly conservative in how I estimated the market value then, and I periodically check for sales of similar properties in my area, as this is more likely to be accurate than looking at trends over larger areas.
Based on the price per square foot of a nearby, very similar apartment to mine that sold only a few months ago, my home equity estimate may even be too low, by as much as $50k. But I do think prices will probably come down further so I don't see any point in inflating the value now. I'll continue to reevaluate this number based on paying down my mortgage and looking at comp sales.

Madame X said...

And FZ, my job seems ok at the moment, though I know my salary is frozen for this year... I'll just hope that people keep buying books!

Andrew Stevens said...

In my opinion, it's usually best not to include your primary residence in net worth calculations. I understand what leads people to include it if they're tracking net worth before they buy. It's often a big hit to take out the downpayment and not give yourself any credit for it, but it's usually for the best to ignore it. Even if you do plan on selling it at some point, you'll probably never actually realize much money unless you plan to downscale considerably at retirement.

However, if you do include it, I think it's best just to book it like a business would, at the purchase price, and realize the gains when (and if) you sell. You don't want to be like another PF blogger one could mention who gleefully booked home equity gains while the market was rising and has left it at its peak value since the market started tanking. (In a market that saw wild swings, I might add, unlike the rather staid market where I live which never saw either the big gains or the big losses.)

Madame X said...

Andrew, re. the 2nd approach, that is actually pretty much how I did it. The value I assigned to my home is approximately the purchase price plus the extra taxes a buyer of a new construction condo has to pay in NYC. I figured that anyone who bought it from me would not have to pay those taxes again so it was fair to see them as part of the purchase price.
Also, I signed a contract on this condo in late 2005, before it was built, and my neighborhood has changed a lot since then... though we'll see if that lasts in a tough economy...

Andrew Stevens said...

In that case, you're probably good and Anonymous on January 12th is mistaken. Anonymous makes a good point, though. It's amazing how many people calculate their net worth apparently primarily to fool themselves (some people, not you thank goodness, include "personal possessions" - give me a break). Net worth should be ruthlessly honest or it's a worthless tool.