Following the end of each month, I publicly review my personal financial condition. This is the primary reason I do not use my full name on this blog; I’d like to be able to continue sharing the specific details of my finances without providing people who know my in “real life” the ability to search for my identity online and discover Consumerism Commentary. A few friends and family are familiar with Consumerism Commentary, but that’s the extent of my publicity among people who may want to know more about me.
Like September, I ended the month with a lower “modified net worth” than I had when the month began. October was worse that September, however. My bottom line was $162,881 in October, down over 6% for the month.
Continue reading this post for the report including some explanations.
The above report is made with Intuit Quicken and Microsoft Excel. Here’s a balance sheet Excel template. If you don’t want to go through all the trouble I do every month, but you still want to post your financial reports online, I suggest checking out NetworthIQ.
This category includes savings and checking accounts (“Cash in Banks”) as well as anything owed to me by clients or advertisers (“Accounts Receivable”). I also include balances in investment accounts that are invested in money market mutual funds. In October, I moved a sizable portion of my high-yield savings to a tax-exempt money market fund (VNJXX) and so far it hasn’t paid off well.
The Long-Term Assets category consists of my investment accounts, including medium-term investments and brokerage accounts as well as my retirement accounts. As I mentioned above, if I have money market funds in my investment accounts, I include that above in “Cash in Banks.” Since money market funds are almost fully liquid, it makes sense to include them as current assets.
Checking my investment balances last month was upsetting. Along with the stock market in general, my investments fared poorly. Despite putting thousands of dollars into the market over the past year, the account values are below their levels from one year ago. The performance of the stock market is the sole reason that achieving my net worth goal of $210,000 for the end of 2008 seems like a fantasy.
Nevertheless, I have increased my 401(k) contributions from 25% of my salary, split almost evenly between traditional 401(k) and Roth 401(k), to 50% of my salary. I won’t max out my 401(k) contributions this year, but I should be able to plan better for next year.
Accounts Payable includes any money I owe within one year, including credit card balances and any bills I owe. Most bills I simply record as an expense once they are paid, but some I record as a liability when the expense is incurred, such as expenses for anyone who works for me. My credit cards are paid in full every month to avoid fees and interest expenses.
Once I’ve been free of a car loan for two years, that item will drop off the report. My student loan is almost paid off, and I’ve been increasing the amount paid for the last several months in order to meet my goal of eliminating this by the end of 2008. I should achieve this goal, paying about half of the loan balance this week and the remainder in December. The interest rate is low, but still higher than most of my savings accounts. Unfortunately, I do not qualify for a tax deduction on student loan interest paid.
I will soon post my income and expense report for October, coinciding with this balance sheet.
How was your performance in October? I hope you performed better than my 6% decrease.
Published or updated November 3, 2008.