2009 started off well. Since December 31, my “modified net worth” has increased 2.4% despite a sickly stock market, presenting a January bottom line of $188,566.
It’s not only a tradition for me to publish my monthly financial reports, this transparency is the original purpose of Consumerism Commentary. People post about their lives online for a variety of reasons. One reason is to hold themselves accountable for the decisions they make. By sharing my net worth, I’m exposing my financial decisions to the public, just like a public company submits quarterly and annual reports to the SEC. Even before Consumerism Commentary had readers, posting my numbers forces me to analyze my position and think about what I need to do in order to reach the next level or achieve another goal.
There is no intent to brag. In fact, although I’ve been lucky thanks to the popularity of Consumerism Commentary itself and the income it has presented, I do not have much to brag about. My financial condition, without income from my side business, would be much more dire. I apologize to anyone who finds these reports discouraging. I try to look at it from a different point of view; if I can succeed moderately, anyone (and many) can far surpass my meager accomplishments as of today.
Let’s get to the numbers first, and following the net worth report (balance sheet), I’ll discuss the details.
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.
“Cash in Banks” includes savings accounts, checking accounts, and money market funds. This number is increasing, but am I allowing it to get too high? First, I need money ready to go when I make my tax payment to the federal government in April. Next, I want to have cash available for a down payment. I do not have immediate plans to buy a house. My opinion is that I’d rather wait until I’m ready to settle down and start a family before taking up more space than I need. I’m not interested in buying a condominium, the typical intermediary step between apartment dwelling and home ownership. Once I decide to leave apartment living behind, I do not want to experience a pseudo-apartment.
“Accounts Receivable” is a balance I’d like to keep low, as long as that means I’m getting paid faster by clients. My business expenses and income are recorded in a somewhat “accrual” method, in which I record income when work is done, so when I receive payment about thirty days after I send the invoice, the accounting is basically a transfer between accounts receivable to cash. The biggest outstanding invoice right now is from ING Direct, who ran a major advertising campaign in December. If you visit Consumerism Commentary with your browser, you may remember the very orange ads.
Like many people I know, my investments haven’t fared well over the past year or so. I just need to keep in mind that I am investing for the long term. Despite contributions to my retirement accounts, my balance shrunk this past month. I plan on continuing to buy as prices are low, but there’s no way to know exactly how low they’ll go.
I continue to leave my car on my balance sheet. Despite approaching 100,000 miles, edmunds.com has kept its value the same for the past year.
“Accounts Payable” represents any outstanding business bills, of which I have none at this moment. It also includes credit card balances. Last month, I initiated an automatic system to pay my Citi Dividend World MasterCard. Through Citibank’s website, I signed up for the service that pays the balance in full automatically by debiting an assigned bank account. The day the payment was due, I checked my account information and saw no scheduled payments. I paid the bill for the full amount due immediately.
The next day, I saw that the card had been paid twice. I transferred money from one ING Direct subaccount to another to ensure the payment wouldn’t bounce or dip into my overdraft line of credit. I now have a credit balance on the card, which will offset future spending.
I have no “Long-Term Liabilities,” car loans or student loans. While I’m happy to be debt free, I know it is only a temporary condition. At some point I will buy a house, and that will require a mortgage. I may replace my Civic at some point, as well, and I might choose to take advantage of a loan if the situation is right.
I’m considering reducing my financial reports to a quarterly basis rather than monthly. Although most of the work I do to put these reports together is automated thanks to Quicken and Excel, it’s still a lot of manual work. I am currently in good financial shape, as long as my income doesn’t falter. It may not make sense to continue reports on a monthly basis while my finances are running smoothly.
Look for my income and expense report, a companion to my net worth report. I will post it tonight or tomorrow. Both reports are necessary to get a full picture of my finances.
Updated January 1, 2018 and originally published February 4, 2009.