A Mixed Bag - December Net Worth Update

Today was the first payday of December, which is the day I have selected to chart my financial progress. I double check all of my accounts to make sure they are accurate and then update my NetworthIQ profile to calculate my wealth. During the month of November I grew my assets by $1104. Most of the gain was from saving $972 in my 401(k) and Roth IRA accounts. My overall investment returns for the month were minimal with a profit of $47 and annualized rate of return of 4.18%. During the month I also paid down my liabilities by $422 through debt payments. The progress came from a reduced balance for my mortgage and car loan, however I ended up adding to my credit card balance.

The credit card slip up is entirely my fault for not planning for Christmas spending. I bought $350 in gifts and a $200 fake Christmas tree for our first year in the new house. I plan to compensate for this almost entirely by using the money gifts I get this year to pay down the debt again. In the future I will budget better for buying presents but this year I goofed. My total gain in net worth for December was $1,526 or 7.01% gain.

When compared to other members of NetworthIQ and the government census data I feel that I'm doing pretty well. Based on my age I am significantly ahead of the game. The median person my age (a few months to go until I hit the Big 2 - 5) has virtually zero net worth. I am significantly behind for someone with my income level, but I take that to mean I'm doing great to have the income and that I'll keep doing my best to help the net worth catch up. I am also way behind those with a similar education background, but considering I just finished grad school back in August, again I think I've got some time to catch up. Projecting out into the future my goal is to have a net worth of a quarter million at 30, a million at 40, three million at 50, and 9 million at 60. Keep checking up on Aspire 2 Wealth to follow my progress.

In addition to my regular monthly checkup I added a new financial tool to my arsenal. I joined the No Credit Needed Network to formally track my debt payoff progress. I have created the Aspire 2 Wealth debt snowball chart which will track my progress and hold me accountable for paying off my debt. My debt at the start consists of $11,774 at 6.5% for my car, $10,841 at an average of 10% for my two credit cards, and $1,798 at 0% for furniture we bought last year. My goal is to complete the chart and have $24,413 paid off by July 1st, 2010. That gives me 30 months and an average payoff of $814 per month.

I decided to not include my mortgage on the chart because I honestly do not plan to pay off my current mortgage at an accelerated rate. I have a very stable job that makes me comfortable with using leverage when buying my primary residence. I also know that once my wife and I start growing our family in the not too distant future we will need a bigger house and will be getting a larger mortgage in 7-8 years. I like the idea of an accelerated mortgage with bi-weekly payments but that won't happen until much later in my life when I start to pay it down in preparation for retirement (totally debt free). In the meantime I feel buying equities and taking advantage of the time value of my money I will come out far better than paying off a mortgage early that only gives me returns of around 4% net taxes.

I hope you enjoyed a peak into my financial life. In January I will post my 2008 Financial Resolutions and update NCN Network and NetworthIQ so keep an eye out for that.