June 27, 2012, 5:00 am

June Net Worth Update + 17.64%

by: The Financial Blogger    Category: Assets and Net Worth
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If you read my personal financial goals review at the beginning of the month, you won’t be surprised to read this net worth statement update. While I post a net worth increase, this is all related to the value of my company shares and house. In fact, if I put aside my assets and only look at my debts, things aren’t that pretty.

 

Boosting Net Worth With My Company Shares

 

You may say that I “cheat” with my net worth because I assign a value to something that is very hard to evaluate. You may also say that I would never be able to sell my blogs after what happened at the beginning of the year with Google. The value of my shares is now at $131,521. This means that the total value of the company is at $263,042 (I own 50% of the shares).

 

We have a specific way to evaluate our company shares which I won’t disclose. However, what I can say is that we make roughly $50,000 of after tax profit annually. Therefore, if you use the current valuation at 263K, it is 5.2 times the profit. It’s a relatively high multiplier when you look at many private company models. On the other hand, I don’t find it overly optimistic either since both our gross income and after tax profit have been increasing year after year. We are more solid and diversified than we used to back in 2009. Someone who would buy it at 5.2 times the net profit would get a business where he only needs to work 10 hours a week because the net profit includes dividend that are paid to us. So the new owner could keep the dividend or use them to pay someone else to do the job. This is why I think it’s a pretty good value, what do you think?

 

House Value Bumped Too

 

I decided to bump up the value of the house as well since I just posted a 5,6K personal loan for the pool.  I know that adding a pool will only give me 20%-25% of its value on the house. But I also based my appraisal on recent sales on my street. When I look at the current market, I could probably sell my house for 360k-370k. I would rather be conservative and use a 2%-3% increase per year. The timing of increasing the value to compensate for the pool loan was more strategic to convince my mind I wasn’t crazy to pay for the pool ;-). Mind you, I’ve been in that pool every single day for the past three weeks! My kids love it too and it will be used all summer long for the next ten years. It was definitely worth it.

 

Cost Explosion

 

As I mentioned in my financial goal review, the costs related to the pool along with my car getting a weekly membership at the garage exploded my budget. In July, I’ll have to cash out a part of my shares to pay for my car repairs that are currently sitting on my credit card bill. It sucks but I have no other choice as it really blew my budget. I expected to put 1,5K a year on my car whereas I paid 5K (this includes both cars) since January.

 

My emergency fund is my line of credit and my second emergency fund is my employer stocks. This is the first time I have had to use both to compensate for a bad situation. This is definitely the time to stop spending. The good news is that my “regular” budget is under control. I just have a hard time with “unexpected” expenses. I just hope that summer time will be more gentle with me and that I could start saving money to pay off more debts!

 

Assets: $562,642

 

ASSETSPREVIOUS
MONTH ($)
CURRENT
MONTH ($)
CHANGE (%)
CHECKING ACCOUNT $1,000 $1,000 0.0%
EMPLOYER STOCK
ACCOUNT
$3,898 $4,872 25.0%
RRSP ACCOUNT $28,628 $28,254 -1.3%
PENSION PLAN $20,218 $26,131 29.2%
HOME $345,640 $351,640 1.7%
COMPANY SHARES $98,000 $131,521 34.2%
MAZDA TRIBUTE $16,058 $15,624 -2.7%
MAZDA RX-8 $4,000 $3,600 -10.0%
TOTAL $517,442 $562,642 8.7%

Liabilities: $325,729

DEBTSPREVIOUS
MONTH ($)
CURRENT
MONTH ($)
CHANGE (%)
CREDIT CARD $6,672 $10,064 50.8%
LINE OF CREDIT $19,900 $19,859 -0.2%
HELOC $263,433 $264,754 0.5%
CAR LOAN $16,058 $15,624 -2.7%
Personal Loan $9,999 $9,791 -2.1%
Pool Loan$- $5,637 N/A
TOTAL $316,062 $325,729 3.1%

Net Worth: $236,913 + 17,64%

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Comments

Everything looks good but I just never add cars as assets. You never really know what you could get for them and usually if you did sell them you will end up buying another one.

Stinks that the CC debt and pool loan jumped but and that the increase in net worth isn’t super liquid but at least net wroth is still going up! Good luck getting those loans down.

Unfortunately, nothing is liquid in my networth beside my employer stocks :-(. This is why I need to pay down my debts and increase my cash flow. the first focus will be my credit card (I usually pay 5K per month on it, so I’ll need my employer’s stock next month to pay it off completely!). Then, it should go smoother :-d… hopefully!

Nice gain. Your net worth increased in one month equivalent to mine for an entire year. lol The valuation for your company sounds about right. I would certainly invest in your blog at 5.2 times earnings.

by: The Financial Blogger | June 27th, 2012 (5:26 pm)

Hey Thomas,

The Tribute is actually linked to my car loan at the same value. As for my RX-8 I drop $400/month in value so at the end of the year, it will show a $0 value.

I don’t believe in boosting my net worth with my cars… I prefer having online company shares to do it 😉 hahaha!

I once took out a line of credit based on the value of my car. It was a good low-interest loan, which I used to pay off high-interest credit cards.

Congrats on your net worth surge. Your pension plan also saw a nice bump!

by: The Financial Blogger | June 29th, 2012 (5:39 am)

@Jason,

the pension plan is an annual update though 🙁 I get my booklet once a year and update it with the real value. It’s nice to see it going up!

Every $6k helps 🙂

[…] The Financial Blogger’s net worth is up 17.64%. […]

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