June 22, 2010, 5:00 am

June Net Worth Update: In The Middle of the Maelstrom (+13.9%!)

by: The Financial Blogger    Category: Assets and Net Worth
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I wanted to wait as long as possible to give a clear picture of what is going on with my net worth but I thought that mid-June was late enough to produce my net worth statement.

Major highlights for this month (there are many!)

Since my last net worth update, there are tons of changes:

Buying a car

I decided to treat myself by buying a nice car to drive to work. Since I will spend about 2 hours per day in my car, I  thought it would be a good idea to have a nice car to enjoy the drive. This is why I bought a 2004 Mazda RX-8. It is definitely not the most economical car on Earth but it’s a lot of fun to drive ;-).

Reimbursing my parents

Nope, I didn’t find 25K in a black wallet ;-). I decided to use part of the equity in my new home and to transfer other expenses to a 1.99% balance transfer credit card to make sure that I am able to write them the check. I wrote the first check of $12,750 now and the second check of $12,750 will be done next month when I’ll receive a part of my bonus.

Reassess the company value

You will see a big jump in my net worth. This is directly related to the reassessment of our company’s fair market value. During our annual meeting, we updated the fair market value of our online company. While we kept it very conservative, it has increased my net worth dramatically (which is a pretty good news!). On the other hand, this is the least liquid of all my asset so may create a false impression of wealth…

Buying furniture and moving costs

I am still calculating where I will be at once all the moving costs and the furniture bill will go through. I decided to treat myself and I went heavy on the expenses. I guess this is what I needed to give an additional push both at work and on my online company!

So let’s take a look at the real numbers now:

Assets: $480,835 (+15.1%)

ASSETSPREVIOUS
MONTH ($)
CURRENT
MONTH ($)
CHANGE (%)
CHECKING ACCOUNT$1 $9,675 967400.0%
EMPLOYER STOCK
ACCOUNT
$2,385 $2,772 16.2%
RRSP ACCOUNT $17,274 $15,982 -7.5%
PENSION PLAN $12,000 $12,000 0.0%
HOME $330,000 $332,000 0.6%
COMPANY SHARES $30,000 $70,000 133.3%
MAZDA TRIBUTE $26,040 $25,606 -1.7%
MAZDA RX-8$1 $12,800 1279900.0%
TOTAL $417,701 $480,835 15.1%


Liabilities: $334,310 (+15.7%)

DEBTSPREVIOUS
MONTH ($)
CURRENT
MONTH ($)
CHANGE (%)
CREDIT CARD $5,149 -$938-118.2%
LINE OF CREDIT-$6,632 $18,792 -383.4%
HELOC $238,902 $265,600 11.2%
PARENTS LOAN $25,500 $12,750 -50.0%
CAR LOAN $26,040 $25,606 -1.7%
MBNA 1.99% TRSF$1 $12,500
TOTAL $288,960 $334,310 15.7%

Net Worth: $146,625

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Comments

Congratulations TFB on the nice progress. My main question would be how much planning you do in terms of improving your net worth? What is your plan for this year and then the next few years?

Trying to understand. Last month you had 129K. Now you have increased to 147K, an 18K increase. Buit that includes a 40K gain on your company shares. What else happened to account for the 22K loss?

@IS
I don’t really have a plan to increase my net worth at the moment. My goal was more toward:
#1 making more money
#2 growing my business
#3 pay off my parents loan

Looks like the 3 objectives are done ;-D I have to work on something else!

@BMSP
oops! I just noticed that I had put a negative sign on my line of credit account in my May update while it should have shown a positive sign (because I owe the money and excel deduct this amount instead of adding it). This would explain 12k out of the 22k.

the other 10K is spread between car buying taxes ($1,000), selling my property (certificate of localisation, listing, moving expenses, etc) and buying furniture (about 4K).

next update should be show a more stable growth ;-0

Wow, your company’s value really took off last month 😉

I am sure readers would find it helpful to understand how exactly you value your company stock.

Very well done!!!

by: The Financial Blogger | June 23rd, 2010 (10:31 am)

@ DGI,

this is because I didn’t reassess my company’s value since December 2009 ;-).

I’ll do a more complete post on how I value my company’ shares but here’s the basic calculation:

(last 12 months of gross revenue * 1.5) + cash in bank account – debts.

I’ll explain later on how and why we took this simple formula 😉

Hey TFB.. congrats on your successes and good luck in the future.. really quick question for you in regards to your house value and your car depreciation..

Did you just come up with those numbers of appreciation or is that fair to assume that your residence will go up 0.6% in value and your car down 1.7%?

Correction: I see now that you basically set your car value to the same amount of the loan.. so I guess that answers that..

But house?

@ Len,

thx!

in fact, as for the car value, I do drop it according to my loan balance. So technically, in 5 years, my car will worth nothing in my net worth statement 😉

I’ll drop the value of my RX-8 with the same percentage each month even though I don’t have a loan attached to it.

In regards to the house, it’s because I have bought my new house at 332K (while I have sold my previous house at 330K). it’s just because they were similar numbers 😉

Ahh.. that makes sense..

Although I wonder if a fella could put in a modest % increase and add it into the spreadsheet for your house.. even say 2% a year or something.. hmmm..

Only reason I ask is that I have a net worth spreadsheet very similar to yours and am always looking to tweak it 🙂

Also wondering about the Pension.. I’m assuming that you’re using the ‘current value’ of the pension and not the calculated future amount?

by: The Financial Blogger | June 24th, 2010 (2:42 pm)

@ Len,

I actually determine that I would either:
#1 give inflation value to my house
#2 have it appraised to get a more actual value

But I will modify the value of my house one a yearly basis as it’s not a very liquid asset. The same way I will value my company every 6 months just to make sure the income is consistent.

Pension plan is the current value. but it’s hard to determine as I have a defined pension plan so I don’t really know the real value of it… that would probably be major flaw in my net worth statement. On the other side, it doesn’t worth much 😉

heh.. to you it’s not that much maybe.. but for me.. it’s actually the difference (right now) between a negative net worth and a positive one! 😛

Anyhow thanks for clarifying.. keep up the great work.

by: The Financial Blogger | June 24th, 2010 (2:52 pm)

If you have a definied contribution pension plan, it will be much easier to assess it and you will be able to take it with you if you ever leave.

The problem with defined pension plan is that you can’t really leave with your plan (you will just get a small pension at retirement instead). Therefore, the valuation of a pension is more financial semantic than anything else since you can’t really access this money…