Net Worth: June 2010

I’m gonna rename my blog: PTSMITF (Punch The Stock Market In The Face). It seriously blows when a great month can be marginalized by a sucky economy. But hey, I ain’t complaining ’cause I still got a job and life is good.

Here’s the lastest 30-day breakdown…

Assets:

Checking Account: $4,750, +$1,590. I’m keeping the checking account pretty stacked for the next month or so as I am doing the apartment hunting thing. Most places require first months rent and a security deposit (equal to the rent amount) to be paid up front. Since we are looking at places in the $1,500/month price range, I need to have quick access to $3,000. Next update there should be a huge depletion from here.

Savings Accounts: $16,535, +$1,823. I’m slowly working on building back up my savings account. Even though the $16K may seem like a lot. I tell myself it’s not. $10K of this is my E-fund. I pretend this money doesn’t exist as it is only for unanticipated expenses that I can’t cash flow. Another $2,680 is earmarked for the remaining cost of my honeymoon. That leaves me with only $3,800 in discretionary savings. That would be saving for things like a new car, a down payment, or a face transplant.

Roth IRA: $13,543 -$1,283. Well, what can I say about this? I can’t expect the market to only go up, but it definitely BLOWS when it goes down. Over three months of gains were wiped out in a few weeks. Thankfully, I have a pretty high risk tolerance and don’t plan to form any emotional attachment to this money for another 40 years. Buy and hold is the name of the game.

TSP (401K): $13,728, -$814. The standard 5% contribution heads this direction each month. I also get that 5% fully matched. I invest in virtually the same funds in both my Roth IRA and in my 401K so they generally perform the same. My loss isn’t as large in this account because I contribute to it on a monthly basis, whereas in my Roth I usually make larger lump sum payments.

Liabilities:

Student Loan: -$4,077, +$210. Not a ton of progress since last months update. It’s definitely not like when I paid down $10K on this bizznatch in one day, but any decrease is good….right? I pinky promise I will pay this thing off as soon as I get settled in my new home and know what my monthly expenses will be looking like.

Credit Card: -$1,503 No, I don’t have credit card debt. I just decided to start showing what my account balance was on the one credit card I use. This balance get’s paid off every month…and I mean EVERY MONTH!!! I use my CC for just about every purchase I make. Some months it’s a couple hundred, others a couple thousand.

Even though the stock market killed my increase, I still managed to gain +$1,188 which puts me at a total net worth of $42,977. It’s definitely not the largest jump I’ve ever seen, but I’ll take movement in the positive direction any day of the week. I love keepin’ track of my accounts and seeing a new NW number each month. You should too! It won’t be long before I break $50,000!!!!

**I chose not to include possessions (including my car) in my NW calculations, which would probably increase my worth by about $8K.**

15 thoughts on “Net Worth: June 2010

  1. Ninja writes: “Well, what can I say about this? I can’t expect the market to only go up, but it definitely BLOWS when it goes down. Over three months of gains were wiped out in a few weeks. Thankfully, I have a pretty high risk tolerance and don’t plan to form any emotional attachment to this money for another 40 years. Buy and hold is the name of the game.”

    But do you sense the self-contradiction in your remarks? You say you have a high risk tolerance, but you emphasize nothing more than your unhappy reaction to a drop in the market. But risk tolerance includes being unaffected by drops in the market too (difficult as that may be emotionally). This is because over the long term, market volatility has historically tended to even itself out and the general direction has always been up. Three months is really a very short period of time, and if you compare today’s numbers to those of March 2009, you’ll see a general upward trend. I agree also with the idea that this is a good time to buy stocks if you can. And if you don’t have any bonds in your portfolio, keeping 10-20% in a bond fund will help cushion a fall from stocks.

    • Larry,

      I don’t think the statements are necessarily a contradiction. While I can understand why you might think they are, let me try and clarify.

      I do believe I have a high risk tolerance as I am 100% stocks for the time being. 10%-20% in bonds would help cushion a fall in the market, but it would also limit upswings in the market. I think being 100% stocks indicates I am willing to take some “risks”.

      Do I like that the market has dropped over the last month? No. But that doesn’t mean that I am emotionally affected by the market to the point where I am going to switch up my investing strategy. I still plan to contribute to my Roth IRA this year, in the exact some funds that I normally do.

      So while I said “it blows the stock market decreased” that doesn’t mean that I think investing in the market is a bad idea or it has caused me to second guess strategy.

      Again, I totally see how you could see a contradiction in my statements but hopefully this clarified a little 🙂

      • “10%-20% in bonds would help cushion a fall in the market, but it would also limit upswings in the market.”

        That’s one of the usual arguments, but the counter-arguments usually emphasize cushioning from downswings, preventing panic selling, and increasing diversification by spreading out your risk. The comment linked below makes the additional case that a small bond component may actually improve performance:

        http://allfinancialmatters.com/2007/04/13/100-stocks-vs-9010-portfolio/

  2. Ninja, I feel your pain. Due to the stock market losses, paying $1550 towards our planned summer cruise, and some unexpected vet bills to the tune of $400, our net worth actually decreased for the first time since I started tracking it last year…it went down $1700 for the month and to a total of $135,500 including our house and cars.

    Oh well, like you we aren’t planning on touching our retirement accounts for a long time, so we’re trying not to cringe too much. As far as what Larry said, I think you can have a high risk tolerance and still feel the pains of loss. I cringe when our accounts take a beating but we pumped an additional $5000 into the market this month. Buy low and sell 25 years later, right? That’s my new saying at least…

  3. I am avoiding looking at my investments at the moment. For some reason, I chose to calculate on the 8th of the month, so I have a week to hope things turn around and I am suddenly rich.

    The stock market is frustrating as heck. But, you just have to turn your head and hope tomorrow will be a better day. Or, invest in bonds/tbills instead. I am heavily invested in equities, and need to rebalance soon.

  4. In the early years, at least your savings from income can help impact the negative market. At some point, you cross the line when your assets are, say 5 times your gross income and the “.25” added can’t offset a large market correction.
    Make sense?

    • Yeah that definitely makes sense. I know one day my retirement accounts will be far larger than my savings and other assets…at least I hope they will be 🙂

  5. I think your “100% stock” strategy is pretty good for your age – historically, the stock market has always outperformed other investment instruments and it’s a good bet that will still be the case, in spite of the market’s natural volatility (including huge psychological swings, but you majored in psychology, right?). If you happen to need your stock-invested money at the wrong time, then you are indeed hosed. But you seem to have picked up on that and have a nice amount of cash on hand to see you through an emergency.

    Back in the early 80’s, I remember getting about 16% interest on our money market account – you talk about a rush when the monthly Merrill Lynch statement arrived! Your little guy up there would have been doing the same thing, but with a big smile on his face ’cause it felt SO GOOD! No way we could have afforded to buy a house, of course, at 18 freakin’ percent, but we were born at the right time and didn’t need the house till about a year later, when an FHA rate was down to 10.4%.

    Good to see you embrace the Zeitgeist, DN, and go with the flow.

  6. I sold my last stock before the crash. Very happy about that. Now I just have one more mutual fund to get rid of and I’ll finally achieve my goal of all cash! Be careful of the buy and hold mentality, it’s quite dangerous. Do you have any time frame of when to sell? When is a good time to sell? How about re-balancing your investments towards less risky stuff in the future? Tough questions but crucial for retirement planning, usually neglected until it’s too late.

  7. One thing I try to refrain from is watching those stock market tickers bouncing up and down. Because of the fact that you’re going the ‘buy and hold’ route, I’m assuming you’ve got a large portion of that in stocks issuing dividends. Leaving that alone for 30 years in an IRA is the smart thing to do. With an investment plan like that, the biggest focus is making sure those dividend checks are coming in every month.

    I do hate those market drops. But think of that as a good time to get your share on. Everyone is all ‘buy low and sell high’ but actually taking it into account is a different matter. With stocks.. There’s all kinds of room for angles. Which is why it’s such an awesome investment vehicles.

    My goal is quite similar to yours. Though my biggest focus are getting those dividend checks. Sure the stock market has risk, but who said one has to be a risky stock investor?

  8. remember that all “bad” things have an upside. dips in the market are the optimal time to spend surplus cash. maybe not now, but when you free yourself from debt.

  9. It’s so hard for me to calculate my networth! As a student with a flex job and none too many assets, I get all jumbled. I’m determined to finally sit down and work it out though! For right now I use mint.com and my own personal budget on excel to keep things organized.

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