Net worth -- a start
Where to start? I think a net worth snapshot would be good. Here’s where we were on October 31st:
October 31, 2005
Assets
Checking account $ 578
Spending account $ 407
Emergency fund $ 0
Investments $ 26,488
Vested stock options $ 15,868
401K $ 111,327
IRAs $ 9,262
529 Plan $ 1,790
Car $ 10,000
Wife's business $ 0
House $ 875,000
Total Assets $1,050,720
Liabilities
Credit cards $ 17,640
Mortgage $ 517,600
HELOC $ 31,850
Wife's student loan $ 55,537
Total Liabilities $ 622,357
NET WORTH $ 428,363
There is good news and bad news. The good news is the bottom line is quite a bit higher than I would have expected. The bad news is the paucity of cash on hand and the lack of an emergency fund. The investments and stock options could be liquidated and cash would be in hand quickly, but there is a large potential opportunity cost in that move--future gains foregone by selling the investments today. The home equity line of credit has a significant line still available, but we view that as a last resort. So while liquidity isn't as bad as the statement appears, increasing cash on hand and having an emergency fund obviously needs to be a major objective.
I’ll make a few comments now on some of the items, but I will go into more detail in future posts. One of the major questions for me is what to include. Regarding liquidity and what would happen if I lost my job, I have enough vacation time accrued that I would get almost $10,000 after tax. I’m not including that but it is something to keep in mind. I have trouble placing a value on my wife’s business, also. She has only been in business for 1 ½ years and has a positive cash flow, but it is very tenuous at this point. How to value the house is a separate post all its own—market value, net proceeds, etc.
By presenting this it gives me a good idea of where I need to focus and I will go into detail on objectives and items as I stumble along here. More good news in looking at this is investments and retirement plans are up over $6,000 since the start of the month, but we will have to see if these gains hold.
(I apologize for the poor table results on the net worth statement. I will have to figure out how to import a picture of my spreadsheet for next month.)
October 31, 2005
Assets
Checking account $ 578
Spending account $ 407
Emergency fund $ 0
Investments $ 26,488
Vested stock options $ 15,868
401K $ 111,327
IRAs $ 9,262
529 Plan $ 1,790
Car $ 10,000
Wife's business $ 0
House $ 875,000
Total Assets $1,050,720
Liabilities
Credit cards $ 17,640
Mortgage $ 517,600
HELOC $ 31,850
Wife's student loan $ 55,537
Total Liabilities $ 622,357
NET WORTH $ 428,363
There is good news and bad news. The good news is the bottom line is quite a bit higher than I would have expected. The bad news is the paucity of cash on hand and the lack of an emergency fund. The investments and stock options could be liquidated and cash would be in hand quickly, but there is a large potential opportunity cost in that move--future gains foregone by selling the investments today. The home equity line of credit has a significant line still available, but we view that as a last resort. So while liquidity isn't as bad as the statement appears, increasing cash on hand and having an emergency fund obviously needs to be a major objective.
I’ll make a few comments now on some of the items, but I will go into more detail in future posts. One of the major questions for me is what to include. Regarding liquidity and what would happen if I lost my job, I have enough vacation time accrued that I would get almost $10,000 after tax. I’m not including that but it is something to keep in mind. I have trouble placing a value on my wife’s business, also. She has only been in business for 1 ½ years and has a positive cash flow, but it is very tenuous at this point. How to value the house is a separate post all its own—market value, net proceeds, etc.
By presenting this it gives me a good idea of where I need to focus and I will go into detail on objectives and items as I stumble along here. More good news in looking at this is investments and retirement plans are up over $6,000 since the start of the month, but we will have to see if these gains hold.
(I apologize for the poor table results on the net worth statement. I will have to figure out how to import a picture of my spreadsheet for next month.)
posted by Dwight at
9:24 AM
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