Monthly Networth Update (May 2008)

Since this is the first update I am making to the blog on my networth, I thought I would share with you the networth as it stands today and the progress made since the beginning of the year. Couple of things that I would improve on my tracking in near future:

1. Account for tax liability I would incur at the sale of my investment assets - real estate and stocks.
2. Seperate the brokerage out into actual stocks held and money held for investments. There is a small portion of my cash in the brokerage account that is held in money market accounts for future investments. In my current tracking I have lumped them together.

So far this year, the increase in my networth has predominantly come from savings. The stock market has been sideways and has not generated much returns. However, given my value orientation to investing my stock portfolio has not declined much compared to the broader market. Stock portfolio details to come soon.

Part I - Wealth Roadmap

Wealth always somehow takes precedence in the human mind and I am no different. So, as promised here is the Part I of my plan - Wealth

(1) Where I am in this pursuit?

I am a fairly young professional. About four years ago I graduated from business school and began my career with a net worth of about negative (-) $85,000. My balance sheet had no assets and huge liabilities - predominantly student loans and car loan. However, in my mind, I was living the high life of LA and burying myself deeper in debt. It took me about 6 months to realize what a rut I was in and that the first thing I need to do was stop digging the hole further. After many sleepless nights, I develop a game plan to get out of the bad financial situation. Had to make some very drastic decisions and choices about life and money (e.g., moving to a ultra-low cost city for a few years and finding ways to live rent-free or for very low-rent. By God's grace, the plan worked and the situation turned around to where it stands today. Below is a breakdown of my current net worth as of May 2008

Assets
Cash $36,292
Stocks $102,338
Home $440,000
401K $48,153
Other $15,000
Total $641,783

Liabilities
Mortgage $250,622
Credit Cards $7,010
Total $257,632

Net Worth $384,151

(2) Wealth Goals

Long-Term - Accumulate $10 million by 2030 (before I turn 50)
Intermediate Term - Accumulate $1 million by 2015 (Before I turn 35)

I neither like nor believe in "retirement". I have too much energy to imagine or even dream of a time when I will be sitting and doing nothing. The wealth goals I have is not for retirement but for independence. I always imaging myself as an 85-year old actively working on something I absolutely love and continuing to create wealth and acquiring wisdom.

(3) Road map

Simple - being a true capitalist.

The greatest strength of America is its capitalistic society. If anyone wants maximum benefits of America - there is only one way - being an intelligent capitalist - putting capital to work intelligently and diligently. The assets of choice could be diverse and often present themselves at deep bargains. All anyone needs to do is be ready when those situations arise. On a regular basis, I evaluate a wide number of asset classes for personal investing and I will share with you my thoughts as we progress.

Obviously, the question is - where will I find capital to be a capitalist. I have a good paying job that I don't absolutely love (but that's a separate discussion topic) and so till my investments generate enough income, I'll stick with some job but hope to consistently decrease my commitment to a job. Here is my 2008 personal capital allocation plan

Income - 100%
Fixed Expenses (Mortgage, health club membership, charity donations, utilities, etc.) - 35%
Variable Expenses (Grocery, entertainment, dry cleaning/laundry, etc.) - 30%
Savings (capital for investing) - 35%

For the past 4 years I have created and adhered to strict household budgets and will be sharing the details with you as we go forward.