This marks the actual return of the monthly net worth reviews and the first time, in a long time, that my net worth actually fell and it fell by 12.1% in the month of April. Now, before well all jump on the “jim has no idea what he’s doing, let’s go read some other blog,” I have to warn you that the fall was expected and planned for.

The fall was due to the payment of income taxes for 2007. I paid a pittance in estimated taxes last year because income from this site (and other online ventures) was relatively small and so I wasn’t required to pay much in estimated taxes. However, on April 15th, the piper had arrived and was demanding his money so I wrote some of the largest checks of my life. I had to pay 2007 federal and state income taxes as well as first quarter 2008 estimated taxes to both the feds and Maryland. The end result was chopping off 12.1% of my net worth. However, since it was expected and planned for, it’s not a big deal. Here’s a case of where the numbers don’t tell the whole story and why commentary is always important.

What did I learn from this? Numbers don’t tell the whole story. It’s much like how the weight scale might not show a fall in your body weight but the mirror shows you putting on more muscle and adding definition. Numbers are good but only to a certain extent, so don’t let it get you too high or too low because they can be deceptive. -12.1% of unexplained net worth loss is crippling, but if you know the reason and it’s not indicative of a bigger underlying problem then you’re okay. In this particular case, -12.1% was good because I earned interest on those monies as they sat in a high yield online savings account!

Other notable actions of the month:

• Series I Savings Bonds: We purchased some Series I Savings Bonds near the end of April, $5k each for my wife and myself, in order to lock in the 1.2% fixed rate. Savings bonds don’t give crazy stock market type returns but it establishes a good base and one that is guaranteed. It locks our funds in for at least a year but the earnings are local and state tax free.
• Consolidation of Accounts: I finally rolled over my former employer’s 401(k) plan into my Vanguard account, a process that was both painless and fast. This didn’t net any financial benefits but it means there’s one less account I need to log into and review, so there’s a net time benefit in that one (I did miss out on a couple days of solid stock market increases while the funds were in transition though, boo!, but you can’t plan for those).

Looking to the future:

• Roof replacement: Our roof is leaking and has been leaking for some time now, so a full replacement will need to occur in the next month. This week I’ll contacting a few contractors to get quotes but I estimate the cost will be in the neighborhood of $4,000. It’s a problem we’ve been aware since before the wedding (in February) but there hasn’t been many heavy rains since then so we’ve been lucky.
• Water Heater: Replacing it is on the radar but it’s currently in great working condition, it’s just old, and we may opt to replace it with a tankless version simply for the energy savings. Since it hasn’t been a priority and since the tank is in the basement, it’s been an “out of sight, out of mind” type of situation.
• Diversification: I need to take a hard look at all of our investments and make sure we’ve properly diversified. It’s something that Nickel and I have talked about quite a bit lately. He told me about Vanguard’s Portfolio Watch, which looks like a great way to help facilitate this.

Please share your thoughts below!

It’s been over a year since my last Monthly Review and I believe it’s time to bring them back. While other bloggers have continued their monthly income statements and balance sheets, I stopped a year ago because I felt it had become counter-productive. The reality is that the numbers themselves are irrelevant because they don’t apply to anyone else and they don’t help people make better decisions or learn from my mistakes. In fact, I felt that the numbers may be a distraction from the ultimate purpose of my monthly reviews, which was the explain both the good choices I’ve made as well as the bad choices.

So, in this return of monthly reviews, I’m going to simply outline the good, the bad, and the ugly of the decisions thus far. From here we’ll see how the month to months go.

Good

• Marriage: Since my wife and I got married this year, our tax situation for 2007 was unchanged. We are, fortunately or unfortunately depending on your perspective, are one of the many couples affected by the “marriage penalty” created by uneven tax brackets (married filing jointly brackets are not double the single brackets). Additionally, since the house and mortgage are both in my name, I was itemizing while she was claiming the standard deduction. Next year, we will be hit with the marriage penalty plus the loss of a standard deduction… considering its something we didn’t have much of a choice about it (hush those anti-marriage folks in the crowd!) we’ll just roll with it.
• Going with Accounting Pro: I’m now working with an accountant to handle some of my business taxes and help me become legit with the online enterprises. There comes a time when you just have to pay a professional and it’s now time for me to pay (rather than to be the professional/consultant!). It’s not cheap but it forces a rigor that is far superior than the record-keeping I had been doing before.

Bad

• Capital Gains: I made a mistake last year in selling some funds for capital gains but then not offsetting them with some capital losses that we should’ve taken, that was a big mistake. We took on about $5,000 in short term capital gains without offsetting it, whoops. That was entirely my fault.
• Stupid Fees: In all the marriage madness and my own ignorance, we took five months of $3 fees for having less than $300 in our savings account at Bank of America, despite having more than enough in our checking account. Dumb dumb dumb. We got $15 back, for three months, but they said they couldn’t go back farther. I was going to push for the other $6 but they wouldn’t budge and, honestly, I don’t blame them. One month I can understand, five? Hmmm… I screwed up.

Ugly

• Stock Market Suckage: This is ugly not because we made any bad decisions but only because it’s happened. In our taxable brokerage account, we’ve had about an 11% in loss on the holdings stretching back into Q4 of last year. That’s pretty gnarly, but nothing we can do, and we’re just going to set it in forget it.
• Honeymoon: Honeymoon is expensive and one of my vices is splurging on vacations. You only get married once right?

The Future

• Rolling Over 401(k)s: We need to investigate the rolling over of all of our legacy 401(k)s to our Vanguard, each of us has one legacy 401(k) to move. It’s not a difficult process, we just need to hammer out the specifics of doing the trustee-to-trustee rollover process for each account. Don’t want to take a disbursement… that’d be ugly (and foolish).
• Consolidating Accounts: We also need to start consolidating all those excess accounts so we can simplify our finances. The process is made much more difficult as my wife is changing her name so we’ll have to wait for those to shake out before we can finalize all of these. I personally have too many accounts to keep track of so it would be good to start cleaning these up.

I hope this satisfies the voyeurs out there, at least for now, but look for more updates starting in May.

Near the end of January, I’d decided that I’d be removing hard numbers from my net worth reviews because I felt that it was nothing more than chest-thumping that added nothing to the discussion. I know some of you mentioned that you enjoyed watching the progress of one of your peers or that you wanted to see whether the personal finance stuff I believed in were actually working, unfortunately neither argument (or any of the others presented) were strong enough to convince me that listing a dollar figure was better than not listing one. The plan now is that after a few months of not even discussing the net worth numbers, I’ll move towards percentages (that way none of you math wizards can figure out the hard numbers).

That being said, I have to say that January was another strong month financially for various reasons:

• My fiancee was promoted again (it’s like her second promotion in six months, I’ve actually never been promoted). Her meteoric rise from a “technician” (I don’t really know their job titles but this was essentially a temp job) working second shift to project manager of that product line took little more than a year. While I don’t talk much about what she does, I figure this is as good a place as any to celebrate!
• Blogging income is still growing, thank you everyone for reading and commenting (I just went full feeds too). It was exciting seeing this site mentioned in the New York Times this past weekend, I always get excited when cool things like that happen.
• I began dabbling in PPC (I spent less than $10 in January) so affiliate income may become a more significant source of revenue in the future once I get my tracking down.

Some things on the horizon that I might be talking more about in the near future:

• Taxes naturally, specifically all the taxes I’ll need to pay on the self-employment income. I’ll also be investigating the use of a tax professional in the area so that will make for some thrilling reading if you’re into taxes.
• While I won’t blog much about the wedding planning, it’s certainly on the brain. While expensive, everything seems to be priced within reason with the exception of freaking photographers. Why does it cost $3000+ to get someone to spend 4-6 hours taking photos and the end product being a 24 page book and some blown up shots? $3000 for a really nice reception hall rent, sure I’ll buy it (you have all sorts of costs), but getting me to shell out three large for the photographer is going to be a little tough.

I’ve decided to stop divulging hard numbers in my “Net Worth” series of posts where I publicly track our progress towards financial prosperity. The reason why I started the series was because other personal finance bloggers were putting their net worths out there and I felt like it was the cool thing to do - and it was. Had I not been so public I wouldn’t have had the honor of appearing in the New York Times, quite possibly the coolest thing that has happened since starting this blog, but I feel that the usefulness and “cool” factor of posting a net worth has been exhausted.

If you’re struggling through debt, posting the amount of debt you have gives you motivation to work harder at paying it off. As you pay, you watch that number shrink. As you pay, your readers celebrate your one step closer to debt freedom. In fact, I myself celebrated the achievement of No Credit Needed and the progress of Tricia at Blogging Away Debt as they fight to overcome the financial burden that led them to blogging. But who celebrates when Random Joe Blogger adds another X% to his net worth? I know I don’t really care and I’m pretty sure no one else really cares either.

What people care about are the things you did, not the amount you saved, and so my monthly personal finance updates will now focus on any personal finance related decisions I’ve made in the last month and not on the dollar amounts. Do you think it is a mistake? Do you welcome this change? Do you not really care? Please share your thoughts!

Yeah I messed up my net worth review last month when I excluded one of my retirement accounts, the 401k of my current company, and so my numbers from last month in both categories were short around $3,000 (since retirement assets are included in net worth, it was just a real life total shortfall in my calculation of $3k, not $6k). So, here are this month’s numbers…

Net Worth: $174,329.82 (+5.04%)

Retirement Assets: $79,161.53 (+9.90%)

Before the crowd goes wild, the huge uptick in the retirement assets had to do in part with the fact that I contributed 90% of my income into my 401k in December (I planned on doing it in November but I didn’t submit the request in time) in order to reduce my taxable income. I’ve since pulled it back to more earthly numbers.

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Welcome to yet another one of these net worth reviews - not quite as comprehensive as Flexo’s corporation-like balance sheets and income statements, but a little more than you’re probably used to hearing from your friends.

November was one of those truly good months in which nothing bad happened - everyone is healthy, the cars are running well, and the house is still in great shape. For all you number lovers, more after the jump.

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It’s been a long long time since I’ve written one of these reviews (back in May is my last one) so those of you who have been patiently waiting for one of these can finally rejoice, it’s here. Some personal finance bloggers give you brutally and painfully detailed account information, I just give the roll up information and then look back at what I did wrong, what I did right, and any other big changes.

All the gory details are after the jump.

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