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May ’08 Net Worth Monthly Review

Last month was the return of these monthly net worth reviews and the first time, probably since when we bought our house (closing costs are brutal), that our net worth decreased across the month (taxes are brutal too). This month, we saw our net worth increase by a healthy 8.6% helped along by a mild recovery in the stock market (1.39% increase in retirement assets).

Last month I talked about three things in the future – roof replacement, water heater, and diversification of our investments. The roof is set to be replaced on June 16th, contingent on good weather, at a cost of $4,450. The roofing company offers a six month same as cash option but I think we’re going to put it on the Citi CashReturns card for the 1.2% cashback since interest rates are so low (it’s nearly a wash after taxes, so we figured for simplicity the credit card option was better). We knew the roof needed to be replaced so we were prepared, there won’t be any other financial impact (other than the -$4,450 to the bank account).

As for diversification, my lovely wife and I had a chat about the future on a recent walk around the lake. We plan on outlining major milestones over the next thirty years, as best as we can guesstimate, and then adjust our financial plan to meet those milestones. I’ve come to the realization that after you’ve maximized your 401(k) and Roth IRAs, you have to begin saving for specific goals. We already have a house so that’s one significant goal achieved, so we have to determine the other milestones on the list (such as education) so we can chart a path forward. One idea I had was to use target retirement funds to simplify saving for specific goals [3].

Looking to the future:

One nice benefit of these net worth monthly reviews is that it forces me to think about what we’ve done this past month and what we need to accomplish in the next month. As I was writing, I was forced to think about things I had set off to the side. In looking back, the net worth portion is really a minor part (I mentioned the increase, what was a main contributing factor, and then moved on to more “strategic” level ideas) but I think that’s a good way to approach it. Please let me know what you think!