Monday, 2 July 2012

Net worth: 12 month performance summary

As I posted earlier today my June 2012 net worth post marks the 1 year anniversary of this blog and twelve months since I began tracking my net worth.  Over that time:

  • My assets have increased from $478,000 to $599,000 (25.2%)
  • My liabilities have increased marginally from $354,000 to $355,000 (+0.3%) 
  • My net worth has increased from $124,000 to $244,000 (+96.5%)
The per period movement is represented graphically below:

You will notice that very early on that I had quite a steep jump in assets.  This was because I used to work in investment banking (as I have mentioned in my investment banking series) and a significant portion of your income is made up by your end of year bonus.  While the headline number of these bonuses are high once you take into account taxes, student loans and medicare that comes out before you see anything, the end number is quite modest - although it gave a significant kick to my net worth.  I will post more about investment banking bonuses later in the series.

What is pretty hard to see from that graph above is the actual movement in debt during that period. Debt actually got as high as  $384,000 in September 2011 and I have managed to pay all this debt down.

I realise that it is much easier to increase one's net worth in percentage terms when starting from a low base compared to a higher starting base.  I have seen this in the last couple of months with ~1% increases compared with 3% or 4% earlier on.   For the next year I will be focussed on
  1. Controlling and tracking how much money I actually spend (I am relatively frugal though can easily spend a few hundred dollars on a big night out); and
  2. Earning significantly more money.  I intend to achieve this by:
    • Advancing in my role at work (i.e. getting raises and better pay); and
    • Earning money outside of work
Although I am very happy with how I have done over the past year, I am constantly reminded by this blog title what my goal was (I actually have considered changing it - especially when I have had a bad month).  However I have decided to stick with it - below is how far I've come, and how much further I have to go.  It is a little case you cant see it below the blue part of the pie is what I have achieved and the red is what I have left to achieve.

I therefore decided to break it down and set a target for 2013.  I dont know whether I can achieve it but I'm going to give it my best show.  My goal is to have a net worth of $500,000 by June 2013.  The real challenge in this is that a ~$256,000 increase is way more than my post tax income (even before expenses) so I cannot do it by saving alone.

For the next financial year I am considering making my net worth posts slightly more detailed.  In the past they have been fairly generic because I was worried about revealing too much on the internet.  I think I'm going to try and give a greater breakdown so that both I can track and readers can see in more detail where the increases and decreases are coming from.

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