In mid-2000, my net worth was negative. It went into the black by the end of that year. As late as 2001, my net worth was in the five figures. Not too long after that, we married, which combined our individual net worths, bringing our collective net worth into the low six figures. As I’ve mentioned, I only really started focusing on our personal finances after our first child was born—so it’s instructive to see the progress in particular over the last, say, four years. Here are the approximate year-by-year increases in our net worth during that time—with the number in parentheses excluding appreciation in the value of our home:
Net Worth Increase
2004: +$240K (+$70K)
2005: +$330K (+$195K)
2006: +$260K (+$260K)
2007: +$247K (+$217K)
These numbers are a bit rough, pulled out of my tracking in Quicken on a current (or then-current) basis—and are limited by the program or my limited understanding of how to do more sophisticated accounting of certain things in the program. That especially applies to my not having an account or having figured out a good way to show any pending tax liability in Quicken. This sort of evens out, as each year includes the effect of whatever tax payments were made that year—but what you would not see here is any tax payments made in 2008 for 2007. There are also a few glitches in my Quicken report relating to how I closed out accounts within Quicken (such as when I moved from one broker to another)—and I have tried (albeit only quickly) to make adjustments for that manually.
As some folks suggest looking at net worth exclusive of your primary residence, the parentheticals show that. The tracking of the value of our home was and is arbitrary in any event—as I only changed the stated value of our home in Quicken when we happened to have an appraisal, mostly when it came up in the context of a mortgage or HELOC issue.
The last three years in particular were quite good in year-over-year increases in net worth, especially factoring in that we had some income dips during that time because of maternity leaves. 2008 is off to a rocky start. In the first couple of months—with the turbulent stock market—our net worth has probably dropped at least $40-45K, all in our stock holdings. On top of that, we are anticipating some major expenses this year. So it could be difficult to maintain the pace that we have achieved in the last few years; and we’re still a long, long way from how I am defining our financial-independence goals.
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