Net Worth Challenge

This update marks the official end of 2006. The year ended quite positively with a nice surge in the stock market, which ultimately helped to send our net worth to a record level of $137,960.77 —- an increase of $14,953.26 from the previous month. Yes, that increase is correct! I know because I checked my numbers three times just to be sure!

Part of the reason for the increase was that my wife had a $4,500 CD (certificate of deposit) from her old bank that she had not told me about. Truthfully, she had forgotten about it herself. Upon learning about the CD, I insisted that we take the money and put it into our Vanguard Money Market account — which is paying a higher interest rate than the rate at her old bank. The other part of the reason for the increase was a small bonus of around $1,000 total from our employers at the end of the year. It was not a large bonus, but we were still happy to accept it.

Overall, I am more than excited to see 2006 end on such a high note. Since I started this blog last September, I did not get the chance to post my 2006 financial goals early enough for everyone to view. One of those goals, however, was to “reach a net worth of $110,000 to $120,000 by year end.” The discovery of my wife’s CD means that our numbers should be increased by $4,500 than the original goal — placing the range at $114,500 to $124,500. We clearly surpassed our original goal set last January, which I suppose is better than not meeting the goal in the first place. However, there were a few reasons that played a role in surpassing our original goal by such a significant amount. I believe we exceeded our goal because of three reasons:

• Stronger than expected return from the stock market. Our investments performed better than my conservative, moderate, and agressive predictions.

• Ability to save more than previously expected. I received a nice raise in my paycheck in July — more than I had hoped for or even expected. Instead of using this “newfound money” for spending, I decided to take the opportunity to increase my contributions to my 401k account. This extra savings helped push our net worth higher during the later part of 2006.
• Matching 401k contributions from employer. I knew that both of our employers offered a matching portion to part of our 401k contributions, however, I did not factor those contributions into our goals for 2006. I will make sure to include this point for 2007, though.

Now that 2006 is over, I am ready to focus on 2007 and am excited to work towards a new set of goals. I’ll save that list for the next post.