Thursday, December 27, 2007

Assessing my current financial state

I have seen many personal finance bloggers noting their net worth and what their goals are for 2008. Since I have only been keeping track of my net worth for two months, I am still figuring out how much the stock market fluctuations affect the number. In addition, I have not made a large capital investment in my home in the last two months so it is difficult to see how that loss in savings affects the final tally.

In fact, I intend to assess my year-end numbers and then consider where I want to go. Is a 10% increase in net worth a realistic goal or could I push it higher? Is adjusting the value on my car every three or four months sufficient? I think so. What about financial updates I only receive once a year? I will put it in and try to ignore a big jump at the end of January.

I have put myself in the best situation I can with the knowledge I have. Since I received a nearly $800 refund back from the federal government for 2006, I increased my pay withholding to keep more of my money. I made sure I donated clothing and money to charity to add to my itemized deductions and paid my property taxes before December 31, 2007 for the same reason. I am finishing up the second year of a 30-year mortgage so the itemized deductions will be more than the standard deduction. My income rose compared to the year previous. I received a 7.5% raise as I was promoted at work, and nearly $1,000 in bonuses for the year. In addition, I opened three different high-yield savings accounts so I imagine my interest income has risen at least 50% compared to a year ago.

These changes to my financial situation mean I will keep a close eye on the numbers when I file my taxes. Will I need another deduction? Or will the Energy Star deduction be a short-term item and I should not adjust my withholding? What does my end-of-year net worth tell me? Where will I invest my time and money to improve my situation?

I believe I am on good footing. I have saved enough money for the window replacement planned this year. My auto fund is automatically added to every pay check and the current car maintained. January 1 means an increase in health insurance fees and an increased contribution to my FSA. Therefore, my budget will need adjusting to accommodate the decrease in income without compromising my savings. However, the percent or number goals for the year will need some time to work through before I create them. I know I want to save more money--how much more? I want to increase my net worth--by how much? Therefore, I will wait until all the numbers come in and then determine my goals for 2008.

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