Sunday, March 2, 2008

Analysis of my February 2008 net worth

As mentioned in an earlier post, I calculate my net worth monthly to see how I am faring financially. I have only been calculating this number since midOctober 2007, but was pleasantly surprised what happened this past month. January 2008 was my first negative net worth month and I was not looking forward to repeating it. However, February proved far more positive than any previous month: I increased my net worth by 2.68%. This number may not seem impressive, but that beat the previous measure by a whole percentage point! How did I do this?

Tax rebates
I contributed extra money to my mortgage payment, reducing my debt by 0.27%, my greatest number yet. I also saved a portion of the tax rebate, but the greatest effect on my net worth were two lump sum contributions to my Roth IRA. I am no good at timing the market, but even I know the markets are not gaining, generally falling thus stocks are on sale. The markets are likely to fall even further but I am betting the market will rebound and give me more value for my index fund than the prices at which I purchased my fund shares. I am pleased I could make these contributions for 2007 and give my index fund a boost in value.

Saved money
Not only did I save a portion of my tax rebates but my attempts at finding additional income by selling stuff I no longer need bore some fruit. I was also paid to work the primary polling place in my state (went to savings) and saved the money I received from my Flexible Spending Account (FSA) that I had subtracted from my spending plan. This gave me over $80 more than I usually receive in the month. Couple this with my extra paycheck and I had more money to save than I normally do.

Excess from spending plan
Hand-in-hand with saving money from alternate sources, I was also able to save money from leftovers in my spending plan. The categories "gas" and "eating out" were the main contributors, but I expect this trend to continue for at least the next month if not more.

The extra money to save and invest gave me a 1% boost in my assets. Again, does not seem impressive but between this and reducing my debt, I have a net worth of more than 2.5% over the previous month! I am exciting by this increase especially as my 401(k) has barely budged despite three infusions of cash in February compared to January's value. My pretax retirement savings is the main driver in my asset gains so it was a real accomplishment to post the numbers that I have.

What will I do for the future? Look for further ways to save. I have the cash from my life insurance to allocate into my Roth IRA, which will definitely increase my net worth. There will be a spending plan category or two to put extra cash into savings. I have a small expected bonus next month to distribute to various savings accounts and look to selling more of my unused stuff that someone else might enjoy. Right now, one of my yogurt makers will end up in a new home and I get a bit of cash!

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