Yes, it is the beginning of a new month and thus, I reflect on the finances of the previous one. When I did my final calculation, I was surprised at the gain during May. I had a net worth gain of 2.61%, the highest I had seen since February 2008. How did I fare so much better than the last few months?
Economic stimulus e-check
As a single person with my AGI, I received $600 as an electronic deposit. Most of it ($500) was used to open a T. Rowe Price international index fund as part of my Roth IRA. Another $50 was deposited in my car savings fund and the remainder is available for spending. This was unexpected money I used to further my retirement fund and future car purchase. Both of these allocations and the currently unspent $50 all add to the amount of money on hand that are part of my assets.
Quarterly or annual statements
Since some of my retirement funds are in a rollover IRA or a pension plan, I receive the statements either quarterly or yearly. This means the change affects my net worth calculation only occasionally. Since I received my statements for the IRA and pension plan last month, the greatest effect is when the number changes. For the next few months, the IRA numbers will be unchanged and minimize any negative effect on my bottom line. The pension plan, while a positive increase, will only be reported once a year.
This is also true for my home assessment. This changes only once a year and is the number I use as the value of my home. The decrease had the greatest effect last month and will not change in my calculations until April 2009.
The money I have in checking, savings, and CDs did decrease as I paid for some replacement windows and other house-related items. However, despite this decrease in available money, I did come out with an overall increase in my assets (0.11%). A greater share of my savings is in higher yielding savings accounts and CDs so I receive 2.5-3% APY versus 0.5% APY. I have a one-year CD at a 5.25% rate that is due in June, the last of the good rates we enjoyed such a short time ago.
Excluding the assessed worth of my house, my retirement funds have the most money in my portfolio. With my increased contributions to my Roth IRA, the extra $500 contribution from my stimulus check and the continued 10% contribution to my 401(k) plus modest market gains, I was able to counteract the decrease in my cash position.
I had a net worth gain of ~$2,400 from the month before, surprising despite my small increase in asset value. I continue to plug away at my mortgage with a small $42 additional payment to principle, and this will make incremental decreases to my mortgage. If these gains and contributions keep up, I will likely meet my $100,000 net worth goal before December 31, 2008.