On the last day of 2007, I set 9 2008 personal finance goals.  These were to be my financial focal points for the year.  Since 2008 is finally over, with all its ups and downs, it’s time to revisit that list, to see how I did with my goals.  Let’s take a look:

1. Pay off all my credit cards before the end of 2008.  Pass.  Done early in the year, and I haven’t gone back to them, even for 0%.
2. Stick to my budget religiously - Fail. I have done an awful job of staying on budget.  The envelope system helps, as long as I don’t reach for the credit card when I run out.  That’s the trick….
3. Earn $25,000 outside my day job.  Stretch goal - $30,000.  Pass, flying colors.  I still have to tabulate everything, but it looks like my business profit for the year will be right around the $35,000 range.  Absolutely fantastic, and I couldn’t have done it without the help of my wife.
4. Open a Zecco account and invest $2,500.  Stretch goal - $5,000.  Well, I invested a little over $3,000 in Zecco, so I’ll give myself a pass.  Unfortunately my account is worth far less than that amount today, due to falling stock prices. 
5. Max out at least one Roth IRA.  Stretch goal - max out both.    Fail.  Not much I can say here, other than I didn’t focus on this goal at all throughout the year.
6. Consolidate my credit cards.  Fail.  I closed just a few cars, when I needed to close closer to 15.
7. Increase my savings account to $10,000.  Stretch goal - $15,000.  - Technically, this one would be a pass. I have just over $10,000 in my savings account.  I’d feel a lot better with closer to $15,000, though.  Times are uncertain, and a bigger cash cushion would help put my mind at ease.
8. Don’t buy any new cars.   Pass.  365 days - not a single new car in the Llama driveway.  Woo!  I have to admit, we did visit the Mini dealership ( the wife had Mini fever ), but we decided it wasn’t a smart move.  Willpower, baby.  You drive a Mini Cooper S and tell me it isn’t hard to leave without one.
9. Increase my Net Worth to $45,000.  Stretch goal - $60,000.  Pass.  I finished 2008 with a net worth of $46,600.  I was hoping to hit $50k, but didn’t quite make it.

So, I passed 6 out of 9.  That’s what, 67% or so?  D+, which isn’t all that great!  Still, I made great strides this year, and I think I’m learning from my mistakes as I go.  Soon I’ll have goals for 2009 written up, and hopefully I’ll do better than a D+ on those.

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Now that’s more like it.  December turned out well, so I wanted to go ahead and put together my net worth report early.  The final numbers are in, and they’re pretty solid.  I finished up the month ( and the year ) with a total of $46,600 in net worth.  That’s up 18% from last month, and a whopping 181% from December of 2007.  Perhaps I’ll see another 181% increase when December 2009 rolls around?  Wishful thinking, indeed. 

$46,600 marks the highest my net worth has been, ever.  The tough part is that I didn’t hit my goal of $50,000.  Though technically I could have, if I wasn’t so harsh in my accounting methods.  You’ll see what I mean in the breakdown below.

Liquid Assets

I’ll take a 25% increase in my liquid assets any time.  Of course, that’s after a healthy drop the month before, so it’s not really that impressive.  So, what went right?  A slight recovery in my mutual funds and stocks helped offset less cash on hand.  I purchased a few more ounces of silver, and both silver and gold prices increase vs last month.  I received ( and then overspent ) my Christmas fund / bonus.  I did a pretty poor job of keeping my Christmas spending in check, which I’m not a real happy camper about. 

I did take an additional $500 write-down for accounts receivable.  I’ll take the last $500 hit next month.  Yet another family “loan” that will never be paid back.  That’s getting old in a big hurry.

From a tax standpoint, things are different this month for sure.  I paid my property taxes for 2008, and I made an $8000 payment to the federal government for estimated business taxes.  I also accounted for a my estimated December tax liability in this month’s report - normally I carry it over to the next month.  That’s a $2300 hit that I don’t necessarily “have” to take, but I want to be more accurate.  I’d rather be accurate than have a big flashy number at the end.

My Cars

My car values are once again dropping faster than I’m paying them off.  My negative equity is now over $8,000 again.  Fun.

My House

I’ve taken an additional ( estimated ) $1,000 write down in my home’s value.  That brings my equity to just over $17,000.  Perhaps I’m being overly harsh here..  or maybe I’m not being tough enough.  I’m not going to pay for an appraisal to find out either way… I’ll just go with my best guess here.

Retirement

Up 9% for the month, but down a total of 7% for the year.  That hurts, considering the amount of contributions I’ve made the entire year.  I don’t want to do the math, it’s too painful.

Business

To make up for last month’s 26% drop in business assets, December ended with a 61% increase.  That’s more like it, and better reflects the business success that I’ve enjoyed the last few months.

Overall

After crunching all the numbers, my net worth jumped a cool 18%, to finish the year at $46,600.  If I wasn’t quite so honest, I could have come in at $50,400 - all due to optional write-downs, and earlier accounting of tax liabilities.  That would have put me at my goal - but not in the way I wanted.  So, I’ll be content with $46,600 - a 181% increase from the end of 2007.  And that even in the face of a catastrophic stock market crash.  All in all, a pretty amazing year.

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Terrible, terrible, terrible.  November of 2008 was not a good month, at least on paper.  My total net worth tanked by a cool 13% for the month - back to levels not seen since May of 2008.  I will place a caveat here though - my business assets / liabilities are estimated, rather than definitive.  I was extremely busy with my small business during the month, and it would take an extraordinary amount of time to finalize these numbers.  I think that time would be better spent working, rather than just making this report 100% perfect.  I hope you understand.

That aside, let’s take a look at what happened in November to make it so bad.

Liquid Assets

Another 13% drop in liquid assets.  Less cash on hand and a spectacular drop in my brokerage account lead the way here.  Somehow I saw a small gain in my mutual funds, and my credit card bill was much smaller, due to an increased reliance on the envelope system.  I fear next month will be different, due to the wonderful Christmas season :).  Christmas is a great time of year, but certainly an expensive one, at least in the Llama house.

My Cars

I guess those days of increasing equity are over, with the drop in gas price.  I’m now upside-down a combined $7576 between my two cars.  One day I’ll be in the black with regards to my cars.  Probably the day they’re paid off

My House

The San Antonio housing market didn’t see anywhere near the run-up in prices that much of the US did.  However, with the situation the way it is, I thought it prudent to take a “write-down” in my home’s value.  Without an appraisal ( an expense I have no interest in paying ), I don’t know the exact value.  So, I took a small $1300 write-down, and I’ll likely follow that up with a few more like it in the coming months.

Retirement

After a staggering 19% drop in October, my retirement accounts were somehow flat for November.  Keep in mind, I’m still contributing to these accounts, so it’s still negative in reality, if not on paper.

Business

Here’s where it gets fuzzy.  I have logged a 26% drop in business assets.  With so much money flowing in and out, I’m probably conservative with these numbers.  When I do December’s report ( and my year end ), I’ll be sure to finalize everything.  That may mean an adjustment of November’s numbers.  I expect to adjust upward.

Overall

After tallying everything up, my net worth dropped by 13% this month, to $39,565.  The last time I was under $40k was May; I don’t like going backwards.  I can’t wait to get working in December to improve my situation.  I’m determined to get as close to $50k by the end of the year as possible.  I don’t know if I’ll hit it, but you can be sure I’ll do my best.

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After a tough September, a strong October is a welcome sight.  Don’t get me wrong - there were some extremely tough financial areas in October, that I’ll get to shortly.  But my wife and I stepped up work on our side business and had a record month there, which more than offset the negatives. 

For the first time since issuing net worth reports, I’m able to give a yearly comparison as well.  In fact, I started this site on Nov 1, 2007 - just over a year ago.  Somehow I managed to forget!  So, Happy Birthday Llama Money!

And finally one last change.  I’ve gone back to separating my business assets and liabilities from my personal ones.  The only confusing area is taxes.  Since I owe taxes on my business ( which I account for monthly to keep things in line ), there’s a large tax liability each month.  I keep the money for this in my personal savings account.  To make sure the number lines up nice, I simply put the tax liability as part of my personal net worth - to offset that cash that’s spoken for already.  K, enough blabbering, let’s look at the ups and downs.

Liquid Assets

My personal liquid assets dropped by 13.5% for the month, though they gained 456% vs Oct 2007.  The reason for the drop is largely because of stock losses - my mutual funds and individual securities tanked spectacularly.  I added a well-priced ounce of gold to my metals portfolio, so that helped offset weak metals prices.   I’m not sweating this drop, mainly because of the newly separated business section.  "Real world", I don’t feel that I have less liquid assets than before… and I probably don’t. 

My Cars

A huge reversal here - mainly in my Civic Hybrid.  With the new "low" gas prices, it simply isn’t worth as much as it was last month.  People have such short term memories, don’t they?  Gas is dropping in large part because of the election.  Isn’t Bush doing a great job, keeping gas prices low?

No matter the reason, reality says that my cars are worth less this month, so I took a big hit here.  Moving away from positive equity once again, and not a direction that I like to go in.

My House

1%.  No surprise here.  Topped $19k for the first time, at least on paper.  I may have to look into revaluing my home.  Here in souther Texas, we didn’t have the insane run-ups in pricing that the coasts saw… but reality may mean a lower valuation is in order here.  I’ll look into this later on this month.

Retirement

Negative 19% for the month.  Ugh.  At least my accounts are up 12% for the year - though that’s due to contributions alone.  I don’t want to do the math to see how much money I had to invest to see that 12% "gain" - I’ve no doubt it’s scary.

Business

I had a record month in business earnings.  About double my best prior month - so it’s something to celebrate.   I’m still sitting on a bit of inventory that I need to move… but I’m not worried.  I have enough cash on hand to cover any outstanding bills, which is all that really matters.  I’ve begun dabbling in selling certain commodities online…. and I’m sure prices will rebound so I can unload my current and inbound inventory.

Overall

A 5.5% gain in the face of a horrific month for all my investments is pretty solid.  Even though my personal net worth dropped by almost 16%, my business gains overshadowed the losses.  My net worth is still below the high I set in August, but I hope to overtake that this month. 

For a really crazy number, look at my total NW year over year - up 184%.  Not too shabby for a single year of blogging about money.  If I wasn’t paying attention, how bad would that number look?  Awareness is a person’s most powerful tool with regards to his or her finances.  If you know where you’re doing well, and where you need work, it’s so much easier to improve on your rough spots.  If you don’t know where you are, how can you know where you’re going?  Stay tuned, and hopefully we’ll see a record November 2008.

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The Dow Jones lost nearly 700 points today - another day of huge losses.  Every stock I own is officially in the crapper - down 10, 20, even 40% from when I purchased.  My retirement accounts are shrinking -and so are my mutual funds.  What am I going to do about it?

Do nothing.  Do exactly nothing.

Selling now, while stocks are down, locks in  your loss.  If you sell now then you just guaranteed yourself a massive loss in cold, hard, cash.  Let’s look at it this way.  You purchase stock in a company ( whether an individual stock, mutual fund, or ETF ).  Your moeny is gone - you spent it on that stock.  You don’t own that money anymore - instead, you own a portion of the company.  The stock can go down 50% - but your portion in the company is the same.  If you owned 50 shares yesterday, you still own 50 shares today.

If you sell out now, you end up with much less cash than you started out with - not what you want to do.  Your goal is to make money, remember?  Stick it out.  Don’t watch the news every day - you’re just freaking yourself out.  If it goes down a bit more ( and it probably will ), keep the same strategy.  In time, every mess works itself out - even this one. 

Don’t jump in with both feet

That being said, if you’re thinking about entering the market or adding to your holdings, I might wait a bit longer.  I’m not convinced that we’ve seen the bottom yet - we may be a few weeks or even months away from that.  So keep your cash piling up for a bit - you may see some even better bargains in the near future.

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Yesterday the Federal Reserve bank cut their key rate by another .5%, bringing it to an exceptionally low 1.5%.  What does that mean to you?  A couple, very important things.  For one, every bank will be announcing new, lower savings rates.  Your fancy online savings account ( you do have a fancy online savings account, don’t you? ) will now earn you a lower rate.  Every dollar you’ve worked so hard to save up will now be taking a breather, and won’t be working as hard for you.

As if that weren’t enough, lowering interest rates is a very inflationary thing to do.  Basically it works like this - lower rates encourage everyone to borrow more.  Cheap money is more attractive than expensive money, after all.  As more borrowing takes place, the money supply increases, and prices go up as a result.  Economics 101, for the college graduates among us.  Inflation is already bordering on out of control - something you surely have noticed at the grocery store.  Increasing inflation is sure to make it tougher on all but the super rich.

What can you do?

Bend over.  What else can you do?  If times were different, I might say toss some of your spare cash in the stock market, so you have a better chance of beating inflation.  However, the stock market is in shambles with no signs of a bottom being near.  Hold on to that cash, even though it’s value decreases by the day.  I wouldn’t say it’s the best place to be, but rather the “least awful” place to be.

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Financially speaking, September of 2008 was one of the toughest months I can remember having.  (Click on that thumbnail to your left for a full-size view.)  After a very strong August, my net worth decreased by 6% in September.  On top of that, my wife quit her job, so future income / net worth is going to be tough to maintain and increase. 

The final numbers show that my net worth decreased by $2981 - yikes.  Let’s see what went wrong this past month.

Liquid Assets

Typically a strong area in my net worth, my liquid assets took an 11% hit in September.  Why?  Well, less cash on hand, a tough month for my mutual funds, and an increase in taxes owed.  I also don’t have a spot on this report for business inventory.  I do have about $900 worth of liquid business inventory on-hand…. that would help the numbers some.  Eventually I will get back to a separate personal and business report, to account for things like this.  It is hard to separate business though, when it’s a one man show.  In addition, I’m expecting an additional $900 from a short term family loan.  I made this loan before my resolution not to do so any more.  It was supposed to be a 2 week type of loan…. and it’s been quite a few months already.  I haven’t included it in my accounts receivable, since I simply don’t know if I’ll see the cash again.

My Cars

Nothing huge here.  My wife’s car increased slightly while mine decreased slightly.  As we pay down the loans, the total equity situation improved 7%.  We’re getting closer to breaking even here.  I’d sure love to get rid of that big negative number on this report.

My House

1%.  No surprise here.

Retirement

An 11% nosedive puts me back below April 2008’s mark.  That’s frustrating, when you consider that I’m still contributing money each and every month.  But once I remind myself that this is retirement money, I don’t worry so much.  I’m only 26, so I won’t need this money for a long time.  If I had the spare funds, I would try to contribute more while prices are down.  Long term, that’s usually a very sound strategy.

Overall

After a fantastic August, a really rough September is painful.  But, if it makes me feel any better ( and it doesn’t ), I fully expect October to be an even rougher ride.  We’ll be figuring out this whole one income deal, and that won’t be cut and dry.  We’ll make mistakes, and probably overspend in a few areas.  But my envelopes are full of cash, and our credit cards are locked securely away.  See you in a month with the latest Net Worth report.

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The Dow Jones Industrial Average tanked by an astonishing 778 points today - closing at 10,365.  That makes today, September 29 of 2008, the largest single day point loss in history.  Worse than the dot com crash.  Worse than the freaking Great Depression.  Before you get too worked up - remember, it’s the largest point loss, not the largest percentage loss.  Even so, it was quite a stunning day in the investment world.  The big reason, of course, was that the $700 Billion bailout plan failed to pass the House of Representatives.  Wall Street was counting on that big pile of free money to come through in a hurry - and they got a little shaken up by the failure.  In related news, Gold skyrocketed to close at $905 an ounce.  The stock market and gold do tend to move in opposite directions ( that’s not a hard and fast rule, just a generalization.  Gold tends to inversely track the dollar. )

The bailout isn’t dead yet

Undoubtedly, the bailout plan will be tweaked and re-written enough to get through the House.  I still disagree with the plan on principle, but I don’t hold the power to vote against it.  When it does pass, Wall Street will recover nicely.  At least in the short term.  See, folks on "the street" have a long history of acting irrationally, and thinking only in the short term. 

Use this as a learning experience

If you are investing for short term profits, be very sure you know what you’re doing.  Chances are, you don’t.  If you don’t, stay away!  Stick with long term investing with index funds or proven companies.  Or, take the chance on a small company that you’ve researched heavily.  But above all, don’t act irrationally.  Take emotion out of your investment choices, and stay the course.  Time and again, "buy and hold" has proven to be a remarkably effective investment strategy.  All that bad news out there is worrisome, and there’s no doubt about that.  But don’t panic now, just sit tight.  Eventually ( could be a couple years from now ), you’ll be glad you did.

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My current online brokerage, Zecco, is offering unlimited free stock and option trades for the entire month of October.  Normally they offer 10 free trades, as long as you have $2500 in equity.  Not next month.  If you are a hyperactive trader, then Zecco is the place to be next month.  Trade as much as you want ( remember that’s stocks or options ), and no commission fees to eat away at your profits.

I’m not advocating rapid fire trading - I’m more of a buy and hold type of guy - but I realize everyone has different investing styles.  This offer is open to current Zecco users, and new users.  So sign up with Zecco now to enjoy a full month of unlimited free trades.

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