Review of 2009 Financial Goals / New Goals for 2010

I track our net worth, and the components that comprise our overall net worth, on an Excel spreadsheet.  At the end of each year, I put in ‘goals’ for each category for how I would like the upcoming year to play out.

Since December is the last month, and I’ve already done our net worth analysis for the month, I can look back at the last twelve months and see how we did.

Away we go!

ASSETS

HOUSE
2009 Goal:   -5.1%

2009 Actual:   -11.6%

2010 Goal:   0.0%

Comments:   Based on the performance of the housing market, I had estimated that the value of our home would continue to fall.  I had hoped it would ‘only’ fall around 5%, but unfortunately, it fell quite a bit more than that.  The encouraging thing is that the rate of decline has slowed over the past few months, so I’m hoping that things level off.  Therefore, I will be happy if the value of our home stays the same over the next twelve months, and have set that as my target for 2010.

CARS
2009 Goal:   +25.4%
2009 Actual:   +43.4%

2010 Goal:   -8.2%

Comments:   I had planned on purchasing a car, which we knew would be necessary once we had Baby Beagle.  Therefore, I was counting on the value of our cars to go up for the year since we would be replacing our least valuable car with a more expensive car.  This took place.  I don’t anticipate any change in what we own in 2010, so I simply anticipate regular depreciation.

INVESTMENTS
2009 Goal:   +14.6%
2009 Actual:   +33.9%
2010 Goal:   +4.7%
Comments:   I had hoped for somewhat of a rebound in the stock market, and this was answered….and then some.  While the overall value of our investments are disappointing compared to what we paid for them, we saw a recovery of a good portion of our 2008 losses.  I think that the upward trend of the stock market will slow down or even reverse slightly in 2010, so I’m setting a conservative goal for this category.

CASH

2009 Goal:   +17.8%
2009 Actual:   -3.3%

2010 Goal:   +11.6%
Comments:   I didn’t have any real reason for forecasting an increase here except for possibly being too optimistic.  I knew that we’d be purchasing a car which would reduce our cash holdings.  This happened, and explains a slight decrease for the year.  We are not currently planning any major expenditures for 2010, so I’m hoping to boost our cash savings by a modest 11%.

RETIREMENT
2009 Goal:   +53.0%
2009 Actual:   +77.1%

2010 Goal:   +18.8%
Comments:   I was more aggressive in forecasting our retirement savings (compared to the Investments category), but there were several reasons.  First, is that I am making regular contributions.  Second, I had anticipated that my employer would continue matching those contributions.  Third, because retirement is so far away, the investment classifications are overall more aggressive.  All of these played into a substantial gain for the year.  This would have been more, but my employer cut their matching contributions in early summer.  I’m forecasting an 18% gain, which would basically happen if there was a modest gain in the market and we continue our rate of contributions.  Should our employer start kicking in again, this could be higher.

DEBT

MORTGAGE
2009 Goal:   -1.5%
2009 Actual:   -1.4%
2010 Goal:   -1.7%
Comments:   This is probably the most boring category, as we simply make the minimum payments on our 30-year fixed rate mortgage.  Eventually, within a couple of years, I’d like to start paying this down more aggressively, but for now, the numbers are pretty self-explanatory.

CAR LOANS

2009 Goal:   $0
2009 Actual:   $0
2010 Goal:   $0

Comments:   I didn’t do percentages here because you can’t divide by zero.  We didn’t have any car loan debt coming into the year, and it was my goal to not add any new debt in this category.  Mission accomplished, as we paid cash for our upgraded car.  Since we’re not planning on making any changes to our car ownership this year, our goal for 2010 is simply to keep the $0 balance here.

CREDIT CARDS

2009 Goal:   $0

2009 Actual:   $0

2010 Goal:   $0

Comments:   Actually, the same goes here as in the car loan category.  While we do use our credit cards, we pay off our balances every month, and this is reflected here.  Our goal for 2010 (and forever) is to keep this at $0.

STUDENT LOANS

2009 Goal:   -29.3%
2009 Actual:   -25.4%

2010 Goal:   -26.0%
Comments:   Any extra payment we have towards debt goes towards two student loans that we have.  We are paying the higher interest one off first, and were able to lop off 43% of that balance.  The minimum payments on the second, lower interest loan, allowed us to pay off 8% of that balance.  Overall, we came pretty close to meeting the target.  While we won’t be able to put as much towards them in the upcoming year (since we’re a single income family now), the percentage paid off is actually targeted to be about the same as last year.  This is because the beginning balance is lower. 

OVERALL

NET WORTH

2009 Goal:   +39.4%
2009 Actual:   +40.6%
2010 Goal:   +20.7%
Comments:   Even though the value of our house was a major drag, the stock market recovery offset this so that we were still able to meet our goal.  I’ve been tracking net worth since 2001, so this is the eighth full year I have to compare, and the 40% increase is the biggest percentage increase I’ve noted since I started tracking.  While this is nice, it’s still dampened by the fact that the 40% increase follows a 42% decrease that took place in 2008, showing that our personal recovery is still a long, long ways off.

However, the fact that we recovered so much was a bright spot.  The other bright spot is that, although the overall number is way down from all-time highs, the main reason for that is the value of our property.  I actually keep track of our net worth excluding real estate, and that number is at an all-time high!  This shows that our strategy of investing in retirement while paying down debt is working for us, and that while the real estate market is slowing us down, we’re still headed in the right direction.

Since we slightly beat our overall target goal for 2009, I’m extremely pleased.  Of course, now the focus is meeting (and beating) our goals for 2010, so as I said earlier….

Away we go!!!

No Kung Fu For You (OK, Really For Me)

Wow, I wish I had an extra $130 per month. But it’s disciplined spending and a dose of reality that makes me keep a level head and not blow $130 per month.
My wife and I were walking around our local downtown area a week or so ago when I walked by a new place and stopped. It was a martial arts academy, and it reminded me a lot of a martial arts academy that I had participated in for a few months years ago.
Back a number of years ago, I can’t even remember, but I’d say probably 10 or so, a friend of mine brought to my attention a martial arts academy that he wanted to try. I was looking for something fun so I tried it out and I loved it!
The academy featured kung fu as it’s main discipline. It was taught not so much from the perspective of physical combat as it was for self-defense, self-discipline, and to achieve grater peace. Taking part in mediation practices along with the physical training was highly encouraged, especially for those who were working at higher levels.
I never got to the higher levels. As much as I loved it, there were a few drawbacks at the time. It was pretty far away from where I lived. It was probably 30-40 minutes away, which made getting to class as often as I liked difficult. It was also expensive. After the initial sign-up deal, the prices went up to a pretty steep price per month. I don’t remember exactly but it was probably $90.
But back to my story.
Walking by, the logo and the name looked familiar, though it was quite a few miles away from where I practiced.
I ventured in just to see what was happening, and after a minute of conversation, the person I was talking to indicated that it was familiar to me for a reason: It was a second location of where I used to practice!
How awesome. I instantly had thoughts of picking up where I left off. I don’t do as much physical training as I should, and I really enjoyed what I was doing back then. Now, I wouldn’t have the location issue, as the current location is only about three miles from where I live. Getting there and back would be a cinch.
However, there are two things that would simply make this prohibitive. First, is cost. It’s now $130 per month. If I were to use it, I would certainly get benefits of going. And paying that much, I’d definitely be motivated to go and to get as much out of it as I could. But, that price tag is way too rich for our budget. We simply don’t have the wiggle room in our budget with everything else.
The second factor in the way is time. My wife stays at home, but our life is certainly much more busy now that we have a newborn. He’s eight weeks old now and our evenings and weekends are pretty full as it is. As it is, from the time that I get home until bedtime, or from wake until sleep on the weekends, I’m not even sure where all the time goes. I think it would be completely selfish to take the four or five hours a week that I’d be pulling out to go do that.
I think the way I have to approach it is this:
Maybe someday I can do that. It’d be a ways away according to any budget I can come up with, but one can hope, right? But in the mean time, this should serve as motivation to use the workout tools I have. We have a treadmill right in our basement. We have sidewalks around our neighborhood. I have a perfectly good bike in my garage. I could probably take 2 hours a week to engage in these activities, and do them for free. Admittedly, I don’t do much of those now, so I should at least start somewhere.
This is definitely motivation. It’s a bummer that I won’t be able to pick up my martial arts, but that’s simply a luxury item that there isn’t room for, neither from a time nor a budget perspective.

When Is A Kid’s Birthday Party Too Much?

Yesterday, there was a birthday party for a kid who lives in the first house by the neighborhood entrance. It was impossible not to notice, and it made me wonder, when is a kid’s party too much?
I noticed a lot of unloading and setup being done on Friday, when I pulled into the neighborhood after work. The location of the house made it a lot more noticeable. The next morning, a giant tent was being erected which covered most of the driveway. I’d estimate the dimensions at 40×20. Tables were being unloaded which covered the driveway.
The next day (Sunday) was obviously party day. There were table linens going on the tables, the sort which you would normally find at a wedding. There were giant inflatable toys being set up in the backyard, the kind which kids can actually go into and jump around. There was a valet service which was preparing to park cars for guests.
Later on, the party was in full swing. I swear, we weren’t spying, it was just impossible not to pass this house when pulling in or out of the neighborhood. Cars were lined up on both sides of the street, making for a dangerous game of chicken if one car was leaving and another was entering. The guests had arrived, and the gift tables (yes, plural) had piles of gifts so high you couldn’t actually see the guests. The caterers were off to one side getting the food ready.
I’ve seen the kids in this house, and I don’t think they’re old. My wife even speculated that this could be a first birthday party. I hope that wasn’t the case. At least, if there was a party that big, I’d hope that it would be for a kid that would at least be able to remember it. Even so, I have never seen such an event for a child of ANY age.
Don’t get me wrong. I’m all for celebrating birthdays. I had parties at my house growing up until I was a teenager. Family and friends were invited and it was a good time. But, the tables were set up in the basement and on the backyard patio. We played on the lawn with whatever toys were brought over or found in the garage. My mom did all the cooking with the possible exception of a cake being bought from a bakery. People parked their own cars.
And the thing about it, is that I had a great time. I didn’t need any more than that. I wonder if the parents are doing it for the kid or if it’s for themselves.
I also think this could be teaching the kid some bad personal finance lessons, which could hurt later in life. For example:

  • He/she might expect such a party every year. Or better. What if the parents can’t afford it one year? What about when the kid gets too old to get two tables worth of gifts? I think this could set the stage for feelings of entitlement, which is never a good lesson to teach children.
  • He/she might learn the lesson that spending money equals happiness. The parents were trying to create a happy time, but if you have to go overboard to do so, that could become the standard. This could create that mindset, and if it’s plugged in at a young age, that could lead to trouble.
  • It can create a pattern of jealousy. Assuming that friends of the birthday celebrant were invited, there could be feelings of jealousy, and that the things that go along with that generally only get stronger as one grows up.

I’m not trying to be a party pooper. I think kids birthday parties are great, and look forward to throwing them for my kids should we be blessed to have kids in the future. I really do think, though, that there are better ways to celebrate that might not teach your kids the wrong things about celebrating at an early age:

  • Backyard or basement parties
  • Pool parties
  • Pizza parties
  • Sporting event parties

These are fun, and plus I think kids enjoy them!

So, when is a kid’s birthday party too much?