When I first started tracking my budget and net worth, I did monthly updates around the 7th of each month. This still holds, and what it means is that December 7th is the ‘last’ net worth update for the year. In order to do year to year comparisons, I’ve always kept the December update as the ‘final’ update.
What this means is that I wrapped up our net worth tracking for the year a couple of weeks ago. I finally had a chance to look at it compared to our estimates, and determine that it was a pretty good year.
I don’t go into actual dollar amounts, but rather like to keep things in percentages. I will still try to keep things interesting and in perspective. I also continue to use accounting principles upon which my budgeting skills were formed, so I will list things according to the simple accounting formula that Assets minus Liabilities equals Equity (or in this case, Net Worth).
Projected: +4.1%Actual: +5.6%
What This Means: I use a combination of inputs to estimate the value of our house. Zillow is one component, our property tax records another, comparable sales in our subdivision and surrounding area, and just an overall feel of what’s going on. Even though the ‘actual’ is still an estimate, I am fairly conservative in my estimations, so I can safely say that the value went up more than I had thought.
Our Cars and Camper
What This Means: At first glance, this appears to be pretty terrible, but in all honestly, the big gap was by my own choice, and is tied to me being somewhat pessimistic. I use Kelley Blue Book as the starting point for valuing our cars. I always lower the estimates about 5%, but knowing that our cars are now each around seven years old and the camper is nearly ten, I purposefully started lowering the value even further. I figure as the cars get old, there’s an ever increasing chance that a blown engine or transmission could render a vehicle pretty much worthless, so I now write down about 20% of the value, and continue to ‘up’ this as the age goes up.
For a point of comparison here, had I stuck with the 5% point, the actual decline would have been around 15.0%, so I would have been pretty spot on.
Our Investments (Trading Account)
What This Means: A darn good stock market for the year helped us along here. Not much else to say, really, except that I wish I’d started off the year with more to invest!
Our Cash (Bank and Savings Accounts)
What This Means: I knew that we were going to get a new roof this year, so I was expecting a big hit. The difference and why it went down was mostly to do with the fact that the roof was more expensive than I had budgeted.
I also didn’t make as much from my side hustles as I did in 2012, though some of this was offset with my wife kicking in through her side hustle.
Overall, not too many complaints.
Our Future (Retirement Accounts)
What This Means: Again, a good stock market helped out quite a bit. I’m actually thinking that a top is coming soon, so I strategically got more conservative going into the fourth quarter. This probably left a couple percentage points on the table, but overall I can’t complain.
What This Means: We paid off what we expected to pay off. Since we didn’t make any extra payments, this essentially landed us right where we thought we’d be.
Our Education (Student Loans)
What This Means: Ditto for student loans. We only have one remaining, and the payment is less than $100 per month and the interest rate is locked in at 2.25%.
What This Means: Since liabilities are pretty well fixed, the difference maker in how we do compared to our goals is tied to how well we do with our assets. Since the overall number came in higher than budgeted, this bodes well for our net worth performance.
What This Means: Since both of our loans came in right where we estimated, it stands to reason that the total liabilities came in right where we thought as well. It’s nice to note that we did not take on any new liabilities.
Overall Net Worth
What This Means: 2012 saw a ‘record’ year for us, with a 28.4% net worth gain. I was hoping we’d keep the momentum, and we did, exceeding what I had hoped. This was our fourth best year since I’ve started tracking (2003 and 2002 were second and third, respectively). I’d like to see years like this every year, but I also am realistic and know that the amazing performance of the stock market won’t continue unabated. This means that we’ll have to continue to increase our savings, and also to increase the pool upon which the investments are based.
We also keep a long term focus. We realize that our personal finances are with us for our entire lives, and the goal is to continue to make positive strides both for the near term and the long term.
Hopefully you had a great 2013. Share your results if you know them, I always love to see how I stack up!