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Journey to Balance Sheet Affluent Update

August 1st, 2009 at 02:59 pm

For the numbers geeks and competitive types (but mostly for myself) I've updated my numbers there on the sidebar.

I realized tracking the quarterly goals wasn't making a lot of sense, given the odd variation in income we experience over the course of the year, estimated tax payments, etc. I've decided instead to just do an annual goal, but every so often I'll note where I am throughout the year.

Because I have no debt other than what has been charged on my credit card & will be paid off at the end of the month (inconsequential) plus accrued SE taxes owed (not really inconsequential but too much effort to calculate each month), my monthly "Net Worth Statement" is really just a list of my assets. What I count as assets are:
Liquid financial assets
Tax-deferred retirement savings
Car (KBB Private Party Value)
House (Purchase Price - 8% eventual taxes & real estate comm to be paid when the house is sold = adjusted purchase price. I then adjust by CPI-U to account for inflation.)

Are these calculations perfect? Nope. There are legitimate differences of opinion as to whether tax-deferred savings should be included (or should be discounted for the taxes that will eventually be paid), whether or not to include car & house (or collectibles or household furnishings or in the case of my SIL her Hermes collection-haha), how to value those non-financial assets, and whether CPI-U is a legitimate measure of inflation.

The important thing is that this is how I have chosen to do my calculations, and they help me measure progress over time and how I am doing in terms of reaching my eventual goal.

Brooklyngirl did an interesting post on feeling rich and free, and I posted a rather lengthy response about why managing my finances well is so important to me. I'm providing a link in case anyone thinks that this goal of becoming "Balance Sheet Affluent" by the time my husband is 50 is merely some obsessive goal or about being greedy:
http://brooklyngirl.savingadvice.com/2009/07/25/i-feel-rich-...
I was very interested to read Brooklyngirl's post and glad to see responses. So often we write about the steps we are taking and the "numbers" goals we have, but not about the reasons for taking them. Good to be reminded.

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