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Debt Finances & Money

How is your net worth doing for the year? [Look at the big picture]

I usually skip past people’s net worth posts in my RSS reader, but something caught my eye as I scanned Mapgirl’s net worth post today. Yes, we all took a beating the last few months, but many of us forget to look at the big picture.

For instance, thanks to the stock and housing market, we lost 14% in October, and 2% in November, but we’re up almost 35% for the year, thanks to paying off debt, putting money into our savings and continually contributing to our investments. And we’re up almost 78% since January 2007!

Not all is lost, unless during this year you’ve lost in the stock and housing markets AND actually increased your debt and reduced your emergency savings.  Perhaps you lost your job or had a medical emergency that racked up tons of debt. If that happened, then I’ll pray for you. But if you just went on a stupid spending splurge, then I hope you’re working on a plan to get yourself out of the red and into the black!

Overall, don’t forget to step back and look at the big picture sometimes. You might continually see your accounts being depleted or your credit card balances going up, but take a look at where you started for the year and see if you’re better off than the same time last year. If you’re up, then you’ve been doing something right and should keep on doing it. If you’re down, then fix what’s wrong…or ask for help.

About the author

Clever Dude

10 Comments

  • The big picture is that most Americans DID lose more than what they started off with at the beginning of this year. Even the majority of fiscally-conservative people saw their net worth drop considerably, NOT because their retirement accounts were recklessly managed or poorly thought out, but because this economic monsoon is taking down everything in its path.

    Okay, so you’re up big this year. But I wouldn’t say that it’s because you were doing something RIGHT, per se. Even those who were managing their money the “right” way aren’t anywhere near being in the black, let alone being up 35% for the year.

    I really don’t think you’re identifying with the masses with this post.

  • @please, so it was just luck that I’m up 35% for the year? What are you up or down? I bet you don’t even know and that’s your first mistake. If you don’t know where you stand, you don’t know where you need to go. And I mean the total picture including all debts, mortgage, savings, investments, assets, etc. Let me know when you have that number.

    My investments (Roth and Rollover IRA (401ks from former employers)) dropped over 50% since I opened those accounts in 2006, but I didn’t have much money tied up in the stock market because I was committing most of our extra income to paying down debt. And we paid down almost $80,000 in debt in the last 3 years. THAT’S how we got our net worth up.

    So while I wasn’t doing the right thing by investing in our future, I guess it wasn’t the wrong thing when those investments went belly up. I improved our situation not through investments and savings, but by reducing our liabilities, which is the right thing to do in almost any situation.

    Although we lost tens of thousands in stocks and home value, we reduced our debt by even more, thus ensuring a positive net worth going into the new year. It’s not the masses I’m not identifying with, it’s YOU I’m not identifying with, and that’s ok. The intent here is that you step back sometimes and see how you’re doing in the grand scheme, not just in this moment. Now go figure that out.

  • Hi CleverDude!

    Thanks for the link repost. It’s funny, but my net worth is so low that even doing something small as regularly putting away money in my 401k this year, and still losing 40% on that account meant that I was still increasing my net worth.

    Commenter Please has it all wrong. It does matter how we manage our money in those small ways. Just because stock investments got hammered in the last 6 months, it shouldn’t stop us from doing all the right things in all the other areas of our financial lives, like reducing credit card debt and building up short term savings. There is no point in having 6-figures saved up if you are holding $50K in credit card debt.

    Good for you and CleverDudette for having a plan that got you 35% ahead of where you were in January. While I’m only up 13%, it’s better than being 0 or down. (Surest guaranteed return right now is paying off my credit cards anyway.)

  • Up 35% for the year?

    At the start of the year my wife and I had a net worth of $1.6 million. Not bad for a couple in their early 30s. But as of yesterday, despite adding about $150,000 in new savings during the year, our net worth now is only about $1.3 million.

    That’s 19% down for the year, despite maxing out 401k and stashing away a substantial amount in non-tax-advantaged accounts.

    And it’s not due to reckless spending. After factoring in savings and taxes, we’re living on about 20% of our gross pay. Nor is it due to reckless investments. We’re nearly entirely invested in a conservative mix of index funds.

    To quote a previous president, “It’s the economy, stupid”.

  • i’ve been bleeding too, but i’m focused on the amount of shares that i hold rather than the current price. i’ve been getting 2 to 1 up to 4 to 1 shares at the current price, so my holdings have increased despite values having decreased. just priming for upturn in the markets.

  • It really depends on how much you had invested in the market. If you had a giant nest egg (and were heavily allocated in stocks), there is no way just doing the right thing could keep you in the positive for the year. If you have a lot of cash (or safe investments) and little in stocks, maybe you’re up for the year. That doesn’t mean you were more “right” than the other guy, it is just the stage of your life your are at. Ten years down the road, my losses would be much more substantial.

    I’m up over 50%, but i started low, which makes it easier to make seemingly large gains (if you just look at percentage). I could have started the year with $5 in my pocket, and if I have a $20 today, I’d be up 400%.

    Anyway, looking back does help a little, but I’m certainly not excited about 2008.

  • Well our 401K’S Lost $8K since Jan 1st, but our net worth has increased about $3K since then, due to debt payoff and savings accumulation. I am always focusing on the bigger picture like this when discussing finances with my husband it is the only way that I can get him to talk about finances with me at all!

    I’m afraid it might start to go downhill since I just lost my job, but we are going to do our damnedest to live within my husbands paycheck while I collect unemployment and try to find a new job.

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