Tuesday, January 01, 2008

2008 goals

I'm slowly emerging from my turkey-induced holiday coma here, and I promise to get back to posting with regularity real soon.

What with today being the busiest day of the year at most gyms, I figured it could be useful to have a look at how good I was at keeping my financial resolutions in 2007. I set a fairly ambitious goal for myself of having a net worth of $40,000 by the end of 2007. At the time, it was in the mid-20s, so that represented an increase of more than 50%.

Well, it didn't quite pan out. I was on track until about August, when the word "subprime" first entered into our collective vocabulary, and I've been moving sideways ever since. Truth be told, I'd probably be in the hole by quite a bit were it not for the fact that the new money I'm adding via savings is doing little more than offsetting equity losses.

When I made the goal, I knew it would be hard to hit, but I still wanted to try. I was swinging for the fences going in, but it doesn't mean the ground-rules double of $35,933 I ended up with is worthless. I'll get home eventually. There was some good questioning of the value of tracking net worth (since ultimately, it's a target most people aren't really in full control of) over at four-pillars recently, and while I accept the point, I still see some use in setting targets to reach for.

As such, I'm setting a new goal of $50,000 by this time next year, for a number of reasons. No. 1, it's a nice round number. And No. 2, it's a challenge to hit. To meet it, I'll have to stick to my aggressive plan of setting aside in excess of 30-35% of my after-tax income into savings every month. But even if I did that, and my holdings did nothing but tread water, I'd still only end up in the mid-40s. So I'm also demanding about a 10% return from the equities I already hold. My portfolio's got about a 4% or 5% yield, so I'm essentially trying to double that in an increasingly skittish market. Let's see what I can accomplish here.

Of course, if my circumstances change in any material way, I'll amend my goals as I see fit. But 50K in one year's time seems like a good starting point.

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