Net Worth Forecast for '07

One of my main goals for 2007 is to increase my net worth to $100,000. I thought I would write down a forecast of how I'm going to do this, which will also show me how close I'll get to my target and identify ways to make it more realistic.

As of today (January 11), my net worth has increased from the beginning of the month due to debt payments clearing, etc. I'm starting with a rough estimate of a net worth of $66,000, give or take a few hundred dollars (this is just an exercise!).

Debt reduction:
-$3495 auto loans
-$3456 mortgage principle reduction
-$4000 credit card balance reduction

Total liability reduction: -$10,951

Asset increase:
$1550 ING emergency fund
$400 life insurance cash value increase
$7308 401k + company match
$2720 conservative estimated rate of return on 401k. This estimate is an 8% increase of its current value.

Total asset increase: $11,978

Total forecasted net worth increase: $22,929

This wold set my net worth at nearly $89,000, so I'd fall $11,000 short of my goal. This amount assumes a number of things:

1.) I won't get any sort of raise/bonus (which I'm supposed to get and if I don't I'll be looking for a new job).
2.) I'll only contribute $125 into my emergency account each month.
3.) A very conservative credit card reduction. After our cars are paid off this will be very aggressive.
4.) I will not hold several ebay auctions throughout the year to get rid of stuff I haven't used for years.
5.) The stock market will not be as bullish as a lot of investors are predicting.

I set my goal high so it would be a challenge. This is going to be an exciting year. Stay with me to see how it turns out!

Goal Outlook For the New Year

To give myself a good chance to reach my financial goals for 2007, I thought I'd look into how I am actually going to try to accomplish them:

In order to reach a net worth of $100,000, I must depend a lot on the market return of my 401k. I'm sure most people with net worth goals depend on the market, so that wasn't supposed to come across as a naive comment! I'm contributing the David Bach recommended 10% of my gross income to my 401k already, and I hope to increase that to 11% by mid 2007, once some of our debts are paid off. That brings me to my next avenue of increasing net worth:

Pay our credit cards down by 50%. This will increase our net worth by a nice chunk, with the biggest chunk of debt to be knocked off in the final 2 months of the year, after our cars are paid off (which also increases our net worth because we won't any money on them anymore!). They're scheduled to be paid off in October, but there's a chance we might be able to pay them off a month or two ahead of time.

Contributing to my 401k and reducing our debts are the two biggest factors (the we are in control of) in increasing our net worth. Smaller factors include contributing to our emergency saving account and paying down the mortgage (with bi-weekly mortgage plan).

Setting up an additional account to use for "fun" stuff will be easy...I just have to do it! It's not the biggest priority right now because 1. we just bought a house and we've been buying a lot of stuff for furnishing and decorating, which falls into the "fun" basket (although I could think of things to do that way more fun than that), and 2. funding the emergency account and paying down debts are much more important.

All in all, I'm excited to start 2007 off with a bang, and I'm really looking forward to trying my best to reach my goals for the year!

Goals for 2007

This may be the last post until 2007, so let me first wish everyone a very Merry Christmas and Happy New Year! Now for my goals for next year:

1. Save $2,500 into my emergency savings account by mid May (MyMoneyBlog goal).
2. Decrease credit card debt by 50%.
3. Increase net worth to $100,000. I don't know how possible this is based on our current income and mortgage payment, but I'm going to give it a shot.
4. Continue to fund emergency fund throughout the year.
5. Start a retirement account for my wife and have her contribute 10% of her income.
6. Open an account to save for "fun" stuff.

This will be updated throughout the year with my progress!

My Money Blog Goal

My 6 month goal as part of Jonathan's experiment on My Money Blog isn't off to the best start. With the new mortgage and the holidays coming up, we had to downsize our $250 per month savings into the ING Direct account to $125 per month. Along with the holidays approaching, we started the equity accelerator program through our lender, so after we make our first payment tomorrow, the next (half) payment will be coming on December 20th. I still plan on reaching my goal of $2500 by mid-May, but it's gonna take a lot of determination. Our annual bonus is up in the air as to how much it'll be, so this should be interesting. Whatever it is, I plan on saving half and using the other half toward improving our home.

6-Month Goal

Jonathan over at My Money Blog has a little experiment he's doing. It's very simple, just write down a 6 month goal for yourself in the comments section, check in at the 3 and 6 month marks to update the status on your goal, and win a prize just for playing! Can't get much easier than that, and here's mine:

Accumulate $2,500 in my ING Direct account by May 16. As of this writing I currently have just under $800. Right now I'm putting away $250 a month into that account which would actually leave me just short of my goal, but I'm hoping for a little bonus at work and a positive tax return that will help me get there.

Goal Setting Entry #1

It's been a long day, but I think I can find some energy to identify some goals for myself. Long and short term personal, professional and financial goals are included. Keep in mind that these are all off the top of my head, so more could be added soon:

Personal Goals
#1: Lay new flooring in my new house to completion, without succumbing to pay someone to do it for me, and still make it look like it was professionally installed.

#2: Move into my new house by no later than November 25, 2006.

Professional Goals
#1: Obtain my Oracle Database 10g DBA OCP (Oracle Certified Professional) by March 3, 2007.

Financial Goals
Short term
#1: Pay off auto loans.
#2: Pay off credit cards 100%, cut those suckers up and never carry any more consumer debt.

Mid term
#1: Accumulate $15,000 in savings in our ING Direct money market account to use for emergency purposes.
#2: Start a "dream" money market fund to use for future vacations, both large and small.

NOTE: If you are reading this blog and are interested in opening an ING Direct savings account with a minimun deposit of $250, please email me at jkickel@gmail.com for a referral link. ING Direct will deposit $25 into your account with a referral, and I'll get $10 for referring you. We both win!

Long term
#1: Put our kids (who aren't born yet) through college.
#2: Retire by age 55 with $2 million in liquid assets (I'm 27 years old at the time of this writing).