Networth Update – September 2009

My networth continues on an upward trend and it is gratifying to note that this has been achieved only a short time after making a decision to manage my finances better. Only a few months ago i would have counted my networth in terms of my pension contributions and “assets” such as my car and household goods. Now i exclude the car and household goods from my networth calculations and concentrate on real assets that continue to passively work for me.

As at September, my Emergency Fund is still my number one priority and gets all the ‘bonus’ money i get from time to time. Its now at a healthy 78.3% of my goal and i plan to have it fully funded by end of year so that i can channel money to other investment goals. My overall networth went up a notch to 14.37% of my “15X40” BHAG and being a long term goal am happy with the numbers so far. This goal has been broken down to a medium term goal of having a networth of Ksh. 4million by end of 2010 and this is at a respectable 53.8%. All’s well on that front.

On the stock’s front, i noticed that my portfolio had taken a hit in the months of July and August and clearly this had to do with the temporary upswing in the market which was then followed by general decline. As i intend to rely on the principle of Dollar Cost Averaging, i have treated this as a minor blip in the overall scheme of things. With regular purchases in the coming months and hopefully an upward swing in the market, i should be able to meet my target by December. As things stand now, i am at 71.7% of my goal which is to have a Ksh. 500,000 stock portfolio by end year.

To view my progress bars, visit my Progress Page.

Personal Finance And The Gender Gap

An interesting article on Reuters caught my eye as it continued to explore the much-investigated “gender gap’ between males and females, this time on my pet subject of personal finance. According to Reuters:

“Men and women handle their personal finances much differently, research shows, with men more likely to keep a close eye on their spending and investments and to pay their bills on time. The data showed two-thirds of men but just one-third of women said they regularly pay their credit card balances in full, said Liz Davidson, chief executive of the company based in Manhattan Beach, California. Also, 90 percent of men said they pay their bills on time each month but only 74 percent of women said so, it said. It said 71 percent of men but 53 percent of women have a handle on their cash flow so they spend less than they earn each month. More than half of men but just a third of women said they have an emergency fund to pay their bills for a few months if they lose their job, it said. Forty percent of men but just 24 percent of women said they were confident their investments were allocated appropriately, while 73 percent of men but just 40 percent of women said they had a general knowledge of stocks, bonds and mutual funds.”

I would actually have said that women are more likely to pay off their credit card balances in full but obviously i was wrong. I find a lot of my female friends find money talk quite exasperating while men will talk about it for hours. Not to say however that the talk always ends up in wise financial decisions. However, lately a lot of women are becoming very keen on managing their finances and this can be evidenced by the large number of women-only investment groups. Impulse shopping i guess contributes a lot to spending more than you earn and this may afflict the womenfolk more than the men seeing as i can walk around an entire shop and actually find nothing worth buying..shoes and clothing included. I would be seriously tempted in an electronics shop but obviously you cant pick up anything worth Ksh. 1,500 like you would a shoe. I was also thrown a bit by the “Emergency Fund” findings. I could have sworn women are better are setting aside money for a rainy day!

According to Reuters, most of those answering the questionnaires earned between $60,000 and $75,000 and were assessing their own financial situations from January through April 2009. Do you think the findings would have been similar if the survey was conducted in Kenya?

Networth Update – June 2009

I should have done this 2 weeks ago but life has a way of disrupting your best laid plans. Since i started on my road to financial freedom, i have always enjoyed reviewing my networth growth. Like everyone else, i always wish i had lots of money coming in from multiple streams which would make the process of reviewing my networth almost like winning the lottery..pur exhilaration! Alas, my income streams are few and not as big as i would wish.

Nonetheless, it is always gratifying to see a healthy bump in my networth each month. My BHAG is up to 12.1% which though a low number is a positive step towards achieving my “15×40” goal. My stocks are a nice surprise after the recent downward trends at the NSE and i have noticed some appreciation there. Definitely looks like my target of half a million stock portfolio by year end will be achieved since am at 78% at the moment.

I have thrown in any extra money i got last month into my Emergency Fund and this has grown the fund to a healthy 58.3% of my goal. Once I have this fund to tide me over for at least 6months, then i can channel my funds into more aggressive stock purchases or even real estate. For now i will continue throwing every extra cent i can get towards the fund.

To view my pretty progress bars, click on my Progress Page.

Living In Debt And Living It Up

Been out of town a couple of days now and like everyone else been engrossed in the Michael Jackson story which threatens to get juicier with each passing day. Already we know that the King was bald, weighed a measly 51kg, was willing to do practically anything to get some sleep, had a face full of scars etc etc. But more astonishing for me is the fact that the King of Pop actually was technically bankrupt due to the amount of debt he was carrying at the time of his death.

According to Fox News, the guy had amassed debts of upto $400million despite earning millions of dollars in the course of his career.

Yet after selling more than 61 million albums in the U.S. and having a decade-long attraction open at Disney theme parks, the “King of Pop” died Thursday at age 50 reportedly awash in about $400 million in debt, on the cusp of a final comeback after well over a decade of scandal.

When he ran into further financial problems, he agreed to a deal with Sony in 1995 to merge ATV with Sony’s library of songs and sold Sony music publishing rights for $95 million. Then in 2001, he used his half of the ATV assets as collateral to secure $200 million in loans from Bank of America. As his financial problems continued, Jackson began to borrow large sums of money, according to a 2002 lawsuit by Union Finance & Investment Corp. that sought $12 million in unpaid fees and expenses. One forensic accountant testified that the singer had an “ongoing cash crisis” and was spending $20 million to $30 million more per year than he earned. In March of last year, the singer faced foreclosure on Neverland. He also repeatedly failed to make mortgage payments on a house in Los Angeles that had been used for years by his family.

It sounds incredible that someone earning that kind of money can actually find himself in debt, Ksh. 3.2billion for that matter. But it merely reinforces the often repeated argument that it is really what you keep that matters and not what you earn. Mortgage payments? The guy had mortgage payments?