Net Worth Update (+2.7%) & Year-End Summary (+37%)

Click here to see my current net worth.  The month of November ended up again due to broader stock market gains.  Overall, my net worth increased by 44,2880 since my last update early December.

The major drivers of the increase were:

  • Investment gains in the broader market

For the year, our net worth increased by $452,785.  Most all gains were due to aggressively paying down debt and the stock market (S&P 500) increasing 29% for the year.

We’ve had some major expenditures this year including a new roof (~$11k), a pool irrigation project (~$4k), two vacations (~9k), landscaping project (~$7k), not to mention $50k in primary home mortgage payments, $50k in charitable contributions, and other expenses (i.e. child care, food, utilities, car).

For 2014, I don’t anticipate we’ll spend nearly as much.  With another baby on the way, we will not likely go on vacation.  Home maintenance should be minimal.  However, with the wife taking a few months off to take care of the new baby, we will be out of some income for those months (she’s a contractor so no benefits).

I realize this year was an anomaly, but hoping for 8-10% returns next year.  Barring a major downturn in the stock market, I think this can happen.

How was your 2013 related to your net worth?

 

Declining A Job Offer

As I stated in a prior post, I lied about my salary to a prospective employer.  You can read all the details there.  I was in a holding pattern until they came back to me with their offer. Thankfully, they had no more questions about my current salary and 2 weeks ago, gave me the verbal offer.  When it was verbally presented to me, I was taken back.  The base salary was higher.  The bonus was higher.  But the sign-on bonus didn’t fully compensate me for what I am leaving on the table.  Secondly, their long term incentive plan was no where near what I make now.  Lastly, my 2013 bonus at my current employer was not included in the sign-on bonus at the new company.  The bottom line after I crunched the numbers was that I would be out approximately $25,000 per year for the next 10 years if I took the offer.

I didn’t see any upside.  Although the new company is closer to home, I would have to be there everyday.  Even though I live 1.5 hours from my current employer, they allow me to work from home 2 days a a week.  Secondly, I am not sure I really clicked with the manager.  She was nice, but I was not impressed by her.  With the decreased compensation, it didn’t make sense for me to accept the offer as it stood.

I attempted to counter.  I asked for a higher base salary, a higher bonus, and an extra week of vacation.  Although the HR manager set my expectations by saying that she’s not optimistic they’ll agree to any of it, she told me she would try.  A few days passed and the HR manager calls me back.  She informed me that the company tends to put their best offer forward and that the offer stands as-is.  I couldn’t believe what I heard!  Everything I’ve read about salary negotiation told me that companies tend to allow room for negotiation.  With that, I politely and respectfully declined the offer.  Her first response to me was that this has never happened to her before.  I wanted to scream by saying, “Well what did you expect.  I gave you a mountain of paperwork, paystubs, brokerage statements, and you couldn’t match my current compensation!”  However, I was polite, and kept the lines of communication open.  She was very understanding, but informed me that there was nothing she can do.  I guess its more cost effective for them to either go with the next best person, or to start from scratch.

I have some other options in the works and will keep everyone posted.

Net Worth Update (+3.3%)

Click here to see my current net worth.  The month of November ended up again due to broader stock market gains.  Overall, my net worth increased by $52,246 since my last update early November.

The major drivers of the increase were:

  • Investment gains in the broader market

Assets continue to rise and liabilities continue to trend down.  We recently took a trip to DisneyWorld, but most of that has been prepaid in the summer and already reflected in my net worth.

How did you do in the month of November?

Lying About Your Salary To A Prospective Employer

Ok, I have to admit that I lied.  About a year ago, I applied for a position at a company.  After getting very far into the interview process, the topic of salary inevitably came up.  Without showing my hand, I tried every trick in the book for them to give me a number first.  Eventually, it was time for me to share my current salary.  I attempted to steer the conversation to total compensation, but they wanted me to break down my base, bonus, and stock options.  When they asked me what I currently make as a base, I lied.  I bumped up my salary by 10%.  After all the salary discussions, they went with a different candidate.

Fast forward 9 months.  The same company calls me back for another position.  They ask me if my salary has changed over the 9 months, and I answer “no”.  It was the truth, but it was based on the initial lie.  After doing well in the interviews, I was told that they want to offer me the position.  During this conversation, HR asked me for my most current paystub.  NOOOOO!!!  I didn’t know what to do or say because, after all, why would I not provide them this information if I was truthful about my salary?  I sent them the requested documentation and received a call back from HR.  Of course she brought up the discrepancy between what I told her my salary was at my current employer versus what was reflected in the paystub.  Since our initial conversation about salary occurred 9 months earlier, I pleaded ignorant and told her that I thought I gave her a salary range and never firmly told her my salary.

That goodness it worked.  The offer is in the mail as we speak.  However, I’m wondering if there was a different way to approach this.  Quite honestly, my current salary should matter.  What should matter is what the company feels is fair compensation for this role based on the current talent pool.  I hope this post will help someone in the same situation. What could I have done differently to avoid this situation?

Net Worth Update (+2.2%)

Click here to see my current net worth.  The month of October ended up again due to broader stock market gains.  Overall, my net worth increased by $33,585 since my last update early October.

The major drivers of the increase were:

  • Investment gains in the broader market

You will notice that the balance in my liabilities didn’t move last month.  This is because of year-end planning as it relates to charitable contributions.  Earlier this year, I set aside money to put into our Charitable Gift fund and held it in a brokerage account.  Over the course of the year, that account grew by approximate $3,000 so I transferred the entire balance to our Fidelity Charitable Gift fund to avoid the capital gains tax.  Also our credit card balance barely moved because I charged our trip to Disney World on my credit card earlier in the month of October.

How did you do in the month of October?

Shopping Around for A New Landscaper

My wife and I have decided that its time to re-haul our entire property as it relates to our landscape.  We are sick of our current bushes, trees, and weeds.  Quite frankly, it looks like a mess.  We are interested in getting new landscaping that looks clean and organized.

I’ve asked my current landscaper to provide me with some thoughts, but we quickly realized that he had no clue as to what to suggest.  I think when it comes to landscape work (not lawn cutting), you can go one of 3 ways.

Cheapest (Basic Landscaper)

Find a landscaper who basically cuts lawns.  If you know you want, they can install it.  We didn’t go this way because we wanted someone to come back to us with suggestions.

Middle (Landscape Designer)

Though landscape designers did not go to school for this type of work, they have suggestions.  They may or may not come back to you with actual designs, but they have ideas that are aligned with your interests.

We had 3 landscape designers come out to our property for estimates.  Our 3 estimates for this option came out to $7,000, $10,000, and $12,000

Expensive (Landscape Architect)

Landscape architects are certified and have typically gone through formalized training.  They take a lot more into consideration when offering suggestions including the lay of the land, slope, drainage, sun exposure, and much more.  They will most likely come back to you with full designs drawn completely to scale.  They know a lot about the plants, trees they are proposing and you know the work will look great.

Our estimate for this option was $21,000

Needless to say, we went with the middle of the road option.  Unlike comparing roofing estimates, its hard to compare apples to apples since all landscapers come back with different suggestions.  However, we liked the options provided to us with the $7,000 estimate, got a good vibe from the landscaper.  We hope to get the work done quickly before the first frost.  I’ll post before and after pictures when the work is complete.

Net Worth Update (+4.1%)

I realize I’ve been absent over the past month.  Things are really kicking here at work and I’m also exploring/interviewing at other companies for some new and exciting opportunities.  I hope to be back soon, so please be sure to subscribe on the right to receive new posts via email!

Click here to see my current net worth.  The month of September started off strong, but lost steam near the end.  Overall, my net worth increased by $60,766 since my last update early September.

The major drivers of the increase were:

  • Investment gains in the broader market

Things that hindered a higher gain was that I had to pay the balance of our planned November trip to Disney.  This ate up about $3,000 in net worth gain.  I also paid down a chunk of the mortgage balance on one of my rental properties.

How did you do in the month of September?

Net Worth Update (-0.3%)

Click here to see my current net worth.  After a fantastic July, the market had its worst month since May of 2012.  Overall, my net worth decreased by $4,369 since my last update early August.

The major drivers of the decrease were:

  • Investment losses in the broader market

Most of the decrease this month can be attributed again to stock market losses.  For the month of August, the S&P 500 was down almost 3.50%.  I was able to cushion some of this loss, by continuing to have 50% of my assets in the market and the rest in more stable investments (cash, real estate).

How did you do in the month of August?

New Obamacare Taxes in 2013

Being a 1 percenter, I am now starting to see the effects of the new Obamacare taxes for high earners.  In addition to these new taxes, there are other taxes not available to people like me.  I’ve outlined them in a previous post.

The two new taxes this year in 2013 are the

  1. 3.8% additional tax in investment income
  2. 0.9% additional in Medicare tax

Both of them hit individuals earning more than $200,000 or married couples earning more than $250,000.  That said, we are that point in time of the year where these additional taxes are hitting us.  I knew these taxes were coming, but I honestly forgot about them until recently.  Just this morning, I opened up my paystub and noticed that is was $50 less than what I normally receive.  As I dug deeper, I noticed the Medicare tax was higher than usual.
That got me thinking how much more in taxes we will pay this year on top of what we normally would have paid.  Since the investment income tax also applies to rental income and dividends, we will end up paying thousands more in taxes.  Here is the breakdown.

  • Rental income – additional $1,500 in investment income taxes
  • Dividend income – additional $50 in investment income taxes
  • Wages – additional $1,800 in Medicare taxes

Total additional taxes in 2013 will be $3,350.  I know, some of you may say “well, you can afford it” or “who cares, you’re worth over a million dollars”.  And you’re right in both cases, but in my opinion that doesn’t matter.  No one spends money more efficiently than the person who earned it.  If this trend continues, where the government feels they can keep skimming off the top, then what will happen is my wife and I will look at each other and say “why are we working so hard.”  Its called the law of decreasing marginal returns.  You will then come to a point where no one works too hard because the high earners and the low earners will have no incentive to produce.