Net Worth Not Impressive: My Coping Strategy

My net worth numbers have been sucking since the end of 2007. Completely crappy. I was getting a fair amount of motivation every month by watching that number grow, and now for reasons mostly not within my control (Hello, stock market! Meet the housing market!), that number has gone haywire, and I don't know when it will right itself. If I can't use net worth progress to track the incremental improvement that I know I'm making, what sort of benchmark am I going to use?

Why my net worth has taken a nose dive
From November 2005, when I started tracking my net worth, until December 2007, I was a freight train, a tigress, a perpetual motion machine, a number of really impressive metaphors. I increased my net worth by $107,822. I don't even know how to calculate the percentage increase because I started $46k in the hole, and high school algebra rules about multiplying and dividing negative numbers were a long time ago. But I know that's not shabby, considering that even at my most indebted that number includes home ownership and law school loans.

But 2008 is a different story. My retirement accounts are down--whose aren't? My debt load has gone up since the end of December when I had to replace my furnace, and I put that on a 0% card lest I chew through the bulk of my emergency fund in one go. I have the money to pay it off but I just don't want to until I've had a chance to rebuild my savings from that hit. But my savings are down, too, and this is truly a pisser. My savings account was nice and fat at the end of 2007, full of various subaccounts (emergency fund, vacation fund, wedding fund, etc.). But now the vacation subaccount has been liquidated to pay for the actual vacation, and the wedding fund is stagnant or even shrinking as I put money in every month only to take it out to pay for deposits on photography, ceremony venue, and the like. It's like pouring water into a bucket with a hole in the bottom. And I just got a notice from the county assessor that my home's assessed value for 2009 will be $18k less than it is for 2008. Even though I know my assessor's valuation is well below market value, that's the number I use for my net worth calculation because I'm conservative in most everything except politics, so that de-valuation will drag the net worth numbers down even farther.

So it's all treading water over here in Feminist Finance land, as far as net worth goes. I'm on target to max out my Roth 401(k) this year, and to once again have four months of living expenses in savings by the end of 2008, and to be able to pay for all of our wedding expenses in early 2009. But with the stock market in the toilet (despite periodic "rallies" like yesterday's, there's no putting lipstick on a pig) and the constant drain of wedding expenses that seem to accrue almost as fast as I save up for them, I can't count on any progress I make to show in my net worth numbers.

With all this going on, how can I track my progress?
What's a savvy woman to do? Throw up her hands and say, screw it, I'll keep on trucking and check in again in 15 months? Nay, gentle readers. I am far to goal-oriented for the ostrich strategy to work for me.

Debt Reduction
I'm going to continue my retirement contributions and direct deposits to savings as I have been doing, but for the next, say, six months, my primary interest will not be in tracking my net worth but in tracking my debt reduction. Since the targeted spending goals are what they are, and since I have zero control over the vagaries of the stock market or my housing valuation, my strategy is going to be to focus on the part I can control: debt repayment. Unfortunately, unlike with credit card debt, making big payments to these fixed-rate loans will not decrease my monthly debt obligations. But they will decrease my total debt load, which has a psychological, if not immediately practical benefit.

I have four debts: my mortgage, my home equity loan, my cosolidated student loans, and my American Express (the 0% card where my furnace expenses--and only my furnace expenses--are hanging out).* I do have other credit cards but those are paid off every month. All but the credit card are fixed rates, though there's a balloon payment on the home equity loan that will come due in September 2010. The home equity loan also has the highest interest rate of the three, at 6.25%. Due to those two factors, that's where I'm focusing my debt repayment energy.

To that end: My home equity loan, which started in Fall 2005 at $44,000, is now under $20k. $19,875, to be precise. Hooray for me.

Living Below My Means
I will also track the percentage of my gross income saved or invested (including extra debt payments), trying to keep that number above 50%. Between automatic retirement contributions, direct deposits to savings accounts, and the extra house payment Shiner contributes every month, I can usually hit this target. Sure, 32% of my monthly savings is earmarked for the wedding or for travel, but most of it is for emergency savings, and a 2008 IRA contribution (which I'll do in one or two lump sums for reasons I'm sure I'll post about later).

Keep Buying Low
Taking a cue from English Major, I am going to start tracking the shares I own in my retirement funds, rather than tracking the total value of those funds. I'm several decades from retirement. I'm not losing money so much as I'm buying low! I'm a freaking genius! Well, she is. English majors unite.

* I have the money to pay off the Am Ex and will do so at the beginning of May, three weeks before the 0% period ends. Three cheers for emergency funds.