A financial panic attack cost one guy thousands : October 2014 Net Worth Update (-0.06%)

Financial Panic Attack

STAY CALM WHEN DEALING WITH MONEY

 

One of the first things my wife said to me this month was “Why do we have a negative net worth statement for October?” and right then I knew she was starting into her financial panic attack mode.

Don’t laugh because some people really do suffer from anxiety and in some cases a panic attack when they know their finances are potentially in danger.

Some people might have grown up in families who suffered financial loss, watched their parents lose everything, low-income, suffered disability or job loss etc. which triggers financial hoarding tendencies like my wife.

When I say hoarding I simply mean they struggle to let go of their money or they make sure that they have money stashed away so that they will be safe if something were to happen.

There are people who are scared to let go of their money let alone have someone invest it for them or even worse investing it themselves for fear they screw up.

My wife isn’t scared to that extent but she wants to know exactly what is happening every step of the way. I didn’t have to worry about her having debt when we met because she was petrified of that too because of some ups and downs with finances in her family.

 

Stock Market Crash

 

Our financial advisor shared a story when we met with him recently about a friend who had stocks and when the crash happen in and around 2008-2009 he had a financial panic attack and sold his stocks low. When the stocks rose again he bought them back but he couldn’t buy back as much as the price was higher.

Now, if he would have just left his investments alone to ride the wave instead of having a panic attack he wouldn’t have lost so much. The stocks ended up increasing far more over the years which is too bad for him but it’s not uncommon our advisor said that people go into panic attack mode and call him up to sell.

They want to sell and even though he gives them his professional advice he says in the end it’s up to the client to make the final decision. The guy who had the huge financial loss ended up calling his friend and advisor and told him that he should have listened to him and left the investments alone.

I’ve always suggested that investing in our future was a gamble and it is and always will be because anything can happen. If he would have believed that the market would correct itself he would have had a higher net worth than he has today.

 

Financial Panic Attack Mode

 

The reason I presume that our advisor told us this story was because he could sense my wife going into panic mode when he talks about how her investments have performed. He suggested that we move her to a slightly more aggressive portfolio because he felt it would give her a better return based on current performance.

Dealing with anxiety and financial loss is a big deal and something he has to deal with on a daily basis he says. He’s no doctor so all he can do is explain his side of the financial picture and hope that based on his professional advice they will make decisions that are right for them. It’s just hard when he sees clients make decisions he wouldn’t suggest and they do lose money.

My wife has always been conservative with her money because she goes into panic attack mode thinking that her retirement dreams will be crushed. Sadly she’s learned that no one has investments that are guaranteed now or in the future. That is the reality of life and finances.

I remember when my wife’s investments tanked in 2009 to the tune of about $5000 which isn’t much to some of you high rollers out there but to her it was huge. She has since recouped that loss and then some but if she would have jumped in and made changes like our advisors friend that might not have been the result for her.

Unfortunately this month our net worth actually went down $388.53 which wasn’t that shocking considering the circumstances. The facts are that converting part of our net worth into our little one’s net worth definitely made a difference to our own net worth number.

We paid $2,500 into his RESP to gain his first years contribution room before time ran out and to collect the maximum amount of government contributions as well.

You won’t notice the RESP in our net worth chart but I’ll be talking more about that in an upcoming blog post. I’ll be tracking the RESP every month but only our contributions not what the government matches.

We also converted our investments over from separate Fee Based accounts to a cheaper Fee based account where the percentage we pay is now reduced because we have over “X” amount invested. This caused a small fall in RRSP values leaving us with a pretty dismal month.

Nothing actually bad happened, just re-allocation of funds to benefit us and the new addition in the longer term. I’m hoping to see a return back to form in the coming months.

This month our net worth didn’t really sink but it didn’t go up like we wanted it to. No one sets out their financial goals to include having months with no net worth increase but it happens so don’t do anything drastic because it gets you no where. It wasn’t because we spent more than we earned and this is what I explained to my wife as we always discuss our finances together.

Sometimes a cup of tea and a calming environment works to explain money to someone who is very protective of it. She knew that we put a huge chunk of our monthly net income into our son’s RESP account but what we didn’t talk about was why it wasn’t included in our overall net worth update.

So with that hit to our net income our budget also showed higher expenses in the grocery budget and baby categories which contributed to our lower personal net worth for October. Had we of not put money into the RESP clearly this month would not have ended in the red. The good part is that the money is going towards a good cause, our son.

 

Our net worth

 

We are always looking for ways how to increase our savings and retirement investments. By tracking our net worth these numbers below show us how well we are doing in terms of meeting our target numbers or what areas we should concentrate more on.

You can check out our September Budget Update to see where the money went in our budget to give you a bit more information. I know we are a bit late posting our net worth update for September but it’s because our son was born so everything is behind on the blog.

I was lucky to have some amazing bloggers help me out with guest posts for Sept, Oct and upcoming in November so we could get on a schedule in the CBB household. Thank-you. If you would like to guest post shoot me an email as I’m looking to fill spots right up until the end of the year.

In September our net worth really didn’t change in any significant way mainly due to spending a large chunk of money when we bought our new mattress. We had a reduction in income due to taking time off from work to be with our son and investments didn’t exactly grow at a fantastic rate either. Here’s hoping we see an increase for November.

All things considered if we hadn’t indulged in buying a much deserved bed our net worth for this month would be considerably different. We’ve worked hard to get where we are now so trying to justify why we’ve spent some of our money isn’t hard but still has to be considered.

October 2014 Net Worth Chart

 

RESP Contribution 2014 : $2500 ( I will add this figure into the above chart starting next month)

 

Understanding net worth

 

What Does Individual Net Worth Mean?

Net Worth is a snap shot of your financial health sort of like a picture or debt to net assets. In simple terms it’s a total of the value of your assets minus your liabilities.

We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up. Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.

 

Canadian Budget Binder Budget Spreadsheet

If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do. I don’t charge for it because I want you to save money not spend more!

Enjoy and let me know what you think… plus there are tonnes of other free printable lists offered at Canadian Budget Binder to help you achieve some of those financial goals and build your net worth. Now… what you need to do is determine just how much net worth you actually have and go from there….

 

Determining net worth

 

How to Determine Net Worth?

Net Worth = Assets – Liabilities 

Figuring out net worth is fairly easy as long as you know your personal numbers or monthly finances which means you need to do your homework. Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.

Understanding your net worth will help you determine if you are on track to meeting or beating your personal financial goals. It doesn’t get any easier than that.

 

Calculate net worth

 

Do you know how to calculate your own Net Worth?

Now you can stop asking yourself the question, how do you find out your net worth? Why? It’s easy to determine. We like to calculate our net worth every month so we know if we are still on track. Some people calculate it yearly or quarterly. It’s really up to you and how informed you want to stay when it comes to your financial health.

Net Worth is essentially an estimate and not everyone uses the same type of figures. Some people don’t include vehicles like we do or they may leave out the assets inside the home like we have. It depends on what you want to calculate or what you can sell today and make money on.

Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)

 

Goals

 

Setting goals are the only way we work towards achieving what we want to get done as a couple around the house and in our financial life. I know that without them we would be flying by the seat of our pants which wouldn’t work for us.

Below are our 2014 target goals some of which are the same from 2013 and many which are new for 2014. I don’t like to move on to new goals if I have other goals that are unfinished but I also like breathing room and play time if you know what I mean.

I hope by posting them each month it motivates me like it has this past year to get stuff done and reach our target goals with some form of ease although nothing in life is that simple.

I find it’s much easier to be held accountable when I share what we need to do with all of you. Yes, my wife refers to the list when she asks what I plan to do next. I’m not sure if that’s a good thing for me or not, lol.

Do you set goals for the year?

 

Our short-term goals 2014

 

Every month I update these mini short-term goals as I like to call them where you will see what’s new and exciting in our world but not just financially. These goals are our life goals which include everyday jobs that need to be completed. We like to carry out these goals on a monthly basis although that doesn’t always work out that way.

I’ll continue to update this list for those that enjoy reading this net worth post each month but like most of you know, a list is never-ending. (Especially when your wife keeps adding to it,  lol)

Not a whole lot has changed for October as most jobs were put on hold once our son arrived.

  • Mortgage is now paid in full
  • To renovate the upstairs bathroom- Renovations started, some products purchased.
  • Clean up the basement- Nope, I added to the mess by moving all of the materials for the renovations down there.
  • Fix some screw holes in the baby room– I will tackle this before baby stays in room exclusively.
  • Start working on putting in the new flooring in the living and dining room- Haven’t even started this yet
  • Purchase all new kitchen appliances- So far all we have is a new stove and an extractor fan (range hood) but they are not installed. We are on the hunt for a kitchen sink, tap and pot-filler.
  • Purchase a new freezer- We are buying one medium sized freezer and donating our large freezer.
  • Invest more in our TFSA, RRSP etc. –  RESP has been set up and I’m now contributing more to my RRSP starting at the end of November.
  • Continue to meal plan, create new homemade meals- Not too much meal creating has been going on since our son has arrived. (check out the all new recipe index on the blog)
  • To read a new personal finance book- I’m not giving up on this just yet.
  • You can read more of my short-term goals in my monthly budget update here.

 

Our long-term goals 2014

 

I will do a yearly update on these goals so you know how we made out with them. The long-term goals are goals spread out over the year(s) as we are not in a huge rush to accomplish them but they are always on the top of our mind.

  • Finish remodel of the entire kitchen- This may or may not get done this year with all the new surprises that have popped up but we are still thinking about it. We know where we are buying the cabinets and have some of the appliances.
  • Purchase a new washer and dryer- We will likely only buy a new set if we find an amazing deal but for now our second-hand units that were free are working fine.
  • Sort out the deck lights (garbage and I’d never buy them again and not in a huge rush to fix them) Don’t ever buy those little deck lights or you will regret it, trust me.
  • Fix the fence in the back garden- I was hoping to get it done before the first snowfall but that didn’t happen so it will be worked on next Spring 2015.
  • Look into buying a pressure washer- Not a huge priority but if I can find a good deal over the course of the year I’ll grab it
  • Update the garage (man cave) not really a man cave but I like to keep it neat and tidy- I’ve just finished cleaning out the garage to put our vehicles in for the winter. I will tackle more come Spring 2015.
  • Save up to purchase a new vehicle (well, second-hand)
  • Save for a holiday to anywhere that is not where we live- We are saving to go back to the UK for a holiday in 2015 or early 2016.
  • Start planning basement renovations (bathroom, bedroom, family room, laundry room, office, storage area.
  • Look at new ways to invest our money i.e. rental units
  • Continuing to educate ourselves on personal finance and investments
  • Continue to network with other like-minded people
  • Continue in my new career in hopes of it becoming long-term permanent

 

Our financial numbers

 

When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey. These are our numbers and our goals, not a means of comparison towards your own goals to others target goals.

We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition. I hope our experiences perhaps will help guide you along your financial path working towards debt freedom.

 

Different paths

 

Not everyone has the same path in life. Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.

Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or was injured on the job etc. but you can’t let that stop you from achieving your financial goals.

Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too. Remember what I said, “It’s not about how much money you make, it’s how you save it”.

Focus on you and don’t let the evil eye of money jealousy or keeping up with the Joneses cloud your vision. No one cares about your money as much as you do so don’t waste your energy trying.

The only reason people accumulate wealth is because they know how to save or invest it wisely even if they did inherit money or win the lottery. The smallest improvements should mean big strides in working towards reaching your goals.

Sometimes we have to fail in order to learn and we’ve all been there. Money can be an evil force for some people especially those who have a negative attitude towards their own financial situation.

I urge you to be optimistic and little by little with determination you too should see improvements, if you want that to happen.

 

Net worth updates 2014

 

October 2014 Net Worth

Below you can click the links to read past net worth updates to see if we were on target or if we struggled with some of our numbers. In the last year since October 2013 our net worth according to our figures has grown $77,805.12

October 2014 $609,780.11 – October 2013 $531,974.99 = $77,805.12

You will notice two Jan 2014 figures and shows where we had our house valued leading to an increase in our assets. I purposely left both Jan 2014 figures in so you can see the increase visually.

That’s all for this month’s net worth update but please check in at the beginning of December to see how we made out in November and what has happened to our finances since.

~Mr.CBB

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Photo Courtesy of: Freedigitalphotos.net/DavidCastillo

Comments

  1. Love reading these regardless of an increase or decrease in worth for the month… It’s just so fascinating!

    I’ve updated our Blogger Net Worth Tracker btw for anyone interested in seeing how other bloggers are doing too 🙂
    http://rockstarfinance.com/blogger-net-worths/

    Here’s to future success!

  2. Great write up on figuring out net worth. I usually do my net worth updates bi-annually. Your drop for Oct was pretty minor given the market volatility that month. I also can get a little nervous when things go too far south but I just think what is invested stays invested and I don’t sell. I am on my second early retirement so I am fairly conservative with my investments so my balance doesn’t normally have big swings.

  3. Christine Weadick says:

    We used to have more RRSP’s and I have always considered them to be a long term thing and didn’t worry too much day to day. Hubby kept track of things there. The one year back when we had a fund we bought go down in price right after we bought some, hubby turned around and just bought more of it at the lower price. We’ve been around long enough to know things can go in cycles, up and down. If it’s a good stock or fund it will likely go back up given time…….. If you haven’t been through a cycle or two it can be a scary ride but confidence comes with time and experience….

    • Now if only our advisors mate thought like you did he’d be loaded he told us!

      • Christine Weadick says:

        You pretty much need to go through a couple of up and down cycles to get to that point…experience can be a wonderful teacher if you let it. Or you need to be more laid back or just not worried about money ( haven’t meet too many like that!!!)

  4. Since having our kids, we’ve become much more conservative with our investments and financial plan in general, so I understand how your wife is feeling.

    A more aggressive portfolio based on “current” performance isn’t really in line with trying to reduce your wife’s anxiety. Keeping things in a conservative portfolio and preparing to hold it for the long term might be a better choice for her.

    • She seemed to be fine with it once it was explained to her. I think that’s half the battle sometimes when someone doesn’t know what will be done with their money and why.

  5. Mary F Campbell says:

    I can certainly relate to your wife’s anxiety – I am a very conservative investor. My philosophy is that “slow and steady” wins the race. 🙂 I have had “negative equity” periods. Hate ’em! A couple years back my participation in some private corporations fell significantly by about $100,000. I view these assets as “paper assets” because they don’t generate a monthly income stream nor will they ever. I just own a piece of those businesses. I did however point out the market value decrease to hubby at the year-end and we hunkered down so that within a year we had replaced those funds within our invested income generating assets. We accomplished this by making additional contributions to our savings and also by focusing on getting a few better rate of return investments. I felt better once we got the bottom line on the net investments in better shape. We don’t have any dot.com type money making schemes in our portfolio… but I can sleep at night and that’s worth it’s weight in gold. 😀

    • Yes my wife is very protective of the money she earns and watches it like a hawk to make sure it’s performing the way it should. You are right it is worth being able to sleep at night. Thanks for sharing Mary. 🙂

  6. After 13 consecutive months of growth, I wouldn’t get too concerned about a -0.06% decrease in one month! 🙂

    • No, I’m not but for some people it’s easier said then done when you tell them they didn’t earn money or they lost money. Money can be the source of happiness and sadness at the same time.

  7. The fact that your net balance only went $388, that’s nothing to sneeze at. With the markets today, I wouldn’t trust them with my money but at the same time, if there was no stock market, I wouldn’t have a job. I know how your wife feels with wanting to hold on to her money.

    • Some people don’t trust anyone with their money and don’t think she isn’t the same she’s always worried something might happen but she doesn’t let it affect her day to day living. Investing is all about risk but I think since she saw a large dip in her investments in 2009 it really opened her eyes to how fast it can go up and go down. Risk… it’s all around us. Thanks for stopping by Dee!:)

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