January 6, 2003

I Practise What I Preach: Five Years Later, Over Four Times the Assets
By Marcel Chartier

Well, it is now the end of another year 2002, and the beginning of another. I got into a bit of a cleaning mood and decided to start with old filing. As I was starting to go through the folders to clean out the old, I ran into an old financial planning assessment of net worth in 1997 - about $40,000. That is all I had in net worth when I started on this process to build value using the practical processes I outline in my articles. I really didn’t know what to do other than I had to do something, and getting a financial assessment through a financial advisor was the first step I took (which wasn’t a bad idea looking back). This process got me to thinking - what amount of growth have I accomplished since then? I knew it was better but by how much? I usually do a quick assessment of net value every year to see if I am on track compared to the past year or so, but I don’t really file my net worth assessments when I do for later comparison - maybe I should, its quite heartening to see such progress.

After doing the math, I have realized that through a steady and increasing contribution to both debt reduction and investment I have increased my net worth by more than four times, and to put that information in perspective - this is in a period of time where the equity markets have tanked and real estate (where I live) is just climbing out of a down market after almost five years of decline. Most of my net worth in 1997 was due to equity value at the peak of the real estate market. Now, most of my value is in cash or investments: even thought I have more than doubled my home equity. My investments are seven times the count I had in 1997, even though they are invested in markets that are significantly down.

I realize now that my net worth is now firmly seated in six figure amounts, and when both equity and real estate markets inevitably rise, as they are poised to do, I could easily see a 20% increase my net value without further contributions. This is the added benefit of being prepared - by continuing to reduce debt, and by investing at reduced market values, I am positioning for significant future value increases.

I wonder what the next five years will bring?