Networth Calculation Mistake

[JoeWras]

So I'm going through Quicken last night and notice the DW's 401k has this huge "cash" balance in it. Looked at it and realized that DW's paycheck deductions were going to the account, but she wasn't appropriately moving the cash to the securities in the account per quarterly statements. She stopped doing this in 2008, apparently because with the bad market, doing it was depressing at the time (money was evaporating).

Whatever the reason, we fixed it up and BAM, networth just increased by 5%. What a NICE surprise. I mean, that's one year of withdrawals right there. I couldn't think of a nicer problem to have!

But this got me thinking. I plan on having someone look at my finances as a double check. But it could be garbage in, garbage out. Right? This is especially true if I'm just providing information over the internet or by phone to a remote adviser. Or should I insist on sending them actual last statements?

So, who do you have to "audit" your situation?

I'm concerned a bit because I see people here ask for firecalc numbers from people, and make broad recommendations. Meanwhile, upon further review, we've seen sometimes it is garbage that is put into firecalc. I'm just hoping I don't have garbage-in. I'm pretty good with numbers, but here's an example of something that slipped under my radar.

 

[Midpack]

I don't have anyone audit our situation, though I ran my numbers by my Vanguard rep for a cursory look before I retired. I audit by using several tools, my own spreadsheets, FIRECALC, i-ORP and other calculators from time to time. If they all seem to provide the same result, I assume (right or wrong) that we're on the right track. We also plan on very conservative returns and a very low WR, so if we're wrong, hopefully we're still on a workable course.

And I am not saying I'd never consult a pro, I might, though never an ongoing relationship. It would be event driven.

I am also troubled when I see folks casually suggest "just go for it" or "what are you waiting for" to someone who asks 'am I ready?' But then again, anyone who comes here asking a group of total strangers "am I ready?' is probably only looking for members posts to reinforce their views to begin with. This is not always a good place for an "audit" IMO, but it is a good place to learn from for making decisions ourselves.

Congrats on the 5% "windfall."

 

[AndrewJackson]

Its always good to discover more money, however, it stinks that the money wasn't invested. Might have increased your nw by 7-8 % instead of 5.

 

[W2R]

Nobody cares about my money as much as I do. I look at my net worth, investments, and overall financial picture every single day. It only takes a few minutes (about five minutes on most days, longer on days when I choose to spend more time on it). I review where every cent of my money is invested, every day, how my asset allocation is doing, what my net worth is currently, and how much I am spending.

I do this DESPITE the fact that my career was in science and engineering, and originally I never had the slightest interest in (or knowledge of) money matters. I discovered that unfortunately, in this world full of con men and others who want to get hold of retirees' money, it was a necessity to learn how to handle my own money and to do it effectively. There is no "do-over" and it is vitally important to do as good a job of this as I can. Actually, it isn't that hard for a responsible person to do a good job of handling his/her own money, and after a while it even becomes interesting and fun.

 

[JoeWras]

Its always good to discover more money, however, it stinks that the money wasn't invested. Might have increased your nw by 7-8 % instead of 5.

Oh, it was invested! That's the beauty of it, it was only a clerical error on our side. And one reason I haven't paid much attention because my cursory glances at her statement looked ok. I just didn't notice the disparity between the statement and quicken until last night.

We don't use "automatic download" from Quicken, so we enter things in manually. The paycheck was going in manually with a deduction for the 401 going as cash to the 401k account. Then each quarter we "buy" the securities that are actually automatically bought through the 401k trustee. Basically, we correlate the statement to the quicken view.

It was this correlation that was skipped. The actual bonus from the 401k was nearly 25% over the 4 years or so, even with it being a fairly conservative balanced fun. In the overall scheme of our shared networth it came to 4 or 5%.

 

[omni550]

JoeWras,

I work from the latest statements provided by the 'source' (Vanguard, Fidelity, Credit Union, etc.) not my own records.

omni

 

[JoeWras]

I guess this has me thinking of a few things, including whether we should have some data downloaded via quicken.

Another bonus (besides the extra money) is the DW is getting more engaged in this process. I've intentionally tried to let her do some of the stuff she owns, to keep her interest. When she saw this last night, her eyes popped out of her head, and I think she's feeling better about an ER exit strategy, and is going to pay more attention to these matters.

 

[JoeWras]

JoeWras,

I work from the latest statements provided by the 'source' (Vanguard, Fidelity, Credit Union, etc.) not my own records.

omni

Yeah, I understand. We do too, except I like to use quicken as a summary view. Problem is if we don't put the latest statement in properly, we get a garbage view.

This slipped under my radar since I knew her 401k was fine via statements, just somehow missed the disparity in quicken. We each thought the other was doing the work to update that account.

 

[W2R]

Oh, it was invested! That's the beauty of it, it was only a clerical error on our side. And one reason I haven't paid much attention because my cursory glances at her statement looked ok. I just didn't notice the disparity between the statement and quicken until last night.

Cursory glances? Cursory glances? Good heavens. You need to CARE more about your financial position, and examine any statements with care. No more cursory glances for you, OK? It doesn't take that long to examine a statement and reconcile it with your own records.

 

[JoeWras]

Cursory glances? Cursory glances? You need to CARE more about your financial position, and examine any statements with care. No more cursory glances for you, OK? It doesn't take that long to examine a statement and reconcile it with your own records.

Admonition accepted! It doesn't hurt to get a kick in the pants. I could use it.

Hey, especially if we're going to make this ER thing work, ya know?

 

[RunningBum]

That is good news, especially that you had it invested in the run up!

It reminds me back when I had been working with my last company for about 2-3 years and a few of us were sitting around after a class talking about our employee stock options, and after listening awhile, one guy asked what we were talking about. He just drew a blank when we mentioned the options. He was in the same job and more or less the same level as the rest of us so I knew he must have them, so I told him to go logon to our stock admin site and check it out. He came back wide-eyed the next day, and said he had vaguely remembered getting stock options when getting hired on, but had no idea they were already well into 6 figures.

To answer your question about tracking, I keep a NetWorth spreadsheet and login to my accounts periodically (maybe every week or two, partly because I like looking at the numbers!) to update the balances. Vanguard lets you track outside accounts too, and tells you when it was last updated (default is daily) but I still log into those accounts directly as well. If anything looks off, I'd dig into transactions and make sure nothing bad happened, but no surprises so far. I'd do the same thing if I used Quicken. One nice thing about manually updating a spreadsheet or Quicken, you see the value you are updating and have a better chance of telling if the numbers seem off.

 

[W2R]

Admonition accepted! It doesn't hurt to get a kick in the pants. I could use it.

Hey, especially if we're going to make this ER thing work, ya know?

Right! Hey, I didn't mean to be scolding you. After all, it's your life and finances. It's just that I care about all of our members and wanted to inspire you to take all of this more seriously. It's a life-or-death matter, really, when you think of it. If/when we screw up badly enough, most of us could end up in a soup line down at the mission and we don't want that.

 

[JakeBrake]

My Fidelity IRA has a manditory core cash account. Everything goes into and out of the core cash account. The core account is FDRXX Fidelity Cash Reserves. When I download into Quicken (which I do everyday), the FDRXX balance is "O". The cash shows as "Cash". After I figured this out, it is not a problem, but I would prefer if FDRXX would download as FDRXX.

My Vanguard IRA does not have a manditory core cash account. I keep the cash in VMMXX VG Prime Money Market. The cash in VMMXX downloads into Quicken as VMMXX with a "Cash" balance of "0".

As for auditing, Quicken will quickly flag any discrepancies between the online balance and the Quicken balance. I don't know that I need additional auditing. When I make a cash withdrawal from an IRA, I manually enter the withdrawal into Quicken before I do the online transaction. I withdraw cash from the IRA's when the 30 day projected balance in Quicken for my main checking account turns red ( a negative balance).

"Numbers is hard"

 

[AndrewJackson]

Oh, it was invested! That's the beauty of it, it was only a clerical error on our side. And one reason I haven't paid much attention because my cursory glances at her statement looked ok. I just didn't notice the disparity between the statement and quicken until last night.

We don't use "automatic download" from Quicken, so we enter things in manually. The paycheck was going in manually with a deduction for the 401 going as cash to the 401k account. Then each quarter we "buy" the securities that are actually automatically bought through the 401k trustee. Basically, we correlate the statement to the quicken view.

It was this correlation that was skipped. The actual bonus from the 401k was nearly 25% over the 4 years or so, even with it being a fairly conservative balanced fun. In the overall scheme of our shared networth it came to 4 or 5%.

Nice.

 

[walkinwood]

I didn't have any errors, but before we ER'd, I had the vanguard Financial planner give us their assessment. It helped put my mind at ease that I wasn't inadvertently adding a zero somewhere.

I use quicken to download credit card, bank and investment transactions as well as fund prices. It works well. I also check my quicken totals with my account statements to double check.

 

[Original Wally]

I look at my net worth, investments, and overall financial picture every single day.

Lol... ONLY once a day? I confess to looking a tad more frequently than that. But then I am a retired beancounter and live for that stuff.

 

[Texas Proud]

Cursory glances? Cursory glances? Good heavens. You need to CARE more about your financial position, and examine any statements with care. No more cursory glances for you, OK? It doesn't take that long to examine a statement and reconcile it with your own records.

+1


But, I do not use Quicken... I do keep track of spending on a worksheet... but as far as our net worth is... well, I only calculate it out every 6 months or so...

Now, I DO look at all my stmts to make sure that the accounts are doing what I expect... and I do (kinda) have a total at Vanguard as I put in most of my other investments... but day to day knowledge of my net worth means nothing to me...

 

[bbbamI]

Don't be too hard on yourself Joe. As you said, y'all have more money than previously thought and your DW is getting interested in financial affairs.

IMO...it can be rather easy to overlook financial matters from time to time in the accumulation phase. I think you will find once you are retired, you will be more focused on your accounts.

DH and I have been retired for several years now. I get the figures from my online accounts and update my excel spreadsheets at the end of each month. So far, so good.

 

[wanaberetiree]

Oh, it was invested!
We don't use "automatic download" from Quicken, so we enter things in manually. The paycheck was going in manually with a deduction for the 401 going as cash to the 401k account. Then each quarter we "buy" the securities that are actually automatically bought through the 401k trustee. Basically, we correlate the statement to the quicken view.

I am not sure what you mean by "automatic download", but I use downloads in Quicken daily and when transactions were downloaded I have no choice but to review them and either accept to reject. So I guess it's nice to discover "new" money, but I'd be nervous about what other mistakes I may have in calculating my NW.

 

[Midpack]

I guess I'm a slacker, I review our holdings (net worth spreadsheet) quarterly...

 

[wanaberetiree]

I guess I'm a slacker, I review our holdings (net worth spreadsheet) quarterly...

...or maybe it's OK +/- 25% mistake in your NW...

 

[RunningBum]

OK, I confess that I probably look more than every week or two, but I don't look and update my spreadsheet every day anymore. I used to when stock options made the swings more wild.

 

[W2R]

OK, I confess that I probably look more than every week or two, but I don't look and update my spreadsheet every day anymore. I used to when stock options made the swings more wild.

I hope you did it yesterday! The market surged, and like some others I hit another all time high net worth yesterday.

Since nothing happened when I said "Wheee!!" about a month ago, I guess there is no point in repeating that particular exclamation of joy, but gosh, it sure looks beautiful.

 

[dessert]

I hope you did it yesterday! The market surged, and like some others I hit another all time high net worth yesterday.

Whew, I was wondering why it was down today, but now I have the explanation.

You're right though, every time it slips above the previous high, it goes down the very next day. (or it seems that way)

 

[RunningBum]

I hope you did it yesterday! The market surged, and like some others I hit another all time high net worth yesterday.

Since nothing happened when I said "Wheee!!" about a month ago, I guess there is no point in repeating that particular exclamation of joy, but gosh, it sure looks beautiful.

I hadn't, but I did just now. Wheeee!!! I was higher back at the height of the dotcom boom but this is the highest since the bust.