my monthly income and spending does not allow for any savings

there's no room to reduce spending as all are towards the car / home / family

i have to start saving using my bonus which is months aaway

Agree with you on this. I found that this formula only works if you are property investor, but I don't buy the property investment theory. So, I am also average like you, but with slightly >1 pts. I believe we should look more on liquid assets rather than the non-liquid as the liquid asset is what you can use to spend on stuff. I seriously know some people who invested heavily in property, but because of this, their cashflow kinda clog, which in turns make their life miserable serving the loan.

From the price of your house + car, I can see that you already leverage yourself to the max which is not really good, IMO. You might need to cut more on your "basic" needs already. Your bonus is like the word mentioned, just a bonus. What if you don't have bonus?

No this formula does not only favor property investors as you need to minus out the liabilities. If your property is 900k, loan is 800 k, you only have 100k networth.

Agree with Jason. Sometimes, "needs" are not really a NEED. U need to re-evaluate your budget and expenses. A little bit here and there adds up mean something.

I prefer bonuses, although I will not want a very low salary with very high bonuses. If you have high monthly salary, and you lack of financial management knowledge, you might leverage yourself to the max, which is happening right now. Anyway, my case is my pay is slightly on par or below market, but I'm getting bonuses, though in stocks.

soon it will be less leveraged with the completion of the house and i start to rent out (easy peasy place to rent out, the main reason why i bought) hence a large savings there

i've removed these from my costs
1. rent (move in back with parents)
2. additional internet bills
3. reduced home internet bills
4. food costs

waiting for the next 2 months for any bonus / increment

or do you guys think that

1. i should wait for this guaranteed bonus & increment
2. go with a higher paying job (+30%)

What if when you buy the property is 900K, now already 1.2K, but your loan is 800K left. You consider yourself 100K networth or 400K?

Thomas J. Stanley's and William D. Danko's expected net worth formulas

Formula 1: Expected net worth = age x 0.1 x gross income.
Formula 2: Expected net worth = age x 0.112 x gross income.

Marotta Asset Management's expected net worth formulas

Formula 3: Expected net worth = (adult years / 240 + 0.1) x adult years x gross income; where "adult years" = age - 20.
Formula 4: Expected net worth = [(age / 166) - 0.15] x age x gross income.


Formula 1 : Pass 3.2x

Formula 2 : Pass 2.81x

Formula 3 : Pass Just......narrowly

Formula 4 : Pass 2x

I did not include my house where I am staying in because its not an investment.......its a home.

I just noticed for a person who needs to use serious amounts eg for kids education, its gonna cause
a serious deflation of the numbers especially in later years,
and when you are older and income is higher, your expectations of net worth is higher!

Don't count eggs that are not hatched eg. rental income.

Regarding your job hopping, mind if I asked you, do you think you will want to job hop forever, just to get the 30% increase. Another question to you is do you think your skillset also jump 30% at the same time. Another question is do you think you can confirm get new job with 30%? Another question is, if you think you can get higher in other places, why not direct go nego with your boss and ask for a promotion and get the same increment?

Presume you mean the prop price is now 1.2mil?

Then your net worth escalates to 1.2m - 800k = 400k

Thus, it explains why I say the formula is made for property investors. The house price might go up, but in actual fact, you won't have the money until you sold it, right?

correct... i'm possibly down with an installment payment of RM1.7k that i have to pay myself =.=

i'm more positively minded though haha...

i want to job hop until
1. i think i have achieved something
2. omg, my skillset remains the same, maybe sharpened through a very steep learning curve
3. confirm, possibly +40%...
4. because its non-nego where i am. you tak suka you keluar BN attitude

correct... i'm possibly down with an installment payment of RM1.7k that i have to pay myself =.=

i'm more positively minded though haha...

i want to job hop until
1. i think i have achieved something
2. omg, my skillset remains the same, maybe sharpened through a very steep learning curve
3. confirm, possibly +40%...
4. because its non-nego where i am. you tak suka you keluar BN attitude

The formula is made for any investor IMO.

Net worth does not mean cash

Its just a net worth formula which is for any asset class, be it properties, cash, intellectual prop, etc.........

AND it can go UP O DOWN......

My point of view is this. Company hire you because of your skillset. If your skillset remains the same, do you think the new employer willing to fork out additional 40% to hire you? Let's assume you are a boss, you got 2 candidates to hire, 1 experience, but skillset remain the same, demanding 40% higher, another fresh, same skillset, which one you hire to optimize your profit? How do you know it is non-nego? If you are good until outside can pay 40% increase for you, why not your boss just give you an increment 20%?

Correct

but... I have a very particular set of skills. Skills i have acquired over a very long career (not too long, maybe 5 years?). Skills that make me a delight (i changed it i know) for people like employers (i changed it again from the original quote)

its a Middle level / Executory level job though.. not top notch yet haha

because, what particular skill set i have is more highly valued elsewhere

You don't have to sell a property to see the cash. You could leverage your property to obtain cash through re-mortgage, and hence you will have the cash to invest further. I am doing that with one of my property.

So based on this property can be counted as net worth as they are convertible to cash (leveraged) and a 'real' asset.

If haf house and car loan means still negative net worth cos in debt?

You can have negative networth if loan more than asset. Example...

House = 400K
Loan = 350K
Car Loan = 25K
Personal Loan = 50K
CC Loan = 10K
Cash, Investment, FD, EPF = 15K

Total networth = 400K+15K-350K-25K-50K-10K = - 20k networth

This post has been edited by gark: Apr 8 2013, 12:06 PM