My personal finance journey – a look back at 2003

This is an update to my personal finance journey covering 2003. I really don’t remember much about this year which means nothing too exciting happened. It was my third year living in Michigan and my job was becoming increasingly stressful. I was still renting the same apartment.

I had also given up any form of budgeting for the year – I don’t think I kept any track of what I spent. I was fortunate enough to be earning more than I could reasonably spend in a month and I became lazy. It’s taken me a lot longer this time to go through old bank statements and piece together what happened.

About the year in 100 words

On my birthday in February the space shuttle Columbia tragically broke apart as it re-entered the earth’s atmosphere, killing all seven astronauts. The war in Iraq started in March and was declared over in May. Actress Katharine Hepburn died in June. In August, the “Great Blackout of 2003” occurred after power lines failed in Ohio leaving 50 million people in the dark for several hours [1]. In October the Concorde made its last flight marking the end of consumer supersonic travel.

Financial news

The economy was on track for a recovery with an 8.2% increase in the third quarter; its fastest rate in two decades. The stock market was likewise surging after reaching a low in March helped by economic stimulus programs, breaking a three year losing streak. Interest rates were down to 1% and a new round of mortgage refinancing led to home sales breaking the 2002 home sales record of 6.5 million houses. A backlash against corporate outsourcing started against the bulk import of cheap foreign goods and job loses to developing countries included white collar jobs.

Corporate craziness

Boeing had a terrible year after being overtaken in sales by Airbus, cancelling the 757 program and converting the 767 into a military tanker. The CFO was fired and their new CEO, tasked with restoring sanity [2], approved the 787 program.

Tyco International threw a wild roman-themed party [3], costing a cool $2 million dollars and eventually the jobs of the CEO and CFO.

Martha Stewart was indicted for lying about her sale of $228,000 of company stock to avoid a $46,000 loss [4].

Largest companies in 2003

Here are the ten largest companies in 2003 by market cap.

Rank Change Company Ticker Market Cap ($B)
1 +1 Microsoft MSFT 264 (-19%)
2 -1 General Electric GE 259 (-30%)
3 Exxon Mobil XOM 241 (-19%)
4 Wal-Mart WMT 234 (-14%)
5 +1 Pfizer PFE 195 (-21%)
6 -1 Citigroup C 183 (-27%)
7 +2 Johnson & Johnson JNJ 170 (-13%)
8 +2 Royal Dutch Shell RDS.B 149 (-21%)
9 -1 British Petroleum BP 144 (-39%)
10 NEW IBM IBM 139

The biggest loser this year was Intel who fell off the list. Microsoft jumped to #1 by losing less capital than General Electric, and IBM entered the top ten club.

Personal finance summary

Scorecard

Average Living Expense $1,834
Security Ratio 0%
Retirement 0%
Savings 4%
Expenses 39%
Wet Worth $20,435

I had no investments in 2003; only a simple checking and savings account which was earning progressively less interest each month. I wasn’t contributing any post-tax money to a retirement plan.

The good news is that my average living expenses were about 39% of my income; leaving a fair amount of money left over each month. In fact, my spending on living expenses descreased from 2002 despite no effort on my part; helped by a salary increase and completing my car lease.

The low savings rate of 4% hides the cash that I was building up each month in my checking account. I spent some a fair amount of savings in July on purchasing my car when its lease expired and later with a gift to Ms. DivLife in the fall.

Net Worth over the year


Based on the difference between the Net Worth and Wet Worth column in the table below, I had assets of around $29,000 – this is split between my car and my pre-tax retirement plan.
My journey ended the year with 2% less cash than I started with and an increase in passive assets that only depreciate each year.


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The way to get started is to quit talking and begin doing.


[1] I remember trying to drive home with no functioning street lights. It was chaos, almost like a practice for a zombie apocalypse.
[2] We’ll meet him again in 2005.
[3] I assume at least it was a secure party.
[4] Instead she paid a couple hundred thousand dollars in fines and 5 months in jail. Not a good trade.

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