With 2016 in the books, I view it as good year in strengthening our personal finances. It is tough to compare 2016 to other years since I have little to compare it to. However, my gut tells me that it was a good year. Our net worth increased by roughly $53,000 over the course of the year. We stuck to our normal script of paying down our higher interest debt, contributed to our retirement accounts, and upped our emergency fund. See the table below for the 2016 net worth overview.
Our overall cash position improved by roughly $4,100 in 2016. We focused on finishing off our emergency fund which, among other things, caused our checking account to decrease.
Home and Auto
Our Home and Auto position improved by $7,100 mainly due to the pay down of our mortgage. The 15 year mortgage shows its benefits when you do a net worth calculation although it definitely eats into monthly cash flow. We paid the minimum on our mortgage since the rate is so low (3.4%). The two vehicles we own do what vehicles do, they depreciated. The value of Car #1 fell by roughly $1,200. The equity in Car #2 rose by $200 which may as well be $0 since it is hard to nail down the value of a used car. We continue to knock off the minimum payment on the Car #2 auto loan as the rate is great (2.8%).
in 2016, we took on our student loan debt in a big way. We continued to make our monthly minimum payment on Student Loan #1, but we were very aggressive with Student Loan #2. There were several months when we were paying $1,000 or more which stretched our monthly budget. However, the final payment on Student Loan #2 came in December and it was a great feeling to have this debt eliminated.
We saw the biggest net worth gains come from our various retirement accounts. My wife and I both have pre-tax retirement accounts (401k and 403b) with our respective employers. We make sure to always contribute enough to get the employer match and sometimes we are able to contribute a little more. Outside of our steady contributions, the additional gains came via strong returns from the continuation of the bull market.
When I changed employers in early 2016, I rolled my Roth 401k funds into a Roth IRA as my new employer did not have a Roth option. There was a several month stretch where we were able to contribute $100 per month to the Roth IRA. However, since we were in focused on paying off Student Loan #2, we weren’t able to fund this account as frequently as we would have liked. Between our contributions and good market performance, we saw some gains in this account.
My wife and I both have (small) traditional pension plans through our employers. There are quarterly (#1) and annual (#2) credit applied to these accounts as well as ongoing interest payments. These aren’t going to be enough to retire on like they used to be for previous generations, but they will be good supplemental income down the line.
I find it useful to do a year-end review because it shows the power of planning and working toward a goal. Seeing the results of the year-end review reminds me why we continually plan, set monthly budget, and closely track our spending. I hope you enjoyed this look back at 2016!