July 2016 Net Worth Update (+$7,805, 6.1%)

July 2016 Net Worth Update (+$7,805, 6.1%)

Background

Net Worth, July 2016 Net Worth, Assets

Here is our July 2016 Net Worth Update. I started documenting our net worth last month (June 2016 Net Worth Report) and the amount came out $127,575.  We saw our Net Worth rise to $135,382 in July (an increase of $7,805).  This is some great progress which we are excited about and will keep us on track to meeting our Five Year Net Worth Projection. We use these projections to provide targets/goals and keep ourselves motivated toward reaching financial independence.  Lets get into the details starting with how I track the family’s net worth.

Methods

I utilize two methods for tracking my net worth.  The first method is by using Personal Capital. This software is an incredible, free financial tool that combines all of your accounts in one place. Personal Capital provides insight into your cash flow, investment portfolio, and other methods to grow your net worth. Use the affiliate links above if you interested in Personal Capital and like the content on this blog.  I know it has helped me get a better handle on my finances and grow my net worth.

The second method is through a custom Excel spreadsheet that I have created and modified over the years.  It is nothing special and I have to update it manually which I enjoy doing. Now onto the nuts and bolts of my net worth.

July 2016 Net Worth Overview

Following the July 2016 Net Worth Overview table there is a breakdown of the individual categories of our net worth. July was a good month of gains. There were nearly $4,700 in retirement savings account gains. We were able to make our usual contributions but the real progress this main came from the rising market (more on that in the details below).  The other two areas of note are the checking account rise and pay down of my wife’s student loan debt. The usual progress was made on all loan payments with the exception of Car #2 which we refinanced last month. We were able to push out the start of payments for Car #2 for two months which will restart in August 2016.  See below for more details on each of the categories.

Net Worth, July 2016 Net Worth, Assets, Liabilities

Emergency Fund

Net Worth, Emergency Fund, July 2016 Net Worth

We have focused on setting aside $100 per month to keep building up this fund. We currently have $14,208 in ur emergency fund. We are 0.55% on the money held in this account.  Combine the contribution and minor interest payment and the account grew by $106 this month.  Nothing exciting about this but it may save the financial day for us and keep us out of consumer debt if an unexpected cost arises.

Checking Account

Net Worth, Checking Account, July 2016 Net Worth

The checking account typically hovers around $5,000, but has peaks and valleys each month depending on when we have our direct deposits and various withdrawals hit the account. We earn no interest on this account.  Last month we were in one of those valleys, this month we are on one of the peaks.  I am chalking this up to the monthly variation in timing of our direct deposits.

Home

Net Worth, Mortgage, Home Equity, July 2016 Net Worth

This month the home value remained unchanged at $225,000. The gain came from making our standard monthly payment which reduces the principal of the loan by $786. We likely won’t live in this home long enough to pay off the balance and with the interest rate being so low I am not focused on aggressively paying it off.  Current pay off date – November 2030.

We purchased our home in Summer 2012 for $186,000. Based on comparable sales and an appraisal when we refinanced, I am estimating the market value of our home at $225,000. The home loan is a 15 year fixed term loan at 3.25%.

My Retirement Plan

401k – Retirement Account

Net Worth, 401k, Retirement, July 2016 Net Worth

In July I contributed my usual amount to my 401k plan. Between these contributions and the post-Brexit market gains, we saw some nice gains this month. It is a great feeling to see sizable gains in your portfolio. In the near-term (next few months), I am going to reduce my contribution rate but still get the full employer match.  With the additional cash that is available, I am going to put more money toward my wife’s student loan debt.  We are in full debt pay down mode right now.

Pension Plan #1

Net Worth, Asset, Pension, Cash Balance Plan, Retirement, July 2016 Net Worth

My current employer offers a pension plan where the employer annually contributes a small percentage of my salary into a fund. The employer funds this percentage quarterly. For example, say the 3% equals $1,000. The employer will contribute $250 every three months into the account for a total of $1,000 on the year. I am not eligible to receive contributions to this account until I have been with the company for six months (six month mark is mid-July). My July pay statements did not have any contributions to this account. If I do not see a contribution in my first August pay, I will be reaching out to my company HR department to investigate.

Roth IRA – Retirement Account

Net Worth, Roth IRA, Retirement, July 2016 Net Worth

This Roth account is held through a robo-advisor account. I am currently not contributing funds to this account so any change in value is only related to investment returns.

Wife’s Retirement Plan

 403(b) – Retirement Account

Net Worth, 403b, Retirement, July 2016 Net Worth

Similar to the 401k, my wife’s retirement plan saw nice gains this month. There were minimal contributions as she was off after the birth of our child.

Pension #2

Net Worth, Pension, Retirement, July 2016 Net Worth

My wife’s employer offers a pension plan where the employer annually contributes a percentage of her salary into a fund. The employer funds this 2.5% annually. For example, say the 2.5% equals $1,000. The employer will contribute $1,000 at the end of the calendar year. The plan also provides a very low return that is similar to the rates you would receive in a money market or savings account, approximately 0.5% annually. This return is credited to your account on a monthly basis which comes out to 0.125% per quarter. This month we saw the small, monthly return that we expected.

Car #1

Net Worth, Car, Assets, July 2016 Net Worth

We own my vehicle outright so there is no monthly payment. A few months ago, I valued the vehicle on Kelly Blue Book (KBB) at $12,000. I have been assuming the value of the car decreases by approximately 1% per month (or 12% per year). The value of the car is now $11,069.

Car #2

Net Worth, Assets, Liabilities, Car, July 2016 Net Worth

For Car #2 we have a 60 month auto loan for $18,774 at 2.8%. We recently refinanced this vehicle from a 4.8% 66 month loan. This car saw the expected depreciation. I have been assuming the value of the car decreases by approximately 1% per month (or 12% per year). 

Student Loan #1

Net Worth, Student Loans, July 2016 Net Worth

This student loan is from my time in business school. I refinanced this loan at 3% and plan to pay it off over the course of the next five years. I was fortunate enough to have my undergraduate education paid for by my parents so there is no loan balance from that time.

Student Loan #2

Net Worth, Student Loans, July 2016 Net Worth

I am really pumped about knocking $1,225 off my wife’s student loan this month. This is our primary area of focus right now.  We want to free up the cash flow associated with these student loans so we are only a few months away from this being a reality.  These are a series of loans that average out to 3.5%. We are focusing any extra money that we have in our budget toward paying down this loan. The monthly minimum is $280 and we were able to put an extra $1,000. The goal is to have this loan paid off by November 2016.

Credit Card

Net Worth, Credit Card, Liabilities, July 2016 Net Worth

My wife and I use one credit card to handle the majority of our purchases. It provides 1% cash-back on everything and 5% on certain, rotating categories.

We roughly charge $2,500 per month on this credit card. We pay the balance in full every month.

Please comment below with your thoughts on our financial situation and the progress we have made with our net worth in our July 2016 update.