2016 Year End Net Worth Update ($53,098, 52%)

Overview

2016 Net Worth, Year End

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.2016 Net Worth, Assets, Liabilities

Cash

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.

2016 Net Worth, Assets, Liabilities

2016 Net Worth, Assets, Liabilities

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%).

2016 Net Worth, Assets, Liabilities2016 Net Worth, Assets, Liabilities2016 Net Worth, Assets, Liabilities

Student Loans

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.

2016 Net Worth, Assets, Liabilities 2016 Net Worth, Assets, Liabilities

Retirement Accounts

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.

2016 Net Worth, Assets, Liabilities2016 Net Worth, Assets, Liabilities

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.

2016 Net Worth, Assets, Liabilities

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.

2016 Net Worth, Assets, Liabilities

2016 Net Worth, Assets, Liabilities

Conclusion

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!

January 2017 Net Worth Update (+$4,072 3.0%)

January 2017 Net Worth Update (+$4,072  3.0%)

January 2017 Net Worth, Assets, Liabilities

Background

Here is our January 2017 Net Worth Update. I started documenting our net worth in June 2016 (June 2016 Net Worth Report) and calculated it at $127,575.  We saw our Net Worth rise to $158,032 in January (an increase of $4,072).  This is some continued 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.

January 2017 Net Worth Overview

January 2017 Net Worth, Assets, Liabilities

Following the January 2017 Net Worth Overview table there is a breakdown of the individual categories of our net worth. January our third straight month with gains of $4,000 or more to our net worth.  The biggest gains continued to come from our retirement accounts and the year-end influx of money to our pension accounts. We spent more than we had hoped in January but this is due to paying sizable deposits on some spring and summer events/vacations.  The steady debt payments always limit our downside to a certain degree as well.  Between the mortgage, student, and auto loans we are guaranteed to see roughly $1,600 of debt disappear each month. See below for more details on each of the categories.

Emergency Fund

January 2017 Net Worth, Assets, Liabilities

We have focused on setting aside at least $100 per month to keep building up this fund. This month we were able to put away $107. We currently have $15,107 in our emergency fund. We are getting 0.55% on the money held in this account.   We capped our emergency fund at $15,000. However, we are continuing to save cash to give us more options by improving our liquidity to take advantage of future opportunities.  Opportunities that come to mind are increased Roth IRA contributions or purchasing a rental property.

Checking Account

January 2017 Net Worth, Assets, Liabilities

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.  This month we were in one of those valleys.  I am chalking this up to the monthly variation in timing of our direct deposits.  The account is somewhat lower this month as we put deposits (paid half) of our summer vacations rental expenses in January.

Home

January 2017 Net Worth, Assets, Liabilities

This month the home value remained unchanged at $225,000. The gain came from making our standard monthly payment which reduced the principal of the loan by $797. 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

January 2017 Net Worth, Assets, Liabilities

In January I continued my usual contributions to my 401k plan. I always make sure its enough to get the full employer match.   Our retirement accounts continued to generate nice gains in the third straight bullish month.

Pension Plan #1

January 2017 Net Worth, Assets, Liabilities

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 employer contributes 3% which is equal to $1,000. The employer will contribute $250 every three months into the account for a total of $1,000 on the year. In January, I received my quarterly deposit for my pension plan which accounts for the sizable gain.

Roth IRA – Retirement Account

January 2017 Net Worth, Assets, Liabilities

This Roth account is held through a robo-advisor account. We contributed $100 to this account in January. I felt guilty neglecting this account and $100 is the minimum one-time deposit.  The contribution, market performance, and year-end dividend payouts created a nice jump for our Roth account.

Wife’s Retirement Plan

 403(b) – Retirement Account

January 2017 Net Worth, Assets, Liabilities

Similar to the 401k, my wife’s retirement plan had another month of nice gains. Both retirement accounts are invested in roughly the same asset allocation so we end up with similar percentage returns.

Pension #2

January 2017 Net Worth, Assets, Liabilities

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. Unlike the quarterly credits of the other pension plan,  my wife’s plan only provides annual contributions at year-end.  The large increase in January is entirely due to the this contribution.

Car #1

January 2017 Net Worth, Assets, Liabilities

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 $10,421.

Car #2

January 2017 Net Worth, Assets, Liabilities

For Car #2 we started with a 60 month auto loan for $18,774 at 2.8%. We continue to make progress on the car loan this month. 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

January 2017 Net Worth, Assets, Liabilities
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

January 2017 Net Worth, Assets, Liabilities

Well one month of extra cash flow freed up from eliminating my wife’s student loans.  This had been our primary area of focus for the better part of 12 months and it feels great to have accomplished our goal.  I wanted to show the blank line at least one month to let the feeling sink in.  Last net worth update for this line item….later!

Credit Card

January 2017 Net Worth, Assets, LiabilitiesMy 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. There is always some carry over month to month but we are never charged any interest.

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