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.

November 2016 Net Worth Update ($4,204 2.9%)

November 2016 Net Worth Update (+$4,204   2.9%)

Background

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

Here is our November 2016 Net Worth Update. I started documenting our net worth in June 2016 (June 2016 Net Worth Report) and the amount came out $127,575.  We saw our Net Worth rise to $149,298 in November (an increase of $4,204).  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.

November 2016 Net Worth Overview

November 2016 Net Worth, Assets, Liabilities

Following the November 2016 Net Worth Overview table there is a breakdown of the individual categories of our net worth. November was a below average month and our net worth was somewhat stagnant when compared to recent months.  The biggest gain came from our retirement accounts as the markets rallied in post-election certainty.  I was excited to see sizable net worth gains this month with the rise in our investment accounts and debt payments  See below for more details on each of the categories.

Emergency Fund
November 2016 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 roughly $150. We currently have $14,857 in our emergency fund. We are getting 0.55% on the money held in this account.  Combine the contribution and minor interest payment and the account grew by $157 this month. We plan on capping our emergency fund at $15,000 and diverting the monthly contributions elsewhere.

Checking Account
November 2016 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.

Home

November 2016 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 $796. 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

November 2016 Net Worth, Assets, Liabilities

In November I continued my usual contributions to my 401k plan. I always make sure its enough to get the full employer match.   There were some nice gains in the post-election market rally. The market seemed to respond to the certainty of knowing who the 45th president will be.

Pension Plan #1 November 2016 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.

Roth IRA – Retirement Account

November 2016 Net Worth, Assets, Liabilities

This Roth account is held through a robo-advisor account. I was contributing  $100 per month to this account. I didn’t like the balance between my pre-tax (401k and 403b) accounts and my Roth account and wanted to see more tax diversification in my retirement accounts. I am stopping this contribution for the time being as I want to start building up additional cash reserves to increase our financial flexibility.

Wife’s Retirement Plan

 403(b) – Retirement Account November 2016 Net Worth, Assets, Liabilities

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

Pension #2
November 2016 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. This month we saw the small, monthly return that we expected.

Car #1
November 2016 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 $10,633.

Car #2
November 2016 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

November 2016 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
November 2016 Net Worth, Assets, Liabilities

We are almost at the end of this debt pay down journey. We put $810 toward this student loan and only have $480 to go. This has been our primary area of focus for going on 12 months now and it great to almost be done.  We are close to freeing up the $280 in cash flow associated with these student loans.  The goal is still to pay off this debt in December 2016. Unless something unexpected pops up, this should not be an issue.

Credit Card

November 2016 Net Worth, Assets, Liabilities 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. 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 November 2016 update.

October 2016 Net Worth Update ($1,333, 0.9%)

October 2016 Net Worth Update (+$1,333, 0.9%)

Background

October 2016 Net Worth, Assets, Liabilities

Here is our October 2016 Net Worth Update. I started documenting our net worth in June 2016 (June 2016 Net Worth Report) and the amount came out $127,575.  We saw our Net Worth rise to $145,094 in October (an increase of $1,333).  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.

October 2016 Net Worth Overview

October 2016 Net Worth, Assets, Liabilities

Following the October 2016 Net Worth Overview table there is a breakdown of the individual categories of our net worth. October was a below average month and our net worth was somewhat stagnant when compared to recent months.  The biggest gains came from our debt payments (both standard minimums and extra principle payments on my wife’s student loan debt).  Our retirement accounts saw some pullback related to weak market performance.  This is one of those months where there isn’t a ton of excitement from an overall perspective, but it is nice to see our net worth grow even in light of poor market performance. See below for more details on each of the categories.

Emergency Fund

October 2016 Net Worth, Assets, Liabilities

We have focused on setting aside $100 per month to keep building up this fund. This month we were able to put away roughly $270. We currently have $14,700 in our emergency fund. We are getting 0.55% on the money held in this account.  Combine the contribution and minor interest payment and the account grew by $278 this month. We plan on capping our emergency fund at $15,000 and diverting the monthly contributions elsewhere.

Checking Account

October 2016 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.

Home

October 2016 Net Worth, Assets, Liabilities
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 $791. 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

October 2016 Net Worth, Assets, Liabilities

In October I continued my usual contributions to my 401k plan.  I still contribute enough to get the full employer match.   I still lost some value here given the small day-over-day losses to end October.  We almost managed to break even when factoring in the contributions.

Pension Plan #1

October 2016 Net Worth, Assets, Liabilities

I have been waiting for this to hit for the past few months and it finally did. As I previously described, 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.

Roth IRA – Retirement Account

October 2016 Net Worth, Assets, Liabilities

This Roth account is held through a robo-advisor account. I was contributing  $100 per month to this account. I didn’t like the balance between my pre-tax (401k and 403b) accounts and my Roth account and wanted to see more tax diversification in my retirement accounts. I am stopping this contribution for the time being as I want to start building up additional cash reserves to increase our financial flexibility.

Wife’s Retirement Plan

 403(b) – Retirement Account

October 2016 Net Worth, Assets, Liabilities

Similar to the 401k, my wife’s retirement plan saw some pullback this month. Her contributions are smaller than what goes into the 401k so the affect is felt more in this account. Not worried about this since retirement investing isn’t a straight-line growth.

Pension #2

October 2016 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. This month we saw the small, monthly return that we expected.

Car #1

October 2016 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 $10,740.

Car #2

October 2016 Net Worth, Assets, Liabilities

For Car #2 we have a 60 month auto loan for $18,774 at 2.8%. We continued 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

October 2016 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

October 2016 Net Worth, Assets, Liabilities

We are almost at the end of this debt pay down journey. We put $814 toward this student loan and only have $1,290 to go. This has been our primary area of focus for going on 12 months now and it great to almost be done.  We are close to freeing up the $280 in cash flow associated with these student loans.  The goal is still to pay off this debt in December 2016. Unless something unexpected pops up, this should not be an issue.

Credit Card

October 2016 Net Worth, Assets, Liabilities

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. 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 October 2016 update.

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.

5-Year Net Worth Projection

This past month I started to discuss my monthly net worth (June 2016 Net Worth Update) which was $127,577 (conveniently calculated using Personal Capital).  I think my family is making good progress, seeing increases of $1,000 to $6,000 per month.  In order to keep moving forward, you need to take a forward look on things.  There is nothing you can do about what has already happened, but you can make decisions that impact your future self. That is why I developed a 5-year net worth projection. Technically, I have a 30 year projection but that is full of assumptions as to what might happen in our personal and financial lives.

Net Worth, Net Worth Projection, Assets, Net Worth Growth

The table below provides a view of my projected net worth gains in 6-month snapshots over the next five years.  I debated on the right time frame for this table. I arrived at five years, as it seemed both close enough to be realistic to project but far enough away to show meaningful growth. (assumptions underneath the table).

5 Year Net Worth Projection Table

Net Worth, Net Worth Projection, Assets, Liabilities, July 2016

Key Assumptions:

    • 7% return on 401k/IRA
    • 2.5% appreciation on our house
    • Max out 401k starting in 2018

Near-Term Focus

We are aggressively paying down my wife’s student loan debt. That effort will absorb any extra capital we have between now and November 2016.  Once we have her student loan paid off, we will have to reassess how to allocate the extra capital.

Next Steps

I am currently considering three options on how to direct this capital come November/December:

      1. Direct it toward the Roth IRA – This would give us  more flexibility if we decide to pursue early retirement (tax-free penalty free withdrawal of contributions after 5 years) while also saving toward a more traditional retirement.
      2. Begin aggressively paying down our $18,870 car loan – This would reduce our overall debt, but we could sell the car at any minute and wipe this debt away.  I would rather focus on putting additional capital toward an appreciating asset (investment, pay down mortgage debt) or in cash.
      3. Start to save cash to either grow our emergency fund or begin to invest in dividend producing stocks – I am happy with our current emergency fund but would like to keep it as roughly 10% of our net worth up until about $20,000.  My interest in generating passive income through dividend producing stocks has really grown since I created this blog.  When I began reading other blogs focused on dividends (Dividend DiplomatsThe Dividend Pig, and ItPaysDividends to name a few) it really opened my eyes to the power of dividends.

I have plans for an article on paying off my wife’s student loans for this Fall.  I will be looking more at this additional capital discussion then.

Conclusion

All in all, I am pretty pleased with this projection.  If I could lock in this type of net worth growth, I absolutely would. This breaks down to roughly a $5,000 increase per month. In my projection, most of this is coming from our 401k contributions and growth with the remainder coming from our minimum monthly debt payments.  My goal is to update this post every six months to align with the table above.  This will allow for a comparison of my projection versus the actual values.