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

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


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.


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.


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.

$11,653 Student Loan Debt in 12 Months


Student loan debt sucks. There isn’t much else to say about that. Yes, it did help you increase your earning potential (hopefully), but it can crush your monthly cash flow.  I keep track of my monthly cash flow via Personal Capital. In my family’s case, attending college and having a relatively small amount of student loan debt was definitely worth it.

Student Loan Debt, Student Loans

That isn’t always the case as can be witnessed by many Millennials struggling to find work in their field of study.  Don’t get me wrong, college is probably the safest path to increasing your earning power, but it is not the golden ticket that it was for Gen X or Baby Boomers. Let’s get onto our debt story.

As of November 2015 my wife’s student loan balance was $11,653.  The minimum payment is $280 which we had been making for more than 5 years. We finally had enough and wanted to free up this ~$300 in cash each month.


  1. Ultimately provides increased cash flow which provides flexibility
  2. Guaranteed $1 for $1 increase to your net worth through the reduction of liabilities
  3. The general relief you feel when you pay off a debt


  1. Decreased liquidity as you are giving up cash on hand to pay off the debt
  2. Cash is not invested in the stock market and no investment returns are generated
  3. Less tax-deductible student loan debt interest

Student Loan Debt Pay-off Tables

Like I mentioned above, we had been paying the minimum on my wife’s student loan debt for several years.  This was the case again in November 2015 and then we decided to get serious about paying the balance off. In the table below, you can see the payments pick up in December but then really start to take off in January 2016. We have consistently been paying off close to $1,000 per month in principal since then (with some down months May and June).

Principal Reduction since November 2015

Student Loan Debt, Student Loans,

Planned Principal Reduction

We worked out a plan to pay off the remainder of the debt between now and the end of November 2016. This consists of committing $1,110 to $1,300 per month from August to November and paying the remaining $630 in November. Late Summer and early Fall are typically low expense months for us so we are putting as much cash as possible toward the debt. The annual Christmas expenses start to ramp up around the November/December timeframe which this plan takes into account.  Hopefully we can stick to this schedule and be done come December.  I am going to think of it as an additional Christmas gift to ourselves.

Student Loan, Student Loan Debt, Student Loan Paydown


You can make a compelling argument that we should keep paying the minimums on the student loan and direct the cash into investment accounts.  However, for us, financial flexibility today is our motivating factor. Plus there is definitely a strong sense of achievement as you see this balance drop.  We are to the point now where the finish line is in sight, only four more months until this weight is off our shoulders.  The thought of that is very relieving and exciting. I can’t wait!
I will circle back and discuss this again when we have truly eliminated this debt and see how we performed against the plan in the table above.

Comment and let us know about your debt pay down plans or successes. Let me know what you think of my plan and financial priorities. Thanks!

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.


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.

College Savings Plan

Paying for Your Child’s College Education

College, Tuition, Student Loans, College Savings Plan, 529 Plan

People tell you that having a child will change your life, you think you understand what that means, but you don’t. You cannot really understand until you look at this little person that you helped create. It is an incredible feeling that is tough to put into words. All you want to do is help this little person in every way you can. One-way that I know I can help my child is by saving for a college education through a college savings plan.

As with everything else in life, there are competing priorities. When it comes to saving for a college education, there may be other priorities to consider (paying down debt or saving for retirement are two that come to mind). My philosophy on this is that you will want to retire at some point so make sure you fund your retirement accounts first. Then focus on paying down debt, which will provide more flexibility and will eventually free up cash to fund a college education. Worst case scenario, your child can take out student loans…you can’t take out loans to retire.

Hopefully you are in position to help your child with their college expenses. In my opinion, this is a must for parents who have the financial means to help. The burden that student loans put on a young adult can make life unnecessarily difficult. Boo-Hoo whiny Millennial, right?

Okay, so you decided you want to help your child pay for college. Let’s look at the options at hand.

  1. Save cash for your child’s education. This would help pay for school but is not the most effective method. There is little to no return on the cash that is saved. In the end, inflation will eat into the purchasing power of the cash. If you want to save and help your child, consider the following option.
  1. Fund a tax advantaged 529 plan. These plans are sponsored by states, state agencies, or educational institutions. There are two types of 529 plans: pre-paid tuition plans and college savings plans.

Types of 529 Plans

Lets take a look at the pros and cons of each of the 529 plans

Pre-paid Tuition Plans

The benefits of the pre-paid tuition plan include:

  • Tuition prices are locked in at the current tuition rates
  • Risk of rising tuition prices falls on the state offering the pre-paid plan
  • Many state plans guaranteed or backed by state.
  • Typically a limited enrollment period.

The negatives of the pre-paid tuition plan include:

  • Plan only covers tuition and mandatory fees. Room and board options can sometimes be purchased depending on the state. Books and other educational expenses are not eligible.
  • Most state plans require either owner or beneficiary of plan to be a state resident.

College Savings Plans

The benefits of the college savings plan include:

  • Can be used for all qualified higher education expenses which include tuition, room & board, mandatory fees, and books or computers
  • Contribution limits in excess of $200,000.
  • There are no age limits and open to adults and children.
  • No residency restrictions apply. Additional tax benefits for those investing in in-state plans.
  • Enrollment open all year.

The negatives of the college savings plan include:

  • Risk of rising tuition prices fall on the individual
  • Investments are subject to market risk and may make no profit or even decline in value.

My Decision

My wife and I have decided to fund a college savings plan. The ability to use the funds for more than just tuition and mandatory fees plus the flexibility to use the funds at any school in the country were overwhelming. Additionally, I believe that I can match, if not beat, the annual rise in tuition with the market returns of properly investing the college savings plan. See the graphics below for the rise in tuition over various time periods.

College, Tuition Growth, 529 Plans, College Savings, Tuition, College Savings Plan

US Tuition, Tuition Growth, Student Loans, Student Debt, 529 Plans, College Savings Plan

With the decision made on what type of 529 plan to go with, we then had to decide on which state sponsored college saving plan that we would choose. NerdWallet has a great tool for examining which state plan provides you with the greatest benefit. This tool considers your state of residence to determine if any additional tax breaks are available. The in-state perks available to a Pennsylvania resident were not that great so the two remaining options to choose from were the Utah and New York sponsored plans. The New York plan offers the lowest fees of all the state sponsored plans (0.16%) which is very appealing. However, the Utah plan offers only slightly higher fees (0.22%) while providing the best variety of investment options.  Utah it is!!


Why is this a focus for our family? Well my wife and I both feel that an education is incredibly important. That isn’t to say that having a 9-5, cubicle farm job is important. It means that in order to think and provide for yourself and family, you need to have a basic understanding of how the world works. Whether that path leads you to a corporate job or to being your own boss as an entrepreneur, it doesn’t matter. In either case you need to be educated.

This is a value that has been instilled in me from day one by my parents. There was always talk of “going to college” or “we are saving for your college education” so that when it was time to make a decision on what to do after high school, I had already made up my mind. I am very thankful that my parents paid for my entire undergraduate education and supported me my entire life. I am truly lucky in that sense. I do still have remaining student loans from business school but those only increased my earning potential, which was worth it in my opinion.

I want to continue that tradition of education and instilling values in my children. The most certain and least risky path to a good life is through a good education. Why not start thinking about this when my first is still in diapers?

Please comment below and tell me about your experience in paying for college.

Net Worth Targets

Net Worth Targets

Millennial Family Finance, Net Worth, Net Worth Targets,

I am a huge proponent of tracking your net worth (see the MFF Net Worth Tracker). The process of tracking net worth is relatively straight-forward (see the MFF Net Worth Explained article). So you have this net worth number, now what?  The most important thing is to make sure you keep this net worth number moving in an upward direction. However, it is interesting to set net worth targets, project your net worth, and understand where you stack up against you age group.

Let’s start with where you stack up against other individuals in your age group. The graphic below outlines five different age groups by percentile (30th, 50th, and 70th).

Net Worth, Net Worthy By Age, Net Worth Demographics, Net Worth Household

Let’s focus on the “Under 35” age group. The most striking information to me is that if you have $0 net worth in the Under 35 crowd, you are better off than 30% of your peers. This lack of net worth in the age group is due to many people graduating college with massive student loan debt followed by poor spending decisions.

Student loan debt is one thing, but the “hey I have a steady income, lets buy stuff” debt is slightly less excusable (but oh so hard to avoid).  I was in that mode when I first starting working after business school. You live a college student lifestyle for a long time and want to treat yourself after. My splurge was on TVs and other home entertainment goods. Nothing outrageous but I spent enough that it is foolish in hindsight. The point being….its not hard to fall into this spending trap.

Fortunately, you and I realize this or at least want to know more about personal finance. Either way, kudos to us for wanting to expand our knowledge and focus on building the intellectual capital to put our financial capital to work.

In life, you need to set goals. Otherwise you are just wandering aimlessly hoping you end up in a good place. The same applies to your finances. Set a financial goal; in this case, set your net worth goal or target. The best resource for net worth targets that I have seen is from Financial Samurai.  These are great targets to set for yourself but don’t be bummed out if you are short of these numbers.

Millennial Family Finance, Financial Samurai, Net Worth, Net Worth Targets

What I like most about this chart is that there are three separate ways to arrive at a target net worth. You can do it based off of age, based off of years worked, or based off of income. In my case, I used a combination of all three to make a composite (or blended) net worth target for my wife and I. With this method, I determined that our net worth multiple should be 1.5x our income. Currently, we are behind this pace and it will be a little difficult to make up ground. However, I am confident that we are making good progress as a family and will continue to use the Financial Samurai net worth targets as our benchmark.

Comment below and let me know what you think of my method to set net worth targets.

Financial Decision: Deck Addition vs. Accelerated Repayment of Student Loan Debt

Financial Decision: Deck Addition vs. Accelerated Repayment of Student Loan Debt

The Options

Option #1: Accelerated Repayment of Wife’s Student Loan Debt of $5,500 at 3.5% interest

Millennial Family Finance, Student Loan Debt, Net Worth, Liabilities


Option #2: Saving enough cash for a Deck Addition to our house at $9,000 at 0%

Net Worth, Deck, Liability, Asset, Homeowner

The Details

Option #1: Accelerated Repayment of Student Loan Debt – We are currently focused on paying down my wife’s student loan debt ($5,500 remaining at ~3.5% interest). The minimum payment is $280 per month, of which approximately $20 goes toward the interest payment.

Based on the current, accelerated plan to pay down this student loan debt, we will be free and clear of the loan in January 2017. This would result in saving $260 ($20*13 months) in interest between January 2017 and March 2018. The additional $280 cash flow that we will have per month adds up to $3640 between January 2017 and March 2018 ($280*13 months). We can allocate this $3640 to other areas (my student loan repayment, investing more in my 401(k), etc.). With the future allocation of the $3,640, there is the potential for additional interest savings or for market returns on any money invested into my 401(k).

Option 1 – Student Loan Cost Change in Net Worth
Student Loan $5,500 $5,500
Future Option (Other Student Loan, Car Loan, Investment) $3,640 $3,640
Interest Savings $0 $260
Potential Savings $0 $?
Total $9,140 $9,400 + $?

Option #2: Deck Addition – We currently have no savings set aside for building this deck addition. We had a contractor provide an estimate for us during the Spring of 2015. The estimate was for $8,000 so I am now accounting for inflation and estimating that it will cost $9,000.

Our goal is to have the deck built for the Spring of 2017. This timeline gives us 9 or 10 months to save $9,000 (or $1,000 or $900 per month) which is a significant amount of money to save every month.

I looked at different realty and home improvement sites to see how much value a deck adds to your home. The range was from “it doesn’t add any real value only an additional perk to the buyer” to 80% to 90% of the cost of the deck. To be fairly conservative, I will split the difference and say that it will add 40% of the cost of the deck to the value of our home.   40% of a $9,000 deck is $3,600.

Option 2 – Deck Cost Change in Net Worth

Deck Addition

$9,000 $3,600
Total $9,000


And the winner is…?

The best financial decision is clearly to continue aggressively paying down my wife’s student loan debt. The cost compared to the impact on our net worth is better than $1 for $1. We spend $9,140 and watch our net worth increase by at least $9,400.   Compare this to the $0.40 per dollar return we get on the deck ($3,600 / $9,000) and the decision is pretty clear.  Additionally, knocking out the student loan provides more flexibility in our monthly budget by providing additional cash flow.

The decision becomes more interesting when you introduce the idea of the emotional “want”. For the majority of people, there is no enjoyment from paying down student loan debt. This is because there is nothing visible or tangible that you can see or use. Said differently, you can’t host a party or enjoy lunch on your paid off student loan. But, you can host a party or enjoy lunch on your new deck.

It is very easy to say that it is a clear-cut decision based on the financial aspect. This neglects the “want” of having a new deck and the benefits that come along with it. There definitely is a balance that needs to be found between making the absolute best financial decision every single time and enjoying life to the fullest. Is having this new deck worth $5,800 ($9,400 less $3,600)? Will it be used enough to make it worthwhile? These are the real questions that need to be answered when making this decision.

Also, there is always the potential that we could move. We plan to stay in our home for at least five more years so this is unlikely. However, you never know when something unexpected happens and you have to move. On the other hand, student loan debt will stay with you until you pay it off.

What would you do in this situation? Please comment below and let me know.
Stay tuned for our decision……


Ultimately, my wife and I decided that we should continue to pay down her student loan debt. The focus is reducing our expenses to free up cash flow so my wife can work part-time and stay at home with our daughter.