March 2017 Net Worth Update (+$7,445 4.5%)
Here is our March 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 $171,688 in March (an increase of $7,445). 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.
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.
March 2017 Net Worth Overview
Following the March 2017 Net Worth Overview table there is a breakdown of the individual categories of our net worth. March was our fifth straight month with gains of $4,000 or more and second straight month adding over $6,00 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. I received a year-end bonus which gave us the opportunity to set some additional money aside this month. We funded the Roth IRA and set aside funds in our Taxable Brokerage account. 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.
We topped off our emergency fund off at $15,000 a couple months ago. We are getting 0.55% on the money held in this account. We continued to save above the $15,000 amount within this account with the purpose of giving us more options. Saving this addition capital improves our liquidity and positions us to take advantage of future opportunities. Opportunities that come to mind are increased Roth IRA contributions during a market downturn or purchasing a rental property. Rather than earn a very safe but low return, we moved all funds above $15,000 into a taxable brokerage account. See the new Taxable Brokerage Account section below.
The checking account typically hovers around $3,500, 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 another one of those valleys. .
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 $803. 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
In March I continued my usual contributions to my 401k plan. I always make sure its enough to get the full employer match. I had the added benefit of receiving a year-end bonus which is included in the monthly 401k percentage calculation. This added a big boost to the
401k savings in March.
Pension Plan #1
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. I expected to see this balance increase with the end of the first quarter of the year. There may just be some lag in the account being funded.
Roth IRA – Retirement Account
This Roth account is held through a robo-advisor account. We contributed $400 to this account in March. $100 came from our recurring contribution and the additional $300 came from my year-end bonus. The contributions and market performance gave us another nice jump for our Roth account.
Wife’s Retirement Plan
403(b) – Retirement Account
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.
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.
Taxable Brokerage Account
We moved $1,150 from our emergency fund to this taxable brokerage account. The goal of this account is to create a down payment for a rental property. The goal of the rental property is to begin creating additional income streams to supplement and eventually replace our full-time employment income.
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 $10,214.
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
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.
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 charge approximately $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 March 2017 update.