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.

2 thoughts on “January 2017 Net Worth Update (+$4,072 3.0%)”

  1. Thanks for the detailed breakdown and analysis. Out of curiosity, how many months of expenses would that emergency fund cover? Are you ascribing to the 3-6 months rule or longer?

    1. It really depends on the scenario. Assuming we simultaneously lose both of our incomes, we could make our emergency fund last 4 or 5 months. However, I like to think the chances of that happening are pretty slim. If we lost the higher of the two incomes but reduced our expenses slightly, we could probably do 12 to 18 months.

      Thanks for the reading and commenting.

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