July 2017 – Net Worth Update
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We have been tracking our net worth for over 2 years now. And almost every single time we report our numbers … we see our total net worth grow.
Now once again … for the 7th consecutive month (starting in January of this year) … we have grown our net worth.
Overall, our net worth has grown by 29.9% since our first report back in March, 2015! That is an increase of over $130,000 in just 2+ years. It is an awesome feeling knowing we are growing our net worth by thousands and thousands of dollars every single year!
Since first reporting our net worth over 2 years ago … we have seen our assets really grow, while at the same time most of our liabilities decrease.
When you are building wealth and growing your net worth … that is exactly what you want to see. Grow your investments (i.e. assets) while lowering your expenses (i.e. liabilities).
If you can continue widening that gap (difference between liabilities and assets), there is more money leftover to buy assets and less money to pay for liabilities.
Now on to our latest monthly net worth update.
How We Track Our Net Worth
Before we move on to reviewing our latest net worth numbers, I wanted to point out that we are using our Personal Capital account to do most of the work.
We are tracking our net worth through this free account. This tool has made it possible for us to easily track our net worth at a moments notice.
So how did we do this July?
July 2017 Net Worth
As of July 21st, 2017 – our net worth is $565,183.20!
In past years, we didn’t want to post net worth updates every month. Instead we opted for posting updates every quarter or so. Since there are so many moving parts to calculating ones net worth, it seemed pointless at the time to go through the exercise every month.
But priorities change … and now we plan to provide an update every month. We started providing monthly updates at the start of 2017 and plan to continue for some time.
So why did we change our mind? Our focus is now on saving a lot more of our income each month in order to invest it. And by reviewing our net worth once a month, I feel that it will help us stay motivated with our goal to save (and invest) more.
Here is our most recent update, compared to our last net worth post in June.
Our net worth in July 2017 increased by an incredible 2.68% compared to June (2017). That is an increase of almost $15,000 in 1 month. Just incredible!
Once again, the the majority of the increase this month was from our investments … which has been very common lately. In addition to investment increases, we were able to decrease our liabilities by a good percentage, which is just as important as growing our assets.
June 2017 Net Worth = $550,405.13
July 2017 Net Worth = $565,183.20
Net Worth Change = +$14,778.07
A high level breakdown of our assets and liabilities are detailed below.
We report our net worth with 3 main asset categories that include – investments, cash, and home value. We don’t like to report our automobiles as an asset, so those are only included as liabilities. If we really wanted to get detailed, I should probably start thinking about adding these assets in the future.
This category includes our dividend income portfolio, 529 plans for the kids, emergency fund accounts, retirement accounts, etc.
It is currently our highest valued asset and we are constantly working every single day to make it grow.
Since last October (2016), we have been focused on investing new money into the stock market. We want to grow our investment portfolio – with a heavy focus on growing our dividend income stream.
June 2017 Investments = $425,372.22
July 2017 Investments = $433,244.79
Investment Change = +$7,872.57
Wow! What a jump in value in just one month.
Once again, investment increases made up the majority of our overall net worth increase last month. We have been investing a lot of new money over the past 10 months and are starting to see these assets grow … and generate income on it’s own.
The value of our investments rose by 1.85%.
Overall, the health of our portfolio looks strong as we have built a solid cash flow machine.
Our current cash includes all of our checking and savings accounts. We don’t usually carry a high cash balance and like to move it into the stock market to purchase income producing assets. However, it is also important to have some cash on hand in order to cover unexpected expenses.
June 2017 – Cash = $5,531.54
July 2017 – Cash = $5,777.65
Cash Change = +$246.11
We are about at the point where we will no longer try and raise our cash balance. Instead, we will look to grow our income even more by investing our extra cash.
I have never been a big fan of reporting on our home value in our net worth. However, it is one of our largest assets so we need to include it.
We are currently using the Zillow estimate on our home, which is calculated directly through Personal Capital. This asset will likely see a bunch of ups and downs each time I report our net worth.
June 2017 – Home Value (est) = $330,429.00
July 2017 – Home Value (est) = $335,116.00
Home Value Change = $4,687.00
After a bit of a decrease in home value last month, we saw a very nice jump in July. I don’t put a lot of emphasis into these estimates when they go up … or down. They are just estimates and we will see increases and decreases month to month.
Overall, all 3 of our major asset classes saw increases. Investments really helped to push our net worth higher this past month.
The stock market has been on a roar lately and a lot of our increases are a direct result. Our home value was also a large portion of the increase since last month.
Total assets rose by 1.68% since last reporting.
June 2017 – Total Assets – $761,332.76
July 2017 – Total Assets – $774,138.44
Total Asset Change = +$12,805.68
There are 3 main liability categories that we will report on. The first and largest is our mortgage balance. Then we have our credit card balances … which is how we pay for almost every purchase we make.
The last category is our car loan(s). We just took on more debt back in January, when I purchased a new car. That was a tough decision buying a new car … but one that I feel comfortable with now.
One month at a time … we are working to pay down our mortgage debt. Fortunately, we have a reasonable mortgage rate and a monthly payment that doesn’t completely hold us down.
We have a 30 year mortgage on our home with a rate of 4.375%. That isn’t too bad of a rate, so we don’t normally pay any extra on the mortgage.
However, the past couple of months we started rounding our payments up the the nearest $100. That ends up being an extra ~$21 a month or so that goes directly to the principal.
In July, we took that one step further and paid an extra $121 on our principal. Not a huge difference, but if feels good to pay down that debt!
Every few months, we consider refinancing to a 15 year mortgage … but the numbers never seem to work out.
June 2017 – Mortgage Balance – ($181,437.88)
July 2017 – Mortgage Balance – ($180,899.37)
Mortgage Balance Change = + $538.51
Note – for every extra dollar we use to pay down our principal … that is an extra dollar we increase our net worth.
At the start of the year, we took on a lot more debt after buying a second car … which I will refer to as “car loan #2”. My 16+ year old vehicle finally died, so I needed reliable transportation.
The good news is that we were able to purchase a new vehicle that gets ove8084r 35 mpg with a 0% financed loan. The bad news is that we took on $17,000+ in debt and a second car payment.
As far as our other “family car”, we have a very low rate and are on year #5 of the loan. We refer to this as “car loan #1”.
Since our rate on this vehicle is 1.56%, we haven’t paid too much extra on it … up until the past couple of months. We are anxious to get this loan paid off now that we have a second car payment. So for a couple of months, we have been adding extra money to help pay down our principal.
June 2017 – Car Loan #1 – ($8,473.40)
July 2017 – Car Loan #1 – ($8,084.63)
June 2017 – Car Loan #2 – ($16,726.04)
July 2017 – Car Loan #2 – ($16,480.07)
Car Loan(s) Change = +$634.74
Credit Card Balance
Since we are not paying any extra money on our mortgage and our car loan has such a low rate, our credit card spending is the biggest area for improvement.
Note – We have always paid our balance off every month on our credit cards.
June 2017 – Credit Card Balance(s) = ($4,290.01)
July 2017 – Credit Card Balance(s) = ($3,491.17)
Credit Card Balance Change = $798.84
Our credit card balances fluctuate a lot month to month. However, we are really focused on spending less.
We were able to lower our credit card balance this past month after we had several large payments last month.
Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.
Since last reporting, our mortgage balance has dropped – as expected. It is good to know that each payment we make, we are paying less and less interest. Because of amortization, each payment we make … the principal drops at a higher and higher rate.
We also saw a drop in our car loan debt and a good decrease in our credit card spending.
Collectively our total liabilities dropped by almost $2,000 … which is awesome!
Growing your net worth is not just about increasing your assets. It is just as important to lower your liabilities at the same time.
The larger the gap is between your total assets and total liabilities is the key to financial independence and something my family is working towards.
June 2017 – Total Liabilities – ($210,927.33)
July 2017 – Total Liabilities – ($208,955.24)
Total Liabilities Change = + $1,972.09
As I like to point out every time we talk about net worth … there are 2 sides to the equation. So a decrease in liabilities by ~$1,900+ is just as important as increasing our assets by the same amount.
For some reason, I actually get more excited now reporting on how we are lowering our liabilities instead of growing our assets.
Net Worth Summary
We plan to keep these net worth posts updated every month now, which is a change from the past.
After reviewing our net worth number for this July, most of our gains came from investments and home value increases. However, that doesn’t really tell the whole story.
We were able to lower our liabilities by almost $2,000 which helps just as much as increasing our assets by the same amount.
In addition to lowering our debt, we were able to save a little more money last month and bump our cash balance up.
Do you track your net worth? What steps are you taking to widen the gap between your assets and liabilities?