June 2016 – Net Worth Update
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After seeing how helpful reporting your net worth can be from other bloggers, I decided to start tracking ours over a year ago. However, instead of tracking our net worth each month like many do, we decided to report it every 3 to 9 months.
There are just too many variables to track it month to month. For example, the value of our home can really fluctuate from one month to the next. That is why we have decided to spread out the frequency of when we report.
We are tracking our net worth through our Personal Capital account. Without this great tool, I can tell you that we wouldn’t have the time or patience to track our net worth.
Now on to our fourth net worth update –
June 1, 2016 Net Worth
As of June 1st, 2016, our net worth is $479,682.09!
While my wife and I don’t see the need to report our net worth each month, periodic updates throughout the year can help give us an idea of where we are. This month, we decided to compare our current net worth for the entire year by looking back to June 1st, 2015.
Our net worth in June 2016 rose by 6.1% compared to last June 2015. That was an increase of $27,582.75 over those 12 months.
June 2015 Net Worth = $452,099.34
June 2016 Net Worth = $479,682.09
Net Worth Change = + $27,582.75
A high level breakdown of our assets and liabilities are detailed below.
Note – Normally we compare our assets and liabilities to the previous report. However this time we are comparing it to one year ago. I want to see how we grew our net worth over the past year.
We currently have 3 main asset categories that we are reporting on – investments, cash, and home value.
To keep things simple, my wife and I decided not to report the value of our automobiles as an asset. My 15+ year old car doesn’t hold much value and I don’t consider our minivan much of an asset either. We are however reporting our minivan loan balance as a liability.
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.
Over the next couple of years, we expect to see major gains from our investments – which will push our net worth much higher.
June 2015 Investments = $356,417.82
June 2016 Investments = $364,890.68
Investment Change = + $8,472.86
At first glance, I would have expected our investments to increase by more than $8,000+. Since we have been pumping money into our investments over the last 12 months, I would have expected a higher increase. While it is not over the same time period, in 2015 alone we invested over $13,000 into the stock market.
All is not lost however. While the value of our investments did not grow by leaps and bounds, our dividend income did. Plus, our projected future dividend income is growing like a weed so I expect next June our investment numbers will be much, much higher.
Our current cash includes all of our checking and savings accounts. It is difficult to analyze the change in our cash from year to year. We have seen a drop of almost $4,000 in cash since last year. A lot of this could be attributed to putting our extra cash to work in the stock market.
I would much rather have our money working hard for us by investing in top notch companies that will produce income. The other option would be to leave the cash in a savings account and earn pennies in interest.
June 2015 – Cash = $9,054.23
June 2016 – Cash = $5,236.42
Cash Change = ($3,817.81)
I like to have a decent cash reserve, but not at the cost of missing out on dividend producing stocks.
I have mentioned it several times here, but I am not a huge 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 2015 – Home Value (est) = $296,079.00
June 2016 – Home Value (est) = $313,538.00
Home Value Change = + $17,459.00
This is the most volatile asset that we currently have and the values listed above are only estimates. There are no guarantees we could sell our home for $313,000+ today.
Despite the limitations of reporting our home value, it is kinda neat to look at it compared year to year. I will be interested to see what the value of our home is next June.
Overall, our home value had a very nice jump and our total investments certainly shot up from all the new money we are investing. Our cash has declined a bunch, but that isn’t necessarily a bad thing considering the new investments we are making.
June 2015 – Total Assets – $661,551.05
June 2016 – Total Assets – $683,665.10
Total Asset Change = + $22,114.05
There are 3 main liability categories that we will report on. The first and largest is our mortgage balance. Then we have a car loan for our family vehicle. Last, we charge almost all of our expenses through 2 credit cards.
Our road to financial independence would likely get much easier if we were to sell our home. We could either find a cheaper home to buy, go the RV route as many others have done, or even rent a place. Owning a home is not cheap, but having a comfortable home to live in with our family is something that we value.
At this point, owning a home is a trade off we are willing to make.
The good news is that we have a decent mortgage rate on our 30 year loan. My wife and I would love to pay extra on the mortgage each month (which we have done in the past) but for now we are putting our money to work buying dividend stocks.
June 2015 – Mortgage Balance – ($191,452.35)
June 2016 – Mortgage Balance – ($186,797.25)
Mortgage Balance Change = + $4,655.10
Each time we report, we should expect similar results. Nothing fancy here, just paying down our mortgage debt one month at a time.
We have an incredibly low rate on our auto loan (1.56%), so it doesn’t bother me that much to make these payments. Just like our mortgage, every month we see our principal decreasing and our net worth increasing as a result.
June 2015 – Car Loan – ($16,153.38)
June 2016 – Car Loan – ($12,758.35)
Car Loan Change = + $3,395.03
We have no current plans to pay extra on our car loan. With the very low rate, I would rather be investing our money into dividend stocks or even paying extra on our mortgage.
Just like we value having a home of our own, my wife and I also value the safety of a minivan to transport our family.
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 2015 – Credit Card Balance(s) = ($1,845.98)
June 2016 – Credit Card Balance(s) = ($4,427.41)
Credit Card Balance Change = ($2,581.43)
Reducing our credit card spending is one area that we can work to improve upon. However, we purposely put all of our monthly spending on our cards (and payoff the balance each month) to earn rewards.
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, both our mortgage and car loan balances dropped – as expected. Our credit card balances shot up since last year.
It is worth mentioning that reducing liabilities is just as important as increasing assets when it comes to growing net worth.
June 2015 – Total Liabilities – ($209,451.71)
June 2016 – Total Liabilities – ($203,983.01)
Total Liabilities Change = + $5,468.70
Net Worth Summary
Overall I think it was a good year of growing our net worth. Our mortgage balance and car loan both dropped as expected. Increasing our net worth is just as much about lowering (and limiting) our liabilities as it is about increasing our assets. This is why we decided to report our net worth periodically. We always seem to talk about our assets like dividend stocks here but not too much about liabilities.
In addition to tracking our liabilities, it is fun to track our assets including our investments. Every month we report our dividend income. While this is a big focus area for us right now, it is only a small portion of our investments. These monthly reports don’t include other things like 401K’s and 529 plans. Reporting our investments as assets helps give my wife and I a clearer picture of our total net worth.
Do you track your net worth? How often do you track it? Are you focused on growing your assets or reducing liabilities or both equally?