March 2017 – Net Worth Update

How to Grow Net Worth - March 2017 Results

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We have been tracking our net worth for the past 23 months.

Our net worth has grown by 21.3% since our first report back in March, 2015! That is an increase of almost $93,000 in less than 2 years. Think we can get to $100K growth by the time we get to 2 years next month?

Of course, if we hadn’t bought a new car earlier this year … we would have increased our net worth by well over $100,000 already.

Over the past 2 years (less the 1 month) … we have seen our assets start to 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).

The only time our liabilities actually went up was when we took on the debt of our new car payment.

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.

Note: This post contains affiliate links.

Personal Capital

I highly recommend checking out Personal Capital and setting up a free account. It is the best tool available to help track your net worth and can even help with your spending.

Now on to our latest net worth update –

March 2017 Net Worth

As of March 23rd, 2017 – our net worth is $527,803.85.

In past years, we didn’t want to post net worth updates every month. Instead we opted for posting updates every 2 or 3 months. Since there are so many moving parts to calculating ones net worth, it seemed pointless to me to go through the exercise every month.

However, things change … and now we plan to provide an update every month.

So how come we changed our mind? We have been really trying to focus on saving a lot more of our income each month in order to invest it.

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 February.

Our net worth in March 2017 increased by a modest 0.55% compared to February (2017). That is an increase of over $2,500 in just 1 month.

This month, the increase was evenly spread out between assets and liabilities … which is something I like to see.

February 2017 Net Worth = $524,911.38
March 2017 Net Worth = $527,803.85

Net Worth Change = +$2,892.47

A high level breakdown of our assets and liabilities are detailed below.

Assets

We currently have 3 main asset categories that we are reporting on – investments, cash, and home value. We don’t like to report our automobiles as an asset, so those are only included as liabilities.

Investments

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.

February 2017 Investments = $405,956.80
March 2017 Investments = $406,866.83

Investment Change = +$910.03

The stock market had been on a tear lately, so a ~$900 increase in one month may seem a little disappointing. However, even though things have slowed down a little in the market … we continued to grow our investments!

The value of our investments rose by 0.22%.

Overall, the health of our portfolio looks strong as we have built a solid cash flow machine.

Cash

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.

February 2017 – Cash = $4,605.01
March 2017 – Cash = $3,409.67

Cash Change = ($1,195.34)

We saw a big drop in our cash since last reporting.

The biggest reason for this was that we paid our annual home owners insurance and insurance for my new car.

We hope to increase our cash starting next month.

Home Value

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.

February 2017 – Home Value (est) = $329,363.00
March 2017 – Home Value (est) = $331,269.00

Home Value Change = + $1,906.00

A nice increase in our home value … although it is simply a figure on paper.

Despite the limitations of reporting our home value, it is good to see the perceived value of our home increasing a little each time we report our net worth.

Total Assets

Overall, 2 out of 3 assets we report on (home value and investments) saw increases. Our cash took a hit in order to pay off several large expenses.

Total assets rose by almost 0.22% since last reporting.

February 2017 – Total Assets – $739,924.81
March 2017 – Total Assets – $741,545.50

Total Asset Change = +$1,620.69

Liabilities

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.

My old car died … so we ended up buying a new car that gets great gas mileage. I commute about 60 miles per day to work … so I need something that doesn’t waste a bunch of gas.

While my wife and I didn’t really want to take on additional debt, it was time for me to replace my old car as the ongoing maintenance costs were rising.

Mortgage Balance

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.

Every few months, we consider refinancing to a 15 year mortgage … but the numbers never seem to work out.

February 2017 – Mortgage Balance – ($183,170.06)
March 2017 – Mortgage Balance – ($182,737.87)

Mortgage Balance Change = + $432.19

When we first took out our mortgage, we had paid extra money towards our principal each month. Usually between $100 and $300 a month. However now, based on our low interest rate, we opt to put this money to work for us in the stock market.

I like to think we can earn a dividend yield higher than our mortgage rate (4.375%).

Car Loan(s)

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 over 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 #4 of the loan. We refer to this as “car loan #1”. Since our rate is 1.56%, we haven’t really considered paying extra on it. We would rather take any extra money and use it to invest instead of paying down this specific debt.

February 2017 – Car Loan #1 – ($9,582.67)
March 2017 – Car Loan #1 – ($9,248.63)

February 2017 – Car Loan #2 – ($17,709.92)
March 2017 – Car Loan #2 – ($17,463.95)

Car Loan(s) Change = +$580.01

The balance on both of these loans should drop a decent percentage each month going forward … especially loan #2 since it is 100% principal.

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.

February 2017 – Credit Card Balance(s) = ($4,550.78)
March 2017 – Credit Card Balance(s) = ($4,291.20)

Credit Card Balance Change = +$259.58

Our credit card balances fluctuate a lot month to month.

Since we pay off the balance on our cards every month, lowering the balances doesn’t save us any interest, etc. It is just a reflection that we are spending less … which is what we want to see.

Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.

Total Liabilities

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 good drop in our car loan debt as well as our credit card spending.

Which brings me to the most important point of all –

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.

February 2017 – Total Liabilities – ($215,013.43)
March 2017 – Total Liabilities – ($213,741.65)

Total Liabilities Change = + $1,271.78

Look at how much our liabilities dropped in just one month! That is basically the equivalent of a mortgage payment for us.

I never like to see our liabilities increase. Over the last month, we have lowered our liabilities by (0.59)% … which is a good thing.

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 ~$1,200+ is just as important as increasing our assets by the same amount.

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 March, it was nice to see growth in most of the categories … not just investment gains.

Our credit card spending, mortgage, and car loan principals all dropped. No surprise there, but we need to continue this trend.

As far as assets, our investments continued to grow … although not as fast as previous months. Finally, our mortgage value saw a modest increase compared to last month.

The only category that we dropped was our available cash.

Do you track your net worth? What steps are you taking to widen the gap between your assets and liabilities?

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