How We are Growing Our Net Worth – October 2017

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It has been 2 years, 7 months since we started tracking our net worth and posting our updates here on The Money Sprout. In that time, there has only been one instance that our net worth has dropped.

So it should be no surprise that in October … we are reporting another large increase (compared to September).

With this latest increase, we continued our streak of positive increases to our net worth every single month in 2017. For the 10th consecutive month (starting in January of this year) … we have grown our net worth.

Since that first report back in March 2015, we have grown our net worth by 34.8%!

That is an increase of over $151,000+ in just 2.5+ 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.

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.

So how did we do this October?

October 2017 Net Worth

As of October 19th, 2017 – our net worth is $586,559.78!

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 September.

Our net worth in October 2017 increased by a good 1.50% compared to September (2017). That is an increase of over $8,500 in 1 month. That is the way I like it … steady and growing each and every month!

September 2017 Net Worth = $578,049.67
October 2017 Net Worth = $586,559.78

Net Worth Change = +$8,510.11

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

Assets

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.

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.

Once again, this past month saw another big increase in the stock market. I am anxiously waiting for the bottom to fall out with a big correction … so that we can pounce and invest more dollars! I want to buy awesome dividend stocks on sale at a big discount rather than paying retail or higher right now.

September 2017 Investments = $441,693.80
October 2017 Investments = $447,251.68

Investment Change = +$5,557.88

The value of our investments increased by 1.26%.

Overall, the health of our portfolio continues to look strong as we have built a solid cash flow machine … that grows and grows each month!

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.

September 2017 – Cash = $6,541.80
October 2017 – Cash = $5,421.61

Cash Change = ($1,120.19)

We saw a drop of over $1,000 in our cash balance compared to last month. Was it from investing a lot more money into the stock market? Not exactly … I accidentally paid my mortgage twice last month! Good thing we had the cash to cover it.

How exactly did I pay my mortgage twice you may ask? Well we setup a new checking account (to earn that $300 to put into our IRA) last month. And I setup an automated deduction on the 6th of every month to pay our mortgage. But I also forgot that I had already paid it for October.

So … in the end … it is another learning lesson to make sure you know all your automated investments or transfers between accounts.

Home Value

I have never been a big fan of reporting on our home value in our net worth. Many personal finance bloggers don’t report their home value. I have gone back and forth on it.

But in the end, it is one of our largest assets so I think 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.

September 2017 – Home Value (est) = $336,806.00
October 2017 – Home Value (est) = $337,467.00

Home Value Change = +$661.00

Just a slight uptick in home value from last month. Just like when it dropped $500+ the month prior … no big deal.

Total Assets

Overall, 2 out of 3 of our major asset classes saw increases. Investments (as usual) really helped to push our net worth higher this past month. The only declining asset was cash and was due to a mistake on my part. The good news is that it went to pay down some debt … so the money is not wasted.

Total assets rose by 0.65% since last reporting.

September 2017 – Total Assets – $785,041.60
October 2017 – Total Assets – $790,140.29

Total Asset Change = +$5,098.69

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. That was a tough decision buying a new car … but one that I feel comfortable with now.

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.

We continued that trend in October by rounding off our payment and putting a few extra dollars towards our principal. Not a huge difference, but if feels good to pay down that debt!

Then we had our second normal payment go through with an automated deduction for the regular mortgage amount. That dropped our cash balance by a decent amount … but the good news is we can skip November’s payment now.

September 2017 – Mortgage Balance – ($180,038.67)
October 2017 – Mortgage Balance – ($179,171.63)

Mortgage Balance Change = + $867.04

Note – for every extra dollar we use to pay down our principal … that is an extra dollar we increase our net worth.

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 #6 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.

I have new goal to have our Car Loan #1 paid off by December, 2018. That will take a $500 per month payment. With such a low interest rate … this may not make much sense. But psychologically … getting this loan paid off will do a world of good right now.

September 2017 – Car Loan #1 – ($7,232.59)
October 2017 – Car Loan #1 – ($6,246.73)

September 2017 – Car Loan #2 – ($15,742.16)
October 2017 – Car Loan #2 – ($15,742.16)

Note – We haven’t paid on loan #2 amount yet for October, based on when we publish this report. And we have technically paid 2 installments of loan #1 since last reporting.

Car Loan(s) Change = +$985.86

Credit Card Balance

Normally, our credit card spending is the biggest area for improvement when it comes to debt.

Note – We have always paid our balance off every month on our credit cards.

September 2017 – Credit Card Balance(s) = ($3,978.51)
October 2017 – Credit Card Balance(s) = ($2,419.99)

Credit Card Balance Change = +$1,558.52

Our credit card balances fluctuate a lot month to month. However, we are really focused on spending less.

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

Over the past couple of weeks, we have started to explore how to build up our credit card rewards … specifically earning travel rewards. We have been earning rewards for the past 10+ years on our credit card spending. But we need to figure out how to maximize our earnings potential and take advantage of bonus offers.

And I recently highlighted how we are having a difficult time hitting our minimum spend for the first card we opened. This is because we are trying to slash our monthly budget … and it seems to be working.

Check out our Travel Rewards page for up-to-date information on our pursuit for FREE Travel.

Total Liabilities

Since last reporting, our mortgage balance has dropped – as expected … by a bunch because of my double payment. 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 great big drop in our car loan debt and an even bigger drop in our credit card spending.

Collectively our total liabilities dropped by over $3,400+ … which is awesome! I believe that is the biggest drop we have ever seen in a month from our liabilities.

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.

September 2017 – Total Liabilities – ($206,991.93)
October 2017 – Total Liabilities – ($203,580.51)

Total Liabilities Change = + $3,411.42

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 ~$3,400+ 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 October, most of our gains came from our investments … but a lot came from lowering our liabilities too. Besides increasing our investments, we were able to lower our liabilities by over $3,000+, which helps just as much as increasing our assets by the same amount. Part of that was paying our mortgage twice … but it still helps build our net worth.

In addition to lowering our debt, we were able to spend a lot less … which helped lower our credit card balances.

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

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