How We are Growing Our Net Worth – April 2016
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Over a year ago, my wife and I decided to start tracking our net worth. After reading up on other personal finance bloggers and their net worth, it felt like it was time for us to start keeping track of ours too.
Instead of tracking our net worth each month however, we decided to track it every 3 to 9 months. Tracking assets like the value of our home, for example can be very volatile month to month. That is why a 3 to 9 month interval seems to be a better option for our family.
Unlike our home value, keeping track of investments like cash, certificates of deposits, and stocks can be very helpful. It gives us a snapshot of the overall picture of our finances, which is both motivating and fun.
On the flip side, keeping track of liabilities over the long term has proven beneficial as well. We can see our remaining home balance fall every time we report along with our auto loan.
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 third ever net worth update –
April 15, 2016 Net Worth
As of April 15th, 2016, our net worth is $469,934.98!
Just like in our first two reports, we still believe that reporting on certain assets like a mortgage can be misleading. This is why we choose to only report our net worth only a couple times per year.
While we don’t like reporting every month, my wife and I hope that by calculating our net worth every 3 to 9 months we can see progress in our results.
Our net worth in April 2016 rose by 3.9% compared to last June. That was an increase of $17,835.64 over those 10 months.
June 2015 Net Worth = $452,099.34
April 2016 Net Worth = $469,934.98
Net Worth Change = + $17,835.64
A high level breakdown of our assets and liabilities are detailed below.
We currently have 3 main asset categories that we are reporting on, which include 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. We have however, decided to report the remaining loan balance on my wife’s van.
This category includes our dividend income portfolio, 529 plans for the kids, emergency fund accounts, retirement accounts, etc. It is currently the highest valued asset and we plan to continue growing it.
Over the next couple of years, I expect to see major gains from our investments – which will push our net worth much higher.
June 2015 Investments = $356,417.82
April 2016 Investments = $361,793.65
Investment Change = + $5,375.83
The stock market has been on a wild roller coaster the past year or so. Since we have been pumping money into our investments over the last 10 months, it is no surprise to see these increases. As these investments grow and start earning dividends, I expect our investments to really start growing nicely for years to come.
Our current cash includes all of our checking and savings accounts. We saw a big drop in cash since last reporting. Most of this was due to moving a lot of money into the stock market and still paying off holiday bills from last Christmas. I also spent a bunch of money fixing up my car which put a sizeable dent in our cash reserves.
June 2015 – Cash = $9,054.23
April 2016 – Cash = $2,161.91
Cash Change = ($6,892.32)
The big drop is actually a wake up call to us. We really need to focus on pumping up our cash reserves.
I am not a huge fan of reporting on our home value, but 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 – which is another reason not to calculate it every month.
June 2015 – Home Value (est) = $296,079.00
April 2016 – Home Value (est) = $310,604.00
Home Value Change = + $14,525.00
This is the most volatile asset that we currently have. While we saw a nice bump in our home value since last June, it could very easily be back down in a couple of months.
Overall, our home value had a very nice jump and our total investments certainly shot up from all the new money we are investing. Unfortunately our cash has declined a bunch, which gives us something to focus on in the future.
June 2015 – Total Assets – $661,551.05
April 2016 – Total Assets – $674,559.56
Total Asset Change = + $13,008.51
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.
My wife and I really enjoy having a house. With 3 young children, we really have no desire to rent. While we certainly enjoy home ownership, it does come with a cost – monthly mortgage payments!
We have a decent mortgage rate on our 30 year loan and continue to make payments every month. 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)
April 2016 – Mortgage Balance – ($187,192.99)
Mortgage Balance Change = + $4,259.36
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)
April 2016 – Car Loan – ($13,065.05)
Car Loan Change = + $3,088.33
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.
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. We are taking some steps and challenging ourselves to spend less on our credit cards each month.
Note – Just to be clear, we have always paid our balance off every month on our credit cards. We are however trying to limit what we spend so that the extra money can be pumped into more investments.
June 2015 – Credit Card Balance(s) = ($1,845.98)
April 2016 – Credit Card Balance(s) = ($4,366.54)
Credit Card Balance Change = ($2,520.56)
As you can tell, we have taken on more credit card debt – which also shows why our cash had a big decline.
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 due to holiday spending and major repairs to my car.
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)
April 2016 – Total Liabilities – ($204,624.58)
Total Liabilities Change = + $4,827.13
Net Worth Summary
Overall I think it was a good 10 months and we took some positive steps towards building our net worth. It is nice to see some of our liabilities drop (which they should) like our mortgage and car loan. Growing our net worth is just as much about reducing our expenses (liabilities) as it is about growing our assets. That is one of the reasons why we decided to start reporting our net worth – to show our work on reducing liabilities.
We also like tracking our investments in our net worth. While we report our dividend income at the end of every month, we still have several other investments like 401K’s and 529 plans that are not included. 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?