How We are Growing Our Net Worth – April 2019
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For the past several years, we have been publishing a monthly net worth update.
These updates help us keep track of our assets such as – investments (stocks and bonds), cash (savings, checking, certificates of deposit), and even the value of our home.
It also helps us track how we are doing on paying down our debt every month … which are known as liabilities. Our liabilities would include the amount remaining on our mortgage, our auto debt, and any credit card debt.
Combining these two (assets minus liabilities) gives us our net worth.
This past month (April 2019) was another positive month for growing our net worth.
Overall, we grew our net worth by over 2% in April compared to March (2019).
This increase allowed us to set a new all-time high net worth value!
Looking back at the past 4 years (since we started keeping track of our net worth), I can say that most months (probably 80+%) we see increases. Every once in a while we will have some declines … which is healthy.
Tracking and growing our net worth is also part of our financial independence (FI) plan.
Our goal to reach FI will depend somewhat on the gap between our assets and liabilities.
To make it easiest to understand … we are working to lower our liabilities to $0 while growing our assets as much as possible.
Here is our latest monthly net worth update for April 2019.
How We Track Our Net Worth
Before we move on to reviewing our April net worth numbers, I would like to mention how 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 April?
April 2019 Net Worth
As of April 30th, 2019 – our net worth is $682,021!
Overall, that is amazing increase of over $16,000 in net worth just in the last month. I will say we had a lot of help from the stock market … but also managed to do some solid work on our own of paying down debt.
This is the highest net worth report we have ever recorded, which is awesome news. We beat our previous record set in March 2019.
Our net worth in April 2019 increased by 2.45% compared to March.
March 2019 Net Worth = $665,716
April 2019 Net Worth = $682,021
Net Worth Change = +$16,305
A high level breakdown of our assets and liabilities are detailed below.
In every net worth report, we include 3 main asset categories – investments, cash, and home value.
Note – We currently do not count our automobiles as an asset and they are only found in the liability section of our reports.
Below you will find a breakdown of each category for last months checkup.
Before we get started though … I wanted to point out a change in how we categorize our emergency fund dollars. Most of our emergency fund is in a high-interest savings account (currently earning 2.20%) or in certificate of deposits.
In the past we included these funds in our investment category. However, most of the funds are really just cash … so we are making the switch this month in how we categorize these funds.
Basically our investment bucket will go down and our cash bucket will increase this month. The end results is still the same though.
Our investment category includes a dividend income portfolio, 529 plans for the kids, 457 account, emergency fund accounts, IRA accounts, Roth accounts, and any other retirement account we have opened, etc.
We have been building these assets for the past 10 to 15 years (depending on the account).
These equity investments are currently (and likely will always be) our highest valued asset.
During April, we saw more healthy gains from the stock market. However, based on reclassifying our emergency funds … we are reporting a decrease in investment funds for the month.
March 2019 Investments = $512,929
April 2019 Investments = $495,715
Investment Change = ($17,214)
When you look at our cash results below … you will see the where those missing investment funds went.
Our current cash balance includes all of our checking and savings accounts. Plus we’ve added our certificates of deposit to this bucket starting in April.
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.
The only exception is our emergency fund dollars … which are in high interest yielding savings accounts or CD’s.
March 2019 – Cash = $2,678
April 2019 – Cash = $37,549
Cash Change = +$34,871
Again … this increase was a direct result of how we are classifying our emergency funds.
Reporting home value in our net worth reports is good and bad.
In the past, we have always used Zillow to estimate our home value. This was a simple an easy way to estimate the value we could sell our home for.
However, I’ve realized that Zillow estimates seem really high compared to what homes are selling for in our neighborhood. And this is consistent every month … so I thought I would take a different approach to estimating our home value.
Starting last month, we began using an average home value by taking the estimates from 5 different online sources.
For more information, check out the following article – Websites to Estimate the Value of Your Home.
Here is a breakdown of all 5 online tools and the different estimates for our home as of April 30, 2019.
- Zillow – $338,179
- Trulia – $341,870
- Redfin – $331,432
- Chase Home Estimator – $337,000
- Realtor.com – $341,200
Taking the average of all 5 tools, we can estimate the value of our home at $337,896. This is the method that we will be using going forward.
March 2019 – Home Value (est) = $339,505
April 2019 – Home Value (est) = $337,896
Home Value Change = ($1,609)
Overall (on average) we saw a slight dip in the estimated value of our home. In the next couple of years, we are planning to sell and downsize … so this is a number we will continue to monitor closely.
Overall our total assets increased by 1.88% since last reporting … which is encouraging. So even though we didn’t technically report an increase of investments … a lot of the gains were from stock market increases.
March 2019 – Total Assets = $855,112
April 2019 – Total Assets = $871,160
Total Asset Change = +$16,048
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 plan to have one of our vehicles paid off completely by this summer. The other vehicle is a 0% interest rate loan … so we are in no rush to pay extra on that one.
Here is a high level breakdown of each liability category.
We have a 30 year mortgage on our home with an interest rate of 4.375%.
If we were to continue paying the minimum monthly amount … our home would be paid off in about 20 years or so. But that isn’t necessarily our plan.
Eventually we will likely downsize into a much smaller home in order to reduce our housing expenses … which currently makes up 37% of our monthly spending.
If we could go back about 10 years, my wife and I would have purchased a much smaller home. We made a mistake and bought a home that was way too big.
We could have lived comfortably with a 1,000 less square foot than what we have now. That move alone would have saved us thousands and thousands of dollars every year.
And we would have purchased a home closer to my work … to help save on transportation costs.
But while we are still living in our home, we continue to lower our mortgage balance every time we make a payment.
March 2019 – Mortgage Balance = ($171,385)
April 2019 – Mortgage Balance = ($170,932)
Mortgage Balance Change = +$453
Each time we make a mortgage payment, our principal drops by a little bit more each month.
We currently have two car loans. One of these loans is for our “family vehicle” (a van). This loan has a very low 1.56% interest rate and we are now only 3 months from having it completely paid off.
My wife and I have already agreed to continue driving this car for at least 2 more years and enjoy the no monthly payments!
We also have a third driver coming on board soon in the family (our son will be 16 later this year), so we are trying to plan out vehicles in the coming years.
This liability on our family van is referred to as “Car Loan #1”.
The second car loan (referred to as “Car Loan #2”) currently has about 4 years until it is fully paid off.
The big difference here is that this second car loan has a 0% interest rate … so we are not in a huge rush to get it paid down. Although I wouldn’t mind getting this debt off our books for piece of mind sometime in the future.
During April … we saw another nice drop in debt on both car loans. We expect to have car loan #1 paid off by this July (2019) at the latest.
March 2019 – Car Loan #1 = ($1,420)
April 2019 – Car Loan #1 = ($1,067)
March 2019 – Car Loan #2 = ($11,315)
April 2019 – Car Loan #2 = ($11,069)
Total Car Loan(s) Change = +$599
Overall, we were able to increase our net worth by almost $600!
That $600 counts just as much towards growing our net worth as does a $600 increase in our investments.
Credit Card Balance
The majority of the spending we do each month is done through travel rewards credit cards. The only exceptions are paying our mortgage, car payments, and our electrical bill.
An important thing to keep in mind is that we never let our credit card payments slip past their due date. Paying interest or late fee’s is a complete waste of assets and not part of our plan.
During April, we saw another uptick in our month to month credit card balances compared to March.
March 2019 – Credit Card Balance(s) = ($5,276)
April 2019 – Credit Card Balance(s) = ($6,071)
Credit Card Balance Change = ($795)
Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.
Why have our credit card balances been going up recently? Unfortunately, one of our parents recently passed away and my wife and I are the executors of their will.
We’ve had to cover many costs recently like funeral expenses, paying their taxes, etc. Once we get the estate settled, we will be reimbursed … but it could take some time and will have a negative impact on our net worth.
We still are paying off our credit card balances each month … by using our emergency funds.
Since last reporting – our mortgage balance dropped, both auto loans dropped, and our credit card balances increased. This is just as important as growing our assets when it comes to building net worth.
Collectively our total liabilities decreased by $257, which is great considering our increase in credit card debt.
March 2019 – Total Liabilities = ($189,396)
April 2019 – Total Liabilities = ($189,139)
Total Liabilities Change = +$257
When it comes to growing your net worth … decreasing your liabilities has the same impact as increasing your assets.
I look forward to paying off our auto debt so we can then use that extra cash to save. Then maybe we will focus on paying down more of our mortgage? That is a guaranteed 4.375% return on our money based on our current mortgage rate.
Net Worth Summary
We plan to keep these net worth posts updated every month.
Not only does it keep us accountable in how we save, earn, and invest … it is great motivation when you see growth like we have over the past 3 to 4 years.
For example, our first ever net worth report was posted back in March 2015 … which was 3+ years ago. We reported a net worth of $434,984 back then.
Now we are over $680,000+ in new worth … which is a sizable increase in 4 years. We also realize the huge gains in the stock market have helped us grow our net worth.
Do you track your net worth? How did your April net worth totals turn out? What steps are you taking to widen the gap between your assets and liabilities?