How We are Growing Our Net Worth – December 2017
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We have been tracking our net worth and posting updates here on The Money Sprout for almost 3 years now. In that time, there has only been one instance that our net worth has dropped … which is awesome!
Based on our net worth history then, it should be no surprise that in December … we are reporting another huge increase (compared to November).
With this latest increase, we continued our streak of positive increases to our net worth every single month in 2017!
For the 12th consecutive month (starting in January of this year) … we have grown our net worth.
Even better … since our first report back in March 2015, we have grown our net worth by 39.3%!
That is an increase of over $170,000 in just 2.75 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 almost 3 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.
So how did we do this December?
December 2017 Net Worth
As of December 31st, 2017 – our net worth is $605,832!
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 November.
Our net worth in December 2017 increased by a modest 2.35% compared to November (2017). That is an increase of almost $14,000 in 1 month. WOW!
November 2017 Net Worth = $591,936
December 2017 Net Worth = $605,832
Net Worth Change = +$13,896
A high level breakdown of our assets and liabilities are detailed below.
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.
This category includes our dividend income portfolio, 529 plans for the kids, 457 account, 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.
Once again, this past month saw another big increase in the stock market … which gave our investments an awesome boost. Lately, we have been putting more new investment dollars to work in bonds to try and even things out. That way, if the market crashes, we can transfer our bond investments back into stocks.
November 2017 Investments = $449,096
December 2017 Investments = $463,768
Investment Change = +$14,672
The value of our investments increased by an incredible 3.27% last month!
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!
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.
November 2017 – Cash = $6,541
December 2017 – Cash = $9,876
Cash Change = +$3,335
We have a bunch of large expenses due after December (see credit card liabilities below) … so our cash balance increased by over $3,000 last month. We need to be prepared to pay off these expenses on our credit cards, and this extra cash will help.
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 … but I still don’t consider our home an investment.
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.
November 2017 – Home Value (est) = $339,979
December 2017 – Home Value (est) = $342,205
Home Value Change = +$2,226
A nice jump in home value compared to last month … but we need to remember it is just a estimate.
All 3 of our major asset classes saw increases. Investments (as usual) really helped to push our net worth higher this past month and our cash saw a big jump too. Our home value increased as well … but I just don’t get as excited about that as the other two categories.
Total assets rose by 0.69% since last reporting.
November 2017 – Total Assets – $795,616
December 2017 – Total Assets – $815,849
Total Asset Change = +$20,233
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 are working to pay extra on one of our vehicles and hope to have it paid off by the end of 2018.
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.
November 2017 – Mortgage Balance – ($178,746)
December 2017 – Mortgage Balance – ($178,746)
Mortgage Balance Change = + $0
We accidentally made two mortgage payments in November, so we didn’t pay one in December. This allowed our cash balance to increase in order to pay for other upcoming bills.
At the start of the year (January 2017), 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.
November 2017 – Car Loan #1 – ($5,756)
December 2017 – Car Loan #1 – ($5,265)
November 2017 – Car Loan #2 – ($15,496)
December 2017 – Car Loan #2 – ($15,004)
Car Loan(s) Change = +$983
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.
November 2017 – Credit Card Balance(s) = ($3,682)
December 2017 – Credit Card Balance(s) = ($11,002)
Credit Card Balance Change = ($7,320)
Our credit card balances fluctuate a lot month to month. However, this past month we took on over $7,000 more of credit card debt. The good news is that $4,000 of that debt is our property taxes. The remainder is from Christmas spending and a Disney trip we recently took.
Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.
Normally, we don’t let our credit card spending get this high … but we just had a lot of expenses come due all at once. The good news is all those expenses have helped us max out 3 travel rewards cards!
Check out our Travel Rewards page for up-to-date information on our pursuit for FREE Travel.
Since last reporting, our mortgage balance has remained the same – as expected. We also saw a great big drop in our car loan debt.
Our credit card spending more than doubled the past month, which was due to many expenses hitting us at the end of the year. Most notably, our property taxes were due and totaled almost $4,000.
Collectively our total liabilities increased by over $6,000. Normally this would be upsetting … but knowing we had some larger credit card bills eased any worry.
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.
November 2017 – Total Liabilities – ($203,680)
December 2017 – Total Liabilities – ($210,017)
Total Liabilities Change = ($6,337)
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 December, most of our gains came from our investments and a little bit from home value and cash increases. Liabilities increased a good amount … but should turn around the next couple of months.
And we will continue paying extra on our car loan #1 payment, so that we can eliminate that debt in another year and then focus on paying off car loan #2.
Overall, it has been a fantastic year with our net worth climbing by over $94,000 since last January! A lot of that growth came from the stock market, but our net worth has increased by 18.40% the past year!
Do you track your net worth? What steps are you taking to widen the gap between your assets and liabilities?