How We are Growing Our Net Worth – December 2018

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For anyone who tracks their net worth and/or investment portfolio … I’m sure December (2018) was a tough month. It was certainly one of the biggest drops in net worth that my wife and I have seen … since we started keeping track of it back in March 2015.

Despite dropping by over 4% since last month, growing our net worth is still part of our financial independence (FI) plan.

To put things in perspective, we still grew our net worth in 2018 by just over $4,000. That’s not a ton … but still a move in the positive direction after a crappy end to the year.

And on another bright note … we were able to reduce our liabilities by just under $16,000 in 2018. Remember that lowering our liabilities (or debt) is just as important as growing our assets when it comes to building wealth.

Just trying to offer a little motivation after a rough couple of months!

Here is our latest monthly net worth update.

How Did We Grow Our Net Worth in December 2018

How We Track Our Net Worth

Before we move on to reviewing our December 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.

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 December?

December 2018 Net Worth

As of December 31st, 2018 – our net worth is $622,333.

Overall, that is a good size drop of over $31,000 in net worth just in the last month.

Since our all time net worth high back in September 2018, we are down just over $43,000 in net worth. That is a 6.5% decline since that time.

Our net worth in December 2018 decreased by (4.84%) compared to November.

November 2018 Net Worth = $653,977
December 2018 Net Worth = $622,333

Net Worth Change = ($31,644)

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

Assets

We always report our net worth with 3 main asset categories that include – 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.

Investments

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 December, we saw a drop of almost $30,000 in investments alone … which is a direct result of recent stock market declines. The good news is that investments today are a little bit cheaper for any new money we put into the market.

November 2018 Investments = $499,188
December 2018 Investments = $470,589

Investment Change = ($28,599)

Overall, our investments dropped by (5.73%) in December compared to the prior month.

Cash

Our current cash balance 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 2018 – Cash = $5,537
December 2018 – Cash = $4,117

Cash Change = ($1,420)

Overall our cash declined by over $1,000. This is mostly just the timing of when our income hits our accounts and is used to either pay down debt or invest.

Note – When it comes to cash … I find it a very inefficient way to build wealth. That is why we put it to good use either paying down debt or investing it whenever we can … even in a bad stock market!

Home Value

Reporting home value in our net worth reports is good and bad.

For example, we use Zillow to estimate our home value. This is simply an estimate at best and may not represent the actual value we could sell our home for.

That is the bad part of reporting it on our net worth.

On the other hand, it is such a huge asset that not reporting it would skew our net worth results.

We currently owe about 50% (maybe a little more) of the value of the home. That is a significant part of our overall net worth in my opinion.

The estimated value of our home decreased several thousand dollars this past month compared to November.

November 2018 – Home Value (est) = $344,685
December 2018 – Home Value (est) = $338,810

Home Value Change = ($5,875)

This size drop was a bit unexpected to be honest. But even last month I commented that if we could be guaranteed to sell our home for $330,000 today … I would take it.

So the estimates I believe are skewed a bit to begin with.

Total Assets

All three of our asset classes (investments, cash, and home) saw good size declines last month.

Overall our total assets decreased by (4.23%) since last reporting … which was disappointing … but not unexpected.

November 2018 – Total Assets = $849,410
December 2018 – Total Assets = $813,516

Total Asset Change = ($35,894)

Like I mentioned before … it’s been a tough couple of months but we were up overall for the year.

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 plan to have one of our vehicles paid off completely by next 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.

Mortgage Balance

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.

November 2018 – Mortgage Balance = ($173,735)
December 2018 – Mortgage Balance = ($172,800)

Mortgage Balance Change = +$935

Each month we make a mortgage payment, our principal drops by a little bit more each month. This past month we got a boost by adding another $21 to our payment.

And we paid for our January mortgage payment a few weeks early … so we actually made the equivalent of 2 payments in December.

Car Loan(s)

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 less than 8 months from having it completely paid off.

This liability is referred to as “Car Loan #1”.

The second car loan (referred to as “Car Loan #2”) currently has about 4 years, 1 months until it is 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 December … we saw a nice drop in debt on both car loans. We expect to have car loan #1 paid off by next August (2019) at the latest.

November 2018 – Car Loan #1 – ($2,893)
December 2018 – Car Loan #1 – ($2,547)

November 2018 – Car Loan #2 ($12,298)
December 2018 – Car Loan #2 ($12,052)

Total Car Loan(s) Change = +$592

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

Basically all of the spending we do is done through travel rewards credit cards. The only exceptions are paying our mortgage, car payments, and our electrical bill.

One 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.

During December, we saw a good decrease in our month to month credit card balances.

November 2018 – Credit Card Balance(s) = ($6,507)
December 2018 – Credit Card Balance(s) = ($3,784)

Credit Card Balance Change = +$2,723

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 dropped, both auto loans dropped, and our credit card balances dropped. So there actually was a bright spot in our net worth report … despite the large declines in the stock market.

Collectively our total liabilities decreased by $4,250!

November 2018 – Total Liabilities = ($195,433)
December 2018 – Total Liabilities = ($191,183)

Total Liabilities Change = +$4,250

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.

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 $620,000+ in new worth … which is a sizable increase in less than 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 December net worth totals turn out? What steps are you taking to widen the gap between your assets and liabilities?

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