How We are Growing Our Net Worth – December 2019

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For the past 5 years, we have been tracking our net worth and periodically posting the results here on The Money Sprout. In that time, we have grown our net worth by over $300,000!

A ton of that growth is a result of the stock market and the huge gains everyone has seen with their investments.

There have also been some steady gains in net worth due to paying down our liabilities, such as our mortgage and vehicles.

Paying down our liabilities has a similar impact on our net worth as growing our income and investments.

Today will be our last net worth update for a while. We actually haven’t made an update since June 2019, so we wanted to finish out the year at least with a final net worth report.

Why are we not going to post our net worth any longer?

The short answer is – it became a lot more complicated starting in 2020.

In this post I’d like to first share why this is our last net worth post (at least for a while). Then we plan to follow things up with our December 2019 net worth update.

Our Final Net Worth Update

You may or may not have noticed, but last spring I started posting lots of content around estate planning (and I still have a lot more to come).

The reason? My wife and I were dealing with settling the estate of one of our parents. This was certainly a difficult time in our lives after losing a set of parents.

And to top things off … we were left with managing the estate. Which might not seem like a huge deal … but it was very stressful.

I won’t get into the details of the estate settlement and problems with other family members … but just know it got ugly.

On the bright side however, my wife and I (along with other beneficiaries) inherited a good amount of assets from the estate.

Ultimately this inheritance will increase our net worth by a good amount. So much so that I felt it wasn’t helpful as it may have been in the past to show how we are growing our net worth.

Don’t get me wrong … we are not ashamed of receiving an inheritance.

But as far as tracking and reporting how our net worth is growing … it just doesn’t paint an accurate picture.

I thought long and hard about keeping our assets separate (pre and post inheritance) but that was going to just be too much time.

So from now on … I will continue to track our family’s net worth privately and stop posting it publicly.

Now that’s out of the way … let’s take a look at our net worth ending December 2019.

Tracking our Net Worth

As I mentioned at the start, we have been publishing net worth updates off and on for the past 5 years.

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.

Moving forward, we will continue to track our net worth monthly … only it will be private.

Running our net worth calculations every month helps us track how we are doing on paying down our debt … which is known as liabilities. Our liabilities 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 (December 2019) was another positive month for growing our net worth.

Let’s take a look at our December net worth results –

December 2019 Net Worth

As of December 31st, 2019 – our net worth was $750,304!

Overall, that is massive increase of over $60,000 in net worth the past six months.

Note – These numbers from December 2019 do not include any inheritance money.

There is no doubt that gains from the stock market helped to push our net worth way up, but we 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 continues a long trend of monthly increases.

Our net worth in December 2019 increased by 8.83% compared to June (2019).

Now … that is a six month increase (not one month) … but it is still an awesome sign of growth!

June 2019 Net Worth = $689,430
December 2019 Net Worth = $750,304

Net Worth Change = +$60,409

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

Assets

Each time we put together a 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.

Investments

Our investment category includes a dividend income portfolio, 529 plans for the kids, 457 account, IRA accounts, Roth accounts, and any other retirement account we have opened.

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 more healthy gains from the stock market.

June 2019 Investments = $506,192
December 2019 Investments = $563,650

Investment Change = +$57,458

For the past 5 years since we have been tracking our net worth, stock market gains have provided a huge increase in our assets.

The past six months (June to December) have been no exception and accounted for over $57,000+ increase in assets … which averages out to almost $10,000 a month.

That is way more than I make at my current job … which makes me wonder.

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.

The only exception is our emergency fund dollars … which are in high interest yielding savings accounts or CD’s.

June 2019 – Cash = $29,006
December 2019 – Cash = $27,796

Cash Change = ($1,210)

Why did we have a drop in our cash between June and December? It was from the ups and downs of moving money into the market and the timing of when our regular W2 income is coming in to our accounts.

Home Value

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

In the past, we 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.

So starting back in March (2019), 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 December 31, 2019.

  • Zillow – $351,985
  • Trulia – $351,352
  • Redfin – $320,059
  • Chase Home Estimator – $337,000
  • Realtor.com – $341,600

Taking the average of all 5 tools, we can estimate the value of our home at $340,399. This is the method that we will be using going forward.

June 2019 – Home Value (est) = $339,207
December 2019 – Home Value (est) = $340,399

Home Value Change = +$1,192

Overall (on average) we saw a slight increase 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.

Note – We may remove the Chase Home Estimator tool from our analysis or replace it. Since we have been using this method, the tool has priced our home at the exact same value every time.

Total Assets

Overall our total assets increased by 6.6% since last reporting (six months ago) … which is great. Of course, the stock market had a lot to due with this big increase.

June 2019 – Total Assets = $874,405
December 2019 – Total Assets = $931,845

Total Asset Change = +$57,440

I realize our total assets is just a number and not our net worth, but closing in on $1 million is pretty cool.

Now let’s talk about the other side of the net worth equation … liabilities.

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. The loan on our vehicle is at a 0% interest rate … 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 49% of our monthly spending.

Now I don’t get completely worked up about spending half of our income on housing from last year. We had to replace our roof, which accounted for a big increase.

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.

June 2019 – Mortgage Balance = ($169,977)
December 2019 – Mortgage Balance = ($167,558)

Mortgage Balance Change = +$2,419

Each time we make a mortgage payment, our principal drops by a little bit more each month.

Over the past six months, we have increased our net worth by over $2,400 … just from paying our mortgage.

Car Loan(s)

We currently have a single car loan.

This loan is on a second car (referred to below as “Car Loan #2”) and currently has about 3 years until it is fully paid off.

Note – Last July (2019) we paid off our other car loan (referred to as “Car Loan #1).

June 2019 – Car Loan #1 = ($320)
December 2019 – Car Loan #1 = $0

June 2019 – Car Loan #2 = ($10,577)
December 2019 – Car Loan #2 ($9,101)

Total Car Loan(s) Change = +$1,796

Overall, we were able to increase our net worth by almost $1,800 in the past six months … just from making our monthly car payment.

That $1,800 counts just as much towards growing our net worth as does a $1,800 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.

June 2019 – Credit Card Balance(s) = ($4,101)
December 2019 – Credit Card Balance(s) = ($4,884)

Credit Card Balance Change = ($783)

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

It isn’t too much of a surprise that our credit card balances increased … especially that close to the Christmas holiday and end of the year.

Keep in mind that our credit card balances are not long term debt. But it is a liability we need to track for our net worth.

Total Liabilities

Since last reporting – our mortgage balance dropped, both auto loans dropped, and our credit card balances increased slightly.

Paying down these debts is just as important as growing our assets when it comes to building net worth.

Collectively our total liabilities decreased by $3,432, which is just like increasing our assets by the same amount.

June 2019 – Total Liabilities = ($184,975)
December 2019 – Total Liabilities = ($181,543)

Total Liabilities Change = +$3,432

When it comes to growing your net worth … decreasing your liabilities has the same impact as increasing your assets.

Net Worth Summary

As I mentioned at the start … this will be the last net worth report we post here … at least for a while.

We still plan to track our monthly net worth for our own records and to keep us moving in the right direction … but we won’t share it publicly.

I do encourage everyone who hasn’t tracked their net worth to start … and that doesn’t mean you need to share it to the world.

Seeing our numbers helps to motivate my wife and I to continue paying down our debt. It also helps us continue with our long term goals of saving 50%+ of our income and investing in assets whenever it makes sense.

Do you track your net worth? How did your most recent net worth totals turn out? What steps are you taking to widen the gap between your assets and liabilities?

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