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Tracking our net worth has become a monthly ritual for me over the past year. It is now one of my favorite things about personal finance, along with building a dividend income portfolio.
By tracking our net worth, it helps keep my wife and I motivated with our path to financial independence. It allows us to save more and more of our income each month. And it helps keep us investing all that extra income into dividend stocks and low cost index funds.
Reporting on our net worth every month has also motivated us to pay down our debt faster and has prevented us from wanting to take on any more. We have realized that paying down our debt is just as important as growing our assets.
Most months, we report that our net worth has grown. However, every once in a while we will actually report a loss in our net worth … which is completely okay.
For example, just last month our net worth dropped by almost 2%. This broke our 13 month consecutive streak of net worth increases we had recorded. We had been on such a roll with massive increases month to month … that it was no surprise we were due for a correction.
Here is 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.
[thrive_text_block color=”light” headline=”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.[/thrive_text_block]
So how did we do this February?
February 2018 Net Worth
As of February 28th, 2018 – our net worth is $606,436. That is about a $12,000 drop in net worth value and represents the first monthly decline in over a year.
There are a few reasons why we saw a big drop. First, the stock market had a sizable correction in February … and so did our portfolio. We look at this as an opportunity to pick up assets at a discount now instead of worrying about our portfolio going down.
Second … we had to take out a loan from our emergency fund to help pay for our son’s braces. So our total assets have declined as a result of this. We plan to slowly add funds back to the emergency fund by paying our loan back … to our-self over the next 30 months.
The good news is that our net worth is still over a thousand dollars above what we posted in December … just 2 months ago!
Here is our most recent update, compared to our last net worth post in January.
Our net worth in February 2018 decreased by a modest (1.88%) compared to January.
January 2018 Net Worth = $618,110
February 2018 Net Worth = $606,274
Net Worth Change = ($11,836)
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 and likely will always be our highest valued asset. There isn’t a day that passes that we are not working to make this asset grow.
As I mentioned in the opening … the stock market had a big correction in February and as a result our total assets dropped. This is the first time in a while that we saw such a big decline in asset value.
In the meantime while the market is correcting, we have been quietly building up a new 457b plan from my employer each month. In about 3 months, we have added over $3,200 in assets to this account. In addition, we continue to buy individual stocks in our taxable accounts and earn dividend income each month.
The collection of these sources help to grow our investment balance each month.
January 2018 Investments = $482,889
February 2018 Investments = $460,689
Investment Change = $(22,200)
That is a good chunk of change that we lost in February, but it is only on paper. We didn’t sell anything and considering the huge increases we were seeing that past couple of months … it isn’t a big deal.
Also it is important to point out that we borrowed over $6,000 from our emergency fund which is included in our total assets. We gave ourselves a loan in order to save over $1,000 on my son’s braces last month.
The value of our investments dropped by (4.6%) last month.
Overall, the health of our portfolio is still as strong as ever and we are collecting more and more dividend checks each month. We will continue to invest more and more money into the stock market when we have available funds.
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.
January 2018 – Cash = $2,376
February 2018 – Cash = $4,881
Cash Change = +$2,505
We were able to get by paying down our credit cards last month and start to build back up our cash position again. At the end of last year, we had several big expenses to pay off including – property taxes, trip to Disney, braces for my son, Christmas spending, etc.
The silver lining in all of that is that it helped us with our travel hacking. In the last 6 months, we have built up a portfolio of travel rewards worth $3,000 to $5,000.
I expect our spending to really slow down the next couple of months … which is a good thing.
I have never been a big fan of reporting on our home value in our net worth. Many personal finance blogger’s 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.
January 2018 – Home Value (est) = $339,943
February 2018 – Home Value (est) = $342,382
Home Value Change = +$2,439
Our home value has been fluctuating up and down a couple thousand dollars the past couple of months it seems like.
Our biggest asset class (stocks) fell by almost 5%, which helped to bring down our total asset value by over $17,000. The other 2 asset classes we report (home and cash) both rose slightly in February.
Total assets fell by (2.1%) since last reporting.
January 2018 – Total Assets = $825,208
February 2018 – Total Assets = $807,952
Total Asset Change = ($17,256)
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.
The one mistake we made when we bought a home was buying too many square feet. We could have easily raised our 3 kids in a house that was 1,000 less square foot than what we have now.
January 2018 – Mortgage Balance = ($178,320)
February 2018 – Mortgage Balance = ($177,892)
Mortgage Balance Change = +$428
Just a normal month of paying our mortgage. It helped dropped the principle on the loan by over $400.
At the start of last 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. I fully expect to drive this car for 15 years or eventually sell it to my son when he starts to drive.
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. Unfortunately, we weren’t able to make this car payment in February. Instead, we used those funds to help pay down our credit cards which was a smart move.
So … it looks like next January (2019) will be our final payoff date instead of December.
January 2018 – Car Loan #1 = ($4,771)
February 2018 – Car Loan #1 = ($4,771)
And on our other car loan, for some reason the payment hasn’t been credited yet for this month, so the balance for now will stay the same. Next month I guess we will double dip on this payment.
January 2018 – Car Loan #2 = ($14,512)
February 2018 – Car Loan #2 = ($14,512)
Car Loan(s) Change = $0
Credit Card Balance
Normally, our credit card spending is the biggest area for improvement when it comes to debt.
Recently, we paid for several large expenses using our credit cards … in order to earn rewards for free travel. We paid for a bunch of Christmas spending, Disney tickets and trip, property taxes, braces for our middle son, furnace repair, and more.
The good news is that we are not letting these payments slip past their due date … so we won’t pay any interest or fee’s.
Note – We have always paid our balance off every month on our credit cards.
January 2018 – Credit Card Balance(s) = ($9,495)
February 2018 – Credit Card Balance(s) = ($4,503)
Credit Card Balance Change = $4,992
Our credit card balances fluctuate a lot month to month. However, this past month we knocked off almost $5,000 of that balance by paying off those big expenses from the past couple of months.
Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.
Just an FYI – normally we don’t let our credit card spending get this high … but we just had all those large expenses due at once.
The bright side of this spending is our travel rewards we are starting to bank now. Check out our Travel Rewards page for up-to-date information on our pursuit for FREE Travel.
Since last reporting, our mortgage balance dropped a little – as expected. We didn’t see any drop in car loan debt for a couple of reasons.
Our credit card balances also dropped by almost $5,000. These balances should continue to drop into March as our spending starts to decline.
Collectively our total liabilities decreased by $5,420 and helped to ease some of the pain with our assets dropping in value. That decrease in liabilities is just as good as growing our assets by the same amount!
Remember … 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.
January 2018 – Total Liabilities = ($207,098)
February 2018 – Total Liabilities = ($201,678)
Total Liabilities Change = +$5,420
Net Worth Summary
As promised … we plan to keep these net worth posts updated every month now. 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.
After reviewing our net worth number for February, most of our losses came from a decline in the stock market. Paying off our son’s braces, property taxes, and a lot of other big expenses also helped to bring our totals down.
We were able to soften some of the losses by paying down our liabilities by over $5,000. I am looking forward to dropping our total liabilities below $200,000.
Despite the market declines and net worth losses, we are happy with our results. As I mentioned earlier, we are still at our December 2017 net worth totals … which was just 2 months ago. I look forward to buying more assets at a discount now and we will continue to try and pay down as much of our debt as possible.
Do you track your net worth? How was your February totals? What steps are you taking to widen the gap between your assets and liabilities?