How We are Growing Our Net Worth – January 2019
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At the end of every month, we publish an update to our net worth. This update helps us keep track of our assets such as investments. And it helps us track how we are paying down our debt … which is known as liabilities.
This past month (January 2019) was a positive month for growing our overall net worth. We gained 3.8% last month compared to December 2018.
Overall … tracking and growing our net worth is 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.
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.
So how did we do this January?
January 2019 Net Worth
As of January 31st, 2019 – our net worth is $646,043.
Overall, that is a healthy increase of over $23,000 in net worth just in the last month.
Since our all time net worth high back in September 2018, we are down just under $20,000 in net worth.
Our net worth in January 2019 increased by 3.81% compared to December.
December 2018 Net Worth = $622,333
January 2019 Net Worth = $646,043
Net Worth Change = +$23,710
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.
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 January, we saw a healthy increase of over $20,000 in our investment portfolio. This is a result of better market condition … which has been fluctuating a lot the past couple of months.
December 2018 Investments = $470,589
January 2019 Investments = $490,949
Investment Change = +$20,360
Overall, our investments grew by 4.3% in January compared to the prior month.
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.
December 2018 – Cash = $4,117
January 2019 – Cash = $2,881
Cash Change = ($1,236)
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!
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 increased several thousand dollars this past month compared to December.
December 2018 – Home Value (est) = $338,810
January 2019 – Home Value (est) = $342,099
Home Value Change = +$3,289
Just like with the stock market, our estimated home value has been jumping back and forth over the past couple of months.
Both of our two biggest asset classes (investments and home) saw good ince increases last month. Our cash balance dropped, which wasn’t a big suprise.
Overall our total assets decreased by 2.76% since last reporting … which was encouraging after a couple difficult months.
December 2018 – Total Assets = $813,516
January 2019 – Total Assets = $835,929
Total Asset Change = +$22,413
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.
December 2018 – Mortgage Balance = ($172,800)
January 2019 – Mortgage Balance = ($172,330)
Mortgage Balance Change = +$470
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.
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 6 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 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 January … we saw a nice drop in debt on both car loans. We expect to have car loan #1 paid off by this July (2019) at the latest.
December 2018 – Car Loan #1 – ($2,547)
January 2019 – Car Loan #1 – ($2,115)
December 2018 – Car Loan #2 ($12,052)
January 2019 – Car Loan #2 ($11,806)
Total Car Loan(s) Change = +$678
Overall, we were able to increase our net worth by almost $700!
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 January, we saw a tiny decrease in our month to month credit card balances.
December 2018 – Credit Card Balance(s) = ($3,784)
January 2019 – Credit Card Balance(s) = ($3,635)
Credit Card Balance Change = +$149
Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.
Since last reporting – our mortgage balance dropped, both auto loans dropped, and our credit card balances dropped. This is just as important as growing our assets when it comes to building net worth.
Collectively our total liabilities decreased by $1,297!
December 2018 – Total Liabilities = ($191,183)
January 2019 – Total Liabilities = ($189,886)
Total Liabilities Change = +$1,297
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 $640,000+ in new worth … which is a sizable increase in about 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 January net worth totals turn out? What steps are you taking to widen the gap between your assets and liabilities?