How We are Growing Our Net Worth – June 2019
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I’m finally back with another monthly net worth update for June (2019).
It has been over two months since I last posted a net worth update here on The Money Sprout.
Actually … it has been that long since I’ve posted any new content here on the blog.
My wife and I had been dealing with a lot of family issues earlier this spring and summer … mostly due to the passing of one of our parents. And since one of us is the executor of the estate, we were responsible for taking care of everything like selling a house, figuring out what bills to pay, and a lot more!
I really hope to cover a lot of what we went through taking care of this estate in future posts.
Despite our parent having a Will drawn up over 10 years ago … along with a Family Trust set up … there were a ton of loose holes we had to patch. And this will likely take another 9 months or more to finally complete.
Anyways … I’ve decided to start posting a lot more frequently here on the blog again … now that things have slowed down a bit.
We’ve got a ton going on with our finances – from closing out this estate to raising financially independent kids … so there is a ton of content I would love to share.
But one thing I am backing off on is posting our net worth updates. I’ve decided to post quarterly now instead of monthly. I’ll still keep track of our monthly net worth totals … but will only give quarterly updates.
So today, we are going to post our 2nd quarterly net worth update for 2019 … which would be June (2019).
Tracking our Net Worth
For the past several years, we have been publishing a monthly net worth update.
Note – we are moving to a quarterly update starting in June 2019.
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.
It also helps us track how we are doing on paying down our debt every month … which are known as liabilities. Our liabilities would 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 (June 2019) was another positive month for growing our net worth.
Overall, we grew our net worth by over 1% in June compared to April (2019).
This increase allowed us to set a new all-time high net worth value!
Looking back at the past 4 years (since we started keeping track of our net worth), I can say that most months (probably 80+%) we see increases. Every once in a while we will have some declines … which is healthy.
Tracking and growing our net worth is also 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 for June 2019.
How We Track Our Net Worth
Before we move on to reviewing our June 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 June?
June 2019 Net Worth
As of June 30th, 2019 – our net worth is $689,430!
Overall, that is amazing increase of over $7,000 in net worth just in the past two months.
While there was some help from the stock market … 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 is awesome news. We beat our previous record set in April 2019.
Our net worth in June 2019 increased by 1.09% compared to April.
April 2019 Net Worth = $682,021
June 2019 Net Worth = $689,430
Net Worth Change = +$7,409
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.
Before we get started though … I wanted to point out a change in how we categorize our emergency fund dollars. Most of our emergency fund is in a high-interest savings account (currently earning 2.10%) or in certificate of deposits.
In the past we included these funds in our investment category. However, most of the funds are really just cash … so we made the switch back in April on how we categorize these funds.
Basically our investment bucket went down and our cash bucket went up back in April. The end results were still the same though.
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 June, we saw more healthy gains from the stock market.
April 2019 Investments = $495,715
June 2019 Investments = $506,192
Investment Change = +$10,477
For the past 4 years since we have been tracking our net worth, stock market gains have provided a huge increase in our assets.
The past two months (April to June) have been no exception and accounted for over $10,000+ increase in assets.
Our current cash balance includes all of our checking and savings accounts. Plus we started to include our certificates of deposit to this bucket back in April.
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.
April 2019 – Cash = $37,549
June 2019 – Cash = $29,006
Cash Change = ($8,543)
Why such a big drop over the past two months in our cash? My wife and I have been trying to manage the estate of one of our recently passed away parents.
The bad news is that we are covering a ton of the expenses to close out the estate … while everything is tied up in probate court.
The good news is that we will eventually get our money back.
Reporting home value in our net worth reports is good and bad.
In the past, we have always 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.
Starting back in March, 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 June 30, 2019.
- Zillow – $343,629
- Trulia – $347,167
- Redfin – $330,638
- Chase Home Estimator – $337,000
- Realtor.com – $337,600
Taking the average of all 5 tools, we can estimate the value of our home at $339,207. This is the method that we will be using going forward.
April 2019 – Home Value (est) = $337,896
June 2019 – Home Value (est) = $339,207
Home Value Change = +$1,311
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.
Overall our total assets increased by 0.37% since last reporting (two months ago) … which is encouraging. Despite using a big chunk of our cash balance to help close the estate of our one of our parents, we still saw an increase in assets.
April 2019 – Total Assets = $871,160
June 2019 – Total Assets = $874,405
Total Asset Change = +$3,245
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.
But while we are still living in our home, we continue to lower our mortgage balance every time we make a payment.
April 2019 – Mortgage Balance = ($170,932)
June 2019 – Mortgage Balance = ($169,977)
Mortgage Balance Change = +$955
Each time we make a mortgage payment, our principal drops by a little bit more each month.
Over the past two months, we have increased our net worth by almost $1,000 … just from paying our mortgage.
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 only 1 month from having it completely paid off!
My wife and I have already agreed to continue driving this car for at least 2 more years and enjoy the no monthly payments.
We also have a third driver coming on board soon in the family (our son will be 16 later this year), so we are trying to plan out vehicles in the coming years.
This liability on our family van is referred to as “Car Loan #1”.
The second car loan (referred to as “Car Loan #2”) currently has about 3.5 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 June … we saw another nice drop in debt on both car loans. We expect to have car loan #1 paid off by this July (2019).
April 2019 – Car Loan #1 = ($1,067)
June 2019 – Car Loan #1 = ($320)
April 2019 – Car Loan #2 = ($11,069)
June 2019 – Car Loan #2 = ($10,577)
Total Car Loan(s) Change = +$1,239
Overall, we were able to increase our net worth by over $1,200 in two months!
That $1,200 counts just as much towards growing our net worth as does a $1,200 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.
April 2019 – Credit Card Balance(s) = ($6,071)
June 2019 – Credit Card Balance(s) = ($4,101)
Credit Card Balance Change = +$1,970
Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.
The cool thing about lowering our credit card balance by almost $2,000 is that our net worth will increase by that same amount!
Just like with our other liabilities, the more we pay down the higher it pushes our net worth.
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 $4,164, which is more than our assets increased.
April 2019 – Total Liabilities = ($189,139)
June 2019 – Total Liabilities = ($184,975)
Total Liabilities Change = +$4,164
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 (after next month), so we can then use that extra cash to save. Then maybe we will focus on paying down more of our mortgage? That is a guaranteed 4.375% return on our money based on our current mortgage rate.
Net Worth Summary
We plan to keep these net worth posts updated every quarter moving forward.
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 4 years.
For example, our first ever net worth report was posted back in March 2015 … which was 4+ years ago.
We reported a net worth of $434,984 back then.
Now we are over $680,000+ in new worth … and quickly approaching $700,000+!
A lot of that growth is from gains in the stock market … but we’ve also done a lot of work by saving more of our income. And these savings are either invested or used to pay down more debt.
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?