How We are Growing Our Net Worth – March 2018
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Each month, I like to track the progress of several personal finance goals we are working towards. For example, at the end of each month we provide our dividend income report. This report highlights the dividend income earned from the past month along with the steps we are taking to continue growing this sustainable income stream.
We also started publishing monthly reports for tracking our net worth. This has become a monthly ritual for me over the past year and a half.
Tracking our net worth helps my wife and I stay motivated on 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. It also helps us stay motivated in paying down our liabilities and keeps us from taking on additional debt.
It has been 3 years since we started reporting on our net worth … and dang it has grown. Of course, I want it to grow by a lot each month and sometimes it does. But there are times when it does go down … like the past two months. But overall, we should continue to see a longer trend line form that is slowly growing month after month and year after year.
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.
So how did we do this March?
March 2018 Net Worth
As of March 31st, 2018 – our net worth is $608,125. That is an increase of almost $2,000 in net worth value compared to last month. This increase still doesn’t get us back to our all-time high we set in January … which was at $618,110.
There are a few reasons why we saw a big drop from January into February/March. First, the stock market had a sizable correction in February … and again in March. As a result, our asset value (specifically investments) have dropped. Personally, we feel as this is a grate opportunity now 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 (about $6,000) back in February 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 climbed up in March despite more losses in the stock market.
Here is our most recent update, compared to our last net worth post in February.
Our net worth in March 2018 increased by a slim 0.31% compared to February.
February 2018 Net Worth = $606,274
March 2018 Net Worth = $608,125
Net Worth Change = +$1,851
A high level breakdown of our assets and liabilities are detailed below.
We have been reporting 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.
The investment 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 … despite what the overall market is doing.
Just like in February, our investment assets fell in value again during March. The market continues to be up and down … which is a big reason for the decline.
The good news is that while the market is correcting, we have been quietly building up our new 457b plan the past couple of months. In addition, we continue to buy individual stocks in our taxable accounts and earn dividend income each month. We have also started adding money into our Roth accounts to take advantage of future tax optimization.
Check out our update post on – retirement investments for 1st quarter 2018 for more information on where we are investing our money.
Overall, our assets fell by $5,181 in March compared to February. This comes after a $10,000+ drop the prior month. The goods news is that we are buying quality investments at a discount right now.
February 2018 Investments = $460,689
March 2018 Investments = $455,508
Investment Change = ($5,181)
That is another decent loss in our investments during March … but it is only on paper. We are long term buy and hold investors and didn’t sell anything during the month. So while it hurts a little watching the value drop … it isn’t a big deal in the long run.
I would also like to point out that we borrowed over $6,000 from our emergency fund back in February … which is part of our investments. We gave ourselves a loan in order to save over $1,000 on my son’s braces last month. March was the first month that we started paying our loan back, so our investments will take some time to grow this value back.
Overall, the value of our investments dropped by (1.1%) last month.
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.
February 2018 – Cash = $4,881
March 2018 – Cash = $11,106
Cash Change = +$6,225
Why did our cash balance jump so much in March? We got our federal tax return back, which bumped it by over $5,000. This money will eventually trickle into our investment category next month. Like I said before … I don’t like to let our money sit idle in a 0% interest checking account.
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.
February 2018 – Home Value (est) = $342,382
March 2018 – Home Value (est) = $343,161
Home Value Change = +$779
We saw a slight tick up in our estimated home value last month.
Our biggest asset class (stocks) fell by about 1% last month, which helped to limit other increases. The other 2 asset classes we report on (home and cash) both rose in March.
Overall our total assets rose by a small 0.2% since last reporting.
February 2018 – Total Assets = $807,952
March 2018 – Total Assets = $809,775
Total Asset Change = $1,823
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 early 2019.
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.
February 2018 – Mortgage Balance = ($177,892)
March 2018 – Mortgage Balance = ($177,462)
Mortgage Balance Change = +$430
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. While we are anxious to pay this loan off, we think we could make a higher return from investing the money.
We made several pre-payments on this loan late last year, so we don’t need to make an additional payment now until this summer. For now, we are using this extra money to invest since the overall market is down. We want to buy equity assets on sale in the market right now instead of paying off a 1.5% interest loan.
Since we didn’t make any payments in March, the balance of car loan #1 remained the same from last month.
February 2018 – Car Loan #1 = ($4,771)
March 2018 – Car Loan #1 = ($4,771)
We did manage to make our car loan #2 payment and saw the balance drop.
February 2018 – Car Loan #2 = ($14,512)
March 2018 – Car Loan #2 = ($14,266)
Car Loan(s) Change = +$246
In total, our car loans pushed our net worth higher by almost $250.
Credit Card Balance
Normally, our credit card spending is the biggest area for improvement when it comes to debt.
Over the past several months, we have 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, homeowners insurance, 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.
February 2018 – Credit Card Balance(s) = ($4,503)
March 2018 – Credit Card Balance(s) = ($5,151)
Credit Card Balance Change = ($648)
Our credit card balances fluctuate a lot month to month. However, this past month we increased our credit card balance by almost $650. Most of that was a result of paying our annual homeowners insurance of $1,000.
Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.
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. In less than 8 months, we have earned over $7,000 in free travel and hope to push it close to $10,000 before a year is up.
Since last reporting, our mortgage balance dropped a little – as expected. We also saw a nice dip in car loan debt – which was also expected.
Our credit card balances actually increased by almost $650. Most of that increase was a result of paying for our annual home owners insurance.
Collectively our total liabilities decreased by $28. That certainly isn’t a ton … but it is still a move in the right direction and will go towards growing our overall net worth.
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.
February 2018 – Total Liabilities = ($201,678)
March 2018 – Total Liabilities = ($201,650)
Total Liabilities Change = +$28
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 over the past 3 years.
For example, our first ever net worth report was posted back in March 2015 … 3 years ago. We reported a net worth of $434,984 back then. In 3 years time, we have managed to grow our net worth by $173,141.
At that pace, we will cross the 7-figure net worth well within the next decade … hopefully much sooner. Even with market uncertainty, we will continue to pump in new money each month into the market while we work to pay down our debt. Focusing on both sides of the net worth equation should help us push past $1,000,000 and then on closer to our actually FI Number … which is somewhere between $1.0 million to $1.5 million.
I really enjoy looking back at our old numbers (like our March 2015 net worth totals) as it helps keep us motivated and show us tangible results of our work.
Do you track your net worth? How was your March totals? What steps are you taking to widen the gap between your assets and liabilities?