It’s been almost two years since I revealed my net worth to the world. I don’t have any excuses for not sharing my net worth updates all that time. Basically, I wasn’t posting anything. It’s time to get back in the rhythm.
My hope, by my sharing of these details, is that it will be an encouragement and motivation for my readers. Please note that when my wife and I embarked on our debt elimination journey in the middle of 2015, we had over $100,000 in debt, not including our mortgage. Our net worth was less than $200,000. It was only because I had been contributing to my 401k (off and on) for over 20 years that we had any kind of financial worth to our name.
About that time, it hit me like a ton of bricks that we was way too close to retirement age to NOT have a significant financial nest egg. I got scared!
From that moment on, it’s been with gazelle intensity that we’ve eliminated debt and have aggressively saved for retirement.
As of the beginning of this month, we are completely out of debt (except for our mortgage and the small balances on a couple credit cards that we use for my regular spending). We now pay the entire balance of all credit cards every month and push excess earnings into our savings and toward additional principle payments on our mortgage.
Our net worth has grown to $617,441. That’s an increase of almost $100,000 per year, which is really close to all of our combined net (after-tax) earnings during that period of time.
That increase equates to a $10,750 increase over the past month and a $161,067 increase over the past year.
Month-Over-Month Net Worth Increase
The month-over-month gain results from three main areas – increase in home value, increase in investment value, and pay-down on our home mortgage.
Our home value, according to Zillow, increased a touch over $1,000. I don’t fully trust the actual Zillow value. I think they represent an amount that is typically a little higher than the market – at least in my area, but the proportionate increase should be close to representative to what’s really happening.
Our investments include my 401k, a Roth IRA, an HSA, and a taxable account that I had in Stash, but am in process of moving to the same brokerage that holds my Roth IRA. The value of these accounts grew by $9,666 .
Almost everything in these accounts are in Mutual Funds, heavily weighted to equities. I’m just starting to explore investing in the individual stock of public companies. I’m sure I’ll share more on that as the plan develops.
Finally, we paid down $3,255 in principle on our Mortgage. We’ve been focusing heavily on paying down our mortgage since we purchased our new home in June. In the five months since we closed on the purchase, we’ve already paid the principle amount down by about $7,500. That’s about $3,500 more than the principle portion of our required payment.
There’s a whole lot of discussion on the topic of paying extra on a mortgage vs. investing for retirement. I have a debate about that going on in my own mind. Depending on how that debate goes, I could make an adjustment in this plan going forward. In other words, I may stop paying extra principle on the house and instead direct more toward my investment accounts.
Change in Assets
Of the overall growth in our assets, some of it is due to the natural movement of the market where we have money invested. Part of it is due to additional savings we have worked into our budget. Last month, I saved just over 40% of my income. Some of that went into my investment accounts, and some of that went towards additional principle payments on my mortgage.
Change in Liabilities
There was a little offset to all these gains. My cash in the bank decreased by about $1,500 and my credit card balance increased by about $1,700. This was primarily due to some additional spending during the month.
Most of that spending went toward medical expenses. We have a high deductible health plan, so we have to pay the first $6,000 of all our medical expenses. About half of that fell in October. Even though we have an HSA, we have elected to leave that alone and let it grow tax free. We pay medical expenses out of our cash flow.
Summary
These results don’t happen accidentally. We have made many sacrifices to cause this to happen. Our combined net income is barely six-figures, so we aren’t destitute, but we aren’t really rolling in it, either. We have to carefully follow a budget and make sure that we are keeping everything within our spending limits. We sold our really nice home a few years ago, and just recently purchased a home that is priced a little below the median in our area. We drive cars that we’ve owned for many years and each of them have over 200,000 miles on them.
At the same time, we haven’t lived a life of total deprivation. This past July, our son and his fiancee got married in Peru. We were able to put a little extra out of our budget into a travel fund during the months leading up to the event. That, along with airline miles from one of our credit cards, allowed us to easily afford to participate in this amazing event in our family’s life. A few short years ago, we would have had to increase our credit card debt debt to be there.
Today, we’re giving more, we’re saving more, we’re doing more, and it’s all done without using money we don’t have. What a great feeling.