Welcome to my net worth update for December 2018!
I’ve been absolutely terrible at doing these monthly updates this year as my last one was for July 2018.
2018 ended up being a tale of two cities. The first half of the year was spent studying for the CFA Exam and then the second half involved abandoning that analyst career path to make a move to sales. Each of these felt like living in a completely different world and I immersed myself in each of them.
Those commitments led to way less posts in 2018, but I gained a lot of valuable experience and knowledge along the way. Now that I’m (mostly) up to speed in my new role, I’m looking forward to getting back on track with posting regularly again.
And here are the numbers for December:
Net Worth Update December 2018
Our savings went up by over $4k. Although this is a nice increase, it’s really misleading as we didn’t truly save any money this month. We had positive net income, but that money went to paying off debt and retirement contributions, putting our net liquid cash flow right around zero.
The savings “increase” comes from Mrs. Budget Boy collecting money from a dozen girls for a bachelorette party with the expenses yet to be incurred. Note the offsetting increase in Accounts Payable.
The money collected is a wash in terms of net income but there are two advantages by being the one to collect money and pay for everything: you get a big chunk of free credit card points as well as a short-term interest-free loan (as long as you’re collecting the money UPFRONT).
The markets have been up and down for 2018, but December was pretty brutal with the S&P 500 finishing the month down 9.2%. The losses in our retirement accounts also include contributions of just over $900, meaning the negative return was greater than shown, but still less than the S&P due to diversification.
The good news is we picked up some shares on sale.
Additionally, with the way the market behaved in the second half of 2018, it makes the decision to stop active trading and pull the money out to pay off debt more satisfying. Good ol’ hindsight analysis. Of course the stage is now set for the best buying opportunity in years for 2019.
Rental Property (No Change)
I haven’t updated the value of this property in over 2 years. That being said, I am fairly confident I’m overvaluing it at the moment. The Baltimore housing market simply hasn’t appreciated the way you’d expect. In fact, it looks like it’s depreciated over that time. Since it’s a long-term hold (at least that’s the plan) and seasonality is a factor, I’m reluctant to write it down at the moment, but at some point I may have to.
Unavoidable depreciation continues to decrease our only car’s value. We still currently owe more on it than what it’s worth, but at least that will change in 2019.
When you track everything like I do, it’s glaring how terrible the financial impact is from buying a car. All the more reason I got rid of my car recently and walk to work.
Accounts Receivable (-$1,306.12)
Mrs. Budget Boy received reimbursements this month for work-related travel expenses. This is another fantastic way of getting free credit card points.
Now that I’ve eliminated PMI on the mortgage to our rental property, making additional principal payments is not a priority. The focus is squarely on eliminating Mrs. Budget Boy’s student loans.
Student Loans (-$890.56)
Ideally, I’d like to be putting more money towards paying off these student loans. With the rental property currently vacant, our monthly net profit simply isn’t where it needs to be do so. As a result, I’ve had to scale back the past few months on aggressively paying down debt.
At least this payment finally wiped out the last student loan at the highest 6.8% interest rate. The remaining loans have interest rates that stretch from 4.5% to 6.0%. Now in the crosshairs are the 6.0% interest rate loans as part of the debt avalanche strategy.
Car Loan (-$326.68)
We continue to make the minimum payment here. Any extra principal is going to the student loans. Once those are eliminated, we’ll be able to allocate that money to the car loan and knock the remaining balance out rather quickly. A major goal for 2019 is to pay off the student loans and car. The only way to pay off both will be by increasing our income.
Credit Cards Payable (-$833.29)
It might seem alarming to see $6-7k in credit card debt carried month to month, but this is paid off in full every month. I put every dollar possible on credit cards and have never paid a penny in credit card interest in my life. Although the balance is a little higher than normal, our expenses have actually been lower. We’ve just had more reimbursable charges recently (e.g. work related travel).
Accounts Payable (+$3,200.00)
As mentioned above in the Savings section, Mrs. Budget Boy collected money to pay for group travel, but the charges haven’t been incurred yet. Recording the liability ensures that the collected cash isn’t treated as “our money.”
In the month of December, our assets decreased by $526.74 and liabilities increased by $594.28. Both moved in the wrong directions! That’s a total net worth decrease of $1,121.02. In terms of percent, that’s a 0.81% decline in net worth.
Our net worth of $137,359.24 is a little off our recent all-time high in September of $141,419.51. The combination of rental vacancies, a short-term pay cut, and the market decline the past few months caused the steep ascent to level off.
Looking at 2018 as a whole, our net worth increased $31,445.19 during the year, a 29.7% gain. This increase is actually smaller than 2017 in both dollars and percent when our net worth increased $39,241.73 for a 58.9% gain. The dollar gain is much more relevant here as the percentage is a bit skewed.
We didn’t change much in terms of spending behavior. We actually lowered our expenses but our total income was also lower. But now the seeds have been planted for much more earning upside in 2019 which can get this train back on track!