This is my first monthly net worth update. And by first, I mean the first that I’m publishing on The Budget Boy.
I’ve actually been tracking my net worth for FIVE YEARS.
That’s exactly five years. Looking at my records, my very first net worth calculation was performed on December 1st, 2012. At this point, I can’t imagine ever not tracking my net worth. It’s the crux of personal finance, visually showing your financial trajectory and net result of all financial decisions.
As a precursor to this new monthly net worth series, earlier this month I detailed all the major financial events over those five years, both good and bad, that has led up to this point.
Now we can get into the details of how that net worth breaks down and changes each month:
Net Worth Update November 2017
Savings include all our bank accounts (checking and savings) as well as cash. The cash portion is minimal as we pay for everything with credit cards. Recently, we put all our savings into stocks, so our savings was at an all-time low. We’re currently building it back up.
Although this looks like we did really well in November, it’s inflated for two reasons. My mortgage servicing transferred to a new company in November, preventing me from making my mortgage payment BEFORE the 1st of December due date. Also, I received a withdrawal from a real estate investment fund. Together, these equaled a little over $3K, which means we didn’t actually increase our savings due to net income (since we were over budget).
Stocks refer to my TradeStation brokerage account which I am actively trading. Although I’ve made money this year, I am currently underperforming the market which has had an incredible year. I lost $36 in my November trading which can essentially be considered a breakeven month.
Although my active trading has been underperforming the market, this at least means good news for our retirement accounts. Our increase here includes both gains and contributions.
Real Estate Investment (-$708.94)
I used to work for a company that bought and flipped houses on a large-scale. As an employee, I was able to invest some money into a “flipping fund” which would be diversified across a bunch of properties. That fund is now in the process of winding down and distributing cash to the stakeholders. This is not a loss but simply a distribution of money out of the fund and into savings.
Rental Property (No change)
I own one rental property which I purchased as a primary residence, lived in for a year and a half, and then converted into a rental property. In terms of value, I prefer to use the property value net of fees. Meaning I count the actual net proceeds I would receive from selling the property after closing costs.
The market value of the property (in my estimation) would be about 20k higher. I find this method to be a more accurate reflection of net worth. It also doesn’t create a mental block toward selling. For the month of November, the value appeared flat.
Vehicles are depreciating assets so you should expect the value to only go down. Just like how I don’t use market value for property — I also don’t use retail value for vehicles. For calculating the asset value of vehicles, I use the trade-in-value, which is less than the fair market value, but more realistic for net worth purposes. $574 is a bigger than usual depreciation amount because I accidentally understated the mileage last month (that’s what happens when you’re not the one driving it).
Accounts Receivable (+$0.95)
Accounts Receivable is an easy place to track money due to you from various sources. For instance, this account is primarily made up of our security and pet deposits for our apartment. We won’t receive this money until we actually move out, but it’s still our money. The $0.95 increase is due to a credit balance on a credit card from a small refund. I am expecting to get a refund check in the mail for this as the bank already debited my account.
Mortgage (No Change)
As mentioned above, my mortgage servicing transferred in the middle of November. I usually make my mortgage payment before month-end, but the new servicing company would not accept payment until the 1st. As a result, no payment hit in November. But this means two will hit in December!
Student Loans (-$660.65)
Paying down student debt is a primary financial focus right now for us. We’re paying much more than the minimum payment while applying the debt avalanche strategy, targeting the highest interest rates first. Now that we hit the lump sum needed for me to actively trade stocks, we plan on putting even more money towards student loans once our savings are fully built back up.
Car Loan (-$311.44)
We’re not paying anything extra on the car loan since the interest rate is lower than the student loans and mortgage. Each month the principal amount paid should increase a dollar or two as the interest expense slowly decreases.
Credit Cards (-$191.39)
The increase or decrease on credit card debt has nothing to do with paying down debt. We abide by the all-important credit card rules and pay our statement balances in full every month. Any increase or decrease has to do with our spending from one month to another as well as timing. We have 17 credit cards altogether with different due dates so the spending allocation impacts the total credit card balance at month-end.
Accounts Payable (-$11.54)
Just like an Accounts Receivable is useful for tracking money due to you, Accounts Payable makes it easy to track other financial obligations. The majority of money in our Accounts Payable is comprised of an Unpaid Taxes account. The small decrease here is an adjustment due to the small $36.05 loss from trading stocks listed above.
In the month of November, we increased our assets by $3,474.33 and decreased our liabilities by $1,175.02, a total net worth increase of $4,649.35. In terms of percent, that is a 4.74% increase in net worth.
This put us over the $100,000 net worth milestone!
This is actually BACK over $100k for me after 2 years of building it back up. My personal net worth story chronicles all these ups and downs you see here. It’s motivating to be back on track and seeing the progress! Hopefully it’ll help motivate you to track your own net worth if you’re not already doing so!