Net Worth Update #1: The Beginning
I plan to share our net worth with you at the beginning of every month! My reasoning for this has multiple parts.
This is something that I already do, in fact I’ve been tracking our net worth since November of 2016 - I just didn’t have this blog at the time.
Putting this out in the open will help me to put my thoughts about the past month down and have their impact tied directly to the numbers.
Someone reading might see something that I don’t! I am hopeful that in sharing my thoughts, I can work with others toward iterating my approach to financial freedom.
I hope to have some sort of template that I can use in my approach to sharing this so it’s easy to follow every month, but I wouldn’t be surprised if this changed in the future as I learn.
That being said, let’s kick it off with the breakdown for the month of July!
Primary Bank Account: $10,244.93
This should likely fluctuate pretty drastically from month to month, there’s no calculation to be had with this amount as it’s simply a snapshot of what our bank account actually says when I log-in to check in the morning. We’ve been moving a lot of our expenses over to credit cards as we recently paid all of those off. We do this to earn points and it’s really nice change to have the cards working for us for once, instead of paying down those high interest rates!
Savings Account: $4,632.81
This is the account that we use to keep a small amount of our money on hand in case of any unexpected emergencies that we haven’t planned for. We currently send $200 a month to it, and we haven’t actually had to pull money out of the account since I’ve started tracking our net worth back in 2016. We use a Barclays Online Savings Account, which currently nets a 1.85% APY, much more than a standard savings account that you would normally find at a general bank.
This amount is a combination of all of our 401k accounts. Mrs Money Smith and I have both moved jobs a few times since graduating college, which has created two accounts for both of us. We don’t have a focus on actively growing our 401k accounts other than contributing enough to obtain a full match from our employers. Right now I am not convinced that we should be actively investing in the stock market as our focus continues to be debt payoff and saving for our second investment property. (You can read about why I prefer real estate over stocks in my last blog post)
Until recently, our LendingClub account was something that I opened, kinda on a whim, a few years ago and never really thought about as a solid income stream. About four months ago we started sending $25 dollars to it twice a month to start putting just slightly more into it to see how the account works out. Our current net annualized return is 10.62% which is actually pretty solid in my mind. Right now we reinvest all of our returns, and just put them back into the account.
S Pine Street: $375,000.00
This is the last known appraised value of our S Pine investment property. My preference for tracking a property's value with regards to net worth it to use the last actual assessment. I don’t like the idea of tracking it’s perceived value through sites like Zillow, because so much can change and the websites don’t always match my personal thoughts on worth.
Total Assets: $453,220.39
Like I mentioned in my post about what to include in your net worth mentions, a property is both an asset and a liability. The liability piece is stated simply through what’s owed on the mortgage note for the property. Currently, with one property, this is a very easy number to track. We only pay a small amount extra each month to our mortgage, mainly because I prefer round numbers with my payments for some reason. This is a slow burn for us, but thankfully the cash-flow that the property brings in pays for the mortgage and then some.
Student Loans: $22,091.55
This number represents the total of both of our remaining sets of student loans. We don’t make it too much of a priority right now to pay those down faster than necessary. The interest rates on our loans range from 3.15% to 6.55%. As we get closer to finishing paying off our PLoC that we took out in 2016 I may revisit the idea of paying down our next highest interest rate loan, or shoveling money like crazy toward saving for the next property.
Credit Cards: $10,449.62
This amount is an interesting one, and I think this is a very important number to track, but we use this slightly different than the way someone who hasn’t paid off their credit cards would. I look at this balance as essentially a negative amount straight to our cash. The reason is that we've paid off our credit cards and now use them for the points that they earn for us. We place most of our expenses on our credit cards and they pay off at various times throughout the month. This number will fluctuate drastically for us because of our spending patterns. Mrs Money Smith travels quite a bit from work, so she frequently expenses a lot of her costs. While that piece alone makes this number not 100% trustworthy, I think it’s still a good representation of where we are.
Auto Loans: $18,777.43
This number should keep moving its way down each month. We pay just a slightly higher amount, rounded up, than what is required each month. The APR on our auto loan is only 2.49% so we’re not very focused on this at all. We are actually a one car household as I am lucky enough to live within walking distance to work. This has been a huge help because that means we only pay one line of insurance, maintenance, or filling up gas for our vehicles!
Personal Line of Credit: 8,365.28
As mentioned above, this is the last liability that stands between The Money Smiths and our ability to say that we’ve paid off all of our loans that are above 7%. This is currently where we send most of our excess cash at the end of the month. Every 1st of the month, I look at how much cash we have in the bank and send an amount that feels safe to our highest interest loan. The plan is to have this amount paid off in the next two to three months, at which point we will start to really buckle down on savings.
MassSave Loan: $19,136.40
This is an interesting loan that we have. We were able to take advantage of a program in Massachusetts to get a 0% loan to be used for high efficiency, green energy upgrades to our property. We took out a loan for just over $23k to upgrade all of the heating and hot water systems for our tenants in S Pine. This was a huge win for us because we were able to upgrade our property, lower our tenants energy bills, and take away a huge worry about the systems in our house (they were 50 years old! - you can read about the property on our Real Estate page). This taught us that we should always look to see what grants are available to continue to provide the best possible outcomes for both our tenants and us. Since this loan is 0% we obviously don’t pay anything more on the loan that what is required, so this number trickles down pretty slowly.
Total Liabilities: $431,769.55
OUR NET WORTH: $21,450.84
Overall thoughts for the month:
This has actually been one of our weaker months, since I first started tracking out net worth a few years ago. Our increase over last month was only $1,231.37, the good news is that it's positive movement. I like to think that we hold ourselves to a higher standard than what we achieved this month, but I can contribute a significant portion of what's making our numbers look bad to a recent $3,000 airplane ticket that Mrs Money Smith put on her credit card for work, hence why I pointed out that the number can be deceiving.
The good news is that all of our assets increased in value, (with the exception of cash in our account), and all of our liabilities decreased in cost, (with the exception of our credit card accounts). This is exactly what we want them to do, so at the end of the day we can still sleep easy knowing that we're moving in the right direction - even if it feels slower than we want it to.
So there it is, I've put one of the most taboo parts of our lives on the internet for the world to see, and I plan to continue to do this every month to show that we're real people. I'll share the good parts, and the bad parts - though I hope not too often.
I'm curious to know if there are other things you track in your net worth, or if you have thoughts on why I track things the way I do. Let me know what you're goals are down below in the comments, or shoot me a message on the contact page.
-Mr Money Smith