Well it is about time I updated this for all those people coming from Rockstar finance, huh? Well, to be honest I didn’t want to just squeak by last week doing an article on my Income and Expense as well as my net worth update. I would rather get out an article with some of my personal finance philosophy out as well. It makes me a bit less dry in my opinion. So you may wonder, why do I track Net Worth? For me it is the best method to see if I am on track for reaching financial independence. I am not too worried about market fluctuation such as we experience at the end of last month, but I do like to see that my efforts are moving in the right direction long term. Being the majority of my net worth is going towards reducing debt currently, it is a bit difficult not to experience growth even with the recent pull back in the stock market.
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June
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July
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% Change
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$ Change
|
|---|---|---|---|---|
| Home | $100,000 | $100,000 | 0% | $0 |
| Mortgage | (90,005) | (89,260) | .83% | 745 |
| Vehicles | 13,042 | 12,900 | (1.09%) | (142) |
| Car Loan | (10,453) | (10,277) | 1.68% | 176 |
| Cash (Net of Credit Cards) | 10,912 | 8,932 | (18.15%) | (1,980) |
| Brokerage Account | 1,257 | 1,433 | 14% | 176 |
| HSA Account | 2,242 | 2,225 | (.76%) | (17) |
| Pension Cash Value | 2,429 | 2,525 | 3.95% | 96 |
| 401 & 457 | 4,744 | 4,736 | (.17%) | (8) |
| ROTH Accounts | 16,127 | 15,692 | (2.7%) | (435) |
| Student Loans | (19,553) | (17,902) | 8.44% | 1,651 |
| Total Net Worth | $30,742 | $31,004 | .85% | $262 |
A few things, I decided to start deducting $150 a month from my vehicles net worth (after this month, I had evened it off to $12,900 that way it can be reduced equally). My ROTH accounts took a beating, mostly because of my investment with Storm Ruger where that individual stock had fallen 10% (and currently down 13% from purchase at the time of writing). I wish I had more free cash to invest, but I have another $2,500 dedicated this month towards my deductible while also trying to get rid of a single student loan (as you can see by my aggressiveness in paying it off). To be honest I really don’t like debt, but I feel that after this loan is gone I will be at a good spot to focus on investing while still paying a little extra on the mortgage each month to ensure it will be paid off before I reach 40. Speaking of the house, I do not plan to move it with the market value as there is no intention of selling it when we reach financial independence. Maybe sometime after, but those funds will not be available at that time.
How was your July?
You’re doing really well — and to have all your debt gone by 40 is a great goal.
Thank you Cecilia, to be honest I really don’t like debt, but I recognize that I also need savings. Better to not have all of my eggs in one basket – such as paying off debt – and then if something happens have no free cash.
Nice job on the net worth increase and paying down a good chunk of student loans.
I don’t include my car because it’s 8 years old – sure I could sell it, but really it won’t net me much. I also don’t include my house and mortgage in my net worth that I put on rockstar finance, because I don’t need to share everything
I just show the liquid accounts. To each their own.
Hi Alicia,
To me a paid off house is part of the plan for financial independence, so I think it is an important part of my plan. That said, I am not tracking isn’t value on zillow or anything. As of now I have no plans to sell it in the future, so any increase in value is kind of irrelevant as it won’t increase my returns or anything.
Car wise one is pretty new while the other is old. I think slowly decreasing their value until they are zero is a good way to go. I also want to research to see if replacing with a used car will save me money, but being I have already taken the brunt of depreciation I have my doubts.
Nice progress, Kipp! I would love to pay off my mortgage, but the interest rate is so low (3.25%) that I’ve decided to focus on investing my extra cash instead. At the rate you’re going, you’ll have all of your debt paid off before you know it!
Thank you Addison! Yea at 3.25% I don’t blame you. I may consider refinancing after I get the principle down some more, but it would depend on the closing costs and the going rate at the time. The big thing is I will kill off the USDA annual fee – which this year is like $397 this year (which is nothing compared to the PMI on a FHA loan). This should go down as my balance goes down, but I am not sure how they handle accelerated pay-offs. If they don’t adjust for my lesser principle balance then my best interest is to get to 20% equity ASAP so that I can refinance. The home is probably worth a bit more than the purchase price, but I am still looking at needing to trim another 5k off the balance before I can look into refinance.
I think if you use Personal Capital, it automatically updates your car’s worth via KBB. Pretty sweet!
Hm, I have heard of personal capital, but I hadn’t heard of them tracking KBB, that is pretty cool. I think Personal Capital is free, correct? I have used Mint in the past, but I don’t like how they have a hard time with one of the places I shop in categorizing… Meijer has gas stations as well as super-stores so it would throw gas, tools, or whatever I purchased from there into groceries. I like my detail to be a bit greater than that so I can see how much I am spending on house crap and how much on food. I can’t drink the gasoline or eat a set of wrenches!
I am completely with you on not liking debt. I cannot wait to get back to aggressively paying off my student loan debt. Nice job on the increase :)!
Thank you Autumn. Just working on it one month at a time! Or one dollar at a time, depends on how you look at it :).
You’re doing great! Once that mortgage and car loan are knocked out then you’ll have extra cash to quickly build your net worth! Keep it up!
Cheers.
Hey Henry,
Thanks! Yea the mortgage isn’t too bad, I could get rid of it sooner but I need to focus on funding the ROTH accounts as well. I figure 40 is good enough so if things go better than expected I will be able to retire earlier :). Car loan wise, I am going to research into replacing with a used, but I don’t think it will be better. I have already taken the brunt of the depreciation, so I doubt the savings will be there. Either way it is a long interest loan with 2.75% interest, so it isn’t a killer. It is actually my lowest stated rate, but some of the student loans are effectively lower because they get the tax break. Always need to consider taxes…
Great job on your growing net worth! I like to watch the balances climb too, even though it seems slow at times. Any upward movement is still great in my eyes =)
Thanks Holly! It is great that is still moved up considering the pullback on stocks at the end of the month. Now I just need to focus on not buying those 5 things on your recent post and I will be good for this month!
Nice progress on the student loan, Kipp! Once you’ve got that, your vehicle loan and your mortgage out of the way, you’re bound to see your net worth grow exponentially!
Small tip: maybe add in – and + in the change columns, now it’s kind of hard to see wether it’s a positive or negative change. Yes, I am one lazy bastard.
Well I did negatives in parentheses, but I suppose I can do – or + instead.
Hi Kipp,
I think it’s smart to pay off this debt first. My recommendation before investing is to pay off any high interest debt you have. As you mention, once your student loans are paid, this would free up more cash for investing.
Take care!
Hi Brent,
To clarify, that is a group of 4 loans all lumped together with Sallie Mae. Only one is over 5% where as the rest are 4.5% or lower (the other are lower 3%). Once that 5.35% loan is gone, probably next month, then I will return my focus to building the ROTH accounts and a little cash in the brokerage. Cash-wise this is only about $50 less a month in obligations, but $50 after tax is a decent amount of money!
It’s moving in the right direction Kipp. Way to throw money at the student loans like a badass. I know it felt amazing when I finally paid mine off. I have to ask, since you include the amount you have in a Roth, do you contribute monthly or lump sums (sorry if I missed this in an earlier post)? I stopped including my retirement accounts in my net worth calculation (which I only do about twice a year) because like you said, fluctuations in the market can make it look like it’s going down. When you’re holding stocks for 30+ years, monthly (or even yearly) fluctuations don’t matter much to me. I do include the amounts I contribute, though. Not trying to be argumentative or anything, just expanding my circle of competence
Hey Ryan,
Up until June there was regular contributions for the ROTH account, but now that my wife is eligible for a 401k we have paused for a moment. I will resume putting money into the ROTH once a single student loan is taken care of. I guess I didn’t previously talk about this… Most of the ROTH in my name is due to conversions and a little bit of contributions and my wife’s was all contributions over time (plus gains on both of course). I will probably be putting in money to these every other month once that student loan is gone.
I include retirement accounts in my net worth because I plan on using them in early retirement. I plan to use the ROTH IRA ladder (5 year’s worth of contributions and then ladder each year through conversions). This will make it all accessible without the 10% penalty. I guess if you don’t plan on using a 401(k) or ROTH in early retirement it could make sense to not include that in your networth, but for me it is part of the plan.
I do know how much I am contributing, to where, and I keep track of that for myself. I suppose I could add to my income & expenses where the money goes, but that is mostly reflected on the net worth page along with changes in value. Most of what I am doing right now is lowering my debt balances as you can see.
I didn’t find your comment argumentative, no worries bro!
Thanks for the response. I’m going to have to read more into the ladder you mentioned. Any good places you know of that I can start?
Here are a couple of good articles:
http://www.madfientist.com/retire-even-earlier/
http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/
Great progress! Getting rid of the student loan will be huge.
Thanks Tawcan! Just freeing up a little monthly cash flow goes a long way. That is why you really need to look at all of your expenses and see what can be improved.
I like the way you present your networth table. i guess folks in the US are really open about their disclosure on finance cause you don’t get to see this in asia
Hi Kyith,
Most people don’t really disclose income or net worth in the US, but no could care a bit less about societal norms :).
Good job as you are going in the right direction. Would like to know what kind of interest rates your are paying on all your liabilities.
I could kind of fit that in there, the student loans are actually 3 different rates (4 different loans) as they are for different school years. I the one I am paying off is 5.35% while the remainder aren’t too bad. Next update I will try to squeeze those in next to them on the table.
Congrats
Your close to the next person up on the Net Worth list!
http://rockstarfinance.com/blogger-net-worths/
Thanks J Money! I will try to make things easier for ya next month by adding a page so you won’t have to keep changing the link. The site is still a bit of a work in progress as it is barely over a month old, but I have more fun making content than all the background stuff so content usually takes priority :).