Our first major loss in net worth since October of last year, bleh.
Although looking back, we’ve also had an INCREASE of about $100,000 since then too, so I guess I can’t bitch *too* much, eh? :)
Regardless though, it still stings… it’s true we can’t control much in the area of the stock market and what that really does over time all too much, but the areas of cash is still looking bleak as it has been the past few updates too. In fact, the last four months we’ve had a decrease in cash infusions for one reason or another actually – kinda scary if we don’t keep a better eye on it (some of it was by design, but not all of it).
Other than the cash area though, the only other noticeable thing is that you’ll see our mortgage payment plan is still in effect :) I’m considering halting it for the month of June as our baby is born and we get some of that under control, but y’all gave some EXCELLENT advice when I blogged about getting down on myself with it all last month, and I think some of you nailed the problem right on it’s head: I need to relax more and not be so hardcore. Something I agree I need to work on more, so big thanks for chiming in :)
Here’s How May’s Net Worth Broke Down in More Detail:
CASH SAVINGS (-$694.62): Not as bad as I had thought it would be – what, with our bathroom being gutted and us making last minute preparations for the baby – but it’s certainly not where we want it to be either. My goal for next month is to get this area back in the black and really hunker down more… though it just occurred to me the wife is no longer working for the next 3 months too, d’oh. I’ll have to blog about that in a bit…
EMERGENCY FUND (-$1,300.00): We pulled out more for this bad boy to cover part of our bathroom remodel, as well as the new tiles we needed to go along with it. I’m also considering just combining this account with our cash savings ones too to better streamline everything… as many of you have mentioned in the past, I don’t think it makes sense much to keep all these separate accounts open when they’re all pretty much the same anyways. I.E. one large savings/emergency fund! I think we’re pretty diligent with our money enough to be able to have it all in one spot, but I’m gonna run it by the Mrs. and then let y’all know what we end up doing here soon… I’m all about simplifying these days!
PHYSICAL GOLD (-$103.40): What a bad time to buy up that 1 oz. gold coin the other month, eh? I wish I would have waited longer to actually jump in on it, but I’m also glad I just went for it and can now check it off my list of things I always wanted to do (and have). I’m sure at some point it’ll start going way back up again – this economy is crazy ;)
IRA: SEP (-$1,763.81): Bleh. Nothing to really report here other than the market just freaking out all over again… all a part of the game, eh?
IRA: ROTH(s) (-$1,770.05): Same here. I haven’t touched this or added anything to it lately – just the market doing it’s thing.
IRA: TRADITIONAL(s) (-$10,215.42): Even more depressing. And check out how FAR ahead now that un-managed account is in our IRA Game! Insane!! I’m thinking of pulling the plug and just putting ALL the money into that same #1 account there, but it just blows my mind that leaving stuff alone can be better than PROFESSIONALS managing our money the entire time… I really don’t get it. But I’m also glad I now have *proof* to back it up too. It’s almost been an entire year since we started this (July 25th, 2011), and I don’t see anything really major changing in the near future either, do you?
- IRA #1 (NOT Managed): $58,257.43 **Still in the lead
- IRA #2 (Managed, USAA funds): $56,553.36
- IRA #3 (Managed, ALL funds): $56,909.43
AUTOS WORTH (kbb) (-$800.00): Nothing super interesting happening here really, other than the wifey still trying to convince me to trade my Caddy in for a minivan ;) I def. don’t see that happening anytime soon, but I *may* be up for picking up an SUV instead… maybe an Escalade up in here?? Haha… we shall see ;)
- Pimp Daddy Caddy: $1,990.00
- Gas Ticklin’ Toyota: $8,745.00
HOME VALUE (Realtor) ($0.00): This still remains the same over the past 2 years – BUT – we believe a house in our neighborhood has now officially been sold, so I’m hoping to have a MUCH more realistic number here very shortly. Our places are pretty close to being the same, so I think it’ll reflect our updated house value pretty well. Stay tuned for a future post on it!
8 months in a row now paying off that extra $2,000! As I mentioned above we’ll probably hit the pause button for this month of June, but I plan on getting right back to it shortly after all things depending. I def. don’t want to give up now that our 2nd mortgage is getting wiped away so much faster! It’s the hardest thing I’ve ever had to do yet!
- 1st Mortgage: $284,948.63 – 30 year conventional @ 5.5%
- 2nd Mortgage: $44,740.83 – Maxed out HELOC @ a variable 2.8%
And that’s that. I pray to the Gods above that y’all had a much better month than we did :) If you’re tracking this stuff – and I REALLY hope you are!! – let us know how things are going!
The most important thing with all this is that we’re continually tweaking and making sure we’re still on track, so even if you’re down in the dumps like we are this month, just remember it’s only a phase. Sometimes we have GOOD months, and other times we have $HIT months, but in the long run the good ones shall always prevail. So keep it up! :)
PS: This time next month I’ll be typing up our new net worth with a screaming baby behind me ;)
PS: If you’re just getting started in your journey, here are a few good resources to help track your money. Doesn’t matter which route you go, just that it ends up sticking!
- The "Budget/Net Worth" spreadsheet - the colorful Excel template I personally use.
- The "Money Snapshot" spreadsheet - a simple Excel template I created for my former $$$ clients
If you're not a spreadsheet guy like me and prefer something more automated (which is fine, whatever gets you to take action!), you can try your hand with a free Personal Capital account instead.
Personal Capital is a cool tool that connects with your bank & investment accounts to give you an automated way to track your net worth. You'll get a crystal clear picture of how your spending and investments affect your financial goals (early retirement?), and it's super easy to use.
It only takes a couple minutes to set up and you can grab your free account here. They also do a lot of other cool stuff as well which my early retired friend Justin covers in our full review of Personal Capital - check it out here: Why I Use Personal Capital Almost Every Single Day.
(There's also Mint.com too btw which is also free and automated, but its more focused on day-to-day budgeting rather than long-term net worth building)
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I’ve had some bigger spending items but they were planned. A new dryer, sodding the lawn and the pending replacement of my AC unit (planned) will take a hit out of my cash. My investments (like most people’s) have been headed down but I’m not worried because I have roughly 40 more years to get some great discounts on stocks :) Things will get better, it is amazing how much a bad stock market month can effect net worth.
That really stinks that so many areas saw a decrease! We didn’t have much of an increase this month though.
It stinks that your net worth went down, but an overall increase of $100k since October? I wouldn’t worry about that $14k too much. ;-) We had a nice increase during the spring due to our tax refund being deposited to our savings account, but a big chunk of that is going to go toward a fence later this month. And then a bunch of what I’ve been saving for the past year will (hopefully) go towards a new car in September. But if I stick to my automatic transfers, it should bounce back within the year. I hope.
Having kids makes net worth go down. : )
Down 5,900ish, but Im not sweating it, I’ll just start buying stock on the way down.
Anybody invested in the market was likely down this past month unless you ‘Sold in May and Stayed Away’. All in all not bad.
Hold on tight, time starts flying as soon as that baby is born!
So exciting about the baby!! Working at home with a baby brings a whole new set of interesting challenges! I’ll be excited to hear how you manage that new aspect of your life, too. (Hey, it ties in to finance, right?)
Escalade — nice choice! And so much better than a minivan. I had people pushing me to get the Toyota Sienna minivan, but I chose the Highlander and I love it. More flexibility, too, although it’s interesting getting adults in to the back row sitting.
I started this comment to post about something money related… and I’ve forgotten! See, I have TWO whining toddlers behind me… this is what happens! LOL
Those are inspiring numbers despite the decrease in worth!
I think the stock market had everybodies net worth down this month. WIth the exception of a few, most PF bloggers had a negative May. There is a plus side to it though, it lets us buy some cheaper shares and I’m all for the value investing. Good luck on the baby situation, I’m sure you are getting pretty excited and possibly scared right about now.
@Lance@MoneyLife&More – Oh yeah! And great point about having 40 years to get everything cheap and really earn from the market – I love it! And so true… I track and watch it every month, but it really doesn’t matter until it’s time to pull from it later on :) We gotta keep it up!
@Michelle – Ups and downs with this stuff eh?
@Stephanie – Good! I hope it does for ya. Seems like you have a great plan going on over there :)
@C The Writer – Hah! I know it. In fact, I’m thinking of keeping a running tally the entire time to REALLY see it first hand – what do you think? ;)
@Alex – Right! An excellent way to go about it for sure, kill it yo!
@Money Beagle – I’m trying :) Less than a month to go and then it’s on (Yikes!).
@Dawn – Haha, that is awesome. And I’m sure I’ll be the same way too here pretty soon ;) My wife HATED it when I sold our Highlander btw – she still jokes around with me today, 4 years after I got rid of it!! But I just keep telling her we have saved $500/mo ever since, so I’m not sweating it ;) (Maybe we’ll get another now w/ baby though?)
@PB @ EconomicallyHumble.com – We try! :)
@DebtsnTaxes – Yup! Stocks going down could mean good stuff for sure, especially for all us active investors. And you’re right – I am excited/scared! A LOOOOOOT! Haha…
Another idea to save even more on the mortgage and hit your principal balance even harder:
With mortgage interest rates being around 3 7/8 % for a 30 yr. fixed and even lower for a 15 yr., why not look into the cost to refinance and how many months it would take to make up the additional refinance costs ? Also, would it makes sense also to throw the HELOC into the refinance since it a variable rate loan ? Let me know what you think.
I think you should get the minivan, there’s something to be said about pushing a button to open the door when you have a child and all their *stuff * in your arms
Up 7k this month, yay!
And keep working at that mortgage, J Money. When I started reading your blog over two years ago, my husband and I had two mortgages that seemed impossible to surmount. You inspired me to keep track of my net worth and that really helped motivate me to keep paying down the mortgages. We’ve paid off $105,000 in the past two years and it feels freaking fantastic. We’ve got 365k to go and I need your continued inspiration!
Watching the wild swings in my portfolio over the past few years has been good for me. I started investing during the bull market right before the collapse, when you couldn’t buy anything that wasn’t going up, and then lived through the recession. I am glad I went through that recession to see my portfolio lose close to half its value but then come back even stronger. Of course, I was buying all the way through 2008 and 2009 (be fearful when others are greedy and greedy when others are fearful) rather than sitting on the sidelines, which helped boost my portfolio performance. There will always be a major correction or two during the year, it’s a buying opportunity!
Early congrats on the baby! That sucks that it went down so much, but I guess the market fluctuates. At least you have a positive net worth!
J$- I wouldn’t worry much about the short term price of gold – remember why you own it. Big picture, all signs in the ‘managed’ economy point for further debasement of all fiat currency.
At the same time, you do realize that 99%+ of your net worth is in USD. Of course, I am assuming, but that is concentrated risk. Check the chart of the value of USD over time with emphasis on post-Lehman collapse.
Happy to advise if needed. Great site, btw.
Sorry you had a rough month. Screaming baby will totally be worth it next month!
J, down about $7K over here but there’s not much we can do about it. We are young adults so most of our investments/retirement are in equities ;-) Think of it as getting a deal on stocks!
Thanks for sharing your net worth update! Can’t wait until I can start making money, so I can have net worth updates :)
Wait, wait, wait, you’re paying an extra 2 Gs on your house every month?!?!?!?! STOP! Not just in June, stop forever! That is like flushing money down the toilet! For a guy with a finance blog, I can’t believe you’re making real estate finance mistake no. 1. You NEVER, EVER, EVER, EVER, EVER, EVER pay anything extra on a mortgage, nevertheless 2 grand. Put that money in an investment account and either manage it yourself (like you’ve been managing your unmanaged IRA or invest with someone like Fidelity.
I explain this to people all the time, sending in extra principal on your mortgage does absolutely nothing for you. Not only are you missing out on the money you could be earning in the market, but you get nothing from paying the extra. Properly managed, money invested can make two or three times as much as you’ll need to pay off your home in 15 years. Plus, given that you’re looking at housing prices around your neighborhood it doesn’t sound like you and the Mrs. plan to stay at your residence forever. Invest that extra 2 Gs and when the market turns you can make a profit on the sale of your house, plus you’ll have the extra cash you invested to fully pay off your mortgage. That means you make MORE profit when you sell, not less.
There is NO reason to pay extra money on the principal. Zero, zip, nada. You’re literally better off burying it in a tin can in your back yard.
Plus, unlike the interest payments you’re making, there’s no tax write-off for making extra principal payments.
@Big Dion: Paying off the mortgage is a strong move — it frees up so much to invest, and you can be so much more aggressive without a monthly nut and with a paid-for house. Mortgage arbitrage is so 2007 :)
He’s paying $45 in interest a day.
@ so Why not just be aggressive and invest it now instead of freeing it up for later? That makes no sense. And a paid-for house is great if you’re going to pay for it tomorrow or next year. A 10- or 15-year payoff plan featuring extra principal payments, however, is just a waste of money.
Also, of that $45 of interest he’s paying a day, the federal gov’t in kicking in 20 percent. A smart investor – like one who has increased his net worth by $100,000 since October – can easily make that on an investment and significantly more over a shorter time frame. It makes NO sense. What do u get for that extra principal payment? Nothing. The full balance is still due the next month.
Finally, arbitrage = free money. I don’t know about you, but free money will always be in style at my house, whether it’s 2007 or not.
@John Gordon – I wish I could bud, but our house is too underwater to refi again just yet (we did one last year which was AWESOME, but would have to switch loan companies to do it again – and no one will approve it yet). Our goal is to knock HELOC down to $0.00 and THEN refi since we’d be at about break-even level w/ the house. Great thinking though! :)
@Lizzy – I’ll probably have to learn this the hard way ;)
@Jennifer Lissette – REALLY?? Wowwwww – that is so cool!!! Thanks so much for telling me that, totally made my day :) Keep on workin’ hard, my friend! And I promise to continue doing the same here too, even on “off” times like this one… you’re awesome.
@Mr. Everyday Dollar – Heck yeah it is! Excellent mindset to have too – most people freak out and pull all their money, only to get in after the recorrection :( So I’m right there with ya on continually investing throughout it all. We gotta soak it all in while it’s low!
@femmefrugality – Yup! For sure…. I can only complain so much :)
@Evan – Huh, never thought of it like that before actually… I don’t know the exact %s on the USD thing, but I’d imagine it’s fairly high for sure… might have to check on that soon ;)
@Jenna, Adaptu Community Manager – Hehe, yup! Most def.
@Evan H. – Haha, yup for sure :) It’s gonna be a while until we dig back in, eh?!
@SavvyFinancialLatina – I can’t wait for you to also! You’ll love it :)
@Big Dion – Haha… so I guess peace of mind and feeling like a champ doesn’t count for anything? ;) I def. admire your enthusiasm and strategy there – it probably IS the best move financially over time, I won’t doubt it – but I think it’s important to factor in everything else non financial with these moves too. The idea that I could have a paid off house in 10 years AND cut my *need* for an income down by 50% going forward is an awesome goal to hit. And there’s nothing saying you couldn’t then invest $4,000+ in the market at that point and go full force if you still were bringing in 100% of your income too.
So for me, the goal of paying down my house is still the right move for what I’m trying to do, but I think your route is just as sexy as too. Just depends on what motivates you and what’s more important. I don’t think there’s a black and white answer here…
@so – Thanks for the interest reminder ;)
“Why not just be aggressive and invest it now instead of freeing it up for later?”
Peace of mind and focus. It is more difficult psychologically for many retail investors to invest aggressively and weather swings with the drag of a large monthly nut. Even tougher for most self-employed folks, because the wolf is perpetually at the door. Plus, if he wants to lock in the benefit of the principal payments, he can always re-finance or re-cast. I disagree that there is no benefit to payoff — it’s a consistent tax free return.
Plus, it’s only a ten-year plan, and (if I recall correctly) J is in his thirties. So for the last half of his working life, he’ll be able to invest all of his income without a monthly nut during 20 of his peak earning years. That sounds like a plan to me.
I appreciate your passion, but at the very minimum, your fixed income investments should go to payoff. F a 2% treasury yield.
“Also, of that $45 of interest he’s paying a day, the federal gov’t in [sic] kicking in 20 percent.”
Meh, only to the extent his total itemized deductions exceed the standard deduction. It’s an OK deal, nothing great, and since the federal gov’t will take 15 percent or more of his investment gain on the back end, it washes out.
As for arbitrage, it’s only free money when your alternative investment goes up — if you were making an arbitrage play in 2008, you’d have been forsaking a 5-6% return to eat a 30% loss, and if you’ve been making a similar arbitrage play over the last ten years, then you’d have been forsaking a similar return on the mortgage for a flat equity market. And that’s not even considering transaction costs.
I’d rather be secure than chase the arbitrage yield. Assuming an 8.5% return over 10 years gives you 3 extra points on J’s $24K investment. That works out to about 3.3% compounded over 10 years. That’s only $800 a year under IDEAL market conditions.
I’ll take the paid for house.
Can I take you everywhere with me? :) Very well put my friend, I’m in agreement.
I guess I understand the security angle, but I actually think you’re safer investing now than paying off in 10 years. Right now we’re in a stagnate market (and yes F a 2% treasury yield), but I’m assuming J Money’s got a pretty solid market acumen and could do a lot better.
I disagree with so on the arbitrage argument as well. But I feel like we could go back and forth on that all day. I’m fine with leaving it there, especially since we’re two days past the initial post. Hopefully you and I can go back and forth on financials here in the future. I also love a good argument over money.
By the way, don’t be put off by the all caps. I use that for emphasis since I don’t feel like writing HTML code for italics in everything I write. I promise I’m not sitting here yelling at my screen and banging on my keyboard.
I’m super glad you’re here too, Big Dion – I love me a hearty discussion! And I think both ways are perfectly fine too – what counts the most is that we all TAKE ACTION, no matter which route we go, and I think we’re all smart enough to do so :) So keep on spreading the good word, y’all – it’s always helpful hearing different perspectives!
J — I understand you and Mrs. are about to have the baby. What are your plans as for as funding the child college plan? 529? Prepaid? Like to hear your thoughts and I’m sure you will be tracking this as well.
Thanks to you I now track everything myself except I won’t be tracking all the baby expenses. My wife and I are set to have our 1st child in August.
Awesome!! Congrats man :) On both the new baby and the tracking of all your finances now – that’s always great to hear. It does wonders, I’m telling you.
And you can bet your sweet as we’ll be funding a college plan soon! We haven’t done 100% of the research yet, but I’m pretty sure we’ll end up with a 529 from our state and start low – maybe investing $100 or two a month automatically – and then as the years go by, or we start making more, keep increasing it until we’re at the $500 or $800/mo range. Or until we amass a nice portion we feel would cover stuff – whatever comes first. Long term I hope to have more than enough ready to go by the time he’s 18 and/or double/triple if we have more kids! Which is def. in the plans ;) So, I guess we’ll be needing to invest in this stuff forever, haha… always gonna be worth it though! And I want to give them the paid for education like my parents did for me – it made a HUGE difference in my life.
Oh, and yeah – I’ll be tracking all of this stuff in my new baby cost spreadsheet! That bad boy is gonna add up!!