Happy Friday, money nerds!
I was chatting with a friend the other day about publishing net worth reports online each month… He was like, ”Dude! That’s a dumb idea because what if the stock market crashes and you lose a whole bunch of money publicly? Wouldn’t you be really embarrassed?“…
I can understand why he thinks this way – after all, the main mission of this blog is to help people grow more money, not lose it…
BUT… the lesser-known (yet equally important) mission of this blog is actually to help people be happy and live the best life they can, regardless of how many dollars they have.
In January, my wife and I lost a whopping $35k in net worth. On the surface, that looks very sad and embarrassing… BUT, the reality is our happiness hasn’t really changed, nor has our lifestyle…
- We still make and enjoy delicious meals together
- We hang and laugh with our friends, same as always
- Our hobbies are the same
- Our family loves us just the same
- We go to work, exercise, do our chores, and relax on the couch together before bed every night, the same as usual
So there’s nothing really to be sad about, even with so much red in our ledger.
I’m not sure if you are feeling crap looking at your net worth this past month… But I encourage you to focus on your day-to-day life and the small things that provide you daily joy. You’ll realize that life is still quite good. 😀 The stock market (out of your control) doesn’t dictate your happiness.
Anyway, here’s how we took a $35k loss last month… 👇👇👇
Net Worth as of Feb 1, 2022: $819,282
Summary of our assets and liabilities:
The broad U.S. stock market had the worst monthly drop since March 2020. This is the main reason our assets dropped in value.
Before we get to the individual account breakdowns, here are a few other money-related things that happened in January.
January Money Moves…
- We paid our annual property tax bill for our rental property. This took $5,321.44 from our property float account.
- Our cell phones are on a group family plan, and we pay a family member in 6-month installments… So this cost us $540 in January $90 total per month for our 2 cell plans)
- We spent $496 on “home improvement” (a.k.a. furniture, rugs, and kiddy stuff in anticipation of a child living with us soon – more deets to come on that soon 🥳)
Extra income and savings:
- We didn’t really drive much in January, so we only spent $39 in gas for the car! (and right now the tank is still about ¾ full).
- I hustled my butt off and made $2,625 for extra contract work for my employer last month (and it looks like there’s some extra opportunity in February too!)
- We made some big moves with our Venture X credit card… Booked a FREE hotel night for a wedding in June ($300 value) and also got awarded about $1000 in travel credit for hitting our minimum spend.
Detailed Account Breakdowns
Cash Accounts (-$7,041): The major decrease here was funding our Roth accounts for 2022. We still have more than $20k in cash reserves, some of which will be invested this coming month. :)
Rental Property + Reserve Account (-$4,764): Apart from our ~5k+ property bill, this rental was actually cashflow positive last month. Here are the rental income and expenses…
$1,975 — Incoming rent from units
(-$138) — Property management fees
(-$617) — Garbage disposal fixes, bath/shower plumbing issues & other maintenance
(-$661) — Mortgage principal + interest
$559 — Total rental gain this month
**Note: I don’t track the monthly ups and downs in property value for this rental. Sources like Zillow and Redfin are too unreliable for my property type, so I only do a value update once a year with a full CMA from my real estate agent.**
Real Estate Syndication (no change in value): We received a $880 dividend in January, which doesn’t change the value of our ownership share. But it does count to our overall investment return. Since we’re coming up on the 1 year mark for this syndication, I’ll have to write a longer post about how this is all performing. So far, it’s crushing initial expectations.
IRA – Regular: (-$12,076): We took about a -6% hit on this account due to stock market volatility. It would have been worse, but the last couple trading days in January were quite nice for the overall stock market.
IRA – Roths: (+$4,813): In early January, we contributed $12,000 to our Roth accounts. The reason we max out both our Roth accounts early each year is because we believe lump sum investing beats dollar cost averaging *most of the time.* Investing at market peaks is scary, but it beats trying to time the market (which I suck at!!)
Joint Brokerage Account: (-$18,343): It stings to see this account with such a massive dip, especially after I just invested $35k in December after the sale of our 3rd rental property. Oh well, we still have a balance over $300k and a long investment horizon.
*NEW* Solo Roth 401(k): ($-578): This is my new Solo 401k with TD Ameritrade (which also has a Roth component). My plan is to max this out in 2022, but the sucky thing is contributions have to be done via wire transfer or mailing in a physical check.
HSA: $4,743 (-$305): No contributions of withdrawals from this HSA. All of the funds are invested in VTI (total stock market index) which is why we took a 6% hit this month.
Breakdown of Liabilities
Rental Property Mortgage: (+$252): Little by little, month by month, our mortgage is being paid off by our tenants. Principal paydown is an often overlooked benefit to owning a rental property, but it’s one of my favorite consistent additions to our wealth each month.
Credit Card Balances: (+$2,459): Since my wife and I pay off our credit card balances each month before the due date, I’m thinking of removing this line item from our tracking sheet going forward. Although it’s technically a “liability,” I can just minus our CC debt from our checking account balance because that’s where it’s paid from anyway. Thinking of slimming down these NW reports in the future for a more simple read!
Other than that, my wife and I have no other debts at this time! 😎
That’s all for now. Cheers to a *hopefully* profitable February for everyone!!
Onwards and upwards!
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 am near a milestone for my networth and the market doing it’s thing has been bouncing near it, otherwise I don’t think I’d have looked much recently. There’s nothing I can do about the market, so I invest and don’t stress about it. When I’m retired and need to take money out, then it will be more of a factor.
I figure my 401k contributions are dollar cost averaging, so a lump sum Roth contribution balances everything out.
Great work Liz. I’ll admit I look at market performance way more than i should. It’s hard to ignore when that’s part of my job and friend circles. But, like you, I don’t stress :). Have a great weekend!!
Stock market downturns are simply “blue light” specials on assets. If your time horizon for living off of your investments is more than 5 years, you should be buying. This portfolio looks to be right-on for somebody 35 years old. I’m 62 and have a different mix of investments. My portfolio has actually grown 4.65% since the start of 2022 because 90% of it is in less sexy income-generating stocks in industries like (utilities, oil, midstream pipeline REITS, medical, hospitals, telecommunications,etc.). If I were 25 years old I’d be all in growth. This morning Feb 4, 2022 I’d be buying Facebook.
Haha I saw the massive Facebook drop yesterday and it’s a tempting buying opportunity… But ultimately my strategy is indexing, and i’m sticking with it :). Glad to hear you’re UP this year, that’s great! Cheers, Dan.
Yes, this is an interesting report, thanks for such a detailed layout. I think a lot of people were upset by the market decline, but if people are around your age or younger, this is a good time to buy assets. We bought some stocks after a sharp drop and I think in the next 5 years they will grow noticeably. Even if they fall again))
Hey Illia! Well, the drop might not quite be over. It could get worse before it gets better. Either way, we’re in it for the long haul!!
I’m always looking forward to reading your net-worth post. In regards to the decrease, I believe most regular joes probably had dents in their net-worth this month due to the stock market tanking. Mine went down by like $6K! $6K decrease is quite low but there is a reason for this. During the crash of 2008, I made a tactical error, I had zero cash to invest. Since then I promised myself to always have gunpowder left for the next tanking. When the market started tanking this January, I went to work. I plowed my cash reserves into some specific stocks (both growth and dividend stocks) that I have been eyeing for some time. The inflow of excess cash offset the drop in my account balance hence the small drop. And by the way, I DCA all the way down. I think it’s very ok to dca as long as you do it within a short period (one to three months), especially if you have a huge amount waiting to be deployed. But whether one dca or lumpsump, we are all just taking a risk and hoping for the best. Thanks for your post and hopefully the market will start going back up soon. Meanwhile, I will keep putting my reserve to work if it continues to go down or until I run out of cash…lol.
Great work Julius. I love how you learned from past mistakes :)
Onwards and upwards! I like that. Just passed zero and working my way up! Interesting to read your net worth posts!
Cheers David! Have an awesome weekend :)
Very similar situation! I’m 39 and our net worth went down $34k this month. Losses in all retirement accounts, 529s and invested HSAs, small brokerage account. Lifestyle doesn’t change at all because we’re in it for a long haul. Shortest horizon is 6 years away from accessing college money.
I am always interested in the “lump sum vs dollar cost averaging” when people seem to be saving-up that lump sum throughout the year to invest in January the next year. Where do you keep it during the year? In cash? Isn’t that missing out on investment time by not investing it until the next January? I guess it makes sense to get-ahead-a-year at some point, kind of like getting a month ahead on your budget (a YNAB principle) but having trouble wrapping my mind around keeping it in cash in 2021 to dump it in Jan. 22 vs putting some in every month in 2022. Seems like you’d get a 1 year advantage 1x but hasn’t been attractive enough for me to try saving up 12k on top of normal contributions and holding it until the next Jan.
Hey there Working Mom!! I completely agree with you! Only reason I had cash to dump in this January was because we sold a rental property in December so I held some of the proceeds in cash until Jan for the Roth accounts.
Usually, I just invest every spare dollar into our after-tax brokerage. Then, come January, I withdraw 12k from our aftertax brokerage and stick it in the Roths (6k +6k). There’s a few days gap where the money is not invested, but otherwise it’s all working for me, all the time.
I think saving cash throughout the year just to do a lump sum has been proven time and time again to be worse off than dollar cost averaging every chance you get :)
Love that you’re in it for the long haul! Keep up the good work :)
The tough part about tracking your net worth is that the more you accumulate over time, the more you stand to lose during a market downturn. Talk about a first-world problem! Even still, it’s never fun to see such a big number in red. As long as those are long-term investments, though, it’ll merely be a blip on the radar.
Yeah I was thinking about that the other day… If I can’t stomach a 50k downturn today, it’s gonna be hard to stomach a 200k downturn when I’m older and have 4x the wealth we have today. And I agree — complete first world problem to have.
Hope all is well with your IF… have a great weekend. :)
As encouraging as these net worth updates are, you brought it home with the fact that even with your networth down, you still enjoy your life, pursue your hobbies, and do things that make you happy. In the grand scheme of things you can’t obsess over the numbers, just work on the trends and enjoy your time in life!
Also nice plug there Joel, congrats on becoming a non-childless household soon!
Joy > money!
January was a six figure down month for us in our net worth, but as the richest Arkansan said, “Its just paper.” Sam was mostly pre computer age, he’d have to rehab that quote now to say Its just numbers on a screen. Its not real until you make it real by selling, which you’d never do in a panic. I think it just adds to your credibility to share bad market outcomes. People just starting out need to see how successful people can take what amounts to loss of a years salary (for many) in stride.
Yep! And for those that followed J$ all the years, he had massive swings month to month in net worth. His summary of reports show a pretty bumpy journey. But non of those losses were actually losses, as you said only selling makes them real.
Cheers Steve have a great week!
January was definitely down for us as well. So sad to no longer make easy money! But we got to be thankful for how much we’ve made since 2020 alone. Nuts!
Here’s hoping we don’t go into a recession.
I’ll cheers to that, Sam. So grateful for the big returns in 2020 and 2021, and we can’t be sad that some of it (only a fraction at this point) has been taken away :)