Net Worth Report – Numero Uno!

Can you believe it’s October already! As much as I love the holiday season, the tight-ass inside me calls the next 3 months the “expensive season” where our costs get a little crazy on food, travel and gifts!  🎃 🦃 🎄 🎁 🎅.

Today I’m sharing my very first ever net worth report. Well, kind of … this is a partial and simplified version, which excludes shared rental properties and private partnerships. This report is the first of many I’ll publish monthly going forward.

Why I’m Sharing Net Worth Tracking With You

There are hundreds, (maybe even thousands?) of bloggers who are tracking their assets and net worth online. But what’s cool is that everyone does it in a slightly different way. Also everyone shares it publicly for different reasons.

Here are my reasons:

    1. To keep encouraging others to track their net worth, too. In fact, everything I write online is to share processes and methods that have helped me, and hopefully can help others out there increase their financial situation. If you don’t track your net worth – start TODAY. If you don’t know how, start here and email me if you have any questions!
    2. A unique-ish perspective. Since my wife and I are pursuing “Coast FI” we are pretty much solely relying on the compounding growth of our existing assets. Even if we don’t add any more contributions, we *hopefully* will still reach our FI number. We’re trying to prove that the slow and boring path to FI is just as good as any other! This slow strategy lets us work in jobs we enjoy, even if it means having a 0% or even a negative savings rate for a few years. You will never hear us complain about our jobs, which is rare these days.
    3. It’s about the process, not the numbers. It’s always fun to check out someone’s net worth or assets statement… But, the true value is watching how things change over time. Plans change. Things fail. Life gets in the way. We all approach obstacles and windfalls differently. It’s the tiny decisions we make along our journey that have the biggest impact in the long run. Each monthly report is just a snapshot. But together, over time, they all tell a story.

Drumroll, Please …

Let’s jump into the big-picture numbers, then afterwards delve into the details and whatnot. Here’s a list of our assets (for my wife and me) and their balances as of October 1, 2020:

Breakdown of Assets

Checking & Savings Accounts ($38,868): This is the liquid cash across our regular bank accounts, including our personal emergency fund. I know, it’s probably a little too high for what we need going forward. My wife and I are just getting back into regular W2 income after our lengthy sabbatical, so we will reduce this cash balance over time.

Rental Property, and Reserve Account ($235,931): The backstory of this duplex is posted here. I recently ordered a Market Comp for the property which confirmed a $220k evaluation. The reason I keep a dedicated reserve account for this rental (and I recommend people do this for all their investment properties) is because I track it separately from my personal income/expenses. I view each rental property like a self sufficient business – all of the incoming rent gets paid into the reserve account, and all expenses taken out of it.

IRA – Rollover ($118,633): This account is the combination of a few old employer 401k plans rolled over into an IRA. The full backstory is posted here. Since my new workplace offers a 401k plan, I won’t be contributing to this specific IRA, and its growth solely depends on the overall stock market.

IRA – Roths ($61,162):  We were a little late to the Roth game, starting both our accounts in 2016. Going forward, our plan is to max out our Roth contributions each year, even if we have to pull from other retirement accounts to do so.

Joint Brokerage Account ($158,853): This is an after-tax, self managed brokerage account. Since my wife and I will most likely need access to retirement funds before we turn 59½, this account is a big part of our early withdrawal strategy. Our long term plan is to slowly sell off our real estate holdings and move money into this brokerage account (and our Roths) going forward.

HSA ($1,677): Quick update on my healthcare situation… I’ve enrolled in a shithouse HDHP plan, but one of the benefits is the ability to invest in a Health Savings Account. Although its purpose is for healthcare expenses only, the tax advantages of an HSA make it an excellent investment vehicle. The max contribution I can make is $3,550 this calendar year, which I’ll be adding shortly when my coverage kicks in.

New 401(k) at work ($0): I was on the fence about contributing to my new workplace 401k plan. Since my wife and I have almost a 0% saving rate (making just as much as we spend), adding any money into this 401k would put us in a negative cash flow situation each month. But, since our emergency fund and cash position is quite high right now, we feel OK living off of our checking account cash and investing parts of my income. At least for a little while.

Breakdown of Liabilities

Rental Property Mortgage (-$122,997): This balance will slowly decrease over time as principal is applied with each mortgage payment. There are options for refinancing this rental property and borrowing more money, but we need to stabilize our income a bit more so we can qualify for a new loan :)

Credit Card Balances (-$304): Although we pay off our credit cards in full each month, there’s typically a few hundred or maybe a couple thousand dollars in new charges. This balance represents whatever we owe at the time we do a net worth snapshot.

My wife and I have no other consumer debt. :) 

Stuff Not Included in These Monthly Net Worth Reports

Our Car: Personally, I don’t consider a car as an “asset” because it’s something that takes money out of our pockets each month, and doesn’t contribute towards growing our wealth. Our Prius (nicknamed “The White Shite”) is owned outright, so there are no payments or debt attached.

Wife’s CalSTRS Retirement Plan: The saddest and most frustrating thing about being a teacher is the tiny compensation and absolute ripoff retirement options. The State of California deducts a small portion of my wife’s paycheck (involuntarily) and hides it in a secret, invisible, web of trickery. It’s almost impossible to determine where her contributions are actually being invested, and if she’ll ever get them back one day. Needless to say, this retirement account is about as dependable as Social Security later in life. It’s an asset we hope to one day benefit from, but unfortunately something we can’t control or rely on.

Australia SuperAnnuation: If you think the USA has confusing government sponsored retirement plans, you should check out Australia’s weird fee-ridden system! The good news is I have about $25k AUD in a self-managed Super account down there… The bad news is the account is growing at a rate of about -2% YoY even though it’s invested in the best available index funds. The only way I can access this money is either when I turn 60, or if I renounce my Australian Citizenship. :(  

Joint Rentals, Real Estate Partnerships & Reserves: My long term strategy is to slowly downsize and eventually exit from owning and managing rental real estate. Shifting money from these assets over time into our IRA & Brokerage account will simplify our withdrawal strategy and be way less crap to manage in retirement. I’ll chat more about this real estate stuff over time.

Goals and Future Milestones

In the short term, like 3-6 months, we’ll slowly add money into the new 401k account. We’ll probably fund the HSA before year end ($3.5k), and then think about maxing our Roths in January ($12k). To do all this, we’ll need to take cash directly from our reserves. I don’t anticipate a huge increase in overall net worth, just a shuffle of money between accounts.

Our longer term goals are still shaping, and much of these depend on market performance, offloading some of our rentals, and possibly increasing our income a bit next year. More to come on all this stuff — things are a bit wonky right now!

As far as milestones, looks like we’re in sight of a $500k report pretty soon! J$ hit the Half Millie mark back in May 2016, then it only took 3 years from him to double it to $1M! 😅 I can’t promise my assets will grow as fast, but it’ll be an interesting journey nonetheless! 

How are your net worth updates for the end of September? Any news or milestones to share?!

Have a great weekend!

– Joel

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20 Comments

  1. Liz @ Splurging on Freedom October 9, 2020 at 5:39 AM

    Thanks for sharing Joel, I really enjoyed your net worth report! Looking forward to your $500K milestone :)

    Reply
    1. Joel October 9, 2020 at 11:20 AM

      Cheers Liz, I enjoy your NW updates too. Congrats on crossing the S$250 recently!

      Reply
  2. Jordan @ FIRE Your Own Way October 9, 2020 at 6:26 AM

    Congrats on being nearly a half-millionaire! Loved seeing your breakdown and love forward to more net worth updates in the future.

    Reply
    1. Joel October 9, 2020 at 11:24 AM

      Thanks Jordan! Definitely feels a little weird putting this stuff out there online (something you’re prob already familiar with yourself on your site!). But the true value will come over time when the reports all start to tell a growth story. :) Cheers for reading!

      Reply
  3. ThomH October 9, 2020 at 7:42 AM

    Enjoyed Reading your NW report. Keep up the good work. I’m curious why your plan is to sell off you RE investments prior to retirement? REIs provide a great tax shelter and you might instead consider 1031-ing them into larger or newer properties for longer term growth and sheltered retirement income. This is how we are now FIREd and living exclusively on our REI’s. Just want to make sure you consider the capital gains and depreciation recapture, that may hit you down the road by cashing out.

    Great job on your assets for you age. You are definitely well on your way!

    Reply
    1. Joel October 9, 2020 at 11:32 AM

      Thanks Thom! I’m not opposed to real estate… I’m just opposed to headaches and constant management :). The rentals I mentioned selling are draining me a bit, even with property management in place. This is 100% my fault, buying too quickly without thinking about efficient scaling. Also, some rentals I have are co-owned, which is a situation I’d like to exit out of as I grow older and have my own family, etc.

      Some properties I want to keep, like the duplex in this NW report. I love it and love the tax benefits that come with it. It would be great to cash-out refi at some point, and also 1031 into a bigger/better opportunity if possible.

      Congrats on your success and living completely off of RE income. That’s awesome to hear!

      Reply
  4. The Millennial Money Woman October 9, 2020 at 11:24 AM

    Joel,

    A great post on your Net Worth report.

    I find that the more I study my current Net Worth – and the more I actually write down my Net Worth on paper – the more likely I am to increase that Net Worth.

    Sounds like half a million will be around the corner for you in no time. I look forward to reading that report soon! Keep up the great work.

    The Millennial Money Woman

    Reply
    1. Joel October 9, 2020 at 11:38 AM

      Yep, once you make NW calculations a regular habit, it increases your desire to grow faster. I hope these reports will inspire other to take action, just like J$’s did for the past decade+. Cheers Fiona! Have a wicked weekend.

      Reply
  5. Impersonal Finances October 9, 2020 at 2:09 PM

    Awesome! It’s great to have a new net worth to track at Budgets are sexy! Great stuff, Joel.

    Reply
    1. Joel October 9, 2020 at 3:24 PM

      Cheers IF! I’ve got a feeling we’re in for a bumpy ride :)

      Reply
  6. Matt @ OMB October 9, 2020 at 11:45 PM

    Thanks for sharing Joel, I’ve shared these in the past but I’m up in the air about sharing myself. Glad you took the risk. Slow and steady!

    Reply
    1. Joel October 10, 2020 at 10:12 AM

      Thanks Matt. It’s a little weird having this information out there. But, I think over time it will help others. It’s definitely a long game. :) Have a great weekend!

      Reply
  7. theFool October 10, 2020 at 6:42 AM

    What is your final goal for a number to retire and live off of?

    Reply
    1. Joel October 10, 2020 at 10:38 AM

      If I had to pick a number, I’d say it’s about $2M, + or – 500k. The reason it’s not a specific answer is because we’re still figuring out what our future annual expenses are going to be. My wife and I are 33/35, and today’s expenses are much different than what they’ll be 10,20 or 30+ years from now. Healthcare is a huge variable, and so is having kids which we’re still figuring out.

      Reply
  8. Simone October 11, 2020 at 8:40 AM

    I love a net worth breakdown. Thanks for sharing. We are on a missing to get rid of all debt (all on real estate) and maybe even retire early. You’ve at 550k sinner than you think. Best wishes!

    Reply
    1. Simone October 11, 2020 at 8:41 AM

      “You’ll be at 500k sooner than you think.”

      Reply
      1. Joel October 11, 2020 at 4:53 PM

        Love your intentional living theme and message on your site. Looking forward to following you and Sean’s progress too! Cheers Simone!

        Reply
        1. Simone October 23, 2020 at 8:41 PM

          Thanks so much, Joel. ❤️

          Reply
  9. Dragon Guy October 11, 2020 at 4:02 PM

    Very nice report. Just be careful with the HSA contributions. Since you haven’t been in the plan for the full year, you can still contribute the full amount ($3,550), but you have to be be in an HSA eligible HDHP all of next year as well. Otherwise the IRS would only allow a prorated contribution for this year and would tack on a 10% penalty for any overages. This was based on research I have previously done, so not sure if it has changed!

    Reply
    1. Joel October 11, 2020 at 4:56 PM

      Thanks DG. Yes I got the same advice from Fidelity (broker for my HSA) – you’re right – I can contribute $3550 this year, even though I only have the plan for 3 months. The catch is I have to be fully enrolled through 2021 in a HDHP. If I screw this up, I’ll have to pay penalty when I file my 2021 tax return. Looking forward to hearing more healthcare tips from you Dragon Guy!!

      Reply

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