November is behind us and we continue to make progress towards our financial goals. For the first month in what felt like a while, we haven't had any major travel or home improvement projects, which is nice.
This month I also reached my goal of reading (or listening to) 52 books for the year. I have met this goal every year since I starting tracking it in 2011 and only started getting into audiobooks in the past couple of years (I'm about 50/50 reading vs listening). Not everything I read is worth recommending, but the best books I read this month were:
The Simple Path to Wealth, by JL Collins. The title sums it up best - it really is a simple read about a topic that many try to overcomplicate.
Religious Literacy: What Every American Needs to Know about Religion, and Doesn't, by Stephen Prothero. This isn't a religious book but was helpful in learning about religions role in our culture.
And of course, the market continues to surprise and delight contributing to our 13th consecutive month of net worth increases. We ended the month with a net worth of $731,362, up nearly $10k.
Our cash balance stayed pretty flat this month and will probably do the same thing for December. We mostly completed our Christmas shopping in November and also booked a cruise for this coming Spring. So far, we've only booked flights and made the initial payment towards the cruise and we'll cash flow the remaining cruise costs.
In our house, Christmas tends to be a pretty low key holiday. We make it special but don't go all out, especially for the kids. This year, we will spend less than $1,500 on gifts, most of that on gifts for each other.
For the kids, we'll spend under $100 each and you know what's crazy? They'll be thrilled. By not constantly giving things to the kids, even small or simple gifts become a big deal. Also, I hate clutter, and if you're being honest most Christmas gifts are clutter. We really try to make sure we aren't contributing to a cluttered house whenever we buy gifts. The one exception to this rule lately has become Legos. Since introducing them to our house earlier this year we've been able to keep the mess to a minimum, but I tolerate it since it is contained and they really spark the kids' creativity.
As inexpensive as electronics have become, we are pretty firm in our stance of kids not having their own electronic devices. This will only get harder as they get older since many of their peers at school or church are already getting their own tablets or phones.
Similar to previous months, the biggest factor driving our net wort change was our investments. The S&P 500 was up 2.81% in November, and our investments were up 3.1%. This is basically just the market gains plus our normal monthly contributions.
For our primary portfolio, our asset allocation is heavily weighted to US stocks, as shown below:
I've been allocating out of bonds for some time now but still have some lagging positions. Rather than have the bond income reinvest into bonds, I reinvest it into stock mutual funds.
As expected, the value of our vehicles declined this month. Back when I had the Corolla, the value had pretty much leveled out and KBB had it hardly depreciating at all. Now with a newer car, I expect to see the value steadily decline for the next several years.
Something to know about my wife's car is that she doesn't drive it much. LIke hardly at all. We live close to our church and kids schools, our kid takes the bus from the bus stop two doors down, and I do almost all of the grocery shopping on the way home from work. With her natural hermit tendencies, this means that there are times when she goes almost a week without driving anywhere.
For years, whenever I review coverage with our auto insurance provider, I always ask how low can we say her car is driven each year. Consistently, I've been told 8,000 miles is the lowest they can quote (even though she probably doesn't drive 1/2 that much). This came up again when I called to add the new car to our insurance, but this time I was told that they actually could quote a lower rate but that I would have to give them an odometer reading and call back with another reading in 30 days.
I gave them the odometer reading and made a reminder to call them back in 30 days. The grand total of driving for those 30 days? Under 300 miles. I told you we didn't drive that car much. They rounded it up to 4,000 miles per year, but that one change lowered our insurance bill by almost $200/year.
Zillow says our house value came down slightly, but we paid extra on our mortgage so the decreased principal helps offset the loss. Nothing too groundbreaking here, but it is exciting to see that we'll now be consistently paying down over $1,500/mo. Our current plan is to increase this amount further starting in January.
Our home improvement projects in November were limited to general maintenance and repairing a few spots of rotted trim on the exterior.
This is the time of year where we look at our last 12 months of spending and decide which areas we want to increase or decrease our spending in the next year. In 2017, we spent roughly $9k on home repairs/improvements, which was roughly what we've spent in 2016, and slightly less than 2013-2015. In 2018, we're thinking we may lower that expense further to make additional progress on the mortgage, but we do have plans to renovate our master bath and kitchen at some point, each of which would be at least a $10k project.
529 College Savings Accounts
I am now including these funds in our net worth, but we haven't really changed much with this account. The amount we've saved here has been growing steadily, but will not be enough by itself at this rate to pay for 4 years of college for each of our children. Our goal is not to be able to fully fund their educations, but this will make a good contribution. Once our home is paid off (within 5 years from now), we will revisit how much we are saving here vs increasing our taxable investing.
Net Worth Summary
A year ago when we set the goal to reach $700k net worth by year end, it felt like a stretch goal. Market returns have certainly helped by significantly exceeding my assumptions, but I would rather be conservative in my projections. As gains continue to exceed our expectations, we can reach our goals with even lower future growth assumptions.