Monday, March 19, 2018

February 2018 Net Worth Update

February 2018 Net Worth Update

Despite the stock market having a rough month (about time!), February was actually a really good month for us in net worth growth. We ended the month at $779k, up $11k for the month.


Our cash increased quite a bit in February primarily just from getting my annual bonus. It will come down a bit in March, but we are now at a spot we feel more comfortable in terms of our emergency fund. We also used this month to make an extra large mortgage payment and finish paying for an upcoming cruise.

Overall, there really isn't much exciting here. I do find it interesting that I don't even think of our emergency fund as available cash. Since we keep our savings account at a separate institution than our checking account, it doesn't ever cross my mind that we can use it since most of the time we've been fortunate to handle any emergencies out of our normal cash flow. I'm not purposefully trying to trick myself, but simply having the accounts separate does create a false sense of scarcity that may stop me from making unnecessary purchases as we focus on other goals. 


Just like anyone who was in the market last month, we took a decent hit. We actually added quite a bit to the market and still ended up down over $10k. The good news here is that we didn't sell anything, and actually lucked out that some of our larger purchases were near the lows of the month. Our allocation is still nearly 100% in stocks and that is not changing.

While it was never a large portion of our holdings, I did finally get bored with Bitcoin and sold it near the end of February (at just over $9,500/BTC, still up more than 2x from my initial purchase). Apparently, I wasn't the only one as BTC prices have been struggling the past few weeks. 


As you can see above, we wrote a big check towards our mortgage last month. Sadly, we can't do that every month, but our new norm for 2018 will be to pay around $2,000 over our minimum each month. In terms of home improvement projects, we are painting one of the last rooms that we haven't painted yet and are planning some yard projects in the coming months. 

Our new neighbors moved in and I was reminded how much money we are able to avoid spending simply by doing home improvement projects ourselves. Before moving in, they had the entire inside of the house painted. I don't know exactly what they paid, but based on a few data points I have (what other similar sized houses in the area cost), they easily spent $5k just for the interior. While it took us a lot longer, we've painted the entire interior and exterior of our house for around $2k. 

We're off to a great start to the year and on track to hit our financial goals.

Sunday, March 4, 2018

Book Review - Overhaul: An Insiders Account of the Obama Administration’s Emergency Rescue of the Auto Industry

I recently finished reading Overhaul: An Insiders Account of the Obama Administration’s Emergency Rescue of the Auto Industry and really enjoyed it. This one has been sitting on my ‘to-read’ shelf for years and I finally got around to it thinking I was just going to ‘check the box’ but not really learn anything new since I’ve already read so many books about this crazy time in the market. Boy was I wrong. 

Many of the books I’ve read about the bailouts really focused on things like bank bailouts, bankruptcies, near-collapses, and TARP. The months post-Lehman collapse tend to get less attention, but that’s when the auto companies were on the brink of bankruptcy. I remember very well the drama of these enormous companies petitioning Congress for bailouts, and the daily uncertainty of whether or not the Government would allow them to actually declare bankruptcy. 

This book was a great insight into a lot of pieces I either didn’t remember or never knew about the auto bailouts. Did you know that in an attempt to save cash, GM actually turned off the escalators in their HQ? Spoiler alert: it didn’t work. I was also surprised to read that GM proposed selling their HQ in downtown Detroit and moving to a less expensive location. The government actually blocked the move saying that was one step too far and would cause irreparable damage to the city of Detroit and was only a drop in the bucket compared to the total problems GM was facing. 

This account also confirmed my long-held belief that GM leadership had no clue what they were doing. I’ve never met any of the main characters in the story but have met people in the finance departments of the big 3 and was never as impressed with those at GM. During and after this bailout, I vowed to never own a GM product and I don’t see that changing.

Several years ago, I also read The Reckoning by David Halberstam which issued a warning to US automakers that they were at risk of getting caught asleep at the wheel while the Japanese auto companies took over. It took a while, but right at 20 years after this book was written, US automakers were facing this reckoning for many of the exact reasons he warned of. 

Even if you’ve already read a lot about the 2008 financial crisis, Overhaul is worth checking out.