Sunday, December 30, 2018

November 2018 Net Worth Update - Up to $851k

November was a big month for us in terms of progress towards our financial goals and had a slight recovery from losses in the market last month. The biggest change we made was to cash in some of our investments and throw the entire amount against our mortgage. We weren’t able to pay it off, but accelerated our payoff by more than a year had we stuck to our previous plan. 

Here’s how things now look for us:

CASH

Nothing too exciting here. I expect our cash balance to hover here until I get my annual bonus in a few weeks and we decide whether to boost our cash or put it all towards our mortgage. 


INVESTMENTS

Despite what the monthly change looks like, our investment accounts did go up in November. During the month, we cashed out around $53k of investments and put it all towards our mortgage. Our overall allocation stayed about the same since what we sold was  roughly the same allocation as everything else. This wasn’t really a market timing attempt, but December’s market is making it look like good timing. 

HOUSE/MORTGAGE

I can’t tell you how exciting it is for me to see our mortgage drop below $100k. We still won’t be able to completely pay it off until 2020 but that’s more than a year sooner than what we had been thinking. 

Our mortgage balance went down by $57k in November; $53k from moving money from our investment accounts, $3k from our normal monthly payment, and $1k that we were able to add to our normal payment from our other cash flows. Moving money from our investment accounts is something we’d considered in the past, but decided to do after talking it through during our Thanksgiving road trip to visit family. This brings our total principal reduction in 2018 to just over $99k with our new expected payoff in 2020.

Friday, December 14, 2018

The bigger your emergency fund, the fewer your emergencies

A few weeks ago my parents were in town, allowing us to go on a rare date without kids. We weren't gone for very long, but it was long enough that my parents somehow broke our microwave beyond repair. They said it just started sparking and smoking, so they turned it off and waited until we got back. 

That microwave had already exceeded life expectancy (the sticker said it was made in 1996!) so it’s not anyone’s fault, but we immediately had an unplanned expense. For a few years now we've tossed the idea around of getting all new appliances but have always delayed since everything still works and some pieces would be very expensive to replace (double wall ovens are awesome, but not cheap). 

Ultimately we decided to only replace the microwave and were able to find a much better unit that still matched our other appliances and only cost around $200. I picked it up from the store and my wife installed it (the usual distribution of labor in our household), so we only had to struggle without a microwave for a single day.

As I've reflected on this 'emergency purchase', it has struck me how little it bothered me. We had plenty of money in the bank to cover a new microwave and could have paid cash for all new appliances had we felt the need to upgrade them all at once. 

We keep an emergency fund of cash for situations like this, but didn’t actually have to dip into it for this. The frequency of unplanned ‘emergencies’ isn’t truly any different if you have a big emergency fund or not. But having a nice cash cushion sure does make it so unplanned expenses have to be much larger to really be considered an emergency.