Monday, May 18, 2020

April 2020 Net Worth Overview - Back Above $1M

What a difference a month makes! After having the worst month ever for our household net worth in March, April came roaring back for our largest single month gain ever. We still aren't back to our peak, but ended the month up over $55k with a total net worth just over $1M.


CASH

Our cash balance went up slightly in April. We got some money from the federal stimulus package and promptly spent it all and more on our bathroom remodel. We're bought the most expensive things for the remodel already, but still have a lot of work left to install all the tile and new fixtures. Although we requested a refund for our cruise that we were supposed to go on in April, we still hadn't received it by month end so eventually we'll also see our cash bump up for that. 

Normally we prefer to keep a cash balance of about 6 months expenses. Our cash balance of $31k is currently adequate for a 6-month emergency fund, but we are looking to boost this a bit higher given current economic uncertainties. Since we are a single income household and my company is going through a rough patch because of the COVID pandemic, I'd rather have a larger cushion until the dust settles. We're not cutting back on every day expenses, we just aren't buying big things outside of the bathroom remodel (which we have no choice on now since we tore it completely apart down to the studs).

INVESTMENTS

Even though our retirement accounts are where the bulk of our investments sit, this is the area that requires the least amount of effort to manage. We have everything on autopilot and don't try to make changes the could be seen as attempting to time the market. Including company match, I put 15% of my pay into my 401k. Even though times are uncertain and we're wanting to build cash, I'm not stopping these regular contribution. 

Not only do we want to keep building our nest egg, investing regularly in volatile times allows us to dollar-cost average, or buy in at different prices. For example, last month the market was down a lot and we bought in at low prices. This month, the market was up a lot and we bought at the higher prices. Over time this means that I am buying at more 'average' prices, and never buying large chunks at the top or the bottom since it is NOT possible to time the market. 

Likewise we are now adding to our taxable investment accounts each month and have also set up automatic monthly purchases. If I kept the money in cash and 'waited for the right time', I would possibly forget or find a reason to wait for 'a better time'. Setting it up automatically takes I never have to think about it. Our taxable investments are partially for bridging the gap between when I retire and age 59 1/2 and may also be used in a few years if we ever want to start a business and need some start-up capital. Normally I wouldn't invest money in the market that I need within 5 years, but we're ok with the risk since it's still unclear if or when we may ever use it.

OTHER ASSETS

Not a lot has changed with our other assets, but not a day goes by that I'm not reminded at how happy I am to not have a mortgage anymore. We've now gone more than 2 months without a mortgage and it's finally starting to sink in. I mentioned earlier that my company is going through a rough patch and I definitely know that many co-workers are stressing out about potential layoffs. I can't say that it doesn't worry me at all, but the difference in stress I feel now vs the last time I went through layoffs is night and day. 

I still don't know if/when we'll see layoffs, but each day I just keep my nose the grindstone and do my best. Having no debt of any kind whatsoever gives me great comfort knowing that we can weather whatever economic storm may be coming. 

Monday, May 4, 2020

April 2020 Reading Review

If you would have told me earlier this year year that I would spend an entire month working from home I would have thought you were crazy. And yet, I spent the entire month of April working from home.

My workload has leveled off, but we've also been doing a major bathroom renovation so I haven't filled up all of this new found time reading like I would have in the past. During the month of April, I completed 6 books, listed below with the best ones listed first.

#1 Becoming -  Michelle Obama

It's still early in the year, but I think this one is likely the best book I will read this year. I loved the way that this gave her view of events surrounding President Obama's life leading up to and during the presidency. It isn't really a book about Barack Obama, but it's hard not to have him be a central figure. It's actually unfortunate because Michelle Obama is such an impressive individual on her own and being married to a former President causes her to be in his shadow. This is a must read, regardless of your political beliefs.

#2 Grant - Ron Chernow

I love a good biography and the fact that this one was written by Ron Chernow was an automatic endorsement for me to add it to my shelf. This was a really long read but really had to be in order to fully capture so many interesting details. Whenever I think of Grant, I just think of Civil War General turned President and how that seems like a natural progression. I didn't really know much more than that. What I wasn't expecting to learn was how much he still had to fight to keep reconstruction efforts ongoing long after the fighting ended Civil War after the fighting was done.

Here's another interesting tidbit. Have you ever heard of the Alabama Claims? Basically the US sued the UK because Confederate ships were built in UK shipyards, helping extend the length of the Civil War. I thought I had read a lot about the Civil War, but had never really read about this. Likely because it happened years after the fighting had stopped. Grant played a critical role in these negotiations.

#3 All the Devils are Here: The Hidden History of the Financial Crisis - Bethany McLean

I'll read just about anything written about the 2008-09 financial crisis and this one was very good as a standalone if you're looking for a good overview of how we got ourselves in that mess. This one focused more on the people, companies, and events that got markets to the point they were at in 2008-09, but didn't get into as much of the bailouts or response. I don't know that I necessarily got much new from it, but that's because I've already read dozens of other books on the same topic. It was very well written, and I regard the author highly and have more of her writing on my shelf. It's always interesting to see how different people connect the dots with the same events, so I'll keep reading books about the financial crisis until we start getting books about the COVID-19 crisis.

#4 Tom Clancy Code of Honor - Marc Cameron

Generally I don't like when authors allow someone else to use their name to write stories with their characters, but I've enjoyed Marc Cameron's Tom Clancy series enough that I try to read them all (I'm not a fan of the Tom Clancy Op Center, or Splinter Cell books as they feel more like I'm reading my way through a video game level). There are more than 25 Jack Ryan/John Clark books out there and while this one was good, I would recommend going back closer to the beginning (chronologically or by published date) to get to know the characters more if you haven't already.

#5 A Framework for Understanding Poverty - Ruby Payne

A while back I helped a friend out with a tank of gas and offered some financial coaching. The gift of gas was accepted, but the offer for coaching was not. It later came to my attention that another mutual friend had been helping this person with financial coaching and that several other friends have also been asked for money by this individual. We're still friends, and that's all good, but someone else recommended this book to me to help understand how people living in poverty think differently about money. What may seem like a completely irrational decision to me, may make more sense when looking at their circumstances differently. This is a quick read, so worth picking up if you're interested in learning more.

#6 A Short History of Drunkenness - Mark Forsyth

Like the title suggests, this was a quick and entertaining read, all about drunkenness. I've enjoyed reading more about Prohibition or other events, and this one was basically just about getting drunk and the different was in which various cultures and societies have done so over time. It won't take long to read, and you're bound to learn a bit of trivia that could be fun to share at the next happy hour.

I expect I may read a bit more in May, but 6 books in a month I feel pretty good about. I added a few more titles to my shelf this month, but am always on the lookout for good recommendations. If you have any, please send them my way.