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.


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).


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.


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. 

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