August 2017 Net Worth Update – up to $685,332

August was a crazy month here in the DIY$ household. We got some of our last trips in before school season makes it harder to skip town with the kids, got the backyard prepped for our concrete patio that will be poured in September, and increased our net worth by $4K to $685,332.

NET WORTH SUMMARY

We’ve done a pretty good job at growing our net worth. With the recent madness of hurricanes and other extreme natural disasters, it has caused us to reconsider some of our net worth allocations. I’m not talking about bonds vs stocks or international vs domestic, I’m talking about taking stock of our ‘survival’ inventory. We already have a bit of non-perishable food stored and lots of tools, but we’ll be re-evaluating whether we have enough. We may also find ourselves buying things that are really just for emergency preparedness purposes.

CASH

Our cash balance crept up again this month, helped out a lot by an extra $1,000 that came our way unexpectedly. I know I keep saying that we’re done with big trips, but our travel never seems to end. It isn’t impeding us from saving for retirement or building our cash but it does slow down our cash pile-up. This month I traveled for work a bit (no out of pocket expense), and we took the kids to California for a wedding. I also just got back from a quick trip to go to a football game with my dad and brothers.

After spending a few days in the SF Bay Area and Sacramento, I think I’ll be adding that area to my list of ‘places I won’t be upset if I never go back to’. Las Vegas and Chicago are already on the list for me. We got to see the Muir Woods (along with what felt like an entire small town), and that was great. I’d still like to see Yosemite, but the city and traffic are just not for me.

INVESTMENTS

The S&P 500 was basically flat in August, growing just 0.05%, yet our investments managed to grow by about 0.5% excluding our normal monthly contributions. While most of our investments are invested in S&P 500 index funds, we do have some international funds that did well.

CARS

Nothing has really changed in our driveway or replacement plans. We have a gas guzzling Expedition EL to tote around our crew and it is great. When we travel and have to rent a vehicle like we did in San Francisco, we typically get a minivan. Every time we rent a minivan, I’m reminded how much I prefer a large SUV.

My little Corolla is a great car. There really isn’t much more to say. It has over 207,000 miles on it and has never had any major repairs. The end of this year will mark 10 years that we’ve owned it. As much as I love it and know it could probably go another 5-10 years, I’ve started looking at replacements. It is getting old and while it runs great, it’s cosmetically showing its age.

HOUSE

Yet again, we paid extra on the mortgage. Our total home equity went down slightly as Zillow has our home value declining. Our neighbor has moved out and has been doing some home improvements before selling. We’re curious to see when he lists his house for sale and how much it ends up selling for.

A friend who lives nearby recently sold his house and it was only on the market for two days. In our area, updated houses sell quickly and for top dollar. Houses that aren’t updated tend to sit until homeowners realize they won’t get top dollar based solely on location.

MINI DIY OOPS

A few times each year, Sherwin Williams has a 40% off sale. Pretty much whenever this sale happens, we buy a couple of gallons of paint. Even with the 40% off it’s still more expensive than some of the stuff at Home Depot or Lowes, but it covers so much better and is much easier to work with. There’s a reason the pros use it. One thing we love is that they keep a record of all the colors you buy, so you can go in and say “I need another gallon of the color I bought last Spring”, and they’ll know what color you’re looking for. That’s how it’s supposed to work.

We bought 3 gallons back in July but didn’t get around to using it until August. Halfway through painting a room, we realized it wasn’t the right color (doh!). It looked a little off from the get-go, but it was close enough that we thought maybe it would dry right. Not so. Turns out, someone fat fingered the numbers and gave us something one shade off from the same sample card. At the store, they were great and swapped it out for the right color even though we had already used some of it.

The room looks great now, but we wasted a couple of hours painting the wrong color. The moral of the story is that Sherwin Williams is great. But when it comes to paint colors remember to ‘trust, but verify’.

So that’s the August update. Better late than never, but life seems to get in the way sometimes. We’re still on track to get to $700k by year-end and are excited for what’s next.

July 2017 Net Worth Update

I can hardly believe July is already over. The year really seems to be flying by. In the month of July, I finished reading seven books, vacationed to both Florida and Hawaii, and somehow we managed to grow our net worth another $12,800 to $680,980.

If you’re looking for a good read, the best two books I read this month were:

Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall by Neil Barofsky

A Splendid Exchange: How Trade Shaped the World by William Bernstein

July 2017 Net Worth Overview

Cash

As you can see, our cash balance continues to be stagnant, and this months excuse is a trip we took to Hawaii. It was totally worth it (left 3/4 kids at home!), and we snuck it in before school started. With school starting, we’ll be staying put for a while and should see our cash start to grow in September (we’re finishing up a backyard patio in August or September). At least our cash is paying a whopping 1.1%, right?

Investments

Again we continue to do nothing different or special with our investments. The S&P 500 was up 1.93% in July and we continued to invest. I keep about 1% of our investments available for more speculative, risky investments and one of those investments is Amazon. I’ve always said that I love the company but hate the stock but decided to buy some early this year on a dip in the $740 range. I still hold it and continue to be surprised at how much it’s gone up, despite recent declines.

Cars

Nothing new to report here, but Kelley Blue Book periodically shows an increase in the value of our SUV. Tesla launched their new Model 3 last week, and I now have a somewhat renewed desire to buy one but my little Corolla keeps chugging along so nothing planned here.

Side note – when we went to Hawaii, we couldn’t reserve a rental car online since the trip was planned at the last minute when we found really good flights. As a result, the cheapest car we could rent was a BMW 7-Series (non-luxury SUV’s and Minivans were available but even more expensive).

So for a few days, I went from driving a $3k 2005 Corolla to a $85k+ 2015 BMW. You know what’s crazy though? I didn’t like it. The gear shifter was confusing, the doors always took two tries to close, and I didn’t figure out how to unlock the doors without the key fob until the second day. There were other issues, but you get the idea.

Sure, it was roomy and comfortable, but it was a really big car to navigate through crowded streets (Waikiki is awful, it’s much more enjoyable out of the city). The island was also too small to really test out the powerful engine. My takeaway though was that I don’t get much enjoyment out of driving a really nice car.

Our Hawaii rental where we went to see a beautiful sunrise.

House/Mortgage

We continue to pay extra on the mortgage and our home value increased slightly, boosting our equity by $3,700. Our next door neighbor is getting ready to sell, that should help us gauge our own value. His house is smaller and needs some updates but he’s got great neighbors so it should sell quick, right?

We need our net worth to increase by $4k per month to hit our goal of $700k by year end. The concrete patio should be the last big house project for the year and travel will slow with school in session. Next year I’ll be excited to really start making a big dent in the mortgage.

 

June 2017 Net Worth Update

I’m just getting back from a nice quick trip for the 4th of July and wanted to provide an update on our net worth. June was an expensive month for us in the DIY$ household. Nonetheless, we managed to still grow our net worth by $3,900 to $668,176.

June 2017 Net Worth Details

Cash

Our cash balance crept up this month but should jump more in July. We finished installing a backyard fence and had multiple trips that had me on planes for 27 hours in the month. Side note, it’s REALLY expensive to rent cars now that we need vehicles that can hold 4 car seats/booster seats.

I even added another stamp to my passport by visiting Santiago Chile for the first time. The best part of the trip was that my 6-year old son was able to join me. While on that trip, I almost had a disaster when I realized mid-flight that I still didn’t have a replacement debit card from when our accounts were hacked. Thankfully I did have some cash to convert and I made to sure to use credit cards everywhere I could and it worked out. Travel and home projects for July should be much lighter.

Investments

The S&P 500 returned 0.48% in June and we continued to stay the course. We continue to add 15% of my income to my 401k and are primarily invested in S&P 500 index funds. The only sort of exciting thing here is that our liquid assets are about to surpass $400k.

Cars

Our car values supposedly went up this month, but the overall trend still is down. I am a little bit nervous that one of our vehicles might die soon, but the fear is ungrounded. Both cars are doing great just getting old. What’s the longest you’ve heard a Corolla lasting? I drove my mom’s Suburban the other day and she’s at 210,000 miles.

House/Mortgage

Yet again, we paid extra on our mortgage but not nearly as much as we’d like to do. Once our cash builds up a little more we’ll start making much larger payments. For the first few years in this house, most of our home improvement projects were on the inside of the house. In the past year, we’ve shifted our focus to the exterior of the home. In June, we finished installation of a new aluminum fence.

We live on just under two acres but fenced in an area large enough for the kids to play in, but small enough to be relatively easy to manage. The next step was to tear down our deck. Rather than rebuild the deck, we’ll be pouring a concrete slab with some steps down to it from the house. Once that’s done, we’ll be focusing on the grass and possibly starting a garden. It’s going to be a lot of work, but surprisingly it feels less intimidating now that we’ve fenced in the area we’ll be focusing on beautifying.

Here you can see part of the new fence and the area the deck used to be

Overall, it’s been a good start to the year for us and I’m optimistic that we can reach our net worth goal before the end of this year. I’ll leave you with another view on our progress so far this year. 

 

May 2017 Net Worth Update

I just got back from a work trip, but wanted to make sure I kept up with my tradition of monthly net worth updates. Our May 2017 Net Worth increased by $6,470 to $664.267. 

May 2017 Net Worth Summary

Cash

Our cash balance went down slightly this month. We had to spend >$300 pumping out our septic tank and also spent most of the month on a low carb diet, which increased out grocery bill a bit more than normal. In May, we also paid for the materials to install a fence in the backyard. Now that school is out in our area, we’ve been wanting to allow the kids to play outside with less supervision and this will allow that. In the not-too-distant future, we may also be tearing down our deck and pouring a concrete pad in its place. None of these projects really will make a significant dent in our cash, but they will slow our growth and delay our acceleration of mortgage reduction. I expect our cash will stay around these levels for the next couple of months.

In May, we also paid for the materials to install a fence in the backyard. Now that school is out in our area, we’ve been wanting to allow the kids to play outside with less supervision and this will allow that. In the not-too-distant future, we may also be tearing down our deck and pouring a concrete pad in its place. None of these projects really will make a significant dent in our cash, but they will slow our growth and delay significant mortgage reduction. I expect our cash will stay around these levels for the next couple of months.

Because our accounts were hacked, my direct deposit was rejected on 5/31. Our old account numbers have all been closed and I missed the deadline by one day to have payroll make my deposit go to the new account. I’ve been out of the office but am told that there is a check on my desk for when I get back. These numbers assume that my paycheck had already been deposited. I feel blessed that missing a paycheck by a couple of days doesn’t really impact our lives like it would for many Americans.

Investments

The S&P 500 earned 1.16% in May and our investments continue to be primarily tied to that index. We had a little scare with some fraudulent activity in our accounts. Someone sold all our index ETFs and bought another stock. Everything is now resolved as if it never happened.

Most of our index funds are invested in ETFs. Whereas mutual funds can only be bought or sold at the end of the day, ETFs trade throughout the day like stocks. I like the flexibility of ETFs, but in reality, I don’t place many trades. I am considering changing to traditional index mutual funds ever since we were hacked. So far I haven’t made any changes but am open to suggestions.

Cars

Our cars continue to depreciate slowly but really nothing too exciting is going on in our garage. The only thing I really did this month was to change the oil and get a new antenna.

House

Similar to previous months we paid extra on our mortgage this month, decreasing our mortgage debt by about $1,100. The house value according to Zillow came down slightly, but overall our home equity increased. I’m excited to start paying A LOT more extra principal payments. Before we can do that, we first need to increase our cash and finish some home improvement projects.

529 College Savings

Our automatic investment to this account was missed this month because our accounts were compromised. I’ve since corrected this, but that explains why the account didn’t grow by as much as it has in previous months.

Summary

May was another pretty good month for us and June is already off to a great start. We are still on target to hit our 2017 Net Worth goal. I continue to be blown away at how quickly things have accumulated.

April 2017 Net Worth Update

For those who are just joining, each month I publicly update our household net worth. April was a good month for us, but nothing out of the ordinary. With this months’ increase of $6,744 to $657,793, we are still on pace to reach our goal of $700,000 by the end of the year.

NET WORTH DETAILS

CASH

Our cash went up a bit this month and continues to get closer to our goal of ~$40-50k. We had a couple items this month that slowed us down like a week of travel, rental car, etc. This next month we’ll also be fencing in part of the backyard and starting some other backyard projects. Household projects slow down our cash build up, but these allow us to enjoy our yard in a way we never have.

INVESTMENTS

The S&P 500 returned 0.9% this month, and most of our investments track that index. 15% of my income continues to go to my 401k, but we haven’t done anything else special.

We finally received and paid all of the hospital bills for our newborn this month as well. We paid from our HSA which I include in the investments category because I do plan on eventually having it invested and growing. As long as the balance is lower than our deductible though, I’ll keep it in cash.

Our total out of pocket was ~$3,500 for the baby. That was literally the cheapest we could go and still give birth at a hospital. My wife has always preferred natural childbirth, and is super tough. This is our fourth child to be born naturally and she’s never had any anesthesia/epidural. Avoiding pain meds during childbirth significantly reduces the hospital bill. Saving money isn’t the reason she avoids them, but it is a nice side benefit. One money saving tip we do use at the hospital though, it to bring our own Tylenol. Have you seen how much hospitals charge for OTC meds?

This month I had an experience that helped highlight a benefit of regularly tracking my net worth. One of our investments accounts is an old 401k we haven’t added to it in several years. I was feeling that it wasn’t moving much even though it is all invested in equities. Since I track the monthly balances for all our accounts as part of this process, it was nice to be able to quickly go in and show that it actually has gone up quite a bit. It just didn’t feel like it since the balance has been hovering around $15,000 for so long. That account has actually gone from $14k to $19k just in the past year or so.

CARS

Nothing too exciting in the car department. As expected, they continue to depreciate slowly, but really are close to their end of life value so long as they continue to be in good mechanical condition.

Late in the month I was driving back from the airport and noticed what smelled like engine coolant coming from my wife’s Expedition. Shortly before I got home the hood briefly started smoking but thankfully didn’t overheat. Much to my chagrin, I knew I didn’t have time to fix this myself, so had to bite the bullet and let a mechanic do it. Thankfully they were able to get it done all in the same day, and $500 later the leaky hoses and parts have been replaced.

I am certainly an advocate for DIY, but there are some instances where it just makes sense to pay a professional. Reasons to hire a professional either are for time or expertise. If the reason is expertise, I’ve found that I can often learn to do most things myself (thank you YouTube!). If I need something done with a tight deadline, I am not always able to do it myself. This was one of those times. It is worth pointing out that we tend to have at least one $500 repair per year on my wife’s Expedition. Her truck has 140,000 miles on it. Contrast that to my Corolla, which has never been in the shop (beyond routine maintenance) and has over 200,000 miles. If Toyota made a big enough vehicle, we’d probably have two. (No, the Sequoia is not big enough).

HOUSE

We continue to pay extra towards our mortgage, but less than we plan to pay once we reach our cash goal. We really haven’t seen many houses go up for sale in our area, but feel the estimate is conservative. Our next-door neighbor will be selling his house and downsizing as he becomes an empty nester this summer. His house is a bit smaller than ours and I’m not sure about the interior condition, but it will be interesting to see what it sells for and what the new owners do to the place.

All-in all, I’m pleased to report we’re on track to reach out net worth goals.

 

Overreaction leads to Underperformace

Have you ever heard of the Dalbar study? This company does an annual study that looks at the impact of investor behavior on returns. What they’ve found is that over time not only do mutual fund investors underperform the market, but they also underperform the underperforming mutual funds. Wow…that’s a lot of underperforming.

This underperformance is attributed to picking the wrong mutual funds and getting in and out of the market at the wrong times. Since it is impossible to time the market, I would argue that it is always the wrong time to be getting out of the market.

Here’s an example of a chart Vanguard put together using data from the Dalbar study:

source: Vanguard

What do YOU do when the market gets scary?

The answer to this question should be “nothing” or “buy more”. Sadly, research shows that many people do exactly the opposite. Selling everything when things are scary can feel good and provide a sense of safety in the short term. These same people will buy back in ‘when the coast is clear’, which typically means prices are much higher than when they sold in the first place.

For your long-term investment strategy, sitting out of the market is the one big mistake that you can’t afford to make. With craziness looming in North Korea and other parts of the world, it would be easy to self-justify getting out of the market right now. But when do you get back in?

Do you remember how Greece’s economy was going to destroy global markets? How about the fiscal cliff and government shutdown? Oh, and let’s not forget about the debt ceiling or the flash crash. For eight years the market has continued to rise, quickly recovering from any number of fear-inducing events. Over longer periods of time, short-term declines aren’t even noticeable.

It can best be summed up by a chart I have framed on my desk at work from Behavior Gap.

The Value of a Financial Advisor

I am a Do-It-Yourself investor. I think most anyone can successfully manage their investments without a financial advisor. Financial advisors will point to the chart above and argue that you need to have your accounts professionally managed to protect you from yourself. While there may be some truth to that, I think all you need is someone who can talk you off the ledge.

Even though I am a DIY investor, I have a financial advisor. He is someone I used to work with and trust his judgment and integrity. He doesn’t manage my accounts, but I get free dedicated access to him because of the size of my accounts. We talk a few times a year and he helps validate that I’m still on track to reach my goals.

If I ever were considering selling everything, he would (hopefully) be able to talk some sense into me and prevent me from making that huge mistake. The real value of a financial advisor is when they can remind you of your long-term goals in times of short-term uncertainty.

March 2017 Net Worth Update

Wow, is it really April already? Hopefully, you avoided getting pranked too badly on April Fools’ day. Here in the DIY house, we don’t really like playing jokes on each other. We spent the day doing some spring cleaning of the garage and playing with the kids. As we enter a new month, it’s also time for another net worth update. In March, our net worth increased to $651,050. 

NET WORTH DETAILS

CASH

Our cash went down a bit this month, but it’s mainly because we did some large charitable giving. The largest chunk of this was our monthly tithe paid in March for February, which was a big income month. Additionally, we made our annual donation to our alma mater. With all that, I’m actually surprised that it only went down as much as it did.

We are working on growing our cash cushion but do have some decent size house project expenses coming up that will slow that down. These projects include a backyard fence and small kitchen remodel. Whenever we do projects we plan to do them without taking money out of our savings account .

INVESTMENTS

The market was essentially flat for the month of March, so our investments didn’t really change other than monthly contributions.

We still haven’t made the final payment for our hospital visit, which will come from our HSA included in this total. The only reason we haven’t paid it yet is that there has been some confusion on who we owe what since it depends on the timing of when claims are submitted whether we pay 100% as part of our deductible or 20% after our insurance kicks in. I think we’ve figured it out, but we had to get refunds from doctors who we paid in full but then didn’t need to since they took their sweet time submitting the claim and ended up getting paid mostly from our insurance.

What a mess. I really hate dealing with doctors’ offices. Thankfully they are used to this confusion and aren’t in a hurry to get paid by us and they won’t send the repo man looking for our baby if it takes another couple of weeks.

CARS

I crossed over 200,000 miles in my Corolla this month! It was a bit anti-climactic but does feel like a pretty big accomplishment in delayed gratification and proper maintenance. We’ve been prepping/planning for a replacement vehicle for a little while now, and I had been thinking that something like a used Lexus was in my future. When I did a little bit of shopping, though, I found that I can actually get a brand new Corolla for cheaper than a 5-year-old Lexus. We aren’t pulling the trigger anytime soon, but I’m now leaning towards a newer, less luxurious car when that day comes. Either one would be a huge upgrade from my current vehicle.

I walked through this logic the other day while carpooling with a co-worker who suggested I get an even more expensive car brand new (they don’t make ‘em like they used to, right?). Rather than give him a sermon on FIRE (Financial Independence, Retire Early), I just nodded and said: “hmm, something to think about”. I’m not going to change his mind and he’s not going to change mine. We can still be friends, but we are at different stages in life/career and don’t have the same early retirement goals. He earns ~4x as much as me, drives a $100,000 car, and is already at the age that I plan to be when I have the option to retire.

HOUSE

Nothing too exciting here other than continuing to pay a little extra on the house each month. We plan to kick this into overdrive once our cash balance gets a bit higher, but we are only paying $600/mo extra until then. A house down the street is for sale and they are asking $490k, so $450k doesn’t seem unrealistic. In the years since moving here, I’ve learned that many of the same features that attracted us to our neighborhood are qualities that continue to attract buyers (proximity to great schools, large lot size, neighborhood amenities, traditional architecture, etc.), which helps houses to sell quickly.

529s

We first started funding our 529s about a year ago and I haven’t included them in our net worth figures. I still don’t plan to even though it is all technically still ours, but I will track it here. It is worth including to show what we have been saving and how that amount continues to grow.

We add $200/mo and have it allocated 100% towards equities. I know this won’t be enough to fully cover college, but we are torn on how much support to provide. I had limited financial support for the first half of college but was on my own entirely for my MBA. My wife was completely on her own for her entire degree. She finished with no debt and I had some debt for undergrad, but we planned and saved aggressively to finish my MBA with no debt.

I know all about the rising costs of education, so hold the hate mail. I also believe that there will always be a way to get the education you need without debt. We’re savings towards our kids’ college, but don’t want to have it all in a 529 so we preserve flexibility on how much support we provide.

So that’s it. Another good month of building our net worth, and we’re still on track to hit our 2017 goal of $700,000. Given the strong 1Q gains, we should get there if our return for the rest of the year is >3%.

February 2017 Net Worth Update

February has been a busy month in the DIY$ household. We welcomed a new baby into the family, had family visit from around the country, and even found time to take a trip to the beach with our newborn (it felt crazy, but turned out great). It was also a great month for us in the net worth department. As I alluded to in last month’s update, we were expecting February to be a great month and it certainly did not disappoint. We ended the month with a net worth of $646,721, an increase of over $35k.

NET WORTH SUMMARY

CASH

Our cash went up substantially, largely due to year-end bonuses that paid in February. We’ve been working on increasing our cash savings, and this helps us get closer to our new goal. We haven’t fully decided how high we want the balance to get, but it’s probably somewhere around $50,000 so long as the potential for a new vehicle purchase remains on the horizon. We also just had a baby and haven’t seen all the bills, but we should be able to cover those expenses using our HSA which is included in the Investments category.

INVESTMENTS

Our investments grew from good stock market performance as well as extra large 401k contributions with the accompanying company match from my year-end bonuses. The S&P 500 notched a 3.72% gain during the month and our largest holding is IVV, which is responsible for over $10k in gains. I added some very small speculative positions in NLY and MORL through my Robinhood account but this won’t move the needle in either direction.

Nearly all of our investments are in no-load mutual funds or ETFs that our brokerage firm allows us to purchase with no trading fee. I do place occasional trades but have opted to use Robinhood for most transactions that otherwise would include a transaction fee. In early February, Schwab announced that they were lowering their trading cost from $8.95 to $6.95. This was definitely a win for consumers but the price seemed selected only to be able to say they were cheaper than Fidelity who has been offering trades for $7.95 for several years.

Over the weekend, I was poking around on the Fidelity website and noticed that they were no longer comparing themselves to Schwab, opting to only compare to companies that charged higher commissions like E*Trade and TD Ameritrade. It seemed a bit shady, so I called them out on Twitter and got the typical canned response.

Yesterday I noticed that Fidelity had lowered their trading cost to just $4.95. Not to be outdone so soon after gaining the lead in the race to the bottom Schwab quickly announced that they would be matching Fidelity at $4.95, temporarily calling a truce in the price war. I don’t see myself trading more often just because trading commissions are lower, but $4.95 certainly feels a lot cheaper than $6.95 or $7.95 and should be a win for investors.

CARS

Sadly, this isn’t going to be where I tell you that I hit 200k miles in my car. That update should be coming soon though since I just hit 199,000! While reading through Twitter it sounds like Corolla’s are pretty popular in the FI community, and hearing other stories of immortal cars gives me confidence that mine will be able to make it to 250,000 miles or more. I did go to a used car lot that specializes in the type of car I’d like to replace my Corolla with, but only because I’m not normally in that area and I successfully avoided giving myself a case of car fever.

HOUSE/MORTGAGE

This month, we finally got our mortgage balance under $200k, woo-hoo! It was always part of the plan to throw a good chunk of my bonus at the mortgage and even though $199k is still a lot of money, it’s a psychological boost to pass that threshold. This month my oldest was asking me if we could buy something like a 4-wheeler and I explained that I would love to have those types of toys, but not until we pay back the money we borrowed to buy our house. To help visualize what this meant, I created this chart that showed how far we’ve come and how far we have to go.

Each red square is $1,000 we have still to pay back. The green squares show how much equity we’ve paid off, including our original down payment. The yellow squares are market appreciation since we purchased.

My projection is that we’ll have the house paid off before the oldest is 12 years old, which would be perfect timing to get a 4-wheeler.

January 2017 Net Worth Update

We’re off to a good start of the year here in the DIY$ household. We had a few large expenses come in this month, but still ended up growing our net worth by $8k to $610,843. We set an ambitious goal for 2017, and as good as this month was, we’ll need some even better future months to get to the goal. Fortunately, January is likely going to be our lowest income month of the year and we had some larger expenses that don’t happen every month. Let’s break it down:

CASH

Our cash balance basically didn’t move at all this month. We paid our normal extra towards the house, but also had some big expenses like our semi-annual car insurance ($800), and 2 new tires for my car ($200). Our insurance bill actually went down a little bit, but that’s only because I took full coverage off of my Corolla. I figured we’re at the point now that we can self-insure the cost of the car, since insurance would likely not give much more than $2,500 if it were totaled.

I don’t know about you, but whenever I have to pay for maintenance on my Corolla, it actually makes me happy. I probably shouldn’t be happy that I had to spend $200 to get 2 new tires, but I really was thrilled because I knew how cheap that was compared to what I would be paying if I drove some other cars. Not only were they cheap, but the tires I was replacing had been on for nearly 4 years and just barely could still pass the ‘penny test‘. Ever heard of it? Take a penny and stick Lincoln’s head in the tread in your tire. If his hair doesn’t get covered, you need new ones.

Just a few days prior to getting tires, I was talking to a co-worker who drives an expensive Italian sports car and lamented that he had to get new tires pretty much every year and they cost over $2,000 for a new set of tires. Hearing stories like that make me love my little cheap car and gives me additional motivation to defer an upgrade.

The coming months should boost our cash balance as we expect some bonuses to come in as well as a raise at work and our tax refund. We finished our taxes for the year and I’m pleased to report that we planned our taxes to the point where our federal refund was only about $600. I prefer to not let the government sit on my money interest free, and this was much better than in previous years when our refunds have been much higher.

INVESTMENTS

The market continues to rally, boosting our investment portfolio by nearly $8k. We didn’t do anything more than our normal monthly 401k contributions and actually decided to take a break from additional IRA contributions while we focus on paying off our house. Between my contributions and employer match we are still adding 15% of my pay to my 401k, so feel that we’ll still be on track to reach our long-term goals even with temporarily reducing our retirement contributions.

One item worth noting is that we have an HSA account that I include in the total for the investments category. It’s currently all in cash and we had some baby related expenses that we pre-paid in January out of that account and expect to use it for the rest of the labor and delivery bills we’ll get in February/March. Eventually I’d like to invest funds within the HSA and cover actual expenses out of pocket, but until the house is paid off or the balance starts to be substantial we’ll be using it for current medical expenses.

CARS

Did I mention that I love my car? Stay tuned for a special announcement when I hit 200,000 miles later this year. The value of our cars moved in the expected direction this month but part of me thinks my wife’s car is undervalued. I saw a dealer selling a very similar car to hers that only had a few more bells and whistles and they were asking more than double the value KBB assigns to her car that I use here. I’m ok using the lower value here though since we aren’t selling so it doesn’t really matter.

HOUSE/MORTGAGE

I don’t have anything special to report on this front, other than the fact that we’ll be making a big extra payment on the mortgage very soon to get the balance under $200,000. Not sure why I’m so excited to see that ‘2’ go down to a ‘1’, but it’s a fun milestone to reach. We’ve got some house projects we’re planning on doing this year but are in a holding pattern right now until the baby is born.

 

We’ve come a long way and still have a ways to go, but as always, it helps to look back and reflect on the progress we’ve made to this point.

 

 

2017 Goals

With 2016 now in the rearview mirror we’re now looking forward to 2017 and have set some new goals to build upon the progress we’ve made in 2016. As I was contemplating goals, I heard Dave Ramsey’s podcast where he outlined seven areas of life to have goals that help with overall personal development. Those areas are:

  • Career
  • Personal Finances
  • Spiritual Growth
  • Physical Health
  • Intellectual Growth
  • Family
  • Social Relationships

 

I generally tend to have goals in most of the categories anyways and thought that I would share some of my 2017 goals that are relevant to the topics discussed on this site.

INTELLECTUAL GROWTH

I read 57 books in 2016, a little more than one per week. When I track my reading, I do include audiobooks but do not include books I read with my kids or my scripture study. Some books are very short and can be read in one sitting (like this one), others take several weeks (like this one) I use Goodreads to track my reading and try to read roughly 50/50 fiction and non-fiction. In years past, I have read as much as 75 books in a year and as few as 57.

My goal for 2017 is to read 52 books in the year. Given my historical trends this is not an extremely lofty goal, but that indicates my desire to continue to read a lot combined with the knowledge that I have other things I would like to take care of. I just finished book #3 for 2017 so I am well on my way. One thing I would like to do this year is to focus on reading books that are already on my ‘to-read’ list (currently over 100) instead of some more random titles that I may come across.

CAREER

At work I was promoted within the past year and would love to get another promotion, but don’t plan on that happening this year. It is typical within the company I am with to wait at least two years to be promoted to the next level from where I’m at and I certainly have aspirations to do so when the right thing becomes available. I have some things I am working on that will help me by going above and beyond and have also recently taken on some additional responsibilities that offer significant visibility within the organization and will help develop some skills that will be valuable throughout my career. I won’t get into specifics, but my goals focus around some projects at work that have the potential to save several million dollars (for the company) as well as branching out and doing well on some special projects that are outside my normal job description.

PERSONAL FINANCES

We ended 2016 with a net worth just over $600k. We’ve spent some time going over our budget and are now setting a goal to achieve a net worth of $700,000 in 2017. Just like last year some of this will depend on market gains but not as much as last year. If we don’t get there simply because the market doesn’t cooperate, I’ll still consider it a success if we stick to our plans for the amounts we earn, save, and invest. Here is a breakdown of how we think we can get there:

As you can see, we do need some growth in our investments and real estate to get to our number but other than that the numbers all seem very doable. I’d love to be able to pay more towards the house but am pleased that we will easily get the mortgage balance below $200,000 soon. Some things that could have an impact on this goal are expenses related to another baby we are expecting soon, home improvement projects planned for this spring/summer, and travel expenses. All of these things are budgeted for outside of these figures but the actual costs may vary from our estimates, which will impact the amount of cash savings or extra mortgage payments we’re able to make.

We have goals set up in other areas as well but wanted to share these publicly for additional accountability and insight into our decision making. Best of luck to all in your 2017 goals and endeavors!