Wednesday, March 12, 2014

Net Worth Update - February 2014

While cash flow is more important when it comes to financial independence, it's still good to look at the balance sheet too, which is why I provide these net worth updates.  What a difference a month makes.  The S&P 500 rebounded from January's decline to give a 4.3% increase during February.  Since more and more of my net worth is tied to the movements of the markets I see larger swings in my net worth based on how the markets perform.  As a dividend growth investor I'm not overly concerned with the short-term gyrations as long as the dividend stream remains in tact, but the markets' effect is noticeable.  January was a bit disappointing for my net worth with a decline of $1,000, but February helped to make up for the slow start to the year.  I had just over  Well the markets decided to take a bit of a breather and pull back some during late January.  I had just over $7,100 in after-tax savings from my paycheck, around $950 in ESPP contributions, $1,300 in 401k contributions counting the employer match, and like every February my employer's profit sharing 401k contribution goes through which provided another $5,600.  The rest of the changes were due to dividends received and changes in the stock market.  All in all February saw a $25,657.26 increase in my net worth.

Current Assets: $535,373.55
Curent Liquid Assets: $163,215.45
Current Debts: -$190,667.07
Net Worth: $344,706.47

Talk about a big change from January's balance.  I know I can't expect to repeat this month in and month out, although I wish I could, but this was a personal best as January 2013 was the previous high with almost a $23k increase.  Assets are well into the $500k level although I know that could easily come crashing down if the markets take a turn for the worse.  Liabilities mainly consist of the mortgage on our house and so very little progress gets made in decreasing the total liabilities.  For now I don't see the point in paying extra on the mortgage given our relatively low interest rate.  I think we'll come out much further ahead investing the difference and then once we're close to FI make the decision of whether to aggressively pay down the mortgage to be completely debt free.  We now have 20.51% equity in our house.

February ended up being a 8.04% increase over the end of January 2014.  YTD I've had an increase of $24,592.25 for a 7.68%.  My goal for the year is to have a $125,000 increase in my net worth, so February went a long way towards improving on that goal.  I'm averaging almost a $12,300 monthly increase so far this year which is about $1,400 less than 2013's monthly average and has me on pace for a $147,000 increase so my net worth goal might be getting revised higher at the halfway mark of the year.

I've changed the chart for my net worth to better reflect our situation now that there's significant debt on the books with our mortgage.  The chart will now show both assets and liabilities as well as the net worth.


My after-tax savings rate for February came in at 54.23% which is over my goal of 50%, so depending on how the first quarter/half goes, I might be adjusting the target higher as well.  This is a big dropoff from 2013's 81.31% rate, but that's because I changed the way I calculate my savings rate.  It's now just savings from my after-tax income that is specifically marked for investment.  I need to do a better job of in-month tracking of my expenses, but the good thing is that while they've crept up it's not a huge increase over my normal baseline.


The trend in my liquid assets expense coverage finally reversed the 3 month declining trend.  As expenses hopefully head lower and savings move higher this ratio should continue to increase in most months.  Based on my expenses from February my liquid savings would last for 5.07 years.

I've updated my Progress page to reflect February's changes.

Also, I'm starting a newsletter that I hope to get going over the next month or two so go on and be the first to sign up to receive new posts to your email and newsletter!

How did your net worth do in February?  Did your net worth ride the stock markets higher?

15 comments:

  1. Congratulations on your new personal best JC. You two are putting up some impressive numbers. I also wanted to thank you for your support of my most recent article. Have a great week and travel safe
    -Bryan

    ReplyDelete
    Replies
    1. Bryan,

      It was pretty cool to see a $25k increase. Although I don't expect that to continue on a regular basis but every now and then I should be able to hit near that level. No problem and keep writing some great articles.

      Thanks for stopping by!

      Delete
  2. You're no longer worth 10x me! Hooray for me. And I increased my savings rate, so take that.

    ReplyDelete
    Replies
    1. WE,

      I guess that means you made some good progress in February as well. An increased savings rate is even better and hopefully that'll continue so you can keep on saving more each month.

      Thanks for stopping by!

      Delete
  3. I'd say you had quite the February!

    I agree with you about not paying off the mortgage early. Did you have PMI with the less then 20% equity in your house? If you did hopefully you can get rid of that now.

    Our February was ok we had a 4% increase in net worth.

    I like all your charts!
    BJ

    ReplyDelete
    Replies
    1. BJ,

      It certainly was a great month and even better after a disappointing January.

      We put 20% down to avoid PMI altogether. Unfortunately being in the first year of a 30 year mortgage we're making very little gains on the equity.

      4% is still a really great increase for just one month, so don't get discouraged.

      I'm glad you like the charts. As a math nerd and visual learned I think they really help, plus it's easy to see the progress and how things stand.

      Thanks for stopping by!

      Delete
  4. Nice work on the new record! I can't even imagine a 25K increase in a month. I like that you plan to take your time paying the mortgage, clearly the money is much better used in your hands :) Signed up for the newsletter, looking forward to it!

    All my best,
    Ryan

    ReplyDelete
    Replies
    1. Ryan,

      Eventually you'll get to a $25k increase for a month. As more and more of your net worth gets tied to the markets you become subject to the markets movements. Great in the up months, bad in the down months. Luckily for me a good chunk of that increase was from savings/deposits.

      With interest rates as low as they've been I don't see much reason to try and pay it off early. Ours is around 4.5%, I forgot the actual number and I think I can do much better than that over the long run. I only think we'll start aggressively paying it down once we are approaching FI so we can get rid of the debt associated with that. Even then I'm not sure if we'll do that because it might still be put to better work by increasing passive income.

      I'm hoping to get something going with the newsletter. I'm sure the first one will be kind of rough and not the form it eventually ends up taking but I'm excited to start it up.

      Thanks for stopping by!

      Delete
  5. Hi JC,

    my networth was growing 2,5% in february.
    That is OK - I´m feeling good!

    But now, because of the problems with Krim and the Ukraine, the portfolio-amount is getting smaller and smaller.
    But who cares - now and the next weeks (I hope) there are good chances to purchase some shares for low money!

    I hope your networth is just as fast grow in the future as in the past!

    Best regards!
    D-S

    ReplyDelete
    Replies
    1. D-S,

      2.5% is great. It's at least headed in the right direction. My guess is the Russia/Ukraine issues are having a much larger effect on European markets than here. Although the plus to that is that you should be able to buy shares for cheaper, and that's always good.

      Thanks for stopping by!

      Delete
  6. Congrats on a very solid jump in net worth! I am curious if you are still on the hunt for a rental property? I remember you posted about looking at a particular property but wanted to know what happened. I also agree there is better places for your money than to overpay on your low interest rate on a primary mortgage where you can write off the interest anyways.

    Take care

    ReplyDelete
    Replies
    1. AAI,

      I'm still on the lookout for properties but the progress is slowed by me working out of town. If I find good properties that look like they'll cash flow they usually get offers made before I can get home to see them. I'm not about to go and make an offer on a house sight unseen. So I think my best bet is to probably go with a turnkey company even if it eats into the cash flow a bit.

      Thanks for stopping by!

      Delete
  7. March will be a bit tougher month. What goes up, must settle once in a while. If you are still looking for rental properties, my blog has some tips.

    ReplyDelete
    Replies
    1. No Nonsense Landlord,

      I wish I could keep $25k increases up because my wife and I would be FI in no time, but I know this is a long-term plan. The markets go down as well as up. I'll be checking out your site because I'm really wanting to expand into rentals this year too.

      Thanks for stopping by!

      Delete
  8. Congrats on your great month...continue to put away 50% of your income and you'll achieve FI before you know it. Unfortunately, with only one income right now, we are not even putting away half as much right now. But when my wife goes back to work later this year, I'm confident that we will begin to make huge progress towards FI because we are planning to use her entire income to invest.

    ReplyDelete