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. Since more and more of my net worth is tied to the markets, there's a larger correlation between my net worth and the markets but in the long run as I continue to save and invest the net worth trend should be higher even though short term fluctuations can vary wildly. 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.
Considering how bad the markets were to start off 2016 I consider January's net worth fluctuation a win. The S&P 500 was down around 5.1% during January which was a big drag on my net worth. The bulk of my net worth is tied to the performance of the markets so as they go so goes my net worth. Although with a long term investment horizon the changes are just noise over the short term and are typically best to be ignored. Of course receiving $278.50 in dividends as well as three dividend increases sure helps to ease the sting of market volatility. Dividends are great because they are always a positive portion of return.
For the month our net worth declined by $17,621.88.
Current Assets: $580,852.11
Current Liquid Assets: $189,393.75
Current Debts: -$185,276.94
Net Worth: $395,575.16
As I mentioned above I consider January a win as far as our net worth goes. The markets were down 5.1% but out net worth only declined by 4.3%. After flirting with $600k in assets and a $400k net worth it's a bit disappointing to make another step backwards. However, we've come up with a plan to raise cash and reduce debt over the next few months to put ourselves in a better position in case I lose my job, for those that don't know I work in the oil field. Year to date our net worth has declined $17,621.88 or 4.26%.
I don't see the point in paying extra on the mortgage at this time given our relatively low interest rate as well as the tax break on mortgage payments and think we'll come out much further ahead investing the extra cash flow. So the liabilities side of the net worth equation will be slow moving. However, once the FI portfolio is able to get to a self-sustaining level of dividends then I'll plan to aggressively pay down the mortgage. As of the end of January we have 22.97% equity in our house. Also, according to Zillow our house has increased just over $11k in value from our purchase price although I just use our purchase price in my net worth calculations.
The following chart shows my assets and liabilities, as well as my net worth, since January 2012. While I have accurate records for my net worth dating back to July 2010, I didn't keep track of my assets and liabilities on a monthly basis until the start of 2012.
Truly passive income, dividends and interest, totaled to $285.16 during January which covered 10.1% of my monthly expenses. Including the income earned from blogging/writing adds another $395.84 to the total bringing my total non-day job income to $681.00. Non-day job income covered 24.2% of January's expenses. Non-day job income showed a solid gain from January 2015's total of $587.35 which works out to a 15.9% improvement.
Based on my expenses from January, my liquid savings would last for 5.61 years. Despite the decline in net worth that showed a slight improvement compared to December 2015 due to lower expenses during January.
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How did your net worth fare in January? Were you able to show an increase despite the markets' drag down?
Image courtesy of holohololand on FreeDigitalPhotos.net.