Thursday, April 21, 2016

Net Worth Update - March 2016


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.

The start to the year was brutal for the markets with big declines during January and the first half of February.  However, what goes down must come up as is typical with the stock markets and March was no different.  The S&P 500 climbed 6.6% during the month which was a huge move forward.  Since the bulk of my net worth is tied up in the markets it was a welcomed reprieve to see things start churning higher.

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 over $800 in dividends and 5 dividend increases helps out too.  Dividends are great because they are always a positive portion of return.

For the month our net worth increased $55,980.13.

And BOOM goes the dynamite!
Current Assets: $637,149.74
Current Liquid Assets: $230,164.95
Current Debts: -$184,784.68
Net Worth: $452,365.06

March was an excellent month for our net worth with the markets moving higher although that only explained about 40% of the increase.  The rest came from a $29k settlement check I received for back overtime pay which was great but unfortunately it's unsustainable.  Although I won't complain about receiving that kind of cash no matter how I get it.

So I'm pretty pleased with March's results.  Year to date our net worth has increased over $39k.  For the month it worked out to a 14.1% gain compared to February and 9.5% year to date.  I honestly didn't expect to see monthly changes quite that large ever again.

We're still in cash conservation mode for the time being with eventually a swap to aggressive debt reduction and then finally move back to regular investing.  I can't wait to be on that last step!  Since I work in the oil field and my wife is planning on being a stay at home mom starting in July, cash is our friend.  If there's more clarity/stability for my job then we'll be able to take a big chunk of our cash to reduce some of our outstanding debts and really push us forward on the debt reduction plan.  Luckily we can cross off one of our goals for the year and that's building up a 6 month emergency fund.

At this time I don't see the point in paying extra on the mortgage 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 getst to a self-sustaining level of dividends then I'll plan to aggressively pay down the mortgage.

As of the end of March we have 23.2% equity in our house.  According to Zillow our house has increased almost $10k in value from our purchase price although I just use our purchase price in my net worth calculations.  Based on Zillow's estimate the equity in our house is 26.4% thanks to the appreciation.

One thing that I've been thinking of doing is refinancing our house.  We're only 2.5 years into our 30 year mortgage, but interest rates have continued to decline.  I've only done preliminary research on a refinance but it looks like we could reduce our interest rate by almost 1%.  That might sound small but that's about a 25% reduction and when you're talking about balances near $170k every bit helps.  The upside to a refi is that it would also free up about $90 in monthly cash flow.  A refi would make progress on all 3 of our financial goals for the year of expense optimization, reduces our required emergency fund by $540 and frees up more cash flow for debt reduction.  The biggest thing holding me back is that I need to see the changes for a no-cost refi on the interest rate because I don't want to shell out cash right now for a refi.

If anyone has any tips or information about a refi please pass them along.

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 $824.98 during March which covered 26.7% of my monthly expenses.  Including the income earned from blogging/writing adds another $724.87 to the total bringing my total non-day job income to a personal best $1,549.85.  Non-day job income covered 50.1% of March's expenses.  So far this year I've received $1,425 in passive income and an additional $1,231 from my blogging/writing.  Through the 1st quarter of the year I'm just slightly behind my goal pace to receive $5k from my blogging so there's a little bit of work to do there but what's really exciting is that I'm on pace to have over $10k of additional income that isn't related to my job.  That's awesome!


For each month I calculate the ending liquid assets balance, i.e. cash and liquid investments only but excluding retirement accounts, and divide that by the current month's expenses.  Based on my expenses from March, my liquid savings would last for 6.19 years.  That was a 0.37 year improvement from February's level.

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

Make sure you sign up to receive new posts to your email so you don't miss anything.  And be sure to follow me on Twitter@JC_PIP to get up to the minute news of new purchases for my portfolio.

How did your net worth fare in March?  Did you ride the markets to a higher net worth?

Image courtesy of holohololand on FreeDigitalPhotos.net.

14 comments:

  1. Great month JC. Feels awesome! Dividend income is always so nice receiving it. Nice job on the Blogging income, that is something I would love to make money with as well but I havn't gotten into making anything yet, it's been pure love :)
    Keep it up bud and thanks for sharing. Don't Stop.

    ReplyDelete
    Replies
    1. Hustler,

      March was amazing for our net worth. Much of my blogging income is from my writing on Seeking Alpha but hopefully I can boost up the organic income from ads, affiliate links and I'm trying to think of some products that could be helpful too. The added income is nice but even if it wasn't coming in I'd still be writing. I love this community.

      Thanks for stopping by!

      Delete
  2. What a killer month, congrats on your success!

    ReplyDelete
    Replies
    1. Ben,

      I wish it was a bit more sustainable since $30kish was from the settlement but I can't really complain.

      Thanks for stopping by!

      Delete
  3. Fantastic jump in net worth. Even though some came from a settlement, it's still income. Nice work sir.

    ReplyDelete
    Replies
    1. IH,

      This was by far the best single month increase although I've hit $20k moves a couple times before.

      Thanks for stopping by!

      Delete
  4. Nice!

    Can you find a refi option that requires no cash out up front? Often you have to pay the "points" on the loan to cover the salesman's commission...

    ReplyDelete
    Replies
    1. FV,

      There are some no cost refi options where you pay no cash up front for the fees but pay for it via a higher interest rate. Since we're planning on staying here for a long time it'll be important to get as low of a rate as possible, although any decrease in the interest rate will be an improvement. I think it should be doable as long as rates don't make any drastic moves higher.

      Thanks for stopping by!

      Delete
  5. Wow it was an awesome month for you. Congrats :)

    Thanks for sharing your networth

    ReplyDelete
  6. Great month, JC! Appreciate these updates... its a great reminder of the benefits of dividend growth investing. I don't track our situation so carefully and regularly. Just once a year or so. Like with you, much of our net worth is tied up in the stock market and real estate. What's different is that both of us work with no plans of changing that for the foreseeable future.

    We recently refinanced, resetting to 3.75% from 4.35%. Saves us a couple hundred bucks per month and a significant amount over the length of the loan. My plan is to split the savings between paying off other debt and reducing mortgage principal faster.

    ReplyDelete
  7. That is an awesome month, with that high NW jump. Some people work 1 - 2 years to save that amount you gained in a single month! That's awesome - Congrats!

    ReplyDelete
  8. Congrats PIP,

    That's an awesome graph and a huge month. Most of my net worth is tied up in real estate also. I understand your reasoning for wanting to reduce debt first. It's worth it just for peace of mind just in case something happens to your income. Thanks for sharing and keep up the good work.

    ReplyDelete
  9. May I ask what you use to generate your graphs?

    ReplyDelete
    Replies
    1. Joshua,

      I usually just use either Excel or Google Sheets to make all the graphs/charts that are displayed here and in my stock analysis posts over on Seeking Alpha. My preference is Excel because I've used it a lot more so it's easier for me to customize it exactly how I want it but Google Sheets is still an awesome tool and best of all it's free.

      All the best.

      Delete