Monday, October 31, 2016

Net Worth Update - September 2016

net worth, balance sheet, equity, financial independence
September 2016 Net Worth Update
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.

In September the stock markets, via the S&P 500, did a whole lot of nothing.  Since a large portion of my net worth is tied to the performance of the markets my net worth typically moves in line with the markets.  Especially while we have no day job income.  So flat markets mean very little change in my net worth.  Although pulling in over $900 in dividends during the month helped to move things in a positive direction.  Unfortunately, that wasn't enough.

For the month our net worth decreased $7,715.14.

Current Assets: $654,707.74
Current Liquid Assets: $231,722.71
Current Debts: -$183,284.33
Net Worth: $471,423.41

Well this is a streak that we need to put an end to.  September was the 3rd straight month of declines to our net worth.  Considering that's come during a time of relatively flat market action something else must be going on.  Honestly I'm surprised that we've only suffered 3 declines in our net worth since we've been without an income from a full-time job starting in May.    

For the month our net worth declined 1.61% although year to date it's climbed 14.09%. 

At this time I don't see much reason 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 is able to get to a self-sustaining level of dividends then the plan is to aggressively pay down the mortgage.

As of the end of September we have 23.9% equity in our house based on our purchase price from 2013.  However, according to Zillow our house has increased just under $30k in value from our purchase price which is a nice bonus, although I keep the purchase price as the value in the net worth equations.  Based on Zillow's estimate the equity in our house is 32.9% thanks to the appreciation.

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.
net worth, balance sheet, equity, financial independence
Net Worth History through September 2016
During June's update I started including a % breakdown of our net worth with each monthly update.  The assets are broken down into cash, taxable investments, tax advantaged investments (401k, Traditional & Roth IRAs), house (using our purchase price) and other which covers things like our cars and various collectibles from when I was a kid.  The liabilities are much simpler and fall into either the mortgage or a personal loan that we have.  
net worth, balance sheet, equity, financial independence, assets, liabilities
Net Worth Breakdown - September 2016
Truly passive income, dividends and interest, totaled to $893.82 during September which is over a $16 increase from June's total of $877.27.  *Dividends are from my taxable accounts only.  

Adding in the gross income earned from blogging/writing added another $510.38 to the monthly non-day job income total.  I'm pretty stoked to see over $500 from blogging/writing on top of the great dividend income.  That's a total of $1,404.20 of income that's not related to a regular 9-5 job.  

We've still got a long ways to go to reach our goal of financial independence, but we're heading in the right direction.  Year to date we've generated over $7.2k outside of traditional employment sources, dividends, interest and blogging/writing.


I've updated my Progress page to reflect September'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.  If you prefer Pinterest or Facebook I'm on there too!

How did your net worth fare in September?  Do you count any of the appreciation of your primary residence as an asset?

Please share your thoughts below!

Image courtesy of holohololand on FreeDigitalPhotos.net.

3 comments:

  1. Obviously my house is an asset, but I don't count it as an asset that is available to be used to finance retirement (though the fact that it is paid for enhances my retirement income). Reality is that I have to live somewhere and that if I stay in this area, chances are good that if this house increases in value, any other house I would want probably would too.

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    1. RAnn,

      Whether to include the house, at book value or "marked to market" or even include it, is one of the biggest debates. I choose to do so for my net worth calculations because the equity does represent an asset that can be tapped via selling the house if we need or choose to move.

      Thanks for stopping by!

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  2. Enjoy reading these updates. Follow you on Twitter from the UK and also look at our holdings on a quarterly basis. So far, I have not included our House Equity within any portfolio calculations and only follow our liquid assets. I can see the value in doing so as it truly gives the whole picture so to speak and especially should you choose to move. Our home is currently at a value in the UK of £235K with no debt attached so it will be of use to follow your formula. It would alter our calculations as at the beginning of this year, we each owned 1000 shares in our Family Office set up for investing which stood in January at £897 per share. Currently in this quarter the share value per share has risen to £1033. We have a similar investment strategy and outlook so look forward to your further posts. @uziel

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