Sunday, February 26, 2017

Net Worth Update - January 2017

net worth, balance sheet, equity, financial independence
January 2017 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.

The "Trump Bump" hasn't showed any signs of stopping with the S&P 500 climbing higher by another 1.79% during January.  Despite a market that climbed higher we still showed a slight decline in out net worth primarily due to violating the most basic law of personal finance: income > expenses.  The $300 in dividends helped to soften the blow a little bit, but we really need to fix the simple problem.

For the month our net worth decreased $397.60.

Current Assets: $652,064.92
Current Liquid Assets: $228,163.90
Current Liabilities: $182,264.16
Net Worth: $469,800.76

The 2 month streak net worth increases ended with January's slight decline.  That was completely due to us continuing to draw on our cash reserves.  Looking forward though the cash bleed will stop now that I'm back at work.  

For the month our net worth decreased 0.08%. 

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 January we have 24.4% equity in our house based on our purchase price from 2013.  However, according to Zillow our house has increased in value $22.3k 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 31.4% due 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 January 2017
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.  Although I do need to gather more information on the various medical, funeral and other debts that total around $40k to give a more accurate representation of our liabilities.
net worth, balance sheet, equity, financial independence, assets, liabilities
Net Worth Breakdown - January 2017
Truly passive income, dividends and interest, totaled $288.61 during January which just over a $27 increase from October 2016's total of $261.28.  That's a solid 10% increase quarter over quarter.  *Dividends are from my taxable accounts only.  

Adding in the EBIT earned from blogging/writing added another $243.17 to the monthly non-day job income total.  Total non-day job income for January came to $531.78.  

I've still yet to get a goals post out for 2017, but I've had an idea in my head for where I'd like to see our dividends/interest/writing income end up for 2017.  For all of 2016 we generated around $9.4k which is solid additional income.  I'd like to see us hit at least $10k for 2017 with a stretch goal being $11k.  We're currently 5.3% of the way towards the $10k mark.  


I've updated my Progress page to reflect January'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 January?  Did you get 2017 off to a good start?

Please share your thoughts below!

Image courtesy of holohololand on FreeDigitalPhotos.net.

2 comments:

  1. Hi JC,
    0.08% is more of a rounding error, than a decline :) Congrats on the 10% dividend growth for the quarter.
    I hope the new job is going well for you.
    Best wishes,
    -DL

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    Replies
    1. DL,

      Yeah the 0.08% decline is essentially negligible by itself. But since I can look at the big picture and see what contributed to the change, i.e. income vs expenses vs investment changes, it's a disappointing result. Our investments were up during January, like I'm sure just about everyone's was, but our net worth declined because our expenses were more than income. Luckily now that we've got a second income rolling in again that will be changing so the cash drawdowns won't be happening assuming I keep up with steady work and we can actually start to make progress on our debts to boost our net worth.

      All the best.

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