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Net Worth Update - August 2019

Net Worth | Balance Sheet | Equity | Financial Independence
August 2019 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 S&P 500 went everywhere and nowhere during August seeing 3 pullbacks to nearly 4% below July's close, but rallied back each time.  By the end of August the markets had calmed some and the S&P 500 closed down 1.8% from July.  Luckily, due to savings, dividends and debt reduction, as well as a small allocation to gold related stocks that really took off, my net worth was able to show an increase. 

 During August my net worth increased $3.909.77.

Total Assets: $803,553.28
Liquid Assets: $306,939.11
Total Liabilities: -$178,323.17
Net Worth: $625,230.12

During August my net worth rose 0.6% and is up 22.6% YTD.  Compared to August 2018 my net worth has seen a rise of $43.5k+.


Our main goal for 2019 continues to be reducing our non-mortgage debt.  As of the end of August we have just over $21.5k non-mortgage debt.  We ended up making $2,000 in additional debt payments in August and I can finally say that one of the car loans will be gone in September.

 At this time it doesn't make much sense to pay 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 August we have 28.2% equity in our house based on our purchase price from 2013.  According to Zillow our house has increased in value around $45k 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 jumps to 40.5%.

 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 August 2019
In order to give you a general idea of the breakdown of my net worth I include 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 and deeply discounted (they don't really move the needle at all but I have them in my spreadsheet because I was bored).
net worth | balance sheet | equity | financial independence | assets | liabilities
Net Worth Breakdown - August 2019

Since I write so much (or at least try to) about investigating companies as an investment I figured it'd be fun to see how our balance sheet looks.  At the end of August our debt to equity ratio is 29% and our debt to total capitalization is 22%.  Not bad, but I can't wait to get that debt down to ZERO!
capital structure | personal finance | net worth | equity | debt
Capital Structure - August 2019
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How did your net worth fare during August?  

 Please share your thoughts below!
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  1. UnknownSeptember 17, 2019 at 3:01 PM

    I know several people will disagree with my position when it comes to viewing a principal residence as an asset. While I do not dispute it is an asset from the true definition of an asset, I view a principal residence merely as a place in which to live and completely exclude it in our net worth calculations.

    I think too many people get a false sense of security when they view their principal residence as an asset.

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    1. Passive Income PursuitSeptember 17, 2019 at 4:00 PM

      Handling the primary residence is definitely a big point of contention among the PF world. I decided to include it in our calculations, but I don't add in the appreciation. If our house was our primary asset I'd be much more concerned, but our investment accounts significantly outweigh our house's value by more than 2:1 and the mortgage balance by 3.5:1.

      I tend to think that early in the mortgage life cycle it's definitely more of a liability than an asset. But as you move through the years it becomes more of an asset. If you have a 30 year mortgage and are already in year 20 I think it'd be safe to say that your house has some kind of value to you from a balance sheet perspective and you could sell at below market value and still have cash left over after paying off the balance.

      I think the biggest thing is to be consistent in however you want to account for your residence. But yes I do agree with you that some people have a lot of their net worth tied up in an asset, their primary residence, that looks good on paper but that asset isn't productive when it comes to producing cash flow.

      Thanks for stopping by!

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