My Gut Reaction to Net Worth Before Calculating
Every month I have a feeling of how I did the previous month. Some times I am way off and sometimes I am right on point. I do not think this month is going to be a great month, in fact, I believe it is going to be one of my rare negative months. I haven’t had a negative month since November of 2016. My lack of negative months have zero to do with my personal finance “prowess”, but rather we are in the middle (or end) of a massive bull market and I have consistently saved money while trying to pay down debts.
Well this month, I can safely say I didn’t keep my debts in check and I don’t think the market moved enough to cover the growth on the liabilities side of the balance sheet. Well, if I were to be honest with myself it wasn’t that my spending was out of line it was that my side hustle earnings were lower this month. This causes me to have less to put towards debts and thus the cycle leads to a down month.
My Net Worth Calculation
Creating a net worth statement is pretty simple. All one has to do is honestly add up your assets and minus your liabilities. If you build your net worth calculation on lies, what’s the point of even doing the exercise. I know calculating my net worth helps me keep track of my decreasing liabilities while seeing if my investments are growing like they should be.
My assets are pretty simple:
- Emergency Fund – It is a little less than where I would like it, but I don’t calculate it in terms of monthly expenditures. Rather I think to myself how much cash would I really need if an emergency happens.
- My Dividend Growth Account – It is small, but this is where I have really been focusing my efforts lately and I will writing a lot about it.
- My Wife’s Roth IRA – Nothing special – just a mixture of cheap index funds and individual companies that capture my attention. I have started to sell covered calls within this account. Just boosts my investment capital – small (read: very tiny) droplets of capital I wouldn’t have had otherwise.
- My 401(k) – My 401(k) is terrible with high fees for shit mutual funds, but where else am I getting a match on my money. I am not one to turn down free cash. I rebalanced the account back in February. Think I am going to make this a semi-annual thing (which means I am up this month).
- Wife’s Mutual Funds – This was an amount that was given to my wife from her now deceased grand parents. They were horribly mismanaged until I stepped in, putting them in low expense vanguard mutual funds. She and I both look at this account as a super emergency fund.
- My House – This is the first year after buying the house for 4 years where I increased the value of the home. I increased it an nominal 3% in 4 years. I don’t plan on reviewing this dead money asset for another year or two.
- My Traditional IRA – Just a few stocks that have captured my attention. Similar to my wife’s Roth IRA I will often sell covered calls on holdings to generate nominal amounts of cash flow.
- Investment Account with my Brother – The Wife and my brother invested a nominal amount ($1,200 each) to try and give my brother confidence with his stock picking ability.
- My Law School Loans – Despite being almost 35 years old I have a significant amount of law school loans left. They are locked in at 3.5%, so what’s the rush to pay them off?
- My Mortgage – I live on Long Island (and its on not in), so the odds of me ever prepaying this down, especially with a 3.375% 30yr fixed is unrealistic.
- Credit Cards – My favorite card is my American Express Premier Gold Card, whose fee I fight every year. I also have some minor outstanding balances that I’ll just pay down slowly.
My Net Worth Increase/Decrease
- From May 1 to June my net worth increased .33%
- My net worth increase YTD has increased 11.91%
Well my gut was wrong. Granted it is a rounding error, but a gain is a gain on today’s date so I’ll take it!