I know it is a tired thought reverberated since the time immemorial, but I can’t believe how fast this year is going! As I sit down to write this post, we are almost at the half way point for the year. I am forced to think about the passage of time every time I write a net worth update, and sometimes that inspires me and sometimes it leaves me disillusioned. This month I am left feeling overwhelmed – inspired to keep up the intensity but tired just thinking about the journey.
Thoughts before I calculate my net worth: I usually have a feeling as to how I did with regard to my net worth. I think this month is going to be a good month. The markets seemed to have flattened out a bit, and I received my federal tax refund which was used 100% for debt repayment.
Thoughts after I calculated my Net Worth: I think I have made a mistake including The Wife’s business assets in my net worth calculation. Built into the very nature of The Wife’s business are big cash flow swings (she has to pay vendors before getting paid herself), and I don’t think those swings are good to watch in the short term. They may cause positive months when they shouldn’t – like last month – or conversely, may provide a drag, when they shouldn’t.
So with that ground breaking revelation that literally affects no one (not even me) I am going to go back and remove the line item from the beginning of the year.
My Net Worth Calculation
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 – I am finally back into undervalued dividend growth investing and I am very excited to share my screens and purchases!
- 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) – I still have about 50% of my contributions going into cash, and every time armageddon has happened this month I deploy some of it. I am not entirely convinced that this marketing timing is worthwhile given my age (36) and the fact that the account can’t be touched for 24 years at the minimum.
- Wife’s Mutual Funds – This was an amount that was given to my wife from her deceased grandparents. 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 – I increased the value of my home starting in 2018 3%. This was the first time since I bought the home that I even bothered to increase the value. Interestingly, The Wife and I just decided to put it up on Make Me Move for 20% higher than what I have it marked down as.
- 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.
Wife’s Business – NEW IN 2018– Just going to value this at the cash that is on the books at the end of every month. There won’t be a distribution for quite sometime, so hopefully, there is a nice trend upwards.
- Physical Gold – I decided that I would buy a small amount of physical gold every month or two from basically now on.
- Crytocurrency Account – I recently bought a tiny amount of Bitcoin. By the time my initial payment cleared bitcoin had dropped 40%. I am not exactly sure what I am going to do with this account just yet. Right now I am going to ignore it.
- My Law School Loans – Despite being 36 years old I have a significant amount of law school loans left. They are locked in at 3.5%, so I have no real rush to pay them off. I’d like to get the monthly cash flow back but at about the $40,000 it would be a tremendous hit to liquidity.
- My Mortgage – I live on Long Island (and it’s 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 was 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. I just recently opened up an American Express Platinum Card for 60,000 points and a lot of benefits for the first year.
- My HELOC – A good portion of it was to capitalize The Wife’s Business. I hope to create a realistic payback schedule in a few months when we get use to running the business.
I decided to keep the debt of the HELOC but ignore the corresponding asset (the removed checking account).
My Net Worth Increase/Decrease
- From April 1st to May 1st my net worth increased 2.56%
- Year to date my net worth has increased 3.77%
When I removed the business checking account the previous 4 months changed dramatically. I am going to update those posts, and basically ignore the issue going forward.