I feel like I’ve been hemorrhaging money all August. We finally made the move to refinance both our primary residence as well as our rental. This will save us lots of money in the long run, but there were some closing costs that we had to shell out some money for. On top of that, I had a big repair over at the condo I had to deal with. Finally, I’m planning a big trip, and so I’m spending a lot of money on plane tickets, hotels, etc. Many of these expenses will “hit the spreadsheet” in the coming months as the costs are offset for a little time due to using credit cards and such.
But – after wrapping up all the numbers for August, things are still looking OK. Our assets are up a good amount so that’s nice. Unfortunately our debts are up too. This is due to the refinancing and the way that process worked in taking out a slightly larger loan to cover most of the prepaids and other costs. I’ll break this down in a future post to show it all more clearly. In reality, the story isn’t so bad because we forgo paying mortgage for a month and we’ll get some escrow checks back from the old lenders that we can just push into the new loans.
My primary goal is to have the freedom to “retire”, or reach financial independence (FI) at age 40. As of this month, that is now just 19 months away!
I’m a big believer in completing monthly net worth updates as a way to stay on top of your financial situation and work towards your goals. Therefore – I share my monthly net worth updates here.
Here’s the latest net worth breakdown.
Total Net Worth this month came in at $1,196,825 – this is $15,993 more than last month. That’s seven months in a row now with some pretty significant gains. When will it stop? Who knows! I’ll take it for now – but I’m also parking more money in cash, anticipating a correction at some point. Of course – I’m also beginning to feel like I’ve been anticipating a correction for the last two years!
August 2016 –
Net Worth Notes:
Cash – Our cash position ticked up significantly this month. This is mostly due to no mortgage payments thanks to the refinancing. We’ll be putting this money into savings or into mortgage debt reduction in the next month or two. At any rate, the cash position remains strong and based on some recent concerns about the market and the overall health of our economy, I intend to keep it that way. Yes, we might miss out on some gains, but I like the idea of having some extra cash on hand right now. If the market drops we’ll be looking to deploy some reserves quickly.
Taxed Stock Account – I recently reduced my monthly contribution here from $2k to $1.5K – believing that a little extra cash might be a good move right at this moment. It’s all set up as part of an automatic investment plan where the money is spread across 5 or 6 different index funds. Occasionally I change the mix based on performance of the various ETFs in the portfolio. Specifically, these are ETF Index funds with iShares and some Vanguard. I intend to continue funding this at this level (or more) for as long as possible. Also in this bucket is a small amount invested recently in a LendingClub account. (Read more about my experience with LendingClub so far here)
Retirement Accounts – This consists of my 401k, Trad IRA, Roth IRA, and HSA account, as well as Mrs. Freedom 40’s 403b, and two Roth IRAs. We maxed out the 401k/403b the last three years and will do so again this year. We make too much to directly contribute to a Roth. *** New this month – this now also includes Mrs. Freedom 40’s newly opened TSP account! *** It looks like she’ll be extending her current Army position for another year, so it made sense to open this. She’ll be plowing big chunks of her pay into this over the next few months to max it out by year end.
Rental Property – This is a 2BD/1BA across the street. We used to live there and rent it out now. Currently, this creates nearly $0 cash flow, but the tenants do pay the mortgage every month so over time, it will presumably (hopefully?) pay off. It can be a headache from time to time, but for now, we keep it. Ref 1. Ref 2. Ref 3.
Home Value – During the Refi process we had to get appraisals done for both of our properties. Our main home appraised $7k higher than I had, while the rental condo appraised for $10k less. I’ll use these estimates for the next several months. We have no plans of moving or selling either property in the near future, so in many ways, these values have limited meaning.
Other – This consists of two cars and some gold and silver coins.
Home Mortgage – No mortgage payment this month thanks to the Refi! We did have to bring some cash to closing though, and the new loan amount is for a bit more than the old loan amount. We’ll address this by pushing the “missed mortgage payment” into this new loan and also the escrow refund from the old mortgage. We are now at 3.5%, which still strikes me as an amazingly great deal! Money is so cheap right now! Again – I plan to write more on our recent refi experience soon.
Rental Mortgage – This is also a bit higher but again, no mortgage payment here due to the refi. As with the primary residence, we’ll look to push that into the new loan soon.
Other Loans – This includes 2 Student loans Mrs. Freedom 40 has. Both are at 2.125%. It also includes Mrs. Freedom 40’s car loan at 0.9% and my car loan at a whopping 0.0%. We could pay all of these loans completely off if we wanted too, but the rates are so low, I don’t think it makes any sense to do so. Instead, we’ll let our money do it’s work in the market and earn us more than what we’re paying for these.
Finally, here’s what our Net Worth looks like over the past 12 months. At the half way point of 2016 things are good, and frankly, better than I would have expected at the beginning of the year. I continue to think we’re due for a market downturn soon – but I’ve been thinking that for a couple years now, so clearly – I don’t know anything!
Some other interesting notes about our net worth to share
YTD Gain/Loss = +$161,816
YTD Percentage Gain/Loss = +15.63%
12 Month Gain/Loss = +$233,068
12 Month Percentage Gain/Loss = +24.18%