Another month, another Brewing FIRE Net Worth update. Each month, I will give a brief summary of our financial standing, which will serve as a progress report on our journey to financial independence.
In addition to giving a snapshot of our net worth, I will compare our progress to the previous month. I will also comment on any notable changes to our finances. Finally, I will give some color on our saving and investing strategy, as appropriate.
May 2018 Net Worth
We use Personal Capital to track our net worth. Personal Capital makes it very easy to track all of our banking accounts, investing accounts, credit cards and loans all in one place. In addition, Personal Capital has a “Cash Flow” feature which compares your income and expenditures over time, helping you make sure you’re balancing your budget. Personal Capital also has numerous other functions for analyzing your investment holdings, asset allocation and performance, as well as some great retirement planning tools.
Another month of incremental gains in most of our accounts. As long as the economy keeps chugging along and the market slowly grinds higher, we should continue this steady progress.
Cash: Lately I’ve been itching to consolidate the many different bank accounts that Mrs. BF and I collectively hold (5 different checking/savings accounts at time of writing). Well, the time has come! I’ve begun the consolidation process, and I hope to have us down to 3 accounts by the end of June. The primary goal here is actually to automate our transfers/investments, so I no longer have to manage so many transactions per month.
Regarding the decrease in balance, we had a few larger expenses this month. We paid for two different mini-vacations, and Mrs. BF had a large work-related expense that is actually reimbursable.
Equities: As I detailed in my post on the Brewing FIRE Investment Hierarchy, we contribute to a series of investment accounts every month according to the relative tax advantage and instant return of the particular investments. Here is an update on our current progress in funding these accounts:
As you can see, we choose to fund our retirement accounts and health savings accounts (HSA, FSA) through pro-rated contributions over the course of the year. I’ve thought about front-loading our investments. We actually do this for our IRAs, which are fully funded every year in January.
On the surface, it makes sense to fully fund our investment account as fast as possible, which would give them more time to grow during the year. However, there are a few drawbacks to this approach. First, my 401k company match is contributed each month, so I would have to jump through some hoops to ensure that I still got the match if I maxed out my contributions half-way through the year. I would have to do something similar with my HSA (and Mrs. BF’s FSA) to front-load contributions, which may or may not be a pain in the ass. Finally, front-loading would necessarily involve more active management of my accounts. This is because our cash flow would change during the course of the year.
I have a feeling that eventually I will take the front-loading approach, for the incremental benefit of earlier investing. But at this point I’m too lazy to make these changes. I’ll save it for another blog post!
Home Equity: In last month’s Net Worth Update I talked about how we are making a small monthly contribution to our mortgage principal, which will end up taking roughly 12 years off the length of our 30-year loan. Well, so much for that plan. After debating the merits of paying off our mortgage over the last few years, we have decided to get more aggressive in our quest to eliminate this debt. I’ll be introducing a new experiment I’m calling Project HELOC very soon, so stay tuned for more details.
Thanks for following our progress as we plod along toward FI status. My goal for these updates (other than charting our progress) is to add one new chart/table/graph each month to further illuminate our strategy on saving, investing, debt reduction etc… Feel free to add any questions or comments below. Cheers!