Each month, I share a net worth update for the Brewing FIRE household. This brief summary of our financial standing serves as a progress report on our journey to financial independence.
In addition to giving a snapshot of our net worth, I will take a brief look at our spending, saving, and investing activity for the month.
July 2020 Net Worth
We use Personal Capital to track our net worth. Personal Capital makes it easy to track all of our banking accounts, investing accounts, credit cards and loans all in one place. Personal Capital also has numerous other functions for analyzing your investment holdings, asset allocation and performance, as well as some great retirement planning tools.
July – Tenant, Interrupted
I’ve stated at least a few times since March that the pandemic hasn’t negatively impacted our lives much. Mrs. BF and I are still gainfully employed, everyone’s healthy, and we’ve been hitting new net worth highs each of the last four months.
One area where we’ve had a bit of hardship, however, is renting the Basement Bungalow. Our basement apartment has turned into a half-way home, of sorts, since we cannot seem to keep people down there for any considerable length of time.
First, our winter tenant (university hockey coach) terminated his lease early in April as the campus was completely shut down.
We found a graduate student (a virologist, no less!) to fill the void on May 1. However, she took a new position in Boston, and moved out May 31st.
Next, our pilot tenant from last summer called and said he was looking to rent the place again. He moved in mid-June, only to be furloughed at the beginning of July.
Thankfully, Mrs. BF has had great success finding local professionals that need a furnished, short-term rental. We have a new tenant, an MBA student, moving in August 1st. We’ll see how long he lasts.
Of course, our basement apartment is more of a side hustle than a true business or investment. It has worked well to defer our housing costs over the past three years. However, it makes me think about how difficult it must be right now to run a business dependent on short-term rental income, like most Airbnb hosts.
I’m glad I got out of the rental property game last year with the sale of my multi-family house. Too much stress, and no income!
Coast FI Update
I know I’ve been stringing along my 7 loyal followers about a potential Coast FI transition in the near future. Unfortunately, I have to keep stringing you along, because I don’t have a plan yet!
But in the meantime, I’ll give you a little insight into the decision we’re currently trying to make.
In all likelihood, I will be reducing my hours significantly before the end of 2020. Call it Slow FI, Coast FI, semi-retirement, or whatever you want. The bottom line is I want to claw back some free time to spend on priorities like our kids, and we are in a good financial position to do this.
The details are a little cloudy at this point. We are considering moving (geoarbitrage?) as part of this transition. In this scenario, I will be a stay-at-home dad for some time. In the other scenario, I will attempt to negotiate a transition to part-time work at my current employer.
Right now, I would say it’s 2:1 odds that we’re going to move (to Virginia). What’s the hold-up? My wife needs to secure a new position before we can pack up and go. It seems that Covid has caused the job hunt to be even more drawn out than normal, so we’re slowly working through the hiring process. Pending a good offer, we’ll put the plans into motion. I will be sure to write more on this as the details become clearer.
We’ve hit a new net worth high again, which makes 4 in a row if I’m keeping score correctly. Also, for the first time in our journey, we’re getting close to the Two Comma Club. In all of my prior projections, I thought we could maybe hit the 1MM mark around 2022, if we were lucky. If we do it in 2020, during this shitstorm of an economic situation, that would be amazing. Especially considering we were under $700k in March.
Spending and Not Spending
|Property Tax||$4,645||Semi-annual home taxes + car taxes|
|Home Maintenance||$148||painting, tile, electrical supplies|
|Student Loan||$0||no payments until October|
|Shopping / Misc.||$403||Kid costs add up|
|Discretionary||$227||Wine, beer, good cheer|
|Subscriptions||$112||pro-rated MLB.tv package|
|Travel||$315||a long weekend in VA|
|Total||$10,079||$5,434 without the property taxes|
Property Taxes: it’s no secret that most of the Northeast pays some pretty hefty taxes to live here. I’m not one of those people who constantly bitches about it, but nearly $9,000 per year kind of sucks. There is also a concern that they will continue to go up, considering our state is basically bankrupt at this point. This would definitely be an immediate benefit to moving.
Kids: it has been estimated that the cost of raising a child is currently in the $300,000 range, excluding college. I had always thought this value seemed inflated, but I’m starting to believe it. Hell, 5 years of full-time daycare would run us nearly $100,000 per child! Also, there seems to be an endless trickle of spending on small necessities: diapers, copays, clothes, supplies for daycare, etc… Couple this with the additional food spending and future extra-curricular activities, and maybe we will end up spending that much on them.
Obviously, I have no complaints. The fun we derive from the kids outweighs their cost. For now..
Income and Investing
Our free cash flow has been down a bit because our retirement account contribution rates are higher than normal. For me, it’s to get $19,500 into my 401k before I (potentially) quit this fall. For Mrs. BF, it’s playing catch-up after not earning (or contributing) during maternity leave.
As mentioned above, our basement tenant bounced at the beginning of the month, so we only collected approximately 50% of the rent in July. For the record, we’ve never charged anyone a penalty for breaking their lease unexpectedly. Shit happens, and we’re in a good enough financial position to be empathetic to crappy situations.
We didn’t put much new money to work this month, since we had to drop almost $5,000 on property taxes.
We made another $260 selling random stuff. We’ve mostly worked through all the excess things we can sell. If we do decide to move, we’ll have another wave of crap to get rid of. De-cluttering is one of Mrs. BF’s favorite activities, so that’ll be fun.
That’s all for us. How was your July? Was it as hot as ours? How’s your net worth looking? Let me know in the comments.
8 thoughts on “Net Worth Update – July 2020”
that’s very exciting that you could become a stay at home dad. cheers to that. 6% gains in those investment accounts is pretty sweet. is that qqq i smell? our money is doing great and we just had champagne last week to celebrate another milestone. i thought these investments would do well but figures about 5-7 years to get where we are now in 3 years. i’ll surely take it all the way to the bank.
it’s day 2 of smidlap con at the cabin in the woods. we’re off shortly on a 10 mile hike with friends. hopefully the bears don’t get us.
Thanks Freddy. I never pulled the trigger on QQQ, but I really should have. I guess I’ll settle for the total index for now.
Don’t worry, I heard the bears up north are practicing social distancing, they won’t come within 6 feet of you!
Glad to be one the 7 you’re stringing along 🙂
We go to Richmond almost once every year. Probably won’t make it this year, but hey once you folks have moved to VA, we should meet up the next time I’m there.
That’s one thing about the big coastal cities and home ownership that bothers me and one of the reasons we don’t see ourselves moving to those places: the high property tax. My 2,000 sq ft home valued at over $350k has a yearly property tax of $3,800. Smaller sized home in the Bay Area that my friend moved to, a whopping $30,000 in property tax!! I can’t wrap my head around that.
Yikes! A coworker of mine lives outside of Chicago and pays $20,000 in property tax. I can’t imagine living in Illinois (Illinois!!) and paying that much in taxes. I hesitate to call this (potential) move ‘geoarbitrage’, because the change in cost of living will be modest. However, I think there are numerous other benefits that are at the base of our decision. I’ll probably write about this soon, assuming everything works out.
Agree with you that vacation rental income is a rocky business right now. We have 3 rentals in Costa Rica, and borders were closed for a few months and things are just starting to come back. But we can’t even get into our own places as borders are still closed to the US! That said, our long-term rentals are fine, and we are still bullish long-term on real estate especially for FIRE, since it provides a more reliable cash flow than paper. Right now, we’re just holding on our paper and real estate and will keep monitoring as the pandemic and economy shift even more!
Good to hear that you’re riding things out OK! I agree that long-term renting should still (and always) remain a viable business, but it was quite a surprise to see how fast the short-term rental market could get upended. As always, I think responsible investing (ie, not being over-leveraged) provides the necessary margin of safety when the unexpected happens.
I am one of your loyal followers, but I’ve been non-stop busy since starting at the hospital. Sounds like things are still going well for you guys, and what a stroke of luck and smart thinking to get rid of that rental while you had the chance! Glad to see things are still moving forward for you! I like to read the positive stories, especially in times like these.
Thanks Liz. I know you’ve been busy with the new job, and the house! Congrats, hope homeownership has been treating you well so far.