Welcome to my first net worth update for Brewing FIRE. 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.
March 2018 Snapshot
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.
Month-Over-Month Comparison
Even though this is my first Net Worth Update, I can still give you a month-over-month comparison vs. February. Overall, there was no net change to our net worth this month. A bunch of new contributions to our investment accounts were largely offset by a decline in the equities markets. Now let’s take a closer look.
Investment Breakdown
Cash: Mrs. BF and I combined our finances in 2016 when we got married, but we still have all of our old accounts as well. In total, we each have a savings and checking account, plus a joint checking account that we use for day-to-day transactions. I’ve been debating how much we should keep in liquid assets, but I haven’t really come to a decision yet. Roughly $30,000 represents a cushion of more than 6 months for us, and that would be assuming we both lost our jobs at the same time. We could easily live on one of our incomes if need be. I think we will plan to reduce the amount of money we keep in cash as time goes on.
Equities: Our invested assets are divided among a number of different accounts. We own a 401k, 403b, 401a, 2x Roth IRAs, 2x taxable brokerage accounts, plus an HSA, an Employee Stock Purchase Plan (ESPP), and a Lending Club Peer-to-Peer lending account. I’ve turned my ESPP into an additional paycheck from my company (more to come on this). Also, I’m unwinding my Lending Club account because I haven’t been impressed with my (non-tax advantaged) returns over the past few years. Personal Capital also groups Baby BF’s 529 plan in our Investment totals, but I have omitted this account from my reporting.
Home Equity: I do not consider our primary residence to be an investment. We didn’t buy it with the purpose of profiting from a near-future sale. However, the property has net value, since the Zillow estimate is lower than our remaining mortgage.
I will talk more about investment strategies and asset allocations in a future post. I hope you enjoyed my first Net Worth Update. Please add any questions, advice, or other information in the comments section. Also, please follow me via email subscription or on Facebook / Twitter. Thanks for reading!
Caveats and Disclaimers
In the spirit of full disclosure, I want to mention a couple details of my situation that have been excluded from my net worth calculations. First, my wife has a student loan balance from graduate school. I have not included it here, because she is not repaying it in a traditional way. She is enrolled in the Public Service Loan Forgiveness program. This means that after 10 years of working for a not-for-profit entity, her remaining debt will be forgiven. She is making the minimum allowed payments (based on income) during this time.
Also, I have omitted my multi-family house from the real estate equity portion. I am in the process of selling this property. It doesn’t generate the cash flow to make it worth maintaining, so I am parting ways with this investment. It is worth roughly the same as the balance on the loan at this point.
Finally, I am not a financial advisor. You shouldn’t blindly follow any advice I give, but rather do your own research and consult with a professional where appropriate. Everyone’s situations are different.