Net Worth: August 2014 Progress

An up market makes for another nice increase in my net worth. Gotta love a bull market like the one we’ve had for the past few years!

The Numbers

For background on the methodology and definitions, see Net Worth: September 2013 Progress. I’m including the past two months for comparisons now, but the “difference” values are computed for the past month’s changes.

Category June 2014 July 2014 August 2014 Difference
Net Worth $626,464.68 $631,084.96 $647,718.57 +$16,633.61 +2.64%
  Assets $1,007,587.76 $1,008,608.51 $1,024,748.07 +$16,139.56 +1.60%
    Real Estate $588,239.00 $592,385.00 $600,387.00 +$8,002.00 +1.35%
    Automobiles $24,175.00 $24,175.00 $24,175.00 0 N/A
    Investments $377,384.50 $373,856.92 $385,750.06 +$11,893.14 +3.18%
    Cash $17,789.26 $17,591.59  $14,436.01 -$3,155.58 -17.94%
  Liabilities $381,123.08 $377,523.55 $377,029.50 -$494.05 -0.13%
    Mortgages $352,350.10 $350,636.90  $348,916.48 -$1,720.42 -0.49%
    Auto Loan $23,629.41 $23,208.09 $22,785.88 -$422.21 -1.82%
    Credit Card $5,143.57 $3,678.56 $5,327.14 +$1,648.58 +44.82%

Analysis

The Month

The S&P 500 Index hit new highs in August, up 3.64% over the course of the month – and my investments finally didn’t drag me down too much, earning a 3.18% bump themselves (though keep in mind I’m also contributing chunks of cash to my 401k, so my investments should be going up higher than the market return in an ideal world). I’ll credit some of that “keeping pace” with my decision last month to drop ARCSX and LADRX and move the proceeds into SMTZX entirely for my current 401k. It’s a retirement target date fund for 2040, which is an easy way to diversify and slowly ratchet down from equities to bonds over time. I learned the hard way not to chase performance with those other funds – though again my 401k hasn’t had great investment options in the past. Retirement target date funds are the best I can do, and they’re not as low cost/fee as I’d like.

The other notable thing this month is the drop in cash and rise in credit card balances. I even paid an extra payment early on one card using that cash, outside of my normal automated bill payments so the balance is “artificially” lower that it typically would have been. We’ve finished up some major remodeling in the bathroom, which let us finally address other changes my wife’s been urging – which is carpeting the majority of the 2nd floor, replacing our beaten up mattress, and getting our nursery ready for baby #2. So the bills have been way up again which is our trend for the year. I anticipate spending to be back down to more normal levels going forward now that we’ve got the crib, dresser, carpet, a lot of baby clothes, changing table, mattress, crib sheets, and much more. Thankfully the major spending looks to be behind us, though I’m sure we’ll see a jump in food and grocery/baby supply expenditures for the next 6 months to a year – depending on whether we’re able to breastfeed. That baby formula adds up quickly!

I’d been building up cash for a while since none of this spending was a surprise to us. Now the priority is to max out any tax advantaged accounts before their deadlines. I always max my 401k and am on target to do so mid-December. Then I typically max my wife’s IRA (we’ve funded $2400 so far earlier this year), my own IRA (if I can, based on income), and a 529 for our son – in that order. The complicating factor is that I’m not always eligible for IRA contributions, and that we need to contribute to the 529 before calendar year end – while we need to fund the IRAs before tax year end (April 2015). I usually opt to max the IRA for my wife first before calendar year-end just to make sure I have the money to do so since it’s more tax advantaged than the 529. Then whatever’s left I throw at the 529 (where tax advantages differ from state to state – NY allows up to $10,000 for a married couple, subtracted from only state income taxes).

 

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  1. Pingback: Net Worth: October 2014 Progress - Big Day Coming

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