Net Worth: December 2013 Progress

December was yet another month dominated by the increase in Investments. There was a heavy lump sum contribution made to a 529 plan for my son at year end in an effort to reduce our taxable income, and another market increase.

The Numbers

For background on the methodology and definitions, see Net Worth: September 2013 Progress.

As always, let’s look back at last month’s balances to use as our comparison baseline:

Last Month

As of November 30th, 2013:

Category Value
Net Worth $564,776.17
 Assets $940,087.51
— Real Estate $596,333.00
— Investments $330,412.20
— Cash $13,342.31
 Liabilities $373,815.72
— Mortgages $369,110.81
— Credit Card $4,704.91

This Month

As of December 31st, 2013:

Category Value Difference
Net Worth $583,374.08 + 18,597.91
 Assets $955,959.58 + 15,872.07
— Real Estate $599,479.00 + 3,146.00
— Investments $345,546.62 + 15,134.42
— Cash $10,933.96 – 2,408.35
 Liabilities $372,585.50 – 1,230.22
— Mortgages $367,515.77 – 1,595.04
— Credit Card $5,069.73 + 364.82

Analysis

The Month

December turned out to be another pretty good boost in investments, looking back. We did a lot of last minute pushes to contribute to our son’s 529 in the amount of $6,000. We had contributed the max $5,500 to my wife’s IRA last month. And we bought a ton of insulation to improve our home and take advantage of energy efficiency tax credits that expired at year end.  All that activity made our cash dwindle – though that isn’t popping out in the numbers here. Something else that isn’t shown in these numbers here is that our car broke down and we bought a new car – the down payment on the new car hit just after the New Year, and the repair bill on the Altima hasn’t come yet. So we’re actually starting the new year off in a very cash tight position that’s leaving us a little concerned.

The Year

This year was an incredible year for us in terms of finances and net worth – and we can thank the recovering economy and stock market for doing most of the work for us. We started the year with a net worth of $398,368.20 and ended up at $583,374.08. That’s a huge increase of $185,005.88 (46.44%) for the year! The biggest jump came in July, with a whopping $72,098 increase mainly due to an amazing stock market bump.

It’s important to take a step back and temper the excitement over this number, as a significant portion of the increases come from home price appreciation on our primary home and rentals. That’s entirely paper money unless we actually sell the properties for those prices – which we have no intention of doing.

The more important number to look at with regard to the homes is the progress on paying down those mortgages, which we did to the tune of around $16,000 of principal paid for the year. That number will continue to slowly accelerate over time, and it’s nice to see that number decrease.

Let’s take a deeper look at what I did specifically in 2013 to contribute to that bottom line. Here I’ll enumerate the actual contributions to Investments we made throughout the year, to show how much of that increase was from new contributions versus market gains.

Category Amount
My 401k $17,500.00
Wife’s IRA $5,500.00
Son’s 529 $6,000.00
Taxable Acct $6,000.00
AMEX Rewards $649.47
Total $35,649.47

We made a total of $35,649.47 in contributions to investments over the year, many of which have tax advantages. The AMEX Rewards are contributions made to a taxable brokerage account using my AMEX Fidelity Rewards card, which equates to a 2% cash back on purchases. All in all, it was a pretty good year – though it’s very clear to me now that my financial life is significantly different from years past (not too long ago) where I was hauling in a large salary without any dependents and less obligations. They’re not kidding when they say that it becomes much harder to save once you start a family. My savings rate pales in comparison to what it used to be. Though it does help to remember that those years spent saving are paying big rewards now that the market is taking off this past year. My wife and I keep saying soon it’ll settle down and we’ll be able to save more, but that day doesn’t seem to ever get any closer. Hopefully it’ll turn out to be true within 2014, as it’s hard to see what other possible major expenses could possibly happen at this point (we bought a house and new car; replaced a transmission; had our first child; and remodeled about 80% of our house including the kitchen over the past two years).

2 thoughts on “Net Worth: December 2013 Progress

    • Thank! Yeah I was hoping to make a last minute push to max out the 529 as a last place to stash my cash for tax purposes, but then all hell broke loose with our car breaking down. From what I can tell 529’s aren’t an amazing deal, so it’s sort of the last place I’d put extra cash, but it does have some state income tax benefits which are very useful here in NY. But since the use of it is limited it’s hard so far out from my son being in college to know how much to contribute without locking money up in an account that I’d then get penalized to withdraw for other reasons.

Leave a Reply

Your email address will not be published. Required fields are marked *