Net Worth: February 2014 Progress

February was a nice turnaround from the woes of January. We kept our expenses much lower and paid off the short term debt we had on our credit card balances due to the high expenses from mid-December through mid-January. As a result we’re in a much more comfortable position now and can look forward to building our cash cushion back up in the next few months.

The Numbers

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

This month I’m combining the numbers into a single table, rather than breaking out last month versus this month. It should make comparisons a little easier. Eventually I may also give further back comparisons (two months back, or against previous quarters or years) to see the long-term trend.

Category Jan 2014 Feb 2014 Difference
Net Worth $576,276.16 $599,369.15 + $23,092.99 + 4.01%
 Assets $974,298.33 $991,155.25 + $16,856.92 + 1.73%
— Real Estate $601,147.00 $602,416.00 + $1,269.00 + 0.21%
— Automobiles $25,000.00 $25,000.00 0 0
— Investments $338,278.52 $355,474.61 + $17,196.39 + 5.08%
— Cash $9,872.81 $8,264.64 – $1,608.17 – 16.3%
 Liabilities $398,022.17 $391,786.10 – $6,236.07 – 1.57%
— Mortgages $365,914.12 $364,726.50 – $1,187.62 – 0.32%
— Auto Loan $25,725.70 $25,311.63 – $414.07 – 1.6%
— Credit Card $6,382.35 $1,747.97 – $4,634.38 – 72.6%

Analysis

The Month

Thankfully, the stock market recovered in February. That helped push the investment balance up to it’s highest amount yet – erasing our losses from January and improving on the balance from December. I’m maxing out my 401k contributions, so across the year so far that’s roughly $3,000 from contributions – after accounting for that we’re not up by too much from December.

In addition, we managed to pay off that large ~$5,500 credit card bill on the due date, avoiding any interest or charges. That payment covered some high spending and a $3,000 bill for a rebuilt transmission on our 2008 Nissan Altima. It definitely had me worried about our cash flow, causing me to work out a spreadsheet to project future cash flow and ensure we had enough to cover bills. Looking at it now, we seem to have gotten out of the cash crunch safely. As always, I pay off all credit card balances by their due dates to avoid any charges, so the credit card balance is more of a trailing indicator of our expenses. And that low number makes me very happy about our spending recently. More remarkable is that we actually took a vacation to Florida and managed to keep the balance fairly low. It was a cheaper vacation for us since we visited my parents and stayed with them for most of the trip; and our air travel and some of the hotel costs were pre-paid, which is another reason why the costs were low. But some of the costs will be reflected in next month’s numbers as they just didn’t “clear” yet – such as costs for boarding our dog and some dining out.

“Off the books” is a remaining balance on a promotional purchase for the bathroom remodel supplies. That balance carries no interest until April, so long as we pay it off in full by then. The remainder is roughly $1,500, but I plan to pay that off in the next month or two now that I feel confident our cash flow issues are behind us. That balance has been “off books” since around October/November, mainly as an artifact of Mint’s inability to connect to the GE Capital site for the card.

This time of year is also the beginning of tax season – hopefully you guys out there don’t wait until the deadline to file! I finally got my last documents in mid-February (18th), so I’ve gathered up everything to file. I use a CPA to file my taxes and have ever since I bought the first duplex, since I was unfamiliar with the vagaries of filing with investment properties. I’m not thrilled about paying for tax preparation, but looking back at the past few years’ worth of filings I’m glad I do since they are now complex enough to be beyond my abilities. (I actually miss the days of filing my 1040 where I spent a little while with a No. 2 pencil, took the standard deduction and did some simple math!) Every year things have changed pretty dramatically with my divorce, then filing single, then remarried, another investment property, new house and now new baby (and a much scaled down work schedule for my wife)! So to be quite honest the end result of whether I’ll owe or get a refund is going to be a big surprise for me. It’s been hard to track from year to year and often the end result is conflicting – for example, last year I got a pretty hefty return for Federal taxes but owed enough in NY state taxes that I was required to pay quarterly estimated tax installments throughout 2013. It typically ends up that I get a refund for Federal, while NY never seems to take enough out of my paycheck despite using the same withholdings.

9 thoughts on “Net Worth: February 2014 Progress

    • I typically have a roughly $5,000 balance in a savings account for emergencies. Unfortunately, I used it to fund a 529, purchase insulation, and fund an IRA as a year end push to lower my taxes. As a larger source of money, I can always tap into a taxable brokerage account in a pretty quick timeframe, around 3-5 days. I just prefer not to sell off equities and incur capital gains taxes if I don’t need to.

  1. Nice gains, especially in the investments category.

    Since you own real estate and also invest in the markets, do you have a preference? I know wealthy people who go nuts for real estate. I also know wealthy people who do it all through the stock market and wouldn’t touch real estate.

    • Well, to be honest my forays into real estate aren’t very organized as a means of becoming a real estate mogul. My first home was bought as a duplex for a handful of reasons – primarily that the area I wanted to live in was strong rental market, I didn’t like paying rent for no equity, my fiance’s father was rich from real estate and encouraged us, and the idea of someone else paying more than half my mortgage seemed cool. Since I was familiar with it from that property we chose to keep my wife’s town home as a rental as well a few years back, otherwise we’d just take a small loss – and again this was a fairly easy place to find renter’s to cover the mortgage and expenses.

      Personally, I think I’d stick to only stocks while I was younger and then around retirement buy some properties with strong cash flow as a means of providing an income stream (and maybe with a property manager). I’m not the type that focused on leveraging crazy amounts of debt to build a rental empire, and this middling approach works out OK since it brings FI closer with the eventual cash flows with no mortgages. But man, sometimes it is a huge pain to deal with the issues. They seem to crop up out of nowhere when you have the least amount of time to deal with them. And then the other 95% of the time it’s just cashing checks. Go figure.

      • Thanks for your perspective.

        I like your strategy and it’s similar to what I’ve considered. That is, just 2 decent, paid off rentals would provide me with all of the money I need in retirement. Then, I don’t have to touch the rest of the stock nest egg.

        The issues scare me a bit though too. I’ve heard many, many horror stories from friends and family. How (or maybe why?) do tenants put multiple holes in drywall? I can’t relate to antics like this because it’s something that I’d never, ever do. However, these stories seem common.

        • I’ve had tenants do some pretty ridiculous things, and quite honestly it has made me very concerned in the past. I mean, if tenants can’t alert me when there’s a major roof leak and the plaster on the walls is bubbling out and falling off – how can I trust them to properly handle a gas oven with a pilot? It’s a risk you take, and that you hopefully mitigate over time.

          But yeah – I’ve had females dispose of um… “personal items” that clogged the main sewer drain and required a snake that looked like an Anaconda; Pipes have burst twice because tenants disabled the smoke alarms and smoked in the basement with a window open and left the window cracked enough to cause the frozen/burst pipes; I’ve had tenants break a window and never tell me – and not even close the storm window in winter! And plenty more. But keep in mind this is a rental in an area that attracts college students and those just out of college. It comes with the territory.

  2. Hey nice goin …. is this the combined net worth i.e u and ur wife also does ur wife work … as this is really impressive for a single person….

    • Well, I’m going to give a complicated answer to a simple question. I am married, so this is combined net worth. My wife entered the marriage with a net worth close to zero: she had a couple thousand in equity in her town home, but still a couple thousand left on a car loan. The first year we were married we both worked; last year she worked part time, earning around $10k; and this year she’s working part time as well, but will be stopping soon. I anticipate she’ll make closer to $4k. So most of this net worth was built on my salary and investing – but my salary for the past seven years is well above the national median, so for comparison’s sake it’s better to compare to a two income family.

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