Net Worth: January 2014 Progress

January turned out to be a volatile month in the markets, with a correction from the huge upswing last year. For our family, it turned into being the month of expenses: with the biggies being the bill that came due for the rebuilt Nissan Altima transmission and the down payment on the new CX-5. Our auto budget is blown out of the water for the year and we just started! We’d been operating under our typical insurance/gas/maintenance before and haven’t had any huge maintenance issues or new car purchases in a very, very long time – so I suppose our auto bill was likely underestimated as a result. This will certainly cause some budget adjustments on my end.

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 December 31st, 2013:

Category Value
Net Worth $583,374.08
 Assets $955,959.58
— Real Estate $599,479.00
— Investments $345,546.62
— Cash $10,933.96
 Liabilities $372,585.50
— Mortgages $367,515.77
— Credit Card $5,069.73

This Month

As of January 31st, 2014:

Category Value Difference
Net Worth $576,276.16 – $7,097.92 – 1.2%
 Assets $974,298.33 + $18,338.75 + 1.9%
— Real Estate $601,147.00 $1,668.00 0.3%
— Automobiles $25,000.00 + $25,000 + ∞%
— Investments $338,278.52 – $7,268.10 – 2.1%
— Cash $9,872.81 – $1,061.15 – 9.7%
 Liabilities $398,022.17 + $25,436.67 + 6.8%
— Mortgages $365,914.12 – $1,601.65 – 0.4%
— Auto Loan $25,725.70 + $25,725.70 + ∞%
— Credit Card $6,382.35 + $1,312.62 + 25.9%

Analysis

The Month

Yikes. The end of the year and beginning of the new one was a rough few weeks, personally as well as financially.

First let’s talk about the biggest concern right now, which is a very tight cashflow. This is lost in the numbers above, but on the first of each month we have three mortgages that come due. One for our primary home and two for rentals. That means I need around $5,000 liquid to cover these each month, so while I may report thousands in cash on these balance sheets that number gets cut down the very next day. But beyond that, we’ve accrued some large delayed debts on our credit cards. That blown transmission I mentioned got paid for on our AMEX card, so while the $3,000 bill has been “paid”, we haven’t actually put the money towards it until our mid-February credit card balance payment happens. That’s a big whopping bill coming due. And “off books” here is a remaining balance for some of the bathroom remodel supplies (unfortunately that card doesn’t get hooked up into Mint, so it doesn’t get accounted for in these numbers) – purchased during a 0% interest promotional period which is ending at the beginning of May – so we have another lump sum payment to cover before that time. When you couple that with our last minute pushes to save by buying insulation (before the tax credit expired), fully fund my wife’s IRA and stuff some cash in a new 529 for my son – well let’s just say it’s going to be a tight few months cash-wide unless I cry uncle and sell off some lots from my taxable investments.

I hate the thought of having to do that as I prefer that account to be a one-way street for deposits only. So in the meantime I’m cutting back on extra principal payments for one of the rentals, updating my federal tax withholdings to include my son, and generally gathering all sorts of “loose” cash we have spread across accounts (mainly due to taking advantage of the Capital One 360 bonuses). If push comes to shove I could also lower my 401k contributions for now and catch up later in the year. I’m also trying to get all my tax filing paperwork ready in anticipation of the last few forms getting mailed out from Fidelity mid-February. I’m hoping there’s a refund in my future, so I can file ASAP and fix up my cashflow – but that’s a desperate one-time hope.

As I mentioned in a previous post, we went out and bought a new 2014 Mazda CX-5 as our new family car. As a result we have two new line items on our balance sheet here: the estimated car value under assets, and the loan balance under liabilities. Right now I’m just spitballing the value since the car is actually too new to value using KBB. Over time I’ll update that figure based on their numbers for private sale.

Another major point here is that this marks the first month we report a loss in net worth month-to-month. We’re at the mercy of the market, which started the year off poorly. The S&P 500 index was down 3.6%, and thankfully my investments “outperformed” that by only shedding 2.1% – though that does include the addition of my maxed out 401k contributions, which distorts it. It does us well to look back and remember that we had an amazing year in the market last year, so a minor setback like January shouldn’t make anyone panic and start selling off stocks.

Last year I made no written plans for any financial goals. This year we’ll try and state some specific goals to meet, though it may be slow going getting started on them starting the year in such a cash tight situations. Anyways, here goes:
– Max out my 401k contributions
– Pay down enough extra principal on one of our rentals to get rid of the $40+ monthly PMI payments.
– Max out my wife’s IRA
– Make some smaller contributions to my son’s 529 plan, maybe $250 a month
– Finish up our remodeling!
– Build our cash cushion back up above $15,000 (remember, $5,000 per month in mortgages means we’d really have $10,000 free)

7 thoughts on “Net Worth: January 2014 Progress

    • The short answer is: I’m not paying any interest or fees, and I do pay them off in full (with the exception of the promotional 0% card which has some of the remodeling costs on it). But also, the cashflow is very tight right now, so paying them off early would actually mean I’d bounce some checks.

      I have my cards set up to pay the “statement balance” on the due date each month. All my cards’ due dates happen to fall mid-month, between the 17th and 24th of each month. So on the 17th of February I pay off whatever the balance was on January 17th. No fees, no interest.

      But more importantly, while the cash reported here is ~$10k, the mortgage payments come due the first of the next month. So to play some cashflow projection here: if I paid off the cards early using my cash, I’d have $3,500 left with $5,000 worth of mortgages due. In reality, instead what happens is that I pay off the mortgages, get down to ~$4,800 cash, get a paycheck on the 15th, bump back up to around $8,000 and then right after pay off the credit card balances and be back down to $2,000. Add in rental payments and we’re back to $5,500 – but I can’t rely on when I get those (or if!) since my tenants aren’t very punctual in paying up.

    • If the dashboard’s numbers can be believed, we’re averaging 23.6 mpg over about 1200 miles so far. I haven’t actually tried to manually verify the numbers myself yet.
      The heavy majority of those miles have come in “suburb” traffic patterns: 30-45 mph limits, lights and turns fairly frequently. So it’s not city driving (stop and go every couple blocks), but not highway either (very few long stretches without a stop).

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