November turned out to be another great month in terms of investing. We made significant contributions to retirement accounts and continued to ride the stock market gains of this great bull market.
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:
As of October 31st, 2013:
|— Real Estate||$596,176.00|
|— Credit Card||$5,937.94|
As of November 30th, 2013:
|Net Worth||$564,776.17||+ 13,072.34|
|— Real Estate||$596,333.00||+ 157.00|
|— Investments||$330,412.20||+ 15,926.69|
|— Cash||$13,342.31||– 4,337.24|
|— Mortgages||$369,110.81||– 1,588.48|
|— Credit Card||$4,704.91||– 1,233.03|
The figure for Investments this month is a bit misleading. In previous months the stock market gains easily out-weighed my contributions (despite contributing $1,500-1,750 per month); this month the contributions do make up a significant portion of the increase. We contributed the maximum $5,500 IRA contribution into a new Vanguard account for my wife this past month (this also accounts for the cash decrease). I also contributed $1,750 into my 401k account. So that breaks down to $7,250 in contributions and $8,676.69 in market gains.
So looking back at previous months Investment values we can see that we did better this past month than we did in October or September on a bottom line number value, but the reality of it is that in those months the split was weighed much heavier towards market gains when broken down (I contributed $1,750 teach of those months to my 401k as well, but didn’t have any other contributions like this month’s IRA lump sum).
The credit card balances dropped some this month, but we’re still higher than normal here. We pay the balances in full month-to-month so they do give a pretty reliable trailing indicator of our expenses. The story here is the continued bathroom remodel and a huge upswing in our gift spending. We have pretty large extended families, so we have a lot of gifts to buy for Christmas as well as a number of birthdays in the November to January time frame. My wife’s done a good job of snagging deals, so while the number is high it’s not quite as high as I was anticipating – and we’re very nearly done with all of the shopping for this time period. Luckily the months afterward represent a relative lull in gifts with birthdays few and far between after mid-January.
Another nice thing that gets a little lost in the great progress in investment balances is the continued chipping away at the mortgage balances. We hold three mortgages: our primary home and two rental properties (a townhome and a duplex). The balances go down just a little bit more each month. Across the past three months you can see they decreased: $1,575.42; $1,581.93; and finally $1,588.48. This is while making the exact same monthly payments, we can see that the principal amounts are ever so slightly increasing.
This brings up another topic: why not pre-pay the mortgages? The three mortgages hold different terms and rates. Looking at it from a pure real estate investor you ideally want to use leverage to your advantage – borrow a lot over a long time frame and maximize rent and your investment dollars. Looking at it from a financial independence point of view, I want these suckers paid off ASAP to minimize my monthly expenses and make a huge dent in the necessary nest egg. So, I split the difference – sort of. We pay an additional $420 principal per month on the highest rate mortgage to accelerate it, but from my perspective I anticipate much higher returns from the market. So I prefer to contribute more to the market than really jack up mortgage pre-payment. As the market evolves I periodically re-evaluate and may shift more towards pre-payment. There is one additional wrinkle, however.
The town home rental was originally bought by my wife with very little money down. As a result she’s been paying MIP (or PMI) – Mortgage Insurance Premiums – and she got a less than great interest rate. Now that it’s a rental we don’t anticipate a refinance would help us out too much. But I do want to get rid of the MIP – that’s money just wasted every month. How much are we wasting? $40.62 per month! That really adds up over time. Imagine that went to the principal instead of off into the hands of some insurance company! This is on my medium-term goals financially. Once we get through the new year and we’re done throwing money at tax advantaged accounts, gifts, and other remodeling/tax credit expenses (insulation!) I’ll be focusing in on getting rid of that MIP.
For those wondering, the mortgage terms and rates are: a 30-year @ 5.25% (duplex); a 30-year @ 6.75% (town home); and a 15-year @ 3.25% (primary).
Can’t Get Enough Net Worth Tracking?
Lots of us Personal Finance bloggers love to track our month to month net worth, expenses, goals and other numbers. Not all of these are net worth overview like this one, but many details monthly expenses, budgets, goals, progress and incomes. All in all it’s a fun peek into other people’s finances. For the financial voyeurs out there. Without further ado, here are some of the other updates I’ve seen for November:
- Budgets Are Sexy
- Retire By Forty
- 1500 Days to Freedom
- Red Debted Stepchild
- Canadian Budget Binder
- Planting Our Pennies
- The Wealth Gospel
- Net Worth Warrior
- Leigh’s Financial Journey
- Poorer Than You
- My Alternate Life
- Beachgirl’s Budget Blog
- My Pennies, My Thoughts
- Reaching For Financial Security
- All You Need Is Enough
- Million Dollar Journey
- 2million’s Personal Finance Blog
- Bucking The Trend