The month of October was another good one for the stock market, and as a result a good one for me.
For background on the methodology and definitions, see Net Worth: September 2013 Progress.
Let’s take a stroll down memory lane back to last month’s numbers to use as a baseline:
As of September 30th, 2013:
|— Real Estate||$596,105.00|
|— Credit Card||$2,690.57|
As of October 31st, 2013:
|Net Worth||$551,703.83||+ 14,529.31|
|— Real Estate||$596,176.00||+ 71.00|
|— Investments||$314,485.51||+ 14,379.37|
|— Cash||$17,679.55||+ 1,744.38|
|— Mortgages||$370,699.29||– 1,581.93|
|— Credit Card||$5,937.94||+ 3,247.37|
Another great month in the market meant another month where my investments dominated the net worth increase. It’s a good time to note that while these gains are easy money right now, the market could slow down – and that really these are the fruits of the past decade of savings. As Warren Buffet said “Someone is sitting in the shade today because someone planted a tree a long time ago.”
I don’t quite have it made in the shade yet, but you get the idea. The market swings here are blowing out the $1,500 in contributions.
Some other trends to note are the increased credit card debt and slight cash increase. I’m expecting some decent sized bills for the bathroom remodeling supplies and some of that has hit the cards and will get paid out of cash this month. Since I always pay my card balances month to month, the credit card balance is really more of a trailing indicator of expenses over the previous month.
Lost in the great gains in investments and the large swing in credit cards is the steady progress in paying down the mortgages. Another $1,580 paid off the principal this past month and that number will slowly creep up every month. Two of those mortgage payments are covered by tenants and the third is our primary home. I pay an additional $420 or so a month towards principal on one of the rentals which has the highest interest rate at 6.25%. The current plan is to accelerate paying that mortgage off to first remove PMI and eventually be mortgage free (at which point we’ll likely tackle the next highest interest rate debt: the duplex rental at 5.75%).
I’m maxing out my 401k and right now any additional cash is being saved towards some expected expenses and investments: bathroom remodel supplies, contributing to an IRA for my wife and possibly buying some extra insulation for the attic before the energy tax credit expires at year end. Oh yeah and building a cushion for when the family may need a small/crossover SUV (since my car died and we’re discussing expanding our family). After that I’ll likely split the extra cash between paying off the rental principal and investing more in a taxable account as a sort of hedge because I can’t guarantee the market will outperform the mortgage rate. I tend to over-allocate to stocks in my investments and prefer to think so paying my mortgages as a bond alternative: a known fixed rate investment.