Net Worth – July, 2017

Each month I’ll be keeping track of our net worth on this blog. The reason for making our net worth public is to not only hold myself accountable, but to provide a record so I can review my progress over time. I’ll be giving a brief analysis on our results for the month and what changes I’m thinking of making.

 

As those of you who follow my blog might remember, I’ve been working on a huge deal at work that, if closed, would result in a significant commission. In June I received the first part of my commission for that deal. In July I received the second (larger) part of that commission. The results of this commission check had an impact throughout our net worth report.

 JuneJuly$ Change% Change
Assets
Checking$250,598.28$29,070.11-$221,528.17-88.4%
Retirement accounts$649,071.11$653,372.17$4,301.060.7%
529 accounts$21,743.55$23,191.89$1,448.346.7%
Brokerage accounts$1,666,429.61$2,388,346.43$721,916.8243.3%
Private equity$200,000.00$200,000.00$0.000.0%
Rental properties$933,500.00$933,500.00$0.000.0%
Primary residence$1,620,000.00$1,620,000.00$0.000.0%
$5,847,480.60$506,138.059.5%
Liabilities
Credit cards$2,334.43$12,620.56$10,286.13440.6%
Rental mortgages$511,550.33$510,881.04-$669.29-0.13%
Primary mortgage$648,168.47$645,043.15-$3,125.32-0.5%
$1,162,053.23$1,168,544.75$6,491.520.56%
Total$4,179,289.32$4,678,935.86$499,646.5311.96%

 

S&P 500 performance for July, 2017 = 1.93%

Assets

Checking – I received the second half of my big commission check this month. This was the larger of the two checks and was about $750k. This money was immediately moved into our brokerage account so it is available to be invested if/when an interesting opportunity comes along. One note here: we will be doing a significant amount of work on our house over the next few months – new roof, adding solar, redoing the backyard, adding new windows, etc. The money designated for this work has been excluded from this report and will be excluded from all future reports.

Retirement Accounts – This includes a 401(k), a few IRAs, and a few Roth IRAs. The only account we are currently contributing to is the 401(k). These were up a meager 0.7%, for a total gain of $4,301.06. Of that, approximately $1,200 are contributions to the 401k.

529 accounts – We are contributing $500/month for each of our two kids. Given the low balance of these accounts I expect that our contributions will dwarf any investment returns for quite some time. We added $1,000 and got another $448.34 in gains from the market, so it looks like my expectations are about right.

Brokerage accounts – This is our early retirement fund and where most of our net worth is. I moved $700,000 of the commission check to our brokerage account with the idea that it will be used for investments. Unfortunately, due to the ridiculously high level of the market, I don’t see a lot of options in the market today. As a result, I think this money is likely to sit in cash (or a short-term California muni bond fund) until I can find better values in the market.

Private equity – 2 separate equity investments in startups. Since there’s no way to value these investments I will continue to keep them valued at my initial investment amount. Hopefully I’ll one day be pleasantly surprised to see that the companies are worth something. No change this month.

Rental properties – On the last day of each quarter I adjust the value of the properties based on Zillow’s estimate. No change this month.

Primary residence – Just like the rental properties, I adjust the value of our house at the end of each quarter. The value of our house doesn’t really matter because we hope to live in this house forever, but I track it for the sake of completeness. No change this month.

Total assets – Total assets were up $506,138.05 for the month (a 9.5% gain). Total assets are $5,847,480.60.

 

Liabilities

Credit cards – We don’t carry a balance from month to month on our credit cards, so this just reflects our balance as of the end of the month. I try to use credit cards for the bulk of our spending as it makes tracking our expenses a bit easier. This month I spent about $6k on flights for work (I will be reimbursed for these). In addition, we had a few things we’ve been waiting to buy until the second commission check came through. The main spending was replacing my 6 year old laptop and my wife’s 9 year old laptop.

Rental mortgages – We paid off $669.29 on the rental mortgages. This number doesn’t change much every month, but the great thing is that the mortgage is being paid by our tenants, so it feels like “free” money.

Primary mortgage – We have 2 mortgages on our house – a first and a second. The interest rate on the first mortgage is just over 4%. The interest on the second mortgage is 5.25%.

Last month we paid about $100k on the second mortgage. My thinking is that we’ll pay the remaining ~$80k off this month. As I pointed out last month, my expectation is the the stock market is going to return around 4-5% annually for the next 5 years. Since our second mortgage is at 5.25% it makes sense to pay the second mortgage off early.

Although I don’t really consider our house to be an asset, I definitely consider our home loans to be liabilities. I think it would be difficult to retire early with substantial mortgage payments hanging over our heads – this is why I’ve decided to pay off the second mortgage.

Total liabilities – Total liabilities were up $6,491.52 for the month (a 0.56% increase). I think this is the first time our liabilities have ever increased in a month, and it’s entirely due to the large number of purchases on our credit cards.

 

Total net worth

Net worth was up $499,646.53 for the month to $4,678,935.86. This was a 11.96% increase from last month.

It’s hard to believe that our net worth grew over $1M in just over a month. It took more than 10 years of working to get my net worth over $1M and now we added that much net worth in just one month.

The market continues to climb, taking our investment accounts with it. Our savings rate is solid (although it looks amazing with these commissions checks) and we’re trying to keep our spending in check. The big issue right now is that we have over $750K in cash or cash equivalents. I just can’t find anywhere to put our money. The stock market valuation is insane, bonds are paying a pittance, and real estate seems, at the minimum, fairly valued. For now all we can do is bide our time and wait for something reasonable to present itself.

 

I’ll be writing a lot more over the next few months about what it feels like to get a huge windfall and how I plan to use the money. If you’re interested in following along please subscribe to my blog.

 

How did everybody else do this month? Where are you putting your money to work today? Does anybody have an asset class or investment type that’s reasonably valued today?

6 thoughts on “Net Worth – July, 2017

  1. Very impressive. I can’t imagine getting such a large bonus check! Every think of using some of the brokerage account money and paying off the mortgages? This would essentially leave you bill free….

    1. I’ve thought about it. Our first mortgage is at 4.125%, the second is over 5%. I strongly believe we can do better than 4.125% per year over the next 10 years, but I’m not sure we can do much better than 5%. So, to hedge our bets, I’m going to pay off the second mortgage and not touch the first, at least in the short term.

    1. It’s surprisingly stressful to figure out what to do with the money, especially in this ridiculously overpriced market.

      As the great American philosopher Biggie Smalls once said – “Mo’ money, mo’ problems”.

      1. Concur!! It takes up a lot of my time these days. If my investment cost basis (in individual stocks and real estate) weren’t so low, I’d be inclined to sell everything, invest all proceeds in VTI, VEU, and BND, and spend time doing other stuff.

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