August 2014 net worth update (+21.1%)

31-Dec-2013 31-Jul-2014 31-Aug-2014 MoM YTD
cash $13,500 $5,400 $6,000 +$600 -$7,500
savings $27,400 $21,800 $25,000 +$3,200 -$2,400
investments $134,600 $156,500 $167,800 +$11,300
+7.2%
+$33,200
+24.7%
mortgage $187,600 $151,500 $149,900 +$1,600
+1.1%
+$37,700
+20.1%
net worth $345,900 $412,000 $498,900 +$86,900
+21.1%
+$153,000
+44.2%
liquid assets – debts $49,000 $12,000 $100 +$11,900
+99.2%
+$48,900
+99.8%
$ until FI $823,900 $901,300 $841,500 -$59,800
-6.6%
+$17,600
+2.1%

After some discussion in the comments on last month’s net worth update, I decided to set my condo value to what I realistically think it would sell for today, from a comparative market analysis done by a real estate agent familiar with my area and unit. This month also saw about $4,000 in after-tax savings from my paycheck, in addition to about $8,000 of 401(k) contributions from last month and some gains in the stock market. I’m now so close to $500,000 in net worth!

I saved 71% of my net income this month! I’m at 73% so far for the year. I’ve been looking at my budget with the plan to change jobs and trying to see what I can reduce, but it’s hard when I have ~$1,900/month of fixed expenses. Add in $200/month for groceries and I guess my bare bones budget is $2,100/month, which is a pretty decent chunk of money. I’m so glad I didn’t buy a more expensive place! If I was going to take more than a month off, I could recast my mortgage, which would drop the required payment down about $400/month.

It’s interesting seeing how different my finances have unfolded than I expected. My May 2011 projections showed me hitting $250,000 in 5 years (2016), $500,000 by age 35, and $1 million by age 51. I hit $250,000 two years later than that in May 2013 and will hit $500,000 this year at age 26. My projections now show that I will hit $1 million in net worth around age 30-31, which is twenty years earlier than my projection three years ago. Early compounding really is your friend!

Expenses: I spent $3,570 in August after the mortgage or $2,543 without it. So far, my total spending for 2014 is $31,272, which is $46,908 annualized.

To hit my $38,500 spending goal for the year, I need to spend no more than an average of $1,807/month over the remaining 4 months this year. That’s not really possible considering that the mortgage, property taxes, and HOA dues alone will add up to $6,653 over the remaining 4 months of the year or about $1,663 on average per month, leaving me with only $144 of room each month to hit $38,500. So that’s not going to happen. My current spending estimate is $42,360 for 2014, which would be a decrease of $2,450 from 2013 or about $200/month.

Some of my controllable expenses broke down as follows:

  • ($47) Clothing – adjustment on the cost of some dresses from July
  • $331 Entertainment/Social [average this year: $214, last year: $224]
  • $28 Eating out by myself [average this year: $18, last year: $25]
  • $36 Groceries – for two people [average this year: $201, last year: $152]
  • $116 Work lunches [average this year: $156, last year: $77]
  • $53 Presents – a gift for a friend’s bridal shower [$221 so far this year, $235 last year]
  • $53 Internet
  • $94 Electricity – June/July [$614 so far this year, $571 last year – rates went up about 7% year-over-year]
  • $3 Household goods [average this year: $23, last year: $29]
  • $20 Eyebrows
  • $38 Toiletries – buying a year’s supply of lip balm [average this year: $21, last year: $31]
  • $29 Fuel [$129 so far this year, $302 last year]
  • $1,420 Travel – a) bought flights for a September trip with my boyfriend, b) bought the second flight for a fall trip with some girlfriends, and c) paid a deposit on the hotel for the trip with some girlfriends (the other women owe me for their portion of the cost…) September will see another ~$650 in travel spending and then I will likely be done with non-work travel spending for the year!

Savings: $25,000 (up $3,200)

These funds are spread across a Chase savings account, a general online savings account, a checking account that gets free ATM fees anywhere in the world, and my health savings account.

I’ve decided to keep the Chase savings account open even though I could now close it with no penalty as it has come in handy a few times, for example to get a deposit rather than a statement credit for credit card rewards and then immediately send them to the mortgage. Plus, it is only the opportunity cost on $300, which at the Ally online savings account rates loses me $2.55/year.

This month, I was able to set aside just over $4,000 to my savings account! (It’s only up $3,200 because I tossed a bit at my mortgage to get it under $150,000…) Since I’m done contributing to my 401(k) for the year, I should be able to save quite a bit of funds post-tax over the rest of the year (close to $4,000 from each full paycheck).

Investments: $167,800 (up $11,300 or +7.2%)

This includes my Roth and Traditional 401(k), my 401(k) employer matching (fully vested!), my Roth IRA, my taxable investments including stock index funds and Series I Savings Bonds.

The change here comes from:

  1. July paycheck 401(k) contribution and employer matching (last contribution for the year to any of my investment accounts)
  2. Some stock market gains

My 401(k) is now worth over $100,000! That’s pretty exciting!

Mortgage: $149,900 (down $1,600 or -1.1%)

Some statistics here:

  • 2.5%: the interest rate on my 5/1 ARM
  • February 2018: when the interest rate on my mortgage is set to reset, possibly to 7.5%
  • 1: months of payments eliminated with this month’s pre-payments
  • ~$900: extra payments made on the mortgage this month
  • ~$2: interest this month’s extra payments will save me on the next regular payment
  • 30.7%: portion of my regular payment went to interest (originally was 59%; down 0.2 percentage points from July)
  • 58.1%: amount of equity in my condo, assuming purchase price (up 0.5 percentage points from July)
  • 47.6%: amount of the mortgage I’ve paid down (up 0.6 percentage points from July)

I cheated and threw enough extra at the mortgage this month to roll the balance under $150,000. It was worth it. I still increased my cash position by $3,200, so I call it not a bad month for savings.

TOTAL: $498,500 (up $86,500 or +21.0%)

I ended 2013 with a net worth of $345,900, so I’ve seen a change of +$152,600 or +44.1% so far this year. I’ve set the y-axis on this graph to $465,000 so we can see how my net worth grows towards that throughout the year. I have now surpassed my original y-axis of $465,000 (!), so I’ve increased it to $550,000, which is my new estimate for the year.

August 2014 Net Worth Graph

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23 thoughts on “August 2014 net worth update (+21.1%)

  1. That’s quite a jump since your last month, congrats! It’s really impressive how you manage to keep your finger off the trigger so to speak and keep your expenses so low even though you make a decent income, keep up the good work!

    • I am glad that you think my expenses are low! I think they are pretty high, but they seem to be pretty stationary from year to year, so it appears to just be the cost of my current lifestyle, which I guess I could change if I really wanted to.

  2. The run-up in the stock market has been pretty astonishing for our net worth as well. After a nudge by Holly at Club Thrifty I looked at our 529 accounts and audibly gasped at how they’ve grown, which, of course caused me to look at our other accounts. Early compounding is amazing. (That’s the subject of our Monday post next week, I believe.) It also made me think that maybe we shouldn’t be keeping so much in savings, but DH thinks with the uncertainty it’s ok. We both wish CD rates were higher.

    • Johnny and Joanna decided to put in two lump sums for their kid’s 529 instead of contributing monthly: http://www.ourfreakingbudget.com/cheating-our-529-college-savings-plan/ I really like that idea.

      Part of the compounding is also with my income, which is incredibly powerful early. Watching how the stock market can go up, especially with how my condo equity is now worth about 60% of my net worth, makes me wish I didn’t have a 5/1 ARM and could invest to keep things more balanced, but with the ARM, I want to make sure I can pay it off before it resets.

      • I tried to convince my dad to do that back when he was trying to give us money, but he didn’t want to. Until recently we didn’t have lump sums to just pour into a 529! Mainly because we were pouring most of our money into retirement accounts. Now we don’t have as much retirement space because DH is no longer in state employment (and DH is making more) so we have some additional money. But we’re also not sure how much to put in the 529s to be done with them because we might over-save. If we’re planning on a state school for DC1 we should stop right now! For a private school with no aid expected we should keep going.

        • Tough decision! I would probably invest in a taxable investment account past the state school point since you can always re-purpose the money for whatever later.

          My boyfriend is quite adamant that if he has kids, he will pay for their education since he can afford to. I’m with him on that. It’s going to be complicated to decide how to save for their education though! My parents didn’t start saving for mine until I was in high school and they just kept all of the money in CDs and savings accounts with the short duration (well and they cash flowed a lot of it). Whatever we end up doing, I don’t think my parents’ way is the right way, although putting the money into savings accounts while you decide what to do with it isn’t a bad idea I suppose, better than not saving it at all.

  3. Nice boost – looks like most of it was from mark-to-market on your condo? We’re due for another update to ours, but I’m kindof waiting until the fall to make sure the run up in prices wasn’t just a temporary fluke. Nice job maxing our your 401K, too! Mine should happen on my next paycheck, and while it’ll be fun having more money come through to our checking account, I’ll also miss the easy wins when it comes to seeing those monthly increases in our my 401K. Worse problems to have, though… right?

    • The increase was: $70k mark-to-market on my condo, $8k contributions to 401(k), $4k savings, $1.5k cash / mortgage principal, so about $70k condo and $13.5k non-condo. Still a decent increase ignoring the condo increase.

      I’m regretting maxing out my 401(k) so early, as I’m losing out on matching money so long as I stay with my employer and am not contributing the monthly amount to get the match. But it was fun seeing the balance go up so much so quickly! Definitely worse problems to have! Now you’ll be able to see the monthly increases in your taxable account though :)

  4. Amazing growth over the past couple of years! Disciplined spending combined with a high income and diligent saving and investing will produce some serious results. If I had to guess, you will blow through the $1M mark well before your 31st birthday.

    • Thanks! We’ll see what happens over the next five years! I don’t have any bonuses in my projections past 2015, but if I add them back, I should surpass $1M around my 30th birthday. I try to be pretty conservative in my projections and just include scheduled income.

      Looks like my net worth is up about $310k in the last two years. ~$90k is an increase in the value of my condo, $190k is savings, and $30k is the increase in investments.

  5. You going to go backwards and adjust numbers to make the real estate increase smoother?

    Also, may or may not make sense depending on how you want to think about your real estate assets (cost to acquire vs realizable value), but I factor in 10% discount selling costs on my apartment (6% broker fee + various taxes and expenses – the norm may be lower in you area) when I calculate net worth.

    • Hmmm I probably should have adjusted the real estate value as I went instead of all at once, but it took two years for me to decide that I didn’t want to value it at purchase price forever. I also never expected it to increase this much in value this quickly. I also decided I would rather keep the value accurate in net worth and then net worth would go down when I sell and pay the costs, just like with my stock investments.

      I estimate the value was up about $13k 5 months after I bought, up $50k after 12 months, and $90k after 2 years.

    • Thanks Bridget! Keep in mind that I started saving for retirement at 19, so I have a few years on you ;) I also have about $40k in retirement accounts other than my 401(k). The $100k is really just contributing the max (~$17.5k) per year for four years :) It is so fun watching it grow!

      • Holy smokes, I actually have more in my IRA than you Leigh? I guess that is because I’ve been investing more aggressively during a bull market? All I’ve done is max the IRA from 2010-2014 (+ 2009 contribution in early 2010) and I think I am at 43k.

        Of course my 401k is less than 1/4 of yours. Kinda jealous of you being allowed to max it out and not being subject to HCE rules. :)

        • My Roth IRA is only at $32k. I didn’t contribute for 2009, which I regretted pretty quickly! (I had internship income that was over the contribution limit, so I could have contributed.) I only learned about the Roth IRA near the end of 2010. It looks like the 2009 contribution and the compounding of that is probably the primary difference in our IRA balances.

          I do make more than the IRS rules for HCE, but that’s reasonably normal at my company I think and I haven’t gotten hit with the HCE limit yet. I would probably have to be making well over $200k to get hit with that and I’m not there.

  6. Thanks for sharing your net worth update with us. I am curious to know what your investments include. You mention retirement accounts etc. but what are in those accounts? Stocks, bonds, metals? Thanks.

  7. I’m hugely impressed that you’re at saving more than 70% of your monthly income – that’s one of my PF dreams :) Particularly with a new one on the way, I’d like to get closer to that in case of …. well, you know. Anything!

    You’re just a squeak away from $500K, go you!

    • Thanks! All it is is living off of the same amount as I did right out of college and banking my raises and bonuses :) I save ~63% of my monthly pay on average – August was a high month.

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