No Debt Plan

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May was a great month for our net worth. We had a total increase of 8.56%. Our cumulative increase in net worth since December 2007 is 23.86%. So in 6 months our net worth has grown almost 25%.

There were two things that contributed most to the jump in net worth:

1. The economic stimulus payment of $1,200 was a direct injection to our net worth. It’s not necessarily going to boost the economy as we ended up saving 70% of it. But, we’ll take it.
2. I also got a reimbursement check from my work for my tuition payment. I had recorded the increase in student loan debt (in deferral) at the time it came in, but had to wait until the check came in to balance it out. Considering that was north of $1,560, that was a significant boost as well.

We’re making solid progress even if you take out those two factors. Net worth would have grown by about half as much, or 4%, otherwise.

Tomorrow is the 4th of July, so I’m working to come up with something patriotic to write about for tomorrow.

Our net worth increased 1.20% in May. This brings us total a net worth increase of 14.10% since we started tracking it in December 2007.

We have dropped off in terms of dramatic changes in net worth. For a few months this year we ran 4-5% increases. However, I am happy with 1-2% each month… consistent, positive growth. Of course more growth would be great, but at least we are moving up. A snapshot of our net worth growth since I started tracking it is below. You’ll need to click the image to see the full chart.

If you add a linear trendline to the cumulative growth line (orange), we end up with a 30-35% in net worth for the year. I’d definitely be pleased with that. I changed the scale so it would show 100% because, well, I’d like to to be that much!

Every month is going to have its ups and downs. We save consistently for ‘big’ purchases. So money that is in our account in April may be spent in May. We receive an asset, but unless it is something really big like a car, it doesn’t count toward our net worth. For example, we had some money saved up to buy a weed trimmer. I bought one in May, so our net worth dropped $70 or so simply because it isn’t worth tracking the value of that asset.

The same thing will happen whenever we finally book and pay for our trip to New York City next year. We’re planning on spending a few thousand dollars, so that is a direct hit to our net worth.

Technically, we should not have experienced a drop, but I don’t want to depreciate small assets over the next year or so — simply too complicated.

April wasn’t a bad month for us in terms of growing our net worth, but it wasn’t fantastic like previous months. We enjoyed almost a 1% gain (0.97%) in total net worth. This brings us to a 12.74% gain since we started tracking it in December 2007.

We had been enjoying 4 and 5% gains a few months ago. There were a few reasons we didn’t see that this month:

• Decrease in assets.
  • Namely, we spent money. We bought a puppy and puppy related items. Gas prices increased. I bought my wife some birthday presents. All stuff we had saved up for, but it does bring net worth down when money flows out.
• We adjusted our budget.
  • We added disability insurance for my wife through her professional organization ($40/month). We increased our grocery budget by $20 for the month. We also increased our gas budget by $25 per month. These whittle away at our free cash flow at the end of the month. That extra $85 could go to savings and increasing out net worth.

All in all, net a terrible month. 1% positive is still positive, and we’ll take it.

What about you? What happened to your net worth last month?

It’s that time again… let’s look at the old net worth numbers.

We had another good month in March. My income varies as I work on a base plus commission basis. February was a great month, March was a good month. On top of that, we changed my wife’s federal tax withholdings. We owed $500 last year, and she only worked half the year. We’re adjusting to make sure we don’t owe $1,000 or more. Because of that, her income “dropped” $80 or so.

Even with all of that, our net worth increased 4.46% over last month. I’ve been tracking our net worth since December of 2007. Overall, since that time, our net worth has increased 11.66%.

However, that number can be a bit deceiving. We save for a lot of purchases in advance. For example, we save our life and car insurance “payments” into savings every month and then pay semi-annually or annually. So eventually, net worth will drop a bit because the amount we have in savings will drop. Either way, we’re still making progress.

I made a mistake in my last net worth post. I posted at the beginning of February and titled the post ‘February 2008‘. I should have titled it for January because February hadn’t occurred yet. So I’m posting again, but this time it is in March updating for February. Ah, well.

At the end of every month you see these little reports popping up all over the personal finance blogosphere. I always way a little bit to update ours so our mortgage payments can clear. My wife gets paid on the last day of the month, so our payments don’t usually hit until early in the following month. I still count for the month before.

February was a fantastic month for us! Our income was above budget due to my commission structure, and we paid down extra on the 2nd mortgage. We fully funded a Roth IRA as well. On top of all that, work deposited my matching 401k fund money from last year — a whopping $750. Our company match isn’t great, but I was definitely surprised to see such a big jump in my account. With the markets being down, it could not have come at a better time either. We’re definitely buying at low prices these days.

End result? Net worth increased 5.70% from the previous month. I’ve only been tracking this two months, but the overall increase in net worth has been 6.90%. I am incredibly happy with that - a huge number for us!

I decided in 2008 I would track our net worth where:

Net Worth = All Assets - All Liabilities

Assets being cash, investments, retirement accounts, cars, and the house. Things that we could sell if we absolutely had to. This does not include our belongings (computers, clothes, sofa, and the like) simply because calculating the market value of those items would be too much work to track. I used the Kelly Blue Book value for the vehicles.

Liabilities being anything that we owe money on/to. Example: credit cards (we pay them off monthly, but since this is a snapshot we account for the cash for those cards as a positive, so we must account for the liability as well), the mortgages, and my student loans in deferral.

Our January net worth was $xx,xxx (I don’t think I am going to share this number publicly) with one caveat. I did not calculate our credit card liability at the time so it may have been $1,000-3,000 lower depending when in the month I ran the calculation.

I’m happy to report that even with the stock market going for a ride (especially today - down 3%), our net worth increased 1.13%. I’ll take any positive we can get.

Do you track your net worth?