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Welcome back to another monthly net worth report! I began tracking our net worth in July 2017, and I have enjoyed watching it grow ever since. I use Personal Capital, which makes it really easy to calculate it and view our progress.
It has been especially fun watching it grow the past two months since starting our new savings goal on September 1, saving $100,000 in two years to purchase our first rental property in cash. You can read more about our goal here!
September brought the end of a seven-month spending spree that involved cash-flowing a trip to Russia to attend three games of the FIFA World Cup, updating a few rooms of our home, buying new furniture and lots of decor, buying a new lawn mower and finally buying a new-to-us truck.
That little spending spree was to celebrate paying off our mortgage in 17 months, starting when we reached Dave Ramsey’s Baby Step 6 at the beginning of September 2016 and ending with our final mortgage payment on January 29, 2018.
I wish I had started tracking our net worth at the beginning of our mortgage-free journey, or better yet when we got married, but unfortunately, it was something I just never gave any thought to until reading The Millionaire Next Door, a book I won in a giveaway on Instagram, and learning that your net worth is basically your financial report card.
So before getting into the details of our net worth this month, I want to take a minute to talk about how to calculate your net worth, as well as how Personal Capital works, for anyone who is new to my blog. If you’ve been around a while or are familiar with this already, feel free to scroll past this information.
According to Investopedia, “Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health; conversely, net worth may be depleted by annual operating losses or a substantial decrease in asset values relative to liabilities.”
Or to keep it simple, your net worth is the value of your assets minus your liabilities.
Assets may include your home, vehicles, investments and money in your bank accounts. It can even include art, jewelry, furniture, etc., though I don’t include any of those things when calculating our net worth simply because beyond checking the value of our cars each month, I just don’t want to take the time to figure up the value of every little thing we own.
A liability is the amount of debt you owe on these things. My husband and I no longer have any debt, but you could take a look at January 2018’s report (which I may add is extremely short for some reason). This is the last month where we had a mortgage balance, so when calculating our net worth, I subtracted our balance of $7,945 from our home’s value at that time of $144,000.
Other than Debitize, this is the only financial tool I frequently use that I haven’t come up with myself (such as my free zero-based budget template). I could design a spreadsheet to track my net worth, but Personal Capital is so quick and easy to use that I just don’t see the point. Plus it’s free.
Personal Capital is an app that updates your net worth upon sign-in by connecting to your bank accounts, investment accounts and even Zillow, though I found that Zillow’s estimated value of our home fluctuated wildly almost month-to-month. Connecting your accounts is optional, so this is not something you have to do if you don’t feel comfortable with it.
It is good to keep in mind that some companies do not allow third parties to have this sort of access to their information, and because of this, I have to log into my husband’s retirement account and manually update the value on Personal Capital. Also, to get a good idea of the value of your vehicles, I recommend checking kbb.com and manually updating those amounts when you log into Personal Capital.
Now, let’s bring it back to October.
Since my husband and I have no liabilities, I have listed the assets below that make up our net worth:
- Cash: $14,004
- Investments: $81,392
- House: $150,000
- Vehicles: $13,375
Net Worth: $258,771 (+$790 from last month)
Even though we saved $2,745 since this time last month, the value of our investments dropped $2,078, so we didn’t experience a huge increase in our net worth. I guess this just comes with the territory when you track it each month instead of quarterly or every six months like a lot of people do. It will come back up quickly as it always does.
If you’re not currently tracking your net worth, I suggest starting now, even if you’re afraid of what it will be. I promise you’ll be glad to be able to look back and see how far you’ve come!
Just let me know if you have any questions about our net worth or if you need help calculating yours for the first time.
See you soon!