Guys, I have to apologize to you for my unplanned month off. I didn’t write a single post in April!
That was the very first time in almost three years of having this blog that I didn’t post at least once during the month. I could blame it on being busy, traveling for work, focusing on other priorities and just not being motivated to work on my blog, but really, I began allowing my blog to start feeling like work, and then I rebelled against it.
I had a feeling that might happen at some point, so now that it has, I’m glad to move on. I love writing, documenting our journey and sharing our story with you, and I’ve missed it!
So, let’s start things back off with updating mine and my husband’s net worth. I’ve done this around the middle of each month for almost two years now. From focusing on paying off our mortgage, to spending months (and lots of money) celebrating no longer having a mortgage, to currently saving for the future purchase of our first rental – our net worth has steadily increased through it all and has only dropped once so far in the 22 months that I’ve been tracking it.
But all of this means nothing to you if you have no idea what I’m talking about. If you’re new to the term net worth, I’m going to take a minute to explain to you what it entails, as well as the free service I use to calculate ours. If you’ve been around the block and just want to see our numbers for May, keep scrolling past the next two paragraphs!
Investopedia’s definition is this – “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.”
But to put it much more simply, your net worth is just the value of your assets minus your liabilities.
Assets may include your home, vehicles, investments, money in your bank accounts and cash. It can even include the value of your art, jewelry, furniture, etc., and as I was asked one time – yes, it can include the value of your guns! I don’t include any of those things when calculating ours, however, because I just don’t want to take the time to add up the value of each little thing we own.
As for a liability, it’s the amount of debt you owe on these things. My husband and I have not had any liabilities for 16 months now since paying off our mortgage, but when we did, the amount of our mortgage was subtracted from the value of our assets when calculating our net worth.
I have never calculated our net worth any other way than using Personal Capital. If you’re unfamiliar with this service, I’ll talk about it below.
Since the recent demise of Debitize (I’m still heartbroken), Personal Capital is now the only financial tool I use that I haven’t come up with myself, such as my free zero-based budget template. Some prefer using spreadsheets to track their net worth, but Personal Capital is so quick and easy to use that I’ve just never felt compelled to put one together. Plus it’s free!
Personal Capital is an app/service 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.
They are now offering a refer-a-friend program for their free service, so it’s a great time to try it out. If you use this link and connect a qualifying investment account (taxable brokerage, 401k, IRA, 529, etc.) with a balance of over $1000 within 30 days of signing up, you and I both will receive a $20 Amazon gift card! It’s a win-win-win!
Let’s check out our numbers for May!
- Cash: $44,850
- Investments: $87,050
- House: $150,000
- Vehicles: $10,368
Net Worth: $292,268 (+$6,797 from last month)
Our net worth has increased by $53,451 since May of 2018, and it has increased by $32,180 so far this year. We’ve seen an increase of $40,168 since starting our $100K savings goal on September 1, 2018, and an increase of $97,787 since I first calculated our net worth in July 2017. Wow, I can’t believe it has increased by almost $100,000 since I very first starting tracking it!
Most people don’t track their net worth every month like I do and choose to do it quarterly or every six months. Using Personal Capital turns this into a pretty passive process, but some people find logging into their accounts and manually tracking their net worth to be a somewhat therapeutic experience.
However you choose to do it, I highly suggest tracking your net worth if you’re not already. Don’t be afraid of the number you’ll see! If you’re in the negative, you’ll love watching your progress as you inch closer to $0 then reach a positive net worth for the first time.
Just let me know if you have any questions about our net worth or if you need help calculating yours for the first time.
Thanks as always for reading!