Every quarter or so, I update my net worth. If you check out the Net Worth Category, you can see a number of years worth of these updates.
What is net worth? Simply put, it’s your assets minus your liabilities. For simplicity’s sake, I consider my assets to be all my financial accounts (bank accounts, investment accounts) plus the value of my car and my house. I don’t include any other personal property. Why? Well, first off, it’s hard to value. I own a lot of things, some (my bike, for example) on the more expensive side. Also, it has no general impact on my bottom line. When it comes to the house and the car, I have loans out on those. For my car, I use the Kelley Blue Book trade-in value, and for the house, I use Zillow. Are either of these the most accurate? Probably not, but they’re easily accessed numbers that are good for comparison to previous net worth calculations.
Why do I calculate my net worth? Well, I write for a personal finance blog, so clearly, this is something that I find interesting. But more importantly, it’s a chance for me to check in on all of my accounts and see how things are going.
When it comes to my retirement accounts and to some extent, my investment accounts, I’m a “set it and forget it” type of investor. I don’t check in on my investments weekly or even monthly. I have automatic contributions to my retirement accounts. I’m in it for the long haul, so I don’t worry about how the number changes on a daily basis. However, by taking a look every three months or so, I can get an idea of how things are changing and also how my small contributions are adding up.
It’s also nice to see that I’m whittling down my mortgage and car payment. Right now, I’m paying extra on my car payment to try to get that paid off as soon as I can. I’ve got over 25 years left on my mortgage, so right now, any extra that I might have to contribute is going towards my home improvements fund. So it’s slow going, but at least I can deduct the interest on my tax returns.
So how am I doing? Well, as expected, this quarter was painful. My net worth is down 1.9%. I’m also down 1.2% for the year, which hurts. My cash accounts took a huge hit, primarily due to the home repairs I had to deal with. I can’t really complain about it – it’s one of the perils of home ownership, and I’m lucky that I could afford to pay it.
That said, the loss isn’t solely due to my cash accounts. My home value is down, and that’s not something that I’m worried about. According to Zillow, it’s still worth more than I paid for it nearly 6 years ago, and most importantly, I’m nowhere near being upside down on my mortgage, so I’m quite content. This number fluctuates, and while it’s always exciting to see it go up, since I’m not planning to sell anytime soon, it’s not really something I’m concerned about. (That said, the house across the street from me is going on the market soon and I cannot wait to see what it lists for.)
My investment accounts are also down very slightly. The markets are in a bit of turmoil due to the upcoming US election, so that’s to be expected. The loss isn’t huge, but it’s all having an effect on my bottom line.
So while a lowered net worth is always a disappointment, I’m not going to worry about it. My goal for the next check-in is to have built up my cash accounts, because that’s where I have the most control. As to the investments, I just plan to continue to contribute to my retirement accounts and let things grow. I’ve got around 30 years (at least) til retirement, so I’m hoping for some serious growth by then!