July is complete and our net worth increased slightly. We also expound on what we learned from the book, “The Simple Path to Wealth.” Let us take a look.
Monthly Net Worth Update
Our total assets decreased last month. Dr. SoS only took a single paycheck during the month and although we still followed our budget and spent less than we earned, we had several areas take a hit including cash, cryptocurrency, and the value of our vehicles. Here are the details.
Our cash decreased this month with our expenses staying the same and our income for the month cut by 25%. We believe we are at the turning point now. After meeting with our new accountant next Tuesday, we will have a standard paycheck for Dr. SoS and will begin rebuilding our emergency savings.
Cash Back/Gift Cards
We did not spend very much last month, but increased our cash back by $51.89. I used our Amazon card to purchase a game to keep Baby SoS entertained. Granted, as strong willed as she is at three-and-a-half, I should call her Little Woman SoS. I had my eye on MindWare’s Q-bits Jr. for a while. The price dropped to $16.95. I had a $5 Amazon gift card for completing a LinkedIn survey and used Amazon cash back for the rest. I love buying things for $0.
I was pretty excited when I saw that Justin Sun, founder of TRON, paid $4.6 million to have lunch with Warren Buffett. I looked forward to see if he could explain cryptocurrency in a way that Warren Buffett might see some worth. It was unfortunate that he had to cancel the lunch. Now we will never know. At least the money will still go toward a good cause. Meanwhile, we call this speculation Mr. SoS’s folly, and as they say in Vegas, “Let it ride!”
Big changes are afoot! Before my second paycheck of the month last month, I updated my Health Savings Account (HSA) contribution so that we will max out our family account for the first time at $7,000 per year. As long as I continue working for a company that provides an HSA, we now plan to max it.
I recently finished a great book, “The Simple Path to Wealth” by JL Collins. Shawn from New Millennial Investor mentioned on Twitter that he bought copies for all the employees at a sub shop where he works part-time. That piqued my interest enough to borrow a copy from the library. I devoured it. Here are updates we are making to our retirement that we learned from the book.
Hierarchy of Investments
I never thought about a hierarchy of investments. After learning about it, we plan to employ the following strategy.
- Invest in my 403(b) up to the amount my company will match. My company matches 50% of the first 4%, so I contribute 4%.
- Max out our HSA contributions. Mad Fientist touts HSA accounts as The Ultimate Retirement Account.
- Next, max out our SEP IRA. This step will be unavailable for many people, but we are in a situation with Dr. SoS running her own practice where this is available.
- Max out my 403(b).
- Although we will be unable to deduct the interest, we would then max out our IRA accounts.
- We plan to invest any money left over in our joint brokerage account.
Following the Simple Path
Before reading “The Simple Path to Wealth,” we only had a vague idea of what we were doing with the order of accounts where we were investing. I have always contributed at least the amount necessary to receive the match in my 401(k) or 403(b), but never realized when or why I should invest in other accounts. If you would like to read the reason behind this specific strategy please read Stocks — Part VIII: The 401K, 403b, TSP, IRA & Roth Buckets for a detailed explanation. Search that page for hierarchy to jump straight to the list that he provides. We now have a set plan, outlined above, that we will follow.
When I arrived at my house valuation, I completely forgot that I decided to increase it to $310,000 last month. Then I looked at the current estimates on our mortgage company web site and realized why I chose that amount. Here are the current estimates.
- Xome: $327,168
- Zillow: $336,000
- Average: 331,587
- Median List Price for our Zip Code: $295,000
Cars and Boat
We encountered some strange gyrations this month when Kelly Blue Book decreased the value of Dr. SoS’s car by $268 and increased the value of my car by $192. We lost the increase from last month when the NADA Guides dropped the value of our boat by $235. Overall, these depreciating assets decreased in value by $311.
We paid off $2,007.44 in liabilities last month. This included $528.90 against Dr. SoS’s student loan, $600 against my car loan, and $1,303.25 against our mortgage. The difference was a credit card balance that I paid off yesterday just after the first of the month.
We ended the month with a small credit card charge. This was the first time since March that we ended the month with a balance. Why, you may ask? Well, I purchased some frames for my glasses, changed the oil changed, and rotated the tires on my car on the last day of the month. Therefore, the charges were still pending on my account and I was unable to make a payment.
Although, I love the 2% back I receive when we use and pay off our Citi Double Cash Card, the one gripe I have is that they will not let you make a payment against pending charges. When you attempt to make a payment in excess of your current balance, you receive a message that states, “That payment is too large. You can only pay up to your current balance plus 7.5%, which is $x.xx.” The x’s are an automatic calculation of what 7.5% of your current balance is. Since I did not have a previous balance, because I paid the card balance the previous Friday, I was unable to make a payment against the pending balance and therefore ended the month with a balance of $454.61.
Each time this happens, I submit a comment to Citibank to allow me to pay my pending charges. My American Express card lets me pay whatever I want above my current balance, but I still do not know why Citibank won’t let me. Do you know the answer?
This past month went by so fast that I had to stop and count my 17 more payments to pay it off. We started looking at used Tesla Model S vehicles for Dr. SoS. We would still love to own a Tesla and I bet that will be her next vehicle, but we are going to save up and pay cash instead of taking out a loan.
We have 112 payments or 9 years 4 months remaining on our loan. Following our Big Audacious Debt Payoff Plan we will have this paid off within the next 8 years and depending on future promotions, raises, and Dr. SoS’s business, we may even have it paid off in the next 5 years.
We realized over a $500 reduction in the principle of this loan. Without any changes the current payoff is 283 more payments, but we plan to pay this off before our mortgage, so again the timeline is between 5 and 8 years.
As of the first day of August 2019, we have a new net worth high of $592,066.49 up 0.18% from our net worth of $590,977.43 last month and up 44.6% from our net worth of $409,451.13 from the first of August 2018. Our current net worth puts us in the top 28% at 223/787 bloggers on the Rockstar Finance Directory Net Worth Tracker, however it appears that no one is currently updating that page. I believe I will volunteer if I can locate the new owner.
We compile this information each month to keep us accountable and to hopefully inspire others to spend less than they make, save more, and make wise investment choices. If you have any comments or questions, please leave a comment or contact us directly.
Thank you for reading!