Time sure flies when you work from home. I completed my net worth numbers on September 2nd, but here we are a month later and the post is still in my brain instead of online. This is our first downturn in our net worth since December 2019, which may be why I delayed writing. However, time is wasting, so let us get right to the numbers.
Monthly Net Worth Update
Assets
Our cash assets took a $6,434.46 hit in August because we refinanced the remaining balance on our 15-year loan at 3.125% to a 30-year loan at 2.875%. We also booked some travel decreasing our credit card rewards balances.
Cash Savings
The biggest drop was in our checking account and was due to paying closing costs on the new mortgage loan along with another mortgage payment. This is where the $6,434.46 went.
Cash Back/Gift Cards
We used the travel rewards points on our Amex Hilton card to reserve a hotel room for the Berkshire Hathaway 2021 Annual Shareholder meeting on Saturday, May 1, 2021. We plan to be in Omaha, Nebraska from Thursday through Sunday for the event. If you would like to meet us in person, please let me know.
Cryptocurrency
I like it that our Coinbase balance increased by another $1,371.04. We are nearly halfway back to where we need to be to get our money back that we put into Ethereum in February 2018.
Retirement
I added $1,747.98 to our retirement savings including my 403b, 401a match, and HSA. I plan to max out my contribution in 2021 for our HSA and my 403b. We may also add money to a Roth IRA or start a SEP or Solo-401k for Dr. SoS with her business.
529
Another $0.07 added to this small account? We need to do some research, but I believe we will only be able to contribute the $5,000 max to our Dependent Care FSA for one more year. Beyond that, we may contribute the amount we need to send our youngest daughter to Montessori School for the year and then withdraw and pay for school out of the account. We plan to discuss this strategy with our accountant when we meet with her in November.
House
Houses are selling for crazy prices on the lake where we live. In the August Net Worth post I shared how the bank had our house appraised and the appraisal came back at $405,000. This floored us, but with houses selling for $400,000 to $850,000 around is, this should not surprise us. We absolutely love where we live. We have great neighbors and a wonderful small community. Every person has a price, though, and we should figure out what price would get us to walk away from this property.
Cars and Boat
I only drove 243 miles in August down from 336 miles in July. Dr. SoS drove 606 miles in August up from 398 miles. This was because my youngest son purchased a 2000 Toyota Celica 5-speed and I drove her car about 70 miles to pick up the car and 70 miles back. Kelly Blue Book decreased the value of my car, but increased the value of Dr. SoS’s car. Our boat value went up slightly, as well.
Liabilities
Our debt payments went backward because of the home refinance and the new air conditioning system we had installed increasing our liabilities by $15,353.07. Ouch!
Credit Cards
We finished the month again with no balances on our credit cards. This is somewhat of a false statement as we took on a 0% loan to install a new air conditioning system. The way this works is that Wells Fargo issued a credit card at 0% and we are paying the balance off over time. However, I considering this a loan and categorize it separately.
AC Loan
As I mentioned in our August Net Worth post, during the 4th of July weekend, we noticed our home central air conditioning did not seem to be keeping up with the heat. Unfortunately, because we were refinancing the house there was not much we could do if we wanted to take out a loan to pay for the new system. The air handler in the attic was from the 70’s and the outdoor unit was from the early 2000’s. We needed to replace both. We received estimates between $12,500 and $18,000 for the new system.
We received four bids and chose the one that offered 0% financing for 5 years. We could have paid cash or used a credit card, received 2% cash back, and paid the bill, but preferred keeping our cash in the bank for other emergencies that did not offer a 0% loan to accomplish. This added $14,436 to our debt. I made an immediate payment of $336 to bring the balance down to $14,100 and make the monthly payment an even $300 for 47 payments.
Car Loan
We are getting closer with only 4 more $600 payments at 0% interest!
Mortgage
This section is a little crazy for the month. Our old loan had a balance of $153,761. Because we made a couple payments before our credit union paid off the previous loan the new loan was for $158,000. This also generated a reimbursement for over-payment from our previous mortgage by $1,855.07. If you take the new loan $158,000 minus the pending $1,855.07 reimbursement you get the mortgage balance for the month. This is not entirely accurate because that $1,855.07 will go into our checking account when received and we will not have a mortgage payment in September, so the new balance will increase to $158,000 next month
Student Loans
We have 22 years 6 months (270 payments) to pay off the remaining $200,085.83 balance. Next month we will finally be below $200,000!
Savings Rate
We continue to calculate our savings rate each month in various ways. Here are the resulting calculations for the month.
- 16.41% – Percent of Debt Payments / Income earned
- 21.05% – Percent of Personal Retirement Savings / Income earned
- 4.27% – Percent of Employer Retirement Savings / Income earned
- 25.32% – Percent of all Retirement Savings / Income Earned
- 41.73% – Percent of Savings + Debt Payments / Income Earned
The debt payments are for our home mortgage, my car, and Dr. SoS’s student loan. The savings is only what I and my company contribute to my company 403b and HSA, excluding any cash savings. This should be significantly greater next month.
Summary
As of the first day of September 2020, we are down 2.45% decreasing our net worth to $751,072.07 from our our previous high from our August 2020 net worth of $769,953.17, but up 25.59% from our September 2019 net worth of $598,030.00.
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.
Thank you for reading!
Mr. SoS
Hi I was wondering why you decided to go back to a 30 year mortgage.
Dam those ac don’t come cheap.
Steven:
Thank you for your comment. This is a topic I seriously considered writing an entire blog post to fully explain. I still may.
When I originally bought our house I took out a 30-year mortgage. It was good because I was paying on this home and a rental home. When my wife and I met, my goals were to get out of debt as quickly as possible. This included our car loans, student loans, and our two mortgages. We refinanced the house from a 30-year mortgage to a 15-year mortgage at a favorable rate of just 3.125%, which happens to be the same rate she negotiated for her student loans.
Having a 15-year mortgage helped us pay down our mortgage very quickly. We now own roughly 60% of our home based on the latest appraisal. When the pandemic hit, my job was secure, but my wife’s business struggled. After several months, then her business improved, but my job was at risk. At that point, mortgage rates bottomed. We refinanced to a 30-year because even with my wife’s meager income, we would still be able to pay the mortgage if I was furloughed or lost my job. Should we choose, we have the option to make extra payments to pay the mortgage off early, but the peace of mind that we do not have to make large payments each month if we need the money for other required expenses.