This was a landmark month for us. We paid off more debt and have a plan for becoming debt free. We are laser focused and ready to share our progress with you. Let’s do this!
Monthly Net Worth Update
As you may be aware if you read our Big Audacious Debt Payoff Plan Part 3 post, we used all our available cash to pay off our Home Equity Line of Credit (HELOC) that had been hanging over our heads for the past couple years. This depletion of our cash reduced our total assets by $1,977.45 or 0.2% of our total assets. Let’s take a look at each of our asset categories.
After we paid off the HELOC, we started saving again. That said, our cash balance is 39% lower than it was last month with a total of only $6,860.72 from the previous month of $11,321.53. Now that the loan is paid, we should be able to rebuild our savings quite quickly.
Cash Back/Gift Cards
I cashed in $225 of cash back from our cards, which went into savings. We also received our annual Costco rebate of $189.94. Our balance is down 21% to $403.70 after these transfers.
As the overall stock market declined, cryptocurrencies seemed to increase. Our balance is up 67% from the previous month. The $4,095.49 balance is now as higher than it has been since last October. I plan to leave the money in this account indefinitely until it is either enough to pay off all our remaining debt or goes to $0.
Our total retirement is only up 0.13% or $778.65 from my deposits into my 403(b) and HSA accounts. The good thing is that since we are sitting in cash we did not suffer the 6.7% drop in the Dow Jones Industrial Average (^DJI) or 7% drop in the S&P 500 (^GSPC) during the past month.
The recent market oscillations brought the Dow to a level slightly below where it closed December 28, 2017 and slightly below where it closed January 11, 2018 for the S&P. As I mentioned in a Twitter conversation with J$ from http://budgetsaresexy.com/, this is not a problem for the consistent investor because they can take advantage of the average of the highs and lows through regular investments. Since we are focusing on paying off debt, we are better out of the market until it finds its level. Meanwhile, I research future investments and build my list of great companies waiting for them to hit my target price. Once that happens, we will begin investing once again.
We keep the value of our house the same every month. I started this back in Net Worth: 2017-12-01 after the frequent wide market fluctuations of our home value caused our net worth to vary as much as $50,000 in a single month. I maintained the same value of $303,000 until Net Worth: 2018-10-01 when we raised the value to $305,000. We are considering updating it again, but kept it the same this month.
Earlier this month, we received a Notice of Change in Assessed Value of Real Property from the county assessor’s office. They have had the appraised value of our house at $217,215 since 2013. The new appraised value as of January 1, 2019 is now $315,235, which is an amazing increase of $98,020. I am not sure that we could sell for that without some work, so for now I am going to keep our value the same.
This is both good and bad news. The good is that the county believes our house is worth more. The bad is that our annual property taxes are increasing a staggering $1,527.34 for the year. This is the largest increase since we owned the house. Previous tax increases were between $21.79 in 2017 to 2018 to the $942.03 increase between 2012 to 2013. Since 2011, our taxes increased 5 times and decreased twice. This is definitely something to consider when purchasing a house and when voting for local tax changes.
Cars and Boat
Kelly Blue Book increased my car by $435, but decreased Dr. SoS’s car by $26. The NADA Guides dropped the value of our boat by an additional $235. Overall, these depreciating assets increased in value $174.
Drum roll please… We managed to decrease our liabilities a total of 3.95% from the previous month. We paid off a total of $16,116.41 in debt in a single month. This took us from $407,797.99 down to $391,681.58. I was so excited to finally get our debt under $400,000. Since we began tracking, our debt has been as high as $508,530.75, which was in April 2017. In our Humble Beginnings, which was our first post, we had $495,458.84 in debt. Through dedication and perseverance, we managed to pay off $103,777.26 in debt in the past two years.
I believe that we can continue paying $50,000 of our debt each year and that in doing so we can achieve our goal of being debt free in under 8 years. I know that sounds like a long time, but will be here before we know it.
Last month, J$ shared his Resource of the Month: Debt Free Charts. I went to Debt Free Charts, downloaded one of the free charts, and used my graphics editing skills to modify it to make it my own. I decided to use the top-down approach coloring off each section as we pay down our debt. Here is the result. Since our balance was under $392,000 we colored the first bar. I plan to share this as we progress.
In all the debt payoff madness that we experienced last month we continue to pay off our credit cards each Friday. All our balances are currently $0. Try it and you may never go back!
We only owe $11,400 on our 0% car loan, which is 19 more $600 monthly payments to pay it off.
HELOC (Home Equity Line of Credit)
If you stay tuned from last month, you now see why I suggested you do. As you now know, we paid off our HELOC on May 11th. This was a major accomplishment for us and saved us hundreds of dollars in potential interest charges. I checked and we paid $1,782.58 in interest in 2018 and $464.74 in interest in 2019. That is just crazy to me. I wish I had that money back. This is the cost of debt and the reason we do not plan to use debt to finance anything in the future that does not generate positive cash-flow.
We have 114 payments or 9 years 6 months remaining on our loan. By my estimates after we get Dr. SoS’s student loan paid off, it will not be long that snowballing that payment to paying off the house getting us to debt free land in under 8 years.
I already began the process of being more aggressive with this loan. Dr. SoS was on a graduated payment plan where her monthly payments would go up every 4 to 5 years. The payment was $775.47 now, but would increase to $1,616.79 toward the end of the, get this, 285 remaining payments generating an astonishing $112,506.32 in interest with a payoff date of February 2043!
I recently updated the payment to a fixed amount of $1,061.85 each month. Following this payment plan is still an insane 285 payments with over $96,000 in interest. Our plan is to increase the monthly payment by between $500 and $1,000 each year. Increasing the payment each year by $500 per month pays the loan off by August 2026. Snowballing that payment into the mortgage then pays the remaining mortgage off by April 2027. Annually increasing the monthly payment by $1,000 pays the loan off by November 2024. Snowballing that into our house pays the house off by October 2025. Only time will tell what we do, but I certainly like the idea of being debt free.
As of the first day of June 2019, we have a new net worth high of $582,322.08 up 2.49% from our net worth of $568,155.58 last month and up 47.23% from our net worth of $395,514.36 from the first of June 2018. Our current net worth puts us in the top 29% at 226/787 bloggers on the Rockstar Finance Directory Net Worth Tracker.
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!