We use the structure of a monthly income statement and balance sheet in tandem to make sure we are keeping our expenses low and planting our pennies wisely. If you’re not already tracking your finances using these two methods, go to mint.com and get started today! If you have any questions about how we do this just post a comment and we’ll be sure to help!
2016 was quite a roller coaster of a year. In the first few weeks of January, the stock market dropped 10%, recovered fairly quickly, had another steep drop and recovery after the Brexit vote, and then went insane and somehow ended up a over 10% by the end of the year. Since we’re not market timers, though, that didn’t really impact any of what we did throughout the year, but we did manage to hold on for the ride, and ended up with some pretty solid net worth gains for the year (both in our brokerage accounts and outside of them).
- Real estate appreciation tipped us higher by ~$145K, which was about 2 years worth of accumulated appreciation on three properties (see these posts for those updates).
- Our brokerage accounts also tipped higher by over $165K, raised by the insane stock market climb as well as our habit of continuing to put money into our various brokerage accounts pretty steadily throughout the year, between our and our employer’s deposits, we put a tad over $100K into various investment accounts this year.
- Our net cash position also increased as we planned to either restore or purchase a “fun car” for Mr PoP and steadily set aside $1,500/month ($18,0000 total) in cash for that endeavor. That money remains unspent, and hopefully we’ll have an update on the plans for it within Q1.
- Liabilities didn’t show much change, with our standard mortgage paydown schedule knocking a bit less than $7K off the balance for the year.
All told, that added up to a gain of $331.1K in net worth for the year, a record for us. I’m doubtful we’ll duplicate that in 2017, but we’ll just have to wait and see!
Here are the numbers for December:
- Our total assets up $20.3K
- Our total liabilities went down by $0.8K
- Net worth went up by $21.1K
- Total net worth as of the end of December is $1,280.4K, which represents a 1.68% increase this month, and a 34.87% increase for 2016.
For the details…
- 401K accounts: $328.1
- Roth IRA accounts: $185.5
- HSA account: $17.7
- Taxable Brokerage Accounts: $168.4
- Total Stock Accounts: $699.6
Real Estate (based on current market comparable sales)
- Primary Residence $269
- Investment Duplex: $175
- Investment Residential Land: $160
- Total Real Estate: $604.0
- Checking Accounts: $17.9 – need to move a some to taxable…
- Savings/Money Market Accounts: $39.0
- Total Cash Holdings: $56.9
Total Assets: $1,360.5
Real Estate Loans
- Primary Mortgage: $79.3
- HELOC on Investment Duplex: $0.0 (re-advanceable)
- Personal Loan – Used to Purchase $50K Duplex: $0.0
- Total Real Estate Related Loans: $79.3
- Credit Card Balance: $0.8
- Total Revolving Credit: $0.8
Total Liabilities: $80.1
Net Worth = Assets – Liabilities
Net Worth = $1,280.4, up 1.68% from November
Tracking Investable Asset Growth
This first graph shows the growth of our investable assets (net of any liabilities against them), and shows the distribution of the various equity classes we hold. Pretty self explanatory.
How Many Years Of Spending Do We Have Saved?
Here I’ve taken the total of our investable assets for each month and divided it by the expenses (excluding our investment property expenses) for that month. The idea being that this shows how many years we could live off of those assets at that rate and gives us a better idea of what lifestyle inflation (or intentional deflation) can do to the relative value of our savings.
It fluctuates in a much bigger range, because in high spending months (like February 2013 when we spent almost $7K paying off our car completely and February 2015 when we spent a bunch installing solar panels), the denominator is so much bigger. Because of that, it’s the overall trend we’re looking for.
Early Retirement Locale Index
Mr PoP wanted one more way to understand more viscerally how much we have in “investable assets”, so we’ve come up with what we’re calling our Early Retirement Locale Index. The basic idea is that we know how many years of savings we have at our disposal if we were to continue living in south Florida. (That’s the chart above.) But using the “magical” 25 years of savings necessary for early retirement, where would we have to move so that our current investable assets would cover 25x our COL adjusted current spending? (Note, this is purely for fun, we’re not intending to move. Don’t worry Mama & Papa PoP!) If you want to follow along, we’re using this Cost of Living Index from Expatistan, and using the average of the two big cities in south Florida on the list (Miami and Tampa) as our current COL index, which gets us 189.5. Our city isn’t on their full list, hence the average – but maybe yours is. Then we’re solving this equation:
Current Years Saved/ 25 = COL Early Retirement Locale / COL S. FL
25.32.01/25 = COL Early Retirement Locale / 189.5
COL Early Retirement Locale = 191.96
… which gives us the city of Hartford, CT!
In the US, but not really top of my list of US cities to visit.
I’ve never actually been in New England, so I guess Hartford seems as good a place as any to start, huh? The historic buildings look lovely, and it seems we’d have no problem finding an insurance provider from the plethora with their corporate headquarters there, though if we’re going to be picky, maybe we’d try to find a place with less crime.
On the other hand, it’d be pretty much financially equivalent to staying put in our little home where we don’t have to deal with snow and ice and can walk on the beach every weekend. So, Florida’s looking pretty darned good right now. Then again, if this same decision came up in August, maybe we (okay, definitely Mr PoP, maybe me) might be signing a different tune.
Here’s our journey through the ERLI so far…
- January 2014 – Delhi, India
- February 2014 – Quito, Ecuador
- March 2014 – Kiev, Ukraine
- April 2014 – Chiang Mai, Thailand
- May 2014 – Madras/Chennai, India
- June 2014 – Colombo, Sri Lanka
- July 2014 – Bangalore, India
- August 2014 – Yerevan, Armenia
- September 2014 – Skopje, Macedonia
- October 2014 – Brasov, Romania
- November 2014 – Prague, Czech Republic
- December 2014 – Mexico City, Mexico
- January 2015 – Zadar, Croatia
- February 2015 – Kiev, Ukraine
- March 2015 – Cairo, Egypt
- April 2015 – Bangalore, India
- May 2015 – Niteroi, Brazil
- June 2015 – Nowhere!
- July 2015 – Skopje, Macedonia
- August 2015 – Recife, Brazil
- September 2015 – Ankara, Turkey
- October 2015 – Lisbon, Portugal / Santo Domingo, Dominican Republic
- November 2015 – Debrecen, Hungary
- December 2015 – Tbilisi, Georgia
- January 2016 – San Antonio, Texas or Louisville, KY – readers pick!
- February 2016 – Lisbon, Portugal
- March 2016 – Brno, Czech Republic
- April 2016 – Vitoria, Brazil
- May 2016 – Santiago, Chile
- June 2016 – Johannesburg, South Africa
- July 2016 – Thessaloniki, Greece
- August 2016 – Gurgaon, India
- September 2016 – Grand Cayman, Cayman Islands
- October 2016 – Las Vegas, Nevada
- November 2016 – Oakland, California
- December 2016 – Hartford, Connecticut
How was your balance sheet in December? Where would your savings land you today?