PoP Balance Sheet – March 2015

Welcome to our March 2015 Balance Sheet!

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!

Mr Market was down a bit for the month of March, but we didn’t see too much of a decrease across our collective brokerage accounts due to the fact that we sent a fair amount of money toward those accounts this month (our normal 401K and HSA deposits, along with $11K that got deposited into our Roth IRA for the 2014 tax year).  As it turned out, we made too much money in 2014 and had to backdoor into our Roth IRAs for the first time.  Luckily for us, we don’t have any traditional IRAs so there shouldn’t be any tax consequences to using the backdoor on our 2015 taxes.

We also went ahead and adjusted the value of our house up to account for the solar panel system that is now sitting atop our roof.  This is a little more subjective, since whole house solar systems are so rare where we live (though solar pool heaters are fairly common) there aren’t really a lot of good comps to get an idea of what value they add.  The best information that I have found seems to come from a HUD study that indicates that the market value of a solar system is (on average) equal to about $20 per every $1 saved on electricity costs per year (which doesn’t seem unreasonable given a use of a DCF analysis on the value of that same cash).  Since our system should save us about $100/month, $1,200 per year, in electricity costs, I went ahead and added $24K to the value of our house.  It’s probably moot since we don’t ever plan on selling this house, but worth tracking anyhow.

You’ll notice that our investable assets dropped for the first time since tracking them here, though the net worth didn’t.  This is because though the drop in our cash due to our upfront payment for the solar system was offset by the increase in value on our house, making those transactions basically a wash from the perspective of our balance sheet.  But because we explicitly exclude our house from what we consider our investable assets, the drop in cash wasn’t offset by anything there.

So for the month of March:

  • Our total assets went up by $14.3
  • Our total liabilities went down by $0.8 
  • Net worth rose by $16.2K 
  • Total net worth as of the end of March is $870.5K, which represents a 1.90% increase this month.

And for the details…

dyerware.com


Assets

Stock Accounts

  • 401K accounts: $238.0 – would have been down if not for our deposits…
  • Roth IRA accounts: $164.0 – also would have been down if not for the $11K we dropped in here for the 2014 tax year
  • HSA account: $10.4 – also would have been down if not for the monthly deposits… (notice a theme?)
  • Taxable Brokerage Accounts: $79.2 – down a little.  No deposits here this month. =)
  • Total Stock Accounts: $491.7

Real Estate (based on current market comparable sales)

  • Primary Residence $239 – updated to include value of PV solar system that will produce about $1,200 worth of electricity per year
  • Investment Duplex: $130 – a little out of date, but we’ll update this once the new roof is on this place in the next couple months
  • Investment Residential Land: $80
  • Total Real Estate: $449.0 

Cars (values from Kelly Blue Book)

  • Car 2: $8.4
  • Total Cars: $8.4

Cash Holdings

  • Checking Accounts: $10.0
  • Savings/Money Market Accounts: $3.6
  • Total Cash Holdings: $13.6  (6 weeks ago this was sitting at over $48K!  This is the fastest we’ve ever had money leave our accounts including when we bought the house!)

Total Assets: $962.7   

Liabilities

Real Estate Loans

  • Primary Mortgage: $90.9
  • HELOC on Investment Duplex: $0.0 (re-advanceable)
  • Personal Loan – Used to Purchase $50K Duplex: $0.0
  • Total Real Estate Related Loans: $90.9

Revolving Credit

  • Credit Card Balance: $1.3
  • Total Revolving Credit: $1.3

Total Liabilities: $92.2

Net Worth = Assets – Liabilities

Net Worth = $870.5, up 1.90% from February

 

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.

dyerware.com


 

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.

dyerware.com


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 204 (Miami has been shooting up the list lately!). 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

11.21/25 = COL Early Retirement Locale / 204.0

COL Early Retirement Locale = 91.47

… which brings us to Cairo, Egypt!

I am probably more excited than I should be about the ERLI landing us in Egypt this month.  I’ve always had a vague love affair with North Africa and wanted to go there, but have never had an excuse (opportunity?) to make it there.  I know some day I will, and I just hope that the vast deserts and huge structures that were built without the aid of modern machinery and electricity are everything that I dreamed of as a little girl.  (All little girls have recurring dreams about riding a camel alone through the Sahara, right?)  Though it’s hard for me to place a modern city of 10 million people with office buildings and public transit into that dream, but that’s what Cairo is these days.

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

 

How was your balance sheet in March? Where would your savings land you today?

9 comments to PoP Balance Sheet – March 2015

  • Savings were good in March – yay for a signing bonus! And my 401(k) contribution almost made up for the market drop. It looks like I would be in Prague this month! I’ve been there – beautiful place.

    Do you think that you’ll backdoor your 2015 Roth IRA contribution to get it over with early? I’ve found that the tax forms are much less confusing if I contribute and convert in the same year.

    It feels like you guys are getting SO close to being millionaires! 😀
    Leigh recently posted..March 2015 net worth update (+4.3%)My Profile

    • Oooh, we’ve heard such good things about Prague!

      As for doing backdoor early, as of right now I don’t think so. Ever since we got married we’ve always done our tax year contributions in the following calendar year after we get our W-2s and it’s never been a problem. Plus there’s a chance that next year we’ll be back under the limit income-wise, so I’d have to check if there are any consequences to back-dooring when we could have gone straight in. (I wouldn’t think so, but I feel like taxes aren’t always logical!)

  • Agreed on Northern Africa. There’s something mysterious about that part of the world, and I want to visit, too.
    Done by Forty recently posted..Middle Class? How about Middle Quintile?My Profile

  • Those lower asset prices just mean better purchase opportunities.

    Our electric bill is horrible in Houston. Maybe I need to look at some panels.
    Adam @ AdamChudy.com recently posted..What I’m ReadingMy Profile

    • Agreed on the lower prices. I keep telling the others in my office we should be glad we’re getting shares on sale in our 401Ks and they look at me with grumpy eyes.

      Definitely check into solar panels and any incentives that might be offered in your area. They could make more financial sense than it seems like at first after the incentives!

  • Our balance took a hit in March thanks to the installation of a $4,000 HVAC unit.

    It’ll be rebuilt this year but… at the end of the year, we’ll gut savings (and have to borrow some) for a $25,000 dental expense.
    Abigail @ipickuppennies recently posted..Make that $15,000My Profile

  • The ERLI is kind of fun, and personally might be very useful in the future. I’ll likely end up moving for my career, so it’s good to know how other cities compare. My current score is a humble ~31.2, but I still plan to do a lot more saving over the years.
    MasterNerd recently posted..Hypermiling: Save Gas by Driving like Zoolander’s GrandpaMy Profile

  • It seems like you guys are on track to break 900K very soon. I would like to visit Egypt but to live there is a different story. Good luck with all the construction and your new panels, looking forward to hearing about how much in savings you guys realize?
    EL @ Moneywatch101 recently posted..Reasons you need an Emergency FundMy Profile