Couple Money » Net Worth

Why Knowing Your Net Worth Matters

Elle — Wed, 09 May 2012 12:28:09 +0000

If you’ve been following this blog for some time, you’ve noticed that I do monthly net worth reviews. It’s one of the most popular series on this site.
Today I wanted share some reason why we do this and then share a couple of reason why we don’t stress over it obsessively.

Why We Do Net Worth Reviews

The purpose of the net worth reviews is to give us a regular system to look at our accounts, see what’s changed, and analyze what went well and what we need to work on.

Net worth reviews gives us an opportunity to talk. We have spoken about money before doing these net worth reviews, but having these reviews on a monthly basis has become a part of our schedule.
Comparing our budget to actual spending is valuable. these reviews allows us to see if what we planned is reasonable or if we completely missed the mark.
We get to see our progress (or lack of) on our financial goals for the year. It’s handy tool for checking up on our annual and long term goals.

It’s also nice to see if the numbers increased or decreased.

Why Net Worth Reviews Aren’t Everything

That said, we don’t obsess over the specific numbers when it comes to our net worth. Here are a few reasons why:

They don’t tell the whole picture. Net worth reviews are great tool at getting a snapshot of your finances. However the current balances of our accounts, assets, and liabilities are just part of the equation. Someone can have some pretty good numbers, but their jobs are not steady (perhaps layoffs are looming). A family may spend $350/month on groceries, but they may either be getting $500 of food (by preparing their own and finding deals) or they’re getting $200 worth of food(paying more to eat out).
One month isn’t enough data. As seen in February this year, our net worth can drop (due to the home’s new appraisal), but our day to day finances themselves haven’t changed. As many of us have seen with investments, stocks can be volatile in the short run, but over time it grows.

So we’ll continue doing net worth reviews, but we’re really focused on the trend rather than the month to month numbers themselves.

Thoughts on Net Worth

I’d like to hear from you. What about your family? Do you occasionally review your net worth? How do you calculate it? Do you find knowing your net worth important or not?

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Net Worth Review: April 2012

Elle — Fri, 04 May 2012 11:55:19 +0000

It’s time for me to examine last month’s finances and see how it’s affected our net worth. The purpose of the net worth reviews is to give us a regular system to look at our accounts, see what’s changed, and analyze what went well and what we need to work on.

April was a big month – we bought a family car and we paid estimated taxes.

Our Spending Habits in April

Here are our 3 biggest family related expenses last month as calculated by Mint:

Auto & Transport: $10,500
Housing (Mortgage, Escrow, HOA, etc): $1,208.25
Food (Groceries and Eating Out): $507.59

I mentioned earlier this week that we had been eating out a bit more earlier this month as we were car hunting and grabbed what was nearby. Since that’s done, we’ve cut back considerably. In addition we also took our friends out to dinner for their anniversary. Looking ahead at May, our expenses should significantly lower.

Checking & Savings

So I mentioned last month that I wanted to build a buffer with our account, but after buying a car that didn’t. However we already start rebuilding the car fund and we cutting back on May’s expenses.

Retirement Accounts

Things are still pretty quiet with these accounts, I was happy to see our balances growing. Pretty much everything is automated with our contributions. I think once we finish some of our financial goals for this year, we’ll reexamine our retirement accounts.

We’re focusing on long term goals with our investing, so I don’t track our accounts everyday. We’re not planning on making any changes to our retirement contributions right now – just continuing at the pace we’ve been going.

Cars and Auto Expenses

We got our car and we’re happy. It’s a well taken care of Honda Accord. It’s already saving us a bit of money with gas mileage. With the Fuel Challenge this month, I’m excited to see the grand total.

We still haven’t decided on which of the older cars to sell. My husband needs to take his car into the shop to get some repairs done, so having the Jetta around is pretty handy.

In case you’re wondering how I calculate the vehicles’ values, I used Kelly Blue Book. Every quarter I’ll update the values to account for depreciation.

Student Loans

We’re chugging along with paying down the student loan. I’m looking at projects to take on and increase income a bit so we have more to contribute towards this goal.

Monthly Summary

Now that everything has been summarized, it’s time to look at the numbers. Here’s our net worth from the spreadsheet:

Net Worth (as of April 30, 2012): $59,271.47 (+$1,117.19)

We’re not where we were at a couple of months ago, but we’re happy to be increasing again. Hopefully the rest of the year will allow us to get back to January’s range.

Photo Credit: borman818

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Net Worth Review: March 2012

Elle — Tue, 03 Apr 2012 12:42:50 +0000

It’s time for me to examine last month’s finances and see how it’s affected our net worth. February was horrible with the equity on the house going down, but I feel good about how March went. In case you’re curious, I run the numbers as I’m writing the updates. I know the introductions seem a bit a vague, but it’s only because I write the net worth while number crunching.

The purpose of the net worth reviews is to give us a regular system to look at our accounts, see what’s changed, and analyze what went well and what we need to work on.

Our Spending Habits in March

Here are our 3 biggest family related expenses last month as calculated by Mint:

Student Loans:$1,238.32
Housing (Mortgage, Escrow, HOA, etc): $1,176.75
Food (Groceries and Eating Out): $486.76

I’ll talk more about it later in this post, I’m really happy to see $1,000 knocked off the student loan. Our housing bills are about the same, with a small increases in our HOA fees. Not happy about it, but we have another year before we’d even start thinking about moving.

We did well with groceries last month, but we had too many trips to the coffee shops and fast food places. A part of it was due to a weekend trip, but we also got lazy on a few days and grabbed something on the way home.

Checking & Savings

We went below our checking account buffer this month. We had our life insurance premiums taken out for both of us. I hope we can grow our buffer in April, but we have some expenses coming up this month.

Our savings look great – we have our car fund up and ready plus we have our emergency fund holding steady.

Retirement Accounts

Things are pretty quiet with these accounts, I was happy to see an uptick on our balances. Pretty much everything is automated with our contributions.

Cars and Auto Expenses

Right now our focus is finding our next car, specifically a family sized sedan. While we would love to have a roomier car sooner rather than later, we’re taking our time to find a great deal. We worked hard to save our money to avoid a car loan, so it’ll probably take a bit more time for us to find The One.

In case you’re wondering how I calculate the vehicles’ values, I used Kelly Blue Book. Every quarter I’ll update the values to account for depreciation. No repairs needed last month. This month I’ll have to get my car inspected and pay DMV for registration. Hopefully I won’t need any major repair.

Student Loans

Thanks to a bit of extra income, we sent in over $1,200. Most of this was due to receiving the tax refund. A portion went to the car replacement fund and the rest went to the student loan. In addition I earned just a bit more with My Financial Reviews and that money went towards paying down this loan.

Going forward, I’ll be focusing on building partners for advertising on my other site. Hopefully we can pay down the loan much faster, perhaps in 2-3 years.

This Month’s Goals

We’re still behind on the goals, but we are making progress. I went ahead and applied for another policy to increase coverage. I just heard back from our agent that my test results were great and I still got the elite preferred rate. I’ll schedule to meet up with him today and to pay this new policy’s premium.

We also have to call a lawyer and see what paperwork we need to get everything set up properly.

Monthly Summary

Now that everything has been summarized, it’s time to look at the numbers. Here’s our net worth from the spreadsheet:

Net Worth (as of March 31, 2012): $58,154.28 (+$4,633.50)

We’re not where we were at a couple of months ago, but we’re happy to be increasing again. Hopefully the rest of the year will allow us to get back to January’s range.

Photo Credit: borman818

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Net Worth Review: February 2012

Elle — Fri, 02 Mar 2012 13:48:16 +0000

Expect to see a huge drop in our net worth due to the new appraisal done on our townhouse.

Our Spending Habits in February

Here are our 3 biggest family related expenses last month as calculated by Mint:

Housing (Mortgage, Escrow, HOA, etc): $1,152.43
Food (Groceries & Eating Out): $482.50
Good Faith Deposit for Refinance: $475

I’m happy to see the food expenses drop a couple of hundred dollars from last month. My goals is to get it down further – hopefully around $350.

Checking & Savings

We have to rebuild our buffer for checking from paying the good faith deposit on the refinance that didn’t happen. I’m saving money up for the upcoming Financial Blogger Conference later this year. Hopefully we can fin a good deal on the plane tickets.

Retirement Accounts

Things are pretty quiet with these accounts, I was happy to see an uptick on our balances. Pretty much everything is automated with our contributions. We’re focusing on long term goals with our investing. We’re not planning on making any changes to our retirement contributions right now – just continuing at the pace we’ve been going.

Cars and Auto Expenses

Our cars are still moving and no repairs this month (yay!). For now we’re just contributing to the car replacement fund and we’ve spread the word with our family and friends that we’re looking for a car. We gave them our price range and what features we’re looking for. While we would love to have a roomier car sooner rather than later, we’re taking our time to find a great deal.

In case you’re wondering how I calculate the vehicles’ values, I used Kelly Blue Book. Every quarter I’ll update the values to account for depreciation.

Student Loans

Nothing exciting to report here. It’s the same old, same old. We have one student loan between us. Right now we’re continuing with the automatic monthly withdrawals for the student loan payments. This gives us a slight discount on the interest rate as an added bonus. It’s been relatively easy to keep up with them; we just confirm payments have been made each month from our joint checking.

Thanks to a bit of extra income, we sent in a bonus payment of $85. It’s definitely a small start, but it’s a start and I hope the extra payments will grow as the year progresses. You can help by spreading the word on My Financial Reviews and letting me know what you’d like to me to review over there next!

House and Mortgage

This month will reflect the lower appraised value of our home. Refinancing our home did not go as planned, but the numbers are the numbers and we’ll be using this amount until the value changes again.

Here’s where we stand today with the mortgage:

Total Loan Amount: $107,456.63
Interest Rate: 5.00%
Loan Term: 30 years, fixed rate

We feel good about the long term prospects of the townhouse. Hopefully we can refinance at a later time and the interest rates will still be favorable. If not, we’re alright. Our mortgage payment is within our budget and we’re happy that it’s not underwater.

This Month’s Goals

We’re behind on the goals, but we are making progress. We’ve asked our friends if they’d be interested in being legal guardians for our little girl should something happen to both of us. We also got some quotes on term life insurance policies so we can increase our coverage.

We still have to update our will and we need to chat with a lawyer to make sure we have all the documents we need ready and properly completed.

Monthly Summary

Now that everything has been summarized, it’s time to look at the numbers. Here’s our net worth from the spreadsheet:

Net Worth (as of February 29, 2012): $53,520.78 (-$18,891.52)

The decrease is completely expected. Hopefully once the last properties are sold we’ll see the appraisal for our townhouse increase.

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Net Worth Review: January 2012

Elle — Mon, 06 Feb 2012 13:58:40 +0000

First month of this year is already over! It’s time for me to examine last month’s finances and see how it’s affected our net worth.

The purpose of the net worth reviews is to give us a regular system to look at our accounts, see what’s changed, and analyze what went well and what we need to work on. Of course we’d love to see the numbers increase, but the review is more about the how and the why behind the numbers.

Our Spending Habits in January

We burned through money last month and not in a good way! An expected expense that affected our numbers was the fourth quarter taxes I paid last month, but that doesn’t cover all the spending.

Here are our 3 biggest family related expenses last month as calculated by Mint:

Housing (Mortgage, Escrow, HOA, etc): $1,185.75
Food (Groceries & Eating Out): $767.17
Bills (Utilities, etc): $358.92

Whoa – as you can see we have gone way over budget with food last month! While I know some of it is due to taking family and friends out for dinner a few times, there’s also some sloppy spending in there. I’ll go through all of our transactions tonight and put a post up about it when I’m finished.

It looks like I’ll need to set up a Mint alert on our food spending for the next month or so to keep expenses reasonable.

Checking & Savings

We dipped below our checking buffer, which is never good. Now we have to rebuild our buffer and build up savings for some upcoming expenses. This month we already had a refinance expense paid – we had a good faith deposit.

Retirement Accounts

Cars and Auto Expenses

Our cars are still moving and no repairs this month (yay!). I did have to get an oil change for the weekend trip and the mechanic gave me an estimate on some work that needs to be done with the Jetta. For now we’re hoping it last us until we can get the car replacement fund funded Gasoline was more than normal as we drove to the mountains.

In case you’re wondering how I calculate the vehicles’ values, I used Kelly Blue Book. Every quarter I’ll update the values to account for depreciation.

Student Loans

House and Mortgage

This week has been busy as we started the refinancing process. that means we’ve had to gather our financial paperwork for the last couple of years and share it with our future lender.

Here’s where we stand today with the mortgage:

Total Loan Amount: $107,844.58
Interest Rate: 5.00%
Loan Term: 30 years, fixed rate

As part of our usual routine, our automated extra principal payment (now $175) was sent in on the 15th of the month. The appraiser is coming this week to check out the neighborhood and our place, so we should have an updated estimate for the house’s value shortly. Hopefully it’ll go well.

This Month’s Goals

So January was big fat no with updating our wills and picking out guardians for our baby girl. On the plus side with this refinance we have to talk to our insurance agent anyways, so I’ll mention that we’ll want to increase our policy coverage and see what he comes back with for premium prices.

Monthly Summary

Now that everything has been summarized, it’s time to look at the numbers. Here’s our net worth from the spreadsheet:

Net Worth (as of January 31, 2012): $72,412.30 (+$413.22)

Not great – we’ll have to work hard this month to get that back up. Expect some posts looking at how we can improve over the next week or so.

Your Net Worth Update

I shared our progress; now I’d love to hear from you. How are you doing with your finances?

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