Tuesday, February 28, 2017

February 2017

Bank Accounts
Total Assets

All numbers are in USD.

Assets and Liabilities buckets

Here are some details behind what goes into our Assets and Liabilities columns.


Retirement bucket
  • 401(k) accounts
- We both have 401(k) accounts at our respective jobs, with all of our old accounts from previous jobs rolled over into our current accounts [this is, by far, the heaviest bucket]
- W has a Roth 401(k) at work [very small component, not contributing anymore]

  • Roth IRA
- We both have individual Roth IRA accounts with Vanguard
- M has a Roth IRA account with CapitalOneInvesting, an old account that doesn't receive any new funds (but reluctant to roll over to Vanguard, just "playing around" money).

   *A note about why fund a Roth IRA - The Madfientist has a detailed article on why traditional IRA is better than Roth IRA. We agree. The reason we still fund a Roth IRA is because we are currently under the income limits where we can contribute to Roth IRA. In a few years our MAGI (Modified Gross Adjust Income) will cross this level. We will stop funding the Roth IRAs at that point.

  • Pension
- M has a fully vested pension from current employer [small component in the overall scheme of things]

529 college bucket
We have a 529 college account with Utah Educational Savings Plan, for our child. We also have different accounts for our nieces and nephews but those are not included in our assets column.

Bank Accounts bucket
Pretty self explanatory. Only checking and savings accounts. We do not currently have any CDs.

Investments bucket
  • Individual taxable brokerage accounts with 
- Vanguard
- Loyal3.
This is mainly "playing around" money. Computershare offers DRIP in major companies, a lot of them with no fee on buying. Loyal3 is a commission free online brokerage platform, which also allows ordinary investors to take part in IPOs.
Update 5/31/2017: Loyal3 closed down and moved all accounts to FolioFirst. FolioFirst also offers commission free trades, on a larger number of stocks. They charge $5 monthly maintenance fee which is waived till August. We'll see what we do.

  • W has a HSA account from work
- We don't technically use this as an investment account, as in we fund this monthly and take money out as and when we need it for medical expenses.

A bunch of Treasury bonds given as present from grandparents. We let them go till final maturity.

Our primary residence. The valuation of $300k is from 2015 when we refinanced. We know there has been appreciation but we don't factor that in.
* A note on why we include the value of our home in assets as this is a point of contention in the PF blogging community. The reason for us is simple: because we include the outstanding mortgage in our debts assessment. The mortgage doesn't exist in a vacuum. The home, and consequently the value of the home, prop up the mortgage. 



30-year fixed at 3.875% (~$238k on Feb 28, 2017)

Car loan
5-year fixed at 0.9% (~$21k on Feb 28, 2017)

Student loans
Government loan at 6.21% (~12k on Feb 28, 2017)
Private loan at 4.99% (~15k on Feb 28, 2017)

Credit Cards
We do NOT have any credit card debts. We use our cards for any and all purchase, for any amount, where ever they are accepted without any additional fee, and we pay off the full balance every month.

Monday, February 27, 2017

What is this NetWorth blog?

After being inspired by MrMoneyMustacheJLCollins, and MadFientist for a number of years, we decided to create this space where we put up our net worth every month.

What is Net Worth?
If you add up all your assets (bank accounts, retirement accounts, CDs, investments in the stock market, real estate investments, treasury bonds, HSA, 529 accounts etc.) and then subtract any and all outstanding loans and debts you have (car loans, mortgage, tuition loans, credit card debts etc.) the answer is your net worth.

Why is Net Worth important?
Net gives you the single most reliable number where you are at the moment. Or how far you've come. Or where you need to be. To be Financially Independent and/or Retired Early (FIRE).

Who are we?
We are a mid-30s couple, with a pre-schooler (as of Feb 27, 2017), living the American dream. Both of us work. Our combined annual gross salary is ~$200k. Details about us are intentionally vague because the point of this blog is not who we are and where we live and how much we make (I guess how much we make does play a role in how much we save); the point is how we are increasing our net worth every month. We will refer to us as M and W.

What is our goal?
To be FIRE by age 50. That would mean all of our expenses at that point will have to come from our investments.

Why this blog?
Two reasons:
1. To publicly, though anonymously, document what we are doing, all the while spurring us to save faster; and
2. By showing it to the world, inspire others that it can be done

We will post our net worth, and the changes, at the end of every month, ideally on the last day of every month, but practically it will be within the last week of the month.