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Before I begin this monthly money check, I want to briefly revisit why I’m writing these updates. Quite simply, my purpose is to track my financial progress and think through how I’m doing with regard to my goals, perhaps clarifying my goals along the way. My purpose is not to brag about finances or elevate money to supreme importance. Human happiness isn’t about money (although money well spent, arguably, can help). I’m also not trying to be an example for anyone. Everyone’s situation is different. This blog is mostly for me, and secondarily for you.
As you know, my goal is to reach a $1 Million Net Worth sometime during my 45th year of life. I gave myself the whole year for the margin of error. I didn’t set this goal for my 45th birthday because, frankly, I didn’t think I’d make it. I’ll be 45 in 39 months, approximately, and I still have nearly $400k to go. It’s a tall order.
However, I’m starting to think it’ll be close. The month of June is an example of why I think this.
From May 31 to June 30, our net worth jumped by $14,885. This is encouraging because there was nothing incredibly unusual about the month. Income was normal, with a little extra for overtime.
What’s more, there were no abnormal investment returns or risky market returns inflating my results. My largest investment — ownership of an LLC along with my brothers that primarily holds farmland and commercial real estate — was flat on the month.
It may sound strange to say that I’m encouraged by a lack of returns, but to me this shows that my financial goals are not dependent on any short term risks. As I’ve noted, I hate the broad stock market right now. I think it’s a bubble and I refuse to buy shares at these valuations. (Actually, I might buy some individual stocks opportunistically, like Nintendo before Christmas season, but I’m not buying the broad S&P 500 index here and now). The beauty of it is, I don’t need stocks. Investing, to me, is about risk and reward and meeting goals. If I can meet my goals without undue risk, I will.
Anyway, financially speaking this was a normal month, and it was a good month. When we move back to the US, we’ll need to pay a whopping $4,000 per month in rent, but even with that expense this would still have been a good month.
Widening the lens, I can’t believe half the year is gone! Let’s see how 2017 is going, with some observations by category.
Net worth is up by $72,837 in 2017. More than half of this is in retirement, so it’s not money we’ll be touching anytime soon. The next largest portion is from debt destruction. It’ll be nice to get that completely out of the way. After that, a bit of cash and investment gains.
I like to keep around $10k in cash, normally. We’re currently building this this up to buy a car.
I’ve been carrying some 0% debt, and it was rather high at the beginning of 2017. The main reason is I wanted a healthy buffer in order to pay the massive preschool bill. With that behind us, I’ve been able to pay this down. I’m going to keep some debt until after the move, just as a matter of cash flow management. At any time, I could roll this to a new 0% offer for 18 months for a fee of around $300.
We drew out some funds from our taxable Prosper account because it’s not very tax efficient. (That said, I still like Prosper in a Roth IRA). The drawdown was more than offset by gains in our LLC. I’ve also started my “Opportunity Fund,” which for now is going to be invested in Muni Bond ETFs for tax free dividends. I plan to ramp up the fund next year — it’ll serve as part college savings and part dry powder for opportunistic investing.
We max out our 401k and IRA accounts. This alone ensures a decent net worth build. Not much more to say here. The road to $1 Million, for us, is mostly about consistent income and retirement savings.
LONGER TERM TRENDS
Widening the lens further, let’s look at the past 18 months with a look at select months on my net worth tracker.
I like the trend, but I think if my net worth has a weakness, it’s that my money is tied up almost entirely in 2 areas: retirement (65% of net worth) and the LLC (30% of net worth). I’d like to start spreading this to more liquid accounts. It’ll take time, because retirement accounts take precedence. Finally, a simple line chart showing growth from September 2015 (when I started tracking) until now. If I can keep up my current pace, I’ll hit $1MM smack dab in the middle of my 45th year.
Here’s to the rest of 2017,