Sunday, February 8, 2015

Our "Net Worth"

I've recently discovered that tracking your family's net worth is kinda a cool thing.  (Check out if you don't believe me!)  So .... not wishing to be left behind, here is a slightly foggy stratospheric bird's eye view of our "net worth".

We calculate our net worth to be $450,000.00, based on the following:

1. Assets (the GOOD stuff):   $600,000.00 (Yippee!)

This would be a combination of our various IRA and 401K accounts, (mostly invested in stock mutual funds), money in tax free municipal bonds, (the bonds themselves, NOT bond funds!), and a little bit left over in regular, taxable mutual fund accounts.

Note that this figure is just an estimate, and the actual value of our accounts is a bit higher at the moment, because the stock market is up.  As you know, stocks go up and down in value, sometimes dramatically, so this figure could be off by 20% in either direction when you read this. 

2. Liabilities (the BAD stuff):  $150,000.00 (Boo!  Hiss!!)  

2.a.  Our House  -  we owe $80,000.00 on our house, which is our primary residence.

2.b.  Our Condo  -  we owe $50,000.00 on a condo back in Columbia, S.C., which we currently rent out.

2.c.  Our 2nd Car  -  we owe $15,000.00 on a car we purchased last year.

2.d.  Our RIDICULOUS, NEVER-ENDING American Express Credit Card balance  -  $5,000.00.  Through absolutely no fault of American Express, we seem unable to stop the bleeding due to our inability to stop spending more money than we earn.  (Yes, we have a CASH FLOW PROBLEM!)

So there you have it  -  $600,000.00 minus $150,000.00 equals $450,000.00, which is our net worth.

Now before you think, "Wow!  $450,000.00 is a whole lotta loot!", bear in mind that, as noted above, almost every month we actually are SPENDING more money than we are EARNING.  The only way we have been able to keep this silliness afloat has been to cash in non-IRA savings year after year, for the past three years.  We have burned through $60,000.00 that way!  This year will be an interesting one, because we have resolved not to cash in any savings to subsidize our spending.  Wish us luck!

And finally, we have been lucky regarding the balance of our assets, because despite our cashing in funds to pay for our excesses, our net worth has mostly remained constant these three years, thanks to the upwards movement of the stock market.  Relying on a continually rising stock market is a foolish plan, so we had better brace ourselves for more bearish times ahead, and plan accordingly.

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