The Big Scratch – Dow Jones reaches 20,000! – February 2017 Net Worth Report

The Dow Jones hit 20,ooo last month! Considering the current political climate, I am very wary about this milestone. Whereas the stock market seemed to be reacting to the Fed over the last couple of years, now it seems the market is responding to policy. We will see where this path leads us, of course, but I remain very skeptical. Nevertheless, we do not pretend that we can time the market, but invest as much as we can as often as we can.

February 2017 Net Worth

The table shows the balance sheet for the beginning of the month January 2017 and February 2017.

Net worth in January 2017 was $663,042.

January 2017 to February 2017 difference = $11,512! This total includes:

Increase/decrease in home equity = $646

Investment contributions = $7,167

Earnings/losses year to date = $3,699

 

Investment Contributions

Our financial goal for 2017  is $83,042. This includes investing the maximum to the 401k, Roth IRA, Traditional IRA, Health Savings account and the brokerage account.

*Nearly 100% invested in low-fee index funds (VTSAX – Vanguard)

In January, we contributed to:

401k = $2,413

Roth IRA = $3,000

H-S-A = $1,754

 

Total (2017 YTD) = $7,167

My employer contributes a match of 10% of my base salary to the 401k and front loads my H-S-A with $1,300 every year.

The Roth IRA is earmarked as an early retirement emergency cushion and college fund for Little Miss TJL. We will max out the Roth IRA in February and then fully fund the Traditional IRA before adding to the brokerage account.

 

Investment Earnings

In January, our stock portfolio saw 1.97% growth, and continues to outperform the S&P 500. Net worth increased by $11,512 which includes investment contributions and gains ($10,866), and home principal payment ($646).

 

Savings Rate

Our net income savings rate goal for 2017 is 70%. A high savings rate can be reached through decreased spending and/or by increasing income. We combine these elements to turbocharge our savings!

In January 2017, we realized a net income savings rate of 32.15%. Pretty paltry considering we ended 2016 with a savings rate of 66.76%! But as we know, one bad month does not an entire year make!

The “low” savings rate is attributable to an expensive tree cutting expense , plus a few larger yearly expenses that came due in January. We should have no problem absorbing this expensive month, but you better believe I will be keeping a lid on extraneous spending for the next few months.

Savings rate on net income is calculated by Total Saved + Mortgage Principal paid divided by Total Income minus taxes and charitable giving.

NISR = Total Saved + Mortgage Principal / Total Income – (Taxes + Charitable Giving)

 

Investment Income

Our net worth minus our home equity is $412,656. These funds are held in equities and a minor amount in cash. These monies will provide us passive income during our FIRE (Financial Independence/ Retire Early) years along with income from our rental property.

Using the 4% rule, we currently earn $1,281 in passive income from our investments (plus an additional $600 from the rental property).

We will consider FIRE when our investments and cash reserves equal $937,424 and the rental property is paid off. This conservative goal allows us a safe withdrawal rate of 3.5% assuming we need $32,800 investment income per year. We will also have an annual profit of $7,200 from the rental property bringing our allowable annual retirement spending to $40,000.

We aim to live off of $35,ooo or less in retirement so this FI goal should allow flexibility.

Notice that at the end of 2020, we will have reach 97% of the FI goal. I will continue to work until March 2021 to receive the annual bonus, plus three months of savings. This will push us over the goal.

 

Are you starting to feel your net worth snowball?

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2 Responses to The Big Scratch – Dow Jones reaches 20,000! – February 2017 Net Worth Report

  1. TJL you are absolutely killing it every month. A huge well done to you both 🙂 You’re definitely going to reach your goals at this incredible rate you’re going.

    I think we’re slightly feeling the wealth snowball, but we’re now shovelling a ALOT of snow ourselves. Hopefully we see the difference we’re making soon.

    Tristan

    • ska@thejollyledger.com says:

      Our advantage lies in that we have already achieved life’s biggest financial milestones (being a bit older, 40’s!). We have had a child, own a house, paid for college education. I haven’t really seen any notable kid associated expenses beyond a few little things. So now there is nothing to really spend on so it’s just accelerated savings all the time. Sometimes things pop up, but now it is easier to absorb them.
      Keep at it, DDU! You will see all your hard work pay off soon enough.

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