Today’s post is the first in what I hope will be a series of quarterly net worth reports. I love seeing actual numbers from everyone in the personal finance community, so I thought I’d join the party and share my own numbers as well! It’s my hope that you find this report helpful as you continue on your own financial journey.
Before continuing on, I’d like to lay out some background about the numbers I’ve shared below.
First, I’ve only calculated my own individual net worth. The spreadsheet below doesn’t include Ms. FP’s assets or liabilities simply because we aren’t married yet and haven’t technically combined our finances. Once we’re married next year, I’ll probably update these net worth reports to include both of our assets and liabilities.
Second, I’ve rounded these numbers to the nearest dollar. I initially tried calculating my net worth down to the penny, but it looked a bit too cluttered for my taste with all those decimal points.
Without further ado, here’s what my current net worth report looks like:
As shown in the spreadsheet, my current net worth as of this post is $61,526. I wish it were higher. As most of you know, I graduated law school with $87,000 in student loan debt back in 2013 and started out with a negative net worth, so getting into solid positive territory feels pretty good.
Below are further details on these numbers.
I actually have more cash than is currently listed, but for purposes of calculating my net worth, I’m only including cash that’s earmarked specifically for my emergency fund or as income from my side hustles.
I try to keep around $500 to $1,000 in my regular checking account as a buffer. Since my checking account can fluctuate depending on the day of the week, I don’t like to count that in my net worth.
The remainder of my cash is stored in either Capital One 360, Digit, or Qapital. I use the money in these accounts for planned expenses, such as vacations or Christmas gifts. Since I’m likely to spend this money, I don’t like to count these as part of my net worth either.
At present, my emergency fund holds about 3 months worth of living expenses. I’m aiming to get this number up to around $10,000-$15,000. For now, I think I have enough to cover me for a decent chunk of time in the event of a job loss. And, I think if a really big emergency came up, I should be able to bridge the gap through side hustles, or worst case scenario, pulling money from my Roth IRA contributions. I can also pull money from other cash funds (such as my vacation fund) if necessary.
I’m also not too worried about keeping some cash on hand because most of my emergency fund savings are earning 5% interest in an FDIC insured bank account. Contrary to what most people think, your emergency fund doesn’t have to earn crap interest! You can still get a decent guaranteed return using “mega high-interest” bank accounts. These are typically accounts that require you to meet some sort of usage requirements and require a little bit of legwork to set up. But once set up, the accounts run themselves.
I store $5,000 of my emergency fund in FDIC insured bank accounts earning 5% interest. The remainder is kept in an Ally bank account earning 1% interest. I might do a post in the future explaining how to make use of some of these mega high-interest accounts.
Side Hustle Income
I keep my side hustle income in a Capital One 360 sub-account. The plan is to eventually move this money into a Solo 401(k). Note that I don’t spend any of this income, since I live perfectly fine off of my day job income.
I’d also like to note that the side hustle income listed on the spreadsheet is lower than what I’ve actually earned this year from side hustling. I put a little over $1,000 of it into an HSA a few months ago and our Airbnb income is currently being deferred into 2017 for tax purposes. My plan with the Airbnb income is to fund as much of next year’s HSA as I can, and then keep the remainder to cover taxes and as an emergency fund earmarked for house maintenance.
These are funds from the 401(k) that I had with my previous employer. The balance is made up of my contributions from 2014, 2015, and part of 2016. Unfortunately, my old law firm didn’t offer any matching, so the entire balance comes from my own contributions.
I should note that I didn’t put as much into my 401(k) as I probably could have. In my first year out of law school, I knew absolutely nothing about how a 401(k) worked. My employer automatically had us contributing 5% of our salary to our 401(k), so that’s what I did. But, I smartly I used the remainder of my income to pay off my student loans as fast as I could.
My overall plan is to roll my 401(k) funds into the 457(b) plan at my current employer. I just need to get around to filling out the appropriate rollover paperwork.
I have my Roth IRA invested in a Betterment account with a 100% stock portfolio. I maxed out my Roth IRA in 2015 and am currently on pace to max it out for 2016 as well.
Betterment has been fine for me so far. However, I might consider transferring the funds I have in Betterment directly to Vanguard in order to reduce my costs some more, especially since I now have enough to buy Vanguard Admiral Shares.
457(b) and Pension
I’m currently contributing 16% of my salary into a 457(b), which puts me on pace to contribute $12,000 per year to the 457(b). Once Ms. FP starts working, I plan to max this account out. The 457(b) plan I have is particularly good because it has access to low cost Vanguard funds, so I can keep my investing costs low.
I also contribute 11.5% of my salary into a defined contribution pension. 5.5% of that comes from my salary and my employer throws in 6%. These contributions are invested in a total stock market fund.
I didn’t have any employer contributions in my last job, so having my employer fund part of my retirement savings is pretty awesome. Having this pension is also great because it allows me to save even more of my income into tax-deferred accounts! In fact, even though I’m not maxing out my 457(b) yet, I am technically still on pace to save more than $18,000 per year in tax-deferred accounts.
Health Savings Account
I jumped onto a high deductible health plan at the beginning of 2016, and with it, got access to an HSA. I use Fidelity as my HSA provider and invest the entirety of my HSA contributions into a total US stock market fund.
You’ll also notice around $200 in employer contributions. As an interesting benefit, my employer contributes $500 per year to our HSAs. I opted not to use my employer’s HSA provider, however, because the investment options were pretty poor and had really high expense ratios. Unfortunately, my HSA employer contributions have to go into this specific HSA account. For now, I’ve just left the money in there sitting as cash. I’ll have to see if I can transfer that money to my Fidelity HSA.
Last year, I made several thousand dollars in side hustle income. However, I didn’t realize that I could reduce my taxes some more by putting my side hustle income into an individual retirement account available for independent contractors. By the time I realized this strategy existed, the deadline to set up a Solo 401(k) had passed. My only option was to open up a SEP IRA, which I did around February of this year.
My SEP IRA is currently held in Wealthfront and my plan is to roll this money over into a Solo 401(k) once I get that set up.
Other Investment Accounts
Loyal3. I have a couple hundred dollars worth of play money that I invest into individual stocks using an app called Loyal3. The nice thing about Loyal3 is that it allows you to invest as little as $10 into a selection of individual stocks, with absolutely no fees. My rationale for using Loyal3 is to satisfy my individual stock picking itch and so that I can try my hand at stock picking without risking too much money.
529 Plan. I like to experiment with different types of accounts, so I set up a 529 plan in my own name about a year ago and contribute $25 per month to it. I chose to use the New York 529 Plan since my state doesn’t offer a tax deduction for 529 contributions and the New York plan has Vanguard funds and low expense ratios. It’s been helpful for me to figure out how 529 plans work before I have kids. Once I have kids, I’ll transfer this account over to their name.
And that concludes this quarterly net worth report!
It’s nice to see my net worth slowly increasing. 3 years ago, I had a negative net worth and knew very little about how to handle my finances. Now, here I am 3 years later, with my student loans gone, and a steadily rising net worth! Hoping to get to that six figure mark one day!
I’ll be back next quarter with another net worth report! Hope you enjoyed this glimpse into my financial life.