Happy New Year!
I love the end and beginning of a new year. It’s a great opportunity to reflect back on accomplishments and challenges, while getting prepared for what may lay ahead.
Now that 2017 is behind us, I can update readers on my household’s net worth performance for the year.
I decided to begin sharing net worth details on this blog earlier in the year after some deliberation. You can read my thoughts on why I decided to do so here.
I feel it’s important to keep track of your financial health. Measuring net worth is a critical component of that habit. It’s something I’ve been doing for many years, and a big reason for my progress towards financial independence.
Household Net Worth at the Start of 2017
We started 2017 with a total net worth of $1,651,632 .
Our net worth was roughly split across the following three buckets, as explained in my post “Net Wort: It’s not the Size that Matters”:
Bucket # 1: Home / $550,000 / 34% of Net Worth
Bucket # 2: Retirement Fund / $600,000 / 36% of Net Worth
Bucket # 3: FIRE Fund / $500,000 / 30% of Net Worth
I now have no debt to speak of, so my net worth is entirely made up of assets. I still have no regrets about paying off my mortgage in 2016.
My goal for the year was to increase my net worth by $200,000. This was a very aggressive target, especially since I currently have a reduced exposure to equities.
Household Net Worth at the End of 2017
We ended the year with a total net worth of $1,890,577
That’s an increase of about 14% over 2016, and a $238,974 uplift.
Here’s how my split across the three buckets ended up looking as a result:
Bucket # 1: Home / $550,000 / 29% of Net Worth / Flat
I kept my home market value flat for the year, despite the fact Dallas has seen a double digit increase in values. I prefer to remain conservative on my home value estimates and will probably bump it up slightly next year.
Bucket # 2: Retirement Fund / $680,000 / 36% of Net Worth / 13% Increase
I contributed the maximum to my 401(k), and Mrs. Max contributed a bit this year. I also received a healthy match from my company, along with an increase in a small pension. The market helped a bit, despite my decreased exposure.
Bucket # 3: FIRE Fund / $660,000 / 35% of Net Worth / 32% Increase
Most of our cash flow from the year went into my FIRE fund. I have some of it invested in equities, but not much. I also started investing more actively in alternative investments, specifically equity crowdfunding. My goal is to increase this fund aggressively, so I’m happy with its growth in 2017.
I track all my net worth information using Personal Capital’s free online tool and application. Here’s a snapshot of the year from my dashboard.
The little canyon in the middle of the graph was when I made some manual adjustments to my home’s market value. Personal Capital had it linked to an automated Zillow account which I deactivated. I didn’t feel that Zillow’s home market values were accurate for Texas. I prefer to control the value myself since I want to be more conservative. It took me a few months to catch the error.
Notable Highlights from 2017
Here are some more details worth mentioning relative to the summary I shared above.
Expenses – We were able to keep expenses capped at my goal of $50,000 for the year. Not only did this keep lifestyle inflation in check, but it also helped tremendously with cash flow.
Savings – Since expenses were very much under control for the year, and income grew modestly, we were abe to maintain a 75% savings rate on a net income basis.
Tailwind – The market had an incredible year in 2017, with the S&P 500 Index returning about 20%. The market impact on my growth for 2017 was only about 25% of the total increase. This is due to my reduced exposure to equities. I won’t even bother calculating how much my net worth would have grown had I been fully invested.
Fun – This year was fairly incredible with respect to experiences. We were able to meet (even exceed) our financial goals for the year, without compromising on the type of lifestyle we want to live. We spent 2 months abroad during the summer, and plenty of weekends having fun throughout the year.
This was also the year I turned 40!
What this year has proven to me is that you can have your cake and eat it too…eventually. It took 15 years of discipline, hard work and perseverance to get to this point financially. There were no shortcuts.
Here’s a snapshot from a prior post to help put our household’s net worth journey in perspective:
Eliminating debt, saving as a priority, and controlling expenses over those years has now put us in a position where we can enjoy the financial journey with less sacrifices.
The next stop is true financial freedom.
Finally, the term ‘net worth’ is very misleading. Read at face value, it might imply that it somehow represents the total intrinsic value of an individual or household. That is not the case. It’s important to recognize that a net worth value is only ONE dimension in a complex financial organism, which should include income, expenses and other personal attributes.
In effect it’s a very personal number, that can’t be judged discretely. It’s only one piece of the total financial independence puzzle.
The only reason to track it and monitor its health is so you can achieve whatever overarching goal you have in mind. Mine is simply the pursuit of freedom.
Readers, do you measure net worth? How did your household do in 2017? Did you make progress on your financial goals for the year? How about that market tailwind this year! Did it help? Please share your thoughts and comments below! – Max
You can call me Max…I’m a Gen-X executive planning to retire from the corporate grind by the age of 45. Although I’m already financially independent, I haven’t yet reached true financial freedom. Join me on my journey as we discuss everything from personal finance to travel and beyond.