It’s January, and you know what that means, right? It’s time for the beginning of 2020 net worth update! Let’s take a look at all our money fails and wins from the previous year and see where we ended up.
2019 Net Worth
When looking at a net worth update, it’s helpful to know where you were in previous years. Let’s take a look back to January of 2019, and see where we were.
A year ago, I had just moved to Pennsylvania and was looking for a house. I found one that I loved, and was willing to put all my savings towards it to avoid a mortgage payment. But, I hadn’t done that yet, so I had about 67K in bank accounts, 25K in non-retirement investment accounts, and 116K in retirement accounts. I also had a house in Georgia, but I had just bought it the year before so I considered it a net 0 in my net worth calculations. In total (excluding that house), I held about 210K in assets.
Unfortunately, I wasn’t doing a great job of tracking my liabilities at this point. Why I only really started that last year, I’ll never know. But, I had a bit of credit card debt and a few other outstanding loans. My net worth (excluding the house in Georgia) was about 160K. That’s just an estimate because like I said, I wasn’t tracking my liabilities last year.
2020 Net Worth
I made some amazing changes in how I tracked my net worth in 2020. I actually included my liabilities. But I also included both of my homes, and the money that I owed on them, in my calculations. Let’s see how my net worth changed from 2019 to 2020.
No More Cash
Like I said above, I used the majority of my liquid net worth to purchase a house. I now only have a little over 9k in cash. One of my big goals this year is to increase my cash holdings, because I don’t feel like I have enough to weather an emergency. My goal is to get 6K in my short-term emergency savings account (I’m about a third of the way there).
It’s hard to see my cash holdings go from 67K to 9K in a year, but it helps to know that I didn’t waste it. Most of that extra money is still there, it’s just in a different asset form. Which leads me to my next category.
Money in Real Estate
A huge chunk of my yearly net worth is tied up in real estate. I’m counting my Georgia house this year, and when you add the two houses together, 230K is invested in real estate. That’s not full story though, because I owe about 160K on one of the mortgages. That gives me a net positive of 70K in real estate.
I’m living mortgage free in one of the houses, and renting the other to cover the cost of the mortgage payment (although the house is empty right now – which is costly). Hopefully the repairs will be finished on it in the next month or so, and I’ll get a new renter by spring. The cost of the few minor repairs is really going to put a dent in my net worth for next year though.
The bulk of my 2020 net worth can be found in my retirement accounts. I have nearly 160K in my retirement account – so I’m at my coast fire number! My investments grew by nearly 40K this year, and most of that is due to the stellar performance of the stock market. Since we know markets fluctuate, I’m going to keep investing for the next few years to ensure that my retirement plans don’t get derailed if we have a few rough years.
Non-Retirement Investment Accounts
Because my goal is to retire early with a passion fire lifestyle, I don’t only invest in retirement accounts. I also have a few non-retirement holdings (individual stocks and VSTAX) which I regularly invest in. At the end of the year, these holdings were worth a little over 32K. They grew by approximately 7K over the course of the year.
This growth is also due to the stellar performance of the stock market. I only invested about 2.4K into these accounts over the course of the year, the rest of the growth is due to compounding interest and an amazing stock market.
I started including all of my debt into my net worth calculations for the year, which is painful but gives me a more accurate picture of how much money I really have. At the start of 2020, I have about 200K worth of debt (most of which is the mortgage). One of my big goals for the year is to get some of that paid off, especially the credit card which is the second highest balance (Yes, I suck with credit cards).
The other balances are loans that I stupidly cosigned with people. Thankfully, the cosigners are currently paying for those things, so although I need to count them in my negative net worth, I’m not currently budgeting to pay them. It is nice to see the balances decrease every month though.
Total 2020 Net Worth
With all that stuff counted up, I ended the year with a net worth of about 220K. That includes about 420K of assets and 200K of liabilities. That means I gained about 80K in net worth over the course of the year.
How Did I Increase My Net Worth?
Saving and Investing
Most of the net worth increase was due to gains in the stock market. Over 46K of that 80K increase had nothing to do with me at all, it was just being invested. This goes to show how important it is to be invested in the stock market, especially for long term goals such as retirement that can handle some volatility.
The rest of my net gain increase was due to a combination of two things – aggressive debt repayment and automated savings. I tried to put about 1K per month towards my credit card bill, but unfortunately, I kept having mishaps where I needed to use my credit card (my cat’s accident which cost over 4K was the biggest expense). Hopefully, I won’t have as many major expenses this year, and the money that I put towards my credit card will go to paying it off rather than preventing the debt from growing. I’ve made payments towards the rest of my debt too, and slowly but surely my liabilities are shrinking. That’s a major step towards increasing net worth.
The other step towards increasing net worth is aggressive saving. My bank accounts were near 0 at the beginning of the year, after I bought the house. I also needed to use some of that savings to pay for the initial home repairs, such as a new floor, new appliances, and a sewage problem. After I got the house in a livable condition, I took a break on the home improvement stuff and started saving. Getting those accounts back up to 9K was an amazing feat. Unfortunately, I know I’m going to spend a little more on improvements this year, so my main goal is to not use debt for that and to get my short-term emergency account back up to 6K. If I can do that, I’ll consider it a win for the year.
Another massive thing I did last year that contributed to my net worth increase was move. Yes, moving costs a ton of money, and is miserable. However, some parts of the country are amazingly cheap. Not having a mortgage has given me the extra money to put into savings and debt repayment each month. Living here isn’t my favorite, but it gives me the opportunity to save up money like nothing else. I can definitely suck it up and live in a place I don’t particularly like for a few years if it’s going to get me to passion fire.
What is Your Yearly Net Worth?
Do you check your net worth yearly? How was your year? I’d love to hear about it in the comments!