Welcome back to Dividend Dollars and our second Net Worth update so far! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!
You may wonder “why not just watch and evaluate the portfolio”? We do review and evaluate the portfolio regularly on this website, read our most recent portfolio update here. However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money is starting to work for me.
In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.
November 2021 Net Worth: $106,675.50 – $111,260.16
We passed $110k! That is awesome! We increased our net worth by 4.2% from last month, that’s just a little under a $5k increase. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We did double the size of our investment accounts this month with some fun adds to positions. However, that capital came straight from my cash balance so it really didn’t contribute to the new worth gain. As the dividend portfolio grows, ages, and compounds that is where we will see the real net worth gain in the future.
Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula, it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.
Below is my calculation broken out.
This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 0.9% this month.
The house increased in value by just under 1% this month!
In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $412,100 which is where I pulled my value from. That is a 17.7% appreciation on the appraised value in less than 9 months! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $49,160.16.
This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal.
In the last two weeks, however, instead of growing this sum we dipped into these funds a little bit in order to add a bit more aggressively to the dividend portfolio.
Taxable Investment Accounts: $1,658.61
This value is the sum of two different investment accounts. We doubled the size of our investment account this month, this is where the decrease in my cash accounts came from! That’s a great start to this portfolio. As the portfolio grows it won’t be easy to double it every month, but we will continue to regularly invest per the plan!
The first account is my Robinhood account which is where I am housing the dividend portfolio that is tracked and experimented with throughout this blog. Currently the dividend account is up 0.58% since starting Dividend Dollars in September of this year.
I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the simplest and easiest platform to access for a straightforward dividend account. We won’t be buying and selling stocks that often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.
The second account is my Acorns account. It is currently up 2.57% since starting Dividend Dollars back in September of this year. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses. I have recently reopened it and am auto-investing every week.
It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing.
I deposit $25 a week into each account to use for investing. For the dividend account, as detailed in the portfolio update last week, I deposited a good chunk of cash into the account due to some great buys being available on the market last week. Read more about the purchases using the link above.
Retirement Accounts: $2,984.03 (+21.68%)
My retirement account is provided by my employer. I have contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions.
Other Assets: $9,427
Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed and it is slowly depreciating in value.
My liabilities consist of one large debt, which is my home mortgage.
Mortgage: -$320,133.64 @ 2.65%
I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.
With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit greater than 2.65% on my investments, then that money is worth more if it is invested rather than putting it towards the house in order to pay less interest on my mortgage.
This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. I also round up my mortgage bill to the nearest hundred dollars and have those extra few bucks paying off the principal owed. However, for the most part I plan on making my regular mortgage payment.
It’s Simple Math
Now that we have broken out the assets and liabilities, take their totals and subtract them and that is how you get your net worth. $111k is where we lie for the start of November 2021. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.
This month was great, the house appreciated and we made some great purchases that will pay us dividends for the long term, all of which will continue to add to my net worth and build passive income in the long run.