2019 Net Worth

Owning a big home is expensive

I was really late on writing our 2019 net worth post – I can’t believe that 2019 just flew by. As I’m writing this post, the year 2020 is almost over. It’s been almost 4 years since we moved into our new BIG house.

Again, this year I’ll show real numbers instead of just percentages. It’s always been on the back of my mind that I wanted to show actual numbers. When I decided to blog 4 years ago, I thought long and hard whether or not to share actual numbers. It was kind of scary to share our financial numbers publicly. So I originally shared our net worth in percentages in the beginning. If you’d like to learn why I share actual numbers, you can read it here.

Without further delay, let’s take a look at our 2019 finances:

INCOME

Mr. 50 and I received a small cost of living increase adjustment to our salaries. I did a lot of side hustles this year. This represents almost 10% of our income for the year. The dividend income from our investment accounts was also increased.  Here is a breakup of our 2019 income sources in a percentage of our total take-home income:

• A non-paycheck income (Side Hustles and Investments) represents about ten percent of our total income which is significantly more than last year.
• The 9.15 % of the side hustle income also represents income we received from my Etsy store, credit card cashback, and money-saving apps like Rakuten (formerly known as Ebates) and ibotta. I sell my original artworks and art prints in my Etsy shop. We exclusively use a credit card for everyday expenses now. It earns cashback. We have been taking full advantage of it. I’m happy to earn a little money back from everyday purchases like groceries and gas. Keep in mind that we pay our balance in full every month.
• If there’s a better deal going through Rakuten, we’ll use them for our online and in-store purchases. The key is checking Rakuten first whenever you spend your money on anything. It’s because there’s a good chance that you’ll earn easy cashback from them. You use it to shop online or in-store like you normally would. Joining is free and it’s super easy to use. I received my 3 payouts last year totaling $200.19. Not bad, right? It pays quarterly through PayPal or by check. Earning cash back from Ebates is so easy. If you sign up through my referral link, you’ll receive $30 when you complete your first $30 purchase within 90 days. My mind was blown away! I’d been missing out all along. We left easy money on the table. So please join Rakuten to start earning today.
• My side hustle income was also significantly more than the previous year. I rented out our bedroom in the basement to a friend. So we earned a little more of the side hustle this year.
• We also use money-saving apps to get cashback and to save money on groceries. Check out my Resources page to learn what apps I use to earn hundreds each year.
• Mr. 50 and I received a good rating at our jobs. So we received nice bonuses at the end of the year. We saved our bonus money in a high-yield online saving account which will be used for 50 junior’s school tuition and serves as an emergency fund.
• Our investment income was a bit higher than last year and I hope it continues this way. If we decide to retire early, this investment (and future rental income) will bridge the gap until our traditional retirement income comes in. Or better yet, we can call “FI” when our investment income is able to cover 100% of our expenses.

 

EXPENSES

The housing was the biggest expense again 2 years in a row. You can see actual numbers on the Sankey Diagram above. The living and transportation expenses were almost equal. We bought a used car (cash) to be used as a dog taxi. Well, we have 3 dogs, and two are big dogs. We didn’t have a way to transport them for vet visits/check-ups. We had a 7-day vacation in Washington, D.C. It only cost us $167 totaled for the 3 of us by taking advantage of hotel and car rental points from a credit card.

Here is a breakup of our 2019 expenses in a percentage of our total take-home income:

• A total of about 44% went to housing-related expenses. This includes mortgage, home maintenance (general maintenance repairs), and utilities. We spent a large amount on home maintenance and repair again this year. A total of $ 15,900 for a backyard fence, a $2,00o for land clearing and bush hogging. The rest went to fix a leaky roof, replace rotten fascia and gutter, and remove a beehive under the roof.
• Owning a big house is damn expensive. There are more things to break and more things to maintain. Well, our house was not in a good shape in the first place (since we bought it). After we are done with all the repairs, I expect we only spend on the maintenance side of it.
• There are a couple of things on the list we still need to fix/replace; rotten wooden retaining walls, and a dead HVAC.
• A total of $32,804 or 23.85 % of take-home pay went to a home mortgage. We added $5,196 extra to the mortgage principal. My ultimate goal is to be financially independent by the time we both turn 50. To reach the goal we will need to be completely debt-free. The only debt we have left is our home mortgage. After weighing the pros and cons of paying mortgage off early, we decided to pay our mortgage off early after we accumulate a year worth of living expenses.
• It appears that our total cost of living ($32,178 or 23.40% of take-home pay) was still very low. We live in a small college town so the cost of living is pretty low. If 50 junior’s school tuition is subtracted from the living expenses, our cost of living ended up being $18,411 annually or 13.38% or $1,534.25 a month. Surely, 50 junior school tuition is a major expense of our household.
• Our cost of transportation (gas money, car insurance, and car maintenance) remained very low compared to other categories. We spent $20,000 on a new used car. I’ll write a post later on how we paid cash for our car. The fuel cost was a little bit higher than last year. On average,  we spent $212 a month on gas for 3 cars which I think it was high. This could be due to multiple trips to out-of-town hospital visits.
• We saved a shine of 12% outside of work. This was significantly less than the amount we saved last year. Our money (that would otherwise go toward our FI account) went to fix broken things related to our house. Did I say owning a big house is expensive?
• The medical and dental cost was very high this year due to prescription drugs, hospitalizations, and chemotherapies.
• I also spent a significant amount on this blog (mainly just a couple of blogging courses and a 3-year website hosting service). Holy SHIT, I spent more money on my blog than we spent on groceries.
• The one thing that satisfied me is our “General Merchandise” spending remained low for all these years. We used to spend tens of thousands of dollars or more buying craps. Thanks to our homestead for keeping us busy (and not buying a lot of produce) and Personal Capital for keeping us on the budget. Besides the benefit of reduced grocery bills, homesteading can really save you money in many other ways.

SAVINGS & INVESTING

• A total of $2,380 went to a high-yield online savings account that Mr. 50 and I got from our job bonuses. It’s for 50 junior’s school tuition and serves as an emergency fund.
• A total of $6,126 went to my employer-sponsored retirement savings plan; $2,734 went to my Roth 401(k) and $3,392 went to my 401(k). I didn’t contribute much at all this year due to the cost of home repair and maintenance. My employer matches dollar-to-dollar for the first 3% and half a dollar for the next 2%.
• Mr. 50 also maxed out his 401(k). However, he is only allowed to make a contribution up to a certain percentage of his salary (which is way less than the IRS contribution limit). A total of $10,360 went to his 401(k). He receives a little matching contribution from his employer. I still don’t understand the logistics as to why his company only allows their employees to contribute to their 401(k) up to a certain percentage, not to the IRS contribution limit. If anybody has any idea as to why or have similar experience/situations, please share your story/insight.
• Later in the year, I changed the contributing amount to $500 a month to 50 junior’s college savings plan. This boosted his college money a bit. A total of $5,400 went to his college money fund this year.
• A total of $3,400 went to a taxable brokerage account.
• We made $5,196 additional principal towards our home mortgage.

Savings Rate = [ (Total Savings Amount + Employer Matching Contribution) / (Total Take-Home Income) + Employer Matching Contribution) ] x 100

Total Savings Amount. It’s everything you save for the future in a year. If you make additional principal payments towards your loans (mortgage, car, personal loan, and student loan), include them here as well. In our case, we have contributed the following: Thanks to Personal Capital for making it so much easier to get these numbers together.

• Employer-sponsored retirement plans ($19,220)
• A pension plan ($813)
• A college savings account ($5,400)
• Taxable investment account ($3,400)
• Savings account ($2,380)
• Additional principal on a mortgage ($5,196)

Total savings: $36,409

Employer Matching Contribution. It’s the matching amount you receive from your employer when you make your retirement contribution. If you don’t know, you can figure it out by looking at your pay stub and multiplying the number by 26 if you get paid bi-weekly or by 52 if you get paid weekly. We received $5,984 between the two of us. If you’re self-employed, just ignore it and remove it from the equation. 

Total Take-Home Income. It’s the total amount of your annual take-home pay you make from your job, any money you earn from side hustles and selling stuff. If you have interest and dividends, include them here too. We earned a total of $110,454 from jobs, side hustles, and investments. 

Take-Home pay = Gross income – Taxes and Deductions

So our 2019 Total Savings Rate is:

[ (36,409 + 6,370) / (137,526 + $6,370) ] x 100 = 26.47%

Note: 

A portion of 401(k) and my pension contributions are contributed pre-tax. When I calculate our savings rate, I do it as after-tax or as a percentage of take-home pay. To keep it simple, I ignore the “pre-tax” part of the equation and just sum up the total savings amount. I’m more than happy to hear how you calculate your savings rate though.

Because I’ve been using this formula to calculate our savings rate since 2013, I’m not sure it’s a good idea to change the formula moving forward. If I did change the formula, I can’t really compare our 2013-2019 net worth years to future years. Personally, I think whatever formula you use to calculate your net worth is fine as long as you keep it consistent throughout the years and know the baseline.  That way you can compare apples to apples. I find this formula simple and easy. Additionally, it reflects how much you actually save based on how much you bring home.

At the end of the day, a net worth number is a very personal number. It can’t be judged discretely. It’s a great tool to help you achieve your financial goals when you compare them to yourself. The only reason I track, evaluate, and monitor our net worth is so we can eventually free ourselves from 9 to 5 grind to do more of what matters. What is your net worth? Are you tracking it? Head to Beginner’s Guide to Net Worth Tracking if you want to learn more.

NET WORTH

Liability

1. Mortgage balance = $362,003

Assets

1. Cash from checking and savings accounts = $12,992
2. My retirement = $154,173
3. Mr. 50’s retirement = $70,960
4. 50 junior’s college savings = $19,645
5. Taxable investment brokerage account = $18,162
6. Our cars value totaled = $38,400

Total = $314,332

So our 2019 net worth is 314,332 – 362,003 = – $47,671

What I learned and what I want to accomplish next year

Personal Capital screenshot showing our 2018 net worth

1. 1. The screenshot above is showing our net worth with our home value included. The spike up in the middle was when I first included our home value. The drop after that spike was when I removed the home value. Later, I decided to include it because I’d like to know the value of our home from time to time. By adding our home to my Personal Capital account,  I don’t have to open another tab and do some more typing to get my Zillow’s Zestimate. All of our assets and liabilities are there in one place. From the number above, it looks like we came close to Financial Independence (FI) with a net worth of $733K. In reality, we’re not even close. This is the main reason I don’t include our home equity in our net worth calculation.
   2. Did you notice several jumps and a big fat jump towards the end of the year? That was from the value of our home is up and down (Zillow’s Zestimate). This is another reason I don’t include our home equity into our net worth. Home values in our areas fluctuate so much.
   3. A primary residence is harder to convert into cash. Again, our home value fluctuates so much in our area and it would skew our net worth. The term is irrelevant to us right now. I’ll put the value of our home as soon as we really own it (when we pay it off). I know, I am very conservative here when it comes to putting home equity into the net worth.
   4. We are still in the negative net worth zone. The more important thing is whether or not your net worth is increasing over time. As long as our net worth increases every year, I’m happy.
   5. Our net worth increased by $94,257. My goal for the year was to increase our net worth by $60,000. We met last year’s goal. 🙂
   6. Having a big house is a lot of work and a lot of maintenance. More square footage to take care of means more chances for things to break. I learned to keep the house somewhat minimalistic, keep things optimized and seriously take good care of things. For example, I educate myself on subjects like how a furnace & HVAC work, how to save money on utilities, and how to optimize stuff around the house.
   7. Our savings rate is about 26%. We didn’t meet last year’s goal. 🙁
   8. By looking at our numbers, there are a couple of goals I want to accomplish in 2020:

• increase the savings rate to 50%
• increase the net worth by $50,000

It’s a good financial habit to calculate your net worth every so often. I use Personal Capital to track our income and spending. It’s quick and easy. I can see all transactions in one place with fancy graphs and tables. Also, I can search for any transactions that I want to look at specifically. As hard as I track our net worth, we still don’t know what the future will bring us. However, it’s good to be prepared. I have exciting news to share next year. Please come back and read our 2020 net worth!

Featured photo image by Styled Stock Society.

How did your household do in 2019?

What are your financial goals for this year?