Net Worth Breakdown #2 : September 2019
Recap:
September will be the last Net Worth breakdown without diapers, formula and million doctor visits for a while. Our baby girl decided to arrive on September 28th so it took me a couple weeks to finally write this breakdown. I was already interrupted once by a crying baby and I’m only two sentences in! My wife and I have determined long ago that we want to live the fullest life possible and in our case that meant growing a family faster than growing a net worth. I will agree with criticism that raising children is expensive but what people don’t mention is all the free moments you get in life from having those children around. Our entertainment expenses have dropped significantly since our first son was born and that is because we no longer seek the fulfillment in the activity bucket of life… Ok, yeah I have to mention that may have something to do with lack of energy but even going to bed at 10pm, we have never been happier!…. Back to September’s Net Worth: This month was a pretty chill month because most of the time was spent waiting on Baby Girl to arrive. The only exciting news is we listed the duplex we have for sale but with this fall market it seems to be slow and people have already put away the checks for the year. The numbers are absolutely ridiculous and it is a cash cow but the market has slowed down so we may pull it off the market until Spring. If you’re wondering why I want to sell if the numbers are so good, it has 100% to do with the area its in and the tenants it attracts. I will be focusing on B neighborhoods and up from now on!
ASSETS:
House Market Value – (+0) – Same as last month. Although we are starting an addition on the back of the house next month so this number will be increasing soon. It won’t be until next Summer because the construction will be delayed during the Winter months.
Rental #1 – ($0) – $80,000 all day… We currently have it listed at $95,000 so I’m hoping to add a little extra to this after is sells.
Profit Sharing – ($1143.48) – Market increase – As stated before, Im not too worried about the ups and downs with any stock.
Employer Stock – (+0) – Still haven’t received the new numbers on my wife’s company stock so we will keep it the same instead of speculating.
Checking/Savings – ($861.86) – This was one of the months that I am happy to just see it in the green. One week off for maternity leave and a real estate transaction falling through will do that to you.
Money Market – ($56.51) – We have this money in a Money Market account because I don’t know what I’m going to do with it yet. Mostly likely it is going towards another rental property but I haven’t found anything I’m in love with. I’d rather have this collect 2% than the 1.1% my savings account offers. (Same recap as last month but exactly the same so why change it!)
Emergency Fund – (+0) – The only way this changes is if my wife quits work! (Shes getting 3 months maternity leave so this definitely wont change for a couple months!)
Vehicle Value – (+113) – Not sure why they increased in value but again Im only tracking because they are worth something.
LIABILITIES:
Primary Mortgage – (+1209.14) – 1st payment towards paying the house off in 15 years!!! Only 179 more payments to go
Rental #1 Mortgage – (+59.77) – Principal pay down! Nothing exciting!
Excess Spending (Budget Overage) – (-$1,253) – Damn near cut this number in half! Thats what I like to see. Any positive traction I can get month to month on this category will be a victory. I know that since we are “Enjoying Today” that this category will have its ups and downs but if we can limit the ceiling of this number then I will feel comfortable with our spending.
MONTHLY NET WORTH CHANGE: +$3,443.76
MONTHLY EXCESS SPENDING : -$1,253
Im taking a similar approach to savings as I did for paying off my debt. I will stay consistent and be purposeful with my money but I will not put my life on hold. I created FI PITTSBURGH to be focused around the same mentality. This is a place where I want people to understand that it is ok to enjoy today and spend some of your money now. I based our motto around this exact idea. ENJOY TODAY WHILE PREPARRING FOR TOMORROW! The path to financial independence is a marathon, not a sprint. Those who take the extreme frugality approach will likely fail due to exhaustion, but those who pace themselves will see success.
In order to stay frugal but enjoy the gift of everyday life, I try to implement the psychological approach of what I refer to as “The Chocolate Theory.”…….(FREE BEER THEORY was a better way to get your attention, sorry for the bait and switch.) This is based on the premise that the less frequent you have something the more enjoyable it can be. If you eat chocolate everyday with your lunch, it becomes routine and the chocolate loses its uniqueness. However, when limited, the same piece of chocolate only eaten once a week has a greater appeal and the experience of that piece of chocolate is heightened. A good example of how I use this in my personal life, is the way I purchase beer. I currently love Hazy IPAs. For you beer lovers out there, you know these cases are typically around $40. Purchasing one of these cases every two weeks definitely does not fit into a frugal lifestyle. I compromise by purchasing a less expensive beer for the first two cases. These cases will typically run $20. So, on average I will save $40 over those two cases. By the time case 3 comes around, I am eagerly waiting for that citrusy, hoppy golden nectar. Notice how saving on those two cases of beer leads to paying for my targeted beer! Not only do I get to enjoy the taste of my favorite beverage but it is essentially free!….Ok, there’s your “Free Beer Theory!”
The concept is very basic but it can be used in multiple aspects of life. My family exercises this in many different stages and sometimes without even realizing it. The day-to-day decisions: cooking dinner vs going out to eat, the weekly decisions: grocery options – name brand vs off brand, the monthly decisions: going to a sporting event vs watching from home and yearly decisions: vacation destinations – local, weekend trips vs out-of-state, week trips. The beauty of applying this strategy to your life is you can rob Peter to pay Paul. You can decide to stay home for dinner, buy generic brand groceries and watch all the sporting events from your living room and that way you can take your family to the beach for a week. Flip the script, you can pull back on the big vacation and live more vibrantly when deciding on your daily, weekly or monthly options. As long as you stay mindful with the actual costs of these decisions, you can really enjoy life while saving for the future.
Now my thoughts on this approach may be out of the ordinary and some may say you’re only saving $40. My rebuttal would be the fact that I am currently in a marathon and just as running one, the mental aspect can be the largest hurdle. If I make daily purchases with this mindset, that means I am constantly practicing frugality without giving up the things I love. In addition to all of this, every time I purchase that 3rd case of beer I am awarded a small victory. These are the small victories that will push you and keep you striving towards a long-term goal. It can be something as simple as a case of beer that gives you a two week break from the frugal lifestyle you are currently living.
If you are currently struggling with your finances, there’s a good chance you are looking for a win today. The great thing about this strategy is you can start today and instantly see results. All you have to do is pay attention next time you go shopping at a store or online. I am all for a budget and I actually recommend starting one but I remember how exhausting all the researching and allocating for the budget was. So, before you give up without truly getting started, I would like to challenge you to reevaluate your daily spending. Think about what items you can limit in your daily consumption or items you can substitute that will give you similar fulfillment for half the price.