We first started doing these debt pay off updates early last year. Back then we were pretty heavily focused on debt pay off. I’d just taken a major pay cut and our budget suddenly felt a lot more constricted than we were comfortable with. Once we hit the debt pay off goals we’d originally set, doing updates that were just focused on debt pay off didn’t make much sense.
And so, our monthly financial updates were born.
Though we’ve been doing them for quite some time over on our YouTube channel, this is the first time that we’ve actually sat down and created a written blog post for one. The goal is to have these companion blog posts every month where we can include more details, make corrections, and have an easy way to navigate between the monthly updates.
These financial updates are a way for us to keep track of our net worth and track our progress towards our longer term financial goals. We do round when we make these so the numbers are not correct down to the penny. But this is okay because our goal here is to track our general net worth trend and not necessarily to monitor each penny.
This is where we list all of our current debts. For more background information on our debts, head on over to this post right here.
Each month, we pay the minimum payments on all of our debts. We call this “slow paying” them. They all carry very low interest rates so we choose to pay them as agreed and let them retire naturally. Excluding our house, all of the debts listed here are scheduled to be paid off by July 2020, just two years from now.
After making the video, we noticed a few typos in this slide which we’ve since corrected.
THE STUDENT LOANS
Joseph and I are both lawyers and have the student loans to prove it. Our student loan balances don’t change much from month to month because we are pursuing Public Service Loan Forgiveness, a program that discharges your federal student loans after 10 years of working in public service. As part of that, we are on income-based repayment. This means that our monthly loan payments don’t put much f a dent (as in no dent) in our student loans.
Though we fully expect these loans to be discharged at the end of our ten years of service, we still count them as debts in our net worth because, well, they are still technically debts that we are responsible for until they officially go away. But you’ll see that we do include a column that is keeping track of how many more months we have until we expect the loans to go poof.
This is where we list our biggest assets–things that we could sell for money which we could then use to meet our financial obligations. When we do these monthly reports, we pull the most recent numbers for each of our assets and update them here on the slide.
Technically there are a lot more things that we could sell in a pinch if we decided to liquidate our lives, but to keep things simple, we just pick our biggest items.
This month the value of our house went down a few thousand dollars from last month, when it had suddenly popped up quite a bit in value from the previous month. We’re not super worried about this because we aren’t actually looking to sell the house anytime soon.
Ourr investments and savings include our retirement accounts, HSAs, cash, and basically all of our other accounts except for our children’s college funds. We don’t view their college funds as our money so we don’t include them in these financial updates.
We hit a pretty big financial milestone this month when our investments and savings crossed $300,000. It seems like just yesterday that we were celebrating reaching our first $100,000. Really that was actually three years ago so it’s been a bit. It was just last year when we hit $200,000 so the increase from there to where we are now in just a year feels like a massive accomplishment.
OUR NET WORTH
We are thrilled to be net worth positive for the first time since graduating law school. Hitting this milestone is a result of years (like almost a decade) of steady progress towards increasing our net worth.
Of course this doesn’t mean that we could just go sell everything and be able to start fresh with a clean slate. First off, that would be a bad idea because we’d be wiping out all of our hard earned savings and depriving ourselves of the future growth that compound interest would have given us. We’re far better off paying our (low interest debt) over time and letting our savings grow.
Second, even if we wanted to pull all that money to pay off debt, we’d lose a big chunk to transaction fees because sadly it costs money to sell things like cars and houses. Not to mention the penalties you pay when you try to withdraw money from your retirement account early.
THOUGHTS ON THIS MONTH
Our net worth has increased by $80,000 this year, which is particularly exciting because our finances are fully automated now. Unlike previous years, we’re not focused on aggressively hitting one goal or another. For the first time ever, we feel like we have hit this comfortable equilibrium point where are lives are well balanced. We’ve created a lifestyle where we are happy with our savings rate, our debt pay off progress, and our daily lives.
The other exciting thing about hitting $300,000 in savings is that it means that we’ve basically pre-funded our retirement. If we stopped saving today, that $300,000 would grow to approximately $4 million by the time we reached traditional retirement age. Though we don’t have any plans to stop saving anytime soon, it’s incredibly reassuring to know that we’ve given ourselves such a nice cushion if life happens.
How did your finances go this month? Share your wins or fails below.
That must feel great to see that net worth swing over to the GREEN by $15k. Well done.
Where is the premade budget report in Excel? I came from your Youtube site (which I love) and I’m having difficulty locating it on your site.
Have you read about the low rates of student loan forgiveness under that plan?
Apparently this is a massive issue: https://www.npr.org/2018/10/17/653853227/the-student-loan-whistleblower
I admire your approach to debts and keeping track of it all – and really like the blog format of this update.