We continued to grow our net worth over the last six months. A little slower than the previous year, but lots of progress nonetheless.
We’re a little over $3.4M as of Q3 end, so up almost a quarter of a million dollars in the last six months! Of this, $2.8M is in investments (excludes our house). We’re still making good headway towards our updated goal of $4M in net investment assets.
I missed the Q2 update (summer was too much fun & full to do much blogging!) so this will compare vs the first quarter 2016 net worth update.
We straightened out our finances (and life) as it related to house inventory finally. We sold our backup primary residence, and also sold a rental house. We’d been trying to sell our old primary residence since last fall, so better late than never I guess! (Kind of embarrassing since real estate is my job). The sale of the rental happened almost by accident. Our life is much simpler.
Investment Assets (net worth – primary residence) are currently at $2.82M. Our loose goal for financial independence inflated from $2.5M to $4M. So we are gaining toward a finish line that moved out about 50%. I think we’re about a year out. We added a lot to 529 plans for the kids. We are fully funded based on some estimates (if the markets & school costs cooperate with our guessing).
We also capitalized one new (relatively small) project at work – another hotel. We are close to a few more projects. They have pretty much started, but I’m not counting anything until we close on full capital. That should be in the fourth quarter.
Our spending is a bit higher than was a year ago, mainly from laziness and lack of tracking. We still don’t have cable and aren’t too wasteful on recurring items. But I’ve relaxed a bit – spending more on dinners out and some help around the house. Oh yeah, and I bought a new truck.
Here are the highlights on variances from last quarter’s net worth, followed by a table of all the assets/liabilities:
Cash on Hand ($35k: $10k decrease) things moved around a ton. We got in money from two property sales, funded/rebalanced several investment accounts, bought a new truck. Whoops…brand new. I’ll probably keep it for a decade or two, but I have to admit I got a brand new fancy one. It’s awesome & I love it. But not a frugal move.
Stocks/Bonds ($970k: $355k increase) We fully funded a couple of 529 plans for our kids with the two property sales. We also contributed to tax deferred and our basic joint savings account. And the market went back up from Q1’s sort of sad times. It was a couple of great steps for us away from real estate and into normal stocks/bonds type investing.
Rental House(s) ($140k: $100k decrease) We sold one of two rental houses. My first house…from 8 years ago…shed a tear. And then be happy that our life is simpler and investments more passive & diversified. We sold to a great family – couldn’t be happier.
Commercial Real Estate ($1.67M: $90k increase) Good headway at work. Although part of this increase ($30K) is just because I added wrong in Q1. We did a small deal that accounted for the rest.
We still have a few deals right on the goal line of becoming fully funded. Those have taken a few extra months to close due to tougher current lending conditions than a year ago. They should be fully capitalized & start during Q4. We also have a few deals that should begin stabilizing and refinancing (construction financing —> permanent financing) in the back half of this year or first half of next. Due to how I define book value (below) this should also create/acknowledge some net worth increases.
As discussed previously, I track these commercial real estate projects by a personally-defined Book Value. Southern Fried BV = my implied ownership equity amount based on appraised value at time of most recent capital event: construction loan, permanent loan (stabilization), or sale. So this mitigates speculative swings in the real estate market somewhat – only increases equity accounts when an appraiser or purchaser validates things. It tends to understate projects, especially as they near a capital event.
Our Primary Residence ($616k: $100k decrease) Finally sold our old home and retired the debt on our new home. Good to have less money (and time) tied up in multiple non-rentals.
|Net Worth||Subtotal||Total||Comments / Change from Q1|
|Cash/Short Term||$35,632 ||Down $10,000|
|Bank 1||$26,843 |
|Bank 2||$16,945 |
|Stocks/Bonds||$970,811 ||Up $355,000
|401k 1||$210,358 |
|401k 2||$38,603 |
|IRA 1||$90,386 |
|Roth IRA 1||$59,500 |
|Roth IRA 2||$51,041 |
|529 Plan 1||$81,484 |
|529 Plan 2||$72,622 |
|Taxable Account||$293,743 |
|Charitable Trust||$66,051 |
|Rental House||$140,771 ||Down $100,000
|House Debt||($149,229)||52% LTV|
|Commercial Real Estate||$1,668,500 ||Up $90,000
|Property 9||$85,000||New Construction: Hotel|
|Property 10||$10,000||Land: Apartments|
|Property 11||$10,000||Land: Apartments|
|Property 12||$10,000||Land: Office/Apts|
|Net Investment Assets||$2,815,714 ||Up $340,000
|Primary Residence||$616,376 ||Down $100,000
|New Home Value||$616,376|
|New Home Debt||$0||Paid Off...Again!|
|Total Net Worth||$3,432,090 ||Up $240,000|
Looking forward at net worth, I think the next two quarters will be pretty strong. We should actually start the next two projects…been meaning to start them for the past 4-6 months. Our atypical spending has decreased also – with less new house work/decorating and less old house maintenance/utilities to pay.
As far as general living expenses, we’re probably a little higher than last year. It’s been hard for me to keep the frugal effort going since I sort of think we’re at FI anyway (my wife disagrees). So I have gotten a bit more lax as I feel us passing further past the finish line. I don’t want this to get out of control, but a little should be fine in my opinion.
We’ll continue rolling any surpluses, bonuses, and real estate distributions into stocks/bonds when possible to diversify away from our current “monopoly board” of RE-heavy investment mix. We took a good step this direction with selling one of our rental houses this summer, rolling the cash into a 529 plan with typical stocks/bonds investments.
Here’s to reaching the new $4M goal soon. And having the cojones to actually pull the trigger on the RE portion of FIRE. Cheers!