This year I committed to increasing our net worth by $50,000 by reducing debt and increasing the value of our investments. This is a substantial amount and it is going to be a really challenging goal to achieve. To measure this goal I need to calculate a baseline net worth.
I’ve done just that. What you’ll find below is a simplified version of our net worth statement as of January 1, 2014. I’ve removed some of the more personal details and rounded the values to keep some measure of privacy. That said however, these are still good representations of our assets and liabilities.
So when it’s all said and done, Jane and I are worth about $350,100. Not bad given our age (mid thirties) and where we started. We do have some work ahead of use though if we’re going to be in a position to retire in 10 years.
One of the things that should jump out at you is the “Consumer Credit/LOC” line. It’s a pretty massive number, but don’t worry it’s not all car loans and credit card balances. We carry a pretty large amount of debt on a line of credit we have through our credit union. The reason for this is the extremely low rate we get as a result of a special relationship my firm has with the credit union. It’s lower than my mortgage! And since we earn substantially more from investing our discretionary income – we’ve chosen to put our money in the market rather than repay debt.
So over the years we’ve used this account to invest into our home (almost half of the balance) and buy some securities. There is some “consumer credit” there however. We’ve splurged in the past. It’s amazing how quickly a credit card balance can get away from you if you’re not paying attention. Over the past two years, we’ve paid a lot more attention.
With the new job however, the rate on my line of credit is going to jump three to four percent. Carrying this much debt at that rate is no longer an option. I’ll be putting most of that new-found income into debt repayment.
Savings & Investments vs TSFA
Another thing that should jump out at you is the relatively low amount in our TSFAs when we seem to have money in our non-registered accounts. You’re right, it doesn’t make sense. Jane I have kept our finances somewhat separate. Right now I’m the only one with a TSFA account. Jane saves – but in regular savings accounts and GICs. That has changed since January. Over the past couple of months, I’ve helped her set up a TSFA with an online brokerage and we’ve started moving her savings into the marketplace. I hope to have her TSFA room fully used by July.
Measuring Net Worth
So that’s that. Now that I have a number I can use it to benchmark my progress, both against myself, the general population, and even against my fellow financial bloggers (J. Money at Rockstar Finance maintains a list of PF blogger’s net worths…very cool).
I’m also looking forward to calculating my PF Score….but that’s a topic for another post.
Do you track your net worth? How are you doing so far?
Photo Credit: Bullion Vault (with some changes made)