Net worth progression from December 2017 to April 2019

Once a month I share a financial update.

Related: Financial Update #12 - March 2019

I do this as it’s motivational to see the progress other people are making on their financial goals and, hopefully, to provide some motivation for others as well.

I shared my first net worth update back in April 2018 and have been sharing monthly updates since.

Income & Expenses

Income

My 9-5 job income listed below is the sum of my post-tax salary plus my 401k and HSA contributions. Any side hustle income is pre-tax since it’s hard to calculate what I’ll end up paying on this until tax season.

9-5 Job Income
Software Engineer$8,767
Side Hustle Income
Medium$107
Total Monthly Income$8,874

Expenses

ExpenseAmount
Rent$865
Car Insurance$50
Miscellaneous$28
Internet$20
Total$963

Based on the above, I saved about 89% of my total income in April –– which, as I’ll talk about below, is not entirely honest.

Net Worth

Here is a summary of my account balances as of May 2, 2019:

Cash Reserves
Savings Account$23,286   (+$7,115)
Checking Account$6,657     (+$385)
Total Cash Reserves$29,943   (+$7,500)
  
Tax Advantaged Accounts
401k$40,372  (+$2,788)
HSA$3,846    (+$342)
Roth IRA$5,596    (+$101)
Total Tax Advantaged$49,814  (+$3,231)
  
Non-Tax Advantaged Accounts
VTSAX$62,083  (+$1,121)
Brokerage Account$3,801    (+$174)
Total Non-Tax Advantaged$66,884  (+$1,295)
  
Net Worth$145,642   (+$12,026)

Here’s a look at my net worth progression since I started tracking it back in December of 2017:

Net worth progression from December 2017 to April 2019

Recap

From March to April my net worth increased by $12,026, a 9% increase since last month, mainly due to two factors:

1. Tax refund season

All year long we give Uncle Sam an interest-free loan and every spring he comes back with a smile on his face, “giving” out money as if he’s doing us a favor. We just overpaid you Sam and all you did was keep the money for longer than you should have!

Still, that tax refund always feels like free money and it provided a nice savings boost. I included the refund as part of my net worth, but not as income for the month due to it’s one-off nature.

2. Good month for the stock market

Much of this month’s increase was due to another good month for the stock market. VTSAX shares started April around $72 and ended around $73.30:

Chart showing stock price of VTSAX during April 2019

Most of my money is tied up in VTSAX, which tracks the market as a whole, so as the market kept climbing so did my net worth.

And two other notes for April:

3. The 89% savings rate is a lie

As in last month’s update, my savings rate is artificially inflated since Sammy owed me some money from a couple months back when we bought a car together. Since she’s been paying for food and miscellaneous expenses to make up the difference my expenses have been much lower than usual.

However, we’re now all squared up and going forwards my savings rate will be an honest measure.

4. A few extra bucks courtesy of Medium

I also made a few extra bucks in April through my posts on Medium. It’s a far cry from that glorious high of $847 in August of last year, but I’m not complaining. I do plan to get back to Medium some time in 2019, but work and some side projects have kept me busy.

Where Did My Money Go?

I haven’t made any investments since January. I’ve been padding my savings instead and will keep doing so for the time being.

Why?

From How To Make Lots Of Money During The Next Downturn:

Bull markets last on average about 97 months (8 years) each and gain an average of 440 points in the Standard & Poor’s 500 stock index. By comparison bear markets since the 1930s have an average duration of only 18 months (1.5 years) and an average loss in value of about 40 percent.

If we are to say the recovery began in 2010, then 2018 is the 9th year of the current cycle. With the Fed starting to tighten, valuations close to all-time highs, and earnings growth slowing down, we can conclude that it’s logical to start taking some risk off the table.

It seems likely there will be a recession before the end of 2020 (11-year cycle). Therefore, you want to move mostly to cash and CDs before then or have short positions that outweigh your long positions at the very end of the cycle.

I’ve been reluctant to invest in the stock market in 2019 due to the sky-high prices, but I wasn’t sure if this reluctance was just ignorance/fear rearing its ugly head. The correction in the stock market at the end of 2018 and posts like the one above, however, have provided enough support for my reluctance that I’ve decided to continue holding out.

Though the market keeps on climbing, it’s bound (this, of course, is just my opinion, which is basically worthless –– I know nothing) to come down and when it does I want to have cash available to buy stocks at a discount.

In the meantime, I’ll continue to make my regular monthly 401k and HSA contributions.

Where I’m Headed

Spring is at its peak, summer is around the corner, and Seattle weather is close to perfection. April was great and hopefully May has some good hiking in store for us.

As far as net worth goes, depending on how the stock market plays out, I should have the $200k mark within sight by the end of 2019.

Regardless, the plan remains the same: keep a high savings rate, plug all I can into VTSAX (though this is on hold for the time being and I’m plugging all I can into my savings account for now, as I talked about above), and continue to chip away at the 401k limit.

Thanks for reading and if you have any questions or comments, you can reach me at ziadig@gmail.com.