For the years I’ve been blogging, I’d always been hesitant to reveal too much personal financial information for a few reasons. The primary issue was that a few friends and family were routine readers and commentors and I thought it might be a bit awkward sharing the most private details of our personal finances. I didn’t want our finances to be a routine topic of conversation and gawking, as ordinary as they are. Well, fast-forward a couple years and I’m relatively certain none of these people follow the blog any more. I just hadn’t been writing as much, was using a freelance writer (I miss JT!) and allowing some guest posts now and then. Since I blog anonymously, I’m now relatively certain nobody I know reads this blog (that’s really saying something! haha); anyway, I was inspired by a recent post from one of my favorite bloggers J.Money at RockStar Finance where he posted the net worth of personal finance bloggers. It was an enjoyable read, so I figured maybe now’s a good time to start posting my net worth.
Background – How I Make Money
Before getting into specific numbers, since net worth is very much determined by where you live, how much you make, how much you spend, whether you have kids, your age, etc., I think some context is appropriate:
- Age – 38, started working full-time at 22 out of college
- Education – Chemical Engineer, MBA
- Job/Industry – Director of Procurement in a midsize biopharma (I do “OK”, with the same firm for years, but many of my friends and colleagues have jumped firms over the years for more money)
- Single Income Family – My wife left the workforce after working only a couple years as a teacher when she had our first child. 2 more children followed and she’s been home ever since, now 9 years. She’ll probably go back in 3-5 years once our youngest is well into elementary school. As a public school teacher she won’t make a killing, but teachers end up with better benefits and her salary can help fund the kids’ 529 plans, vacations and such.
- Locale – Northeast, affluent suburb 30 minutes from city. Medium-high cost of living, but not New York City or West Coast by any means.
- Other Income – I am a co-founder of an outsourcing startup for outsourcing REVIT, Autocad and other engineering services. The company is doing much better than it was a year or two ago, but I have yet to ever recieve a distribution. We’re doing well enough that my partner/founder was able to quit his full-time job and run it himself, but since we’re still virtually break-even each quarter, we’ve pretty much just continued to invest in the business. I am also a landlord and have posted some humorous stories about what happens when you rent to college kids, but again, 3 years in, not a single distribution. I do have some equity in the properties obviously given years of mortgage payments and my down payment, but due to some prior bad apples, we’ve had to spend what would have been profits on repairs, legal fees, etc. I’m obviously a blogger as well. I used to make a few thousand dollars per month which was the most awesome thing ever from a financial standpoint. However, as things continued to evolve with Google algorithms, which companies were using affiliates, my freelance opportunities, etc., that number has dwindled to probably a few hundred each month. I don’t really write for the money now, I just enjoy continuing to write now and then. My job has become much more demanding to the point where I’m working late and traveling enough that any freetime I used to spend writing at night is now more dedicated to kids and household demands. So, I write when I can on weekends now and then. Since I make more now in my “real” career, and had always treated the blogging income as a bonus, it hasn’t killed our finances, but it certainly puts a dent in how much I put away each month in the 529 plans, etc.
- Spending Patterns – I’m not the posterboy for frugal living. We work hard, play hard. When we decided not to build a McMansion and move into a more expensive situation, we wanted to do something big here since we decided to stay, so we put in a pool (and learned a lot about Contractor Tricks). We do the typical trips to Disney, the shore, we ski each year and do a lot of activities. Each kids’ swim season is $800 in the winter a few hundred in the summer. In essence, we don’t do the “picnic instead of dinner out” and ripping of Bounce sheets. I like to cut our costs with investments in home energy savings like my favorite move recently – TheNest, new windows and such, but if you’re wondering why I’m not maxing out my 401(k) and have all kinds of money flowing into investment accounts each month, it’s because we do have a fairly high cost lifestyle. I look at it as trying to have some balance. We don’t spend so much that it’s irresponsible, and we remain on track to hit our retirement goals at this pace. But at the same time, I think some people overdo it and live like misers in their prime years (prime years of their children as well) and then have more money than they know what to do with when they’re elderly. What a waste. With that said, here’s how I keep track of our net worth:
All bloggers posting their net worth take a different approach. Some people might count cars, TVs and collectibles and such in their net worth. I don’t really bother trying to count things in the gray area to boost my net worth. I’ve been tracking my net worth myself for several years now (it’s incredibly easy and fun with a free service like Personal Capital now) and tend to count only actual investments, known equity in properties, actual cash on hand, but also the current valuation of company-issued stock and options even if not vested. I have not counted any present value of accrued pension benefits, although I probably could. Same with Social Security. After all, by law, I am entitled to a particular benefit when I reach retirement age, but I’d like to focus my tracking on more tangible, in-hand assets should I ever need to liquidate funds and access them.
Net Worth Breakdown:
(click to enlarge for total net worth)
I break my net worth into 4 categories each month:
- Total – Summation of all categories – all assets minus all liabilities
- Net Worth ex-College, ex-Real Estate – I excluded college savings and real estate equity since this would not be easily accessed, even in retirement. I make the assumption any dollars in the kids’ college accounts will need to be used for their needs and we will need to continue to live in our home or equivalent
- College Savings – This is a category I track closely to be sure my kids have at least $100,000 each by the time they hit 17. So far, on track with some aggressive assumptions.
- Retirement Only – Included the various 401(k), IRA, Roth IRA
Random explanations and details – I don’t really carry much of an emergency fund. I view it as a waste to leave $30K-$50K sitting in a savings account losing money to inflation. So I rely on my taxable trading account. If I were laid off, I’d get probably 9-10 months’ severance and I carry some short positions in my trading account so even in a down market, I’d be able to cover a year’s living in total. That “interim BLG” entry is anticipated earnings for the current month’s blog business which has not yet been paid. Adsense, other payments often come through a month or so after they’ve been earned. The options and RSU are long-term comp from my employer. The 47K for investment real estate is a rough estimate of what I’d get if we sold our investment properties based on my share. 401(k) was just about on track to hit 300K until the market reversed over the past month or two. The Ameritrade IRA is a Roth. I had listed bitcoin in the retirement category because I don’t think there’s a tax liability there upon sale? (uncharted territory – here’s how I bought my first bitcoin). Our net worth is Heavily dependent on the stock market, as I’m still young and invest very aggressively, including the kids’ college funds. As my oldest reaches 14 or so, I’ll dial back the allocation in his 529. In terms of retirement funds, I intend on staying 100% stocks until probably 50. Therefore, a single down market month can easily wipe 10-20K off the net worth. But it’s been nice to see many months where the net worth increased 10-20K while heavy investors in bonds have seen their funds stay steady or even decline of late.
What Are Your Thoughts on My Reveal?
Good Approach? Agree with Methodology?