Happy New Year! Another quarter-end, I can’t believe how fast time flies! And we all know what that means, right? Net Worth updates across the Financial Independence blogosphere! For us, this is a special NW update because it’s the last one before we both give notice at work in two months! And the last NW update before our apartment goes on the market! In other words, this better looks good, otherwise, we might get cold feet, also known as One More Year Syndrome. Soooo, where do we stand financially? Here are the numbers…
Our Net North at year-end came in just below three and a quarter million USD, that’s a gain of about $185k, or 6% in the quarter:
Let’s dig some more into the details:
- Credit Card debt went up. We recently got a new credit card with a 0% teaser rate for 12 months, 20,000 travel reward points, no annual fee and no foreign transaction fee (BofA Travel Rewards Card).
- Our investments benefited from the strong equity performance. Everything equity-related went up roughly in sync with the S&P500 return (6.1% price return, 6.6% with dividends).
- Fortunately, our home value has stabilized again and even went up a bit after the drop in Q3. This is the Zillow estimate ex 8% transaction cost minus the mortgage and HELOC. I’d still take it with a grain of salt because some of the recent sales in our building deviated from their respective Zillow estimates by five-figures! Both up and down!
- The 401(k) grew a bit faster than the market return, obviously because of our contributions. In addition to my own contributions ($18k/year) and the company match I also made supplemental after-tax contributions that will be transferred into a Roth once I leave the company.
- Little Miss ERN is happy to know that at the tender age of 4, she already has $30k in college savings! I still count that as our net worth because this account could potentially serve as a last-resort cash reserve in case our retirement finances were to blow up!
- We got a nice surprise in our private equity portfolio. In late 2014 we made a small angel investment in a startup. At $30k it was small enough that a total loss would not derail our plans. Remember, some folks lose $30k during a lunch break! But the company has done pretty well and now brought a pretty well-known investor on board. Our (non-traded) shares were valued at $44k in the most recent round of financing. I know, the accountants here might not like booking an unrealized profit like that. But I’m conservative with my estimates everywhere else, so let me have fun with this investment!
- The options trading strategy keeps chugging along pretty nicely. The actual return on the investment was 4.5% during the quarter (+21% for the year!) but we transferred some money to the private equity real estate portfolio to satisfy a capital call in one of the real estate funds.
Where do we go from here?
Hopefully without jinxing anything, let’s move up the Q1 2018 target to $3.35m, $100k above the 12/31/2017 figure (and $150k higher than the 3/31/2018 target from the previous quarterly net worth update):
- The $100k jump includes the annual bonus to be paid out in Q1. I hope that I’ll get a little bit more than that, but just to be on the safe side, let’s low-ball the bonus a little bit.
- We like to keep a bit more of a cash reserve in the checking account to be prepared for unforeseen expenses so we will probably keep some of the bonus money in the checking account.
- We will utilize the 0% rate (until 12/2018) on our new credit card. Yup, that’s right, we will live off a credit card for a while because we have to front-load our 401k contributions during the first three months. Get a life, Dave Ramsey, we actually like debt and leverage in small doses!!! It’s to make sure we get the maximum $18,500 pre-tax contribution and $16,000 supplemental (after-tax) contribution before I quit!
- A fresh $11k contribution goes to our IRAs.
- The private equity funds will probably generate more income than $3,930, but I assume that the excess cash flow is deposited in the Options Trading Account.
- I assume that our apartment would not have sold by quarter-end. If we do sell the unit faster than I expect, the bulk of the proceeds will move into the options trading account. Also, I’m rounding down the value again, just to be on the safe side. That Zillow number has been bouncing up and down too much, so I like to play it safe here.
In any case, it looks like we’re on track to move from FI to FIRE pretty soon. Well, we better be on track because in multiple ways we’ve already handcuffed ourselves to the idea of early retirement. Most importantly, we already started with some pretty elaborate travel planning for 2018:
- A two-week trip in April, attending the Virginia CampFI and visiting family in the area.
- A three-month trip to Europe in the Summer.
- Swinging by FinCon in Orlando (not Tampa, sorry for the typo earlier!) in late September! For the first time ever, yay!
- A two-month trip to Asia and Australia/New Zealand in the fall/winter.
Since all of that is probably not quite consistent with a 9-5 corporate job and we already booked most of the airfares and made substantial down payments on several cruises we are about as committed as we can get! Stay tuned for updates in the next three months!