The Net Worth Mission: June 2019

Calculating my net worth should be part of my routine.

So here I am!

May is over and we are already in mid-June. I wanted to post this earlier but I was quite busy. But anytime seems a perfect time to check how much I am worth! I’ve decided to calculate my net worth and to start tracking it on a monthly basis as I already do with other financial indicators.

On a very simplistic view:

Net Worth = Assets-Liabilities

Assets are what we own such as a residence or money and liabilities are what we owe, generally debt.

Why is it important to track?

Well, in one value we can say a lot about our financial life. It also helps to visualize progress towards financial goals.

As time goes by, our net worth will vary and it should allow us to map how rich or poor we actually are. Looking rich does not necessarily mean being rich. Having a big house or driving an expensive car means we are most likely falling into the trap of lifestyle inflation.

That means the more we earn the more we tend to upgrade from our basic needs!

If we owe too much and if we are not able to pay for it anymore, we would be left with nothing. Be aware!

Ideally, we do not want to carry too much debt, unless that is somehow part of our investment strategy. What comes in should always be higher than what goes out. This creates the magic positive cash flow.

Asset Listing

So I have listed what I own (and what I consider to be relevant):

• Real Estate
• Cars
• Money
• Savings
• Investments

I exclude minor values such as computers, guitars, smartphone, furniture, etc (due to the low impact these represent on my portfolio).

So adding up what is impactful, taking the market value of the real estate, cars, and current savings/investments I would end up with $712,211.01.

Looking to such number it does look good but keep reading!

Evaluating real estate can be a bit tricky so I have used online evaluation tools which gave me a projection of what I would be able to get if I sold everything today. However, the real price can always be different and fees/taxes would have to be taken into account.

So I take such an amount with a grain of salt and I do not consider it as 100% realistic. However, the main goal of tracking my net worth is to track its evolution and more importantly its direction.

Like everyone else, I want my net worth to keep increasing with time.

Liabilities Listing

Assets are great but most of us have liabilities as well. I am no exception so here it goes:

• Mortgage
• Loans

So adding these I currently have $474,340.51 in liabilities, mostly into my mortgage.

Ideally, we want our liabilities to decrease with time unless we are using debt to leverage our investment strategy. While I might agree, that our mortgage can be considered a long term investment, it is not a golden rule.

There are many factors to take into account but at least in Luxembourg, we can argue it has been a safe haven and considered a good investment over the years.

I also have a few loans but since their interest rate is so low, I am not really worried about paying them off. I think I am better off using the money to capitalize on my investments but it’s a personal decision. I have been quite disciplined and treat my investments as automatic payments.

I am not against paying off debt when interest rates are higher than your investment returns.

The Net Worth

So taking my assets and liabilities, I am worth $237,870.50 (as of June 1st)!

Not bad at all considering I am in my early 30s. However, I would be much better off if I had started my financial freedom mission a few years back.

My current mindset, priorities, and discipline would for sure avoided a few financial mistakes that every millennial tends to make.

The ugly part is that my liabilities are scheduled to increase at least until the end of the year. I have not used all of my allowed mortgage credit so I will have to use it in the coming months.

But taking into account my savings rate and investments, I would set as an achievable target of $230,000 in net worth by the end of the year. This assumes I will be able to pay down some of my debt and would have a positive evolution on my investment portfolio. This last part is largely dependant on how the stock market will develop given the current risk factors.

What is your net worth goal? Let me know in the comments below.

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Disclaimer: I am not a financial advisor. Always do your own research when investing.