2nd Quarterly Net Worth Update

Time for a Quarterly Net Worth Update!

As a reminder, my net worth at the end of fellowship (July 1, 2017) was negative $208,000 (Excluding my $99,000 mortgage; more on that below).  I started writing on this website in November of 2017, and after my first six months (two quarters) as an attending physician, that net worth improved to negative $65,446, which was an improvement of $142,554

Where am I now in the 3rd quarter of my year and the 2nd Quarterly Net Worth Update?  Keep reading to find out.

[Note: I use personal capital to track my net worth.  It’s a great tool and is completely free.  If you sign up and own >$100,000 in assets, they may ask to help you with that.  I’ll refer you to my “Do-It-Yourself” Finance Page if you want to know what I think about whether you need help with your personal finances or not!]

Here we go!

Net Worth = Assets Debts

Assets

Here are my assets and their respective amounts for each category.  All of this is as of 4/26/18 (Except the checking/savings which is accurate as of the date of this post).

Asset Class Investment Amount 1/27/18
Checking Cash $18,700
Savings (early loan pay off/emergency fund) Cash $42,765
TPP 403B Vanguard Institutional Index Fund $26,979
  Vanguard Mid-Cap Index Fund $10,630
  Vanguard Selected Value Fund $3,442
  Vanguard Small-Cap Index Fund $6,315
  Vanguard Total International Stock Index Fund $5,094
Mrs. TPP 457 (governmental) NC Large Cap Index Fund (Black Rock) $4,139
NC Small/Mid Cap Index Fund (Black Rock) $2,508
NC International Index Fund (Black Rock) $1,669
My Back Door Roth Vanguard Total Stock Market Index Fund $5,282
Mrs. TPP Back Door Roth Vanguard Total Stock Market Index Fund $5,282
529 TPP Kid # 1 (Utah) $2,481
529 TPP Kid # 2 (Utah) $1,658
529 TPP Kid # 3 (Utah) $1,241
Home Equity $28,000
Total Assets $166,184

Some comments on my assets

Comment Number 1:  The market has been down.  This obviously impacts my asset numbers; though I have to admit its a lot less of an impact than it would be for those with a larger account.  Despite this, my account still is growing because contribution determines the largest portion early on.  This is why it’s important to live like a resident after training.

Comment Number 2:  I put up these updates one month later than most because I receive a clinical bonus (picking up extra shifts) the month after each financial quarter.  Putting in the extra work certainly helps achieve our goals faster.  We are short staffed right now where I work, and so extra shifts really just means working the ones I am assigned.  Every dollar helps, though.

Battery powered car
Their car may be much less expensive than mine, but they probably have just as much fun. They love my car, too, though 🙂

Comment Number 3: My wife and I are doing pretty well to be putting away as much as we are into our 403B and 457 + 529 for each of our three kids + backdoor Roth + all the debt we are paying off each year (~90k per year).  I am proud of what we are accomplishing.  It looks like we are on the right track.

Comment Number 4: Just going to try and sneak this in here, but I’ve made the decision to go pre-tax (standard) with my 403B contributions for the next year and a half while we pay down our student loan debt.  This will allow us to pay an extra $500 per month towards our loans. I plan to switch back to roth contributions after that.

Comment Number 5:  I have a really good (not great) match at my employer.  My contribution annually is my max of $18,500.  My employer matches/contributes up to a total of $47,000 for my current pay scale.  Not quite the max that they could (up to $55,000 in 2018), but still really good.  This helps a lot.

Comment Number 6:  I plan to rebalance my portfolio every year.  So, this will occur after my next quarterly net worth update in July. You can already see that my institutional fund (large cap) is starting to account for a disproportionate amount of my investment space.

Comment Number 7:  I recommend that most people use an 80/20 (90/10 at the max) stock/bond ratio.  If you want to learn why I am 100% stocks until I pay off my student loans, you can read more about that on a guest post I wrote over at Physician on Fire.

Debts

Here are my family’s current debts.

As a shout out: If you want to read a great book that provides perspective on why you should aggressively pay down your debt, I recommend Dr. Fawcett’s book on Eliminating Debt for Doctors.

Class Amount of Debt
Student Loans $139,827
My Car Loan $41,127
Her Car Loan $25,500
Home Mortgage (~99,000)*
Total Debt $206,454

Some Comments on my Debt

*Comment Number 1: I received some interesting comments in my last Net Worth post regarding how to count your home in your net worth calculation.  Because I owe much less than my home is worth, then theoretically if I were to sell it today, I would only have an asset to realize.  As I started reading on this, I realized it is a controversial topic!

If sold, the debt would no longer be present. So, I have changed my net worth DEBT numbers to no longer include my mortgage.  The equity value above my mortgage value is listed in my assets.  I realize this is going to be controversial.

In the end, I am reaching my goals regardless of whether it’s included or not.Doctor's Guide to Eliminating Debt

Comment Number 2: The glaring car loans still exist.  And they will until they are paid off.  I’ve discussed this at length.  My car and playing golf with my kids makes me happy.  You won’t see me backpacking Europe, though.  Travel doesn’t provide me as much joy as many of the blogging community out there.

So, my frivolous money goes towards a couple of car payments.  To each their own.  I’ll get to my goals despite this. And you can, too.  You just can’t have it all at once.

Comment Number 3:  See comment number 3 under assets above.  With the changes to standard 403B contributions, we can expect our loan payments to be paid off two months earlier.  After thinking about this more (and how much I hate debt), it made more sense to worry about my debt right now.  This is taking priority for the next 16 months.

Net Worth / Goals Achieved

So, my net worth (Assets – Debts) is a total of (Negative) -$40,270.  Here’s my improvement over the following time periods:

  • In the last quarter (since my last Net Worth Update), I have improved $30,549.  That’s huge for just one quarter.  I only took home $15,000 the first three months of this year (plus one bonus). So, 2/3 of that went to building wealth!
  • Since I finished training (when my net worth was  -208,000), I have improved my position by $167,730 in just 9 months. That’s a lot of money that has gone to building wealth in the last 9 months!

Goals Achieved

Looking back at my original TPP Wealth Manifesto, I’ve now achieved some goals.

  • I wanted to get to $100,000 in assets by 1 year out.  I have more than 150% of that.  Even if you take out my anticipated early loan payment (currently hiding in part of my emergency fund) of $25,000 and monthly cash for this up coming months debt/life stuff…  I still have achieved this goal.  I am proud of that.  Hard work pays off.

Goals Going Forward

  • I proposed a goal of zero net worth two years out from training.  This was a reasonable goal when including my mortgage in net worth value estimates.  Still including that, I should get there 3-6 months earlier than my goal!  If you don’t include the mortgage, I’ll be there in only one year instead of the two I had planned on.  Either way, goals are being achieved.
  • I wanted to be free of student loan debt by July 1st, 2019.  That goal is looking like it will be realized.  I currently have $139,000 left, but have changed my monthly payment to $5500 going forward after changing my investment philosophy (pre-tax instead of roth).  Additionally, I have bonus money that will be going to this goal.  I hope to achieve pay off one or two months early of my goal.  I will have paid $190K in debt off in less than two years out from training.
  • My stated goal of living like a resident (and not buying the next house) until my student loans are paid off has also been achieved thus far.  We are still sticking to this plan.
  • Many of my other goals are much further down the pipeline, but that was the plan.  I still seem on track for those at this point.

How I will get there

I expect to invest a total of $76,500 (> 25% of AGI) via investment vehicles for retirement (403B + 457 + Backdoor Roth IRAs), an additional $12,600 for my kids 529 plans, $66,000 in scheduled student loan payments, and an additional $30,000-40,000 from bonus pay/incentives and side hustle profits.

I’ll additionally be paying off (financially unintelligent, but heart happy) car loans. With this plan, the total amount of net worth change over the next year should amount to ~$195,000 without any compounded interest taken into account (who knows what the market will do).

At this pace, I should expect to have a zero dollar net worth (and heading towards positive), by 12 months from now even if you include the mortgage in my Net Worth calculation.  This will be 18 months out from training, even though I started with a net worth of negative $208,000 (or $308,000 including the house).

There is hope!

So, for all of those students graduating or the young medical professional staring debt in the face, it can happen for you!  You just have to make a plan and stick with it!

We still intend to give >10% of our take home pay and 25% of the profits from this site towards charity (church, wellness initiatives, friends in need, charity, mission work, etc).  This will likely be closer to 15%.  Don’t forget to help those along the way.

I’d love to hear people’s comments. How do you think I am doing?  Could I be doing better anywhere (outside of those car loans, eek…)?  What questions do you have?  Leave a comment below.

TPP

16 thoughts on “2nd Quarterly Net Worth Update

  1. Don’t sweat the small stuff like cars. I wouldn’t even sweat the loans. Ten years from now you won’t even remember those loans.

    My kid is graduating next week from college. I put 20K in a UGTM for her which over 20 years produced enough money to pretty much pay for everything else not covered by her college fund like semester abroad plane trips home clothes a monthly allowance etc. The last dab I took out last week and used it to buy her a car, so she starts her life debt free and the college cash flow never bit into my own cash flow even after I retired with 2 kids in college. At least 2/3 of that cash flow for her was accrued interest aka free money. I never told her about the UGTM just used it for her benefit. I’m a big fan of pre-planning known future cash flow and using interest to pay for it or at least part of it.

  2. Enjoyed reading about your progress. You are doing great!

    Shouldn’t the years in the dates in the first paragraph be 2017?

  3. Thanks for the shout out of my book, The Doctors Guide to Eliminating Debt.

    I would suggest a different way to think of you house in the calculations. There should be no changes in your net worth with or without adding your mortgage. You should classify it in one of two ways:

    1: You count only the equity in your house on the asset side as you are doing.
    2: You count the mortgage on the liabilities and the real market value of the house (not the equity) in the assets.

    Both of those methods come up with the same net worth. I like the second one the best, because it doesn’t hide your debt. If you bury the mortgage in the calculation of the equity of the house, you lose sight of it as something to eliminate. Then you might eventually think you are debt free, but you still have a mortgage. I don’t like the idea of “debt free except for the mortgage.”

    Great job on the fast improvement of your net worth. Keep it up and you will have great wealth someday.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

    • I actually agree, Dr. Fawcett. I guess I took the middle ground between those two approaches by still noting my mortgage in the debt column with an “*” so that I wouldn’t forget about it.

      I love your idea of being debt free. It is definitely something I aspire to, though I’ll readily admit I’ll be buying a house when I become free of my student loans. The house will be less than 2 times my income, though. So, I hope to pay that off pretty quickly as well. Not sure if it will be in 7 years like you propose, but hopefully ten years or less.

      Thanks for stopping by!

  4. I’m in 100% stocks myself. I read all the arguments for having bonds as part of your portfolio, but if I did include them it would be such a small percentage that I figure the potential upside of stocks is worth the added risk. I did decide to allocate 5% to REITs.

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