2017 - Financial Year In Review

2017 has been a better year than 2016 in terms of finances. Our good health still remains our greatest blessing. I wish to thank the powers that be for this incredible gift. As we get ready for 2018, I want to look back at last year and review finances. The format is going to be very similar the 2016 post, which can be found here.

Total net worth

This is a sum total of all the liquid assets, investment assets minus all the debt, which is our mortgage loan. Property value is not included.

Beginning of year balance (Saturday, January 14, 2017): $90,120.35
End of year balance (Saturday, December 16, 2017): $163,332.47

Net Change: +$73,212.12
Percentage Change: +81.24%

Liquid net worth

This includes a total of all the liquid accounts.

Liquid net worth change

Beginning of year balance (Saturday, January 14, 2017) - $161,230.18
End of year balance (Saturday, December 16, 2017) - $44,321.82

Net Change: -$116,908.36
Percentage Change: -72.51%

Paying off the mortgage is the reason why our liquid net worth is low.

Investments

This includes change in value of investments in 401k, Roth IRA and taxable accounts at the end of the year.

Investments through 2017

Total invested (Saturday, December 16, 2017): $100,354.41
Total value of investments (Saturday, December 16, 2017): $115,376.71

Change: +14.97%

Debt

2017 is a wonderful year where we paid off our house and eliminated all debt.

Saturday, January 14, 2017: -$124,913.24
Saturday, December 16, 2017: $0

Change: Debt eliminated!

Total Expenses

Total expenses in 2017 are insanely high because I am counting the mortgage pay off as an expense.

2017 Total expenses: $144,977.76
2017 Total expenses (without mortgage pay off): $19,797.58

2016 Total expenses: $32,385.66
2016 Total expenses (without mortgage payments): $19,530.03

Change: +347.66%

I think the interesting thing here is that we are able to live on less than $20,000 per year if we don't have a mortgage, and this includes home insurance and property taxes.

Food

2017 groceries and eating out: $3,226.18
2016 groceries and eating out: $2,688.83

Change: +19.98%

I am not sure how we spent almost $600 more in 2017 compared to 2016...I am going to keep a close eye on this in 2018.

Computer related expenses

2017 computer expenditure: $1,456.29
2016 computer expenditure: $2,149.85

I am kind of surprised that I spent over $1,400 on computer related expenses, and this number is kind of high considering I did not build a gaming machine in 2017. More than 50% of the expenses is for one item - the MSI 1080Ti. I really need to take it easy with computer related purchases in 2018.

Change: -32.26%

Video game purchases

2017 video game purchases - $222.60
2016 video game purchases - $179.50

I said I intended to keep the game purchases low in 2017, and I failed at it. Considering the Steam backlog I have, I really shouldn't be buying any more games until I finish a significant portion of it.

Change: +24.01%

Unplanned big expenses

2017 Unplanned big expenses: $348.00
2016 Unplanned big expenses: $3361.27

Fortunately, 2017 has been kind of us in terms of unexpected expenses. I am hoping it will be the same in 2018!

Change: -89.65%

Conclusion

My financial goals for this year include maximizing 401k, Roth IRA and HSA. and budget for fun, so that I can spend money guilt free. Overall, I am very happy with the progress we made in 2017.

Paid Off Our Mortgage

We paid a total of $3,572.87 in interest in 2016. I began thinking about it over the course of the last few weeks. I did not see much of a reason to keep paying interest to the bank when I have the funds to pay off the loan in full.

Between my interest earning accounts, I earned a total of $2,738.51. Therefore having the mortgage cost me $1,148.17, that's $3.17 per day. between Monday, February 1, 2016 and Saturday, January 28, 2017.

It got to the point where having the money in the bank isn't increasing my net worth.

Interest paid in 2016

There have been several good arguments made in favor of not paying extra towards the mortgage and investing the money in the stock market in mutual funds, like S&P 500.

However, I realized this particular argument does not fully apply to my situation. I have enough money to pay off the mortgage in my CD and Savings account. So my choice comes down to investing the money as a whole in the stock market or liquidating the CD, and combining it with funds in my savings account, to pay off the mortgage.

Now, there will be folks out there who believe that investing the money as a lump sum in the stock market in an S&P 500 fund is the way to go. They are not wrong. I want to make that very clear. I have a feeling that doing so will put me ahead in the long run.

I just don't have the courage to do so.

I would rather pay off the mortgage and invest what I would have paid towards it in the stock market every month.

With this strategy in mind, I called the bank on Monday, January 23, 2017, to close my 60 month CD and have them deposit close to $100,000 in my online savings account. They closed the CD without any issues, and the money was deposited in my savings account on the same day. I received an email confirmation from the bank about the account closure.

CD account summary

I had to pay $1081.77 in early withdrawal penalty, so my initial balance of $100.905.97 was reduced to $99,824.20, which was deposited into my savings account.

Savings account summary

I initiated a transfer of $126,000 from my savings account into my checking account at 7:34PM on the same day. The money was deposited into my checking account on Friday, January 27, 2017.

I called the mortgage company first thing in the morning, and got the necessary details about paying off the loan. I was told that I need to pay off the balance through a wire transfer. I was given all the necessary details needed to include on the form, such as the ABA number, destination account number etc.

I went to my local bank and initiated the wire transfer at 9:24 AM. They received a confirmation at 9:31 AM. The process was very simple, and it cost me $12.

Checking account activity

At 9:45 PM on the same day, my account status on mortgage account was updated.

Mortgage paid off!

I was told that I am going to receive my escrow balance check, and satisfaction of mortgage within 30 days. The mortgage company is going to contact the county clerk office to update them regarding this, so that I can receive my tax bill.

I will have to contact the homeowner's insurance company and have them remove the lender from my account and send me the bill for home insurance going forward.

My liquid net worth (including investments) has of course dropped significantly, but I am fine with that, considering I do not have mortgage payments anymore. I intend to put a savings plan in place, and hopefully save close 95% of my pay check, and I would imagine that it will grow over the course of the next few years.

My current net worth after the pay off

2016 - Financial Year in Review

2016 has been a wonderful year for finances. Our greatest blessing remains our good health, which is what enabled us to make great progress. I wish to thank the powers that be for all the gifts. As we get ready for 2017, I want to look back at last year and review finances. There is no particular format for this review. I went through my expenses spreadsheet and made some observations.

Total net worth

This is a sum total of all the liquid assets, investment assets minus all the debt, which is our mortgage loan. I choose not to include property as an asset...I don't have a reason for this.

Beginning of year balance (January 16, 2016) - $19,227.71

End of year balance - $80,704.86

Change - +319.73%

Liquid net worth

This includes a total of all the liquid accounts.

Beginning of year balance (January 16, 2016) - $138,639.33

End of year balance (December 16, 2016) - $161,365.71

Change - +16.39%

Investments

This includes 401k, Roth IRA and taxable investments.

Total invested in 2016 - $25,947.63

Total invested (December 16, 2016) - $40,817.69

Total investment net worth (December 16, 2016) - $44,864.63

Change - +9.91%

Debt

We are fortunate enough to be debt free except for our 15 year mortgage loan @ 3%, for our house which we purchased in December 2015.

January 16, 2016 - (-$134,097.00)

December 16, 2016 - (-$125,525.48)

Change - +6.39%

Total Expenses

I think there are several areas where there is some room for improvement.

2016 Total expenses - $32,298.31

2015 Total expenses - $57146.40

The reason for high expenses in 2015 is due to the 20% down payment for our home.

Change - (-43.48%)

Food 

2016 groceries and eating out - $2688.83

2015 groceries and eating out - $2692.17

Change - (-.12%)

We could have easily saved more, but some careless decisions led to getting so very close to the 2015 amount.

Computer related expenses

2016 computer expenditure - $2149.85

I built a new Skylake machine costing $1728.90...I don’t regret it, but I am going to take it easy with computer related expenses going forward.

2015 computer expenditure - $1591.95

Every year from 2012 onward, I’ve spent over $1500 per year on computer related expenses. I think 2017 is the year to break this trend.

Change - +35.04%

Video game purchases

2016 video game purchases - $179.50

Two copies of Battlefield 1, and one Uncharted 4 are the major culprits.

2015 video game purchases - $200.16

Two copies of Battlefield Hardline, Legend of Zelda are the major culprits.

I intend to keep video game purchases under $100 in 2017.

Change - (-10.32%)

Unplanned big expenses

Expenditure for 2016 - $3361.27

A $1500 car repair, a $1100 trip to New York City for a family wedding and a root canal, all contributed to this. I am hoping 2017 will not have any surprises like this.

Expenditure for 2015 - $407.60

Change - +725.13%

Yearly Net Worth for 2016

I have been tracking my net worth since September 2014. I calculate it after the 15th of each month when CD and Savings interest deposit gets credited.

Here is the overall net worth graph -

Our net worth from September 2014 to December 2016

The sharp drop in net worth happened when we put a down payment on our house, and added the mortgage loan to the net worth calculation.

Here is the 2016 net worth graph -

Our net worth through 2016

Here are the raw numbers for the year 2016 -

Saturday, January 16, 2016 - $19,227.71
Tuesday, February 16, 2016 - $23,754.88
Wednesday, March 16, 2016 - $35,170.08
Sunday, April 17, 2016 - $39,981.02
Wednesday, May 18, 2016 - $45,126.21
Thursday, June 16, 2016 - $50,424.84
Saturday, July 16, 2016 - $56,655.58
Tuesday, August 16, 2016 - $61,539.37
Friday, September 16, 2016 - $65,852.22
Thursday, November 17, 2016 - $75,676.98
Friday, December 16, 2016 - $80,704.86

We managed to increase our net worth from $19,227.71 to $80,704.86. This was done through diligent saving, tracking our expenses very closely, and .

So my goal for 2017 is to automate savings, and allocate a percentage of our income towards experiences, be it overseas travel or a road trip. I feel like we should now focus on building a life, and let the net worth take care of itself through automated savings.