This post will spill the juicy details of our current net worth. Read on for the exact breakdown and commentary.
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I’ve so far avoided tabulating my net worth on this blog. A few different concerns have stopped me.
First of all, I actually haven’t had a very accurate picture of this until we recently had to tabulate everything for a commercial mortgage lender. With the growth of our real estate portfolio, it’s become more and more complex to calculate our assets and liabilities. Services like Personal Capital are great for combining bank accounts, but they’re not as useful when you’ve got a lot of different mortgages floating around.
Also, you’ll read below that our net worth has risen over the last few years to a relatively high number. As a personal finance blogger, there’s some danger of alienating your readers if it seems like you’re writing from a place of overt privilege.
Imagine Jeff Bezos complaining about the cost of private school, for example. It just isn’t a very compelling argument.
Committing to brutal honesty
That being said, I think it’s time for more brutal honesty.
If I could describe this blog’s style, I’d say it’s brutal honesty mixed with mild humor and optimism. I think I firmly committed to this path when I first published a tabulation of our annual expenditures. In this seminal post, I counted up the full list of all the things that we spend our money on in a typical year. It came out to $340,000 a year.
The reception to that post was mixed. The Physician Philosopher famously reacted with concerned horror, which I found touching. The Financial Samurai later commented that he felt that he had found a kindred high spender in the world of personal finance writing.
The second response was generally shared by other high earners in high cost of living areas, where everything just costs a lot of money. I’ve identified these people as my target audience, but certainly I hope that a lot of what I write is generally applicable to any level of income and expenditure.
High earners should eventually amass a high net worth
I’ve also seen that any finance blogger with a high income will eventually amass a considerable fortune if they’re any good at managing their money.
The Dr-ess and I have high incomes, and we’ve been aggressively saving and investing now for quite some time. So it actually would be odd if we didn’t have a high net worth by now.
What is net worth?
At its most basic level, your net worth is calculated by adding together all your assets and subtracting away all your debts. That number is what most would consider to be your “net worth.”
Depending on your financial situation and investing strategy, this can be a simple calculation, or pretty complex.
At the end of the day, it’s up to you to decide which things should be counted as assets. Do you want to include the resale cost of your cars in your net worth? Go right ahead. How about the value of your rare coin collection? Sure. Your “vintage” mom jeans from the 1990s? I dunno about that…
So without further ado, here it is:
Our net worth (September 2020)
|Cash on Hand||$94,414|
|Real Estate Loans||-$1,734,453|
Cash on Hand
This category consists of cash in our checking or savings accounts. It includes our personal checking accounts, and also cash that we have sitting in our business checking accounts. The latter accounts are the ones that we use for things like property renovation, and all of our day to day expenses come out of our personal accounts.
|Name of Brokerage||Ownership||Type of Account||Account Balance|
This category is a pretty large bucket that’s made up of our combined stock portfolio. I have some individual stocks in the Etrade account (mostly made up of Tesla) and a little money in a taxable brokerage account with Vanguard. I cashed out most of my taxable brokerage accounts over a year ago to focus on real estate investment.
You can see that the vast majority of this bucket is made up of the Dr-ess’ taxable Vanguard account ($372,161). This includes some money market funds where we keep cash sequestered for private school tuition and real estate taxes, but it’s mainly the place where we put the profit from the sale of our first primary home. Her account used to be much bigger, but we recently transferred over $200k to pay off a big chunk of our HELOC (see below).
The last category is money that we’ve set aside in 529 educational savings accounts for our kids’ education. We’ve been putting away $1000 a month since they were born. I count this as part of our net worth because it’s money we won’t have to spend later, and if worse comes to worst we can always pull cash out with a 10% penalty on the gains.
Real Estate: Assets and liabilities
As you can see, the vast majority of this category is concentrated in our primary home in Southern California (if Zillow can be trusted). We’ve theoretically had a good return on this purchase, but it eats up a big portion of our income to pay the mortgage and property taxes on it.
Our rental real estate portfolio is also a rapidly growing part of our net worth.
Read more about our recent acquisitions here.
|Type of Account||Ownership||Account Balance|
|457b, 403b, 401a||Dr-ess||$500,796|
We have a real hodgepodge of retirement accounts between the two of us. What’s clear is that the Dr-ess has been working and saving for far longer than I have! Her retirement accounts dwarf my own.
Bank notes: Liabilities
|Type of Note||Account Balance|
|Student Loan 3.5%||-$216,004|
|Auto Loan 2%||-$33,409|
The HELOC is against our primary residence, and allows us to access quick, low interest credit up to $500,000. We’re using it to take down competitive real estate deals with cash offers.
The student loan is my consolidated medical school debt. I’m paying it down slowly and have about 10 years left to go on the repayment term.
The auto loan is for my Tesla Model 3, which is the most expensive car I’ve ever purchased. I think it’s worth it.
When you put everything together, our “net worth” is $3,046,858.
About 10 years ago when we got married, our combined net worth was about $70,000. Soon after we got married, though, our wealth got supercharged with a generous donation of $200k by the Dr-ess’ parents for the downpayment of our first home.
Read about how we caught the last upswing in the LA real estate market and made an 11-25% compounding return on our money.
But the vast majority of our money came from a decade of earning and investing with the help of a historic stock and housing market bull run.
So did I just gain credibility or lose readership by appearing out of touch? Probably both.
Coming up soon, I’ll discuss why I don’t feel “net worth” is as great as everything thinks it is. Subjective real estate valuation and taxes are two big problems with the overall concept, but there are more.
Read the follow up post: Why your net worth isn’t as useful as you think
But in the absence of any other great measure of wealth, “net worth” will have to do for now.
I’m sure you’ve got some thoughts. Please comment below, and subscribe for more brutally honest details!