Here is our first net worth statement. Moving forward I plan to total up all our accounts on the very last day of each month and provide them in this format.
At the top-level I intend to separate out Assets and Liabilities. This provides the best overall financial snapshot at any given time. I can quickly see how things look — what we own, what we owe. Our net worth is then calculated by subtracting our liabilities from our assets. In even simpler terms, net worth is the difference between what we own and what we owe. Since this is our very first posted statement, I wanted to take a little time and explain the line items within each section of the statement:
- Cash & Savings – Includes balances in our checking account, savings account, and any cash held at home or in our wallets/purses. This is money that we can quickly and easily access.
- Taxable Brokerage Accounts – Includes the current value of investments held in our Ameritrade iZone and Vanguard accounts. These are regular accounts with no tax-advantaged status for retirement. The typically investments in these accounts are mutual funds and individual stocks, although I will also include the value of money market balances too. This money is not accessible as quickly as cash and savings.
- Roth IRA – Both my fiance and I have tax-advantaged retirement accounts in addition to our regular, taxable brokerage accounts. I started my Roth IRA in college through Vanguard. My fiance’s grandparents started hers in high school when she had earned income from summer jobs. Her account is held at Ameriprise. Money contributed into these accounts has already been taxed, so the money will be tax-free when we eventually make qualified withdrawals at retirement age.
- Other Assets – We each own a car for transportation. This line item will represent the current value of those vehicles, as determined by Kelly Blue Book. This will not be updated every month like the other accounts, but instead will be re-assessed yearly.
- Credit Card Balances – Includes the current balance on any credit cards at the end of each month. In general, we pay off all credit card balances by their due date each month in order to avoid interest payments. But since those payment dates are different between the various cards, there will almost always be some balance to report on the last day of each month. We also may utilize 0% promotional rates from time-to-time.
- Student Loan – Includes the amount owed for our two, consolidated student loans. While we worked to pay our way through school as best as possible, we did come out with some amount of loans. We do not plan to immediately pay them off due to the low interest rates. But we will make regular, monthly payments to each.
- General Loan – I took a couple loans from a family member in high school and in college to pay for my car and to invest in the stock market. I also plan to make regular, monthly payments for this loan.
One final note for this month’s net worth statement: I started my new job yesterday, but will not receive my first paycheck until June 30th. Therefore this is our true “starting point” right after college graduation. The future looks and feels bright and I am excited to begin seeing our progress each month.