Net Worth Update Definitions

Below are the details and definitions for all line-items that appear on our monthly Net Worth Updates.

Assets

  • 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.
  • 401(k) – My wife is eligible for her 401(k) plan at work while I must wait several more months before I can start my own.  Therefore this will represent the value of her investments in her company 401(k) plan.  Eventually mine will also be included.  It is a traditional 401(k) account where contributions are tax-deferred.  That means we get an immediate tax deduction in the year when contributions are made, but when we begin making qualified withdrawals at retirement age it will be taxed at ordinary income tax rates.
  • House #1 – Primary & Rental – This represents the value of our new duplex.  We know the current value because of an appraisal done during the purchase process, which should validate the number as reasonably accurate.  I do not intend to update this every month, but will consider doing it yearly.
  • 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.

Liabilities

  • 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.
  • House #1 Mortgage – The amount owed on the bank loan for our first property.  The loan terms are 5.5% over 30-years.  We will make regular, monthly payments for this loan.
  • 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.
  • Other Liabilities – Used to offset money held in our asset accounts, which ultimately will not be ours to keep.  The one big item in here currently is Tenant Security Deposits that we have in our Checking account.  The money is not technically “ours”, since it must be given back to our tenants at the end of their lease — less any costs for damages or losses that we decide to keep.  Therefore we are just “holding” it until the time when we must pay it back.  We get a truer picture of our actual net worth by tracking it in this way.