Poorer Than You

Money: It's Not Just For Rich People

Net Worth Update: March 2019

By , updated 25 Comments
This post may contain affiliate links

Happy April! In case you missed it, I continued the April Fools’ Day tradition around here with a bit of fun-poking around the idea of “mindset” and FI foods. Once the cat was out of the bag about the joke, I turned it into a game with a fun little prize: an Amazon gift card for whomever can name the most sources for the fun food references in the post! There are still a few days left and no one has yet been able to name all 33, so that prize could be yours!

In the meantime, let’s jump on into March’s numbers:

Change: +$8,248 or +7.72%

March Net Worth TOTAL: $115,063

March 2019 Net Worth Chart | Poorer Than You March 2019 Net Worth Breakdown | Poorer Than YouAnother month of doing okay!

I’m kidding. EIGHT FREAKING THOUSAND DOLLARS WHAT?!? Even though that’s not my “best month ever,” that’s amazing!

The explanation, though, is really pretty simple.

Cash: +$870

Most months I’ve been hoarding cash for bank account opening bonuses and for my upcoming dental work (oh joy). But this month, not so much! Instead, we dumped cash into our 2018 Traditional IRAs (Individual Retirement Accounts). This was planned for, so it wasn’t a hit, but it does mean that cash didn’t grow much this month, despite getting a big ol’ fat tax refund.

Grizzly Bears Fighting
As per usual, don’t yell at me about a tax refund being an “interest free loan to the government.” Not unless you want to bring out my yelling-back-at-you Momma Bear side.

Okay, understandably, some folks really may wonder why I chose to get a big tax refund this year, rather than keep my withholding low and invest throughout the year.

Well, the simple answer is: a lot of things changed from last year’s taxes, and we had absolutely no idea what this year’s taxes were going to look like. I didn’t know that my freelance client was going to stop giving me work, so I was withholding assuming that I’d get about $15,000 in work from them again in 2018, but instead, I got $0. Which is fine, but it means I over-withheld. By a lot.

We also didn’t qualify for Obamacare (ACA) subsidies in 2018 because, well, we were no longer on an ACA plan! So we didn’t know how that was going to shake up our taxes, and better safe than sorry to over-withhold.

So we got a big tax refund and we shoved it all into Traditional IRAs, which further grew our tax refund. It’s a fun virtuous circle that never ends! Until you hit the $5,500 per person contribution limit, that is. ($6,000 per person in 2019.)

Retirement: +$6,848

Right, so, I put $5,500 into the Traditional IRA. And I did my normal HSA contributions from my paycheck, as always. The remaining $700 or so was stock market growth, and that’s all she wrote!

Car: +$63

My car value is up again this month. Still basically irrelevant, still don’t know why it would be going up several months in a row… maybe 2004 Camrys are super hot right now? I know teens these days are wearing 90s mom jeans, so maybe it’s related. Seems like if you’re wearing mom jeans as a norm-core fashion statement, you probably need a silver Camry to complete the look.

Other Assets: -$15

My Lending Club account is nearly depleted! Gone soon, I imagine. Alas, poor Lending Club… it never lived up to what I wanted it to be.

Student Loan: -$150

Last month there was no change because the short month meant my end-of-February payment didn’t show up. Well, this month, we get the two-fer! February and March payments now reflected, so it’s double down. How exciting!

Credit Card: -$108

0% interest credit card and I have the cash to pay it off so I just pay the minimums for now… if you’ve been following along a while, you know the drill here!

One little fun update: Bank of America actually sent me an email this month to let me know the exact date that the promo rate is ending, and give me 90 days of warning. That’s nice, because I don’t like relying on my own calculation of “I signed up this date and it was a 15-month promo, therefore…” Seems too likely that I’d get hit with some sort of “gotcha.” But to have the end date in writing from the bank itself? PERFECT!

Other Debts: -$225

Car insurance payment month! Which means the “debt” that I calculate as growing every six months to pay it is now paid off. And it starts again!

Milestone Progress

Debt Freedom: No extra payments this month (again), so May 2024 is still the calculated date. Still more literal teeth to pull (and to pay for) and then I can think about switching us to debt-payoff mode again.

$200,000 in Retirement Accounts: Currently at $113,218 with $86,782 left to go! The “goal” is to hit it 5 years after hitting $100k in retirement, which is 53 months from now. That will take growth/contributions of about $1,637/month. That seems very reasonable, once we get past all this “paying for dental work” stuff, anyway!

Not super exciting in the explanation this month, but that’s how I like it! Boring, with big numbers.

I run these numbers by hand in a spreadsheet, and you could do the same, or you can check out Personal Capital for some automagical tracking. You and I each get a $20 Amazon gift card if you sign up through me and then link it up to at least one valid investment account.

Either way, add it up and let me know how you’re doing in the comments, below!

Time Travel

Photo credit: Steppinstars

Net Worth Update: March 2017

By , updated 5 Comments
This post may contain affiliate links

Happy April! Hope you enjoyed my big, wonderful April Fools’ Day joke on Saturday. Oh, and if you thought you were a smarty pants and didn’t download the ebook because you picked up on the fact that it was an April Fools’ prank? Then you got pranked as much as anyone else! Because there is some glorious actual content in that ebook for those who downloaded it and read past the “April Fools'” portion. If you love this blog, you’ll love what’s in that ebook, so check it out if you haven’t already!

And now, time for the March recap numbers:

Change: $8,433 or +22.11%

March Net Worth TOTAL: $46,582

Net Worth Graph, March 2017 - Poorer Than You

Money Money Money Money… MONEY!

Okay, so, a big jump like that? Definitely requires some explaining. (Didn’t I say in my April Fools’ post that I couldn’t post this net worth update without a serious explanation? YES AND I WAS NOT KIDDING.)

But first, let’s just celebrate:

Any excuse to use Liz Lemon gifs is a good excuse.

Alright, now that we’ve got our dancin’ on, let’s talk about where these numbers came from.

Taxes

I swear, I’ve had increases every month this year that could be attributed to taxes. That seems impossible, but it’s really not. Here’s what happened:

In 2016, my husband and I were both freelancers, which meant that we (our businesses) were responsible for withholding and paying our own taxes. We saved waaaaay more than we ultimately needed for taxes in savings accounts for our businesses. And we paid our quarterly estimated taxes throughout the year, using the “100% of the previous year’s tax burden” method. Those quarterly estimated tax payments (federal and state) were sucked right out of my savings account where I was (over)saving for taxes.

Additionally, since we were basing everything on 2015 numbers (“2015 actuals” if you want to be fancy about it), I paid more of the 2016 estimated taxes than my husband did, because in 2015, I made more. However, because of numerous factors (including my 2-month unpaid maternity “leave”), I ended up making less than he did in 2016. So, basically, he owed me some money. 😛

Our tax burden was lower than planned for because of several reasons, including getting sweet new tax deductions for having a baby, making less money because of the maternity leave, and our decision to shove as much money as possible into my HSA (Health Savings Account) and our Traditional IRAs. The HSA/IRA contributions alone resulted in a federal tax bill that was $2177 less than if we didn’t max out those accounts, and a state return that was $680 less (which actually turned it from owing, into a small refund!). So yeah, a net gain of $2857 – just for taking the extra money we’d hoarded and putting into the right investment accounts.

(At 7% interest, that $2857 will turn into about $21,748 in 30 years!)

The Marriage Bonus

Now you may read the tax info above and astutely notice “Hey! Your net worth partially rose because you took money from your husband and put it into accounts that are in your name! (The HSA and one of the IRAs.)”

You would be 100% completely right about that. And as I said, a portion of that makes sense, since I paid a greater percentage of our estimated taxes throughout the year, even though I ended up making less. But still, there’s a big chunk of my nearly-$9,000 gain this month that is just… my husband’s money being put into my name.

This is because when we got married, we decided not to combine our net worth information for this blog. It’s my blog, not his. Technically, my net worth shot up the day we got married, and it’s never been properly reflected on this graph. But over time, it’s starting to show up in little bursts, like this one.

Besides, marriage provides other net worth increases besides straight assets: you end up adding another productive partner (hopefully) to the “business” that is your estate. You split costs, like roommates, but also work together on common goals in a way that you would never do with a roommate (or maybe some people would, but those are some seriously buddy-buddy roommates if that’s the case).

So it’s not really surprising to see my net worth shoot up as a result of my husband and I both oversaving for taxes. That is what I call the “marriage bonus.”

Back to Work!

I got back to work after my maternity leave in February, but work really picked up again in March. I’m not running at full speed like I was before the baby – that would be insane, considering I’m working from home with the baby here. But I did ramp up somewhat in March, and I’m working on building buffer time into my life so that I can take on even more work. Mostly so that I can be flexible for my clients and handle a large workload for them during any given week, if they require it. I don’t want to turn down any work (if I can help it), and I want to stay reliable in everyone’s eyes!

So far, so good!

Instant Pot Update

Last month, I asked you all if I should get an Instant Pot. Thanks to some feedback in the comments on last month’s update, and on the Facebook page, I decided to go ahead and buy one.

It hasn’t come yet, despite shipping forever ago. I picked a cheap third-party seller on Amazon to buy from, and this is what I get. I’ve filed for a refund from Amazon, since we’re now way past the time frame where it should have arrived. I’ll probably re-buy directly from Amazon once the refund is processed… but I might set up a price alert and wait for a sale. A post by Trent on the Simple Dollar about the Instant Pot from the other day reaffirmed my reasons for wanting to get one… but also confirmed that maybe I should hold out for a good deal on it.

That’s it for this month’s update! Have you filed your taxes yet, or are you waiting until the last minute? If you’ve done it, how did that affect your net worth?

If you’d like to see how I stack up against other personal finance bloggers, be sure to check out The Ultimate List of Blogger Net Worths over on the Rockstar Finance directory!

Save

Net Worth Update: February 2017

By , updated 4 Comments
This post may contain affiliate links

February has been a month of reflection for me: between doing the 30-day money cleanse, doing our taxes, and generally reading & writing more about money (again). I also got “back” to work (from home) this month, which of course has been an adjustment. So, did it all help? Is my net worth growing at all?

Net Worth Graph for February 2017 | PoorerThanYou.com

Change: +$3,129 or +8.93 %

February Net Worth TOTAL: $38,149

I guess the work this month did pay off, after all! This puts me within spitting distance of achieving the 1st goal I came up with for the 30-day money cleanse: Hit a net worth of $38,901 by June 2017. Looks like June is totally doable! 😀

Here’s what went into February’s net worth jump:

Leaning Off of Cash

I’ve long been a proponent of an emergency fund, especially when you first start out with organizing your finances. I grew up watching the people in my life who weren’t good with money bounce from emergency to emergency, always needing cash but relying on credit instead, like a crutch. I saw decisions made about which home repairs to make, and stretching car inspections to months after they were actually due. I wanted to save myself from those types of situations, so I prioritized an emergency fund, even above high interest debt reduction.

But 10 years later, things are different for me. After reading about how ERN over at the Early Retirement Now blog has no emergency fund, I took a look at my own cash reserves. Between emergency funds, a cash buffer in checking, and cash savings (for things like travel, my next car, etc.), my husband and I were sitting on more than six months’ worth of expenses in cash. Not to mention several months’ worth in Roth IRA contributions (which could be taken out at any time with no taxes or penalties), plus hefty amounts of available credit at low interest rates (thanks to years of careful credit building and management).

I found that even if we took away the cash emergency funds and all the money saved up for our next car, there was still more than 3 months’ of expenses in cash in our accounts! So, that’s what I did: we’re currently in the process of moving what used to be labeled “emergency fund” money into investments, as well as the Next Car fund. Note that this only works because we’ve been saving cash up for so long!

Not-So-Much-An-Emergency, No Fund Needed

Also, I’ve severely narrowed the list of things that I consider an “emergency” these days. Car breaking down? That’s not an emergency, that’s a planned-for expense. (I have a “Car Maintenance” savings account for it!) Loss of income? Being a freelancer, I’ve been able to shift and change things whenever that happens, rather than pulling from a fund. Medical issue? An emergency, sure, but I work on maxing out our HSA every year, so that’s its own separate “emergency fund,” and most of it is invested in equities (stocks), not cash.

It’s a bold plan, but after 10 years of financial responsibility, it feels like I’m ready for some bold plans. Cash, earning 0.75%, has been dragging down my portfolio and holding my net worth back. Inflation eats away at it every year. There are a lot of different ways to create security, and successfully outpacing inflation is one of them. My idea is to use a little bit of everything, in order to get ahead. But before now, I was using “cash” too much. 

Taxes

Still working on them! There was a slight hiccup with some 1099s, but that’s been straightened out. Now I’m just waiting until I have a long chunk of time, so that I can test out Credit Karma’s new (free!) tax prep offering and write a review for you nice folks. But in continuing to fiddle with the numbers in TurboTax, I can see that maxing out our HSA and Traditional IRAs for 2016 makes a massive difference in how much we owe in taxes.

$2,857.10 is the difference, in fact! That includes the fact that by maxing out the HSA and IRAs, we go from owing state tax to getting a state refund. We still owe some federal taxes no matter what – ah, the freelancers life! The best part is that because we’re putting the money into investments, that $2,857.10 gets to grow our net worth – rather than going to government coffers. Nice.

That’s really about it for February – an exciting number change, but not much of a story here! Moving money into investments made a huge difference this month. Is anyone surprised?

Bonus Round – Instant Pot?

Oh! One more thing before I totally wrap up the net worth post for the month. Since you guys were so helpful last month with my question about noise-isolating headphones (I got the HyperX Cloud IIs – thanks Chloe!), I figured I’ll ask another:

Our slow cooker is crapping out on us after 5 or so years of heavy use. RIP, 7-quart Crock Pot! I’m trying to decide whether to replace it with the same exact model we have, or to get an Instant Pot. But when I went to look at Instant Pots, I was a little overwhelmed to see that there are five different models! So I’d love to hear some opinions on the Instant Pot, if you have them. I don’t want to over-clutter our kitchen with unnecessary appliances, but we cook at home all the time and I know lots of people love their Instant Pots.

Do you own an Instant Pot? If so, do you love it? Which model do you recommend? Has it replaced a slow cooker for you, or do you have both?

If you’d like to see how I stack up against other personal finance bloggers, be sure to check out The Ultimate List of Blogger Net Worths over on the Rockstar Finance directory! And as a fun bonus, ERN recently did an analysis of the wealth inequality of that list (no seriously, it’s a fun post! analyzing wealth inequality!).

Save

Save

Save

Save

Net Worth Update: January 2017

By , updated 12 Comments
This post may contain affiliate links

After tallying up everything we spent to have a baby on Obamacare last year, I really need a financial pick-me-up. What do the stars, and my hard work, have in store for me with this month’s net worth update? Do they have the numbers boost that I so desperately need right now?

Net Worth Graph - January 2017 | PoorerThanYou.com

Change: +$4,818 or +15.95%

January Net Worth TOTAL: $35,020

Oh thank goodness! This is a new all-time high for my net worth – bringing me back up above where I was right before I started my unpaid maternity leave.

So what happened to give me such a drastic upswing this month?

Taxes

The government taketh away… but not as much as I thought! Since my husband and I were both freelancers for all of 2016, we were putting away 30% or more of what our businesses made for taxes, just to be safe. Now that the year is done, I’ve dumped all of our tax info into TurboTax, and voilà: a much lower tax burden for 2016 than what we put aside.

Side note: Mint users can get up to $20 off TurboTax products. And Mint is free. So log in or make an account, and check the “Advice” section for the link! I love TurboTax for doing my taxes, they make it so simple and easy, even when being self-employed would normally make them much more complicated.

That said, I’m also going to try out Credit Karma’s new free tax prep service when I have all the paperwork, just to see if it’s up to snuff compared to TurboTax. So look out for a review of this new free service from me soon!

This shows up in my net worth already because I always track my tax burden for freelance work as a liability in my net worth calculations. So now that I have a more accurate number, I can adjust that liability way down. (I haven’t actually filed our taxes yet, because I’m still waiting on paperwork from one of our clients, but I’m confident in the numbers based on invoices and payments received.)

And what shall we do with all of this money we saved for taxes that we no longer need for taxes? Why, we’ll be putting it all into our Traditional IRAs & Health Savings Account (HSA) and lowering our tax burden even further, of course! I did the math in TurboTax last night, and putting that money into our IRAs & HSA will let us keep an extra $2,857 (vs. not putting anything else into our 2016 IRAs or HSA)!

At 7% interest, that little $2,857 will grow to $21,748.21 over the next 30 years!

Investment Growth

Starting to sound like a broken record mentioning this every month, but it certainly helped again this time. Despite the fact that I had to take out an additional $2647 from our HSA to pay the last of the medical bills from giving birth in November, our investments were only down $940. That means that there was enough growth in the investments to absorb 64% of the medical bills in January. Yowza!

Now, this is not something to be counting on, month-to-month. The stock market is way too volatile for that. In fact, I’m not even hoping for stock market growth right now. Since I’m still contributing (see above re: what we’re doing with our self-created “tax return”), I would actually want stock prices to go down and be on sale! But, obviously there’s an upside to them going up in the month when I had to sell off some of the investments in my HSA.

Getting Back to Work

I’m a W2 employee again! One of my clients has decided to bump me up from 1099 contractor to W2 employee, and still let me keep my set-my-own-schedule and work-from-home-as-able flexibility. No benefits as of yet (it’s a small, new company, so they’re working on one thing at a time), but it will help with tax stuffs. I set my withholding really high (low number of exemptions) so that maybe, just maybe, I can stop paying quarterly estimated taxes for my other still-freelance work.

This month, my husband and I started experimenting with all sorts of ways to get me back to work. We’ve tried having me work while the baby naps, as well as having me go into the workshop on the weekend. One plan we’re going to try involves getting a really good pair of noise-cancelling headphones to wear while working at home (with my husband taking care of the baby). So I’m very much in need of noise-cancelling headphone recommendations! Looking for super-comfortable (to be worn for 4+ hours at a time) and really, really good at filtering out baby cries. If you have a recommendation, please tell me about it in the comments below!

If you’d like to see how I stack up against other personal finance bloggers, be sure to check out The Ultimate List of Blogger Net Worths over on Rockstar Finance!

Who’s Right? I Want to Contribute to Retirement Throughout the Year, Husband Wants to Wait Until the Last Minute

By , updated Leave a Comment
This post may contain affiliate links

Can you afford to wait? (Photo by Eric Rothermel)

My husband and I have a little disagreement going about retirement contributions. It’s not about how much to contribute — I’ve run the numbers on that, and given our ages and how much retirement money we’ve socked away already, the usual rule-of-thumb of 12% of our gross earnings will do just fine to give us 80% replacement when he (the older one) reaches retirement age. Of course, if we want to retire early, we’ll need to do more than 12%… but again, the contribution amount is not our argument.

The argument we keep having (the civil, calm, disagreement where I assure you no plates are thrown or furniture flipped) is when to put the money into the accounts. I like to hop onto my Vanguard online account as soon as I get some money coming in, and set up an immediate transfer into my IRA for 12% of whatever amount I just got. Husband, on the other hand, has a savings account specifically titled “$5,500 for Retirement,” in which he hopes to save up the 2016 maximum contribution amount, and then once he has all of it, dump it all at once into his IRA.

The Husband does this because he likes to keep a lot of cash on hand for emergencies. He knows that once the money is in the IRA, it’s much harder to access than in that savings account, so he’d like to wait until the last minute (generally the April 15th yearly deadline or close to it) to lock up his cash. I, on the other hand, argued that he might be losing out on some compound interest with this practice.

So who’s right? Or does it even matter? Is there a difference between transferring money right away versus saving up until you’ve got your amount for the year and depositing it all at once?

Yo, MATH, you wanna help us out here?

Math to the rescue

Let’s say that you end up contributing $165,000 over 30 years. That’s probably about right for what The Husband and I might contribute (each), it’s also $5,500/year (which is the current IRA contribution limit), and it’s an example I got from a Vanguard article on this very subject (“Delaying IRA contribution until April can cost you“) which comes with a handy-dandy graph for me to borrow, too!

Vanguard compared two scenarios: investing the yearly amount ASAP (January of the tax year of your IRA), vs. waiting until the absolute deadline (April of the following year). The difference they found:

Procrastination Penalty Chart
Source: Vanguard

The Early Bird nearly doubles their initial investment over 30 years, with $158,967 in earnings (in addition to the $165,000 in contributions). Meanwhile, the Procrastinator loses out on nearly 10% of that, and gets only $143,467 in earnings (not peanuts, but definitely lower).

“Less time means there’s less opportunity for your investments to benefit from the power of compounding, which is when you generate earnings on top of earnings,” said Stephen Weber, an investment analyst with Vanguard Investment Strategy Group. “Losing even a few months can weaken the potential effects of compounding.”

Now of course, I can’t actually put the full $5,500 yearly contribution into my IRA every January (who can?) – I have to do the best I can by contributing a good amount each time I get paid. But doing it sooner, rather than later, still avoids as much of that “procrastination penalty” as possible.

So without bragging too much…

HAHAHAHA I WAS RIGHT, SUCKER!

Now go put some money into your retirement account.

Recent Posts

Affiliate Links

This page may contain affiliate links. You may read my full affiliate linking policy, but the TL;DR is that I may receive compensation when you click on certain links, I only recommend products or services if I have personally used them, or would use them personally if my own life situation were different.

Connect With Me