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End of Year Net Worth

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  • The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4601
    Joined: 05/13/2011

    At the beginning of this year I realized that my wife and I needed to start tracking our monthly net worth.  We were starting very far behind and needed to be sure we stayed on the right path.  After my wife and I earned a total of three post graduate degrees, we also had accrued a lot of debt.  Here are the numbers.

     

    Jan 1st 2016     Net Worth = -692,000

    Dec 30th 2016    Net Worth = -509,800

     

    Total improvement throughout the year ~183,000  (full disclosure, just got an unpleasant letter from CPA which will probably knock that down by 25k)

     

    Overall, this has been a good year, I am hoping to improve on this next year and make a 200,000 improvement to net worth, overall goal is to be financially independent at 55 years old.  I appreciate all of the information on the site and the educational discussions in the forums.  I still have a long road ahead, but this year was a good first step in the right direction.  I wish somebody had handed me a copy of the WCI book on my first day of residency, I would never be this far behind.

     

    Happy New Year

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    That’s great, almost $200K. My increase was much smaller than that throughout residency and for the first 7 years as an attending. It starts snowballing eventually.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #32139 Reply
    Sajimone Sajimone 
    Participant
    Status: Physician, Small Business Owner
    Posts: 93
    Joined: 01/09/2016

    I’m hearing interesting things from folks with 529s that use it in a way that saves on taxes and to the benefit of the contributing parent as oppose to the student kid? One individual has a daughter who is in grad school with a full ride and apparently a 529 surplus of funds. This person took out the amount that would of covered the grad school tuition and went on a month long European vacation penalty and tax free? Another one bought a rental property near the college area where the student lives in the rental property and pays the monthly rent/mortgage using 529 funds? The latter sounds more legitimate to me… thoughts? My kids are 8-10 years away from college but never too early to plan ahead

    #32140 Reply
    hatton1 hatton1 
    Participant
    Status: Physician
    Posts: 3120
    Joined: 01/11/2016

    Net worth means different things to different people.  Technically your net worth is all your assets including the depreciated value of your cars and household items minus all liabilities.  When I think of this calculation I think mainly of my financial assets and the Zillow value of my property. I have tried to figure out the value of some antiques that I own to see if I need insurance riders and I gave up.  If you want to included household items just check what your household property is insured for on your homeowners for an estimate.  If I want to know my net worth I just look at personal capital which displays this nicely if you link your property.

    #32149 Reply
    Liked by Vagabond MD
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3486
    Joined: 01/21/2016

    I’m hearing interesting things from folks with 529s that use it in a way that saves on taxes and to the benefit of the contributing parent as oppose to the student kid? One individual has a daughter who is in grad school with a full ride and apparently a 529 surplus of funds. This person took out the amount that would of covered the grad school tuition and went on a month long European vacation penalty and tax free? Another one bought a rental property near the college area where the student lives in the rental property and pays the monthly rent/mortgage using 529 funds? The latter sounds more legitimate to me… thoughts? My kids are 8-10 years away from college but never too early to plan ahead

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    I have a friend who is overfunding his 529 plans because he plans to take university-sponsored courses in retirement–say, a photography course in Rome, for example. There are probably lots of games you can play, and lots of ways to get caught. I do not have interest in cheating the system or have the appetite for that kind of risk. The 529 program, at face value, is a great way to save money for college. Let’s just leave it at that.

    #32163 Reply
    Liked by NJDoc, hatton1
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3486
    Joined: 01/21/2016

    I was just doing my calculation for end of the year.

    It’s been a heck of a year for us. I’m almost embarrassed to post it. I mean, it’s relatively easy to post stuff online when you’re still getting back to broke and you’re anonymous. But when you’re doing very well and not so anonymous, perhaps not so easy….

     

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    I agree. Our net worth also edged up by a significant amount (22%, excluding equity in house), from a large number to a larger number, and it would be gaudy to post it online. That said, my runway is shorter than most of the members of this community, so the number should be larger.

    #32164 Reply
    Liked by NJDoc
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6326
    Joined: 01/12/2016

    I was just doing my calculation for end of the year.

    It’s been a heck of a year for us. I’m almost embarrassed to post it. I mean, it’s relatively easy to post stuff online when you’re still getting back to broke and you’re anonymous. But when you’re doing very well and not so anonymous, perhaps not so easy.

    I figure our net worth increased by a 7 figure amount. Lots of stuff factoring in:

    • Serious house appreciation
    • Big pay-off of our debt
    • Great investment returns
    • Large amount of new savings
    • Significant business appreciation

    No one thing really. All that stuff contributed about equally. The last couple of years definitely feel like the snowball is now rolling on its own.

    I don’t count stuff (cars, toys, jewelry etc), but I do count the kids’ 529s and UGMAs. Probably should consider that spent money but that’s just the way I’ve always done it.

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    Agree completely. At some point it makes no sense and is dangerous/no benefit and a source of friction. I dont anticipate spilling the beans after I’ve broken zero. Even when its very negative, you can be masking a lot of assets in those numbers that will eventually (with forced savings) flip quite strongly in your favor. I didnt even realize how it had already begun until some post on when you should hit x number, which I thought was unobtainable, only to realize how far we already were on our way.

    This was the plan, to accumulate assets (real estate and investments) in lieu of obliterating my student loans, but its nice to see it start working anyway. As those debts roll themselves off in time, they start to really show themselves. A tip of the iceberg phenomenon.

    #32166 Reply
    Liked by CM
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1869
    Joined: 01/08/2016

    I’m hearing interesting things from folks with 529s that use it in a way that saves on taxes and to the benefit of the contributing parent as oppose to the student kid? One individual has a daughter who is in grad school with a full ride and apparently a 529 surplus of funds. This person took out the amount that would of covered the grad school tuition and went on a month long European vacation penalty and tax free? Another one bought a rental property near the college area where the student lives in the rental property and pays the monthly rent/mortgage using 529 funds? The latter sounds more legitimate to me… thoughts? My kids are 8-10 years away from college but never too early to plan ahead

    Click to expand…

    I have a friend who is overfunding his 529 plans because he plans to take university-sponsored courses in retirement–say, a photography course in Rome, for example. There are probably lots of games you can play, and lots of ways to get caught. I do not have interest in cheating the system or have the appetite for that kind of risk. The 529 program, at face value, is a great way to save money for college. Let’s just leave it at that.

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    I tossed this topic out for discussion a few months ago, but not many replies:  https://www.whitecoatinvestor.com/forums/topic/creative-529-uses/

    Vagabond, I agree I don’t want to cheat the system, but I want to legally keep/earn every penny I can from The Man…this is recently reinforced as I look at the tax-chunk missing from my end-of-year distribution!

    #32174 Reply
    Liked by Vagabond MD
    Sajimone Sajimone 
    Participant
    Status: Physician, Small Business Owner
    Posts: 93
    Joined: 01/09/2016

    I’m hearing interesting things from folks with 529s that use it in a way that saves on taxes and to the benefit of the contributing parent as oppose to the student kid? One individual has a daughter who is in grad school with a full ride and apparently a 529 surplus of funds. This person took out the amount that would of covered the grad school tuition and went on a month long European vacation penalty and tax free? Another one bought a rental property near the college area where the student lives in the rental property and pays the monthly rent/mortgage using 529 funds? The latter sounds more legitimate to me… thoughts? My kids are 8-10 years away from college but never too early to plan ahead

    Click to expand…

    I have a friend who is overfunding his 529 plans because he plans to take university-sponsored courses in retirement–say, a photography course in Rome, for example. There are probably lots of games you can play, and lots of ways to get caught. I do not have interest in cheating the system or have the appetite for that kind of risk. The 529 program, at face value, is a great way to save money for college. Let’s just leave it at that.

    Click to expand…

    Thanks Vagabond!  I apologize as this is the wrong thread for this discussion but I brought it up as I do include it in my net asset.  Im not sure if I would call this cheating the system but as G stated.. legally keeping every penny and not paying any extra in taxes which ultimately leaves more to us and our family and less to the IRS.  Does paying market rent using 529 funds by the student who is attending an approved educational institution for rental property you own and appropriately accounted for as a rental income considered cheating the system?  I see it as potentially defensible if audited and probably no different than the intention of a backdoor Roth.  For high income earners.. we’re not allowed to directly contribute to the Roth but we all do so indirectly through a loophole.  Where’s the ethics in that game…?

    #32182 Reply
    Avatar csciora 
    Participant
    Status: Small Business Owner
    Posts: 86
    Joined: 08/17/2016

    Is there a reason you don’t include 529 accounts in the net worth? I treat them just like other qualified accounts since they can be liquidated if necessary (for a penalty of course) and I can control the asset allocation. I definately include home equity in the equation with the knowledge that home value is not a mark-to-market situation like securities and so is more of an estimate than an exact number. What I struggle more with is whether to include high value tangible assets (cars, jewelry, etc) which clearly have monetary value but I am highly unlikely to liquidate in order to spend on something else unless absolutely necessary.

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    I only count assets as things that typically appreciate in market value or generate cashflow AND can be readily liquidated for real cash. That eliminates almost all consumer goods for me. If you have a collection of antiques, jewelry and family heirlooms, it would probably be a legitimate asset financially except for the liquidation part. Unusual items that can only be sold at auction with possible steep discounts and endless family angst wouldn’t be an asset for me.

    It really comes down to why someone is keeping track of net worth in the first place. If the goal is having the biggest number, throw in everything including old clothes and junk sitting in the basement for years. My focus is primarily on cashflow (not net worth), so the net worth calculation is mostly for confirming we’re making investments and reducing debt over time. No one should be particularly impressed with a net worth of $10M with $500K in negative cashflow every year, but I have that conversation with small biz owners often enough to realize it’s not unusual thinking. That’s even skipping over the delusional values many owners place on their business in the first place.

    #32185 Reply
    Avatar hightower 
    Participant
    Status: Physician
    Posts: 1498
    Joined: 12/07/2016

    Congrats WCI.  You’ve really earned it!  I’m sure it feels great!

    For me, thanks to paying off a lot of debt this year AND because our house value increased quite a bit this year, our net worth is up around +$250k.  I don’t like having so much of my net worth in my house because it doesn’t feel “real” but at least I’m not well into the negative anymore like I was last year at this time (I think I was around -$50k last year).

    Hoping for a good year of saving aggressively and paying off my last 39k of high interest rate student loans.  I resisted the urge to buy a new car, so that will help keep me moving the right direction as well.

    #32197 Reply
    Avatar pulmdoc 
    Participant
    Status: Physician
    Posts: 434
    Joined: 09/19/2016

    I do include the 529 accounts for my kids in “the number” because they are just as fungible as 401k, IRA accounts etc. Yes the money is earmarked for education, but if it wasn’t coming out of a 529 account it’d be coming out of cash flow or taxable accounts, reducing those numbers instead.

    As for creative uses of 529’s, qualified expenses include room and board (off campus) up to the budget listed by the institution. So if State U says room and board is $9k/year and you buy a $1M condo for your daughter and her friends to live in, only $9k/year can be removed from the 529 without penalty.

    #32202 Reply
    Liked by retinadoc
    Avatar Crazyroadtodublin 
    Participant
    Status: Physician
    Posts: 78
    Joined: 03/08/2016

    WCI

    Your success is well deserved.  Your site has saved docs tons of time, money and aggravation.  May the new year be even kinder to you.

     

    CrazyRoadDublin

    #32207 Reply
    Avatar shantster 
    Participant
    Status: Physician
    Posts: 116
    Joined: 01/16/2016
    Splash Refinancing Bonus

    Still in fellowship, to complete this coming June. I’ve been tracking since the first of 2015 and am finally in the negative 5 figures. I attribute most of this to easy accessibility of moonlighting in fellowship and a targeted approach to destroying the student loans for 2016 (down nearly $20K on resident/fellow salary).

     

    2015: -$116,439

    2016: -$103,797

    2017: -$71,371

     

    Hopefully I’ll hit $0 net worth next year at this time. I already have a job and found a very nice and highly affordable rental apartment to split with my significant other as we will be able to move to the same city now that training is over for me. I don’t anticipate my yearly expenses going up much from current lifestyle.

    #32208 Reply
    Lithium Lithium 
    Participant
    Status: Physician
    Posts: 1219
    Joined: 02/15/2016

    Approximately $1.19 million.  I have about $133k on my mortgage and am using Zestimate to figure how much my house is worth (which seems a bit low).

    I have not kept track of my net worth year by year but recall I went over 1 mill in May or June and was at the six figure mark in fourth year of med school, about six years ago (obviously I was always a big saver).

    I’ve done well, but haven’t done anything too exotic.  Most of this is due to investing according to the Boglehead way, having no one else to support, and not having student loans.

    Tracking XIRR as of 12/22/16.

    #32211 Reply
    Liked by startupdoc
    Avatar Josh0731 
    Participant
    Status: Physician
    Posts: 98
    Joined: 01/21/2016

    I also calculate this number annually to track my progress, and this is really nerdy, but I also track my progress on the “WCI Physician Expected Net Worth formula”. I like the idea of some kind of metric to say where maybe I should be. For what it’s worth I started as an UAW and 3 years later am now right down the middle of the range.

    #32212 Reply

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