How do y'all figure out how you're doing?

[Revelate]

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@Anonymous wrote:

My cash flow spreadsheet would give most people eye twitches because they're so complicated.  A lot of sheet tabs connecting to data on other tabs.

Every recurring bill of any sort is forecast 36 months out and then I take 18 months of forecast bills, expenses, etc, and tie that to a number in my high interest savings.  At any point in time I always have 18 months of Eff-You money where I can pick up and leave everything behind and survive for 18 months.

On top of that, my cash flow forecasts let me modify which card I run a balance on each month for reporting purposes but also help me maximize rewards and any float when there are large purchases.  I basically know my income for 36 months from today because I am paid on long term contracts that can take up to 1000 days to reimburse me from work I performed today.  My income never varies and my forecasts are +/- 1% even 3 years in advance.

I also have no loans or obligations, so that makes it a LOT easier but I am considering getting my first mortgage EVER this year to buy a 4-flat for investment reasons.  Not sure if I want to mortgage it when I have the cash to buy but it might be fun to see what my accountant can do with it, if anything.

I also have a daily "don't spend more than" box which tells me exactly how much throwaround money I have today, based on forecasts.  On top of that I have my "wish list" of items I want to buy but am waiting for a better deal to show up.  I use websites like camelcamelcamel to track historic low prics and usually don't buy something until it hits that low number, even if it takes 12-18 months, lol.

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HAh yeah that's more complicated than what I think I'd like to do.

I basically want to just get monthly snapshots and then tie them to life events like:

Here's where I left this crappy job

Here's when I started school

Here's went I walked from school

Here's when I a new job

That sort of thing, trying to tie decisions in my life to my financial health and hopefully make smarter decisions in the future.  I don't know how much I'd really want to try to go further then that, there's a lot of minutiae in the details but at least for now when I know that cash in > cash out I'm not worried about that level of data though I do reconcile things pretty religiously every couple of weeks through YNAB to see how I'm tracking to my sloppy plans budget wise.

Baby steps haha.

TT: long term market returns will trend towards some average, that's unavoidable I think; in my case I had a meh much of 2016 and now a godlike 2017 because for various reasons I wound up tech heavy in my portfolio... it's what I know and while I have some fliers in biotech and some foreign investment ETF's but tech dominates my portfolio (especially as I consider Amazon and Netflix and even Tesla to be tech regardless of what the market states... they all started out as fundamental tech plays), and when up 61% on 220 shares of Activision since the start of the year for example it overly inflates the numbers and a bunch of other tech stocks have all been running wild this year, shoot just doing sloppy math from a 1/10/17 datapoint I'm up like 11% aggregate, and up 16.7% just in my brokerage account alone.

That's just dumb stupid blind luck.

[Revelate]

Question for you Driftless and TT both: a house is a mix of both asset and debt, why not track it that way since one could leverage that if absolutely needed?

Or is it something that basically you have your forever house and you never anticipate a reverse mortgage or HELOC or similar in the future financial plans?

Mine's just a condo, I don't expect to die in it frankly and I picked it partly because I thought it was go up in value... wasn't really a smart choice for anything else (like dating or employment / commute optimization) but it has at least appreciated a little bit. 

Also ABCD: mortgage money is still cheap cheap, even if you can't do anything fancy with it even taking 6% historical market returns still over the mid and long term should at least breakeven for current rates + inflation?

[driftless]

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@Revelate wrote:

Question for you Driftless and TT both: a house is a mix of both asset and debt, why not track it that way since one could leverage that if absolutely needed?

Or is it something that basically you have your forever house and you never anticipate a reverse mortgage or HELOC or similar in the future financial plans?

Mine's just a condo, I don't expect to die in it frankly and I picked it partly because I thought it was go up in value... wasn't really a smart choice for anything else (like dating or employment / commute optimization) but it has at least appreciated a little bit. 

Also ABCD: mortgage money is still cheap cheap, even if you can't do anything fancy with it even taking 6% historical market returns still over the mid and long term should at least breakeven for current rates + inflation?

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Because you have to live somewhere.  I had not thought of a reverse morgage or HELOC but if that if that was part of your thought process, then, yes,a house would be an asset.  Right now our house is just like the furniture that is in it, our place, and I don't think of the furniture nor house as having monetary value.  

This house is a forever house until we can't do the stairs anymore.  

[tacpoly]

One reason not to include a house with cash and securities is because you don't know its true market value until it's sold. It will over or under-inflate your total assets.

I recommend using a line graph instead of a bar graph. You can also plot your monthly intake and expenses on one (left) axis and total assets per month on another (right) axis so you can see patterns.

[Thomas_Thumb]

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@Revelate wrote:

Question for you Driftless and TT both: a house is a mix of both asset and debt, why not track it that way since one could leverage that if absolutely needed?

Or is it something that basically you have your forever house and you never anticipate a reverse mortgage or HELOC or similar in the future financial plans?

Mine's just a condo, I don't expect to die in it frankly and I picked it partly because I thought it was go up in value... wasn't really a smart choice for anything else (like dating or employment / commute optimization) but it has at least appreciated a little bit. 

Also ABCD: mortgage money is still cheap cheap, even if you can't do anything fancy with it even taking 6% historical market returns still over the mid and long term should at least breakeven for current rates + inflation?

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Our home will be paid off in 3 years. We prefer to ignore the house as an asset in financial planning (it's certainly not viewed as an investment) because it will be our retirement home. End of the day; proceeds from the home sale may go towad buy-in at a full service retirement community that offers independent living with phased assisted living built-in. So, funding of retirement daily living expenses is restricted to retirement savings plans, pensions, social security and after tax investment portfolios. If luck prevails, the after tax investments can all go toward non essentials.

I use Fidelity's retirement planning tool to look at assets and surplus/shortfall of income in retirement relative to itemized expenses that are input manually. I think most use a % of income default but, I much prefer using actual expenses.It is a powerful tool which takes into account your investment style and asset mix. All Fidelity accounts are directly linked so only non Fidelity accounts require updating when periodically checking progress.

I didn't start looking at retirement planning until age 35 (after marriage) although I took full advantage of a company 401k (dollar for dollar match at 8% of gross income).

[Revelate]

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@tacpoly wrote:
One reason not to include a house with cash and securities is because you don't know its true market value until it's sold. It will over or under-inflate your total assets.

I recommend using a line graph instead of a bar graph. You can also plot your monthly intake and expenses on one (left) axis and total assets per month on another (right) axis so you can see patterns.

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Thanks Tac, that's a good idea; going to talk to Chase and see if I can get the monthly statements from the account they closed as a result of the fraud to get the monthly data since I run my entire financial life through there... and deposits vs. outflow is easy to build from that.

[iced]

I think the short answer is many people don't keep that close of an eye on net worth, which looks like what you're going after. I do tend to keep track of things, but only to a limited extent.

For my investment accounts/retirement/etc, many today have nice tools embedded in their system. For instance, e-trade has dashboards to show me where my money is and what it's done in the last year. Many tools can also take that data to predict the trend it will take in the next few months. I use similar tools at Fidelity, TIAA-CREF, and Putnam/Empower.

For me and my wife, we only base our net worth from the value residing in our accounts, excepting savings. That is, we really only factor in liquid assets to our net worth. As for debt, we have enough in emergency savings to pay off all non-mortgage debt so those cancel out and is this why we don't factor it in. We have a mortgage but we can easily get 3x and possibly 4x what we owe so we just negate it out of our calculation.

This makes it easy to calculate. Add up the values from 6-10 accounts, subtract 0 for liabilities/debt, and were done.

[Anonymous]

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@Revelate wrote:

Also ABCD: mortgage money is still cheap cheap, even if you can't do anything fancy with it even taking 6% historical market returns still over the mid and long term should at least breakeven for current rates + inflation?

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Mostly because it isn't cheap to be stuck in a depreciating asset if your income can be better on moving.  I bought my first tiny apartment right out of high school and lived in it for only a few months before a job offer 2 hours away made me immediately rent it (profitably) and rent a studio apartment closer to my new income.  Having a mortgage can be tricky when it comes to renting your property out (some allow it, some don't, etc) and for me if I would have been stuck in a place I couldn't rent, I would have lost the significant 50% pay boost that moving allowed.

In my early 20s I bought my second place, a two bedroom, and the same thing happened: a job offer one state over was so tasty that I just rented my two bedroom and moved and rented a tiny studio in the new city I was working in for about 18 months before a new counter-offer brought me back to my home state.  At that point, I owned two rentals free-and-clear that were bringing in almost $1000 a month in profits.  So I ended up just renting a tiny studio in my home town for 4 years because it was cheaper than owning by a long shot.  Bought a nice home in the 00s and paid cash for it, but it was 1/2 the size of what everyone my age was mortgaging "for the tax breaks" lol.  Lived there for 5 years and when my new neighbors were buying for double of what I paid, I cashed out around 2006 for a huge profit.  If I had a mortgage I wonder if I would have done the stupid cash-out refi during the housing bubble that crushed so many souls.  Instead I parked my profits in bullion and capital investments in my then-booming business and rented a studio apartment again for $450 a month.  When the bubble collapsed housing prices, I could have bought my old house for 45% off what I sold, lol.  But I didn't, I waited it out.

Mortgages allow more affordability but they're tricky sons of bits...  Everyone I know gets prequalified for an amount and then looks for houses maxing out their mortgage allowance.  I won't do that.  I look for location, location, location and then I will beat on offers until I find a desperate seller.  Mortgages take too long to close, etc.

The house I live in now was the 68th house I made an offer on over a year.  68 offers, cash, fast close.  67 were denied -- but at least 15 of those sellers came back in a few months with a better offer that I declined.  The house I own today is 35% the size of the average new home construction in the area, and the sellers were mega desperate because they had to move.  So I cash offered about 20% off asking and offered to close that day with a certified check, waiving everything.  I waived inspection, waived disclosures, waived title search, waived it all.  Ended up closing 1 week after offer and my check paid off their mortgage -- if I didn't have cash on hand, there is NO WAY I would have gotten the deal.  A mortgage would have made me miss the opportunity completely.

I am here 2 years now and already considering renting it out and moving into a cheap studio again, lol.  When I travel (often for pleasure) I rent the house on AirBNB and get up to $120 a night and it always rents within days of posting.  $1900-$3600 a month for a house that costs me pennies to own means I am stupid for living here.  I can rent it for $1800 on an annual lease and that's almost $14,000 a year profit for me I am leaving on the table.  Downside is I am cash broke for the next 4 months so I can't even start looking at properties.  If I got a mortgage I know my bargaining power would decrease and I might buy a home that isn't perfect for my lifestyle.

Mind you, I have no kids, no wife, no major ties to location since I can now work almost anywhere, so I am different than those who demand a great school, safe area for kids, parks, etc.  To be honest, my current house is perfect for a new family with 1 baby or 2 retiree empty nesters, so I definitely need to get out of here so someone desperate for those features can pay a premium in rent, lol.

[Anonymous]

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@iced wrote:

I think the short answer is many people don't keep that close of an eye on net worth, which looks like what you're going after. I do tend to keep track of things, but only to a limited extent.

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This is so true.  I monitor my net worth and have since I was 18 but they still taught that in high school econ classes in the 80s and 90s.  I've always known my net worth and it's always been accurate.  My valuations of my homes and rental properties have always been accurate -- this is why I sell/liquidate in bubbles and buy back in crash periods.  It's insane to sit in a home that is 50% overvalued because the Fed wants unqualified people to buy homes.  I've liquidated in 2 bubbles now in my life, and I am excited for when the next one comes around because I will literally sell every housing asset I have and start from zero when the bubble pops -- with probably 30-40% more money to attack the foreclosures with.

Here's to the return of balloon mortgages with stated income!

[iced]

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@Anonymous wrote:

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@iced wrote:

I think the short answer is many people don't keep that close of an eye on net worth, which looks like what you're going after. I do tend to keep track of things, but only to a limited extent.

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This is so true.  I monitor my net worth and have since I was 18 but they still taught that in high school econ classes in the 80s and 90s.  I've always known my net worth and it's always been accurate.  My valuations of my homes and rental properties have always been accurate -- this is why I sell/liquidate in bubbles and buy back in crash periods.  It's insane to sit in a home that is 50% overvalued because the Fed wants unqualified people to buy homes.  I've liquidated in 2 bubbles now in my life, and I am excited for when the next one comes around because I will literally sell every housing asset I have and start from zero when the bubble pops -- with probably 30-40% more money to attack the foreclosures with.

Here's to the return of balloon mortgages with stated income!

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The trick is it's difficult in many cases to tell overvalued from hot location. People in 2007 just knew their SoCal and Nevada homes were hot, only to find out that wasn't always the case. Even now, I'm not sure if it's a bubble or hot market where we are, and it's split the two of us. She wants to sell and be done with it, mostly because she doesn't want to deal with being a  landlord, and I'm seeing a potential to make income off rental given that identical or lesser properties in our neighborhood (and even building) are renting for around $2000/month more than what we pay in P&I+taxes. But, it could all come crashing down tomorrow or be worth 15% more in 6 months. It's all a gamble!