Monthly Update

Monthly Update

This has been a very exciting month for me financially.  First, a stock that I have a great deal of money in went up 30%, increasing the position value from $44.5k to $57.8k and bringing me closer to my debt payment and home mortgage goals. However, this is something that I expected as I have been following the company for years now. I know their industry, their product, and where it is in the product life cycle. With luck, I will be able to sell and get clear of the stock by the end of October once their product has been approved by the FDA.

One thing I didn’t expect though came while I was working with my bank to remove the private mortgage insurance (PMI) from my mortgage. I only put 10% down on my home and the bank charged me an insurance fee for their protection.  This fee really sucks because its $60 a month, or $720 over the course of a year.  I don’t know about you, but I would breathe easier if I had a spare $700 floating around! As part of this process, the bank sent a real estate broker to check the value of my home and prove that I do have 20% equity in it. I bought the home at $220k and expected the value to be around $240k, which is the figure the city uses to tax me. The broker came back with the comps and said the value was closer $290k (and that was on the low-end of the range)! I pretty much flipped out when I saw that. It’s not every day that your net worth increases by $50k overnight!

Good times 🙂

In other news, I tried to see if I could greatly decrease the monthly cost of my internet, which stands at $87 a month, and chip away at those regular expenses that just devour the wallet. Unfortunately the next best option is only $10 cheaper. I could switch to another provider and cut this cost in half for a reduced speed, but given how I share the connection with a tenant in the basement I’m a bit constrained from going down that route.

I also counted my bonds again and the face value was lower than I thought, $1.6k and not 2k. I also paid down my debts by another $1600, more than the minimum. This leads to a total monthly net worth gain of about $74k.  My overall net worth stands at $156k and my passive cashflow remains at $650/mo.  Updated figures are below.

Assets

$2200k in cash
$1,650 in bonds
$26k in 401k/Roth IRA
$59k in stocks
$100k home equity (House value $290k – Home mortgage $190k, )

Liabilities

$14k in a personal loan (@10%, being paid off at $534/mo)
$18.2k in school loans (@6%, being paid off at $600/mo)
$190k home mortgage (at 4.125%, being paid off at $1400/mo, half from me, half from a mother-in-law unit I rent out)

Cashflow

$640/mo in rent, on a month-by-month basis

I really can’t over exaggerate how exciting this is for me. As a history and political science major in college, I never imagined that I would ever make a lot of money or be a wealthy person. Now I’ve finally passed a six-figure net worth and stayed there. Once the debts are paid off and money is just raining in, I can only imagine how less stressful life will be. The big question that is plaguing me though is whether I should cash the bonds in now to pay off the high interest debt or cash them in later to pay off for part of the bathroom remodel downstairs. The lifetime value of the bathroom would be much greater (increased home equity, increased rent), but that 10% loan just kills me 🙁  Dealing with the amount of interest alone is like feeding a black hole. Even when you shovel tons of extra money into it, it hardly seems to go down.

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