Update: November 2021

As of November 26, our net worth had appreciated the prior month by 2.86% in USD and 5.4% in EUR to $117,153 and €103,492 respectively.

Our performance in November was aided by strong performance from some of our stocks. We also received several large refunds due to the lowered income in my wife's business resulting from the coronavirus disruptions.

New Date of Record in December

This is the first month where I felt like I should wait until the final day of the month to record the totals. I chose November 26 years ago because it was around when the Deutsche Rentenversicherung made its withdrawal from our German checking account, and it was guaranteed to be before my job paid me. My concept with this timing was wanting to record whatever remains after making all the monthly expenses. Wealth is, after all, that which remains.

The day I recorded our net worth, the market started moving a lot. October 26 through November 25 was a very strong stock market month. From 26 onwards, things started moving downwards, and they moved down a lot. It feels weird to say that we were "up" in November, when the final days of the month were so consequential.

So I'll likely change to recording our net worth on the final day of the month, with my salary subtracted.

Liquid Net Worth

In my spreadsheet, I've also added a "Liquid Net Worth" section. This is basically what I could access if I were to need a bunch of cash. Now, we don't own a home, and I've never included our physical assets in our net worth calculation, so this number isn't drastically different.

I would like to be able to glance at a number that gives me an idea of the number of years we could live off our assets. That means, that retirement accounts and rewards programs don't get counted. Were I to add physical assets and my pensions into the full calculation, they would also be omitted.

At the end of November, this number was $97,131/€85,805. Since we spend about €25,000 a year, it means we could quit our jobs and live about 3.5 years. Were we to cut expenses, we could lengthen that out.

December Outlook

My December Christmas bonus and extra money will be offset by some expenses having to do with some trips, one of which we've already made and another we might make if Omicron doesn't ruin it for us. Obviously, not doing the trip is better for our finances, but, man, we have to live our lives.

Until next time. Stay healthy/Bleib gesund.

Net Worth Update: June and July, 2020

In June, our liquid net worth¹ increased by 8.01% in USD and 5.7% in EUR to $68,000 and €60,606 respectively. In July, it increased 13.67% and 9.48% to $77,298 and €66,350 respectively.

The biggest factor in both months was the stock market. Like anyone who held positions similar to the overall market, we experienced terrific growth. It is counterintuitive that in such a moment, with as much economic hardship as exists, that the stock market should be on such a tear. I honestly don't know exactly what it is that the market sees, and I won't pretend to. I listen to a lot of stock market talk, and some experts claim that this is a bubble that's likely to pop at any moment, while others say otherwise. It's pointless to try and act on this chatter. I know what my time horizon is, and I hold.

Cash is King (Sometimes)

One thing I haven't been doing, however, is buying. Our savings the past few months has gone exclusively to cash. That's not a stock market timing call but rather a series of tactical moves given the relative uncertainty of the moment. I know that we have certain large expenses in the future, but I don't know what my wife's income will be, and it's hard to guess it more than a few weeks out. Therefore, I've been preemptively saving to knock out those costs whenever they arise, in order to prevent having to scramble to pay for them from that month's cashflow. You might be thinking, "Well, duh, that's the way savings works," and you'd be right. But our situation has changed enough that we have to do this for stuff that we could previously just pay for out of cashflow.

That means saving early for tax preparation costs, estimated taxes, and large purchases. We've also been continually adding to our emergency fund. An emergency fund is basically early saving for known recurring expenses in addition to surprises, after all. One unsettling aspect of this pandemic is that my industry has been especially hard hit, and my seemingly secure job doesn't feel as secure anymore.

A couple of large cash infusions also buoyed these months' changes. In June, we deposited the stimulus check that was sent out. US expats who file their taxes were also eligible, and we were happy for the money. Secondly, my employer paid me early for August, and without any message from them, I truly don't know what that was about (new employee clicked the wrong button on the bank website maybe? I've done it).

And on top of that, because most of our cash is in the euro, the recent upward spike of the euro's value has made that lump more valuable in USD.

Vacation?

Although it's summer vacation time in Germany, we have decided to stay home. And by home, I mean our apartment in Germany. We contemplated some trips, but hotel prices in Germany weren't low enough to really make it worth our while. Outside of Germany, some prices are incredible, but we quickly wrote off getting in a plane or bus or long distance train, especially since those prices also aren't all that great.

I will say, the FOMO is real. The weather's also not been very summer-like, so it's been kind of lonely and dark. We've used the time to take care of some home improvement projects, and I've been using FaceTime more often to get in touch with American family.

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1. This includes: bank accounts, investments (excluding German private pension but including US IRAs), credit cards, rewards programs valued at 1¢ per point, cash, installment plans and any other debts. ↩︎

Net Worth Update: April, 2020

Our net worth increased in April to 8.68% in USD and 9.68% in EUR to $56,998 and €52,630 respectively.

After two months of declines, the numbers reversed with one of the best months for stock longs in decades. That was the primary basis for our own results because our income was definitely down. I earned less at the end of March than usual, and my wife's income was also depressed.

Because I own a mix of growth and value stocks, individual stock performance was all over the place. Some got creamed in March and barely recovered during the April rally, while others roared back to all time highs. Already, some companies are announcing cuts to their dividends, which I'm not worried about: I prefer that they cut their dividends than risk the viability of the firm.

We did pretty well with our savings, saving 35.51% of our mixed pre/post tax incomes. Our spending was drastically reduced in April, and I suspect that May will be the same. One area where spending remained high was groceries. Despite using some Payback points (a popular European loyalty program) to get about €100 in grocery store vouchers, we still we on the high end of our budgeted amount. Part of that was my elevated alcohol consumption at the beginning of April (even the cheap stuff adds up), but I'm still a bit surprised. I guess by not eating out ever we're just eating more groceries.

Re-thinking How I Calculate Net Worth

Currently, I add up the follow to come up with net worth:

• Bank accounts
• Investment accounts (including tax-advantaged accounts)
• Credit cards
• Loans (0 currently)
• Installment plans for large purchases (0 currently)
• Cash
• Loyalty programs with a clear cash value
• In both USD and EUR

However, we have other stuff that has value and should be added in, such as:

• Defined benefit pension
• Social security in the US and Germany
• Physical assets with some kind of sale value
• The remaining value of our labor

That's definitely part of our worth! If I took out a life insurance policy on myself, I'd try and value what my income means to my wife, and some kind of discount cash flow model would probably be the way to determine the value of the policy.

Plus the "stuff" we have has value. Just looking around the room where I'm sitting, I could probably get more than a few thousand for the random bits of technology that we have. Now, to be sure, those are depreciating assets - meaning they lose value over time - but they're assets and should be counted as such. And that's before we get to owning large physcial assets such as a house or car.

There are two reasons I haven't included them before:

1. There's a certain amount of guesswork involved in valuing these things. A DCF (discount cash flow) model has some major assumptions baked in, for one, and guessing how much I could get for a computer or camera or dining room table is tricky. Unlike cars, there's no Kelly Blue Book for most depreciating assets. I'll probably use eBay averages to get a sense of what something's worth, but it's still an assumption.
2. None of these are liquid assets. Although they might be part of my monetary worth, I can't spend this stuff. I couldn't access my pension or SS, and turning a coach into cash is hardly instantaneous. That said, my IRA accounts in the US also aren't liquid: the tax consequences are so onerous that it would be absurd to turn those into cash and spend them.

Therefore, I'll have to arrive at two numbers: a "total" net worth and a liquid net worth. I think for most people interested in FIRE (Financially Independent Retire Early), the liquid net worth is the more important number.

I think I'll have this ready to go at the end of May, but that's only a guess.

Until then.