Ever since buying this house a few years ago, I have been carrying a good amount of credit card debt. The amount was in the tens of thousands, but I never really worried about it because I wasn’t paying any interest on it as it was all at zero percent interest. Besides, I had enough in cash and marketable securities to just pay it off if I had to for whatever reason. This all changed in the past month.
I met with my account to do my taxes, and they informally told me I was to receive a nice refund. I promptly told The Wife that we were going to apply it to our debt because that is the right thing to do. The Wife is very anti-debt, so she knew it was the right thing to do but was still bummed that we had to use our tax refund in the most responsible way possible. Her feelings are completely valid, I get the benefit of seeing the spreadsheet where I keep the net worth tick up, she does not (I offer but she doesn’t seem to have an interest). As such, it seems like a good amount of money is going into a black hole.
Over the next month I am going to liquidate pieces of my dividend portfolio along with the tax return to completely eliminate all credit card debt. Is it the right move in terms of pure investment? Probably not, but there is something satisfying to both The Wife and I to have that line item on the net worth at $0. It also allows me to free up a couple hundred a month servicing the debt. I can use this opportunity to redeploy the same amount that I was spending to other goals and objectives.
Calculating my Net Worth
- My Cash Savings Accounts – I only really count my emergency savings since everything else is ear marked to be spent elsewhere. This cash account is a bit under where The Wife and I would like, as such, we try to increase it a little every month.
- My 401(k) – Just keep throwing part of my paycheck at my 401(k) even though I sort of hate my 401k. I do not actively trade this account, but every time there is a sharp decline (like we had in January 2016) I will move whatever little cash that is in the account that has accumulated over to a fund. This is different then the pure market timing technique I took part in a little while ago.
- Wife’s Non-Qualified Account – This is money that The Wife had way before we were married. It was gifts from her parents and grandparents, and thus receives its own little partition. I like to think about it as a super emergency fund.
- The Wife’s Roth IRA – The Wife has zero appetite for risk, so this account hold 3 broad market etfs (DGRO, IJH and IVV) as well as a small position that I will trade when the mood should strike (this position is currently in $GT).
- My Dividend Investment Portfolio – Easily my favorite part of my financial
empirehut. This account is correlated to the broad market, so last month it took a nasty hit and came back a little. This is the primary account I am going to use to get me back to zero in terms of debt.
- Home Value – A lot of bloggers seem to stress over home value. In my old place I just rounded to a number that I thought I’d sell for (I was off by less than 1%). I am just going to keep using my purchase price through 2016 (like I did for 2015, 2014 and most of 2013 when I bought the place). No real reason to worry about it as I am not going anywhere any time soon.
- My Traditional IRA – I was actively trading this account also, but I made the financial confession that I was speculating in some really shitty stocks. For the past few months I have been transitioning the holds into long term holds that I felt were undervalued ($HOG, $GT, etc.)
- My Mortgage – Every so often I think about putting money towards the mortgage but I always back off.
- Law School debt – A while back I paid off the much smaller of the loans I have a while before this category makes any significant moves.
- Credit Card debt – All at 0%. Will be at zero next time I write one of these posts.
My Net Worth Growth
- From February 2016 to March 2016 my net worth increased .86%
- The positive movement captured back some of the disgusting losses I had from last month’s update (which was also my YTD calc) of -4.22%…moving my YTD number to -3.39%