How we increased our net worth by more than 170% in less than a year

By glblguy

Joshua Davis (articnomad)

The M-Network along with many other bloggers are doing a year end net worth wrap-up. You can find links to all of the participating blogger’s articles at the end of this article.

I didn’t actually start tracking my net worth until February of 2007. I decided to start tracking it based on the suggestion from a number of personal finance books I’ve read, primarily The Millionaire Next Door.

What is Net Worth and how to calculate it?

Calculating your net worth is pretty simple, assuming you have all of the data. Mathematically your net worth is your assets minus your liabilities. In reality it’s what would be left over if you sold everything you owned and paid off all of your debts. What to include in your assets and liabilities is a bit more controversial as I learned when I wrote about Net Worth: How To Include Your Retirement Account. Net worth is a tool that provides an overall picture of your financial situation. I wrote an article on How To Determine And Track Your Net Worth that will provide you with more detail.

Our Net Worth Wrap-up

I am probably going to disappoint you, but for a number of reasons I am not going to disclose the specific numbers in my net worth. I have too many friends and family that read my blog and could also get into some issues with my employer for sharing the detailed numbers. As a result, I don’t feel comfortable disclosing the specifics.

What I will share is the percent increase from February to December of 2007. During that time we increased our net worth by more than 171%. We are in the black as well. Here’s the 4 main things we did:

1 – We saved

In February, we received both our tax refund and a bonus from my employer. Both of these were put directly into ING savings accounts to fund our emergency fund and to assist with paying off our debt. We also started saving money into our Christmas and property tax funds. I additionally had stock options that matured. I don’t believe in keeping individual company stocks, and therefore sold them, placing the funds into our ING savings accounts furthering increasing our assets.

2 – We sold stuff

We were big into RV camping and had both a full-size heavy duty Dodge truck and a 34 foot Jayco trailer camper. We owed money on both. We decided we loved financial peace more than camping and sold both the truck and our camper. We also had a two yard sales where we sold a bunch of extra stuff that we no longer used or needed.

3 – We paid on our debts

We used the windfall cash we received from our taxes, bonus, and stocks to pay on our debts. Namely four credit cards. We continued to aggressively pay on our debt throughout the year, paying anywhere from $500 – $1200 a month against our credit card debt. We did this by running a tight budget and being frugal with our money. It’s amazing how much “spare” money you can find in your budget when you actually begin looking for it.

4 – We had a fair market analysis done on our house

Until July, I was under estimating the value of our home. We had a Realtor perform a fair market analysis on our home and as a result we received a pleasant surprise, I was undervaluing our home to the tune of $35,000. That gave us a pretty big jump in our net worth.

In summary

Overall we had an excellent year from a net worth perspective. While we don’t have the nice truck, the nice camper nor were we spending money and buying all of the stuff we had the previous year, it was far more gratifying to see our debt dropping and our net worth rising. I mean a 171% increase…hard to complain about that!

Do you track your net worth? If so, how did you do during 2007? If you didn’t track it during 2007, do you plan to during 2008?

Read about other bloggers Net Worth Wrap-ups:

31 Responses (including trackbacks) to “How we increased our net worth by more than 170% in less than a year”

  1. Patrick Says:

    Great progress, Glblguy! Our house went up in value a little bit, but I left it at the purchase price. No particular reason other than we don’t plan on selling right now, and it isn’t in the category that interests me the most – out retirement and liquid assets! :)

    Best of luck to you and your family in 2008 and beyond! ;)

  2. ed Says:

    While I haven’t been tracking my net worth (or rather unworth) maybe I should begin doing so after the first of the year bill payments settle down.

    It’s really cool that you gained that much net worth in your home, especially with the market tanking as bad as it is.

  3. Mrs. Micah Says:

    Holy crap, Gibble!! Very inspiring. :)

  4. Lynnae @ Says:

    That’s fantastic….and very inspiring! It takes a lot of discipline to use windfall cash to pay down debt. Congrats on the big net worth increase this year!

  5. Pinyo Says:

    Great turnaround story. I wish you the best with 2008.

  6. Laura Says:

    Good job glblguy! We have Quicken and use Google Docs to keep track of our finances. I’m not going to be using Quicken since it gets off track after 2 months of downloading my statements.

    I wish you well this year. Keep it up!

  7. glblguy Says:

    @Patrick – From what I’ve read, housing values in our area are one of the few in the country that are rising. I just undervalued the growth over the past few years, so yes it was a pleasant surprise.

    @ed – It’s just another tool that gives me confidence in the direction I’m headed. It makes me feel good to see the assets go up and the liabilities go down. I agree on the house value…feeling very grateful right now.

    @Mrs. Micah – LOL…dang it, the “Gibble” secret is out.

    @Lynnae – Thanks, and I agree it does but it really is the right thing to do. It allows you to avalanche your debt instead of snowflake :-)

    @Pinyo – Thanks Pinyo…not turned around yet, but on my way!

    @Laura – I have a love hate relationship with Quicken. I stopped using it a few years back. It’s just far more than I want or need.

  8. My Dollar Plan Says:

    Great growth. Making the decision on the RV must have been tough if it’s something you love. Big picture wise, great choice. Keep it up!

  9. glblguy Says:

    @MDP – Thanks. It was a tough decision and is still tough. My 4 year old keeps asking when we’re going camping again. We’ll get back to it in a few years, just need to get things stabilized right now. You gotta do what’cha gotta do! Thanks for the encouragement!

  10. Craig the Debt Freedom Advisor Says:

    ING account…yes! I have an ING savings account as well and I love it because they don’t hit you with charges for anything. That is where I keep my emergency fund also. I am working on bolstering my emergency fund and then knocking out some debt (school loan and car payment) this year 2008. Thanks for the inspiring words!

  11. glblguy Says:

    @Craig – I really like ING and have moved all of my savings over into ING accounts. Their website is awesome and I love the ability to create sub-accounts. Thanks for the comment!

  12. Suzanne of New Affiliate Discoveries Says:

    Thanks for the info and the links to other financial net worth bloggers. I’ve been trackign my net worth for the past 2 years, and only about 3 months ago am I in the black. It’s a great feelign to see assets climbing and debts falling!

  13. Chester's Clean House Says:

    Good job and keep up the good work. We wish we could have seen that kind of increase. We are working at it slowly, but we still have too many bad habits. Thanks for the encouragement.

  14. Never the Same River Twice Says:

    This is really inspiring, thanks for sharing.

    I do have a question about your stock option money. I understand not wanting to hold onto company stock. Did you use the money to pay off debt, put it into other retirement accounts, or just leave it in ING? I would worry that you are losing valuable interest compounding if you let it sit in a savings account when you could have had it in a mutual fund or ETF.

  15. glblguy Says:

    @Never The Same River Twice – We used it to payoff debt. The day it was deposited I made payments against our debt. Plan to do this same this year when the options become available for me to sell. Thanks for the comment, and you’re right had I not payed off my debt, I would be worried about the same :-)

  16. Jason L Says:

    I hate nitpicky comments, but…

    Couldn’t it be argued that your garage sales actually lowered your net worth? At your garage sales, you sold stuff presumably at a price lower than their replacement cost. While you kept the items, you could have evaluated their value at their replacement cost, and not their used sale price. However, assuming you were valuing them at their used sale price before the sale, didn’t you merely convert their value from goods to cash at the equivalent price. That would mean the cash you received should not have been considered a gain in your net worth.

  17. glblguy Says:

    Hi Jason. Sorry for not responding sooner, for some reason your comment got flagged as SPAM.

    Very valid point. I mentioned that just in passing, the amount of money we made at the garage sale was less than $1,000 and a small portion of our overall networth. It would not have made a significant difference. I’m also not sure that garage sale prices are really lower than the true value of the item. We sold a few large items and I think we got a pretty fair price for them.

    Have to do some research on this…you have me thinking :-)

  18. Jo Says:

    I track my networth on networthiq, and I love doing it…seeing the progress has motivated me a lot. Congrats
    I just wanted to say, camping can be done in a very frugal way too, so dont give up everything…you can have a nice tent and probably pay cheaper per night than with an RV spot. My partner and I go for 70 dollar weekend getaways regularly!