"Net Worth Update" returns after 1 year hiatus! After some deliberation, I decided to reopen this window into my personal financial life for WCM readers. Sure it's unconventional but hey I've got nothing to lose - I'm broke!
Since I'm giving out money tips to other medical professionals, I thought I should put my money where my mouth is. Below you will find details about how I manage my money. I plan to update this quarterly so you can grow with me in this crazy world of math, medicine, and money.
- Cash - my attitude towards cash is that I only need enough to cover my monthly expenses. Whenever I have extra, I put that towards my emergency fund, paying off debt or investing for the future. You may have noticed that I'm currently holding quite a bit of cash. That's because I'm planning to pay off my credit card debt this year as detailed in my New Year's Resolution post.
- Emergency Fund - depending on where you look, people usually recommend a emergency fund of 3-6 months' worth of expenses. I hold my emergency fund in Betterment which technically is a taxed brokerage account, but the assets are liquid and accessible. I made a large withdrawal from my emergency fund as part of my plan to pay off debt. I plan to return to building it back up after paying off my credit card debt.
- Roth IRA - best overall retirement investment vehicle. Read this post if you want to know why. I started my account in 2013 and have been contributing the max and I plan to keep contributing the max every year. This year will be a little challenging since I am prioritizing debt payoff. But I'm optimistic I can continue to make the max contribution.
- Roth 403(b) - new since the last update, I decided to start investing in my employer's Roth 403(b) plan. There is no employer match but the other benefits were enough to win me over. I detailed my reasoning in A Change of Heart - WCM Investing Update. Unfortunately, I had to stop contributing given my current goal of becoming debt-free.
- Health Savings Account (HSA) - I started contributing to my employer's HSA plan which was new for 2016. I plan to take advantage of the company match and max out the contribution at $3,250. See my previous posts here and here for the benefits of an HSA.
- Taxed Brokerage Accounts - as some of you are aware, last year was a tough year for the market and my portfolio was no exception. While the absolute value change may suggest I made a gain on my investments, the reality is I lost ~10% after accounting for all investments. Luckily my investing outlook is long term so I'm not making any changes to my portfolio. Currently I'm holding on making additional investments pending consumer debt payoff. Hopefully I can return to investing by late 2016.
- Car - I went with the Kelley Blue Book value for my 2009 Honda Fit which is a very optimistic estimate as the car has quite a few cosmetic blemishes. Like a true geek, I put a $1,000 deposit on the upcoming Tesla Model 3. But the Fit should fare just fine until then.
- Credit Cards - As you can see above, there has been a significant increase in my credit card debt. Part of it has to do with some trips I took (including one to Iceland - highly recommended!), part of it has to do with my love of restaurants, and part of it has to do with increased expenses related to WCM. All credit card debt that I carry a balance on are at 0% interest. The others I pay off on a monthly basis. Since the last update, I have had a change of heart regarding taking on low interest consumer debt to invest. I am now actively trying to pay off all my credit card debt (Thanks Dave Ramsey).
- Student Loans - By far the biggest factor accounting for my negative net worth and the bane of my existence. More than 80% of my student debt comes from the cost of medical school. I am currently on income-based repayment (IBR) with the intention of eventually qualifying for Public Service Loan Forgiveness (PSLF). I forgot to account for accrued interest during the net worth update from April 2015. That oversight has been corrected.
Overall, I'm relatively pleased with a 5.6% increase in my net worth in the last 12 months, especially given the market fluctuations of 2015. However, I can definitely do better in terms of controlling my spending. Did I really need to put down that deposit for the Model 3? What do you think? Am I living beyond my means? Lemme know in the comments.