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Fail: Not tracking where all my money was, and having multiple accounts open.
Flip: Consolidating my funds and tracking my net worth on Personal Capital.
A year ago I started my journey to become more fit financially. I knew we had a problem. Although we earned a decent income, I was seeing our spending increase, to the point that we were spending over $1000 more a month than we were bringing home in our paychecks. And it wasn’t because we had a large repair, or purchase. This was just lifestyle creep. The credit card companies were starting to love us. To start off, I also didn’t know what Net Worth meant, so I had to start there. You can read about that fail here.
Last May, I knew we needed to do something different. We had to get our act together and it worked. Today, our net worth is more than $100,000 more than it was last year. Here are the ways I did that.
Where did we increase our net worth?
Debt Payoff –
Student Loans – $600.30
Car Loan – $3140.38
403b – $18,000
403b employer match – $6,100
Roth IRA – (for spouse and me) – $11,000
457 – $5107
403b (spouse) – $3,000
Health Savings Account – $6,750
Health Reimbursement Account – $4,500
Rollover Unused Vacation – $1,750
Investments increased by $15,363.03
Cashed in Life Insurance Policies turned into Emergency Fund – $15,000
Extra Principal toward Mortgage – $10,000
Total – $100,310.71
One year ago, I had 6 bank accounts open and 6 retirement accounts. With so many accounts, it is that much harder to stay organized and manage all of the different investments. I was not in control of these accounts.
If you have multiple accounts consider consolidating them. If you have multiple retirement accounts from old employers, you can do a direct rollover into one traditional IRA.
Fewer accounts means less stress and the ability to focus and be more intentional.
Track Accounts in one Location
Consider tracking all your accounts and balances in one location. This makes it easier to know your net worth and set goals to increase it. You can track this in your own spreadsheet or you can use an online tool.
I use Personal Capital and recommend it to everyone. It is free and gives a great visual dashboard where I can see all the growth that my accounts are making. It is very easy to navigate and see how each individual account is doing.
Do you have life insurance? Is it right for you? There are two types of life insurance. Whole and Term.
Term life insurance is paid for during a specific time, 5, 10, 15, 20, or 30 years. Death benefit is only paid out during these time frames. Usually this is more affordable.
Whole life insurance is insurance for life. It builds up a cash value, but it takes a long time for that cash value to exceed the death benefits. This is generally more expense.
Both my husband and I had whole life insurance policies that our parents had purchased when we were babies. We decided to change the insurance we had so we signed up for term insurance instead and cashed out our whole life policies.
It is important to look into your insurance and see if your needs are being met. Just make sure not to cancel any policies until you have an alternative in place.
Set Goals and Be Intentional with Money
I started with a goal of retiring early. To grow my net worth, I became intentional with my money by learning to budget and spending less. Then I was able to save more. As a family we worked together. My kids heard me say the word NO. And they learned to budget for their birthdays. We worked out a meal plan and saved money on our groceries.
We just saved. As much as we could. Now with a goal, we have a purpose.
We have seen significant gains in just one year, and it has just motivated us to do better this next year!