Has the Coronavirus affected my Net Worth? Let's find out!
Hello Friends!
I hope this message finds you well. At least cozy at home, safe, and fed. I know personally that the time in Quarantine has been a mixed bag. With a lot more space to learn, reflect and try new things, all while balancing some boredom, sameness and depressed or melancholic moments.
I am incredibly grateful to have homes that will continue to pay for my frugal lifestyle, even rented on a less profitable month to month basis. With my work tasks grinding to nearly a complete halt, I am realizing more and more how much of a responsibility it is to go inside to find (or create!) my own happiness, fulfillment, inspiration and drive. I will admit that I have varying degrees of success at this.
This week I plan to poll other retired friends of mine on how they manage this. I’ll let you know if I get any good feedback.
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Let’s dive into updates! (I didn’t think there would be many given the state of the world, but surprise!)
New Home
When I wrote my last quarter-ish (I need to set reminders to do these on time) report, we were preparing to close on our new place and move. We closed on Jan 30th and spent a series of grueling weeks after the move getting it all put away. I consider myself a minimalist and I was shocked to see how difficult it was to move all of our stuff into our new place with minimal storage.
In early March, just as Coronavirius was starting to become a concern, we finally wrapped up buying new (used) furnishings and selling all we did not need through Craigslist & Facebook marketplace. I am so grateful to have moved to a quieter, out of the way part of town, where we have walking trails galore!
Unfortunately all our travel plans have cancelled so we have not had a chance to rent our home and offset the costs of it yet.
Airbnb Grinds to a Halt
On March 10th, Paul Thompson, Host of the Ready Investor One Podcast, interviewed me for Episode 112 and asked how my properties were doing in light of all the Coronavirius talk. At the time, I might have had 1 cancellation, so I confidently and ignorantly said I wasn’t worried about it affecting us. Boy was I wrong! The following week was chaotic with bookings literally falling off the calendar. I lost almost every. single. one. I quickly pivoted and had all my homes rented for steep discounts and on a month to month basis.
After doing some math, I project with the lower costs of paying less in booking fees, for less software, staff, and cleaners, I may make a similar profit to what I did last year. Lets see.
Unintended Frugality
Aside from some generous gifts (because what the heck else am I spending money on!?) my spending has reduced itself to an almost comically small amount. We basically just get fancy groceries, anything our hearts desire and my creative recipes demand, and pay for living expenses: Mortgage & Utilities. My secret spendy vice is eating at restaurants, so without that option, I’ve been cooking a lot of extravagant new recipes (the best of which I share here). I’ve really upped my cooking game which seems valuable. Double win!
Refinanced Colorado Springs Home
I’m not a huge fan of mortgages. I know they help so many get a foothold into owning a home, and yet I think the use of interest, amortized payments, and high closing costs can make them a dangerous debt hole if not well understood. This point of view had made me skeptical of refinancing and buying down points, so I thought I might never venture there. Well, we crunched the numbers and the numbers don’t lie! I was surprised to see that extra payments would not get us the savings that lower our interest rate would, even with the high cost of a refi (over 5K).
We went from a 5.5% mortgage to a 3.25%, with a combo of refi and buying down points, and we are now saving over 50K in interest over the life of the loan! This bonus on top of lowering our monthly payment to increase cash flow. Yay!
Whoa a Millionaire!?
As I was entering all my updates into Personal Capital, including adding my last home purchase with its value and debt, I saw my assets cross the $1 Million mark. This stopped me dead in my tracks and I actually had to take a moment to pause. Whoa. I may have also shed a tear.
One thing you probably don’t know is that last year I was feeling burnt out and made a commitment to myself that: by 35 (I am 33 and was at the time) I want to have over $1 million net worth (which at the time felt really far away and I was like, “I don’t know how the heck that will ever happen”) and step away from property management duties, whether that means hiring a team to take over or selling my business.
I know it doesn’t fully count yet because my mortgage debt brings the total net worth down and yet I now see the light and know I can hit that goal in the next year and a half. Watch me!
This timing of this is particularly comical because while being interviewed on the Nurses on Fire Podcast this week, Naseema, the host, accidentally said that I was a Millionaire. I was quick to stop and correct her, saying that even though I consider myself Financially Independent, I haven’t crossed the million dollar mark yet. Well, I stand corrected!
THE NUMBERS
Here is my current breakdown (as of 5/15/20):
Assets
Cash: $58,232: UP 18K from last time
Investments: $67,194: DOWN 7k
Homes: $925,000 (this is just my portion of ownership value of the homes, some owned with a partner): UP 231K ***(new home added)
Debt
Credit (statement balances paid in full each month): $6192
Mortgage / Loans: $334,003: UP 217K
Net Worth: $710,128: UP $21,570
>Cash: I have continued to save in my checking account, despite the low interest as I am waiting for my next acquisition or investment opportunity.
>Investments: You can see a small market dip reflected here.
>Homes: Even with the initial dramatic drop in the stock market, homes have seemed to hold their value, at least for now, which may partially be due to a shortage of available homes for sale.
>Credit: This is a rolling number as balances are paid in full each month.
>Mortgage: Up a lot from a refi and a new purchase.
Summary
Even though Covid-19 threw a wrench in our strong Spring roll out and likely the usually high Summer numbers, it really hasn’t affected my Net Worth growth much. I am incredibly grateful that my homes are producing live-able income and that I am getting the space to formulate my future plans.
Future
I had a new nephew come into the world on 4/16/20 and I have decided that I would like to buy a home for each Nephew as a college fund. I have begun researching and yet I am sitting on the sidelines waiting to see if there is a market correction in the coming months. I may tire of waiting and buy anyway, of course you’ll be the first to know!
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Have you begun tracking your Net Worth yet? If not, why not? As the old adage says: “Where attention goes, energy flows.” As I have proven, this can really work in surprising ways. If I had not been tracking my Net Worth, I would not know that I had hit a lifelong goal. To be honest, I had a few moments of worrying about my financials in the last few months and it’s been so helpful to be able to pull up a simple app.
It feels like such an important time to get finances in order so I am continuing my:
$99 Financial Bootcamp One on One call offering!
If you can’t afford that but are really interested, reach out and we can figure out a sliding scale option.
TAKE ACTION:
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Track your Net Worth (get $20 when you sign up, it’s free!)
Upcoming Events (See me Speak Live!):
Financial Freedom Summit - This event moved to Sept 29-30th, Long Beach, CA
Bigger Pockets Conference - Oct 5-6th, New Orleans
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