Investments surpassed $900,000. Time to Celebrate in Texas?
July ushered in a BIG TNFG WIN.
We surpassed $900,000 in our total investment portfolio. This mirrored how we reached over $950,000 in total net worth last year. We might see a million-dollar repeat performance. Rolling it back further, in 2022, we reached a whopping 1 million dollars in total ASSETS in less than 10 years. This is the final stretch to the 1 million investment goal.
New phone (in Austin) who dis?
Table of Contents
How Investments Add to Your Wealth
While the median household wealth is $192,000, the US Census Bureau found that nearly 45% is home equity ($86,000). By contrast, their stock position hovered around 15% ($28,800). That’s not a good thing. If you want to be efficient, your home equity portion should not exceed 30%. Why?
The main reason is liquidity.
Most people aren’t likely to sell their home, especially if it’s paid off. Doing so would only lead you to find a new way to pay for housing (again). Your wealth should be divided as follows: 44% in equities and mutual funds, 17% in Real Estate, 6% in pensions and retirement funds, 17% in businesses, and 16% in other assets. From 1992 to 2024, the S&P 500 returned nearly 8.27% and over 10.24% annualized (with dividends). Over the same period, the average annualized real estate return was 5.5%.
That 5% makes an oversized long-term impact.
Before we jump ahead again
For those new to the term “wealth,” it’s synonymous with net worth. Net Worth = Assets minus Liabilities. A simple definition is what you own vs what you owe. The best way to fix your household wealth equation is to:
- Spend Intentionally,
- Increase your income, and
- Invest the difference.
The Investment part is fun since you can mix and match. You can invest in improving your soft skills, technical skills, or education. You can also invest indirectly through your 401k (or equivalent) and/or directly in the stock market. This may include investing in valuable networks ie. relationships, organizations, etc. There you have it those are the supposed secrets of the wealthy.
Those secrets helped my family’s net worth go from negative $150,000 to nearly $1.4 million in 11 years.
Reflecting on Simpler Times
In July 2016, I went on my first solo travel to Brazil for the Olympics. While it was intimidating, it pushed my boundaries mentally. So much so, that I purchased a Condo (October 2016). I now realize how pivotal and transformative every moment is. Each decision compounds into the next good decision. Future opportunities are in part a function of your wealth.
While most people didn’t believe me at first; throughout the process, it became apparent that it’s not something you can force on people. They either want to be wealthy and stress-free, or they don’t. It’s not even about the money. Your investments are a function of ‘Time,’ the most limited asset you own. All we can do is share every tip, tool, and strategy so that you can make the best of your time.
You can’t say we never tried to help.
3-Yrs since the Business Insider Feature, Inflation/Recession scares are still warring strong
While the year started cautiously at best, the market continued to roar with the strength of AI and the magnificent 7. And so we thought.
Inflation hit a peak of 9.1% back in June 2022, the Federal Reserve took even more restrictive action. After a few bank collapses and more than enough layoffs, we are back at sub-3% inflation. The market rallied from the news which sent stocks soaring specifically Tech stocks. With the SP500 hitting 15% year to date, we might have capped the year at the expected 26%. And then…
Recession? Well not quite. Investors panicked and started taking profits. Fear spread to my beloved NVDA positions and billions were lost. Most financial experts feared one problem, “a few companies are carrying us.” Just like that money flowed from Large caps to Small caps, in what’s being called the Great Rotation.
And then earnings started pouring in. Companies like Starbucks, Amazon, McDonalds, Google, etc either missed or faltered. It became apparent that Americans were struggling to keep food on the table. Why? It’s a rolling recession. If you have money and means at the start, you are hurting but not so much. However, if you were living paycheck-to-paycheck, the debt is mounting up.
With no Federal rate cuts coming, it’s a matter of time until the bottom falls in Q3 2024.
What’s it like on our end?
Through the endless motions of the market, we kept investing. Our Investments are down almost $80,000 in twelve days. It’s nearly biblical out here, however we are up over $240,000 in gains in our combined portfolios. The long-term strategy pays off, even if the pain train is coming. It’s important to note that credit card balances drop less than $1,000. Although productivity is seemingly up and unemployment is at a new low, we are still very much in a recession.
Prices are up. Eating dinner is now close to $180 in the DMV. Just hanging out for a quick cafe turn into a $60 fee. Tipflation is causing us to stay home, it’s not fun enough outside.
To compensate, the average American will have to make a tough choice. You can either change your financial habits or be forced to change.
My wife and I suggest that you get off the Hedonic Treadmill. It’s no fun, spending more money, hoping for a raise, and only to spend more money again.
With all of that said, this article will showcase the TNFG monthly Net Worth Breakdown for July 2024 where making money makes sense. In addition to our household wins and losses, we always drop useful financial nuggets and aha moments that might help you along your financial freedom journey. What a long intro this month.
A Million More Mental Problems and Brownie is back!
Post-pandemic is churning out mental health issues. So much so that crime is up. The world is struggling to keep up with wealth inequality. Europeans are throwing water at tourists. Check with your friends as we cope with another global issue. Money is dwindling for food, gas, and utilities.
As difficult as it may seem, we’ve been in this staggered lifestyle for almost four years. And it hadn’t been easy on most people. The best way to cope is to start with a 5-10-20-year plan. Most of our problems are vested in the idea that we aren’t living with any true purpose. We are waiting for things to merely happen to us and for us. It’s the entitlement matrix.
You have to break free and create your own story. I don’t value labor so we are headed for the financial freedom exit.
Shifting Post July to the 2nd Half of the Year
Hardcore Planning Season from July to December
Day by day it might seem like a hurdle but wealth is counted in the long term. To stay focused, we are moving toward renovating our current home and buying a new one in 2026. As such, we are investing while paying off debt.
The goal by the end is about +$90,000 net worth growth (around +$360,000 total for 2024).
So far, this year has been more miss than hit. The 2020-2021 investing cycle was easier by comparison, so the wins come harder and are way more deliberate.
At this stage, it’s all about holding on to big wins in 2025. 2024 is all offense and less defense. I expect an explosive finish in Q4, the market will likely settle at around +26% for the year.
Here’s Our Monthly Net Worth Summary Overview:
So What Happened?
Our assets and liabilities improved by 1.59% and 1.34% respectively. This led to an overall net worth boost of 2.03%. In 2023, it was a change of 5.50%. Grateful for the climb, the last day saved us since NVDA grabbed +12% on July 31.
S&P for July flattered by 1.37%, and we dropped by 1.8%. With all the pent-up energy, Americans are looking for the next Fed rate cut. This is likely one of the best opportunities to invest when the market is arbitrarily down. If you aren’t invested, you will miss out.
For now, don’t anticipate good times. It’s more likely that there will be a seismic drop in mid-August and again in October. This will reflect a drop in spending across the board. Companies are expected to dish out deep discounts and sales for a legendary Black Friday. The recession is nearly avoided.
Either way, my wife and I are shifting to:
- Back to stacking 10% worth of investment cash for future opportunities,
- Consider shifting asset allocations with more Utilities + Energy,
- Considering buying more shares of $NVDA while stocks hit a record low, and
- Rebalancing where needed.
Our Expenses for July 2024
Coast FIRE Cash Flow for July 2024
With the Austin trip coming up in August, time to count macros and decrease luxury eating because over $1,200 for Food and Dining is ridiculous. Let’s go over our July cash flow. It’s important to note that we aren’t on a budget per se, we end up spending around $5,000 per month.
We use the Net Max Budgeting method that allows flexibility in how we spend. As long as there is $3,250 in our checking to start the next month’s expenses, we are covered. After that, we pay expenses and invest the difference.
Income:
My wife and I are mid-tier professionals living in the Washington D.C. area. Around these parts, they paid pretty well. We pull in about $120,000 gross salaries each (+/-). Our take-home is around $9,600 per month after deductions. We pull in an extra $1,400 per month from our rental property. Net of expenses, it’s closer to $200 per month.
Expenses:
Most household expenses comprise over 70% of housing, transportation, and food. We manage things differently. While financial influencers opt for paying debt or cutting down small expenses, we keep the big-ticket items smaller.
Our total housing (including utilities) cost peaks at 20% (excluding the rental property). The trouble zone is our auto which comes out to 18%. The average total food cost monthly is around 11%. Our big three numbers are 21% less (a cash value of $19,000). Every dollar counts.
Those auto expenses are kicking our butts for the 2023 car. The car insurance came in at $860 with the monthly car loan of $893. At least our grocery bills seem reasonable this time at $740. Brownie came back so we had to pay $95 for his flight.
What is the Next Step beyond July?
What’s the deal for August?
We are headed ‘South x South West’ (Destination – Austin, TX). It’s time for BBQ and a lack of nutrition. Much needed family recharge time. Brownie is finally coming along for the ride.
The world is getting smaller so why not travel? With money getting tight, travel domestically for great bargains. I’m still hoping Google Maps acknowledges me with money, we have over 186 million views. That’s got to be worth something one day.
Beyond that here are our overarching goals for 2024:
- Keeping our expenses where they should be by “Not equating happiness and social acceptance based on the money you spend.“
- Hold on to our recession-proof investment strategy through Q4 2024.
- Get to $30,000 in M1 Finance focusing on Growth and Dividend Income that generates at least +$3,000 in passive income by year-end. Check out the portfolio in real time. If you like the platform and want to start investing, I have the $10 for $10 referral if you need it – https://m1.finance/SYdqDJ2SyADC.
- Shooting for a sustainable $1 Million Investment Portfolio by March 2025. To help monitor your savings, cash flow, net worth, investments, retirement, and more FREE with Personal Capital. Now known as Empower, a name change similar to Twitter going by X. Sign up with my link & get a $20 Amazon gift card. *Terms apply. https://pcap.rocks
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