Two months ago, in Real Talk July, I set a goal to reach a net worth of -$53,000 by the end of 2018. This was quite a conservative goal it seems, since I just met that goal at the end of August. My net worth is now -$50,295!
One reason I was able to jump so quickly from -66k (July) to -50k (now) is because one of my favorite statements came in the mail. I geek out a little bit when I get to update my net worth values when my yearly pension fund statement comes in the mail. Even though we contribute 14% of every pay check to STRS (the state teacher retirement system) in Ohio, our account value is only updated once per year, at the end of the schools’ fiscal year. They drop in our account additions, our employer’s account additions, and the amount of service we completed.
Note that my balance I have listed does not include the employer’s account contributions; that is not listed in our statements. It will be used after 5 years to start calculating what the pension benefit would be once I were to reach that point.
I use my pension fund account value in my net worth statement because upon separating service it is absolutely an option to cash out the account (and pay taxes) or to roll it into an IRA. So while I can’t access the funds right now, I will be able to one day.
I also got some other big payments (stipend mentioned in August Real Talk; other big amount will have a separate post soon) during August and have been making slow strides on paying down debt. The market hasn’t helped me much, but a little fraction of the growth was due to the market. All of these items grouped together led to a jump up of about $15k
Miscalculations: Pros & Cons
When calculating what would happen to my stipend I got mid-August, I forgot that all supplemental income gets taxed at a higher rate than my normal pay check is taxed. So that means I didn’t have as much deposited into my emergency fund as I had originally thought. After my final pay check of messed up pay, I need $487 more for my emergency fund. I want it to have exactly 3 months worth of necessity spending in it.
On the plus side, because of the 22% tax rate applied to my stipend, I have now paid in all of my federal taxes that I will owe for 2018. This means I can increase withholdings in order to lower the amount taken out in each check. I get to keep more of my check 🙂 My goal at the beginning of the year was to be as close to $0 refund (or, more realistically, within $100 of the correct amount paid) at 2018 tax filing season. This means I can invest the money now instead of waiting until February or March to get it into the market.
Fully fund my emergency fund – need $487 more – done by end of September
Max Out Roth IRA in 2018 – only $588.33 more – done by end of October
Continue paying down auto loan – pay off by July 2019
Build taxable account to $10,000 – most realistically done by December 2019