I started tracking my net worth by accident. What I was trying to track was which credit card needed to be used at which part of the month such that I didn’t accrue any interest (aka such that I would be able to pay all my bills off in full.) I was living paycheck-to-paycheck and while I wasn’t in debt, I didn’t have my finances under control.
My finances had never been much of an issue until two months earlier when I got my second credit card. I thought I was being smart because I knew I always paid my bills off in full and on time and the new credit card was a rewards card. I’d be getting rewards for the spending I was already doing!
If only it was that simple. Around the same time of getting the new credit card, I had just returned from a year in France, I was engaged to a guy who was planning to move in with me in a couple of months time, I was furnishing my first “real” apartment and I was starting my thesis work.
Moving can be expensive. There are the necessary items you buy when you first arrive. “Home” doesn’t feel like a home yet because it hasn’t been unpacked, furnished or decorated. These are things we tend to try to take care of as quickly as possible. When we need things done quickly, they often cost money.
|PICK TWO: The general rule of thumb is to pick two things that are important. You can have two, but the third will limit the ability to get the other two things.|
By the end of the year I had created a spreadsheet including all my debts, all my income, my bank accounts, and the dates of when all the bills were due. By having this all in a spreadsheet I was easily able to tally all of my accounts and find a net worth number. While this wasn’t important to me at the time, I had effectively started tracking my net worth.
In addition to net worth I also started to track all of my spending. This is something I continue to do because it helps me budget and keep my spending under control.
Net Worth Breakdown
Here I have highlighted the major points in my tracking so far. I think it’s interesting to see what things have affected my net worth over the past year and four months.
January 2011: At this point I had the goal of saving up some money so I could buy a car. I was planning a road trip for October, so the goal was to put together enough cash to be able to find something.
February –July 2011: I stopped eating out, I cooked all of my own food, I packed my lunch every day. I had cut spending to the basics to save as much money as I could. The only thing I was really spending money on was food and basic household supplies. I remember being ecstatic when I reached my goal.
August 2011: It had become clear that the finance and I needed to go our separate ways. This took a lot of time to sort through everything as we had been working towards combining our lives for the previous two years. I spent everything I earned for a few months as I was dealing with the situation. I ate out a lot more often; I bought myself a number of things (a new sleeping bag was one of the most expensive purchases). I no longer had any major savings goals because I had also decided that I wasn't going to buy a car.
September - November 2011: I threw myself into work preparing for a conference in late November.
December 2011: I went on a two week vacation visiting family and friends. While I needed to take that vacation to help clear my head, it was expensive and it shows.
January 2012: I formed new goals, and was reinvigorated to work towards them.
February 2012: Reimbursement from a conference in November finally came through.
March 2012: I fronted some money for a work related trip. I got help from an accountant with my taxes.
April 2012: I got my tax refund! (Almost a full month of income!)
What tracking my net worth has taught me so far:
- I have emotional spending triggers.
- Total denial of spending money can be done for short-term goals but it sucks and is unsustainable.
- You NEED goals to work towards or you won’t make progress.
- Seeing positive progress feels wonderful!