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Net Worth Update

1/6/2014

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Assets: $1,142,128
Real Estate - $853,000
Retirement accounts - $202,003
Brokerage - $64,650
Cash equivalence - $20,803
Other - $2,005

Liabilities: $423,660
Real Estate Mortgages - $423,660

Net Worth:  $718,798


I did not get to pay off one of my mortgages last month like I previously would have liked.  I've been having an ongoing issue with a chilled water AC unit in one of my rentals.  I have no idea how much it's going to cost, so I didn't want to blow half of my cash for the rentals on paying off the mortgage.  Although if I can get paid by everybody this month I should have enough to pay it off, depending upon some other unforeseen circumstance.  

Real estate assets increased by over $4,000, but the bigger gainer was the increase in the stock market.  It's been increasingly hitting new highs, which always makes me nervous, but the conditions aren't right for a major collapse.  Famous last words.  My net worth 2 months ago actually fell, but it more than made up for it this month with an increase of 1.6%.  

So far I'm track for the overall 1% gain a month through out the year.  If I can keep it up, it would put me around $750k by the end of the year.  I've previously written about my concern with the chilled water system in one of my rentals.  If it can't be permanently fixed then I don't know what I'll do.  I have about $70k in equity for the unit that if I can't sell it for more than my loss than I will have to give it back to the bank.  I would also need to talk to a lawyer about what sort of financial repercussions this could have on me.  Will I still be liable for the entire mortgage or will giving them the property suffice them.

This situation has caused me a great deal of angst over the past month.  I've also seriously been looking at my philosophy in how it relates to debt and risk.  I hate debt!  I only use it because I have to, but on the same token if you're cash flow strong, then putting too much of your equity into one investment could be a serious problem.  Now that I write this out it seems obvious.  It's call diversification!  My original plan was to pay off said property asap, however, I may instead either build up cash to buy another property or I could just continue to accumulate cash to make a huge investment in the stock market when it accumulates again.  Both would help me diversify more and also to spread my risk around.  I'm paying a very low interest rate on the final property, so paying it off early would actually only lower my return on equity, versus a more profitable venture.

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    This website was created due to the atrociously misguided financial advice that I've heard over the decades.  Financial freedom is not intellectually strenuous, but it takes discipline. 

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