Investing in a Down Market (March 2020 Net Worth Update)

Last month, I began documenting my journey to financial independence

I identified my goals of reaching a $1 million net worth and earning $30,000 in annual passive income

Throughout this process, I will be completing monthly check-ins to show you my progress and provide some context for anyone who is also looking to start down his or her own path to financial freedom. 

As I continue towards my goals, there will likely be a lot of ups and downs. I’ll cover it all either way.

Before we get into the numbers, let’s take a moment to discuss house hacking, which is something I do to dramatically reduce my housing costs.

Can House Hacking Help You Gain Financial Independence?

House hacking is the strategy of purchasing a house or small multi-unit property, living in it, and then renting out the extra space to cover your housing costs.

For example, you could buy a duplex and live in one unit while renting out the other, using the income from the other unit to pay off your mortgage or other living expenses.

For me, house hacking will likely play a large role in getting things off the ground.

Some months ago, we bought a 2 bed, 2 bath condo in Chicago. We rent out the extra bedroom and bathroom and that covers our mortgage.

Renting that room gives us more flexibility financially and gives us extra income that we can use to contribute to our own financial goals. 

Without house hacking, we’d probably be paying about $1,300 out of pocket monthly for all of our housing costs. House hacking more than halves that number, so we’re coming out of pocket very little while also building equity in the property.

In short, I love house hacking and it’s been instrumental in getting started with building my portfolio and keeping my net expenses low.

With that said, here’s what the last month’s numbers looked like:

March 2020 Net Worth Numbers

Assets – March 2020 

Assets March 2020

I still have a sizable sum of cash for potential real estate investments.

Finding a deal has been challenging for me. In Indianapolis, where I’m looking for a new real estate deal, I actually backed out of a deal for a 5 unit building on the southwest side of town.

Long term, I want to diversify my real estate holdings. To this point, I’ve only invested in my house hack in Chicago. I will have at least one more of those in the next couple of years, so I want to work on building my portfolio in a better cash flow market in the meantime.

When investing in real estate, I prioritize cash flow. I’m seeking a market with a greater population growth rate, reasonable pricing, and minimal taxes when compared to Chicago. Indianapolis seems to fit that bill.

Despite my additional contributions, my stock portfolio has shrunk. The coronavirus has ripped through the market, and my holdings have done poorly in the last week.

Similarly, despite my contributions, the value of my IRA holdings decreased as well.

That said, whatever the market does, I’ll keep consistently investing because I’m playing this game for the long run. There will be a lot of volatility in the short term due to things like market sentiment and short term events.

All I can focus on is building out my holdings consistently over time.

Regardless, in total, that leaves us with $264,855.89 in assets for March 2020.

Liabilities – March 2020 

Liabilities March 2020

On a positive note, my liabilities actually went down this month. 

We made some contributions to our HELOC just to get rid of some debt.

The HELOC is revolving, meaning we can pull out more debt later if we want. We have a $127,000 credit line and we are only using about $20,000. I intend on saving this liquidity for future real estate deals, potentially using it to finance some of the down payment or even an entire deal.

Other than that, not much else has changed with our liabilities. We haven’t made any contributions to our promissory note or student loans. The note is due in August 2023. And we don’t have to make payments to those student loans any time soon while my wife remains in school.

To reiterate, we pay off our credit card balance every month before interest accrues. The $57 you see above is just the balance I’m carrying right now because I haven’t paid off a card yet. I’ll pay it off shortly.

I’ve never paid credit card interest in my life, and I don’t intend to start now, barring an emergency.

That means we have $186,318.30 in liabilities for March 2020.

My Net Worth – March 2020 

As we wrap up the second month of my journey to $1 million, my net worth is $78,537.59

That means our debt ratio (liabilities divided by assets) is 70.35%

That also means that our net worth decreased by -$4,059.53.

What’s Next?

Despite the poor month, I’m not going to get discouraged. This is a lengthy process, and we are only at the beginning. Reaching my goals won’t happen in a couple of months; it will most likely take years and a lot of time and effort to achieve financial independence.

If anything, the market slump has encouraged me to go out and try to find more money to buy things while they’re cheaper than they were a few weeks ago. 

But, for now, my journey to financial independence remains an uphill battle. 

There will be good and bad times, and I have to make sure not to become discouraged during any of them.

This website, and any communication stemming from it, while hopefully informative, should not be taken as financial or legal advice. Assume all links are affiliate links. I am an Amazon affiliate.

Jack Duffley

Jack Duffley is a real estate investor and attorney based in Houston, TX.

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