Net Worth Update – January 2014

The first month of 2014 is coming to an end. Last year when I labeled my updates, I went according to how I was starting the month; So “Net Worth Update – December 2013” was for how I was starting December. But I’m switching it up in 2014; “Net Worth Update – January 2014” is how I’m ending January. I think that makes more sense, since it shows the progress that I’ve made during that month. Not that it makes a big difference either way, I just figured I should acknowledge the change.

So, here it is:

Net Worth as of January 31, 2014
Net Worth as of January 31, 2014

In one month I’ve grown my net worth by $1,125. I have a goal of growing my net worth by $10,000 in 2014. I’ve made 11% of my goal in 1 month! Whoot whoot!

Of course, I foresee 2014 being a very bumpy ride. My tax refund should come in next month, which will bump things up by an additional $2,000+. But I’m also going to be spending a lot to fix up the house to put it on the market. I’d like to keep those expenses under $5,000. Which means my net worth is probably going to dip back down between now and Spring.

The more I look into the real estate market in my area though, the more I think I’m way undervaluing my house (relatively speaking). I bought the house for $54,900 in 2007. It needed a lot of work; some things I did right away, and other things I’m still working on. If things had been consistent over time, the house would definitely be worth more now. But, the market crashed, and the neighborhood has deteriorated some. I value the house at $45,000, assuming the worst.

Zillow lists my house as currently being worth around $72,000. In my opinion that’s way too high, and Zillow is well known for over-valuing property. But the great thing about Zillow is that it helps you look at prices of homes around you that are currently on the market, or recently sold. A couple of blocks away there are several 2 bedroom town homes that look like they haven’t been remodeled since the 70’s or 80’s that are on the market for $60,000-70,000. There are several houses that are in very bad shape that are priced similarly. And the 2 bedroom corner house a block away? With half the land that I have? It’s on the market for $89,900. Zillow values it at $84,000.

Of course, some of these people are obviously listing too high, which is why they’ve been on the market for so long. That being said, it gives me hope that my house will be worth more than the $45,000 I currently have it valued at in my net worth. I don’t want to price it for less than it’s worth, but I also don’t want it to sit on the market for too long. I’m hoping to find a great Realtor that can walk me through this.

All that being said, I don’t want to change how I currently have it valued in my net worth. Given that I hope to sell it soon, there are a lot of expenses to be considered. If it sells, I’ll have the Realtor’s commissions to pay. And it’s common in my area for buyers to request the seller to pay closing costs. And even though I’m doing a lot of work before listing it, it’s still possible that a buyer will request that some change or repair be made. All those costs add up, and will eat into the value I place on the house.

Given my housing situation, I expect my net worth to be a bit of a roller coaster ride for about the first 6 months of the year. It looks like the stock market is also changing; My Roth IRA lost value this past month, and my 401k total only went up by $30, despite over $400 being invested into it this month. I’m not too worried about it; lower stock prices may lower my current value, but it also means I’m buying at a lower price. Plus for now I’m more concerned about my debt than I am about investments.

So my priorities for the year are the house, and then starting my debt repayment. I’m hoping 2014 will be a good year for me. It’s showing promise so far!

– Cindy W.

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