Net Worth: Loss of Control Angst

For a while on this site I was posting my net worth.  I took it down because it didn’t seem to be adding value to the conversations and as it grew it began to feel  more like bragging.  It’s not that I didn’t earn the money and other assets I have, it’s that I no longer felt truly in control of the changes.

The vast majority of my wealth is tied to 2 things.

  1. My house.  If the last few years have taught you nothing about the housing market, then you have not been paying attention.  The value of my home has moved up and down in a $70,000 range, and I of course have had little to no control over that valuation.  It’s completely market driven.  And, it has a meaningful effect on my ability calculate net worth.  So much so that I actually started calculating net worth with and without real estate included.
  2. My retirement accounts.  I mostly invest in index funds in my Roth, rollover, and 401k accounts.  Again, the valuation is completely market driven.  As the markets took off again last year, so did my net worth.  It’s large enough to move thousands of dollars each day.  I control the contribution rate, but I max the Roth and 401k every year now so those things are baked into the growth.

I still track my net worth each month and analyze our spending, but there’s really no more optimization to be had unless I get a better job/new source of revenue.  The cash/spending accounts amount to less than 10% of the total, and that percentage is slowly shrinking.  It leaves me feeling kind of powerless.

The days when I could pack a lunch every day for a month rather than eating out and watching its impact on my wealth are gone.  The “latte factor” is a rounding error for me.  I know this is a total first world problem that most people would love to have, but it’s still bugging me.  Basically, the story here is that I no longer truly feel in control of my wealth building in the same ways as before, and I’m not as comfortable as I would like to be.

I can’t tell if it’s truly the lack of control or the knowledge that my day to day spending choices are almost irrelevant now.  It might be the latter.  How do I stay disciplined in this kind of situation.  My personal finance habits are highly ingrained, but how does one avoid slipping?  How do I continue to instill good habits in my son when money really isn’t an issue?

I decided to post this on Bogleheads first to get some feedback because I think my readers are idiots Innocentthe traffic here is so pathetic I’d have to wait forever.  As usual, those folks had lots of good feedback.  My biggest takeaways were:

  • Focus on the pieces you can control, and how these incremental pieces get you one day closer to retiring.
  • My son will learn more from what I do rather than what I say. Continuing to live a life of rational personal finance decisions and not spoiling him will set the right example.
  • Continue to track net worth but shrug at uncontrollable variation and go play LEGO’s.
  • Keep eyes on long-term $4M prize and every penny of day to day spending choices that brings me that much closer.

All good feedback.  What about you guys?  Got anything else for me on this?

Posted in Net Worth, Retirement
  • Greg

    Is the money the goal, or is the goal freedom? Lower your living expenses. Learn and improve skills that enable self sufficiently. Explore hobbies that could be potentially become a source of income. These are some measurable activities that progress your goal and they are under your control to accomplish. And build a rich (relationships, motavations, purpose) life to enjoy along the way!

    • Thanks Greg. I continue to try to find ways to monetize my hobbies, but some are just fine being just for fun. I’m lucky to have a wife and son that contribute greatly to a “rich” life in addition to the money. Freedom I think is always the goal. I’m still a long way from feeling that kind of free.

  • Evan R

    Why not build more streams of income? I saw that you are building an app which is cool…what about a rental property? active investing? etc.

    • Well, as you know I’ve explored the rental deal pretty extensively on this blog http://sunkcostsareirrelevant.com/category/real-estate/. If I could purchase using cash only, then I would consider it, but I’m just not there. The app and project X are both opportunities that I’m proud of taking, but the results of each are still TBD. Obviously all of these are things I can and do control so that’s great, and if they get big, then I’ll have more control over my net worth. I’m also back actively investing in biotechs which I’m sure will get me in trouble in no time. It’s really hard to stay disciplined as a trader, and the environment for the individual investor seems to only get worse. I guess I am doing more to regain control. It’s just that such a large % is out of my hands at the moment.

  • Mike G

    Start couponing! 😉

    • Ha, yeah I do that to the extent that it’s worth the time I spend.