2017 Financial Year in Review: Can’t Complain

Brooklyn Subway

This is the third post of a series that will provide regular updates on our personal financial situation and performance.  All of the metrics and relevant data points you will see here are things that I have tracked using a combination of Personal Capital and my own spreadsheets for the past 5 years.  For privacy reasons, I’m not going to display dollar values, but will show trends and ratios.  My hope is that by seeing how I track my own finances, you may get some ideas for how to better track yours.  Feedback appreciated, as always!


2017 was a banner year for my family financially despite it being the first full year after a major lifestyle change.  Looking back since 2010, it was the third highest year of net worth growth despite having less than half the earned income I did in prior years.  On a percentage basis, however, it was the lowest year of growth we’ve had since 2010.  That’s really a testament to how much we’ve been able to grow our net worth over time and how much it really takes to move the needle on a percentage basis.

Change in NW Charts

Here are a few additional summary items for the full year:

  • 37.9% after-tax savings rate despite my wife being on maternity leave for three months with no income
  • 13.5% growth in net worth, mostly coming from investment gains
  • 49.6% of the way to FI (assuming a 4% withdrawal rate)
  • 9.0 years to reach FI (based on 2017 spending and saving)

Income Sources

Our income has had a few bumps up and down in the past 12 months as you can see in the following chart:

2017 Income by Source

You can read about the different components in the October and November updates.  We also had a significant amount of dividends paid in December that I’ve excluded since they were reinvested and/or in tax advantaged accounts I couldn’t access.  If we included them, they would add another 13% to our total income for the year.

12 Month Average After-Tax Savings Rates

It’s not what you earn, it’s what you keep.  After-backing out tax withholdings, we have pretty consistently saved around 40% of our earnings, which I’m happy to see we maintained with only one income again this month.

2017 Savings Rates Graph

The savings rates above are on a rolling 12 month basis, so the big bump up from March to May was a hangover from my higher-paying prior job.  I suspect we were able to maintain the ~40% rate since we doubled up 401k contributions for my wife, knowing she’d be out part of this year.  All else equal, I’d expect this to drift down to somewhere in the 30% range going forward once we have two daycare bills to pay.  We will get some additional benefit from my wife’s employee matching kicking in on her 401k after a waiting period.

2017 Savings Rates Table

Our other savings during the year are 2017 IRA contributions ($5,500 each) and a little bit of taxable savings when there was an extra paycheck one month.  Based on where our income shook out, those contributions should be deductible, which will further reduce our tax bill.  We also made a contribution to our kids’ 529s to get a credit on our state tax return.

Net Worth Growth

Our net worth grew again in December, continuing the trend we’ve been consistently seeing this year.  I’m getting a bit concerned about complacency and how I’ll react the next time we have a correction.  I just haven’t had any recent experience with a decline in net worth and I suspect a lot of other people haven’t either.  When the expectation is indefinite growth, bad things happen.

2017 Net Worth Growth Graph

2017 Net Worth Growth Table

* Total net worth – home/vehicle equity – unvested 401k balances – estimated deferred taxes

** Baseline net worth – 401k/IRA retirement savings – 529 college savings – life insurance cash value – real estate crowdfunding investments

Our total net worth was up 13.5% in 2017.  This number will always trail baseline net worth growth at is includes our house which I value at the lower of our purchase price or market value.  Since home equity currently makes up approximately one-third of our total net worth, it acts as a pretty big anchor on growth (by design to be conservative).

Our baseline net worth was up 32.9% in 2017.  This is pretty representative of growth in my investment portfolio, but also recognizes that I’ll have a hefty deferred tax bill due when I ultimately cash in retirement savings.  I’ve tried to capture that to be conservative.

Liquid net worth is down 6.8% in 2017, mainly because I drew down a portion of our HELOC to fund some illiquid crowdfunding real estate investments.

Changes in Net Worth

Our net worth grew every single month in 2017, mainly driven by investment portfolio gains. We saved a bit of money in every month too, but that wasn’t the primary driver.

2017 Change in Net Worth Graph 2017 Change in Net Worth Table

Even though we’re saving ~40% of our after-tax income every month, it only contributes about one-quarter of our growth in net worth.  It’s both liberating (and a bit depressing) that what we do day-to-day has such a small impact on our overall financial situation.

Investment Portfolio Asset Allocation

I track all our investments in Personal Capital which is useful for having asset allocation tracked automatically.  Here is our asset allocation at the end of 2017.

2017 Asset Allocation

This is pretty close to our target allocation with roughly three-quarters of the portfolio invested in equity index funds.  The balance is invested in bond index funds and alternatives (primarily real estate).  We don’t own any mutual funds, which helps to keep the overall expense ratio pretty low.  None of these buckets are materially different from our target allocation, so no rebalancing is necessary.

2017 Tax Allocation

In addition to tracking our investment portfolio asset allocation, I also track the distribution by tax status.  Our investment portfolio comprises tax-free Roth IRAs, tax-deferred 401k’s and taxable brokerage accounts.  This mix doesn’t move around substantially period to period, but I’d expect it to shift slightly more towards tax deferred over time as the biggest category of our savings are 401k contributions.  In any case, it’s nice to know I’ll have a number of different drawdown strategies to consider, regardless of where any future tax code changes ends up.

Financial Independence Metrics

Following on my posts about our path to financial independence I reran our numbers at the end of the year using our 2017 savings and spending.  I’m happy to see that our numbers didn’t degrade materially despite a slowdown in savings (with my wife out of work) and no slowdown in spending.

FI Charts for 2017 Review

We are currently about halfway to reaching FI, which I project will take us nine more years to achieve.  My goal for 2018 is to maintain or grow our progress from here.

Note: You can read about our path to financial independence here, here and here.

Other Metrics

In addition to tracking trends over time, I also look at a couple of additional ratios that are included below:

2017 Other Metrics

I target having 6 months of savings in our emergency fund, which I keep in a taxable account with a more conservative asset allocation (40% stocks / 60% bonds) than the portfolio overall.  I currently have about 8 months saved, but expect that to drift down closer to my target now that I have a second childcare bill to pay

Every month I set up an expense accrual for bills that occur irregularly throughout the year, like car insurance, property taxes, etc.  I redid all of my accurals for 2018’s irregular bills and am currently way overfunded.  I’ll likely use that money for some additional savings or plug a few holes in the budget elsewhere

We currently have an HSA that is massively overfunded relative to our annual deductible and out of pocket maximum.  We theoretically could pay 16.7 years of deductible without extinguishing the account.  I plan to just let this account ride and will use to pay for healthcare costs way out in the future, but I did draw down some of it to pay hospital bills from my daughter’s birth.

The last metrics are simply leverage calculations, or lack of leverage at the moment.  Our only liabilities are a HELOC, miscellaneous credit cards, and the accruals mentioned above.  By not being hardly levered at all, we are in a very strong position for weathering the next downturn.


A lot changed for my family over the course of 2017: new jobs, new kid, and a stock market on a tear.  If you would have told me a year ago where we’d be, financially or otherwise, I don’t think I’d have believed you.

I am proud to say that our first full year of living a simpler, more family-focused life has been a success and worth the move it took to make it happen.  The fact that we were able to have such strong financial performance on top is the icing on the cake.

As I said before, my big concern going forward is complacency.  Even as I write this the market is setting new records and I’m hearing more and more hype about cryptocurrency.  I just hope that the market isn’t running ahead of fundamentals and it all comes crashing back down.

I hope you all had a stellar 2017 and are gearing up for a great 2018 as well!

John started Present Value Finance in 2017 to share his experiences and insights on personal finance to help people make better decisions and take control of their financial lives.  

He achieved financial independence in 2016 by walking away from the high stress world of corporate finance to focus on his family. He’s a husband, father, family CFO, and all around finance geek.

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