Net Worth Update – January 2015

It’s hard to believe that January has come and gone already, but it has. It’s been a cold month too – a couple of days it was 6 degrees F (-14 C) as I drove to work. I’m not able to process temperatures that cold – I mean six degrees … really? That’s not a temperature, it’s a shoe size! Anyway it’s another month closer to summer and it’s time to see if Financial Independence is another month closer too.

My Score for January

Living Expenses $ 3,900
Security Ratio 8.16 %
Expenses 55.6 %
Investments 27.7 %
Savings 16.7 %
Retirement 0
Wet Worth $ 41,672
Work Freedom Day 13-Nov-15

Living Expenses

This is my fixed monthly budget for living expenses and it includes both essential (e.g. groceries, mortgage, insurance), and non-essential (e.g. music, travel) purchases. $3,900 is the amount from my current budget; budget 3.0.

I spent a total of $3,841.24 this month which means I was $58.76 in surplus for the month against my budget.

Security Ratio

This is the percentage of living expenses that my dividend income would pay for this month.

This month’s value of 8.16% is a return to normal levels after December’s record of 23%. January is a fairly low month for dividend income which is the main factor affecting this value. Last month I earned $916 in dividend income, this month was $318.

Living Expenses %

The percentage of net income that’s spent on living expenses. Lower numbers are better here.

This month’s 55.6% is also a return to normal levels after December’s record low. Since my living expenses are a fixed amount, any change in this number is caused by higher income or a revised budget level. This month’s result was helped by the lower budget amount starting this month.

The chart above shows the trend in my Living Expenses % since the start of 2014. For the first part of 2014 I was paying two mortgages. In June 2014, I introduced Budget 1.0 after selling my first house and I made some minor tweaks in Budget 2.0 from October onwards. January 2015 is the first month following Budget 3.0.

Savings %

The percentage of net income spent on savings.

I put aside $500 every month for mid and long term goals (any large expense due a year or more in the future), as well as $547 for my car payment. Contributions to my Emergency Fund also come from this category. This month, the savings amount was 16.7% of my month’s income.

Investment %

The percentage of net income that I invest.

Any spare money left over after savings, retirement and living expenses are paid goes into my current income portfolio. This month it was 27.7% of my income.

Retirement %

This would represent the percentage of any post-tax contributions from net income towards my retirement accounts, but I don’t have any plans to do so at the moment. I’ve also recently changed my asset allocation in my pre-tax retirement accounts.

Wet Worth $

My liquid assets minus all debt (excluding retirement and assets).

My wet worth increased $8,488 this month to $41,672. There’s a more detailed breakdown of this amount further below.

Work Freedom Day

The day in the year that I’ll have earned enough dividends to pay for the remaining year’s budget.

Based on my current projections I’ve moved my Work Freedom Day one day closer to 13 November 2015. There’s still a lot of room for error in this prediction so I’ll be updating it monthly as estimates become actuals.

Dividend Income

Income from dividends was $318 this month. Back in January 2014, I earned $260 so this is an increase of 59% over the same time last year.

You can see a summary of the results on my goals page.

Dividend income from stocks

This month 6 stocks paid dividends: DOW, JPM, UNP, ADP, KMB & CB as shown below.

The yield calculations are annualized, or extended forward a year based on the current dividend payment against the cost basis or market value respectively. They don’t include contributions from stocks added after the ex-dividend date so they may under estimate the value.

Last month my dividend stock portfolio was valued at $29,662. This month it’s $29,576 – a decrease of $86. I added $1,623 in new investments but my prior ROC shares were partially converted into ALB shares which decreased the value in addition to the general stock market dip at the end of the month. The portfolio now has a 14% unrealized gain, down 5% from last month’s 19%.

Dividend income from funds

I also hold several mutual funds in my taxable account that I consider part of my dividend income portfolio.

I added a total of $1,700 to my fund investments this month – $1,200 in VHDYX, $100 in VTIAX, $100 in VWESX and $300 in VWEAX. This is in addition to the $1,623 I invested in dividend stocks.

Overall my portfolio of both stocks and funds increased by $462 to $175,328. My unrealized gains decreased from $11,070 or 6.8% to $9,733 or 5.9%.

Wet Worth

I’m showing my Wet Worth in this post – this is the cost of my liquid assets minus debt, I exclude assets and retirement accounts from this number. I prefer this over Net Worth since the equity in large assets (house, car) and retirement funds is hard to get at and not always predictable. I find this is a more honest view of where I’m at on my journey.


The change in Wet Worth is caused by

Cash +$184 Positive cash flow this month from higher income and lower spending. I increased my tax withholding this month so I held a little money back from my paycheck until I see the new monthly amounts.
Debt -$1310 Overall debt decreased because of mortgage and car loan payments.
Savings +$6,388 I’m now including my Health Savings Account in the Savings category so that added about $6,000. Previously I counted this money as Retirement but it’s available for medical expenses now if I need it, so it belongs here.
Emergency Fund +$166 My Emergency Fund now consists of cash, a stock fund and a short term bond fund. I’m decreasing the cash portion and adding to the stock fund, plus adding a little extra each month to reach my 2015 target.
Portfolio +$462 My overall income portfolio increased in value this month as noted above.
Total +$8,488 Total change in Wet Worth.

January 2015 Summary

January was another good month and that’s now 13 months of continued increase in a row since the start of 2014 which is awesome! The improvement is artificially high this month because of the HSA adjustment but even without that it, overall my wet worth still increased so that’s good to see.

 

Quote of the Day

There are only 3 colors, 10 digits, and 7 notes; its what we do with them that’s important.

0 thoughts on “Net Worth Update – January 2015”

  1. Great job once again, DL!

    Thirteen months of consecutive growth is quite remarkable, even though your wet worth is still relatively small in size. I wonder how long you’ll be able to keep that up considering that your savings soon won’t be able to cover negative portfolio swings anymore.

    Congrats on moving your work freedom day up by one day! It’s a fun metric to keep track of your progress, I’ve implemented it on my spreadsheets too.

    Best wishes and best of luck next month,
    NMW

    1. Hi NMW,

      Thanks! Yes I’m happy with the continued increases but it’s not been a goal of mine – I’ve been lucky that the stock market went up when I made large purchases. I’ve some more large expenses coming up in the next couple of months so I’m sure the run won’t last too much longer. I’m enjoying it while it lasts though!

      It’s great that you’ve calculated your work freedom day – deciding how to celebrate on that date is also a nice problem to have!

      Congrats on your January dividend income too – the amounts may be small now but so is a snowball when it first starts rolling downhill…

      Best wishes,
      -DL

  2. -14, brrrr that reminds of when I lived near Chicago and wandered around with my friend in the -20 nighttime. Then I got really sick so regretted playing about in the snow.

    Anyway, another great update. Things are progressing forwards, and I am sure this year is gonna be awesome!

    Keep up the good work,

    Cheers

    1. Hi M,

      You don’t have to be outside for long at those temperatures to get ill! I’m definitely a summer person. It’s been snowing all day here today which is ok when I’m inside and can look at it through a window but not when I have to shovel it tomorrow!

      Thanks for your support – this year’s off to a good start already!

      Best wishes,
      -DL

  3. Chugging right along! I agree with you that the HSA makes sense as part of your WW calculation. I do a very similar calculation for my wife and I and it is always great to see things ticking along in the right direction!

    1. Hi W2R,

      Thanks for the encouragement – I included the HSA as part of retirement as I’m not really planning to use any of the money now, but you never know what’s around the corner and it is available for health expenses immediately so it’s better classified as savings.

      I definitely prefer wet worth even if it’s a much smaller number than net worth. Houses and other assets are only worth what you can actually sell them for so any pricing until that point in time is subjective.

      I hope you had a great January too!

      Best wishes,
      -DL

    1. Hi Henry,

      I think you have a lot more stock than I do so you’ll bounce back fast I’m sure!

      The bond funds I have helped keep the value up this month – they went up as my stocks went down. They’ll also be a drag when the market goes back up so it works both ways.

      Best wishes,
      -DL

  4. Congrats on investing over 27% of net income. That’s impressive by any means. I just did my numbers for January and my portfolio went down too in spite of new capital… But we just keep adding more capital for the long term and continue to reap the benefits down the road.
    Wishing you all the very best for another great month in Feb.

    1. Hi DGJ,

      Yes, it’s definitely long-term for the win and a cheaper market means your dividend income will go further which is all good.

      I hope you have a healthy and successful February too! Hopefully you were able to find some cheaper stocks in your weekly purchase this week.

      Best wishes,
      -DL

  5. Hahaha! Please no complaining about the 6 degrees! It has been -30s C here for at least 4 days in a row (plus others in the previous weeks)! 😉 Great job on the growth!

    1. hi DivGuy,

      Ouch!! I’ll try convincing myself that it’s actually quite warm when I drive to work tomorrow then! It’s all about perspective 🙂

      Best wishes and keep warm!
      -DL

    1. Hi DFG,

      Yes, the simplest way to do that is probably the following:

      1. Starting with the bar chart and data, create a new column in the worksheet containing the average value for the year using the “average()” formula. Each row in this column is the same value, so you can assign all other rows to be the average value.
      2. Add the new series to the chart using the “Select Data” chart menu command – it’ll show up as a third bar series and look pretty weird but that’s okay.
      3. Now right-click on the chart and select “Change Chart Type” from the menu.
      4. On the left side of the dialog are a set of chart types. Select the bottom one “Combo”.
      5. By default it’ll probably chose the last series in the chart to be a line which is what you want. But in this dialog you can select how you want each series to be shown.
      6. You don’t need to worry about the secondary axis option since all the data is being compared on the same scale, so leave those checkboxes unchecked.

      I’ve made a simple example here which I’ll leave up for a little while in case you want to view it. Let me know any trouble accessing the link.

      Hope that helps!
      Best wishes,
      -DL

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