Net Worth Update – March 2015

Here’s my net worth update and summary for March 2015. March was another quiet month with no major surprises – I filed my taxes, booked our trip to the UK this summer, saw the first green grass uncovered by snow, listened to Little Big Town’s Painkiller way too many times and spent quite a bit of time updating the UK Dividend Champions List. But did I step forward or backwards along the path to Financial Freedom?

My Score for March

Living Expenses $ 3,900
Security Ratio 20.2 %
Expenses 52.2 %
Investments 31.3 %
Savings 16.6 %
Retirement 0
Wet Worth $ 63,890
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 3.0.

I spent a total of $4,151.58 this month which means I was $251.58 in deficit for the month against my budget. The over-spend was largely because I bought Ms. DL a Surface Tablet in January this year to replace her 8-year old dinosaur laptop. The credit card payment to payoff that purchase was this month.

Security Ratio

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

This month’s value of 20.2% is a due to the large number of dividend payments that are paid in March and it’s the third-highest value ever so far except for June and December last year (21% & 23% respectively). Last month I earned $345 in dividend income, this month was $787.

Living Expenses %

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

This month’s 52.2% is better than last month’s 57.3% due to the increase in passive income this month. Any change in this number is caused by a change in either income or budget and my budget expenses have not changed.

I received about $4,000 as a tax refund this year which I did not include in the calculations above. My taxes were reduced by mortgage interest (which is quite high as we only started the mortgage last year) and 401(k) contributions. I’m giving some of the refund money to Ms. DL since we both own the house and I claimed the tax deduction.

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. I can’t wait to see the first value below 50% this year!

Savings %

The percentage of net income spent on savings.

I put aside $530 every month for mid and long term goals (any large expense or purchase 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 $1,237.25 or was 17% 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 31.3% of my income which is the highest percentage so far this year.

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. You can read about my retirement account asset allocation here if you’re having trouble sleeping.

Wet Worth $

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

My wet worth increased $4,812 this month to $63,890. There’s a more detailed breakdown of this amount further below.

Work Freedom Day

The day in the year that my dividend income could pay for the rest of the year’s expenses.

Based on my current projections my Work Freedom Day remains at 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

Total income from dividends was $787 this month. Back in March 2014, I earned $658 so this is an increase of 20% over the same time last year.

I also received an extra $151 from long-term capital gain distributions in my Vanguard funds which I excluded from my income calculations. Any such capital gains are automatically re-invested and I don’t consider those payments as income since they’re not guaranteed; I put them straight back to work where they contribute to higher dividend income over time.

The following chart shows the cumulative dividend income so far this year compared to previous years.

Dividend income from stocks

21 stocks paid dividends this month as shown below.

The yield calculations are annualized, or extended forward a year based on the current dividend payment against the market value. 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 $32,749. This month it’s $33,653 – an increase of $903, which includes $1,777 in new investments so there was a loss of market value. The portfolio now has a 13.6% unrealized gain, down from last month’s 17%.

$1,200 of the new investments came from my weekly $300 Sharebuilder purchases, $577 came from an additional purchase of 6 shares in Vanguard’s VPU ETF.

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 $2,351.94 to my fund investments this month – $1,700 in VHDYX, $100 in VTIAX, $275.75 in VWESX and $276.19 in VWEAX. This is in addition to the $1,777 I invested in stocks.

Overall this month my portfolio of both stocks and funds increased by $3,565 to $193,300. My unrealized gains decreased from $14,776 (8.45%) to $11,688 (6.44%). I added a total of $4,129 in new capital plus an extra $2,524 in cash reserves from my tax refund and savings account. Since the overall increase in market value was $3,565, this implies a market value decrease of $3,089 or about 1.6%.

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 +$1,437 Cash balances increased due to tax refund.
Debt -$935 Debt decreased this month due to regular mortgage / car payments and normal credit-card spending.
Savings -$1,267 I’m starting to re-characterize a portion of my savings as cash in my Investment portfolio – I’ll be doing this over the next 10 months. The Vanguard Wellington fund (VWELX) that I use for long-term savings also decreased by about $300 this month although it paid $137 in dividends that was automatically re-invested.
Emergency Fund +$141 My Emergency Fund consists of cash, a stock fund (VTSMX) and a short term bond fund (VBIRX). I’m slowly converting the cash portion into the stock fund, as well as adding a little extra each month to reach my 2015 target.
Portfolio +$3,565 My overall income portfolio increased in value this month as noted above.
Total +$4,812 Total change in Wet Worth.

March 2015 Summary

March was another solid month, even without the tax refund and I was able to overcome any market declines with new capital to avoid a net decrease. I did not increase my monthly budget despite a salary increase this month, although I did increase my Savings contribution a little. All new money is going back into Investments. That’s now 15 months of continued wet worth increase since the start of 2014 which is awesome!

 

Quote of the Day

Never mind what others do; do better than yourself, beat your own record from day to day, and you are a success.

0 thoughts on “Net Worth Update – March 2015”

  1. I love some of the ways you assess your performance (you know already I love Work Freedom Day)! Wet worth? Security Ratio? Superb and simple.

    Well done for this month. It was a strong one. To think, sometime in the near future you will see that 20% security ratio as the norm! Next stop: 100%!

    Keep up the good work!

    1. Hi DD,

      Thanks for the support! I want to find clear and transparent benchmarks that I can use to measure my progress and those three are working well for me at the moment. When I was originally calculating net worth including house prices I found myself making all manner of adjustments to the ‘estimated’ price

      I think it’ll be quite some time before the security ratio moves significantly higher but it’s fun watching the numbers slowly tick higher!

      I appreciate your comments as always!

      Best wishes,
      -DL

  2. Hey man, good to know you’ve booked your tickets to the UK! When ru gonna be here? This time, we must have a beer together!

    Another wonderful month for you here, gotta love those huge quarterly dividend payments. Sometimes, I wish more UK companies would pay quarterly too. At present, there are only around 10 that do so, Royal Dutch Shell being one of them.

    Ditto to D2’s comment about the security ratio

    CHEERS

    1. Hi M,

      I’ll mail you about the travel plans – I bought the tickets using airmiles so the total cost was only $400 instead of the more normal $1500+.

      One thing I like about the quarterly system is that there’s a bit more transparency since the accounts are scrutinized every quarter and not every 6 months, although creative accounting can sometimes work around that I suppose. The dividend payments can be compounded earlier too for a fractionally higher yield.

      Hold that beer! Best wishes!
      -DL

    1. Hi DGJ,

      Thanks for your support! I think June and December will beat March though so I’m looking forward to seeing that. I’m hoping for a budget reduction in October too which would be great if it works out.

      Best wishes,
      -DL

  3. DL,

    Awesome month! Your relative expenses down, your investment money up, … What else could you wish for? Your wet worth and dividend income graphs aren’t lying: you’ve been doing fantastic.

    Keep it up!

    Happy Easter,
    NMW

    1. Hi NMW,

      Yes it was a good month with no real surprises – here’s hoping April is the same!

      It’s great to keep seeing you doing so well over in Belgium too! Thanks for your support.

      Best wishes,
      -DL

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