Here’s my net worth update and summary for June 2015 – this part follows on from my June income summary. June was a fairly quiet month in terms of surprises, but I was busy with work deadlines…another reason to look forward to being financially independent!
So with that said, was June a step forward towards FI or a step backwards?
My Score for June
|Living Expenses $||3,900|
|Security Ratio||27.76 %|
|Expenses||49.71 % (!)|
|Wet Worth $||73,800|
|Work Freedom Day||11-Nov-15 (!)|
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 $2,905.57 this month which means I underspent my budget by $994.43. This is planned though since I budget on an annual basis and I have some big bills coming up which will cause a deficit next month.
This is the percentage of my monthly living expenses budget that my dividend income would pay for this month.
The dividend stars all aligned this month since this month’s ratio of 27.8% means that my dividend income paid almost one third of my expenses this month. Last month I earned $379 in dividend income; this month was $1,083.
Living Expenses %
The percentage of net income that’s spent on living expenses. Lower numbers are better here.
This month’s 49.71% is the first time that my expenses have fallen under 50% of my income which is an awesome milestone to reach! Sadly it won’t be every month just yet but it’s a sign of things to come. Any change in this number is caused by a change in either income or budget; my budget hasn’t changed and income increased significantly due to the higher dividend payment.
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.
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 and added an extra $100 into my Emergency Fund. This month, the savings amount was $1,177.25 or 16% of my month’s income.
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 34.27% of my income.
I’ve written about my portfolio income and gains in June in a separate post, so I won’t repeat all of that here again.
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 decreased $789 in June to $73,800. 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 advances two days to 11 November 2015!
Wet Worth Detail
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||+$1,012||Cash for living expenses increased on the whole due to the budget surplus this month.|
|Debt||+$496||Debt decreased this month due to regular mortgage / car payments and fairly normal credit-card spending.|
|Savings||-$1,971||I’m continuing to re-characterize a portion of my cash in my savings to cash in my Investment portfolio.|
|Emergency Fund||-$20||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||-$307||My overall income portfolio decreased in value this month. See my earlier June income post for details.|
|Total||-$789||Total change in Wet Worth.|
June 2015 Summary
June was a great month on the whole. The total amount of cash I’m holding onto is decreasing and slowly being converted into investments. My income portfolio did well last month too. Sadly though, June ended my 17th month streak of continued wet worth increase since the start of 2014.
Quote of the Day
Don’t fear failure so much that you refuse to try new things. The saddest summary of a life contains three descriptions: could have, might have, and should have.