Monthly Summary – August 2015

Here’s my net worth update and summary for August 2015 – this part follows on from my August income summary.

My Score for August

Living Expenses $ 3,850
Security Ratio 10 %
Expenses 53.8 %
Investments 29.7 %
Savings 16.5 %
Retirement 0
Wet Worth $ 71,174
Work Freedom Day 9-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. $3,850 is the amount from my current Budget 3.5.

I spent a total of $6,400.85 in August which means I overspent my budget by $2,550.85. This was all planned and expected though since I budget on an annual basis and I had some large annual expenses 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 ratio of 10% means that my dividend income paid 10% of my expenses this month. Last month I earned $349 in dividend income; this month was $387.

Living Expenses %

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

This month’s 53.8% is a little worse than last month’s value of 53.4%. It’s still comfortably down from the year’s maximum level of 57.3% that I reached back in February. Any change in this number is caused by a change in either income or budget; my overall income was a little lower (*) this month and my living expenses were constant.

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. In January I started Budget 3.0 which I updated to Budget 3.5 in July.

(*) These values are based on amounts deposited in my checking account and includes some investment income from last month rather than this month due to the delay in payments reaching my bank.

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 and added an extra $100 into my Emergency Fund. This month, the savings amount was $1,177.25 or 16.5% 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 29.7% of my income.

I’ve written about my portfolio income and gains in August in a separate post, so I won’t repeat all of that here again.

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 decreased $5,060 in July to $71,174. 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 one more day to 9 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 -$2,457 Cash for living expenses increased on the whole due to the budget deficit this month. Paying the credit card charge for my yearly house insurance payment was the main culprit for the overspend.
Debt -$3,965 Debt decreased this month due to paying off last month’s credit card charges.
Savings -$2,577 I’m continuing to re-characterize a portion of my cash in my savings to cash in my Investment portfolio. In addition some of the investment funds I hold for long-term savings dropped in value.
Emergency Fund -$470 My Emergency Fund consists of cash, a stock fund (VTSMX) and a short term bond fund (VBIRX). Loses this month are due to lower market value in the investments.
Portfolio +$3,521 My overall income portfolio decreased in value this month. See my earlier post for details.
Total $5,060 Total change in Wet Worth.

August 2015 Summary

August was a solid month on the whole; although I’m watching my income portfolio decrease in value, the monthly dividend income keeps trucking in. The total amount of cash I’m holding onto is decreasing and slowly being converted into investments. September will bring some higher dividend income which is something to look forward to.

 

Quote of the Day

Thinking will not overcome fear but action will.

0 thoughts on “Monthly Summary – August 2015”

    1. Hi M,

      I hope your insurance premiums were better than mine! I think mine went up a stupid amount compared to inflation; the saving grace was that I’d budgeted a higher amount so it didn’t change my budget. But I’ll be shopping around a bit for some quotes to see if another insurer can beat the price I have now.

      Hope everything’s going well with you and your family. I’ll be posting the September summary this coming weekend; I’ve been distracted by a side-project this week which is coming along nicely.

      Best wishes,
      -DL

    1. Hi DFG,

      I’m glad you found something useful! 🙂 I think it’s important to view budgeting on a yearly timeframe rather than a monthly basis.

      I hope your new job is working out well and that it’ll help you increase your saving rate, but more importantly, spend more time with your family!

      Best wishes,
      -DL

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