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 %|
|Wet Worth $||41,672|
|Work Freedom Day||13-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; 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.
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.
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.
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.
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.
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%.
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.