December 2015 – Spending and monthly summary

I’m ending 2015 with a bang! Here’s my wet worth update and spending summary for December – this post follows on from my December income summary.

My Score for December

Living Expenses $ 3,850
Security Ratio 30.2 % (!)
Expenses 45.6 % (!)
Investments 40.0 % (!)
Savings 14.4 %
Retirement 0
Wet Worth $ 92,082 (!)
Work Freedom Day 6-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 $3,839.14 in December which means I underspent my budget by $10.86.

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 30.2% means that my dividend income paid almost one third of my living expenses this month. It’s a shame it doesn’t do this every month! This result is an all-time high due to record income this month. Last month I earned $382 in dividend income; this month was $1,161.

Living Expenses %

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

This month’s 45.6% is another all-time high and beats last month’s 52.9% as well as every other month since I started my journey to Financial Independence. The previous record-owning month was December 2014 at 49.6%.

Any change in this number is caused by a change in either income or budget; since my budget is constant that means my overall income was high this month. Apart from higher investment income, I also had a higher pay-check in December.

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.

Overall in 2015 I had two months where living expenses were less than 50% of income; June and December. It’s no co-incidence as these are the months where my investment income is the highest. This is still a big improvement over 2014 where I only managed one month under 50% which was also December with 49.6%.

I’m hoping I can beat 50% three times this year, likely in June, September and December but it will be harder due to the higher monthly 2016 budget which increases my living expenses in 2016.

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 plus $38 into my Cash buffer. However due to higher income, the savings amount which is fairly constant dropped to 14.4% 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 40.0% of my income.

I’ve written about my portfolio income and gains in December 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 target retirement account asset allocation here if you’re having trouble sleeping. It’s a simple low-cost index investing strategy using tax-advantaged accounts.

Wet Worth $

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

My Wet Worth increased $694 in December to $92,082. 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.

Now that my actual numbers are in, my final Work Freedom Day advanced to 6 November 2015. It’d be nice to pull that into October in 2016 but the higher budget is going to work against this so we’ll see.

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.

There’s a small increase this month. The change in Wet Worth is caused by

Cash $191 Cash for living expenses increased this month. There were no major expenses and overall spending was under my budget resulting in some positive cash-flow.
Debt -$236 Debt increased this month mostly from (planned) credit card charges.
Savings $190 I gained $190 overall in my Savings accounts this month. Increases in my cash savings were offset by loses in my investment savings although the total value didn’t drop overall due to $914 of capital-gains which were re-invested. I use the Vanguard Wellington (VWELX) fund for long-term Savings goals
Emergency Fund $32 My Emergency Fund consists of cash, a stock fund (VTSMX) and a short term bond fund (VBIRX). I added $100 to the stock fund in my Emergency Fund, and I exchanged my VBIRX bond fund into VTSAX Total Stock Market so I’m now at a one-thirds Cash and two-thirds Stock allocation in my EF.
Portfolio $516 My overall income portfolio increased in value this month. See my earlier post for details.
Total $694 Total change in Wet Worth.

December 2015 Summary

It’s great being able to end the year on good news. I still have a long ways to go for Financial Independence but I will finish that journey one month at a time.


Quote of the Day

The starting point of all achievement is desire.

6 thoughts on “December 2015 – Spending and monthly summary”

  1. I really like how you view your finances with your work freedom day calculation and security ratio that you mention. It’s an interesting way to look at money and what type of financial safety net you have created for yourself. Always nice to see a net wroth growing over time as well. Thanks for sharing your financial summary.

  2. DL

    Great numbers you have there. I like the WET WORTH increase, mine in 2015 was in decrease, but I think that in 2016 I will increase it back.

    Keep the snowball rolling.

    Sharon – Divorcedff

    1. HI Sharon,

      I think my Wet Worth’s going to be taking a big hit this month the way that January has started out! But at least stocks will be cheaper on the whole – it’s the long term that matters.

      Wishing you a successful 2016 and that you make good progress on your FI journey this year. Thanks for stopping by and commenting 🙂


    1. Hi DFG,

      I hope you’re able to improve your percentages from the new job and I look forward to watching them increase! I’m considering to increase my budget this year too.

      Best wishes,

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