2014 has been a good year for this Finance Zombie.
After stumbling across blogs like Financial Samurai, RIT, simple living in Suffolk, FFBF and The Escape Artist (to name but a few) I got to grips with the idea of Financial Independence, had a bit a light bulb moment that FI is indeed possible and got to work trying to escape the Horde.
I started tracking my Net Worth in the summer, at first monthly and now weekly. If you don’t do it, I highly recommend it. Do it in Excel, on Mint on a scrap of loo roll. I was pleasantly surprised how my pension investments were doing and using that I grabbed me some motivation and started saving more aggressively.
I had another lightbulb moment last week. So many blogs out there highlight the importance of spending less that you earn, reducing your spending and only spending on what you really need. After reading this over 1 million times, it finally clicked that by getting used to spending less now, we reduce our normal outgoings and so we need to accumulate less to become FI on and so we can bring the date of FI forwards! And, it doesn’t have to be painful. We don’t have to live a life of sacrifice, staring at shiny new things and wishing we had them.
I am lucky that I have never been a particularly material person, I couldn’t car less what car I drive or if my pants are from Gucci or George. But I can chew through money while spending on hobbies, cycling, motorcycling, climbing etc 🙂 So I am in the process of still enjoying these hobbies, but I have realised that enjoying them doesn’t have to come from the buzz of buying new gear. The carbon Time Trial bike will have to wait then…
By my pessimistic projections, FI by 50 is possible. It’s a long road ahead, but I am fired up for the challenge. We have increased our Net Worth by 10% since the summer and I have upped my savings rate to above 50% (it seems to jump around between 51 and 53%) but there is more to be done.
|Net Worth as a % of value at 7 Dec|
To increase Net Worth by 40%
I look at savings as a % of net salary. 60% looks doable in Excel. Sadly Excel is not real life, and the reality of saving like this will be tougher.
Cycle 200 miles a month
Why not. I like cycling. This will be easy to hit through the summer months, but not so much in the winter. Will be an accumulation target through the year. Get me out of the gym and onto the road 🙂
I’m going to post my progress towards these goals each month. Having them up in black and white will make success all the sweeter and any failure should provide some motivation to hit my target the following month.
At the moment I am not sure if I will post actual numbers or just a % progress towards a goal. Any thoughts?
As an experiment I have set up a false portfolio, a really simple one. I want to see how it does going forward, drawing down 4% each year. To see, theoretically, how someone invested in a few simple funds and an investment property would fare from month to month.
I want this to be as admin free as possible for me, so I’m not going to choose individual stocks or bonds, which might be unrealistic but hey-ho it should prove an interesting experiment, for me and any readers 🙂
Hope y’all are setting some tough financial goals for the New Year.
Spend less, save more, escape the Horde.