I finally have a new laptop after the old faithful servant of 5 years died a death a couple of weeks ago. Perhaps not quite what an emergency fund is set up for, but still useful to have some cash lying about for moments like that. That has been the reason for my silence. My hands are too hoof like to even consider writing out an article on my phone.
I had a strange one at work yesterday, one of those where you get caught in a whirlwind of reading articles on the internet and only come out of the trance a couple of hours later. It was a session reading about early retirement strategies, various random blogs, checking out a few different savings calculators and generally bouncing around the black hole that is the internet. It wasn’t particularly helpful, and certainly destructive to my productivity at work. That said, it is the exact type of thing that happened to me over a year ago that lead to my discovery of Financial Independence. So it can’t be all bad, these brief periods of malaise and boredom at work.
As part of the army of personal finance bloggers, I update my networth and savings rate each month and compare progress against some goals set earlier in the year.
|PF bloggers squadron, I’ll be a Cheetah|
Tracking you NetWorth is a useful tool to understand where, in aggregate, your finances are and setting a challenging goal can help you increasing this as fast as possible. The problem with a NetWorth goal is that it, to some extent, is out of your control. The larger you allocation is towards the more volatile asset classes the less control you are going to have over your NetWorth in the short term. The savings rate is a different beast, one that you can capture, electrocute a few times and keep under your control.
Trying to control your NetWorth, worrying about it decreasing, is only going to result in sleepness nights and a nervous twitch whenever looking at the market.
It is with this in mind, and the recent volatility in the markets, that I trepidly update my numbers. To some music, I always have to have music playing. Silence grates my ears. Today it is ‘Didn’t it rain’ by Hugh Laurie.
Goal 1 – Increase Net Worth – Target of 40% across the year
To be on target I need to aim for an increase of approximately 2.8436156% a month –> ([1.4 ^ (1/12)] – 1) x 100 or 28.71% to the end of September. I don’t include the equity in my house in this amount given it’s illiquidity and uncertainty around valuation. It includes the ISA, Pension and cash assets, less any borrowing (i.e. credit cards).
The main event
Net worth increased by 2.5% in the month and that brings me to a 28% increase since the start of the year. So I’m just under the target I set myself at the beginning of the year.
Even with China and Europe constantly trying to hijack my NetWorth goal for the year, I’m still just about on target.
|Mr Z Networth to September|
It’s been a bit of a bumpy ride since May, with little progress being made on my part. My portfolio isn’t big enough to really have felt much pain, and what pain there has been has largely been cancelled by my contributions. This isn’t true of those with a more substantial war chest.
NW for the year to date is here.
Nearly a whole % behind target, that’s a FAIL.
Savings rate – Target average of 60%
I set a target of 60% at the start of the year, to challenge myself to get my savings rate up towards the lofty heights seem by some other bloggers and it’s being going pretty well. I’ve been really pleased that I’ve managed to hit 60% most months.
Savings rate for September has retreated from my all time high of 66% last month, down to 62.6%.
This has helped the average for the year creep up a notch up to 58.8%, up from 58.3% last month.
This is where having a long term goal has really helped to keep my savings rate high, I’m not just saving for the sake of it, but for my own target of Financial Independence. That has certainly made it easier to carry on saving hard.
I like the graph above, not in a self obsessed narcissistic kind of way, but it shows the importance of consistency. A relatively poor March has pulled down my savings rate for the year, and the reason for this? A bonus that was partially spent. It was easy to spend part of my bonus, consider it a wee treat to ourselves for doing so well. BUT LOOK WHAT IT DOES TO OUR SAVINGS RATE.
With the in month rate being above target I’ll take that as a pass for the month.
Spend less, keep on saving and Escape the Horde