I set myself some goals at the start of the year, to entice myself towards this over-arching destination. Trying to aim for just a single goal, potentially a decade off, will have painfully slow incremental progress. Which will only be demotivating. In the mean time, a few smaller mini-goals will hopefully keep me focused and motivated.
I’m back from a week or so away. It was a week away from work, which is always good. But also some time to decompress from everything else, including writing and thinking about Financial Independence. It’s a pursuit that can become all-consuming if left unchecked. It finds it’s way into your thoughts on walks, at work, just before bed and on the loo. Everywhere. It doesn’t have to be like that. It can be the end result of an automated lifestyle, one where excellent financial decisions are made automatically everyday, cash piles up at the end of each month and is invested in a sage like manner. Then, after a few years, Financial Independence is bestowed upon you. It doesn’t require constant attention and thought, yet it gets that way sometimes 🙂
The backing track to this months update is The Bronx. Aahhh it takes me back.
The first goal is to achieve an average savings rate of 60% across the year.
This goal is going to be tough, what with a wedding to pay for this year. We’ve been paying off the wedding as we go along to some extent, so last years savings rate of 59% had already been adjusted for wedding costs. Still, I fully expect to fail this goal this year. Positive thoughts.
Let’s start looking before any one off wedding costs, to give it a bit of a positive slant. This way my savings rate increased, largely as a new chunk was diverted towards the mortgage as an overpayment. Now, this would mean that I hit a savings rate of 70% in the month. Meaningless and inspiring. Meaningless because it’s not my actual savings rate, there are actual one-offs to account for and so my savings rate isn’t this high. But inspiring because once the wedding is all paid for this is where my natural savings rate equilibrium will mean revert to 🙂
A honeymoon bill was paid, dropkicking my savings rate in the teeth picking up it’s shattered body and suplexing it over and over again, knocking it down to 13.4%. That’s the lowest since I started tracking my savings rate and it really fucking hurts.
Simple average for the year is 33.6%
Target: 60% savings rate
Simple average: 33.6%
The second goal is centred around NetWorth growth, which is admittedly driven by progress on the first goal. But it’s much more fun to track. The target for 2016 is to increase my NetWorth by 45%, I don’t include the equity of my house for the purpose of this goal (overpayments on the mortgage will be included, see Goal 3 ).
I needed to increase NetWorth by 6.4% at the end of February to be on track. With tumbling markets I (and plenty of other investors) started the year by going backwards but this recovered some in February, so giving and increase in NetWorth of 3.1% in February. This includes includes both market movements and contributions.
Overall this leaves an increase of 0.8% since the start of the year, not on target but at least heading in the right direction.
After all the fear mongering that the media spewed forth in January the markets, although volatile, have recovered. Wouldn’t it be nice if they had stayed depressed a little longer? I did shift a chunk of cash across in the middle of February to top up my ISA towards the limit and dropped it into two Vanguard funds, a large cap all world and an Emerging Market one. So at least I got a little extra on that action.
Target: Annual 45% increase in NetWorth.
Actual: Annualised projected growth of 4.6%.
Goal three is simply to overpay the mortgage each month. Not by a fixed amount each month, but just to get into the habit of hoovering up a bit of spare cash each month and knocking down ol’ Jimmy Mortgage by a peg or two. Because, let’s face it, he’s an arrogant sod.
In February Mrs Z and I each slammed £100 against the mortgage in overpayments. Lovely.
Target: Overpay mortgage
Actual: £100 overpayment
I also set myself a February Mini-Experiment, where I was only allowed to spend £100 in the month, from a pile of £1 coins I got from the bank at the start of the month. It was an interesting experiment, and one that deserves it’s own post. So more on that at a later date.
Spend Less, Save More & Escape the Horde