I set myself some goals at the start of the year, to entice myself towards the over-arching destination of Financial Independence. Trying to aim for just a single goal, potentially a decade off, will have apparently painfully slow incremental progress. Which will only be demotivating. Our brains just aren’t wired to keep track of such distant things. In the mean time, a few smaller mini-goals will hopefully keep me focused and motivated.
March absolutely flew by, with a lot of change at work, wedding planning helping to skew the passage of time and a stag do to survive.
Before I get started with this savings diary, check out Weenie’s update for March. Killing it.
As is standard for Mr Z, not much can be done without some tunes to help. I’ve been listening to some old Pearl Jam whilst pulling the numbers together for this update.
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 wedding costs over the last year or so as we go along, so last years savings rate of 59% had already been taken down a peg or two due to wedding costs. Still, there will be kick in the tail of the wedding expense beast landing this year. So, 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. Kind of the way companies like to report shitty results. “Yes our results are dog shit this year, but if we remove this, this and this we now make a profit.”
Now, this would mean that I hit a savings rate of 55% in the month, not too shabby. It’s pretty similar to the prior month in absolute terms, but a bonus in the month means that it drops relatively. The bonus is actually just sat in cash so I could include it as “saving”, but it’s only going to be spent on holiday or paying of another late wedding cost. I’ll take the hit this month rather than next. Slightly 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 paid for I should be hitting some tasty and sexy savings rates.
A cacophony of final bills for the wedding came flooding in this month and collectively shoed my savings rate into a near coma. With everything accounted for my savings rate was a negative 23%.
Target: 60% savings rate
Simple average: 14.3%
Despite this being a huge fail for the month, I’m still pretty happy. This is the first time we have dipped into savings for anything over the last couple of years. And with pretty much the final bills paid for the wedding, we have paid for our wedding largely whilst continuing to save and most importantly not taking out credit of any kind. [Not strictly true as we have some of the costs on a 0% credit card whilst cash benefits from interest in a Santander 123 account.] This has been from doing nothing more than building positive habits. These habits have allowed us to save a significant portion of our incomes each month and not to resort to loans to pay for anything.
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 9.73% at the end of March to be on track. The year started off with a tumbling January, but there has been some recovery in the markets since.
Some positive movements in the markets helped to offset what was an expensive month, meaning despite a negative savings rate my NetWorth still increased. Admittedly by a paltry 0.15%.
Overall this leaves an increase of 0.9% since the start of the year, a quarter of the year gone and I’m treading water.
A best fit analysis of the graph would suggest a long term upward trend, despite a less than impressive January to March. All of this points towards me doing the right things, i.e. simply spending less than I earn and saving the difference. That’s it.
Target: Annual 45% increase in NetWorth.
Actual: Annualised projected growth of 3.65%.
Goal three is simply to overpay the mortgage each month.
In March Mrs Z and I each slammed £100 against the mortgage in overpayments. Lovely. I have a graph in Excel that shows the principle with overpayments and without. They are starting to diverge noticeably now which is very inspiring. Visual stimulus really does work.
A quick few sums tells me that if we carry on saving and overpaying the mortgage like we are we would be in a net mortgage free position in 19 months. Shit a pig! That’s amazing.
Target: Overpay mortgage
Actual: £100 overpayment each
I also set myself a March Mini-Experiment, to not eat for a day, a self imposed fast. For no other reason than to see what it would be like. I did it and it was nowhere near as expected, the thought of doing it was far worse than actually doing it. Post to follow 🙂 A write up of my February Mini-Experiment of only spending using coins is here. I’m going to hold off on a April Mini-Experiment as I’m getting married in April :-), preeeeety sure that will keep me busy.
All of my prior months updates are here, if you just need more!
Spend Less, Save More & Escape the Horde
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