Hey hey financial voyeurs, its monthly NetWorth and Savings rate update time. A savings diary, you might say. Dear Diary…
April was pretty much spent at my actual wedding and then the following honeymoon, which was largely spent in San Francisco and Yosemite National Park. Can I get a ‘Hell Yeah’ for Yosemite? Spending a few days in a cabin in Yosemite with not much to do other than go for hikes, play board games and cook was amazing.
With a large chunk of my Financial Independence reading coming in the form of US blogs, it was good to make a trip out there. Everything is bigger. The people, the cars, the roads, the food, the scenery… It did strike me while I was there that the US might be a country that is more set up for FI.
Advertising and marketing was a much more powerful force out there and that perhaps some things were considered essentials and so baked into salaries, things like huge trucks. But if you could ignore these things you would be well on your way to Financial Independence.
From reading blogs I was aware of the prevalence of the horror that is the Ford F-150, but I wasn’t ready for just how big and abundant they are. How someone can justify sitting in traffic, alone, in one of these beasts is beyond me. Only to return with a pint of milk. It will be rationalised in some moronic way, “I need it to tow my jet ski once a year”. But that’s the equivalent of putting on your walking boots to get from the living room from the kitchen and walking through your houseplants on the way to warrant wearing them.
As is standard for Mr Z, not much can be done without some tunes to help. I’ve been donning the leather pants and rocking out to Van Halen whilst pulling this update together.
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 the single far out goal of financial independence, potentially over a decade off, will have appear to have painfully slow progress. Which will only be demotivating. Our brains just aren’t wired to keep track of such distant things. So, in the mean time, a few smaller mini-goals will keep me focused and motivated.
The first goal is to achieve an average savings rate of 60% across the year.
This goal is going to be tough, with a wedding in the first half of the year. We paid off wedding costs over the last year or so as we went along, so last years savings rate of 59% had already been taken down a peg or two due to wedding costs. Still, there was a spike in costs in March as the final bills came in. So, I fully expect to fail this goal this year. Positive thoughts and all that.
The gang of weddings costs that bullied my savings rate in March weren’t around this month, so things were clear and Mr Z Limited could carry on as normal.
April was a stonking month for saving. I’ve been slowly cranking up the amount I put into investments in my ISA and we are now paying off a small amount extra each month on the mortgage. With all this Mr Z Limited hit a savings rate of 72.1% in the month.
The high savings rate might seem a little strange, given we were on holiday for most of April. Here’s the thing, we paid for everything up front, so the pain was already included in prior months savings rates. As horrified as my nan-in-law was, we asked for cash gifts if wedding guests wanted to give us anything. This covered our spending money whilst on honeymoon. Happy days.
Target: 60% savings rate
Simple average: 29.03% PASS (in month)
Hopefully once things calm down a savings rate in excess of 70% can become the norm 🙂
My second goal is centred around NetWorth growth, which is admittedly driven by progress on the first goal and the whims of market movements. But it’s much more fun to track and a much more visual representation of progress, kind of like a savings diary. The target for 2016 is to increase my NetWorth by 45%, I don’t include equity on my house for the purpose of this goal.
I needed to increase NetWorth by 13.2% from the start of the year to the end of April to be on track. The year started off with a timely reminder from the markets that investing isn’t all plain sailing, but there has been some recovery in the markets since.
My best savings rate of the year and a bit of help from the currently sketchy Mr Market leaves me with an increase of 5.99% since the start of the year, a significant jump up from the 0.9% to the end of March.
Market movements and generally steady savings from myself result in an upward trend over the last year and a half or so.
There are plenty of other bloggers sharing their NetWorth from month to month, J$ at Budgets are Sexy with over 8 years of updates. At first glance it can appear a bit narcissistic and showy, especially once it starts gaining momentum.
Yet all it is, is the result of a simple lifestyle change. Simply spending less than I earn and saving the difference. That’s it. This has resulted in a near doubling of my NetWorth since August 2014. And August 2014 was the accumulation of nearly a decade of work!
Yes, posting my NetWorth keeps me motivated, but it also keeps me honest and on track. And hopefully it shows the impact a few small changes can make if they are applied consistently.
Target: Annual 45% increase in NetWorth.
Actual: Annualised projected growth of 19.06% (up from 3.85% last month).
Goal three is simply to overpay the mortgage each month.
In April Mrs Z and I each threw £100 against the mortgage in overpayments. Lovely.
I have a graph in Excel that shows the outstanding mortgage, one line with overpayments and the other without. They have diverged noticeably now, which is very inspiring.
Target: Overpay mortgage each month.
Actual: £100 overpayment each.
All of my prior months updates are here, if you just need more!
Spend Less, Save More & Escape the Horde
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