Feels like it’s been raining, here on the west coast, for an eternity. As I sit at my dining room table, in the light of the setting sun, rain is whipped into a frenzy by the wind whirling in my garden and clatters against the window. Bizarrely, it’s a nice and peaceful setting.
Life cracks on at a hell of a pace, but I still take the time each weekend to update a spreadsheet that tracks my NetWorth and Savings Rate. And once a month I take stock of where I am and check in against a couple of goals.
The most important of these is my savings rate. For the last couple of years I’ve been targeting 60%, and just missed out on it both years. Hopefully 2017 will be the year. Then, once 60% becomes normality, I’ll increase my target to 65%, then 70% and so on. At least until my happiness plummets off the edge, into the Chasm of Despair. Then I’ve found my limit.
The second is around NetWorth growth. Sure, it’s a little out of my control. I can steer it in the right direction with my savings rate, but it will also be at the whims of the market to some extent.
Savings Rate – 60% target
Being well and truly in the accumulation phase, my savings rate is the most important aspect of my plan to become Financially Independent.
A high savings rate will be the Nitrous Oxide in my savings journey and also the metric that is most within my control. I just need to apply a subtle upwards pressure to my earnings and a brute downward pressure on my spending. Result: higher saving rate.
I emerged at the end of April in Spring with a total savings rate of 70.39%.
Calculating May’s saving rate was making me feel a little uncomfortable. A couple of expenses from April drifted into May and there was some other larger than normal outgoings occurring. As I rattled through my calculations it became apparent that my fears weren’t unfounded…but things weren’t as bad as my sleepless nights of spending-guilt suggested.
Savings Rate clocked in at 58.7% for May in the end, not even my worst rate of the year. It shows how much my Savings Barometer has shifted over the last few years. I don’t run a budget, I find them bureaucratic and draconian. Nonetheless my Zombie-Senses were prickling at the higher spending. It’s a strange situation I find myself in, worrying that I’m spending myself into an early grave, only to hit a 58% savings rate.
All of this leaves me with an average saving rate of 68.1% for the year to date. Still above target 🙂
NetWorth – 45% annual growth target
This Zombie’s steady ascent continued up NetWorth mountain in April, with a growth of 13% seen since the start of the year.
A saving rate of nearly 60% and some positive market movements helped this upward trend to continue. This meant that Zombie Inc, increased it’s NetWorth by 4.4% in the month alone! That brings me on target to increase NetWorth by 49% by the end of the year, nicely on target.
Shifting my spending cannon from being aimed at pointless shit to ‘spending’ on equities instead has been working pretty well for the last two and a half years or so.
I’ll be the first to admit that I’ve been riding on the back of a charging market, it’s been easy really. And hint of a retreating market has been short lived.
At some point the markets will head south and my bottle will be tested, along with plenty of others. Working and then saving a large chunk of my earnings only to see my NetWorth decrease month after month will be difficult. Yet it is almost inevitable. I almost wish the mighty bear would arrive and slash the market apart with its Claws of Doom. Then I could be on the other side, marvelling at my black belt of investing, knowing that I didn’t panic.
Prior updates can be found right here.
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