Savings Diary: July 2017 Update – #Standard

July clattered passed in a haze.  It’s Sunday evening and I’m sat on my couch writing this, whilst it peacefully rains oustide.  Each weekend I updated my cracker of a spreadsheet that tracks my NetWorth and Savings Rate.  And at the end of the month I take stock of where I am and check in against a couple of goals, and summarise them in this fantastic post.

<Repetition Alert> The most important of these goals 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 goal targets the growth of my NetWorth.  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. <Repetition Alert End>

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 and in the long run an increasing NetWorth.

My expectation is to keep my savings rate above 50%, that way I’m buying at least a month of freedom for every month that I work.  Compounding just makes it even better.  A rate of 60% is me trying to push myself, as the years to financial independence melt away as you push the savings rate north of 50%.

The first half of 2017 was pretty kind and Mr Z’s industriousness at work and awareness of spending resulted in a savings rate of 70.8% to the end of June.  Things are looking pretty good at this point, to hit the 60% target for the year.

After crunching through the data, July looks pretty good with a saving rate of 67.5%.  Not as good as June, but still a cracker.

Keeping it nice and high

This brings my in year savings rate to 70.3%.  Happy days.  I can happily skip out the office each evening with a saving rate like this, knowing that each month of work is buying me over two months of freedom.  Knowing that even if I quit work tomorrow my current savings could support me for years, and in those years what I have saved this month would have grown exponentially from intelligent investing.  Meaning each month I work is actually buying me way more than two months of freedom at this rate of saving.

That’s some tasty motivation right there.

But life isn’t just about saving rates, as exciting and sexy as they are.  There does come a time to spend money every now and then.  For Mr Z, it looks like August and September are to be that time.  August is going to take a bit of a beating as we booked some flights for a holiday in September.

So a civil war between my savings rate and expenditure is brewing and about to boil over in August.  For now, let’s enjoy the serendipity that July has offered me on this front.  Another month with a good savings rate and another positive step towards Financial Independence.

NetWorth – 45% annual growth target

Disclaimer – I don’t include the equity in my house in this calculation.

At the end of June my NetWorth had seen a growth of 21.8%, just above the rate needed to hit my target by the end of the year.

Investment returns were quite small last month, but a bonus from work helped to keep things ticking over with a growth in the month of 3.5%.  This month the gods of uncertainty were kinder to my NetWorth, resulting in a growth of 3.5%.

So July saw the same growth in NetWorth as June, despite a lower savings rate.

July 2017

I’ve just started a series of posts having a look at my work history, which started way back somewhere in 2004/05.  I was a Foron back then and although I haven’t gone back and scraped through all my records a graph of my NetWorth might look something like this.

Looking waaaay back

Somewhere along the line I started paying into my company pension.  It was around 2009, 5 years after starting to work.  If I could go back in time and suplex a young Mr Z through his work lap top, pick him up and then judo chop him in the head, I would.  Then sometime in 2012 or 2013 I hatched a plan to save cash, saving accounts were paying a better rate than I was paying on my mortgage.  The plan was to pay off the mortgage early.

Then in 2014 I found the Financial Independence community, set up a stocks&shares ISA, set myself out a proper investing plan and the results have been pretty good. 🙂

It looks even better if I chuck in the equity in ‘Z Mansion’ into the mix.

Point being, I’ve only really been at this for 3 years and the results have been fantastic so far.  If I’d started with my current approach to finances back in 2004 I would have been where I am today before I’d even started paying into a pension back in 2009 (assuming the exact same sequence of returns).

What does that chart say to you?  To me it shows how controlling your expenses and index investing work.

Prior updates can be found right here.

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Mr Z

5 thoughts on “Savings Diary: July 2017 Update – #Standard

  1. Sarah

    Brilliant work, such commitment and realism.
    Have you listened to the Choose FI podcasts? A lot of American enthusiasm, but I like them.

    1. Mr Zombie Post author

      Hi Sarah – no I haven’t. I’ll check it out, as was having a look for a podcast the other day. I think I ended up listening to a Madfientist one for about the third time 🙂

      Mr Z

  2. SurreyBoy

    As ever, an informative article. Your commitment is clearly generating real progress. A thought on whether to include home equity. Assuming a repayment mortgage is used, then the equity increases each month unless the value of the home drops – giving a spreadsheet guru a warm inner glow.

    In my FI spreadsheet I include what I term surplus equity – which is the equity I currently have minus the likely cost of the property I expect to downsize to when I give the bird to the man and quit the salt mines. That surplus equity will one day be cash and then invested etc.

    It works for me anyway, and makes the mortgage payment feel easier as my spreadsheet reflects the capital repayment portion going into my back pocket so to speak.

    1. Mr Zombie Post author

      Thanks SurreyBoy. Hoping that people will see I’m doing nothing other than being consistent and so far it is paying off.

      I did calculate NetWorth including my property equity initially, using Zoopla as the estimate for Market Value. But I found it too volatile, causing huge movements in my NetWorth.

      What I do include is mortgage overpayments, but they are only £250 a month.

      My overcomplicated spreadseet does also calculate NetWorth including property at estimated market value 🙂 I just don’t include it here. Hmmm, I could add it into the monthly post to show NetWorth including property equity…

      Mr Z

  3. Creesey

    Fantastic post as always Mr Z. I can confirm ChooseFI podcast is very good, if you can deal with the fact that the presenters are almost charactures of Americans!! (I actually really like it and find it quite funny).
    Meaningful Money Podcast with Pete Matthew is also excellent, but I’m sure you have heard of it already!
    In relation to net worth, I personally don’t ever include this in my calculation. And I think it is dangerous to if you are going to rely on that in retirement. It is illiquid, even after paying off the mortgage there are maintenance and improvements to be done, family circumstances may dictate you can’t or may not want to move (e.g. child has grandkids and they live nearby), it doesn’t pay any form of dividend or rent and in my opinion should only ever be seen as a liability. It is a bonus if you can cash in on location arbitrage or downsizing, but to factor in to retirement planning for a lot of people, is in my humble opinion, is erroneous.


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