We use the structure of a monthly income statement and balance sheet in tandem to make sure we are keeping our expenses low and planting our pennies wisely. If you’re not already tracking your finances using these two methods, go to mint.com and get started today! If you have any questions about how we do this just post a comment and we’ll be sure to help!
January was a bit of a reset month for us. With the new year, we once again started up pre-tax contributions into our 401Ks, and Mr PoP’s employer dropped a lump sum into his HSA as well. We were able to set a bit aside for our taxable account after a bit of a pricey January, and all these things (combined with a market that rose more than 1.75% for the month), boosted our net worth. So no complaints on the net worth front, I suppose?
In the charts below we’ve added a new visualization graph that’s based on LTM (last twelve month) spending. Our expenses tend to jump around a fair amount from month to month, and we’re hoping this will help us smooth that a bit and give us a better idea of when we’re long-term prepared for FIRE, but it still feels incomplete. Any ideas on how we can add to it would be greatly appreciated if you have them!
Here are the numbers for January:
- Our total assets up $22.8K
- Our total liabilities went down by $1.1K
- Net worth went up by $23.9K
- Total net worth as of the end of January is $1,304.3K, which represents a 1.87% increase for the month
For the details…
- 401K accounts: $339.2
- Roth IRA accounts: $189.9
- HSA account: $18.8
- Taxable Brokerage Accounts: $177.8
- Total Brokerage Accounts: $725.7
Real Estate (based on current market comparable sales)
- Primary Residence $269
- Investment Duplex: $175
- Investment Residential Land: $160
- Total Real Estate: $604.0
- Checking Accounts: $13.0 – need to move $3K to taxable for Jan…
- Savings/Money Market Accounts: $40.6
- Total Cash Holdings: $53.6
Total Assets: $1,383.3
Real Estate Loans
- Primary Mortgage: $78.7
- HELOC on Investment Duplex: $0.0 (re-advanceable)
- Personal Loan – Used to Purchase $50K Duplex: $0.0
- Total Real Estate Related Loans: $78.7
- Credit Card Balance: $0.3
- Total Revolving Credit: $0.3
Total Liabilities: $79.0
Net Worth = Assets – Liabilities
Net Worth = $1,304.3, up 1.87% from December
How Close Are We Getting to FIRE?
New this year is a graph that Mr PoP and I are still trying to figure out how useful it is to us.
In this one, we’re tracking month-by-month, two lines. The blue one is an approximation of FIRE income – it is the sum of the last twelve months of net real estate income plus 4% of the most recent brokerage account balances. The yellow one is an approximation of our FIRE spending, for which I’m using the last twelve months of what I’m thinking of as our “recurring spend”. Bu that I mean our spending, net of all the crazy shenanigans we’ve been up to the last couple of years with remodeling and “fun car” spending. The main reason we’re netting these out, is that we definitely won’t be pulling the plug with any big line items like this hanging over us.
Right now the blue line is below the yellow one… ideally one would like that in reverse. =P
We’re still chewing on this visualization a little bit, because while it’s nice and succinct, it still omits some important information from our portfolio and spending patterns, specifically our empty lot (worth ~$160K) that instead of generating income is currently costing us ~$1,500/year, as well as the ever decreasing lifespan of our mortgage. We also spend ~$9400/year on the principal and interest payment of our mortgage, so paying that off (and the value of the lot would pay it off and then some!) would decrease our outflow needs significantly, and even if we pay it off according to schedule it’ll be gone in 2026.
Do you take any future changes into account in your visualizations?
Tracking Investable Asset Growth
This first graph shows the growth of our investable assets (net of any liabilities against them), and shows the distribution of the various equity classes we hold. Pretty self explanatory.
How Many Years Of Spending Do We Have Saved?
Here I’ve taken the total of our investable assets for each month and divided it by the expenses (excluding our investment property expenses) for that month. The idea being that this shows how many years we could live off of those assets at that rate and gives us a better idea of what lifestyle inflation (or intentional deflation) can do to the relative value of our savings.
It fluctuates in a much bigger range, because in high spending months (like February 2013 when we spent almost $7K paying off our car completely and February 2015 when we spent a bunch installing solar panels), the denominator is so much bigger. Because of that, it’s the overall trend we’re looking for.
Early Retirement Locale Index
Mr PoP wanted one more way to understand more viscerally how much we have in “investable assets”, so we’ve come up with what we’re calling our Early Retirement Locale Index. The basic idea is that we know how many years of savings we have at our disposal if we were to continue living in south Florida. (That’s the chart above.) But using the “magical” 25 years of savings necessary for early retirement, where would we have to move so that our current investable assets would cover 25x our COL adjusted current spending? (Note, this is purely for fun, we’re not intending to move. Don’t worry Mama & Papa PoP!) If you want to follow along, we’re using this Cost of Living Index from Expatistan, and using the average of the two big cities in south Florida on the list (Miami and Tampa) as our current COL index, which gets us 188.0. Our city isn’t on their full list, hence the average – but maybe yours is. Then we’re solving this equation:
Current Years Saved/ 25 = COL Early Retirement Locale / COL S. FL
20.15/25 = COL Early Retirement Locale / 188.0
COL Early Retirement Locale = 151.53
… which gives us the city of Montevideo, Uruguay!
On the southern coast of Uruguay, Montevideo looks like a beautiful place to live, and it is apparently consistently ranked as the city in Latin America with the highest quality of life. And while we’d need to learn Portuguese to truly appreciate the city, hopefully we’d also get a chance to buy some chrysanthemums from the famously frugal former president of Uruguay, Jose Mujica.
Here’s our journey through the ERLI so far…
- January 2014 – Delhi, India
- February 2014 – Quito, Ecuador
- March 2014 – Kiev, Ukraine
- April 2014 – Chiang Mai, Thailand
- May 2014 – Madras/Chennai, India
- June 2014 – Colombo, Sri Lanka
- July 2014 – Bangalore, India
- August 2014 – Yerevan, Armenia
- September 2014 – Skopje, Macedonia
- October 2014 – Brasov, Romania
- November 2014 – Prague, Czech Republic
- December 2014 – Mexico City, Mexico
- January 2015 – Zadar, Croatia
- February 2015 – Kiev, Ukraine
- March 2015 – Cairo, Egypt
- April 2015 – Bangalore, India
- May 2015 – Niteroi, Brazil
- June 2015 – Nowhere!
- July 2015 – Skopje, Macedonia
- August 2015 – Recife, Brazil
- September 2015 – Ankara, Turkey
- October 2015 – Lisbon, Portugal / Santo Domingo, Dominican Republic
- November 2015 – Debrecen, Hungary
- December 2015 – Tbilisi, Georgia
- January 2016 – San Antonio, Texas or Louisville, KY – readers pick!
- February 2016 – Lisbon, Portugal
- March 2016 – Brno, Czech Republic
- April 2016 – Vitoria, Brazil
- May 2016 – Santiago, Chile
- June 2016 – Johannesburg, South Africa
- July 2016 – Thessaloniki, Greece
- August 2016 – Gurgaon, India
- September 2016 – Grand Cayman, Cayman Islands
- October 2016 – Las Vegas, Nevada
- November 2016 – Oakland, California
- December 2016 – Hartford, Connecticut
- January 2017 – Montevideo, Uruguay
How was your balance sheet in January? Where would your savings land you today?