PoP Balance Sheet – January 2017

Welcome to our January 2017 Balance Sheet!

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…



Brokerage Accounts

  • 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 

Cash Holdings

  • 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

Revolving Credit

  • 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? 

16 comments to PoP Balance Sheet – January 2017

  • Uruguay is a Spanish-speaking nation, which is easier to learn than Portuguese (unless I’m missing something with its proximity to Brazil). I recommend Duolingo. I perused the wikipedia article; Uruguay sounds much cooler than what I remember learning about during high school Spanish! Appears to be a progressive country with most of its power coming from renewable sources. Definitely sounds worth a visit.

    Congrats on the continued growth! Query: can you use a 401(k) to fund FIRE? Or do you need your brokerage to get you to retirement where you can use the 401(k)?
    Leah recently posted..A little sparkleMy Profile

    • Dangit, you’re right! I think it being right below Brazil my mind immediately went Portuguese. =P I’ve heard others recommend duolingo, too! Some day we will have to use it. =)

      With the 401K, it’s definitely something that you CAN access, it just takes a bit of work (via Roth laddering) or a willingness to pay a 10% penalty at the withdrawal. Not the message Fidelity wants out there, but it’s possible. That said, we’d definitely be relying primarily on the taxable in the first few years if/when we pull the plug.

      • From my research, there’s also a SEPP option where by you withdraw a certain amount for a long period of time from one or more IRAs. Depending on the situation when I end up retiring, I may use a combination of Roth laddering or a SEPP simply because so much of my investments are tied up in retirement accounts. It’s a tricky balance though to leave enough around for later while also having enough to live off of for now.
        Leigh recently posted..January 2017 updateMy Profile

      • duolingo is free and super easy. As in, 5 minutes a day type of super easy. Maybe I find it easier because I already speak Spanish. If you’re into podcasts, I also really enjoyed coffee break Spanish back when I was commuting. If we make plans to go somewhere Spanish speaking one of these days, I’ll ramp back up on my listening skills.
        Leah recently posted..A little sparkleMy Profile

  • Why did your ratio drop so much this month compared to last month?
    Nicoleandmaggie recently posted..The guy that recruited DH quit: Musings on stabilityMy Profile

    • December was pretty low spend, and January was a bit higher than normal… So when we’re using the monthly as a burn rate instead of the 12-month moving average, the fluctuations make a much bigger difference. To my mind, that has pros and cons, which is why I like that we’re also starting to track the LTM data for a data point.

  • Michelle G

    I’d like to know more about how you calculated your long term expenses… How much do you include for health insurance, for example. Is it supposed to be a close approximation of what your expenses would really look like in early retirement?

    • So for now these are just actual LTM expenses with items like the renovations and “fun car” spending stripped out since we see an end to those items before we pull the plug or do anything drastic. But we have drawn up sample FIRE budgets and the numbers are pretty similar. Decreases in work and commuting costs end up balancing out increases in health insurance, etc…

      Though health insurance is definitely going to be an open question it seems. I’m not thrilled about that, but we do understand that we are healthy and can do something like a health-sharing ministry if traditional health insurance becomes unsustainably expensive. Having gone completely without coverage more than once in my life, it’s not something I’m advocating as part of our future. =P

      • Michelle G.

        Cool, it makes sense that increased health insurance expenses would make up for savings elsewhere after retirement. And, I agree that it would be really nice if there were a lot less uncertainty in the health insurance marketplace!

        And also, do you have a retirement date planned? Or are you just going for financial independence and not necessarily planning to leave your jobs?

  • I like the new format with the blue and yellow lines. We use the MadFientist’s laboratory, which has something really similar.

    You guys are getting really close!
    Done by Forty recently posted..2016 Was the Worst (Our Annual Spending)My Profile

    • I really should dig through MFs’s lab! You’re not the first ones I’ve heard that like what they get from it. =)

      • Michelle G.

        Maybe he’s changed it a bit since the last time I went, but it used to rely heavily on your savings rate, which I found tricky because of how to account for taxes, particularly when a decent chunk of my savings is pre-tax 401k contributions.

  • I like the new chart! I also play around with the Mad Fientist’s lab, while having a variety of my own charts. I have:
    1) “Age could retire vs current age” which uses a calculation of what age I could retire without any further savings
    2) “Passive Income over Expenses YEAR” which for each year has three lines for each month including the prior December: a) passive income (sum of interest, credit card rewards, selling stuff, and taxable dividends since they could be kept without any additional tax consequences), b) 4% SWR across all investments, and c) that month’s expenses.
    3) “4% SWR versus expenses over time” which has two lines: one for monthly expenses and one for the 4% SWR amount that my portfolio would have spit off each month. It’s been fun watching the 4% SWR line get larger and occasionally closer to the expenses line as time has gone on.
    4) “4% SWR versus Expenses By Year” is basically the same chart as the previous one except each data point is for a particular year rather than month and I included the passive income described in chart 2) in the 4% figure line.
    5) “$ to FI vs net worth over time” has two lines: one for monthly net worth and one for the “goal post” each month, which is a moving target. I like this chart better than one indicating a stationary goal post since it isn’t really stationary. I surpassed 50% at some point in 2016! (and then went away from it again) I calculate the FI goal post as my condo value plus 25 x monthly expenses without the mortgage payment.
    6) “$ needed for FI vs net worth over time” has two lines: one for monthly net worth and one for the amount until the “goal post” above each month.
    7) “% of Expenses covered by 4%” has just one line and it’s been really fun watching this chart get higher over the years! I expect to see it get over 50% some months this year.

    Of course, much of my investments at this point are in tax-advantaged accounts and I have no rental income, so these goal posts shown in these charts are meant to be re-evaluated once I reach them. I’m really curious to see how the charts change this year since I’m in grad school with minimal income to speak of! You guys are getting so close! Following my calculations, I would say that you guys are at the point where I would need to figure out new goal posts 😉
    Leigh recently posted..January 2017 updateMy Profile

  • I like your new visualization as is. I think if you try to add projections into it, you might eliminate the simplicity that makes it easily understandable.

    So, $250k more or so in investments and then the blue line crosses the yellow?!
    Ellie @ The Chedda recently posted..Our Expenses – January 2017My Profile