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!
The big change on the balance sheet this month is the car loan. We mentioned that we were going to probably do this when we talked about the money aspects of Mr PoP’s NSX purchase, and we finalized the loan paperwork this month. Opting for a loan against something that we could have paid cash for isn’t our traditional modus operandi, but the 1.49% interest rate on a 36 month loan from our credit union was tough to pass up. Over the course of the loan we’ll pay in the neighborhood of $600 in interest total.
This feels pretty cheap in terms of allowing us to keep a little more liquidity – though it does come at the price of pretty high payments. And by that I mean obscenely high. Even when we had 2 car loan payments back in 2010, together they were not this high. So this will be a new feeling. However, we do get to delay that feeling for a month since the first payment isn’t due until April. =P
Here are the numbers for March:
- Our total assets up $46.6K
- Our total liabilities went up by $26.3K
- Net worth went up by $20.3K
- Total net worth as of the end of March is $1,360.9K, which represents a 1.51% increase for the month
For the details…
- 401K accounts: $369.4
- Roth IRA accounts: $207.0
- HSA account: $19.9
- Taxable Brokerage Accounts: $199.6
- Total Brokerage Accounts: $795.9
Real Estate (based on current market comparable sales)
- Primary Residence: $269.0
- Investment Duplex: $175.0
- Investment Residential Land: $160.0
- Total Real Estate: $604.0
Cars (based on “fire sale” pricing per Mr PoP’s research)
- Mr PoP’s NSX: $30.0
- Checking Accounts: $33.4 – need to move some to taxable
- Savings/Money Market Accounts: $2.0
- Total Cash Holdings: $35.4
Total Assets: $1,465.3
Real Estate Loans
- Primary Mortgage: $77.6
- HELOC on Investment Duplex: $0.0 (re-advanceable)
- Personal Loan – Used to Purchase $50K Duplex: $0.0
- Total Real Estate Related Loans: $77.6
- Loan on NSX: $25.6
- Total Car Loans: $25.6
- Credit Card Balance: $1.2
- Total Revolving Credit: $1.2
Total Liabilities: $104.4
Net Worth = Assets – Liabilities
Net Worth = $1,360.9, up 1.51% from February
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 (though they have started to get significantly closer!)… 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
20.80/25 = COL Early Retirement Locale / 188.0
COL Early Retirement Locale = 156.42
… which gives us the city of Stuttgart, Germany!
Stuttgart, home of the Mercedes Benz AND Porsche headquarters. If Mr PoP had done better in the German 101 class he took in college, he might be itching to start booking tickets there now! And I probably wouldn’t be fighting him on it. I had the pleasure of visiting Stuttgart more than half my lifetime ago when I was in high school (summer exchange-type program with my German class) and what I remember most vividly was visiting the Mercedes Benz museum. Where even as a non-car geek, it was incredibly interesting to walk around learning about all of the cars and the history of Mercedes Benz!
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
- February 2017 – Noweheresville – or maybe we can just live in the car?
- March 2017 – Stuttgart, Germany
How was your balance sheet in March? Where would your savings land you today?