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!
It feels crazy to think that this balance sheet marks the four-year anniversary of when we started this blog. Our very first post was our balance sheet as of the end of May 2012! While that’s not quite ancient in internet history, I think it definitely qualifies this site as being “middle aged”. And in fact, it reminds us how glad we are that we didn’t choose a blog name centered around being youthful (which we considered), especially as I just recently plucked an all white hair off my head to show to Mr PoP and am not feeling particularly youthful as those become more and more common. (Note – I seem to be skipping grey hairs and going straight from blonde to grandma-white. The jury is still out as to how I feel about this.)
Anyhow… May was a pretty boring month on our balance sheet. And really, I’ll take a boring balance sheet any day over the decidedly non-boring adjustment that Forbes made to Theranos founder Elizabeth Holmes’ net worth this week. Down $4.5Bn! Eeep! The stock market rose ~1.5%, which lifted the value of our holdings, along with what we added into our 401Ks and other various accounts.
The only change of any significance (and it’s really a small significance at this point) is that we went ahead and finally retired our car from the balance sheet. We debated about doing this at least once before, but inertia kept the car on the balance sheet far longer than was probably appropriate. When I checked the current Kelley Blue Book value of the car (something I do twice a year when our car insurance renewal is up), it was just $5.7K. It just seemed silly to keep including it when its value counts for roughly 0.5% of our total asset base and we don’t have any loans against it.
So here are the numbers:
- Our total assets went up by $8.8K (after eating the write down on the car value)
- Our total liabilities went down by $1.8K
- Net worth went up by $10.6K
- Total net worth as of the end of May is $1,026.5K, which represents a 1.04% increase this month.
For the details…
- 401K accounts: $295.0
- Roth IRA accounts: $174.6
- HSA account: $14.7
- Taxable Brokerage Accounts: $134.4
- Total Stock Accounts: $618.7
Real Estate (based on current market comparable sales)
- Primary Residence $239
- Investment Duplex: $140
- Investment Residential Land: $80
- Total Real Estate: $459.0
Cars – last month we’ll have this category…
- Car 2: $0.0
- Total Cars: $0.0
- Checking Accounts: $9.5
- Savings/Money Market Accounts: $22.5
- Total Cash Holdings: $32.0
Total Assets: $1,109.7
Real Estate Loans
- Primary Mortgage: $83.2
- HELOC on Investment Duplex: $0.0 (re-advanceable)
- Personal Loan – Used to Purchase $50K Duplex: $0.0
- Total Real Estate Related Loans: $83.2
- Credit Card Balance: $0 – paid these balances the day before recording our net worth. =P
- Total Revolving Credit: $0
Total Liabilities: $83.2
Net Worth = Assets – Liabilities
Net Worth = $1,026.5, up 1.04% from April
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.
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 179.5. 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
17.15/25 = COL Early Retirement Locale / 180.5
COL Early Retirement Locale = 123.79
… which gives us the city of Santiago, Chile!
Neither of us has ever been to South America, but Santiago seems like a great place to try out. In addition to the rave reviews of Chile from a friend of mine who participated in a study abroad there in high school, Santiago seems like a great place to spend some time. In a valley surrounded by mountains, the weather seems a little cooler than what we’re used to, but not so cold we’d need to have the parkas on hand, and the abundant sunshine means that we’d get to enjoy the nice weather, too! Though it’s a large city with 4 million people living in it, Santiago also has the largest subway system in South America, which (I would think) makes the city much easier to get around than the size would otherwise indicate.
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
How was your balance sheet in May? Where would your savings land you today?