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 main action on our balance sheet this month was updating the values of our real estate since it had been over a year for all of them, and it was getting really overdue. All at once, the changes look pretty big, so when you’re looking at the “pop” (hehehe…) in the graphs this month, try and remember that those changes were actually much more gradual than the way we are representing them here (and I’m too lazy to update our property values with current comps every month).
The updates have also gotten Mr PoP and I talking about how useful different parts of our financial tracking are to us, so I think we’ll continue with this structure at least through the end of the year, but will probably change it up a bit after that. (Open to suggestions if you have favorite personal finance metrics that you find useful to track!)
Here are the numbers for September:
- Our total assets went up by $158.6K, most of which is due to those 3 long overdue updates to our property valuations
- Our total liabilities went down by $0.3K
- Net worth went up by $158.8K
- Total net worth as of the end of September is $1,239.5K, which represents a 14.69% increase this month.
For the details…
- 401K accounts: $322.9
- Roth IRA accounts: $182.8
- HSA account: $16.1
- Taxable Brokerage Accounts: $144.3
- Total Stock Accounts: $666.1
Real Estate (based on current market comparable sales)
- Primary Residence $269 – updated earlier this month
- Investment Duplex: $175 – updated earlier this month
- Investment Residential Land: $160 – updated earlier this month
- Total Real Estate: $604.0
- Checking Accounts: $18.6 – need to move a bunch to taxable…
- Savings/Money Market Accounts: $32.5
- Total Cash Holdings: $51.1
Total Assets: $1,321.2
Real Estate Loans
- Primary Mortgage: $81.0
- HELOC on Investment Duplex: $0.0 (re-advanceable)
- Personal Loan – Used to Purchase $50K Duplex: $0.0
- Total Real Estate Related Loans: $81.0
- Credit Card Balance: $0.7
- Total Revolving Credit: $0.7
Total Liabilities: $81.7
Net Worth = Assets – Liabilities
Net Worth = $1,239.5, up 14.69% from August
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.
The huge fluctuations between last month and this month are due to all those prepayments and reimbursements I mentioned on our income statement. On a trailing twelve month basis, we’re at around 18.59 years of spending, so not *quite* as good as it looks if you only focus on this month.
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 180.5. 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
39.38/25 = COL Early Retirement Locale / 180.5
COL Early Retirement Locale = 284.34
… which gives us the city of Grand Cayman, Cayman Islands.
We have never been to the Cayman Islands, but from everything I understand, Grand Cayman is pretty much the epitome of a tropical paradise. So if this month’s spending were anywhere near what our more typical average looks like, we’d be severely tempted to throw it all in and check out Grand Cayman for one of our morning beach walks. We could even pick up an offshore account while we’re there! (Just kidding…mostly.)
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
How was your balance sheet in September? Where would your savings land you today?