Welcome to my second quarterly update which details my net worth and cash flow as at the end of June 2017. As well as the goals I have set for myself for the next quarter.
If mine is the first personal finance blog you have come across firstly I am super humbled by that and secondly you might be thinking this is kind of strange putting the info out there for the world to see.
However it is a fairly regular occurrence with bloggers to either track their net worth or report their monthly income.
I debated whether I should post this or not as I was not sure about how the information would be received, particular here in Australia where ‘tall poppy syndrome’ can mean anyone who seems to be doing OK can be shot down in a hurry.
But my view is that if you have come to my site which is about becoming financial independent in order to retire early then you must be a little bit open minded and willing to discuss what can be a taboo subject.
Why I decided to go public
The reason why I think so many other bloggers have felt comfortable sharing their net worth is that they want to show you that early retirement is an achievable goal and not just some pie in the sky idea that you can only dream about.
It also helps to highlight that the wealth that you see in movies or magazines is in reality not how most people that reach financial independence actually live.
Mr 1500 days provides an awesome article over on the Rockstar Finance website that details why bloggers share their net worth so openly and my fellow bloggers sum it up far better than I could.
So for me I decided to go public for a couple of reasons.
– To keep myself accountable.
– To help me to stay motivated and see my progress over time
– To know there is an end in sight to the daily grind of my day job
What is net worth?
The simplest way to work out your net worth is to add up the value of your assets and then subtract the amount of your liabilities.
So examples of assets are things like how much any property or cars you own are worth, the size of your share/stock portfolio, how much savings you have in the bank and the value of your Superannuation (retirement savings).
Then your liabilities are those things that you owe so this can include mortgages, personal and car loans and credit cards.
If you want to start tracking your own net worth I have created a net worth tracking spreadsheet over on my Resources page.
The juicy details – my net worth figure
Total Assets – $2,818,133
This is up $86,440 from last quarter. We did not hit the jackpot or anything to get that increase in three months.
It can be attributed to me undervaluing one of our properties. I am always pretty conservative in the figure I assign based on doing some market comparisons.
It turns out that the property is actually worth $80,000 more than the figure I assigned to it back at the end of March. We know this figure is accurate because we just sold the property!
It had been a heart rather than head purchase off a family member back in 2011. For a long time the property value stayed the same and it was only costing us a little bit each month to hold it. So we kept it ticking along.
As it is an older property, we have always been worried about something major going wrong. Such as the wiring all needing to be done, or a major plumbing issue. If this was to happen it would cost more than the years rent to pay for.
So when we had some real estate agents value the property it was a no brainer for us to sell.
As I mentioned back in March our portfolio is very heavily skewed in property. So we are looking at getting a bit more of a balance going forward.
Our principal place of residence is included in this assets figure. Some people choose not to add it.
However the reason we include it is that the place we live is also an investment property. It is dual income so we live upstairs and we rent out downstairs to tenants so it doesn’t make sense for us to exclude it altogether.
In the past month or so the tenants have moved out. So we are currently assessing what our next move will be. So stay tuned for a big announcement coming soon.
Total Liabilities – $1,576,766
Our liabilities are a lot. It’s a pretty scary figure to be honest.
However the bulk of the debt is in our home and investment loans. We don’t have any personal loans.
We are carrying a bit of a balance on our credit card following our recent trip to Hawaii. Since the trip was for a once in a lifetime event we do not regret having spent the money on travel.
But it is something that causes me stress so we will look to get the balance back to zero ASAP.
So that leads us to the all important number.
NET WORTH – $1,241,367
A lot of our net worth has come down to making some smart decisions in terms of the properties we purchased.
The prices in Sydney have gone nuts recently so that is a lot to do with it. But we made some large sacrifices to make the purchases we did. And we chose dual income properties to help make it easier to hold the properties.
If we had that net worth and no liabilities it would be a pretty sweet position to be in and I could be joining the early retirees as I type this. We could sell everything, live in a camper van and retire tomorrow.
But since we have two young daughters we would prefer to have a family home for them. We are debating over a few ideas now as to what our next move will be in terms of us reaching our retirement goal by 2025.
The only way we will be able to achieve this goal is if we are able to invest more money or put my money into paying down our loans. To do this we need to increase our cash flow.
The low down on cash flow
The fundamentals of good money management is that you spend less than you earn, and this forms the basic premise behind cash flow. Basically cash flow is ensuring that the inflow of money you have coming into your account is able to cover what is flowing out of your account. In an ideal world, after the outflow of expenses.
The reason I chose to include cash flow in my quarterly update is because whilst the net worth figure above creates a pretty picture of where we sit at a high level, cash flow gives a better view of the day to day money management, and it is what I need to have more focus on.
This past quarter we are still finding our way being a one income family so we again spent more than we earned this quarter.
We switched our shopping back to Aldi, where I used to go all the time. But we still ate more take away than we should have.
Having our tenants downstairs move out and investment loan interest rates going up, didn’t help. But on the positive side of things, I did pick up a few freelance writing jobs. Which brought in additional income but aren’t paid until July so they will be included in next quarter’s results.
To be honest food is really the only area where we overspent. Most of our costs are for our mortgages and child care which we have little ability to reduce further. I have accessed the Spending Hacker electricity savings guide to see if we can chip away a few extra dollars off our energy bill.
Kick Starting Some Goals
Unfortunately last quarter’s goals were not met. Our two week holiday in Hawaii, put a strain on the cash flow.
It also meant that I was not able to maintain the 2 blogs a week standard I had set for myself. I have been a bit hard on myself in not achieving this, so for now if I can get out 6 blogs a month I will be pretty happy with that.
I would rather focus on quality over quantity.
I also did not get in the exercise I had planned. Putting in a lot of hours on the blog, as well as picking up some freelance writing jobs have taken up a lot of time.
So for this quarter I am just going to set myself one major goal. To create and send live my marketing and copywriting website.
My aim is to be able to replace my full time wage with freelance work. As this will give me the flexibility to work around my family more.
How are you tracking?
So there you have it. All the juicy details to show that whilst a high net worth might look attractive, we actually struggle more to manage our cash flow than when we were starting out.
Adding two kids in the mix, and reducing to one income has meant we need to adjust the sails. We need to determine where we want to go to next to help us reach our 2025 retirement target.