I’ve just finished calculating all my expenses for the month of August, so it’s now time to publish another net worth update. This is one of my favorite things to do, as I love tracking the progress that I’m making and seeing how the numbers are doing. It doesn’t hurt that the market has been extremely friendly to investors lately, but as long as I’m making progress I’m happy with the way things are going. I hope everyone else also had a productive August, and hopefully were able to even squeeze in a vacation in there. But you’re probably reading this to see the numbers, so let’s get right into the data now!
Here’s my newest net worth after August:
I was able to make some huge progress again this month! I am really happy with the way things are going, I’ve been able to save a huge chunk of money each month. Obviously the market isn’t hurting in this case, but a large majority of the increase is due to the amount that I’m stashing away. I’ve increased my 401k contributions as I spoke about previously, as I basically want my checking and savings account situation to remain the same or even decrease a bit.
I’d rather the extra money that is sitting in there be in the market at this point, as I was being too conservative with the amount I was saving versus spending. That was causing money to just pile up in my checking and savings accounts where I basically earn nothing! Now that extra money will be going towards my new HSA account as well as the increase in my 401k. I’ll continue to tweak that as necessary based on how much I’m spending.
So let’s see how far my assets would actually take me at this point in time. I’m going to calculate that using my average spending over the last 12 months. I’ll then multiply that by 12 months to get the total spending for the year, and then divide my total net worth by that amount. That’s how long I’d be able to live off my savings at that point in time.
$2698 average spending last 12 Months * 12 Months = $32,377 spending in a year
$106,331 net worth / $32,377 spending per year = 3.28 years worth of spending
Lower spending last month contributed to the highest number I’ve ever recorded here, beating out February 2017. I went on vacation last month, so even though it wasn’t an expensive one – expenses could have actually been even lower! I’m hoping that I can bring that average spending down a little bit more this month, but that may be more difficult with the extremely high gas prices. We’ll see though, as prior to this I had some higher than normal spending.
I also thought it would be cool to see the opposite, how much would I be able to withdraw each month? I set the rate of return at 4% as a conservative guess, and the retirement time period would be for 30 years. I’d be able to withdraw $506 a month for 30 years which is 18.8% of my average monthly spending.
It looks like my challenge of being able to cover 20% of expenses by the end of the year is on track to happen. Even with a conservative net worth increase and my spending staying at the same level, it looks like I’ll be able to do that by November.
Image Source: Me