Happy early Fourth of July to anyone reading in the United States! It’s time for my June net worth update, and I was hoping for a good one even with some high spending this month. I recently returned from vacation, but did have a few targets in mind for where I wanted to be financially. It also helped that I found an error (in my favor) when calculating my net worth, which gives me an artificial boost for this month. Spending was high, but the results from that won’t really show up until July at this point. I also did some gift card buying and selling. That temporarily inflates my spending numbers, but should average out over time when I “spend” the money that I already have.
Here is my net worth for June 2017:
Huge increase for the month, right? Don’t get too excited! I had actually forgot about the extra money that I had allocated from my paycheck to go into my TD Bank account last month, so it looked worse because my main checking account still had all those payments. So there was a missing $2500 from last month’s calculations (whoops). I didn’t actually find a large sum of money hidden underneath the sofa. Even if you don’t include that, it was still a great month for building up money within the checking account.
Savings account includes two automatic transfers and the minimal amount of interest that I receive. All of my market accounts grew this past month, whether it was from contributions, market growth, or a combination of both. Always nice to see everything on the positive side of things.
And while the increases were huge this month, I expect that to balance out next month. I have a very large credit card bill incoming thanks to a vacation in June, so I’d expect my checking account to either stay flat or take a small dip. If the market continues at the current rate, I’m thinking that I should be able to hit a six figure net worth though!
Next step is to increase the 401k contribution, as my checking and savings accounts have way more money in them then required for an emergency fund. I’m continually spending less than I make, and I’d rather put that money to work for me in my 401k than just sit in accounts that make 1% or less than 1% interest.
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.
$2647 average spending last 12 Months * 12 Months = $31,769 spending in a year
$98,707 net worth / $31,769 spending per year = 3.11 years worth of spending
I met my goal of hitting 3 years worth of spending for June! We’ll see how long it stays above that threshold with Summer spending making the average creep up, but it feels good that I was able to at least make that happen. I know I hit that back in February, but that was before I was using average spending to calculate – and spending in February was super low compared to the rest of the months.
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 $469 a month for 30 years which is 17.7% of my average monthly spending.