Happy New Year everyone! I hope that everyone has had financial and personal success throughout 2017, and that the trend continues into the new year. In January of 2017 I had a net worth of $85,000 which is now $128,000 for an increase of $43,000. I look at 2017 as a tremendous success for me, gaining an average of $3500 in net worth each month! A little over two years ago I was barely crossing the zero line, and now I’ve built up a substantial amount without sacrificing any of the things that I enjoy doing. As my portfolio gets larger and larger, much of the increases will be at the mercy of the market. But for 2018 I’ll set my focus on continuing to save and keeping expenses down.
Here is December’s net worth:
Big increases this past month! The huge increase in my checking account this month stems from two reasons. I have a new credit card which didn’t have a payment due until January. I put the bulk of my spending on that card to hit a minimum spend bonus, so I haven’t had to make that payment yet. Expect a larger drop across checking accounts for next month’s update.
The other reason for the increase would be that I used all of my credit card cash back during the month of December, so that kept expenses much lower than they usually are. It’s a tradition of mine to use all of those bonuses then, kind of like giving myself a Christmas bonus.
The rest of my accounts continued to see increases across the board, with the market trending in the right direction. I also received my final employer contribution into my HSA account and continue to contribution as much as possible into both my 401k and HSA. I probably won’t be able to max out my 401k, but I should be able to hit $12,000 in contributions in 2018.
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.
$2556 average spending last 12 Months * 12 Months = $30,673 spending in a year
$128,247 net worth / $30,673 spending per year = 4.18 years worth of spending
I was able to get across the four year threshold this month, and this is probably my biggest uptick since I’ve been doing these updates. Low spending and market increases will do that! The next milestone will be accumulating 5 years worth of spending, which would also mean I’m 20% towards my early retirement goal if we’re using the 25x expenses rule.
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 $610 a month for 30 years which is 23.9% of my average monthly spending.