Since this is the first time I’m posting our net worth, I’m including every quarter since we combined finances and came up with our common goals.
As of the close of Q1 2016, our net worth is $-38,735.42.
On the plus side, this number does provide material so we have something to cry ourselves to sleep with each night.
On a real plus side, our net worth was $-97,172.34 only 18 months ago.
This rapid rate of building wealth is part of the reason why learning about personal finance is sexy.
Seeing as how this is my first Net Worth post, I will clarify a few items and offer up some additional details below.
These are my guidelines and they reflect my views on tracking my net worth.
My definition for a savings rate: contributions to investments, payments of debt & cash used to build our cash buffers. I do not include interest paid on student loans.
As I prepared this post I realized my excel file doesn’t itemize the interest paid on our student loans. This means our savings is overstated in each quarter of 2015 by a total of $11,423.08 due to my girlfriends’ student loans coming out of forbearance.
Forbearance – the real F word – is a temporary status during which a borrower is allowed to reduce or forego making regular payments without damaging their credit. That sounds like a nice break, but the catch is that interest continues to accrue. Our particular situation resulted in one student loan being in forbearance for six months and another for a full year.
Obviously this was a time when we were having our asses handed to us and it took a while to get our situation figured out.
Our 2015 savings rate ended up being 23.5% post tax. The quarterly numbers in the chart reflect higher numbers as they include interest as I mentioned above.
Our goal for 2016 is to hit a post-tax savings rate of 50%.
The most critical number I review each quarter is not the increase/decrease of net worth, but our ‘savings rate’. The savings rate is within my control whereas the value of my equity portfolio is determined by factors outside of my control.
That is basically a wrap for Q1 2016. I’ll be sure to post up a similar summary for the 1st quarter of my blog soon – hint: revenue = $0 :’(
Additional guidelines/details for anyone who is still reading at this point:
My First Guideline is that I am in a committed relationship with my girlfriend. This means ‘my net worth’ and ‘her net worth’ have been combined to form “Our Net Worth”. This is the only number most reflective of our journey to financial independence, so I will refer to our net worth in all future posts.
Being in a committed relationship where you can trust your partner with financials gives us room for money saving opportunities. One example from this last quarter: I paid the majority of the credit card bills while my girlfriend focused on finalizing her 2015 IRA contributions. Our teamwork led to a tax savings of $1,437.50. +1 for taxes!
Second guideline for me is Don’t Forget Guideline Number 1. It might be tempting to view my financial situation and be proud of the accomplishment of being at net worth positive, but this is a distracting fact. My girlfriend and I are in this together for the long haul, so it would be foolish to isolate our individual circumstances.
My Third Guideline is to stay respectful of the process and to enjoy it. Financial Independence involves going through phases and it is always helpful to remember that we do what we can, but no one is perfect.
As such, we will have holes in our budget that we will work to patch up, but they shouldn’t cause us too much stress.
As long as we keep at it with the big stuff, then we shouldn’t sweat the small stuff.
I know that is easier said than done. Still gonna say it.
One final note about our only major purchase recap from Q1: 5.6k Hawaii Trip
We celebrated our 2nd anniversary — of dating, not marriage…yet 🙂 — with a trip to Hawaii. We found ways to save money via large items such as AirBnb and finding ways to utilize credit card points. We even found a few frugal opportunities to save while we traveled back home.
Altogether, with airfare and lodging included, our 16 day Hawaii trip came out to ~$350 per day for a total cost of ~$5,600.
This might seem like a lot of money, but we planned far in advance for this expensive trip and we saved enough of our money to never feel guilty about enjoying our time.
*N/A = I did not have the prior quarter numbers to compare the increase/decrease in my cash buffer and so I couldn’t calculate the total savings rate. I didn’t bother tracking income since the savings rate information was missing.