July 2013 Progress Report 4

I track both my income and expenses monthly. I started this process over two years ago to provide a better picture of my financial standing, and do this in tandem with a monthly net worth update. This process paints a fairly clear picture of my financial status and helps me identify the savings I’m adding to my net worth snowball as well as the growing interest my net worth snowball is accumulating.

July 2013 Income:

$4,191…Net Income

$  866…401k Contribution

$5,057- Total Income

July 2013 Spending

$ 325… Housing

$   24… Utilities

$ 286… Groceries

$ 152… Restaurants & Bars

$ 100 … Entertainment

$ 249… Transportation

$     0… Travel

$ 70… Cell Phone

$   0… Clothes & Shopping

$  56… Gifts

$ 33… Gym/Fitness

$ 20… Drugstore & Dr.

$1,315- Total Spending

74% Savings Rate

$311,796 ….June 2013 Net Worth

My net income remained steady as I didn’t receive any perks or bonuses this month.  The unfortunate thing is that I worked nearly every single weekend of the month for free. Oh the joys of being salaried.

This month featured higher than normal spending for my groceries category as I stocked up at Costco on staple items. Grocery spending also bumped up from hosting a couple small dinner gatherings with friends and family. The entertainment spending category was also quite a bit higher than my normal levels as it reached the $100 mark this month. $30 of this was devoted to purchasing an annual state parks access pass. This is a very worthwhile investment. For $30 I can access many beautiful hiking opportunites available in my great state. I have already paid for the pass within a month’s time if I had been paying the equivalent day pass rate instead.

I also spent $50 paying for a 1/2 day cruise around the Puget Sound with my girlfriend and family. The cost was a bit high, but the experience was enjoyable and part of my mother’s birthday celebration making it a worthwhile splurge.

On a net worth basis, July was excellent as my net worth climbed 4.4% for a $13,240 gain and month end total of $311,796. The $13k gain was my 7th greatest monthly jump in the 31 months I’ve been tracking net worth. It felt nice to climb back over the $300,000 milestone after my stock brokerage account caused my net worth to dip below that mark from the plummet in my commodity-oriented stocks in June.  The great thing is that savings only accounted for 28% of this month’s net worth jump while the other $9,500 was due to investment gains.  These occasions reinforce the importance of investing and the power of compounding interest as my portfolio’s monthly appreciation surpassed the amount of money I diligently saved while laboring through 60+ hour work weeks and long, congested, commutes. Meanwhile, my little stock and savings funds just chugged along tirelessly adding to my net worth snowball.

I am not going to rely upon or project this type of rapid portfolio appreciation every month, but it is encouraging when it happens. That being said, with the all-time stock market high levels and lack of consistent values on the stock market, I am still dialing down my stock purchases for the moment to only include Roth IRA and 401(k) purchases. The rest I am funneling into cash and Lending Club investments currently so I will be ready to pounce on stock sales with my hard-earned cash.

My net worth stands at nearly 18 times my 2012 spending levels and would require me to maintain a 5.6% withdrawal rate of my net worth to fund my current lifestyle with annual spending around $17k. 4% is considered the standard safe withdrawal rate across many personal finance circles, so I have some more ground to cover before financial independence. Based on a 4% withdrawal rate and $17,500 2012 spending, I would need to have a net worth of about $440,000 to be financially independent. I remain very excited and confident about my prospects of achieving this milestone before age 30.