Well that was anti-climactic. After months of market growth, March was rather flat. Regardless, we remained above the $700,000 barrier in net worth! Most of the gain was due to investment contributions.
In addition to our “normal” and automated savings, we spent all of our tax return on investments. We also received dividend payments which get automatically reinvested. As a general rule, we invest as much as we can as often as we can regardless of market performance.
April 2017 Net Worth
The table shows the balance sheet for the beginning of the month March 2017 and April 2017.
Net worth in January 2017 was $663,042.
January 2017 to April 2017 difference = $51,139! This total includes:
Increase/decrease in home equity = $1,946
Investment contributions = $31,641
Earnings/losses = $17,552
Our financial savings goal for 2017 is $83,042. It includes investing the maximum to the 401k, Traditional IRA, Health Savings account and the brokerage account.
This has become a stretch goal for us due to a lower than expected raise and bonus. Regardless, I am going to continue to aim for it and possibly find some ways to generate additional income this year.
*Nearly 100% invested in low-fee index funds (VTSAX – Vanguard)
In March, we contributed to:
401k* = $2,416
Trad IRA = Fully-funded!
H-S-A* = $454
Vanguard Brokerage = $4,800
Dividends (re-invest) = $1,280
Total = $8,950
*My employer contributes a match of 10% of my base salary to the 401k and front loads my H-S-A with $1,300 every year. My contributions to these accounts are automatically deducted from my paycheck. I never even noticed it’s gone.
Our net income savings rate goal for 2017 is 70%. A high savings rate can be reached through decreased spending and/or by increasing income.
February and March tend to be our highest savings months every year due to bonuses and tax returns. In March, we realized a net income savings rate of 77%! After a rough start in January, we are now above a cumulative SR of 65%.
If we continue to keep our expenditures low, our saving rate will begin to approach the 70% range.
Savings rate on net income is calculated by Total Saved + Mortgage Principal paid divided by Total Income minus taxes and charitable giving.
NISR = Total Saved + Mortgage Principal / Total Income – (Taxes + Charitable Giving)
Our net worth minus our home equity is $450,983. These funds are held in equities and a minor amount in cash. These monies will provide us passive income during our FIRE (Financial Independence/ Retire Early) years along with income from our rental property.
We will consider FIRE when our investments and cash reserves equal $937,424, each bucket is full, and the rental property is paid off. This conservative goal allows us a safe withdrawal rate of 3.5% assuming we need $32,800 investment income per year. We will also have an annual profit of $7,200 from the rental property bringing our allowable annual retirement spending to $40,000.
We aim to live off of $35,000 or less in retirement so this FI goal should allow flexibility.