Saturday, December 31, 2011

Self analysis 2011

In January I posted my financial goals for 2011. It was a fairly simple list with only 3 goals. It is time to review my financial goals for the year and see how I did:

  • Goal 1: "I earn $60,000 per year by December 2011." I now have a yearly income of about $70,000, so I definitely reached this goal.
  • Goal 2: "I save 40 percent of my net income in 2011". I actually saved 75 percent of my net income in 2011. I did this by keeping the expenses at a minimum and continuing my "student lifestyle" after I started working full time in August.
  • Goal 3: "I have a positive net worth by December 2011". I reached a positive net worth in August 2011, 4 months before the deadline. I then made a new goal to reach $15,000 before the end of 2011, which I also accomplished.

Conclusion:
I accomplished all 3 goals. To be honest I made goals that had a high probability of success. I will post my financial goals for 2012 right after New Year's Eve. They will probably be a little more aggressive than this year's goals.

Saturday, December 17, 2011

December 2011: $17,721 (+$4,688)

Bank accounts$18,107
Mutual funds$46,723
Pension savings$3,747
Student loan$–50,856
Net worth$17,721
Burn rate1,44 years

The last net worth update this year. I have increased my net worth with more than $26,000 in the calendar year 2011I will write a separate post later about how it went with my financial goals for 2011. I will also post my financial goals for 2012 just after New Year's Eve.

Saturday, November 12, 2011

November 2011: $13,033 (+$3,496)

Bank accounts$15,263
Mutual funds$44,887
Pension savings$3,739
Student loan$–50,856
Net worth$13,033
Burn rate1,18 years

Nothing special last month. I have now reached 18 months with increasing net worth in a row. According to my burn rate, I would have survived more than one year if I stopped working today and paid down all my debts. My major long term financial goal is to reach a burn rate of 20, which is my definition of financial independence. My current estimate says that I will reach this goal in the year 2022.

Friday, October 14, 2011

October 2011: $9,537 (+$4,083)

Bank accounts$15,359
Mutual funds$43,443
Pension savings$1,590
Student loan$–50,856
Net worth$9,537
Burn rate0,81 years

I spent less than a third of my earnings last month and put the rest in my investment account. The student loan interest rate is now fixed at 3,36 % for the next 10 years. Let's hope that is a good deal. Payments will start in February 2012. Well on track to reach $15,000 by the end of 2011.

Saturday, September 17, 2011

September 2011: $5,453 (+$5,222)

Bank accounts$15,448
Mutual funds$39,271
Pension savings$1,589
Student loan$–50,856
Net worth$5,453
Burn rate0,44 years

I received the first paycheck from my new job this month (my first full time job). It feels great to finally start earning money after years of hard work at the university! I set a new goal to reach a net worth of $15,000 before the end of 2011.

Saturday, August 20, 2011

August 2011: $231 (+$2,650)

Bank accounts$16,269
Mutual funds$33,230
Pension savings$1,587
Student loan$–50,856
Net worth$231
Burn rate0,02 years

My net worth is now positive, and my major financial goal for 2011 is reached. The student loan was written down because I passed exams in June.

Saturday, July 16, 2011

July 2011: $–2,420 (+$1,202)

Bank accounts$15,750
Mutual funds$33,016
Pension savings$1,577
Student loan$–52,763
Net worth$–2,420
Burn rate–0,18 years

Spent some money on holiday, but also received about $1,000 from the government because I paid too much tax last year. Will start working full time from the next month. My net worth (and therefore also my burn rate) is still negative, but I'm finally getting close to a positive net worth now.

Thursday, July 7, 2011

Burn rate

My major long term financial goal is to become financially independent, which I define as having a net worth of more than 20 times 25 times my yearly expenses. This means that I can live comfortably from the interest of my portfolio the rest of my life. From now on I will calculate my financial burn rate every month and post it in this blog. Burn rate means how long (how many years) it would take to run out of cash if I no longer had an income, and if I first had to pay off all my debts.

(net worth)  /  (total expenses last 12 months) = burn rate

My goal is to have a burn rate of more than 20 years before I am 40 years old. At the moment my net worth is negative. Therefore my burn rate is also a negative number.

Clarifications:
  • As mentioned above, my burn rate is the time I would "survive" after all my debts first have been paid off. I could of course have "survived" a lot longer without paying off my debts first, but then I would be living on borrowed money. 
  • When I buy a house, my equity in that house will probably not be included in the calculation of my burn rate. This is because I can not live off the value of the house without selling it. Items such as cars, appliances, furniture etc. will also be held outside the equation for the same reasons. I will elaborate more on these and other details later.

Saturday, June 18, 2011

June 2011: $–3,622 (+$47)

Bank accounts
$14,376
Mutual funds
$33,153
Pension savings
$1,611
Student loan
$–52,763
Net worth
$–3,622

Again just a small increase in net worth. Mutual funds down several percent. Still about 3 months away from a positive net worth.

Saturday, May 21, 2011

May 2011: $–3,669 (+$9)

Bank accounts$14,454
Mutual funds$32,904
Pension savings$1,736
Student loan$–52,763
Net worth$–3,669

Basically a flat month, only up a symbolic $9. Had some major expenses. This means that I made it to 12 months in a row with increasing net worth. The student loan will now finally stop growing, as I received the last payment this month.

Saturday, April 16, 2011

April 2011: $–3,678 (+$2,231)

Bank accounts $15,359
Mutual funds $31,044
Pension savings $1,735
Student loan $–51,816
Net worth $–3,678

Good month in the stock market. Also used extra money from part time job to buy more mutual funds. No major expenses. Now I'm only 2 or 3 months away from a positive net worth, which is my major financial goal for 2011.

Saturday, March 19, 2011

March 2011: $–5,909 (+$2,061)

Bank accounts $16,315
Mutual funds $26,935
Pension savings $1,700
Student loan $–50,859
Net worth $–5,909

Mutual funds down a few percent. Student loan was written down because I passed exams last year.

Sunday, February 20, 2011

February 2011: $–7,970 (+$649)

Bank accounts $15,255
Mutual funds $27,457
Pension savings $1,767
Student loan $–52,448
Net worth $–7,970

Nine months in a row with increasing net worth now. Still well on track to achieve the goal of a positive net worth before the end of 2011.

Saturday, January 15, 2011

January 2011: $–8,619 (+$2,239)

Bank accounts $15,249
Mutual funds $25,827
Pension savings $1,797
Student loan $–51,491
Net worth $–8,619

Good month. Extra work, low expenses and a good stock market all contributed to a nice jump in net worth. Used extra cash to buy more mutual funds. My student loan is still growing and will do so until May this year. Norwegian student loans have a very low interest rate (currently 3,16 % floating interest), so I don't know if I will pay it back faster than planned (20 years). Saving to buy a house feels more right for me now.

Saturday, January 1, 2011

My financial goals for 2011

Happy new year! Here are my financial goals for 2011:
  1. I earn $60,000 per year by December 2011.
  2. I save 40 percent of my net income in 2011.
  3. I have a positive net worth by December 2011.