Sunday, December 30, 2012

Self analysis 2012

In January I posted my financial goals for 2012It is time to review these goals and see how I did. For each goal I have given myself a grade from A to F.

  • Goal 1: "I earn $75,000 in 2012". This goal was about income before taxes (the tax rate for high income earners is about 30 percent in Norway). I ended up earning $96,412 before taxes and $72,023 after taxes. The success factor here was working overtime and receiving tax money from last year back from the government. Grade A. 
  • Goal 2:  "I save more than 60 percent of my net income in 2012." I ended up saving 63,2 percent of my net income. The savings rate could have been even higher if had not bought a car last year. Grade B.
  • Goal 3: " I have a net worth of more than $30,000 by July 2012." I reached $30,000 in March, and in July my net worth was $34,375. Grade A.
  • Goal 4:  "I have a net worth of more than $50,000 by December 2012."  I reached $50,000 in October and also passed $60,000 before the year ended. Grade A. 

I accomplished 4 out of 4 goals, and ended up with the grades A, B, A, A. Earnings were great, and my net worth could have been even higher if I had kept the expenses down. I will soon post my financial goals for 2013.

Thursday, December 13, 2012

December 2012: $61,148 (+$6,869)

Bank accounts$27,776
Investment account$77,730
Pension savings$5,796
Student loan$–50,154
Net worth$61,148
Burn rate2,47 years
Savings rate63,2 %
Millionaire month   October 2027

No major expenses and a good month in the stock market. I have increased my net worth with more than $40,000 in the calendar year 2012. I will write a separate post about later how it went with my financial goals for 2012. I am also working on my financial goals for 2013.

Wednesday, November 21, 2012

Best and worst months so far

Below is a list of the 5 best and worst months since I started posting my net worth in this blog in October 2010. The only negative month was June 2012, when I bought a car.

Best 5 months:
  1. September 2012: +$8,561
  2. February 2012: +$6,002
  3. November 2012: +$5,946
  4. September 2011:  +$5,222
  5. April 2012:  +$4,998
Worst 5 months:
  1. June 2012: $5,240
  2. May 2011:  +$9
  3. June 2011:  +$47
  4. February 2011:  +$649
  5. November 2010:  +$654

Thursday, November 15, 2012

November 2012: $54,279 (+$5,946)

Bank accounts$24,669
Investment account$74,863
Pension savings$4,901
Student loan$–50,154
Net worth$54,279
Burn rate2,18 years
Savings rate63,2 %
Millionaire monthNovember 2028

I have now passed a net worth of $50,000, which was my main goal for 2012.

Saturday, October 13, 2012

October 2012: $48,334 (+$4,257)

Bank accounts$21,155
Investment account$72,914
Pension savings$4,276
Student loan$–50,038
Net worth$48,334
Burn rate1,98 years
Savings rate61,0 %
Millionaire month    June 2028

Friday, September 14, 2012

September 2012: $44,077 (+$8,561)

Bank accounts$19,194
Investment account$71,349
Pension savings$3,572
Student loan$–50,038
Net worth$44,077
Burn rate1,65 years
Savings rate58,8 %
Millionaire month    May 2028

A large increase in net worth because I received holiday pay from my previous job in advance.

Saturday, August 11, 2012

August 2012: $35,516 (+$1,140)

Bank accounts$19,178
Investment account$62,824
Pension savings$3,551
Student loan$–50,038
Net worth$35,516
Burn rate1,37 years
Savings rate57,7 %
Millionaire month    May 2028

No special events last month. Notice that I have added 2 new categories to these monthly updates.

Monday, July 30, 2012

New net worth update categories

From the next month I will add two new categories to my monthly net worth updates: "Personal savings rate" and "Millionaire month". I have tracked both these for a couple of years for myself already. They are objective and measurable benchmarks that will hopefully help me to reach my goal of financial independence faster:

Personal savings rate:
This should be a familiar expression for the average reader of this blog, but let me define it precisely: Savings rate = Money saved / Net income from all sources. To avoid large short-term flutuations I will use the sum of the last 12 months' total savings and net income to calculate it. My current savings rate is 58 percent, and the long term goal is to keep it between 60 and 75 percent. The household savings rate, according to OECD, varies greatly from country to country. For instance in 2011 it was 8.0 in Norway (my home country), 4.6 in USA and 11.0 in Germany. Some countries even have a negative savings rate. How early you can retire is closely related to your savings rate, as described in this excellent blog post from Mr. Money Mustache.

"Millionaire month":
This is a realistic and conservative estimate (not a goal) of which month I will reach a net worth of $1,000,000. It is based on my current assets and liabilities, expected future earnings and expected return of my savings (based on previous returns). I track my net worth in a very complex and detailed spreadsheet with one row for each month up to age 75. In this spreadsheet I can any time see which month I expect to become a dollar millionaire. If I insert new numbers for future earnings, interest rates, consumption etc., the millionaire month will change at once. My current millionaire month is July 2028. This means that I am now "on track" to becoming a dollar millionaire in 2028. This estimation will likely become more accurate the closer I come to reaching millionaire status.

What is your savings rate and "Millionaire month"?

Thursday, July 12, 2012

July 2012: $34,375 (+$2,488)

Bank accounts$20,163
Mutual funds$61,173
Pension savings$3,538
Student loan$–50,499
Net worth$34,375
Burn rate1,34 years

Nothing special last month. I had some large bills to pay, therefore only a modest increase in net worth.

Tuesday, June 12, 2012

June 2012: $31,888 (–$5,250)

Bank accounts$20,605
Mutual funds$58,256
Pension savings$3,525
Student loan$–50,499
Net worth$31,888
Burn rate1,19 years

As I have planned for the last 18 months I bought a car last month, therefore the large decrease in net worth, making it the first negative month since May 2010. Allthough the car was bought with cash, I look at it more as a liability than an asset, so I will not include it in my net worth estimate. For the same reasons I don't include any personal belongings in my net worth (furniture, clothes, TV, computer etc.).

Sunday, May 13, 2012

May 2012: $37,138 (+$1,727)

Bank accounts$28,997
Mutual funds$54,967
Pension savings$3,672
Student loan$–50,499
Net worth$37,138
Burn rate2,18 years

Another month with very little spending. My index funds are down a few percent since last month, so the net worth increase is only $1,727. The goal of reaching $50,000 by December 2012 is still within reach.

Saturday, April 28, 2012

April 2012: $35,410 (+$4,998)

Bank accounts$26,050
Mutual funds$56,439
Pension savings$3,777
Student loan$–50,856
Net worth$35,410
Burn rate2,35 years

Monday, March 12, 2012

March 2012: $30,412 (+$2,535)

Bank accounts$20,970
Mutual funds$56,509
Pension savings$3,788
Student loan$–50,856
Net worth$30,412
Burn rate1,71 years

$2,500 net worth increase and a solid month, passing the $30,000 mark. There are some large expenses in my budget the next 4-6 months, but my goal is still to increase my net worth every month, and to reach $50,000 by the end of 2012.

Sunday, February 12, 2012

February 2012: $27,877 (+$6,002)

Bank accounts$21,406
Mutual funds$53,548
Pension savings$3,779
Student loan$–50,856
Net worth$27,877
Burn rate1,75 years

A record increase in net worth, largely because I received a $3,000 holiday pay (10 percent of last year's earnings) from my last job.

Friday, January 13, 2012

January 2012: $21,875 (+$4,154)

Bank accounts$20,273
Mutual funds$48,700
Pension savings$3,757
Student loan$–50,856
Net worth$21,875
Burn rate1,59 years

Another good month, although I had some large expenses (including paying for a holiday trip). Next month I will start paying down my student loan. It is a $51,000 loan with a fixed 3.36 % interest. The payments will be $900/quarter = $300/month. Slightly more than half of this will be principal payments.

Sunday, January 1, 2012

Financial goals for 2012

Happy new year! Here are my financial goals for 2012:
  1. I earn $75,000 in 2012.
  2. I save more than 60 percent of my net income in 2012.
  3. I have a net worth of more than $30,000 by July 2012.
  4. I have a net worth of more than $50,000 by December 2012.