Net Worth Update

Net Worth Update (February 2017)

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Previous update here.

Quick Summary:  I’m writing this post from my parents house where I’m making a brief visit on my way to a friend’s wedding. The view is nostalgic and familiar, fog shrouded hills and rain that seems to yearn to fall from the belly of low clouds that slink quietly by like majestic creatures of the deep. This month I really focused on cutting back expenses, reducing debt and not spending money I don’t have. Success was met on all three counts!

After a thoughtful comment from the Small Investor, I was prompted to re-assess my cash accounts vs. credit card debts and decided to pay a portion of the debt which is starting to charge interest in excess of what my savings will earn per month. The savings account I had my emergency fund in required no withdrawals for interest to be paid, but I’ve switched commencing March 1st to one that doesn’t have such a restriction, and pays 3.00% p.a. to boot. This led to a reduction in cash, credit card debt slashed by over half, a personal debt paid off ($499) and a slight reduction on my business loan.

In February I also spent a record low of $164 on eating out…The first time it fell below $250/month since posting my goal of reducing eating out expenses last year…(what are you doing man!).

The market rally that seems to be spurred by the shift in US politics led to an increase in retirement funds – alas but another blip that’s somewhat meaningless in the short term. But I’ll take a positive month over a negative one anytime.

Overall, my net-worth increased 6.77% – although still in the red I’m delighted with the month. In March I’m going to continue my focus on keeping expenses low, paying off debt (I’ve already cut credit debt to below $1000) and then channelling funds into my emergency account aka the “Fortress Fund”. Then good god, can we start investing already!

Numbers below…

Savings Rate: 4.64%

Assets:
Cash: $8,975 decreased 23.51%
Superannuation: $35,273 up 1.46%
Investments: $0 (nil holdings)
Other Assets: $11,147 down 1.20%

Total Assets: $55,395 down 4.13%

Liabilities:
Credit Cards : ($2,066)  decreased 56.64%
Student Loans: ($31,684) steady
Business Loan: ($14,750) reduced 1.67%
Other Liabilities: ($21,500) down 2.27%

Total Liabilities: ($70,000) decreased 4.69%

Net Worth: ($14,605) increased 6.77%

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Welcome signs…slight uptick in LTNW.

As always, thank you for following along!

Notes.

  1. Cash consists of online savings accounts. I moved away from carrying cash in Q1 2015 and make 95% of my transactions electronically, for more accurate and up to date record keeping. I have a small transaction account holding around a tenth of my cash funds with the balance held in an ’emergency fund’ and a smaller account for rent savings/payments, both in modest interest bearing accounts (2-3%p.a.).
  2. Superannuation is the Government mandated retirement savings system in Australia
  3. Other Assets consists of one car at market value, depreciating monthly.
  4. Student Loans consist of the HECS/HELP debt provided by the Australian Government,  indexed to inflation. The loan repayments are based on taxable income, with repayments required from taxable incomes of $54,869p.a. or more in 2016/17.
  5. Other Liabilities consist of two loans which are interest free.

8 thoughts on “Net Worth Update (February 2017)

  1. Hi Wealth (WFT?)

    I’ve just stumbled across your blog and I’m pumped to find another Australian, I feel like we’re a rarity in the FI world.

    I’m not sure if you’ve addressed it before, but why are you carrying $9k in cash if you have $2k owing on your cards? I am assuming from the comment that your debt is costing more than the savings are earning that your CC balance is overdue?

    Also, welcome to 3% savings! Is that with ING? If so you’re going to love it – I’ve bounced banks for years chasing the best rates and since being with ING I’m consistently thrilled with their rates and services. Plus their marketing techniques are super friendly, and they have been offering sign up bonuses for you and a friend for years, loving it!

    1. Hey LadyFire, thanks for stopping by – my credit cards aren’t overdue (thank god!) but the interest free period slipped out on one of them (55 days) so I paid it out. Currently I don’t have any credit card debt that’s being charged interest, but because these updates are made at the end of the month and I pay my CC on the 1st of each month, there is always some CC debt in the net worth updates (quirky, I know!).

      As for the 3.00% interest it is with ING. I’m a moderate fan of ING and will take the 3% interest any day, but I’m certainly not tied to them. I think they used to be much better (2% cash back on Paywave purchases was great, and a shame to see it go). Pays (literally) to shop around.

      Hope to see you around again 🙂

      1. That 2% was wonderful. I’m mostly sold because they pay all the ATM fees, and I’ve made $300+ from referral bonuses! Until someone else can match that I’ve got no reason to go anywhere 🙂

        Glad your CC’s aren’t overdue! They’re such a pain to include in the updates aren’t they? My spending and saving never match up because of the Credit Card interest free periods, so I’ve started including balance owing, but I still think they throw all the numbers off in a confusing way.

        I look forward to your next update! Enjoy the vacation

  2. So how much free cash flow do you have to attack that debt? Could you pay off enough to have a positive net worth within a year? If not, are there cuts that could be made or ways to up your income?

    1. I think a positive net worth in a year is absolutely achievable. At the moment my FCF is borderline – I can pay out my expenses and save a little each month, the upside going forward is that my main source of income has room to increase 2-3 fold once I get more busy at work.

      In the mean time, I’m working to reduce my discretionary spends (eating out, alcohol, entertainment, travel). Hopefully I can learn to live with a lower expenditure and really ramp up my savings rate once work gets going – only travel is likely to lure me back, but I’ll include it in any budget when that time comes. These 3 things are things to keep front of mind though – I’ve only really just started documenting my savings rate, that helps plenty.

      Thanks for stopping by SI.

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