theFIREstarter

Hellooooo and welcome to part (ii) of my 2015 yearly financial review. In case you missed the “more thrilling than bungee jumping” ¹ part (i) where we looked in depth at expenses throughout the year, you can go back and catch up here.

Let’s jump straight into the financial treats I have in store for you, shall we?!

income

I think we did well on the income front this year, but similar to the expenses report, unfortunately I don’t have the full figures for 2014 to compare it to. Sure, I could just look at our pay packets for the year and do quick and dirty comparison, but there is so much extra income that we don’t usually even think about that gets added onto our basic salary it would be a pretty pointless comparison IMO. So we’ll have to wait till 2017 for the first full YOY figures!

The headline figure is that we pulled in £71,265.41 of income between the two of us (after tax). That seems like an awful lot of money but we still managed to spend just over half of it! 🙂

Here’s how the income breaks down with some notes:

1. This is my share save “income”. It’s broken down into a separate category because it automatically came out of my pay packet and never hit my bank account, but it was obviously still income. The scheme stopped in February so there was only 2 months of £250 each.
2. This is Mrs T’s share save, a full years worth of £250 per month. The share price of her company is now lower than the price she is allowed to buy at. As evidenced in my post on it here the price was £4.46 and the shares are now trading at below £4!!! I think the best move is to pull the money out ASAP and put it into index trackers instead. That’s the great thing about Share save schemes, you have lot’s of options and can’t really ever lose!
3. This is my primary income after tax and other deductions (I deduct my train ticket and don’t include that in spending, because that is something that is inherently tied to my job and an expense I won’t pay as soon as I give that job up!)
4. Mrs T’s primary income after tax and other deductions (i.e. Sharesave scheme)
5. Some nice interest from TSB bank accounts that pay 5% on balances up to £2K
6. Some nice interest from Santander 123 accounts that pay 3% on balances up to £20K
7. Cashback from the 123 account. This used to just about cover the £2 monthly charge, but it’s going (gone?) up to £5 per month now, but with the decent interest rate I think we’ll stick with it for now.
8. A decent amount back from our Cashback credit cards! We use the American Express platinum plus (1.25% cashback) and where that is not accepted we use a Barclaycard Visa one that gives 0.5%
9. Wahey! Solar panels, I love thee!
10. Quite embarrassing the amount of money we’ve been gifted this year, but the large majority of it was really for TFS Junior 🙂
11. eBay sales! Always good to claim some money back from old unwanted crap.
12. The majority of this was from a deposit we paid for an Air Source Heat Pump that we then backed out of, which was a smart move looking back on it.
13. Investment income is not gains or losses on paper or even dividends paid -I don’t think it’s worth including any of that as the only stocks I hold are wrapped in an ISA and SIPP so there is no chance of me ever using them (yet) for buying stuff. No, this was actually the profit I made when I sold my share save scheme shares in September. A cushty little gain ²!
14. If you don’t do your online shopping through TopCashback yet then you’ve either been under a rock for the last year when I’ve been banging on about it so much, or you are none other than the ermine 😉 ?
15. “Other” 😉 – This is mainly gambling winnings which has been acquired by a nice big win on the golf plus a bit of matched betting activity, which I am going to look into further this year as I heard there are some people making decent money on it. Yes, I’m looking at you TheMiniMillionaire!
16. Over five “bags of sand” ³ given back to me from the tax man, what’s not to like here!?!
17. So around £65K in non pension related income (although I guess you could say the SIPP tax rebates are just that). Not too shabby.
18. Pensions: I think this goes to show that even just maximising your employer match (if available) gives you a really nice income boost. It’s like free money people!!!! JFDI!!!
19. There we have it. The grand total!

other points of interest

• Our lowest month income was December with £3,890, with the second lowest October with £3,958. This makes sense as I went part time in September and took a 33% pay cut. However…
• Average income for the full time January-August, which included my big bonus payment, was £5,417, yet the September-December part time period was only a shade less at £5,397! I would have bitten your hand off if you would’ve offered me that at the start of the year! This will very likely not continue into 2016 but I’ll see what I can do 😉
• The highest income month was, unsurprisingly, July when I got my bonus paid, with a whopping £10,288. At least I didn’t spend it on paying off a credit card or buying a 100″ 8K 4D 1mm flat screen TV with compliments mode built in, though.
• The average monthly income over the whole year was £5,410

always be hustlin’

This is all very interesting, however I think the most interesting statistic by far is how much income we generated by activities that are not directly due to our main salaried income:

Main salaried income: £52,810

Income from other activities: £12,119.27!!!!

All figures in the above two sections are not including pensions by the way

This is pretty crazy! OK, so it includes nearly £2.5K profit from my share shave scheme, and £5K worth of SIPP tax rebates but these were things that I decided to do with my disposable cash rather than spend it on expensive ways of entertaining myself and new gadgets. It also includes many other small forms of hustle that we already know about, and it shows they all add up, as I wrote about here. This also made me think of the standard spendthrift consumer, who despite little effort on the hustling front probably also pulls in extra income throughout the year, even if that is just from gift cards at birthday and christmas time. If you asked someone living paycheque to paycheque how much they spent each year they would probably estimate whatever their after tax salary was, but I bet it turns out that they actually spend a fair bit (5-10%) more than that due to small extra income throughout the year that gets unaccounted for! Yet another good reason to track it all and keep a record.

I think that’s more than enough on my thoughts on income for the day, let’s move on!

net worth and savings rate

You can see our full year break down of net worth and savings rate figures here but for the click through shy here are the headline figures:

• Net worth Jan 1st 2015: £68,703
• Net worth Dec 31st 2015: £98,147
• Net worth increase 2015: £29,444 (+42.86%)
• Net worth inc. house equity Jan 1st 2015: £135,515
• Net worth inc. house equity Dec 31st 2015: £169,161
• Net worth inc. house equity increase 2015: £33,646 (+19.89%)

Our best month was July with an £8,717 (+10.9%) increase and the worst was August (hah!) with a £913 (-1.03%) decrease!

Our headline savings rate was 48.37% which was just shy of the magical unicorn that is 50% but I’d have taken that for sure at the start of the year. Our best month, surprisingly, was September with 69.8% (you’d bet it would’ve been July given the data above) and the worst was unsurprisingly December with 14.88%

I’ll be honest and say if we get anywhere near 48% in 2016 I will be over the moon. I am thinking maybe aiming for 45% as a stretch target but I will do a budget and some other workings out rather than just sticking my finger in the air and declaring a figure, so watch this space!

It is interesting to see that our NW has only gone up by just shy of £30K despite us saving, according to the income/expenses discrepancy, £34,472. This would leave me to believe that our investments have lost about £5K this year, which could well be the case!

It’s probably also worth noting two other potential sources of inaccuracy which are: 1) The January starting figure was a bit of a backwards extrapolation (that’s just a fancy way of saying it was a guess 🙂 ) and 2) Despite Mrs T saving £127 per month into her pension I have kept this at a level of £3,000 throughout the year on the investments sheet. This is because she needs to merge an old pension into the new one and I would rather not overestimate it, for now. However with the recent drop in the markets I bet that’s not too far off the truth anyway!

I think I’m going to break out the investments review into another part. Yes part (iii)!!! Just to keep you lot on a bit of a cliff hanger over the weekend 🙂 – How cruel is that!? It will give me time and space to give it the proper justice rather than just tagging it onto the end of this post, so everyone’s a winner in the long term. I hope you don’t mind 😉

looking forward to 2016

It’s going to be hard setting any financial targets for 2016 because everything financial will be up in the air:

• I’m still part time at work, will I find time (or motivation!) to find extra software development work on the side?
• Alternatively will I find some other new side hustles to boost our income?!
• Mrs T will be going on maternity around the end of March. She has 6 weeks of near enough full pay but then will be on statutory maternity pay
• We will obviously have a new baby to pay for so not 100% sure of the costs of that (although 95% sure we’ll be fine)
• We will both be attempting to cut down on our elective spending as noted in the spending challenge post.

Nevertheless, it’s still worth attempting to set targets and so I’ll be rustling up a new budget and some new goals as well which I will attempt to publish before the end of the Month (Goal #1! 🙂 )

I am really looking forward to the year, there will be lot’s of exciting life changes afoot and despite financial uncertainty, it would be silly to say anything other than we are in a good place and are very lucky to be where we are.

I am sure with a couple of rational heads on our shoulders we are going to be just fine.

How did your income and savings rate go in 2015!?

Did you find any lucrative side hustles, please do let me know if you did?

Did your net worth get gazumped by the falling markets or did you manage to somehow outperform?