A Year Down The Tracks

Jul30
by TFS on July 30, 2014 at 4:49 pm
Posted In: TFS Updates

 

A Year Down the Tracks

My one year blog anniversary (or “blogoversary” as some like to call it) came and went pretty quietly a few weeks ago on the 3rd July, which probably means it’s time to take stock of what’s happened over the year. As well as the obvious areas of financial position and how much closer I am to my goal of reaching FI, I also like to focus on some more intangible areas such as “learning”, i.e. how much random shit have I read that has been deemed useful. It seems like a strange time to be doing a yearly update but I may as well pick the quasi-arbitrary date of my first ever blog post to check in each year on my progress towards my 5 year goal, because, well… what other date would I pick? 🙂

 

Financials

Let’s have a nice table to show things in the best clarity possible shall we?

 

3rd July 2013 3rd July 2014 Notes
House Value £150,000 £175,000
Mortgage £110,000 £105,000
ISA £1500 £6874
Other Savings 0 £1500 (Share save)
Cash Buffer £2500 £4000
Other Debt 0 £0
Net Worth £44,000 £82,374

 

Net Worth: Whoo hoo! Net Worth is up nearly 40 G’s?! Hopefully most of you will have instantly noticed that this isn’t really quite so great as it initially looks as the lions share of that is simply due to the housing market taking off and the value of our house (well… flat/apartment) going up.

Another thing to note in that area is that we decided to move because of that very fact; we are getting near to a completion date so watch this space for an update on that subject soon, fingers crossed! This also means that most of our excess funds have been pumped into moving costs, which is one reason why the increase in ISA funds looks pretty pathetic. The other downside of moving house is that we are saddling ourselves with approximately £80,000 more worth of debt, which is something I am not all that enthusiastic about, and will make reaching FI a lot harder. However, it is a figure we felt comfortable with, in the grand scheme of things.

We have also made some non traditional investments that will ultimately reduce our monthly spending, such as buying a more fuel efficient car. Obviously our bottom line takes a hit here initially and it’s too soon to see any sort of pay back yet in our macro financials on the Net Worth chart.

One last thing is that I haven’t bothered including mine or Mrs TFS’s work pensions in these figures because A) I haven’t got the figures to hand and B) as it automatically comes out of your paycheque, I wouldn’t really count that as a measure of our own financial performance this year.

Liquid Assets: much more important to an early retiree is how much money they have in liquid and income producing assets. Our total assets including cash only went up from £4,000 to £12,374. This equates to just 15% of our Net Worth. Not much to say here apart from it needs work, and I will also be opening a SIPP before the end of the year is out to make contributions into.

Spending: On the spending front, I have stopped doing a budget. This may sound crazy to some of you but we’re at a point where I thought we’re efficient enough with our spending, have optimised a lot of areas, and have the right philosophy when it comes to buying stuff (i.e. don’t buy it, or if you do try to get it second hand, etc…). Saying that, I think we can still improve, and I am going to tot up our 6 months spending for the first half of 2014 and do a post about this shortly. Should be interesting! I think I know where money is leaking already but it’s good to get it down in black and white for a sobering face punch from your spreadsheet, or piece of paper if you are old school 🙂 . If it looks pretty bad, I may have to start doing a monthly budget again for a while as it is all too easy to let things run away again without consistent monitoring!

Savings Rate: Because I haven’t added up spending yet, I can’t do a savings rate calculation, but it is not going to be anywhere near the 50%+ rate I am looking to achieve. For the year running from 3rd July 2013 there are some obvious reasons, namely that we got married and went on a ridiculously expensive honeymoon (Financial whoops, but totally worth it!). Both of these big ticket items, whilst being lovely and wonderful experiences, are not something we plan on repeating any time soon! We came out the other side not only without debt as most people seem to do, but with a small increase in ISA funds, which I am counting as a win. Our savings rate from January onwards is probably not much better due to sunk costs going into moving house, stamp duty, fees, and so. Que sera… there isn’t much we can do to avoid those so we’ll have to lump it.

I will recalculate our savings rate for the final 6 months of 2014 at the end of December, and I fully expect it to be ramped right up back to where we should be. Watch this space!

% Towards goal of FI: Finally the most important part… After one year out of a 5 year plan I guess I should be 20% towards my goal, but realistically I have actually gone backwards (£80,000 more of mortgage debt). Not a great start. However, my original plan was never to reach FI in the traditional sense, but to get to position of being able to quit the day job and do some part time work that I enjoyed, so being totally mortgage free is not a strict pre-requisite in this plan. However, I am clearly going to have to re-write the plan – actually just write the plan in the first place as I never got round to putting it down on paper! Anyway the bottom line is here, let’s say I am 5% towards this goal as I do have some assets in the incoming producing area, and have many systems and perhaps more importantly a philosophy firmly in place that will save us money long term and get our savings rate up. Clearly there is a lot of work to be done over the next four years though.

 

Blogging and other aspirations

I wanted to get 20,000 page views by June, the actual number was a lowly 7,048. However I am absolutely delighted with this because I have barely posted once a week over the last 2 months! It means the readers I have built up over previous posting activities have decided to stick around even though there has been a distinct lack of action, which is great (and thank you!). Obviously, I am not so happy with my posting activity and will be looking to increase back to at least 2 posts per week as soon as possible.

I only laid out my 2014 goals up to June so I need to update that for the rest of the year, re-calibrate my numbers and set some new tasks to keep me busy. I’ve learned a valuable lesson in that last time I set out too many items in each month, and I also planned them too far in advance. For example in May I’d set out a “no added sugar month” challenge, which was silly in retrospect because we had a lot of big events (Wedding, Mrs TFS 30th birthday, etc…) in May, which made it very hard to do that kind of challenge. We are both now in fact doing that challenge from the month starting 15th July, which worked out much better for us (as we go on holiday on 15th August). I know you can always argue what is the point in doing a challenge if it’s easy (believe me, it is never easy to avoid eating added sugar nowadays!!!) but you want to give yourself the best possible chance of completing these things.

So then, lesson learnt, from now on I will put in one general item or task per month to concentrate on, and then leave one slot for “other” – which can be a challenge or whatever else – determined in the weeks running up to the start of the month, so I can better fit things around what’s happening in my real life 🙂

 

Reading, Learning, Philosophy 

I was going to call this section “personal growth” but I didn’t want to sound like a pretentious w**ker, so I left it as a more meat and potatoes heading of what I think that kind of thing actually consists of.

I’ve done a lot of reading (for me), especially over the last 6 months. More than in any given year since school I would have thought. What’s more my reading subjects have changed from consumer style publications and websites to informational blogs, websites and books, or to put it in a more straightforward way, resources that are actually teaching me new and, more importantly, useful* things. So, this has also increased learning, (yay!) but again more importantly it has further shaped my philosophy on life, the world, and how we humans are currently using it. What was a year ago a well intentioned yet rather fuzzy viewpoint of the higher cause is now coming into much clearer focus after what I’ve read and learnt over the year, and now I feel I can take action and be confident in those actions. Call me a slow mover I guess but I like to get all the facts before I decide to take sides and do anything. My basic standpoint now is that I am all but convinced that things like peak oil and AGW (Anthropological Global Warming) are real and imminent, and that the general consumer lifestyle we lead today will be a thing of the past in as short a time as 20-30 years. I am also shocked at how clueless most people are (as I was about a year ago) about this, despite having environmental messages and climate change warnings rammed down our throats on a daily basis. Anyway, I won’t ramble too much here and will type up more thoughts in a separate post or two in future, but this is an overview of how the philosophy is evolving: Moving away from just saving and making money for the purpose of achieving FI (while still a primary goal) but doing it in a way that is sustainable and making sure it is in line with the outlined philosophy**

I’ve also read and learnt loads of other random stuff, about human history, and tons more about personal finance and how to save money, and a lot of the inspirations in the latter category have come from the readers of this blog who post in the comments section. So I would clearly like to say a big thank you to everyone who has read and commented over the last year.

 

THANK YOU!!!! 🙂

 

And I hope you all stick for another year to see how much we can learn, save, and get closer to FI together!

It’s amazing what can change in a year, I’ve started a blog that some people actually read, got married, and started the process of moving house. Life moves pretty fast…

I am excited for year two to see what it brings. The task of reaching FI in five four years is looking harder than ever but we might just get there, and if the general gist of the yearly update in July 2015 is anywhere near as good as this one, I will be a very happy man – although some extra zeros on the end of the investment accounts would be nice! 😉

Wishing you all a prosperous latter half of 2014.

TFS.x

 

 

 

*I’m not denying that the Daily Mail cannot teach me things, like who got killed yesterday, or who Kim Kardashian’s 14th husband is, but unless you are are police investigator or the most nutty of celeb gossip nuts, I think you’d agree that none of that information is actually that useful to you in your life, in any practical sense.

**Bonus hint: It turns out that generally, the stronger you feel about this sort of thing, the easier it is to save money anyway, as a reduction in consumption of any kind of consumer type stuff such as small plastic items all the way up the international holidays will save you money.