September 2017 Review

Well October is here (already!) so I guess it’s that time for me to write down my progress and try and justify my spending profligacy. Before that though I have some news – I’m taking January and February off work next year! Half of this is paid holiday leave which I’ve been saving up, the rest is unpaid leave – 20 days that have been approved.

Hopefully this wont impact my FIRE progress too much. In any case, I’ve been in my current work role for just over 5 years now so I feel it’s right to take a pause, step back and reset. So what am I going to be doing?

The plan is to write a book. A novel, that is. Over the last 4 years I did a 2 year part time A-Level in creative writing at Northampton College, and then a 2 year part time diploma in creative writing at Oxford Uni (the diploma is the equivalent of the second year of university). Some of my course mates are going on to do MAs in creative writing which a lot of famous authors have done. Having said that, a lot of famous authors have not done MAs, and MAs are really expensive so I wanted to try and write a book first and see how it goes before thinking about doing an MA.

Writing a story is something I’ve always wanted to do, and I have so many ideas it seems a waste to keep them to myself. It’s quite probable nothing will come of it – it’s notoriously hard to get published – but I still want to try. I don’t want to look back in 30 or 40 years time and regret not doing it.

I also plan to do some travelling, and write while I travel. Only 4 weeks or so – I’m thinking of going to Thailand as they have some of the most striking beaches and islands in the world. I plan to try and find a hammock and write my novel in a warm breeze (while everyone else at home in England is freezing their socks off – ha!). Maybe as well I’ll find some inspiration in some of the ancient Buddhist culture there.

Thailand is where one of my favourite authors and screenwriters Alex Garland wrote The Beach. He is also the writer of recent films like Ex Machina, Sunshine, and 28 Days Later. Perhaps by following in his footsteps I’ll soak up some of that ambience that inspired his work. Well, one can hope anyway.

Anyway enough about that, here are my numbers for September.

Spending:

  • Mobile phone – £19.40
  • Rent – £550  – I own my house (with a mortgage) but I pay myself rent. I don’t actually move any money around, but for the purposes of my spreadsheet and my savings rate I treat my house as though it were a rental property and I am a tenant in it.
  • Food, drinks, toiletries – £129.31
  • Eating/drinking out, takeaways – £167.02 – Quite a heavy month for going out – couple of birthdays and also I’ve been dating recently which, as a man, can be quite an expensive activity…
  • Petrol/travel – £47.41
  • Car expenses (insurance, repairs etc) – £0
  • Gym/Sports – £30 – I started doing the Park Run and working out at home each week so I’m thinking about giving up my gym membership, but… I don’t know. With winter approaching I have a feeling I’ll want the relative comfort of the gym to exercise.
  • Music/gigs/cinema – £95.70 – My Amazon Prime membership came out this month. I reckon it’s worth it. Also cinema tickets.
  • Cash Withdrawals – £117 – I still get cash out from time to time. I suppose some of this should fit into some of the above categories somehow but it’s complicated. I do try and spend on my card for most things to keep this category as low as possible.
  • Miscellaneous – £89.62 – Including a few books, and a repayment on a couple of mattresses I bought a few months back.
  • Bank charge – Negative £9.01 (ie they paid me).

Total: £1236.45

Income:

I split out my income into active and passive – passive is basically my rental income, active is everything else.

  • Salary (after pension/sharesave removed) – £2176.54
  • Pension payment – £877.50 – I put in 6%, my employer puts in 20%
  • Sharesave – £250
  • Matched betting – £0
  • Rental Income (after bills, expenses, council tax and mortgage interest removed) – £1247.08 – spent some money on a gardener this month for my rental property but then got a refund for my energy bill which almost balanced it out.

Total Active Income = £3304.04

Total Passive Income = £1247.08

My Savings Rate

This is where my approach differs to other bloggers. Most bloggers don’t appear to consider their investment income (my passive income above) the way I do. They usually just reinvest it, or they might add it to their total income.

So for most bloggers looking at my stats above they might see an income of £3304.04 and spending of £1236.45 and say, aha, your savings rate is 1-spending/income which equals 0.63, or 63%.

Other bloggers might add the active and passive income together for a total income of £4551.12 and use the same calculation above to get a savings rate of 73%.

Other bloggers might consider the mortgage repayments as an expense also (I’ve only considered the mortage interest above) but that’s a different topic altogether.

My method is to use passive income as an expense reducer. That is, my spending is £1236.45 minus £1247.08 which equals negative £10.63. As my active income is £3304.04 and my spending is negative £10.63 then my savings rate is almost exactly 100%.

Yeah I know, 100% savings rate, sounds too good to be true. See my earlier post here if you want a bit more explanation on this. Basically while it sounds great, this month didn’t include many annual expenses or major life expenses, and I don’t have kids (yet), so it doesn’t really tell the whole story. But I do think it is an accurate way of measuring the savings rate (until someone tells me otherwise).

My Net Worth Tracker

My net worth increased in September from £177,208.63 to £178,168.41, a £959.78 increase. This is based on the estimated values of my properties minus my debts (mortgage/loans etc), plus my savings, plus my investment accounts (including pension) and the total of my bank balances.

The increase this month is not amazing actually, it’s because I use Zoopla to estimate my property values and according to Zoopla my rental property reduced in value by £4k this month. (I realise Zoopla isn’t the most accurate way of measuring a property’s value but based on my rental yield I don’t think it’s too far off actually – indeed I’m probably being quite conservative in my valuations.)

Since this time last year I estimate my net worth has increased by £56,834.76. Here’s a lovely graph to show how my net worth has increased since September 2012:

New Worth September 2017

As mentioned before it’s the green line that’s the main one. I’m hoping to get to a net worth of £200k by the end of the year though it depends to a great deal on share values and house values so we’ll see.

Conclusion

Another decent month I think – a 100% savings rate is pretty good. When I look through my expenditure I can definitely see ways to trim it down so next month perhaps that’s what I’ll try to do. Having said that, next month I’m going to be booking flights and I also have a tenant moving out of my rental property so I don’t imagine the picture will look quite so rosy.

If anyone is reading this, let me know your thoughts!

As always thanks for reading,

Wephway

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