June 2018 Review

This post is a bit late this month, the World Cup has taken over my life somewhat, and that along with a slightly shameful fascination with Love Island has meant I have had precious few evenings or weekends to find time to write. I’ve been considering buying a waistcoat as well, but I can’t think why.

I had a relatively quiet June all things considered – after the beer festival at the start of the month I decided I needed a bit of a break from alcohol and didn’t have another drink until the very end of the month. Even so, I’ve been out and eaten out a lot again this month, partly because of the football, partly down to the fact there are so many good restaurants around, partly because it’s nice just to get out of the house while the weather is so good.

I took my girlfriend down to meet the family for the first time – I think she enjoyed herself, my family are a pretty laid back bunch really. My young nephew is growing up fast, at just over a year he’s pretty much able to walk, and my sister announced she will be having another baby early next year so that’s exciting. I feel like I’m letting the side down a little bit though (!)

On the work front things are going better – I’ve had a lot of praise from the management about my handling of some major projects this year so I could be in line for a decent bonus at the start of next year. I presented in front of about 70 people last week and all in all the feedback was positive.

Financially speaking I had a relatively good month, the main thing that let me down was the amount of eating out and takeaways we had. I also paid £166 for a couple of nights stay at a hotel for my friend’s wedding in August, and I paid about £150 in advance of a festival I’m going to in July. Anyway, here’s the breakdown:

Spending and Income Breakdown for June 2018:

Spending:

  • Mobile phone – £5. This was actually £10 but I got £5 back through my bank account.
  • Imputed 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 – £148.32
  • Eating/drinking out, takeaways – £248.78
  • Petrol/travel – £210.14 – Probably spent about double this month because of the trip down to see my family.
  • Car expenses (insurance, repairs etc) – £0
  • Gym/Sports – £30
  • Music/gigs/cinema – £17.76
  • Cash Withdrawals – £160.00 – £100 of this was a cashless top up in advance of a festival I’m going to in July.
  • Miscellaneous – £269.50 – Mostly hotel costs for next month.
  • Bank charge – Negative £9.85 (ie they paid me).

Total: £1629.65

Again, too much eating/drinking out. Still, I did see quite a funny video which made me think maybe I should be enjoying my freedom before I (hopefully) one day have children:

People with no kids don’t know

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) – £2289.50
  • Pension payment – £899.13 – 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) – £1163.80.

Total Active Income = £3438.63

Total Passive Income = £1163.80

My Savings Rate

I work out my savings rate by using passive income as an expense reducer. So in this case my spending is £1629.65 minus £1163.80 which equals £465.85. As my active income is £3438.63 and my spending is £465.85 that makes my savings rate 86.45%.

See my earlier post here if you want a bit more explanation on this. I do think it is an accurate way of measuring the savings rate (until someone tells me otherwise).

This year I’ve started doing a graph of my savings rate from month to month and for the year to date. Here you go:

srjun2018

My savings rate for the year is currently sitting at 72.2% which I’m happy with but there are still some big expenses to come this year, including self assessment income tax so I’m not counting my chickens just yet.

My Net Worth Tracker

My net worth increased in June from £214,630.60 to £219,835.01, a £5204.41 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.

About £3k of this increase is thanks to me saving my income (well, not spending it all is perhaps a better way of putting it) and the other £2.2k is thanks to the value of my pension and my properties increasing in value (according to Zoopla).

(I say this every time – 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 I’m probably being quite conservative in my valuations.)

Since this time last year I estimate my net worth has increased by £49,227.25. Here’s a lovely graph to show how my net worth has increased since September 2012:

nwjun18

Interestingly, this year, most of my net worth increase has come from saving as opposed to the value of my assets increasing. I had a look back over previous years and this is what I found:

Year Saving Hard Investing Wisely (ie asset value increases)
2012            5,157.91                                –
2013            3,891.52                 17,600.00
2014          16,585.21                 18,281.00
2015          23,172.99                 21,619.00
2016          14,706.71                 26,500.00
2017          21,115.92                 30,730.91
2018 (so far)          16,051.10                   4,422.35

So I’m reasonably pleased with my savings for 2018 so far – if I was to repeat that in the second half of the year that would be awesome, but in terms of my investments things have stagnated somewhat. That’s perhaps not surprising given most of my net worth is tied up in property and property values have languished this year. I’ll just have to wait and see what happens I guess.

It is good to see the numbers creeping up but it all feels a bit abstract sometimes – I can look at my pension and think that looks good, but what does it actually mean if I can’t access any of that until I’m 60+? Or if I was to sell both houses now I’d pay a lot in costs (estate agents, solicitors, capital gains tax), so is my net worth really as high as the headline figure? I suppose I can look at the rental income I receive as a more tangible figure, but even that seems quite fragile and variable month to month – if half my tenants moved out next month I’d be making a loss each month.

Sometimes I look at my finances and think things are going great, other times I look and think I have a really long way to go still. When I started this journey I had a pie-in-the-sky figure of £1m as a target net worth, a little like RIT (though he increased his target when he got closer to the date and worked a couple of extra years on top of that to be sure). I hope that things will snowball in time, but there are still many years to go. Put it this way, I’m not going to be quitting the job anytime soon.

Oh, also, poor Germany hey? If only there was a word, a German word perhaps, to describe how I feel about the Germans going out of the World Cup at the group stage 😉

Thanks for reading,

Wephway

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4 thoughts on “June 2018 Review

  1. Hello! Enjoyed the update, I haven’t really read yours in detail before and was fascinated by the idea of backing out imputed rent as an expense (and presumably including it somewhere else as an income?)

    Going to dive into your archives to discover your thinking on this! 🙂

    Like

    1. Hey Investor, thanks for visiting! Yes I spent some time mulling over savings rates, mortgages, imputed rent and so on, I must have spent countless hours reconfiguring my spreadsheets to try and make sense of it all. Actually it was only my second ever post that I went into more detail on it, this one here (feels like a long time ago now!):

      https://deliberatelivinguk.wordpress.com/2017/07/03/savings-rates-your-mortgage-and-passive-income-a-new-way-of-thinking/

      Basically I concluded two things, firstly that active income and passive income should be separated and passive income should be seen as an expense reducer – that is, if your passive income covers all your expenses then you are technically FI (maybe not comfortably FI but that’s a different matter). And secondly I decided to start treating my house as though it were a rental property – I already have a rental property and a spreadsheet set up for it so I just replicated that. And so I look at my house as though it were a business, with revenue (ie rent) and costs (insurance, tax, mortgage interest, utilities etc), and the difference is my passive income. A bit like getting dividends from shares I suppose. I consider the repayment part of the mortgage separately – I see that as a saving, that is, I’m investing in further equity in the property. It probably all sounds a bit convoluted but it made sense to me. I’d love to hear your thoughts on it!

      Like

  2. Bit late to the party (as usual) but was nice to reminisce on the great month that was June this year> World cup and amazing weather… what more could we ask for!

    I am a parent and although much of what MM says in that routine rings very true, I still very much find the time to watch the football and have a few beers every now and again, so don’t let that sort of stuff put you off! I think striving for FI and therefore more time in your life in general, should make it easier when the kids come along.

    I mean I only started on my FI “journey” about 3 years before having a kid and I’m already enjoying the benefits of having way more time with the kid than any other father I personally know… which is pretty incredible when you think about it, how powerful this initial FI idea and all that follows (e.g. lifestyle design, efficient living and so on) actually is.

    Having said that… you are right to enjoy the absolute freedom while you can. Get as much “living” out of your system as you can because then when the rugrats come along you will have absolutely no regrets. You still do plenty of “living” as a parent but it is in the main a very much different style of living. Some might say it’s better, some worse, I say it’s all great just different that’s it!

    Good work with the job stuff, sounds like you are smashing it and I hope you are rewarded with a nice phat bonus!

    Like

    1. Thanks TFS,

      Yes actually I think just getting older I’ve found my style of ‘living’ is slowly changing, but I guess once kids come along that will change even more so. I’m already thinking about buying a house a bit further from the town centre because I just don’t go out as much as I used to and I like the more rural surroundings.

      June was just an amazing month, I loved the World Cup and had some great evenings/afternoons out celebrating with my workmates. And Love Island was entertaining – I was very dismissive at first but it broke me down and we got into a nice routine coming in and settling down for it every night. Maybe I’ll try and avoid it next year though, I haven’t decided. It was a bit like a drug in some ways – very addictive!

      Cheers, W

      Like

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