Each month I will post an update on my finances to both give you, the reader, some insight into my situation and to give me markers of my progress on my financial journey. My updates consist of two parts:
- Financial Progress Table – Tracks joint net worth progress.
- Spending Table – Compares monthly spending to an average (for us) budget, keeping us accountable for additional expenses. I will also include my personal discretionary budget as well; I will not include my spouse’s discretionary spending, which I do not see.
Each net worth goal in the Financial Progress table is broken down into undisclosed units of money. Our current goal is to reach “Financial Freedom.” By the time we reach this goal we will have:
- A retirement account that can support us when my husband hits 65
- Two college savings funds funded for four years of in-state public university tuition, room, and board
- An emergency fund for six or more months of living expenses
- Sufficient liquidity for my husband and/or I to make a career change with one to two years’ runway
- A mortgage less than two times our combined gross salaries without bonuses or equity.
Once “Financial Freedom” is achieved, the focus will then working be towards “Financial Equilibrium”, where the income from investments covers all our ongoing expenses.
We’ve created a joint budget which represents the average amount we can expect to spend each month. This is average amount we need to comfortably live in case of a job loss, emergency, etc. I expect to frequently mostly keep in line with our budget when amortized over the year, even though amounts may vary from month to month.
For privacy reasons, there are two things I do not include in our joint spending updates: our monthly mortgage and charitable donations (pegged at 10% of our net income).
Here is my own personal discretionary spending for the month. I try to spend $600 or less each month for my “fun money” since that’s the allowance that’s apportioned to me and my husband.
Relatively spendy month. Our fridge died, so we had to buy a new one. We also had our condo deep-cleaned which was stupidly expensive. Let’s just say it was a similar order of magnitude as the fridge, but they managed to scrape all the burnt bits off the stove so I feel pretty satisfied by the whole thing. Also, I ended up flying to the west coast for a milestone birthday party for my grandmother, so that was a pretty penny too.
I’m kind of sad how much our net worth dipped this month. Between the spending, stock market slump (only 1.5 more years of bear market to go!), and a few thousand in charitable donations (not in the spending summary above but does count toward our yearly 10% of income threshold), we definitely backslid a bit. I plan to quit my job in six weeks, and would like to build up a little cash cushion in advance, but I’m afraid that I’ll need to money to exercise my options instead. So yeah, we’ll see how that goes.
How were your finances in May?