This reminder popped up for me recently: Check your net worth, my darling! Oh. Right. It’s September. Another four months of living and not working and it’s time to write another post updating my progress on this early retirement experiment. This is normally my best shot at evangelizing. Look, it’s working!
Truth be told, I knew the time was coming and I was dreading it. The saccharine nature of my past-self’s reminder did more to irritate me than invigorate me. I still kind of expect to wake up with the world deciding it’s recession time. There are a lot of people making decisions who maybe shouldn’t be trusted to make those decisions. What happens when the cycle dips? Can I preach about this path after my net worth shrivels? It’s a matter of when and not if. Tomorrow? Three years from now?
My worry is moot for now. The stock market is still having fun. My net worth increased almost $20k in the past four months. I’m okay for now. The angst is a problem for Future-Me.
I was also dreading this update because I know I’m running out of cash. When I retired, I held about 18 months worth of living expenses in my bank account. My Australian tax return a year later bought me another six months or so. I’m now one month shy of my two-year retirement date. I need to start peeling off some of my VTSAX for sustenance.
So, I played around on vanguard.com until I figured out how to direct any future dividends directly into my bank account. This money will no longer be reinvested while I stand to the side, laughing maniacally. I know my dividends aren’t enough to completely fund my current expenses, but it should last me through the end of the year. I’ll reassess then. Another problem for Future-Me.
The final reason I was dreading this update was because calculating my net worth is becoming more complicated since opening my LLC. I have one more bank account and one more credit card to log into now which adds at least five minutes to the process. And the decisions on logistics elude me. Should I make a separate net worth, income and expenses chart for The Power of Publishing? I have not recouped the initial expenses, so I’m not really inclined to. At least not yet.
This writing thing is still firmly in the hobby category. The $189.66 I made my from my stupid blog in the last four months assures me of that. Hopefully, by the time my reminder to check my net worth comes up again at the end of December, I can reassess. Surely, my book will be out by then.
Wow, that was a lot of introduction and a lot of kicking-the-can down the road. I promise I’ll pick up the can and place it in a trash receptacle the next time we talk about this subject.
Here’s what my chart looked like after my last update. The last data point shown is the first third of 2017.
A lot of people complained that they couldn’t see anything. That’s fair. It does cover seven years. Here is the chart with just the last two years.
That’s not satisfying to look at.
How about the last four years?
Wow, that’s really not satisfying to look at. I don’t have enough money to live the life I lived in Australia without any income. Sydney is expensive and I lived lavishly. I rented a two-bedroom apartment for just me! What insanity.
The last five years?
Meh. I still prefer the chart for the entire seven years. I’ve come so far! I like the reminder.
Now to update it. First, I logged into my bank accounts. I used a calculator to do a wee bit of math. I added up all my credit card balances over the last four months and all the cash I took out over that same period. Then, I divided that number by four and proclaimed this my expenses data point, the red line.
Next, I logged into my investment accounts and added up those, along with the balances in my bank accounts, to get my net worth. Finally, I multiplied that number by my theoretical withdrawal rate (.04) and divided by twelve to get my monthly projected passive income, the green line. I plotted that number on the chart as well.
Here’s the updated chart using just the last five years of data. The last data point is for the second-third of 2017.
Still too much data? Here’s the updated chart over just the last two years.
My projected passive income is higher than my expenses, so the experiment is still theoretically working. When can I stop saying theoretically?