I’m updating my visual aid each month and here is where I stood at the end of September 2013 for my goal of financial independence.
My passive income reflects growth in my net worth. Read my assumptions to get this figure here.
My expenses have been higher than normal the last few months. This was my attempt to “spend out” and buy myself everything that was currently on my “wants” list.
Here is my pretty chart at the end of October.
The red line creeeeped up ever so slightly as my net worth went up almost $22,000 in the past month. I am lucky enough to earn what most people would consider an enviable day job income, but that represents only a little more than half of that increase. The rest came from my investments. The market is up right now, but I also lucked into some market timing. Earlier this year, I opened a checking account at a certain bank and deposited a certain amount of money and, after a certain amount of time, the bank gave me $200. I cashed out that checking account when my investment vehicle of choice was on sale earlier this month.
The real story in this chart though is my expenses. I ran out of wants (for now) and so my expenses went down. October was a healthy month all around, but even for a person who makes more money than most, expenses matter more than income. The lower my expenses, the less money I need. The less money I need means the more money I can invest now and the passive income line meets the expenses line that much sooner.
This all goes back to my favorite money management nugget of wisdom: Minimize your expenses because you’ll never get rich spending your money on depreciating assets.