The year ended! 2018 retired and it’s time to update my chart!
But, first, if you don’t mind, a stroll through history.
I was reading through my old journals and I came across some fun stuff I think you’ll like seeing. Or maybe you won’t. I don’t know what you like anymore.
How you handle your money will inevitably change with your lifestyle and your situation. Digging through these old journals, I traced the various ways I handled my money.
Here is how I kept track of my finances in March 2011. My filing system was a bunch of loose legal pad pages. The small legal pads. The best size.
I listed out my expenses each month, the day it was due, and whether or not it was paid automatically. I also included a little check box to fill in when a bill was paid. It was crazy satisfying to check those boxes.
“s.l.” stands for minimum student loans payment. They were my biggest priority at that point and I stalked them incessantly. The numbers at the bottom indicate how much I paid total toward student loans that month. I always paid more than the minimum, using the entirety of my second monthly paycheck, and whatever extra I calculated I could afford when next month’s bills came through. I looked at this regularly.
Eventually, I upgraded my system and started using a notebook. Bound pages are better, right? More professional. More legit.
I also used this notebook to keep track of any money-related monthly challenges I tried out, like categorizing my expenses.
And contemplating long-term money goals.
Eventually, I abandoned this notebook because the pages started falling out, defeating the whole purpose. Bound is better, but glue-bound is really no-bound soon enough.
I turned to a slapdash google doc spreadsheet and, of course, my wall chart
So, my point — if I have a point — is that you should track your money somehow, but nobody cares exactly how you do it. There often isn’t a “wrong” way to do something. Specific quirks welcome.
Loose leaf small-size legal pad pages accounting would never be a suggestion in a personal finance book. Hell, it’s not even a suggestion in my book. But it worked well enough.
Okay, enough of the history lesson/plug for my book and on to the update.
Scroll here for chart update
Here’s my unwieldy chart the last time you saw it. It runs through the first four months of April 2018.
Yeah, my precious chart is a monstrosity that demands you squint and guess and zoom, and then, maddeningly, delivers so little. There is a lot of data in the squinty booger up there. Needless data.
Now that I’m only updating my chart once a year and not once every month or once every four months, I can simplify.
Here’s the new chart I made that I think is quite wieldy. It consists of my average monthly expenses for that year and my projected passive income based on my net worth at the end of that year.*
The last time I looked closely at anything was my birthday, a few months ago. I wanted to know my net worth at the start of 36. Coincidentally, that day also happened to be the market’s all-time high.
I liked that data point quite a lot, so I included it in the chart for kicks and giggles (the “Turned” data point — it’s supposed to read Turned 36).
And then I wrote that exclamation point-laden introduction and checked back in to calculate the official 2018 data point.
Oh, the president of my country is a Russian asset? Carbon emissions are actually increasing? The government is shut down? They haven’t figured out how to stop Brexit, yet? The market is flirting with that damn bear?
Ouch. From my 36th pat on the back to the end of 2018 a few months later, my net worth dropped almost $125,000.
On the bright side, if I take out that Turned 36 data point, my net worth only decreased about $69,000 from December 2017. Woot?
It’s not fun, but it’s inevitable and I’m not going to throw my hands up in the air and panic dance. Even with my extravagant lifestyle — I haven’t told you about my Colombia trip yet — I’m easily living below my means. I know I can stay my retirement course.
And the losses aren’t really losses until I sell anything again and I don’t need to do that for at least six months.
So, I’m choosing optimism. Maybe a new green deal initiative will revitalize and reshape our civilization and we can stop hurtling towards the edge of our petri dish.
And, it’s good news for most of you who actually earn money. You want this downturn so you can scoop up some VTSAX cheaply.
I want to scoop up some cheap VTSAX.
My goal for 2019 is to make some money to take advantage of the sale. How am I going to do that? I have no idea. I just decided it today.
*The formulas I used for this chart:
Average monthly expenses = (Total expenses for the year) / 12
Projected Passive Income = [(Net worth at end of the year) * (0.04 – Educated guess on safe withdrawal rate )] / 12