May 2017 Income Report

May 2017 – Detailed Financial Report #29 – Net Worth $558,202 | Income $23,452

In Uncategorized by Gen Y Finance Guy10 Comments

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GYFG here checking in for the May monthly financial report. If you have been reading these reports for a while you will notice that I introduce each month with the same intro month after month. I do this for two reasons; a) for the newbies to the site (which make up about 50% of the sites traffic); and b) to remind everyone what these reports are all about. By all means if you have read the intro at least once, then please feel free to skip down to the “Summary of May 2017” section where the new content begins.

For those of you that are new around this corner of the internet, I wanted to fill you in as to what these reports are all about. These monthly reports are about full transparency. They are just as much for me as they are for you. It’s a hard decision to make all of your financial details public, but it’s also a very motivating one. It’s not just the post, but the process of putting this post together that really benefits me.

My sincere hope is that my transparency will inspire you to take the helm of your own financial ship and be intentional with its direction. I truly believe that anyone can reach financial freedom, if they are willing to do things differently. If you earn an average salary and have an average savings rate, then you can expect an average result! That means you will likely have to work at a job you may or may not enjoy until you’re 65 and then maybe you can retire IF you’re lucky.

Hey, there is nothing wrong with average. If you’re happy with average, then by all means keep doing what everyone else is doing. Not sure how you feel about that, but I have no interest in living an average life. I want EXTRAORDINARY.

Most people don’t want to live below their means in order to reach FINANCIAL FREEDOM, because that’s painful. They think it involves cutting out all the joy in life. You know what I’m talking about, those financial gurus that tell you that in order to get rich you need to cut out the $5 lattes and stop going out to eat. Then after 40 years of diligent and above average savings and super low spending, you will be a millionaire. Basically, you have to live like a college student and suppress all the things you want to do in life and then when you’re old you will be rich.

Okay, that doesn’t sound like the plan for me either.

The good news is there is another way. This site and these reports are here to show you the OTHER path to financial freedom. There is a way where you can have your cake and eat it too. I believe and hope that over time I will be able to convince you of the following:


In order to reach financial freedom you can choose to live below your means by cutting expenses to the bone and living in a state of scarcity or you can expand your means and live in a state of abundance by increasing your income and enjoying the $5 latte or other indulgence of your choice.


Not only that, but if you’re diligent you can reach financial freedom a lot sooner than anyone has ever led you to believe.

Our Mission Statement:


To Humanize Finance, Build Wealth, and Reach Financial Freedom.


I know I don’t have to publish my juicy details every month, but it’s important to me that you know that I put my money where my mouth is (because not that many finance blogs or people giving financial advice do this). I publish all of my financial details not to brag, but instead to show you what is working as well as what’s not working. Sometimes finance can get pretty dense, but I think real life examples and numbers can help slice through the complexities (and BS). Personally, I have always enjoyed the financial reports put out by other bloggers around the blogosphere.

As always, you can find all my previous reports on the Financial Stats page (as well as annual trends and a few other financial metrics not found on this report). In these monthly reports the plan is to give you a month over month update on Gross Income, Assets, Liabilities, Net Worth, Expenses, Contributions, Savings Rate, and progress on the mortgage pay down goal.

Shall we begin?

Summary of May 2017

May 2017 Financial Stats

 

Wonder how I pull all this information together every month?

Note: You may be wondering why I don’t use a bunch of screenshots from personal capital in these reports, and that is a fantastic question. As many of the other bloggers out there who use personal capital, post nothing but the graphics from within the application. I personally only use it as an aggregation that feeds into my own database that creates all the graphics you see in this post. The tool is fantastic, but I personally think the graphics are a bit limited, and prefer my visualizations.

We use Personal Capital to aggregate and consolidate our transactions from across all of our financial accounts (checking, savings, retirement, credit cards, mortgages, HSA, and other investment accounts). At the end of the month I export that information into my financial stats spreadsheet in order to produce this (beautiful) monthly report.

Tracking your finances is, in my opinion, the best way to stay on top of your finances. You can’t optimize what you don’t measure. You can’t make informed decisions if you don’t know what you having coming in vs. going out. Without a holistic view of how much you spend every month, there’s no way to set savings, debt repayment, or investment goals. It’s a financial freedom must!

If you don’t already have a FREE account with Personal Capital, stop reading and go sign up for your account right now(Seriously, this financial update will be here when your done. There’s no time like the present to take action. You will thank me later!)

Month Over Month Financial Summary

May 2017 Financial Summary

Just three things to point out in case you missed it:

  1. The Stocks asset bucket went down by $17,771 or 18.7% due to a transfer from an old roll over IRA to my self directed IRA with PeerStreet.
  2. Due to one above, the large increase of $20,295 is primarily driven from this transfer, as well as some interest payments I received.
  3. Credit Float decreased by $7,309 and should continue decreasing as statements become due (we pay them off every month).

INCOME; What went down in May?

May Income = $23,452

  • Previous Month: $25,861 (this changed slightly from last month due to an error)
  • Difference: -$2,409

Here is a look at the trend for the last 13 months:

May 2017 Trended Gross Income

There really isn’t much excitement on the income front. Next month will see a nice jump due to it being a 3 pay period month for me. Income should be around $36,000 in June. Then in July I will be getting my mid-year bonus, which should put our income close to $50K for the month.

Now where did all that money go?

I have come to the realization that there are always going to be unplanned expenses. Our goal is to save 50% of our income and live off and enjoy the difference guilt free. With that type of rule governing our financial life, it is a free pass to inflate our lifestyle, but only proportional to our income. You can see prior financial reports here. We do however try to line up expenses with expected income as much as possible.

May 2017 MoM Expenses

 

We did a bit better than where I thought we would be, when I wrote the following last month:

If I get the timing right our May expenses should more than offset this unexpected spike, which based on my travel schedule for May, it shouldn’t be a problem. This means our expenses for May will be a record low of around $6,500.

Our real expense after deducting amortizations was just under $6,000. Surprisingly, our spending is projected to remain under $7,000/month for the remainder of summer.

Note: the big negative for travel & hotel is due to reimbursements for work related travel.

Here is the trend for the last 13 months:

Note: I have now changed the chart to reflect the add-back of loan amortizations to reflect what I call “real spending” above. This is done because amortizations are really just a balance sheet transfer from cash to pay down liabilities, it has no impact to net worth.

May 2017 Trended Expenses

We are currently projected to spend about $15,000 more than last year, which is really good considering the unplanned $33,000 that we spent in January. Consciously or unconsciously we have been making adjustments…I guess…


CALL OUT: It is crazy how slippery money can be. Because of this I totally recommend you automate as much of your finances as possible, especially the saving and investing piece. We set our financial goals at the beginning of the year and then automate the process of reaching them.

Examples:

  1. Our mortgage payment is automatically set up to pay $1,600 in additional principal. This is on hold. Trying to work down net worth concentration to something closer to 20%.
  2. My 401K contribution is automatically deducted at a rate that will ensure I max out by year end ($18,000)
  3. My HSA contribution is automatically deducted at a rate that will ensure I max out by year end ($6,750)
  4. We are now sending $500/month to our Rich Uncles investment account. Looking to increase the account balance to $11,000 by year end (currently at $5,500)
  5. We are now sending $2,000/month to our PeerStreet investment account. We now have $77,000 invested here and are on hold from new monthly investments. This is generating about $6,000 of income annually.

All of these things take priority over any spending that we do in a given month. We monitor expenses but don’t really manage them. Instead we manage savings and investments and let the expenses work themselves out.


Savings Rate

Below is how we did vs. our goal of saving 50% of our after tax income.

May 2017 Savings Rate

You can see that although our goal for the year is 50%, but we bounce all over the place on a monthly basis.

Speaking of savings rate, have you checked out my post where I mathematically prove the importance of your savings rate as a higher priority than the compound return? If you’re trying to build wealth quickly, then you have to read this post.

Net Worth and Mortgage Pay Down Update

My ultimate goal is to build up a Net Worth of $10M returning 6% a year or $50,000/month in gross income. Don’t freak out, this is only about $5.5M in today’s dollars when you take into account a 3% inflation rate. If you want to see how I plan to get there you can read all about it here

May Net Worth $558,202 (up +5.8% for 2017 YTD)

  • Previous month: $550,347
  • Difference: +$7,855

Net Worth is up 1,216% since 2012!

Net Worth Break Down:

May 2017 Net Worth Allocation

A dedicated post is planned in the near future to deconstruct our net worth in a much more granular format.

I expect to see cash to grow to a larger percentage overall as we move throughout the rest of 2017. I like seeing that the value of our cars are only making up 3% of our net worth now, there was a time that they made up way more than they should have, which is the reason I even include them in the net worth calculation.


Note: I think people tend to glaze over the fact that the savings rate plays a much bigger role in increasing your net worth than the rate of return on your investments (in the early days of your journey). In the short term, savings rate has a bigger impact on net worth. The goal is to eventually build a big enough asset base that the gains from compounding will eventually outpace the gains from savings. Actually, check out the post I recently wrote: Savings Rate – The Most Important Variable to Wealth Building [and the math to prove it]


Progress On Our Mortgage Payoff Goal

You can read about our strategy to pay off our mortgage in 7 years (and 3 months).  After several refinances we currently have a 3/1 ARM at 2.25% and we currently owe $299,126. It is nice to see it go under $300K.

May 2017 Mortgage Payoff GoalOur primary residence is currently sitting at 24.6% of our net worth, still higher than we would like, which is why we have not made any additional mortgage payments this year. We would like to see this closer to 20% in the short term and far less in the longer term (like less than 10%). That is not to say that we don’t still plan to stick to our 7-year goal to have it paid off, we just feel more comfortable stacking up the cash in our bank account.

The End

I hope these reports inspire and move you to action. Don’t take a passive role in your finances and hope for the best. There is a famous Jim Rohn quote that I think everyone should keep in mind:


If you don’t plan your future, somebody else will. And you know what they have planned for you? NOT MUCH!


You have to be intentional with your finances if you ever want a fighting chance to make it to financial freedom. It doesn’t have to take 40-50 years of slaving away for the man before you have the option to retire. I personally think that 15-20 years is really all you need, and for the folks that are more aggressive (i.e. extremely frugal, not us) or very high earners you can probably reach financial independence in 10 years or less (maybe us, it’s yet to be seen but income is our focus vs. expenses).

I am looking forward to chatting with you all in the comments below. How was your month? Also, if you have a blog, I encourage you to write a monthly financial report and come back here and share the link. I would love to be part of your support and accountability.

One last thing before we go. If you are new or even if you’re not new and you have been wanting a more guided tour of the blog, I finally launched a “Start Here” page. I highly recommend you check it out.

Cheers!

– Gen Y Finance Guy



Personal Capital allows you to aggregate your entire financial life into one account. All you need to do to see all your accounts in one place is log in to Personal Capital and voila! But it doesn’t stop there. They even automatically classify all your income and expenses for you. You get a FREE and fully AUTOMATED tracking system!

Comments

  1. You have a very healthy income. If I’m reading this correctly, between $23-50K per month, right? Curious as to what your occupation is. Our income is in that range as well; and it’s not a number most people can bring home. Dual income makes it a lot easier though.

    1. Author

      Hey Tim,

      Yes, our income range is up there. This year income will range between $23K to $62K, but will average about $35K for the year. My income tends to spike in January and July when I get paid bonuses.

      My occupation is in Finance and Business Intelligence. I am currently the Chief Business Intelligence Officer.

      Cheers,

      Dom

      1. Hey GYFY, love the blog. With regards to the income…is it pretax or post tax? Sorry if you’ve already answered the question.

  2. Well done Dom — really enjoy the charts. Curious, when it comes to your residential mortgage, is it a place you plan to stay in for the long haul or do you have a longer term vision of buying / selling RE? A $355K mortgage on your salary is a great deal. Best –R

    1. Author

      Hey Rich! I am glad you like the charts, I am kind of a chart addict. We plan to be in this house for 7-10 years and then turning it into a rental to fund our next dream house, which by then we will have two properties free and clear to help finance that one. We currently only owe $298K and plan to have it paid for by 2021 or sooner.

      There is a housing development out in wine country that we are interested in, but we need another bust to get it at a fair price. Right now the prices are bloated. Currently they are 4,000 to 6,000 sqft homes on 2 acres going for about $1.3M. Only time will tell.

      We may reach mortgage freedom and decide that we don’t want/need to upgrade. I mean we do have 3,300 sqft on 0.25 acres, so hardly living a crunched lifestyle.

      Cheers!

  3. That’s awesome. Hard to believe we’re right back in bloated territory. In our east coast city, 1.3M will get you a 1200 square foot condo. Someday maybe I’ll buy something but not in this environment. –R

    PS — The best wedding I’ve ever been to (other than my own) was in Sonoma. Love that area.

  4. How did you find the Personal Capital tool? I’m a little leary about linking all my financial information in one place. Seems too easy for hackers to get everything in one place, but I love the idea of getting this type of reporting.

  5. GYFG, you’re an inspiration to me. Oddly enough I believe we’re almost the exact same age with identical mortgages. We bought in 2014 for $355k and we’re down to $212k. I’m hoping to pay off my balance in 10 years… I wish I could pay mine off in 4-5 years like you. I’m focusing on maxing out all retirement vehicles first before throwing extra towards mortgage principal. Cheers to you my friend. Love your work.

    1. Author

      Thanks for the kind words MM!

      From your comment, at $212K you are already ahead of us with respect to how much you have already paid off.

      As you probably read in the above post, we have discontinued actually making any additional mortgage payments, and are instead just stacking up the cash. I just go done writing my June financial report, and I noted in there that we are currently $7,200 behind on where our principal balance should be. So, therefore I know that when I look at my cash balance that $7,200 of that balance is already spoken for and it’s increasing by $2,400/month.

      I am even thinking about setting it aside in a completely separate account.

      Onward & Upward my friend!!!

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