Monthly Report #9 – Jan 2021

Welcome to the first monthly report of 2021!

If you’re a more recent subscriber to the blog or twitter follower, these reports are where I disclose my finances to you in full, and update you on my progress towards achieving financial independence and early retirement.

Things have been INSANE this month.

If you’ve been following my journey, you’ll know I’ve been working hard on a few different side hustles.

It’s taken 6 months now, and I’ve just and my highest earning month EVER!

The amount I earned is included in this disclosure 👇

As we go through this monthly report, you’ll see snapshots of the spreadsheet I use to:

  • Track my expenses
  • Estimate my retirement expenses
  • Work out my FI number (amount of £ needed to escape my 9-5)
  • Track debts
  • Track savings
  • Track asset & equity
  • Track my net worth

It took my months to build it to its current state and I’ve built a good amount of automation into it now, so it literally takes me about 10 minutes to update the necessary tabs to get the Net worth report out at the end.

If you’d like a copy, you can get it, along with my 5⭐ rated ebook, 7 Simple Steps… by clicking here 👇 and there’s 20% off included for all my readers. Just follow the link 👍

Now, let’s get stuck in!

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Expenses for January

Not a huge amount of difference from where we left of last year.

The food budget has escalated a bit from the £550 ish we were spending before. We’ve tried to reign this in as much as we can, but with our daughter now over 1 and eating for Great Britain and needing lunches 3 days per week for Nursery, we’ve had to accept that our food budget is just going to increase.

I have however found that many of the snack items we get for her (fruit pouches and oat bars etc) can be found in Aldi for about half the price. So, at least that will save us something!

If there’s one thing I am saving money on right now, it’s hair cuts!

Definitely not out of choice. It’s not been this long since I was a teenage emo kid.

I have NOT missed it 😂

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Retirement Expenses

For those of you who’re seeing this update for the first time, let me explain how I calculate my FI number – the amount of money I need saved to reach early retirement and leave my 9-5.

All I have done, is take the monthly expenses from the previous tab and alter them slightly for what I imagine our lives will look like in retirement – A lot more holidays, no mortgage, and lots of pocket money to make sure we can do whatever we want whenever we feel like it. Because, what’s the point in retiring early if you have to limit yourself 🤷‍♂️.

I then take the monthly expenses figure, multiply this by 12 to get our yearly expenses number, and then multiply this by 25 to get our FI number. This is the amount of money you need saved in an investment account with exposure to the stock market. You can then draw down 4% of this amount every year (equal to your yearly expenses) and never run out of money!

In fact, most people die with more money than they had when they started drawing down, as the stock market always outperforms their withdrawal rate. The 4% rule allows for flexibility and has safety built in.

So, where do I currently stand with my retirement goal?

In the left-hand table, you can see the worst-case values I have assigned to my different pension pots.

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Starting from the top – My Pension value at 57 is my workplace pension, which, if the government gets its way, I won’t be able to touch until I’m 57.

I’ve estimated a worst-case 7% return for this account. But just this last 6 months, the fund I am invested in has yielded a 25% return:

Obviously, that’s GREAT news!

However, there’s still the issue that I probably won’t be able to touch this until I’m 57. 55 at the very earliest.

So, how do I fill that gap between when I want to retire, and the age at which I get access to my pension?

That’s where my Personal Investment Fund comes into play, the second row down in that table from above.

I’ve estimated, worst case, that this portfolio will be worth £281,255 by the time I’m 48.

But again, that’s assuming a 12% return. And this year alone, I’ve achieved a 93% return…

More good news!

You can learn my stock research strategy here 👇

The complicated part is working out how much money I need to have saved so I can draw down my yearly expenses for the number of years required until I get access to my workplace pension. And at the same time, making sure there is enough of that original pot of money left so that when it is combined with my workplace pension, it is enough to cover my expenses (using the 4% rule) throughout the remainder of my retirement.

That amount of money I need is approximately £281,255.

That will be worth £238,201 after 9 years of withdrawals, which when added to my workplace pension, is enough to cover the remainder of my retirement using the 4% rule.

However! I’ve just recently started bringing in a decent amount of money with my side hustles, which means I will be less reliant on my investment portfolio and thus can probably retire a few years earlier than my original plan of 48.

Obviously things change, markets can fall in the short-term and my side hustle isnt an absolute guarantee.

So, I’m not setting any plans in stone just yet.

As I approach this point and feel more confident in maintaining my portfolio performance, I’ll likely start bringing that retirement age down so I can free myself from the rat-race even sooner!

A huge part of the reason for this is the income I’m now bringing in from my side hustles. You can read all about my first month using retail arbitrage to make an extra £722 in January here.

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Actual Savings

Really happy to have crossed over the £40K mark with my pension savings.

I’ve added a column to the start of the year which is the Jump Off Point (JOP) from December 2020 to give some comparison to where I left off last year.

The jump in value in the last two months is enormous!

The table on the far-right of the image is tracking what my yearly income would be is I were to stop working or start drawing down on my pensions fund now.

Still a way to go, but compounding is visible already!

Equity & Assets

This is a snap-shot of our current equity and asset value.

I could count a lot more of our belongings etc into our assets to artificially boost my net worth, but I don’t see what value that adds for me or any of my readers, so I just track the few high-value items we have.

Debt

The mortgage makes this look horrendous 😂

But I’m not worried. We’ve moved into our forever home at age 30 and have a plan in place to eliminate this in the next 15 years so it does not impact our early retirement plans.

This blog is my way of keeping myself accountable. So, you can expect to start seeing these numbers plummet over the coming few years!

Net Worth

VERY happy to report my net worth is now really close to £170K! 🤯

To think, I was an an absolute financial mess less than a year ago…

Goes to show what hard work, commitment and a powerful tool like this spreadsheet can do for you!

That brings us to the end of January’s update!

I hope you’ve enjoyed this run-through.

If you’re getting value from these posts, subscribe below so you don’t miss the next one.

If you’d like to join my Private Stock Group, you can sign up here 👇

Published by Finance&Lifestyle

A Dad from the UK documenting his journey to financial freedom. Sharing my lifestyle and finance hacks so more people can find financial independence, retire early and take back control of their future.

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