Net Worth For April

Yet again I did my net worth figures really early and then did absolutely nothing about getting them out in the world. I get really excited when pay day comes around in terms of what that will do to my figures, and want to work my net worth out before my credit card bill gets cleared in full. It’s ridiculous really as in the grand scheme of things it all evens itself out. Maybe when I come to do May’s figures I’ll wait until May is actually done and dusted and then get the figures out quickly. Maybe! So without further ado, here’s my numbers for April.

Debts

Mortgage £87,696.45

Assets

Cash £17,028.49

Money in sharesave £10,804

AVC’s £3,937.57

Shares £35,360.54

House £228,000

Total Assets £295,130.60

Net Worth including house equity

£295,130.60 – £87,696.45 = £207,434.15

Net Worth excluding house equity

£67,130.60 – £87,696.45 = -£20,565.85

A few things have occurred to me about my net worth figures. The first is that I just use the price that I paid for the house as the house value. A quick look at Zoopla shows that actually they say it’s worth £245k instead of the £228k figure that I’m using. Now I could change that, adjusting it each month depending on what Zoopla has to say. Here in Scotland house prices seem to be relatively stable (well outside of Edinburgh and other major hot spots), so the Zoopla figure might not jump around all that much. Saying that, I’ve not intention of moving any time soon, and I don’t really give too much credence to my net worth figure including the house equity, as unless I sell up and buy somewhere much smaller then as an asset it’s not all that much use. As a lovely home to bring my kids up in though it’s invaluable. I’ll see what Zoopla say next month when I come to do my figures. If the value has stayed the same I might just use the higher figure and stick with that.

The other major thing that’s sticking out to me when I work out my figures is my pension. So I include the AVC’s that I choose to pay into, but I don’t have anything in there at all to reflect my defined benefits pension. If I can stick work out till I’m 60 then that will be worth £10k a year to me, so really that has to show up in my net worth somewhere. Even if I was to leave work now that pension would still be sitting there waiting for me and worth about £5k a year at 60. I’ve been doing a bit of reading up on this, and I really think I need to start including some sort of a figure in there for the pension. So even if I used the current figure of £5k a year, if I was to receive that for 25 years then that’s worth £125k. And quite frankly I’m planning on living till I’m 100 – so that’s a very conservative estimate! I need to have that showing somewhere.

I’ve tried adding it in to my net worth figures, and it certainly makes my little pie chart look a lot more balanced than it has been up to this point. I couldn’t help feeling that adding it in was cheating though. I can’t quite work out why I feel like that, as this is definitely money that I’ll have access to. I think I might feel wrong about adding this in because as it’s a non-contributory pension I somehow don’t feel like I’ve earned the right to include it. I definitely have though, as there’s been lots of blood, sweat and tears involved over the last 18 years of working there. If anybody has any thoughts on how to handle this please let me know below. All suggestions gratefully received.

Things seem to be going generally in the right direction. I’m getting close to being only £20k away from being able to clear the mortgage if I cashed everything in. I’ve got enough equity in the house that if I needed/wanted to I could sell up and buy myself a decent house outright and be happily mortgage free. The mortgage is still a lot bigger than I would like it to be. It definitely feels that it’s weighing me down a lot. I’m delighted that I should be able to make an additional overpayment to the mortgage at the end of this month as a result of me finally getting the hang of and getting on with matched betting. Let’s hope my money making continues with matched betting and that allows me to keep chipping away at the mortgage. I know it doesn’t make sense for me to be clearing my mortgage as quickly as I can when I’m only paying base rate interest, but it’s good for my soul to be getting rid of it. Money shouldn’t be an emotional thing, but sometimes it is, and for me being rid of my mortgage is something I really want to achieve sooner rather than later.

So the same things still apply to my finances as ever. To say I need to rejig my investments is the understatement of the century. My next job is to change my instructions on my shares so that the dividends no longer get automatically reinvested in new shares. Instead I’ll take the dividend money and invest in index trackers. This year and next year I have sharesaves maturing, so I’ll buy and immediately sell and again put that money in index trackers. Then I’ll keep an eye on the share price (as though I’m not already obsessively checking it every few hours at work!) and when it’s at a decent level I’ll offload the shares that are available for me to sell and which aren’t in an ISA. That will still leave me too many of my work shares in the ISA, but at least I’ll be a bit more balanced and I will work on moving things around a bit more in the future.

It was pay day the other day, and this got me thinking how different people who are striving for FIRE are to the rest of the population. Now don’t get me wrong, I look forward to pay day. Well actually not pay day itself, the couple of days before when the payslips are available. I like to plug my pay and sharesave figures into my spreadsheets and see the figures go up the way. The actual money in the bank does nothing for me. I’m not planning on spending it anyway, or as little as possible, so what does it matter if I’ve been paid? I moved teams a few months ago and my boss asked me a week or so after pay day if I’d got paid ok with the team change on the system. I had to tell him that I had no idea as I hadn’t actually checked my bank account. My bank account gets checked twice a month, once when the statement comes in to make sure all the transactions are correct and once when I’m doing my net worth figures. I don’t think he could quite believe that I had no idea if I’d been paid or not. Most people are waiting for the money to hit the account so that they can get spending. My equivalent is “brilliant, more money saved and more money towards the mortgage”.

There seems to have been a bit of an explosion of holiday booking in the office recently. There’s also been lots of chat about opening interest free credit cards to pay for these holidays. We’re all reasonably well paid (well, you know, none of us have to worry about higher rate tax, but we’re not exactly minimum wage either) and we all got a bonus last month. Despite this, people are taking out credit cards to pay for far flung holidays. Now I like a holiday as much as the next person, but I’m certainly not going in to debt to pay for a fortnight in paradise.

Now bear in mind that I’ve worked with most of these people for five years now. We were a brand new department set up so we all started at the same time. Most of us came from within the same organisation and had come from a call centre role.  So basically for most of us our salaries have pretty much doubled in half a decade. So we’ve been used to living on a pretty low wage, got a big bump up in the salary and had some steady increases ever since. And yet still most people are spending on credit cards and juggling from one pay day to the next. OK, so five years is quite a long time. During that time as a department we’ve seen marriages, divorces, births, deaths and everything in between. Peoples’ lives have changed dramatically. But if they’d stayed in their previous jobs I’m pretty sure they would have been doing that same limp from one pay day to the next. So where has that huge increase in the salary gone?

Inevitably people have bought bigger houses (guilty as charged!), upgraded their cars, upgraded their significant others(!), gone on fancier holidays and generally spent money on unnecessary rubbish. It’s really got me thinking though. What if we didn’t do that whole lifestyle inflation thing? What if we just kept living like we were when we first started working? Now when I got my first job straight out of uni I was back living with mum and dad to try and pay my debts off, so I’m not sure I fancy going down that route again. But still, it’s something to think about. No matter how much you try and resist the insidious creep of lifestyle inflation, it somehow gets its grip on you.

I was speaking to a customer the other day that epitomised this whole increase in spending inclination for me. I was taking her income details and she was on about £35K a year, so about £3.5k more than me. She was more or less my age too so already I was thinking about the similarities between us and starting to compare our finances. Don’t judge me, the days drag sometimes so I have to do something to keep me amused. Then we start to talk about her husband and he’s on £120k a year. Suddenly not quite so similar after all.

But you know what, despite their income being five times mine, my finances were in a much better place than theirs. They were on an interest only mortgage, with their only way of paying it off being to sell the house a bit further down the line. They had massive credit card debts and rather predictably a huge overdraft. No savings, obviously. It beggars belief that a couple with such a great income could have made such bad decisions to find themselves in such a situation. Except she didn’t think there was an issue. Despite being just one paycheck away from financial disaster she honestly thought that was a normal position to be in. I’d like to say that this is the exception, but sadly I talk to people like this all the time. I want to shout down the phone at them to explore FIRE, as they could be there in no time. Instead I chat politely and agree that it’s difficult to find any spare money to put in savings. Unbelievable.

So not too much lifestyle inflation for me. I’ll continue to overpay my mortgage, keep my costs under control as best I can and keep investing. Trying to increase my income will continue to be vital for my FIRE success. I’m delighted with how I’m getting on with Matched Betting. I’ve got myself into a little routine of sitting down with the laptop when I get in from work and making myself some money. I quite enjoy doing it, and whilst I don’t think I’ll be retiring from my day job any time soon, it will hopefully continue to boost the coffers and bring me that bit closer to Financial Independence and skipping down the happy path to early retirement. Here’s hoping anyway.

2 thoughts on “Net Worth For April

  1. The story about the 120K/year couple is mad/infuriating/unbelievable in equal measure!
    What on earth were they spending that on? They must live in a mansion or something, got to be housing or maybe private school for their kids? It is funny that people think that is normal though you are right.

    One thing with your “Net Worth excluding house equity” – I don’t think that should be a negative figure? If you don’t include house equity you shouldn’t really include the mortgage either, so I would just list that as the first figure of £67K? This figure is useful because you can then work towards getting that up to a level where it kicks off enough income/growth to pay your living expenses (completely separate from mortgage and house stuff). I don’t really see how the metric of Net worth excluding house equity but including mortgage debt is helpful, but if there is a particular reason for it I would be interested to know what it was of course in case I’ve missed something 🙂

    Cheers

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    1. A mixture of plenty of debt, a big house and lots of lavish spending for that couple from what I could gather. The worst thing is I’m on camera whilst I’m speaking to these people, so I have to try and keep my feelings from showing!
      In terms of my net worth figures I know where you’re coming from with me including my mortgage debt but not my house equity. It’s like I’m punishing myself twice in my figures. I may change how I calculate it at some point as this is really early days for me keeping such detailed figures. My thinking is that for the foreseeable future I’ll want to stay in the house I’m in just now, at least until the kids are through uni and well settled. I want to have some way to keep track of how I’m doing if I stay in my current house but still had my mortgage to pay. So let’s say one day the nonsense at work all gets too much for me and I pack it all in. I could theoretically at that point sell my house and buy a smaller one outright, but assuming I want to stay put, I want to know what my financial situation is in terms of what I could theoretically liquidate to pay the mortgage and how much I would still owe. It’s far from ideal that at this stage that’s a negative figure, but I’m working on that! You’re right of course that I just need to grow my investments to the level where they will pay my living expenses, I’m just worried that as I’m 50 next year I might be running out of time to achieve that, particularly with only one not particularly high salary coming in to the house supporting the three of us. The good news is that once I hit 60 my £10k a year pension kicks in and things start to look a lot more rosy. So I just need to bridge the gap between now and when I hit 60. Except of course if I leave work early my pension entitlement will be reduced. Such a lot to think about and figure out, hence the blog to try and get things straight in my mind and pick the FIRE brains out there.

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