It’s time to tot up what I’m worth again. I’ve decided to make a change to how I calculate my figures. I have a defined benefits pension with work that I have never actually included in any of my net worth figures. Considering this is one of the big reasons where I stay working where I am then this seems absolute madness. A big part of my retirement plans centre around the fact that I will have about ten thousand a year from this pension if I can stick it out for another ten years.
As of this month I am now going to include it in my figures. I’m going to take what I have accrued so far, well at least as of my April 2019 statement, which is the most recent one that has been produced. I’ll take that annual figure and multiply it by twenty to give an approximation of what it might be worth once I can start drawing it. To complicate matters slightly I’m going to include it in some of my figures, but not all. I like to be able to separate out what I could theoretically cash in right now if I have a mid life crisis that necessitates me liquidating everything.
The plan for now then is to include the DB pension in the overall net worth figures, but also separate it out along with the house equity to give me an idea what things look like if I want to stay living where I am but cash everything in to clear the mortgage. This allows me to see how close I am to being mortgage neutral, which is an important target for me. I don’t want the pension muddying the waters on those figures, so it’s getting put to one side for that calculation.
As usual last month’s figures are in brackets for comparison. Clearly it’s going to look like I’ve had a massive bump up of my net worth from last month to this. I wish. At least moving forward it will give a more realistic picture of what my finances look like. I definitely need to have a think about how to represent my finances in a way that more reflects my own situation.
As I have the DB pension giving me a half decent starting point I really need to find some way to measure how I’m doing in making up the shortfall in what I’ll get and what my living expenses are likely to be. I have a bit of an idea in my head about how much I need to live on and so how much I need to grow my investments by. I think I’m on track, but I definitely need to flesh that out a bit.
I really need to start measuring my savings rate as well. I had a bit of a shot at calculating that, but things are all going to change come October when maths boy goes off to university and my maintenance halves. My tax credits and child benefit have already reduced down, so I’m living on slightly less than before, but still trying to save just as much. At the moment I’m struggling to see how I will manage to keep saving the same amount, but no doubt there are some savings that I will manage to make. That sounds like a bit of a project for me towards the end of the year, to measure things a bit more and see how I’m doing towards the targets that I have in my head, but not recorded anywhere.
Enough of my thoughts about new things to record. Without further ado here are July’s figures and how they look in comparison to June.
Mortgage £97,790.14 (£98,281.81)
Cash £33,612.22 (£36,507.46)
Defined Benefits Pension £123,683
AVC’s £6,440.24 (£5,567.13)
Shares £37,782.93 (£36,282.17)
House £250,000 (£250,000)
Total Assets £451,518.39 (£328,356.76)
Net Worth including house equity
£451,518.39 – £97,790.14 = £353,728.25(£230,074.95)
Net Worth excluding house equity and Defined Benefits Pension
£77,835.39 – £97,790.14 = -£19,954.75(-£19,925.05)
The cash amount went down not because I went on a spending spree, but rather because I took about three thousand from my savings and bought some more index trackers. I had too much cash on hand as a result of the further advance that I did earlier in the year on my mortgage. I’ve still got enough savings sitting there that I can get my boiler replaced when it finally gives up the ghost and get my en-suite sorted when I’m more comfortable with having people working in the house when it’s not strictly speaking necessary. As far as getting a new car is concerned, I’m still of the mindset that as I’m currently driving about three miles a week to go to Aldi then the new car can probably go on the back burner for the foreseeable future.
The fact that I’ve spent £3,000 on new trackers along with my normal £600 that I do anyway, means that the increase in my shares value is particularly poor. The index trackers are actually doing pretty well. As usual it’s my work shares that are letting the side down. If I could go back in time I would tell my younger self to forget about doing share saves and just stick the money in index trackers. Unfortunately I don’t have a tardis in my back garden, so I am where I am. My plan is to pretty much just forget about the work shares and maybe at some mythical point in the future they will recover. In the meantime I will just keep sticking as much as I can into my Vanguard ISA. By the end of the tax year I will be up to the maximum £20k, which is pretty good going. That’s going to be a one off though, as it includes the money from cashing in two share saves, transfers from my savings as well as my normal monthly amount. I’m definitely not going to be in a position to do that every year.
I’m reasonably happy with this month’s figures. My AVC’s and index trackers are doing pretty well. The work shares are down about £2k, but what’s new there? I’m quite comfortable with the strategy that I’ve got going now. I’m slowly getting a bit more diversified away from having everything in work shares. At some point I’ll offload a big chunk of these, but not just now. Even if they start paying dividends again next year that would be a bit of a help and a reason to keep hold of them until the price is very slightly less dire. I’ll keep plugging away with my index trackers and hopefully they will continue to rise in value. I was happy to see this month that the combined value of my AVC’s and trackers are now worth more than my work shares. That definitely feels like I’m making some progress on project diversification.