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Net Worth and Financial Freedom Update: July 2017

Welcome to my net wroth update and financial freedom report for August 2017. This is where I go back over the numbers from the past month and see how things went. I realize that what you focus on expands. So I am making a point to introduce a few new parts of my financial update. They are:

Net worth

Expenses

Financial Freedom Factor

Let’s get started and see what happened this month.

Changes in Total Net Worth

 

(As I mentioned in the inaugural net worth update. When it comes to monthly reports I’m going a different route than a lot of others. Instead of going through the nitty-gritty of every detail on my net worth statement. I’m taking a macro view so we don’t get bogged down by the details.)

 

Increase: Decrease:

%

of Earned Income For The Month

 

Uh-oh. This is the first time my net worth has gone down month over month in this decade. It sucks gang. It really sucks. I’ll get into everything right away. The nice part about this decrease is that it’s a slight one and that I can see exactly where we went wrong. As you will see in a second it’s pretty obvious what caused it to go down.

Expenses for July 2017 – What the heck happened

 

Oh July you fun and frisky month you! July is when our house insurance is up. We actively upped the amount we were insuring the house. I was basing it on resale value which has nothing to do with insurance. When you insure your house you should have it based on the cost it will be to rebuild not just to buy a similar house. Depending on the market and building costs those can be out by more than $100,000.

Then there was another cost… what could it be…. Oh yeah! I had to pay for the rest of our Disney trip. Between the park, staying at a house the second week, and the car rental our money disappeared pretty quickly. We also did our annual family events which add on to our monthly spending but it’s ok. At the end of the day summer is always more expensive because we cram so much into these months.

As much as the spending was big, we are fortunate to have been storing away the extra cash for the last year. We have put $20 a day in a separate account for Disney and it worked out nicely.Since we did that the money was available in our money system. Which you should totally sign up for, because it’s free, and it changed my life, and others too. 

 

Compare July Spending to July of Last Year

One of the great things about tracking your finances for years with Personal Capital or Mint, is that you can go back and see how you did from one year to another.

This month our spending was about $1000 more than it was last July. There was a trip and some home renos last year which factored into our spending. It’s interesting how they fell in the same month.

It’s time like this where I look at our spending and I get uncomfortable mostly because I’m not used to it. I remind myself that this is temporary and we will be back to the weekly routine soon and if we don’t do some of these things now, I will likely regret them down the road.

 

Financial Freedom Report

Total Expenses / Passive Income

This is the most important part of my financial plan. My net worth can go up and down, or stay flat. while I care it’s not the most important. What concerns me more is my financial freedom factor.

This is when you take your expenses for the month and divide it by the income you are earning passively such as income through investments, real estate and business systems.

The idea of this number is that once it equals 1, you are financially free. Anything larger than 1 requires that you either increase your income or reduce your expenses. If the number is below 1, then you are doing even better, because you are taking in more income than you spent in the month.

Based on this month my Freedom Factor is

Given our spending this past month I’m surprised it’s not higher. This means I have a long way to go before I reach financial freedom. If you are looking at your freedom number and thinking “There is no way I can do this!” You aren’t alone.

This doesn’t happen overnight. It happens a little bit at a time, month in and month out. Just like any big goal, give yourself time and permission to go after it. The bright side is that we did boost our passive income this month. Our goal is to have an increase of $200 a year every month. It’s a high goal, which means we won’t always hit it, but it’s better than shooting low and never knowing if you could have pushed it a little more.

Financial freedom doesn’t happen overnight. It happens a little bit at a time. Take continuous action towards your goal and give yourself time and permission to achieve it.

One Last Thing

 

If you would rather track your net worth with software Personal Capital or Mint.com are good choices. Both are completely free. 

If you are wanting to track your net worth either one is a good place to start. Personally, I absolutely love being able to see my net worth every day as it’s a huge motivator to keep making smart financial decisions.

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If you are needing a primer on net worth, you should sign up for our newsletter and get the Net Worth Template I have used for 10 years. It’s  absolutely free, plus I’ll throw in some other goodies too.

Have you calculated your net worth for November? I’d love to hear how your month went, post a comment below.

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