August 2014 Spending…… £5,632 gulp

August Spending Breakdown

An eye opening first month’s spending diary for me…..and it’s been a dramatic start for the diary, with £5,632 spent in this month alone.

As you can see above, most of this was on travel, to pay for a dream holiday in October… a jaunt to Peru/Bolivia to see the Amazon, do the Inca Trail, see Lake Titicaca and much more. An indulgence, but well worth the money.

After spending heaps on travel…… I’m pleased to see the next things I spent money on were mortgage payments and investments into my NISA, which makes me feel virtuous again.

Will I continue to track my spending?  Oh yes, it’s fascinating to see it all laid out where my money actually goes….this could become addictive (and I love the Toshl graphics).

 

 

 

 

 

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Net Worth 0 – August 2014

My main aim for this site was to anonymously share my net worth, so here we go – I’m putting all my numbers out there.

Let’s start with the data:)

I’ve displayed this month, last month and last years values for comparison.

 

Category Aug 2014 Jul 2014 Monthly Change Aug 2013 Annual Change
Cash £42,799 £28,361 £14,438 £13,902 £28,897
Investment (ISA) £6,179 £5,811 £368 £2,000 £4,179
Pension £61,042 £60,208 £834 £50,829 £10,213
Home £335,666 £335,666 £0 £260,000 £75,666
Car £3,600 £3,700 -£100 £4,800 -£1,200
TOTAL ASSETS £449,286 £433,746 £15,540 £331,531 £117,755
Credit Card -£1,014 -£4,152 £3,138 -£4,314 £3,300
Mortgage -£162,238 -£163,171 £933 -£173,587 £11,349
HMRC Taxes -£19,273 -£15,958 -£3,315 -£1,998 -£17,275
TOTAL LIABILITIES -£182,525 -£183,281 £756 -£183,281 £756
NET WORTH £266,761 £250,465 £16,296 £148,250 £118,511

 

So to bring a bit more context into these rather dry numbers, I’ve elaborated on my categories below, and added a bit of insight to my personal situation, as we are all different.

 

Cash

  • This includes my high interest current account, cash ISA savings and Peer to Peer savings.
  • This fluctuates a lot as I get paid quarterly (and I got paid this quarter, so looking very healthy now)

Investment

  • This is my long term investing in a tax sheltered NISA (and £1k of shares I’m waiting to rise)
  • The aim is to through all my money in this and max it out with £15k each year going forwards

Pension

  • A combination of an old employer pension, and a SIPP I pay my pension into now and self manage
  • Currently pay £1k a month into the SIPP

Home

  • My house where I live, it’s a lovely 3 bed semi in Outer London
  • I value this using the Nationwide House Price Index, I’ve also done loads of improvements, which haven’t been factored in

Car

  • My run-around – I depreciate this by a fixed £100 each month, and check if against used prices occasionally and adjust as needed

Credit Card

  • A balancing item for any items on credit cards – I pay these off monthly and don’t carry any balances month to month, but as I count my current account balance as a cash asset, need to offset this

Mortgage

  • The mortgage on my home, am very happy that this is now < 60% LTV
  • I have been overpaying this by £500/month, this money is now going to go into investments after I remortgage

HMRC Tax

  • As I’m self employed I need to pay my own taxes, this includes any amounts I owe HMRC, both from the previous tax year that isn’t due yet, and an estimated amount from this year’s work. This includes the final part of my student loan, which will soon be history
  • I keep enough money in cash to cover this liability

Investing 101

OK, I’m now taking my own version of Investing 101, by reading the following key texts

  • The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein
  • A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel

4 Pillars       Random Walk

 

Wow, was my first though after reading them – there is so much I need to learn and take in – I knew I was a novice, but after reading these I’m realising how much more there is to understand.

My eyes have really been opened  – and some previously held beliefs have been really challenged

  • Beating the market is a myth – very few people actually achieve this on an ongoing basis
  • Beware fees and charges
    • Financial advisors are salesmen – pure and simple – their aim is to separate you from as much as your money as possible
    • Managed funds have high charges, and don’t beat the market
  • Be realistic when evaluating company values
    • There are loads of tricks and accounting scams that have been used over the years
    • Watch out for the bubble….don’t get sucked into buying the latest version of tulip bulbs

My investment philosophy has really changed, and  now understand I am not intelligent enough to beat the market, so I should just track them – the markets are inherently efficient.

I’ve now rearranged my meagre investments into low cost index funds.

 

How I’m going to get there

Welcome to my blog – as part of my new philosophy of  “Good Financial Choices” I want to improve my finances, by making good solid choices that will take me to my ultimate goals.

I’ve got the long term goal to grow my net work to £1,000,000 , and I’m going to set my first mini-goal now. This mini-goal will help me toward the main goal, and is a SMART Goal. Now I’m committing to it publicly.

First Goal

  • Put the full £15k in my ISA this tax year (by April 2014)

In order to meet this goal, I’ve got some simple plans to enable me to make the right choices.

Simple Plans:

  • Now I’m under the 60% LTV on my mortgage, no more overpaying mortgage, instead all the money will go into my ISA
    • I’ve been overpaying £500 a month to my mortgage, this will be diverted from October
    • Also ensure I re-mortgage to a lower interest rate (now I’m under 60% LTV)
  • Keeping paying £1k a month into my pension, and increase with any increased contract rate (pay rise)
  • Learn more about investing, to ensure my money is working as hard as it can for me
  • Frugal-ness – my spending has increased recently, have a look at what can be trimmed and invested instead
    • I need to challenge myself more, and do the ‘Do I really need this’ test
    • Find more frugal days out and ways to socialise without spending money