If you track how your Net Worth is progressing month over month, you may consider how each purchase may affect your Net Worth results at the end of the month. I know I do.
And if you’re trying to stick to a pretty tight budget, you may be on a Cash Diet to avoid overspending on your credit cards. We certainly are.
It may be surprising to you then that this month, we blew that all out of the water. This month’s Visa statement is $4,709.30, and yes, you read that right.
Related: Net Worth Updates
Spenders Vs. Savers
When it comes to Personal Finance, there are typically two types of people: Spenders and Savers.
On one end of the spectrum, you have the Spenders. Their main priority is to enjoy today with little to no regard for tomorrow. Not only is life short, it is unpredictable. You never know when you’ll be taking your last breath so you might as well enjoy life to the fullest while you can. After all, it’s not like you can take your money with you to the next life. It’s really no big deal if you have to incur a little bit of debt to enjoy life’s little (or big!) pleasures.
On the other end of the spectrum, you have the Savers. Unlike the Spenders, their main priority is build a secure future, and making sacrifices today will all be made worth it with the long term payoff. Who cares if you’re literally melting away from the heat wave? Leaving the A/C off will save you loads of money, and with the effect of compounding, the amount you save today will be worth so much more in the future.
Although we’re typically closer to the Saver end of the spectrum, we’re nowhere near as extreme as I know some other people are. Maybe because we have roommates or maybe because I’m pregnant and discomfort is not something I’m interested in at all, but we’ve never shut off our A/C – not even during “critical” pricing periods. Despite that, we had committed to sticking to a budget in an attempt to build a fat Baby Fund that would carry us through the one year of maternity leave I’m planning to take.
Spending in August
So what happened in August?
Other savers might say we lost our minds. Spenders, on the other hand, might say we found a little balance. You see, even though we’ve been focused on keeping our spending and expenses low to funnel everything else into our Baby Fund, there was a big furniture sale and I had planned/hoped to buy a new sectional before the baby came.
Our current couch was an old hand-me-down from the Mr’s brother and was stained, ripped and sagging. And since we had let our pup sleep on it, it was also filthy. Not exactly somewhere I’d feel comfortable leaving my baby on!
So with the new couch came a new rug (the previous one was also filthy – think puppy potty training, accidents, throw ups…). And while we were on a roll, Mr. Unchained decided it would be best to do the kitchen backsplash, a project we had put off since we got the house 4.5 years ago. (It was just dry wall and thus stained and oil-splattered.)
He figured that since we’ve given the roommates until November to move out, it would be best to spread out the projects a little. So we bought 30 square feet of mosaic glass and marble tiles, priced at $8.99/sq foot which we got on sale for $5.99! And since we were doing the backsplash, it only made sense to finish painting the kitchen and breakfast area.
Told you we spent our Net Worth away…!
Fixed monthly expenses:
- Internet/Wireless: $147.38
- Home/Auto Insurance: $209.44
Variable monthly expenses:
- Dog: (food and annual license) $118.92
- Gas: $274.60
- Vehicle and Driver’s licenses (annual): $189.50
- Chiropractor: $380 (reimbursable through the Mr’s benefits)
- Gifts: $41.01
- Maternity clothes (warmer fall clothes): $106.68
- Golf: $33.09 (half of which the Mr.’s friend paid him back for)
- Walmart: $67.89
- Dining out: $30.08
- Shoppers Drug Mart: $51.56
- Furniture: $2,672.27
- Backsplash and materials: $333.59
- Paint: $127.09
So how are we paying for all this?
If you’ve been following my blog for some time, you may be aware that I don’t really believe in an Emergency Fund. Neither do I believe in stashing away large amounts of cash in an easily-accessible Savings account (other than for short term savings goals, like our Baby Fund). The interest rates are so minimal that once you factor in inflation, you’re probably getting a negative return.
However, Mr. Unchained is maxing out his company’s Employee Share Program, which allows him to contribute up to 10% of each paycheck towards the purchase of company shares, which are then matched at 50%. (If you’re not already taking advantage of your company’s ESP, you’re really missing out! I know match rates vary from company to company, but where else are you going to get a guaranteed return of 50%?!)
We haven’t touched that money since January (and prior to that, November 2015), and our original plan had been to leave it until tax time next year. At that point, we would cash out whatever we had and put it towards our RRSPs which would hopefully generate a tax refund (or at least save us from paying additional income taxes.)
In any case, we cashed out enough to almost cover our Visa bill. Just to give you an idea, his shares were worth $6,686.17 at the end of July. As of today, his account is now worth $3,473.40, of which only $821.40 is currently cashable. (Employer contributions are not cashable for 1 year). On positive side note, I cashed out last week at $57.29, and the shares are now down to $54.76.
Our plan to leave it untouched until the next RRSP deadline (March 1, 2017) will resume, which leaves us with just under 6 months to build it back up.
August Net Worth
Surprisingly, despite the massive spike in spending, we still saw a small increase ($2,349.49) in our Net Worth, from $524,183.74 to $526,533.23. This increase (+0.45%) is the smallest we’ve had all year but I’m just happy we’re not regressing!
Income Generating Portfolio
Last month, our Income Generating Portfolio had recovered quite significantly (6.24%), ending off at $60,724.33. This month also saw a slight increase of +1.32%, bringing us to $61,527.80. We also saw the tiniest increase in monthly income (+0.2%), from $19.42 to $19.46. It’s not much, but considering the fact that last month saw a decrease of 6.59%, I’ll take a meager increase of 0.2% any day!
Because we chose to continue maxing out our contributions to our Baby Fund (i.e. we didn’t dip into it to fund our furniture and renovation purchases,) we continued to make decent progress towards our goal of having $14,051.52 saved up by the end of the year.
We ended off July with a “Save per Week” amount of $531.03. Thanks to a few bigger contributions, we’ve managed to work our way down to $529.10. Yes, I know, that’s still a large number, but at least it’s decreasing 🙂
As of today, we’re sitting at $5,585.94. With 16 weeks to go and $8,465.58 to save, I do think our goal is going to be unattainable with the higher amounts that we’ll be spending in preparation for the baby’s arrival. The closer we get to my due date, the more appointments I’ll have to attend (i.e. the more unpaid time off I’ll have to take from work). Our roommates have also been given a deadline to move out by the end of November, which means we won’t be able to save much (if at all) in December.
We’re just shy of 40% of our goal, but I think we’ll still be pretty comfortable even if we only reach $12,000. I had given ourselves a monthly buffer of $1,000 for baby and miscellaneous expenses. Our projected shortfall for current expenses is $2,051.52 for all of next year, so even if we save $12,000, that still leaves us with $829.04/month.