All good things come by threes. Therefore, it’s my third monthly net worth drop in a row. Sounds pretty bad? Well, it isn’t! I just received a paycheck for 2 weeks of work this month as I started freelancing earlier than expected. I will receive my BIG paycheck within the next 28 days.
Everything happened very fast this month. On 9th January, I was still hoping to have my first freelancing client in February. In the evening of the 10th January, an employee of the consultancy that helps me to find jobs contacted me with a potential client. On 11th January, I had a telephone job interview with the client and I got the job! They told me that I will receive 55€/hour. So I needed to get out of my current company very fast.
This was not that easy as big companies tend to be slow and I was lucky enough to get out of the company on the 15th January. One day later my working student time had been terminated and my freelancing journey started!
Today, I will hand in the first bill that will make me more than 5,000€ for the last two and a half weeks. However, I will only have 2,575€ left after taxes. Believe me, taxes are crazy in Germany!
I will go deeper on this topic in the last section of this post. There is other great news. Mrs. Budget and I finally found our first own apartment! We will move into it in March. Lastly, I received my first dividend payments of the year from my dividend stocks! But now, let’s take a look at my net worth of January 2018.
My total net worth
Note: All Dollar values are calculated with Googles exchange rate from Euro to Dollar on the 1st February 2018! I prefer EUR over Dollar as it’s easier to compare my performance without a dependency on the recent exchange rates. The monthly changes in dollars are not calculated from the last month but from the exchange of the according EUR values.
My total net worth of this month is 8,236.02€ ($10,301.21)! [Change: -479.68€ ($599.96)]
First, let me give you an overview of my different accounts:
- Checking account: 1,964.09€ ($2,456.59) [Change: -985.29€ ($1,232.35)]
- Freelance checking account: 0.00€ ($0.00) [Change: 0€ ($0)]
- Savings account:
- Emergency fund: 1,200.23€ ($1,501.19) [Change: 0€ ($0)]
- Apartment savings: 1,150.20€ ($1,438.61) [Change:+50.00€ ($62.54)]
- Working equipment savings: 150.02€ ($187.64) [Change: +50.00€ ($62.54) ]
- Wedding savings: 1,013.17€ ($1,267.22) [Change: +50.00€ ($62.54)]
- Vacation savings: 600.09€ ($750.56) [Change: +100.00€ ($125.08)]
- Depot account (investing [ETF]): 1,182.89€ ($1,479.50) [Change: -29.55€ ($36.96)]
- Investing cash account [ETF]: 4.17€ ($5.22) [Change: 0€ ($0)]
- Depot account (investing [DGI]): 957.49€ ($1,197.58) [Change: +276.90€ ($346.33)]
- Investing cash account [DGI]: 13.37€ ($16.72) [Change: +7.96€ ($9.96)]
Okay, my checking account got a huge hit this month. There are several reasons for it. Mainly, I haven’t received a whole paycheck this month. I also had to buy a weekly train ticket that was very expensive, I’ve increased my monthly investing contributions and I’ve invested a large sum in myself with courses that should keep me ahead. Anyway, I will try to get this above 2k during the next months.
My freelancing checking account is still untouched as I will receive my first payment within the next 28 days.
The emergency fund will be built during the next months but for now, there is no change here. The other savings accounts received their normal monthly contributions.
I was able to buy a new company for my dividend growth stocks which seem to be super safe and have a yield that is fine for me (3%) and a good dividend growth (10.8% for the last year and 6.8% for the last 10 years).
Just my ETFs went down pretty hard. The more time passes, the less trust I have in my first ETF picks. I have to evaluate them again and check if only the Dollar:Euro ratio has changed that much during the last months or I just selected the wrong funds. I still trust one of them, but I will probably sell some positions there and replace them with solid dividend growth stocks.
Net worth detail: Income
Overall income: 971.14€ ($1,214.65) [Change: -480,87€ ($601.45)]
In more detail my income looks like this:
- My student job: 471.14€ ($589.28) [Change: -504.07€ ($630.47)]
- Support from my parents: 400.00€ ($.) [Change: 0€ ($0)]
- Other income: 100.00€ ($125.08) [Change: +23.20€ ($29.02)]
As mentioned before, my paycheck was very small this month. I’ve only worked two weeks for the company where I was a working student. The rest of the month was freelancing. That’s the benefit of a big company. Mostly, you will receive your paycheck on the last of the month. However, I’m totally fine to wait another month for the big paycheck of the last two and a half January weeks.
My parents will support me in February the last time. After that, I will probably have more income than they have and I think the money flow should change directions from that point.
The other income looks great, but it was just money that I’ve lent out that came back to my account. So this does nothing to my net worth at all.
Net worth detail: Expenses
Overall expenses: 1,406.43€($1,759.09) [Change: -245.39€ ($306.92)]
In more detail my expenses look like this:
- ATM money: 150.00€ ($187.61) [Change: +100.00€ ($125.08)]
- Mobile phone contract: 30.99€ ($38.76) [Change: 0€ ($0)]
- Insurance: 87.10€ ($108.94) [Change: 0€ ($0)]
- Spotify subscription: 0.00€ ($0) [Change: -4.99€ ($6.24)]
- Credit card payments: 419.24€ ($524.36) [Change: -117.74€ ($147.26)]
- Amazon: 70.88€ ($88.65) [Change: -91.57€ ($114.53)]
- Development stuff: 200.00€ ($250.15) [Change: +180.17€ ($225.35)]
- Blogging stuff: 40.02€ ($50.06) [Change: +40.02€ ($50.06)]
- Train tickets: 104.60€ ($130.83) [Change: +104.60€ ($130.83)]
- Miscellaneous: 303.60€ ($379.73) [Change: -455.88€ ($570.19)]
My expenses dropped slightly but it’s actually pretty good. I’ve started a nanodegree program that will add another highly demanded skill to my repertoire. So it’s an investment in myself but this will take around 4-5 months to finish and will cost me 200€/month.
Spotify hasn’t charged my account yet, so I think I will have to pay both bills next month. My credit card went down a little and will have an even larger drop in February.
The train ticket was very expensive but it was required and I needed to do the upfront payment here.
Overall my expenses dropped and that’s a good thing. They will rise for sure in March when I move out from home and have to pay the rent, food, taxes and all that stuff. But my income will increase even more.
I was a little bit generous with my expenses over the last months. The main reason was that I already had the full-time job as a freelancer in the back of my head. This was the root cause of the 3 drops of my net worth in a row. My goal is to fix this as soon as possible.
I am still proud that I’ve already decreased my spendings on Amazon, my credit card and miscellaneous.
Net worth detail: Investments
My investments look like this right now.
- Dividends received: 4.33€ ($5.42) [Change: -0.56€ ($0.70)]
- Fees paid: 18.65€ ($23.33) [Change: +3.00€ ($3.75)]
- Taxes paid: 0.82€ ($1.03) [Change: +0.34€ ($0.43)]
- Stock value: 2,140.38€ ($2,677.08) [Change: +247.35€ ($309.37)]
- Money in my cash accounts: 17.54€ ($21.94) [Change: +7.96€ ($9.96)]
I’m totally happy with my newest purchase. I’ve bought a company that is anticyclical and have nutrition, hygiene, and personal care products. The dividend growth for the last year was above 10% which is great and for the last 10 years, they had a dividend growth of more than 6%. The yield is at 3% which is below my targeted value but fine as I am a big fan of protecting my down-side. So a solid company where I am not losing money is better than a high-risk company that could bring me incredible returns or makes me lose my whole investment. This company still increases its earnings and I am glad to have them in my portfolio.
The only drawback here was, that I’ve purchased them through a foreign stock market. I don’t know why I’ve selected this option on my broker’s website. But this has cost me roughly 5-10€. That’s the reason why the fees are that high. The company was also available on an exchange in my country.
I received my first dividends of the year (4.33€) from one company that is pretty low priced right now. I still feel good owning them and maybe I will increase my position in this company as they will pay another (and even bigger) dividend during the year. However, parts of me want to diversify my portfolio first. I will keep you updated on my next net worth report.
Overall, some positions have been increased and others dropped. As I said before, I’m more comfortable owning my dividend growth stocks than owning some of my ETFs. That’s the reason why I may sell them after just two years and replace them with companies I trust in. I will decide this in February as it’s losing me money each and every month. After that evaluation I may have to change things, so the next net worth report should be interesting.
The taxes are low but just because I can make use of my tax exempt amount. In one year I will probably have to pay 30-40% per dividend which is exhausting.
Note: I won’t tell you what companies exactly I’ve purchased. The reason is, that I don’t want to influence any person to buy a company that I buy. Your circumstances are maybe totally different and a good buy at that time could be bad now. I also think that I am far from being an expert and I don’t want you to judge and buy a company because of my opinion. Anyway, I will add guides on how to pick successful DGI companies soon. For now, check out this post to learn more about the strategy.
Net worth detail: Financial goals of 2018
Let’s compare my financial goals of 2018 with my situation in January:
Note: For simplicity, I have cut my financial goals a little. I tend to write them down as whole sentences after the SMART principle. If you want to know what’s that about, make sure to check this post.
All of these goals are not only depending on a lot of discipline but also how much work I have as a freelancer. For now, it looks great and I think I will be able to work in 9 of 12 months. The rest will be used for holidays and I am not allowed to work on public holidays, too. So calculating this number seems reasonable to me.
With a 5k per month after taxes, I should be able to achieve all of the above-listed goals. The emergency fund is therefore very important to make me able to pay all bills even when there is no project I work on.
I’ve added the forwarded dividends to my goals this month. I have already a big chunk of the goal but they include an estimation for my ETFs which I may have to replace next month. The car is required for us before our summer holidays and the sooner the better. We have to do the grocery shopping and all of that stuff without a car and if I have a project like the one right now, I have to travel 3 hours by train (one way).
The other goals depend on how much I spend on the car and how many projects I have. We will see how this year works out for me.
What do I expect the next month(s) to be?
As expected in the last net worth report we were able to find a home for Mrs. Budget and me. Until she’s finished with her studies we will live from a single income most of the time. The best thing about this apartment is that we both liked it the most. Another benefit is that it’s not very expensive (530€ and 630€ with costs for heating and water). We also have to make just a small deposit of 1,060.00€. This is less than my savings account has right now but we also need to buy the kitchen from the current renter.
The taxes will make a huge amount of our expenses now. I will have to pay roughly 40% in income taxes and also insurances and social security contributions are very high. In general, the costs of living in Germany are pretty high. So even with this nice income, we are far from being rich.
I also want to be quite honest with you, the next months will be challenging. Firstly, there are a lot of changes and many new responsibilities will occur. Secondly, I am not allowed to fail on one thing where many people get trapped. As soon as the income grows, the expenses grow likewise. This means, even when you have another $50, the first thing that happens is that you grow your expenses by $50. I think this is even worse when you are accustomed to having a low budget and suddenly your income increases that much.
I want to split my money to short-, mid-, and long-term savings as well as my spending money. The goal is to be smart. Financially smart. However, there will be some purchases during the next months that we need to do. But you need to find a balance between what provides value to your life and is required and what do you actually don’t need at all.
I hope I can grow my hourly rate by another 5-10€. This would help us even more and can make a huge difference per month.
My investments are the most interesting part for me right now. I am curious how many great companies I will find and if I am able to reach my goal of a forwarded dividend of 240€ (which means 20€ per month). This would allow me to buy roughly another share per month and will, therefore, speed up my path to financial independence.
So how was your net worth behaving in the last month? Let me know by leaving a comment in the comment section below.