Another month passed by so quickly and another large drop. However, this was expected as two of my bills were paid last month by my client. Additionally, this shouldn’t just be my lowest net worth since writing these reports but also the lowest for the next few years (hopefully, for the rest of my life).
So overall, as this drop was expected, I’m pretty satisfied that the huge car purchase didn’t send us into a negative net worth.
There was one large mistake done by me this month, that could have easily gotten me into trouble. Luckily, this year I had a large sum put aside for my income taxes (I have to pay them just twice in the first year) which I used to help me out. This also shows me again how important an emergency fund is.
One last note before we start looking at my finances. I want to make those net worth reports more useful for you, my readers. Therefore, I will always sum up my takeaways from the month in this post and also at the bottom and I hope they will help you and your finances as well.
So without further ado, let’s dive in.
My total net worth
Note: All Dollar values are calculated with Googles exchange rate from Euro to Dollar on the 5th July 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 EUR values.
My total net worth for this month is 1,891.46€ ($2,214.31)! [Change: -4,078.83€ ($4775,03)]
First, let me give you an overview of my different accounts:
- Checking account: 1,413.60€ ($1,654.88) [Change: -2,625.42€ ($3,073.54)]
- Freelance checking account: 13,488.76€ ($15,791.10) [Change: -2,122.35€ ($2,484.61)]
- Freelancing savings account: 0.30€ ($0.35) [Change: 0€ ($0)]
- Savings account:
- Emergency fund: 1,176.55€ ($1,377.37) [Change: +0.59€ ($0.69)]
- Car savings: 305.39€ ($357.52) [Change: +0.39€ ($0.46)]
- Working equipment savings: 400.51€ ($468.87) [Change: +50.30€ ($58.89) ]
- Wedding savings: 1,265.34€ ($1,481.32) [Change: +51.08€ ($59.80)]
- Vacation savings: 400.78€ ($469.19) [Change: +100.24€ ($117.35)]
- Depot account (investing [ETF]): 0€ ($0) [Change: -1,234.16€ ($1,444.81)] This position will be removed next month!
- Investing cash account [ETF]: 0€ ($0) [Change: -0.19€ ($0.22)] This position will be removed next month!
- Depot account (investing [DGI]): 2,624.73€ ($3,072.73) [Change: +415.53€ ($486.46)]
- Investing cash account [DGI]: 6.22€ ($7.28) [Change: -318.28€ ($372.61)]
- Depot account (investing [DGI USA]: 2,180.90€ ($2,553.15) [Change: +1,267.21€ ($1,483.51)]
- Car loan: 21,371.00€ ($25,018.73) [Change: -331.04€ ($387.54)]
Easily, you can see some movement here. Overall my accounts dropped, that was caused by the fact that I didn’t receive any income from my freelancing business. I received two payments last month. So, I have to wait a few more days until I can collect my next cash. The rest was pretty basic. It’s the end of the quarter, so I received on all my savings accounts a small interest payment.
The biggest move was definitely that my ETF account and broker cash account are now 0€. I talked about it earlier, I wasn’t confident in most of those investments. These ETFs were bought 1-2 years ago and I didn’t know much about investing at that time. So I planned to replace these positions for the last few months and it seemed to be a perfect time. With the money from them, I was able to buy shares of a great US REIT. That move skyrocketed my annual forwarded dividend and will help me to increase my cash flow.
Net worth detail: Income
Overall income: 305.00€ ($357.06) [Change: -20,699.13€ ($24,232.18)]
In more detail my income looks like this:
- Freelancing salary: 0€ ($0) [Change: -20,655.84€€ ($24,181.50)]
- The contribution of Mrs. Budget to our rent: 350.00€ ($409.74) [Change: +350.00€ ($409.74)]
- Starter bonus of our electricity provider: 105.00€ ($122.92) [Change: +105.00€ ($122.92)]
Two payments in May. Therefore, zero payments in June. That’s fine. I was happy about the other two positions. Mrs. Budget was able to pay again a part of our rent. Remember, she is a working student and not a full-time employee. With that said, she receives a much smaller income than I do. This month she paid 150€ for June and 200€ for July. Next month, she tries to give me even more of that which is really great.
We changed the electricity provider as soon as we moved into this apartment. It’s not even cheaper but also pays a nice sign-up bonus. Now, 3 months later, we received this bonus which is great and can be used for our debts or the emergency fund.
I’ve already told you that I made one big mistake this month. I have a company that is looking for freelancing jobs for me. They do actually nearly everything except the freelancing work itself. All the contract and also payment stuff is taking care of by them. They also provide a system where I can easily record my working hours and generate the bill to charge them with. However, before I can send out the bill, I have to wait until the client has confirmed my working hours.
This month, I forgot to generate the bill after he confirmed the working hours. Which means I have to wait until the 30th of July until I get my next payment. It’s not that bad as I have enough money on my freelancing checking account because I have to pay my first income taxes in September. However, I need to be more cautious about stuff like that.
Takeaway #1: It’s great to have tools that make your finances more convenient and automate big parts of it. However, don’t become lazy because of those and always have a look at what they are doing and check back if everything runs the way it should.
Net worth detail: Expenses
Overall expenses: 4,616.94€ ($5,404.99) [Change: -1176.67€ ($1,377.51)]
In more detail my expenses look like this:
- ATM money: 120.00€ ($140.48) [Change: -4.50€ ($5.27)]
- Rent: 630.00€ ($737.53) [Change: 0€ ($0)]
- Mobile phone contract: 102.19€ ($119.63) [Change: -0.60€ ($0.70)]
- Insurance: 578.97€ ($677.79) [Change: +101.17€ ($118.44)]
- Spotify subscription: 9.99€ ($11.70) [Change: 0€ ($0)]
- Credit card payments: 209.40€ ($245.14) [Change: +48.03€ ($56.23)]
- Amazon: 39.96€ ($46.78) [Change: -109.31€ ($127.97)]
- Development stuff: 0€ ($0) [Change: 0€ ($0)]
- Blogging stuff: 0€ ($0) [Change: 0€ ($0)]
- Taxes: 1,868.35€ ($2,187.25) [Change: +449.81€ ($526.59)]
- Miscellaneous: 1067,77€ ($1,250.02) [Change: -1,637.28€ ($1,916.74)]
A nice drop overall. This still seems to be very much but that is mostly because I pay higher taxes with my income and my insurance is pretty high as well. This month I also had to make a semi-annual payment for our car insurance.
The taxes include this month our annual payments for our dog Lucky, as well as our car insurance.
One thing, I am really angry about this month is that I had to pay 25€ for driving too fast. Usually, I drive very sensibly and this was just my second traffic speeding ticket in 10 years. However, that’s just really a waste of money. I will definitely be more cautious while driving.
Net worth detail: Loans
Overall expenses: 21,371.00€ ($25,018.73) [Change: -331.04€ ($387.54)]
In more detail my expenses look like this:
- Car loan: 21,371.00€ ($25,018.73) [Change: -331.04€ ($387.54)]
Our debts begin to sink. I made my first payment this month and as you’ve seen above, I also have another 305€ to make an extra payment. I will wait until I have 1,000€ and then reduce that loan even more. Probably, I can pay twice the amount that I have to. So the loan that was granted for 6 years, should be fully paid off in less than 3 years. As soon as my emergency fund holds 6 months of expenses, I can easily add another 300-500€/month. My goal is to pay off the loan until December 2019. I’m pretty sure with enough dedication I can achieve that.
Takeaway #2: Loans are a bad thing. Many people get too familiar with having debt. Don’t let that happen to you, instead try to avoid debt in the first place. If that’s not possible, get rid of those loans as fast as possible and pay back all the money. They reduce your monthly cash flow and it’s for sure not a great thing to pay for an object 2 years after the purchase.
Net worth detail: Investments
My investments look like this right now.
- Dividends received: 5.84€ ($6.84) [Change: -8.67€ ($10.15)]
- Taxes paid: 0.35€ ($0.41) [Change: -3.61€ ($4.23)]
- Portfolio value: 4,776.50€ ($5,591.78) [Change: +802.37€ ($939.32)]
- Money in my cash accounts: 34.54€ ($40.44) [Change: -672.26€ ($787.01)]
This month was mainly focused on spending the money that was laying on the cash accounts and adding more dividend growth stocks. I also sold my ETFs as mentioned before and bought even more dividend paying shares. The dividends were pretty low this month but through my acquisition of a monthly paying dividend company, I should never have less than this month. Which is great! This will not only increase my net worth over time but also my monthly cash flow. At some point in time, I want to have more passive income than expenses and somehow, I got the feeling that this was a big move towards that goal.
Takeaway #3: If you buy shares, make sure that you know what you are doing. I bought ETFs and wasn’t totally convinced that they will help me financially. Now, a year later I was able to change that but I definitely lost some nice dividends already. If you want to learn something from a more sophisticated dividends investor check out my interview post with THE Dividend Investor.
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 June:
Note: For simplicity, I have cut my financial goals a little. I tend to write them down as whole sentences following the SMART principle. If you want to know what’s that about, make sure to check this post.
Not much changed in June. However, I’m starting to realize that my goal of 30,000.00€ net worth was set too high. I have to pay roughly 22,000€ (combined) in income taxes in September and December of this year. I also need to replace my MacBook sooner or later as I work with this device and my storage, as well as my CPU and RAM, are a little bit too low. This will decrease my taxes but this purchase is already calculated in. Maybe, I will also add an iPad and a Mac Mini (I need both in the future for my iOS development). We will see how it goes, but right now, I can’t imagine how I should be able to reach this goal.
My annual forwarded dividend, on the other hand, received a nice boost and that’s why I think in the next two months I will achieve this goal. My new personal target is to reach 360€ at the end of the year and then in 2019 maybe 1,200€. That would be 100€ on average per month which is just incredible after less than 2 years of dividend investing.
Our wedding account gets also not enough contributions and I’m on the fence how I should split my monthly contributions. My emergency fund needs more money, as well as the wedding account. I don’t pay interest rates on those but on my loans. So I need to figure out where to put the money in first. Maybe I will add my contributions to my wedding account for 3 months and reach the goal sooner, so I can devote the rest of the year to the other two things. It’s not better financially but psychologically to first pay off some small things with lower (or no interest rates).
What do I expect the next month(s) to be?
I was lucky enough to get another project extension until my vacations start. So I have a job (and income) until the 24th August. Afterward, I can go to the holidays and just relax. Then I will hopefully get another great project where I earn a lot. But I think, I have reached a point where more money is not the biggest goal. I really enjoy working at home full-time and I hope my next project has, as well, many remote days. So yes, I would prefer a project with 55€/hour and 4-5 days at home over one with 70€/hour and to be at their office mostly.
From the investing angle, there are two things in my mind now.
First, I want to increase my annual forwarded dividend and improve my portfolio even more. I have already companies in the EU and USA and 6 different sectors. Luckily, I find more than enough great companies, so I never was in the situation where I want but couldn’t buy more shares.
The second thing in the back of my head is how to get rid of the debt as fast as possible and fill my emergency fund at the same time. As soon as I’ve achieved that, I have an extra 800€ per month to invest. With that money, I will probably start investing in another asset class (real estate) which will then take even more time to start with. But for now, I hope in the next months I make a big step towards killing the car loan and filling up the emergency fund.
Takeaways from this month:
#1: It’s great to have tools that make your finances more convenient and automate big parts of it. However, don’t become lazy because of those and always have a look at what they are doing and check back if everything runs the way it should.
#2: Loans are a bad thing. Many people get too familiar with having debt. Don’t let that happen to you, instead try to avoid debt in the first place. If that’s not possible, get rid off those loans as fast as possible and pay back all the money. They reduce your monthly cash flow and it’s for sure not a great thing to pay for an object 2 years after the purchase.
#3: If you buy shares, make sure that you know what you are doing. I bought ETFs and wasn’t totally convinced that they will help me financially. Now, a year later I was able to change that but I definitely lost some nice dividends already.
I had also a very fun interview with the guy that introduced dividend investing to me. A guy who was able to make more than $10k in dividends in his first 3 years of focusing on that strategy. Make sure to check my interview post with the Dividend Investor.
So how was your net worth behaving in the last month? Let me know by leaving a comment in the comment section below.